Q4 2023 The Real Brokerage Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Real Brokerage fourth quarter earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. I will now turn the call over to Ravi Jani, Vice President of Investor Relations and Financial Planning and Analysis at The Real Brokerage. Sir, the floor is yours.

Good morning, ladies and gentlemen, and welcome to the real brokerage fourth quarter earnings call.

At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.

I will now turn the call over to Ravi, Johnny Vice President of Investor Relations and financial planning and analysis at the real brokerage Sir the floor is yours.

Ravi Jani: Thanks and good morning. Thank you for standing by, and welcome to the Real Brokerage conference call and webcast for the fourth quarter and full year ended December 31st, 2023. We appreciate everyone for joining us today. With me on the call are Tamir Poleg, our Chairman and Chief Executive Officer, Sharran Srivatsaa, President, and Michelle Ressler, our Chief Financial Officer. This morning, Real published an earnings release including results for the fourth quarter and full year ended December 31st, 2023. Real expects to file audited consolidated financial statements and related notes for the period ended December 31st, 2023 and 2022.

Thanks, and good morning, Thank you for standing by and welcome to the real brokerage conference call and webcast for the fourth quarter and full year ended December 31, 2023, we appreciate everyone for joining us today with me on the call are to near Poland, Kirk Chairman and Chief Executive Officer Sharon.

You got that President and Michelle Ressler, our Chief Financial Officer. This morning, real published an earnings release, including results for the fourth quarter and full year ended December 31, 2023 real expects to file in March 2024, audited consolidated financial statements and related notes for the period.

Ended December 31, 2023, and 2022 the related MD&A for the year ended December 31, 2023, and its annual information form for the year ended December 31, 2023 with the U S. SEC in its annual report on form 40 F on Edgar and with the Canadian Securities.

Ravi Jani: The related MD&A for the year ended December 31st, 2023 and its annual information form for the year ended December 31st, 2023 with the US SEC and its annual report on Form 40F on EDGAR and with the Canadian Securities Regulators on CDER. Before we get started, I'd like to remind everyone that statements made in this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements. Our actual results may differ materially from those forward-looking statements, and the risk factors that could cause these differences are detailed in our Canadian Continuous Disclosure Documents and SEC reports. Real disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. With that, I'd like to turn the call over to Chairman and Chief Executive Officer Tamir Poleg. Tamir, please proceed.

Regulators on Cedar.

Before we get started I'd like to remind everyone that statements made in this conference call that are not historical facts, including statements about future time periods may be deemed to constitute forward looking statements our actual.

Actual results may differ materially from those forward looking statements and the risk factors that could cause. These differences are detailed in our Canadian continuous disclosure documents and SEC reports.

Real disclaims any intent or obligation to update these forward looking statements, except as expressly required by law with that I'd like to turn the call over to chairman and Chief Executive Officer, Tim Your bullet Sameer. Please proceed.

Tamir Poleg: Good morning, and thank you, Ravi. I will start with an overview of our strategy and some recent business highlights. Sharran will provide an update on actions we are taking to drive agent growth and improve agent experience, and Michelle will provide a more in-depth discussion of our financial results for the quarter. I'll then provide a few closing remarks before opening up the call for Q&A.

Good morning, and thank you Robby I will start with an overview of our strategy and some recent business highlights <unk> will provide an update on the actions we are taking to drive agent growth and improve agent experience and Michelle will provide a more in depth discussion of our financial results in the quarter. I will then provide a few closing remarks before opening up the call.

For Q&A.

Tamir Poleg: To begin, Reel is a real estate technology company that is differentiated in our industry. Unlike traditional real estate brokerage firms, we provide real estate agents with an unmatched combination of financial incentives, a proprietary software-based technology platform, which eliminates the need for physical office space, and a collaborative culture we believe is unique in our industry. Our vision is to simplify life's most complex transaction, that is, the purchase or sale of a home, by providing agents with the tools, technology, and resources they need to grow both their businesses and as individuals, all while delivering a seamless experience for homebuyers and sellers. In the short term, this vision includes the rollout of our one real consumer-facing mobile app, which streamlines the client experience and enhances the attachment of our higher margin ancillary services.

To begin really the real estate technology company that is differentiated in our industry. Unlike traditional real estate brokerage firms, we provide real estate agents with an unmatched combination of financial incentives are proprietary software based technology platform, which eliminates the need for physical office space and the collaborative culture. We believe is unique and.

Our industry.

Our vision is to simplify life. Most complex transaction that is a purchase or sale of a home by providing agents with the tools technology and resources they need to grow both their businesses and as individuals all while delivering a seamless experience for homebuyers and sellers in the short term. This vision include zero.

Out of our one real consumer facing mobile App, which streamlines the client experience and enhances attachment of our higher margin ancillary services in the long term, we expect our platform to encompass a holistic ecosystem of financial technology products payments and investment planning tools, providing agents with an avenue to build.

Tamir Poleg: In the long term, we expect our platform to encompass a holistic ecosystem of financial technology products, payments, and investment planning tools, providing agents with an avenue to build generational wealth. Ultimately, as the platform matures, we believe homebuyers and sellers could also benefit from the breadth of our service offering. Our goal is to redefine the role of real estate brokerage in the lives of our agents and in the broader housing industry.

Generational wealth.

Ultimately as the platform matures, we believe home buyers and sellers could also benefit from the breadth of our service offerings.

Our goal is to redefine the role of real estate brokerage in the lives of our agents and in the broader housing industry.

Tamir Poleg: Importantly, just like our institutional investors, agents are owners of our business, and that is why everything we do is with the intent to grow long-term shareholder value. Turning to the quarter.

Importantly, just like our institutional investors agents are owners of our business and that is why everything we do is it would be intend to grow long term shareholder value.

Turning to the quarter.

Tamir Poleg: This morning, Real reported record fourth-quarter results, with revenue in the fourth quarter of 2023 increasing by 89% versus the prior year to $181 million, driven by an 82% increase in the number of transactions closed, combined with a 4% increase in average revenue per transaction. For the full year, revenue grew to a record $689 million, an increase of 81% versus $382 million in 2022, which compares favorably to the nearly 20% decline in existing home sales. We end December with 13,650 agents, up 66% versus the prior year and up 12% sequentially from the end of the third quarter of 2023. As Sharran will discuss, we're pleased that this momentum has continued and even accelerated so far in 2024. Adjusted EBITDA in the fourth quarter of 2023 was $8.5 million, or $2.3 million excluding the impact of non-recurring balance sheet adjustments that were recorded in the quarter.

This morning, we reported record fourth quarter results with revenue in the fourth quarter of 2023, increasing by 89% versus the prior year to 181 billion driven by an 82% increase in the number of transactions closed combined with a 4% increase in average revenue per transaction.

For the full year revenue grew to a record 689 million, an increase of 81% versus $382 million in 2022, which compares favorably to the nearly 20% decline in existing home sales.

We ended December with 13650 agents up 66% versus the prior year and up 12% sequentially from the end of the third quarter of 2023.

As Ron will discuss we're pleased that this momentum has continued and even accelerated so far in 2024.

Adjusted EBITDA in the fourth quarter of 2023 was $8 $5 million or $2 3 million, excluding the impact of nonrecurring balance sheet adjustment that was recorded in the quarter.

Tamir Poleg: This was a significant improvement from a negative $0.1 million of adjusted EBITDA in the fourth quarter of 2022 and marked our third straight quarter of positive adjusted EBITDA. The improvement versus the prior year reflects robust revenue and gross profit growth, which outpaced growth in our operating expenses, and demonstrates the scalability of our platform combined with the benefits of actions taken earlier in the year to improve margins and optimize discretionary spans. Full year 2023 adjusted EBITDA was $13.9 million, or $7.6 million, excluding the balance sheet adjustment, a significant improvement from the negative $700,000 in the full year 2022.

This was a significant improvement from a negative zero point $1 million of adjusted EBITDA in the fourth quarter of 2022 and marked our third straight quarter of positive adjusted EBITDA.

The improvement versus the prior year reflects robust revenue and gross profit growth, which outpaced growth in our operating expenses and demonstrates the scalability of our platform combined with the benefits of actions taken earlier in the year to improve margins and optimize discretionary spend.

Full year 2023, adjusted EBITDA was $13 $9 million or $7 $6 million, excluding the balance sheet adjustment.

An improvement from the negative $700000 in the full year 2022.

Tamir Poleg: As we look ahead to 2024, there is a clear sense of excitement within Real about the housing market's nascent recovery. This optimism is bolstered by the momentum we're seeing in our pipeline, highlighted by both the surge in new agents joining our platform and the significant uptick in open transaction volume. That said, the rate environment remains volatile and warrants close monitoring.

As we look ahead to 'twenty 'twenty four.

There is a clear sense of excitement within real about the housing market nascent recovery.

This optimism is bolstered by the momentum we're seeing in our pipeline highlighted by both the surging new agents, joining our platform and the significant uptick in open transaction volume.

That said the rate environment remains volatile and warrants close monitoring Nevertheless, although we are not providing explicit financial guidance for 2024 at this time I am confident in our ability to deliver another year of significant revenue and adjusted EBITDA growth, regardless of how the end market recovers.

Tamir Poleg: Nevertheless, although we are not providing explicit financial guidance for 2024 at this time, I am confident in our ability to deliver another year of significant revenue and adjusted EBITDA growth, regardless of how the end market recovers. Moreover, we remain enthusiastic about the outlook for our mortgage brokerage and title business line. We expect both businesses to grow at a pace faster than our core brokerage business in 2024, aided by the rollout of the OneReal Consumer Facing app, combined with growth initiatives we have undertaken to drive increased attachment of this high-margin ancillary service. We also remain on track for the Q2 2024 launch of our first fintech product, The Real Wallet, a digital debit and credit card platform specifically designed for real agents. As a reminder, the Real Wallet will enable agents to consolidate all commission income, revenue share payments, and equity earned through Real into one digital platform with the ability to access these funds through a Real-branded debit or credit card.

Moreover.

We remain enthusiastic about the outlook for our mortgage brokerage and title business lines.

We expect both businesses to grow at a pace faster than our core brokerage business in 'twenty to 'twenty four aided by the rollout of the one room consumer facing app combined with growth initiatives, we have undertaken to drive increased attachment of these high margin ancillary services.

We also remain on track for the Q2 2024 launch of our first Fintech product known as the real wallet digital debit and credit card platform, specifically designed for real agents.

As a reminder, the real wallet will enable agents to consolidate all commission income revenue share payments and equity earnings through real into one digital platform with the ability to access these funds through a real branded debit or credit card use.

Tamir Poleg: Utilizing the Real Card will allow agents to accumulate points that can then be applied towards reducing their brokerage and transaction fees, further enhancing the value proposition for agents who join our class. This innovation highlights our dedication to improving the Asian experience by providing unique tools and services that bolster their business operations and financial flexibility while positioning Reals squarely at the forefront of merging FinTech with real estate. With that, I'll turn it over to Sharran for an update on our growth initiatives. Thank you, Tamir.

Utilizing the real card will allow agents to accumulate points that can then be applied towards reducing their brokerage and transaction fees.

Further enhancing the value proposition for agents, who join our platform.

This innovation highlights our dedication to improving the agent experience by providing unique tools and services that bolster their business operations and financial flexibility, while positioning real squarely at the forefront of emerging fintech with real estate.

With that I'll turn it over to Sharon for an update on our growth initiatives.

Thank you Tim here.

Sharran Srivatsaa: In the fourth quarter, our agent count rose to a record of 13,650 agents, up 66% versus the fourth quarter of 2022. I'm thrilled that this momentum has accelerated since the start of the year, and today, Real now supports 16,000 agents across the U.S. and Canada. This surge in growth has been in part fueled by our recently announced Private Label and ProTeams programs, initiatives designed to make it easier for independent brokerages and team leaders to align with Real while maintaining their unique brands and compensation structure. The Private Label Program allows independent brokerages to leverage Real technology and a leading transaction management platform while maintaining their local brand identity, which often comes with a strong customer base and deep emotional attachment.

In the fourth quarter, our agent count rose to a record of 13650 agents up 66% versus the fourth quarter of 2022.

I'm thrilled that this momentum has accelerated since the start of the year and today, we'll now supports 16000 agents across the U S and Canada.

This surge in growth has been in part fueled by our recently announced private label and proteins programs initiatives designed to make it easier for independent brokerages and team leaders to align with real while maintaining their unique brands and compensation structures.

The private label program allows independent brokerages to leverage real technology, and leading transaction management platform, while maintaining their local brand identity, which often comes with a strong customer base and deep emotional attachment.

Sharran Srivatsaa: This initiative has already proven to be a game changer for brokerages like Global Red, enabling them to join Real without losing the brand equity they've worked so hard to build. Similarly, our pro teams program offers unprecedented flexibility for team leaders to customize financial models for their individual team members, ensuring that the structure that has fueled their success at other firms can continue under the Real umbrella. This level of customization and support represents a significant advancement in how we support the growth and profitability of our agents and teams. These programs, along with our continuous focus on agent-centric benefits, such as access to health care, revenue sharing, and the Real Retirement Program, highlight our dedication to not just growing our agent count but ensuring that each real agent has the support and resources that they need to succeed. We were often asked by investors. Why do agents choose real? And it's clear, there's no singular reason, but a combination that sets us apart.

This initiative has already proven to be a game changer for brokerages like global red enabling them to join real without losing the brand equity they've worked so hard to build.

Similarly, our proteins program offers unprecedented flexibility or team leaders to customize financial models or their individual team members ensuring that the structure that is fueled their success at other firms can continue under the real umbrella.

This level of customization and support represents a significant advancement in how we support the growth and profitability of our agents and teams.

These programs along with our continuous focus on agent centric benefits such as access to health care revenue sharing and the real retirement program highlight our dedication to not just growing our agent count, but ensuring that each real agent has the support and resources that they need to succeed.

We're often asked by investors why.

Why do agents choose real.

And it's clear there's no singular reason, but a combination that sets us apart.

Sharran Srivatsaa: First, our approach starts with freedom and flexibility. Recognizing agents are entrepreneurs who know their clients and businesses best, we empower them with the tools and autonomy to operate as they see fit.

Our approach starts with freedom and flexibility recognizing agents are entrepreneurs, who know their clients and businesses best.

We empower them with the tools and autonomy to operate as they see fit.

Sharran Srivatsaa: Financially, Real stands out with an extremely compelling economic model. Our agents enjoy industry-leading commission splits, a low annual cap, revenue sharing, and equity opportunities, making Real a platform for significant wealth generation. Many agents who join Real find themselves retaining substantially more of their commission dollars when compared to other brokers. The backbone of our advantage is our technology. Real is unique in the industry for our proprietary Reason software, used daily by our agents. This not only enhances efficiency but also ensures that we maintain full control over our operations and support services without relying on numerous disparate third-party Our work hard, be kind philosophy fosters a culture of collaboration over competition.

Financially real stands out with an extremely compelling economic model our agents enjoy industry, leading commission splits a low annual cap revenue sharing and equity opportunities, making real a platform where significant wealth generation.

Many agents, who joined real find themselves retaining substantially more of their commission dollars when compared to other brokerages.

The backbone of our advantage is our technology real is unique in the industry or our proprietary reason software used daily by our agents.

This not only enhances efficiency, but also ensures that we maintain full control over our operations and support services without relying on numerous disparate third party systems.

Culture is another important pillar of our identity.

Our work hard behind philosophy fostered a culture of collaboration over competition. Maintaining this culture is a responsibility that we do not take lightly and we will continue to nurture it in order to create a community that agents are so proud to be a part of.

Sharran Srivatsaa: Maintaining this culture is a responsibility that we do not take lightly, and we will continue to nurture it in order to create a community that agents are so proud to be a part of. Lastly, REAL represents a platform of opportunity. We are a forward-looking organization in a rapidly evolving industry where we are attracting agents who want to be at the forefront of change. The recent influx of top producers and teams from both cloud-based and traditional brokerages further validates our approach. As we look ahead, our focus remains on enhancing our offerings and continuing to build a community where our agents can thrive. I'm incredibly proud of what we've accomplished together and even more excited about the future. With that, I'll turn it over to Michelle. Thank you, Sharran.

Lastly, real represents a platform of opportunity we are a forward looking organization in a rapidly evolving industry, where we're attracting agents who want to be at the forefront of change.

The recent influx of top producers and teams from both cloud based and traditional brokerages further validates our approach.

As we look ahead, our focus remains on enhancing our offerings and continuing to build a community where our agents can thrive.

I'm incredibly proud of what we've accomplished together and even more excited about the future with that I'll turn it over to Michelle.

Michelle Ressler: And thank you everyone for joining us. Before diving into our results for the fourth quarter, I want to highlight the remarkable year-on-year performance across our business. We closed over 66,000 transactions in 2023, an increase of 78% from 2022, while the total value of transactions closed reached a new record of $25.9 billion, up 80% from 2022. These results would be impressive in any market, but are even more so when considering the nearly 20% decline in the existing home sales market in 2023.

Thank you Sharon and thank you everyone.

Are any of them.

Before diving into our results for the fourth quarter I want to highlight a remarkable year for me that's all of our business.

We closed over 66000 transactions in 'twenty right.

78.

22, while the total value of transaction costs reached a new record of $25 9 billion up 80%.

Yeah.

This result would be interested in any market, but even more so when considering the nearly 20% decline.

Home sales market in 2023.

Michelle Ressler: Full year 2023 revenue of $689 million increased 81% from $382 million in 2022, while gross profit of $63 million grew even faster, up 97% compared to $32 million in 2022. Importantly, growth and gross profit outpaced growth in our cash operating expenses and resulted in our first ever full year of positive annual adjusted EBITDA, which was $13.9 million for the full year 2023 and $7.6 million for the full year 2023, excluding the impact of a $6.2 million non-recurring balance sheet adjustment related to stock-based compensation expenses recorded within cost of goods sold. This marks a significant increase from the negative 700,000 adjusted in 2022. For the full year, we generated $19.9 million of cash flow from operations and allocated $2.9 million to share repurchases, including $1.1 million in the fourth quarter of 2023. As Tamir mentioned in his remarks, we're not providing formal guidance for 2024 at this time.

Full year 2023 revenue of 600.

89 million increased 81% 308 2 million in 2022.

While gross profit.

<unk> grew even faster at night.

87% compared to 32 million in 2020 two.

Importantly growth in gross profit outlook right.

Cash operating expenses and resulted in our first ever full year, a positive annual adjusted EBITDA, which was $13 9 million for the full year 2023.

$7 6 million or 2023, excluding the impact of the 6 million nonrecurring balance sheet adjustment related to stock based compensation expense recorded within cost of goods sold.

This marks a significant increase from the negative 700000, adjusted EBIDTA in 2022.

For the full year, we generated $19 9 million of cash flow from operation.

Allocated kimco 9 million share repurchase debt, including $1 1 million in the fourth quarter at 2023.

As Claire mentioned in his remarks, we're not providing formal guidance for 2024 at this time.

Michelle Ressler: However, given the strong growth in agent count throughout 2023 and thus far in 2024, we do expect to deliver continued year-over-year improvement in revenue, gross profit, and adjusted EBITDA in 2024. Moving on to the quarter. Revenue in the fourth quarter of 2023 rose to $181 million, an increase of 89% versus the fourth quarter of 2022. Growth was driven by an 89% increase in commission revenue, which benefited from an 82% increase in transaction closes and reached approximately $17,750 in the quarter, combined with a 4% increase in brokerage revenue per transaction. Recall our primary economic unit is an individual transaction as we recognize revenue at the time the transaction closes. Title and mortgage revenue totaled $900,000 in the fourth quarter of 2023, an increase of 86% versus the fourth quarter of 2022.

However, given the strong growth in agent count throughout 2023, and thus far in 2024, well deal with that could deliver continued year over year improvement in revenue gross profit and adjusted EBITA in 2024.

Moving on to the quarter.

Revenue in the fourth quarter of 2023, well $181 million, an increase of 89% versus the fourth quarter of 2022.

Growth was driven by an 89% increase in commission revenue, which benefited from an 82% increase in transaction close and reached approximately 17750 in the quarter.

With a 40% increase in brokerage revenue per transaction.

Recall, our primary economic unit is an individual transaction.

It's nice revenue at the time of the transaction quite a bit.

I know in mortgage revenue totaled 900000 in the fourth quarter of 2020 three.

The increase of 86% versus the fourth quarter of 2022 candidly.

Michelle Ressler: Given we close on the acquisition of one real mortgage in December 2022, the prior year fourth quarter only reflected a partial contribution from the acquisition. Gross profit in the fourth quarter of 2023 was $15.5 million, up 89% from $8.2 million in the fourth quarter of 2022. Growth margin of 8.6% was approximately flat in the fourth quarter of 2023 relative to the prior year and down slightly sequentially from 8.7% in the third quarter of 2023.

And then we closed on the acquisition of one real mortgage in December 2020 to the prior year fourth quarter only reflect a partial contribution from the acquisition.

Well that's profit in the fourth quarter of 'twenty to penetrate with $15 5 million up 89% to.

$2 million in the fourth quarter of 2022.

Margin of eight 6% was approximately flat in the fourth quarter of 2023 relative to the prior year.

And down slightly sequentially from eight 7% in the third quarter of 2023.

Michelle Ressler: As a reminder, our cost of goods sold includes stock-based compensation related to our agent stock purchase program. This program allows agents to receive a portion of their commissions in the form of real equity subject to certain vesting requirements. This amount is excluded from adjusted EBITDA as stock-based compensation.

As a reminder, our cost of goods sold include stock based compensation related to our stock purchase program.

Program allows agents to receive a portion of their clinicians in the form of real equity subject to certain vessel requirements.

This amount is excluded from adjusted EBIDTA in the stock based compensation line.

Michelle Ressler: While we had anticipated a modest sequential improvement in gross margin relative to the third quarter of 2023, we saw some margin pressure in the fourth quarter, primarily due to revenue mix. As commissioned revenue was much stronger than expected, a high cost problem, while revenue from our higher margin ancillary services line was lower. For the full year 2023, growth margin was 9.1%, an increase of 75 basis points versus 2022, reflecting both the benefit of actions taken to increase margins and a higher contribution from our ancillary business lines. While quarterly growth margins can fluctuate based on mix and natural seasonality in our business, we remain focused on continually driving year over year growth margin improvement, particularly as our higher-margin ancillary business lines continue to scale. Total operating expenses, which include general and administrative, marketing, and R&D, were $26.8 million, or 14.8% of revenue, in the fourth quarter of 2023. This reflects a roughly 100 basis point improvement from the fourth quarter of 2022. Notably, operating expenses this quarter include a $5.1 million out-of-period adjustment to stock-based compensation expense that was recorded in the fourth quarter.

While we had anticipated a modest sequential improvement in gross margin relative to the third quarter of 2023, we saw some margin pressure in the fourth quarter, primarily from revenue mix.

Commission revenue was much stronger than expected a high class problem, while revenue from our higher margin ancillary services line was lower.

For the full year 2023.

Margin was nine 1%.

It increased 75 basis points versus 2022 reflecting both the benefit of actions taken to increase margin.

And a higher contribution from our ancillary business Brian.

Sure.

Quarterly gross margin can fluctuate based on mix and natural seasonality in our business. We remain focused on continually driving year over year gross margin improvement, particularly other higher margin ancillary business lines.

No.

Total operating expenses, which include general and administrative marketing and R&D.

$26 8 million.

14, 8% of revenue in the fourth quarter at 2023.

This reflects the roughly 100 basis point improvement from the fourth quarter of 2022.

Notably operating expenses. This quarter included $5 1 million out of period adjustment and stock based compensation expense that was recorded in the fourth quarter.

Michelle Ressler: Excluding this catch-up, total operating expenses as a percent of revenue would have improved by approximately 400 basis points year over year, demonstrating the operating leverage in our platform. Revenue share expense was $6.8 million in the fourth quarter of 2023, up from $4 million in the prior year period, and improved as a percentage of sales to 3.8%, down 40 basis points from 4.2% in the prior year period. This cost is entirely variable and reflects real commission shares paid to agents for recruiting new agents to the brokerage. This cost is categorized as a marketing expense as our sponsorship structure aids in attracting and retaining new agents, while also enhancing productivity across our platforms. Adjusted operating expense, which reflects total operating expenses, less revenue share, stock-based compensation, depreciation, and other unique or non-cash items, totaled $11.2 million in the fourth quarter of 2023, or 6.2% of revenue, a roughly 180 basis point improvement from 8% in the prior year, further illustrating the scalability of our business model.

Excluding this catch up total operating expenses as a percentage of revenue would have improved by approximately 400 basis points year over year demonstrating.

Demonstrating the operating leverage in our platform.

Revenue share expense was $6 8 million in the fourth quarter of 2023.

So the $4 million in the prior year period, and improved as a percentage of sales the three 8% down 40 basis points from four 2% in the prior year period.

This caused a highly variable and reflects Royal Commission chair.

As for recruiting new agents to the brokerage Rev.

Ishares categorized all the marketing.

Our sponsorship structure AIDS in attracting and retaining new agents.

While also enhancing productivity across our platform.

Adjusted operating expense, which reflects total operating expenses less revenue share.

Based compensation depreciation and other unique or noncash items totaled $11 2 million in the fourth quarter of 2023 or six 2% of revenue.

180 basis point improvement from 8% in the prior year further illustrating the scalability of our business model.

Michelle Ressler: Adjusted operating expenses and metrics are provided in our press release to help investors better understand the composition of our non-variable ongoing fixed cash operating expenses. Real's net loss was $12 million in the fourth quarter of 2023, compared to a loss of $6.8 million in the fourth quarter of 2022. Adjusted EBITDA was $8.5 million in the quarter. However, this amount reflects the non-repairing balance sheet adjustment described earlier.

Adjusted operating expenses of metrics provided in our press release to help investors better understand the composition of our non variable ongoing fixed cash operating expenses.

Well its net loss was $12 million in the fourth quarter of 2023 compared to a loss of $6 8 million in the fourth quarter of 2022.

Adjusted EBIDTA was eight 5 million in the quarter. However, does not look like the nonrecurring balance should the government described earlier.

Michelle Ressler: Excluding the impact of this adjustment, adjusted EBITDA improved to $2.3 million in the fourth quarter of 2023, a significant improvement from the negative $100,000 in the fourth quarter of 2022. The increase was driven by higher revenue and growth profit, which outpaced growth in our cash operating expenses. Turning to our balance sheet and cash flow, we ended the year with unrestricted cash and investments of approximately $29 million, an increase of $10.2 million from the end of 2022. Our cash balance consists of $14.7 million of unrestricted cash and $14.2 million in short-term investments.

Excluding the impact of this adjustment adjusted EBITA improved so to your point $3 million in the fourth quarter of 2023.

Michigan improvement from the negative 100000 in the fourth quarter of 2022.

Increase was driven by higher revenue and gross profit, which outpaced growth in our cash operating expenses.

Turning to our balance sheet and cash flow.

We ended the year with unrestricted cash and investments of approximately $29 million, an increase of $10 2 million from the end of 2022.

Our cash balance consist of $14 7 million of unrestricted cash and $14 2 million and short term investments.

Michelle Ressler: We remain well capitalized and believe we have ample liquidity to fund our continued growth while continuing to return capital to shareholders. We will remain opportunistic with respect to M&A with a focus on maximizing long-term shareholder value. To close, I'll recap a few KPIs you're commonly asked about. The total value of homes transacted over our platforms increased to $6.8 billion in the fourth quarter of 2023, a 92% year-over-year increase. The median sale price of properties sold by our agents was $355,000 in the fourth quarter of 2023, which represents a 2% increase compared to the fourth quarter of 2022. Total operating expense per transaction, excluding revenue share, was $1,124 in the fourth quarter of 2023, a 2% year over year improvement.

We remain well capitalized and believe we have ample liquidity to fund our continued growth while continuing to return capital to shareholders.

We will remain opportunistic with M&A with a focus on maximizing long term shareholder value.

To close I'll recap a few kpis are commonly asked about.

The total value of homes and backlog over our platform increased to $6 8 billion in the fourth quarter of 2023.

92% year over year increase.

The median sales price of properties sold by our agent was 355000 in the fourth quarter of 2023.

It represents a 10% increase compared to the fourth quarter of 2022.

Total operating spend per transaction, excluding revenue share with 1124 in the fourth quarter of 2023, 2% year over year improvement. However, adjusted operating expense per transaction of 632 in the fourth quarter of 2023 improved by 20% compared to the fourth.

Michelle Ressler: However, adjusted operating expense per transaction of $632 in the fourth quarter of 2023 improved by 20% compared to the fourth quarter of 2022, a testament to the efficiencies enabled by our technology platform. Additionally, as of the end of the fourth quarter of 2023, 10% of agents had exceeded their annual commission cap, up from 9% during the fourth quarter of 2022. This cohort represented approximately 43% of commission revenue during the quarter. Canada accounted for 18% of commission revenue in the fourth quarter of 2023 compared to 14% in the fourth quarter of 2022. Our headcount efficiency ratio, which we define as full-time employees excluding real title and one real mortgage employees divided by the number of agents that are on our platform, was 1 to 116 at the end of the fourth quarter.

Quarter of 2022.

Testament to the efficiency is enabled by our technology platform.

As at the end of the fourth quarter of 2023, 10% of agents that exceeded their annual commission cap up from 9% during the fourth quarter of 2022. This cohort representing approximately 43% of commission revenue during the quarter.

Canada tells it for 18% of commission revenue in the fourth quarter of 2023 compared to 14% in the fourth quarter of 2022.

Our head count efficiency ratio, which we define as full time employees, excluding real title and one real mortgage employees.

Divided by the number of agents that are on our platform was one to 116 at the end of the fourth quarter as compared to $1 98 at the end of the fourth quarter of 2022.

Tamir Poleg: This compares to 1 to 98 at the end of the fourth quarter of 2022. This concludes my financial remarks. More details on our results and key operating metrics can be found in the earnings press release and investor presentations that accompany this call. I will now turn it back to Tamir.

This concludes my financial remarks, more details on our results and key operating metrics can be found in the earnings press release and Investor presentation that accompany this call I will now turn it back to Tamara.

Tamir Poleg: Thank you, Michelle. Reflecting on the entirety of 2023, it's clear that Real has not only navigated but excelled in what has been an extremely challenging market environment, one in which the market for existing home sales declined by nearly 20%. Our success is a powerful endorsement of our differentiated business model, the unparalleled value we offer to our agents, the cutting-edge technology that underpins our operations, and, most importantly, the collaborative culture we've nurtured since our inception. These pillars have not only sustained us but have propelled us forward, even when the industry at large faces headwinds. Before going to Q&A, I want to take a moment to talk about our proprietary software-based technology platform known as Reason. Technology is a common buzzword in our industry, but I believe what distinguishes Reason from other platforms is its universal adoption across our agent base.

Thank you Michelle.

Reflecting on the entirety of 2023, it's clear that really has not only navigated, but excel in what has been an extremely challenging market environment, one in which the market for existing home sales declined by nearly 20%.

Our success is a powerful endorsement of our differentiated business model the unparalleled value we offer through our agents the cutting edge technology that underpins our operations and most importantly, the collaborative culture, we've nurtured since our inception. These pillars have not only sustained us both have.

Repelled us forward, even when the industry at large faces headwinds.

Before going to Q&A I want to take a moment to talk about our proprietary software based technology platform known as reason.

Now technology is a common buzzword in our industry, but I believe what distinguishes reason from other platforms is its universal adoption across our agent base.

Tamir Poleg: Unlike other brokerages, where maybe 10% or 20% of agents use the in-house technology offering, at Real, every agent leverages Reason. This 100% utilization rate reflects our philosophy that technology should be integral to a brokerage, not optional. The power of reason lies in its ability to leverage software to automate what are traditionally human-intensive processes on the back end of a real estate transaction, enabling us to close a transaction in minutes, something that could take hours, if not days, at traditional brokerage.

Like other brokerages, where may be 10% or 20% of agents use the in house technology offering at real every agent Leverages reason this 100% utilization rate reflects our philosophy that technology should be integral to our brokerage not optional.

The power of reason lies in its ability to leverage software to automate what are traditionally human intensive processes on the back end of a real estate transaction, enabling us to close the transaction in minutes something that could take hours if not days of traditional brokerages.

Tamir Poleg: This automation allows agents to spend less time on paperwork and administrative tasks and more time on what they do best, selling real estate. Meanwhile, the benefits to Real are evident in the fact that our transaction processing team headcount has remained flat at just nine employees for the past two years, while our annual transaction count has effectively quadrupled from 17,000 in 2021 to over 66,000 in 2023. Importantly, Reason isn't just transaction management. It's a comprehensive real estate agent operating system, a hub for accessing marketing tools, training materials, collaborating with other agents, as well as managing day-to-day brokerage operations.

This automation allows agents to spend less time on paperwork and administrative tasks and more time on what they do best selling real estate.

Meanwhile, the benefits to real are evident in the fact that our transaction processing team head count has remained flat at just nine please for the past two years, while our annual transaction count has effectively quadrupled from 17000 in 2021 to over 66000 in 2023.

Importantly, <unk>.

The reason isn't just transaction management tool is.

It's a comprehensive real estate agent operating system, a hub for accessing marketing tools training materials collaborating with other agents as well as managing day to day brokerage operations.

Tamir Poleg: With the real wallet on the horizon, Reason will evolve even further into a wealth-building fintech platform, something that is truly unprecedented in real estate. With all of our transaction data housed on one single system, our in-house AI assistant, Leo, becomes smarter with every transaction, anticipating steps that must be taken, recommending appropriate actions, and extracting the key data insights to help agents run their businesses more efficiently. With Leo, we believe Really is one of, if not the only, major real estate brokerage utilizing AI to improve transaction efficiencies, and we are still just scratching the surface of its potential.

With the real wallet on the Horizon reason will evolve even further into our wealth building fintech platform something that is truly unprecedented in the real estate space.

With all of our transaction data.

On one single system, our in house AI assistant Leo becomes smarter with every transaction anticipating steps that must be taken recommending appropriate actions and extracting the key data insights to help agents run their businesses more efficiently.

With Leo we believe really is one of if not the only major real estate brokerage utilizing AI to improve transaction efficiencies and we are still just scratching the surface of its potential.

Operator: With that, I want to express my deepest gratitude to our agents, employees, and industry partners who have supported Real both in 2023 and throughout our journey. Your unwavering commitment and belief in our vision have been instrumental and continue to be the cornerstone of our success. Now let's move to the Q&A session. Everyone at this time will be conducting a question and answer session for analysts. If you have a question or comment, please press star 1 on your phone at this time. Do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality.

With that.

I want to express my deepest gratitude to our agents employees and industry partners, who have supported really both in 2023 and throughout our journey your unwavering commitment and belief in our vision has been instrumental and continue to be the cornerstone of our systems now, let's move to the Q&A session.

Certainly everyone. At this time, we'll be conducting a question and answer session for analysts. If you have any question or comment. Please press star one on your phone at this time we.

We do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Operator: Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Darren Aftahi from Roth MKM. Your line is live. Hi, guys. Good morning.

Once again, if you have any questions or comments. Please press star one on your phone.

Your first question is coming from Darren <unk> from Roth M. K M. Your line is live.

Hi, guys. Good morning, Thanks for taking my questions and nice job on that.

Darren Paul Aftahi: Thanks for taking my questions. Nice job on the results. Tamir, I think you mentioned in your prepared remarks a comment about acceleration of agents into 24. And I'm curious if you could kind of dovetail those comments next to the launch of pro teams and private label and how much of an impact that initiative is kind of having on that acceleration. Hi, Darren, thank you.

Sameer I think you've mentioned.

In your prepared remarks.

Comment about acceleration of agents into 'twenty, four and I'm curious if you could.

Kind of dovetail those comments are next to the launch of proteins in private label and how much of an impact that initiative is kind of adding on that that acceleration.

Yeah.

Hi, there and thank you yeah, we have shelter and acceleration since the beginning of the year. So we added more than 1000 agents in January more than a thousand agents in February.

Tamir Poleg: Yeah, we have felt an acceleration since the beginning of the year. So we added more than a thousand agents in January and more than a thousand agents in February. We expect to onboard more than a thousand agents in March, and we have about 2,000 agents who have signed ICAs but have not been onboarded yet. So we have a strong pipeline of agents waiting to join. I think that the pro teams and private label discussions are probably still not fully reflected in growth yet. So those are discussions that we started towards the end of 2023 and the beginning of 2024. Those are large teams and independent brokerages that do not make the switch overnight. We do have a very strong pipeline of candidates for pro teams and private labels that are looking to join in the next few months. So I think that despite the fact that growth has been extremely strong, it might be even stronger when the full effect of proteins and private label kicks in over the next few weeks. Great. Another one, if I may.

We expected onboarding more than 1000 agents in March and we have about 2000 agents, who signed ica's, but not onboard yet. So we have a strong pipeline of Egypt waiting to join I think that the proteins and private label discussion.

Are probably still not fully reflected in the gross yet. So those are discussions that we started towards the end of 2023 and the beginning of 'twenty 'twenty four those are large teams and independent brokerages that do not make the switch overnight you have a very strong pipeline of candidates to proteins in the private labels that are looking to join them in next few months.

So I think that despite of the fact that the growth has been extremely strong.

It might be even stronger when the full effect of proteins and private label that kicks in over the next few weeks.

Great.

Another one if I may.

Tamir Poleg: Could you maybe list out your top two or three strategic priorities for the team in 2004, maybe not financial per se, but just to see where we stand. Sure. I would say three main things. One is continuing to improve efficiency; this has been a focus of the company since we actually started. Our ability to process transactions very efficiently, quickly, and without any human labor involved is key for us, and we continue to evolve and improve on that. Second, obviously, growth. We expect to bring a large number of agents on board this year, and that puts a lot of pressure on our onboarding team and overall operation and support team. The third pillar is the real wallet.

Could you maybe list out.

Your top two or three strategic priorities.

<unk>.

In 2000 and for maybe not financial per Se, but just received priority.

Sure.

I would say three main things one continuing to four one continuing to improve efficiency. This has been a focus of the company since we actually started.

Our ability to process transactions very efficiently quickly and without any human labor involved is key for us and we continue to to evolving and.

An improvement that second obviously growth, we expect to bring on.

A large number of agents on board this year and that puts a lot of pressure on our onboarding team and.

And overall operations and support team.

The real wallet, there was a lot of excitement internally around the wallet and how the world can evolve. So obviously, we are starting also testing within a couple of weeks with a small.

Tamir Poleg: There's a lot of excitement internally around the wallet and how the wallet can evolve. So obviously, we are starting alpha testing within a couple of weeks with a small group of agents, and then we will roll it out to the entire agent population. So that's a huge focus for the company. And obviously, the consumer-facing app, the Onewheel app, which we are now building the building blocks in the background. We're also kind of back to the drawing board when it comes to the user interface and just planning the additional steps and evolution of the Onewheel app. So all of those four would be the main focus for 2020. Great, if I could just sneak one last one in. Your comments about reason, I'm curious, would you ever license that technology? Or is that something you'd want to keep in your house?

Group of agents and then we will roll it out to the entire Asian population. So that's a huge focus for the company and obviously the consumer facing got the one real App, which now we are building the building blocks in the background. We're also.

Kind of back to the drawing board when it comes to the user interface.

Just planning to be additional steps.

Steps in the evolution of the one we were up so all of those four would be the main focus for 'twenty going forward.

Great if I could just sneak one last one.

Comments about reason I'm curious.

Would you ever license out that technology or is that something you'd want to keep in house.

Tamir Poleg: This is something that we would want to keep in-house. This is a huge competitive advantage that we have built and continue to build. I think that if you think about potential M&As, if in the past, you have seen brokerages acquiring tech companies in order to maybe integrate their technology within their operation, I think that with Reason, we can actually flip that picture.

This is something that we would want to keep in house. This is a huge competitive advantage that we have built and continue to build I think that if you think about potential M&A in the past.

Hum.

You had seen brokerages acquiring tech companies in order to maybe integrate there.

Apologies within their operation I think that we've reason, we can actually flip that picture. So as a tech company that has built a very robust operating system for our brokerage operating system for agent businesses, but can you can instill.

Tamir Poleg: So as a tech company that has built a very robust operating system for a brokerage and an operating system for agent businesses that can instill efficiency, both in our operation and in the agent's operation, and also monetize transactions in a better way, I think that that allows us to leverage that technology in order to potentially acquire transactions. And when I say acquire transactions, I mean acquiring other brokerages in order to leverage their transactions and leverage our technology in their operation. Great. Thank you. I appreciate it.

Efficiency, both in the operation and the agents operation and also monetize transactions in a better way I think that that allows us to leverage that technology in order to potentially acquire transactions and when I say acquire transaction.

The actions I mean, acquiring other brokerages in order to.

To leverage their transactions and.

And leverage our technology in their operation.

Great. Thank you I appreciate it.

Darren Paul Aftahi: Thank you. Your next question is coming from Stephen Sheldon on behalf of William Blair. Your line is live.

Thank you. Your next question is coming from Stephen Sheldon from William Blair. Your line is live.

Operator: Hey, thanks for taking my questions and a great job all around here. First one, just generally wanted to ask how much visibility you have into the agent recruiting pipeline you have. And how do you monitor or track the recruiting efforts of your existing team, agents, and teams, I guess, to bring others in? It sounds like you have maybe some more visibility given these new initiatives that are bringing over bigger teams, but do you also get visibility into smaller, smaller, maybe agent teams that are working to add an agent or two? We just love any detail on the visibility you get.

Hey, Thanks for taking my questions and great job all around here.

First one just generally wanted to ask how much visibility you have into the agent recruiting pipeline and then how do you monitor or track the recruiting efforts of your existing agents and teams I guess to bring others to reel. It sounds like you have maybe some more visibility given some of these new initiatives that are bringing over a bigger teams, but do you also get visibility.

City into.

Yeah smaller smaller maybe agent teams that are working to add an agent or two we'd just love any detail on the visibility you get.

Stephen Hardy Sheldon: Sure. Thanks, Stephen. So yeah, as you distinguish between large teams and maybe solo agents or small teams, this is probably the same for us. We don't have a CRM that organizes the data from all of the agents. I think that at this point, growth, especially when we're talking about fellow agents, is pretty predictable for us, just because we can look at patterns, we can look at seasonality, we can quite accurately estimate what the number of fellow agents or small teams that will be joining us. I think that what we're seeing is that more and more large teams are joining independent brokerages. So, for example, last year, a team or a brokerage of 100, 150 agents would have been a large team for us to onboard.

Sure. Thanks Steven.

So yes.

Distinguished between large teams and maybe solo agents.

Hello agents or smoking this.

This is probably the same for US we don't have a CRM that are organized that the data from all of the agents.

But at this point gross especially when we're talking about fellow agents is pretty predictable Russ just because we can look at patterns. We can look at seasonality, we can quite accurately.

Estimate what would be the number of fellow agents with small teams that will be joining us I think that.

What we're seeing is that more and more large teams are joining them independent brokerages. So for example last year a team or a brokerage of 100 to 150 agents would be a large gene for us to onboard right now we're talking to teams and brokerages of 456 700 agents.

Stephen Hardy Sheldon: Right now, we're talking to teams and brokerages of four, five, six, and 700 agents. So obviously, in those discussions, we're very active. We track the pipeline, but I think that, again, on the solo agents, it's pretty predictable without us having any visibility into what's happening. On the large teams and independent brokerages, we do have full visibility. Got it. Yeah, that's really helpful. Just follow up.

So obviously in those discussions were very active we chocolate pipeline, but.

Again on the solo agents, it's pretty predictable without us having any visibility into what's happening on the large teams and independent broker dealers, we do have full visibility.

Got it that's very helpful.

As a follow up just curious how the one real consumer out build out is going relative to what you would've expected.

Tamir Poleg: Just curious how the one real consumer app build out is going relative to what you would have expected. When do you think it could start to have an impact on attach rates for ancillary solutions like mortgage and, down the road, but eventually title? What are some of the important milestones that we should be thinking about? Sure. So obviously, we're putting a lot of focus on the OneReal app. The challenge there is that nobody has tried it before.

When do you think it could start to have an impact on attach rates for our.

Ancillary solutions like mortgage and kind of down the road, but eventually title.

What are some of the important milestones that we should be thinking about.

Sure. So obviously, we're putting a lot of focus on the one we lapped the challenge. There is just nobody has tried it before so we are doing everything from scratch, we're designing everything plus from scratch or we're building all of the internal building blocks all of the integration between title mortgage and brokerage those things take time I think that on the back.

Tamir Poleg: So we are doing everything from scratch. We're designing it from scratch. We're building all of the internal building blocks, all of the integration between title, mortgage, and brokerage. Those things take time. I think that on the back end, we're making good progress. On the front end, which is the user interface, we have not released a new version of the app just because, as I said before, we are somewhat back to the drawing board and trying to design the additional... Building Blocks of the Consumer or the User Interface, so home search, collaboration with the agent, paperwork, all of those things. I expect that process to complete in about. 8 weeks, I would say.

And we're doing.

Good progress on the front end, which is the user interface.

We have not released the new version of the App, just because as I said before we are somewhat back to the drawing board and try to design the additional.

Building blocks of the consumer or the user interface, so home search glove collaborations with the agent paper.

Paperwork.

All of those things.

Expect that process to completing about.

Eight weeks I would say I think we will see more progress on the one we lap in the second half of the year when it comes to attaching ancillary services.

Tamir Poleg: I think we will see more progress on the one we left in the second half of the year when it comes to attaching ancillary services. This year, both title and mortgage will grow, and their growth will outpace the growth of brokerage. So I expect those two companies to grow at a minimum of 200% year over year. And I can tell you that mortgage lending had its best month ever in February. So this is a good sign, because February is typically a very slow month for real estate.

This year, both island mortgage will grow well their growth will outpace the growth of our brokerage. So I expect those two companies to grow at a minimum of 200% year over year I can tell you that mortgage has had the best month ever in February. So this is a good sign February is typically a very.

Slow months for for real estate. So we are seeing attach rates.

Tamir Poleg: So we are seeing the tax rate going in a very positive and promising direction. On top of that, we have some of our biggest teams already committing to using real titles. So we will probably see the effect of that starting in Q2 and then for the remainder of the year. But, as we said before, we are very bullish on those two businesses. And I think that in 2024, their impact on our finances will become much more significant. Great to hear. I appreciate the detail.

Sure.

Going into very positive and promising.

Direction on top of that we have some of our biggest teams already commit committing to using real title. So we will probably see the effect of that starting in Q2, and then for the remainder of the year, but as I.

<unk> said before we are very bullish on those two businesses and I think that the 'twenty 'twenty four their impact on our financials will become much more significant.

Great to hear I appreciate the detail. Thanks.

Stephen Hardy Sheldon: Thank you. Your next question is coming from Matthew Erdner from Jones. Your line is live. Good morning, guys.

Thank you. Your next question is coming from Matthew Earner from Jones trading your line is live.

Operator: Thanks for taking the questions. Could you talk about the commission splits that you guys are seeing with your agents and how the recent suits have had kind of an effect on those operations? Hi Matt, thanks.

Hey, good morning, guys. Thanks for taking the questions could you talk about the commission splits you guys are seeing with your agents and how the recent suits have had kind of an effect on those operations.

I'm not thanks.

Matthew Erdner: It's interesting because we've been trying to monitor and look at some patterns in the market. I can say that we have not seen any change thus far. So we actually have seen a little bit of a decline in commission rates in Canada, which was surprising because it has nothing to do with the antitrust lawsuits. But in the US, it's business as usual when it comes to commission rates. So we're not seeing that pressure.

It's interesting because we we've been trying to monitor and look at some patterns in the market.

I can say that we have not seen any change thus far so we actually have seen a little bit of a decline in commission rates in Canada, which was surprising because it has nothing to do with the antitrust lawsuit, but in the U S.

For our agent business as usual when it comes to commissioning. So we're not we're not seeing that pressure also reports from our agents suggest that they're not feeling that pressure from their clients maybe.

Tamir Poleg: Also, reports from our agents suggest that they're not feeling that pressure from their clients. Maybe yet, maybe it wouldn't come at all, but it's still not being felt in the business or by the agency. Yeah, that's good to know. And then it turns into the real wallet.

Maybe yes, maybe it.

It wouldn't come at all but it's still not.

Being felt in the business got whereby the agent.

Yes, that's good to know and then turning to the real world.

Matthew Erdner: When do you expect this to kind of be fully scaled? What impact is this going to have on your guys' margins overall as a whole? And then could you talk a little bit about the banking partners behind it? Could you repeat the first half of the question, please? When do you expect the real wallet to kind of be fully scaled adoption rate? You know, what's the impact on the margins going to be, you know, when you do get it fully scaled?

When do you expect this to kind of be fully scaled.

What impact is this going to have on your guys' margins overall as a whole and then could you talk a little bit about the banking partners behind it.

Could you repeat the first half of the question. Please.

When do you expect a real wallet to kind of be fully scaled up adoption rate.

You know, what's the impact on the margins you're going to be you know when you do get it fully scaled and then our banking partners as well.

Tamir Poleg: And then the banking partners as well. Sure. So the banking partner, the banking as a service partner we work with is a company called UNIT. They have banks that they work with, which are kind of behind the scenes.

Sure.

So the banking partner the banking as a service partner, we work with a company called units they have banks that they work with which are kind of behind the scenes. We are going to grow somewhat slow with the war with as I said, we're starting alpha testing within a couple of weeks and then we will roll it out to more and more agents. The question is not how.

Tamir Poleg: We are going to go somewhat slow with the wallet. As I said, we're starting alpha testing within a couple of weeks, and then we will roll it out to more and more agents. The question is not how many agents will use it; it's how much credit we feel comfortable giving to our agents. So, at the beginning, we will be ultra-conservative with our underwriting. And then, as we get more and more experience with the wallet, and you know, patterns around that, we can offer more credit to the agent. So I think that that will evolve over time. I think that 2024 is going to be somewhat of a, Tamir Poleg, Sharran Srivatsaa, Real Brokerage, David Marsh, Thomas White, Wyatt Swanson, Unknown. I think that on a gross margin basis, the wallet can have an impact of 1 to 2%. Yeah, that's good to know.

Many agents will use it as how much credit do we feel comfortable giving to our agents. So at the beginning here, we will be ultra conservative with our underwriting and then as we get more and more experience with the wallet.

And you know.

Patterns around that we can offer more credit to the agents, so I think that probably.

That will evolve over time I think that.

'twenty 'twenty four is going to be somewhat of a.

Tier four for the wall, even though it will have a positive effect on our financials.

In 2020 for.

Long term I think.

It's a little bit early to predict because the wallet can evolve in so many different directions and it can go even into into the consumer realm as well, so offering well if related products to our agents clients.

On a gross margin basis, the wallet can have and in the 1% to 2%.

Hmm.

In total gross margin.

Matthew Erdner: And then as a follow-up to that, you know, as you kind of get this thing off the ground, are there any front-loaded expenses that you guys are expecting to incur or, you know, just expenses going forward that we should kind of put into the model for the wallet? Uh, The only expenses right now are development related, and I mean, it's part of our development budget. We have, we started working on it in 2023, and we'll continue to work on it in 2024. I don't think there are any outstanding or extraordinary expenses related to the wallet that you should factor in as part of the model.

Yes, that's good to note and then as a follow up to that you know as you kind of get this thing off the ground are there any frontloaded expenses that you guys are expecting to incur or you know just expenses going forward that we should kind of put into the model for the wallet.

The only expenses right now our Dev related and.

And it's part of the budget, we have we started working on it in 2023, and we will continue to work on in 2024, a I don't think there are any outstanding or extraordinary expenses related to the wallet that you should Uh huh.

Tamir Poleg: Awesome. Thank you guys. Thank you. Thank you. Your next question is coming from Soham Bansal from BTIG. Your line is live. Good morning, everyone. Hope you're all doing well.

Factoring in the model.

Awesome. Thank you guys.

Okay. Thank.

Thank you. Your next question is coming from so Hama Bunzl from B T. I G. Your line is live.

Hey, good morning, everyone hope, you're all doing well.

Operator: Tamir, I guess just stepping back for a second, you know, historically, the brokerage business has been called, you know, high single digit, sort of 10% EBITDA margin business. Now, obviously, your margin profile is going to be a little different given your business model. But, you know, as you sort of put together some of the innovative things that you're doing on the fintech side, and then just that mortgage and title attach, you know, how should we think about sort of normalized margins, right in the normal market, right, call it 5 million existing home sales, long term? Unknown Attendee, I think that if you factor in the wallet, title, mortgage, and some additional services that we will be adding later on, we're looking at gross margins in the mid-teens, which I think we will get to within a couple of years, high single-digit, I would say.

To me or I guess, just stepping back for a second you know historically the brokerage business has been call. It you know high single digit sort of 10% EBITDA margin business now obviously your margin profile is gonna be a little different given your business model, but you know as you sort of put together some of the innovative things that youre doing on the Fintech side and then just that.

Mortgage entitled ancillary attach.

How should we think about sort of normalized margins right in in in normal market rate call. It 5 million existing home sales long term.

I think that if you factor in the wallet title mortgage and some additional services that we will be adding later on we're looking at gross margins in the mid teens.

Which I think we will get to within a couple of years and.

EBITDA margins of.

You know high single digit I would say that's our target.

Soham Bansal: That's our target. We got it. Okay. And the second one, you talked a lot about sort of productivity on the operations side, which I think is certainly unique, but, you know, I wanted to ask you about the sort of levers that you have to pull to improve productivity on the agent side, right? Because I think we can all debate what happens to agent count long term, but as long as you can sort of keep your agents productive and keep taking share that way, that feels more sustainable to me. So can you just talk about that piece for a little bit?

Got it okay and the second one you know you talked a lot about sort of productivity on the operation side, which I think is certainly unique but you know I wanted to ask you about sort of levers that you have to pull to improve productivity on the agent side right. Because I think we can all debate what happens to agent count long term, but as long as you can sort.

Keep keep.

Keep your agents productive and keep taking share that way that that feels more sustainable to me. So can you just talk about that piece a little bit. Thanks.

Tamir Poleg: Thanks. Sure, it's probably a combination of both technology and human human initiatives. So on the technology side, I think that the technology that we're building that allows agents more visibility into their businesses and just streamlines a lot of processes just saves a lot of time, which, which kind of opens up the opportunity to serve more clients at the end of the day. So they can handle more transactions in a given day or month versus before joining real. So that's the technology piece of it. The human piece of it.

Sure, it's probably a combination of both technology and human.

Human initiatives. So on the technology side, I think that the technology that we're building.

That allows the agents more visibility into their business isn't just streamlined a lot of processes, just saves up a lot of time, which which kind of opens up the opportunity of serving more clients at the end of the day. So they can they can handle more transactions in a given day or month versus before joining real so that's what's called your piece of it.

The human piece of it we're.

Tamir Poleg: We're taking a lot of action towards educating our agents both on the listing side and on the buy side. Just with kind of very tactical information on how to source leads, how to generate and source leads, how to nurture leads, how to do weekly tasks, weekly emails, deal of the week. Sharran is doing a lot of work around educating the agents on how to improve their productivity. And the last piece of it, I think that because of the very collaborative community that we built, there is so much happening on a daily basis, both online and offline, that successful agents are just educating newly licensed agents or agents that are now closing three transactions a year and want to take their business to the next level, which is six transactions a year. There's a lot of collaboration and sharing of information. And I think that this is extremely unique and can help a lot of agents and can overall improve the pro-agent productivity within the company. Thanks for the thoughts and ideas.

Taking a lot of action towards educating our agents both on the listing side and on the buy side.

Just kind of.

Very tactical information on how to source leads how can you how do you generate in sourced leads how to nurture leads.

How to do weekly tasks weekly emails a deal of the week Sharon He's doing a lot of work around.

Educating the agents on how to improve their productivity and the last piece of it I think that because of the very collaborative community that we built there is so much happening on a daily basis, both online and offline that successful agents are just.

Educating newly licensed agents or agents that are now closing three transactions a year and wanted to take their business to the next level, which is six transactions a year, there's a lot of collaboration and and.

Sharing of information and I think that this is extremely unique and that's going to help a lot of agents and overall improve the Parisian productivity within the company.

Got it thanks for the thoughts.

Soham Bansal: Thank you. Once again, for our analysts, if you have any questions or comments, please press star, then 1 on your phone. The next question is coming from Tom White from D.A. Your line is live. Hey, this is Wyatt Swanson on behalf of Tom.

Okay.

Thank you once again for our analyst if you have any questions or comments. Please press Star then one on your phone. Your next question is coming from Tom White from D. A Davidson your line is live.

Hey, this is why it's once in on for Tom Thanks for taking our questions.

Operator: Thanks for taking our questions. It seems like you guys have had some really nice momentum with high productivity teams joining Real since the start of the year. Could you talk a bit about how the agent recruiting or agent attraction landscape may have changed for you guys in recent months? And then, you know, any specific parts of the overall Real Brokerage value proposition for agents that you're finding are really starting to resonate more with agents at the moment? Thanks. Hi Wyatt.

It seems like you guys have had some really nice momentum with high productivity teams joining real since the start of the year.

Could you talk a bit about how the agent recruiting or agent attraction landscape may have changed for you guys. In recent months and then you know any specific parts of the overall real brokerage value prop for agents that you're finding are really starting to resonate more with agents at the moment. Thanks.

Highway so yes the momentum.

Thomas Cauthorn White: So yes, the momentum has, Transcripts provided by Transcription Outsourcing, LLC. I think that maybe what fuels that is the fact that we are becoming a household name, first of all. I think it also has a human component, whereas some high-producing teams in different areas are joining us, and then a lot of other agents within the area are asking themselves, okay, why did that team join Real? Maybe we should look into it.

It has accelerated for us and and I think that now this momentum is there.

Starting to translate into the transaction so our pipeline of open transaction.

It's about 100, almost 100% higher than it was at the same day.

Last year. So this is translating into revenue.

I think that.

Maybe what skews that is the fact that we are becoming a household name for first of all I think it also has the human component whereas.

Some high producing teams in different areas are joining us and then a lot of other agents within the area are asking themselves. Okay. Why did that team joined real maybe we should look into it I think that the the model itself is so sticky and the fact that every agent that joins US is an opportunity to add another 234 or five other.

Tamir Poleg: I think that the model itself is so sticky, and the fact that every agent that joins us is an opportunity to add another two, three, four, other agents just because of the revenue share creates a snowball effect. To feel the effect of that snowball effect, which is, which is great when I think about some of the initiatives that really excite those agents and teams that are now joining us. First of all, private label and pro teams are huge. So just as a reminder, private label allows independent brokerages to switch over to real estate without changing anything in their branding, without investing in rebranding, without spending any money, just keeping their brand, their local brand that they built for so many years, which is extremely valuable for them, and they joined under our platform without changing the name or anything like that.

Agents, just because of the revenue share is create a snowball effect and I think that we are now starting to.

Do you feel that the effect of that snowball effect.

Which is which is great when I I think that some of the initiatives that really excite those agents and teams that are now joining us first of all private label and proteins are huge.

So just as a reminder, private label allows independent brokerages to.

Switch over to real without changing anything in your branding without investing in rebranding without spending any money just keeping their brand their local brands that they do for so many years, which is extremely valuable for them and joined joined under our classroom without changing the name or anything like that proteins is essentially.

Tamir Poleg: Proteins is essentially a dashboard that allows team leaders and brokerage owners to configure a different plan for each and every agent within their team. So think about having 100 agents; one agent can be on a 70-30 split, another agent on a 50-50, some agents pay a monthly fee, some agents pay a closing fee. It's an accounting nightmare for brokerages and teams. So ProTeams just takes care of all of this in the background automatically for them.

A dashboard that allows.

Team leaders and brokerage owners to configure a different plan for each and every agents within their teams. So think about having a holiday agents one agent connect can be on a 70 30 split another agent on a 50 50, some agents pay a monthly fee some agents pay a clothing fee.

It's an accounting nightmare for brokerages and teams. So proteins just takes care of all of this in the background automatically for them.

Tamir Poleg: Those two initiatives make the switch over to real seamless, extremely seamless, and it just eliminates a lot of the concerns that they have. So those two things obviously have a positive impact on growth. The other thing I would mention is the wallet. Just the ability to earn points in order to offset fees and the ability to have a credit line attached to your business, which is something they cannot do right now at their current bank. This is something that they're excited about and also, for example, for a team leader to be able to offer credit cards, or grant credit cards to their team members, this is huge. This is something that nobody else offers. So they see the vision of this financial ecosystem that we're trying to build together with them. Got it. That's really helpful. I appreciate the color.

Those two initiatives makes the.

The switch over to real seamless extremely seamless and it just eliminates a lot of the concerns that they have so those two things obviously you have a positive impact on growth.

The other thing I would mention Theres, a lot of excitement around the wall and just the ability to earn points in order to offset fees and the ability to have a credit line attached to your business, which is something they cannot do right now are at their current back. This is something that they're excited about and also for example for a team leader to be able to offer.

Credit cards branded credit card to the team members. This is huge this is something that nobody else offers so they see the vision around this financial ecosystem that we're trying to build together with them.

Got it that's really helpful. I appreciate the color and then just a follow up could you give any more detail or color just on overall agent growth expectations for the next few quarters or for calendar 2024 overall.

Thomas Cauthorn White: And then just to follow up, could you give any more detail or color just on overall aging growth expectations for the next few quarters or for calendar 2024 overall? Yeah, we're not providing full year guidance. But as I said, thousands agents join in. January, 1,000 in February.

No, we're not providing a full year.

Our guidance, but as I said, a thousand agents join in.

January 1000 in February we're expecting over a thousand in March probably another 1000 and in April I don't know if that pace sustainable or maybe it will even increase but at this point in time.

Tamir Poleg: We're expecting over 1,000 in March, probably another 1,000 in April. I don't know if that pace is sustainable or maybe it will even increase, but at this point in time, it seems like... This is going to be a very, very strong growth year for us. Okay. Thank you.

It seems like Oh this.

This is going to be a very very strong growth year for us.

Okay understood. Thank you.

Thank you.

Okay.

Operator: There are no further questions from analysts in the, Great. Now that we've concluded the analyst portion of the call, we want to address some of the questions received from shareholders on the Say Technologies Q&A platform that was launched last week. We received a number of excellent questions, and so thank you to all who participated.

There are no further questions from analysts in the queue.

Okay.

Right now that we conclude the analyst portion of the call. We wanted to express some of the questions received from shareholders on the Sei technologies Q&A platform that was launched last week, we received a number of excellent questions and so thank you to all who participated.

Operator: First question for Tamir: are the agent incentives, including the 85-15 split, sustainable? Yeah, the 85-15 commission split in favor of our agents is core to our value proposition and something we have no plans to change. No plans to change in the future. The split is one of the most generous in the industry, as you probably know, especially when factoring in the $12,000 cap, but it is also one of the reasons why we're focused on driving growth of our ancillary business lines, such as title and mortgage, as well as the re-wallet, where growth margins could be five to eight times higher than our traditional brokerage margins.

First question for Tim here are the agent incentives, including the 80 515 split sustainable.

Yeah. The 80 515 Commission split in favor of our agents is core to our value proposition and something we have no plans to change no plans could change in the future. The split is one of the most generous in the industry as you probably know, especially when factoring in the 12000 dollar cap.

But it is also one of the reasons why we're focused on driving growth of our ancillary business lines, such as title and mortgage as well as the reward where gross margins could be five to eight times higher than our traditional broker brokerage margin.

Tamir Poleg: Next question for Sharran: what is the strategy to recruit and retain top agents? And how do you plan to retain top talent as the brokerage grows? Awesome. Thanks, Ravi.

Great next question for Sharon what is the strategy to recruit and retain top agents and how do you plan to retain top talent as the brokerage grows.

Awesome. Thanks, Robby I you know for US the growth is not just about great numbers right. It's about attracting great people and then building a great community that actually create great numbers. So conceptually.

Sharran Srivatsaa: You know, for us, growth is not just about great numbers, right? It's about attracting great people and then building a great community that actually creates great numbers. So conceptually speaking, our approach is quite simple.

Speaking our approach is quite simple.

Sharran Srivatsaa: We believe the top agent of today is actually looking for a completely different platform, and we call it an entrepreneur-centric platform. Now, what does that mean? Agents today want to design and build and run their businesses the way they see fit in their market, according to their skills, with their own business models. And traditionally, that's been where an agent has to plug into a brokerage's model, but we have changed this approach, where we say it's our job to create these entrepreneur-centric Lego blocks. A Lego block that an independent brokerage would want is completely different than what a team would want. It's completely different than what an individual agent would want. So our focus is to build more of these Lego blocks to help agents build their businesses on the real platform, which gives us a true partnership with the agent.

We believe the top agent of today is actually looking for a completely different platform and we call. It an entrepreneur centric platform now what does that mean agents do they want to design and build and run their businesses the way they see fit in their market to their skills with their own business models and traditionally its been where an agent has to plug into <unk>.

Brokerages model, but we are have changed its approach, where we say its our job to create these entrepreneur centric legal blocks, a Lego block that an independent brokerage would would want is completely different than what 18 would want is completely different than what a individual agent would want so our focus is to build more of these.

Illegal blocks to help agents build their businesses on the real platform, which gives us a true partnership with the agent.

Yeah.

Tamir Poleg: Tamir, next question: have there been any concerns about REAL's infrastructure with respect to the rapid growth we're experiencing? On the contrary, we're very excited about the growth. Given the scalability of our tech platform, we're not concerned about the ability of our systems to handle the significant growth we're experiencing. In fact, just this week, our transaction team set an all-time record by closing 500 transactions in a single day. This is something that we have never done before.

Got it.

And to me. Our next question have there been any concerns about real infrastructure with respect to the rapid growth we're experiencing.

On the contrary, we're very excited about the growth given the scalability of our tech platform, we're not concerned about the ability of our systems to handle significant growth. We're experiencing in fact, just this week our transactions team set an all time record by closing 500 transactions in a single day. This is something that we have never done.

Tamir Poleg: Of course, we are making select headcount additions where necessary to ensure the agent onboarding and support teams remain well equipped to support our agents whenever and wherever they need it. But with that said, this is another reason why we're excited about Leo AI, which effectively functions as a virtual assistant for every agent on our platform and reduces our need to hire the same number of full-time employees as a traditional brokerage model. Great. Next question for Sharran:

Before of course, we are making select select head count additions were necessary to ensure the agent Onboarding and support teams remain well equipped to support our agents whenever and wherever they need.

But with that said this.

This is another reason why we're excited about.

Which effectively functions as the virtual assistant for every agent on our platform and reduces our need to hire the same amount of full time employees as a traditional brokerage model.

Great next question for Sharon.

Sharran Srivatsaa: And we talked about this a little bit in the analyst Q&A, but could you just expand on the vision for private label? And how is this a unique value proposition for some agents? Yeah, for sure.

And we talked about this a little bit at the analyst Q&A, but could you just expand on the vision for private label and how has this unique value proposition for some agents.

Oh, Yeah for sure. So this goes to our entire company's philosophy of test and invest and we've been working on this private label offering for about the last 12 months in 'twenty 'twenty. Three we ran a pilot of this program in five different markets and that's what actually allowed us to say that this is this could be adopted really walk so what private label really mean, just Jim you talked about.

Sharran Srivatsaa: So this goes to our entire company's philosophy of test and invest. And we've been working on this private label offering for, you know, about the last 12 months. In 2023, we ran a pilot of this program in five different markets, and that's what actually allowed us to say this could be adopted really well.

Sharran Srivatsaa: So what private label really means, as Tamir talked about, is an independent brokerage that has built a brand in the local market can keep their brand while partnering with real. This is important because, in every other instance, these independent brokerages would have to give up their brands that they have built to actually join a company. So to give some broad context, there are over 100,000 independent brokerages in our country, and these independent brands and owners have spent years building brand equity in their local markets. In fact, from personal experience in my previous brokerage, tell us we built a leading brand across 22 offices in Southern California that was acquired and combined with the national brokerage, and we lost that brand overnight.

As an independent brokerage that has built a brand in the local market could keep their brand while partnering with real this is important because in every other instance, these independent brokerages would have to give up their brands that they are built to actually joined the company. So to give some broad context, there are over 100000 independent brokerages and our country and these independent brands and owners.

Spent years building brand equity in their local markets and in fact from personal experience in my previous brokerage tell us we rebuilt a leading brand in across 22 offices in southern California that was acquired and combined with a national brokerage and we lost that brand overnight. We had this option it would've been a much more scalable option for us so with private label.

Sharran Srivatsaa: If we had this option, it would have been a much more scalable option for us. So with private label, independents can join Real, keep all their branding exactly the same, and effectively, that creates, makes Real like a brokerage as a service provider, powering independent brokerages with our backend technology and systems and support. I'm super excited about the potential of Private Label to offer this value to independent brokerages and teams because it shows and goes to the scalability of our platform overall. So it's also worth mentioning that this is not done across the industry.

Independents conjoined real keep all their branding exactly the same and effectively that creates it.

It it makes real like brokerage as a service provider powering independent brokerages with our back end technology and systems and sports so.

Arms it breaks out about the potential of private label to offer this value to independent brokers and teams.

Because it shows and goes to the scalability of our platform. Overall. So it's also worth mentioning that this is not done across the industry. There are a few players in our industry like a side, who have provided somewhat of a similar offering to independent brokerages and their equity valuations are in the billions of dollars. So we actually feel pretty good about the potential.

Sharran Srivatsaa: There are a few players in our industry-like sector who have provided somewhat of a similar offering to independent brokerages, and their equity valuations are in the billions of dollars. So we actually feel pretty good about the potential for Private Label to help shine light on this tremendous value that we offer and the legal blocks that we give to independent brokerages. Great, next question for Michelle. When Real grants stock awards, where does the stock come from? Does the company go out in the open market to purchase the shares, or is there a float of treasury stock that the company is hoping to issue as the stock award? Yeah, so the answer is both.

For private label.

Shine light on this tremendous value that we offer them the Lego blocks that we give to independent brokerages.

Great next question from Michelle when real Grant Stock Awards, where does the stock come from the company go out in the open market to purchase the shares or is there a float of treasury stock that the company is hoping to issue the stock awards.

Okay.

Yeah. So the answer is no.

Michelle Ressler: We have the ability to issue stock as necessary in order to satisfy the various stock awards. However, we're also active purchasers of our stock on the open market, and that enables us to issue shares from trust. So the buyback was, you know, initially put in place to satisfy the agent awards. And so as long as we continue to buy back our stock, which we feel is undervalued and a good use of our strong cash flow in order to offset dilution, then we can, you know, issue those shares from trust. Got it. Tamir, what is the strategy to increase the number of mortgage providers participating in the OneReal Mortgage platform, and are there any opportunities to automate the mortgage and title processes? That's a combination of two questions.

We happen to believe issued stock as necessary in order to satisfy the area stock wise. However, we're also active purchasers.

Our stock on the market and that enables us to issue shares from track. So the buyback was initially put in place to satisfy the age of the word and so as long as they continue to buy back our stock, which we feel is undervalued and.

And a good use of our strong cash flow in order to offset dilution than we can you know.

Issue those shares from trusts.

Got it.

And here what is the strategy to increase the amount of mortgage providers participating in the one real mortgage platform and are there any opportunities to automate the mortgage and title processes. It's a combination of two questions.

Tamir Poleg: Yeah, I mean, obviously, the rate environment has been volatile, but we are actively recruiting more mortgage loan officers. So if anyone in the crowd is an MLO, please, and you're interested in joining One Way Mortgage, please reach out to us and apply. Regarding the efficiency of those two businesses, yes, I think that the same things we have done in the brokerage business can be done for mortgage and title, and we are now working on it.

Yeah I mean.

Obviously the rate environment has been volatile, but we are actively recruiting more mortgage loan officers. So if anyone in the crowd is an envelope players and you're interested in joining our when we mortgaged please reach out to us.

Fly.

Regarding the efficiency of those two businesses, yes, I think that's the same.

At the same things we have done.

The brokerage business can be done for our mortgage and title and we are now working in it. So we think that those two businesses will not only grow revenue, but become more efficient in their operations. For example, we are building in our system, which essentially we will replace that system called Qualia four four title so kind of.

Tamir Poleg: So we think that those two businesses will not only grow revenue but become more efficient in their operation. For example, we are building now a system which, Essentially, we'll replace a system called Qualia for Tidal, so we are kind of powering the overall operation of Tidal ourselves instead of using a third-party system. And what we're building, I believe, is going to be superior. And we are going to own it, and OneWheel Tidal is going to be the only company that uses it. So there are a lot of opportunities to also streamline Tidal processes and mortgage processes using technology, and we are working on it.

Powering the overall operation of title ourselves instead of using a third party system.

And what we're building I believe is going to be superior and we are going to own. It and we are one we'd probably be willing to be the only company that is using it. So there are a lot of opportunities to also streamlined title processes of mortgage processes using technology and we are working on it.

Tamir Poleg: Great. And last question for Tamir: where do you see the stock market going for real in the next two to three years? Obviously, we don't control the stock market or stock prices any more than we control the weather.

Great and.

Last question for Tim Here, where do you see the stock market going for real in the next two to three years.

Obviously, we don't control the stock market or our stock price isn't any more than we control the weather, but we do know that over the long term the stock price will be mostly reflects the intrinsic value of the business.

Tamir Poleg: But we do know that over the long term, the stock price ultimately reflects the intrinsic value of the business. And so what that means for us, for real, is that as we continue to execute on our strategy, rapidly grow revenue, and sustainably compound our earnings and free cash flow per share, our stock price will ultimately reflect the significant value that we know we can and will create for our shareholders. So we just need to continue and execute, build a great business, and work on growth and profitability. And I expect the stock price to react accordingly. Great. Well, we'll end it there.

And so.

What that means for us really is that as we continue to execute on our strategy rapidly grow revenue and sustainably compounded our earnings and free cash flow for sure our stock price will ultimately reflect the significant value that we know we can and will create for.

For our shareholders. So.

We just need to continue and execute build a great business working on growth and profitability and I expect the stock price to react accordingly.

Great well well, we'll end it there if anyone has any additional questions on today's earnings release. Please feel free to contact me directly Matthew would you. Please give the conference call replay instructions once again.

Operator: If anyone has any additional questions on today's earnings release, please feel free to contact me directly. Matthew, would you please give the conference call replay instructions once again? Thank you. Ladies and gentlemen, as mentioned, today's conference will be available for review. Please see the complete disclaimer at https://sites.google.com or at www.sites.google.com, www.youtube.com.uk, 4010.

Thank you, ladies and gentlemen, as mentioned today's conference will be available for replay. The replay phone number is 8774814010 and the replay code is 49 884.

Operator: The number you have dialed is currently unavailable. Once again, the replay phone number is 877-481-3333 and the replay code is 4-9-8-8. Disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Once again the replay phone number is 870 74814010 and the replay code is 40 988 for.

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