The Real Brokerage Inc. Announces First Quarter 2024 Financial Results

TORONTO & NEW YORK--()--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 EBITDA1 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.

1There 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

Replay Link:

https://www.webcaster4.com/Webcast/Page/2699/50322

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

TOTAL LIABILITIES AND EQUITY

$

83,577

 

$

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 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

Basic and diluted loss per share

$

(0.09)

 

$

(0.04)

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:

 

 

 

Depreciation and amortization

 

326

 

 

269

Equity-settled share-based payments

 

8,844

 

 

5,761

Finance costs

 

400

 

 

183

Changes in operating asset and liabilities:

 

 

 

Trade receivables

 

(3,094)

 

 

148

Other receivables

 

(27)

 

 

(1)

Prepaid expenses and deposits

 

910

 

 

(224)

Accounts payable

 

522

 

 

(104)

Accrued liabilities

 

7,840

 

 

3,081

Customer deposits

 

11,492

 

 

7,955

Other payables

 

10,364

 

 

(475)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

21,480

 

 

9,278

 

 

 

INVESTING ACTIVITIES

 

 

 

Purchase of property and equipment

 

(96)

 

 

(140)

Investment deposits in debt instruments held at FVTOCI

 

(171)

 

 

(506)

Investment withdrawals in debt instruments held at FVTOCI

 

22

 

 

-

NET CASH USED IN INVESTING ACTIVITIES

 

(245)

 

 

(646)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Purchase of common shares for Restricted Share Unit (RSU) Plan

 

(4,623)

 

 

(601)

Shares withheld for taxes

 

(321)

 

 

-

Proceeds from exercise of stock options

 

613

 

 

66

Payment of lease liabilities

 

-

 

 

(80)

Distributions paid to non-controlling interest

 

(38)

 

 

-

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

CASH, CASH EQUIVALENTS AND RESTRICTED CASH BALANCE, ENDING BALANCE

$

44,512

 

$

26,411

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

 

 

-

Adjusted EBITDA

$

3,601

 

$

(792)

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

Total Revenue

 $                           200,743

 $                           107,845

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

Less: Revenue Share Expense

2,703

4,376

3,876

4,020

 

5,434

7,684

7,946

6,840

 

9,064

Revenue Share Expense (% of revenue)

4.4%

3.9%

3.5%

4.2%

 

5.0%

4.1%

3.7%

3.8%

 

4.5%

Less:

 

 

 

 

 

 

 

 

 

 

 

Stock-Based Compensation - Employees

1,205

897

281

608

 

1,019

1,214

285

6,543

 

1,493

Stock-Based Compensation - Agents

582

547

1,776

2,614

 

1,541

1,640

2,769

1,830

 

2,137

Depreciation Expense

3

135

87

108

 

269

284

277

298

 

326

Restructuring Expense

-

-

62

160

 

41

44

80

58

 

-

Expenses Related to Anti-Trust Litigation Settlement

-

-

-

-

 

-

-

-

-

 

9,857

Subtotal

1,790

1,579

2,206

3,490

 

2,870

3,182

3,411

8,729

 

13,813

Adjusted Operating Expense1

5,636

7,541

6,804

7,674

 

9,542

10,633

11,385

11,226

 

13,600

Adjusted Operating Expense (% of revenue)

9.1%

6.7%

6.1%

8.0%

 

8.8%

5.7%

5.3%

6.2%

 

6.8%

 

 

 

 

 

 

 

 

 

 

 

 

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

(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

7.0

8.1

6.8

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

102

120

118

117

Headcount Efficiency Ratio1

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

$1,817

$1,789

$1,537

$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

$788

$725

$1,124

$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

$606

$558

$632

$715

 

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 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, 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.

Contacts

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

Contacts

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