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?

Thank you, Tamir, and thank you everyone for joining us. I'll start by reviewing some of our key financial results for the full year and fourth quarter. As Tamir touched on, it was a particularly challenging second half of 2022 for our industry, but our significant growth on a year-over-year basis more than offset the market headwinds. For the full year 2022, the total volume of homes sold was $14.4 billion, which represents a 226% increase compared to 2021. The total number of transactions on our platform during the year increased to over 37,500, a 181% increase. In Q4 alone, despite the drop in market volumes, Real completed 9,745 transactions, an 85% year-over-year increase. This corresponds to a total value of homes sold in Q4 of $3.5 billion, a 109% year-over-year increase. Meanwhile, the median sale price of properties sold by our agents declined 3.3% quarter-over-quarter to $348,000, roughly in line with the 4.3% decline in the average price of existing home sales in the U.S. between September and December. For the full year 2022, revenue increased to $382 million, a 214% increase compared with 2021. Meanwhile, gross profit increased 188% year over year to $32 million. Fourth quarter revenue was $96.1 million, a 90% year over year increase, while fourth quarter gross profit increased 100% year over year to $8.2 million. Our gross margin expanded to 8.6%, up from 8.1% in Q4 2021. The increase from prior periods is driven by the slowdown in the market that resulted in fewer agents exceeding their respective commission caps. As of December 31st, 8.9% of our agents had exceeded their caps versus 12.4% at the end of Q3, as the lower market transaction volume made reaching the cap more difficult. 8.5% of our US agents ended the quarter with capped status, down from 11.4% in Q3, while 14.1% of our Canadian agents were capped, down from 24.6% in Q3. As a result, the capped cohort represented 44% of commission revenue in Q4, compared to 57% in Q3. Our highest earning elite agents at the end of the quarter continue to represent the top 1% of our agent base, unchanged from the prior quarter, but are responsible for generating 12.7% of total commission revenue, a slight drop from 13.6% in Q3. This cohort, in particular, has remained impressively resilient to the challenging market conditions. Overall, we believe Real continues to be the winning solution for productive agents looking to be as efficient as possible, even during a market downshift. In Q4, 56% of commission revenue was generated by our agents representing the buy side, 34% was on the sell side, and 6% was from dual agency representation. This is essentially unchanged from the same quarter in 2021 and does not include revenue that we book related to agent referrals, which accounts for approximately 4% of the total. Commission revenue per productive agent, a core measure of agent productivity, moderated to $27,200 in Q4 from $34,900 in Q3 and $32,600 from Q4 in 2021. To strip out the effect of new agents joining, We also track the commission revenue per productive agent already on our platform at the beginning of the quarter. This is similar to a same-store sales figure reported by the retail industry. For these agents, the average commission revenue in Q4 was $30,300, which is higher than the overall agent productivity previously mentioned, but a 19% year-over-year decline and 14% quarter-over-quarter decline due to softer housing market conditions and seasonality. The number of transactions closed by this cohort declined to 3.1 in Q4 from 3.9 in both the prior quarter and the same quarter in 2021. We are excited by our accelerating agent count growth, as Timur mentioned, and look forward to seeing strong contributions from newly onboarded agents begin to be reflected in subsequent quarterly financials. Note that in 2022, it took 74 days on average for newly onboarded agents to close their first deal. We are continuously working to improve upon this number with the rollout of our soaring program, which we kicked off in the back half of 2022. Turning to our geographic expansion, we grew our presence significantly in 2022, opening brokerage operations in seven new states and provinces. In Q4, we began operating in Alabama in the U.S. and British Columbia in Canada. Earlier in the year, we launched in Arkansas, Mississippi, Maine, New Mexico, and Ontario. In 2023, we plan to fill out the rest of the map in the U.S. and continue our progress in Canada with Manitoba as our next target. Regarding Canada, our business in the country represented 14% of commission revenue in Q4, a decline compared to 20% in Q3, but up significantly from 3% in Q4 2021. The large year-over-year increase reflects our expansion in the country during 2022, while the quarter-over-quarter drop reflects the larger slowdown in the Canadian residential market compared to the U.S. Shifting over to OPEX, our total operating costs for the quarter, including revenue share, were $15.2 million, which represents 15.8% of revenue. Our operating expense per transaction, excluding revenue share, which is a core component of our agent incentive, increased narrowly by 6% year-over-year to $1,146. We continue to be laser-focused on optimizing our already efficient cost structure, given industry headwinds, and in line with our goal of reaching positive adjusted EBITDA in the second half of the year. Our headcount efficiency ratio, which we define as full-time brokerage employees excluding RealTitle and LemonBoo employees, divided by the number of agents that are currently on our platform, continued to improve, rising to around 1 to 98 from 1 to 77 as of Q3. The ratio of the number of employees on our transaction processing team to transactions processed over the quarter dipped to 1 to 1,083 from 1 to 1,404 over the quarter due to the lower transaction volume. Only nine employees support this function, and we did not shrink the team in response to the slower volume, which drove the lower ratio. Lastly, the ratio of support staff employees to agents improved, 1 to 1,368, up from 1 to 1,119 the prior quarter as we continue to see operating leverage in our efficient support model as our agent base grows. We believe these metrics best highlight the headcount efficiency and scalability of our platform that is made possible by the strength of our tech stack. We believe this is ultimately one of our biggest competitive advantages for the business, and this will become even more apparent as we continue to scale. Our net loss for the quarter was $6.8 million compared to $3.8 million in Q4 of 2021, translating to a loss per share of $0.04 compared to a $0.02 loss per share for the same period the prior year. For the full year 2022, our net loss was $20.6 million from $11.7 million in 2021. Adjusted EBITDA loss for the quarter was recorded at $3 million, unchanged from a $3 million loss in Q4 2021. On a full year basis, the adjusted EBITDA loss was $8.9 million compared to a $5.1 million loss in 2021. We believe that adjusted EBITDA provides useful information about our financial performance, most importantly by excluding non-cash stock-based compensation that we offer to our agents and employees. To reiterate, we expect to be adjusted EBITDA positive in the back half of this year due to the contribution from changes to our agent incentive model that I'll touch on shortly, as well as the pickup in activities we've witnessed so far this year. We're on track to achieve this even in a very conservative scenario in which industry transaction volumes drop an additional 15% to 25% and prices fall 7% to 12% in 2023 compared to 2022. Our agent base only increases to 12,500 by year end compared to 9,000 at the beginning of February. And full year revenue only rises modestly to end the year in the $480 million to $490 million range. Note that this scenario does not represent our expectation for 2023 performance, which is meaningfully higher, but rather a reasonably achievable scenario that will result in us getting over the positive adjusted EBITDA threshold. Turning to our financial position, we had $10.8 million in unrestricted cash on the balance sheet and an additional $7.9 million in investments in financial assets to bring our total liquidity to $18.7 million as of December 31, 2022. Note that beginning last quarter, we have begun to separate the amount of cash that we hold in escrow for homebuyers and are now reporting that amount as restricted cash. We believe this increased transparency reflects our truer cash position and is in line with how others in the industry report it. We continue to have no debt and no need to raise debt in the near term, which we consider an important highlight given the prospect for interest rates to remain higher for some time. Our total cash and investments in financial assets, excluding the restricted cash held in escrow, totaled $18.7 million. This represents a decline of $3 million during the quarter, of which $800,000 was attributable to the purchase consideration for lemon brew lending. Subsequent to the end of the quarter, we announced a number of changes to our U.S. agent pricing and fee model that make it more sustainable while still offering industry-beating incentives for our agents. In 2023, we are implementing the following new fees. A $30 fee on each transaction to cover broker review, E&O insurance, and processing expenses. A $175 annual fee to participate in our revenue sharing program and a 1.2% processing fee on all revenue share payments. Additionally, we increase the subsequent fees as follows. A $100 increase of the joint fee to $249, a $250 increase of the annual brokerage fee to $750, a $60 increase of the post-capping transaction fee to $285, and a $29 increase to the elite agent transaction fee to $129. These changes went into effect for new U.S. agents that joined after January 31, 2023, and will go into effect for all U.S. agents beginning April 1, 2023. We expect these changes in aggregate to contribute over $5 million directly to our bottom line in 2023, with an even more significant four-year effect in 2024. These changes are important. It helps set the company on a clear path to profitability, and we believe these changes will yield an even greater effect in the years to come as we continue to scale. Again, we will begin to see these effects in earnest in Q2 of 2023 and are excited for the path ahead. In conclusion, we continue to cautiously monitor economic trends while applying conservative, cost-conscious planning in the event that 2023 is another difficult year. In 2022, we focused on taking market share while investing in our business and making the necessary adjustments to our agent model to drive our next phase of growth. We have cause for optimism in 2023 as our pipeline of transactions that have not yet closed have climbed steadily year-to-date and is currently at the highest point in our company's history. Additionally, March sales trends are looking incredibly promising and suggest that the worst may be behind us. This concludes my financial remarks. I will now ask the operator to open up the line for Q&A. Operator, can you please pull for questions?

Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Please hold while you poll for questions. Your first question is coming from Darren Aftahi from Roth MKM. Your line is live.

Hi, guys. Good morning. Thanks for taking my questions. There's a lot to unpack here on some of the comments you said, in particular, Michelle. I'm just trying to make heads and tails. It sounds like you're seeing improved traction sort of year-to-date in your business. I guess you didn't give guidance, but you mentioned that 480 to 490 revenue scenario. Like, what gives you kind of confidence in that? And I guess as we think about your commentary around adjusted EBITDA, beyond the $5 million benefit this year, is there any underlying assumption about ancillary services benefiting your business?

Yeah. Hi there, and thank you. So those assumptions rely mainly on the brokerage business. We think that this year there will be somewhat of a modest contribution by the ancillary businesses that we own. What we've seen since the beginning of the year or the first week of January is just a very significant uptick in activity and new contract signs. So we have a pretty good visibility into the next two months. And what we're seeing is extremely encouraging. March so far is shaping up to be probably our best month ever. And also the backlog moving forward is looking very promising. So the figures that Michelle mentioned of 480 to 490 million in top line revenue, this is what we need in order to get to adjusted EBITDA positive in the second half of the year. I mean, those numbers are for the full year and we are very confident that we are going to do much better than this. So at this point, We have good visibility. We are much more optimistic than we were three months ago about the market. And we have a very significant backlog to rely on.

That's helpful. Thanks, Tamir. And then just as we think about 23, so you guys had really nice growth in agents and a lot of this stuff is just attracting people to your platform. Like, how do we think about... maybe inorganic or whether you consider it organic attraction of agents. And I guess big picture, like what is your general view in terms of your theoretical ceiling for agents on this platform long-term? Is it, you know, 50,000, a hundred thousand?

Sure. We believe that if you build value, then people will, will be attracted to this value. And this is what we've been focused since day one of the company. We were trying to build the most amazing platform for agents. And we are now starting to see the signs of agents actually joining because of that value that we offer. So we don't really see any glass ceiling at this point. We think that there's a long runway for us as a company. I mean, we are very confident that we will get to tens of thousands of agents within a couple of years. And I also believe that we will get to, you know, six digits. I think that the question here is not only about the number of agents, it's about how do you build something meaningful that will differentiate our agents compared to other agents in the industry, and how do we equip them with a way to serve their clients in a different way? Because I believe that buyers and sellers are demanding a different kind of service, and this is what we're trying to build. So at the end of the day, it's not only about the number of agents, it's also about the value that you're creating 40 agents and their clients? And how do you monetize all of those transactions that are generated by those agents? And this is what we're now focusing on. We are heavily focusing on monetization through technology. And I think that in the next couple of years, we will see the effect of that on our financial statements.

And I guess just last one for me, your productivity per agent on a transaction basis is very impressive. I'm just curious as you scale to, tens of thousands, if not hundreds of thousands. Can that metric stay at that level, or do we assume at some point it starts to get diluted?

I believe that this is sustainable. At the end of the day, it's about the focus of the company. So as a company, we're not focused on the vanity number of agents on the platform. We want to focus on production, and we want to help agents that are – serious about practicing real estate. So at the end of the day, we're not trying to attract only any agent, we're trying to attract the agents that want to succeed and want to close transactions and want to focus on real estate. And I think that this is why we're seeing such impressive per agent productivity numbers. And I believe that we will continue to attract those agents that are more focused on on production rather than other things. So I believe that this is sustainable.

Yeah, and I also think we should highlight that this is a challenging market, so we expect that those metrics will only go up from here.

That's helpful. Thanks, Michelle. Thank you. Your next question is coming from Tom White from DA Davidson.

Your line is live.

Hey, this is Wyatt Swanson on for Tom. Thanks for taking our questions. I've got a few here. My first one is just kind of on the changes to the agent fee structure. Could you talk a little bit more about what the rationale was for implementing those changes now? And then how does your current revenue share offering differ versus some of the other similar models in the space?

Sure.

The changes in fees has been a collaborative process and effort with our agents. At the end of the day, our agents are shareholders in the company. So they are both the clients of the company, but they also own an equity stake in the company. So they want to see the company succeed and grow and become profitable. So we had very long discussions with groups of agents. We explained the situation and our costs went up because of inflation, but our model is such that it's capped at some point. So when agents close more deals, They pay us the same because we stopped participating in the commission split with them. So when we explained all of this and we thought about how to minimize the impact, the negative impact to the average agent, we came up with all of those different fees. So the joining fee for agents who want to join, it really doesn't make a big difference if they pay $149 or $249. This is why we increased this fee. We implemented a very modest transaction fee of $30. We wanted to stay competitive compared to other brokerages out there, but at the end of the day, we wanted to make sure that our agents would be as slightly impacted as possible, and I think that we came to a solution that everybody was somewhat happy with. Regarding revenue share, we differ in revenue share in the fact that Our revenue share is very generous, let's say, to, again, the average agent. So we are generous on the first tier. We believe that most agents would be attracting one, two, three, four, five agents to the company versus those agents that attract hundreds of agents into the company. So we wanted to be generous with that. with the let's say everyday average agent. And this is why we are generous there. And we also announced a co-sponsored revenue share, which I will spend a minute on. Uh, when we looked at our 900,000 agents base, we realized that only about 1500 of them are actually attracting other agents. And when we asked them, why is that? Why, why are the rest of the agents not really engaged in attraction? We realized that many of them are interested in building a revenue share, um, revenue stream, but they don't really know how to have those conversations. So we decided that we are going to allow every agent to name two sponsors, and this provides a chance to every agent to team up with other agents who are maybe more experienced in agent attraction and just cooperate in attracting agents into the company. And if they're successful, then they split the revenue share. We also believe that from a cultural perspective, this prevents from turning into a very siloed company so it just creates more collaboration within the company so it was right move and we announced it a few a few weeks ago we are currently seeing that about 13 percent of all new agents joining are coming through co-sponsored revenue shares so we are seeing an optic in attraction activity because of that that's great thank you and then

Could you share your current expectations as it relates to gross margins for this year, given some of the moving pieces there with fewer agents capping, but the fee structure changes and so on?

Sure. And Michel can touch more on that. Again, we're not providing guidance, but I think that given the new fees and also the market conditions, I think that the margins this year will be more favorable than last year. Michel, if you have anything to add to this.

Yeah, I mean, as you mentioned, we're not providing guidance, but we are optimistic about 2023. And, you know, I think that you can see the the early effects of, of the fact that within our business model, we planned for downturn in the market. So our business model only strengthens in a challenging environment. And, you know, should 2023 continue to be difficult, this will only further benefit the company.

Got it. Thank you both. Thank you.

Your next question is coming from Chris Sakai from Singular Research. Your line is live.

Hi, I'm in for Dave Marsh. Can you provide an update on title company operations? How many states is it operating in and what is the plan to roll out in additional states?

Sure.

Hi, Chris.

So currently Tidal is focused on two main states, Texas and Florida, and we also have an operation in Georgia as well. We are licensed in many more states, but we are now expanding into Colorado, Nevada, Arizona, and California. In February, we had a record month in terms of revenue on Tidal Company. We've communicated before that we created JVs, So we are now inviting our agents to become owners in the title companies that we own. And this way they can actually make money out of, uh, out of title services, not only out of commissions. Um, and what we're seeing in those JVs, we have two main JVs. One is targeted at cappers. So agents that are more productive, one is targeted at non cappers. Uh, we have about 65 agents on the cappers JV, uh, in Texas and Florida. And about 120 in the non-cappers. What we're seeing in terms of attach rates on those JVs is north of 70% of capturable transactions are going to those JVs. So this is encouraging in terms of attach rates. And now we are expanding the JVs to additional states. So this is still very early stages. But again, we've seen a record month. And I think that we got it right with the JVs. So we're seeing a lot of engagement from our agents.

Okay, sounds good. And then the same questions for acquired mortgage operations. How many states is it operating in and what is the plan for additional rollout?

Lemon Brew is licensed as a mortgage brokerage in 20 states and is operating in 20 states and as a mortgage lender in 12 states. We currently operate only as a mortgage broker. We concluded the acquisition just a couple of months ago. We are now immersing Glemmon Brew into our business. They're doing a lot of work with our agents. So it'll take a little bit of a ramp-up time to get meaningful revenue from them. But we are working on a few very interesting offerings to our agents. Aside from everything that we're building on the consumer-facing app, we are working on a concept that will enable Lemon Brew to guarantee closing and guarantee the date of closing within 14 days of loan application for our agents clients. So we believe that with this program, we will see much more engagement from our agents and their clients. But again, it takes a little bit of time to ramp up ancillary services revenue.

Okay, thanks. And last, what's your general tenor of the real estate market with rising rates and especially with recent bank failures?

I think what we've witnessed in the past nine months is the fastest pace of increasing interest rates in history and at the same time the most leveraged economy ever. So debt to GDP is at an all-time high. And what we're now starting to see is that things are starting to break. You know, what we've witnessed with the banking industry in the past week or 10 days. I believe that there's a chance that lending standards will tighten because of everything that's going on. On the other hand, we are seeing a very robust job market and very solid demand for housing. So I think that there are a lot of conflicting trends right now in the market. We are very optimistic about housing. I can tell you that at the beginning of this year, We've seen the same type of phenomenon that we have seen in the first half of 2022, meaning bidding wars and people bidding over asking price on homes. And when rates went, again, above 6.5%, that subsided a little bit. But we are seeing and we are hearing our agents reporting a lot of activity with buyers. So I think that as long as the economy will not break drastically, We are very optimistic about the real estate market. And regardless of that, I think that us as a company, we are definitely an outlier just because of our fast growth and the fact that we are adding agents so rapidly. Our performance is not going to be very connected to the market performance. We are going to do much, much, much better.

Okay, thanks for the answers, Tamir.

Thank you. Once again, everyone, if you have any questions or comments, please press star, then 1 on your phone. Your next question is coming from Brian Kenslinger from Alliance Global Partners. Your line is live.

Great, thanks. Two questions. The first is a follow-up from the bank crisis question. I just want to understand from your answer, your goal of $480 to $490 million in revenue, that does not include... a negative impact from the bank crisis on volumes. Is that how I read that answer?

Hi Brian. Not exactly. What we said is that our assumptions for the year is that transaction volume will drop 15 to 20% and home prices will drop seven to 12%. And even with those assumptions that are quite severe, We expect to be just a bit positive in the second half of the year. And in order to achieve that, we need to have about $480 to $490 million in top-line revenue, which we believe we will do much, much better than those figures. So I think that, yeah.

And then my follow-up is, can you touch on, and maybe I missed it, your M&A plans? I know... The goal long-term is to add ancillary services, and you've got a few, to your business. So maybe talk about that, given they'll probably have higher contribution margins.

Sure. What we're seeing on the title side is that gross margins are in the range of 80% to 85%. On the mortgage side, we're seeing gross margins of about 60%, 65%. We have a short-term strategy on title, which is, again, creating those JVs and inviting our agents in. to participate in those JVs and this is how we secure those transactions that our agents are processing because they have an incentive to send them to the JV. Long term, again, we want to embed Tidal into the consumer experience on the app and it'll be part of the seamless experience that we're building for our agents clients. On the mortgage side, what we are now doing is just introducing our mortgage business to our agents, having a lot of events, a lot of interactions with the agents, asking them to try the services, highlighting the success stories. As I mentioned, we are working on a, on a, uh, an offering that will allow our agents clients to close within 14 days with a hundred percent certainty that their loan will close. So this is something that doesn't really exist in the industry. Uh, so we're, we're trying a lot of things, But it takes time, as I mentioned, to ramp up ancillary services revenue. I believe that this year we will start seeing more meaningful revenue coming from title, and probably towards the back half of the year we will see more significant revenue coming from mortgage. But at the end of the day, long-term, if we think five years ahead, ten years ahead, everything lies in the consumer experience that we're building. And, again, title and mortgage services will be embedded into that experience. Okay.

Thank you.

Thank you very much.

Mr. Lee, there appears to be no further questions.

Thank you, and if you have any additional questions for today's earnings release, please feel free to contact me directly. Operator, would you please give the conference call replay instructions once again? Thanks.

Absolutely. In order to access the replay, you need to call 877-481-7000. The replay will be available today at 2 p.m. Eastern. Ladies and gentlemen, this does conclude the conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.