REAX Q1 Earnings Call: Agent Growth and AI Initiatives

Real estate technology company The Real Brokerage (NASDAQ:REAX) beat Wall Street’s revenue expectations in Q1 CY2025, as sales rose 76.3% year on year to $354 million. Its GAAP loss of $0.02 per share increased from -$0.09 in the same quarter last year.

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StockStory’s Take

The Real Brokerage’s first quarter saw growth driven by a substantial increase in closed transactions and a notable expansion in its agent base, as management highlighted on the call. CEO Tamir Poleg emphasized that the company’s strategy of combining financial incentives, proprietary technology, and a virtual-first model continues to attract agents even as the broader real estate market faces headwinds. President Sharran Srivatsaa noted that Real agents delivered a 5% increase in average transactions per agent despite ongoing affordability pressures and an industry-wide decline in existing home sales. The company’s focus on ancillary business lines, such as mortgage, title, and Real Wallet, also contributed to year-over-year revenue gains. Investments in AI-powered tools like Leo CoPilot are beginning to improve agent support efficiency, but management acknowledged that these initiatives are still ramping up in terms of direct impact on agent productivity.

Looking forward, management believes that continued investment in technology and ancillary services will be central to driving margin expansion and operational leverage. CEO Tamir Poleg stated, “The rise of AI is not just another tool, but a fundamental shift that… will reshape industries, professions, and entire business models,” underscoring the company’s intent to scale its AI assistant Leo for both agent and consumer-facing applications. CFO Ravi Jani cautioned that while a higher mix of productive agents—who have reached their commission cap—may continue to pressure gross margin, fee program changes and growth in higher-margin services are expected to partially offset this dynamic. The company reiterated its disciplined approach to cost management and technology investment, aiming for sequential improvements in revenue, gross profit, and adjusted EBITDA over the coming year.

Key Insights from Management’s Remarks

Management attributed the quarter’s growth to strong agent additions, increased transaction activity, and early progress in scaling ancillary businesses, while acknowledging ongoing industry challenges and evolving technology adoption.

• Agent base expansion: Real added over 2,700 net new agents in the quarter, reaching more than 27,700 by early Q2, which management linked to the company’s virtual-first platform and financial incentives.
• Ancillary services growth: Mortgage, title, and Real Wallet businesses grew a combined 50% year over year, with management emphasizing their higher margins relative to core brokerage and their importance for future profitability.
• AI integration in operations: The rollout of Leo CoPilot, an AI-powered agent assistant, allowed Real to automate all inbound agent support calls, with thousands of daily interactions improving speed and accuracy of agent support. However, management noted consumer-facing AI features are still in development.
• Shift in agent productivity mix: Management reported a growing share of highly productive agents—those who have reached their annual commission cap—now contributing 50% of commission revenue, a shift that impacts gross margins but signals increased platform engagement.
• Strategic focus on training: Expanded training formats, including Real Academy, regional roadshows, and targeted masterminds, reflect a commitment to upskilling agents amid a changing industry landscape, aiming to address a widening gap in agent productivity.

Drivers of Future Performance

Management expects future performance to be shaped by ongoing technology investments, margin expansion from ancillary services, and careful cost discipline.

• Scaling AI and automation: The company plans to further develop Leo CoPilot with enhanced voice capabilities and expand its use to consumer-facing interactions, aiming to boost agent productivity and operational efficiency over time.
• Ancillary services as profit drivers: Growth in mortgage, title, and Real Wallet is expected to contribute more meaningfully to gross margin as adoption rates and product offerings increase, with management highlighting recent product launches and leadership hires to accelerate progress.
• Margin headwinds and mitigation: A higher proportion of capped agents may continue to suppress gross margin in the near term, but management anticipates that recent fee program changes and ancillary business growth will help offset this pressure and support margin stabilization.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the pace and impact of ancillary service adoption and its contribution to margin improvement, (2) the rollout and effectiveness of consumer-facing AI features within the Leo CoPilot platform, and (3) sustained growth in the agent base and transaction volumes relative to industry trends. Progress in integrating technology to further automate workflows and the company’s ability to maintain cost discipline will also be important performance indicators.

The Real Brokerage currently trades at a forward EV-to-EBITDA ratio of 16.1×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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