Prepared remarks
Hello and welcome to the eXp World Holdings Fourth Quarter and Full Year 2024 Earnings Fireside Chat via Live Stream and our Metaverse on the web frame. I’m Denise Garcia, managing Investor Relations for eXp World Holdings. Today, we will commence our earnings fireside chat with remarks from Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings; Leo Pareja, CEO of eXp Realty; Spring Bengtzen, CEO of Utah Life Real Estate Group; Wendy Forsythe, CMO of eXp Realty; and Kent Cheng, Principal Financial Officer and Chief Accounting Officer at eXp World Holdings. After our prepared remarks, we will open the call to a Q&A session with our speakers, but we will start with a review of the forward-looking statements. Several forward-looking statements will be made today that should be considered along with the cautionary statements in the company’s SEC filings. These statements are subject to various risks and uncertainties that could result in actual outcomes differing materially from what is projected.
Please refer to our SEC filings, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, for a discussion of specific risks that may impact our business performance and financial condition. We do not assume any obligation to update or revise any forward-looking statements or information. As a reminder, today’s call is being recorded, and a replay will also be available on eXp World Holdings. Now for a few logistics before we get started. Welcome to our Metaverse on the web. For those joining us today, welcome. To zoom in on a specific screen, click on that screen and then select Zoom In. If the content disappears or you lose audio, just refresh your page. If you need assistance while in frame, use the Help button at the bottom right to connect with tech support. If you have a question during our presentation, you can enter your questions by scanning the QR code shown on this screen with your mobile phone or by visiting slido.com and entering the event code EXPI.
From there, you can submit a question or vote for an existing question by giving it a thumbs up if you'd like it asked. This screen will stay visible on the right-hand side of the stage. Now I’ll turn the fireside chat over to our speakers before opening the call to questions. Glenn, you may begin.
Thank you, Denise, and thank you all for being here today. Before we look at our fourth quarter and full year results, I want to take a moment to discuss the overall picture and the strong platform we’ve created for eXp. We have eXp North America, which is truly the driving force behind our global expansion. When you examine the segment level reporting, you'll see that North American Realty remains a key profit center for the company, enabling us to develop our business model in a unique and sustainable way. Over the past 15 years, we have built the eXp platform, making us the only large brokerage that offers a comprehensive marketing suite for agents, personal development services, and health resources for agents—the first in the world to do so. We also provide meaningful revenue sharing in equity and have invested in innovative technologies like our enterprise-level metaverse platform, FrameVR, which allows us to operate worldwide.
Now, moving on to some highlights from the fourth quarter. Since last July, I have focused heavily on the International side of the business, which has shown significant progress. Last week, several members of our team visited Egypt, and I also traveled to Dubai. We were there to support the launch of the Egypt MLS with our business partner, who is collaborating with the government on this initiative. We're very optimistic about its future. At the end of last year, we had a record number of productive agents in International, with revenues growing by 63% in 2023 and accelerating to 72% in the fourth quarter. As we expand, International is expected to play an increasingly significant role in eXp's growth. Furthermore, International has not only been achieving remarkable growth but is also becoming more profitable as an independent segment of the business due to improved efficiency as we scale across different countries.
We’re in the process of entering additional markets, including Turkey, Peru, and Egypt. In June of last year, we also launched our agent referral platform globally, bringing our presence to 22 countries, soon to be 27 with the addition of these new countries. This enhances our business capabilities and networking potential for eXp agents around the globe. One of the common themes we hear is that our international footprint provides a significant advantage to agents, particularly as consumer behavior shifts to purchasing in multiple countries. The opportunities for referrals are increasing greatly. I anticipate that International will continue to be the biggest driver of future growth, alongside domestic opportunities. Just for perspective, there are likely about ten times more agents working in business real estate outside of North America than within it. I’m excited about where we’re headed, and with that, I’ll hand it over to Leo to share some North American highlights. Leo?
Thank you, Glenn, and thanks to everyone joining us today. I want to begin by discussing our Net Promoter Score, which is central to our mission at eXp. Serving our agents is our top priority, and we measure this through our Net Promoter Score across the organization. Generally, a score above 50% is considered excellent. Last year, we saw an increase of three points from 2023 to 76. This achievement is significant, especially given the complexities and changes we faced last year. I take great pride in the overwhelmingly positive feedback we received regarding the transaction process; 88% of our agents rated their experiences as a nine or ten. This is especially commendable given the turbulence in our industry last year. We are also proud of the consistent feedback from our state broker teams. You can see some quotes emphasizing improvements not only in everyday transactions but also in onboarding processes like our White Glove onboarding.
Moving on, I am thrilled to announce that we have received an award for the eighth consecutive year as one of the best places to work, as recognized by our employees. This reflects the culture we’ve built and the innovative products and experiences we offer to agents daily. What drives our success? A blend of various initiatives, including incentives aimed at attracting some of the most productive individuals in the industry. Our fast start attraction bonus totaled over $8 million paid to 7,000 agents in 2024. In the same year, we updated our Pioneer RevShare program to remain competitive in the market. We continue to invest in our leading education and training programs, with eXp University seeing a remarkable 111% increase from 2023 to 2024. We held regional rallies in 20 different locations throughout 2024, and in the spring of 2025, we will host events in 18 locations. Given the significant topics surrounding NAR legislation, we supplied agents with buyer and seller representation toolkits to assist in agent attraction, and made those resources widely available during this challenging time.
Another core belief for us is that we cannot build everything in-house. Unlike some competitors who see themselves as tech companies, we consider ourselves a world-class brokerage that is tech-enabled. Therefore, we pursue partnerships with top-notch collaborative tools to improve our efficiency. Canva Pro was made available to all agents and saw tremendous success, with over 68,000 designs created in the first 30 days, rising to 189,000 in the first 60 days. We also partnered with Sisu, an industry-leading business tracking platform that enhances productivity and project management for team leaders handling recruitment and onboarding. Additionally, our luxury group experienced a 46% growth in 2024, expanding membership applications to 22 countries and Puerto Rico that year. With over 8 billion listings promoted through our luxury platform in 2024, we are focused on providing top-notch training and education.
We launched FastCAP in September, which I believe will be a crucial component of our agent education platform. It’s a six-week immersive program guiding agents step-by-step to build their businesses quickly, without any added cost. This partnership with Sisu helps gamify the process, yielding remarkable results for new agents. On average, four appointments convert to two signed agreements, while those who follow the minimum course standards see results jump to around seven appointments with 3.8 signed agreements. Early feedback from both new and seasoned agents who sought a refresh has been extremely positive. Looking ahead to 2025, we enter with strong momentum. Our education and training initiatives have contributed to a 12% increase in transaction counts per eXp agent and a 23% increase in sales volume per agent in the fourth quarter. December was particularly strong, with the top 10 teams in the US collectively closing $439 million in sales volume, showcasing the exceptional talent we’ve attracted in 2024.
Notable joiners included Kris Caldwell from Denver, who previously led a top team at Compass, and Gina Kirschenheiter and Travis Mullen from Orange County, who gained fame on a reality series. We also welcomed Jeff Quintin from New Jersey, a top agent at Keller Williams for a decade, and Justin McLaughlin, who returned to us with his team after a brief stint elsewhere. Our company is seeing a high rate of agents returning after exploring other options. Now, I would like to introduce an agent who joined us in January and has already made a significant impact, closing $318 million in sales and 660 units in 2024. Spring Bengtzen is here with us to share her thoughts on her decision-making process. She was not only a top agent at her previous firm but also a leading recruiter, making her insights valuable for our audience. Spring, thank you for joining us. I'm keen to hear what sparked your conversation with us and ultimately led to your move.
Yes. Well, thank you for having me, Leo. I’m grateful to be here. I believe that eXp is in its 2.0 era with over 80,000 agents strong. The foundation, you guys have a really solid foundation of operational excellence and your focus on agent production and growth was very attractive to me. I, as you mentioned, run a large team out of Salt Lake City, Utah, and production always comes first in my organization. And eXp’s emphasis of being home of some of the highest producing teams in the industry, as well as there’s a lot of opportunities to participate in multiple masterminds, events, training opportunities and the resources just to collaborate with top producers was really attractive to me to be able to scale our retail production business. On top of that, beyond production, your guys’ enhanced revenue share program played a major role in my decision. Unlocking level five for capping is a game changer.
And then also unlocking, if you’re an ICON agent, unlocking all seven levels is massive opportunity for myself and other agents for growth and scalability. It’s really unmatched, truly unmatched in the industry. I’m really excited about that. And then the other factor I would say, Leo, was your stock equity program. The fact that you let agents participate and contribute up to 5% or 5% of their commissions, and it’s uncapped, really creates a great opportunity for us to invest in the future of the company and in the future of our personal growth and having an ownership stake in eXp is something that truly sets the brokerage apart and it was one of the key factors of why I made the decision.
Thank you so much, Spring, for joining us and also sharing those comments with everybody. Wendy, I will hand it off to you.
Thank you, Leo. And thank you, Spring. In 2024, we focused on aligning our eXp value stack to provide our agents with the best tools, services, and support in the business. Our mission was to make our value stack an essential part of their business so that they would not consider any other brokerage, and that their partnership with eXp would be immensely valuable. The graphic on the screen shows all the incredible elements that we have as part of our eXp value stack today. This realignment and reinvestment in our agents is having a significant impact. We challenged our agents during our January kickoff event to take bold steps in 2025. eXp 2.0 will carry our legacy of innovation, disruption, and vision into the next phase, and our agents are excited about this. One of our agents from San Diego, Dan Beer, has expressed renewed inspiration from our tech stack, our value stack, and everything we are doing to support the growth of his business.
Our agents are our superpower, and this year, we will continue sharing their stories. Stories like Cher, our youngest ICON agent in South Africa. Success stories like David, who joined us after a long career and has achieved ICON status for four consecutive years. Stories like Sunny from Vancouver, Canada, who joined us to create multiple income streams in his business. And stories like Dana from St. Louis, who transitioned her entire independent brokerage to eXp to empower her agents to elevate their earnings. These success stories play a crucial role in attracting and retaining agents at eXp. We are very optimistic about the upcoming year, and we invite you to join us at one of our major events in Montreal, Barcelona, or Miami, where the energy and enthusiasm of our eXp community will be evident. Now, I will hand it over to Kent to review our financial highlights.
I’d like to start by emphasizing that at eXp, our financial success begins with our agent. Their dedication and engagement are at the heart of our performance. In the fourth quarter, our agent Net Promoter Score remains strong at 77, reflecting the continual satisfaction and loyalty of our agent community. Despite a challenged macroeconomic environment, we delivered $4.6 billion in revenue in 2024, up 7% from the prior year. This growth is a testament to the strength of our platform and the resilience of our business model. In Q4, real estate sales volume increased 17%, driven by a 12% year-over-year improvement in agent productivity. Full year International revenue grew 63% in 2024, accelerating from 50% in 2023. In Q4 alone, International revenues surged 72% year-over-year. From a probability standpoint, we reported a net loss from continued operation of $16.8 million for 2024. However, when adjusted for the $34 million litigation contingency and the $4.9 million impairment charge net of tax, the full year adjusted net income was $12.2 million, an impressive 247% increase over the prior year.
Additionally, we delivered adjusted EBITDA of $75.5 million for 2024, representing a 16% increase year-over-year, a strong achievement despite the significant market headwind we face. On the next slide, I will walk you through the key financial and operating metrics that drove our performance in Q4. In the fourth quarter, we grew revenue by 12% year-over-year. Our productive agents and agent teams were the key drivers of this growth, contributing to a 6% increase in real estate sales transactions. This translates to a 12% increase in transactions per agent, reflecting the continued improvement in agent productivity. We maintained a sustainable gross margin, which stood at 12%, excluding revenue share and stock-based compensation. From a profitability standpoint, adjusted EBITDA grew 151%, a result of our disciplined approach to operations and cost management, while continuing to invest in our agents and staff.
Our cash position remained strong. We ended the quarter with $113.5 million in cash, ensuring financial flexibility as we executed our strategy. Operationally, we closed the quarter and the year with a total of 82,980 agents, reinforcing our position as the most agent-centric brokerage in the industry. On the next slide, I will highlight the financial and operating metrics that drove our full year results. The full year trend is similar to Q4. Our business performance remained strong and consistent throughout the year, despite challenged market conditions. For the full year 2024, we grew revenue by 7% year-over-year. We maintained a solid gross margin of 12.6%, excluding revenue share and stock-based compensation. Adjusted EBITDA increased 16% to $75.5 million. From an operational standpoint, we successfully completed over 430,000 real estate transactions, a 3% increase over the prior year.
Sales volume reached $185 billion at 9% year-over-year, driven by a 6% increase in transactions per agent. On the next slide, I will break down the financial results by segment. Our North America Realty segment remains the primary driver for both revenue and profit for the company. Despite a challenged U.S. financial market, we delivered strong results. Revenue for the fourth quarter grew 11% year-over-year to $1.068 billion, driven by a higher home sales price and improved agent productivity. For the full year, segment revenue increased 6% to close to $4.5 billion. Profitability also saw significant gains. Fourth quarter adjusted EBITDA increased 63% year-over-year to $14 million, while full year adjusted EBITDA surged 151% to $99 million. As Glenn described, International continued to grow revenue while becoming more profitable, improving adjusted EBITDA profitability by 31% year-over-year.
Other affiliate services, including Frame and Success, contributed modest revenue and adjusted EBITDA. I’d like to take a moment to highlight our equity program, a unique and differentiated component of our agent compensation. In 2024, we issued 1.8 million shares to our agents through the agent growth incentive program, with an estimated total value of $22 million. Looking at the longer time horizon, over the past six years, we have issued more than 13.3 million shares to agents through this program, representing an estimated total value of $227 million, a testament to our commitment to agent ownership. In addition to issuing shares, we remain committed to responsible capital allocation. In 2024 alone, we purchased over $141 million of common stock, representing more than 11.9 million shares. This effort helped us maintain our shareholder ownership stake and equity value. With that said, I’d like to turn the presentation back to Denise, who will facilitate our Q&A session. Thank you.
Great. Thanks, Kent.
Thanks, Denise. And thanks, everyone, for joining us here today.
Thanks, Kent. I’ll kick off with a question for everyone on the team before we open the call to questions. First, I’ll start with you, Glenn. How is International different than domestic U.S. and Canada?
I apologize for repeating myself for a moment. I've been working closely with the International team for about seven to eight months. Recently, I traveled to Egypt and Dubai, and I observed the launch of the Egypt MLS in collaboration with the government. Notably, there's been a significant debate in the U.S. regarding private marketplaces. Data emerging from this discussion highlights that sellers typically achieve quicker sales and higher prices through the MLS. A partner we have, who is a successful agent in the U.S. but originally from Egypt, confirmed this with his counterpart from the Middle East. It's fascinating to see this development. The International market is similar to where the U.S. and Canada were 30 or 40 years ago, resembling a scenario where real estate and the web intersect, but without the advantages of the MLS. There are various portals vying for advertising and charging agents for visibility, but their concerns about data quality and other elements are lacking. eXp is introducing a professional touch, and we are gaining recognition for this new approach in other regions.
I take pride in our progress, which explains the rapid growth in International markets. We are clarifying our messages to better serve consumers, agents, and brokerages. This insight couldn't have been gained without our successful operations in the U.S., as we are bringing our best practices to these International markets. We're witnessing positive outcomes. Currently, we’re set to open in three countries: Peru in March, Egypt as soon as the legal documents are completed, and Turkey in April. Additionally, we have a few other countries developing in the background, and we’re making adjustments to leadership in different countries to ensure we have top talent helping us expand internationally. I often liken our approach in International to the idea presented in the movie Moneyball, ensuring we have the right team working with us to foster growth in this area. Overall, I'm very excited about the direction we're headed, as we begin to see the same growth curve we experienced in the U.S. from 2015 to 2018 appearing in the International landscape.
Great. All right. Thanks. Next question is for Leo. Leo, what’s your strategy to help eXp agents win in 2025?
Thanks, Denise. Our approach for 2024 will be a continuation of our current strategy. eXp has really established itself as a strong contender for growth. We provide unique opportunities for agents to expand their businesses. I view the company as a platform that enables real estate entrepreneurs to pursue their ambitions at any scale. We are fortunate to collaborate with a diverse range of agents, including those who sell eight to ten homes a year. Our primary focus is on operational excellence, coupled with top-tier technology partnerships, and continually enhancing our value offerings. In 2025, we plan to intensify our investments in strategies that promote long-term growth. Our agent incentive programs have been effective, and you recently saw our announcements regarding Sisu and Canva. We also revealed at Nasdaq that we will transition to Slack Pro. Unlike companies that claim they can develop everything in-house, we prefer to leverage our resources to partner with leading technology providers and hold them accountable for performance.
We will tell our vendor partners that if they are not the top technology available at the end of their contract, we will seek alternatives to ensure improvement. Furthermore, we will place a strong emphasis on training. I mentioned this earlier with FastCAP. When Glenn introduced this vision 15 years ago, it was unique in the market. We have observed that many new companies now resemble us more than traditional competitors. Hence, we have evolved from merely our initial model to enhancing a comprehensive value stack that supports agents throughout their entire career journey, from starting out to scaling up. As we look ahead, my focus extends beyond this quarter or even this year; we aim to ensure that our platform is sustainable for decades to come.
That’s great. Thank you. Thank you, Leo. And now, Wendy, one for you. You identified many components within eXp’s agent value stack during the presentation. Which ones of these are you seeing resonate most with agents more recently?
Thanks, Denise. Yes. That value stack graphic is one of my favorite because it really does demonstrate how robust our offering is to support our agents throughout their entire day. So, to answer your question, I think it depends on the stage of the day most of our agents are in. So, certainly from a marketing perspective, Canva has been a huge hit for our agents. We mentioned the number of almost 190,000 designs being created in the first 60 days. Canva has allowed our agents to lean into easily creating marketing tools for their business. Sisu is another tool from our value stack that has allowed our agents to bring accountability tracking into their business, which is an important part of increasing productivity. And speaking of productivity, FastCAP. Leo mentioned the numbers for FastCAP. That program has just been tremendous at helping agents start or restart those habits that are needed to grow production in their business.
And lastly, I’ll mention just the overall support that our teams are able to give our agents. Our expert care desk handled over 3.6 million tickets last year and was able to serve those incoming calls within 37 seconds and resolve a vast majority of those questions during that first interaction. So, for our agents, that’s tremendous. When you need support, you want to be able to get your questions answered immediately and we’re able to do that. For new agents joining us, we onboarded 94% of new agents within 24 hours, less than 24 hours, which is tremendous for a new agent that is joining us. The last part of support that I’ll mention, there’s so much there, but getting agents paid. When we think of our value stack, all of those other things around that graphic that I shared pivot to that day that you get paid, that you get your commission check and 90% of our transactions settled within 24 hours, meaning we get you your money in your hands ASAP and we know how important that is. So, all of those different elements at different times of the day mean different things, but they all add up to allowing you to do your business more effectively with us and that’s our goal.
Great. All right, Kent, I have a question for you. As you look ahead to 2025 with a focus on growth, how do you plan to build on the progress achieved in 2024?
Yeah. Thank you for the question. I think our 2025 probability will probably depend on how the housing market plays out over the course of 2025. As you can see, the interest rate is still high in the more 6.9% or 40-year mortgage rate. There’s still some uncertainty in the market. Recently, we looked at the Fannie Mae latest forecast. Fannie Mae still forecast U.S. house market will down about 3% in Q1 and then see some single-digit growth in second half. So, that’s more like the market condition. And as you see the performance in Q4 and last year, we did a really great job, increased adjusted EBITDA, we grew our revenue, we optimized our cost structure to maximize productivity by identifying many new agent-centric growth incentives. So, I think in 2025, we are going to continue to focus on agent-based initiative and investment that in our pilot, such as incentive technology, improve our process to drive the long-term growth as Leo just mentioned.
Great. All right. Thank you, Kent. Now, I’ll open up the call to our questions from analysts. John Campbell from Stephens, if you have a question, you can go ahead.
Questions and answers
Thanks, Denise, and thanks everyone for the time. Leo, this is for you. You've been a prominent figure in the CCD-CCP debate from Compass. Could you provide a brief overview of your latest thoughts on this situation and where you think it's heading? Additionally, to what extent can you share your strategy if we consider that the industry's listing landscape may become fragmented? I'm curious how you might respond and whether you see a role for House Hunters or other ways to leverage your national presence.
Thank you for the question. I have been quite vocal about my views on this topic. From our perspective as a global operator, North American Real Estate represents the most comprehensive, liquid, and precise dataset available, which many other countries envy. My prior experience with a MLS technology company showed me that nations like Australia and Japan have attempted to emulate our system because it serves consumers better. I believe the opposing argument is largely driven by self-interest and profit, which does not prioritize consumer needs. Furthermore, I suspect they may face potential class action lawsuits from sellers who could be negatively impacted by these concentrated efforts, as well as scrutiny from the Department of Justice. If I were selling my home, I would definitely list it on the MLS, and I would recommend the same to you and your family. However, there are occasionally justifiable exceptions, such as tenant-occupied properties that can't be shown for an extended period, or new construction sites that aren't safe for public viewing.
I have personally encountered various situations in my real estate career, including cases involving high-profile clients who wished to keep their properties private. However, these cases represent only a small percentage of transactions. I believe that maximizing exposure in a short timeframe is ultimately the best approach for sellers. Regarding your second question, I have expressed to NAR and others that a fragmented marketplace would harm consumers. But if that is the direction we must go, we are the largest platform in the U.S. with more agents and transactions than any competitor. We are fully equipped to handle this at scale. Ideally, we want to stay within the current framework, as it benefits consumers the most. Should we regress to a state reminiscent of 50 years ago, as Glenn mentioned, resembling the commercial real estate landscape, we would maintain a significant advantage over others. Nevertheless, I firmly believe that such a shift would not be in the best interest of consumers. I remain hopeful that we can come to reasonable and sensible outcomes.
Yeah. That’s great feedback. I appreciate that. And then going back to the cost or the profit question for you, Kent, you guys really have shown great cost discipline throughout the year and growing EBITDA pretty nicely this year. I’m hoping we can maybe just kind of do a quick spot check or refresher on the OpEx side. First, what’s the mix between fixed and variable that you guys have now? And then secondly, looking out the rest of the year, can it sound like that some of this will be contingent on U.S. housing, but just broadly how you’re thinking about fixed cost growth? And how much of that’s fully committed versus how much is going to be influenced by the broader market?
I think that’s a good question. I would say a lot of our costs, right, we can flex up and down, right, because a significant part of our cost is support onboard the agent, support, complete the transaction. So I would say a significant part then can be flexed up and down based on volume. Another part is we are investing in AI, right? Eventually, we’re going to see some, we’re going to see payoffs. I mean, eventually AI will help us to also flex up and down and really leverage technology to become more efficient.
Makes sense. Thanks, guys.
And I would add just to add, on the International side, we’re definitely focused on opening up more countries. And so that does add additional cost components to the overall mix, but that has its offsetting benefits two years or three years out of revenues and then getting to scale, et cetera. So I’m focused, or as an organization, we’re focused on getting to as many markets as we can handle in a reasonable period of time and that obviously then has a cost factor that goes with it.
That makes sense. And then one more here. I mean, I’m seeing this in the chatbox and I actually had the same question. You guys are now providing real estate transactions as opposed to total transactions. Maybe talk about the rationale there and if we can get historical numbers to match up.
John, you said the real, okay, make sure I understand your question. We provide real estate sales transactions, correct?
Yes. I think you provided total transactions. So what you provided in the back look, the year-over-year quarter is different than what you guys provided last year.
No. I think what we provide should be pretty comparable. Yeah.
Okay. Thanks. Thanks, John. I think we have another question here from our analyst at William Blair, Matt Filek. Matt, you can go ahead.
Thank you, Denise. Hey, everyone. You have Matt Filek on for Stephen Sheldon. Thank you for taking my questions. Wanted to start with one on agent trends. How should we think about agent count trends in 2025 and can you also provide some context on how agent trends may look between domestic and International markets, especially since you just entered some new International markets and there’s clearly an increasing focus on growing that part of the business?
I’ll address that briefly. Our total agent count has decreased year-over-year. We calculated that approximately 29,000 agents left us last year, which included some cleanup on the International side. However, when we look closely at the numbers, we have actually added a more productive agent count compared to a year ago. My estimation is that we now have an additional 3,000 to 5,000 net productive agents on the eXp platform compared to last year. We're focusing on productive agent count as our key metric for the International market, and we are certainly seeing positive trends domestically after many agents left eXp and the industry last year without producing. For the International side, there’s potential to add another 2,000 to 4,000 agents in the next 12 months, possibly even more. Domestically, there are still many agents who were not selling much and are still leaving, but overall, our net productive numbers are trending upward. Leo, do you have anything to add?
Yeah. So at our size and scale, it’s not uncommon for us to be more reflective of the overall market when it comes to agent churn. 30-year low in 2024 from historical average. But what we’ve been focused on is really retaining and attracting the most productive agents. So, all 90% of our churn sat between zero and seven transactions per year with more than half of them being at zero. So we’ve really focused on maintaining and attracting the highest productive individuals, as well as team leaders. So to me, 2025 looks like a win if our focus is continued on productive agents. Because as we continue, and by the way, I’ve been saying this quite a bit on media interviews. This is not a kind of two-quarter situation we’re going to be in. I’m feeling that we’re going to be in this low transaction count for the foreseeable future, like a couple of years, 18 months, 24 months, 36 months. Obviously, you can’t have a crystal ball, but it’s not a short-term thing. So as we look at how we last and survive and compete in a low inventory environment, it’s really about making sure that we’re partnered with the best producers in all the markets that we operate in and continue to add to the value stack. So the agent count is less important when we look at transaction count and making sure that we’re in business with the folks controlling the business in every market.
Got it. Thank you, Leo and Glenn. That was helpful. And then on International, can you just remind us how you are thinking about the timeline to getting these new countries profitable and then maybe just recap what countries currently are profitable? I know there are a few. Just trying to gauge when International as a whole could reach a profitability inflection point?
It will take some time to expand to over 60 countries in the next five years. This involves building infrastructure, conducting tests at the local level, and learning from mistakes in each new country. However, we do have several countries in strong positions. The U.K. has been a strong market for us, along with France, South Africa, and a few others that continue to be profitable. The U.K. is our most mature market, generating a solid profit last year. We are definitely seeing progress in these markets. My goal is to invest in International growth so that in five years, this will become the largest profit center for the company, with more than 50% of all agents operating internationally.
Got it. Thank you, Glenn. And then last one for me, know this is a smaller piece of the business, but notice that your commercial brokerage part of the business recently partnered with CoStar to give your brokers access to that platform and was just hoping that you could maybe quickly touch on that partnership along with the number of commercial brokers you currently have and just your overall plans for growing that part of the business?
Yeah. I’ll take that one. The CoStar partnership is important as we look at competing in that segment. And when you look at the agent counts and what’s important to them, I can’t correct me if I’m wrong. I’m not sure if we break that out. So I don’t want to make a forward disclosure statement here if I can’t say that number publicly, but it was important that we had the best in class stack. So just how we view our agent value proposition on the residential side and making sure that the value stack exists properly. Commercial is no different. We partner with CoStar as well as Buildout for a best-in-class commercial CRM. And we’re continuing to explore different opportunities because within the CoStar partnership, it’s not just the CoStar portal, but it’s also discounts on LoopNet, BizBuySell for our folks that engage in business brokering. So it’s a myriad of things as we look to that space. And that one feels a lot like International in the sense where there’s a great opportunity. There’s a lot of expansion there from a revenue standpoint and we’re still early on in optimizing what that stack could look like. There’s a couple of other products that we’re looking at, as well as disciplines and services to add to the value stack. So I’ll let Kent say if we’ve actually disclosed the breakdown publicly and he can answer that question.
Yeah. We have not break down the agent count between commercial and residential. But what I can say is commercial agent count is still representing a very small percentage of the total agent count.
Okay. Appreciate the time.
Thanks, Matt. I think we have one other question from Wyatt Swanson at D.A. Davidson. I know you’re not on the stage, but if you want to open your mic, I think you might be able to ask a question.
Hi. Yes. Can you hear me?
Yes.
Great. Thanks. I’m on for Tom White. Thank you for taking our questions. So related to the earlier operating expenses question, can you talk a bit about how you envision operating expense growth playing out in calendar year 2025? And maybe comment on your willingness to cut investment in some of your longer term initiatives to cushion the bottomline impact of any protracted slowdown in the broader housing market just as the year progresses?
We are operating with expenses that are quite variable, as Kent mentioned. This business was designed to function from a variable standpoint, which gives us a unique advantage. We experienced this firsthand back in 2000 when we had to make significant changes during COVID, and we've adjusted several times in the past five years. Fortunately, we have minimal fixed costs. If necessary, we can reduce expenses, but our primary focus remains on our mission and reaching a larger market. Ultimately, we aspire to be the most agent-focused real estate brokers worldwide, while also expanding our presence globally. We believe our model resonates with agents worldwide, and we're currently gaining traction in several markets beyond the U.S. and Canada. We aim to continue pushing forward, especially as we build momentum, as the last thing we want to do is hinder that by scaling back on growth.
Got it. That makes sense. That’s really helpful. And then maybe a higher level one, how do you see agentic AI operators and similar technologies impacting your business and the brokerage industry over the coming years?
Yeah. Well, fundamentally, I think it’s going to change everything that we’re doing. I mean, you’re looking at what we’ve got with operator, with OpenAI, certainly Project Mariner that’s coming out with Google and a number of other models that will allow for repetitive work that still takes some knowledge of what to do if. A lot of that stuff’s going to become significantly automated through AI. And we’re working with various tool sets right now internally to speed up the processes of a lot of different things, including things like the automation using AI of contract management, which is something we started investing in in 2021 and we’re now at a point where we’ve proven up that our document AI platform will start to actually help agents understand that they’ve got good paperwork. Sooner in the process, it’ll start to actually develop the DAs and start to do a lot of the pre-work with the supervision of managing brokers.
But a lot of this stuff is going to speed up and make the whole process a lot cleaner. My rallying cry to the organization is that we certainly don’t expect to be the same size, but I would expect that five years from now, if nothing else changed, we’d be able to run eXp as it exists with approximately one-third to one-half of the current staff. I fully expect that those who are plugging in and using AI and our citizen developers and helping us grow, that there won’t be any challenges with them continuing to grow with the company because we are growing, but it will be a different landscape and a different cost structure because of agentic AI and all the other AI technologies that are rapidly coming at us.
Got it. I really appreciate the color there. Could you provide maybe an update on agent commission rates? It doesn’t seem like the NAR settlement has had much of an impact, but kind of curious as to what you’re seeing with your business on this front?
I’ll address this. Following the settlement, a report was released by Mike DelPrete, which analyzed anonymized data from approximately 55,000 transactions across a wide range of companies. In the 90 days post-settlement, there was about a 10 basis point change, and if we examine historical trends, this may reflect seasonal variations. As we approach Q1, the situation appears consistent with our performance in previous years. Prior to this call, I spoke with the Associated Press about how these changes have affected us. There was an educational challenge to overcome, which we managed effectively, receiving substantial coverage from various organizations, including the Consumer Federation of America and Tanya Monestier from the Buffalo School of Law. While the alterations were more procedural than educational, we have not observed any significant movement in commission rates.
Got it. Thank you both. I appreciate it.
Thank you. Thanks, everyone, for joining. As always, please stay connected by visiting expworldholdings.com for the latest updates on eXp news, results and events. Additionally, you’ll find a recording of this call and our latest investor presentation on the Investors section of the site. This concludes the eXp World Holdings fourth quarter and full year 2024 earnings fireside chat.