Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- eXp World Holdings Inc (EXPI, Financial) reported a 5% increase in revenue year-over-year, driven by higher real estate sales volume and increased agent productivity.
- The company's Net Promoter Score (NPS) improved from 72 to 76, indicating enhanced agent satisfaction and service quality.
- International revenues jumped by 69% year-over-year, showcasing strong performance in sales volume and productivity.
- The company successfully reduced its SG&A expenses in North American Realty by $4 million over the previous year.
- eXp World Holdings Inc (EXPI) achieved a 22% year-over-year increase in adjusted EBITDA, reflecting solid execution and cost management.
Negative Points
- The agent count declined by 1% year-over-year, reflecting challenging market conditions and strategic decisions to remove unproductive agents.
- Despite industry-wide challenges, eXp Realty's home sale transactions in the US were down 3% year-to-date.
- The company anticipates continued downward pressure on US existing home sales in the next quarter due to macroeconomic uncertainties.
- Legal expenses related to antitrust lawsuits have increased, impacting overall financial performance.
- The company is facing challenges in adapting to industry changes, such as the requirement for buyer broker agreements, which may lead to operational complexities.
Q & A Highlights
Q: Glenn, where are you spending most of your time and focus?
A: Glenn Sanford, CEO, is focusing on the international side of the business. He recently attended the first international EXPCON in Lisbon, Portugal, and is working directly with the international team to build new systems and refresh the agent value proposition in various countries. He plans to attend more international meetings in Europe leading up to EXPCON.
Q: Leo, can you discuss what drove the quarter-to-quarter increase in agent count?
A: Leo Pareja, Chief Strategy Officer, explained that the increase was due to the strategic acquisition of Realty Connect, a referral company. This acquisition helps retain agents who might leave the industry and generates high-margin referrals for active agents. Realty Connect is a high-margin business with low operational costs.
Q: Kent, can you discuss the second quarter gross margin and your thoughts on gross margin for the remainder of the year?
A: Kent Cheng, Chief Accounting Officer, noted that the non-GAAP gross margin was 12.8% in Q2, with a year-to-date percentage of 13.3%. They expect more agents to reach their cap in the second half and anticipate the gross margin to follow a typical seasonal pattern, similar to the back half of 2023.
Q: How is eXp World Holdings addressing the industry changes, particularly the August 17 changes regarding buyer broker agreements?
A: Leo Pareja emphasized that eXp is proactively educating its agents about the changes, which require buyers to sign a broker agreement before touring properties. The company is focused on operational excellence and ensuring compliance with the new rules, which are enforced by MLSs with potential fines and penalties.
Q: Glenn, could you highlight which international markets performed well in Q2 2024 and which ones you are most excited about?
A: Glenn Sanford highlighted South Africa, the UK, France, and Spain as strong performers. He mentioned that South Africa is the fastest-growing brokerage in the country's history. The company is reevaluating the agent value proposition in each country to ensure it meets local needs and is moving towards an incentive-based model for country leaders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
