The Real Brokerage Inc. Announces Second Quarter 2023 Financial Results

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Ultra Club
$500/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Aug 09, 2023 07:30 am
TORONTO & NEW YORK -- 

The Real Brokerage Inc. (TSX: REAX) (NASDAQ: REAX), the fastest-growing publicly traded real estate brokerage, announced results for its second quarter ended June 30, 2023.

“The second quarter was an inflection point for our company, with the achievement of adjusted EBITDA profitability earlier than anticipated, and I’m enormously proud of the work that our employees and agents have put in to get us here,” said Tamir Poleg, Chairman and Chief Executive Officer. “Real now has an agent base that is more than twice the size it was a year ago, placing us in a strong position in the back half of the year. We are focused on executing Real’s mission to reinvent the way that consumers purchase homes, and I am excited to announce that we plan to release the first version of our new consumer app at our annual RISE conference in October later this year.”

Q2 2023 Financial Highlights

  • Revenue increased 65% year-over-year to $185.3 million.
  • Gross profit increased 91% year-over-year to $17.8 million.
  • Adjusted EBITDA profit of $2.6 million, compared to a $583,000 loss in Q2 2022.
  • Net loss attributable to owners of the Company of $4.1 million, compared to $4.2 million from Q2 2022.
  • Loss per share of $0.02, unchanged from Q2 2022.
  • Unrestricted cash and investments increased by $8.6 million during the quarter. As of June 30, 2023 the Company held $17.2 million in cash and an additional $10.9 million held in investments in financial assets, not including $29.6 million of restricted cash associated with customer deposits.
  • The Company repurchased 601,000 common shares for $806,000 pursuant to its normal course issuer bid.

Q2 2023 Operational Highlights

  • Reached nearly 11,500 agents at the end of the second quarter, a 105% year-over-year increase.
  • The number of transactions executed in Q2 2023 grew 72% year-over-year to 17,537, and the total value of completed real estate transactions grew 66% year-over-year to $7.0 billion.
  • Commission revenue per productive agent was $34,700, below $41,400 in Q2 2022 but significantly improved from $26,000 in Q1 2023. These agents on average closed 3.4 transactions during the quarter, compared to 3.8 in Q2 2022 and 2.7 in Q1 2023.
  • Operating expenses per transaction, excluding revenue share, declined 12% year-over-year to $788.
  • As of June 30, 2023, Real’s headcount efficiency ratio, defined as full-time brokerage employees excluding Real Title and One Real Mortgage (formerly LemonBrew Lending) employees, divided by the number of agents on our platform, was 1 to 113. This is little changed from 1 to 114 in Q1 2023 and represents a significant improvement from 1 to 62 as of Q2 2022.
  • Subsequent to the end of the quarter, Real announced it intends to voluntarily delist from the Toronto Stock Exchange. Shares will be delisted effective as of close of markets on August 11, 2023 and will continue to trade on Nasdaq Capital Market under the same ticker.
  • Subsequent to the end of the quarter, Real announced the public release of Leo, its new AI-powered virtual concierge that is fully integrated into the reZEN transaction management platform. Leo can answer agent questions in real time 24/7, leveraging Real’s extensive proprietary knowledge base to save agents time and make our already lean support team even more efficient. Real will host a live webinar to showcase Leo’s capabilities today, August 9, at 12 p.m. ET. All interested parties can join by registering here.

The Company will discuss the results on a conference call and live webcast today at 11:00 a.m. ET.

Conference Call Details:

Date:

 

Wednesday, August 9, 2023

Time:

 

11:00 a.m. ET

 

 

 

Dial-in Number:

 

North American Toll Free: 877-545-0523

 

 

International: 973-528-0016

Access Code:

 

774191

Webcast:

 

https://www.webcaster4.com/Webcast/Page/2699/48756

 

 

 

Replay Number:

 

North American Toll Free: 877-481-4010

 

 

International: 919-882-2331

Passcode:

 

48756

Replay Link:

 

https://www.webcaster4.com/Webcast/Page/2699/48756

Additional information concerning Real’s audited consolidated financial statements and related management’s discussion and analysis for the three months ended June 30, 2023 can be found on the Company’s profile at www.sedarplus.ca.

Non-IFRS Measures

This news release includes reference to “Adjusted EBITDA”, which is a non-International Financial Reporting Standards (“IFRS”) financial measure. 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 amortization, interest, stock-based compensation, current and deferred income tax expenses and other items management considers non-operating in nature. Adjusted EBITDA has 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 for the three months ended June 30, 2023 and 2022 is presented in the table below labeled Reconciliation of Total Comprehensive Loss Attributable to Owners of the Company to Adjusted EBITDA.

 
 

THE REAL BROKERAGE INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS

(Expressed in thousands of U.S. dollars)

UNAUDITED

 

Unaudited

 Audited

 

June 30, 2023

December 31, 2022

ASSETS

 

CURRENT ASSETS

 

Cash and cash equivalents

$

17,165

 

$

10,846

 

Restricted cash

 

29,580

 

 

7,481

 

Investments in financial assets

 

10,911

 

 

7,892

 

Trade receivables

 

1,925

 

 

1,547

 

Other receivables

 

52

 

 

74

 

Prepaid expenses and deposits

 

1,059

 

 

529

 

TOTAL CURRENT ASSETS

 

60,692

 

 

28,369

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Intangible assets

 

3,314

 

 

3,708

 

Goodwill

 

10,174

 

 

10,262

 

Property and equipment

 

1,466

 

 

1,350

 

Right-of-use assets

 

-

 

 

73

 

TOTAL NON-CURRENT ASSETS

 

14,954

 

 

15,393

 

TOTAL ASSETS

 

75,646

 

 

43,762

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

1,146

 

 

474

 

Accrued liabilities

 

21,280

 

 

11,866

 

Customer deposits

 

29,580

 

 

7,481

 

Other payables

 

1,354

 

 

1,188

 

Lease liabilities

 

-

 

 

96

 

TOTAL CURRENT LIABILITIES

 

53,360

 

 

21,105

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Warrants outstanding

 

324

 

 

242

 

TOTAL NON-CURRENT LIABILITIES

 

324

 

 

242

 

TOTAL LIABILITIES

 

53,684

 

 

21,347

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

EQUITY ATTRIBUTABLE TO OWNERS

 

 

 

 

 

 

Share premium

 

56,266

 

 

63,204

 

Stock-based compensation reserves

 

32,024

 

 

25,083

 

Deficit

 

(62,217

)

 

(50,704

)

Other reserves

 

(272

)

 

(469

)

Treasury stock, at cost

 

(4,328

)

 

(14,962

)

EQUITY ATTRIBUTABLE TO OWNERS

 

21,473

 

 

22,152

 

Non-controlling interests

 

489

 

 

263

 

TOTAL EQUITY

 

21,962

 

 

22,415

 

TOTAL LIABILITIES AND EQUITY

 

75,646

 

 

43,762

 

 
 

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 June 30,

Six Months Ended June 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

$

185,332

 

$

112,356

 

$

293,177

 

$

174,005

 

Commissions and other agent-related costs

 

167,573

 

 

103,064

 

 

264,610

 

 

158,851

 

Gross Profit

 

17,759

 

 

9,292

 

 

28,567

 

 

15,154

 

 

 

 

 

 

General and administrative expenses

 

9,654

 

 

6,116

 

 

18,292

 

 

11,490

 

Marketing expenses

 

10,266

 

 

5,700

 

 

17,950

 

 

9,416

 

Research and development expenses

 

1,579

 

 

1,680

 

 

3,103

 

 

2,719

 

Operating Loss

 

(3,740

)

 

(4,204

)

 

(10,778

)

 

(8,471

)

 

 

 

 

 

Other income

 

40

 

 

257

 

 

68

 

 

436

 

Finance expenses, net

 

(272

)

 

(208

)

 

(577

)

 

(372

)

Net Loss

 

(3,972

)

 

(4,155

)

 

(11,287

)

 

(8,407

)

Net income attributable to noncontrolling interests

 

146

 

 

53

 

 

226

 

 

114

 

Net Loss Attributable to the Owners of the Company

 

(4,118

)

 

(4,208

)

 

(11,513

)

 

(8,521

)

Other comprehensive income/(loss):

 

 

 

 

Cumulative (gain)/loss on investments in debt instruments classified as FVTOCI reclassified to profit or loss

 

42

 

 

(116

)

 

135

 

 

(393

)

Foreign currency translation adjustment

 

(85

)

 

190

 

 

62

 

 

394

 

Total Comprehensive Loss Attributable to Owners of the Company

 

(4,161

)

 

(4,134

)

 

(11,316

)

 

(8,520

)

Total Comprehensive Income Attributable to NCI

 

146

 

 

53

 

 

226

 

 

114

 

Total Comprehensive Loss

 

(4,015

)

 

(4,081

)

 

(11,090

)

 

(8,406

)

Loss per share

 

 

 

 

Basic and diluted loss per share

 

(0.02

)

 

(0.02

)

 

(0.06

)

 

(0.05

)

Weighted-average shares, basic and diluted

 

179,764

 

 

178,330

 

 

178,252

 

 

178,330

 

 
 

THE REAL BROKERAGE INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(U.S. dollar in thousands)

UNAUDITED

 

Three Months Ended June 30,

Six Months Ended June 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

OPERATING ACTIVITIES

 

 

 

 

Net Loss

$

(3,972

)

$

(4,155

)

$

(11,287

)

$

(8,407

)

Adjustments for:

 

 

 

 

Depreciation

 

284

 

 

135

 

 

553

 

 

138

 

Equity-settled share-based payment

 

6,075

 

 

274

 

 

11,836

 

 

1,211

 

Finance costs

 

116

 

 

100

 

 

299

 

 

209

 

Loss on short term investments

 

-

 

 

(339

)

 

-

 

 

(135

)

Stock Compensation Payable (RSU)

 

-

 

 

2,481

 

 

-

 

 

4,051

 

Changes in operating asset and liabilities:

 

 

 

 

Trade receivables

 

(526

)

 

111

 

 

(378

)

 

14

 

Other receivables

 

23

 

 

21

 

 

22

 

 

(43

)

Prepaid expenses and deposits

 

(306

)

 

149

 

 

(530

)

 

(851

)

Accounts payable

 

776

 

 

517

 

 

672

 

 

565

 

Accrued liabilities

 

6,333

 

 

3,554

 

 

9,414

 

 

4,955

 

Customer deposits

 

14,144

 

 

(1,590

)

 

22,099

 

 

11,281

 

Other payables

 

641

 

 

7

 

 

166

 

 

471

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

23,588

 

 

1,265

 

 

32,866

 

 

13,459

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

Purchase of property and equipment

 

(110

)

 

(249

)

 

(250

)

 

(625

)

Acquisition of subsidiaries

 

-

 

 

-

 

 

-

 

 

(7,445

)

Investment Deposits in Debt Instruments held at FVTOCI

 

(3,223

)

 

3,989

 

 

(3,729

)

 

3,989

 

Investment Withdrawals in Debt Instruments held at FVTOCI

 

845

 

 

-

 

 

845

 

 

-

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

(2,488

)

 

3,740

 

 

(3,134

)

 

(4,081

)

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

Purchase of common shares for Restricted Share Unit (RSU) Plan

 

(810

)

 

(1,180

)

 

(1,411

)

 

(5,692

)

Proceeds from exercise of stock options

 

146

 

 

24

 

 

212

 

 

47

 

Payment of lease liabilities

 

(16

)

 

(22

)

 

(96

)

 

(45

)

Cash disbursements for non-controlling interest

 

 

(43

)

 

-

 

 

(43

)

NET CASH USED IN FINANCING ACTIVITIES

 

(680

)

 

(1,221

)

 

(1,295

)

 

(5,733

)

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

20,420

 

 

3,783

 

 

28,437

 

 

3,645

 

Cash, cash equivalents and restricted cash, beginning of period

 

26,411

 

 

28,988

 

 

18,327

 

 

29,129

 

Fluctuations in foreign currency

 

(87

)

 

(252

)

 

(19

)

 

(254

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE

$

46,745

 

$

32,520

 

$

46,745

 

$

32,520

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON CASH ACTIVITIES

 

 

 

 

Share-based compensation as part of Expetitle acquisition

 

-

 

 

-

 

 

-

 

 

4,325

 

Increase in non-controlling interest

 

146

 

 

-

 

 

226

 

 

-

 

 
 

THE REAL BROKERAGE INC.

RECONCILIATION OF TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO OWNERS OF THE COMPANY TO ADJUSTED EBITDA

(U.S. dollar in thousands)

UNAUDITED

 

For the Three Months Ended

For the Six Months Ended

 

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Total Comprehensive Loss Attributable to Owners of the Company

(4,161

)

(4,134

)

(11,316

)

(8,520

)

Add/(Deduct):

 

 

 

 

Finance Expenses, net

272

 

208

 

577

 

372

 

Net Income Attributable to Noncontrolling Interest

146

 

53

 

226

 

114

 

Cumulative (Gain)/Loss on Investments in Debt Instruments Classified as at FVTOCI Reclassified to Profit or Loss

(42

)

116

 

(135

)

393

 

Depreciation

284

 

135

 

553

 

138

 

Stock-Based Compensation

6,075

 

2,884

 

11,836

 

6,062

 

Restructuring Expenses

44

 

-

 

85

 

-

 

Other Professional Expenses

-

 

155

 

-

 

281

 

Adjusted EBITDA

2,618

 

(583

)

1,826

 

(1,160

)

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, expectations regarding Real’s growth and the business and strategic plans of the Company.

Forward-looking information is based on assumptions that may prove to be incorrect, including but not limited to assumptions regarding 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; the impact of increased interest rates; economic and industry downturns; the Company’s ability to continuously innovate, and the dependability of the Company’s platform; the Company’s ability to successfully launch new technologies, including Leo, its AI-powered virtual concierge, and consumer experience platform; the Company’s ability to attract new agents and retain current agents; the loss of key personnel; the Company’s ability to expand its brokerage and adjacent services businesses; the Company’s ability to carefully manage its expense structure and continue to grow; the Company’s ability to compete successfully in the markets in which it operates; the Company’s ability to sustain adjusted EBITDA profitability; the impact of cybersecurity incidents and the potential loss of critical and confidential information; the effect of claims, lawsuits and other proceedings that the Company is subject to from time to time; the impact of natural disasters and catastrophic events; compliance with the laws to which the Company is subject and the Company’s ability to protect its intellectual property rights. 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

The Real Brokerage Inc. is revolutionizing the residential real estate industry by pairing best-in-class technology with the trusted guidance of the agent-led experience. Real delivers a cloud-based platform to improve efficiencies and empower agents to provide a seamless end-to-end experience for home buyers and sellers. The company was founded in 2014 and serves 47 states, D.C., and four Canadian provinces with over 11,000 agents. Additional information can be found on its website at www.onereal.com.

For additional information, please contact:
Jason Lee
Vice President, Capital Markets & Investor Relations
[email protected]
908.280.2515

For media inquiries, please contact:
Elisabeth Warrick
Director, Communications
[email protected]
201.564.4221

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).