The Real Brokerage, Inc.

Welcome to the Real Brokerage second quarter earnings call. At this time, all participants are 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 Ms. Alex Lumpkin, Chief Legal Officer at the Real Brokerage. Ma'am, 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 30, 2025. We appreciate everyone for joining us today. With me on the call today are Tamir Koleg, our Chairman and Chief Executive Officer, Jenna Rosenblatt, our Chief Operating Officer, and Ravi Jani, our Chief Financial Officer. This morning, REAL published an earnings press release including results for the second quarter ended June 30, 2025. 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 SEDAR. 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 Chairman and Chief Executive Officer, Tamir Polig. Tamir, please proceed.

Good morning, and thank you, Alex. I will start with an overview of our strategy and recent business highlights. Jenna will provide an update on actions we are taking to drive agent growth, improve agent experience, and enhance operational efficiency. And Ravi will provide a more in-depth discussion of our financial results. 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 fundamentally different 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 an agent's 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 empowering agents with the tools technology and resources they need to grow both their businesses and as individuals all while delivering a more seamless experience for clients in the near term this vision includes the rollout of a consumer facing product which streamlines the client experience and enhances attachment of our higher margin ancillary services Long-term, we envision our platform encompassing a holistic ecosystem of real estate services and financial technology products, providing agents with avenues to build long-term wealth. 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. That is why we will remain relentless in our focus on delivering long-term value for our agents, for their clients, and for all of our shareholders. Moving to the quarter, this morning, Real reported record second quarter results. Revenue in the second quarter increased by 59% versus the prior year to $541 million, driven by a 62% increase in the number of transactions closed. This compares favorably to the total existing home sales market, where industry transactions declined by 1% during the quarter. Importantly, all of our growth continues to be organic. Gross profit in the second quarter increased 50% to $47.9 million, and outpaced a 42% increase in operating expenses, which totaled $46.2 million. I'm proud to say that this resulted in our first ever quarter of positive operating income, which was $1.7 million in the quarter, and positive net income of $1.6 million. Adjusted EBITDA was positive $20 million, a 43% improvement from $14 million, in the second quarter of twenty twenty four and contributed to strong cash flow from operating activities of forty one million dollars now turning to our agent community we ended the second quarter with twenty eight thousand agents marking a forty three percent increase versus the prior year and as of this morning our agent count exceeds twenty nine thousand two hundred this sustained growth underscores the compelling strength of our value proposition during second quarter we off-boarded over one thousand five hundred agents who had either not renewed their real estate licenses or had not paid mandatory association dues the outcome of this is clear in our performance metrics where we saw transactions per average agent increase by seven per cent year over year significantly outpacing industry averages Moreover, our revenue churn, which remains a key indicator of our ability to retain our most productive agents, held firm at what we believe represents a best-in-class 2% in the quarter. Beyond our core brokerage strength, a significant part of our long-term strategy involves the growth and scalability of our ancillary business lines, which today include One Real Mortgage, One Real Title, and Real Wallet. these segments are particularly strategic as they typically generate gross margins that are five to eight times higher than our core brokerage representing powerful future profit drivers in the second quarter our ancillary business lines grew by a combined fifty per cent contributing approximately one per cent of total revenue and nearly five per cent of our gross profit One Real Mortgage saw exceptional revenue growth of 80% in the quarter, with performance driven by the continued expansion of our loan officer network and successful promotional offers. For One Real Title, revenue growth was 7%. This deceleration was anticipated and is primarily due to the strategic shift in our title strategy that we discussed last quarter. We are purposefully transitioning from less scalable team-based joint ventures to more robust and and profitable state-based JVs. In Q2, we launched the first three of our new state joint ventures, and while the revenue contribution from these JVs was minimal in the quarter given the necessary ramp-up time, we are confident in this model's long-term scalability and profitability. Lastly, RealWallet continues to demonstrate strong progress across both product development and adoption and generated Q2 revenue of $250,000. Its growth has been particularly impressive. In the U.S., approximately 3,600 agents now use real wallet business checking accounts. This includes 850 agents utilizing the new tax-focused business checking accounts, which are specifically designed to help them better plan for their tax liabilities. Total real wallet deposits now exceed $14 million, a nearly 70% increase since our last earnings call in May. In Canada, we've extended $4 million in lines of credit to over 250 agents through our production-based lending program. In the third quarter, we will begin piloting our U.S. lending product and also formally launching real wallet rewards points. Given our U.S. agent base is nearly 10 times larger than our Canadian agent base, we are incredibly excited for the potential to significantly increase the size and impact of the real wallet portfolio. Lastly, before turning it over to Jenna, I want to discuss a recent strategic move that we believe significantly accelerates our consumer roadmap. the acquisition of FlyHome's AI-powered consumer home search portal and related technology assets, which we announced on July 1st. We believe this is a major step towards delivering an end-to-end AI-driven home buying experience. Our vision has always been to leverage technology to enhance every facet of the real estate transaction. The Fly Homes platform, with its deep MLS integrations, real-time market insights, and user-friendly interface, is a perfect fit. It will be integrated into Leo for Clients, our upcoming consumer-facing product, allowing us to offer a more intelligent and personalized home search journey. This acquisition is not just about technology. It also brings a talented team of experienced engineers with deep real estate and AI expertise into Real's R&D organization, bolstering our in-house capabilities. In addition, our mortgage broker subsidiary, OneReal Mortgage, is offering Flyhome's innovative buy-before-you-sell, financing solutions to clients, providing another powerful tool for our agents and their clients in competitive markets. The acquisition and our minority equity investment in fly homes were funded with cash on hand, and we expect the ongoing operating expense impact to be approximately $2 million to $3 million annually. We view this as a highly strategic investment that significantly strengthens our competitive position and accelerates our technology roadmap. Now, for more detail on our operational performance, I'll turn it over to our Chief Operating Officer, Jenna Rosenblatt, for an update on our growth and agent initiatives.