Real REMAX Group Inc. Common Stock 2026 Q2 Earnings Call

Thanks. Good morning. Thank you for standing by, welcome to The Real Brokerage conference call and webcast for the second quarter ended June 30, 2026. We appreciate everyone for joining us today. With me on the call today are Tamir Poleg, our Chairman and Chief Executive Officer, Jenna Rozenblat, our Chief Operating Officer, and Ravi Jani, our Chief Financial Officer. This morning, Real published an earnings press release including results for the second quarter ended June 30, 2026. The press release, along with the consolidated financial statements and related management's discussion and analysis for the quarter, have been filed with the U.S. Securities and Exchange Commission on EDGAR and with Canadian securities regulators on SEDAR+.

Before we get started, I'd like to remind everyone that statements made on this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements. Our actual results may differ materially from these forward-looking statements, the risk factors that could cause these differences are detailed in our Canadian continuous disclosure documents, including our management's discussion and analysis for the period ended June 30, 2026, our annual information form for the fiscal year ended December 31, 2025, and our management information circular dated July 9, 2026, as well as our SEC reports and the S-4 registration statement filed in connection with the RE/MAX transaction. Real disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. With that, I'd like to turn the call over to Chairman and Chief Executive Officer, Tamir Poleg. Tamir, please proceed. Thank you, Alix.

Good morning, everyone. Real is a real estate technology company built to improve how real estate works for the professionals at the center of a transaction, ultimately for the buyers and sellers they serve. We attract productive real estate professionals with a differentiated value proposition, help them build stronger businesses through superior technology and support, expand the products and services available to them and their clients over time. When we do these things well, operate with financial discipline, we create durable value for agents, consumers, and shareholders alike. I want to frame today's call a little differently than usual, as this could be the last time we report to you as a standalone Real. Our security holder vote on the RE/MAX transaction is scheduled for August 14.

Assuming approval by both Real security holders and RE/MAX's shareholders and satisfaction of the remaining closing conditions, we expect to complete the transaction thereafter in the second half of 2026. The headline for the quarter is straightforward. Despite one of the most challenging housing markets in years, we again delivered significant growth, improved core profitability, and further strengthened our balance sheet. Revenue increased 30% to more than $700 million. Adjusted EBITDA increased 38% to $27.6 million. We ended the quarter with record cash and short-term investments of $86.6 million. Those results reinforce something we've believed for a long time. When we consistently help great real estate professionals build better businesses, we can deliver differentiated growth, improve profitability, and create long-term value. That's why we believe the RE/MAX transaction is such an important step in our evolution.

RE/MAX brings an iconic global brand, highly productive agents, and franchise owners with deep local market expertise. Real brings a modern AI-enabled technology platform, a differentiated economic model, and a track record of innovation and disciplined execution. Together, we believe we can better support real estate professionals, improve the experience for buyers and sellers, and build a stronger, more profitable company for the long term. Jenna will discuss the momentum in our operating results and integration progress. Ravi will then discuss our financials in more detail before I return with a few closing remarks. With that, I'll hand it over to Jenna.

Thanks, Tamir, and good morning. We ended the second quarter with approximately 35,350 agents, up 26% year-over-year, and entered the second half with a strong pipeline. In fact, as of today, our agent count has already exceeded 36,000. Even in a difficult market environment, we continue to experience organic growth from entrepreneurial agents, teams, and independent brokerages looking for better technology, better economics, and a platform that helps them run their businesses more efficiently and more profitably. We also continue to make progress rolling out new technology that can meaningfully change how agents operate and how they serve their clients. As an example, HeyLeo, our AI relationship management platform for agents, continues to evolve to enhance both the agent and client experience.

This includes several new features that Leo 2.0 has beta-launched in recent weeks, including direct integrations with some of the largest real estate CRMs in the industry. As a result, with the help of Leo, our agents can now seamlessly leverage agentic AI to help activate, engage, and nurture their leads. This matters because most agents already have significant opportunities sitting inside their client database, but simply don't have the time or tools to consistently follow up with their clients. By helping agents respond faster, maintain more consistent engagement, and identify when their clients are ready to act, we believe HeyLeo can improve agent productivity while creating a better experience for buyers and sellers.

We're very pleased with the early results and feedback from our agents and look forward to making this technology available to all of our agents once fully rolled out. Turning to RE/MAX, as chief integration officer for the transaction, my primary focus is straightforward: be ready to execute on day one while preserving the strengths that have made both organizations successful. Since our last call, we have established an integration management office, identified leaders across every major division and work stream, and have engaged experienced third-party advisors to assist us with our integration plans and support day one readiness. Based on the work completed to date, we remain confident in our ability to achieve approximately $30 million of cost synergies within three years of closing. As we gain better visibility after closing, we'll continue evaluating additional opportunities, and we'll communicate our progress transparently.

Throughout the process, our priority is to bring together the best of both organizations while making the transition as seamless as possible for employees, agents, franchise owners, and consumers. Success won't be measured by how quickly we change things. It will be measured by how effectively we strengthen the combined platform while preserving the relationships and culture that have made both successful. With that, I'll turn it to Ravi.

Thank you, Jenna. Good morning, everyone. Let me provide a little more context around the financial results. Consolidated revenue for the second quarter was $700.6 million, up 30% year-over-year. Growth was driven by a 27% increase in closed transactions to a record 62,380, substantially outpacing both the U.S. and Canadian home sales markets, together with a 1% improvement in average agent productivity and a 2% increase in average revenue per transaction. Ancillary revenue from Real Wallet, One Real Title, and One Real Mortgage grew a combined 28% year-over-year to $4.2 million, with Wallet revenue growing 140%, Title growing 29%, and Mortgage growing 10%. The key takeaway is that Real continues to take market share and grow at a significant rate despite a housing market that remains near historically low transaction levels. At the same time, our high-margin ancillary businesses are also delivering improved growth and profitability.

Gross profit was $58.3 million, up 22% year-over-year, while gross margin was 8.3% compared to 8.9% in the prior year. The year-over-year decline was primarily a mix effect. In the second quarter, approximately 42% of our closed transaction size came from capped agents, up 300 basis points year-over-year. Post-capped transactions carry a lower brokerage margin by design. That is the economic trade-off for retaining our highest-producing agents, and our strong retention rates give us confidence that it remains the right trade-off. Total operating expenses were $65.3 million in the second quarter, including $11.6 million in acquisition-related costs associated with the pending RE/MAX transaction. This resulted in a reported operating loss of $7 million in the second quarter, compared with operating income of $1.7 million in the second quarter of 2025.

On a normalized basis, excluding acquisition-related costs, operating income would have more than doubled from the prior year. Net loss was $8 million, and on a non-GAAP basis, adjusted EBITDA was $27.6 million, up 38% year-over-year. Adjusted EBITDA margin expanded to 3.9% from 3.7% in the prior year. We ended the quarter with a record $86.6 million in unrestricted cash and short-term investments, up from $49.9 million at the start of the year. Subject to the satisfaction of remaining closing conditions for the RE/MAX transaction, we expect to prioritize debt repayment and deleveraging following closing. With respect to the standalone Real business, we expect the third quarter to follow normal seasonal patterns across the residential real estate industry, with revenue and adjusted EBITDA declining sequentially from the second quarter and gross margin lower year-over-year.

Assuming the RE/MAX transaction closes as expected, we intend to use our third quarter call in November to provide a combined company baseline and preliminary 2027 guidance for the combined business. More details on our results and key operating metrics can be found in the earnings press release, financial statements, and investor presentation that accompany this call. I'll now turn it back to Tamir.