The Real Brokerage, Inc.

Good day, ladies and gentlemen, and welcome to the Real Brokerage Second Quarter Earnings Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Investor Relations, James Cabanera. Sir, the floor is yours.

Thank you. And once again, welcome to REAL's second quarter 2021 earnings call. With me on the call are Tamir Poleg, Chief Executive Officer, and Michelle Ressler, Chief Financial Officer. This morning, REAL filed its unaudited interim financial statements and management discussion analysis for its second quarter ended June 30, 2021 on CDAR. These documents, along with the accompanying news release, can be found on CDAR. The content of this conference call should be considered in conjunction with and is qualified in its entirety by reference to such documents. I'll now read the Safe Harbor Statement. This statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report contained in subsequent filed quarterly reports, as well as in other reports that the company files from time to time with CDAR. Any forward-looking statements included in this earnings call are made only as of the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, circumstances, unless otherwise mentioned. All references in this call reflect currency in U.S. dollars. This conference call will include references to adjusted EBITDA, which is a non-international financial reporting standard, IFRS, financial measure. Non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA is used as an alternative to net income by removing major non-cash items such as amortization, interest, stock-based compensation, current and deferred income, tax expenses, and other items management considers non-operating in nature. Adjusted EBITDA has no direct comparable IFRS financial measure. The company uses non-IFRS measures solely to provide investors with added insight into real financial performance. Listeners are cautioned that such non-IFRS measures may not be appropriate for any other purpose. Non-IFRS measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Now I would like to turn the call over to Tamir Polig, Chief Executive Officer of REAL. Tamir, please proceed.

Thanks, James, and thanks, everyone, for joining today. As before, I would like to start by thanking the hundreds of agents who joined REAL in the past few months and to our community of agents who have contributed massively to the accelerated growth we are experiencing. I will now continue by highlighting some top-level financial results. Then I will provide some operational updates before turning it over to Michelle to dive deeper into our financials. After that, we will open up the call for Q&A. Okay. So let's start with the financial results. Q2 revenue was $23 million, an increase of 790% year over year. Driving that growth was 126% increase in real estate agents joining real, as well as an increase in the net revenue per agent of 362% to $1,506. We see no signs of growth slowing down at this point. turning to operating highlights. When we consider what is supporting our growth, it is a few operational factors and strategies, and those are geographical expansion, agent referral, retention, product focus, and the efficiency of our team. Beginning with geographic expansion, during the second quarter, we announced Rio's expansion into Oregon, Nevada, New Hampshire, and Arizona. That brings our tally to 31 states plus D.C. We look forward to the growth of each and every one of those states can bring to real. In terms of agent referrals, every new agent that joins us has the potential to bring other agents. We are seeing our agents reaching out and attracting other agents in their communities. Agents are incentivized to do so because real agents earn revenue share throughout five tiers of referrals, creating a network growth effect. Also, we believe that our story resonates with a lot of people. The culture of the agents we are attracting is also attracting other like-minded agents. In addition, we would assume that many of the agents in this country have never heard about real brokerage. So just the fact that we are becoming better known is opening the eyes of many agents. They suddenly realize there is a new company and a new opportunity that they should be mindful of and maybe look into. We feel that that is also driving growth. To give just one example, this is what led the LoveLocal real estate group to coming over to real in Q2. LoveLocal is a Nevada real estate group, which in 2020 completed over a thousand real estate transactions and 300 million enclosed home sales in the greater Las Vegas area. They saw what we were doing and they just joined us. Moving to retention, At RIO, we offer equity incentive plan for agents tested over years. In Q2, we took another important step forward as it relates to our equity as an attraction and retention incentive with cross-listing of our common shares on the NASA capital market. The equity incentive plan has allowed us to attract and retain more agents and more high-producing agents. We are constantly increasing the number of high-producing agents as demonstrated in our growth of revenue per agent numbers. Turning to our product focus, we have been spending the last six months on building a new internal system and a new agent app. We are pleased that this new app launched just two days ago. The app will give our agents better visibility into their business in real time. It will provide them with more services to enable them to service their clients in a better way. The app structure will allow us to add consumer-facing services in the future, which will help the home selling and buying experience feel much better for our agents and their clients. We intend to start testing some consumer-facing services by the end of this year. With respect to the new internal system that we have been building, we expect that that is going to allow us to scale to 100,000 agents without needing additional substantial investment in technology infrastructure. At the same time, we built a system that automates significant portions of the transaction processing. That will save us many of men hours per month. Finally, moving on to the efficiency of our team, we have had growth in the number of full-time employees, which has led a positive correlation to the volume of our agency and real estate transactions. This has been done very efficiently. In fact, as of June 30, 2021, we used an efficiency ratio, which is full-time employees divided by the number of agents that are on our team, was 1 to 61. An improvement over Q1, which was 1 to 56. We have a long-term target of 1 to 75. We view this as a competitive advantage in terms of how quickly and efficiently we can scale, and it provides benefits in future profit margins. For context, most companies in our field have a ratio closer to 1 to 25 or 1 to 30. Most of all, our agents who are receiving equity incentives and shareholders are also rewarded. RIO remains steadfast in its mission of having a positive impact on as many human beings as possible within the real estate space. At this point, I will now turn it over to Michelle for a more in-depth view of our financials. Michelle.