Good day, and welcome to the Redfin Corporation Q2 2022 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Meg Nunnally. Please go ahead, ma'am. Thanks, Cody. Good afternoon, and welcome to Redfin's Financial Results conference call for the second quarter ending June 30, 2022. I'm Meg Nunnally, Redfin's Head of Investor Relations. Joining me on the call today is Glenn Kelman, our CEO, and Chris Nielsen, our CFO. Before we start, note that some of our statements on today's call are forward-looking. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but our actual results may turn out to be materially different. Please read and consider the risk factors in our SEC filings, together with the content of today's call. Any forward-looking statements are based on our assumptions today, and we don't undertake to update these statements in light of new information or future events. On this call, we'll present non-GAAP measures when discussing our financial results. We encourage you to review today's earnings release, which is available on our website at investors dot Redfin dot com for more information related to our non-GAAP measures, including the most directly comparable GAAP financial measure and related reconciliation. All comparisons made in the course of this call are against the same period the prior year, unless otherwise stated. Lastly, we'll be providing a copy of our prepared remarks on our website by the conclusion of today's call, and a full transcript and audio replay will also be available soon after the call. With that, I'll turn the call over to Glenn. Thanks, Meg, and hello, everyone. Redfin in the second quarter performed below the expectations we set in our last call, with revenue of $607 million compared to a projection of $613 million-$650 million. The shortfall was due to the largest rate hike in 35 years, which in June curtailed the second quarter lending revenues of Bay Equity, the lender we acquired in April, by $15 million. Our net income was nonetheless in line with expectations after the exclusion of $10 million in restructuring costs for the 6% of our employees we laid off in June. The adjusted EBITDA loss was $29 million. In five years as a public company, Redfin has never before fallen short of our revenue projections. This is also true that even as the housing market weakened our results, Redfin has gotten stronger. We expanded our site from 91% of the homes in America to 94% to compete as a national rather than a regional destination. Our year-over-year brokerage share gains once again began to accelerate from 4 basis points in the first quarter to 5 basis points in the second quarter. We hired agents too quickly during the pandemic, but now sales execution is improving across the board. Of the Redfin customers who bought a home, a higher percentage stuck with us for that purchase, the first such gain since April 2020. The percentage of Redfin home buyers who got a Redfin mortgage increased to 11% in June and 15% in July, which is nearly double the five-year monthly high of 8% that we'd reached prior to acquiring Bay Equity Home Loans. Title Forward second quarter attach rate also more than doubled from 12% in 2021 to 32% in 2022. We've learned where low fees let us take share and where we can raise prices to increase profits. In the markets where we came back to advertising the 1% Listing Fee we charge our move-up customers, new Redfin listings in July grew 10 points faster than the market overall. In the month prior to the campaign's launch, new Redfin listings were growing more slowly than the market. As we invest more in advertising this fee in 2023, we expect listing share to accelerate. We'll likely stop trying to convince buyers they should save money on their own agent, since buyers aren't the ones who pay that agent directly. On July 26, we eliminated the commission refund we offered home buyers in 22 markets, with few objections from customers or agents. If this pilot continues to be successful, we'll eliminate the refund entirely as early as January 2023, improving full-year gross margins in our core business by more than 500 basis points. In the nine small markets that already eliminated the refund in 2019, we kept taking share. Our mission to put customers first is stronger than ever, but we need to save customers money at the points in the moving process when money matters the most, when choosing which listing agent to hire, and when shopping for mortgage rates. This pricing decision is one of thousands that Redfin is making to become profitable, as this market correction has forced us to simplify our business. Our goal isn't just to survive the downturn, but to come out of it stronger. Profit discipline and sales execution have become more important to Redfin, with housing demand weakening. As affordability pressure began to mount in February, more people searched Google for rental homes than real estate, favoring sites like Zillow with well-established rental search. Redfin is still competing effectively for new visitors searching online for homes for sale, but our visitors have become less likely to return, with some suspending their home search until the economy improves. The shift in interest toward rentals slowed traffic growth to Redfin.com and Redfin's mobile applications from 11% year-over-year in the first quarter to 9% in the second. Over time, Redfin expects to compete better for renters, not just home buyers. Since adding rental listings to Redfin.com at the end of March, visits to rental listings on Redfin.com and Redfin mobile applications has grown at a monthly rate of 9%, and the number of inquiries Redfin.com sent to our property management customers has grown even faster. Already, Redfin.com accounts for 4% of the rental inquiries generated by all of our rental search sites. The Redfin.com contribution is just one reason that RentPath, the rentals marketplace we acquired out of bankruptcy in April 2021, recorded its first-ever quarter-on-quarter revenue growth since 2017. I just said first ever. I meant to say its first quarter-on-quarter revenue growth since 2017. Excuse me. Total rental site visits, including rental traffic on Redfin.com, are up 9% year-over-year. While we still need to improve customer retention, second quarter bookings are up 24% year-over-year. Since July 2021, the productivity of salespeople at generating new bookings has doubled. At the June National Apartment Association conference, RentPath relaunched as Rent, anointing Rent.com as our flagship site rather than Apartment Guide, and simplifying the story of how our marketing services and online marketplaces work together. Excuse me, I just lost my place. As Rent recruits more property managers to promote their apartment buildings on our network of sites, we'll compete more effectively with the largest real estate portals. Our goal is to surpass Realtor.com, now second only to Zillow in real estate traffic. Already among people looking to buy or sell a home in the 20 largest U.S. markets, 30% in the second quarter named Redfin as one of the first three real estate sites to come to mind, compared to 23% for Realtor.com. At the beginning of 2021, these numbers were reversed. Becoming one of North America's top two real estate search sites can have a seismic impact on demand, accelerating brokerage share gains. We can invest more in driving demand as we improve monetization. This is where Redfin has made the most progress over the last three months. First, by eliminating our commission refund in the 22 market pilot. Second, by increasing the rate at which the Redfin customers who buy homes stick with a Redfin agent for the purchase. The buyer pullback from the market downturn left many of our agents idle, swinging real estate services to a second quarter adjusted EBITDA loss. We reduced costs within the quarter, lowering expenses quickly while holding on to the people needed for long-term growth. This June 14 layoff may be a setback for near-term gains in share and close rate, but not over time. The agents who stayed had a close rate nearly double that of the agents who left. Even if the buyers now returning to the market will take time to close, our agent sales pipelines are now mostly full. Another improving measure of agent performance is loyalty sales. The fraction of our brokerage sales that come from past clients, client referrals, or through agents' personal networks had already increased from 24% in 2019 to 27% in 2020 to 32% in 2021. In the second quarter of 2022, it rose even higher, to 35%. Outside of our layoff, agent attrition has also improved, falling by five points from the second quarter of 2021 to the second quarter of 2022. This is why we expect loyalty sales to keep outpacing sales from our site, excuse me, especially as we offer more incentives for top-performing agents. Redfin employs many of the agents we recommend on our site because we believe those agents deliver better service. Employing agents also gives us the standing to ask those agents to sell Redfin's suite of lending, title, and renovation services. It's why we could double the rate at which Redfin home buyers get a Redfin mortgage, though we've only owned Bay Equity since April 1. Our success in Atlanta and Salt Lake City, where 34% of home buyers got a Bay Equity mortgage in July, tells us that Redfin's overall attach rate of 15% is just the beginning. Over time, we also expect significant margin expansion on our loans. When we announced the acquisition, we told investors that Bay Equity and Redfin earned a similar amount of gross profit per home buyer in 2021 as a tribute to Bay Equity's underwriting efficiency. Since then, a massive contraction in mortgage lending has led many online lenders to issue mortgages at a loss, forcing Bay Equity to cut its gross profit per loan in half. Bay Equity already reduced staffing on July 28. When rates stabilize and Bay Equity can raise prices on new loans and also refinance many of our 2022 loans, we'll have the potential to generate more profit from a customer than any other broker. This acquisition can change the fundamental physics of our business. Redfin has been a new source of sales for Bay Equity, but also a recruiting partner for building Bay Equity's traditional business of meeting home buyers through agents and other brokerages. In market after market, from Washington, D.C., to Seattle to Chicago, Bay Equity has recruited loan officers who once got plenty of loans from Redfin agents while working with competitors, but then saw that loan volume dwindle after our acquisition. Joining Bay Equity, a loan officer gets a steady source of referrals from Redfin agents, but also brings over other customers and agent partners outside of the Redfin network. Beyond mortgage, the business most affected by market forces is RedfinNow, which gives homeowners an immediate cash offer. Our property segment earned $6.8 million in second quarter gross profit, up from $5 million in the second quarter of last year. Because of a sharp decline in U.S. home buying demand, we now expect to sell the homes we agreed to buy in April and May for a loss after accounting for holding costs, selling costs, and repairs. That won't be enough to sink our battleship. Our forecast assumes home prices keep declining moderately through the rest of 2022, but we still expect our properties division to earn a significant gross profit for the full year. We aren't worried about the homes we agreed to buy in June or July because we haven't bought as many or paid as much for these homes. In April and May, RedfinNow's offer amounts were based on the assumption that home prices would hold steady over the four months that it typically takes us to clear out the original owner to get the home on the market and to get the next owner under contract. In June and July, RedfinNow assumed home prices would decline about 6% over that time. We're now selling homes much more quickly than we are buying them. In July, we put more than four homes under contract to sell for every one we put under contract to buy. Our inventory should peak early next week at $436 million in homes owned and then decline quickly. We expect that virtually all of the homes we bid on in spring will be under contract to the ultimate buyer by October and off our books by year-end. We have long believed that homeowners' interest in immediate liquidity is here to stay, but that we wouldn't know iBuying's true margins until we weathered a downturn that lasted longer than the false starts of late 2018 and mid-2020. We also believe that iBuying is only worthwhile as part of a brokerage that can serve homeowners even when market conditions make iBuying nearly cost-prohibitive. That latter belief has already been vindicated. For every RedfinNow inquiry that led to an accepted offer in June, two more led to the homeowner hiring a Redfin agent to list the home instead. Driving brokerage share is the rationale not just for RedfinNow, but for every one of Redfin's businesses. We invested in rentals because becoming one of the Internet's top real estate destinations is crucial to our share growth. We built a title business and bought a lender because employing agents lets us sell a suite of services better than any other broker. Every extra dollar that these businesses earn from a customer can be reinvested in driving more brokerage demand or can be returned to investors. After all, we're too small and too mission-driven to be a holding company for housing-related business. We tell ourselves that if business doesn't drive brokerage share, it's out of there. Though each of these businesses shares the same market share goal, we presented the profits of each separately to clarify the scope of our investment in each. Our plan to generate our first annual net income in 2024 entails generating adjusted EBITDA in 2023. Only one of our major businesses, rentals, can lose a significant amount of money next year. Our brokerage-generated profits in 2021 and Bay Equity have been profitable for almost its entire 16-year history prior to this summer's rate hike, so both can return to profits when the market settles down. We expect the remainder of our businesses will be near breakeven in 2023. Before turning the call over to Chris, let's discuss the housing market, which got significantly worse in June but then improved in July. The breaking point for many buyers came on Friday, June 10, when mortgage rates spiked 30 basis points and climbed another 43 basis points to 6.28% the following Monday and Tuesday, to the biggest one-week jump since 1987. From June 2021 to June 2022, pending home sales dropped 20%. Just from May 2022 to June 2022, the drop was a whopping 9% when economists expected it to be 1%. Existing home sales may dip below an annualized rate of 5 million units, a Mendoza line for housing that we haven't breached for a full year since 2014. The percentage of homes that had a price drop in June doubled from 9% in 2021 to 18% in 2022, a trend that we expect to accelerate when the dust settles on July numbers. In pandemic markets like Denver, more than half of all listings had a price reduction. In Boise, that number was 62%. From March to mid-July, year-over-year price growth slowed from 16%- 9%, but the value of most homes probably fell further. The reported numbers reflect sale prices only for homes that sold when we know the market has become more selective. Beautiful homes on quarter lots still sell readily, but the homes with funky layouts now don't sell at all. In lieu of publicly reported price drops, builders are funding lower mortgage rates, paying closing costs, doubling agent commissions, buying washers and dryers, and upgrading kitchen finishes. One reason prices are falling fast is the fraction of inventory now being sold by iBuyers, builders, and other institutions, which has increased from 27% in 2017 to nearly 35% in 2022. Redfin knows from our experience as a broker that people who have lived their whole lives in a home just aren't going to mark it down after a few weeks. iBuyers price the listing below every current comparable and price it even lower if it doesn't get an offer in the opening weekend. Builders also respond to market downturns quickly. This makes market corrections sharper, but maybe also shorter too. The good news is that buyers are already responding to drops in prices and mortgage rates. The market-wide data on sales closed in July and August reflect how far demand fell in June. Now demand has modestly improved in the second, third, and fourth weeks of July. It may improve further as mortgage rates dropped this week to around 5% from a peak north of 6% in June. If the housing market and the overall economy can stabilize, many, many Americans still want to move, and we're here to help them with low fees and the best service in the brokerage industry. Take it away, Chris. Thanks, Glenn. This was a volatile quarter, and we're being responsive to the changing macro environment and taking actions to manage towards profitability, including reducing the number of homes we purchased through our properties segment, laying off employees in our headquarters real estate services and mortgage businesses, and limiting backfills for voluntary attrition. Second quarter revenue was $607 million, up 29% from a year ago, and below the low end of our $613 million-$650 million guidance range. The difference was due to a quicker than anticipated decline in refinancing and purchase home volumes for Bay Equity. Real estate services revenue, which includes our brokerage and partner businesses, generated $252 million in revenue, which was flat year-over-year and in line with guidance. Brokerage revenue or revenue from home sales closed by our own agents was up 1%, driven by home price appreciation, while transaction volume was down 2%. Revenue from our partners was down 23% on a 13% decrease in transactions and a mixed shift to lower value houses. Overall, real estate services revenue per transaction was up 4% year-over-year. The property segment, which consists primarily of homes sold through RedfinNow, generated $263 million in revenue, up 52% from a year ago, and driven by a 45% increase in homes sold. Our rentals business generated $38 million, down 10% from a year ago, but up slightly from the first quarter of 2022. As Glenn mentioned, this marks the first quarter of sequential revenue growth for this business in many years. Our mortgage segment generated $53 million in revenue in the second quarter. This is below our guidance range, as discussed above, but we're thrilled with how Bay Equity loan officers have been serving Redfin customers. Our other segment, which now includes title and other services, contributed revenue of $6 million, an increase of 72% year-over-year, driven by increased attach rates for our title and closing services. Total gross profit was $118 million, down 6% year-over-year, with a total gross margin of 19.4%. Total operating expenses were $36.2 million, up 23% year-over-year. $23.6 million of the increase was attributable to the acquisition of Bay Equity, our mortgage business, as well as restructuring expenses incurred in the quarter. As a percentage of revenue, total operating expenses represented 32%, down from 33% one year ago. Technology and development expenses increased by $10.0 million, or 24% year-over-year. Included in the increase was $0.7 million from Bay Equity. The remaining increase was primarily attributable to an $8.7 million dollar increase in personnel costs due to increased headcount. Total technology and development expenses represented 8% of revenue, down from 9% one year ago. Marketing expenses increased by $1.3 million as compared to the same period in 2021. Included in the increase was $1.8 million from Bay Equity. The remaining decrease was primarily attributable to a $1.9 million dollar decrease in outside services and recruiting, offset by a $1.5 million dollar increase in personnel costs. Total marketing expenses represented 9% of revenue, down from 12% one year ago. General and administrative expenses increased by 12.2% or 20%, or $12.2 million or 20% as compared with the same period in 2021. Included in the increase was $8.4 million from Bay Equity, a $3.2 million increase in legal expenses, largely due to a settlement offer, and a $3.1 million increase in personnel costs due to increased headcount. This was partially offset by a $4.2 million decrease in acquisition-related expenses. Total G&A expenses represented 12% of revenue, down from 13% one year ago. Restructuring expenses included in total operating expenses were $12.7 million, and there were no such expenses in the same period in 2021. These expenses were attributable to $2.4 million in severance and other costs associated with our mortgage restructuring and $10.3 million in severance costs associated with our June 2022 workforce reduction. Turning to segment level profitability, real estate services gross margin was 29.4%, down 550 basis points year-over-year. This was driven by a 670 basis point increase in personnel costs and transaction bonuses. This increase was offset by a 210 basis point decrease in tour and field costs and a 50 basis point decrease in listing expenses. Total net loss for real estate services was $18.8 million, down from a net income of $7.8 million in the prior period. The decrease was attributable to lower revenue and margins as well as a $12.5 million year-over-year increase in operating expenses. These expenses were added during a period of rapid growth in our real estate services business, and we've already begun to pare back with the restructuring announced in June. Properties gross margin was 2.6%, down 30 basis points year-over-year. This was driven by an 80 basis point increase in purchase, maintenance, and capital improvements costs. This was then offset by a 50 basis point decrease in personnel costs as the business scaled. Total net loss for properties was $3.2 million, down from a net loss of $1.4 million in the prior years, with the increase in operating expenses slightly exceeding the increase in gross profits. Rentals gross margin was 79.3%, down 290 basis points year-over-year. This was driven by a 180 basis point increase in personnel costs as we sold more marketing services that require personnel to fulfill. Total net loss for rentals was $19.2 million, down from a net loss of $14.1 million. Declining profitability was primarily attributable to year-over-year declines in revenue as discussed earlier, while operating expenses remained roughly flat at $49.8 million compared to the $49.3 million in the prior year. Mortgage gross margin was 12.8% for the second quarter, below our implied guidance of 31%-36%. This is driven by lower refinancing and purchase volume from Bay Equity's historic business. Total net loss for mortgage was $6.5 million. We acquired Bay Equity on April 1 of this year and completed the wind down of our legacy mortgage business during the second quarter of 2022. Wind down activities contributed approximately $4.9 million to the segment's net loss. $1.6 million is attributable to Bay Equity. Other segment gross margin was -0.1%, an improvement from the -6.1% a year ago. Total net loss was $2.1 million compared to a net loss of $1.1 million in the prior period. Turning back to consolidated results, total net loss of $78 million was below the low end of our $72 million-$60 million guidance range. Our guidance didn't include $10.3 million of restructuring expenses for our G&A layoff. Diluted loss per share attributable to common stock of $0.73, compared with the diluted loss per share attributable to common stock of $0.29 per share one year ago. Now turning to our financial expectations for the third quarter of 2022. Consolidated revenue is expected to be between $590 million and $627 million, representing year-over-year growth between 9% and 16%. We expect our real estate services segment to account for $200 million-$208 million of that revenue, and the property segment to be between $305 million and $330 million. Rentals revenue is expected to be between $37 million and $38 million. Mortgage revenue is expected to be between $45 million and $48 million. Total net loss is expected to be between $87 million and $79 million compared to total net loss of $19 million in the prior year. Adjusted EBITDA loss is expected to be between $47 million and $39 million. We expect real estate services gross margin to decrease in the third quarter compared with the same period of 2021. In prior earnings calls, we discussed operational changes we were making that were intended to increase real estate services gross margins in the second half of 2022. However, deteriorating macroeconomic conditions have overshadowed these operational changes, and we now expect gross margin compression. With respect to properties, we expect gross margins to be negative in the third quarter as we work through selling inventory that we purchased earlier in the year. We expect inventory to peak in August. We want to continue to offer a choice to customers, but we're being more conservative on offer prices right now. With respect to mortgage, we expect gross margins to be roughly flat to slightly down quarter-over-quarter. On a consolidated basis, this guidance includes approximately $37 million in total company marketing expense, $19 million of stock-based compensation, $16 million of depreciation and amortization, and $5 million of interest expense. In addition, we expect to pay a quarterly dividend of 30,600 shares of common stock to our preferred stockholder. This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded, that there are no further revisions to stock-based compensation estimates. Now let's take your questions. Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one if you would like to ask a question. I'm going to pause for just a moment to allow everyone an opportunity to signal. We'll take our first question from Ryan McKeveny with Zelman & Associates. Please go ahead. Hey, thank you very much. Glenn and Chris, appreciate all the detail and commentary on the levers in the business. You know, certainly the comment about the potential impact to the real estate gross margins next year removing the buyer refund is encouraging. Wanted to ask one more on the real estate gross margin and some of the levers. A comment you guys have in your filings in the Form 10-K is that the real estate gross margin is generally higher in some of the top markets and generally lower in smaller markets. I guess I'm curious on kind of the levers that you guys can pull. You know, how do you think about those smaller markets that maybe are subscale or lower margin and pushing for growth in actual brokerage business, versus potentially leaning more into the partner channel, you know, to potentially kind of grow through less, you know, brokerage-specific growth and brokerage-specific costs and maybe more so leaning into the partner business, which I believe is kind of a higher margin lead gen business. Again, just curious if you can talk about the balance there between kind of brokerage and partner and, you know, if there are additional levers that you guys can pull and, you know, if how maybe how that compares between the bigger markets and some of the smaller markets. Thank you. Well, we're going to manage the business to maximize gross profit dollars per customer. As these smaller markets grow, their prices are also increasing, which will increase both their gross profit contribution and their gross margin. The reason that we often want to serve customers through our employees is because our employee agents have higher close rates, they have higher loyalty rates, and they generate more gross profit per customer. We are going to be financially disciplined about it. If we feel like a partner can serve the customer well and generate more gross profit, we'll do that. We've been raising thresholds throughout the month of July just because demand has been stronger than we expected immediately following our layoff. There will be a modest shift toward the partner business, at least in the first part of the third quarter. Got it. Okay. Thanks very much, Glenn. That's helpful. And then Chris, one just kind of big picture on the cash flows. I guess looking ahead and thinking about the convertible debt, I guess maybe if you can just, you know, give us a big picture sense of how you guys are thinking of, you know, ultimately managing the cash flow side of things. Obviously the maturities are quite a ways away, but I think to some degree people are just curious, you know, how you think about, you know, managing the cash, you know, from now and the coming years, you know, with those maturities on the horizon. Just any big picture thoughts there would be helpful. Yeah. I think that, you know, the commentary on our capital matches with Glenn's commentary and our march to profits here, that the way we think about continuing to drive the business forward is increasing our profitability into 2023, into 2024, reaching net income positive in 2024. That sets the stage then, for us to feel really good about the capital position that we'll have as those notes start to become mature. I do think of these things as nicely matched up that way and not separate topics. Help. Thank you. We'll take our next question from. Thanks, Ryan. With Evercore. We'll take our next question from Mark Mahaney with Evercore ISI. Hi, this is Jian Li for Mark Mahaney. Thanks for the question. The one thing to clarify, sorry if I misheard that, but was iBuying the gross margin you're expecting to be negative in Q3 with some mentioned headwinds, but on a full year basis, you're still expecting it to maintain positive gross margin. Did I hear that right? If you can just, like, talk through the leverage in the business to support margins, especially if the current trends persist. Thanks. Well, we're assuming that prices will continue to decline and the business will still generate significant gross profit for the full year. The levers for the business are making sure that we react quickly to the market, lowering our bids on the homes that we're buying now. Obviously, we also want to convince the customers who ask us about a RedfinNow offer and decide that the offer is too low to instead list the home with Redfin, which is working out better than it ever has, at least in June. Mostly we just wanna sell the homes quickly, renovate them well. Sometimes we've been backlogged in 2020 and 2021 and haven't been able to get the properties on the market because we can't just get somebody out there to fix it up. Now, we've got good capacity. The homes are selling quickly. We're gonna reach peak inventory next week. We know it's downhill from there just because we already have so many homes under contract. I think we've got good visibility here. It would take a fairly apocalyptic price drop for us to swing into negative territory for RedfinNow. We've already factored in significant price declines. Got it. That's helpful. If I may, one more on just the marketing spend this quarter. Saw some leverage here. Is that like a kind of a pullback in marketing spend? If you can talk through kind of the No. Efficiencies of the brand campaign. Yeah. Okay. It's more seasonal. We probably stepped back a month early from our TV campaign because just the tone of the campaign didn't match the mood of the American consumer. It was just about a frenzied housing market coming into 2022, and that market has become less frenzied. Other than that, we've been advertising fairly aggressively, actually shifting some dollars toward the 1% Campaign, which is resonating well. Mostly, though, we just plan to end the advertising campaign in the summer. We've done that every year. Great. Thanks a lot, guys. Thank you. Once again, if you'd like to ask a question, please signal by pressing star one. We'll take our next question from Jason Helfstein with Oppenheimer. Hi, it's [Ridwan Rafiq] on for Jason Helfstein. Two quick questions. If we're thinking about real estate as a top of the funnel driver for the rest of the business, how do you think about long-term gross margins and EBITDA margins for real estate, assuming other segments will limit spending amount on marketing? The second question is, are you making any further changes to the way you compensate agents? Thanks. The brokerage has been an engine of profit for the company. It generated significant adjusted EBITDA last year, as you can see in this new segment reporting, and it should remain that way. We had too many agents in the second quarter. It swung us to an adjusted EBITDA loss for that business, but we view that as an intolerable situation long term. We're not gonna think about the brokerage as a loss leader for getting a loan or a loss leader for doing the title. We want that business to have its own high gross margins north of 30%, and then we just want to monetize that customer again and again through mortgage and title. We'll deliver more value to the customer. We'll offer them a great rate on the loan. Because we have employees, I think we're more capable of selling a complete real estate solution. We don't wanna back off at all on brokerage gross margins just because we have these ancillary businesses. That's evidenced by the price increase, where we're eliminating the commission refund in 22 markets and possibly extending that further. On the second question, I don't know. Chris, do you wanna answer that first? Might be more in your wheelhouse. Why don't you go ahead, Glenn? Can you just rephrase the question? I wanna make sure I understand it. Yeah, no, totally. Given, like, the recent layoffs, are you, like, implementing any more changes on the way you pay your agents? Oh, on agent pay. Yes. Yeah, yeah. Not really. You know, we adjusted how much we pay our agents at the beginning of the year because we were lowering loads in anticipation of having better close rates. We've seen that of the customers who buy, they are sticking with us at a higher rate, so that's been encouraging. We have been waiting for two years to get a result from that effort, and now we have one. Other than that, we aren't making major changes to agent pay. Thank you. That's helpful. Thank you. Thank you. Once again, that is star one if you'd like to ask a question. All right. With no additional questions in the queue, that does conclude today's question and answer session. It also does conclude today's conference. We thank you all for your participation. You may now disconnect.