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EXp World Holdings revealed on Thursday that revenue rose in the fourth quarter of last year, but a difficult market still took its toll on the company, resulting in a net loss and very slow agent headcount growth.
The company, parent of brokerage eXp Realty, brought in a total of $983 million in revenue between October and December, according to the latest report earnings report. This is up from $933 million in the fourth quarter of 2022. However, despite the increase, the company still lost $21.2 million, a significant increase from the $7 million loss a year ago.
The report noted that the loss in the fourth quarter of 2023 included “a $9.2 million impairment charge on goodwill and amortizable intangible assets related to the Virbela segment.” However, even subtracting that number, the quarter’s loss was still higher than in the fourth quarter of 2022.
Glenn Sanford
Glenn Sanford, founder, chairman and CEO of eXp World Holdings, pointed out the difficulties in the real estate market last year in the report.
“EXp delivered solid revenue despite continued revenue weakness in the fourth quarter USA residential real estate market, thanks to our highly productive agent base around the world. “Sanford said. “Our agent-centric model and value proposition, scale and exceptional efficiencies enable us to invest in our agents’ success.”
Despite the soft market, total transaction volume increased 6% year-over-year to 115,424 transactions in the fourth quarter.
“2023 is a tough year,” Sanford added during a conference call with investors Thursday afternoon.
The call, apparently a first for the industry, was held in eXp’s virtual world, which is typically only available to agents and eXp personnel, and was streamed on YouTube, complete with slides , which contains various statistics about the company’s performance.
The report also includes data for the full year 2023. For the full year, eXp generated revenue of $4.3 billion, down 7% from 2022. The company also lost about $9 million, a reversal from a profit of $15.4 million. a year ago.
Transaction volume in 2023 fell 3% from the same period last year to 494,408 transactions.
Shares of eXp had been hovering in the low $11s ahead of Thursday’s earnings report. Shares were up slightly on the day, but down from their early 2024 share price of over $16.
EXp shares fell in after-hours trading following Thursday’s earnings report, but mostly recovered during the company’s investor call.
Credit: Google
As of Thursday afternoon, EXp had a market capitalization of about $1.7 billion.
EXp stock has been somewhat volatile over the past year. Last February, they were trading in the mid-$13 range, but eventually surged to over $25 in late summer of 2023. There was another small gain in December, but overall the company’s shares have been trending downward since their summer highs.
EXp last reported earnings in November. At the time, the company revealed revenue of $1.2 billion between July and September 2023. That’s down 2% annually, but still enough for the brokerage to post a profit of $1.3 million.
In addition to revenue and profits, Thursday’s report showed eXp had 87,515 agents for the full year. Year-over-year growth is 2%, which is noteworthy given that the total number of U.S. real estate agents officially began to decline in early 2023.
However, the company’s year-end agent count also fell 1.8% from the previous quarter. Sanford said on the investor call that the fourth quarter was “the first time in history that our agent count has declined quarter-over-quarter,” though he added that agent attrition occurred primarily among the least productive agents, who only account for Make one or two trades.
The agent growth numbers are notable because eXp Realty is perhaps more known for its rapid staff growth than any other brokerage. For example, back in 2021, when eXp had about 68,000 agents, Sanford cited growth rates at the time and predicted that the company would soon have 100,000 agents in the U.S. and 500,000 agents globally.
“We believe that 100,000 (U.S. agents) is almost a fait accompli within the next few years,” Sanford said at the time.
Sanford acknowledged last year at the Inman Connect conference in New York that market shifts in 2022 and 2023 — driven by higher mortgage rates and lower inventory — have so far stymied that ambition. More broadly, it has shifted the conversation about big real estate companies from headcount to competition for top talent who can close deals under tougher conditions.
Sanford’s comments on Thursday’s investor call highlighted the shift. He celebrated that the company is recruiting and retaining highly productive agents and teams. He pointed out that eXp’s market share will grow from 3.9% in 2022 to 4.2% in 2023.
When discussing agent numbers, Sanford also said on the call, “We’re going to reconsider some different things.” He didn’t provide more details, but noted that going forward, “we expect our customer service numbers to grow as the number of agents increases.” Growth resumes over time.”
Sanford also revealed during the call that he has not given up on having more agencies under the eXp umbrella. When asked about headcount in 2024, he noted that the company has experienced strong growth in international markets such as South Africa, Dubai, France and the United Kingdom. Sanford estimates there are 20 million agents worldwide, and if eXp can “achieve the same level of market penetration” globally as it does in the U.S. and Canada, the company could have “potentially a million agents.” ”.
Sanford didn’t say how long it might take eXp to reach that scale. But he did say that international markets may provide the brokerage’s greatest growth opportunities in the coming years.
Ultimately, Sanford concluded on the call that eXp is currently in a “strong position.”
“We are entering 2024 with very strong momentum,” he said on the conference call.
UPDATE: This article was updated after publication to add more details from eXp’s earnings report and comments from the company’s investor call.
Email Jim Dalrymple II
