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Amid a slowing real estate market, eXp World Holdings managed to log a solid performance with its revenue increasing 12 percent annually to $1.2 billion during the third quarter of 2022.
Despite the boost in revenue fueled by double-digit agent count growth and an increase in ancillary services, eXp’s profitability waned. The international brokerage’s net income dropped 81.5 percent from $23.8 million in Q3 2021 — one of its best quarters ever — to $4.4 million.
In a statement on Wednesday morning, eXp World Holdings Chief Financial Officer and Chief Collaboration Officer Jeff Whiteside said he was pleased with the brokerage’s “record third quarter” as they increase their value proposition and market share.
“EXp delivered a record third quarter with 12 percent revenue growth and continued to deliver positive cash flow and earnings, reflecting the agility of our business model,” Whiteside said. “We continue to gain market share and drive growth while focusing on increasing operating efficiencies for our business and our agents.”
Whiteside and eXp World Holdings CEO Glenn Sanford both touted a 30 percent boost in agent count as the crown jewel of their Q3, which placed them 89 agents shy of their goal of 85,000 agents before the end of 2022 (the company reached 85,000 agents during its annual EXPCON conference in early Q4).
The boost in agent count is the result of eXp’s aggressive domestic and international recruiting and expansion plans, which saw the brokerage pick up a number of high-performing teams stateside and launch operations in Chile and Poland — their 23rd and 24th global markets.
EXp’s closed transactions and volume count increased by single digits in Q3, a marked slowdown from Q2 when the company posted high double-digit increases for both metrics.
The brokerage’s agents closed 138,354 transactions (+6 percent YoY) worth $50.4 billion (+8 percent YoY) from June 1 to Sept. 30, the period when rising mortgage rates and inflation began to take a greater toll on homebuying activity.
In a statement before the company’s live fireside chat (i.e. earnings call), Sanford said eXp’s Q3 performance shows its resiliency and ability to thrive through multiple market shifts.
“We continue to grow revenue and gain market share despite an increasingly challenging market,” he said. “The third quarter reflects eXp’s resilient model and ability to grow through any market.”
The CEO said he’s confident in the brokerage’s ability to maintain robust recruiting and retention rates as it launches a slew of new agent programs and services they believe will keep top-producing agents and teams coming to eXp.
“We continued to strengthen our agent value proposition with new services, including Revenos and eXp Luxury as well as initiatives led by SUCCESS, SUCCESS Health and SUCCESS Coaching,” he said in reference to the programs all announced at EXPCON in mid October. “Our scale enables us to provide a differentiated platform for agents with the extensive resources and tools they need to be successful, both professionally and personally.”
The company didn’t provide forward-looking guidance in its earnings; however, Whiteside and Sanford said eXp is preparing for a continued slowdown by increasing cost savings and creating additional earnings opportunities for agents outside of selling homes.
“I think one of the things that we’re looking at is how do we moderate our expense flow to match up with our transaction model?” Sanford said during the fireside chat. “The way I think about it is that once we get to sort of this next level of where the market bottoms out, we’ll be able to shift our resources in such a way that we should be able to be profitable in good markets and bad markets.”
Sanford said the company’s newly-minted referral platform, Revenos, will be a key driver in retaining agents as the industry grapples with double-digit decreases in existing-home, new-home and pending home sales growth.
“We’ve got a referral division where if they’re not going to be actively going or listing property, they can actually hang their license there and reduce their fee exposure quite a bit and simply refer out transactions,” he said. “It gives them a place to hang their license during the slower periods.”
The CEO ended the call by striking a cautiously optimistic tone about eXp’s ability to weather the upcoming year while maintaining profitability. “We’re in this shift that we’ll be in for another couple of quarters before we get to what we call that flat level,” he added. “But once we hit that, then I think we’re going to look really good just in terms of the way that we’re structured as an organization.”