EXp World Holdings saw its revenue and profits continue to rise despite challenging market conditions in the second quarter of 2022, according to an earnings report released Wednesday morning.
According to the report, the international brokerage’s revenue increased 42 percent annually to $1.4 billion, and its gross profits increased 34 percent compared to the second quarter of 2021, reaching $107.3 million.
The company did, however, see its net income drop from $37 million in the second quarter of 2021 to $9.4 million in 2022, which it attributed to its year-over-year tax expenses increasing $22.3 million due to a one-time VA allowance release, and a reduction in excess stock-based compensation tax.
The company had an adjusted EBITDA of $26.9 million, and its cash and cash equivalents totaled $134.9 million in the second quarter, compared to $107.4 million last year.
Company leaders said they expected momentum to continue even as the market shifts into one marked by high mortgage rates and buyer reluctance.
“EXp delivered another record quarter with 42 percent revenue growth and solid profitability while returning a record $56 million to our shareholders through share repurchases and dividends,” eXp World Holdings Chief Financial Officer Jeff Whiteside said in a statement ahead of a scheduled earnings call.
“Looking ahead, we expect our agile model to result in ongoing market share gains as we navigate more challenging market conditions,” Whiteside added. “We expect our focus on affiliated services and technology will further strengthen our agent and customer value proposition. Simultaneously, we will focus on increasing operating efficiencies for our business and our agents’ businesses. We remain confident in our ability to deliver profitable, sustainable growth over the long term.”
The second quarter also saw eXp’s transaction volume increase 44 percent year over to $57.9 billion, and its amount of transactions closed increased 30 percent to 150,032.
The second quarter saw the company continue its expansion into foreign markets, opening offices in New Zealand and acquiring the Canadian listing search portal and brokerage Zoocasa.
The company’s expansion efforts have recently coincided with a broad downturn in demand for homes.
But CEO Glenn Sanford said in May that the company is positioned well for this sort of slowdown, as evidenced by the company’s financial performance in the second quarter of 2020, when the home market ground to a temporary halt amid coronavirus-related disruptions.
“We’ve believed for some time that when the next down market arrives we’re in a very unique position and strong position to grow as a company,” Sanford said at the time.
Company leaders said during an Aug. 3 earnings call that they were prepared for the second half of 2022 to be more difficult than the first, and that they had made arrangements to cut spending by 25 percent during the second half.
“Recognizing that the second half of 2022 could be challenging in the industry, we’ve mad ongoing adjustments to our cost structure for the full year in preparation for changes to the economy and real estate industry,” Whiteside said.
The company’s agent count in the first quarter was around 80,000 — up from just over 53,000 agents in April of 2021. And eXp had plans to add another 20,000 or so before year’s end. At the end June 2022, there were 82,856 agents and brokers on the company’s platform, eXp said in its quarterly report.
The company saw a net growth of 4,660 new agents total between the first and second quarters of 2022.
Sanford said the brokerage’s best recruitment tool is its 80/20 compensation model and its revenue sharing program, which allows eXp agents to keep 3.5 percent of the revenues brought in by new agents they bring to the company.
“Our primary tool is our aligned compensation model, which is the key driver,” Sanford said during the Aug. 3 earnings call.
Even as the eXp brand has drawn more agents, its profits have grown.
The latest earnings report came on the heels of a strong first quarter for the rapidly growing business. The company raked in $1 billion in the first three months 2022, up 73 percent from the same time the year before. Gross profits rose to nearly $84 million in the first quarter, and net profits rose to just short of $9 million.