The Real Brokerage, Inc.

Good morning, everyone, and welcome to the Real Brokerage second quarter 2024 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, Ravi Jani, Vice President of Investor Relations and Financial Planning and Analysis at Real Brokerage. Sir, the floor is yours.

Thanks, and good morning. Thank you for standing by and welcome to the Real Brokerage conference call and webcast for the second quarter ended June 30th, 2024. We appreciate everyone for joining us today. With me on the call today are Tamir Poleg, our Chairman and Chief Executive Officer, Sharan Srivatsa, President, and Michelle Ressler, our Chief Financial Officer. This morning, Real published an earnings press release including results for the second quarter ended June 30th, 2024. The press release, along with the unaudited consolidated financial statements and related management discussion and analysis for the quarter, have been filed with the U.S. Securities and Exchange Commission on EDGAR and with the Canadian securities regulators on CEDAR. Before we get started, I'd like to remind everyone that statements made in this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements. 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. REEL disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. 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, Ravi. I would like to apologize in advance. I lost my voice, but rest assured it has no impact on our financial performance. I will start with an overview of our strategy and some recent business highlights. Sharon will provide an update on actions we are taking to drive agent growth and improve agent experience, and Michelle will provide a more in-depth discussion of our financial results this quarter. I'll then provide a few closing remarks before opening up the call for Q&A. To begin, RIO is a real estate technology company that is differentiated in our industry. Unlike traditional real estate brokerage firms, we provide real estate agents with an unmatched combination of financial incentives, a proprietary software-based technology platform, which eliminates the need for physical office space, and a collaborative culture that we believe is unique in our industry. Our vision is to simplify life's most complex transaction, that is, a purchase or sale of a home, by providing agents with the tools, technology, and resources they need to grow both their businesses and as individuals, all while delivering a seamless experience for home buyers and sellers. In the short term, this vision includes the rollout of our one real consumer facing mobile app, which streamlines the client experience and enhances attachment of our higher margin ancillary services. In the long term, We expect our platform to encompass a holistic ecosystem of financial technology products, payments, and investment planning tools, providing agents with an avenue to build generational wealth. Ultimately, as the platform matures, we believe home buyers and sellers could also benefit from the breadth of services offering. Our goal is to redefine the role of a real estate brokerage in the lives of our agents and in the broader housing industry. Importantly, Just like our institutional investors, many of our agents are also shareholders in our company, and that is why everything we do is with the intent to grow long-term shareholder value. Turning to the quarter. This morning, we reported record second quarter results, with revenue in the second quarter of 2024 increasing by 84% versus the prior year to $341 million. driven by a 73% increase in the number of transactions closed, combined with a 6% increase in average revenue per transaction. This result compares favorably to the 3% decline in existing wholesale industry transactions during the quarter. Gross profit in the second quarter of 2024 was a record $31.9 million, and contributed to the adjusted EBITDA of 14 million, also a quarterly record, and a significant improvement from 2.6 million in the second quarter of 2023. We ended the quarter with 19,500 agents, up 70% versus the prior year, and an increase of nearly 6,000 agents since the start of the year. As of this morning, our agent count exceeds 20,500, meaning we've added over 1,000 agents since the start of the quarter. Typically, the third quarter is seasonally slower for agent movement due to agents focusing on closing deals rather than switching brokerages. Despite this, we are encouraged by the volume and quality of agents in our attraction pipeline, reinforcing our confidence in achieving robust agent growth for the remainder of this year and in 2025. In addition to our strong brokerage performance, our ancillary mortgage and title business lines grew by a combined 68% versus the prior year, including 160% growth in mortgage. Recall these ancillary business lines typically command gross margins that are six to eight times higher than our average brokerage gross margin, and we expect substantial growth in these ancillary businesses throughout the remainder of the year. Our confidence is underscored by the significant increase in mortgage loan officers at One Real Mortgage which has grown from 18 at the end of last year to over 50 currently. Additionally, our new title 2.0 strategy continues to gain traction and we expect to deliver accelerating revenue growth in the back half of the year. Regarding the broader industry landscape, the macroeconomic environment has been challenging. Existing home sales continue to decline year over year and remain near historic lows despite increased inventory on the market. Our monthly survey shows that affordability is the biggest challenge for homebuyers and economic uncertainty is growing. Given these conditions, the performance this quarter is particularly notable. While we remain hopeful that potential rate cuts could help break the current stalemate in the housing market, we are not relying on a significant recovery and instead remain focused on what we can control, that is, delivering an exceptional experience and value proposition for our agents and the client they serve. On the product front, we continue to upgrade the OneReal consumer-facing app and we'll be releasing enhanced features in the second half of the year. Regarding the Real Wallet, we are on track for an initial product launch later this year with the initial focus on debit card transactions with credit to follow thereafter. As we noted last quarter, launch timelines for novel technologies can be influenced by various regulatory and compliance factors that can be out of our control. Nevertheless, we remain excited about the product and its potential to improve our agents' businesses. With that, I'll turn it over to Sharan for an update on our growth and agent initiatives.