Following its meteoric growth during the pandemic, virtual-focused brokerage eXp managed to grow its agent count in Q1 2023, even with revenue down against the headwinds of a market downturn.
With a net income of $1.5 million, the company managed to stay profitable during the challenges of early 2023—from shaky consumer confidence to an uncertain mortgage rate environment. But revenue at $850.6 million was down 16% year-over-year even after the company shed almost $150 million in expenses.
Total agents reached over 87,000, up 8.3% in the United States and 12% overall from Q1 2022.
Investors responded positively to the report, with eXp stock rocketing almost 9% in early trading Wednesday morning.
“We did a lot of cost-cutting last year,” said founder and CEO Glenn Sanford on an earnings call. “It was nice to see that even in what (is) historically the worst quarter of the year, we were able to actually have a little bit of net income…(a)nd all this really comes down to how we focus on the agent value prop.”
Now past the boom market of 2020 – 2021 (when eXp saw revenue climb by as much as 183% and agent count rise by 87%), eXp is seeking out more stable footing in a more normalized market while still committing to its foundations in the metaverse and a focus on agent recruitment.
Sanford stepped back into the CEO role at eXp Realty early this year after giving up the reins in 2019 to oversee eXp World Holdings, its parent company. He is now entrusted to guide the brokerage he founded back in 2009 through the transition to normalcy—and beyond.
“I believe that we’re now fully into the new normal in terms of sales volumes and those types of things,” Sanford said, reflecting on his first few months back as CEO. “So now it will be more of a steady growth, I think, once we get into…Q3, Q4, we’ll actually start to see year-over-year growth rates, is my guess. And I think agents are starting to pick that up as well.”
eXp was rocked by scandal early into Sanford’s tenure, with several current and former agents claiming they were sexually assaulted by eXp recruiters at eXp events, and that Sanford and other executives failed to act after being informed of the alleged attacks. That lawsuit is ongoing.
Looking toward the future, Sanford said the focus is on recruiting high-performing teams to the eXp platform, building out the company’s value proposition rather than trying to reinvent it. In response to an investor question, he cited eXp’s ability to generate leads at scale as well as the cost-effectiveness of not having a physical office space.
“A lot of offices, by the way, are reducing their costs, closing down, they’ve merged or they’re getting ready to do something,” Sanford said. “So there’s some opportunistic moves as well.”
The challenges are even greater due to an overall exodus of agents from the industry. Sanford said he believed that the National Association of REALTORS®’ (NAR) estimate of a 0.3% decrease in agents is an undercount, with many effectively bowing out of real estate practice even as they keep their NAR membership.
Despite how much the market—and eXp—has seen growth slow in the past year, Sanford also reiterated some of the company’s larger, long-term goals, including reaching an agent count of over 500,000 and expanding into 100 countries. Sanford had partially walked back the 500,000 target early this year after the company had initially projected it could reach that number sometime around 2026.
“We’ve been talking about the idea of around 95,000 agents at the end of the year, and based on just our current trajectory, that might even be slightly optimistic for year-end,” Sanford said.
