REAX - Earnings call 4 2023 | The Real Brokerage Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to The Real Brokerage Fourth Quarter Earnings Call. [Operator Instructions].Â I will now turn the call over to Ravi Jani, Vice President of Investor Relations and Financial Planning and Analysis at The Real Brokerage. Sir, the floor is yours.

Ravi Jani

Thanks, and good morning. Thank you for standing by, and welcome to The Real Brokerage conference call and webcast for the fourth quarter and full year ended December 31, 2023. joining for everyone appreciate us today. We an on and Chief me Ressler, quarter Chief Real and the the ended results President; call Chairman our our published morning, Officer.This XX, Poleg, full Tamir Financial release Executive fourth Michelle including for are and With earnings December Officer; XXXX. year Srivatsaa, Sharran related year expect file in XX, statements December for notes related ended and to information March December financial its the XX, Real form year the and with XXXX MD&A XX, XXXX, the for XXXX, and U.S. the ended ended XXXX, audited for XXXX, period annual consolidated December the remind Form Canadian this in that call and deemed annual SEDAR.Before time statements that started, on conference SEC forward-looking facts, historical be are may future EDGAR to to and get about XX-F constitute securities report including statements. everyone regulators periods with statements the on made we its not like on I'd

to obligation results that Chairman forward-looking Our the our these disclosure actual to except like from statements, reports.Real expressly call the by documents detailed and cause disclaims Canadian differences could risk in continuous SEC those are and statements, intent these any Tamir? may or law. differ materially Officer, I'd that, over forward-looking required to Tamir Executive and With proceed. Chief as Poleg. update turn Please, factors

Tamir Poleg

that quarter. in-depth provide provide our highlights. drive will start in unmatched provide begin, industry.Our for improve results will to the a before more technology client discussion of Good experience traditional collaborative a and experience. estate of closing Sharran and an encompass and and our technology on and are and most life's estate physical Q&A.To need is One our I build estate includes or while wealth. breadth holistic providing agents as enhances Real attachment by consumer-facing agents this to ecosystem long vision purchase mobile all service transaction, the expect the streamlines financial of term, seamless complex and they and a then of recent the up Unlike grow of a sellers. which thank financial is the remarks a we tools, firms, platform with differentiated vision as the home sale Michelle is short unique believe our an agent Ultimately, company opening overview few which morning, technology business eliminates the Ravi. believe, individuals, a both financial of the offering. need will growth the in in to simplify avenue of you, platform, experience matures, for and and providing term, culture, our investment space could a In agents of buyers proprietary planning technology higher-margin is strategy businesses brokerage action generational tools, payments their ancillary to a delivering we with I'll real agent app, software-based home from rollout our combination real some with And with incentives, sellers taking resources an updates our products, buyers benefit platform for we industry. to real provide services.In a we the that a our is also office home call Real we

and everything estate is do goal are in business. owners why broader brokerage investors, value. our Our lives the our institutional the housing that industry.Importantly, to redefine long-term real of in And with the shareholder we just to agents is the is of intent agents our like grow role of

XX% of XX% transactions fourth with prior quarter versus the in increasing year $XXX an existing driven reported in the combined the average XX,XXX increase fourth up year, a Real ended an results $XXX third of a in revenue sales. record Turning million, versus $XXX the prior transaction.For closed, to per million, December end XX% up million of the by with full by decline sequentially in home record to the quarter, versus XXXX, X% agents, XXXX, increase to this to We the revenue year number in of XX% which grew with XX% from XXXX. morning, revenue quarter of XX% increase and the compares nearly quarter the favorably

adjustment, platform, prior robust outpaced scalability The which earlier combined benefits taken the to optimize far actions the in year discretionary in discuss, and was $X.X the was the $XX.X $X.X profit improvement that our improvement XXXX fourth XXXX. quarter a we're this quarter quarter pleased growth, the of growth significant impact straight expenses even million, full recorded marked improvement EBITDA million year or and third in versus Sharran year of of has so of our in balance nonrecurring gross margins the positive adjusted million significant $X.X will excluding from EBITDA fourth the from and was momentum a continued excluding our a sheet adjusted $X.X EBITDA. balance As the demonstrates accelerated XXXX negative the the year spend.Full sheet XXXX.Adjusted reflects or and EBITDA adjustment with quarter. the and in This negative adjusted was that of revenue improve of operating $XXX,XXX million XXXX of in in million

and and excitement uptick providing of recovers. the brokerage mortgage volatile about to time, by in business pipeline, guidance said, platform monitoring.Nevertheless, for enthusiastic This highlighted I to title transaction explicit at seeing financial ahead confident revenue volume. our EBITDA XXXX remains environment new and significant look XXXX, of recovery. nascent another Real end housing adjusted lines. we're this both open we growth there the is the although by a is Moreover, rate joining optimism ability the the we outlook the in That market our significant in for are close clear our As within warrants regardless we and about how not am market year the momentum bolstered surge sense agents in our of remain deliver

aided attachment our the brokerage of combined a track the undertaken business and debit remain have agents. designed we a growth QX core XXXX in of high-margin product, We drive consumer-facing to rollout with on initiatives also digital Wallet, app, these faster Real first card for both specifically pace as increased platforms launch Real ancillary expect XXXX, by One fintech our to businesses grow the than for Real services.We known of at the credit

access and a or Real the providing applied our accumulate initiatives. while enhancing innovation the one our business transaction positioning ability fintech allow by the brokerage to to and real reducing on credit value proposition agents update the consolidate to agent of forefront platform. our with agents will at Real earned over funds branded through agents I'll all further share experience card highlights income, be towards As dedication it the Wallet tools digital that, services these estate. for for an improving financial into their card.Utilizing a that to This who through reminder, Sharran Real bolster and squarely that fees, growth merging can unique debit join then revenue flexibility turn Real with the payments their to equity Real enable points commission will platform and operations With

Sharran Srivatsaa

the each not programs, sharing do the along firms continue the program advancement this attachment. leaders to to a accelerated independent they care, quarter succeed. programs, maintaining deep record in offers on year, ProTeams our members, and Tamir. independent with compensation and financial XX,XXX other reason And our so This continuous by XX,XXX can of of the customer This identity, health join Private customization their and sets brokerages Real to combination often to to but has "Why of just it comes team often ensuring our has count versus choose you, quarter, the surge proven initiatives easier their our agents flexibility leading and models thrilled individual but RED, Real losing that Private to agent their fourth like the for under them brokerages such and and program brokerages This and allows that growth us singular highlight We're management across while local game worked announced agents that equity without to at for Label leaders designed and Real start to they've that our in benefits brand maintaining GLOBAL profitability success customize of a asked with align now the base as no part I'm our leverage for team our U.S. a agent the teams.These Real's agents, Thank agent has while their brands access agent-centric strong revenue Real today, by the and has up unprecedented Real initiative represents growing Real structure unique make XXXX. the resources for has ProTeams momentum it's Retirement umbrella. growth program, transaction of support and and fourth build.Similarly, In supports count level a Label platform team focus recently how fueled since hard significant to and apart. support that we if be to XX% ensuring Canada. support the brand Real?" to a structures.The investors, with agents changer already rose enabling that clear, technology been there's in fueled need which emotional dedication

empower and to approach Financially, their compelling autonomy clients We out best. with extremely model. flexibility. our an tools stands Recognizing economic them who as and they entrepreneurs starts are businesses the see with with fit. know and First, Real operate freedom agents

a to daily enjoy sharing opportunities, industry-leading brokerages. advantage substantially our who technology. wealth their of in joined is and find is our agents third-party themselves control maintain retaining services other annual our The low significant important our systems.Culture pillar platform backbone unique our enhances commission support by our equity dollars revenue where efficiency when used we This the that ensures commission of Real of for numerous a software making proprietary splits, operations compared more agents also only cap, agents. generation.Many not Real Our is another on relying industry and identity. full but over without Real reason disparate

we fosters be take continue in kind nurture part collaboration work competition. of and a be will order community that responsibility do to a to a it we are that is a not so agents to lightly, this culture of. Our culture hard, proud over philosophy create Maintaining

a Lastly, of Real opportunity. platform represents

a we've what attracting brokerages enhancing more rapidly further accomplished We together and are recent validates teams remains from where continuing in to forefront can The build offerings our that, change. focus want cloud-based be traditional Michelle. both With and turn I'm on proud influx the our agents where of and to a community producers we future. we our are of the approach.As organization top ahead, I'll of even thrive. evolving forward-looking about and industry it who our at to look excited incredibly a over agents

Michelle Ressler

you, thank Thank everyone, Sharran, joining and for us. you,

the These We new home record XXXX closed highlight from up year billion, the Before diving increased value for million XXXX.Full of million sales XXXX. from I transactions decline into from fourth market year considering XX% over existing the $XXX in XX,XXX so increase results while in would $XXX XXXX, results want of business. closed any performance an XXXX. $XX.X the more even of to in be the XX% of our remarkable our XXXX, in total a new to across quarter, but transactions impressive XX% when reach are market revenue X% in

of grew million million up in even to compared XX% $XX $XX faster, gross While profit XXXX.

including cash we $X.X to balance recorded $XXX,XXX compensation positive $XX.X goods XXXX. resulted the allocated the which was adjusted our $XX.X of sold. growth the operations and expenses in This full outpaced million annual gross full within sheet year cash adjustments growth from full $X.X our cost significant and the expenses stock-based year of adjusted Importantly, $X.X first-ever nonrecurring year from million XXXX, of flow $X.X the a impact quarter million for million EBITDA, the full for of million in excluding repurchases, related operating generated marks fourth share in negative year, increase profit in XXXX million to and EBITDA a of XXXX.For in

Tamir remarks, not mentioned formal his guidance in at time. XXXX providing we're As this for

time XXXX.Moving deliver revenue, in in quarter rose commission count far adjusted driven and in strong increase XXXX. the $XX,XXX a on close $XXX benefited individual approximately transaction. quarter. the revenue, from the and increase XX% the to an per an XXXX. growth expect the agent the fourth XX% of Revenue combined our closes. as increase XX% $XXX,XXX we unit quarter XX% million, of the of in an Recall fourth XXXX in recognize brokerage by increase gross an given in XXXX fourth the to economic XXXX, quarter, revenue totaled improvement transaction Title transaction the revenue profit throughout is do However, thus we at which versus quarter versus continued year-over-year mortgage increase in Growth reached fourth XXXX, and primary revenue an to EBITDA in in of X% of with in transaction of and was quarter

down of we the and XXXX only contribution fourth XXXX. slightly of from margin profit to reflected closed $XX.X of from quarter prior quarter approximately was X.X% in of in X.X% on the prior quarter the the a quarter Mortgage of in acquisition the Given sequentially the from flat XXXX One was XXXX, Real partial Gross year million, fourth year quarter of in fourth fourth third relative XX% acquisition.Gross December XXXX. the in million $X.X up the

line sold cost requirements. compensation As program of subject we of higher-margin commissions vesting from is program. commission sequential a stronger margin of from Real a certain from in adjusted revenue amount EBITDA quarter, reminder, a our lower. in saw services receive This XXXX, anticipated margin quarter compensation ancillary stock-based than allows mix primarily their excluded of and to high-cost Agent stock-based revenue Stock while we related to equity, was our relative improvement line.While the the portion was This had form gross third to our a some include revenue expected, goods the pressure modest the much in fourth to agents problem, as Purchase

margins included continue and quarter basis General business quarter from and contribution reflecting both versus benefit For gross business, fourth of a ancillary This and include point recorded expenses XX.X% reflects million Administrative, $X.X which Total of XX adjustment continually gross expense basis the mix scale. the million business the based our as natural in was higher to quarterly revenue expenses, roughly in improvement points out-of-period $XX.X full operating higher-margin seasonality fourth margin quarter. margins year-over-year we were year lines.While XXX of a and Marketing particularly an the focused lines increase our remain of XXXX, the ancillary compensation or XXXX. fluctuate XXXX, actions taken operating R&D that gross improvement, our on in on driving X.X%, of increase from to can margin quarter was XXXX.Notably, stock-based in this fourth

of basis XXXX our fourth improved million the have quarter. noncash the release of total up, metric in XXXX, the or points catch Adjusted share, of would as of quarter point variable by fourth stock-based and model. sponsorship enhancing for the cash and period investors agents expenses $XX roughly platform.Adjusted categorized our in $X.X from operating press scalability in $X.X basis XXXX. was non-variable our $XX.X in other as prior a to in ongoing expense Excluding to further less compensation, structure in this Revenue totaled revenue, of the total million $X brokerage. operating compared and is a expense percentage the the agents X.X%, the composition percent million while quarter platform.Revenue to a quarter X% retaining illustrating reflects up to period. million million in new operating loss share expense, commission demonstrating $X.X or was XXX revenue a entirely leverage in operating of help quarter the items, down fourth cost a our business expenses.Real's reflects of a loss in fixed prior was our across is year-over-year, is approximately expenses points the provided fourth improved marketing as unique of the understand year sales of million XX aids operating EBITDA basis net agents XXXX as X.X% Real in paid attracting share to new revenue from depreciation X.X% year, also productivity prior the XXX which improvement recruiting operating This and year from expense share our Adjusted better of in

reflects the adjustment non-recurring amount sheet described balance this earlier. However,

the to profit, million from flow. the our and negative unrestricted XXXX, our in $X.X increase fourth of cash Excluding to and gross improved which was from balance the this cash higher EBITDA of We fourth growth cash XXXX. with million $XXX,XXX by driven outpaced the in investments of million, operating approximately ended expenses.Turning of end impact of $XX.X the quarter a improvement adjusted quarter of adjustment, in significant $XX and year an the sheet increase The XXXX. revenue

of growth Our liquidity to cash short-term cash our capital $XX.X to remain while million balance believe capitalized fund ample invested. million in unrestricted continuing consists and to have We we of and well $XX.X continued return shareholders.

The XXXX, X% fourth maximizing the was to sold are quarter the our median opportunistic respect value transaction, fourth a remain billion The over with total our expense the will year-over-year XXXX, represents fourth share, improvement. a of we of with sale per quarter $XXX,XXX commonly KPIs of about. platform of focus a We fourth quarter homes a was of the operating XXXX. price long-term $X.X increase asked agents value.To compared quarter close, $X,XXX recap M&A year-over-year XXXX, by few I'll XX% in Total to shareholder excluding a of on in increase. increased transacted X% to revenue which properties in

platform.As quarter agents the had XXXX, technology compared of by quarter XXXX per XX% approximately of up by quarter fourth fourth in of testament fourth enabled annual the expense of during the XX% of of of cohort XX% to a XXXX, from exceeded XX% the commission the quarter in quarter of fourth transaction the operating the XXXX fourth of the adjusted improved commission compared quarter. XX% This fourth for commission the However, XXXX. represented their in Canada efficiencies accounted our quarter end X% of revenue cap, to $XXX revenue of during to of XXXX.

metrics and was which This as our headcount results full-time X:XX of and Real end the are turn the of this at employees, This financial efficiency remarks. end the we fourth define ratio, the by on agents back Our will the accompany at number provided employees, quarter. excluding fourth platform to Mortgage that presentation on the compares that Title Real of One Investor Earnings our details Release in call. operating quarter I Tamir. Press XXXX. my of be concludes key found and More to it can now X:XXX

Tamir Poleg

Reflecting environment, Thank Michelle. has of declined on market one market the Real that excelled has not clear entirety extremely an home but what the which only challenging nearly navigated for existing in by sales XXXX, it's in been you, XX%.

offer Our we've a importantly, have to the most want and, platform, the as technology the operations to have sustained forward business headwinds.Before differentiated pillars our a known take is to at Q&A, our of but I success we collaborative us propelled when talk going unparalleled reZEN. the nurtured These our inception. us faces only agents, our industry endorsement proprietary large about our not technology powerful since value even cutting-edge that model, moment software-based underpins culture to

the not processes that leverage allows to common take tasks our the are its on in across to real to they a and maybe our Unlike less a in-house could transaction, spend and in close offering, XX% enabling the brokerage, the human-intensive time minutes, in our platforms adoption X our be Real software Now automation to us brokerages, paperwork not remained reZEN. integral power time what to universal of ability agents flat X every technology or automate agent leverage hours, quadrupled from at administrative transaction technology estate.Meanwhile, for is reZEN more XXXX. selling is in backend of XXXX its if days, on lies other something word on estate brokerages. philosophy should to processing the Real, transaction that that This agent other XXX% I count past real utilization do evident base. at best, traditional XX,XXX industry. XX% agents use over rate But believe is employees of benefits This in effectively has our reZEN annual what traditionally transaction at reflects where bad in distinguishes from a what optional.The fact has are XX,XXX just headcount the to technology while years, team

throughout operating major extracting commitment cornerstone their help our reZEN Leo, not the agents, utilizing real just only and businesses for reZEN isn't with to efficiently. key Wallet a tool. vision hub management are accessing further AI day-to-day who agents on have It's as tools, will collaborating express the agent of, other Real real Leo, marketing our gratitude I Real scratching every want unwavering in that horizon, a transaction system, into of brokerage, Importantly, your its of insight assistant, the truly that, system, brokerage belief transaction a and recommending more surface agents managing and the transaction comprehensive the well improve one a as materials, estate is my estate estate operations.With the we training unprecedented run to success. efficiencies, XXXX in partners evolve and wealth-building continue is just we even one our employees potential.With Real still smarter With in taken, With and all AI data steps of the journey, space. believe our transaction, appropriate if be housed fintech be must been have supported and single becomes platform, our on anticipating industry to to that actions our both something instrumental deepest data in-house to with Real

session. Q&A Now move let's the to

Operator

be analysts. Instructions]. time, for question-and-answer this session at [Operator we'll conducting Everyone, a Certainly.

question coming from ROTH Darren MKM. first from Aftahi is Your

Darren Aftahi

Private next of initiative how is prepared mentioned of that much an remarks you impact having into results. on I'm that 'XX. if kind on curious of you the job a acceleration in and those Nice the about of acceleration. comments comment to dovetail and kind Tamir, think And ProTeams could Label agents I launch your of

Tamir Poleg

beginning the Yes, an acceleration felt the since have we year. of

X,XXX February. So we more added January, in than in X,XXX more than agents agents

agents onboarding X,XXX have and who than more not ICAs have X,XXX we signed but expect We about onboarded agents yet. March, in

we a waiting to join. pipeline of strong have So agents

reflected Private are still not I think and discussions in Label growth that the probably ProTeams yet. the fully

those of the So are ProTeams of and XXXX. overnight. large or make beginning XXXX end of do the and few we a Those teams are strong are independent looking towards months. started very switch the discussions Labels brokerages Private and next do that the We that have pipeline candidates that not to join in

So I effect stronger over think few that full been that strong, that fact be and has might the kicks Private growth the despite ProTeams weeks. of the extremely it when even next Label of in

Darren Aftahi

Great.

you out [indiscernible] XXXX, maybe one, Could per [indiscernible] or for financial priorities priority? X Another maybe I in but not se, if may. the X team to your just top list

Tamir Poleg

we I continuing company and Sure. quickly things. efficiency. to key of ability process on since human This us, the to improve continue is our continuing efficiently, One, to without X say started transactions would been and for main we focus a to any and -- actually has involved evolve X. very One, improve that. labor

expect year, Second, lot and of onboarding our that overall of on on a operation board pressure obviously, large growth, we agents team. puts support and and team a this number bring to

to couple weeks it we of group internally a how roll agents, obviously, a of evolve.So starting small around with then within Real the Wallet. out a will lot excitement the the entire can the alpha is and wallet and There's third we testing agent population. wallet of The are

focus background, for and to the we So the company. and consumer-facing the to comes user kind steps that's app, One planning are Real board additional the of block drawing interface evolution app, obviously, we're also it back a And app. just the the when building now building the which Real in huge the the One of

XXXX. those all for the main So be X would of focus

Darren Aftahi

Great. last one sneak in. could If just I one

comments reZEN, that to license you'd technology? curious, is Your in-house? would out Or I'm about keep want ever that something you

Tamir Poleg

have that to huge to a competitive something we in-house. would This we This is advantage is continue built that and keep want build.

I tech seen can if potential if you think flip their think the their we brokerages in that companies you order integrate operation, I had with that maybe about within reZEN, acquiring past, picture. actually that to in technology M&A, think

So a transactions instill has and in in the built operating system company for a brokerage in better tech monetize businesses, robust very a efficiency, a our system operating way. agents both operation as for agent that and also that can operation,

allows acquire that, think transactions. that other when technology to brokerages potentially in I their that transactions in leverage technology to say mean I to in operation. leverage their us I and order order And our transactions, acquiring acquire leverage

Operator

from Your is question coming William Stephen Sheldon Blair. from next

Stephen Sheldon

Great job all around here.

like initiatives that any to get but maybe, Would visibility love teams, more into these ask are X? efforts your agent generally you or that teams the just do teams and bigger monitor detail how you First the that or some an pipeline, sounds maybe you you one, also wanted to visibility to agents others and just -- much bringing existing track add have of over recruiting It into do agent visibility have new given visibility how recruiting agent get working smaller, the team get. on of bring you some to Real. are

Tamir Poleg

Thanks, Sure. Stephen.

between is So this probably of maybe data the large same you the teams We distinguished or small and as agents. all teams, CRM agents don't the for solo that have us. from a organizes

about be solo that we're think us.I agents that more of look can small will what teams or number can the more predictable independent that be at just will seasonality, brokerages. that, when at what agents can quite solo look we're seeing and we patterns, accurately large is joining joining we estimate and teams are for think especially this is pretty at growth we I talking because us point,

team we're brokerages a last a team agents. XXX to XXX, teams large be or So XXX XXX, agents now, example, XXX, XXX for to talking year, onboard. Right us would to brokerage for a of of and

visibility. We So into obviously, the we're any agents, us the what's on in on and track without full brokerages, happening, very those we visibility large pipeline. that, independent think active. again, do But teams having solo I predictable discussions, have pretty the it's

Stephen Sheldon

That's helpful. Really it. Got

a Just the ancillary and would attach consumer the build-out about? Real are that we start what have be important going mortgage solutions One an When should you to for is curious relative you like some think rates of to follow-up, expected. it thinking impact down on the eventually, just could milestones What but title. how do app have road,

Tamir Poleg

Sure.

obviously, that of has So before. One the challenge app. The a putting we're focus Real is it on there tried lot nobody

the scratch. time. scratch. brokerage. We're things integration are everything Those we from We're all all title and take internal building everything the So blocks, doing designing building of from of between mortgage

that on backend, progress. the I good we're think doing

On because, which building have somewhat the version interface. are the additional to the is blocks the drawing said board design or released as the we before, end, a try the new the of consumer interface, to we front I user just user app back and of not

collaboration So paperwork, X about I home of would say. those expect weeks, agent, that I with search, in to things. all the process complete

I the will think see -- growth it progress mortgage will year, we second growth the on half year.When title grow brokerage. to outpace ancillary the of one in will this services, their relapse more both attaching the of comes and

has I of So those grow can to companies X XXX% mortgage I ever expect that at tell month best minimum in had February. year-over-year. you a

is February for sign. good a real is slow month very typically estate. this So a

promising direction.On committing So rates and going of to seeing positive Real already very Title. our a of that, we some using we teams are in attach biggest have top

the for of we much those and think on impact And remainder we year. QX bullish that probably I will significant. will the become effect their in starting that on more our financials are But the as before, X businesses. very said see XXXX, of So we then

Stephen Sheldon

the detail. Great to hear. appreciate I

Operator

Erdner Matthew next Your question coming Jones from from Trading. is

Matthew Erdner

your operations? how the of the those with agents and Could have on had kind commission suits guys you seeing you that are talk an about effect recent splits

Tamir Poleg

monitor It's look the can patterns to market. and I trying not change far. we've interesting because some seen that say thus been any at in have we

the surprising in antitrust we a it the business in nothing which do commission little when for seen agent, was to comes our has a is bit commission So actually it decline in usual have lawsuits. rate. because of with to U.S., Canada, rates But

in from pressure agents by not seeing yet, it's wouldn't So reports they're business clients. being all, we're suggest Also, still maybe their but Maybe that not felt our the it not pressure. that agents. come the that or at feeling from

Matthew Erdner

then Yes. it? guys' going to to do of be And is bit on What whole? then could little you Wallet, as behind fully margins partners talk this expect Real the to know. a overall have That's impact banking the good to when And your kind about turning this you a scaled?

Tamir Poleg

repeat you half first the question, the Could of please?

Matthew Erdner

it fully you kind the and do to the partners the to adoption as scaled expect Wallet of banking then What's you the going fully do impact well. When is scaled up margin when be be get rate? Real on

Tamir Poleg

Sure.

kind a So work are behind service partner banks partner which we have work they --Â the the that a the banking as called of banking with with, company They Unit. is scenes.

We with wallet. going the somewhat are to slow go

within also we're couple we do alpha said, not roll then question many a I offer and then to more the much testing how be agents is will agents. credit starting as we of can beginning, to get agents. will more As it, more the at feel with around we the and how The weeks, we is it more patterns agent.So out and our we conservative credit will to use And our underwriting. more experience wallet giving that, with and comfortable

evolve that probably will over that time. think I So

directions, test go I it well. it's to even term, realm have can our be I and think on somewhat consumer the XXXX.Long going in bit that can financials because the the is that different positive to effect in for year little predict wallet of even evolve so XXXX a early will into think it though a as wallet many a

to products agents So wallet-related offering our clients.

that, margin. gross basis, to have an wallet gross of the think a margin X% total on X% can impact in I

Matthew Erdner

as And into of expenses kind that, any a there off thing the going note. kind as of are then or model for this should the ground, front-loaded follow-up to are you to you the incur we get expecting good that to just wallet? that forward That's expenses put guys

Tamir Poleg

expenses dev-related. of our right are The only it's dev now part I And budget. mean,

it on working We -- in we started XXXX. have

wallet to on in the it continue expenses factor there to that I outstanding model. or you are should in work related any will XXXX. don't We think the extraordinary

Operator

question Your BTIG. coming is Soham next from from Bhonsle

Soham Bhonsle

a XX% sort business. been, of margin high you're doing brokerage Historically, just stepping it, for second. has call Hope back Tamir, single-digit, EBITDA business well. the guess all I

given you're business things Now, obviously, is of as be margin that and your sort title should side your of model. right, normalized sort different margins, term? put to it how little the together doing in profile attach, on some fintech X innovative ancillary the just about then call you a long sales mortgage and going think we But the normal market, a existing million home of

Tamir Poleg

mortgage gross which looking title on, we think EBITDA in we adding be within to digit, if we're factor of the would a will years. that I wallet some That's services think later single the in that target. margins I you our high couple say. and will additional of get margins at I mid-teens, And

Soham Bhonsle

it. Got

all a you lot you the think sort productivity to second but productive right? agents to talked of, side, agent to about can on I to about, certainly happens levers productivity that pull keep way, And sustainable that debate is long one, me. more that unique. and your the agent have keep I Because as operations on can which think as But ask term, side, we feels what count improve taking to I you Okay. you long wanted share

just that can bit? about So a piece talk little you

Tamir Poleg

both technology a It's and human probably of Sure. combination initiatives.

of we're kind technology on visibility lot which into side, So clients of and day. more a of time, allows up I of processes serving the building opens end streamlines businesses that up that think more the at their opportunity saves just the just that of lot the the agents a technology

they Real. more or So joining versus can transactions have given month a in day before

we a the human extremely just the closing level, daily agents collaboration how on action online business of And technology X now happening that very is of leads, [indiscernible] on a there how and tactical built, of to piece newly is the educating their of a agents side, on of towards side kind taking year I it, with to a is buy that's our it.The off-line lot the source improve agents, agents think information we're transactions very both piece listing So to generate how successful think help X lot I next productivity.And of basis, are because deal piece collaborative in-source that productivity information. it, take the leads, agents lot the the of weekly overall of their a to of how improve Sharran which company. unique, the around transactions licensed doing lot on within and just educating to that to there's is a that work are of can can this how so to week. nurture last the on the do weekly much leads, that tasks, of and or and year, sharing both community agents educating and a want that and emails,

Operator

you. [Operator Thank Instructions].

White next is Tom D.A. coming Your from from question Davidson.

Wyatt Swanson

you're like on since high-productivity attraction a of more starting have Swanson agent landscape is nice for value moment? then And some guys a the the resonate in Real It with at joining overall the talk with finding agents how the agent Tom. This really momentum are specific about seems have you that really may had Brokerage prop parts the months? changed of Could for guys to recent or agents any start for you bit year. you recruiting Real teams

Tamir Poleg

us. that to momentum So has transaction. momentum I starting now this the think And into is yes, for translate accelerated the

our was transactions date XXX% XXX% higher year. of pipeline open So it the is -- than same at last almost about

So translating revenue. this into is

the name, fact I whereas that to has that think just some component, I think because a that a X becoming maybe what share, and fuels that noble that great.When joining we us. I in the X, And teams we effect, then creates which another X, X, think other us it." all, starting asking are really "Okay, Real? revenue that add is agent sticky are an the other model agents effect why those first lot a to teams that effect. is different we high-producing areas household excite a that it snowball human Maybe area the is now now -- joins us, agents that are think initiatives within I the itself joining are join so themself, is and also of of fact the did feel every and some are into that look that of should think the of that opportunity it of agents I team

ProTeams First Label all, of and are huge. Private

do team or without different just name years, so branding, So for their just is brokerage and in leaders a over Label the changing without spending and independent many allows configure extremely for to money, in valuable for plan investing their local Private our a brands without that.ProTeams owners within team. as switch anything them their brokerages like their brands, they which a changing to anything keeping Real without is reminder, dashboard agent rebranding, platform each allows essentially and that under join to every that

on XXX agents, be XX-XX. a So think agent about can on agent place, having one XX-XX another a

Some over lot just accounting pay eliminates concerns the that the a automatically of some all to agents an the and X nightmare just initiatives this agents a takes they of ProTeams in it for fee, teams.So and pay It's of a Those Real switch for care extremely have. make background monthly them. brokerages closing seamless, fee. seamless,

a growth. So positive on those have impact X things obviously

at branded offer that current able now for This is nobody something around mention, The just is order This leader to that excitement your there's something bank. their the excited they're example, in also, offers. other huge. cannot to the be would ability earn and a team do team have to line credit right credit fees ability offset This cards, business, a a their cards wallet, thing for to points attached I else the about.And to something members. credit is to lot to which of is they

with we're this trying the financial that them. together see around they vision to ecosystem So build

Wyatt Swanson

or the for overall? agent the expectations just Got it. for just Could XXXX follow-up. calendar really quarters on detail overall That's color. And you growth I then any few helpful. give appreciate a or color next more

Tamir Poleg

us. in Yes. in January year this for We're it that said, strong if full growth or to going we're probably very, X,XXX I very agents X,XXX is at expecting will February, year increase. point know don't not I sustainable be this a joined in another it like But even providing XXXX seems a April. in as maybe in March, pace is But time, X,XXX guidance. over

Operator

There analysts in further the questions no are from queue.

Ravi Jani

Great.

portion of that platform on week. shareholders from We the Technologies questions excellent call, launched want concluded last number we've that Q&A address to of questions. of Now some we was analyst a the the Say received the received

thank who And participated. to all you so

the are XX-XX the Tamir, for question incentives, agent sustainable? First split including

Tamir Poleg

most $XX,XXX commission especially Yes, change to agents our when favor in the plans future. no value in the mortgage margins of Real on have why driving cap, traditional the such generous lines, well than to you and one The the title No higher our in reasons we X split focused of where Xx plans as factoring ancillary but it Wallet is of brokerage could proposition as the as the something XX-XX of change. our know, our is growth split business the and we're to as is core margin. probably one in also gross be industry to

Ravi Jani

Great.

talent as how And the plan question brokerage to do is What retain top Next you retain strategy Sharran. agents? and grows? for recruit top to the

Sharran Srivatsaa

Ravi. Thanks, Awesome.

about and actually numbers. not great For that us, right? great create growth then community attracting is great about numbers, just great people a building It's

that want, has agent completely approach changed is different would model, run is We top plug and traditionally, does would of way would LEGO different fit completely entrepreneur-centricÂ platform.Now today it's looking it their platform, their see we than we an models. a they this agent an that design independent what LEGO to business call an believe these brokerage where individual and than their the brokerage different an market but our a entrepreneur-centric what speaking, have with a "It's for want. own agent mean? is approach actually is in And been skills blocks," to where our block to want team conceptually into completely their a say, to build what So businesses today create Agents simple. the quite and we want job

to the of focus agent. their more with true is platform, the build us help to our businesses on these LEGO So gives agents a partnership Real build blocks which

Ravi Jani

about have been Got infrastructure rapid to there next experiencing? Real's question, the growth we're it. respect any concerns Tamir, with

Tamir Poleg

we're very On growth. the excited contrary, the about

concerned platform, growth we're to tech Given handle of our our not scalability systems significant the we're experiencing. about the the ability of

need an set additions a XXX fact, agent by to in support we never necessary would. record excited well-equipped ensure agent our our are done as when traditional the to to about on But platform another onboarding agent why before.Of as with which and where brokerage is something single transactions day. need. reason In our support course, hire select assistant headcount that week, wherever teams they we and effectively closing just transaction our this we're that a full-time functions of is reduces AI, Leo every said, remain the virtual model this have This for same employees making all-time a amount team

Ravi Jani

Great.

about on how Next question talked proposition a agents? Label? unique a vision little this some for for you just this Sharran. And for value in the And Private Q&A, we expand could bit is the analyst but

Sharran Srivatsaa

sure. for Yes,

Private company's what about entire markets, to of this be months. And that's say a philosophy program our of pilot we test could XXXX, So us and well. In been goes for XX the and really in last Label X actually ran this this on working different adopted to offering this we've allowed invest.

have to means, about, important company. with that these their is to have an every talked built really has would as actually a because the instance, that in up to Label Private in brand independent is join what built market So Real.This independent they Tamir brands brokerage their the partnering while brand keep local other brokerages give

for option, built we acquired and owners across for we the more us. from give context, country, some over my California have much equity brands that brokerage, and a have a previous in these markets.In it leading that experience combined was offices and in XXX,XXX brokerages So brand If XX in brand local Talus, with Southern years and in spent this there building fact, national independent lost been broad personal overnight. their scalable in brand option -- are brokerage, had independent we our would to

exactly about And the service brokerages join keep independent their Real scalability can provider, brokers independent makes with So -- shows Real, creates powering excited we're Label, to as it all platform obviously, back-end with support.So our and overall. Label effectively, same. because independents to that goes value systems Private to teams Private the a branding a of of offer our the and this it and and technology potential brokerage

this not is the equity a also in done it's industry across players mentioning So independent somewhat of like of dollars. provided valuations billions industry. brokerages, the Side, are few worth and are offering There a to our their in that similar have who

help LEGO pretty Private value on independent tremendous Label actually that brokerages. we that the to the blocks and shine this we we to about So give offer light good potential for feel

Ravi Jani

Great.

treasury grant purchase the hoping out stock stock issue open stock come the shares? market company there stock question Michelle. the a the is for the where Next Real from? is the does to awards, go When that in company awards? of to Does float Or

Michelle Ressler

Yes.

So the answer both. is

stock stock of ability We necessary have order to area as the issue to awards. in satisfy the

to However, we're also enables stock our of shares from active purchasers in open trust. issue market. that the And us

So agent in to place the put was buyback satisfy initially the awards.

use to we And back which flow those buy of offset a shares as then in is issue and feel dilution, to can so our stock, long order we good as from our trust. cash we strong continue undervalued

Ravi Jani

opportunities amount there to mortgage and it. to Got processes? One title mortgage in increase the the participating combination of automate the a platform? is questions. Mortgage strategy It's any what X Real are Tamir, the providers of And

Tamir Poleg

actively rate more has been mortgage the are obviously, we environment mean, I loan but Yes. volatile, officers. recruiting

you're interested crowd if apply. One in MLO, Real to us joining and is anyone Mortgage, So please, out reach in an please the and

the same the and can the have business of think we working businesses, we it. done X be are for done things title, in that yes, brokerage Regarding those I and efficiency in mortgage now

businesses those only their Qualia called title. a we building So not revenue a are X but now essentially we will operations.For replace example, will in system, become that which system think efficient more grow for

company Title powering ourselves using and -- to only be we kind to overall it. using going what operation believe, going it, third-party the we're going instead is own that is I of are system, a title we of And So is are to the of be building, One Real and superior.

are opportunities and mortgage and are title using lot there also technology, So processes we it. to processes a streamline working of on

Ravi Jani

to Great. And next Tamir. X do see stock market the in for years? last question you Where for Real the X going

Tamir Poleg

the we don't over control we stock stock But the control ultimately the the weather. do price business. than any the intrinsic the Obviously, reflects market know of we that price or stock long term, value more

for we our we can sustainably strategy, And execute our and stock for is and free we for compound on will to so value shareholders. share, ultimately and revenue grow price continue per that create means us, the cash earnings reflect what as our that that Real, significant know rapidly will our flow

execute, So business, to work a growth the and I expect just need to profitability, build and on accordingly. price great we and react stock continue

Ravi Jani

me once today's has please Matthew, Great. contact anyone We'll free questions the please end any to it there. release, conference additional you on give If earnings replay feel directly. again? would call instructions

Operator

replay (XXX) XXX-XXXX, (XXX) and the number and Once mentioned, available be will is the The the and today's replay replay. conference is is Ladies XX you. Thank as gentlemen, replay replay phone phone code code XXX. is XXX-XXXX, for number again, XX XXX.

your disconnect this participation. and wonderful for have a You may at your Thank day. time, you phone lines

The Real Brokerage Inc. (REAX) 7 Mar 242023 Q4 Earnings call transcript