The Real Brokerage, Inc.

Good day, everyone, and welcome to The Real Brokerage third 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 The Real Brokerage. Sir, the floor is yours.

Thanks, and good morning. Good morning. Thank you for standing by and welcome to the Real Brokerage conference call and webcast for the third quarter ended September 30th, 2024. We appreciate everyone for joining us today. With me on the call today are Tamir Poleg, our Chairman and Chief Executive Officer, Sharron Srivatsa, President, and Michelle Ressler, our Chief Financial Officer. This morning, Real published an earnings press release including results for the third quarter ended September 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. REAL 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 our Chairman and Chief Executive Officer, Tamir Poleg. Tamir, please proceed.

Good morning, and thank you, Ravi. 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 in this quarter. I'll then provide a few closing remarks before opening up the call for Q&A. To begin, Real is a real estate technology company that is differentiated in our industry. Unlike traditional real estate brokerage firms, we provide real estate agents with a compelling 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 a consumer-facing product, which streamlines the client experience and enhances attachments of our higher-margin ancillary services. In the future, 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 long-term wealth. Ultimately, as the platform matures, we believe home buyers and sellers could also benefit from the breadth of our service offering. Our goal is to redefine the role of our 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 we are keenly focused on generating long-term value for our agents, for their clients, and for our shareholders. Turning to the quarter. This morning, we reported record third quarter results with revenue in the third quarter of 2024 increasing by 74% versus the prior year to $372.5 million, driven by a 76% increase in the number of transactions closed, including 88% year-over-year transaction growth in the U.S. This increase was all organic. and compares favorably to the 2% decline in existing home sale industry transactions during the quarter. Gross profit in the third quarter of 2024 was $32.1 million compared to $18.8 million in the third quarter of 2023 and contributed to adjusted EBITDA of $13.3 million, a significant improvement from $3.5 million of adjusted EBITDA in the third quarter of 2023. We ended the third quarter with 21,770 agents, up 79% versus the prior year, and an increase of over 8,000 agents since the start of 2024. As of this morning, our agent count now exceeds 22,500, meaning we've added over 700 agents since the start of the fourth quarter. Our mortgage entitled business lines also saw impressive performance, growing by a combined 97% versus the prior year, including over 200% growth in mortgage. These ancillary business lines typically carry gross margins that are six to eight times higher than our brokerage business, and they are expected to continue outpacing growth in our core brokerage business in the future. Now, regarding the broader market environment, affordability challenges continue to weigh heavily on existing home sales, which are on pace to finish this year near a 30-year trough. While we're cautious about forecasting a meaningful recovery until mortgage rates stabilize in the mid-5% range, we remain focused on what we can control, delivering an exceptional experience and value to our agents and the clients they serve, Make no mistake, we believe Real is well prepared to succeed regardless of the broader market and interest rate environment. This resilience and forward momentum was on full display at our third annual Rise Conference in Las Vegas last month, where Real's vision for the future truly came to life. More than 1,500 of our agents gathered to celebrate our achievements and see firsthand the new products and innovations that we believe will power their businesses for years to come. At Rise, we introduced Leo Copilot, our next generation AI tool that now sits at the center of Reason, our proprietary software platform that is used by all real agents. By centering Reason around Leo Copilot, we've created a streamlined AI-driven experience where agents can navigate our software through a single intuitive interface. Leo Copilot leverages our internal data on agent workflows to anticipate their needs and enhance efficiency. We believe this integration makes Real one of the only brokerages where AI truly drives agent productivity, bringing our agents to spend more of their time serving clients and closing deals. With Leo Copilot, we're embedding AI directly into the agent experience. We also unveiled Leo for Clients, which represents the evolution of our consumer-facing portal beyond a traditional mobile application and extends our AI technology directly to clients and consumers. Leo for Clients is a text-based client-facing platform that we expect will provide prospective homebuyers with the tools they need to find a home, book a showing, apply for a mortgage, and track real-time closing progress, all while maintaining seamless connectivity with their agent. We believe by providing an intuitive and streamlined homebuying journey that meets the expectations of today's digital-savvy consumers, Leo for clients will provide the same seamless tech enabled experience to the client side that our agents have come to rely on. Another major highlight from our eyes was the official launch of RealWallet, a financial platform designed to give agents enhanced control over their earnings and business finances. As a reminder, RealWallet consolidates an agent's earning, revenue share, and equity from Real into one interface, providing real-time wealth insights and faster access to commissions for those agents using a business checking account through RealWallet. At launch, U.S. agents can open a business checking account and receive a Real branded debit card, while select Canadian agents have access to a business line of credit linked to their earnings history. Future updates are expected to introduce AI-powered financial tools, reward programs, and integration with Apple and Google Pay, further enhancing agents' financial flexibility. With that, I'll turn it over to Sharan for an update on our growth and agent initiatives.