Real Matters (REAL) Q3 2024 earnings summary

Executive summary

• Consolidated revenues rose 17% sequentially to $49.5 million and 8% year-over-year, with strong operating leverage in U.S. Appraisal and Canadian segments.

• Adjusted EBITDA was $1.7 million, up 132% sequentially, with margin improving to 12.6%.

• Net income for Q3 2024 was $1.7 million, a decrease from Q2 2024 but a significant improvement from a loss in Q3 2023.

• Market share gains were achieved with top clients in U.S. Appraisal, U.S. Title, and Canada.

• Cash and cash equivalents stood at $41.4 million with no debt at quarter end.

Financial highlights

• U.S. Appraisal revenues reached $37.5 million, up 15% sequentially and 12% year-over-year, with net revenue margin at 27.6%.

• U.S. Appraisal adjusted EBITDA increased 15% year-over-year to $5.5 million, with margins rising to 53.2%.

• U.S. Title revenues increased 5% sequentially to $2.1 million but declined 18% year-over-year, with adjusted EBITDA loss of $1.9 million and net revenue margin at 43.6%.

• Canadian revenues rose 30% sequentially to $9.9 million, with net revenue margin at 19% and adjusted EBITDA margin at 69.3%.

• Consolidated net revenue was $13.1 million, up 14% sequentially and 8% year-over-year; operating expenses rose 11% to $11.9 million.

Outlook and guidance

• Previous fiscal 2025 targets withdrawn; a new target operating model is established, focusing on transaction volume-based targets and margin expansion.

• U.S. Appraisal segment targets: 550,000–620,000 annual transactions, net revenue margin 26–28%, adjusted EBITDA margin 60–70%, adjusted EBITDA $50–$65 million.

• U.S. Title segment targets: 120,000–150,000 annual transactions, net revenue margin 60–70%, adjusted EBITDA margin 50–55%, adjusted EBITDA $30–$45 million.

• Canadian segment is on track to achieve net revenue margin targets based on nine-month performance.

• The business is positioned for growth as the U.S. mortgage origination market recovers, with significant capacity to scale in both appraisal and title.