In Real Brokerage’s first earnings call since announcing its plans to acquire REMAX, executives sought to reassure investors, analysts and agents on both sides of the deal that the move was the right one and that the two companies could merge without disrupting their distinctive models.
The message to REMAX agents and franchisees was that they would not be forced to adopt Real’s cloud-based brokerage model. The message for investors was that REMAX’s brand, volume, and consumer leads could help Real expand its technology, AI, mortgage, title, and fintech tools, while realizing expected run-rate savings of $30 million.
Tamir Poleg
The conference call was the clearest indication yet of how Real intends to explain the proposed combination after announcing last week that it would acquire REMAX Holdings in a deal that implied an enterprise value of REMAX of about $880 million as of the announcement date.
“Real has built a community and an economy that works with platforms, technology and agents,” Real CEO Tamir Poleg said on a conference call. “REMAX has brand recognition, a global network and decades of trusted relationships with the most productive agents in the industry.”
Real says REMAX model won’t cause confusion
Real executives reiterated that the acquisition does not mean that REMAX distributors and franchisees need to adopt Real’s brokerage model.
“Real and REMAX will continue to operate as separate brands, each with different models and value propositions,” COO Jenna Rosenblatt said on a conference call. “REMAX agents and franchisees will not be forced to migrate to the Real model.”
Jenna Rosenblatt
In exchange, Rosenblatt said, the deal will give REMAX agents and franchisees access to Real’s technology and services, including reZEN, Leo AI, Real Wallet, ancillary services and consumer lead generation tools.
Poleg made a similar point in prepared remarks, saying REMAX agents who prefer to work in an office alongside a broker owner or team can continue to do so.
“If you are a REMAX agent who has been successful in working well with broker owners and teams in the office, that remains the case,” Poleg said. “What you can look forward to is access to new technology, tools and services that Real has built that will be available to you after we close.”
Still, Poleg acknowledged that the initial response from REMAX franchisees is fraught with uncertainty. Asked by an analyst about the network’s feedback, he said the initial reaction was “a mixture of a little bit of excitement and surprise,” adding: “People, understandably, don’t like change all that much.” But he said that as REMAX management communicated with franchisees, the response turned to excitement, and Real’s agents also fielded calls from REMAX agents wanting to learn more about the company’s technology.
Later in the call, Poleg cited retaining agents and franchisees as the first major hurdle Real is focusing on before closing.
“The most important thing we can do between signing and closing is to communicate and demonstrate very clearly to the REMAX agents and franchisees, as well as the Real agents, that this combination will make their business better and not disrupt them,” Poleg said.
Real sees signs of improvement in lead, service and AI
While Real sought to reassure agents and franchisees, executives also said they see REMAX’s network as a major opportunity to expand ancillary services and AI-powered lead conversion.
Poleg said the RealNetwork and REMAX networks combined closed more than 700,000 trade sides in the U.S. last year. One Real Mortgage’s 1% attachment rate across its transaction base would generate high-margin income for the combined company of approximately $25 million, while a 1% title attachment rate would generate more than $10 million, he said.
“Our long-term goal is to be well above 1%,” Poleg said. “So you can see how these numbers can really change the bottom line over time.”
The company also sees opportunities in REMAX’s consumer web traffic. Poleg said REMAX.com and REMAX.ca generate approximately 1 million leads annually, and Real wants to use Leo AI to nurture those leads before handing them over to agents.
“We want to have Leo working on these websites so he can actually nurture the leads and then hand them off to agents who are ready to do the deal and guide the buyer through the process,” Poleg said.
Rozenblat also provided an update on HeyLeo, Real’s consumer home search portal and AI relationship management platform, which launched in beta in March. She said Haleo has taken 357 MLS and is on track to reach more than 400 by the end of the second quarter. He said the platform already covers more than 85% of the geographic distribution of real agents, with 450 agents in beta and another 4,500 on the waiting list.
Real also reported continued growth in its core brokerage and emerging platform businesses during the quarter. The company announced that its agents closed approximately 42,000 transactions, an increase of 25% year-on-year, and the number of agents increased from approximately 33,500 at the end of the quarter to more than 33,900 as of May 6. RealWallet’s revenue more than tripled year over year to $436,000, with 8,000 active agents using the platform and over $25 million in deposits.
Real promises millions of dollars in savings
Real executives highlighted the growth opportunities as well as the cost savings expected from the deal.
Poleg said the company is targeting $30 million in run-rate savings from the combination, based on what he called “real, tangible duplicative costs” such as the two publicly traded companies’ cost structures, shared services and vendor agreements.
CFO Ravi Jani said the deal was underwritten based on what Real could see before taking ownership of the combined company, but indicated there may be additional opportunities after the deal closes. He cited the recent implementation of synergies by Compass as an example for the sector and said the Real would remain disciplined.
Rabbi Jani
“As we’ve seen with other M&A deals in this space, the targets we take on deals from a synergy standpoint are kind of based on what we could see before we owned the combined company and what we could look inside,” Jani said. “Could that synergy number change? Yes, of course.”
Poleg then identified realizing $30 million in savings as one of Real’s three biggest priorities before closing, along with agent and franchisee retention and day one operational stability. He also said Real hoped the day the deal was completed would be “a boring day in the best possible sense” and that agents and franchisees on both sides would wake up to find the business running as it had the day before.
Poleg concluded the call by tying his ownership stake to the deal’s broader vision, reminding investors that he is not only Real’s CEO and co-founder, but also “one of the company’s largest individual shareholders.”
“I have never been more excited about our future than I am right now,” Poleg said. “The opportunity before us is generational, and I deeply believe that this company’s best days are ahead of us.”
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