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The total weight of a topsy-turvy real estate market fell on eXp World Holdings during the fourth quarter, with its revenue declining 13 percent year over year to $933 million.
While the cloud-based company held onto its profitability in the third quarter with a net income of $4.4 million, it failed to do the same for the fourth quarter, with net losses reaching $7.2 million during the three months ending on Dec. 21, 2022.
The company’s adjusted operating earnings before interest taxes depreciation and amortization (EBITDA) declined 72.5 percent from $13.1 million in Q4 2021 to $3.6 million in Q4 2022.
The losses were attributed to a volatile housing market that saw closed transactions decline 13 percent year over year to 109,168. Sales volume also declined 16 percent year over year to $37.6 billion.
Despite contracting sales, eXp said its total agent count increased 21 percent during FY 2022 to 86,203 — meaning the Washington-based company onboarded more than 1,200 agents since its October EXPCON when CEO Glenn Sanford announced eXp had reached the 85,000-agent mark.
In a statement before the company’s live fireside chat (i.e. earnings call) on Thursday, Sanford struck an optimistic tone about eXp’s overall position within the market, pointing to the brokerage’s full-year results as proof of its ability to weather a shifting market.
“I am excited to return as CEO of eXp Realty to drive our next phase of growth by doubling down on agent-centric innovation,” he said. “Our model was designed to withstand varying market conditions, which uniquely positions us to continue investing in the agent experience in a down market. In turn, we maximize long-term growth and profitability.”
Although eXp faced a tumultuous fourth quarter, the company’s full-year results were solid, with revenue increasing 22 percent from 2021 to $4.6 billion. The company was still profitable for the full year with its net income declining 81 percent from $81.1 million in 2021 to $15.4 million in 2022.
Real estate sales metrics were also on the upswing for 2022, with eXp agents closing 511,859 transactions (+15 percent year over year) worth $187.3 billion (+20 percent year over year) — a reflection of eXp’s domestic and international recruitment that included launches in the Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai.
The adjusted EBITDA for FY 2022 was $60.5 million.
“Thanks to the hard work of our agents and our industry-leading operating efficiency, our core eXp Realty North American business remained solidly profitable in the fourth quarter despite the market downturn,” Sanford added. “In line with how we manage our business, we are now reporting segment-level financial information, which also provides transparency into the financial performance of our core business and the investments we are making to reinforce and extend our position as the most agent-centric brokerage on the planet.”
During the company’s fireside chat, Sanford and eXp World Holdings CFO and Chief Collaboration Officer Jeff Whiteside struck a bullish tone about eXp’s long-term prospects. Sanford echoed insights from his latest Inman Connect New York appearance, where he touted the strength of cloud-based models against competitors with traditional models.
“What’s interesting is the industry really has been fairly slow to respond to the new normal even with the pandemic,” he said. “Relative to many of the legacy franchise players, it really feels like, at least from a competitive standpoint, that there’s a lot of brokerages that are basically dinosaurs, teaching other dinosaurs how to be better dinosaurs.”
“Because of that backdrop, we’ve been able to scale to really tens of thousands of agents and hundreds of millions of dollars, actually billions of dollars in revenue in North America, and within really a fairly short period of time,” he added. “The next phase of eXp is growth. It’s one of the reasons why I came back as CEO of EXP Realty — to really continue our focus on the agent-centric nature of the real estate brokerage, leveraging our scale with the ultimate goal of being the number one worldwide real estate, brokerage and brand.”
Sanford said eXp’s global agent net promoter score (73) proves the brokerage’s recent improvements, which include the launch of Revenos, eXp Luxury and other SUCCESS initiatives, are working and will continue to attract a robust agent base.
“We believe that now is the time to actually grow in a down market,” he said. “Our agent NPS score [is] really our North Star and really a great predictor of our long-term success.”
“We have an all-time high [score], globally, of 73,” he added. “And we continue to sort of double down on how we’re using NPS as a tool to actually drive a founders’ mentality into an organization in a way that creates key metrics for our team to iterate around.”
Although the company expects 2023 to mirror 2022 in terms of market headwinds, Sanford and Whiteside said eXp is in a prime financial position with $100 million in cash flow and no debt. Those two things, they said, will enable the brokerage to keep investing in its agents and tech endeavors.
“We’re investing in products to drive greater agent productivity, which ultimately means that they’re getting high-quality opportunities,” Sanford said while teasing a coming update to eXp’s website experience.
Like the previous quarter, eXp didn’t provide forward-looking guidance in its earnings. However, Sanford highlighted the decision to operate with greater financial transparency and begin segmenting the earnings results for eXp North America, eXp International and Virbela.
“One of the reasons I did that is because of the challenging market, we wanted to show to our agents, staff, shareholders and others that at scale, eXp Realty, would be profitable in good times and bad times,” he said.
The company’s stock (NASDAQ: EXPI) experienced a small lift in after-hours trading, with the price per share rising 1.41 percent to $12.25 — which is down from the 52-week high ($27.43), but considerably better than the 52-week low ($9.96).
Its market cap stands at $1.84 billion.