The Real Brokerage, Inc.

Good morning, ladies and gentlemen, and welcome to the Real Brokerage Third Quarter Earnings Call. At this time, all participants are on a listen-only mode, and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, James Carbonara, with Hayden Investor Relations. Sir, the floor is yours.

Thank you. And once again, welcome to Real's Third Quarter 2021 Earnings Call. With me on the call are Tamir Kolag, Chief Executive Officer, and Michelle Ressler, Chief Financial Officer. This morning, REAL filed its financial results and management discussion and analysis for its third quarter ended September 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 forward-looking 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 21A 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 which contains 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 statement to reflect subsequent knowledge, events, or 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 non-international financial reporting standard IFRS financial measure. Non-IFRS measures are not recognized measures under IFRS. They do not have standardized meaning prescribed by IFRS. and therefore are 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's 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'd like to turn the call over to Tamir Pollack, Chief Executive Officer of REAL. Tamir, please proceed.

Thanks, James, and thanks, everyone, for joining today. I would like to start by thanking the hundreds of agents who joined me over the past few months and to our community of agents who have contributed to the 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 our Chief Financial Officer, Michelle Ressler, to dive deeper into our financials. After that, we will open up the call for a Q&A. Let's start with the financial results. Q3 revenue was $39 million, an increase of 885% year-over-year. Driving that growth was a 132% increase in real estate agents joining Real, as well as a 325% increase in the revenue per agent to $13,000. Now, turning to operating highlights. When we consider what is supporting our growth, it is based on a number of operational factors and strategies, namely geographical expansion, agent referral, retention, product focus, the amazing culture that attracts more and more agents, and the efficiency of our team. beginning with geographical expansion. During the third quarter, we announced real expansion into Canada with the launch of Real Broker AB in Alberta. We also expanded into Indiana, North Dakota, Minnesota, and Montana. After the quarter ended, we announced expansion to Iowa and Michigan, bringing our tally to 38 states, the District of Columbia, and the Province of Alberta in Canada. We look forward to growing our business in Canada and in each of our operating states. Our focus closing out the year and for 2022 will be North America. The intention is to go deeper in the U.S. rather than expanding horizontally. In terms of agent referrals, our agent attraction has always been correlated to our existing agents. We will be rolling out more tools for current agents to attract new agents. Every agent that joins the company has the potential to attracting more and more agents. As a reminder, agents are incentivized to recruit other agents because real agents earn revenue share through five tiers of referral, creating a network growth effect. We also believe that our story resonates with a lot of people. The culture that the agents we are attracting is also attracting other like-minded agents. As an example, this is what attracted Redline Brokerage and its 85 agents to Real in October. They saw our platform technology network and felt that by joining Real, they can both maintain the momentum that they are proud to have achieved and provide greater benefits to their agents. We are proud to say that they are now part of Real, the Real team, and we look forward to having them play an integral role in our operations. Moving to retention, at Real, we offer an equity incentive plan to both attract and retain agents. Agents can purchase stock at a discount with their commissions. They can earn stock by capping and attracting other agents. Agents can also earn elite agent stock awards if they reach specific production benchmarks. The majority of agents join and opt into the Equity Incentive Plan. It is a huge incentive to join and stay. Moreover, we believe that the Equity Incentive Plan has allowed us to attract and retain more agents and more high-producing agents. It has also allowed us to attract top-tier talent to our management team. In fact, in the last two weeks, we made two important appointments. Firstly, just last week, we announced that Catherine Mobley, will join our management team as chief marketing officer. Kat is an award-winning executive with more than 20 years of experience. Her focus has been on delivering strategic and data-driven strategic strategies for growth, venture-backed, and private equity companies. Previously, Kat led global marketing at First Advantage. Prior to her role at First Advantage, she served as the chief marketing officer at several technology firms and managed a range of global brands with accounts at several Fortune 500 companies. Secondly, earlier this week, we announced Raj Naik, will join our management team as chief operating officer. Raj has been an entrepreneur in technology for over 20 years. He joins Real from WorkRise, previously known as RigUp. WorkRise is a workforce management platform for the skilled trades, where he served as managing director for its construction business unit, and was a member of the executive leadership team. Raj also spent nearly four years at Uber, holding senior leadership positions in the rides, vehicle solutions, and Uber Eats business units. Prior to Uber, he held executive and founding roles at startups in election software, family safety technology, and business performance and compliance software. Raj founded his first company with friends while he was studying at the University of North Carolina at Chapel Hill, later sold to Oracle. Clearly, we further bolstered our management team with two driven, accomplished, and leading executives in Kat and Raj. They've been where Real is headed and will provide enormous value in supporting our growth ambitions. We welcome them to the family and at Real, and we believe they will fit right into our culture and team. To our product focus, I'll start with Instant Payments, which we launched a couple of weeks ago. Instant Payments is intended to change the way agents are paid in the real estate industry. With this first-of-its-kind model, agents will have the option to be paid at the time a transaction is executed rather than at closing. We are doing something that we believe no other brokerage has done before or has the ability to do in terms of the data they collect and process. I really hope that other brokerages will be following us because this is what is fair for our agents. I encourage other brokerages to do the same because I want more agents in this country to benefit from it. and because I think that this is what's fair for every agent in this country. Having said that, I think that very few brokerages can actually execute on a program like this because some do not simply have the data processing capabilities or the vast majority do not have the cash to actually support and finance that program. Agents work hard for months without payment. Our number one priority is our agents, and we want to be there to both help them and reward them for their efforts. This new program will disrupt the industry by assisting agents, new and experienced, to build and grow their business by getting paid faster. We are really excited to provide instant payments to our agents. Other items on the products focus include insurance. our new agent app that gives our agents better visibility into their business in real time and provides more services to enable them to service their clients in a better way. We have a new internal system that allows us to scale to 100,000 agents without needing additional substantial investment in technology infrastructure. One of the takeaways from Zillow's termination of their iBuyer program is that you cannot rely solely on software. Real will be basing its consumer-facing experience on a combination of software solutions for providing convenience, transparency, and speed on one hand, and a human agent who will be able to guide the client and understand their needs and emotional journey. We believe that by building a digital experience that leaves the agents in the center of the transaction, we can dramatically improve the way people buy and sell homes. I think that in a few years, when people talk about Real or think about Real, And who are we competing with? The first answer will not be traditional technology brokerage, but rather larger online real estate companies. Finally, moving on to the efficiency of our team, we continue to have growth in the number of full-time employees, which has led to a positive correlation to the volume of our real estate transactions. This has been done very efficiently. In fact, as of September 30, 2021, our current efficiency ratio, which is full-time employees divided by the number of agents that are currently on our team, remains high, right around 1 to 60. I think that this is excellent because we are at that phase of growth. where we are adding more and more resources at a fast pace. Even though we are hiring and putting a lot of resources to work in anticipation of building future products, we are still at a very good ratio. 1 to 60 is similar to Q2 and higher than Q1, which was 1 to 56. We are at a long-term target of 1 to 75. For context, most companies in our field have a ratio closer to 1 to 25. We view this as a competitive advantage in terms of how quickly and efficiently we can scale, and it provides the benefit in future profit margin. To sum up, we are focused on continued growth through geographical expansion, agent referral, retention, product development, and the efficiency of our team. Powering it all is our mission of having a positive impact on as many real estate agents and home buyers as possible. At this point, I will now turn it over to Michelle Ressler for a more in-depth view of our financials. Michelle.