By M. Marin

NASDAQ:AIRE

READ THE FULL AIRE RESEARCH REPORT

2024 comps not apples-to-apples

reAlpha Tech Corp. (NASDAQ:AIRE), a real estate technology company developing an end-to-end commission-free homebuying platform leveraging artificial intelligence (AI) technologies, reported 2024 results last week. Revenue more than doubled in 2024 to $948k at this early stage in the company’s development. The company believes it can make it easier for prospective homebuyers, sellers and realtors to find or sell properties at appropriate prices and minimize the challenges of navigating through the process by using the homebuying guidance tools available to them on the reAlpha platform.

For most people, purchasing a home is probably the largest financial transaction they make. Real estate is the world’s largest asset market, according to The Economist. Given that purchasing a home is likely probably the largest financial transaction most people make and the world’s largest asset market, according to The Economist. This makes it paramount that prospective buyers and sellers obtain pertinent information before entering into a transaction. Currently, the process of analyzing a real estate property as a potential investment can be cumbersome as prospective buyers must search multiple databases. reAlpha helps streamline the process by searching and delivering information about prospective properties based on investment criteria established by the prospective buyer / seller.

Potentially transformative impact of recent NARS settlement; company views AI as strategic industry disruptor

The company believes AI can be a disruptive technology in the proptech space and that it can gain market share by leveraging its growing portfolio of AI-enabled applications to make it easier and more convenient for buyers to research market trends. reAlpha is developing a portfolio of technology solutions that enable prospective buyers, sellers or renters to analyze properties in order to make informed investment or divestiture decisions. To promote the platform and brand, the company recently formed a strategic investment of $5 million from Mercurius Media Capital, a media fund that provides advertising inventory in exchange for equity in companies, in exchange for preferred shares.

Importantly, the reAlpha real estate technology platform is commission free. reAlpha expects the platform to benefit from an expected significant shift in how transactions are conducted in the real estate sector following a recent landmark decision in the NARS case, which is generally viewed as launching a transformation in the real estate industry that includes the elimination of 6% standard commissions and made commissions negotiable.

Strategic initiatives in 2024

The company completed multiple initiatives designed to transform reAlpha. Specifically, strategic moves in 2024 include that reAlpha launched its end-to-end, commission-free homebuying platform in April 2024. By eliminating commission fees, reAlpha expects to transform the homebuying experience. The company expects the reAlpha platform to generate revenue from closing costs and additional services following the transaction such as potentially helping homebuyers find a mortgage that meets their needs, managing the title search process, and obtaining homeowner insurance, among other potential revenue sources. Moreover, the platform is available to users 24-7, which is also expected to make the tools attractive to users who need to obtain information and other useful services outside of standard business hours.

Company expects zero commission model will gain traction

The reAlpha platform is an AI-powered real estate agent that operates with zero-commission to buyers. The company expects it to benefit from the settlement earlier this year by the National Association of Realtors (NAR) of a class-action lawsuit and agreement to change the way real estate fees are levied. The platform offers AI-backed tools to support real estate transactions with no broker commission. Given the impending fees that the NAR settlement likely will impose on real estate transactions, the company believes its zero fee feature will be attractive to homebuyers.

AIRE believes its zero commission model will gain traction with users and that it can generate revenue from multiple related services including helping to obtain and research mortgages, providing moving in services and information and enabling users to leverage its growing database to help make purchase decisions, among other services.

Strategic M&A to enhance growth, expand footprint includes recent acquisition of GTG

As AIRE expands its solutions portfolio, the company continues to add complementary businesses and technologies organically or through strategic M&A, with acquisitions a key component of reAlpha’s growth strategy to broaden the range of services related to residential real estate transactions that it offers, while maintaining zero commission and charges. Thus, in addition to developing proprietary AI-backed technologies, AIRE also plans to continue acquiring companies with complementary technologies that can accelerate its growth. In fact, strategic M&A is a critical component of the company’s footprint growth strategy.

The company also acquired a controlling stake in Hyperfast Title in July 2024, which enabled AIRE to offer title services in 3 U.S. states, as well as an 85% stake in AiChat in July 2024, which enhanced reAlpha’s AI capabilities in conversational customer engagement and expanded its presence in the Asia-Pacific region. In addition, the company launched the reAlpha Super App in August 2024, which provided homebuyers with the ability to use the reAlpha platform and its AI-driven homebuying services directly in their mobile devices, and completed the acquisition of Be My Neighbor, which enables AIRE to offer mortgage brokerage services in multiple U.S. states. Be My Neighbor was licensed in a total of 28 U.S. states by year-end 2024.

In 1Q25, the company acquired GTG Financial, a mortgage brokerage company licensed to operate in seven U.S. states, including California, which expands reAlpha’s geographic footprint to a total of 28 U.S. states. As the company builds out its geographic reach – its goal is to operate a nationwide presence by the end of 2025 – this expected expansion would likely be a catalyst to accelerate revenue growth.

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