Pioneering virtual brokerage eXp reported slowing transaction volume while still remaining profitable during the challenging market of 2022, taking in $933.4 million in revenue in Q4 2022 as founder Glenn Sanford re-takes the reins as CEO in an attempt to steer his company back toward its pandemic heyday.
With a 21% increase in agent count and $4.6 billion in revenue (up 22%) for the full year, eXp—which was built on a foundation of having essentially no physical office space—has benefited tremendously from the real estate boom of the past couple years.
But as the company saw transactions fall 13% in Q4 and transaction volume down 20%, along with a flat agent count over the last few months, Sanford’s path to leading eXp through a more competitive, balanced market could be a difficult one.
“One of the reasons why I came back as CEO of eXp Realty was to really continue our focus on the agent-centric nature of the real estate brokerage,” Sanford said on a conference call following the earnings report, “leveraging our scale with the ultimate goal being the No. 1 worldwide real estate brokerage and brand.”
eXp stock was volatile following the earnings call, down more than 5% in early trading Wednesday before rebounding into positive territory.
With 85,000-plus agents worldwide, Sanford said the company is essentially doubling down on its current model—a commitment to operating in virtual, metaverse-like spaces, and agent recruitment with an emphasis on brand growth.
eXp also entered six new international markets in 2022—though North America makes up the vast majority of its business.
Something that isn’t helping the company’s brand or recruitment efforts is a recently filed civil lawsuit alleging that recruiters drugged, raped and sexually trafficked women at eXp events. The company has not commented publicly on the accusations.
From a financial standpoint, CFO Jeff Whiteside emphasized that the company’s lack of debt and cash flow allows it to thrive in a more challenging year.
“Despite a very challenging environment in the fourth quarter, the North American revenue decline was 14% versus industry-wide sales decline in the 30%-plus range, and we remain profitable,” Whiteside said.
Part of that emphasis on agent and brand growth is an emphasis on Net Promoter Score—a measure of consumer satisfaction—which Sanford repeatedly focused on during the earnings call.
“That’s really our North Star and is really a great predictor of our long-term success,” Sanford said. “We continue to sort of double down on how we’re using Net Promoter Score as a tool to actually drive a founder’s mentality into an organization in a way that creates key metrics for our team to iterate around.”
“We believe a high Net Promoter Score is the best indicator of underlying health of the business and the most important driver of shareholder value over the long term,” Whiteside added.
With this dogged push for agent growth and more investments in virtual tech (eXp is currently transitioning over to a fully browser-based metaverse platform with VR capabilities), the goal appears to be stay the course for Sanford and company.
But there was at least some acknowledgement that things have changed since 2020-21, with Sanford addressing a projection he made in late 2021—that eXp would have 500,000 agents in the next five years.
“So, our 500,000 agent number, as I’ve stated in the past, is an aspirational number that we believe that we will get to eventually at some point,” he said. “It’s really a matter of what the timing of that number is…it’s aspirational and the crystal ball broke years ago.”
