EXp’s revenue fell 13 percent from the second quarter of 2022 to $1.2 billion, and its gross profit decreased 10 percent to $96.5 million, according to an earnings call Thursday afternoon.
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EXp Realty maintained profitability in the second quarter of 2023, but its gross profits and revenue both shrank considerably from a year ago as housing market activity remained dampened.
The company reported a net income of $9.4 million, with earnings of $0.06 per diluted share.
“We delivered another profitable quarter despite lower transaction volume, as persistently high mortgage rates kept many buyers on the sidelines,” eXp World Holdings Chief Financial Officer Jeff Whiteside said in a statement. “Even as we continued to fund our key growth priorities and invest in agent-centric innovation, our balanced approach to spending resulted in a higher operating margin compared to the prior-year quarter.”
The company generated $64.6 million in operating cash flow during the quarter, and ended the quarter with $124.7 million in cash and cash equivalents compared to the $121.6 million it closed out 2022 with.
The second quarter also saw transactions decrease 9 percent annually to 137,199 and transaction volume decrease 16 percent to $48.6 billion.
The quarter marks the second straight profitable quarter for the firm, which counted net losses of $7.2 million during the fourth quarter of 2022 before resuming profitability during the first quarter of 2023.
Its agent count grew 7 percent compared to a year ago, with more than 88,000 agents joining the platform across 24 global markets. The second quarter saw eXp roll out a number of new agent-centric initiatives, including its “my link, my lead” referral tool, which launched in June, and Luna, its AI-powered support bot for agents. It also announced its plans to reduce revenue share criteria in order to accelerate agent rewards.
“We are continually raising the bar on what it means to be the most agent-centric brokerage on the planet by constantly iterating our agent value proposition that delivers the best support and tools,” eXp World Holdings CEO Glenn Sanford said in a statement. “We know that in a slower housing market, productivity is at the top of everyone’s minds. As the largest and most efficient independent brokerage in the industry, we have the scale and financial resources to fund new investments in agent productivity while others scale back.”
EXp ended the second quarter with a global agent Net Promoter Score — a method of measuring agent satisfaction — of 72, up from 68 a year earlier.
While mortgage rates for 30-year fixed mortgages well above 7 percent, Sanford pointed to cooling inflation as cause for optimism and predicted that pent-up demand for houses will be unleashed once mortgage rates begin to fall significantly enough.
“While high mortgage rates are expected to persist in the short term, consumer price inflation has started to cool down in our core North American market, and forward interest rate curves suggest that rates may now be at or near peak levels,” he said. “We are optimistic that lower mortgage rates will unleash significant pent-up demand as affordability improves and buyers can once again meet seller price objectives.”