Real defies the odds, reports strong annual revenue gains
The Real Brokerage more than doubled its agent count vs. last year, with chairman and CEO Tamir Poleg crediting its technology and “agent attraction model.”
Unlike most of its real estate industry peers, The Real Brokerage managed to buck the trend of annual revenue declines in its Q1 earnings.
The fast-growing brokerage, which more than doubled its agent count over the past year, reported a 75% increase in annual revenue and an 84% increase in gross profit. Real still ended the quarter in the red, with a net loss of $7.4 million, but that represented an improvement over the prior quarter, and the company is optimistic about its growth and future performance.
Tamir Poleg, Real's chairman and CEO, said he was pleased with the company's "exceptionally strong growth" given the "difficult backdrop" of elevated interest rates impacting housing affordability.
In light of its Q1 results, the company updated projections for the remainder of the year. "We now expect to reach our goal of becoming adjusted EBITDA profitable in Q2, earlier than our prior target of reaching adjusted EBITDA profitability in the second half of 2023," said Poleg.
Revenue: $107.8 million, up 75% year over year, and more than $10 million higher than Q4 2022.
Gross profit: $10.8 million, up 84% vs. last year, and an increase of more than $2 million from Q4 2022.
Cash and cash equivalents: $11.0 million in cash, not including $15.4 million of restricted cash associated with customer deposits, and an additional $8.5 million held in investments.
Net income/loss: A loss of $7.4 million vs. $4.3 million year over year and $6.8 million in Q4 2022.
Adjusted EBITDA: A loss of $792 thousand, compared to a $577 thousand loss year over year. The loss improved significantly from the prior quarter, when adjusted EBITDA loss was $3 million.
Transactions: 10,963 executed transactions, up 75% year over year, representing a total value of $4.0 billion, a 66% annual increase.
Agent count: More than 10,000 at the end of the first quarter, a 120% increase vs. last year. Nearly 1,800 agents joined Real on a net basis in Q1, representing the largest single-quarter addition in company history.
What Real had to say
Poleg emphasized agent growth as a key to the Real's overall growth, and attributed the positive financial results to the company's rapid rise in agent count.
"These results come during a difficult period for agents across the country as evidenced by shrinking agent bases at many other brokerages," Poleg said. "What's clear to us is that our agent attraction model is working, and our technology and value proposition is resonating with agents that want to be successful," Poleg said.
He added that Real is "focused on aggressively gaining strong market share by providing the best ecosystem for agents."
In the Q1 earnings call, Poleg highlighted several product initiatives, most notably a consumer-facing app that focuses on streamlining the mortgage application process. The app will have a limited beta launch in a few weeks.
"The future of real estate lies in taking this very complex process of buying a home and wrapping it into a single, well-crafted, easy-to-understand product," Poleg said.
Poleg also announced the launch of Real Signature, a proprietary electronic signature tool designed to improve agent productivity and save money vs. using a third-party tool. Plus, said Poleg, the company will own transaction data, which it can use to build better experiences long-term. "It is an important building block of the one-stop-shop consumer product we are developing," he said.
Real has also dipped its toes into AI, recently unveiling a GPT-based digital personal assistant called Leo, which provides agents with real-time answers pulled from Real's own data, with the goal of increasing agent efficiency.
Beyond products, the company noted its growth in new markets, including recent expansions in Canada and the Mid-Atlantic region, and its plans to launch a military division staffed largely by a cohort of new agents who joined Real as a result of the company's acquisition of military-focused Sentry Residential in April.