The company remains on a rapid-growth trajectory, but net losses also increased this quarter, largely due to a recent commissions lawsuit settlement.
This article originally appeared in Real Estate News on May 7th, 2024
Few major real estate companies have managed to achieve strong revenue gains in the past year, and none have reported growth in the high double-digits — but not only did Real see an 86% increase in revenue, it nearly doubled its gross profits.
The brokerage also reported a significant increase in agent count, which now tops 18,000, and an 88% jump in sales volume. Real said it closed more than 19,000 deals in the first quarter of 2024, compared to about 11,000 in the first quarter of 2023.
However, the company's balance sheet continues to be in the red. Real reported a net loss of $16 million for the quarter, which was more than double the loss from the previous quarter. In the earnings report, Real noted that the figure included nearly $10 million in litigation expenses incurred during the quarter, primarily related to its settlement of antitrust litigation.
Despite the net loss, investors seemed pleased with the results: Shares were up 22% on earnings, trading around $5.12 per share this morning.
What Real had to say
Real President Sharran Srivatsaa pointed to recently launched initiatives such as the brokerage's ProTeams and Private Label — the "brokerage as a service" model unveiled in January — as helping drive agent growth to the company.
"Over 200 agents joined Real this quarter through the Private Label program, and we expect this number to more than double in the second quarter," he said. "As the industry prepares for forthcoming practice changes, we expect the trend of agents migrating from traditional, high-cost brokerages to more efficient, high-value models like ours to continue."
Key numbers
Revenue: $200 million in Q1, an increase of 86% year-over-year. Revenue also improved nearly 11% from $181 million in Q4 last year.
Gross profit: $20.8 million for Q1, which is up from $15.5 million the previous quarter and nearly double the $10.8 million profit from the same period a year prior.
Cash and cash equivalents: $20 million at the end of Q1, up from $14.7 million the previous quarter. That does not include $24.4 million in restricted cash and $14.4 million in investments.
Net income/loss: Real reported a net loss of $16 million in Q1, which is more than double the $7.4 million loss the company reported for Q1 2023. Real noted that the figure also includes $9.9 million of litigation expenses the company incurred during the quarter.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $3.6 million, which is lower than $8.5 million from the previous quarter but better than the $0.8 million loss in Q1 2023.
Transactions: 19,032, up from 17,749 total transaction sides in Q4 and from 10,963 a year ago.
Agent count: Real reported 16,680 agents at the end of Q1, up from 13,650 at the end of 2023 and an increase of 67% year over year. As of the earnings call on May 7, agent count exceeded 18,000.
Notable moves
In April, Real joined several other large brokerages in reaching a deal in the class action commissions cases, agreeing to pay $9.25 million into the settlement fund. The company had been named in just one major commissions lawsuit — the Umpa case — which was filed in December and consolidated with the Gibson case last month.
However, with NAR extending the settlement rule changes to August, Srivatsaa said the implementation "has not been fully baked out."
The brokerage succeeded in recruiting a number of large teams during the first quarter, including PREMIERE Group, with 250 agents across 20 states, and the 10-person Suarez Team, which has closed more than $1.5 billion in total sales. Real also announced the addition of 13 new offices in March.
Written By: AJ LaTrace
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