eXp World Holdings, Inc. Q1 FY2025 earnings call

• Glenn Sanford discussed the eXp platform as an interconnected system with four strategic parts: eXp Realty North America, international brokerage, SUCCESS Enterprises, and FrameVR.io. Felix Bravo highlighted international expansion with 103% revenue growth year-over-year, new market launches in Peru, Türkiye, and preparation for Egypt, aiming for 50,000 agents in 50 countries by 2030. Leo Pareja addressed stance on CCP, partnership with Zillow, and cosponsorship program. Wendy Forsythe noted eXp was number one in transactions for third straight year, named to USA Today's top workplaces, and discussed value stack tools used by agents. Jesse Hill provided financial highlights, including revenue of $954.9 million, agent productivity stats, and cash position of $115.7 million.

North America Realty segment was the largest revenue and profit generator, with Q1 revenue of $923 million and adjusted EBITDA of $7.7 million. International segment saw revenue up 103% year-over-year and significantly narrowed adjusted EBITDA loss. Other Affiliated Services segment (primarily success) contributed modest revenue growth and an adjusted EBITDA loss of $1.5 million. Real estate sales volume was up 4% in Q1, driven by increased home sales price and International segment productivity. Agent count was 81,904, but transactions per agent increased, indicating retention of high-productive agents. Non-GAAP gross margin was 13%, down 70 basis points from prior year, and GAAP gross margin was 8%, down 30 basis points from prior year.

• Focus on leveraging AI and automation for efficiency, expecting synergies in unit economics in the back half of 2025. Continued focus on attracting and retaining high-productive agents, with AI and technology shifts enabling quicker development and deployment of solutions. Emphasis on international expansion scaling rapidly with strategic market launches and localized approaches.

• Macroeconomic environment posing challenges in the U.S. market. Tax change in the UK in April negatively impacting buyers, pulling forward transactions into Q1 which will affect Q2. Concentration of agent attrition in low-producing cohorts, though agent NPS hit a record high.

Q: Glenn, can you share more details on how eXp is leveraging AI now and what an enabled eXp platform might look like in the future?

A: Glenn Sanford said eXp has been pivoting to leverage AI, with teams in various markets using new tech to build tech stacks quickly. For example, rebuilding the Peru website in hours with non-technical teams. Seeing true citizen developers emerge, allowing subject matter experts to act as full-blown software developers.

Q: Felix, can you discuss what you learned about opening new countries? And what’s the difference in your launches today compared to a year-ago?

A: Felix Bravo said over the past year, eXp completely evolved international launches, leveraging technology, partnering with right in-country leaders, building strong local value propositions, shifting to self-managed and regionalized teams, and revamping marketing strategy with social campaigns and in-person events. This has made recent launches more impactful than a year ago.

Q: Leo, can you dive a bit deeper on the agent count trends that Jesse pointed out when we saw this quarter?

A: Leo Pareja said eXp continues to retain most productive agents, with 41% of agents on teams in Q1. Agent attrition improved 22% year-over-year, with majority of departing agents in low-producing cohorts. Also mentioned recent big team joiners like ERS Real Estate Group and Neal & Neal Team.

Q: Wendy, what are agents saying about the Cosponsor program? How much of a game changer is it?

A: Wendy Forsythe said agents are very excited about the Cosponsor program, seeing synergies in connecting with other agents for growth, with conversations happening during spring rallies. It's dovetailing with momentum and collaboration.

Q: Jesse, a question for you. You mentioned getting more efficient over the course of 2025. How should we think about operating expenses for the remainder of the year, and to what extent can your expenses be flexed up or down based on sales?

A: Jesse Hill said eXp doesn't flex cost structure dramatically quarter-to-quarter but can dial spending up/down in specific areas. Focus is on efficiency and AI layering for cost savings in the back half of 2025. Viewing operating expenses from an efficiency perspective to drive cost savings down the line.

Q: Oscar Nieves for Jesse: Earlier, you mentioned that adjusted EBITDA was down year-over-year primarily due to the gross margin compression. So we want to know what’s your expectation for the full-year on gross margin and also for operating expenses? How do you see those moving for the rest of the year?

A: Jesse Hill said focus is on volume with high-productive agents, which compresses margin percentage but is acceptable. Operating expenses are examined from an efficiency perspective, with AI layering expected to provide synergies in the back half of 2025.

Q: Oscar Nieves for Leo: Earlier you outlined your views on the CCP, and particularly, you said that delayed marketing will create market confusion. And on that note, how does your alignment with Zillow and the new leasing standards risk, do they result in a negative impact or just they have no impact on your private leasing strategy?

A: Leo Pareja said eXp's position protects consumers and the enterprise, with no detrimental impact. Their office exclusive strategy is compliant with CCP, and they want to distribute listings to as many eyeballs as possible to protect consumers and reduce liability.

Q: Question from Andrew Thompson (eXp Country Leader in South Africa): Is the U.S. going into a recession? And what are your thoughts on the U.S. market in terms of property sales for the balance of this year?

A: Leo Pareja said they are watching metrics like interest rates, supply, and consumer confidence. The business model is scalable to pivot and react to headwinds, with consumer confidence being a key factor to watch.