eXp continues to lose agents, but transaction volume gets a boost
The company suffered losses due to its payout in the commissions settlement, but touted agent productivity, international growth and positive revenue.
eXp saw a small gain in revenue in the third quarter, which it attributed to "superior productivity" of its agents, but the company's bottom line took a significant hit.
The cloud-based brokerage, headquartered in Bellingham, Washington, recorded a net loss of $6.5 million in Q3 compared to a net income of $2.3 million a year ago, due in large part to its recent settlement in the commissions cases.
While total transactions dipped slightly, transaction volume increased by 5% year-over-year to $50.8 billion despite a continuing decline in agent count. The company has been losing agents for four consecutive quarters since beginning an "offboarding" program toward the end of last year aimed at weeding out less productive agents.
The brokerage also announced a brand "glow up" to become more competitive in luxury markets across the U.S. Those efforts include a redesigned eXp website, a partnership with graphic design software company Canva, and the acquisition of Grand Lux Realty, a brokerage based in the lower Hudson Valley that expects to have $100 million in sales by the end of the year.
"Establishing a strong brand voice is key as we continue to create new opportunities for our agents," said Wendy Forsythe, the brokerage's chief marketing officer.
What eXp had to say
During its Q3 earnings call, eXp World Holdings Founder and CEO Glenn Sanford focused on the firm's efforts to grow its international presence and its investments in technology.
Revenue for international transactions has increased by 63% over the last 12 months, and the company plans to open locations in Türkiye, Peru and Egypt in early 2025, Sanford said. The company is actively negotiating deals to open offices in another two to three countries.
Earlier this year, Sanford spoke at a leadership conference about his global ambitions for eXp, saying, "Our real goals are not domestic." In a previous earnings call, he also referred to international expansion as "the largest driver of future growth for the company."
The company continues to leverage technology and generative AI to improve its digital products with the goal of increasing agent efficiency.
"Agents are our singular focus," Sanford said.
Key numbers
Revenue: $1.2 billion, which was relatively flat from the previous quarter but up 2% year-over-year.
Cash and cash equivalents: $130.4 million, roughly $10 million more than the company recorded at this time last year.
Net income/loss: A loss of $6.5 million, influenced by an $18.0 million litigation contingency provision related to the company's October antitrust settlement. In Q3 2023, the company had a net income of $2.3 million.
Adjusted EBITDA: $23.9 million, an increase of 15% compared to the same period a year ago.
Transactions: 117,830, marking a 1% decrease year-over-year.
Agent count: 85,429, a 4% decrease from last year, and the fourth consecutive quarter of declining agent count.
Notable moves
In October, eXp agreed to pay $34 million to settle commissions litigation. The company expects to release the funds within 30 days after a judge approves the settlement. The settlement has received some criticism, however, with plaintiffs in a related case filing an objection calling it "an improper sweetheart deal that is not fair or reasonable to the class."
Earlier in Q3, eXp made two significant changes to its compensation structure, which are designed to reward high-performing agents. The two new programs, the ICON Incentive Program and Revenue Share Capping Incentive Program, maximize agents' earning potential, the company says, and began rolling out November 1.