The Real Brokerage, Inc.

Good morning, ladies and gentlemen, and welcome to the Real Brokerage fourth quarter and full year 2022 earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. I will now turn the call over to Jason Lee, Vice President of Capital Markets and Investor Relations at the Real Brokerage. Sir, the floor is yours.

Good morning, everyone, and thank you for joining us today for Real's fourth quarter and full year 2022 earnings call. With me on the call today are Tamir Polig, our Chairman and Chief Executive Officer, and Michelle Ressler, our Chief Financial Officer. This morning, we all filed its financial statements and management discussion and analysis for the fourth quarter and full year ended December 31st, 2022, on Cedar and Edgar. These documents, along with the accompanying earnings press release, can be found on both Cedar and Edgar. Before I turn the call over to Tamir, I'd like to remind everyone that the company will be making statements about its future results and other forward-looking statements during this call. Our actual results may differ materially from these forward-looking statements, and the risk factors that could cause these differences are detailed in our Canadian Continuous Disclosure Documents and SEC Reports. REAL disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. Now, with that, I'd like to turn the call over to Chairman and Chief Executive Officer, Tamir Polig. Tamir, please proceed.

Good morning and thank you, Jason. 2022 was a challenging year for the housing market, with Q4 as the weakest quarter across the industry. A key driver was the title policy implemented by the Federal Reserve in response to the persistent inflationary pressures, which resulted in seven increases to the policy interest rate during the year, pushing average 30-year mortgage rates about 6% for the first time since 2008. The corresponding hit to buyer affordability and seller incentive to give up their lower existing mortgage rates resulted in a significant downturn, particularly to transaction volumes. In 2022, U.S. existing home sales declined 18% compared to 2021, although the average home price still rose 10%. In Q4 alone, home sale volume in the U.S. decreased 36% year-over-year, albeit with moderate price declines. Despite the residential real estate market headwinds, we are optimistic that we have witnessed the bottom in Q4, given the strength in what we have witnessed so far in this quarter. Our growth remains strong, and we continue to accelerate our market share gain. Our growth in agent share resulted in a 90% year-over-year rise in revenue and a 100% year-over-year increase to gross profit in Q4 despite the dropping transaction volume in the broader market over that period. Most companies in our industry have reported year-over-year declines in revenue against this challenging backdrop, and many have seen their agent bases shrink as agents leave the industry. Although we are not immune to these market forces, we continue to offer an amazing value proposition for agents, and as a result, have been able to grow our agent base significantly. We entered 2022 with 3,850 agents at Rio and ended the year with over 8,200, a 113% increase. Subsequent to the end of the quarter, we announced in February we surpassed the 9,000 agent mark, a further 10% increase from year end, and we are witnessing an acceleration in our agent growth since we hit that milestone. In December, we announced the addition of Sharon Srivatsa as president of the company, focused on all aspects of growth, including agent attraction and education. Sharon is a highly respected leader in the real estate industry with decades of experience and a deep understanding of the residential real estate market and what it takes for agents to build a successful business. Furthermore, our revenue churn, which we define as the dollar amount generated by churned agents over the prior two quarters, declined to 2.4% in Q4 from 2.5% in the prior quarter. Meanwhile, our agent churn fell to 4.4% from 7.3% in Q3. The lower churn helped drive our highest net agent addition in company history with nearly 1,500 net new agents joining in Q4. Earlier this year, we announced a number of revenue enhancing and agent attraction initiatives and tweaks to our model that we expect to impact our 2023 results and help us scale profitability which Michelle will touch on shortly. These changes are very meaningful. One aspect that I'm particularly excited about is our new co-sponsored revenue share feature. This exciting new feature allows agents to select two sponsors who split 90% of their revenue share stream equally while paying the remaining 10% back to Rio. This offering underscores our belief that agents are a primary source for attracting new agents' talent to our platform and to our knowledge, we are the only brokerage to offer this capability. We believe 2023 is also the year in which the higher margin ancillary title and mortgage services will begin to contribute to our financial results. However, our full consumer vision will take several years to fully implement as we not only build systems that streamline our mortgage and title businesses, but we also plan to build a layer of experience that will seamlessly connect brokerage services with mortgage and title services. In December, we closed on our previously announced acquisition of Lemon Brew Lending, adding mortgage capabilities to our platform and moving us one step closer to our goal of providing consumers an end-to-end frictionless home buying experience. As we have previously mentioned, we expect to release the first iteration of the consumer experience in late Q2. This early version will take customers through the pre-approval process with a conversational UI and we plan to rapidly iterate based on our community feedback. In 2023, our top priorities remain building an industry-changing consumer experience, continued acceleration of platform growth and market share, executing on additional monetization opportunities on our growing platform, and maintaining a cost-effective structure with strong cash management. We remain on track to become adjusted to beta positive in the second half of 2023. Although we of course hope that the real estate market will be a win at our back towards this goal, we are on track to achieve this milestone even under current market forecasts for further double-digit declines to sales volumes and easing prices. As the housing industry eventually turns, we are incredibly excited to roll back with intensity, which will be amplified by an even larger agent core and an augmented agent incentive model that sets us up to deliver a significant compounding effect. And with that, I'll turn it over to Michelle for the financial update. Michelle?