Real was one of the few brokerage companies to end the year with significant gains.
The cloud-based firm reported year-over-year revenue growth of 89% in Q4 and 81% for the full year. Agent count and transaction sides were also way up as Real continues to focus on growth.
To help facilitate that growth, however, Real increased operating expenses in 2023 by 72%, which included a significant increase in revenue share costs coinciding with the company's growing agent base.
Even with the large jump in revenue, Real ended the year with a loss of more than $27 million, which exceeded its losses in 2022.
Still, investors appeared to react positively to the results. Real Brokerage shares were up more than 20% for the day, trading at $3.45 per share. Real's share price has increased more than 120% since the start of the year.
What Real had to say
Company executives highlighted Real's push into producing proprietary software suites and tech tools for agents as a competitive advantage and a key driver of future share value. CEO Tamir Poleg cited the 100% adoption rate of its in-house Reason platform among agents and told investors the company has no plans to license the tech to competitors.
Additionally, Poleg emphasized the company's Real Wallet fintech initiative, which was introduced in October and will provide credit directly to teams and individual agents.
"The question is not how many agents will use it, it is how much credit do we feel comfortable giving to our agents," Poleg told investors. "For a team leader to be able to offer branded credit cards to their team members is huge. This is something that nobody else offers."
When asked if he has heard any feedback or seen any major changes in the way business is conducted since the Sitzer/Burnett verdict last October, Poleg told investors it's been "business as usual" in the U.S.
"We've been trying to monitor and look at some patterns in the market and I can say that we have not seen any change thus far," he said about agent compensation and commissions.
Real was named as a defendant in the Umpa commissions lawsuit filed in Missouri in December.
Key numbers
Revenue: $181 million in Q4, an increase of 89% year-over-year. The company posted revenue of $689 million for year-end 2023, an 81% jump from its $381 million revenue in 2022. Quarterly revenue dipped from $215 million in Q3.
Gross profit: $15.5 million for Q4, which is down from $18.8 million the previous quarter but nearly double the profit from the same period a year prior. The company posted a gross profit of $62.9 million for the year, which was nearly double the $32 million gross profit in 2022.
Cash and cash equivalents: $14.7 million at the end of Q4, up from $10.8 million the same period a year prior. That does not include $12.9 million in restricted cash and $14.2 million in investments.
Net income/loss: Real reported a net loss of $12 million in Q4, which is nearly triple the $4 million loss from the previous quarter and almost twice the loss of $6.8 million in Q4 2022. The company ended 2023 with a net loss of $27.22 million, which was greater than the loss of $20.34 million the prior year.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $8.5 million, up from $3.5 million the prior quarter and an improvement over the loss of $104,000 in Q4 2022.
Transactions: 17,749 total transaction sides in Q4, an increase of 82% from the same period a year prior. For the year, the company reported 66,646 transaction sides in 2023, up 78% from 37,450 in 2022.
Agent count: Real reported 13,650 agents at the end of 2023, up from 8,200 by the end of 2022. As of March 7, agent count had reached the 16,000 mark.
Notable moves
Real announced its Private Label and ProTeams initiatives in January, designed to drive agent count. For teams thinking of joining Real, Poleg said the offerings "make the switch to Real seamless and eliminates a lot of concerns" they may have.
And the company continues to focus efforts on recruiting even larger teams and independent brokerages.
"For example, last year, a team or a brokerage of 100 to 150 agents would be a large team for us to onboard. Right now, we're talking to teams and brokerages of 400, 500, 600, 700 agents," Poleg told investors, adding that Real expects to bring on 1,000 agents in March and has another 2,000 in the pipeline.
Poleg said Real is also growing its ancillary businesses.
"This year, both title and mortgage will outpace the growth of a brokerage. I expect those two companies to grow at a minimum of 200% year-over-year, and I can tell you that mortgage has had its best month ever in February."
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