– EXp World Holdings’ revenue declined 2 percent annually to $1.2 billion in the third quarter.
– The company maintained profitability with net income reaching $1.4 million.
– The company’s adjusted operating earnings before interest, taxes, depreciation and amortization (EBITDA) increased 53 percent year over year to $19 million.
– Gross profits declined 10 percent annually to $83.6 million.
– The declines in revenue and net income were attributed to a slower market environment and decreased transaction volume.
– The company’s rising Net Promoter Score (74) is evidence of its solid value proposition.
– The total agent and broker count increased 5 percent year over year to 89,156.
– EXp World Holdings’ stock closed at $13.91 per share on Thursday.
– The company has been included in a follow-up suit filed regarding the Sitzer|Burnett case.
– CEO Glenn Sanford expressed concern about the potential impact of the case on buyers and emphasized the company’s commitment to operating with high integrity.
EXp World Holdings’ revenue declined 2 percent annually to $1.2 billion in the third quarter, according to a call on Thursday. The company held onto its profitability, with net income reaching $1.4 million.
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EXp World Holdings‘ sails remained strong in the face of worsening market headwinds, with the cloud-based brokerage’s revenue declining two percent year over year to $1.2 billion, according to a quarterly earnings call Thursday.
Despite the decline in revenue, the holding company maintained profitability with a net income of $1.3 million — a 70 percent change from Q3 2022 when the company’s net income clocked in at $4.4 million.
The company’s adjusted operating earnings before interest, taxes, depreciation and amortization (EBITDA) increased 53 percent year over year to $19 million, and gross profits declined 10 percent annually to $83.6 million, according to earnings data released prior to the call on Thursday afternoon.
The declines in revenue and net income were primarily attributed to a “slower market environment” with 139,480 transactions — just 1 percent above Q3 2022. Meanwhile, transaction volume tumbled 4 percent to $48.5 billion.
EXp Chief Financial Officer and Chief Collaboration Officer Jeff Whiteside said eXp’s third-quarter performance reflects the company’s financial stewardship and ability to help its agents and brokers gain market share, despite elevated mortgage rates and weakening affordability.
“We delivered solid financial performance during the third quarter, with year-over-year Adjusted EBITDA growth of 53 percent despite challenging market conditions as we continued to improve the efficiency of our operations,” he said in a prepared statement. “We once again gained market share, despite lower market activity due to elevated mortgage rates, which resulted in decreased transaction value compared to the prior-year quarter.
“While we continue to prudently manage expenses, our strong cash flow profile enables us to simultaneously pursue an ambitious and innovative agent-centric agenda while allocating capital to our shareholders through share repurchases and cash dividends,” he added. “By continuing to invest in our agents through the current market cycle, we are building a strong foundation for accelerated growth and continued share gains despite fluctuations in the market.”
The company said its rising Net Promoter Score (74) is evidence of its solid value proposition, as the total agent and broker count increased 5 percent year over year to 89,156. EXp also highlighted the success of its Boost incentive program for brokerages, the September launch of EXPCON and eXp Luxury in Canada, and reaching 1,000 agents in South Africa.
“During the third quarter, we continued to focus on agent-centric innovation that drove meaningful results, as we once again increased eXp’s agent Net Promoter Score (NPS) while extending our market share gains,” eXp World Holdings founder, Chairman and CEO Glenn Sanford said in a written statement. “In a slower market environment where every transaction counts, eXp’s agents in the U.S. significantly outperformed the market during the third quarter.”
“This outstanding performance speaks to the differentiated nature of eXp’s platform and the power of our unique, success-oriented culture,” he added. “Moving forward, we see many opportunities to further iterate on our agent-centric value proposition with programs like Boost, Accelerate, Thrive and eXp exclusives and partnerships with Opendoor and the HomeRiver Group.”
EXp’s stock closed at $13.91 per share on Thursday, with share values declining to $13.75 in after-hours trading. The company is far from its 52-week high of $25.39 per share; however, its market cap is still strong at $2.03 billion.
Several major real estate companies’ stocks took a tumble after a Missouri jury awarded $5 billion to homesellers in the landmark Sitzer|Burnett case. EXp wasn’t a defendant in the Sitzer|Burnett trial; however, they have been included in a follow-up suit filed on Tuesday that includes Compass, Redfin, Weichert Realtors, United Real Estate, Howard Hanna Real Estate and Douglas Elliman.
Sanford addressed the impact of Sitzer|Burnett in the company’s earnings call, saying he was “concerned” about what might happen to buyers if they become responsible for handling their agents’ commissions alongside rising down payments, mortgage rates, home prices and other transaction-related costs.
“I actually started out as a buyer’s agent, my first five years in the business, which is kind of interesting because I see buyer agency as being a very valuable tool for buyers,” he said. “I’m concerned, quite frankly, about what this might mean to buyers who may not be able to afford representation if things change up too much.”
Sanford said eXp will continue to operate with “high integrity” as they figure out how to navigate an uncertain future.
“At the end of the day, we’re about really two things — real estate agents being able to build rewarding careers in this industry and [making] sure that we continue to provide the relevant tools, systems, training, coaching, what have you… That’s really where our focus is,” he said. “Obviously, it’s too soon to sort of comment on how we’re going to navigate. I feel like we’ve been operating with high integrity in this industry, and we will continue to do so.”
“It’s just a matter of seeing what [the] next steps are in this business of real estate.”
Property Chomp's Take:
EXp World Holdings, a cloud-based brokerage, reported a 2 percent decline in revenue to $1.2 billion in the third quarter, according to a quarterly earnings call on Thursday. Despite the decline, the company maintained profitability with net income of $1.4 million. The company's adjusted operating earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 53 percent year over year to $19 million. However, gross profits declined 10 percent annually to $83.6 million.
The decline in revenue and net income can be attributed to a slower market environment, with only a 1 percent increase in transactions compared to the previous year. Transaction volume also tumbled by 4 percent to $48.5 billion. Despite these challenges, EXp World Holdings' Chief Financial Officer and Chief Collaboration Officer, Jeff Whiteside, emphasized the company's ability to help its agents and brokers gain market share and navigate the changing market conditions.
The company's rising Net Promoter Score (NPS) of 74 is evidence of its solid value proposition, as the total agent and broker count increased by 5 percent to 89,156. EXp World Holdings' founder, Chairman, and CEO, Glenn Sanford, highlighted the success of various programs and initiatives, such as the Boost incentive program for brokerages, the launch of EXPCON and eXp Luxury in Canada, and reaching 1,000 agents in South Africa.
Despite the decline in revenue and the challenges posed by an uncertain market, EXp World Holdings remains focused on providing agents with the necessary tools, systems, training, and coaching to succeed in the industry. The company will continue to operate with integrity and adapt to any changes that may arise.
EXp World Holdings' stock closed at $13.91 per share on Thursday, with share values declining to $13.75 in after-hours trading. The company's market cap remains strong at $2.03 billion. It is important to note that EXp World Holdings was not involved in the recent Sitzer|Burnett trial, which awarded $5 billion to homesellers. However, the company has been included in a follow-up suit along with other major real estate companies.
In conclusion, while EXp World Holdings experienced a decline in revenue, it maintained profitability and demonstrated its ability to navigate a challenging market environment. The company's focus on agent-centric innovation and its commitment to providing agents with the necessary tools and support have contributed to its success. Moving forward, EXp World Holdings remains optimistic about its future growth and share gains in the real estate industry.