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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507502303/en/
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
Real Brokerage (NASDAQ:REAX)
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