Great. Good morning, everyone. Thank you so much for joining us today. My name is Bernie McTernan, Internet and Consumer Tech Analyst here at Needham & Company, and thanks for spending time with us for this conference. This is the first fireside that we're doing of the day, but we've been doing this conference for a couple of years now, so thanks, everyone, for your time. We appreciate it, but I want to turn it over to Tamir Poleg, CEO of Real Brokerage. He's going to go through about a 20-minute presentation. I'm going to hop back on for Q&A afterwards, but if you have any questions, please type them in the portal. We'll be sure to get to them, and without further ado, turn it over to Tamir.
Thank you, Bernie. Hi, everyone. Thank you for being here with us today. My name is Tamir, and I'm the Co-founder and CEO of Real Brokerage. Real is a real estate technology company that I've co-founded back in 2014, and we have a very compelling growth story right now, especially given the current state of the real estate industry. Our primary business is real estate brokerage, where we provide real estate agents with a differentiated platform to grow their businesses. We offer them compelling economics, a collaborative culture, and most importantly, cutting-edge AI-driven technology that is centered around our proprietary software stack. As of the third quarter of 2024, we had 21,770 agents in the U.S. and Canada, which is up 79% versus the prior year. We continue to see growth, and today, we have over 22,000 agents working on our platform.
During the 12 months that ended in September, we generated $1.1 billion in revenue, which is an 81% increase year over year, and that compares to a roughly 4% decline in the existing home sales in the market over that time, so obviously, we're performing much, much better than the market. Just to give you a little bit of perspective on our industry, there are approximately 1.5 million real estate agents in the U.S. and another 160,000 agents in Canada. In an average year, the industry generates roughly $100 billion in annual revenue, which represents the total amount of commissions that are paid to agents. Every agent must be affiliated with a brokerage. That's a regulatory requirement, and typically, brokerages are names that you're probably familiar with: Keller Williams, Coldwell Banker, or it could be Real. But agents cannot operate completely independently. They have to be affiliated with a brokerage.
And the market has been dominated by traditional players for many, many decades. You're probably familiar with some of the names. All of those traditional players rely heavily on office space for the distribution of services. And they charge agents a lot of money. And they deliver what we believe is somewhat of a poor value. So even though we've been growing very rapidly, we're still less than 2% of the overall market, which gives us confidence that we can continue to grow and have a very long runway ahead of us. When we started the company, we actually saw an opportunity to create a brokerage platform that is better than what the incumbents offered. We thought that we can base our offering on technology while eliminating the needs for office space and just be able to deliver agents higher value at a lower cost.
At the same time, we also envisioned creating an operating model for a brokerage that's more sustainable, does not need office locations, and applies a lot of software instead of human labor in everything that the brokerage does. So we believe that we have achieved this balance, and our recent performance validates this vision. Just to give you a little bit of perspective on our recent growth, because we are a very unique story in the industry right now, and I don't know if you're following the other publicly traded brokerages, but obviously, we're an outlier. In 2020, when we decided to take the company public, which was a very unusual decision for us, back then, we were generating roughly $15 million in annual revenue. But we wanted to create an equity incentive plan for agents. We see our agents as partners in building this business that we built together.
So initially, we went public on the TSX V in Canada. Then a year later, we listed on NASDAQ. Currently, we're only listed on NASDAQ. But going back to the summer of 2020 or the beginning of 2021, almost overnight, we started growing like crazy. If you compare our last 12-month numbers compared to Q3 2021, you will see that we have grown our revenue by 14x in just three years. Just to remind everybody, transaction volume in the housing market has declined by over 35% during that same time period. So obviously, very different performance from the company compared to the market. So we've proven that we can grow rapidly in good times, but also grow very rapidly despite very challenging market conditions that we've been experiencing for the past two years. The big question becomes, why are agents joining Real?
Why are we enjoying all of that growth and so many high-performing agents joining us? While our competitors are losing market share, we're taking market share from them. So first of all, there are four main reasons why agents join us. First, the freedom and flexibility. When agents work for a traditional brokerage, there is typically a manager in the office. That manager tells them when to come to the office, what their marketing materials should look like, which meetings they have to attend. When they join Real, they join a platform that allows them to grow their businesses the way they want to. And that's a huge plus for agents that are independent contractors. Second is the favorable or compelling economics. An average agent at Real will end up paying Real half of what they're currently paying at their traditional brokerage.
Typically, brokerages charge agents monthly fees, commission splits, transaction fees, E&O fees, all kinds of fees. Our model is based on an 85-15 split with our agents with no monthly fees so obviously, this is attractive to a lot of agents but additionally, we have a cap, meaning that once agents pay us $12,000 a year in commission splits, they get to keep 100% of their commissions and only pay a $315 fee for every transaction so think about an agent that is making $300,000, $400,000, $500,000 a year in commissions and at their brokerage, they would probably pay the brokerage, I don't know, $100,000 a year in commission splits. In our case, they will only pay us $12,000, and they will keep the rest to themselves so obviously, the economics are very favorable, especially if we're talking about high producers.
We have actually been able to increase our per-agent productivity over time. We are attracting more and more productive agents. Currently, our per-agent productivity is higher than the industry average. The third reason why agents join us is technology. We truly view Real as a tech company. While we operate a brokerage as well as a mortgage and title companies, our technology platform developed over a decade is what truly sets us apart. At the core of our tech stack is our proprietary transaction management software, which we call Reason, which is built around four main pillars designed to empower agents and streamline their work. First is productivity.
This includes everything agents need, from a CRM to a transaction management system that allows them to draft contracts and send them for review and e-signature, an education module, a powerful dashboard that provides them real-time visibility into everything that's happening in their businesses. Everything, by the way, is mobile-first. It's designed for our agent-facing app. An agent can pretty much manage their businesses from the palm of their hands. The second pillar of our technology is marketing. And here, we took a very unusual approach. We decided not to create a consumer-facing brand because people are not choosing agents today based on their brand affiliation. People are using agents because they know that that person is an expert. Maybe they helped them in the past. Maybe they helped a friend or a neighbor buy or sell a home.
We decided that instead of creating a consumer-facing brand and spend tens of millions of dollars on a consumer-facing brand that really doesn't change anything, we should help our agents brand themselves within their local markets. It has an offline component. So everything an agent needs, from business cards, yard signs, brochures, car magnets, you name it, everything is customizable and can be ordered on our platform. And we also help them with the online visibility just because consumers are currently online when they're starting their home search or even thinking about selling their home. So every agent at Real receives a personally branded website, a personally branded app that their clients can download. Look at the agent's listings. Look at listings in general. Look at the agent's bio and communicate with the agent directly from there.
And by the way, everything is included as a part of the Real package. They don't have to pay extra for any of those. The third bucket of technology is community. As a company, we don't have offices for the agents to use. We have more than 22,000 agents across North America, but we don't have any costs associated with offices. At the same time, we also understand that agents want to collaborate. They want to exchange leads. They want to know each other. They want to create groups. So we have a community feature on the app that allows them to do exactly that. They can post. They can chat one-on-one. They can chat in groups. They can exchange leads. Our community is extremely vibrant. And this is the glue that connects all of the agents across North America together.
Then the last piece of technology is brokerage operations. Try to imagine everything that is happening in the back office of a brokerage. Those people that are providing support and transaction management and payment processing and all of those things. We have taken that and automated almost to the full extent possible. Typically, at a brokerage, you would have one employee for every 20 agents. Our ratio is one employee for every 140 agents. Obviously, we are much more efficient than other brokerages. That's due to the fact that we took all of these processes and we implemented software that replaced the need for humans. Everything that has to do with, again, support, reviewing contracts, processing payments, everything is automated. This is why we're able to continue and scale and add more agents and more transactions without growing operating expenses at the same pace.
And that is, by the way, a huge competitive advantage that we have and others don't have. So just to double-click on our technology for a moment, while we believe that we've built a leading tech platform for real estate as a real estate brokerage, we recently announced some AI innovations that represent the next evolution of our vision. Specifically, last month in our RISE event, our annual agent event, we announced that we are recentering our Reason software platform around Leo Copilot, which is an AI-powered command center that taps into the vast amount of data that we have on our agents, our agent productivity, their transactions, their pipelines in order to anticipate each agent's needs and simplify workflow. So a year ago, we launched Leo. Leo is an AI-powered assistant for agents. And Leo now has visibility into everything that agents do on our platform.
Leo knows exactly which clients our agents are catering to. Leo knows the processes that every agent is taking. Leo has visibility into all of the transaction documents. So this AI-driven approach transforms how our agents work and allows them to spend less time doing administrative work and just focus more and more on relationships and acquiring new business while we help them with closing the transactions. And Leo, by the way, Leo Copilot isn't just a chatbot or a virtual assistant. It's a game changer that puts us in a leadership position, harnessing AI to enhance real estate services and agent experience. The last reason why agents join us is culture. And agents want to be in an environment where they can grow, they can learn from others, they can collaborate, where they do not compete with other people that are sitting next to them in an office.
I'm incredibly proud to say that at Real, we've built a culture of collaboration versus competition. That created a buzz across the industry. A lot of agents are joining us for that very unique and special culture. At traditional brokerages, agents often compete with each other. They focus on the same markets. They sit in the same office. That creates sometimes uncomfortable situations. This does not exist at Real. Also adding the fact that almost all of our agents are shareholders in the company. If another agent succeeds, it means that me as an agent, I succeed because I'm a shareholder. I will root for them. I will push them. I will help them. I will try to make them better. This is the kind of environment that we built.
It's a kind of an environment that agents like just because they support each other. Let's spend a second on the efficiency of our platform. We measure efficiency in a couple of ways. In this slide, we show that our fixed cash operating expenses, the percentage of revenue, continue to decline year over year as we're able to grow revenue much faster than our fixed costs, which, by the way, I believe we will continue to do over the next few years. Another important metric is what I talked about earlier, our efficiency ratio that we measure as the number of employees for full-time employees per agent. So typically, at a brokerage, you would have one full-time employee for every 20 agents. Our ratio is 1: 140. That ratio, by the way, continues to improve over time.
I think that it will continue to improve moving forward. This is a huge competitive advantage relative to our peers, especially relative to the incumbents or traditional brokerages, and it allows us to support rapid growth while prudently managing our OpEx growth, but Real is really much more than a brokerage, and let me spend a couple of minutes talking about the ancillary services opportunity here. We spent a lot of time talking about our brokerage business and the technology behind it, but it's also important to discuss our ancillary services. In recent years, we made two strategic acquisitions. We acquired a title company and a mortgage company, and expanding into these areas was deliberate because while our brokerage gross margins typically average between 9%-10%, our title services are generating over 80% gross margins, and mortgage services generate around 50% gross margin.
So these are significantly higher margin businesses compared to brokerage. And we are now in the process of rapidly scaling both of those business lines within our company. Looking into the future, our growth isn't just about the ability to attract more agents and process more transactions. It's also about maximizing the value of each transaction by increasing attachment of these services, those high-margin services. And that's a huge opportunity for us to drive improved profitability and drive long-term margin growth. When we think about the future of the company, our vision is to transform the home buying and selling process into a streamlined AI-driven experience for both agents and their clients. And for many, many years, we were hyper-focused on agents and building the perfect platform for them. And then about two years ago, we started shifting more and more resources into the consumer experience.
Anyone who has bought a home, especially recently, knows that today's home buying process is broken. It's not enjoyable. It's not convenient. As a buyer, you don't really have a lot of control or visibility into what's happening or into the closing process. And we think that technology can dramatically improve the client experience while keeping agents in the center of the transaction. To that end, just last month, we announced that we are now developing a new consumer-facing product named Leo for Clients. This AI-powered text-based interface will allow clients a seamless experience from discovery of homes to close, integrating tools for mortgage, pre-approval, property search, sorry, inspection, notification. Everything will be on Leo for Consumers. This is a very ambitious undertaking because nobody has tried it before. Nobody has succeeded in that before.
It involves combining the three core components of a real estate transaction: brokerage services, mortgage services, and title services into one tech offering. But this is exactly what we're trying to do. We're in testing at the moment, and we're scheduled to launch Leo for Consumers in the second quarter of 2025. Leo for Clients represents, in my view, a huge opportunity to drive ancillary service attachments and further monetize our high-margin mortgage and title businesses. So again, this is coming up in the middle of 2025. Moving on, another major initiative that we're very excited about is the Real Wallet, which is our first fintech product tailored specifically for real estate agents. Currently, when agents close a transaction, we collect the funds, and then we transfer the agent's share, which is typically 85%, directly into their own bank accounts.
In October, we launched the first version of Real Wallet, which is a digital wallet that every agent at Real will have. At launch, U.S. agents can open a business checking account and receive a Real-branded debit card, while select Canadian agents have access to a business line of credit linked to their earnings history with the company. For us, we now have an opportunity to earn fintech revenue via the interchange fees on the debit cards. Or every time the agents swipe, we earn the interchange fee. And if agents in Canada use the credit lines, we actually earn APR on that. We have a lot of information, a lot of data on our agent businesses that allows us to underwrite them for those credit lines. And the wallet will continue to grow.
We believe that wallet adds a new layer of financial flexibility and intelligence for agents that is simply not available at traditional brokerage models. Really, just to summarize, the Real Wallet exemplifies our vision to go beyond a traditional brokerage, building a comprehensive financial ecosystem that supports the entire home buying and selling process. It empowers agents to manage and grow their wealth on our platform, which is designed specifically for their specific needs. Just to summarize, and then we can open it up for Q&A. As we close 2024, we look forward to 2025. We're very excited that we will continue to deliver exceptional industry-leading growth and improved profitability. I think that from an investor standpoint, it's very comforting to look at a company that really proved that it can grow through bad times and good times.
And again, with all those tech initiatives, I think that we're just getting started, and there's an opportunity to create one of the most valuable real estate technology companies in the world. Bernie, back to you.
Yeah. No, great. Thanks, Tamir. Great presentation, as always. Maybe just to start, we'd love to go back to, I think it was slide four, where it talks about the split between where agents are. Yeah, exactly. In terms of small private brokerages, scaled private brokerages, and then Real having less than 2% of the market right now. As you think about the next couple of years here, and especially some of the investments that you and others are making in technology, are we going to have an acceleration towards more tech-enabled brokerages, which I generally think are the more public brokerages?
Or how do you see this chart changing if this was 2028 instead of today?
Yeah. I think that we have to remember that still 90% of agents are affiliated with traditional brokerages. And I think that other models are becoming more and more popular and prevalent. And while in the past, the conversations were around, "How can I get support if there's no office?" we don't get asked that anymore. So I think that if we're looking into the future, when I'm looking at the incumbents, the traditional brokerages, and especially if you look at the publicly traded ones, their earnings tell a story. And that story is of a shrinking market share and a dying business. So there might be some events that can accelerate that slow death that they're experiencing.
But definitely, if I'm looking, I don't know, 10 years ahead, I would say that at least 50% of the agents in the U.S. and Canada will probably shift to models like ours. And we're very well positioned to become one of those very few companies that capture that market share. I don't know if it'll happen in five years or 10 years or 15 years and whether it's going to accelerate. But I would assume that the more time goes by, the easier it'll get for companies like ours to attract agents.
Understood. And you mentioned those, I think it was the four primary drivers of agents choosing Real. Maybe how has that changed over the past couple of years? Maybe split was the most important thing a couple of years ago. Now it's more technology-driven. Or how do you see this evolving in the coming years as well?
Yeah. I think that definitely at the beginning, there was more focus on the freedom and flexibility in the economics. And now it's becoming more about technology and culture. Obviously, the economics play a huge role. But I would say that the economics were somewhat replaced by what we call opportunities. Because if agents can earn equity in the company, if they can earn revenue share by attracting their friends, this supplements the very favorable economics. I think that moving forward, the technology that we're building will probably play a more significant role in our agents' businesses and lives just because it will turn them into even more efficient, help them save more time, and create a competitive advantage for them in the eyes of their clients, just better service for their clients.
So I think that technology will gradually play a more significant role in why agents join Real and stay at Real.
Got it. And is anything changing from a competitive standpoint in terms of how hard it is to acquire agents? I mean, it seems like from the results you guys have been producing, I mean, agents have gone from 8,000 at the end of 2022 to probably closer to 24,000 at this point. I mean, are you seeing anything with brokerages leaning in more now that expectations are it should be an upmarket next year? You have Redfin going with their less reliance on a fixed compensation model, going more variable comp. Anything that you're seeing broadly?
If we're talking about new players coming into the market, not really. I mean, there are always people that are trying to build something.
I think that people underestimate the amount of investment that's needed in order to create a nationwide infrastructure, especially if we're talking about a publicly traded company. If we're talking about the existing players, and especially the traditional brokerages, we're not seeing any initiatives that in our minds will help them go back to growth mode. So I think that there are very few players right now that are doing interesting things within the industry. And we're probably leading the group, the pack. But if I needed to bet on anyone, I wouldn't bet on the traditional brokerages to all of a sudden do something that will transform their business. Also, many of them are just, they don't have the ability financially to invest. So I think that kind of the landscape is pretty clear at the moment. Yeah.
As you're talking about new products and technology that you have that are coming to the market, I thought that Leo Copilot coming kind of mid next year, I think you said Q2 next year, is pretty interesting. So maybe how deep do you think it will be able to go conversationally? I think the example on the slide is pretty simplistic, but how detailed do you think it can get? And then also, what was the investment to create a type of product like this? Is it leveraging more of an open-source LLM or something like that? Or just how to think about how much is yours versus leveraging third parties?
Yeah, it's a good question. Leo has two sides. One is Leo Copilot. Leo Copilot is the Leo side that helps agents.
So Leo has visibility into everything that agents do, all of their transactions, all of their paperwork, their earnings, their performance. And Leo Copilot is available at the moment. We're actually continuously improving Leo Copilot. I'll just give you an example. As a brokerage, we have to review all of the files that our agents sign with their clients. So on a real estate transaction, let's say on average, you have 100 pages, contracts, addendums, all of those things. You would need a human on the brokerage level to review all of the contracts. Typically, the way it's done is that agents upload the file, and then there's a broker that needs to review the file. As you can imagine, brokers are busy. It takes them a few hours or a couple of days to attend to that file.
And then they send the comments back to the agent saying, "Hey, you're missing a signature on page 8, and you're missing a box that needs to be checked on page 13." We now taught Leo to review contracts without humans needing to actually take a look at it. So once an agent uploads a file, Leo, within two or three seconds, provides the agent all of the things that need to be corrected in the file. And we started with California. We're now expanding it to additional states. So what I'm trying to say is that Leo is becoming smarter and smarter and helps us with efficiency and helps us offer a much better service to agents. Just think about an agent used to getting back comments on a file within a day or two, and all of a sudden, it's three seconds. So that's a major improvement.
But I think that you touched on, or you referred to Leo for Clients. Leo for Clients will be available in the second quarter of 2025. The thing with Leo for Clients is that Leo is just a massive brain. And Leo learns how you personally and specifically communicate with your clients, which kind of questions you're asking them, what does your flow look like, what are the things that which words you're using. So Leo will be able to imitate the way you communicate in a way that the clients would not know that it's Leo. The clients will think that it's Bernie asking the questions. It's Bernie making the suggestions. It's Bernie suggesting to go and look at this house. And my experience with Leo so far is that it's pretty close to insane.
So far, I've tried to use Leo for finding homes and asking specific questions about listings, and I can tell you that Leo was better at finding me homes than I was able to do by myself, so again, I think that Leo will just change the way people, both consumers buy home, but the way agents interact with their clients.
Yeah. Wow. Really interesting. As we're approaching kind of the end here, I wanted to make sure we touch on some macro issues here that I'm sure everyone's very much focused on. Just general thoughts, housing market next year. I mean, Fannie Mae, I think, lowered their estimate for 2025 from 11% to 4%. I think Zillow came out today saying they think it could be 10%, or at least their economist team did.
Just, I don't know, I know it's early, but any thoughts in terms of what the market could bring next year?
Yeah. Typically, I'm trying, and we are, as a company, trying to be very conservative in our assumptions. And obviously, we're trying to be somewhat disconnected from the market and grow despite of market conditions. But I can say that October housing data was encouraging. I can tell you that on our platform, it's difficult to draw some trends just because we're growing so rapidly. So the charts are just up and to the right all the time. But at the same time, I would say that next year, we will probably see a low single-digit growth in transaction count and a very low home price appreciation. So if I had to provide numbers, I would say 47% growth in transaction count and 2-3% home price appreciation.
Okay. So kind of like mid-high single, maybe double if everything goes right, which?
Yeah. I think that the worst is behind us, to be honest.
Yeah. Have you seen anything like post-election? I know you referred to the October EHS data, but anything in terms of if there was pent-up demand, if people were on the sidelines waiting for post-election to be more active? I know this isn't peak selling season by any means, so you don't want to overextrapolate a small data point, but just anything kind of more recent post-election that's driven more buyers to the market.
Again, it's difficult because we've been growing agent counts so rapidly. And if we look at our transactions, they continue to grow. What we're hearing from our agents is that this beginning of winter season is not looking like prior years, which means they're busier.
So there's a level of optimism as to market conditions at the moment post-election.
Got it, and sorry, I should have asked for the clarification on the macro question too, but just interest rates, do your thoughts in terms of the numbers you gave? I mean, is that contemplating a 7% rate? Do you think it goes lower from here?
Oh, it should go lower, for sure. Yeah. I mean, yeah. I don't know if we'll see a 5-point something at the end of the year. By the way, there is a chance, I think. I think we're looking at the low 6 for end of 2025. The lowest 6. Okay.
Interesting. Okay. One thing, that big topic of conversation with NAR, just buy-side rates and buy-side agreements or contracts that need to be done.
I mean, I think the data is suggesting that we've seen so far that it hasn't had a major impact, at least on commission levels, but just would like to get your thoughts.
Yeah. So all of the surveys that I read from other companies suggest that there wasn't any change in buy-side commission rates. This is in line with the data that we're seeing on our platform. And just for people here to understand, we processed last quarter over 37,000 transactions. So we have pretty solid visibility into what's happening. And about 55% of our business is buy-side. So we haven't seen any decline or pressure on buy-side commissions. Also, in our conversations with agents, this is not coming up as a major concern.
Okay. Interesting. What about the other major NAR topic, Clear Cooperation, where does Real stand on that? Yeah.
We haven't made any public announcement as to our stance. I think that at the end of the day, we care about our agents and we care about their clients, meaning that we care about consumers. We think that if you're selling a home, you want your listing to have as much exposure as possible. I mean, obviously, if you choose to. But at the same time, I think that anyone who's talking about Clear Cooperation at the moment is talking out of a position. And I think that we will be fine either way if CCP stays in place or if it goes away. I do see opportunities this way or the other, but at the moment, we'll just let others bash over it.
Okay. Fair enough. I mean, wanting to get back to the financials, and you touched on ancillary revenue towards the end of the presentation.
I'd love to get a sense just how material is it now? Because better gross margin, you mentioned 80% gross margins for title and escrow. And what can you really do to drive attach? It sounds like Leo for Clients is a potential driver there, but we'd love just to get greater in-depth thoughts.
Yeah. I think that Leo for Clients would be the main accelerator of attach rates. At the moment, on title, for example, we're offering our largest teams around the country JV opportunities. So they could become partners in a title company that we will establish together in their market. And this way, they can actually profit. They can monetize. And there are signs that this is working well. So we're now expanding and adding more and more JVs.
I think that, again, Leo for Clients is the first time ever that we will have a direct interaction with our agents' clients. So up to now, we only serve our agents. With Leo for Clients, we will have a way to communicate with our agents' clients in a way that we will be able to offer them our mortgage services, our future insurance services, obviously using our in-house title services as well. So we believe that that tech angle, coupled with some incentives for the buyers, will result in much higher attach rates. Again, the second half of 2025 will be very telling.
Okay. Is there a reason why agents don't seem, I don't know, just as incentivized or whatever it is to be attaching title and escrow and mortgage right now?
It's just habit. Every agent has their preferred lender and their preferred title person, which they trust.
I think that trust is very important because as an agent, what you care about is probably two things. One, you want to make sure that the transaction closes and you get your commission check. And two, you want to look good in the face of your clients. And I think that if you have a relationship with a lender or a title company.
Yeah. I was going to say you don't want to mess up the big commission for the smaller one.
Exactly. So you want to make sure, or you want to make sure you work with someone who already demonstrated that they can close your deals and nothing goes wrong. And this is exactly what we need to replace. We need to replace that trust factor. And I think that there are some ways to do it. And we are working on some initiatives at the moment.
Got it. And maybe just lastly, I mean, not only have we seen agent count explode, but EBITDA has gone from negative to now positive, at least for the past handful of quarters now. I mean, as we're talking about all these tech investments that are happening, is there anything like do you have the right OpEx space? Should we be expecting a big step up in expenses at some point as you continue to scale the infrastructure, or do you think you just can continue to get operating leverage on the existing infrastructure?
Yeah. I think that we are very focused on growing gross profit faster than we grow operating expenses. And this is something that we don't want to change.
At the same time, being a publicly traded company that is now crossing the billion-dollar annual revenue line means that we need to invest a little bit more in infrastructure, in internal controls, in SOX compliance, all of those things. So there will be some added investment into that. We also added some significant headcount in the third quarter. We are going to grow our R&D budget in 2025 just because of all of the things that we're doing with AI. But again, at the same time, we're determined to grow gross profit faster than operating expenses.
Sounds good. Well, Tamir, let's leave it there. Thanks for the time. Appreciate it, as always. Thanks to everyone who joined in the webcast.
Thanks, Bernie.
Yeah. Hope you have a great rest of the day and holiday season. Thank you, everybody.