Good morning, ladies and gentlemen, and welcome to The Real Brokerage Third Quarter Earnings Call. [Operator Instructions] I will now turn the call over to Ravi Jani, Vice President of Investor Relations, Financial Planning and Analysis, at The Real Brokerage. Sir, the floor is yours..

Thanks, and good morning. Thank you for standing by, and welcome to The Real Brokerage Conference Call and Webcast for the Third Quarter Ended September 30, 2023. We appreciate everyone joining us today.

With me on the call today are Tamir Poleg, our Chairman and Chief Executive Officer; Sharran Srivatsaa, President; and Michelle Ressler, our Chief Financial Officer. This morning, Real filed its financial statements and management discussion and analysis for the third quarter.

These documents, along with the accompanying earnings press release, can be found on both SEDAR and EDGAR. 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 these 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 our Chairman and Chief Executive Officer, Tamir Poleg. Tamir, please proceed..

serving their clients and growing their businesses. With regard to our ancillary Title and Mortgage businesses, we are actively working to increase attachments. While we continue to outperform the broader market, these businesses remain subscale and we are making necessary adjustments to our business model in order to accelerate their growth.

We also welcomed Christian Wallace as Chief of Integrated Home Services last month to lead this important endeavor.

Christian brings a wealth of experience to Real, joining us from Rocket Mortgage, where she was responsible for a number of initiatives designed to improve the customer experience, and her expertise will be instrumental in scaling these businesses.

We are excited by the opportunity to expand our Title and Mortgage businesses, given these business lines typically command gross margins that are 6x to 8x higher than our traditional brokerage margin. This represents a significant opportunity to enhance our overall margin structure in the future.

As always, we will be thoughtful in how we integrate and expand these operations into our existing platform. Lastly, we announced that as of October 2023, Real is now operational in all 50 states as well as 4 Canadian provinces.

While this marks an important achievement in our company's history, we still represent less than 1% of the entire real estate agent population in North America, and we see ample opportunity to further expand our share in each state and province. With that, I'll turn it over to Sharran for an introduction and update on our exciting agent initiatives.

Sharran?.

Thank you, Tamir. For those of you on the call who don't know me, I joined Real as President last year.

Although, most recently, I was a principal for a private investment firm and spent my earlier career at Goldman Sachs and Credit Suisse, I am an entrepreneur at heart, having built, scaled and exited numerous businesses across the real estate and technology sectors over the past two decades.

My journey has been driven by a quest for innovation and the desire to create robust platforms that empower companies and professionals to achieve their utmost potential.

As Real's President, I'm responsible for all aspects of Real's growth, including agent attraction, training and education, retention and also as the sales leader for firm-wide sales performance, meaning it's my job to whip our agents into shape to sell a lot more homes.

I'm excited to contribute to Real's efforts to revolutionize the real estate brokerage industry, and I firmly believe that we've built a business that is truly differentiated, and we're just getting started. As highlighted by Tamir, in the third quarter, our agent count rose to a record 12,175 agents, up 81% versus the third quarter of 2022.

This growth underscores the significant investments we have made in our business, technology, culture and agent resources in order to establish Real as the destination brokerage for all real estate agents.

We know that if we can provide an unparalleled value proposition and a deep sense of community, we can become a brokerage that agents will never want to leave. During the RISE conference in October, we introduced a slate of new tools to enhance agents' marketing and lead generation efforts.

This includes our end-to-end agent listing toolkit, a suite of listing presentation tools, digital and video marketing assets and a step-by-step coaching resource.

Furthermore, we launched our digital asset management system, a centralized hub for all of Real's creative materials, facilitating easy discovery and distribution of content while preserving brand consistency.

Additionally, we have developed a new relationship with Luxury Presence as a preferred vendor to assist our agents in developing AI-enhanced websites optimized for lead generation. All of these were designed for agents to run a smooth and profitable business, all from their phones, in the palm of their hands.

Also at RISE, we introduced several new initiatives designed to provide agents even more opportunities to generate income, build wealth and support their families.

First, we made a significant adjustment to our revenue sharing model, reducing the threshold for unlocking the second tier of revenue share, from 10 to 5 agents attracted to Real, allowing more agents to participate in additional tiers of revenue sharing much sooner.

Second, we announced that all Real agents will have access to health care benefits consultation resources, allowing Real agents to benefit from our large group purchasing power.

We were also proud to announce the creation of Real Retirement, a program allowing agents the ability to continue earning income even after stepping back from actively selling real estate.

Under the program, beginning January 1, 2024, agents who have been producing with Real for at least the last 3 years will be eligible to continue to collect their monthly revenue share payments after they're no longer actively representing clients, provided they maintain an active real estate license with Real.

Extending our support of agents' financial stability and long-term wealth generation, we introduced a new suite of tools that we call the Wealth Plan, emphasizing education, planning and accountability, Wealth Plan helps agents design and realize their wealth goals and allows them to share their wealth plan with team leaders, coaches and advisers, ensuring that there is a support system to monitor progress and help them maintain accountability towards achieving their goals.

Wealth Plan embodies our belief in a collaborative growth, providing the necessary resources and community support to navigate their financial journey. Lastly, last month, we also announced the One Real Impact Fund designed to provide tax-free financial assistance to agents during times of hardship.

In closing, the advancements and innovative programs we've rolled out underscore our dedication to fostering a supportive environment for our agents at Real. Our journey is more than transactions. It's about building a community where agents can thrive, where selling real estate is not about counting transactions, but is actually a rewarding career.

The growth, the tools and the financial security initiatives we've introduced our all-in at fostering such an environment for our agents. I'm honored to be part of the team, excited for the future and look forward to engaging with many of you as we continue this journey together. With that, I'll turn it over to Michelle..

Thank you, Sharran, and thank you, everyone, for joining us. I'll start by reviewing some of our key financial results for the third quarter. More details on our results and key operating metrics can be found in the earnings press release and investor presentation that accompany this call.

Revenue in the September 2023 quarter was $215 million, an increase of 92% versus the prior year and a 16% increase sequentially.

Growth was driven by a 91% increase in commission revenue, which benefited from an 82% increase in transactions closed, which grew to 20,400 in the quarter, combined with a 5% increase in commission revenue per transaction. Recall, our primary economic unit is an individual transaction as we recognize revenue at the time the transaction closes.

Fee income and other revenue totaled $3.1 million during the quarter, an increase of approximately 245% versus the prior year, reflecting increased agent and transaction count as well as adjustments to our fee structure implemented earlier this year.

Title and mortgage revenue was $1.3 million in the quarter, an increase of 173% versus the prior year. Excluding the contribution from One Real Mortgage, which we did not own in the prior year period, organic growth for these ancillary services would have been approximately 100%.

Gross profit in the quarter was $18.8 million, a 119% increase versus the prior year third quarter. Gross margin at 8.7% increased approximately 100 basis points versus the prior year, with the increase driven primarily by higher fee and other revenue, which effectively drops through to the bottom line.

On a sequential basis, gross margin declined from 9.5% in the second quarter as expected due to the seasonality in our business given the higher percentage of agents typically reach their commission caps in the third quarter. As a reminder, our cost of goods sold include 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 in the stock-based compensation line. Total operating expenses for the quarter were $22.7 million or 10.6% of revenue.

This reflects a roughly 100 basis point improvement, both year-over-year and sequentially. The improvement is attributed to operating leverage, with our fixed costs growing at a slower rate than both revenue and gross profit.

Revenue share expense, which is our largest operating expense, was $7.9 million or 3.7% of revenue, up from $3.9 million or 3.5% of revenue in the prior year period. This cost is entirely variable and reflects Real's commission share paid to agents for recruiting new agents to the brokerage.

We categorize revenue share as a marketing expense as our sponsorship structure aids in attracting and retaining new agents while enhancing productivity across our platform. This quarter, we introduced a new non-IFRS financial measure called adjusted operating expense.

This metric reflects total operating expenses minus revenue share, stock-based compensation, depreciation and other unique or noncash items. It is designed to help investors better understand the composition of our non-variable ongoing cash operating expenses.

This quarter, our adjusted operating expense totaled $11.4 million or 5.3% of revenue, marking an 80 basis point improvement from 6.1% and further illustrating the scalability of our business model. Real's net loss for the quarter narrowed to $3.9 million compared to a $5.2 million net loss in the third quarter of 2022.

This translates to a loss per share of $0.02 compared to a loss per share of $0.03 in the comparable prior year period. Adjusted EBITDA improved to $3.5 million compared to $0.5 million for the third quarter of 2022, with the increase driven by higher revenue and gross profit, which outpaced growth in operating expenses.

As Tamir stated at the top, although the fourth quarter is always seasonally lighter than the third quarter, we are on track to be adjusted EBITDA profitable for the full year 2023 and expect to remain profitable on a full year basis going forward. Turning to our balance sheet and cash flow.

Although cash flow from operations was an outflow of $8 million in the quarter, this was primarily due to a $13 million reduction in customer deposits, which are reflected as restricted cash on the asset side of our balance sheet, and consist of cash held in escrow on behalf of real estate buyers.

The sequential reduction from the second quarter reflects typical seasonality in our business. Importantly, our unrestricted cash and investments balance increased approximately $5 million to $33 million as of September 30, up from $28.1 million as of June 30. This consists of $19 million of unrestricted cash and $14 million in short-term investments.

We remain well capitalized and believe we have ample liquidity, both to fund our business while continuing to invest in high-returning growth opportunities such as Real Wallet and One Real mobile app. To close, I'll recap the few KPIs we are commonly asked about before turning it back to Tamir.

The total value of homes transacted over our platform increased to $8.1 billion in the third quarter, a 91% year-over-year increase.

The median sale price of properties sold by our agents was roughly unchanged from last quarter at $370,000, which represents a 2.8% increase compared to the same quarter in 2022 and is in line with the broader market trend.

Total operating expense per transaction, excluding revenue share, continued its downward trajectory and was $725 in the quarter, a 10% year-over-year improvement.

As of the end of the third quarter, 12.5% of our agents had exceeded their commission cap, up from 10.2% at the end of the second quarter and essentially in line with the end of the third quarter in 2022. This cohort represented approximately 51% of commission revenue during the quarter.

Canada accounted for 21% of commission revenue in the third quarter compared to 20% in the prior year period. 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 1:101 at the end of the quarter.

This compares to 1:77 at the end of the third quarter of 2022. This concludes my financial remarks. I will now turn it back to Tamir..

one, our long-standing investment in consumer-facing platform positions Real agents to provide an exceptional experience that stands to set them apart from the competition; two, in such market evolution, large brokerages like ours are likely to benefit disproportionately as our scale and resources afford the ability to offer a comprehensive suite of buyer solutions that smaller players may not be able to match; and lastly, we will stand in a favorable position when compared to many of our peers.

Given our industry-leading commission splits and low-cost structure, we believe we face less potential economic risk should the overall commission pool diminish. Nevertheless, we hope for a balanced resolution so that our entire industry can move forward, and we can continuously provide value to our agents and their clients.

In closing, let me emphasize our unwavering commitment to navigating the obstacles and the opportunities before us. While the housing landscape is undoubtedly challenging, we have proven that our model strives even in the most adverse conditions.

Our innovative tools and technology, robust financial performance and dedication to our agents are the cornerstone of our resilience. Together, we will weather the storm and emerge stronger, ready to shape the future of real estate. Thank you for your continued support, and I look forward to our journey ahead. Now let's move to the Q&A session..

[Operator Instructions] Your first question is coming from Darren Aftahi from ROTH MKM..

Hey, guys. Good morning. Thanks for taking my question. A question, Tamir, on your comments about churn. I know in the past, there was some voluntary churn you guys have kind of pushed.

The churn we saw in the quarter on agents, was that all involuntary?.

Thank you. Yes, the churn this quarter came from agents who predominantly decided to leave the industry. What happens in many MLSs is that agents have to pay their dues twice a year, once in January, once in July.

So a lot of agents had to pay their dues in July, and they just decided that instead of paying their dues, they were just giving away their licenses and they left the industry. Fortunately, the vast majority of those agents were nonproductive. But yes, we did not proactively terminate agents this quarter..

Got it. And then your productivity per agent seems like it seems to rise quarter-on-quarter this year.

I'm curious about your thoughts with the introduction of Leo 2.0 and the app platform on the impact of productivity, meaning do you think that you're able to grow your business more efficiently with more agents just given this tech platform can automate a lot of these back-end processes?.

Sure. So two things. One, I think that it's a little bit early to say that the per agent productivity increase is attributed to Leo. As we communicated, we announced Leo 2.0, which is Leo being proactive in helping agents close deals and close them faster and get them paid faster.

So the 2 different things are how Leo helps us in the back office and operations in support of the agents. And we're already seeing that Leo, as we said, is answering 700 questions a day. And that number continues to increase, which means that we are saving some cost of hiring new people to serve those questions that are now served by Leo.

And agents are happier because they get instantaneous answers instead of waiting a few minutes for a support person to get back to them. So that's one thing.

The second thing is how Leo helps them with productivity, and this is something that we're just now starting to see with Leo 2.0, and I do expect to see some impact on production per agent coming from Leo, and we will track it and communicate that in the future..

Great. And just last one for me. The Mortgage and Title business, I appreciate how impactful that could be on your bottom line.

Can you just speak to some of the adjustments you mentioned earlier with hiring that new individual from Rocket Mortgage and kind of how the One Real app kind of plays into scaling that business longer term?.

Sure. So on the mortgage side, One Real Mortgage now uses the consumer-facing app, the One Real app, to take clients through the mortgage application process. So just earlier this week, they started taking 100% of their clients through that process. And we think that it will be very successful.

At the same time, Title, we're now looking at the geographies in which Title has expanded to. We're looking at some JVs that we've done with different teams. We're trying to analyze what's working, what's not working as great.

We're seeing a lot of traction in California, and we think that California could be a huge profit center for Real Title moving forward. So we're trying to concentrate our efforts on those geographies and those teams and JVs that are actually working. And Christian came from Rocket Homes or Rocket Mortgage. And she knows those businesses very well.

She's on top of everything. I think that we're doing great efforts when it comes to better planning, both on projecting revenue and on how we spend our dollars. So I think that 2024 is going to be an instrumental year for both Real Title and One Real Mortgage..

Your next question is coming from Stephen Sheldon from William Blair..

Hey. You have Matt Filek on for Stephen Sheldon. Congrats on the launch of your consumer-facing application. Had the opportunity to download the app and thought the user interface was excellent.

I know the app is currently focused on processing mortgage applications, but wondering if you can elaborate on what functionalities you plan to roll out over the next year and then longer term..

Sure. Thank you. We see the app as being a holistic journey for homebuyers from the very first moment that they think about buying a home and until they actually close on a home.

So if you try to break it down to different segments, it comes with home discovery, so just the ability to look at listings and then schedule showing directly with the agents of applying for a mortgage, of having a checklist of what needs to be done before you're actually starting to look at homes, with buyer education of what does it mean to buy a home and what does it mean to own a home, some sort of a tracker, transaction tracker, that shows them exactly where they are and what's expected next and what's expected from them.

There should be a document cabinet that stores all of the documents that they have signed. There is the ability to choose the closing date and all of the different updates, obviously, communicating with the agent and the loan officer. So we have a holistic view on the home buying experience.

And in the next year, we will be adding more and more features. I think that for the app to be fully operational with all of the elements that I just described and more, by the way, including purchasing a home insurance as well, it will probably take another 18 to 24 months..

Got it. That's very helpful.

And I know this may be tougher to call, but if we assume housing market conditions remain consistent with the current environment, should we expect a similar pace of quarterly agent additions looking ahead?.

To be honest, we were a little bit disappointed with the net agent growth, and I think that it was mainly attributed to those agents who decided to leave the industry and those were nonproductive agents. I can tell you that we're almost halfway through the fourth quarter, and we have seen an uptick in new agents joining.

So I think that the remainder of the year and moving forward, we'll probably see stronger growth numbers when it comes to agent growth..

Your next question is coming from Matt Erdner from JonesTrading..

Hey, guys. Thanks for taking the question.

Sticking with the agents at the moment, how have these new products and services kind of attracted either new agents or agent interest since you guys have announced these products?.

Thanks, Matt. I think that what we're seeing is a lot of energy around the company. So existing agents just are very enthusiastic about everything we're rolling out and all of those tools that help them in their day-to-day and with their clients. And I think that, that creates an energy that's addictive.

And it makes others wonder, okay, what's going on at Real and maybe we should check it out. And once they have those conversations, they're also able to articulate what is it exactly that our technology provides them and how we're differentiated and what it can actually do for them.

So it may not be a direct effect, but definitely, there's a lot of energy and buzz around the company right now in the marketplace, and it's driven by our agents that are extremely happy about all of the technological advancements..

Yes, I got you. That's helpful. And then I guess, once these products are rolled out, what impact do you think that it's going to have on revenue margins, EBITDA margins just going forward, thinking about that..

Yes. I think that longer term, if we think about our Title business and Mortgage business and some of the fintech product that we will be rolling out next year, I think that our kind of longer-term gross margin target would be at around 20% and EBITDA margins at around 10%. It will probably take 5 years or so to get there, but that's our plan..

Your next question is coming from David Marsh from Singular Research..

Hey, guys. Congratulations on the quarter, really impressive, especially with what's going on with mortgage rates at this time. Just wanted to start by touching on the finance expense line, really, really low in the quarter.

Could you talk about what changed there? And is that a sustainable level going forward? Have you made some kind of a change there that you're just not going to require any kind of payments for financing expenses?.

Finance expenses is generally related to foreign currency translation. So that will fluctuate as we see fluctuations in the strengthening or weakening of our foreign operations..

Got it. And I know you guys aren't really in the business of providing guidance and there's a lot of moving parts here, but especially in light of market conditions.

But as we think about seasonal patterns in real estate, in residential real estate transactions, typically, we see a dip towards the end of the year and in the first quarter and then kind of strength in the second and third quarter. But obviously you're still growing agents pretty rapidly. I mean we kind of are in the business of modeling.

So can you give us some idea of how to think about things. I mean, a good solid halfway through the fourth quarter here.

I mean, should we think about a sequential decline? Or is the agent growth still such that you're going to have some immediate effect of that seasonal factors?.

Sure. I can take this one, David. So typically, Q4 is a decline of 20% to 30% over Q3 just because of seasonality.

I think that what we have seen in the third quarter is interest mortgage rates reaching 8%, which probably will affect the backlog of transactions that are scheduled to close in the fourth quarter in the industry, in general, and it will probably apply additional pressure on the volume of transactions closed in the fourth quarter.

We think that given the fact that we are continuing to grow our agent count, the fourth quarter will obviously be a much higher one compared to the fourth quarter of 2022, but we do think that seasonality plays a role here. So sequentially, over the third quarter, the fourth quarter will probably be weaker in terms of transactions and revenue.

Internally, we also think that the first quarter is going to be challenging. Obviously, it's very interest rate dependent, but we do think that the spring will probably bring some energy and a lot of new transactions into the market. So we're optimistic as to March and on, but we do think that it's going to be quite a cold winter for real estate..

Well, the good news is, if we do actually get a pause or a flat-out stop in rate hikes, that could really help things. I mean, the 10-year as we sit here today is down to 4.56%, and I think I start to see some headlines of mortgage rates dipping back down into the 7.5% ballpark. So that should probably help a little bit.

I guess just lastly for me, it's kind of like my favorite thing to talk about because I think it's kind of the most exciting part of your story, just the vertical integration opportunity that you have with Title and Mortgage. I mean could you just let us know on the Mortgage side, it sounds like things are really picking up.

Could you just talk about how many states you're doing Mortgage business in and kind of what that looks like in terms of rollout?.

Sure. I think that one thing that is starting to change here is that we're trying to focus on fewer markets and create a playbook that we can then duplicate to additional markets instead of just chasing a transaction here and a transaction there. So that's part of the strategy for the remainder of the year and for 2024.

We're now really doing business in, I would say, less than 10 states, and I mean significant volume. And I think that we will continue to focus on those less than 10 states on the Mortgage side.

And once we have like a model that works and we know exactly how to started a business in that state and getting momentum going and engage all of our agents, we can duplicate that to additional territories. So that's currently the plan. As Michelle said, Real Mortgage is up about 100% year-over-year. This is still small numbers.

So we do expect those businesses, both Mortgage and Title to grow at a faster pace. Even though 100% is impressive, we have much bigger plans for both of those businesses..

That sounds like a very, very fiscally and operationally responsible path forward there. And I think that speaks very highly of your stewardship of the company, Tamir. So yes, I wish you guys the best and just hang in there. Hopefully, rates will come down and things are really going to take off..

Your next question is coming from Tom White from D.A. Davidson..

Hey this is Wyatt on for Tom. Thanks for taking our questions. So I have one. There's been some chatter about some of the smaller independent brokerages out there faced with the prospect that another year of low total sales turnover who may finally decide to move their businesses over to some of the virtual or lower-cost offerings like Real and others.

So how do you guys make sure that Real Brokerage maximizes its capture of these smaller independents or teams if, in fact, this does happen?.

Thank you, Wyatt. We are in constant conversations with a lot of existing smaller brokerages as well as large teams in the country. I think that we are becoming a household name in the industry and more and more people hear about us, and it's all about execution at the end of the day.

If they see that we provide value, and we also build products that are a little bit more tailored to what they need, which is something that we're doing right now, by the way, we're trying to build our systems in a way that will provide more flexibility to teams and brokerages and coming over and not changing their entire backbone system or the way they interact with their agents from a financial perspective, it will just make the transition smoother for them.

So this is something that we're now building, and we will communicate that to them.

But I think that it's all about creating more and more conversations and also educating our agents on how to have those conversations because at the end of the day, there is so much we can do as a company, but we can also rely on our agents to go and attract and just put the word out there about the company.

But yes, I agree with you that if the current conditions will remain, a lot of smaller brokerages, independent brokerages, will not be able to sustain that, and they will be looking to make some sort of a change.

And obviously, I mean, as the only company in the industry that's currently growing, I think that we will be able to attract many of them just based on the fact that they see that there is momentum happening here, and they will want to be a part of it..

Mr. Jani, there are no further questions..

Great. Now that we've concluded the analyst portion of the call, we wanted 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.

So the first question, which kind of dovetails with David's question is, how impactful of an effect do ancillary services such as One Real Mortgage, Real Title and, in the near future, Real Insurance have on the value of Real Brokerage? Tamir, do you want to take that one?.

Yes, sure. And I feel like we touched on that a little bit, but thank you for the question. This is actually a great question because these businesses, both Title and Mortgage, have the opportunity to truly transform our margin profile and long-term earnings trajectory.

When we look at Mortgage and Title, these are business lines that typically carry gross margins between 60% and 80%, so super high.

And so when we look at the profit potential of an individual transaction that includes both Brokerage, Title and Mortgage, we can potentially see 7x the gross profit per transaction relative to just a brokerage-only transaction. So that's meaningful.

Regarding how much of an impact these businesses will have in the near future is really a function of how quickly we can scale them, which is something that we are acutely focused on, as I mentioned.

But to give you a rough order of magnitude, every 5 percentage point of attachment for Mortgage and Title would translate into approximately 2 percentage points of gross margin on a total company basis.

And so that's why when we look out over the long term, we see a path to gross margin approaching the 20% and EBITDA margin nearing 10%, as I mentioned. But to summarize, while today, those businesses are small, we expect them to have a profound impact on the value of the business in the future..

Next question, what part of the business is giving you the most trouble now?.

Well, our rapid growth over the past 3 years has certainly presented us with a variety of challenges across the company, which is common for organizations that are scaling at our pace. I wouldn't characterize any of these as trouble per se. But because we're actively managing these challenges with strategies in place, I wouldn't call them trouble.

That said, the main area of focus, and perhaps my greatest source of impatience, is the pace at which we can roll out our innovative ideas and technological developments. We have an exciting road map, and I'm eager to bring these advancements to fruition. We're moving as fast as we can, but quality can be rushed.

And ensuring we do things right is a priority. In essence, we're racing against our own high expectations to deliver exceptional value, and that's kind of a good challenge to have..

Next question, for Michelle, how much of the company's stock is owned by agents?.

So we don't know how many shares agents hold in their personal trading account. But based on the shares that we attribute to agents, we estimate it to be around 15% of our company. And for us, this is important because agents are truly aligned with our management and our shareholders in making sure the company is profitable.

They're partners of the business, and so this way they're invested in helping it continue to grow..

Great. One question was about the app, and Tamir, you addressed this a little bit earlier in the future of the app.

But can agents have an app that clients can use to see if they've completed certain tasks for their buy-sell process and what next steps are?.

Sure. And I touched on that briefly, but the One Real app, which is our first consumer-facing app, is really our initial product to address just that.

While One Real today is built for homebuyers to get preapproved and have greater certainty of closing, over time, this app will be the solution, including everything from a closing checklist that you just mentioned, to an entire mobile home management system.

So yes, it's in the pipeline and in the works, just stay tuned as the product evolves, but rest assured that we are working to give agents the tools to make sure that their clients receive the best and most differentiated experience..

Sharran, next question, what can agent do successfully today that can change their business 12 months from now?.

Ravi, thank you for this. I think this goes to the heart of how we actually run the real estate business because this has been a quite challenging market environment where most agents' businesses, where you are in the marketplace, North America is down about, on average, 30-ish percent.

But there's something super important to note here, right, because just in the last 3 years, we've moved from what I like to call a momentum-based market to a skills-based market, meaning during the time when we were in and coming out of the pandemic, the market was moving so fast and the agents and consumers are just managing momentum of the transactions that were happening.

But over the last 12 months, the skill of an individual agent is setting each of them apart. So if we think about kind of the focus of what agents should do, I think there's 3 things that I've been sharing with all our agents to position themselves to win over the next 12 months. And let me walk you through what those 3 things are.

So number one is to capture attention. Agents who have a massive focus on what I call the front end of the funnel, with the idea of building the interest risk list, will win as market conditions change because most consumers are in the waiting and watching to pull the trigger.

Even on the interest rate environment, we had seven consecutive periods of interest rates increasing. And the consumer was actually getting used to what the new normal was. And as soon as they see a one-term pullback, now they're like, wait a minute, I'm just going to wait.

So that's actually caused more disruption because now it's changed the way of this watching and waiting. So for us, it is capturing and building the interest list on the front end of the funnel. The second is the days of kind of churning and burning are over because we need to implement what I call lifetime nurture.

This means that building the interest list is not enough, we have to both build the list and serve the list, meaning agents who take a lifetime nurture approach as opposed to a churn and burn approach, we'll win in this market because a lifetime nurture approach says, hey, I'm always in the right place. Mr./Mrs.

Client, I'll wait for your right time to happen. And the last but not least, I really hope that everybody in our industry learns this is that today is the time where an upgraded skill will completely set us apart. So consumers need sound advice now more than ever.

Over the last 20-ish years, the utilization of working with an agent is up 31%, even though there's more data and more tools available to the consumer. So I'd say this is because the transaction is becoming more and more complex.

So understanding new contracts, understanding pricing strategies, understanding negotiation skills with all that's happening in our landscape is what's going to be important for agents to win. So I'd say capture attention on the front end of the funnel, implement lifetime nurture and really work on upgrading skills..

Thanks, Sharran.

Tamir, next question, what are the current projections as an overall percentage of profit that the venture into fintech is expected to make? Specifically, how much of an impact are you expecting the rollout of the real credit card to make as a percentage of overall profits?.

I have to say that we're incredibly excited about the Real Wallet and its potential to really transform the role of brokerage within an agent's life and in the financial ecosystem. The Real Wallet allows agents to monetize all of their assets accumulated at Real.

While it's really too early to give specific financial projections, we've clearly studied the impact of loyalty card programs on other industries, whether it's the Costco card program or any of the major airline programs.

And that's why we're so excited about how transformative it could be for Real and our agents given it gives agents a unique opportunity to monetize their wealth and earn rewards from spending that they would have done otherwise on someone else's platform, which they can now use to reinvest into their business.

Secondarily, it gives us an opportunity to potentially monetize the significant amount of GMV and pass-through revenue that flows through our ecosystem and our income statement, for which we don't really receive any economic benefit. For example, this quarter, our agents sold $8.1 billion worth of homes.

And yet, as a company, we generated only $3.5 million of adjusted EBITDA. It's easy to see how capturing even a few basis points of such an enormous sum could really impact our bottom line in a way that's beneficial for agents and shareholders.

So it's a little bit too early to say, but we do think that this can have a very profound impact on our financial statements in the future..

Great. And last question, we'll take from the Say portal.

What is Real doing to attract outside investment from institutional and retail investors that will want to see the stock price grow in the coming years?.

we want to build a resilient company that delivers sustained long-term value for our shareholders. We are steadfast in our commitment to this objective. And believe our strategic efforts and execution will be reflected in our stock performance over time..

Great. A great way to end. If you have 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..

Absolutely. In order to access the replay, you need to call (877) 481-4010 with a confirmation code of 49221. Once again, the phone number is (877) 481-4010 and the confirmation code 49221. The replay will be available at 2:00 p.m. Eastern today. Ladies and gentlemen, this does conclude the conference call.

You may disconnect your phone lines at this time. And have a wonderful day. Thank you for your participation..