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CORRECTING and REPLACING The Real Brokerage Inc. Announces Third Quarter 2022 Financial Results

First table, second column, Intangible assets row should read 366, Non-current assets row should read 13,958 and Total assets row should read 47,326.

The updated release reads: 

THE REAL BROKERAGE INC. ANNOUNCES THIRD QUARTER 2022 FINANCIAL RESULTS

The Real Brokerage Inc. (“Real” or the “Company”) (TSX: REAX) (NASDAQ: REAX), the fastest growing publicly traded real estate brokerage, is pleased to announce it has filed its financial results for the three and nine months ended September 30, 2022.

Additional information concerning Real’s unaudited consolidated financial statements and related management’s discussion and analysis for the nine months ended September 30, 2022 can be found on the Company’s profile at www.sedar.com.

Third Quarter Financial Highlights

  • Revenue increased 188% year-over-year to $111.6 million.
  • Gross profit grew 158% year-over-year to $8.6 million.
  • Net operating loss of $4.3 million, compared to a loss of $1.0 million in Q3 2021.
  • Operating expense as percentage of revenue of 11.5%, compared to 11.2% in Q3 2021.
  • Net loss attributable to owners of the Company of $5.2 million, compared to a $1.1 million loss in Q3 2021.
  • Loss per share of $0.03, compared to a loss per share of $0.01 in the same period in 2021.
  • Adjusted EBITDA loss of $1.9 million, compared to a loss of $0.7 million in Q3 2021.
  • As of September 30, 2022, the Company held $21.9 million in cash and an additional $9.8 million held in investment securities available for sale at fair value.
  • The Company repurchased $1.1 million of common shares pursuant to its normal course issuer bid.

Operational Highlights

  • Surpassed 6,700 agents at the end of Q3 2022, a 126% year-over-year increase.
  • Subsequent to the end of the quarter, Real surpassed the 7,000 agent milestone in October.
  • The number of transactions executed over the platform grew 197% year-over-year to 11,233 in Q3 2022.
  • The value of completed real estate transactions grew 193% year-over-year to $4.2 billion.
  • For agents that closed a deal during Q3, commission revenue per agent was slightly over $35,000. These agents on average closed 3.6 transactions during the quarter.
  • Operating expenses per transaction, excluding revenue share, declined 43% year-over-year to $802 from $1,419 in Q3 2021.
  • Subsequent to the end of the quarter, Real expanded its existing relationship with Redline Real Estate Group to serve as the foundation for expansion into British Columbia, bringing Real’s brokerage footprint to 44 U.S. states and the District of Columbia in the U.S. and Alberta, Ontario and British Columbia in Canada.
  • As of September 30, 2022, Real’s efficiency ratio, which is calculated as full-time employees (excluding Real Title) divided by the number of agents, increased to 1:77 from 1:62 at the end of Q2 2022.

“Despite a challenging quarter for the housing market, Real continued to gain market share with strong growth in the number of agents joining our platform and the number of transactions executed, which offset effects of the broader market weakness,” said Tamir Poleg, Chairman and Chief Executive Officer. “As we head into the end of the year, we believe our superior agent offering will continue to be a winning proposition in gaining market share, while our strong balance sheet allows us to effectively navigate the market and invest in building out our full consumer-facing vision.”

The Company will discuss the results on a conference call and live webcast today at 11:00 a.m. EST.

Conference Call Details:

Date:

 

Thursday, November 10, 2022

Time:

 

11:00 a.m. EST

 

 

 

Dial-in Number:

 

North American Toll Free: 888-506-0062

 

 

International: 973-528-0011

Access Code:

 

375759

Webcast:

 

https://www.webcaster4.com/Webcast/Page/2699/46760

 

 

 

Replay Number:

 

North American Toll Free: 877-481-4010

 

 

International: 919-882-2331

Passcode:

 

46760

Webcast Replay:

 

https://www.webcaster4.com/Webcast/Page/2699/46760

Participants are encouraged to dial in 5 to 10 minutes before the beginning of the conference call.

Non-IFRS Measures

This news release includes reference to “Adjusted EBITDA”, which is a non-International Financial Reporting Standards (“IFRS”) financial measure. Non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA is used as an alternative to net income by removing major non-cash items such as amortization, interest, stock-based compensation, current and deferred income tax expenses and other items management considers non-operating in nature. Adjusted EBITDA has no direct comparable IFRS financial measures. The Company has used or included this non-IFRS measures solely to provide investors with added insight into Real’s financial performance. Readers are cautioned that such non-IFRS measures may not be appropriate for any other purpose. Non-IFRS measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The following table reconciles the non-IFRS measure to the most comparable IFRS measure for the three and nine months ended September 30, 2022. This measure does not have any standardized meaning under IFRS and is not a measure of financial performance under IFRS, and therefore, may not be comparable to similar measures presented by other companies.

 
The Real Brokerage Inc.
Consolidated Statement of Financial Position
(In thousands)
UNAUDITED
 
 

September 30, 2022

December 31, 2021

Assets
Cash and cash equivalents

21,943

 

29,082

 

Restricted cash

-

 

47

 

Investment securities available for sale at fair value

9,786

 

8,811

 

Trade receivables

783

 

254

 

Other receivables

74

 

23

 

Prepaid expenses and deposits

782

 

448

 

Current assets

33,368

 

38,665

 

Intangible assets

366

 

451

 

Goodwill

12,527

 

602

 

Property and equipment

1,019

 

170

 

Right-of-use assets

46

 

109

 

Non-current assets

13,958

 

1,332

 

Total assets

47,326

 

39,997

 

Liabilities
Accounts payable and accrued liabilities

14,090

 

6,604

 

Other payables

11,610

 

3,351

 

Lease liabilities

63

 

91

 

Current liabilities

25,763

 

10,046

 

Lease liabilities

-

 

40

 

Accrued stock-based compensation

7,922

 

2,268

 

Warrants outstanding

240

 

639

 

Non-current liabilities

8,162

 

2,947

 

Total liabilities

33,925

 

12,993

 

Equity (Deficit)
Share premium

63,738

 

63,397

 

Stock-based compensation reserve

10,274

 

6,725

 

Deficit

(43,895

)

(30,127

)

Other Reserves

(539

)

(347

)

Treasury Stock, at cost

(16,390

)

(12,644

)

Equity (Deficit) attributable to Owners

13,188

 

27,004

 

Non-controlling interests

213

 

-

 

Total liabilities and equity

47,326

 

39,997

 

 
The Real Brokerage Inc.
Consolidated Statement of Loss and Comprehensive Loss
(In thousands)
UNAUDITED
 
 
Three months ended September 30, Nine months ended September 30,

2022

 

2021

 

2022

 

2021

 

Revenue

111,633

 

38,798

 

285,638

 

71,202

 

Cost of sales

103,057

 

35,477

 

261,908

 

64,216

 

Gross profit

8,576

 

3,321

 

23,730

 

6,986

 

General & Administrative expenses

5,544

 

2,043

 

17,034

 

7,195

 

Marketing expenses

6,197

 

2,154

 

15,613

 

4,018

 

Research and development expenses

1,146

 

145

 

3,865

 

3,297

 

Operating loss

(4,311

)

(1,021

)

(12,782

)

(7,524

)

Other income

(231

)

-

 

(667

)

-

 

Listing expenses

135

 

-

 

135

 

-

 

Finance expenses, net

954

 

43

 

1,326

 

311

 

Net Loss

(5,169

)

(1,064

)

(13,576

)

(7,835

)

Non-controlling interest

78

 

-

 

192

 

-

 

Net Loss Attributable to Owners of the Parent

(5,247

)

(1,064

)

(13,768

)

(7,835

)

Other comprehensive income/(loss):
Unrealized losses on available for sale investment portfolio

(142

)

-

 

(535

)

-

 

Foreign currency translation adjustment

(51

)

-

 

343

 

-

 

Comprehensive Loss Attributable to Owners of the Company

(5,440

)

(1,064

)

(13,960

)

(7,835

)

Comprehensive Income Attributable to NCI

78

 

-

 

192

 

-

 

Comprehensive Loss

(5,362

)

(1,064

)

(13,768

)

(7,835

)

Loss per Share
Basic and diluted loss per share

(0.03

)

(0.01

)

(0.08

)

(0.05

)

Weighted-average shares, basic and diluted

179,466

 

165,700

 

179,320

 

165,700

 

 
The Real Brokerage Inc.
Non-GAAP Net Income (loss) to Adjusted EBITDA Reconciliation
(In thousands)
UNAUDITED
 
 
Three months ended September 30, Nine months ended September 30,

2022

 

2021

 

2022

 

2021

 

Net Income (loss)

(5,440

)

(1,064

)

(13,960

)

(7,835

)

Non operating expenses
Finance expenses, net

1,174

 

43

 

2,053

 

311

 

Depreciation

87

 

44

 

225

 

130

 

Stock-based compensation

2,057

 

(80

)

5,288

 

4,713

 

Listing expenses

135

 

310

 

135

 

455

 

Restructuring expenses

62

 

3

 

62

 

63

 

Extraordinary expenses

25

 

-

 

306

 

-

 

Adjusted EBITDA

(1,900

)

(744

)

(5,891

)

(2,163

)

 
The Real Brokerage Inc.
Consolidated Statement of Cash Flows
(In thousands)
UNAUDITED
 
Three months ended September 30, Nine months ended September 30,
 

2022

 

2021

 

2022

 

2021

 

Cash flows from operating activities
Loss for the period

(5,169

)

(1,064

)

(13,576

)

(7,835

)

Adjustments for:
– Depreciation

87

 

42

 

225

 

129

 

– Equity-settled share-based payment transactions

1,113

 

(1,696

)

2,324

 

2,920

 

– Listing expenses

-

 

(36

)

-

 

(3

)

– Gain on short term investments

10

 

-

 

(125

)

-

 

– Finance costs (income), net

28

 

43

 

237

 

311

 

(3,931

)

(2,711

)

(10,915

)

(4,478

)

Changes in:
– Restricted Cash

-

 

-

 

47

 

-

 

– Trade receivables

(543

)

(66

)

(529

)

(158

)

– Other receivables

(8

)

-

 

(51

)

198

 

– Prepaid expenses and deposits

517

 

(385

)

(334

)

(471

)

– Accounts payable and accrued liabilities

1,966

 

2,711

 

7,486

 

5,140

 

– Stock Compensation Payable (RSU)

1,603

 

757

 

5,654

 

1,069

 

– Other payables

(3,493

)

728

 

8,259

 

984

 

Net cash provided by (used in) operating activities

(3,888

)

1,034

 

9,618

 

2,284

 

Cash flows from investing activity
Purchase of property and equipment

(302

)

(22

)

(927

)

(65

)

Acquisition of subsidiary

-

 

-

 

(7,445

)

(1,100

)

Net cash provided by (used in) investing activity

(302

)

(22

)

(8,372

)

(1,165

)

Cash flows from financing activities
Investment in securities

(5,422

)

-

 

(1,432

)

(8,890

)

Proceeds from exercise of Warrants

-

 

-

 

-

 

26,475

 

Purchases of Common Shares for Restricted Share Unit (RSU) Plan

(1,219

)

(2,853

)

(6,911

)

(3,772

)

Proceeds from exercise of stock options

26

 

37

 

73

 

47

 

Payment of lease liabilities

(23

)

(21

)

(68

)

(62

)

Cash distribution for non-controlling interest

(24

)

-

 

(67

)

-

 

Net cash provided by financing activities

(6,662

)

(2,837

)

(8,405

)

13,798

 

Net change in cash and cash equivalents

(10,852

)

(1,825

)

(7,157

)

14,917

 

Cash, beginning of period

32,520

 

37,951

 

29,082

 

21,226

 

Fluctuations in foreign currency

275

 

(49

)

20

 

(66

)

Cash, end of period

21,943

 

36,077

 

21,943

 

36,077

 

Supplemental disclosure of non-cash activities
Cash grants payable as part of Expetitle acquisition

-

 

-

 

75

 

-

 

Share-based compensation as part of Expetitle acquisition

-

 

-

 

4,325

 

-

 

Release of vested common shares from benefits trust

2,107

 

-

 

3,433

 

-

 

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, “likely” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof. Forward-looking information in this press release includes, without limiting the foregoing, expectations regarding Real’s growth and the business and strategic plans of the Company.

Forward-looking information is based on assumptions that may prove to be incorrect, including but not limited to Real’s business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. Real considers these assumptions to be reasonable in the circumstances. However, forward-looking information is subject to known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in the forward-looking information. These factors should be carefully considered and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, Real cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and Real assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

About Real

The Real Brokerage Inc. (TSX: REAX) (NASDAQ: REAX) is revolutionizing the residential real estate industry by pairing best-in-class technology with the trusted guidance of the agent-led experience. Real delivers a cloud-based platform to improve efficiencies and empower agents to provide a seamless end-to-end experience for homebuyers and sellers. The company was founded in 2014 and serves 44 states, D.C., and three Canadian provinces with over 7,000 agents. Additional information can be found on its website at www.onereal.com.

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