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eXp World Holdings Reports Q3 2023 Results

2023-11-02 16:30 ET - News Release

Agent Count Grew 5% Compared to Q3 2022 to More Than 89,000 Agents in 24 Global Markets

International Realty Revenue Increased 47% Compared to Q3 2022 to an All-Time Record

Company Declares Cash Dividend for Q4 2023 of $0.05 per Share of Common Stock

BELLINGHAM, Wash., Nov. 02, 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 third quarter ended Sept. 30, 2023.

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

  • Revenue decreased 2% to $1.2 billion.
  • Gross profit decreased 10% to $83.6 million.
  • Net income of $1.3 million. Earnings per diluted share of $0.01 compared to earnings per diluted share of $0.03 in the year-ago quarter.
  • Adjusted EBITDA (a non-GAAP financial measure) increased 53% to $19.0 million.
  • Generated $56.8 million of Adjusted Operating Cash Flow (a non-GAAP financial measure).
  • As of Sept. 30, 2023, cash and cash equivalents totaled $120.1 million, compared to $121.6 million as of Dec. 31, 2022. The Company repurchased approximately $55.9 million of common stock during the third quarter of 2023.
  • The Company paid a cash dividend for the third quarter of 2023 of $0.05 per share of common stock on Sept. 4, 2023. On Oct. 25, 2023, the Company’s Board of Directors declared a cash dividend of $0.05 per share of common stock for the fourth quarter of 2023, expected to be paid on Nov. 30, 2023 to stockholders of record on Nov. 16, 2023.

Management Commentary

“During the third quarter, we continued to focus on agent-centric innovation that drove meaningful results, as we once again increased eXp’s agent Net Promoter Score (aNPS) while extending our market share gains,” said Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings. “In a slower market environment where every transaction counts, eXp’s agents in the U.S. significantly outperformed the market during the third quarter. This outstanding performance speaks to the differentiated nature of eXp’s platform and the power of our unique, success-oriented culture.

“Moving forward, we see many opportunities to further iterate on our agent-centric value proposition with programs like Boost, Accelerate, Thrive, and eXp exclusives and partnerships with Opendoor and the HomeRiver Group. Internationally, we recently announced a partnership with HomeHunter Global. All of this ultimately empowers our agents to spend more of their time on revenue-generating opportunities. We continue to believe that our investments in agent success are the key to driving superior growth over the long term.”

“We delivered solid financial performance during the third quarter, with year-over-year Adjusted EBITDA growth of 53% despite challenging market conditions as we continued to improve the efficiency of our operations,” said Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings. “We once again gained market share, despite lower market activity due to elevated mortgage rates, which resulted in decreased transaction value compared to the prior year quarter.

“While we continue to prudently manage expenses, our strong cash flow profile enables us to simultaneously pursue an ambitious and innovative agent-centric agenda while allocating capital to our shareholders through share repurchases and cash dividends. By continuing to invest in our agents through the current market cycle, we are building a strong foundation for accelerated growth and continued share gains despite fluctuations in the market.”

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

  • eXp Realty ended the third quarter of 2023 with a global agent Net Promoter Score of 74, up from 71 a year ago. NPS is a measure of agent satisfaction and an important key performance indicator (KPI) given the Company’s intense focus on improving the agent experience.

  • Agents and brokers on the eXp Realty platform increased 5% to 89,156 as of Sept. 30, 2023.

  • Transactions increased 1% to 139,480.

  • Transaction volume decreased 4% to $48.5 billion.

  • Announced the first brokerage, The Bean Group, to join eXp Realty through the Boost program on Sept. 12, 2023.

  • Hosted the inaugural EXPCON Canada, the Company’s first signature event held outside the United States, on Sept. 6-8, 2023.

  • Announced the expansion of its partnership with Realty.com into Canada with the launch of Realty.ca on Sept. 7, 2023.

  • Appointed Bain Fellow and NPS creator Fred Reichheld to the eXp World Holdings Board of Directors on Sept. 7, 2023.

  • Announced eXp Realty exceeded the 1,000-agent milestone in South Africa on Aug. 10, 2023.

  • Launched eXp Luxury Division in Canada on Sept. 7, 2023.

Third 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, Nov. 2, 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, Nov. 2, 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 largest independent real estate company in the world with more than 89,000 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; engagement in third party affiliations; improvements in technology and operational processes; expansion of our residential real estate brokerage business into foreign markets; revenue growth; share repurchases; dividends; 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 September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
Revenues$1,214,513  $1,238,975  $3,298,056  $3,664,766 
Operating expenses       
Commissions and other agent-related costs 1,130,888   1,145,853   3,044,858   3,380,930 
General and administrative expenses 78,568   89,460   232,876   256,173 
Sales and marketing expenses 3,194   3,636   9,035   11,546 
Total operating expenses 1,212,650   1,238,949   3,286,769   3,648,649 
Operating income 1,863   26   11,287   16,117 
Other (income) expense       
Other (income) expense, net (708)  (78)  (2,887)  394 
Equity in losses of unconsolidated affiliates 354   329   839   1,213 
Total other (income) expense, net (354)  251   (2,048)  1,607 
Income (loss) before income tax expense 2,217   (225)  13,335   14,510 
Income tax (benefit) expense 868   (4,627)  1,111   (8,115)
Net income 1,349   4,402   12,224   22,625 
Net income attributable to noncontrolling interest -   -   -   18 
Net income attributable to eXp World Holdings, Inc.$1,349  $4,402  $12,224  $22,643 
Earnings per share       
Basic 0.01   0.03   0.08   0.15 
Diluted 0.01   0.03   0.08   0.14 
Weighted average shares outstanding       
Basic 153,392,005   151,826,315   153,065,727   150,622,845 
Diluted 158,183,888   155,915,307   156,834,985   156,434,440 
                

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

SEGMENT REVENUES
(In thousands)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
Revenues 2023   2022   2023   2022 
North American Realty$1,198,207  $1,226,368  $3,254,666  $3,632,276 
International Realty 14,896   10,146   37,644   26,148 
Virbela 1,720   2,328   5,694   6,181 
Other Affiliated Services 979   1,417   3,729   3,298 
Revenues reconciliation:       
Segment eliminations (1,289)  (1,284) $(3,677) $(3,137)
Consolidated revenues$1,214,513  $1,238,975  $3,298,056  $3,664,766 
                


ADJUSTED SEGMENT EBITDA
(In thousands)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2023   2022   2023   2022 
North American Realty$27,171  $22,445  $82,496  $91,115 
International Realty (2,647)  (4,614)  (10,105)  (9,584)
Virbela (1,297)  (3,197)  (3,789)  (8,684)
Other Affiliated Services (918)  (563)  (2,767)  (2,139)
Corporate expenses and other (3,359)  (1,722)  (8,829)  (13,737)
Consolidated Adjusted EBITDA$18,950  $12,349  $57,006  $56,971 
                


CONSOLIDATED US-GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(In thousands)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
  2023   2022   2023   2022 
Net income$1,349  $4,402  $12,224  $22,625 
Other (income) expense, net (354)  251   (2,048)  1,607 
Income tax (benefit) expense 868   (4,627)  1,111   (8,115)
Depreciation and amortization 2,790   2,767   8,148   7,154 
Stock compensation expense (1) 11,764   5,800   29,912   22,828 
Stock option expense 2,533   3,756   7,659   10,872 
Adjusted EBITDA$18,950  $12,349  $57,006  $56,971 
        

(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 September 30,   Nine Months Ended September 30,
  2023   2022   2023   2022 
Net Cash Provided by Operating Activities$22,348  $22,026  $176,516  $187,324 
Less: Customer Deposits (34,433)  (42,028)  16,421   (16,135)
Adjusted Operating Cash Flow$56,781  $64,054  $160,095  $203,459 
                


EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
    
 September 30, 2023 December 31, 2022
 (Unaudited)  
ASSETS   
CURRENT ASSETS   
Cash and cash equivalents$120,141  $121,594 
Restricted cash 54,000   37,789 
Accounts receivable, net of allowance for credit losses of $1,803 and $4,014, respectively 113,344   87,262 
Prepaids and other assets 12,325   8,468 
TOTAL CURRENT ASSETS 299,810   255,113 
Property, plant, and equipment, net 13,862   18,151 
Operating lease right-of-use assets 14   2,127 
Other noncurrent assets 7,598   1,703 
Intangible assets, net 11,458   8,700 
Deferred tax assets 65,241   68,676 
Goodwill 24,879   27,212 
TOTAL ASSETS$422,862  $381,682 
LIABILITIES AND EQUITY   
CURRENT LIABILITIES   
Accounts payable$9,322  $10,391 
Customer deposits 54,210   37,789 
Accrued expenses 108,385   78,944 
Current portion of lease obligation - operating lease 14   175 
TOTAL CURRENT LIABILITIES 171,931   127,299 
Long-term payable 5   4,697 
Long-term lease obligation - operating lease, net of current portion -   694 
TOTAL LIABILITIES 171,936   132,690 
EQUITY   
Common Stock, $0.00001 par value 900,000,000 shares authorized; 180,883,383 issued and 153,798,815 outstanding at September 30, 2023; 171,656,030 issued and 152,839,239 outstanding at December 31, 2022 2   2 
Additional paid-in capital 757,006   611,872 
Treasury stock, at cost: 27,084,568 and 18,816,791 shares held, respectively (519,635)  (385,010)
Accumulated earnings 11,968   20,723 
Accumulated other comprehensive income 416   236 
Total eXp World Holdings, Inc. stockholders' equity 249,757   247,823 
Equity attributable to noncontrolling interest 1,169   1,169 
TOTAL EQUITY 250,926   248,992 
TOTAL LIABILITIES AND EQUITY$422,862  $381,682 
        


EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Nine Months Ended September 30,
  2023   2022 
OPERATING ACTIVITIES   
Net income$12,224  $22,625 
Reconciliation of net income to net cash provided by operating activities:   
Depreciation expense 6,299   5,699 
Amortization expense - intangible assets 1,849   1,455 
Loss on disposition of business 472   361 
Allowance for credit losses on receivables/bad debt on receivables (2,211)  588 
Equity in loss of unconsolidated affiliates 839   1,213 
Agent growth incentive stock compensation expense 29,912   22,828 
Stock option compensation 7,659   10,872 
Agent equity stock compensation expense 104,548   131,230 
Deferred income taxes, net 3,435   (10,845)
Changes in operating assets and liabilities:   
Accounts receivable (23,401)  13,603 
Prepaids and other assets (3,966)  (3,003)
Customer deposits 16,421   (16,135)
Accounts payable (1,069)  1,952 
Accrued expenses 28,039   4,770 
Long term payable (4,692)  - 
Other operating activities 158   111 
NET CASH PROVIDED BY OPERATING ACTIVITIES 176,516   187,324 
INVESTING ACTIVITIES   
Purchases of property, plant, equipment (4,193)  (9,222)
Proceeds from sale of business 330   - 
Acquisition of business, net of cash acquired -   (9,668)
Investments in unconsolidated affiliates (5,525)  - 
Capitalized software development costs in intangible assets (1,930)  - 
NET CASH USED IN INVESTING ACTIVITIES (11,318)  (18,890)
FINANCING ACTIVITIES   
Repurchase of common stock (134,625)  (139,635)
Proceeds from exercise of options 4,761   2,221 
Transactions with noncontrolling interests -   (425)
Dividends declared and paid (20,979)  (18,537)
NET CASH USED IN FINANCING ACTIVITIES (150,843)  (156,376)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash 403   (771)
Net change in cash, cash equivalents and restricted cash 14,758   11,287 
Cash, cash equivalents and restricted cash, beginning balance 159,383   175,910 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE$174,141  $187,197 
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:   
Cash paid for income taxes 2,382   2,933 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:   
Termination of lease obligation - operating lease 855   - 
Issuance of treasury stock, for acquisition -   4,800 
Contingent consideration for disposition of business 1,209   - 
Property, plant and equipment increase due to transfer of right-of-use lease asset 1,100   - 
Property, plant and equipment purchases in accounts payable 27   20 
        

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/984f6322-f1d9-4e46-9277-2d58998d7224


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eXp World Holdings Reports Q3 2023 Results

eXp World Holdings, Inc., the holding company for eXp Realty®, Virbela and SUCCESS® Enterprises, today announced financial results for the third quarter ended Sept. 30, 2023.

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