Real Brokerage Inc Q1 FY2025 earnings call

Strategy Overview: Real is a real estate tech company differentiating through financial incentives, proprietary tech platform, and collaborative culture. Vision is to simplify home transactions. ### Agent Growth: Added over 2,700 net new agents in Q1. Focus on skill-building via Real Academy, regional roadshows, and masterminds. ### Financial Results: Strong revenue and gross profit growth. Operating expenses improved excluding prior year litigation settlement. Balance sheet strong with $35 million in net unrestricted cash. ### Leo CoPilot: Transitioned all inbound agent support calls to Leo, an AI-powered assistant handling thousands of interactions daily. ### Real Wallet: Welcomed Dominic Parikh as GM, expanded functionality with Apple Pay/Google Pay integrations and tax-focused business checking accounts. ### One Real Title: Pivoted to statewide JV strategy, launching first 3 state-level JVs. ### One Real Mortgage: Introduced stock award program for loan officers.

Revenue for the first quarter was $354 million, a 76% increase compared to the prior year. Brokerage revenue contributed $352 million, up 77% year-over-year. Ancillary businesses generated $2.2 million in revenue, a 50% increase. Gross profit was $33.9 million, up 63%. Gross margin was 9.6%. Real Wallet showed progress with over 3,200 agents using business checking accounts in the U.S. with total deposits ~$8 million. One Real Title is pivoting to a statewide JV strategy, and One Real Mortgage introduced a stock award program for loan officers.

Management expects significant improvements in revenue, gross profit, and adjusted EBITDA for the year, with a strong start to the quarter setting a positive tone for the year ahead. While the mix of capped agents may continue to impact gross margin in Q2, it's expected to be partially offset by fee changes and ancillary business growth.

Actual results may differ materially from forward-looking statements due to risk factors detailed in Canadian continuous disclosure documents and SEC reports. These include factors that could affect revenue, margin expansion, and operational leverage as outlined in the company's regulatory filings.

Q: Could you talk about how agent adoption is of using AI services like Leo?

A: Leo CoPilot takes inbound phone calls and has daily interactions with agents. Currently tracking metrics on better service to agents but no metrics on agent productivity yet.

Q: On gross margins and capping, how to think about trends?

A: Higher mix of capped agents in Q1, but fee changes in February and ancillary growth expected to partially offset.

Q: How is agent adoption of voice AI services?

A: Leo is testing real-life conversations with consumers, and agents can train their own AI for client calls, with potential to push ancillary services.

Q: On agent recruiting, what's resonating?

A: Combination of value and cost, with private label and Pro Teams part of the mix.

Q: On converting employees in India, impact on time to market?

A: Bringing in employees strengthens bond, expanding team helps with time to market.

Q: On ancillary services license in all 50 states?

A: Not prioritizing all 50 states; focusing on existing geographies and ramping up in current areas.