REAX - Earnings call transcript Q2 2024

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Operator

Good morning, everyone, and welcome to the Real Brokerage Second Quarter 2024 earnings call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Ravi Jani, Vice President of Investor Relations and Financial Planning and Analysis at Real Brokerage. Sir, the floor is yours.

Ravi Jani

Thanks, and good morning. by, webcast to ended for XXXX. standing conference Real June for and call the you and the welcome Brokerage XX, Thank second quarter appreciate today. We joining for everyone us the Srivatsaa, President; Michelle our on With Tamir Officer. Chief and today Executive Sharran Chief Ressler, Poleg, me Officer; Chairman call Financial and our are June earnings This an including for XXXX. press morning, Real the XX, results release, published second quarter ended filed with related the along release, the the been management's quarter and press financial and unaudited The statements for discussion analysis have with U.S. consolidated Securities Commission securities EDGAR with regulators and on and on Exchange the SEDAR. Canadian

Before that be statements may we that about this get are started, made call periods time deemed I'd like to to remind conference including future statements constitute everyone not forward-looking facts, historical in statements.

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

Tamir Poleg

my unique provide update in-depth firms, call and real like actions it believe financial financial our real on more collaborative before an To company Good you, thank Ravi. remarks will platform, I this combination is our estate we I will to office Sharran that provide highlights. for experience, brokerage agent traditional Q&A. improve we a growth results in start and rest Real we in I'll has eliminates a I business then performance. and with of drive technology a space of taking an of culture recent begin, but apologize provide agent some Michelle and provide for a discussion quarter. which software-based a agents closing morning, are strategy need Unlike estate in our unmatched is will differentiated opening that industry. overview advance would incentives, lost our real no impact and proprietary technology financial is the industry. our voice, assured up to physical on few an estate the with

which to generational In Our long streamlines and we to they mobile transaction an platform their sale businesses individuals, and and In the of higher-margin while ecosystem of as attachment matures, of both the providing the platform term, for to of the home a term, purchase delivering is investment as services. build grow we simplify wealth. products, vision the our and could the services life's agents enhances buyers client ancillary encompass avenue holistic planning our of believe this vision providing app, financial technology is need technology agents expect with seamless benefit our sellers. homebuyers facing a a payments and to resources breadth complex offering. home from that sellers tools, Ultimately, also the most a experience tools, Consumer Real all experience or with rollout includes and short One by

to is Our the a and broader housing the agents real redefine goal the of industry. lives brokerage estate our of in in role

grow also do is Importantly, of we shareholders investors, the shareholder just agents and everything with why many our long-term that like our are to our institutional is value. in company, intent

record driven result to existing the the $XXX per the results morning, in of number transactions quarter. second X% combined million, with revenue reported industry a improvement closed, was we revenue of the XXXX adjusted of quarter $X.X of quarter quarter This in quarter sale second record nearly start from to compares decline XXXX. second in a a increase of transactions and and quarterly during XX% million, XX% versus million $XX.X the with agents, agents of the contributed the a increase since and a to EBITDA the with X,XXX significant prior record quarter also the million in to average quarter. home in $XX year profit the X% ended year. second year increase favorably the increasing the transaction. This versus XX,XXX an by We of by the Turning XXXX, up prior XX% Gross in

the of agent are growth X,XXX in year quality our morning, agents slower than agent is seasonally volume added this remainder since by XX,XXX for in the encouraged to we pipeline, the over of quarter. brokerages. rather As our closing exceeds and attraction start focusing of agents agents due we've XXXX. for the count in Despite movement our Typically, meaning and third of the reinforcing confidence on switching deals agent this, robust achieving this quarter

higher these our ancillary title XX% In year. combined business gross the a lines Xx brokerage addition lines our margin, performance, to these strong and call command versus We ancillary mortgage growth expect the than throughout gross of to are mortgage. year, Xx remainder our brokerage by that the and grew margins including businesses XXX% in business we growth prior typically in substantial average ancillary

the is Mortgage, confidence to over significant end currently. One of increase in at the underscored mortgage officers Real which has by from XX XX last grown Our loan at year

growth traction, accelerating year. the new revenue of we our in strategy back continues expect X.X half gain to and to the Title deliver Additionally,

broader challenging. and inventory market. industry the close the year-over-year to the increased history Regarding Existing despite continue remain environment decline near in macroeconomic home landscape, been sales has

the shows survey homebuyers challenge economic growing. affordability monthly Our that biggest is uncertainty for is and

notable. conditions, these quarter is Given the performance particularly this

can break rate cuts the on a remain market, remain relying stalemate the they in not we we are serve. is the that instead significant exceptional and our current recovery focused agents clients on control, and While an for what potential could value we housing [ ] and proposition help delivering that hopeful experience

the year. we we'll of the half Real be One upgrade product releasing app, the the front, in On features continue second Consumer-facing enhanced to and

product card transactions follow track debit on to initial Wallet, credit Real with are with we launch initial the the this thereafter. Regarding focus for year an on later

factors we for noted can product initiatives. that our novel improve last to its launch technologies our lines With out Nevertheless, on update and and the potential As of agents' it influenced turn remain over to regulatory be that, growth for about Sharran quarter, agent be we businesses. compliance by can excited time an I'll control. various and our

Sharran Srivatsaa

Thank everyone. you, division a I'm brokerage top morning, again good X to Tamir, and in share our excited format. update

for onslaught aggressive in-person, you and across some social household been it, industry the Real us We've name in the focus been dive a making a discuss reality. year. name to on key let's video, making a this in driver highlights household make podcasts, So Real mission in print, and one, Number a areas of media has and this our name. a

tools Number make this agents easier a on. join succeed. designed incredibly to two, growth now our it purposeful sessions programs numerous we the skilled industry-wide mention awards than for our I'll to agent several the them. ever and With new recognition and are support and and creating marketing few out accolades for programs robust have and have brand agents. rolled training our year of innovative agents, campaigns, trajectory increased contributed We've all to of significantly that Real

built down while they benefiting our can we joining team of size their First, software ensuring to ProTeams. the the dynamics their layer splits teams platform. that individual ProTeams retain unique customize to is Real, allows from level, of that economic custom a breadth agent agent any upon

XXX first of in quarter of Second, via allows XXX attracted and forward year. joined. resources more quarter, and welcoming Label look Private independent second to In half we agents the leverage another has brokerage brokerage independent brands. Label. independent in Label join Private the XXXX, the to agents our XXXX. launched second joined XX via and program even their maintaining This the already Private We in established in January brokerages technology Real program while This

of Third, designed agents excited launch which the provides in with elevated May, markets. luxury high-end and to we were an set Real Division, to Luxury cater to tools teams

While focused establish a quarters, on was needs have us influx exclusive the market thought in to has of joined appropriate serve. luxury clients unique with traditionally we luxury agents time Real and they a recent who division been the the mass the it that's solely teams of player

a to three, the and tools can agents to level launched in of Real they also provide these Real program, to support Partners all program access that offers we programs vendors, they and service Each of clients. support. the that thrive flexibility, quarter, their on elevating training exclusive Number preferred with agent This environment. provide need a market doubling agents our down any

we best per the introducing for North always year, bringing This Academy, agent significantly programs agents. leadership skills been and that and on Our drive in teaching invested aimed revenue at new novel Real doing training has boost productivity. what's Star

the every knowledge excel. who Real Number have the our teams. guidance to personalized ensures always education to agent help ahead the they successful. four. of curve, with expanded are agent need our Meanwhile, Our the agents commitment expansion need equipped receives and This be tools they that we ensures that significantly support joins to and

been what macro we environment remains current this conditions. The So significant has given none easy. While strides, particularly of about the competitive challenges? intense, made

However, coupled difficult that to with is a advantage our for technology our innovations increasingly others competitive decade-long with investment replicate. in proprietary AI-driven us provides

does maintain growth but our rapid ensure for expectations. our investment our that in what As mean and underscores is training is problem, robust our operations the to sincerely this experience need in have year? We a the seamless the mean to in progress investing our rest results itself high-class Lastly, of for surpassed we enhancing challenge. Number stronger. commitment This for ongoing the five, a platform never the agent we has agents. support been of through second half, and our and

NAR to weeks, our are our With preparing proprietary we through in the programs. rule training effect new few a proactively agents take set

industry-wide I conclusion, training but not tools practice our remain lead to will next my In The committed With NAR landscape. to new new are will this extend growth I'll only turn to leading agents future personally prospects instance, evolving the also looks implement For worked through heights. to about to thanks the to with tirelessly to excel an and in who Michelle. agents changes, of we equip year. optimistic week, bright. we like influx this over the innovation. have manage that, it And our to heartfelt to I'd team continue reach together, session

Michelle Ressler

increase and quarter increase transactions which quarter XX% and second topped of driven of a in you, the second second XXXX, growth totaled number the XX% Title X% versus rose $X.X business quarter of driven increase for during in driven brokerage second our the Revenue by of key in our of thank increase per increase the of a to XX% XXX% revenue, and over a $XX.X approximately year. growth the second Real businesses everyone, by million and XX,XXX versus record. transaction. reached the One quarterly was XX% XX XX% XXXX, increase the the in quarter from The us. in in the an closed, by $XX.X profit ancillary X.X% in million Sharran, in second XXXX XX% from average an Gross was new second Gross joining from XXXX revenue of you, of quarter of for One resulting decline declined in an of margin quarter was Revenue by quarter XXXX. XXXX Thank primarily $XXX points This an the million, Real million, of Mortgage of from prior basis X factors. revenue. XXXX quarter

First, annual cap. revenue percentage agents from had who reached their we a higher of generated

the our Second, decline. Canada business year-over-year contributed margins half of year-over-year, gross margin in which roughly declined

quarter sales line. of excluded program, totaled amount to receive stock-based from stock-based agent vesting requirements. cost This Real to calculation commissions certain EBITDA where to adjusted stock reminder, in equity, a compensation of in As and can million purchase their $X.X opt part agents subject include the compensation is our in our tied the

basis, by As is $XX.X generated past, our an remain particularly the XX.X% continue business X.X% quarter, general compared of revenue which of to quarter scale. Operating in gross With revenue $XX.X first reached on increase marketing driving commission is the during expense to second million lines focused cap as the the quarter $XX.X totaled and million which was of improvement cap. expenses, in their include increasing number year-over-year or said, that Typically, I who of in percentage million XXXX. noted share quarters included annual gross expense, result as have or quarter Revenue third expenses XXXX the seasonality margin agents this we R&D agents our second in XXXX, reached a an during $X.X rate of administrative, in second second quarter XXXX. year. ancillary of million in the marketing of fewer and the of margin from the second on and with there annual during quarterly revenue the

the XXXX, in to our second operating Note of X.X% ongoing operating revenue, expenses. of last of part is the quarter quarter quarter roughly year. of basis prior XXXX, in share year-over-year declined quarter the $X.X As that the model revenue a in a revenue to a in share a implemented in rise point we percentage XX% investors outpaced profit, the $X.X changes the point expense quarter XXX of to total stock-based $XXX,XXX of paid non-IFRS from of unique cash loss variable portion XXXX. XXXX non-variable XX to Adjusted improvement second or revenue that second intended a an and is gross improvement X.X% of commission agents reflects in the the share, due metric the year. This which was items, loss compensation, share revenue, improvement operating of from to million notably new operating depreciation agents expenses. operating who that increase Real's attract less of XXXX revenue in million XX% and other million X.X% our $XX.X reflects entirely is second fixed which is Adjusted expense, totaled expenses help to basis in split makeup compared or noncash operating Operating X.X% reflects second understand expense a in brokerage.

of in our on income quarter. income an the business North As basis generated and was in our $XXX,XXX detailed profitable operating brokerage American MD&A, operating

our businesses, which title gross mortgage mode. nascent by However, and are was in offset income businesses this

to the the approximately loss percentage important of improved points in second access by quarter of quarter net points Real's second XXXX. Considering EBITDA operating to the of XXXX meaningful a an million that a points, quarter million that of of in loss of million second of loss Adjusted net XX from of percentage growth, strong As to increase basis quarter efficiencies improvement. improved operating significant outpaced second second second note expenses, growth from gross in revenue basis operating our driven XXXX XXXX, compared reaching second improved of The was $XX XXXX. XXX second revenue, quarter by in a our quarter negative million by and by quarter of in gross compared negative negative as XXXX. profit X% $XX.X cash the XXXX, of loss negative $X.X enabled million XX% profit, a the pass-through, the our the increase platform. $X.X to portion which in the was our $X.X technology quarter it's in the revenue reflecting XXXX the of to in XX% year-over-year in X%

the balance $XX.X first ended Turning $XX.X sheet of to approximately XXXX. flow. to cash of investments of quarter our and the the with million We and compared million end at unrestricted cash quarter

from been million in operating continued higher, if flow cash into flow paid account Cash well for liquidity to $XX $X.XX to million we repurchases. debt operating capitalized allocated would litigation-related quarter, remain restricted During activities the escrow of Real not generated [ the while continuing $XX.X capital from million share and quarter. to activities ample the growth a to fund and shareholders. settlement no We with return our ] have

operating I'll of close, efficiencies always will a expense The long-term to about. on quarter of increase. billion year-over-year always, second of year-over-year transaction XX% by homes second costs increased increase. continue was shareholder in $XX.X per value in sold KPIs declined XX% over we $XXX,XXX with platform creation. and quarter asked platform. few As X% recap properties the diligently allocate median effectively, represents commonly year-over-year $XXX sales capital a value the which to to XXXX, transacted To are focus of agents price our Adjusted a we from manage total and testament technology was the $XXX an The our XXXX, our by enabled a

have XXXX, accounted cohort during from quarter of quarter during to cap, of XXXX. quarter in XXXX. exceeded during represented XX% quarter of As XX.X% XXXX. compared second the compared second quarter of of of second the second the of second revenue the second of agents annual commission Canada XX% approximately XX% their the of the XX.X% of commission revenue of commission XXXX end This in XX% up XXXX to quarter for the

a full-time which excluding the Our the improvement the define X quarter, XXX of quarter end Real the platform headcount second efficiency agents XXX by XXXX. One to X on divided One as ratio, to second employees, we title Real from at and Mortgage of number employees of of significant end the our at was

the from operations, half quarter reflected headcount headcount full first be X at results. to in Real expense agent across additions sequentially and including XXX due of new in of second to additions Our these ratio joined decline functions. employees the in did administrative impact support and the organization, the XXXX Many June end of our efficiency R&D, quarterly will

As this own an Tamir that our expectations. was quarter, surpassed one outstanding noted,

adjusted meaningful We growth balance EBITDA continue the for deliver the expect to in year. to year-over-year of

caution I results for QX second investors reasons. run rate would half few Although into our not the a to

quarterly there's revenue with QX, lower. First, QX seasonality always to is the while revenue in industry similar typically QX

the decline increased like the will in cost Second, sales market continue half extremely housing challenging, year. that existing head environment home while our impact it year-over-year. the not evidenced which count to structure third, it second noted, the And we've from by during our look is second of may results, as quarter,

Real's investing evolution as Additionally, a to we support public in are company. key projects

and to investor Tamir. turn Real while call. on continued can now it remain will success. press details presentation I the found back and this release metrics that operating we prudent accompany always, As key More in be costs these our for results managing earnings positioning in

Tamir Poleg

bringing and the we Real's Michelle. to of at celebrated Thank Last first accomplished by the but our during XX,XXX I'm brokerage. welcoming bell proud we anniversary even XX to closing NASDAQ you, I'm incredibly Real's position agent month, the years. look have that what XX-year I believe of of Real the is more excited from cusp change the next uniquely on lead is strength. forward a positioned this to as transformative change decade, I industry and

talk not of what let's change. Number homeownership endure. the about one, First, will will dream

home be real need prepared keep those for opportunities interest While economic always class, will and such them. levels largest stability to with employment rates, asset susceptible provides that owning factors satisfaction will to people cyclical seize consumer confidence, the as world's always a and will The industry brimming homes. estate the and

Second, to life. a home process. for and local agents market will cannot and deeply and and emotional is both remain essential buying financial Buying person's decision trust The guidance, personalized provide financial transaction automated majority vast the be home that irreplaceable and transaction the in agents the knowledge, a selling of most often significant the are transactions. is expertise

regulators with Third, the heavily protect that are of a regulated transparency implications consumer significant with consumer transaction, in we essential protection ensuring need industry money well and Real, continue to to everyone collaboration ensure agents benefits transactions regulations transparency. to an involved policies are and trust. to involve sums substantial therefore, consumers. committed our legal will fostering Real practices At and best are enhance increasing estate have environment of be and versed that and in

will to change. on Now what

competitive economic places generational hang increasingly more are seek and and come. market why offer such to resources. where models demand in They value ours will licenses. cost. lower wealth, more agents to superior will opportunities to a share the in years believe will more technology need build First, brokerage. brokerage environment, In diversified their terms, revenue they at capture continue careers the to Traditional like entrepreneurs is an and their to just remain we which can seeking from will may significant not continue short, favorable support struggle models brokerages Agents environments to agents

leverage that technology is and Brokerages already for efficiency investment feasible. software in-house intensify. will and enhance need spreadsheets provides. the The on data technology reZEN reliance big longer pen capabilities, AI our and paper must only Second, platform develop or no

transactions, As we in-house the our agents ahead XXX% use of of platform believe only to we brokerage the are industry. process where technology major our

entered about our the One they Consumer-facing more expect communicate platforms AI Z Amazon. client access market must Leo, Gen is platform, what our can Real designed like with by the Rise shaped app at upcoming share experiences expectations October. will as Conference Uber in-house These in deliver. homebuyers We mobile also elevate and technology experience, information, Agent and first where seamless to effortlessly digital transactions complete consumers precisely especially our

has embrace find Lastly, brokerages to low-margin new a must Brokerage business, ways historically transactions. to monetize technology. slow been

estate additional a agent services, We By this building while real are and enhancing experience. the rewriting overall revenue comprehensive streams can brokerages of fintech and create narrative. ecosystem client

most unwavering the ahead transaction to am As vision look on in commitment I complex that successfully confident we decade, trends. capitalize to our technology will agents, our and to these navigate investments and ahead our transform to next road the emerging cutting-edge enable our us life's

thank your continued We are excited for about support and the you future, journey. on this

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

Operator

[Operator question Stephen William Sheldon from from is Instructions] Your Blair. first coming

Stephen Sheldon

encouraging, come focus it leaving market here, here that here by think, the you some some the is. brokerage? pretty And of to been churn has agents quarter agent is altogether, and which been down to changes think churn slow down housing Do I rate, expect about that how to How to -- quarter. ask at to a agent consistent, bring the much leaving last the have but given Great given especially that versus settlement of any big point? relative do I a really rate? The how this upcoming Real team tough the you of driven environment especially the competing industry for quarter is wanted additions you

Sharran Srivatsaa

are not So the churn, seen, agents based several a of portion doing is as that have you transactions. that on significant actually

XX% rate transactions. XX% churn or agent the of So is to on based one close doing I think to fewer

kind transaction agents in even done what reflected kind overall. actually general that's have of of So the

support NAR time see the that important of However, going the changes is we to our we coming can up, operational with churn a really metric changes. want I a to that we're much will is tell for new practice new things of over us. agents track give kind how you one And

-- going think world, practice they don't agents the they're that's because to changes. skill It's are the of industry reason we the that work in only if to want the leave So actually have new that to the don't going the new to leave.

the are agents the rest to the see out we're business. of we the for drive So we and both level growth NAR of and the that. closely. manage more And tools, new There give support well. the a the churn the changes can super numbers operational and stabilize watching that is number we assured, going churn is needed we skill our training can agents don't But number the that number think education

Michelle Ressler

years. was Our been lowest churn it has which X the X.X%, revenue in was

clearly have so And the of them of also that. And agents probably that lot are producing. leaving just because are very the who that a left shows industry

Stephen Sheldon

there. And expect see uptick growth sounds traction it with great Mortgage like in then just strong to continued the you like Title, ancillary and services and

going be move the can rates talk to crucial about like up gross per to to strategy profit So that's over transaction time. general higher? you really attach seems It getting

ways you're those to trying over So time. rates about maybe go about the going talk just to attach higher get that

Tamir Poleg

Mortgage There between are and Title. One Real One differences Real

revenue. actually we've country, around creating side, significant our recent with what On the contribute amount to teams are down starting been to we focused and JVs that JVs months the a some of in on Title of was nailed now largest

embed make agent of strategy. long app in show it and of the putting it's of lot is we're to into JVs short half a seamless. and Title of the quarters. of couple will lot we've of the past But some Obviously, to in think second the of terms the services entire that term, means that I signs we just that fruit in the that smoother that a starting going consumer-facing see our our work close experience in the what with and year and want think education term, community, I to labor been

more opportunity loan be Mortgage, see Those offices with existing of obviously, One, officers. an reside. couple coming they attracting business. in we're In they agents Real Real book of terms working of are a of more with local where things. and the And One

from we focused on loan So ground a we over we've with Real Mortgage also has to and officers said, the is working each business agents. as officer moment. and at brings been boots went XX loan obviously, our and on book XX that. X And And of the

think I that that we well. revenue the on as will see of impact So

we heavily loan In on digital experience process addition smoother of making the to and a Real that, to with application the kind App. are focused application entire One close Consumer the with

So term, to the ease with of it's of we our the win and service clients. the because and we But long agents think and just that will working speed use the close. for time being, their

Operator

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

Matthew Erdner

we see marketing spend acquisitions of past. in Private about could talked as You've additional growth see the given Teams and and of organic well? R&D you the area? Do the still Label, fuel to opportunity growth in this kind And then also,

Tamir Poleg

looking of new in or we In are we've terms active opportunities. M&A know, you the for past, been and constantly acquisitions, as

we have tech have we we I build for to couple need that years all think that at of come. this the point, roadmap order the to a in of ingredients

we for So look strong own as mortgage own developing own teams, Brokerage, in Title, well. We we we constantly agent as the interesting Mortgage tools realm ideas well. of and

We in we but seen the lookout. to continue be a interesting anything on while, haven't

like, we're our to we a that both actually anything given and cap an our sheet. balance there's solid in market acquisition, if position So make

ProTeams. of terms or for Label, Private technology requirements In

enhancing Obviously, in the X all everything meaningful time, the is but we're those product not of foresee that the I roadmap. think I investment any do already initiatives. in because R&D

Matthew Erdner

margin market. the more kind on generated follow-up firing fluid a of a can be housing Mortgage services ancillary Hopefully, question. cylinders? they're of kind just then next we to Title when you And much all and do get think year, from How additional

Tamir Poleg

any I'll a have over little at providing know, on say and gross XX% you just guidance. gross we margins margin. Title, on we're we're As not XX% that Mortgage, around

company. Mortgage gross So the obviously, of on margins. Title on gross around and we the XX% deal to Every margin overall contributes brokerage, additional have the profile

think in to building. we long it not attaching of can that when transaction. ancillary we success, And term. a technology every good lot Obviously, an to we a but believe services So overnight comes job it's it takes power very of do the

think I single in that those digits the lines. now, looking Right we're each double-digit long term, attach business at we're rates. of at low

Operator

question Darren Aftahi is from coming Roth from next Capital. Your

Darren Aftahi

is Darren. This on Dan for

market is of agents any leaving on start of pace on you're of the of year-to-date. coming advertising? organically. with to not of of that the investments? Do Just the added know second the you that year higher in a share some table the of quality sort some by of I plan is aggressively Or lot spending sort coming the you've think with that's half more the

Tamir Poleg

don't we think on the No, anything that table. leaving we're

a state we're are think agent if an clearly and on look our we all mean you I job growth people I at general. and outlier. of of industry that the traction doing in great overall, the

we're long then to And the very that you more way internally, But and can the something little that to well, go. will we improve attracted deliver that prudent here we're will We've spend do and as organically we term, value Obviously, And we to I we for can the or agents we grow managed them. thing. building would same value think bit. value So believe a be think spend more the always in money. very we're the been growth that doing side. on to say, maybe the we growth I I try more continue

job need would attracting on a creating we're think good and that. And value agents. I I to don't both on we that think spend on more So doing

Darren Aftahi

side, the really more see to as you out you're agent thinking be about the commission cap likely a just good. that of structure? to I the follow-up, productivity those to productive, fees to adjusts as economic new laying really, rates maybe is so with on tend there sort rules agents just they're your And then more in NAR how your the is mean, any for industry still anything about potential raise

Tamir Poleg

is other through wallet we're think Real the any have have see at not basic this make ideas does at the opportunities additional for we we right the about need ancillary we But and some services, point. model to think We point. agents model thinking any mind. in not do again that in alterations money this -- optimization model We and through place,

Michelle Ressler

highlight is this Just was profitable the profitable again, and brokerage quarter. to

while to our model long can so that and for line, we is for see on the continue bottom we believe the sufficient as are Mortgage Title as operating future. And drawing foreseeable

Operator

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

Thomas White

this is one related approaches? agreements Wyatt XX navigate agents of in this just Real is things around peers? your missed NAR changes the does to about buyer I if August as in meaningful talk industry I you to best to Tom. for prepared sorry on settlement. rep I'm like remarks, This And how but had telling their the what Could ways differ the practices in on terms any compared

Sharran Srivatsaa

the bundle are has you probably meaningful changes these as change that most the ever going pointed ever that out, done NAR of in through So is our been with settlement been is lifetime.

seriously. we're this taking So very

one, what Number there's we're structurally, like doing. broad really So X things.

contractual the in-person these with and to new question both of agents, digitally and the done done and in with local we've materials overall. we've a you importantly, XX, that training settlement significant asked I months changes our implementation the the is on for level. changes we've after that related XX But So had actually, most last down that

going starting for person. the August agreement market every a be -- in most requirement single are XX there buyer of in So reposition is to place

we've we're and in settlement training the all follow required to the are So we whatever alignment DC, that agents in the markets doing, each practices XX we're since to with for it is which of our ensure is -- states updated agreement. agreement. these the -- settlement each completely And

our in with So for about overall. more being alignment not the It's settlement us -- not truly agreement peers. -- there's it's it's us, no

broker up decoupling the single the X buyer and core And using commissions of to the of practices. end [ on the agents are competition that. rules those with we're So All doing not to our the every almost agreement are ]. between in also the of ensure month, to following offering MLS single and market speed that now day trainings our every of

our to settlement compared agreement done peers, changes. change material we're to in with fully needs no with the there's alignment of So but practice be the what

Thomas White

in today main could say Brokerage players? of one to other stacks reason the relative the the And part thoughts then for space on would is share you of like chooses an agents players? the you current prop versus -- that how latest other of Real up brokerage And some the value agent Real Brokerage what your

Sharran Srivatsaa

thought I'm A around and thought. this, quick sure you've seen

So most agent why of completely the our -- has now. centricity realized changed to claim are But -- entrepreneurs are what we very agent-centric. right the business they the of over because agents that time is be lot a models

means the the that running model. or to an solo want have business your whether centric on your so to brokerage, entrepreneur independent we you you're run you're can you or that So see way you fit. is agent team that a business platform bolt a a What ability

entire whether on your dependent agent Kind or an one. How value a big a you you're platform business and is number based the X our a without team way. on kind sole do you entrepreneurial model? or friction of things. prop to So of lot So of brokerage have that's an can can bolt to a business

The how agent the with huge entire brokerage build technology of can't can that And an a the provide second part tools platform. to is the actually prop value themselves? the is that they

sold. of -- not our of one world it's companies our the just For example, just And we adoption their model XXX% the we how only a more do homes where like better. agents have is our which It's in get transactions selling much platform, third we the do technology to you money. are allows for keep use how more agents XXX%

getting get more to not also business brokerage keep in of business, share our of also revenue money in agents because business efficiency and the stock. only So model, the but our

gives ways income, money revenue It So to X one to we call giving comparative agents them multiple there. the at Real. and create it out than model make ways more option than

it economically you model to for us pretty when competitive X agents. efficient a those combine allows very and be for things, So

Michelle Ressler

in just there that survey saw released, obviously recently And we pulled we I our was the XX%. was up Real culture agents but economics favorable that in, choose at chime a agents. we If may the top reasons X

agents here Sharran to all culture things So mentioned. really sort we've and of just speaks by that driven that the are built the

Operator

Goldberg Partners. Investment Your Josh GX from next question from is coming

Josh Goldberg

a rate so is questions. story, new opportunity growth. or growth terms like the interest you newer tip Currently, X guess, XXX% XX% for something first, have to had on as the agent year, people it could be in I agents? what for bring the environment a you're agent that, How year lower are agent here your that really at iceberg landing last agents maybe growth I before. of quarter, just XX% the of maybe likely who the describe and agent in more I follow-up. And the growth

Tamir Poleg

I high can years, think have including you prior low count, look rate you we that agent a that in both at and rate if see environment. year, grown this environment a

that are market because demonstrated part relies think agnostic conditions. model their we to of the on attracting I We're macroeconomics we this our friends. pretty we can our that grow Obviously, the heavily agents.

a it inquiries teams and the Real the new reliant about inbound of that are other agents us. X, XX% gents. agent XX% But reaching agents. the are agents remaining attraction, X, us inquiring agent our agents about are coming joining joining to agents And every potential because attract XX on us So existing model for from to joining has so just means we company referrals also itself, and of just out X, through

opportunity U.S. agents in have, And the that the fact we another becomes. in should the agents the Canada. more million XXX,XXX-ish in mind and are the So there bear bigger X.X we

at being XX,XXX, obviously, over can little understand a you bit the So potential.

the we no to So of beyond thousands have agents next the hopefully, tens doubt years, that of and get in quarters will well that. we and

is that I opportunity there. the So think

now right place. game. our execution value that think I proposition an It's is the in

Josh Goldberg

this but in that like of you strongest agents continue to third anomaly. at you look a in to close some quarter X position of pipeline softer grew Obviously, are be while? agents seeing for your because the of that's ability seasonal, It X,XXX doesn't at an that that a in when quarter, your to could quarter increase. add you But the clip sound number,

Tamir Poleg

year. We of have X,XXX on added, the pipeline, strong very have the a beginning agents we and since month per average,

anomaly. So this not quarter an was

around first quarter, pace. The looking that there's no X,XXX agents. cannot very on strong continue I pipeline, also had count And growth why think we we a agent reason at our that of

Josh Goldberg

their environment up? take XX% Second of will completed some that caps broaden reached margins haven't to X.X%? it of your you do affected more sort you and out XX% there the cap little represented margin their over on question that think How was, half so of this revenue the revenue and revenue time, play the your lion's your when Or these that of think you are hit out see do ones keep of over you that crop will rate of Do sounded the could like will margins those almost and around share your cream on at a X.X%, commission top your commission people really the the the in brokerage a go call slightly. XX% be that interest lower it your where agents gross transactions? that being

Tamir Poleg

when different at maybe interest think the the rate when and very that from now. look past primarily the I environment if was XXXX we -- market

bit gross margins higher. Our a were actually little

be stabilized start have that think deals more additional Mortgage, improve will when market Again, margins. they we selling. be that I on strong at meaningful services they an few Wallet that gross effect a are that moment. maybe agents the not think others. opportunity the Rea' from is will gross maybe I and But And I up, at Title, are experienced to opportunity the for picks margins that and as think and as more to it an come probably not where that closing will

Josh Goldberg

a those achieve you in ancillary those you On think did $X.X about services? said those that the this -- you for need amount of breakeven What's revenue to services, ancillary area I million quarter. in

Tamir Poleg

It's not moment. at the very are far from they where

a of have within quarters. to just both breakeven to expect be We couple them of

Operator

There queue are at the further time. no in questions this

Ravi Jani

first is technologies and Tamir. commissions new the So in opened under last completed of positioned affect Real analyst revenue? And received internal was Instructions] week. the Have the we how the we the address buyer portal want shareholders of that Now to on could Real's we portion on some buyer done marketplace same analysis changes for commissions [Operator questions call, around Q&A that do from again, an the you question, conditions? in how potentially

Tamir Poleg

we notable Obviously, seen haven't are of to keep any this things while lot. couple thought about is we've changes, -- we a And there are mind. something a in

First, most we industry. the and in some of offer favorable age economics the

concerns be commission rates Given brokerage that agents any Real out other about motivated missing could are those business affiliating on would owners, than economically earnings. with find significant

if more models so leaving likely like will of ours expect trend would high-value commission traditional the And pressure, brokerages accelerate. join we efficient agents to did under come

brokerage Real our potential ability Second, by relative One to under have ancillary and on a out-of-pocket umbrella, potential value costs. services, Real all about clients discounts offer could to agents gents means which that concerned offer the and the services Mortgage offering clients better their Title

rate. take of don't their any fee to generated cap. absolute Third, a as important by it's of commission transaction to revenue that reached $XXX pay only fluctuation regardless is Real the annual who realize exposure This roughly as half in have already means commissions per our agents agents commission we direct

obviously, good So environment, we the positioned. are monitoring but are feel we we summary, how about in

Ravi Jani

of question question. Ms. and kind fills Jal into Josh's Next for

rapid to revenue scale understand Just could growth? relatively Title Mortgage degree in businesses recent and help have the what management those And shareholders businesses incremental SG&A without significant despite SG&A? able why are had to quarters flat

Michelle Ressler

the start-ups. think for the experience clients. and truly drive we costs. and growth moment, businesses are for while on I focused investing we're is as Instead, these we leverage. enhance of personally optimizing revenue And businesses business the So to not always those SG&A to At

contributors these the know are future. expect that and So both in be profit to not-too-distant businesses we high-margin

Ravi Jani

type When what for will Real for wallet. the of the And Real question and will the arrive Tamir company? on make impact wallet it last

Tamir Poleg

platform credit products. specifically It through into debit and this later income, commission, product consolidate will digital Just Real to for recap, wallet and year. the an credit card designed the fintech and platform, and agents is expect earned agents. very digital funds share enter equity we still excited a card payments We're Real Real one Real revenue a initial through and can access to these space, branded launch debit

testing position maybe in of I September, to think October. will we end a start be that in the in hopefully, September,

being agents in of a rewards Real. points, or brokerage with affiliated results transaction which card the For thus reduce accumulating cost can lowering fees, using Real

provides business credit with the or growth all other feature to Additionally, for financing expenses or agents tools. access marketing

enhance For ways the investors, wallet to technology exemplifies while using the transactions. industry-leading our finding to creative approach experience, agent innovation monetize and to

Ravi Jani

That wraps the call. up Q&A portion the shareholder of

free additional you. today's again? on instructions to once call replay any you've Thank questions conference would feel please contact please give directly. earnings If release, me you Matthew, the

Operator

replay conference does is call. you. Everyone, Thank be X(XXX) conclude that the is and the XXX-XXXX, (XXX) Today's X replay code will for today's again, number XXX phone Once available replay. replay XXX XX. and number is conference The is XX. replay XXX-XXXX code the

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

The Real Brokerage Inc. (REAX) 7 Aug 242024 Q2 Earnings call transcript