TORONTO & NEW YORK, May 7, 2024 (BUSINESS WIRE) --
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 first quarter ended March 31, 2024.
"Real delivered exceptional results in what is traditionally the lowest revenue quarter of the year, while setting a new quarterly record for net agent additions, which surpassed 3,000. This performance clearly demonstrates the strong appeal of our agent value proposition in the marketplace," said Tamir Poleg, Real's Chairman and Chief Executive Officer. "Despite higher interest rates and tight inventory impacting overall housing market activity, our strong start to 2024 and our robust transaction pipeline -- currently at an all-time high -- position Real well for continued significant revenue growth and improved profitability, irrespective of how the end market recovers."
"Our ProTeams and Private Label initiatives, which formally launched in January, have received an enthusiastic response. Over 200 agents joined Real this quarter through the Private Label program, and we expect this number to more than double in the second quarter," said Sharran Srivatsaa, President of Real. "As the industry prepares for forthcoming practice changes, we expect the trend of agents migrating from traditional, high-cost brokerages to more efficient, high-value models like ours to continue."
"Real generated $21.5 million in cash from operating activities this quarter, enabling $4.6 million in share repurchases," said Michelle Ressler, Real's Chief Financial Officer. "We continue to invest strategically in our technology and infrastructure in order to support our rapid growth, while maintaining disciplined capital allocation with a focus on generating long-term shareholder value."
Q1 2024 Operational Highlights
The total value of completed real estate transactions reached $7.5 billion in the first quarter of 2024, an increase of 88% from $4.0 billion in the first quarter of 2023.
The total number of transactions closed was 19,032 in the first quarter of 2024, an increase of 74% from 10,963 in the first quarter of 2023.
The total number of agents on the platform increased to 16,680 at the end of the first quarter of 2024, an increase of 67% from the first quarter of 2023. As of May 7, 2024, over 18,000 agents are now on the Real platform.
Q1 2024 Financial Highlights
Revenue rose to $200.7 million in the first quarter of 2024, an increase of 86% from $107.8 million in the first quarter of 2023.
Gross profit reached $20.8 million in the first quarter of 2024, an increase of 92% from $10.8 million in the first quarter of 2023.
Net loss attributable to owners of the Company was $16.1 million in the first quarter of 2024, compared to $7.4 million in the first quarter of 2023. Net loss attributable to owners of the Company in the first quarter of 2024 includes $9.9 million of litigation expenses incurred during the quarter, primarily related to the settlement of antitrust litigation.
Adjusted EBITDA(1) was $3.6 million in the first quarter of 2024, compared to negative ($0.8) million in the first quarter of 2023. Adjusted EBITDA in the first quarter of 2024 excludes $9.9 million of litigation expenses incurred during the quarter, primarily related to the settlement of antitrust litigation.
Operating expenses, which include General & Administrative, Marketing, Research and Development, and expenses related to the settlement of antitrust litigation, increased to $36.5 million in the first quarter of 2024, a 104% increase from $17.8 million in the first quarter of 2023. Operating expenses in the first quarter of 2024 include $9.9 million of litigation expenses incurred during the quarter, primarily related to the settlement of antitrust litigation.
Revenue share expense, which is included in Marketing expenses, was $9.1 million in the first quarter of 2024, a 67% increase compared to $5.4 million in the first 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 $13.6 million in the first quarter of 2024, an increase of 43% from $9.5 million in the first quarter of 2023. Adjusted operating expense per transaction was $715 in the first quarter of 2023, a decline of 18% from $870 in the first quarter of 2023.
Loss per share was $0.09 in the first quarter of 2024, compared to a loss per share of $0.04 in the first quarter of 2023.
The Company repurchased 1.7 million common shares for $4.6 million in the first quarter of 2024, pursuant to its normal course issuer bid.
(1)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 first quarter results on a conference call and live webcast today at 8:00 a.m. ET.
Conference Call Details:
Date: Tuesday, May 7, 2024
Time: 8:00 a.m. ET
Dial-in Number: North American Toll Free: 888-506-0062
International: 973-528-0011
Access Code: 123643
Webcast: https://www.webcaster4.com/Webcast/Page/2699/50322
Replay Information:
Replay Number: North American Toll Free: 877-481-4010
International: 919-882-2331
Access Code: 50322
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 ended March 31, 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 March 31, 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 POSITION
(Expressed in thousands of U.S. dollars)
(unaudited)
As of
--------------------------------------------------------------------------------
March 31, 2024 December 31, 2023
------------------------------ -------------------- ------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 20,072 $ 14,707
Restricted cash 24,440 12,948
Investments in financial assets 14,413 14,222
Trade receivables 9,535 6,441
Other receivables 90 63
Prepaid expenses and deposits 1,222 2,132
-------------------- ---------- -------------------- -------------------- ----------
TOTAL CURRENT ASSETS 69,772 50,513
==================== ========== ==================== ==================== ==========
NON-CURRENT ASSETS
Intangible assets 3,219 3,442
Goodwill 8,993 8,993
Property and equipment 1,593 1,600
-------------------- ---------- -------------------- -------------------- ----------
TOTAL NON-CURRENT ASSETS 13,805 14,035
-------------------- ---------- -------------------- -------------------- ----------
TOTAL ASSETS 83,577 64,548
==================== ========== ==================== ==================== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable 1,093 571
Accrued liabilities 21,214 13,374
Customer deposits 24,440 12,948
Other payables 10,666 302
Warrants outstanding 540 -
-------------------- ---------- -------------------- -------------------- ----------
TOTAL CURRENT LIABILITIES 57,953 27,195
==================== ========== ==================== ==================== ==========
NON-CURRENT LIABILITIES
Warrants outstanding - 269
-------------------- ---------- -------------------- -------------------- ----------
TOTAL NON-CURRENT LIABILITIES - 269
-------------------- ---------- -------------------- -------------------- ----------
TOTAL LIABILITIES 57,953 27,464
==================== ========== ==================== ==================== ==========
EQUITY
EQUITY ATTRIBUTABLE TO OWNERS
Share premium 68,422 62,567
Stock-based compensation reserve 53,448 52,937
Deficit (94,302) (78,205)
Other reserves (5) (167)
Treasury Stock, at cost (2,110) (257)
-------------------- ---------- -------------------- -------------------- ----------
EQUITY ATTRIBUTABLE TO OWNERS 25,453 36,875
-------------------- ---------- -------------------- -------------------- ----------
Non-controlling interests 171 209
TOTAL EQUITY 25,624 37,084
-------------------- ---------- -------------------- -------------------- ----------
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 March 31,
------------------------------------------------------------------------------------
2024 2023
-------------------- ------------ -------------------- -------------------- ------------
Revenues $ 200,743 $ 107,845
Commissions and other agent-related costs 179,984 97,037
-------------------- ------------ -------------------- -------------------- ------------
Gross Profit 20,759 10,808
General & administrative expenses 12,136 8,638
Marketing expenses 12,629 7,684
Research and development expenses 2,462 1,524
Settlement of litigation 9,250 -
-------------------- ------------ -------------------- -------------------- ------------
Operating Loss (15,718) (7,038)
Other income (expenses), net 173 28
Finance expenses, net (552) (305)
-------------------- ------------ -------------------- -------------------- ------------
Net Loss (16,097) (7,315)
Net income attributable to noncontrolling interests - 80
-------------------- ------------ -------------------- -------------------- ------------
Net Loss Attributable to Owners of the Company (16,097) (7,395)
Other comprehensive income/(loss) - net of tax,
Items that will be reclassified subsequently to profit or loss:
Cumulative (Gain)/loss on investments in debt instruments classified as at FVTOCI reclassified to profit or loss 43 93
Foreign currency translation adjustment 119 147
-------------------- ------------ -------------------- -------------------- ------------
Total Comprehensive Loss Attributable to Owners of the Company (15,935) (7,155)
-------------------- ------------ -------------------- -------------------- ------------
Total Comprehensive Income Attributable to NCI - 80
-------------------- ------------ -------------------- -------------------- ------------
Total Comprehensive Loss (15,935) (7,075)
Loss per share
Weighted-average shares, basic and diluted 184,692 178,629
THE REAL BROKERAGE, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of U.S. dollars)
(unaudited)
Three Months Ended March 31,
--------------------------------------------------------------------------------
2024 2023
-------------------- ---------- -------------------- -------------------- ----------
OPERATING ACTIVITIES
Net Loss $ (16,097) $ (7,315)
Adjustments for:
326 269
Depreciation and amortization
8,844 5,761
Equity-settled share-based payments
400 183
Finance costs
Changes in operating asset and liabilities:
(3,094) 148
Trade receivables
(27) (1)
Other receivables
910 (224)
Prepaid expenses and deposits
522 (104)
Accounts payable
7,840 3,081
Accrued liabilities
11,492 7,955
Customer deposits
10,364 (475)
Other payables
-------------------- ---------- -------------------- -------------------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,480 9,278
INVESTING ACTIVITIES
(96) (140)
Purchase of property and equipment
(171) (506)
Investment deposits in debt instruments held at FVTOCI
22 -
Investment withdrawals in debt instruments held at FVTOCI
-------------------- ---------- -------------------- -------------------- ----------
NET CASH USED IN INVESTING ACTIVITIES (245) (646)
FINANCING ACTIVITIES
(4,623) (601)
Purchase of common shares for Restricted Share Unit (RSU) Plan
(321) -
Shares withheld for taxes
613 66
Proceeds from exercise of stock options
- (80)
Payment of lease liabilities
(38) -
Distributions paid to non-controlling interest
-------------------- ---------- -------------------- -------------------- ----------
NET CASH USED IN FINANCING ACTIVITIES (4,369) (615)
Net change in cash, cash equivalents and restricted cash 16,866 8,017
Cash, cash equivalents and restricted cash, beginning of year 27,655 18,327
Fluctuations in foreign currency (9) 67
-------------------- ---------- -------------------- -------------------- ----------
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
--------------------------------------------------------------------------------------------
March 31, 2024 March 31, 2023
------------------------------------ -------------------- ------------------------------------
Total Comprehensive Loss Attributable to Owners of the Company $ (15,935) $ (7,155)
Add/(Deduct):
Finance Expenses, net 552 305
Net Income Attributable to Noncontrolling Interest - 80
Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss (43) (93)
Depreciation 326 269
Stock-Based Compensation Adjustments 8,844 5,761
Restructuring Expenses - 41
Expenses related to Anti-Trust Litigation Settlement 9,857 -
-------------------- ---------------- -------------------- -------------------- ----------------
THE REAL BROKERAGE, INC.
BREAKOUT OF REVENUE BY SEGMENT
(Expressed in thousands of U.S. dollars)
(unaudited)
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, 2024 March 31, 2023
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Main revenue streams
Commissions $ 199,252 $ 107,115
Title 795 598
Mortgage Income 696 132
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Operating Expense 10,129 13,496 12,886 15,184 17,846 21,499 22,742 26,796 36,477
2,703 4,376 3,876 4,020 5,434 7,684 7,946 6,840 9,064
Less: Revenue Share Expense
4.4% 3.9% 3.5% 4.2% 5.0% 4.1% 3.7% 3.8% 4.5%
Revenue Share Expense (% of revenue)
Less:
1,205 897 281 608 1,019 1,214 285 6,543 1,493
Stock-Based Compensation - Employees
582 547 1,776 2,614 1,541 1,640 2,769 1,830 2,137
Stock-Based Compensation - Agents
3 135 87 108 269 284 277 298 326
Depreciation Expense
- - 62 160 41 44 80 58 -
Restructuring Expense
- - - - - - - - 9,857
Expenses Related to Anti-Trust Litigation Settlement
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1,790 1,579 2,206 3,490 2,870 3,182 3,411 8,729 13,813
Subtotal
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Adjusted Operating Expense(1) 5,636 7,541 6,804 7,674 9,542 10,633 11,385 11,226 13,600
9.1% 6.7% 6.1% 8.0% 8.8% 5.7% 5.3% 6.2% 6.8%
Adjusted Operating Expense (% of revenue)
THE REAL BROKERAGE INC.
KEY PERFORMANCE METRICS BY QUARTER
(unaudited)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------
2022 2023 2024
-------------------------------------------------------------------------------- -------------------- -------------------------------------------------------------------------------- -------------------- ------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------
Transaction Data
-------------------------------------------------------------------
Closed Transaction Sides 6,248 10,224 11,233 9,745 10,963 17,537 20,397 17,749 19,032
Total Value of Home Side Transactions ($, billions) 2.4 4.2 4.2 3.5 4.0 4.0 7.0 8.1 6.8 7.5 7.5
Median Home Sale Price ($, thousands) $345 $375 $360 $348 $350 $369 $370 $355 $372
Agent Metrics
-------------------------------------------------------------------
Total Agents 4,500 5,600 6,700 8,200 10,000 11,500 12,175 13,650 16,680
Agent Churn Rate (%) 7.9 7.2 7.3 4.4 8.3 6.5 10.8 6.2 7.9
Revenue Churn Rate (%) 1.6 2.1 2.5 2.4 4.3 3.8 4.5 4.9 1.9
Headcount and Efficiency Metrics
-------------------------------------------------------------------
Full-Time Employees 112 121 122 118 127 145 162 159 151
Full-Time Employees, Excluding One Real Title and One Real Mortgage 82 91 87 84 88 88 102 120 118 117 117
Headcount Efficiency Ratio(1) 1:55 1:62 1:77 1:98 1:114 1:113 1:101 1:116 1:143
Revenue Per Full Time Employee ($, thousands)(2) $752 $1,235 $1,283 $1,144 $1,226 $1,226 $1,817 $1,789 $1,537 $1,716 $1,716
Operating Expense Excluding Revenue Share ($, thousands) $7,426 $9,120 $9,010 $11,164 $12,412 $13,815 $14,796 $19,956 $27,413
Operating Expense Per Transaction Excluding Revenue Share ($) $1,189 $892 $802 $1,146 $1,132 $1,132 $788 $725 $1,124 $1,440 $1,440
Adjusted Operating Expense ($, thousands)(3) $5,636 $7,541 $6,804 $7,674 $9,542 $10,633 $11,385 $11,226 $13,600
Adjusted Operating Expense Per Transaction ($) $902 $738 $606 $787 $870 $870 $606 $558 $632 $715 $715
(1)Defined 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.
(2)Reflects total Revenue divided by full-time brokerage employees (excluding One Real Title and One Real Mortgage employees).
(3)Adjusted 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, a copy of which is 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 18,000 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/20240507502303/en/
SOURCE: The Real Brokerage Inc.
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For additional information:
Ravi Jani
Vice President, Investor Relations and Financial Planning & Analysis
investors@therealbrokerage.com
908.280.2515
For media inquiries:
Elisabeth Warrick
Senior Director, Marketing, Communications & Brand
elisabeth@therealbrokerage.com
201.564.4221
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