TORONTO & NEW YORK - The Real Brokerage Inc. (NASDAQ:REAX), also known as Real, has reached a settlement agreement to resolve the Umpa v. NAR class action lawsuit. The settlement, which releases Real and its subsidiaries from the claims without an admission of liability, involves a payment of $9.25 million into a settlement fund following court approval.
The lawsuit, filed in the Western District of Missouri, alleged certain practices by Real that have now been addressed as part of the settlement terms. Real has agreed to implement changes in its business practices that will clarify the negotiability of commissions, prohibit claims that buyer agent services are free, and ensure listing broker compensation offers are included in client communications. The company will also develop training materials to support these changes.
Real, a real estate experience company, operates in all 50 states in the U.S. and Canada and supports over 16,000 agents through its digital brokerage platform. The settlement is subject to preliminary and final court approval and will take effect after final approval.
The company does not expect the terms of the settlement to materially impact its future operations. This news comes from a recent press release by Real and reflects management's current expectations regarding the settlement and its effects on the company's operations.
The settlement agreement is a significant step for Real as it aims to maintain its commitment to providing a seamless end-to-end consumer experience in real estate transactions. The resolution of this litigation allows the company to continue focusing on its growth and service offerings, guided by trusted agents and supported by technology.
This report is based on a press release statement from The Real Brokerage Inc.
InvestingPro Insights
The Real Brokerage Inc. (REAX) has recently managed to settle a class action lawsuit that posed a potential risk to its business. With the lawsuit now behind them, the company can refocus on its growth trajectory and operational efficiency. InvestingPro data provides some key insights into the financial health and performance of Real that may interest investors.
InvestingPro data highlights an impressive revenue growth for Real, with an 80.52% increase in the last twelve months as of Q4 2023. This is further accentuated by a quarterly revenue growth of 88.66% in Q4 2023, signaling a strong upward trend in the company's sales. Despite these robust growth figures, the company's gross profit margin stands at 9.12%, which is relatively low and aligns with one of the InvestingPro Tips indicating that REAX suffers from weak gross profit margins. This is a critical area for investors to watch as it may impact profitability.
InvestingPro Tips also suggest that REAX is trading at a high Price / Book multiple of 20.55 as of the last twelve months ending in Q4 2023. This could indicate that the stock is valued richly compared to its book value, a factor that value-oriented investors might consider. Additionally, REAX has experienced a significant return over the last week, with a 31.09% increase in its stock price. Such performance could be appealing to momentum investors looking for stocks with strong recent returns.
For those interested in exploring further, there are 19 additional InvestingPro Tips available, which can provide deeper insights into REAX's financial metrics and market performance. Investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment strategy with comprehensive data and expert analysis.
The company's next earnings date is set for May 8, 2024, which will be a pivotal moment for investors to assess the impact of the settlement and the ongoing adaptability of Real's business model. With the InvestingPro Fair Value estimated at 4.1 USD, investors have a benchmark against which to measure the company's performance and future growth potential.
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