Fast-growing The Real Brokerage posted a $3.97 million net loss during the second quarter of 2023, but revenues shot up from a year ago.
“During the second quarter, Real once again delivered best-in-class growth with our agents closing a record number of transactions,” said Tamir Poleg, the CEO of Real. He described the second quarter as an inflection point for Real, as the company achieved adjusted EBITDA profitability earlier than anticipated.
Poleg acknowledged the headwinds faced by the industry, telling analysts that elevated mortgage rates are stifling sales activity. Like many other brokerages, the firm is still in the red (it lost over $20 million last year). Its nearly $4 million loss in the second quarter was a big improvement from the first quarter’s $7.4 million loss, but only marginally better than its $4.2 million loss year over year.
Real recorded $185.3 million in revenue in the second quarter, up 65% year over year.
While agent productivity still lags compared to where it was in the first half of 2022, Poleg said that more agents helped propel the brokerage record a 72% annual increase in transaction sides for the quarter — at 17,537 — and a 66% annual increase in volume to $7.0 billion.
Meanwhile, executives noted that agent churn was down to 6.5% compared to 8.3% the prior quarter and 7.2% in Q2 of 2022.
The company kept expanding its geographic footprint. During the second quarter of 2023, they opened in Delaware, in South Dakota for the U.S. and in Manitoba, Canada. The brokerage now operates in 47 states in the U.S. and four Canadian provinces. Real expects to be in all 50 states by the end of the year, Poleg said.
The virtual brokerage in March disclosed that it is raising fees on agents. New agents pay $249, up from $149, and all agents pay an annual fee of $750, up from $500.
Increased fees from agents are being put toward tech offerings. Last May, the brokerage launched Leo, an Chat GPT-powered assistant integrated with Real’s proprietary transaction management platform, reZEN. Lastly, the company is expected to release its new consumer-facing app, with an integrated mortgage application process, at the annual RISE conference in October 2023.
Poleg said the firm is also looking to expand its core services, which include Real Title and LemonBrew Lending, which currently don’t provide meaningful contributions to Real’s revenue. Poleg insisted that they were “essential building blocks,” paving the way for the creation of a “one-stop-shop homebuying experience.”