As was to be expected with a slower home sales pace industry wide, the first quarter of the year’s financial results for eXp World Holdings, the parent company of eXp Realty, were not as strong as a year ago. However, firm executives were still pleased with how the company performed in the face of headwinds.
“We did do a lot of cost cutting last year, but it was nice to see that even in what is historically the worst quarter of the year, we were able to have a little bit of net income, and our adjusted EBITDA was positive, so a lot of good things going on for the quarter from a top level perspective,” Glenn Sanford, the CEO and founder of eXp World Holdings and the CEO of eXp Realty, told investors and analysts on the firm’s first quarter earnings call with investors Thursday evening.
During the first quarter of 2023, eXp World Holdings recorded a 16% annual decrease in revenue to $850.6 million and a net income of $1.453 million, down from $8.864 million a year ago.
The firm’s North American Realty segment generated $837.1 million in revenue, down from $1.001 billion a year prior. This segment of the firm makes up 98% of the firm’s total revenue. On the international realty front, revenue was up 52% year over year to $10.76 million.
Executives attributed the drop in revenue to yearly decreases in both transaction count and the average selling prices. The brokerage recorded a 10% decrease in closed transaction sides worldwide to 102,305 sides (in the U.S., the transaction count was down 16% year over year for the quarter), while global sales volume was down 20% on an annual basis to $33.2 billion.
Despite the drop in closed transaction count, Sanford was pleased that the firm’s market share in the U.S. was up to 4.1%, an 11.6% increase compared to a year ago.
“We fundamentally feel that’s going to be a continued direction we’ll see in the soft market in Q2. We will see how it compares. My guess is that industry-wide will still be down Q2, maybe Q3, but we believe that we’ll continue to grow market share. So when we come out the other side of this, we will be in great shape to reap the rewards of a much-improved market,” Sanford said.
Sanford also highlighted the brokerage’s 12% year-over-year increase in agent count to 87,000, including an 8.3% annual agent count increase in the U.S. In comparison, the National Association of Realtors (NAR) is currently reporting a 0.3% drop in agent count.
The one major announcement Sanford unveiled on the call was the launch of eXp Ventures, an internal venture fund to invest “strategic and synergistic products and services.” The firm will invest a total of $10 million per year in these projects.
Looking ahead Sanford said he is hearing less negativity from agents about the market.
“Those who were taking it on the chin last year through the summer and the fall, they have adjusted to the new normal. I believe that we are now fully into the new normal in terms of sales volumes, so now it will be more about steady growth,” Sanford said. “I think once we get into especially Q3 and Q4, we will actually start to see year-over-year growth rates, and I think agents are starting to pick that up as well.”
