The Real Brokerage Inc. Q2 FY2025 earnings call

• Real is a real estate technology company offering agents financial incentives, a proprietary tech platform, and a collaborative culture. - Q2 revenue up 59% to $541M, driven by 62% increase in transactions. - Ended Q2 with 28,000 agents, 43% y/y increase; revenue churn at 2%, best-in-class. - Ancillary businesses grew 50%, with One Real Mortgage up 80%, One Real Title 7%, Real Wallet $250k. - Integrated Leo CoPilot AI assistant for agent support, reducing human support calls by 28%. - Launched first state joint ventures for One Real Title, transitioning to state-based JVs. - Planning to launch U.S. lending product and Real Wallet rewards points in Q3.

The Real Brokerage reported record second quarter results with revenue increasing 59% year-over-year to $541 million. The core brokerage segment saw a 62% increase in the number of transactions closed, exceeding 49,000 in the quarter. Ancillary business lines, including One Real Mortgage, One Real Title, and Real Wallet, grew by a combined 50% in the second quarter. One Real Mortgage had exceptional revenue growth of 80%, One Real Title saw 7% revenue growth, and Real Wallet generated $250,000 in Q2 revenue. Ancillary segments contributed approximately 1% of total revenue and nearly 5% of gross profit.

• Anticipate Q3 revenue to decline modestly from Q2 levels due to industry seasonality. - Higher mix of capped agents in Q3 likely leads to sequentially lower gross margin. - Q3 OpEx expected to increase relative to Q2 due to headcount additions, Flyhomes acquisition, AI automation, and higher professional fees. - Remain disciplined in managing OpEx while focusing on long-term value.

Statements made in the call constitute forward-looking statements. Actual results may differ materially from forward-looking statements. Risk factors causing differences are detailed in Canadian continuous disclosure documents and SEC reports. Real disclaims intent to update forward-looking statements except as required by law.

Q: How should investors think about the financial impact of revenue share model enhancements?

A: Revenue share changes don't impact financial statements; it's a redistribution within the agent community.

Q: Will gross margins be down year-over-year in H2?

A: Yes, due to more revenue from productive capped agents.

Q: Update on agent and team recruiting pipelines?

A: Pipeline is strong, added ~1,200 agents in past 5 weeks; offboarded nonproductive agents.

Q: Goals for cross-selling ancillary products?

A: Combination of product enhancements and AI-driven initiatives; attach rates for mortgage at 4%, title at 1%.

Q: Status of One Real Title state JVs?

A: Intend to open ~12 state JVs, initial positive signs from launched states; more automation levers to pull with AI/automation team.

Q: Correlation between Wallet adoption and retention?

A: Active Wallet users are higher-producing agents; U.S. lending launch expected to strengthen retention.