Real revenue, agent count up nearly 100% in past 12 months
Strong growth was the theme of the quarter despite a net loss. CEO Tamir Poleg also said he believed Real will come out ahead should commissions rules change.
The Real Brokerage reported enviable revenue numbers in its third-quarter earnings report today, bucking the trend of flat or falling revenues reported by most public real estate companies last quarter.
Real has seen consistent upward growth in several important metrics, nearly doubling revenue and agent count in the past year, and increasing transaction volume.
Not all numbers were positive: The company reported a net loss of $4 million for the quarter, similar to the previous quarter (and an improvement from a year ago). But EBITDA profits were way up compared to the same quarter last year.
During the earnings call, CEO Tamir Poleg also addressed the buyer-broker commissions lawsuits in the wake of the recent Sitzer/Burnett verdict. Poleg said he believes that, relative to smaller firms, Real would "benefit disproportionately" should compensation practices change.
Revenue: $215 million in Q3, a 92% increase year-over-year and nearly $30 million higher than the previous quarter.
Gross profit: $18.8 million for Q3, an increase of 119% year-over-year and $1 million higher than last quarter.
Cash and cash equivalents: Unrestricted cash and investments total $33 million, which doesn't include $16.3 million of restricted cash tied to customer deposits.
Net income/loss: $4 million net loss, which is roughly the same as last quarter but an improvement from the $5.2 million loss in the same period a year prior.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): Profit of $3.5 million, well above the $549,000 reported during the same period a year ago and up nearly $1 million gain from the previous quarter.
Transactions: 20,397 transaction sides in Q3, up from 17,537 in the previous quarter and well above the 11,233 sides closed in Q3 2022.
Agent count: 12,175 agents at the end of Q3 2023, an increase from 11,500 at the end of the previous quarter and nearly double the 6,700 agents from the same period a year ago.
What Real had to say
Real has not been named as a defendant in the major commissions cases, including Sitzer/Burnett, but Poleg commented on the wave of class action lawsuits hitting the industry and assured investors that the company is closely watching what is happening.
"We firmly believe in the vital role that real estate agents play in transactions both for sellers and buyers," he said. "Should we envision a scenario where an increasing number of buyer's agents are paid directly by their clients, we hold a strong belief that … large brokerages like ours are likely to benefit disproportionately, as our scale and resources afford the ability to offer a comprehensive suite of buyer solutions that smaller players may not be able to match."
Poleg also said that Real would "face less potential economic risks should the overall commission pool diminish" thanks to its commission splits and lower cost structure.
The company had a very busy quarter with new programs and updates, leaders said. Highlights include a change to its revenue share model intended to help agents earn more money, a new app and other tech upgrades, and the announcement of a "retirement" benefit that allows agents who step away from sales to keep earning on their revenue share if they maintain their license with Real.
The company also recently announced the appointment of Christian Wallace as its chief of home integration services. Wallace will help Real grow its mortgage and title business, Poleg said.
As of October, Real is now fully operational in all 50 states and four Canadian provinces. However, despite the milestone, "we still represent less than 1% of the entire real estate agent population in North America," Poleg said, adding that there is significant upside for agent growth.