eXp drops nearly 2K agents in fourth quarter as profits fall
The company said its "decision to offboard a significant number of unproductive agents" in Q4 was offset by "excellent" retention of strong producers.
eXp experienced its first ever quarter-over-quarter decline in agent count, but the company is expecting to get back on the growth track in 2024.
The number of agents at the end of 2023 totaled 87,515, according to eXp's fourth quarter earnings report. That's down from 89,156 in Q3, but still up 2% year-over-year.
Founder and CEO Glenn Sanford said during the earnings call that the drop was the result of "offboarding" agents who were not contributing and simply costing the company money. He also noted that 80.7% of overall agent attrition came from those who had 0-2 sales in the past year.
Sanford noted that removing a group of agents was unusual and not something he expects to see going forward.
As for the company financials, revenue was stronger year-over-year in the fourth quarter but down about 7% for the full year. The company experienced a net loss of $9 million in 2023 — in contrast to a net income of $15.4 million in 2022 — but EBITDA remained positive in what Sanford characterized as a difficult year for the industry.
Sanford also pointed out that while annual transactions were down last year, the company was able to grow its market share from 3.9% to 4.2%. That will put eXp in a strong position once home sales begin to recover, Sanford said.
What eXp had to say
Many of the questions during the earnings call centered around agent count. Sanford said the company attempted to work with the offboarded agents before deciding to remove them.
"We tried to get them in production, but a lot of them effectively ghosted us as an organization, so they weren't even really communicating," Sanford said.
Sanford is bullish on growing agent count again and reiterated his optimism about global markets in particular.
"We really expect that international is going to be our big growth in the coming years, and I'm really excited about it," said Sanford, noting that the company is looking at some new markets while continuing to grow in areas where it is already established.
Key numbers
Revenue: $983 million in fourth quarter, up from $933.4 million a year ago, but down from $1.2 billion in Q3. For 2023, revenue came in at $4.28 billion, down from nearly $4.6 billion in 2022.
Cash and cash equivalents: $126.9 million at the end of 2023, up from $121.6 at the end of 2022.
Gross profit: $70.9 million in the fourth quarter, down from $83.1 million a year prior. For the year, gross profit decreased 12% to $324.1 million.
Net income/loss: A loss of $21.2 million in the fourth quarter, and a net loss of $9 million for the year. The company reported net income of $15.4 million in 2022.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): $500,000 in the fourth quarter, down from $3.6 million a year prior, and $57.5 million for the full year.
Transactions: 115,424 for the fourth quarter, down from 139,480 in the previous quarter, but 3% higher than a year ago. For the year, eXp had 494,404 transactions, down 3% compared to 2022.
Agent count: 87,515 at the end of 2023, down from 89,156 at the end of September. Year-over-year agent count is up 2%.
Notable moves
The brokerage announced the introduction of a new app — My eXp — that's currently in beta testing mode. Sanford said it should be released to eXp agents in the next few months.
The company expanded eXp Luxury in December, launching in Australia, New Zealand, South Africa and the United Kingdom. The brand, which had more than 1,100 members in November, is a concierge service that includes "elite global marketing and best-in-class technology."
Also in December, longtime eXp executive Jason Gesing stepped down from the eXp World Holdings board of directors. Gesing was previously CEO of eXp Realty from 2019 to 2022 and remains at the company as chief industry relations officer.