eXp World Holdings, Inc. Q2 FY2024 earnings call

• Glenn Sanford emphasized iterating on the agent value proposition, with NPS increasing to 76. International revenue jumped 69% year-over-year, and focus on agent productivity, including initiatives like REVenue Share 2.0, global referral program, and Elevate coaching.
• Leo Pareja discussed eXp Realty's performance vs industry, market share gains, and initiatives such as REVenue Share 2.0, global referral program, Fast Start attraction bonus program, eXp exclusives, Express offers, eXp luxury, AI integration, and Task Center. Mentioned AI integration with open AI and HubSpot technology usage.
• Kent Cheng reviewed financial metrics, including revenue growth to $1.295 billion (+5% YOY), adjusted EBITDA of $32.9 million (+22% YOY), agent network changes, and segment details for North American Realty and International Realty.

North American Realty: Segment revenue was $1.275 billion, a 5% increase from the prior year due to increased real transactions and home sales prices despite a challenging residential real estate market. Adjusted EBITDA was $38.5 million, a 30% increase year-over-year due to improved business efficiency and reduced cost. International Realty: Revenue was $20 million, an increase of 69%, primarily due to increased real estate transaction driven by improved agent production in previously launched markets. Adjusted EBITDA loss was $2.4 million, a 37% improvement from prior year due to increased revenue and cost reduction initiatives. Other Affiliated Services: Contributed modest revenue and adjusted EBITDA loss.

• Anticipated downward trend in U.S. existing home sales to persist in the next quarter barring significant macroeconomic shifts.
• Plan to continue investing in the international market and agent growth to boost production in the U.S.
• Gross margin percentage expected to be generally consistent with a typical seasonal pattern and last year's performance.

• Endemic churn in the real estate industry affecting agent count and retention.
• Uncertainty in the real estate market posing challenges to revenue projections.
• Legal expenses related to antitrust issues impacting financials.

Q: Discuss what drove the quarter-to-quarter increase in agent count?

A: eXp did a strategic acquisition of Realty Connect, a limited function referral company. It serves as a retention vehicle, has a proprietary CRM, generates high-margin referrals, and attracts referral agents from various brokerages with low operational costs.

Q: Any churn among top producing agents?

A: Disproportionate churn is focused on non-productive agents. The Boost program is an incentive for small to midsized independents. Most churn is among low-producing agents, and top producers are still being attracted with detailed questions on profitability and sustainability.

Q: OpEx and profit improvement?

A: SG&A expected to have mid-single-digit increase in the second half due to annual salary adjustments and legal costs. Still on track to deliver the $20 million profit improvement plan, with $6.8 million per quarter target.

Q: Markets performing well in 2Q 2024 and most excited about?

A: South Africa, U.K., France, Spain are performing well. Reevaluating agent value proposition, country leaders, and comp structures to be more incentive-based rather than salary-based to lower operating costs in early stages.