Real Brokerage Inc. ((REAX)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Real Brokerage Inc. recently held its earnings call, revealing a generally positive sentiment with notable achievements in organic growth and agent base expansion. The company reported a positive adjusted EBITDA, indicating strong operational performance. However, challenges such as gross margin pressure and an operating loss were also highlighted. Despite these hurdles, the positive aspects slightly outweighed the negative challenges, showcasing the company’s resilience and strategic focus.
Exceptional Organic Growth
Real Brokerage Inc. experienced remarkable organic growth, with closed transactions increasing nearly 50% year-over-year. The company surpassed a significant milestone by having over 30,000 agents on its platform for the first time, marking a substantial expansion in its operational capabilities.
Revenue and Gross Profit Increase
The company reported a 53% increase in revenue, reaching $569 million, and a 40% rise in gross profit to $45 million. This growth outpaced operating expenses, highlighting the company’s efficient management and strategic growth initiatives.
Positive Adjusted EBITDA
Real Brokerage achieved a positive adjusted EBITDA of $20.4 million, a 54% improvement from the previous year. This contributed to an operating cash flow from operations of $9 million, underscoring the company’s strong financial health and operational efficiency.
Agent Base Expansion
The agent base expanded significantly, ending the quarter with over 30,100 agents, a 39% increase from a year ago. The current agent count stands at approximately 30,700, reflecting the company’s successful recruitment and retention strategies.
Real Wallet Adoption
Real Wallet business checking accounts saw increased adoption, with more than 4,600 agents using the service. Total deposits exceeded $20 million, up from approximately $14 million at the time of the last earnings call, indicating growing trust and reliance on this financial service.
AI and Automation Advancements
The company launched a dedicated AI automation team, saving over 10,000 hours annually. AI tools have been expanded to handle 47% of agent interactions, demonstrating Real Brokerage’s commitment to technological innovation and efficiency.
Gross Margin Pressure
Despite the positive growth, the company faced gross margin pressure, decreasing to 7.9% from 8.6% in the prior year period. This was primarily due to a higher proportion of transactions completed by agents who have reached their annual cap.
Operating Loss
Real Brokerage reported an operating loss of negative $0.5 million, an improvement compared to a $2.5 million loss in the third quarter of 2024. This reduction in loss indicates progress towards achieving operational profitability.
Title Business Transition Impact
The transition in the Title business from team-based to state-based joint ventures created headwinds, impacting revenue by about minus 50%. This shift reflects the company’s strategic adjustments in response to market conditions.
Forward-Looking Guidance
Real Brokerage’s forward-looking guidance highlights its exceptional growth metrics and financial performance. The company achieved a 53% year-over-year revenue increase and a 40% rise in gross profit. The agent base grew by 39%, contributing to a 49% increase in closed transactions. Adjusted EBITDA was positive at $20.4 million, marking a 54% improvement. The company maintains a strong balance sheet with nearly $56 million in unrestricted cash and no debt. Real Brokerage’s strategic focus on technology integration, AI adoption, and ancillary services is expected to drive sustained growth and margin expansion in the coming years.
In conclusion, Real Brokerage Inc.’s earnings call reflected a generally positive sentiment, with significant achievements in organic growth, revenue increases, and agent base expansion. Despite challenges such as gross margin pressure and operating losses, the company’s strategic initiatives and forward-looking guidance suggest a promising future. Investors and stakeholders can look forward to continued growth and innovation from Real Brokerage Inc.