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eXp World Holdings Reports Q2 2023 Results

2023-08-03 16:15 ET - News Release

Positive Net Income of $9.4 Million

Agent Count Grew 7% Compared to the Same Quarter One Year Ago to More Than 88,000 Agents in 24 Global Markets

International Realty Revenue Increased 35% Compared to the Same Quarter One Year Ago to an All-Time Record

Generated $64.6 Million of Adjusted Operating Cash Flow

Company Declares Cash Dividend for Q3 2023 of $0.05 per Share of Common Stock

BELLINGHAM, Wash., Aug. 03, 2023 (GLOBE NEWSWIRE) -- eXp World Holdings, Inc. (Nasdaq: EXPI), or the “Company”, the holding company for eXp Realty®, Virbela and SUCCESS® Enterprises, today announced financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Consolidated Financial Highlights as Compared to the Same Year-Ago Quarter:

  • Revenue decreased 13% to $1.2 billion.
  • Gross profit decreased 10% to $96.5 million.
  • Net income of $9.4 million. Earnings per diluted share of $0.06 compared to earnings per diluted share of $0.06 in the year-ago quarter.
  • Adjusted EBITDA (a non-GAAP financial measure) of $24.7 million.
  • As of June 30, 2023, cash and cash equivalents totaled $124.7 million, compared to $121.6 million as of December 31, 2022. The company repurchased approximately $48.8 million of common stock during the second quarter of 2023.
  • The Company paid a cash dividend for the second quarter of 2023 of $0.045 per share of common stock on May 31, 2023. On July 28, 2023, the Company’s Board of Directors declared a cash dividend of $0.05 per share of common stock for the third quarter of 2023, expected to be paid on September 4, 2023 to stockholders of record on August 18, 2023.

Management Commentary

“We are continually raising the bar on what it means to be the most agent-centric brokerage on the planet by constantly iterating our agent value proposition that delivers the best support and tools,” said Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings. “Our agents’ feedback is critical in helping to determine and enhance programs. We have prioritized agent support through our reimagined eXpert Care Desk, which provides live support to agents 24/7. And in May, we launched Luna, the GPT-4 powered generative AI support agent, in direct response to aNPS feedback. We are seeing remarkable engagement, with a significant number of agents using the service asking follow-up questions. Even early in its development, Luna can correctly answer the majority of questions asked.”

“By consistently iterating on our agent value proposition along with our agent feedback, we are seeing strengthened agent Net Promoter Scores (aNPS), with second quarter aNPS up four percentage points year over year despite the challenging market.

“We know that in a slower housing market, productivity is at the top of everyone’s minds. As the largest and most efficient independent brokerage in the industry, we have the scale and financial resources to fund new investments in agent productivity while others scale back. During the quarter, we deployed several new agent support systems, increased our onboarding support coverage to 24/7 and established a white glove premier service desk for our top contributors. We also accelerated our initiative to get our agents paid faster and are making good progress toward our objective of near-real time agent payouts.”

“We delivered another profitable quarter despite lower transaction volume, as persistently high mortgage rates kept many buyers on the sidelines,” said Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings. “Even as we continued to fund our key growth priorities and invest in agent-centric innovation, our balanced approach to spending resulted in a higher operating margin compared to the prior year quarter. Our efficient, cloud-based model, strong balance sheet and attractive operating cash flow profile are enabling us to invest in our agents to drive long-term growth and shareholder value.

“While high mortgage rates are expected to persist in the short term, consumer price inflation has started to cool down in our core North American market, and forward interest rate curves suggest that rates may now be at or near peak levels. We are optimistic that lower mortgage rates will unleash significant pent-up demand as affordability improves and buyers can once again meet seller price objectives.”

Second Quarter 2023 Operational Highlights as Compared to the Same Year-Ago Period:

  • eXp Realty ended the second quarter of 2023 with a global agent Net Promoter Score of 72, up from 68 a year ago. NPS is a measure of agent satisfaction and an important KPI for eXp given the Company’s intense focus on improving the agent experience.
  • Agents and brokers on the eXp Realty platform increased 7% to 88,248 as of June 30, 2023.
  • Transactions decreased 9% to 137,199.
  • Transaction volume decreased 16% to $48.6 billion.
  • Named Carolyn Merchant Chief Marketing Officer of eXp Realty on April 6, 2023.
  • Named Carrie Lysenko CEO of Zoocasa on April 16, 2023.
  • Announced a strategic title and brokerage joint venture with Vesta Settlements, LLC, to bring local title expertise and personalized service to agents in Virginia on June 2, 2023.
  • Announced Boost Program for Culturally Aligned Independent Teams and Brokerages to financially incentivize qualifying independent teams and brokerages to join eXp Realty on June 29, 2023.
  • Announced eXp Realty will accelerate agent rewards by reducing revenue share criteria on June 30, 2023.

Second Quarter 2023 Results – Virtual Fireside Chat

The Company will hold a virtual fireside chat and investor Q&A with eXp World Holdings Founder and CEO Glenn Sanford and CFO Jeff Whiteside on Thursday, Aug. 3, 2023 at 2 p.m. PT / 5 p.m. ET.

The investor Q&A is open to investors, current shareholders and anyone interested in learning more about eXp World Holdings and its companies. Submit questions in advance for inclusion to investors@eXpWorldHoldings.com.

Date: Thursday, Aug. 3, 2023

Time: 2 p.m. PT / 5 p.m. ET

Location: EXPI Campus. Join at https://expworldholdings.com/contact/download/

Livestream: expworldholdings.com/events

About eXp World Holdings, Inc.
eXp World Holdings, Inc. (Nasdaq: EXPI) is the holding company for eXp Realty®, Virbela and SUCCESS® Enterprises. eXp Realty is the fastest-growing real estate company in the world with more than 88,000 agents in the United States, Canada, the United Kingdom, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai and continues to scale internationally. As a publicly traded company, eXp World Holdings provides real estate professionals the unique opportunity to earn equity awards for production goals and contributions to overall company growth. eXp World Holdings and its businesses offer a full suite of brokerage and real estate tech solutions, including its innovative residential and commercial brokerage model, professional services, collaborative tools and personal development. The cloud-based brokerage is powered by Virbela, an immersive 3D platform that is deeply social and collaborative, enabling agents to be more connected and productive. SUCCESS® Enterprises, anchored by SUCCESS® magazine and its related media properties, was established in 1897 and is a leading personal and professional development brand and publication.

For more information, visit https://expworldholdings.com.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA and Adjusted Operating Cash Flow, which are non-U.S. GAAP financial measures that may be different than similarly titled measures used by other companies. These measures are presented to enhance investors’ overall understanding of the company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.

The company’s Adjusted EBITDA provides useful information about financial performance, enhances the overall understanding of past performance and future prospects, and allows for greater transparency with respect to a key metric used by management for financial and operational decision-making. Adjusted EBITDA helps identify underlying trends in the business that otherwise could be masked by the effect of the expenses that are excluded in Adjusted EBITDA. In particular, the company believes the exclusion of stock and stock option expenses provides a useful supplemental measure in evaluating the performance of operations and provides better transparency into results of operations.

The Company defines the non-U.S. GAAP financial measure of Adjusted EBITDA to mean net income (loss), excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based compensation expense, and stock option expense. The Company defines the non-U.S. GAAP financial measure of Adjusted Operating Cash Flow to mean net cash provided by operating activities, excluding the change in customer deposits. Adjusted EBITDA and Adjusted Operating Cash Flow may assist investors in seeing financial performance through the eyes of management, and may provide an additional tool for investors to use in comparing core financial performance over multiple periods with other companies in the industry.

Adjusted EBITDA and Adjusted Operating Cash Flow should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to Net Income (loss), the closest comparable U.S. GAAP measure. Some of these limitations are:

  • Adjusted EBITDA excludes stock-based compensation expense and stock option expense, which have been, and will continue to be for the foreseeable future, significant recurring expenses in the business and an important part of the compensation strategy; and
  • Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets, amortization of acquired intangible assets, and impairment charges related to these long-lived assets, and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.

Safe Harbor Statement

The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. These statements include, but are not limited to, statements about the continued growth of our agent and broker base; expansion of our residential real estate brokerage business into foreign markets; and revenue growth and financial performance. Such forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to revise or update them. Such statements are not guarantees of future performance. Important factors that may cause actual results to differ materially and adversely from those expressed in forward-looking statements include changes in business or other market conditions; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the company’s Securities and Exchange Commission filings, including but not limited to the most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K.

Media Relations Contact:

eXp World Holdings, Inc.

mediarelations@expworldholdings.com

Investor Relations Contact:

Denise Garcia

investors@expworldholdings.com


EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share amounts and per share data)

          
  Three Months Ended June 30,Six Months Ended June 30,
   2023   2022  2023   2022  
Revenues $1,232,927  $1,415,060 $2,083,543  $2,425,791  
Operating expenses         
Commissions and other agent-related costs  1,136,411   1,307,810  1,913,970   2,235,077  
General and administrative expenses  82,541   91,391  154,308   166,713  
Sales and marketing expenses  2,878   4,210  5,841   7,910  
Total operating expenses  1,221,830   1,403,411  2,074,119   2,409,700  
Operating income  11,097   11,649  9,424   16,091  
Other (income) expense         
Other (income) expense, net  (1,299)  62  (2,179)  472  
Equity in losses of unconsolidated affiliates  143   567  485   884  
Total other (income) expense, net  (1,156)  629  (1,694)  1,356  
Income before income tax expense  12,253   11,020  11,118   14,735  
Income tax (benefit) expense  2,831   1,661  243   (3,488) 
Net income  9,422   9,359  10,875   18,223  
Net income attributable to noncontrolling interest  -   -  -   18  
Net income attributable to eXp World Holdings, Inc. $9,422  $9,359 $10,875  $18,241  
Earnings per share         
Basic  0.06   0.06  0.07   0.12  
Diluted  0.06   0.06  0.07   0.12  
Weighted average shares outstanding         
Basic  153,249,120   150,783,418  152,899,883   150,049,170  
Diluted  156,693,959   155,816,038  156,119,627   156,579,590  

The following tables reflects Revenues and Adjusted Segment EBITDA by reportable segments:

           
           
SEGMENT REVENUES
(In thousands) 
  
  Three Months Ended June 30, Six Months Ended June 30,
Revenues  2023   2022    2023   2022  
North American Realty $1,219,345  $1,404,028   $2,056,459  $2,405,908  
International Realty  11,991   8,908    22,748   16,002  
Virbela  1,811   2,040    3,974   3,853  
Other Affiliated Services  1,072   1,043    2,749   1,881  
Revenues reconciliation:          
Segment eliminations  (1,292)  (959)  ($2,387) ($1,853) 
Consolidated revenues $1,232,927  $1,415,060   $2,083,543  $2,425,791  
           


           
           
ADJUSTED SEGMENT EBITDA
(In thousands) 
  
  Three Months Ended June 30, Six Months Ended June 30,
   2023   2022    2023   2022  
North American Realty $34,122  $39,899   $55,325  $68,670  
International Realty  (3,782)  (3,014)   (7,458)  (4,970) 
Virbela  (1,196)  (2,715)   (2,492)  (5,487) 
Other Affiliated Services  (1,168)  (747)   (1,849)  (1,576) 
Corporate expenses and other  (3,247)  (6,509)   (5,470)  (12,010) 
Consolidated Adjusted EBITDA $24,729  $26,914   $38,056  $44,627  
           


           
CONSOLIDATED US-GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(In thousands) 
  
  Three Months Ended June 30, Six Months Ended June 30,
   2023   2022   2023   2022  
Net income $9,422  $9,359  $10,875  $18,223  
Other (income) expense, net  (1,156)  629   (1,694)  1,356  
Income tax (benefit) expense  2,831   1,661   243   (3,488) 
Depreciation and amortization  2,779   2,429   5,358   4,387  
Stock compensation expense(1)  8,488   9,230   18,148   17,028  
Stock option expense  2,365   3,606   5,126   7,121  
Adjusted EBITDA $24,729  $26,914  $38,056  $44,627  
           
(1)This includes agent growth incentive stock compensation expense and stock compensation expense related to business acquisitions. 


          
          
ADJUSTED OPERATING CASH FLOW
(In thousands) 
  
  Three Months Ended June 30, Six Months Ended June 30,
  2023  2022  2023  2022 
Net Cash Provided by Operating Activities $98,024 $53,791  $154,168 $165,298 
Less: Customer Deposits  33,472  (23,373)  50,854  25,893 
Adjusted Operating Cash Flow $64,552 $77,164  $103,314 $139,405 
          


EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

     
  June 30, 2023 December 31, 2022
  (Unaudited)  
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents $124,714  $121,594 
Restricted cash  88,560   37,789 
Accounts receivable, net of allowance for credit losses of $1,544 and $4,014, respectively  134,998   87,262 
Prepaids and other assets  8,101   8,468 
TOTAL CURRENT ASSETS  356,373   255,113 
Property, plant, and equipment, net  15,224   18,151 
Operating lease right-of-use assets  32   2,127 
Other noncurrent assets  6,567   1,703 
Intangible assets, net  11,728   8,700 
Deferred tax assets  65,306   68,676 
Goodwill  27,552   27,212 
TOTAL ASSETS $482,782  $381,682 
LIABILITIES AND EQUITY    
CURRENT LIABILITIES    
Accounts payable $7,321  $10,391 
Customer deposits  88,643   37,789 
Accrued expenses  128,461   78,944 
Current portion of lease obligation - operating lease  29   175 
TOTAL CURRENT LIABILITIES  224,454   127,299 
Long-term payable  5   4,697 
Long-term lease obligation - operating lease, net of current portion  3   694 
TOTAL LIABILITIES  224,462   132,690 
EQUITY    
Common Stock, $0.00001 par value 900,000,000 shares authorized; 177,900,083 issued and 153,588,186 outstanding at June 30, 2023; 171,656,030 issued and 152,839,239 outstanding at December 31, 2022  2   2 
Additional paid-in capital  701,806   611,872 
Treasury stock, at cost: 24,311,897 and 18,816,791 shares held, respectively  (463,738)  (385,010)
Accumulated earnings  18,138   20,723 
Accumulated other comprehensive income  943   236 
Total eXp World Holdings, Inc. stockholders' equity  257,151   247,823 
Equity attributable to noncontrolling interest  1,169   1,169 
TOTAL EQUITY  258,320   248,992 
TOTAL LIABILITIES AND EQUITY $482,782  $381,682 


     
     
EXP WORLD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Six Months Ended June 30,
   2023   2022 
OPERATING ACTIVITIES    
Net income $10,875  $18,223 
Reconciliation of net income to net cash provided by operating activities:    
Depreciation expense  4,163   3,570 
Amortization expense - intangible assets  1,195   817 
Loss on dissolution of consolidated affiliates  -   361 
Allowance for credit losses on receivables/bad debt on receivables  (2,470)  608 
Equity in loss of unconsolidated affiliates  485   884 
Agent growth incentive stock compensation expense  18,148   17,028 
Stock option compensation  5,126   7,121 
Agent equity stock compensation expense  65,652   86,835 
Deferred income taxes, net  3,370   (6,892)
Changes in operating assets and liabilities:    
Accounts receivable  (45,266)  (22,269)
Prepaids and other assets  367   2,236 
Customer deposits  50,854   25,893 
Accounts payable  (3,069)  (1,152)
Accrued expenses  49,273   31,961 
Long term payable  (4,692)  - 
Other operating activities  157   74 
NET CASH PROVIDED BY OPERATING ACTIVITIES  154,168   165,298 
INVESTING ACTIVITIES    
Purchases of property, plant, equipment  (3,433)  (8,077)
Investments in unconsolidated affiliates  (5,350)  - 
Capitalized software development costs in intangible assets  (1,179)  - 
NET CASH USED IN INVESTING ACTIVITIES  (9,962)  (8,077)
FINANCING ACTIVITIES    
Repurchase of common stock  (78,728)  (79,820)
Proceeds from exercise of options  1,253   780 
Transactions with noncontrolling interests  -   (425)
Dividends declared and paid  (13,460)  (11,744)
NET CASH USED IN FINANCING ACTIVITIES  (90,935)  (91,209)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash  620   (1,141)
Net change in cash, cash equivalents and restricted cash  53,891   64,871 
Cash, cash equivalents and restricted cash, beginning balance  159,383   175,910 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE $213,274  $240,781 
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:    
Cash paid for income taxes  1,833   2,444 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Termination of lease obligation - operating lease  837   - 
Property, plant and equipment increase due to transfer of right-of-use lease asset  1,100   - 
Property, plant and equipment purchases in accounts payable  -   246 

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/1aae9410-bab0-4bd9-94e0-215f0b1d05da


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eXp World Holdings Reports Q2 2023 Results

eXp World Holdings, Inc. (Nasdaq: EXPI), the holding company for eXp Realty®, Virbela and SUCCESS® Enterprises, today announced financial results for the second quarter ended June 30, 2023

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