Thank you for joining for the Real Brokerage Session on the last day of a very busy week. Thank you so much for being here. I'm Stephen Sheldon. I'm an analyst at the Tech Group at William Blair covering the real estate sector, including Real Brokerage. So please visit our website at williamblair.com for a complete list of research disclosures and potential conflicts of interest. We're thrilled to have The Real Team back at our conference again this year. There's even more to dig into than usual. You know, after it was announced in late April, the planned acquisition of remax um so obviously that's been a big focal point for the story uh in the last couple months beyond the large acquisition uh announced acquisition i should i should uh say reel has been a clear outlier in the resi brokerage industry growing quickly even with as most probably know very subdued housing activity out there uh for context in the first quarter reels agent count and gross profit both grew mid 20 percent range year over year uh and so we're optim optimistic about its potential to increase monetization of solutions like mortgage title real wallet there's a lot of growth opportunities out there for them um so i i continue to think it's a good time to be looking at the story uh from the company today we have uh tamir uh poleg who's up here with me who's the co-founder chair and ceo we have uh ravi johnny who's the cfo sitting in the audience, and we have some teammates from the IR team sitting in the front row here. So with that, I'll turn it over to Tamir.

Thank you, Stephen, and thank you, William Blair, for having us again, and thank you all for being here. My name is Tamir. I'm the co-founder and CEO here at Real. For those of you who've been here last year, you're probably familiar with the story. Real is a real estate technology brokerage, very fast-growing, kind of an outlier in the in the industry especially given what's been happening in the past three and a half years in our industry and kind of the slowdown in the housing market we've been growing tremendously well so you're some of you are familiar i want to spend today talking about what we've been building so far and also the recent announcement of the acquisition of remax and why why we're so excited about the future of the company before we dive into it as always this presentation may contain some forward-looking statements so I would encourage you to read the disclaimers in our publications but diving into where real is right now and I'm talking about real I'm not referring to Remax at the moment we're operating in all 50 states in the US and in six Canadian provinces we have over 34,000 agents who decided to join real there are one and a half million agents in the US they have to be affiliated with the brokers they can go to a traditional model they can go to a franchise model like Remax and they can choose real we are the fifth largest real estate brokerage in the country right now since the first quarter of 2023 we've been adding agents at a CAGR of about 50% which is super impressive again this is a really really hard time in the housing industry and we we demonstrated that we can continue and grow despite of the housing conditions. Last year our agents closed almost 200,000 transactions and our agents are a little bit more productive than the average in the industry. That translated into around $2 billion in annual revenue for the company and we generated around $70 million in adjusted EBITDA. Now the question becomes why is real growing where everybody else is losing market share, where everybody else is struggling and it starts with the value proposition that we offer the compelling economics we have an 85 15 split on commissions an agent closes a deal we pay them 85 of the commission we keep 15 of the commission and there's a cap in how much they pay us in commission splits every year and that is twelve thousand dollars so if you're an agent that's generating five hundred thousand dollars in commissions you only pay us twelve thousand dollars extremely extremely attractive compared to other brokerages where the average is 70 30. So this is super attractive for them. Then the proprietary technology platform that we built that is essentially an operating system for an agent business. Everything they need from visibility into their business, into their leads, into their transactions, going into transaction management, going into marketing, everything they need is in one place that is offered to them free of charge. They don't have to pay for third-party tools. Everything is integrated and everything is on our app. And then the third main reason why agents are joining us is the collaborative culture. Most of our agents are shareholders at Real. And this makes the culture a little bit unique in the way that agents feel like other agents are their partners. They want to see other agents succeed, unlike sitting in an office with other agents where you're competing over a business at Real. Everybody collaborates. There's a lot of knowledge sharing. There's a lot of support that agents are offering to other agents instead of the company offering it. We don't need to because agents are supporting others. I think that one of the strongest things that we've demonstrated pretty much since 2020, and we started the company in 2014 we went public in 2020 and uh and since then we've been publicly traded we're only trading on asdaq but what once one of the things that we demonstrated is that we know how to grow in great markets in 2020 and 2021 but in also really bad markets and right now the housing market is at a trough uh the housing conditions are worse than they were back in 2008. On average, existing home sales on an average year are 5.1, 5.2 million homes being sold. Now we're at a rate of 4 million even below that. So there's kind of a 25% decline in existing home sales. But going back to the first quarter of 2021, 2023 compared to today, we grew revenue from around 400 million dollars last 12 month revenue from around 400 million dollars to about two billion dollars in the worst housing conditions in the past three decades and this is something that um that you know we cannot ignore at the same time we also grew agent count from 10 000 agents to over 34 000 agents and we continue to add more and more agents this is a very compelling model for a lot of agents around the country adjusted the beta went from pretty much negative a million dollars in in 2023 to about 70 million dollars last year and we're continuing to attract agents that are actually closing deals this is an industry where a lot of agents are joining they're thinking that it's going to be easy and then they're not closing anything we are focusing on productions because this is how we monetize our business on the tech side we are a tech company that is also operating a real estate brokerage but we built a tech platform called Reason and Reason the way to think about it is try to imagine everything that is going on in the back office of a brokerage everything that has to do with supporting the agent with processing transactions and processing payments we automated all of that to the full extent possible on average at a traditional brokerage you would have one employee for every 20 agents our ratio is one employee for every 25 agents roughly 25 agents and this this is an efficiency ratio 95 sorry this is an efficiency ratio that just does not exist our the second closest competitor is at 45 i know that many of you know compass compass efficiency ratio is one full-time employee for every 12 agents and this is due or thanks to to the system the proprietary technology that we built that allows us to scale without adding more and more overhead and cost now onto that tech stack we layered ai leo is our ai assistant and leo has visibility into everything that the agents do every conversations that they're having with our state brokers every conversation that they have with our support line leo is learning from that and leo now answers about 100 000 agent questions on a quarterly basis just think about the huge cost saving and what happened if we needed actually humans to to answer 100 000 agent questions so we layered ai on top of all of our systems, and that helps us be so efficient. In addition to that, we also have a fintech angle to the business where we invite agents to bank with us. We process about $2 million a year in payments, and a lot of it is passed through. An agent closes a deal, we receive the commission check, and then we pass about 90% or 91% of it to the agent, so we don't monetize it. The real wallet is a banking system where agents can bank with us. They have checking accounts. They have debit cards if they want to spend the money. They have lines of credits that are available to them based on our underwriting because we have visibility into their businesses. And it's just another way for us to monetize the platform. We started the company by monetizing real estate commissions. This is how we monetize transactions. And currently our gross margins are around 8 to 9% on the brokerage side. But at some point we also acknowledge the fact that our agents have relationships with consumers and we can leverage those relationships to try and sell mortgage and title. Mortgage and title are super high margin services. On title we have about 80% gross margins. on mortgage, we have about 50% gross margins, and we want to attach as many title and mortgage transactions as possible. So we operate a title company, we operate a mortgage company as well. Right now, the attach rates on mortgage are around 1%, so obviously there's a lot of upside. This is still a nascent business. On the title side, attach rates are around 3.5%. Again, a lot of upside there but just being able to attach more ancillary services to every transaction could dramatically change the profitability profile of the company. Now let's move to the news and this is interesting because I think that nobody expected Real to acquire Remax. Remax is this iconic brand, 145,000 agents across 120 countries, Real is only operating in the US and Canada. So at the end of April we announced that we are acquiring RE-MAX for about 880 million dollars. That's the value of the transaction. Obviously RE-MAX holds a little bit of debt. We're buying it at a trough level at a seven multiple on Synergize 2025 adjusted EBITDA which we think is very attractive and obviously when the market recovers we will see the upside in that. But the idea behind it is that when we looked at our business, we realized that Reel has amazing growth, we have technology, we don't have the scale, we don't have the brand. We decided not to build a consumer-facing brand, we decided to build ourselves as a platform for agents, and RE-MAX is known across the world. Everybody knows RE-MAX, and we realized that RE-MAX has what we don't have, they have the brand, they have the scale, we have what they are lacking. which is the growth and the technology. And RE-MAX has been losing agents in North America for the last couple of years because they had a technology gap, because their value proposition was diminishing. It's a little bit difficult to attract agents to RE-MAX because you're not providing enough value. And the RE-MAX broker owners, their franchisees, are struggling with margins because they operate offices where everything is done manually. Or they're acquiring third-party tools, which they're paying a lot of money to. So we thought that by bringing Reason, our tech stack, into REMAX, offering it to REMAX agents and franchisees, we can solve for all of those problems, get REMAX back on our growth trajectory, and also realize a lot of synergies, which I'll touch on in a bit. In terms of timing, we hope to close the transaction in the second half of the year, hopefully within a couple of months. We're going through the steps of regulatory approval, shareholders' votes, and we hope to have good news very soon. If we look at the combined company, what it would look like based on 2025 numbers, We're looking at $2.3 billion in pro forma revenue, $157 million in adjusted EBITDA for the combined company, over 180,000 agents across the world. In terms of transactions, we're looking at 1 million transactions in the US and Canada. This is a huge transaction pool that we can try and monetize not only through commissions but also through ancillary services, title and mortgage. And this is a huge opportunity for us. And obviously there is a lot of opportunity to expand globally, but also in North America. The models are different. So real is a brokerage. We operate a brokerage. We process transactions where Remax is a franchise. RE-MAX invites people who are brokers to open RE-MAX offices, pay franchise fees. So we operate two different businesses, but we want to bring those two businesses under one roof so we can monetize those two different offerings. We can touch on what it means for agents. But at the end of the day, agents will not have to choose between this or the other. There is a profile of agents who are more entrepreneurial, they're seeking more freedom and flexibility, they're more tech savvy, they don't need hand-holding, they don't need office access, they're welcome to join under the real model. And if you're an agent that is looking for a little bit more of a brand recognition, you want office space, you want your broker to be next to you, you're welcome to join under the RE-MAX model. We are going to operate Real and Remax as two different businesses, two different offerings, enjoying the same shared services and the same technology. But the idea is instead of an agent having to choose this or the other, they now have all of the offerings in-house. in in addition to to the brokerage or everything that is agent facing and and we were very focused on building technology that can help agents close more transactions and be more efficient we are also developing consumer facing technology one of one of the assets that remax has is a website that generates a lot of leads and we created an ai assistant that can essentially take a person who's visiting a website or somebody who is just a lead that you acquired on Zillow for example and our AI is able to have a conversation with that person understand what this person is looking for what kind of homes which areas what's important for them if they're looking for a blue kitchen our AI will identify the blue kitchen on the MLS's and send those listings to to that buyer so that at the end of the day we can help our agents and later on the RE-MAX agents convert more leads into money into into dollars so AI will become a more foundational part of our business obviously it's helping us in our operations in and in efficiency but we want to put AI to work when it comes to conversations with consumers right now when a real agent has a listing and they're putting a yard sign there's a QR code that they can place on the yard sign and whoever is driving by can scan the QR code and have an immediate conversation with Leo about the property. They will receive a presentation of the property. Leo will be answering all of the questions about the property. They can schedule a showing. So AI is becoming more and more integral to what we do. One other interesting aspect of the transaction is that about 95% of Reel's revenue is driven by commissions. It's dependent non-agents closing commissions where two-thirds of remax revenue is recurring franchise revenue and by combining the two types of revenues we we create a healthier revenue mix for the combined company and then talking about synergies out of the gate without looking under the hood without understanding all of the different inefficiencies on the remax side we identified about 30 million dollars in cost synergies between their office space between the kind of the the duplicative roles of the two companies to the two companies are publicly traded so we don't need that double cost we estimate the cost synergies at around 30 million dollars this is kind of a base case we think that once we get immersed in in the remax business we will identify even more but that's kind of an initial estimate that we can stand behind which might improve later on the more exciting part of this combination is the revenue opportunity that exists i talked about remax transactions in north america those million transactions that we can tap into if you apply a one percent attach rate on mortgage which is what we have right now on the real side to remax this translates into 25 million dollars in revenue at 50 margins and again one percent is extremely modest we want to go much higher than that if we apply a one percent attach rate on title on real side we have three and a half percent right now which is also a modest number every one percent of attach rate on title translates into one into ten million dollars in revenue at 80 percent margins. So this is the opportunity that we're looking at here from an ancillary services perspective. We are going to offer the real wallet, our fintech platform, to all of the RE-MAX agents. We want them to bank with us. We want them to hold deposits with us. We want them to swipe the debit cards. So obviously a lot of opportunity to monetize through fintech services as well and then the most exciting part for me at least is the remax website remax operates two websites remax.com remax.ca in canada those websites generate as i said one million buyer leads per year and those are high intent leads now the interesting part is that they have not been monetizing those and the industry standard for monetizing real estate websites is at five to seven percent conversion. Every one percent conversion on this website translates into thirty million dollars in high margin revenue almost at a hundred percent revenue. So just try and apply five percent at thirty million dollar per one percent this this is just a huge opportunity and we intent on focusing on that right out of the gate. One other way to monetize those leads is not only by sending them to agents and charging a referral fee once the transaction closes, we can also monetize them by sending it to companies like Guaranteed Rate who translate those buyer leads into mortgage leads. So this is something that's already in the works. So I'll just try to summarize all of this is a real estate technology platform and the combined company will enjoy both and own brokerage which is what really is doing with an iconic global franchise brand like Remax this is something that does not exist in the real estate industry this is a very unique combination we're excited about it. This combined company will enjoy the growth that we're bringing. We intend on continuing to grow agent count despite of the very weak housing environment and we demonstrated that we grew dramatically from 2023 where we had 10,000 agents to now where we have 35,000 agents so we will continue to grow the combined company. We're buying Remax at the trough of the market at what we think is an attractive multiple with a lot of cost and revenue synergies that we can materialize. And then there are multiple catalysts to this combined business. Obviously, if and when we get some tailwind from the market and there will be a housing recovery. I don't know if it's going to happen this year, next year, 2029, you name it. But there's a 25% upside in the business just by going back to a normalized housing environment without us doing anything without us adding any agent 25% upside in that. And obviously, once we integrate the platform once we once they use our technology, there's a way to monetize that there are a lot of synergies cost synergies.

But what we're mainly excited about is all of the revenue that we can extract out of those 145,000 agents and a million transactions in North America so that's great well we have I think seven minutes left here so maybe I'll start with some questions and then we can see if anyone in the audience has questions so yeah as we think about the Remax deal I mean obviously you can look at the math so many different ways and there's a ton of compelling monetization opportunities you can go after I guess as we think about the risks and the the challenges you know there's gonna be a a lot of work to integrate. You've talked about trying to get attach rates higher. Maybe just talk about what are some of the key things that you think Real and Remax kind of together need to get right to make this a successful acquisition.

So I think that the first thing is in any integration there's risk because there's a lot we don't know about their business. We operate a different business. We think that we understand very well their franchisees businesses so that's number one just general integration risk number two real has a clean balance sheet we never operated with any debt and now we're taking on that even though that that can be serviced through through the cash flow and as I said the combined company on a 2025 performer basis would have generated 157 million dollars in in adjusted the beta so we feel comfortable about taking on the debt and and the leveraging to about two times in in a very short time frame but just the the idea of you know having that is something that we'll have to get used to there's I would say on the RE-MAX network side there's a lot of curiosity there's a lot of excitement but also question marks because there will be leadership change we operate differently there will be changing in momentum um so i think that we will need to get the buy-in from the remax network and and kind of show that we're here to to improve and not taking anything away and to get i guess what you know i know it's still really early but as you look at the remax franchisees you know how the con i feel like getting the tech platform getting them to adopt it is kind of a crucial thing here what's been the initial feedback you've gotten from them have they been looking at it testing around again i know it's very early but just what are the indications because i i feel like getting that tech platform adoption could also be a big key to getting the ancillary adoption so you talk about that some so i have to remind all of us and myself as well that we're still operating two different businesses we haven't closed the deal um as we announced a A lot of agents from Remax and franchisees reached out and wanted more information and we cannot really share everything. And there are some things that we still don't know. What we do know is that we wanna be able to offer a light version of Reason, which would include some features so that we can at least get them to adopt Reason to some extent. And then I think that the more extreme case is coming to a franchisee and saying, hey, we can take over the operations of your business. we can manage everything for you so that you can focus on training your agents on how to sell homes and attracting more agents to the office all of the operating burden all of the administration is is on us um and i think that the key will be to to get the adoption from some um key people on the franchise on the on the network side and then highlighting them as a test case uh and that's we intend to do it maybe one other quick one on remax and i don't know if i've asked you this before but i think one of the questions we always got covering remax as well was you know there's a

huge international agent base and i think they were generating remax is generating about a tenth of the revenue per agent internationally as they were in the u.s and so the question for them was always you know when how can you drive that monetization higher um i guess his what are any thoughts there that you have i don't i don't know if you want to get into that but it's something that i've thought about more with you guys taking over remax yeah we want to enhance the value proposition across uh across the globe pretty much for everybody everybody at remax uh initially we will focus on north america so us and canada this is where we want to focus initially um there is also kind of a different structure to Remax rest of the world where they sold it they sold the rights yeah the franchise rights but we still want to be able to grow the brand globally but I think that from a monetization standpoint North America is the focus and then maybe just as we think there's a lot going on in the brokerage space you know there's been a lot of consolidation you guys being a good example of being a consolidator here what has that meant to you know the ability for real to recruit agents you know has there been dislocation from some of the other big deals that have happened I guess maybe just talk about what you're seeing in the

overall agent recruiting pipeline yeah I mean we're seeing a lot of consolidation I think that the reasons are kind of different between one deal to the other I think that people were expecting when Compass was acquiring Anywhere, people were expecting a lot of Anywhere agents to look for new brokerages. This really did not happen. I think that agents are starting to understand that it's better for them to be affiliated with a more established brand or more established groups. And right now we're forming two large groups, the Compass Anywhere or compass and then the real remax group um from our standpoint there's a lot of agent attraction momentum right now because what we're seeing is a lot of folks that for example have been with uh cold little banker and they're used to an established brand and they wanted to come over to the real ecosystem but they were lacking that um brand and and the recognition of we're part of something that has been around for a long time. And now with the REMAX acquisition, they feel like we can offer them the right model with an established brand, with a company that is here to stay, and just a market leader. So we're seeing a lot of momentum on our side.

And let's see, we've got, I guess, a minute left. Anyone in the audience have anything?

Yeah, so what's the REMAX agent take on the REMAX? So every RE-MAX office or franchisee can determine their own splits. The interesting part is that the economics that actually flow through to RE-MAX headquarters is roughly at $2,500 annually per agent. And this is around the number that Reel is making per agent. So we're making roughly $3,000 per agent. And so we're kind of indifferent if agents stay at RE-MAX or they switch to the real model, but the economics are almost identical.

And I guess just with our last kind of minute or two, for anyone who's kind of just here to listen, I guess, about housing activity, any signs of life, what are you seeing more real time? Like, what are you seeing out there?

At the beginning of the year, everybody was expecting 2026 to be a recovery year. and i think that everything that has been happening with braids and and you know macro um is pushing that down the road um spring season is kind of solid to be honest but at the same time i think that we are again we're an outlier just because we're going but um there's there's a problem with affordability and it needs to be fixed yeah all right we'll end it there uh the The breakout is gonna be upstairs in Ginny B. Thank you everyone for attending.

Thank you, Tamir, for being here and spending some time with us.