eXp World Holdings, Inc.(EXPI)Q3 2025 法說會逐字稿

Welcome to the eXp World Holdings Third Quarter 2025 Earnings Fireside chat via live stream at our Metaverse on the web, Frame. My name is Denise Garcia, and I manage Investor Relations for eXp World Holdings. Today, we will begin our earnings fireside chat with remarks from Leo Pareja, CEO of eXp Realty; Wendy Forsythe, CMO of eXp Realty; Felix Bravo, Managing Director, eXp Realty International; Jesse Hill, Chief Financial Officer of eXp World Holdings; and Glenn Sanford, Founder, CEO and Chairman of eXp World Holdings. Following our prepared remarks, we will open the call to a Q&A session with our speakers. Let's begin with a review of the forward-looking statements. There will be a number of forward-looking statements made today that should be considered in conjunction with the cautionary statements contained in the company's SEC filings. Forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

Please see our filings with the SEC, including our most recently filed annual report on Form 10-K and quarterly reports on Form 10-Q for a discussion of specific risks that may affect our business, performance and financial condition. We assume no 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 made available on eXp World Holdings. Now for a few logistics, and we'll get started. Welcome to our Metaverse on the web. For those of you joining in Frame today, to zoom in on a specific screen, you can click on that screen and then click zoom-in. If the content on the screen disappears or if you lose audio, simply refresh your page. While on Frame, if you need help, just use the 'Help' button at the bottom right to link with tech support. Should you wish to ask a question during our presentation, you can enter your questions by scanning the QR code presented on this screen with your mobile phone or go to slido.com and type in the event code, EXPI.

From there, you can submit a question or vote up an existing question by giving a thumbs-up for that question to be asked. This screen will remain up 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.

Thanks, Denise. We continue to grow and retain agents and get results. This quarter marked our second consecutive quarter of quarter-over-quarter agent growth. It's a great indication that our strategies and programs we've created to attract and retain agents are working. Not only have we been able to attract and retain agents, but we're creating a stronger, more productive agent base. Sales transactions per agent are up again, increasing 5% year-over-year. The number of our productive agents is up 7% year-over-year and I'm super excited, worldwide agent attrition has improved by 13% year-over-year. Let's talk a little bit more about retention and attrition in the U.S. on our next slide. In the U.S., the majority of our departing agents continue to be our lowest producing cohort, and we are retaining the highest producing agents, which are multiple times less likely to churn than our lower producing agents.

In fact, of the nonproductive agents that left eXp, 63% left the industry altogether, but fewer agents are leaving with attrition improving by 18% year-over-year in the U.S. Our strategy to attract teams is working and helping drive the increase in productivity. 39% of the new agents to eXp were on teams in the third quarter. Agents on teams are 79% more productive than individual agents. I'd like to highlight some of our notable teams that joined us. Starting with Tammy Register in North Carolina. Tammy spent a decade at Keller Williams and the prior decade at Hometown. She's consistently one of the top agents in her market, either #1 or #2. We also welcomed a good friend of mine, Chris Heller, who was formerly CEO of Keller Williams Realty. He's held the #1 spot at Keller Williams and he's held leadership roles across the industry in some of the most impactful companies in our industry.

Then there was Brett Zebrowski that we welcomed in Southern California. His 90-agent team boutique brokerage came over, specializing in luxury real estate in Southern California. On the next slide, we have a top producing SoCal solo producer, Vivian Lesny, who's also ranked very high on the NAHREP list. Two of our San Diego powerhouses, Kyle Whissel and Dan Beer, came together to create the Whissel Beer Group. This merger will be one of the largest teams we have at eXp with over $1 billion in sales in 2024 and with huge goals for 2025. We're interested to watch them scale throughout California, then regionally, and we expect to see them operating on our platform nationally. After that, the Victorica Group in San Antonio came back after briefly operating as an independent and very quickly realized the benefits of being able to scale on our platform. On the next slide, we have K2 out of New Mexico.

They're the #1 Zillow seller home team who was formerly independent and now is joining us to scale. Right next door in Texas, Amy Tapp as an independent broker joined us as well, which has been a testament to how we continue to recruit independent brokerages. Last but not least, in the third quarter, we welcomed The Impact Group, one of Denver's top teams. Their 31-agent team closed $305 million in sales with over 400 units in 2024, and we're excited to see what they do here. On this next slide, I want to touch upon eXp University, which is a testament to the execution on everything we just delivered. FastCap has been in effect for over 12 months now with 17,000 agent registrations for the program and the agents that complete the program are reporting seeing results in both the number of appointments and agreements executed, whether it's buyer agency agreements or listing agreements. On the heels of that, we've just launched FastATTRACT. Most recently, we announced an AI accelerator 8-week program. With that, I'm going to pass it to Wendy so she can give you more statistics on what FastATTRACT is looking like.

Thanks, Leo. Building on the information Leo shared about eXp University, I want to discuss our FastATTRACT program that was launched in Q3. This initiative was specifically designed to assist our agents in enhancing their revenue share. Over a six-week period, we focused on developing agents’ skills related to revenue share, and we achieved outstanding results. The pilot program in Q3 was so successful that we are continuing it into Q4, and it will be integrated into our curriculum through 2026. I want to welcome FastATTRACT to the eXp University curriculum and congratulate our 138 agents who performed remarkably during the pilot. We are thrilled about the skill development that FastATTRACT will provide to help many of our agents improve their revenue share capabilities. Leo also mentioned the new joiners featured in the media. Another aspect of our PR strategy, alongside showcasing new joiners, is emphasizing our leaders' thought leadership in the media.

In Q3, we highlighted our thought leadership on various topics, such as marketing, branding, AI and technology, women in leadership, and consumer advocacy, gaining significant media attention in major industry publications. This is a crucial component of our brand messaging and voice strategy, and we did an excellent job securing those headlines in Q3. In-person events are another key element of our efforts to foster culture and connect with our agents. In Q3, we were pleased to host an outstanding group of our top producers in Scottsdale, Arizona, for our Q3 Mastermind Event. The event saw 387 agents participate in two full days of collaboration and idea sharing, featuring a prominent industry speaker, Jared James, and received excellent feedback for fostering collaboration. These events are essential to our culture and teamwork. As Leo often says, you earn your way into these spaces, and being present in these rooms is vital for uniting our culture and staying attuned to our clients' needs and industry trends.

This leads us to an event we planned extensively in Q3, eXpCon in Miami, which took place recently in October. I’m pleased to report that we experienced greater attendance at eXpCon Miami in 2025 compared to 2024, which our team is very proud of. It was a wonderful event that highlighted our culture. We hosted over 105 breakout sessions, featuring more than 50 of our eXp agents prominently on stage. One exciting aspect of this year’s event was our focus on user-generated content, utilizing our agents as key marketers before, during, and after the event. We appreciated the support you provided in marketing the event through social media and sharing your experiences. The recap shared on screen went viral, showcasing the various announcements made during eXpCon Miami. This strategy of user-generated content was integral to our marketing campaign, helping to build excitement and spread the word about the event.

Thank you for your contributions in promoting all the great things that took place at eXpCon in Miami. Next, I’d like to recognize our operations team and give you a glimpse into their daily work. On an average day, the operations team handles more than 14,000 expert care desk tickets, successfully resolving 73% of those tickets on the first contact. We understand how crucial it is for you to have those tickets resolved quickly. Additionally, we receive around 700 phone calls daily, knowing that reaching us by phone is often a last resort. When you call, we answer the vast majority of the time, and if we miss your call, you’ll typically be on hold for less than a minute and 40 seconds. We are committed to being there when you need assistance. Our broker support team conducts approximately 30 training sessions daily to support you and help with your business needs. You access eXp World over 7,300 times each day on average.

Lastly, an impressive statistic is that, on average, 9 agents per day became ICON agents in Q3, and I want to extend my heartfelt congratulations to all our ICON agents. This year, we are celebrating the 10th anniversary of our ICON agents, so congratulations to all of you. All these factors contribute to our value stack. In this quarter, we recorded an increase in our production per person year-over-year, partly due to our ongoing investment in this value stack. We achieved a 3.5% year-over-year increase, moving from 5 transactions per person to 5.2 transactions per person. This is a remarkable accomplishment. Now, I’ll hand it over to Felix for an update on international.

Thank you, Wendy, and thanks, everyone, for being here today. I'm really excited to share all the progress that we've been making on our international growth strategy. Over the past year, we've been pretty busy. Year-to-date, we've successfully opened operations in 5 countries. We opened up Peru in Q1, Ecuador and Turkey in Q2, and South Korea and Japan opened recently here in Q3. The most important part about eXp continuing to expand internationally is that from day one, we have opened up with active agents and transactions flowing through, even global referral transactions starting to happen, which we had in Japan the very first day. This is a testament to our new country launch playbook and how we are learning to open up countries more efficiently, ramp up our agent count and transaction count faster, but more importantly, how we're attracting the right kind of agent, the productive agent looking to build their business both locally or even at a global level.

Just recently here at eXpCon Miami, we announced our plans to open up Luxembourg, Netherlands, and Romania. We're really excited about these markets, and we are building off the momentum that we have created in EMEA by launching these 3 new countries in that region. We're confident in the leadership that we have found, which ties back to that new country playbook we've talked about so much this year, strong leadership and a strong value proposition focused on helping agents build the best possible business, whether that is to sell 5 to 10 homes or they want to build a mega team across the world that sells thousands of transactions. These markets are traditionally dominated by franchise and legacy models. We have seen time and again our ability to be disruptive in these markets and provide a better value and a more competitive split for these agents. Very excited about these 3 new countries.

We just recently announced that commercial is going international. This is exciting because as international scales, our demand and need from our agents to help them in not just the residential aspect of their business, but in other aspects, whether it be commercial, luxury, or other affiliate businesses is starting to build. We’re really excited to announce that U.K. commercial officially launched October 8. And from day one, we already have commercial agents in the U.K. beginning to join. More importantly, it's another added value proposition even for our commercial agents in the U.S. and Canada who are now able to do cross-border transactions with their investors. So very exciting about U.K. commercial. I’m going to share a little bit more business highlights for you guys from the third quarter. We have hit a massive milestone for us here at eXp International after just 9 months of the year.

We've surpassed last year's total revenue number and crossed the $100 million revenue mark for the first time in a calendar year. In Q3, our real estate transactions grew 44% year-over-year, driven by a 56% year-over-year increase in our productive agents. This resulted in a 34% increase in productivity per person as well as a 59% increase in sales volume. This is a testament to what we've talked about over the last year, doubling down on value proposition, focusing on working with top-performing agents in each country. Our existing agents leverage the platform to become more productive, more productive than they were previously at other brands or on their own. More importantly, the new agents we're attracting, as we open up new countries, are coming in productive from day one and leveraging our platform. We have always been where the pros go to grow in North America, and we’ve taken that page internationally, and we are now attracting some of the top teams and top agents across the world.

Fully operational, like I said, in Peru, Turkey, Ecuador, South Korea, and Japan. That doesn't just mean we are open, that means we have agents doing transactions both locally in those countries and leveraging that referral platform internationally. As we continue to grow and expand, the more value proposition and opportunities we offer our current agents. On the next slide, we'll talk a little about what our future goals are. All this momentum you're seeing puts us confidently on track with our international market expansion strategy. We are still on pace looking towards a 2030 vision of 50,000 agents in 50 countries. We'll continue to do this by partnering with strong leadership in countries where there is demand for our model and focusing on creating the best competitive business model and most competitive value propositions for what an agent needs locally to sell real estate while giving them accessibility to a global platform. With that, I will turn the call over to Jesse Hill, who will walk you through our third quarter financial highlights.

Thank you, Felix. Congratulations on reaching the $100 million milestone. Now I'll discuss our operational and financial highlights for the third quarter, starting with revenue. We generated $1.3 billion in the third quarter, reflecting a 7% increase compared to the same period last year, despite no significant change in the macroeconomic environment. Real estate sales volume rose 7%, driven by higher home sales prices and increased agent productivity, which saw a 3% year-over-year rise in sales transactions. Our agent count stood at 83,446, down 2% year-over-year, but as Leo pointed out, this represents a 1% increase compared to the previous quarter. We are also witnessing more transactions per agent, demonstrating our ability to attract and retain highly productive agents. Our GAAP gross margin was 6.5%, a decrease of 57 basis points from Q3 last year, due to more productive agents reaching their caps.

Our non-GAAP gross margin, which we provide for comparison with competitors who exclude stock compensation and revenue share, was 10.9%. Adjusted EBITDA was $17.7 million, remaining positive but lower year-over-year, impacted partly by the reduced gross margin and offset by operational improvements made in the first half of the year that are yielding benefits in Q3. We concluded the quarter with a solid cash position of $112.8 million on our balance sheet. Next, I'll review our financial results by segment for the quarter. The North America Realty segment remains our top revenue and profit contributor. North America revenue reached $1.3 billion for the quarter, with adjusted EBITDA of $23.1 million and operating income of $10.6 million. We include operating income or loss by segment for added transparency as part of our internal review. As Felix mentioned, our International segment continues to grow, with revenue up 68% year-over-year for Q3 due to a rise in productive agents and transactions.

The adjusted EBITDA loss improved by 5%, mainly because of the increased productivity driving transactions and revenue. Our other affiliated services, primarily involving Success, generated modest revenue with an adjusted EBITDA loss of $1.3 million. Next, I will highlight some key drivers for the quarter. The steps we took in the first half of 2025 established a strong foundation for our current results. We prioritized operational efficiency by automating back-office processes and investing in technology while utilizing AI to streamline our workflows. Our expanded affiliate programs, including eXp Luxury and Land & Ranch, are expected to enhance margins as they gain traction. Our scalable international strategy continues to drive growth across markets. We rolled out improved marketing and digital community tools that empower our agents to develop robust, sustainable businesses. Collectively, these initiatives have reinforced our platform, increased productivity, and positioned us for profitable growth as the real estate industry evolves.

Looking ahead, while we do not offer specific forward guidance, we are committed to enhancing operational efficiency and ensuring ongoing profitability. Our key priorities include leveraging AI and automation to simplify operations, expanding our partnership programs in areas such as sports and entertainment, and pursuing international growth with a disciplined, scalable model. We will also maintain financial flexibility, ready to invest where we identify significant opportunities to support our agents, strengthen our technology platform, and enhance long-term shareholder value. Our focus remains on disciplined execution, maintaining a strong balance sheet, and building a more efficient, resilient, and profitable eXp. Now, I will hand the call over to Glenn before we open it up for questions.

Thanks, Jesse, and thanks, everyone. This quarter has been about simplifying, strengthening, and scaling across every part of the organization. I'll start with SUCCESS Enterprises because that's where I've been spending a fair bit of my time. It represents one of the blueprints at the edges that we're using for how we evolve eXp as a platform company. Last quarter, I shared that I'd be stepping in as Publisher & Managing Editor of SUCCESS. Since then, we've taken decisive action to streamline operations and reimagine the business. We focused on 3 things: AI-driven operations. We've embedded AI throughout the back office product and operational workflow, eliminated unnecessary complexity and dramatically increased output per team member. We replatformed SUCCESS.com, rebuilding the site from the ground up for scalability. We've got an incubating team of Vibe coders around the organization who are subject matter experts that we are repositioning to take on core development roles of platforms and systems inside the company.

We are also renewing our SUCCESS Coaching Certification, which we will launch in January 2026 with Courtland Warren. We’ve introduced labs.success.com as a hub for experimentation, learning, and collaboration. Through these actions, we've reduced our annualized spend by more than $2 million since Q2, which is quite an accomplishment while improving speed, innovation, and team cohesiveness. This transformation didn't just make success stronger; it also provided a framework on how to evolve other segments of the eXp platform. Revitalizing SUCCESS has become the model for how we think about platform development across eXp. Our Vibe developers, the internal product teams building for agents, brokers, or staff are now using the same approach to rebuild systems companywide and as a standout example of this progress is the eXp Connect Hub. The hub was born from labs.success.com, and it’s now a fully-featured personal development social network for the personal development industry.

We've built it to support thousands of agents, brokers, and staff to design digital spaces that integrate communication, learning, dashboards, and automations all inside of our ecosystem. Everything we're building from AI copilots to digital community tools is designed to help agents build scalable, sustainable, life-changing businesses. With that, I'll turn the presentation back over to Denise to facilitate the Q&A.

Great. Thanks, Glenn. I'll kick it off with a question for everyone on the team before we open the call to questions from the audience and our analysts. First, this one is for you, Glenn. Since you started eXp, you've often talked about eXp being the platform for the future of real estate. How do you see that platform vision playing out now?

We've seen this really since the Internet started to take shape and form, the ability for people to be connected in a way that allows them to operate more seamlessly. It started with simple things like email but now, of course, we've got virtual worlds powered by high-speed Internet. You have Starlink and these advancements. Digitizing and democratizing legacy infrastructures creates opportunities for different types of business models. This change presents a unique opportunity for us to scale. We are one of a few platforms that will fully scale out over time to capture substantial portions of the organized real estate business. This positions us well to take advantage of the new changes happening in the industry.

Great. Thanks. The next question is for Leo. Leo, as you mentioned, eXp continues to narrow the gap on agent growth in the U.S. What do you see as eXp's advantages over other brokerages, particularly in the midst of consolidation and change here in the U.S.?

Thanks, Denise. To dovetail on what Glenn said, we’re a fully scaled enterprise. We are no longer the disruptive start-up but now likely considered one of the larger incumbents of the new breed. I often say Glenn created a category, and we’re that category leader. Now we have the advantage of being in all 50 states and many international markets, along with the cash flow, sustainability, and ability to invest at a size and scale that most other smaller companies attempt to achieve. Given the level of disruption from consolidation in the industry, I think we're well-positioned to be one of the surviving larger scaled enterprises that Glenn referenced. It's important to note that no single company or model will capture all the market. Historical incumbents, like RE/MAX and Keller Williams, never got above 10% or 15% of total agent count in any year. The Compass Anywhere combination targets a specific market of agents attracted to the brand-first model, while we believe that we are secondary to the agent. We think of ourselves as the platform empowering the agents. In this new world of fewer larger players, the question is which position we'll take, whether it’s 1, 2, or 3, but we will definitely be one of the scale players that have an opportunity in this unique marketplace.

Thanks, Leo. I'll ask the next question to Wendy. Wendy, what do agents want most from eXp? And how are you evolving the agent value stack to meet those needs?

Thanks, Denise. Agents are looking for two key things from eXp. The first is innovative tools and technology to empower their business growth. Agents need to stay ahead in a competitive market. So they're turning to eXp for its forward-thinking solutions, whether it's Canva, CRM of Choice, Revenos, PayNow, or My eXP. These tools empower agents in marketing, branding, and lead generation effectively to scale their businesses. The second thing agents are looking for is training, coaching, and community. While we are a virtual brokerage, we are deeply rooted in real connection and education, through our weekly big agent meetings, eXp University, Elevate Coaching, one-on-one mentorship programs, and eXpCon. We emphasize real value in continuously learning, growing, and connecting with top producers, supportive peers, and leaders. These two pillars, tech innovation and collaborative community, create a powerful environment for our agents to thrive, regardless of where they are in their career. As Leo likes to say, we are a platform where you can build your dream for any size, no matter where you're at.

Next, I'll go to Felix. How is eXP different from traditional brokerages in the newest countries that you've just added?

Yes. Thanks, Denise. In the Netherlands and Luxembourg, we see markets that are traditionally dominated by employed models, similar to the U.K., where most agents are employed and have fixed income from their brokerage. Over the last 5 or 6 years since we've been open there, we've disrupted that model and are now the #1 estate agency brand in terms of listings and sales. We offer agents not just competitive splits but a higher earnings potential and the chance to grow their own brands rather than just being employees. In Romania, agents typically work under legacy franchise models with 50-50 or 60-40 splits, lacking opportunities to build their own businesses. We're excited to show agents how our model allows them to do so. In many cases, agents are encountering revenue share or equity models for the very first time through us, empowering them to seize these opportunities.

Great. All right. Jesse, a question for you, and then we'll kick it off to the analysts in the audience. Is there a particular growth metric that stood out to you this quarter?

Yes. Thank you, Denise. We track quite a few KPIs internally, of course. One that I'd like to highlight for Q3 was our agent productivity, defined as sales transactions per agent. This improved 5.4% year-over-year here in Q3. At our scale, that translates into very meaningful gains. We're talking about 83,000-plus agents and 120,000-plus transactions in just the quarter. Incremental improvements in this metric begin to compound significantly with that volume. This also shows that our strategy to recruit, train, and retain the most productive agents and teams is truly playing out for us.

Great. All right. So we'll open up the call to questions. For now, I'll take our first question from Tom White at D.A. Davidson.

First, regarding operating expenses, Jesse noted the significant reduction in general and administrative costs that helped offset the decline in gross margins. I would like to know what you believe were the top two or three actions that led to this drop in general and administrative costs, and how sustainable this new level is. Were there any one-time or timing-related factors that contributed to it being particularly low? If the market improves next year, will you be able to maintain this level of general and administrative expenses, or will it increase as revenues grow more significantly? I also have a quick follow-up.

Thanks for the question, Tom. We're pleased to discuss the unexpected improvement in G&A. We've been sharing this outlook for several quarters and appreciate everyone's understanding. We anticipated some increased expenses as we invested in AI and automation. We reported $86.5 million in Q1, $89 million excluding one-time factors in Q2, and now down to $82 million in Q3. There are no unusual adjustments; this is now our baseline for Q3. We will continue to invest when unique opportunities arise. The main reasons for this decrease are streamlined back-office operations and AI reducing manual tasks. We are enhancing unit economics and efficiency. What you're observing now reflects our previous discussions.

On the agent count, nice to see another quarter of sequential growth. It sounds like teams are a bright spot. I would love just a more detailed understanding of the teams growth. Is it coming from particular parts of the country or from specific competitors? And what could you do to turbocharge the teams' attraction, either through economics or just technology and feature sets that teams need?

Thanks, Tom. It's a little bit of all of the above. If you track our press releases, we have been winning across the board against legacy players, independents, and high-producing teams. Real Trends published an article recently stating there are about 500 mega teams with 28% total population count, and we have about 4% of agents at NAR. So we’re disproportionately winning. A few fun stats: our top 250 team leaders are up over 15% on revenue year-over-year. Our value stack inside of eXp University is designed to support teams by offering world-class programs. We offset tens of thousands of dollars into their P&L and provide leverage as they onboard new agents. The technology we are providing has created a culture impossible to replicate at scale in any single company. We have become the home of the super team.

Thanks, Tom. We had another question from analyst Stephen Sheldon at William Blair. He asked, 'This question is for Jesse. In recent quarters, you've mentioned leveraging automation to reduce transaction processing costs. Could you provide an update on this progress and where you see the biggest opportunities ahead?'

Yes. It's along the same lines as Tom's question. We are implementing tools like Doc AI to streamline documentation and automate previously manual activities. Our unit economic costs decreased, from $620 in Q2 to $523 in Q3, indicating efficiency gains. Direct costs show substantial improvements as we’ve invested heavily in this area in late 2025, and we aspire to drive further efficiencies going forward. More updates will come in 2026.

Great. We have a question from the audience. eXp just won for best use of AI by a brokerage. What examples can you share about eXp helping agents remove redundancy in tasks with AI?

I'll take that one. In 2020, we began building our in-house platform for document management using AI for transaction management. This can review contracts, identify missing documents, and locate signatures. This means agents can interact with their files only once before going to a real person. It's an ongoing development, but it’s rolled out across 50 states and aims at full back-office automation. Additionally, we built eXp Labs in August 2023, enabling rapid development of software applications that enhance agent collaboration and connection, integrating elements of social networking for agents to share insights and build referral networks. We also utilized AI to help support our international expansion, providing documentation and resources to streamline tasks significantly.

We’ve also been using AI to scale productivity tools and deliver personalized agent microsites for each agent in international markets. Recently, we rolled out a public-facing portal with listings and WhatsApp integration, streamlining connections and communications. This allows agents to leverage cross-border transactions, maximizing their opportunities. We're constantly innovating and looking forward to more developments enhancing our operations and agent experiences.

Thank you, Glenn, and Felix. Thank you, everyone, for joining. Please stay connected by visiting expworldholdings.com for the latest updates. 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 Third Quarter 2025 Earnings Fireside chat. Thank you.