Real Brokerage Inc. Reports Strong Growth Amid Challenges

Real Brokerage Inc. ((REAX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Real Brokerage Inc. recently held an earnings call that painted a picture of robust growth and strategic advancements. The company reported significant increases in revenue, agent count, and contributions from ancillary businesses. While the integration of AI and technological advancements was a focal point, the call also acknowledged a net loss and a slight decline in gross margin, which tempered the otherwise positive financial achievements.

Record-Breaking Revenue and Growth

Real Brokerage reported a record first-quarter revenue of $354 million, marking a 76% increase compared to $201 million in the prior year. This impressive growth was primarily driven by a 77% increase in the number of transactions closed, showcasing the company’s expanding market presence and operational success.

Strong Agent Growth

The company ended the first quarter with 26,870 agents, reflecting a 61% increase from the prior year. Additionally, Real Brokerage has added over 800 agents since the start of the second quarter, underscoring its ability to attract and retain talent in a competitive industry.

AI Integration with Leo CoPilot

Real Brokerage has transitioned all inbound agent support calls to Leo CoPilot, an AI-powered assistant, making it one of the first brokerages to automate its primary support layer with AI. This strategic move aims to enhance agent productivity and operational efficiency, positioning the company at the forefront of technological innovation in the real estate sector.

Growth in Ancillary Businesses

The company’s high-margin ancillary businesses, including mortgage, title, and Real Wallet, grew by a combined 50% compared to the prior year. This growth significantly contributed to margin expansion, highlighting the importance of these businesses in Real Brokerage’s overall strategy.

Improved Financial Metrics

Real Brokerage reported a 63% increase in gross profit, reaching $33.9 million, and an improvement in adjusted EBITDA to $8.3 million from $3.6 million in the first quarter of 2024. These metrics indicate a stronger financial footing and effective cost management strategies.

Net Loss Reduction but Still Present

Despite the positive financial trends, Real Brokerage reported a net loss of $5.1 million. However, this represents a significant reduction from a loss of $16.1 million in the prior year, signaling progress towards profitability.

Decline in Gross Margin

The gross margin decreased to 9.6% from 10.3% in the prior year. This decline was attributed to a higher mix of production from capped agents, who contribute lower gross margins, highlighting a challenge that the company needs to address.

Forward-Looking Guidance

Looking ahead, Real Brokerage anticipates continued growth, with revenue reaching $354 million in the first quarter of 2025, a 76% increase from the previous year. The company expects gross profit to increase by 63% to $33.9 million, while the net loss is projected to improve significantly to $5.1 million from $16.1 million in the prior year. The expansion of the agent base and growth in high-margin ancillary services are expected to drive future performance.

In summary, Real Brokerage’s earnings call highlighted a strong growth narrative, with impressive revenue and agent growth, alongside strategic advancements in AI integration and ancillary business expansion. While challenges such as a net loss and declining gross margin remain, the company’s forward-looking guidance suggests a positive trajectory, making it a compelling story for investors and stakeholders in the financial markets.