The Real Brokerage, Inc.

Good day, everyone, and welcome to the Real Brokerage second quarter 2023 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. It is now my pleasure to turn the floor over to your host, Jason Lee. Sir, the floor is yours.

Morning, everyone, and thank you for joining us today for Real's second quarter 2023 earnings call. With me on the call today are Tamir Polig, our Chairman and Chief Executive Officer, Michelle Ressler, our Chief Financial Officer. This morning, REEL filed its financial statements and management discussion and analysis for the second quarter ended June 30, 2023, on Cedar and Edgar. These documents, along with the accompanying earnings press release, will 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. 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. So this claims 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 Pollack. Tamir, please proceed.

Good morning, and thank you, Jason. During the second quarter, Real once again delivered best-in-class growth, with our agents closing a record number of transactions, translating through record revenue and adjusted EBITDA profitability. This comes despite a challenging market backdrop that has resulted in many other brokerages posting year-over-year declines. Meanwhile, we see our agent productivity stabilizing and believe there is further upside as the market volume rebounds. We are pleased to have achieved the important adjusted EBITDA profitability milestone as communicated last quarter. This is the direct result of the impressive agent growth we've experienced, our hard focus on maximizing our already efficient cost structure over the past year, and the revenue generating changes we made to our model earlier this year. Due to the strong result this quarter and the strength of our platform, we anticipate remaining adjusted beta positive in the back half of the year. To provide context to our operating performance during the quarter, let's review the state of the market. Elevated mortgage rates continue to depress residential housing activity due both to affordability concerns on the buy side and the reluctance to give up low rate mortgages on the supply side. U.S. existing home sales were down 21% year over year and 2% quarter over quarter on a seasonally adjusted basis. However, our strong agent growth in conjunction with the seasonal upswing in home sale volume resulted in another record beating quarter for real. Revenue for the quarter topped 185 million, which represents a 65% year-over-year increase and a 72% sequential increase from the prior quarter. Against this backdrop, we're proud to be the premier destination for productive agents. During the quarter, we grew our agent base by nearly 1,500 agents, bringing the total number on our platform to just under 11,500 agents. This represents a 105% increase from the second quarter of 2022. Although per agent productivity still lags where we were in the first half of 2022, we saw a meaningful rebound that drove volume for the quarter to a record 17,537 closed transactions, which is 72% higher compared to the same quarter of 2022 and 60% higher sequentially. We also continue to expand our geographic footprint. During the quarter, we opened in Delaware and in South Dakota in the U.S., as well as Manitoba in Canada. We now have agents operating in 47 states, Washington, D.C., and four Canadian provinces. We expect to be in all 50 states by the end of the year. While most of our brokerage growth ahead lies in expanding in our existing markets, we are excited to be nearing this important operational milestone. Agent churn was 6.5% for the quarter, an improvement from 8.3% during the prior consecutive quarter and 7.2% in Q2 2022. Our revenue churn, which we define as the revenue generated by churn agents over the prior two quarters, improved to 3.8% from 4.3% in Q1 2023, but remains above 2.1% in Q2 2022. To put this into context, the impact from churn is incredibly low compared to the impact of the impressive inflow of agents joining our platform. Nonetheless, we have also been actively reviewing our onboarding and training procedures to make sure that every agent that joins our platform is empowered from day one to be successful at RIO. The bottom line is that we are focused on developing programs and resources to help our agents run their businesses effectively. In just the past few months, we've launched a quarterly agent recognition program to celebrate success and foster community. We have overhauled our marketing center to make it easier for agents to discover and distribute content. And we launched a new agent onboarding program with weekly training. I would also like to provide an update on several of our important initiatives. Yesterday, we announced the full public rollout of Leo, our new AI-powered virtual concierge that is fully integrated into our recent transaction management platform. Leo can answer agent questions in real time, 24-7, leveraging Real's extensive proprietary knowledge base to create a completely customized experience. This release has been gone through an alpha testing phase with a select group of agents, and we are excited to now offer this to all agents. This will save them time and make our already lean support team even more efficient, which fundamentally aligns with our core philosophy of becoming the premier technology-driven brokerage by building scalable solutions for our agents. We'll continue to improve and add features to Leo, ensuring that our agents and employees realize the full potential that AI has to offer. We are also working hard to lay the foundations for our industry-changing consumer experience we've spoken about in prior calls. Last year, we acquired Expert Title and Lemon Brew Lending, which we have rebranded as Real Title and One Real Mortgage, respectively. These acquisitions serve as the bedrock to the one-stop shop home buying experience we are developing. While the revenue contribution from these divisions is still relatively small, they are essential building blocks and are growing fast. We are pleased to announce that we expect to be releasing the initial version of our consumer-facing app with an integrated mortgage application process and our annual Rise Conference taking place from October 22nd through the 24th. As I've said before, our one-stop shop vision truly represents a revolution in the way people will buy and sell homes. We view this initial app release as the first step in a multi-year journey and the timeline we followed reflects our commitment to making sure that we build this correctly from the onset. We are excited to share the app And we'll have more to share on several other important initiatives at the conference in October. And with that, I'll turn it over to Michelle for the financial update. Michelle.