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EXp Cites ‘Volatile Housing Market’ For Double-Digit Sales Decline In Q4

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The entire weight of a topsy-turvy actual property market fell on eXp World Holdings throughout the fourth quarter, with its income declining 13 % yr over yr to $933 million.

Whereas the cloud-based firm held onto its profitability within the third quarter with a web earnings of $4.4 million, it didn’t do the identical for the fourth quarter, with web losses reaching $7.2 million throughout the three months ending on Dec. 21, 2022.

The corporate’s adjusted working earnings earlier than curiosity taxes depreciation and amortization (EBITDA) declined 72.5 % from $13.1 million in This fall 2021 to $3.6 million in This fall 2022.

The losses had been attributed to a risky housing market that noticed closed transactions decline 13 % yr over yr to 109,168. Gross sales quantity additionally declined 16 % yr over yr to $37.6 billion.

Glenn Sanford

Regardless of contracting gross sales, eXp mentioned its whole agent depend elevated 21 % throughout FY 2022 to 86,203 — which means the Washington-based firm onboarded greater than 1,200 brokers since its October EXPCON when CEO Glenn Sanford introduced eXp had reached the 85,000-agent mark.

In a press release earlier than the corporate’s reside hearth chat (i.e. earnings name) on Thursday, Sanford struck an optimistic tone about eXp’s total place throughout the market, pointing to the brokerage’s full-year outcomes as proof of its skill to climate a shifting market.

“I’m excited to return as CEO of eXp Realty to drive our subsequent part of progress by doubling down on agent-centric innovation,” he mentioned. “Our mannequin was designed to resist various market circumstances, which uniquely positions us to proceed investing within the agent expertise in a down market. In flip, we maximize long-term progress and profitability.”

Though eXp confronted a tumultuous fourth quarter, the corporate’s full-year outcomes had been strong, with income rising 22 % from 2021 to $4.6 billion. The corporate was nonetheless worthwhile for the complete yr with its web earnings declining 81 % from $81.1 million in 2021 to $15.4 million in 2022.

Actual property gross sales metrics had been additionally on the upswing for 2022, with eXp brokers closing 511,859 transactions (+15 % yr over yr) price $187.3 billion (+20 % yr over yr) — a mirrored image of eXp’s home and worldwide recruitment that included launches within the Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai.

The adjusted EBITDA for FY 2022 was $60.5 million.

“Because of the arduous work of our brokers and our industry-leading working effectivity, our core eXp Realty North American enterprise remained solidly worthwhile within the fourth quarter regardless of the market downturn,” Sanford added. “In step with how we handle our enterprise, we at the moment are reporting segment-level monetary data, which additionally supplies transparency into the monetary efficiency of our core enterprise and the investments we’re making to bolster and lengthen our place as essentially the most agent-centric brokerage on the planet.”

Through the firm’s hearth 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 newest Inman Join New York look, the place he touted the power of cloud-based fashions in opposition to rivals with conventional fashions.

“What’s attention-grabbing is the {industry} actually has been pretty gradual to reply to the brand new regular even with the pandemic,” he mentioned. “Relative to lots of the legacy franchise gamers, it actually seems like, not less than from a aggressive standpoint, that there’s numerous brokerages which are principally dinosaurs, instructing different dinosaurs the best way to be higher dinosaurs.”

“Due to that backdrop, we’ve been in a position to scale to essentially tens of hundreds of brokers and tons of of hundreds of thousands of {dollars}, really billions of {dollars} in income in North America, and inside actually a reasonably brief time period,” he added. “The following part of eXp is progress. It’s one of many the reason why I got here again as CEO of EXP Realty  — to essentially proceed our concentrate on the agent-centric nature of the true property brokerage, leveraging our scale with the final word objective of being the primary worldwide actual property, brokerage and model.”

Sanford mentioned eXp’s world agent web promoter rating (73) proves the brokerage’s current enhancements, which embrace the launch of Revenos, eXp Luxurious and different SUCCESS initiatives, are working and can proceed to draw a sturdy agent base.

“We imagine that now could be the time to truly develop in a down market,” he mentioned. “Our agent NPS rating [is] actually our North Star and actually an excellent predictor of our long-term success.”

“We’ve got an all-time excessive [score], globally, of 73,” he added. “And we proceed to kind of double down on how we’re utilizing NPS as a software to truly drive a founders’ mentality into a company in a manner that creates key metrics for our group to iterate round.”

Though the corporate expects 2023 to reflect 2022 when it comes to market headwinds, Sanford and Whiteside mentioned eXp is in a primary monetary place with $100 million in money circulate and no debt. These two issues, they mentioned, will allow the brokerage to maintain investing in its brokers and tech endeavors.

“We’re investing in merchandise to drive better agent productiveness, which finally implies that they’re getting high-quality alternatives,” Sanford mentioned whereas teasing a coming replace to eXp’s web site expertise.

Just like the earlier quarter, eXp didn’t present forward-looking steerage in its earnings. Nevertheless, Sanford highlighted the choice to function with better monetary transparency and start segmenting the earnings outcomes for eXp North America, eXp Worldwide and Virbela.

“One of many causes I did that’s due to the difficult market, we needed to point out to our brokers, workers, shareholders and others that at scale, eXp Realty, can be worthwhile in good occasions and dangerous occasions,” he mentioned.

The corporate’s inventory (NASDAQ: EXPI) skilled a small carry in after-hours buying and selling, with the worth per share rising 1.41 % to $12.25 — which is down from the 52-week excessive ($27.43), however significantly higher than the 52-week low ($9.96).

Its market cap stands at $1.84 billion.

E-mail Marian McPherson