The Real Brokerage Inc. (NASDAQ: REAX) (“Real” or the
"Company"), a technology platform reshaping real estate for agents,
home buyers and sellers, announced today financial results for the
second quarter ended June 30, 2024.
“Real achieved outstanding results in the second quarter,
surpassing our own expectations and achieving new highs in Revenue
and Gross Profit," said Tamir Poleg, Real’s Chairman and Chief
Executive Officer. “Our performance underscores the resilience and
attractiveness of our business model, combined with the
efficiencies enabled by our differentiated technology
platform.”
“We were thrilled to announce the launch of the Real Luxury
division and the Real Partners program this quarter,” said Sharran
Srivatsaa, President of Real. “These initiatives, along with our
ProTeams and Private Label programs, were designed to attract even
more agents to Real and to provide them with access to vetted
vendors and partners, elevating the service we can offer our
clients. As the industry prepares to implement practice changes, we
are doubling down on training and equipping our agents with the
tools and skills they need to thrive in any market condition.”
“We look forward to building on our strong first half results to
deliver continued significant year over year growth and improved
profitability in the balance of the year,” said Michelle Ressler,
Real’s Chief Financial Officer. “We will continue making necessary
investments in our people and platform to support our rapidly
growing agent base, deliver an exceptional experience, and ensure
Real’s long-term success.”
Q2 2024 Operational Highlights1
- The total value of completed real estate transactions reached
$12.6 billion in the second quarter of 2024, an increase of 80%
from $7.0 billion in the second quarter of 2023.
- The total number of transactions closed was 30,367 in the
second quarter of 2024, an increase of 73% from 17,537 in the
second quarter of 2023.
- The total number of agents on the platform increased to 19,540
at the end of the second quarter of 2024, an increase of 70% from
the second quarter of 2023. As of August 7, 2024, over 20,000
agents are now on the Real platform.
Q2 2024 Financial Highlights
- Revenue rose to $340.8 million in the second quarter of 2024,
an increase of 84% from $185.3 million in the second quarter of
2023.
- Gross profit reached $31.9 million in the second quarter of
2024, an increase of 79% from $17.8 million in the second quarter
of 2023.
- Net loss attributable to owners of the Company was $1.2 million
in the second quarter of 2024, compared to $4.1 million in the
second quarter of 2023.
- Adjusted EBITDA2 was $14.0 million in the second quarter of
2024, compared to $2.6 million in the second quarter of 2023.
Adjusted EBITDA in the second quarter of 2024 excludes $0.4 million
of litigation expenses incurred during the quarter related to the
settlement of antitrust litigation.
- Operating expenses, which include General & Administrative,
Marketing, and Research and Development expenses, increased to
$32.5 million in the second quarter of 2024, a 51% increase from
$21.5 million in the second quarter of 2023.
- Revenue share expense, which is included in Marketing expenses,
was $12.5 million in the second quarter of 2024, a 62% increase
compared to $7.7 million in the second quarter of 2023.
- Adjusted operating expenses, which reflect operating expenses
less revenue share expense, stock-based compensation, depreciation,
expenses related to the settlement of antitrust litigation, and
other unique or non-cash expenses, were $14.7 million in the second
quarter of 2024, an increase of 39% from $10.6 million in the
second quarter of 2023. Adjusted operating expense per transaction
was $485 in the second quarter of 2023, a decline of 20% from $606
in the second quarter of 2023.
- Loss per share was $0.01 in the second quarter of 2024,
compared to a loss per share of $0.02 in the second quarter of
2023.
- The Company repurchased 2.7 million common shares for $10.6
million in the second quarter of 2024, pursuant to its normal
course issuer bid.
- As of June 30, 2024, Real had cash and cash equivalents of
$33.6 million, consisting of $23.3 million of unrestricted cash and
$10.3 million held in investments in financial assets.
- Real continues to have no debt.
_________________________ 1 All dollar references are in U.S.
dollars. 2 There are references to "Adjusted EBITDA" and "Adjusted
Operating Expense" in this press release, which are non-IFRS
measures. See accompanying note under the heading "Non-IFRS
Measures" for an explanation of the composition of these non-IFRS
measures.
The Company will discuss the second quarter results on a
conference call and live webcast today at 8:30 a.m. ET.
Conference Call
Details:
Date:
Wednesday, August 7, 2024
Time:
8:30 a.m. ET
Dial-in Number:
North American Toll Free:
888-506-0062
International: 973-528-0011
Access Code:
947955
Webcast:
https://www.webcaster4.com/Webcast/Page/2699/50818
Replay Information:
Replay Number:
North American Toll Free:
877-481-4010
International: 919-882-2331
Access Code:
50818
Replay Link:
https://www.webcaster4.com/Webcast/Page/2699/50818
Non-IFRS Measures
This news release includes references to "Adjusted EBITDA", and
"Adjusted Operating Expense", which are non-International Financial
Reporting Standards (“IFRS”) financial measures. Non-IFRS
measures are not recognized measures under IFRS, do not have a
standardized meaning prescribed by IFRS, and are therefore unlikely
to be comparable to similar measures presented by other
companies.
Adjusted EBITDA is used as an alternative to net income by
removing major non-cash items, such as depreciation, amortization,
interest, stock-based compensation, current and deferred income tax
expenses and other items management considers unique and/or
non-operating in nature.
Adjusted Operating Expense is used as an alternative to
operating expenses by removing major non-cash items such as
stock-based compensation, depreciation, and other unique or
non-cash expenses, while retaining ongoing fixed operating expenses
and excluding variable cash expenses associated with revenue
share.
Adjusted EBITDA and Adjusted Operating Expense have no direct
comparable IFRS financial measures. The Company has used or
included these non-IFRS measures solely to provide investors with
added insight into Real’s financial performance. Readers are
cautioned that such non-IFRS measures may not be appropriate for
any other purpose. Non-IFRS measures should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. Our Adjusted EBITDA is reconciled to the
most comparable IFRS measure for the three months and six months
ended June 30, 2024 and 2023 and is presented in the table below
labeled Reconciliation of Total Comprehensive Loss Attributable to
Owners of the Company to Adjusted EBITDA. Our Adjusted Operating
Expense reconciled to the most comparable IFRS measure is presented
for the three months ended June 30, 2024 and on a quarterly basis
for the prior two fiscal years in the table below labeled
Reconciliation of Operating Expense to Adjusted Operating
Expense.
THE REAL BROKERAGE, INC. INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITIONS (Expressed in thousands of
U.S. dollars) (unaudited)
As of
June 30, 2024
December 31, 2023
ASSETS CURRENT ASSETS Cash and cash equivalents
$
23,316
$
14,707
Restricted cash
33,124
12,948
Funds held in escrow account
9,250
-
Investments in financial assets
10,276
14,222
Trade receivables
18,631
6,441
Other receivables
56
63
Prepaid expenses and deposits
1,541
2,132
TOTAL CURRENT ASSETS
96,194
50,513
NON-CURRENT ASSETS Intangible assets
2,996
3,442
Goodwill
8,993
8,993
Property and equipment
1,977
1,600
TOTAL NON-CURRENT ASSETS
13,966
14,035
TOTAL ASSETS
110,160
64,548
LIABILITIES AND EQUITY CURRENT LIABILITIES
Accounts payable
1,196
571
Accrued liabilities
33,629
13,374
Customer deposits
33,124
12,948
Other payables
11,028
302
Warrants outstanding
356
-
TOTAL CURRENT LIABILITIES
79,333
27,195
NON-CURRENT LIABILITIES Warrants outstanding
-
269
TOTAL NON-CURRENT LIABILITIES
-
269
TOTAL LIABILITIES
79,333
27,464
EQUITY EQUITY ATTRIBUTABLE TO OWNERS Share
premium
79,075
62,567
Stock-based compensation reserves
57,020
52,937
Deficit
(95,517
)
(78,205
)
Other reserves
422
(167
)
Treasury stock, at cost
(10,435
)
(257
)
EQUITY ATTRIBUTABLE TO OWNERS
30,565
36,875
Non-controlling interests
262
209
TOTAL EQUITY
30,827
37,084
TOTAL LIABILITIES AND EQUITY
$
110,160
$
64,548
THE REAL BROKERAGE, INC. INTERIM CONDENSED
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in thousands of U.S. dollars, except for per share
amounts) (unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Revenues
$
340,778
$
185,332
$
541,521
$
293,177
Commissions and other agent-related costs
308,910
167,573
488,894
264,610
Gross Profit
31,868
17,759
52,627
28,567
General & administrative expenses
14,015
9,654
26,151
18,292
Marketing expenses
15,889
10,266
28,518
17,950
Research and development expenses
2,608
1,579
5,070
3,103
Settlement of litigation
-
-
9,250
-
Operating Loss
(644
)
(3,740
)
(16,362
)
(10,778
)
Other income
57
40
230
68
Finance expenses, net
(523
)
(272
)
(1,075
)
(577
)
Net Loss
(1,110
)
(3,972
)
(17,207
)
(11,287
)
Net Income Attributable to Noncontrolling Interests
105
146
105
226
Net Loss Attributable to Owners of the Company
(1,215
)
(4,118
)
(17,312
)
(11,513
)
Other comprehensive income/(loss): Cumulative (Gain)/Loss on
Investments in Debt Instruments Classified as at FVTOCI
Reclassified to Profit or Loss
51
42
94
135
Foreign currency translation adjustment
376
(85
)
495
62
Total Comprehensive Loss Attributable to Owners of the
Company
(788
)
(4,161
)
(16,723
)
(11,316
)
Total Comprehensive Income Attributable to NCI
105
146
105
226
Total Comprehensive Loss
(683
)
(4,015
)
(16,618
)
(11,090
)
Loss per share Basic and diluted loss per share
$
(0.01
)
$
(0.02
)
$
(0.09
)
$
(0.06
)
Weighted-average shares, basic and diluted
189,046
179,764
186,568
178,252
THE REAL BROKERAGE, INC. INTERIM CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS (Expressed in thousands of
U.S. dollars) (unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
OPERATING ACTIVITIES Net Loss
$
(1,110
)
$
(3,972
)
$
(17,207
)
$
(11,287
)
Adjustments for: Depreciation and amortization
340
284
666
553
Equity-settled share-based payments
13,536
6,075
22,380
11,836
Finance costs
271
116
671
299
Changes in operating asset and liabilities: Funds held in
restricted escrow account
(9,250
)
-
(9,250
)
-
Trade receivables
(9,096
)
(526
)
(12,190
)
(378
)
Other receivables
34
23
7
22
Prepaid expenses and deposits
(319
)
(306
)
591
(530
)
Accounts payable
103
776
625
672
Accrued liabilities
12,415
6,333
20,255
9,414
Customer deposits
8,684
14,144
20,176
22,099
Other payables
362
641
10,726
166
NET CASH PROVIDED BY OPERATING ACTIVITIES
15,970
23,588
37,450
32,866
INVESTING ACTIVITIES Purchase of property and
equipment
(501
)
(110
)
(597
)
(250
)
Investment deposits in debt instruments held at FVTOCI
(1,542
)
(3,223
)
(1,713
)
(3,729
)
Investment withdrawals in debt instruments held at FVTOCI
5,730
845
5,752
845
NET CASH USED IN INVESTING ACTIVITIES
3,687
(2,488
)
3,442
(3,134
)
FINANCING ACTIVITIES Purchase of common shares for
Restricted Share Unit (RSU) Plan
(10,603
)
(810
)
(15,226
)
(1,411
)
Shares withheld for taxes
(420
)
-
(741
)
-
Proceeds from exercise of stock options
3,010
146
3,623
212
Payment of lease liabilities
-
(16
)
-
(96
)
Cash disbursements for non-controlling interest
(14
)
-
(52
)
-
NET CASH USED IN FINANCING ACTIVITIES
(8,027
)
(680
)
(12,396
)
(1,295
)
Net change in cash, cash equivalents and restricted cash
11,630
20,420
28,496
28,437
Cash, cash equivalents and restricted cash, beginning of year
44,512
26,411
27,655
18,327
Fluctuations in foreign currency
298
(87
)
289
(19
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BALANCE, ENDING
BALANCE
$
56,440
$
46,745
$
56,440
$
46,745
THE REAL BROKERAGE, INC. RECONCILIATION OF TOTAL
COMPREHENSIVE LOSS ATTRIBUTABLE TO OWNERS OF THE COMPANY TO
ADJUSTED EBITDA (Expressed in thousands of U.S. dollars)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Total Comprehensive Loss Attributable to Owners of the Company
(788
)
(4,161
)
(16,723
)
(11,316
)
Add/(Deduct): Finance Expenses, net
523
272
1,075
577
Net Income Attributable to Noncontrolling Interest
105
146
105
226
Cumulative (Gain)/Loss on Investments in Debt Instruments
Classified as at FVTOCI Reclassified to Profit or Loss
(51
)
(42
)
(94
)
(135
)
Depreciation and Amortization
340
284
666
553
Stock-Based Compensation
13,536
6,075
22,380
11,836
Restructuring Expenses
-
44
-
85
Expenses Related to Anti-Trust Litigation Settlement
369
-
10,226
-
Adjusted EBITDA
$
14,034
$
2,618
$
17,637
$
1,826
THE REAL BROKERAGE, INC. BREAKOUT OF REVENUE BY
SEGMENT (Expressed in thousands of U.S. dollars) (unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Main revenue streams Commissions
$
338,574
$
184,022
$
537,826
$
291,137
Title
1,255
948
2,050
1,546
Mortgage Income
949
362
1,645
494
Total Revenue
$
340,778
$
185,332
$
541,521
$
293,177
THE REAL BROKERAGE INC. RECONCILIATION OF
OPERATING EXPENSE TO ADJUSTED OPERATING EXPENSE BY QUARTER
(Expressed in thousands of U.S. dollars) (unaudited)
2022
2023
2024
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Operating Expense
10,129
13,496
12,886
15,184
17,846
21,499
22,742
26,796
36,477
32,512
Less: Revenue Share Expense
2,703
4,376
3,876
4,020
5,434
7,684
7,946
6,840
9,064
12,475
Revenue Share Expense (% of revenue)
4.4%
3.9%
3.5%
4.2%
5.0%
4.1%
3.7%
3.8%
4.5%
3.7%
Less: Stock-Based Compensation - Employees
1,205
897
281
608
1,019
1,214
285
6,543
1,493
2,265
Stock-Based Compensation - Agents
582
547
1,776
2,614
1,541
1,640
2,769
1,830
2,137
2,335
Depreciation Expense
3
135
87
108
269
284
277
298
326
340
Restructuring Expense
-
-
62
160
41
44
80
58
-
Expenses Related to Anti-Trust Litigation Settlement
-
-
-
-
-
-
-
-
9,857
369
Subtotal
1,790
1,579
2,206
3,490
2,870
3,182
3,411
8,729
13,813
5,309
Adjusted Operating Expense1
5,636
7,541
6,804
7,674
9,542
10,633
11,385
11,226
13,600
14,728
Adjusted Operating Expense (% of revenue)
9.1%
6.7%
6.1%
8.0%
8.8%
5.7%
5.3%
6.2%
6.8%
4.3%
1Adjusted operating expense
excludes revenue share, stock-based compensation, depreciation and
other non-recurring or non-cash expenses.
THE REAL BROKERAGE INC. KEY PERFORMANCE METRICS BY
QUARTER (Dollar amounts expressed in U.S. dollars) (unaudited)
2022
2023
2024
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Transaction Data Closed
Transaction Sides
6,248
10,224
11,233
9,745
10,963
17,537
20,397
17,749
19,032
30,367
Total Value of Home Side Transactions ($, billions)
2.4
4.2
4.2
3.5
4.0
7.0
8.1
6.8
7.5
12.6
Median Home Sale Price ($, thousands)
$345
$375
$360
$348
$350
$369
$370
$355
$372
$384
Agent Metrics Total Agents
4,500
5,600
6,700
8,200
10,000
11,500
12,175
13,650
16,680
19,540
Agent Churn Rate (%)
7.9
7.2
7.3
4.4
8.3
6.5
10.8
6.2
7.9
7.5
Revenue Churn Rate (%)
1.6
2.1
2.5
2.4
4.3
3.8
4.5
4.9
1.9
1.6
Headcount and Efficiency
Metrics Full-Time Employees
112
121
122
118
127
145
162
159
151
231
Full-Time Employees, Excluding One Real Title and One Real Mortgage
82
91
87
84
88
102
120
118
117
142
Headcount Efficiency Ratio1
1:55
1:62
1:77
1:98
1:114
1:113
1:101
1:116
1:143
1:138
Revenue Per Full Time Employee ($, thousands)2
$752
$1,235
$1,283
$1,144
$1,226
$1,817
$1,789
$1,537
$1,716
$2,400
Operating Expense Excluding Revenue Share ($, thousands)
$7,426
$9,120
$9,010
$11,164
$12,412
$13,815
$14,796
$19,956
$27,413
$20,037
Operating Expense Per Transaction Excluding Revenue Share ($)
$1,189
$892
$802
$1,146
$1,132
$788
$725
$1,124
$1,440
$660
Adjusted Operating Expense ($, thousands)3
$5,636
$7,541
$6,804
$7,674
$9,542
$10,633
$11,385
$11,226
$13,600
$14,728
Adjusted Operating Expense Per Transaction ($)
$902
$738
$606
$787
$870
$606
$558
$632
$715
$485
1Defined as the ratio of
full-time brokerage employees (excluding One Real Title and One
Real Mortgage employees) to the number of agents on our
platform.
2Reflects total company revenue
divided by full-time brokerage employees (excluding One Real Title
and One Real Mortgage employees).
3Adjusted operating expense
excludes revenue share, stock-based compensation, depreciation and
other non-recurring or non-cash expenses.
Forward-Looking Information
This press release contains forward-looking information within
the meaning of applicable Canadian securities laws. Forward-looking
information is often, but not always, identified by the use of
words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”,
“expect”, “likely” and “intend” and statements that an event or
result “may”, “will”, “should”, “could” or “might” occur or be
achieved and other similar expressions. These statements reflect
management’s current beliefs and are based on information currently
available to management as at the date hereof. Forward-looking
information in this press release includes, without limiting the
foregoing, information relating to Real’s expectation regarding
increasing the number of agents, revenue growth and profitability
and the business and strategic plans of Real.
Forward-looking information is based on assumptions that may
prove to be incorrect, including but not limited to Real’s business
objectives, expected growth, results of operations, performance,
business projects and opportunities and financial results. Real
considers these assumptions to be reasonable in the circumstances.
However, forward-looking information is subject to known and
unknown risks, uncertainties and other factors that could cause
actual results, performance or achievements to differ materially
from those expressed or implied in the forward-looking information.
Important factors that could cause such differences include, but
are not limited to, slowdowns in real estate markets, economic and
industry downturns, Real’s ability to attract new agents and retain
current agents and those risk factors discussed under the heading
“Risk Factors” in the Company’s Annual Information Form dated March
14, 2024, and “Risks and Uncertainties” in the Company’s Quarterly
Management’s Discussion and Analysis for the period ended June 30,
2024, copies of which are available under the Company’s SEDAR+
profile at www.sedarplus.ca.
These factors should be carefully considered and readers should
not place undue reliance on the forward-looking statements.
Although the forward-looking statements contained in this press
release are based upon what management believes to be reasonable
assumptions, Real cannot assure readers that actual results will be
consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this press
release, and Real assumes no obligation to update or revise them to
reflect new events or circumstances, except as required by law.
About Real
Real (NASDAQ: REAX) is a real estate experience company working
to make life’s most complex transaction simple. The fast-growing
company combines essential real estate, mortgage and closing
services with powerful technology to deliver a single seamless
end-to-end consumer experience, guided by trusted agents. With a
presence in all 50 states throughout the U.S. and Canada, Real
supports over 20,000 agents who use its digital brokerage platform
and tight-knit professional community to power their own
forward-thinking businesses. Additional information can be found on
its website at www.onereal.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807372723/en/
For additional information, please contact: Ravi Jani Vice
President, Investor Relations and Financial Planning & Analysis
investors@therealbrokerage.com 908.280.2515
For media inquiries, please contact: Elisabeth Warrick Senior
Director, Marketing, Communications & Brand
elisabeth@therealbrokerage.com 201.564.4221
Real Brokerage (NASDAQ:REAX)
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