Real Brokerage (REAX) Q1 2025: Agent Count Surges 61% as Ancillary Margin Strategy Accelerates
Real Brokerage delivered a standout quarter, with agent count and transaction growth sharply diverging from industry contraction. The company’s tech-enabled model, anchored by AI tools and high-margin ancillary services, is driving both agent productivity and margin expansion levers. With disciplined cost control and a robust balance sheet, Real is positioned to capitalize on industry disruption and scale its platform economics.
Summary
- Agent Productivity Outpaces Industry: Agents delivered more transactions per head despite a sluggish market.
- Ancillary Expansion Drives Margin Leverage: Mortgage, title, and RealWallet revenue up sharply, building higher-margin mix.
- AI Platform Sets Operational Pace: Leo Copilot and automation initiatives are reshaping internal efficiency and future client experience.
Performance Analysis
Real’s Q1 performance sharply outpaced the broader housing market, with revenue up 76% and transaction volume rising 77% against an industry backdrop of declining existing home sales. The agent base grew 61% year-over-year, reaching 26,870 at quarter end and surpassing 27,700 as of this call, a clear sign of competitive share gains as most peers contract. Notably, agents increased average transactions per head by 5%, underscoring both recruitment quality and engagement.
Ancillary businesses—mortgage, title, and RealWallet—delivered 50% revenue growth and are central to Real’s margin expansion thesis. These segments, though still small at $2.2 million in quarterly revenue, produce gross margins five to eight times higher than the core brokerage. Gross profit rose 63% year-over-year to $33.9 million, while gross margin slipped to 9.6% due to a rising share of capped agents—those who hit annual commission caps and pay lower per-transaction fees. Operating leverage was evident as adjusted operating expenses fell to 6% of revenue, and adjusted EBITDA more than doubled, reflecting disciplined cost management even as headcount efficiency dipped temporarily from contractor conversions.
- Agent Growth Defies Market Headwinds: Real added over 2,700 net new agents in Q1, with 800+ more joining since quarter end.
- Ancillary Revenue Scaling: Mortgage and title units posted record months in April, and RealWallet annualized run rate now exceeds $700,000.
- Cost Efficiency Holds: Adjusted OpEx per transaction fell 12% YoY, and cash flow from operations reached $16 million, supporting both growth and $6 million in share repurchases.
Real’s model is showing the rare combination of top-line acceleration, margin leverage, and capital discipline, setting it apart from traditional brokerages facing cyclical and structural headwinds.
Executive Commentary
"Our vision is to simplify life's most complex transaction, that is, a purchase or sale of a home, by providing agents with the tools, technology, and resources they need to grow both their businesses and as individuals while delivering a seamless experience for clients."
Tamir Poleg, Chairman and Chief Executive Officer
"We're pleased to report another quarter of impressive performance as we continue to deliver consistent growth and improving profitability... We're always going to be very disciplined and focused on cost and execution."
Ravi Jani, Chief Financial Officer
Strategic Positioning
1. Agent-Centric Platform as Growth Flywheel
Real’s agent-first approach—offering financial incentives, equity, and a proprietary tech platform—has become a magnet for top-producing teams, especially as traditional models struggle with cost and regulatory pressure. The company’s ability to attract and retain agents, even as the broader industry contracts, is now its primary growth engine. Programs like Real Academy and functional masterminds are deepening agent skill, further driving productivity and loyalty.
2. Ancillary Services as Margin Catalyst
The buildout of high-margin ancillary businesses—mortgage, title, and RealWallet—is central to Real’s margin expansion strategy. These services not only generate superior unit economics but also deepen agent and client engagement with the platform. The pivot to statewide joint ventures in title and the launch of tax-focused business checking in RealWallet are early signs of a scalable, ecosystem approach.
3. AI-Driven Operational Leverage
Leo Copilot, Real’s AI-powered agent assistant, is now handling all inbound support calls and thousands of daily agent interactions, materially reducing support overhead and improving agent experience. The rapid deployment of AI for both internal and future client-facing use cases is positioning Real to lead the next phase of brokerage automation, with future plans for agent-personalized AI voice assistants and deeper integration into the transaction process.
4. Disciplined Capital Allocation and M&A Readiness
Real’s strong cash position and lack of debt provide latitude for opportunistic M&A, particularly as valuations in proptech compress. Management remains disciplined, targeting deals that enhance agent value, retention, or productivity, while continuing to invest organically in core AI and fintech capabilities.
5. Regulatory and Market Adaptability
With industry models and MLS (Multiple Listing Service) rules in flux, Real’s tech-forward, flexible approach allows it to adapt rapidly, focusing on consumer benefit and agent empowerment rather than chasing industry headlines or one-size-fits-all models.
Key Considerations
This quarter underscores Real’s ability to execute on multiple growth levers simultaneously, but the path to sustainable margin expansion and national ancillary scale remains complex and competitive.
Key Considerations:
- Agent Productivity Gap Widens: Real’s agents increased per-head transactions even as industry volume fell, highlighting the platform’s appeal to skilled operators.
- Ancillary Scale-Up Still Early: While growth rates are strong, mortgage, title, and RealWallet remain a small share of total revenue and require continued execution to move the margin needle materially.
- AI as Differentiator, Not Just Cost Saver: Leo Copilot’s rapid adoption signals operational leverage, but the true test will be consumer-facing impact and ancillary attachment rates.
- Capital Discipline Maintained: Share repurchases and no-debt balance sheet provide downside protection and optionality for strategic moves.
Risks
Gross margin pressure from capped agent mix will persist until ancillary and fee changes scale, and the cyclical housing market remains a structural overhang. Regulatory shifts, commission litigation, and MLS model changes could alter industry economics. Execution risk remains in scaling ancillary services and integrating AI into core workflows and client experience.
Forward Outlook
For Q2 2025, Real expects:
- Continued revenue and gross profit growth, with margin stabilization as fee changes and ancillary contributions ramp.
- Agent count momentum to persist, with over 800 net adds since quarter end and a robust pipeline entering the summer selling season.
For full-year 2025, management reiterated expectations for significant improvements in revenue, gross profit, and adjusted EBITDA, with focus on scaling ancillary businesses and operational efficiency.
- Ancillary service expansion and AI deployment are expected to be the main drivers of incremental margin and productivity.
- Capital allocation will remain balanced between investment in growth and potential opportunistic M&A.
Takeaways
Real is executing a rare dual play of rapid agent-led growth and margin uplift through high-margin ancillary services and AI automation.
- Agent and Transaction Growth Stand Out: Real’s platform is attracting productive agents and teams at scale, fueling both volume and future ancillary attachment opportunity.
- Margin Expansion Hinges on Ancillary Scale: The shift to higher-margin mortgage, title, and fintech is underway, but will need to reach greater scale to offset capped agent mix impact.
- AI and Platform Investments Raise Competitive Bar: Real’s automation initiatives are driving both cost efficiency and agent experience, with future consumer-facing features set to further differentiate the model.
Conclusion
Real Brokerage’s Q1 results highlight a business outpacing industry contraction, with a scalable agent-centric platform, disciplined capital management, and a clear roadmap for margin expansion through ancillary and AI-led service layers. Sustained execution on these fronts will be critical to defending and extending its lead as market dynamics evolve.
Industry Read-Through
Real’s results signal that tech-enabled, agent-centric models are gaining share in a challenging housing market, as legacy brokerages struggle with cost and regulatory headwinds. The focus on high-margin ancillary services and AI automation is likely to become table stakes for industry players seeking margin resilience. The rapid adoption of AI for agent support and future consumer engagement points to accelerating digital transformation in real estate, with implications for adjacent fintech, mortgage, and proptech sectors. Brokerages failing to invest in platform scale, automation, and integrated financial services risk falling further behind as the market recalibrates around productivity and cost efficiency.