Tamir Poleg: The only expenses right now are dev-related, and I mean, it’s part of our dev budget. We started working on it in 2023. We will continue to work on it in 2024. I don’t think there are any outstanding or extraordinary expenses related to the Wallet that you should factor in a model.
Matthew Erdner: Awesome. Thank you, guys.
Tamir Poleg: Thank you.
Operator: Thank you. Your next question is coming from Soham Bhonsle from BTIG. Your line is live.
Soham Bhonsle: Hey. Good morning, everyone. Hope you’re all doing well. Tamir, I guess, just stepping back for a second, historically, the Brokerage business has been called high single-digit, sort of 10% EBITDA margin business. Now, obviously, your margin profile is going to be a little different given your business model, but as you sort of put together some of the innovative things that you’re doing on the fintech side and then just the Mortgage and Title ancillary attach, how should we think about sort of normalized margins, right, in normal market, right, call it, 5 million existing home sales long-term?
Tamir Poleg: I think that if you factor in the Wallet, Title, Mortgage and some additional services that we will be adding later on, we’re looking at gross margins in the mid-teens, which I think, we will get to within a couple of years and EBITDA margins of high single-digit, I would say. That’s our target.
Soham Bhonsle: Got it. Okay. And the second one, you talked a lot about sort of productivity on the operations side, which I think is certainly unique, but I wanted to ask you about sort of levers that you have to pull to improve productivity on the agent side, right? Because I think we can all debate what happens to agent count long-term, but as long as you can sort of keep your agents productive and keep taking share that way, that feels more sustainable to me. So can you just talk about that piece a little bit? Thanks.
Tamir Poleg: Sure. It’s probably a combination of both technology and human initiatives. So on the technology side, I think, that the technology that we’re building that allows agents more visibility into their businesses and just streamlines a lot of processes just saves up a lot of time, which kind of opens up the opportunity of serving more clients at the end of the day. So they can handle more transactions in a given day or month versus before joining Real. So that’s the technology piece of it. The human piece of it, we’re taking a lot of action towards educating our agents, both on the listing side and on the buy side, just with kind of very tactical information on how to source leads, how to generate and source leads, how to nurture leads, how to do weekly tasks, weekly emails, deal of the week.
Sharran is doing a lot of work around educating the agents on how to improve their productivity. And the last piece of it, I think, that because of the very collaborative community that we built, there is so much happening on a daily basis, both online and offline, that successful agents are just educating newly licensed agents or agents that are now closing three transactions a year and want to take their business to the next level, which is six transactions a year. There’s a lot of collaboration and sharing of information, and I think that this is extremely unique and that can help a lot of agents and can overall improve the pro-agent productivity within the company.
Soham Bhonsle: Got it. Thanks for the thoughts.
Operator: Thank you. [Operator Instructions] Your next question is coming from Tom White from D.A. Davidson. Your line is live.
Wyatt Swanson: Hey. This is Wyatt Swanson on for Tom. Thanks for taking our questions. It seems like you guys have had some really nice momentum with high productivity teams joining Real since the start of the year. Could you talk a bit about how the agent recruiting or agent attraction landscape may have changed for you guys in recent months? And then, any specific parts of the overall Real Brokerage value prop for agents that you’re finding are really starting to resonate more with agents at the moment? Thanks.
Tamir Poleg: Hi, Wyatt. So, yes, the momentum has accelerated for us and I think that now this momentum is starting to translate into transactions. So, our pipeline of open transactions is about 100 — almost 100% higher than it was at the same date last year. So, this is translating into revenue. I think that maybe what fuels that is the fact that we are becoming a household name, first of all. I think it also has a human component, whereas some high producing teams in different areas are joining us and then a lot of other agents within the area are asking themselves, okay, why did that team join Real? Maybe we should look into it. I think that the model itself is so sticky, and the fact that every agent that joins us is an opportunity to add another two, three, four, five other agents just because of the revenue share, it creates a snowball effect and I think that we are now starting to feel the effect of that snowball effect, which is great.
When — I think that some of the initiatives that really excite those agents and teams that are now joining us, first of all, Private Label and ProTeams are huge. So, just as a reminder, Private Label allows independent brokerages to switch over to Real without changing anything in their branding, without investing in rebranding, without spending any money, just keeping their brand, their local brand that they built for so many years, which is extremely valuable for them and joined under our platform without changing the name or anything like that. ProTeams is essentially a dashboard that allows team leaders and brokerage owners to configure a different plan for each and every agent within their team. So, think about having 100 agents, one agent can be on a 70-30 split, another agent on a 50-50, some agents pay a monthly fee, some agents pay a closing fee.
It’s an accounting nightmare for brokerages and teams. So, ProTeams just takes care of all of this in the background automatically for them. Those two initiatives make the switch over to Real seamless, extremely seamless and it just eliminates a lot of the concerns that they have. So, those two things obviously have a positive impact on growth. The other thing I would mention, there’s a lot of excitement around the Wallet. Just the ability to earn points in order to offset fees and the ability to have a credit line attached to your business, which is something they cannot do right now at their current bank. This is something that they’re excited about. And also, for example, for a team leader to be able to offer credit cards, branded credit cards to their team members, this is huge.
