Q1 2022 eXp World Holdings Inc Earnings Call

Glenn do you want me to take the reins right off the bat or do you want to just make it quick.

Introduction of Liberty <unk>, yes.

Once you I think that'd be perfect makes sense.

Yes.

Okay.

The genuine.

An attempt downer should I, just getting started right at the top of the out here.

Yes, I think we can we can go anytime now five blocks.

Terrific.

We'll get started then good afternoon, everyone and thanks for joining this fireside chat to discuss the fourth quarter earnings results for E. S. P World Holdings.

We've got the X fuel holding CEO , Glenn Sanford and CFO , Jeff Whiteside with US today. My name is Tom White I'm, a research analyst at at D. A Davidson, which is a full service investment bank.

I'm one of these a wall street analyst that covers <unk>.

E X P. I shares I think I have it administering pleasure of being the very first analyst to pick up the stock for coverage as well back back in early 2018. So it's been a very very fun ride watching the business grow and getting to know the team just quickly in terms of the format for the call here.

We're gonna, Jeff and Glen are going to make some quick intro comments.

Then I'm going to help kind of moderate a little fireside chat here in and then we'll open it up to Q&A, we're going to be accepting questions via slideshow. So anyone who wants to ask a question. Please go to slide Oh Dotcom, a hash tag E X P. I pose the question and we'll get to those in due course so.

Maybe we'll kick things off here, Jeff I don't know if you want to go first it sounds like you have some slides, which can cause overview of the quarter.

I Didnt, Tom Thank you very much and thank you very much for hosting welcome everybody. Good afternoon. Good evening and thank you for joining us in our Q4 2020.

A summary, so just to get started in a few slides won't take too long so upside that would be us. So if we start with no very excited to report a strong fourth quarter and 2020.

Very proud of our results and our full year 2020.

Especially considering that the crazy it was with Covid and just really excited about going into 2021, what you book in the fourth quarter revenue the revenue increase in the fourth quarter by 122%.

And that went from $274 million.

Q4, 2019 to $609 3 million in Q4, so when we look at the full year revenue.

We are going from.

An increase of 84% from $980 million.

One $8 billion in revenue.

So that was a great year of as I said before we had shrunk from a revenue standpoint and from a from a growth standpoint.

We had a great Q1.

We had a stall, but we have 33% growth rate in Q2, and then the second half of the year was extremely strong for us.

From a revenue standpoint, and our revenue is based on primarily the agent count in the business. We had rapid agent growth in Q4, the number of agents and brokerage joined us in E. S. P. In Q4 increased 15%.

41313, compared to 35877 at the end of Q3.

That was a net add of 5336.

And for a full year.

Our number went from 41000 I'm sorry from 25000 for 23 to <unk> 41313, and that was an increase of 63%.

Year over year age accounts.

Our next matches that we look at is.

<unk> net income.

And in Q4 net income increased to $7 $7 million from point $8 million in Q4 2019.

And for the full year.

Net income.

Was $31 million and that was compared to $9 6 million in 2019.

Record transactions in Q4.

And we went from.

In Q4, the record transactions went from 38611 two.

The 82055.

Before and then for the entire year.

Good.

35000 transactions 322 in 2019.

<unk> were up 77% to do 238981 in the full year.

And finally from a volume from a volume standpoint, you some certainty.

Got it.

I'm sorry.

And then we probably we finished off with a.

The volume this year.

Okay.

Uh huh.

There's one volume number I'm sorry.

Annual transaction volume increased.

89% from 72.

From $38.2 billion to $72 2 billion so great.

Great great numbers across the board one see a couple more things before I get before I finish my original comments so.

Some big news on the material weaknesses front. So this this year the company released Remediated all of our material weaknesses in the business and Youll see that in our 10-K.

We rebranded and updated D. S P I.

Realty brands in our USPI Corporation, we launched five new countries, Mike will get into that increased the stock buyback to offset dilution and you still have zero debt on the balance sheet completed acquisitions and showcase itx.

And continuing to build a great product and rubella in the commercial front end.

And then and finally, we'd really significantly strengthen our leadership team across the entire business, especially in the brokerage international marketing areas commercial finance and technology.

Those are some opening comments Tom clients would you like to say a few words.

Yeah, I'll I'll call touching on a few things this last.

Q4 was where it was was a really good quarter for us where we ended up making a lot of progress on a number of different fronts.

We ended up.

We've got a acquisition earlier in the year with pressure Ok's itx, and they were able to turn on in the fourth quarter, our Canadian portal.

P royalty dossier.

Early this quarter there was great turned on ESP royalty dot com their early stages in the development of our community portal, but we were able to get off of a third party vendor. So we're able to now control for our future as it relates to building a robust consumer experience and also a robust agent experience when it comes to lead Gen and then being.

Able to integrate a lot of things that we.

Have been wanting to do for quite some time around things like affiliate services.

Incorporating things like our express offers platform et cetera, all into one unified on consumer and agent platform. So that was a was a really strong on the DXP royalty side.

We also as <unk>.

Most of you will have noted we purchased the success magazine, we closed on that in.

On December I believe it was.

And that has been a really inter.

Interesting acquisition, we were the largest single customer of success magazine and we've been doing that because we've been mailing the magazine to our agents and brokers for the better part of a couple of years.

<unk>.

If you think about your sales in general.

Not to mention real estate sales.

Real estate sales and all sales is to some extent and extension of personal development learning sales scripts you're learning.

A lot of things about yourself, how to handle rejection how to a prospect how to do those things that that makes sales sales and and so success magazine for US really represents a extension of a mode around E X P that will allow us to have certainty.

Things that are highly proprietary to to us and having the longest running personal development brand in the history of personal development inside of the E X P World umbrella companies helps.

Helps sort of solve for that.

Jeff touched on the fact that our team is working really really well together.

Feel like we are right now.

Hum and it shows up in our and our internal net promoter scores our employee net promoter scores, our glassdoor scores and everything else, but we really do have a team that enjoys building. This company together, which I think is in my mind very much of a leading metric on how we're going to do in.

In future quarters, and future years, the more that we enjoy building this company for our customers and our agents our brokers.

The better worried about to deliver on those value props Pam and so.

Obviously, Michael will talk a lot about international annual you'll find that here's somebody who has a really passionate about growing that side of the business, but Q4 was great. We ended the IPO 41000 and change in agents.

You May have noted in the press release that we put out our accompanying the.

Q4, and year end earnings that went out earlier this morning that we crossed over 48000 agents.

So a net add of effectively.

7000 agents, so far year to date and and so that's an incredible feat.

When we think about just the speed of growth and the continued acceleration of growth and how the value proposition really matches up with our agents brokers and staff and then of course rubella is there as a as another platform that we really I mean, obviously, you're in the platform now and we're continuing to improve that.

What form we're continuing to get some pretty iconic customers and clients through that platform, but more importantly, we're able to use this platform.

To actually enable our ability to scale collaborate build community and ultimately deliver the results that we have for agents brokers and staff, which ultimately translates to two to the numbers that you've got to talk radio so that worked with that I'll turn it over to.

To Tom and.

Great terrific I appreciate it guys. Thanks for the for the for the comments there.

First off I guess I just wanted to say to both you know congrats on a great end to the year.

As a crazy year. It was it was a challenging year, but.

It also seemed to be a pretty transformational year for the real estate industry overall.

And specifically for you guys, maybe just to kick things off planet I'd be curious to hear just your high level perspectives on on on how you know.

Hugh.

I imagine you're pretty proud about how the how the business performed last year given the pandemic.

They don't really seem like a new kind of inflection point in your growth would just be curious to hear about what you think.

What is driving that and what drove this kind of a new inflection point for you guys.

So first and foremost I think you'll see the fact that.

The <unk>.

Sort of taking pricing in Q1 Q2 of 'twenty 'twenty with the pandemic and the Lockdowns and the fact that you know route eight real estate agents weren't able to easily go in and out of offices. There was a lot of additional overhead just to go to physical offices.

Plaid, obviously, well for a company that doesn't have physical offices or in a traditional sense. We've got the virtual office and so that's obviously, a louder agents and brokers to work together.

I think the B b.

The other piece is that we've we've really got to a critical mass and in the quality of agents that we have been attracting have been phenomenal and that's continued to lend itself to continued growth in the model.

I think the other piece is that we've.

We figured out how early on to build a real estate brokerage that could pivot if needed and and so we were able to pivot.

In April of 2020, we reduced some staff we hired back more than we like goal because Q3 Q4 was was stronger than them.

We thought it might be in April of 2020, but we were able to scale down and scale back up very quickly.

Which resulted in us you'll having really a really strong.

Q2, even though revenues were up 33% we ended up significantly more profitable in Q2 than if we had like we had.

Our model that where we were continuing to expand because we would have been investing in future expansion, but we were able to reduce staff quickly circle, the wagons and ultimately put ourselves in a position to be able to scale back up once we knew that things were not going to be as dire as the as the potential.

Could have been and I think that's the thing that we.

We have going for us that again, our other large competitors don't have going for them is that in a downturn.

Theres a lot of fixed expenses that they won't be able to get out from under and and for US. We've built it this way.

On purpose, because we launched this year or in 2009 initially when the market was top of mind, We said hey, we can't afford physical offices and so we ultimately were built for both.

Both good economies and bad economies.

Makes sense. Thanks.

A ton of stuff that I want to dig into here.

About the business, but maybe just quickly start on some costs start with some questions on on kind of the broader housing market and sort of the macro backdrop and.

Obviously last year was I think a surprisingly strong year for residential real estate volumes I don't think many people expected, how healthy and robust market with kind of snap back after the initial days of the pandemic.

Can you maybe share your view on what you think kind of drove that that that snapback that expansion in the market last year, and and and and how you think.

The market looks kind of entering.

Entering 2021.

Yeah, So first and foremost.

Your interest rates dropped to historic lows into I think we're still sub 3% on mortgage and 30 year fixed mortgage rates.

And.

Even in the Great Depression, I don't think that it got down to 3% I think that was sort of a historic low.

Even at that point in time.

And so where we are when we look at buyers.

Hum that youll have in common and everything else that goes along with it.

They can just buy more home for the same mortgage payment. So there is looking at the opportunities to buy homes, while interest rates are really low and locking in the property that they they would like to live in and so I think that was probably the biggest thing with all of the.

The fed doing that all the stuff that it was doing.

The stimulus or spend that took place obviously, we've got another stimulus that is just the process of getting fully fully passed them and then that will get out to two to everyone. But those stimulus is plus low interest rates I think were the big drivers in the.

In the housing market, along with a lot of other things I think the stock market benefited from from those same same things in general.

I think 2021.

As we get as we start to work out.

Where we're at I think there's needs to be some interest rates increasing.

And then most likely I E.

Certainly not.

I don't know the Crystal ball is working exactly right, but I suspect, there's not going to be much more in the way of stimulus. So that would suggest that later on in.

This year that will start to see some moderation of the housing market, but it's a combination of low interest rates and in stimulus that I think were the big drivers in 2020.

Makes sense.

<unk>.

You get a lot of questions from investors around.

Seasonality of residential real estate and obviously last year was.

Very atypical in terms of the typical seasonality we see in this industry.

Ear year results are a great evidence of that given how robust and strong year fourth quarter is which typically isn't.

A huge quarter for real estate.

Do you think where we have another year here of.

I dunno, maybe less seasonality.

You know as folks continue them.

Adjusted work from anywhere trends are or what have you.

He already you know do you think we may return to normal seasonality at some point or do you think this is it may be possibly sort of a new normal.

I think Q1 and Q2.

Are going to see just in terms of year over year numbers are going to see strong.

Our strong strong bias is the upside just in terms of comparison comparative quarters. I think we you know Q3 was super strong last year in Q4, whereas obviously really strong not just across per firm, but in the housing market, but I think that using that as the next backdrop and I think youre going to see some modern.

Ration in the growth in Q3, and Q4, just because the growth that you're measuring against was so strong in 'twenty 'twenty and so those that I'm.

So if I look at Q4 for US was we were above Q3 normally I think in the last three years. Prior our Q4 was actually below our Q3 numbers.

And that was because of the seasonality and I think if we look at this year.

Nobody knows exactly what's going to go on but I.

I wouldn't be surprised if Q4 is again this year less in Q3 and in Q3 will be somewhat tempered compared to Q3 last year, even though you know just based on our growth rates will still be strong.

Okay. That's great My maybe we'll shift gears here and dig into some of the operational metrics for.

For the business in and for you guys. The main area to start obviously is agents and an agent town in.

Obviously agent growth was super strong in 2020 and.

It seems to be an inflect and up again here in the first quarter I think Ive said north of 40000 agents.

Can you, maybe just talk a little bit.

About the growth dynamics, youre seeing sort of so far in in early 'twenty 'twenty. One is it is it being driven by international to any significant degree and kind of how do you expect agent count to kind of play out for the balance of the year.

Yeah. So certainly international is compares driving a little bit about growth Theres theres no doubt about that.

The other.

The other part is that our model is I think based on sort of what took place in 2020.

Our model is now recognized as a totally.

Buyable and legitimate model for the entire industry I think we started to see some competitors that are trying to very small, but they're trying to do similar things and and.

But.

I think that's the key is that our models now accepted as one.

The standard models and residential real estate and two years ago.

That would not have been the the commentary the commentary would have been a fair bit different but now it's it certainly is the case, so that plus international international is going to be a big portion of our growth story for the foreseeable future.

253% of U S.

Agent base at DXP, and you sort of think about does that grow 50% potentially year over year and then what is international then sort of add to that mix since where you kind of play with the numbers and international.

International can be a big big percentage of our 2021 numbers.

Courtyard, I definitely wanted to dig into international a bit and can take advantage of Michael being here.

Sure.

Maybe just just sticking with agents domestic agents forbid any kind of update on on what the typical new ESP agent looks like.

Are there any particular regions or or.

Competing brokerages that have been particularly fertile for you.

For you guys in terms of attraction recently and also curious whether youre seeing growth in the overall U S agent pop you population just due to the strength in the market. I mean is it is it bringing people who maybe were sent and retired or kind of it sitting on the sidelines kind of back in bringing new agents and <unk>.

Into the into the into the workforce.

Yeah, well certainly with the best.

The housing market in general there's a lot of a people who are getting their license. We saw this would take place in Q2.

2005, 2006 2007, when the housing market was really hot we're seeing a lot of lot of people are getting their license because our business has been really good the last the last few years and so there is that there is there definitely is that.

I think in the months of January and February this year I think we.

Ended up converting somewhere between 14, and 17 independent brokerages to the E X P model so whereas in regional normally you think of the mainline brands Keller Williams Remax as being their brokerages that we bring over the most agents from the.

The reality is is that we're starting to really pull in a lot of the independent brokerages, they're looking for they're basically.

The tuners here or if we can't beat them join them and so a lot of the independent broker dealers are growing we can't offer the same types of benefits to our agents that DXP provides an ESP because it does run on fairly low margins. They don't see that they are giving up a whole bunch by coming over to you X P M factor.

They're probably on a net basis, gaining when they look at all the all the value they're building to bring to their agents by joining this platform. So we're seeing a lot of independent brokerages and I think that's where we.

We will see a lot more growth in 2020, one as well.

Okay, Great just want to remind folks if you if you want to pose a question to Glen and Jeff just go to slide <unk> Dot Com hashtag E X P I and we'll get to your questions here.

In a bit.

Glenn I wanted to touch on the net promoter score.

And.

The importance of that metric to how you guys.

Run the business and how management makes.

Decision there a big uptick there in net promoter score.

Can you, maybe just talk a little bit about what that improvement means you're thinking and again, how are you guys going to use it for internal decision making.

Yeah, So net promoter score.

For those who.

Aren't familiar it's a good question on a scale of zero to 10 ankle likelihood.

We refer a friend or colleague joined directs pay royalty.

And so that's the that's the basic question and from there you go so you'll get a score.

And from that score were able to ban you'll make decisions as a team to help improve that score and so when we think about agent.

Experience, whether it be on transactions Onboarding, just overall DXP, we measure multiple places along the age of.

Lifecycle and what it does quite frankly is it allows us to work as a team rather than having to Tim mandate, here's our priorities from sort of a corporate top down perspective, and so by using the net promoter that allows any team to work on our part.

The business to on improving those scores. So we're so we've got you know good scores now got some of the best scores we've ever had in the history of DXP and one thing that we noted back in around 2016 2017 is if our scores were around 60 band, we weren't growing that fast and when our scores were above 70.

We're actually we're growing faster and we retained a lot more of our agents. So we've really used 70 is sort of the number that we don't want to dip below in any category of the business because we know that the low 70 at least for us.

I don't want say bad things start to happen, but we start to see some some pain points, where agents might leave us.

That will sit there and go man, we should've solve that particular challenge so for US just using that basic score and then asking the second question, which was what influenced you to give us that score and that's obviously the Gibson nine or 10, they're gonna toss all the things we did right, but if they give US you know seven.

Seven or eight or six or below they'll tell us things that we can improve and if we see enough of that data show up in our scores, meaning that Hilton I didn't get a phone call back or I can't reach my broker or.

And where do you see these different theme show up then it allows our team to go and actually work on solving real issues that make a real impact to our agents and I know Jeff's all over M. P. S and works with the team really closely on it and I think it's you know it's probably.

Probably the number one metric other than making sure where we've got a sustainable model.

Yes, and I'd add Tom that we do the same thing for employees seller NPS score, which is our employee NPS score via the exact same thing.

Yes.

The scores above 80, and you can see on the glass door. We're at 4.8. So we do the exact same thing we figure out what's going on how we can make it better and.

Fix things right away and we do that operationally to the model says with employees.

Okay, maybe just one more on agents and then we can shift over to international forbidden and then maybe talk about some of the financials, but.

Glenn in the past you've you've given some.

I guess I'm.

When called guidance per se, but.

Sort of internal targets, maybe about what you think you can get.

Domestic agent count up to you now.

Over one year three year five year period, any any kind of update there on on your current thoughts I think I caught you.

At a conference recently, putting out some pretty robust domestic agent target. So I just wanted to.

To see if I can get you to clarify or confirm this.

Yeah. So for US you know what I view as the numbers.

And for the way I've I've done the math since the beginning is I believe that our model will grow at 50% year over year for quite some time without any.

And obviously, we're still gonna do good work, but if we actually work on the model, we should grow in excess of that and so when I when I look at the model.

Right now I'm Mike.

My thought is domestically, we should be growing somewhere around 60% to 70% this year.

And internationally, we're going to grow you really.

Exponentially because you know there is a much smaller number of agents, but the value prop is really matching up well in these different countries. So you sort of add those two numbers together and I know that this year.

The internal aspirational goal is 100000.

I'm I'm still I still feel like that's a little bit aspirational base less aspirational than when I was talking about it in Q4 last year.

The reality is is that you know a few things go right for us and we May in fact have something close to that number at the end of this year, but again its if theres a theres a lot of things that have to go right, but if we start to get up into the 80000 plus.

Plus agent range I feel like that's a pretty pretty doable number even though that still represent a big growth rate per 2021.

Yeah that would be it would be amazing and maybe a couple of international.

So that was another thing I think that that stood out to me last year was just that in a year when nobody was getting on planes.

Or traveling you guys were popping up all these internet new international markets and so.

So maybe I know it's early for a lot of these but maybe you guys could talk a little bit about which of these new geographies youre kind of most excited about either because like structurally on paper. They just look really appealing are attractive for a model like yours or just in terms of what youre seeing in terms of early early agent momentum.

Okay, Mike Malone for sure absolutely Glenn I'll grab that.

And Tom Thank you for the question and you're right you were just starting to describe what the accomplishments were last year and imagine. This we opened South Africa, India, Mexico, Portugal, and France, all within a span of two months without ever getting on a plane in the middle of a pandemic that is probably.

<unk> something that's not been accomplished in our industry. So this is something where the model became proven on a global scale. There are some incredible markets that we've entered I think that what we've done in India, and Mexico, and Brazil, which we just opened.

A week and a half ago. These are huge markets. These are markets with those very large number of agent accounts. These are numbers, where everyone has already started to adopt in a very large way our platform and so I think if we start talking about markets, which we are excited about.

We're excited about all the markets that we enter but I think that where we're looking at is things that have a large number of agents in market that have a large market size or large size of population in a very healthy real estate market in and of itself. So I think Brazil, India, and Mexico would be markets that I would say to really keep a keen eye on.

Okay terrific and then.

Can you just talk a little bit about.

How you overcome.

Maybe the obstacles of of being a brand new brokerage in some of these markets.

Is the is the goal is the sort of the strategy around expanding in these markets all that different from from what you guys have done in the U S or is it very much like kind of.

Our local market by local market thing you've got to you've got to win over attract.

High profile agent, who people pay attention to and then it sort of builds or is there a different kind of strategy for how you look to grow and expand in in these new markets. I think it's a combination of a few things Tom I think that the idea is that we're building a very substantial global brand when I joined <unk>.

S. P last year in the beginning is started in some of these markets. We were entering having to explain that the success that ESP had had in the markets that they were already in we don't mean to do that anymore and it's extraordinary that that's happened in such a quick period of time, it's the idea that everyone knows.

XP when we start talking about ESP. It's the idea that now we've got 48000 ambassadors across the world that are telling this story and an organic format and the markets that we're entering now it's less about who is the XP and more about the cohesiveness that we're doing into that plan.

That form where we serve in a local market via the idea. That's really has been great. With this model is our agility, we actually have the core model of what ESP is with a very.

Generous commission splits with the stock options and with the ability to create a revenue share all of those things remain the same however, the model itself in the numbers all differ in the penetration that we're in so that we have a local competitive advantage. So the idea that with that.

Chile is what has allowed us to be as successful as we have been as we've entered these new markets.

Okay, maybe just a last one on international then I'll shift to some financial questions and then we can go to some of the the audience questions but.

I think it was back in November when we were speaking Michael <unk>.

And Glenn.

The topic was kind of international agent mix like what percentage of <unk> overall agent count would be and it could be international stay by the end of this year and I think Michael you were throwing out maybe like a 25%.

100000 agents ending the year curious if you have any kind of updated views on on what your agent mix looks like U S versus international say either exiting this year or maybe in three years or five years I mean could this be.

<unk>.

I don't know it could just be like a 50 50 type is.

Business in terms of agent count in five years or is that.

Okay got it.

No I think that if we're looking at a five year timeframe. It absolutely can be it's the number of agents that are across the globe. It allows us the possibility to get there with really an internal goal that we have we're certainly looking at north of that 20% number.

We are very much on track for that and we are still very very bullish on what we're doing where we as we say, we're just getting started and the reception has been extraordinary around the globe.

Okay great.

Maybe ill dig into just a couple of.

Questions about the financials.

Maybe starting with with gross margins.

They were they were up nicely.

On a year over year basis for the year, but you know in the fourth quarter, they declined a bit year over year, and I think Glenn you've talked.

Maybe you can elaborate a little bit about some of the impacts there and and.

And how we should think about the trajectory of gross margins here over the balance at the 2021.

Yes, so our our gross margins are.

Highly influenced by the sales volume an agent's capping.

And coming out of a really strong Q3.

And then having a follow on really strong Q4 put a lot of agents in a position where they basically pay the most money they'll pay to E X P for their given copier and so that created some pressure on honor on our gross margins.

And then.

Alternatively, I mentioned, a little bit about showcase itx.

Alternatively, where we're really getting into a position, where we should be able to actually increase a little bit of the gross margins don't know what percentage that is but I think that there's going to be some.

Margin expansion.

Once we're able to.

Yes.

Tumors.

In a pre approval cycle get more properties through our express offers platform, which has some nice margins on it and.

And then also you get some of the other surfaces title escrow et cetera through through the mix and so this.

Bye.

Most likely by Q3, we'll actually have.

Those services actually built into our consumer platform and that should start to play out into Q3 Q4.

Being able to increase some of those those margins from there.

And Tom on the on the topic I think it was an extraordinary year in Q4, because usually as you know the margins go back up in Q4, but the volume was just.

Huge and that was that was the pressure on margins in Q4.

Okay, and then just I guess over the next couple of quarters not to be so short term focused but obviously the first quarter looks to be like another strong year I mean, how should we think about I guess the.

Kind of the timing for when agents.

Caf years resets.

And I guess.

Remember a couple of years ago, you guys implemented some changes to make sure that.

You were really kind of optimizing around the Rev share and.

Doing so in a way that would enable you to hit or at least kind of approach to that.

Kind of 10% gross margin target that you've talked about for core brokerage.

How do you feel I guess like outside of the big Spike in volume because of the robustness of the market.

How are you feeling about.

Being able to get to like a 10% gross margin in core brokerage before some of the ancillary stuff.

Yeah, I think it's I think we've backed off.

We've really I think you're even starting in early 2020, we really backed off the topline number of 10% gross margin for core brokerage just because as we learn more about how all of this mixes together.

It would be tough to get there.

If we didn't fundamentally change the model, which we don't have any interest in doing because our model makes sense with subtracting a large number of agents.

Really the best model in the in the industry and and for us to get to the 100000, 200000, and 300000 and 500000 whatever the number is eventually.

We need to make sure that we're highly competitive for agents and brokers in them and thats. The other side, which is the mortgage the title escrow and other services, which would be where we would expand gross margins, but we do think that.

On the.

Net margin basis really focused on.

On what is that what what are all the things that we can do to get that to closer to 4% on a net basis and so when we sort of look at that.

We think that there's there's a path there that's that's a lot more viable because we really were talking about the 10 six four model, we think that there is a.

Theres something less than 10% on the top side or something less than 6% on the expense side, and we think that 4% still a viable sort of net number as we continue to grow.

Yes.

A question from an investor just on financials, and then we'll get to some of these final questions, which look interesting to you, but the question was just on.

To that point, Glenn about that G&A efficiencies there it looks like G&A ticked up a little bit.

Quarter over quarter or could you maybe talk a little bit about Jeff what the driver there wasn't and how we should think about.

That that line item in Opex.

Kind of going forward, yes, I think.

The way, we look at as Tom was that.

We started off the year at 10, 3% of.

Revenue and we ended the whole year at 717, 1%. So we think we got about a 24% productivity on the SG&A. So that's that and that's kind of.

The number went down significantly in Q2 Q3 of them went back up in Q4 as we added more people. So as we look at it. We think we can we think we can run somewhere around.

That seven to seven 5% SG&A line.

So that's how I would look at it so we are getting productivity.

We have we're not spending more than we need to but we will spend and we will invest to support our agents and support that the NPS and EPS scores, but the 7.1 the 7.5.

It looks like that seems to be a bit of it.

That's a number that you can look at going into 2021.

Okay, great Okay.

Overall for the year I'm talking about.

Understood. Thanks that I'm not sure. If you guys can see the slide a screen, but I'm looking at it right now it looks like maybe we'll just go top to bottom here from what I see it as aside from rebel of success in <unk> are we considering expanding into different businesses have we considered the creation of a global MLS to help global agents.

Yes, so our global MLS as a as a as a unique.

Unique idea that we could look at doing when we get to some sort of critical mass.

We'll have some internal marketplaces, and some internal ways to advertise properties too.

To consumers.

At our websites, but the reality is that most consumers know where they want a search and so when you think about a global MLS.

We build out DXP royalty dot com to future all our properties across all the markets that we serve.

It will it will serve some of that function, but for the most part.

What we have right now as per dollar success showcase itx DXP Realty those are for <unk>.

Our primary.

Businesses and showcase <unk> is really an extension of NXP royalty and we don't really have a large.

Appetite for expanding outside of those general spaces, obviously mortgage title escrow inside of Realty would make a lot of sense, but I think we've got more than enough staff to work on for the next year and so I don't expect us to do any other.

Any other business says this year.

Okay.

Next question.

Think maybe Glen you touched on this but is there a hard date her start date for the integration of showcase <unk> into the ESP platform and Glenn maybe I'd just add.

Can you give maybe a little bit more color for investors.

Just what exactly what will it look like and what will it mean for the core brokerage business.

Yes, so showcase itx is there a technology team that builds.

Consumer facing websites featuring homes that are part of the.

The MLS ecosystem that DXP as a member of a nature of the markets that we're in so U S and Canada have very robust MLS those and so we're able to tap into that data and then we're able to create rich displays of that data add in potentially some other data sources to create a unique consumer experience and then consumer.

Would search those websites very similar to the way that we did searches for Zillow redfin realtor dot com and lots of other other websites that future properties, but they would be able to use that and they're already using it. So we already and we already have showcased powered ESP royalty dossier XP royalty dot com.

And and so it already exist.

And then we'll just be enhancing a lot of the features and functionalities as we go along both consumers and then and then and then ultimately as well port for agents and brokers that are working with consumers on those platforms.

Okay, I'm going to skip down to the one question about the.

N a R D O J.

Settlement and Glen will be curious to hear you.

Opine on that and and also curious to hear if you have any thoughts about the latest lawsuit I think was filed by by Rex.

Against Zillow and the NAR.

What do you think the future of the MLS and.

In the U S is.

So I don't really think that there's going to be a lot of difference quite frankly, I think there's there's different players that would benefit from a.

From from MLS is.

Sort of getting disrupted in some way I don't actually think consumers are those are included in that mix I think there are companies that have.

Different models that they.

For websites ban they potentially make more money, but I don't know that it's actually a truly a consumer benefit that being said the idea of displaying buyer agency commissions. That's that's part of the MLR.

Yep Yep.

Makes sense has now been done.

By most brokerages around the U S that displays that I don't think that actually changes anything fundamentally I think there's a.

And I haven't studied too much on rexes lawsuit with <unk>.

With Zillow, but.

I think that there, they're trying to figure out and litigate their way into into a an industry and I'm not sure that that's that that approach ultimately will work for them and but that doesn't mean that that.

They're going to stop working on those fronts.

Okay.

There's a question here about.

What's happened to the stock in recent weeks.

I guess coincidental.

Coincidental with the stock split Glenn I don't know if you if you went away on weighing on that.

Or not.

Well a couple of things one on an adjusted basis, when we announced the stock split the stock was actually trading at a lower price than it is today. So when the when the stock split got announced there was a lot of times, what you know what.

It can happen of course, Tom you've probably even opine on about what my time to stock split it gets announced a lot of people jump into the stock and the stock splits tip off twice as many shares as they had before they sell a few shares it puts pressure on the stock but.

On balance the thing that we were trying to solve for was.

Making sure that agents were getting a meaningful number of shares when they were being awarded shares for various activities inside of XP and with the stock price going up.

And getting close to that 70, $80 a share range, which was when we announced it.

It really was put us in a little bit of a quandary as to you know an agent may be getting awarded 2.3 shares or something for an activity or if the stock continues to go up even being fewer shares in that and that just does seem to be an opportunity to increase the number of shares and to keep it at a more modest range.

Okay.

There's a question here about how you guys are going to grow your margins over time to increase net income I think in some of the prior answers you've you've touched on some of the things here, but maybe.

You can respond to that one.

Yes, I think I think we did pretty much cover that I think there is the other side of it is we do have these these other new business units to ESP, including <unk>.

Success magazine, the personal development spaces, it's $14 billion of your industry just in the U S alone we have the longest running personal development brand.

It's pretty there's a really high margin businesses.

I've learned even in the last five months, but I've been involved with.

Success magazine lot of digital products. So.

When we think about other things that we can do.

We think that there's some really really cool things that we can do in that business that will eventually add add to the mix, but on the core brokerage.

As you know pretty much the things that we've already talked about.

Okay.

No no that asked about buybacks and maybe that's a good time for me to ask this question, which.

Kind of touches on that.

It's around capital deployment and you guys are sitting on a pretty healthy cash position. These days certainly relative to <unk> is.

Significantly better than this time last year.

Just kind of curious about.

How youre thinking about.

Deploying capital.

M&A share buybacks.

Further investments in kind of ear in your existing businesses any any kind of color you can you can share on.

And what you guys might do with the cash on the balance sheet.

Yes.

So we look at our company as you know we have suite, we still have zero debt.

Our on balance sheet, and so we look at our year coming up we believe we have a lot we have as much capital as we need on the balance sheet.

Trying to do is offset.

The agent equity plants from a dilution standpoint, so that's why we've increased the buyback, but we feel with that increase in the buyback and with the cash that's generated from the business naturally.

We have enough capital on the balance sheet and I think if we.

We have had many discussions that if we needed more capital on the balance sheet to do a significant acquisition. We do believe we have the opportunity to do that but there's no need at this point in time to raise incremental capital.

To go through 2021.

Okay.

Sounds good.

Question about the P&L impact for showcase and success Glenn you just sort of touched on success a bit, but maybe you could talk a little bit more about.

How showcase impacts.

The financial model.

And I'd be curious to hear that.

Yeah. So couple of couple of things that you can look at showcase in the short run.

Being something we're investing in we've grown the team on showcase from the this page six eight people that came over we're increasing that likely upwards of 30, 30 people engineers and others to actually build out this robust consumer platform.

Alternatively.

Once all of that gets built out we are also a big customer using a third party platform called kv core by inside real estate.

And we believe that we can reduce the expenses that we're spending there or per a third party platform.

And so in the short run I think there's there's investment that's taking place in the longer run we think that there'll be an offset and then and then more importantly.

Over the over the midterm, we're going to actually be able to create new revenue opportunities through actually controlling our own portal. So that's where we're talking about Q3 Q4 being able the condition consumers around mortgage title escrow and other services that DXP provides will be much easier when we can.

Troll, the ecosystem and where we're generating thousands of leads a month already through that platform.

Which is which is great to see but eventually we believe that once it's built out it will generate hundreds of thousands of leads for agents and brokers on a monthly basis.

Okay, maybe just a quick follow up on that.

And specifically how showcase maybe will help you drive attach rates for some of the ancillary and you mentioned kind of conditioning consumers can you can you talk about a little bit about like I guess, many agent buy in for you.

Your mortgage and title offerings is it is it also a situation where you might have specific condition or educate your agents on kind of the benefits of of of maybe using your mortgage and title offerings or is it is it a situation where I'm trying to get consumers to.

These products, yes, it's a little bit of both.

Don.

We've got a.

Good good products, we've got silver line title and escrow, which I think is.

That's in pretty good shape, where our mortgage is.

Partnerships right now arent as strong as we'd like them to be so we're still continuing to work on on what that will look like as we as we go forward.

But the idea is that as consumers hit our website that they would be prompted with have you got preapproved you know what you've qualified for here's the benefits here's the rates that are currently available to you.

And so that's that's one stage of the exercise and then.

Because of that.

If consumer if the if the agents already know that the consumer is qualified for a loan.

And that the pre works already been done and we can create the right interface with the Adrian then the buying is a lot easier than trying to go to an ancient that's where working with somebody in their existing database.

Have already have those pre conversations and have already connected them to a mortgage officer that they know to get them preapproved, a prequalified so by getting the consumer earlier in the funnel, helping them get Preapproved. Then win has has those relationships continuing to develop.

Your agents are more likely to say hey, we want you to fill out the mortgage piece on an ESP royalty dot com till we see what you are approved for or what you qualify for <unk>.

And then if we can make sure that the relationships and the touches with the agent and the consumer are strong then again it should be much easier, but if we were to ask an agent to go from cold to using in a mortgage product I think what we've found in most other companies have found is that that's a more difficult.

Called ask because you're asking them to trust.

A third party that they may not have ever used before too.

Hopefully get their client approved and if they if that they mess up not.

Not just the consumer suffers the agents suffers because they were potentially expecting.

To actually get paid at the end of the transaction. So we've got to make sure that all of this stuff lines up and we have to do it in the right order.

Sure that makes sense.

So we've got about three minutes here and I see three interesting questions here remaining on the slide us So Glenn I don't know if you want to do a little bit of a speed round and Jeff and maybe just to hit these last three questions here can you see them.

Yes, so the first one whats your expectation for rebelling intra industry efforts and growth for 2020. One going forward you can continue to work on it where we talked about that we were approaching $1 million of mountain and our revenues.

On the <unk> platform.

There's still work that needs to get done for us to fully get there were not far away from that but it's it's a unique platform for companies that aren't like us for us we see the benefits every day.

We would we would use something we'd use verbally or something like it.

For as long as I can think about running the company going forward because of the.

What it does for us but.

That's not the same unfortunately per per for as many companies out there. So it's still so a lot of work.

Yeah, and I would add that we were investing heavily in it.

Massive for us as a company just to give you a couple of stats quickly.

<unk> campuses went from five to 49 in 2020 team suites went from 49%.

$2 29, and one time events, which we did not have before.

71 major one time about.

It's taking time of building the team we're building the product.

We still are huge believers in the product.

Great next question, guys, Hello, rising interest rates or a downturn in the market affect your revenue and income.

So it certainly is going to have an impact on everybody in the real estate space. The differences that I think what we have as a as a model that's growing agents, which means you know the the revenue that comes from that agent base.

Can offset to a large extent some of the slowdown in the market and we saw that even in Q2.

Almost all of our competitors saw a reduction.

A net reduction in revenue, we were still up 33% even in Q2. So we're just better positioned just because the value prop works.

Okay, and then just last one everyone's favorite question around.

Zillow Zillow is now a broker according to the.

Question for you, what's our strategic move to protect our interest.

Yeah, So it's to iterate iterate iterate and just continuing to make sure that we've got you know good consumer experience that's why showcases.

As a critical component.

But you look at it 5.5, $6 5 million homes a year.

Almost every one of those is assisted by a an agent $1 4 million real tours.

The reality is that it.

As much as Zillow may make inroads and others make inroads.

We're still in an industry that for the foreseeable future for as long as I think any of us will be in the real estate business there'll still be a high percentage of the business. That's assisted by individuals that you know I can trust them and helping you through those transactions and I would add that we got a phenomenal group of agents leaders.

And growth people in this company right now we're tracking more and more every day. So we got a great team that's going to market.

Terrific as well.

I think that the.

It takes the hour thanks against the opportunity to moderate really enjoyed it.

I enjoyed watching you guys grew over the past year, Glenn and chip I'll pass it off to you is there any any final comments.

No. Thanks for thanks, again, everyone for showing up and being part of the.

Part of the Investor call that we had earlier.

We do this every every quarter.

And so we're just excited that the gist.

There's room continues to grow and.

That so many people are paying attention to what we're doing so so thanks, everyone for coming here.

Thanks, Tom Thanks, Jeff Thanks, Michael and again, thanks, everyone.

Thank you.

Okay.

Sure.

Thanks.

Not certain checking.

Sure.

Yeah.

Yes.

Okay.

Thank you.

Hello, Heather just a quick check the polygala line.

Leann.

Excellent.

And welcome to the ESP World Holdings' second quarter 2021 earnings Fireside chat via Livestream on ESP World. My name is Cory Jacqueline and I and the female DXP World Holdings today, we will begin our Q2 earnings fireside with a conversation between Glenn Sanford founder and CEO of <unk> Holdings.

And John Campbell, Managing director at Stephens, Inc. John joins from Stephens, Inc, where he has built and currently leads the firms and real estate services practice welcome back John as you hosted the 2020 'twenty Q2 earnings about a year ago. So it's good to have you on.

After that conversation will move into a review of the Q2 financial highlights presented by Jetblue eyesight, CFO and Chief collaboration Officer at DXP World Holdings, who will be followed by me Courtney Jacqueline and I will share DXP agent and consumer insights. We will then move on to Jeff Siegel, our VP of innovation innovation part.

My technology innovation, who will cover our innovative approach in areas of opportunity and finally, we'll return to John Campbell for a continuation of the Q&A.

Let's begin with the earnings Fireside forward looking statements.

There will be a number of forward looking statements made today that should be considered in conjunction with the cautionary statements contained in the company's SEC filings forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially.

These statements please see our filings with the SEC, including our most recent annual report Form 10-Q for a discussion of specific risks that may affect our business performance and financial condition, we assume no obligation to update or revise any forward looking statements or information.

As a reminder, today's call will be recorded and a replay will also be made available on ESP world holding dotcom a few logistics before we get started.

To see all three screens hit the states zoom button to the writers or chat box.

Them into a specific screen you can hit the plus icon above that screen. If you happen to see no sides are a great side hit the refresh button icon at the top right hand corner of the screen to correct, while in ESP virtual Kansas should you need any help or have questions. Please enter your comments ended the chat box at the bottom left on a member of the team will contact.

To you.

At this time I would like to turn the fireside chat over to Glen fanfare, and John Campbell to start the earnings conversation.

Hey, Courtney. Thank you very much for the intro and again welcome John Campbell.

First and foremost you know just wanted to say.

Thank you to all of our agents brokers and staff for another amazing quarter.

It was we really did continue to grow exponentially during the quarter and obviously continuing to grow.

Very quickly so.

John I'm going to just kind of.

I turn over to you for a few of the questions and I'll jump into answering from from my perspective, and then we'll continue on so thanks again Courtney and.

John over to you.

Yeah. Thanks, Glenn.

It's a thrill to be here with you guys, especially on the hills of such an impressive quarter.

It's good to hostess again.

Picked up coverage of you guys back in 2018.

And I think we saw something kind of special underway for you guys.

I will say never imagine you guys get to the point you have gotten this quickly as you've gotten has been pretty remarkable C. But just going back to that launch coverage I mean, if we go back and look backwards looking at I think it took you guys nearly a decade to get to 15000 agents and <unk>.

Just put.

Net adds 17000 over the last two quarters. So I mean, clearly you've got the flywheel spinning.

If you look at overall agents as a percent of kind of nor our U S agents is three or 4%.

If you look at it internationally, obviously, just brushing the surface. So it feels like you guys are still kind of bottom of the first inning. So theres a lot of opportunity there.

And last one help moderate this call I talked about.

The valuation for your stock and whether investors are giving you credit for it.

You kind of compare that to what Redskins at right now if you look at Red Sands revenue multiple you could take out the eye buying.

<unk>, which is a big big chunk of that revenue base.

And you put that on the <unk> stock.

It's about $131 stock today.

Last time I had.

Moderate this cost at $125 stock, but the difference here is you guys. Obviously had the two for one stock split so thats, an apples to apples basis, that's more like a $262 stock for you guys.

Relative to what it would have been in the past so needless to say a lot of opportunity. It feels like to continue to build out the agent base and obviously a lot of opportunity on the stock as well so.

That's my tidbits.

I wanted to kind of pass along but Glenn as far as.

A question to start off here.

Obviously, a lot of good things to talk about in the quarter and the fundamentals but.

But let's start off with a dividend.

When I when I was up this morning, and I saw that I scratch my head a little bit it didn't seem.

Like a move that you make is a growth company early on but the more I thought about it the more it seems to be kind of brilliant move for you guys to talk to us about what that means for agents in the overall <unk> value prop.

Yes. So thanks, Thanks, John Yeah, So the dividend and you know what I think a lot of people weren't expecting it for the same reason that you talked about as high growth companies typically arent dividend companies, but were being an agent.

Oriented real estate brokerage and we've been obviously.

Better equity programs that we've been.

Building out on behalf of our agents and brokers since really 2014.

And we really just look at the fact that over time, we want this additional potential stream of income to be able to go to two to our agents brokers and obviously, our shareholders as well, but the real key for US is to continue to iterate on the agent value proposition. So whether we think about how we developed our Rev.

Sir how we develop your equity how we think about their health care options for agents, how we think about all the different things that are there.

The dividend was it was a natural next step for us because we've been now profitable I think since late 2019 quarter after quarter consistently and now you've got Mike and Jeff will talk about financials, but we're now solidly over $100 million in.

In cash on the books it just makes sense to start to.

To look at paying paying out a dividend and that obviously the board.

Look at this quarterly.

But it would be my goal to ultimately make this a relatively permanent part of the infrastructure of EXL going forward because it then.

<unk> does not just be something that you have to sell as an agent to sort of get returns from you'll be able to.

Net income just as an agent.

<unk> has an additional stream so for us it really was a really cool differentiate and I think it also just highlights. The fact that we are running a profitable.

Our profitable real estate brokerage and.

And that is really key and I think when we when we see the housing market turn a bit.

We should be able to as we saw last year in Q2, especially we're able to moderate our expense level such that even in a down market.

We plan to operate it in such a way that we can continue to be profitable and by extension hopefully pay the dividend.

Yes makes sense.

Looking at this relative Jim I mean.

Uh huh.

You've got a lot of copycats out there there's kind of it is going to be more to come but as you guys continue to experience a lot of success.

But I think you've kind of hit on this.

What are your views relative to competition as far as their ability to pay a dividend. It just seems like this is as you think about the scale like one of the major advantages you guys face right now.

Is your ability to scale to create consistent free cash flow to be profitable, but just talk about how that looks at kind of relative to competition.

Yeah. So you know obviously.

We developed a really unique agent centric real estate brokerage model starting in 2009 and for a lot of for a long time people sort of said that would work and then and then eventually.

Obviously in the last few years has become obvious that did work. We've had companies that are literally almost copying exactly what we're doing but theyre going cheaper like maybe they are not charging monthly PS mirror, they're paying out more money, there or whatever but you know at the end of the day Youll companies do have to eventually you actually build themselves to be profitable and and if they do.

Don't ban then eventually the equity.

May not be worth that much at the end of the day and garage.

We thought this was another way to sort of draw attention to the fact that our model is scalable and and has.

You really got to a point, where it feels like it's going to be consistently profitable over the long term and that has to do with the various ways that we really really built out the model.

Re cast a little bit of the Rev share model about the.

A year and a half ago or so.

Where we committed to the 50% of company dollar payouts and so that helped us sort of moderate some things and we just we just moderated everything so that we can in fact be profitable and be able to show apples to apples.

Yes.

Financial statements the income statements and balance sheets.

Against any company industry, now and I think that where we're going to look great on corn.

For basically every metric you can pick up.

Yes, absolutely.

And I know, Jeff is going to get into the details on the quarter, but from where you sit kind of at the CEO level.

What did you see in this quarter that was kind of stood out as the most impressive thing to you.

No.

It will.

Probably is a little less from a financial perspective, but more just the way our agents and brokers are stepping up to actually do.

Whether it be in real life events of last year was really interesting we didn't have.

Shareholders or ESP con.

In person because of Covid this year.

Shareholders was done.

Online in November we're planning on.

And we are scheduled to have DXP con in Las Vegas, or first in real life event, but our agents or brokers really stepped up to fill the gap in terms of collaboration community.

Coaching training so so many agent led events around.

The country around the world.

And then we supplemented that with sponsorship of our sprint initiatives, where we would we would help sort of the smaller.

More intimate groups actually connect and help level up the other thing I think we saw was how one of the tweaks that we made a year or so ago was the way that we count what we refer to as frontline qualifying agents.

And.

We initially gave people sort of credit for anybody they recruited for six months when we realize that that wasn't really in the best interest of the people being attracted to the company and to some extent hurt hurt the company heard other agents.

By making that change I think one of the things that you saw was this increased productivity.

What I hear consistently from the field as agents will want agents to be more successful and they're willing to help in any way. They can I heard about initiative and a lot more detail here. This last weekend Colby DXP family tree, which is where a number of our top agents have come together.

To help any agent anywhere in really in the world.

You'll level off so the company has.

What the number is now, but it's 60 70 hours a week in World training, we've got some some in real life stuff going on at local levels.

Monsour, primarily by the brokers and that sort of thing, but then the agent lead stop is just amazing and I think thats really translating into something very special.

Yes makes sense I've got one more for you then.

The difference of his piece, but.

Clearly what you guys are offering to agents is attractive I think thats pretty evident in the rate of agent growth.

You've seen a pretty positive trend it sounds like the last couple of quarters of larger kind of agent teams joining the platform.

Are you still seeing that is that still kind of playing also force and kind of what's driving that.

It is yeah no for sure we continue to attract.

And I think that.

The longer we are are we prove that we can.

We provide that infrastructure that that that platform for agents and brokers to build unique style.

Organizations that is not possible in a franchise model.

The more that these top teams.

About how do I break out of my just my local geography, and how do I actually monetize this in multiple markets DXP really is.

We only platform.

That they can tap into that provides so many benefits for them to expand and it's not just expand nationally into all 50 U S States in Canada, but we've got another well on top of that another 15 countries with two more coming on board before the end of the quarter.

And you just look at the the ability to leverage your towers that you honed over 10 15 20 years in the business and now you've got a platform that you can really monetize.

Your business even better.

Yes, absolutely.

Good morning, Thank you.

That's all I got for now we can go back to Q&A later.

Yes.

Yes.

Okay.

Alright, alright. Thank you Glenn Thank you John for being here I appreciate it.

A quick quick quick story before I start.

In 2018, the company paid $500 million in revenue for.

For the entire year and I started talking about it it's not $500 million that you have a building right.

Start thinking bigger and.

So now a few couple of years later, believing is seeing so are our Q1 revenue. If we just go to the summary page Courtney please.

Q Q2 revenue was $1 billion, so we're up 183% year over year.

Our gross profit in Q2 was $79 9 million.

Up 133% year over year, and our Q2 net income was $37 million, that's up 350% and it.

Our Q2 this is a pretty extraordinary for this quarter and it includes a $26 million tax provision benefit by releasing our valuation allowance.

So we've incurred previous operating losses, and built up a net operating loss benefit on our balance sheet over the years.

As we have shown sustained profitability over our recent quarters. We are required by GAAP to released to benefit from our balance sheet to our income statement and that's how we get to the $37 million and net income in Q2.

Our Q2 delivered diluted earnings per share is 24 cents, a 300% which includes that tax benefit our adjusted EBITDA, which is a non-GAAP metrics is $27 million and basically that's a major metric that we look at internally, taking up primarily stock compensation expense to see how we're doing.

Our operating cash flow in Q2 was $68 million.

And thats up 185% year over year. So now lets take a look at some of our key metrics.

I'm going to focus first on our Q2 metrics and what we're starting here, which is we talk about it a lot, but we really need to highlight it in.

Express how important it is what our agent NPS score is our time metric and basically we have a 70 in 2021 in Q2 and Thats a critical measurement on how we run our business and to put some of this in perspective.

Hey.

Bain came up with the NPS score and plus zero is good plus 20th favorable plus 50 is excellent and plus 80 is world class. So we're hitting at 70, and we look at that score and as it goes as it goes down in certain areas, we really focus on our business and make sure that that we fix whatever we need to fix to make our agents have the best possible.

Experienced.

From any brokerage so rent 70, which we're very proud of.

The agent Count ended at $58 63, which is up 87% versus last year. Our units is $1 15 for 31 up 164% versus last year and a price per unit is what we're all experiencing and housing markets is up 17% at $3 49, I mentioned, the Glen I think when I came here I think.

Our average was like 245000, so way up our volume was $40 billion versus 13 in the second quarter of last year up 210% and so looking now at the financial metrics I mentioned, the revenue being $1 billion versus $354 million up 183% gross margin was $80 million for <unk>.

Four up 133% and gross margin percentage was 8% versus $9 seven and this is kind of it's kind of a result of our model between the number of agents capping because we're doing so many so much volume and the price per unit going up that margin kind of goes down a little bit there is pressure on that but the <unk>.

<unk> makes up for it as you can see in the operating income. So we are getting leverage on the next slide from SG&A. So at SG&A were six 3% of our.

Our revenue versus seven 4% operating income $17 million versus $8 million net income $37 million 8 million and our adjusted EBITDA as I mentioned before is 27% $27 million versus 2014 up 98%.

Operating cash flow of $61 million was 21 and our <unk>.

Cash equivalents, our cash in the bank after after our investments our buyback is $107 million or $64 million in the second quarter of last year. So we're up 69%. So really really quick on the year to date basis, you can see that most of the operating metrics state stay close other than units. So we've done 189.

309 units.

132% on a year to date basis, and our volume is at 65 billion versus 2000 and $4 billion. So we're up $1 70 on a year to date basis.

Couple of other metrics 1.584 billion in revenue year to date up 153%.

Our gross margin is $133, 60% to 114% and then I'll just kind of skip down to the bottom.

Net income on a year to date basis was $42 million versus $8 million.

And our operating cash flow of 101 was $36 million.

Balance is the same 107, so very very healthy condition, both from a growth standpoint from an investment standpoint and from a profitability standpoint. So as we look at the next page and you look at our agent and our revenue growth over time.

You can see this chart and we had phenomenal agent and revenue growth.

Over time, especially since 2016.

And it really it really exploded in 2018, we've elevated growth in both agent count revenues as a result, as Glenn mentioned, our commitment to our agents.

This the chart in front of US shows ESP Realty, ending agent count and revenue by quarter. So to give you. Some perspective, it's a bit of an eye chart, but in 2018. We had we ended the year with 55000 agents $500 million in revenue in 'twenty.

22019, It was 25423 agents and $980 million in revenue and last year. It was 41313 $1 $8 billion of revenue last year. So overall, our agent growth year over year is 87%. We're now at 60000 agents.

And our total Q2 revenue is $1 billion.

So now for some recent highlights and our focused investment areas.

As we mentioned we declared our first cash dividend and a.

A driver of that is that the company has achieved positive accumulated earnings and shareholder equity. So if you look at our balance sheet, we've gone from a loss to a positive the Q&A of earnings so the <unk> <unk> per share.

<unk> is expected to be paid on August 30th to shareholders on record as of.

August 16th <unk> seen our recent press release, where we've established success lending. This is a new joint venture for us with kind lending and where we're spending a ton of time, unless we want to make it the best possible value proposition for agents and then our shot share buyback so.

We repurchased approximately $54 9 million of common stock in Q2, and our purpose to remind.

People again is that we have a goal to offset the dilution from our agent equity plans and we're really happy to say that on a quarter basis and a year to date basis, we have done that with the buyback.

So on the right hand side, our major investment areas for growth include marketing.

Allstate technology innovations and Courtney itself will get into that in some detail.

Our our realty expansion so as you'll.

You see what's happening in domestic market in the U S. What we're seeing really is a network effect. So back in the day, we had few large.

Influencers and now we have watch.

We've had some great meetings, just recently with some great great leaders in our business, we're starting to see the network effect in the U S International you've heard a lot about that were in 70 countries right now and growing and then our commercial business. We are building awareness and at the same time, we're adding benefits and training tools for our residential agents that do both residential and commercial.

It's going well affiliate services mortgages is a great example of this and then finally, we continue to invest in rubella and frame our virtual platforms, our virtual platform or verbally for work is powered ESP growth.

The productivity of the growth take international Nobody's got on a plane. So far we're in 17 countries. It's just phenomenal and as time goes on it is the best product on the marketplace and I think a lot more outside companies.

Absolutely.

So thank you very much.

Alright, thank all our staff and our agents for a great quarter I'd like to now pass it over to <unk>, Our CMO, who is responsible for applying.

The ESP holdings brands, and leading all areas of marketing, including drive digital strategy at growth for enhancing dxp's value proposition for our agents and our staff.

Importantly.

Please join us.

Excellent. Thank you Jeff.

With me here today.

Today, I'm going to be focusing on the agent and consumer insights to inform our marketing strategy, Brian and innovation strategy as well.

Background here on ESP insights from based on proprietary research and generated from us from both internal and external sources.

<unk> underpins our findings as really around uncovering a deeper understanding of the agent value proposition and brand perceptions as well as a better understanding of consumer sentiment towards home ownership preferences and expectations related to the pandemic. These findings provide key insights that help our team.

Build out the HP brand in collaboration agents enrich the overall value proposition. They also guide the priority <unk> of our investments in marketing and innovation they help us co create.

Services and capabilities ultimately empower our agent technology to better serve their customers. So let's dive into a little bit more detail here in terms of like Asia values, our agents value.

From a service and social listening research, we know the top benefits most valued by our agents range from more tangible to more emotional our agents value came up here on the left hand side on ownership and compensation and their development on this more emotive benefit of freedom with regard to honor.

The equity component is highly valued.

It's a key component Garrett something that agents want to ask about.

In addition, Q.

Quantitative research I'm talking to you. We also have a lot of qualitative research and leadership areas of leadership and development training and education is really important on that something we do really well and you can see here in the middle we have DXP University. Our agents are all enrolled they have access to 80 plus hours of training in the world just like Christina.

Any day right, it's like from a sense of what's happening real time.

A course topics or building, a real estate business working with buyers and sellers.

Now for the attribute of freedom, which is more subjective I'm talking to agents comes from being able to build their personal brand. We really do believe that the agent brand is hero right and that's.

Bill in tandem with the XP, Brian last year, we built DXP brand and visual elements with the agents right. We will let them for about 90 days, where we traded and voting on the new logo, which is something that is historically important to ask the same thing we did win one startup company.

Freedom also means.

This idea of being able to operate across borders and boundaries right. So Tim can operate across several states and in 17 countries in 17 countries and markets, where we operate.

Now, let's move on to the brand.

So how agents perceive our brand with last year's refresh of the brand I. Just mentioned, we found that agency year over year report, having stronger exchange solutions with the brand attributes. So on the left hand side chart, you can see what resonates most with the agents of the attribute of innovation. So how do you read this is 81.

Percent of our agents will be selecting the attribute of innovation is something that resonates with them right, which is a 10 point lift over the previous year.

<unk> is really interesting because valued on attribute this associated is the virtual world that will operate along right. So these are very correlated in terms of being collaborative and CFO those come right behind it. So this is the real perception and agents out of our brand why that's important is these brand store.

These brand scores of all increased year over year, that's a positive indicator of brand clarity alright, So let's talk more about consumer insights we've been talking to so far about what our agents perceptions and brand our and value prop we.

We did a study on this year. It is in field in April and it's going to be released in the next couple of weeks and the <unk>.

2021 emerging real estate trends study it focuses on achieving a deeper understanding of new homebuyers and owners and those interested in selling their home and.

The research provides timely insights that consumers, they're recognizing the importance of agents and technology and the recording of a shift in our perspective of homeownership at large which is related to the pandemic right. It's comparing before the pandemic to now.

Key findings that will find here in the system for this top level right.

Over 70% of new homeowners and buyers, they're reporting owning a home is more important now because of the pandemic right. This is especially true. If you look at the millennial segment. They actually report 80% in terms of the pandemic has changed their view on the importance of owning a hump on its driven a lot by E. I understand it the smart financial decision.

And on savings.

If you take a look at on the left as well, 86% of new and seem to be homeowners say real estate agents are important are very important to the home buying process.

Value.

<unk> remains high and will remain high if we think about what's happening right now and as we take a look at reasonable to think in the future that that will continue.

61% of new homeowners homeowners and buyers are also more likely to ask about the real estate agents technology and resource tool.

Compared to before the pandemic. So the takeaway here is that there is a customer expectation that the real estate agency Tech savvy right.

As we move into the innovation update is there is an emphasis on technology to empower agents and new ways to connect with them and the consumers during these times and into the future.

With that I'm going to transition over to our VP of innovation technology.

Jeff joined Us.

<unk> thousand 19, he has been in the real estate industry for over two decades operating in numerous calls broker startup founders CTO.

Short time here already he has built several software products elements, including express offers our high volume platform. Seth will continue this presentation review of our innovation approach and areas of opportunity.

Welcome Sam.

Thanks, a lot Courtney.

Time to be here everyone.

John DXP about two years ago.

And it was kind of an easy decision looking at the landscape.

It's just super easy to see that this is the most innovative company with the biggest appetite.

To change things for the better while keeping agents at the center of sanction and Thats a belief that I'm sure is.

Well that agents are indispensable and it's our job and my job here.

To build upon that.

Continue to build that.

But today I am Super funds to tell you about a new initiative that we launched that's called the innovation hub.

Obviously innovation is.

I think Q, new here at ESG I am talking to you as an avatar in a pink blazer for instance, that's already pretty innovative.

But do the new innovation hub initiative, we're positioning to take the.

Commitment to innovating for agents really to that next level.

And I'm going to start by telling you a little bit about our approach which is on the slide here.

The innovation hub is new this is a new concept, but the approach is something that we've actually honed and refined for years here.

It allows us to target our resources for.

For development and innovating.

Really efficiently and <unk>.

Learn and then develop right after that to summarize it.

Gather information about pinpoints needs opportunities.

And then validate before we type a single line of code rapid prototype, which is something that I think we've got down to a science here and then controlled beta test from there where we can kind of learn.

And refine this typical agile cycle and from there we can make it.

<unk> and <unk>.

If it's something that we want to launch wide.

To me, though the most important steps in this thing are the first two and this speaks a lot to what Courtney was just showing you guys.

Okay.

We want to know what to build before we build that essentially we all heard about companies, adding an innovation department before let's be honest, but what you normally end up getting is innovation for the shakers of innovation you get buzzy headlines trendy.

That kind of stuff that we've all sort of heard about but at the end of the day. The other part that we've heard about is that users end up not really caring about any of that stuff. They don't end up using it and it doesn't make a difference day to day.

Here, we have an <unk>.

Unwavering commitment to building things that actually will make a difference day to day to an agent's business, we want them to want to use it whenever we build and actually go ahead and do so I'd like to call it data driven ideation.

So, let's dig into the innovation hub a bit further.

On the next slide we're going to start with a project that I started with my first day here are the XD.

Just called Express offers that's our take on the <unk> program because it's a good example of.

Of our innovation approach in action, a nice mix of innovation and tech and innovation business as well after.

For those who don't know I buying as an alternative approach to selling a home for cash.

Those are the traditional listing process it.

It sort of allows the seller to sell on their own terms.

And schedule.

Without dealing with some of the other things that come with the traditional listing like preemptive repairs and showing financing contingencies and all that kind of stuff in 2019, when I joined I buying which is picking up steam and we heard.

Through our channels from the agents that they needed a way to get a tool.

Like that into their pockets to sort of see to remain competitive.

And are our approach to it differs from the competition.

And in a number of ways the DXP flavor on this is that.

<unk> remains a key part of the process and they guide sellers through the high buying process through the express offers.

Start to finish.

We actually maintain a network of third party cash buyers in all 50 states so, whereas other <unk> companies typically they themselves do the buying ESB doesn't buy any houses in this we work with this network.

A huge number of buyers and we're in all 50 states, which is another key differentiator.

The way that that is all structured shellers can end up receiving multiple cash offers and the results have been good we've had thousands of property submitted thousands of offers in response to that and all of this is enabled by the <unk> price every check that we ended up building not to run this CRD XD.

Thanks.

Shelf was lucky enough to actually write the code and build the initial version of the software.

Today this program as well.

And it always has been run by a killer team on the business side and Thankfully for me. It's now pushed forward into the future by some of our best software Engineers.

Taken it over and continue.

<unk> and <unk>.

And iterate and bring it forward.

So what's next what opportunities are we focused on now on the right side of the slide.

Number one enhanced agent tech capabilities with so much innovation in the real estate space seeking to dis intermediate the agents from the transaction were following the research that Courtney mentioned earlier that the public wants to work with agents and we want our innovation everything that we're doing.

To enhance the value of the agent the capability of the agent the scalability of the agent.

Everything thats associated with that on our side of the business as well.

Humor portal features as Glenn has mentioned before our consumer portal initiatives Thats really our consumer touch point and could be a great lead Gen opportunity one day for ESP as well.

We've secured most of the MLS feeds in the U S and we see a really big opportunity potentially.

Potentially for our <unk> Dx team to build a really unique tool for consumers that could end up being.

Been a great source of leads for the ESP agents here.

If we actually really know that just right.

Jeff experts to continue on the lead Gen.

<unk> is a pilot in house lead Gen program that is leveraging some intelligent lead routing software that we built here as well.

That route leads to agents or geographically close to the lead opportunities.

Again lead Gen is just showing can be one of the most important things that we can provide for agents we hear about it survey after survey.

Zero all agent contact channels, so we're happy to keep providing solutions for that.

Successful lending.

I heard Thats, a recently announced mortgage JV.

Got a big opportunity there.

Our opportunity to create our own native mortgage experience from the ground up we can really make this work for agents and consumers alike, and Theres a lot to chew on here from an innovation standpoint, Joseph a big area of interest for me personally as well.

And then an eye towards the future what comes after that what else are we doing on the side.

To be honest, we're watching the trends we're interested in things like machine learning and AI and thinking about how that can improve our business looking at ways that it can scale our operations as well by automating things that are time consuming but still complex.

Looking at things like cross reality in the opportunities that that could provide for real estate.

But at the end of the day, we're going to do what moves the needle for our agents and our business, we're not going to innovate for the sake of saying that we innovated.

We are going to focus our resources and remain committed to that data driven ideation approach that I talked about before.

So as I said ESP has always been an innovative company, but we're just taking that next step now.

Really interested in leading the industry with new ideas novel innovation and things that will actually move the needle that will actually make a difference day to day for the agents out there in the field.

In our ESP family and the operation side to support them.

So with that now I'm going to hand, it back to Glenn Jeff and John Thanks, everyone. This is fun.

Okay. Thank Seth Thanks, Courtney and of course, thanks. Thanks, Thanks, Jeff.

This is a we've got 1200 I believe the staff that make the ESP work from a from a back office leadership perspective, and then and that's in addition to the 60000 agents and this is just obviously, it's such a small subsection of the amazing people that are behind the scenes.

Gluing it altogether.

There are parts of the organization that are well designed and then there's others that is a lot more on the innovation and let's see if this might work. So it's a great great to get those updates so with that.

Why don't we jump in John I know, you've probably got a few even a few more questions. After hearing from from the team here, but turn it over to you for some Q&A with the with Gemini, Yes, Thanks, and congrats again you guys. It just feels like a professionalizing the visit more and more creative structuring formalities.

As fantastic.

I want to start off maybe just on the housing market in general I don't feel like we can't forget one of these calls out of the way without doing that so I mean market still kind of fills crazy you've got a lot of price growth you've got a lot of competition bidding wars still happening.

It seems like there could be loosening up a little bit maybe a little bit of inventory coming on the market. Maybe buyers are starting to wind back a little bit, but just curious about your thoughts on kind of where you are in the market. Today. If there is a turning point and maybe also if theres any kind of thoughts around the pandemic and if theres effect later this year.

Oh, yes, so you're asking about my Crystal ball.

So so yes, we are definitely seeing.

A little bit more.

Inventory is showing up we got a little less.

And so we're seeing some.

Moderation of the housing market, but not not to the extent that it's slowing.

To any extent, but maybe just not.

Going as fast as the hyper speed it was going.

Bob.

So I think there from that perspective.

It's actually good for the market to see a little little moderation.

Obviously, we've got this delta variant that's kicked in which is creating masked man.

Vaccine mandates a whole bunch of stuff. So I think it's still a little bit.

Well very much of an unknown as to what are they going to be the various responses.

But.

What I think we're seeing is that that COVID-19 is not going away just the fact, the fact that people got vaccinated.

And isn't fundamentally stopping COVID-19 from being as a backdrop to what's going on and so I think what we're going to see is we're going to see more.

We call it home office agents agents working.

Remote relative to their brokerage.

And that can become more and more of a norm. So the question will ultimately come back to why why do offices, even exist and of course, we really pioneered this whole.

Bricks and mortar light.

Our non bricks and mortar based operation and of course, we did that with the entire executive team as well from day one.

So I think from a COVID-19 perspective, I think we're continuing to be well positioned to have to adapt with them that plays into the further housing cycle, which is where do people want to live that they don't have to go to an office and I think that's just going to continue to drive a fair bit of of continue.

Jude transition in the housing market that will keep that portion going of course low interest rates.

I don't think they're going up anytime soon.

Me personally.

But I think that were we.

We've seen these historical low interest rates I think there's a lot of cash out there.

And as a result, that's going to keep interest rates down as well as in all the fed decisions. So that's going to keep some some positive outlook or for housing because most buyers are impact payment buyers. So so that's kind of my thoughts Jeff.

Alright, probably took everything.

Yes.

I think you've got to cover glass Thats great answer.

Yes, so Glen we talked about the deposit trends around the agent additions in.

This is kind of a team based approach kind of playing it playing out for you guys, but if we look at the other side of it like the retention side of things I know this industry can be a game of musical chairs, sometimes I personally don't see why you would leave the XP platform, especially now with the dividend.

But talk to us about what youre seeing on the retention side I don't know if you guys break it out by like quadrants of agents, but how it has kind of looked under the surface as well.

Yeah, So we don't really break it out too much.

What we have seen and Jeff you actually dive into these numbers more than than I do but.

But I believe that since last year since COVID-19 became part of our backdrop. Our retention figures have went up pretty substantially so Jeff what.

Yes.

Yes, we don't break it out, but our retention has gone up at least 30%.

Since since this time last year. So we saw a lot more movement.

But now I think I mean, the value proposition, just keeps getting stronger and stronger and I think the other thing too is that we.

Talking earlier about this network effect we.

And we just got some really strong leadership across our agent base across the country and now across the world. So I think I think the awareness of the company and the benefits and once they see it.

They cannot see it anymore and I think the retention numbers I'm seeing we're up about 30% year over year our retention.

Okay, that's great to hear and then.

And Courtney sections, you talked about the importance of the equity compensation for agents, we've clearly had a lot of questions in the past from investors around.

Does the stock price, whether it be up or down does that does it have an influence on your recruiting and retention.

I think from my angle, obviously looking at it from an investor I would be more likely to join you guys. If the stock is low Brian if I think there's a lot of upside as I want to get that equity equity issuance and then be able to benefit from it but just curious I mean have you seen kind of any kind of notable conclusions you've been it'll come to just based on the stock price and whether that influences retention and recruiting.

Yes, I think I think it does influence a little bit on the recruiting side in that your agents are.

They use a lot of social media.

They like to create awareness for <unk>.

For the business on multiple fronts. So when we saw the stock hit hit new highs early this year.

There's a lot of the social media that was playing around that so I think that does play a little bit into it but I I don't know that it hurts us when the stock is down it just I think it just helps us when when we have.

Different things going on that's a positive in the marketplace. So like today.

You go into social media, you'll see a lot of social shares where agents because obviously the dividend.

Is something Thats unique.

It makes us standout from any other company that is trying to do stock like us.

And so that's going to play out well and just just getting attention on on the company.

So anytime there's good things going on in stock price can be considered a good thing when its going up.

It just helps us on the attractions side.

Yes, I would add John I mean, as we see the company grow like it is.

The agents are just there.

Really excited and I think what the what the equity piece of the stock does it makes them feel like they are owners, which they are alright. So to do the right theme there kind of seen the long game and we have consistently delivered quarter after quarter up until Q2.

And I think people are getting excited as we see the growth you see the profitability that you see the shape of the company and they feel like owners. So I think it's as important that feeling as owners.

As opposed to whether it goes up or down we don't goes up or down but on the long haul.

It's just the feeling of ownership, it's a big deal for us.

Hi.

I think Thats fair and then your owners now with the <unk> <unk> dividend increase.

Hey raise for you so that's nice as well.

Yes, let's talk about the commercial or excuse me the international side.

I don't know if you could give us a snapshot now kind of what roughly what percent of your agent base is international and how that has kind of grown if theres any key markets you might want to call out.

Yes, so internationally about 10% of our agents are international and that includes Canada. So so you sort of look at $60000 6000, and I think we're probably around half of that is actually and in Canada.

It's.

One of the things we've been doing is kind of looking at as we're in markets for some period of time year two years three years.

We're looking at what we need to do to tweak the model to become even more competitive and so just just being aware that we have the ability to be more agile I believe.

And a lot of these markets around the world than than most of the incumbents because.

Because we have such a low cost to operate as a brokerage it does give us certain advantages. So we're definitely making some some some moves there.

You can also.

Check out.

E X P. I believe it's.

DXP Global partners, if you are from a.

From a website perspective, and that really talks to a bunch of the sort of international expansion, where we're at where we're getting ready to launch.

And so it gives you a little bit more detail, so XP global Dot partners dock, not dotcom DXP global about partners.

Yes, John that the markets that we've entered so far.

Some of the.

We're getting.

Solid traction in countries like India, Mexico Mehdi Kingdom.

With Africa, Brazil, Portugal and.

And in certain countries I can mentioned Adam day right. Now. So this is a completely that this is a completely different way of selling real estate in that country and they're doing such a fantastic job and really show them. The benefits of this model in that country. So we are getting traction the teams up to 17 were up 17, 4%.

Countries right now.

And as Glenn mentioned as we go and we learn we adapt.

I wanted to be the most competitive and also.

And the benefits that we have for those agents globally and we're also seeing is we're seeing our U S agents getting really excited about growth globally and that's also a huge benefit of us being one brokerage as opposed to the franchise.

Yes, absolutely and I think that's something that some of us might overlook sometimes is that I hate to keep using the cliches of a flywheel, but it's absolutely. What it is that's what you did in the U S. You start off with a handful of thousand agents and it kind of builds upon itself. So its encouraging that youre weighing those seeds I guess in those international markets, but Glenn I think youre not talked about this before but.

Talk about the split structure.

Relative from the U S relative to some of the international markets and how that could maybe impact gross margins over time.

Yes so.

In the U S and Canada, where we're an 80 20 model we cap out at 16000, we have some some some transaction fees.

Host post capping.

So that were.

Breaking even.

Not making a small amount on a per transaction basis post cap.

But internationally the backdrop and a lot of countries is.

He is closer to a 50 50 model so in the U S.

730, and a franchise fee is a pretty typical backdrop.

But internationally, it's closer to 50, 50, 60, 40, and maybe a franchise fee on top of that so for us to be able to go into a market. We can typically go in it.

$75 25, and still be the best.

Model or one of the best models in the marketplace and then you add the revenue sharing component, which is typically not.

Something that's available to agents to help expand the brokerage and then you add the potential for equity and we've got Jeff threw a bunch of groups internationally on the equity side. So there may be some countries, where it's just too small to sort of think about but.

Practices and stuff like that but for the most part we want to be able to be the most.

Robust value prop in each market, we go into and we should be able to pick up an extra.

50% or so margin effectively on the transactions while agents are capping.

Because of the way we're structured so in theory, we should be more profitable internationally, but then the flip side of course is that in a lot of countries.

The effective dollar cost of our property is.

3%, what the U S dollar price would be.

So adjusting for those those dynamics, but we should have a higher higher margin percentage internationally.

Yeah makes sense and then speaking of margin so gross margins something some investors point to you guys. Some compression there obviously, but there's a clear explanation.

Our nation, obviously your agents are outperforming your Cathy Morris, so it's not necessarily a bad thing.

I always like to say you don't you don't pay your bills with percentages right from an absolute dollar level. The level of your revenue growth has given you have so much more where you're able to kind of track ahead of expectations. So well that Chad just talk to us about the gross margin.

The trends around gross margins, what's kind of driving that lower and then when do you feel like there's an inflection point and other maybe drivers longer term of what can get that higher.

Yes.

As you mentioned Jon.

<unk> is the major driver for the margin to go down.

And then I'd say the other the other major driver is the price per unit. So.

We're doing less you can do less units and so cap with that price per unit over time.

You can see the revenue.

The growth and the volume is making up from a profit standpoint for the lower margins.

But over time, we see we see opportunity in affiliated services and we've talked about this quite a few times.

It's just going to it's going to take some time and we're working hard on it but over over time, we see that and we see some of the other technology that Seth.

<unk> lead generation things quarter, you were talking about to help on that margin.

The business, so I'm talking more operating margin.

But I think that.

A lot of people talk about when times go bad when it's not COVID-19.

Ironically, our margin last year as you can see it was close to 10% right. So in a lower growth. We did 33% growth rate last last year. This time and our margin was almost 10%.

So yes.

As you said the revenue growth makes up for it pressure is really coming from capping and the price per unit, but.

Does balance out at the end because of the volume makes up for the operating margin.

Yeah makes sense and then.

I went down.

As far as I could go in my notes on your guys for over all these years and it seems like you've had the cap at 16000 for several years, obviously the housing market has done exceptional since that timeframe.

But any sense for like what percent of agents are capping I don't know if thats something you guys can share.

So Jeff have you broken that out.

I believe our capping agents has historically been around 25% of our agents are capping agents.

Yes.

That is a historical level.

As you know John I mean, the growth is going so well we don't have averages that we can we can look at it right now about 25% is kind of what we've seen historically.

It could be up a little more recently because of the price for that.

That's around <unk>.

Level that we see.

Okay. That's helpful.

I wanted to touch on maybe one or two of the newer developments I know, we're running out of time here, but.

I thought that.

The announcement of the mortgage JV was pretty interesting. So just talk to us about kind lending what drove that decision to tear up with them and what you see as an opportunity over time.

Yeah. So.

If you get a chance to just kind of do the back story Glen Glen Stearns Stearns lending one of the top five lenders in the country.

Sold to Blackstone I think in 2012 2013.

And that was for some some some personal reasons at the time.

And then.

Here about a year or two years ago got back into the mortgage industry. He was on the first season of undercover billionaire which was how I sort of learned about him and of course, we put together our relationship with Greg Cardon, who was in the second season of undercover billionaire.

No.

Got a chance to meet him learn about his his background.

Very very aligned on core values as core values and our core values in the way they approach things in the way that they do things.

Really matched up well with the way we are with the type of partner that we would love to have in that business. The other part that I think was really key for US was is that.

This is a team that really wants to roll our sleeves and help make a JV work. So it's not like you just.

Youre announcing deal with guaranteed rate like everybody's got to deal with guaranteed rate kind of thing.

This was actually something much more strategic where we were actually going to work hard together to build a mortgage company.

We're <unk>.

Combining efforts to actually do something very unique in the marketplace and so for US we think that.

One huge experience in mortgage that a lot of the team that goes with Stearns is now part of kind of lending and by extension is helping launched the successful lending JV.

And with that I think by October we should have our licensing in place to start to actually do the first loan.

But this is someone that has some a celebrity status, which I think is going to be really key because we're talking about your agents brokers and their.

Their customers.

Wanting to do business with this entity as opposed to just being another generic.

Joint venture so for US I think it's again another.

Hope will prove out to be a very strategic move on our part, but we think this is going to be something that.

Glenn <unk> and myself, we're going to actually get on claims work on recruiting loan officers in local markets. The top loan officers to join a really great brand underneath success lending that is able to then leverage that 125 year history of personal development and <unk>.

All of that we're going to be we want to create something again pretty unique pretty special and then and then being able to then combine that with some of the other operators.

Yes, I mean, thats really exciting and even if you look at Realogy.

One of your competitors theyre doing over $100 million, a year and a JV earnings so.

Lots of potential there.

There are as you guys get that in place kit, which see what you do with that but.

Gordon Thats, all Ive got Glenn if you want I guess Lee with.

Closing comments I. Appreciate you guys give me the time to host today and look forward to talking to you guys again soon awesome well. Thank thank you John Thank you.

Thank you Jeff.

And Courtney and SaaS for joining us on stage here today, obviously.

I can tell you that DXP in my opinion.

So much and especially in the <unk>.

Third quarter 2018, what Jeff join joined Us.

He has been such a partner in helping grow the business. So thanks again for joining.

Today.

One we're going to continue to.

To work on the various business aspects of the company and we're going to our goal is to grow to be a worldwide.

We want to be able to launch shield.

510, plus countries a year entering really grow internationally.

To a large large size are changing lives of agents and brokers and by extension you know all of us as shareholders benefit from this amazing organization that we are growing together. So again, thanks for joining us today. Thanks for being part of this I think it is.

The fact that Jeff White side gets to talk about the fact that we did $1 billion in revenue in the quarter makes it a pretty special day and again thanks.

Thanks, everyone for being part of this.

Alright, Thanks, Glenn and thanks, John Courtney Seth Thank you very much.

Great.

With that we conclude our Q2 'twenty, Tom we're happy to have you back as our moderator and.

And this initial segment, we will be talking and moving into a presentation. There is a review of the 2021 financial highlights presented by Jeff Whiteside, CFO and Chief collaboration Officer of ESP World Holdings, followed by Jason guessing, our CEO of <unk> royalty, who will share our accelerated growth as well as operational excellence in <unk>.

And employee satisfaction finally returned to Tom White, and our leadership team for Q&A, let's begin the earnings Fireside chat with a review of the forward looking statements there.

There will be a number of forward looking statements made today it should be considered in conjunction with the cautionary statements contained in the company's SEC filings forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Please see our filings with the SEC, including our most recent quarterly.

Our report on Form 10-K for a discussion on specific risks that may affect our business performance and financial condition, we assume no obligation to update or revise any forward looking statements or information as a reminder, today's call is being recorded and a replay will also be made available on ESP World Holdings Dot com now for a fee.

<unk> logistics and we'll get started for those of you in the <unk> World.

Should you wish to see all three screens HIPAA stage zoom button to the right of your chat box to zoom into a specific screen you can hit plus icon above that screen. If you happen to see no slides are great side, if the refresh icon button at the top right hand corner of that screen to correct wildly XP campus should you need any help or have question.

Please enter your comments in the chat box at the bottom on the left and a member of the team will contact you.

And the last segment of our Fireside chat Q&A.

We wanted to talk quickly about slide out to ask a question. During our presentation. You can enter your questions by scanning the QR code presented on the screen with you found or go to site of Dot Com and type of event code E X pie from there you can submit a question or build up an existing question I'll give it a thumbs up.

I'd also like that question asked this free will ramp on the left hand side of the stage at this time I would like to turn the fireside chat over to Glen Sanford timeline Starkey earnings conversation.

Hey, Tom are you are you there yet.

Glen.

Well I'm going to kick things off here.

Once you go ahead and kick things off.

Terrific, great well good morning, everyone.

Thanks for joining us and thanks to the folks at <unk> for <unk>.

Letting me to host.

I'm a research analyst with D. A Davidson I cover disruptive companies in the residential real estate space and I've had the pleasure of covering ESP World Holdings since early 2018, I'm going to ask.

Question here of Glenn to kind of get things going and then we'll go through a couple of presentations from Jeff and Jason and then we'll circle back and.

And do some more Q&A, but I guess first off Glenn.

Congrats on a really strong end to the year.

Maybe just a comment.

On kind of your high level thoughts about how you thought the business performed last year.

How you've managed to kind of sustain the growth.

You've put up in.

And really manage kind of your overall growth rate would just be curious to hear your high level thoughts.

Thanks, Tom for being here, it's been you've been following us for quite some time and Thats been.

It's been a fun journey so far.

No.

One kind of what just draw attention to just a couple little stacks.

Jason is going to cover a bit of this in his section, but we.

We just went over 76000 agents so.

We're continuing to grow at a very rapid rate in fact, another interesting stat is that as of now in the United States.

125 real towards United States is actually DXP agents so.

We've obviously grown very fast.

But I think the key for our growth is really around big truly mission driven that's been.

Kind of I don't want to call our secret sauce, but it really is the driver for growth.

We are continuing to be the most agent centric real estate brokerage on the planet and that's.

That's really how we approach everything we're approaching it how do we how do we truly build the.

Market share and turning this industry into an industry that's really agent.

Led an agent.

Driven in.

We want to provide the best opportunity for earnings from brokers.

We also are enhancing that already exciting value proposition for agents something you'll hear a bit about later on this year.

Even now is how we are enhancing our revenue share program, our revenue share program peso, 50% of our company dollar.

And we're actually enhancing that.

With our with profits from our affiliate companies services to actually pay out more than 50% of company dollar.

In 2022 to our agents and brokers, who helped us grow and and even in 2021, we shared almost $170 billion in revenue share and actually share at approximately $50 million of equity.

Two our productive agents outside of them electing to receive.

Equity Commission, that's actual awards to our agents, so we actually paid out approximately $220 million.

Additional benefits over and above.

The normal production of agents, which really dwarfs any other brokerage or brand that shares with their agents and brokers. So we've shared more than anyone else.

And in 2022, we expect to share more than anyone else on a rev share side.

By itself in 2022 than any other brokers that shares with their agents. So we're really excited about continuing to.

Extend those benefits and that really has been a big driver for our agent and traction in growth.

We want to also help our agents' productivity and partnerships and then also adding more competitive moats.

Last but not least before turning over to Jeff.

More of the financials is really around just continuing to be agile re imagining our brokerage works at 500000 agents versus where we are now and just figuring out what the philosophy is for supporting agents, while providing them a higher touch experience over time with our staff, that's probably our biggest thing.

A cloud based brokerage.

When we use NPS really has a big driver for decision, making but I think one of the places where we'll spend a lot of time in 2022, it's just figuring out how to be even higher touch.

Brokerage for the agents and brokers that join us all over the world. So super excited about that.

With that why don't I go ahead, and turn it over to us too.

<unk>.

Jeff.

And to talk a little bit about.

Some of our financials.

Awesome.

Alright, well, thank you very much Glenn and Courtney really appreciate it. Thank you Tom for moderating today.

Good morning, all and thank you for joining us at our fourth quarter 2021, virtual fireside chat.

<unk>.

Had another phenomenal quarter.

In the fourth quarter of 2021, and full year 2021 of growth.

And I'm proud on behalf of our team to share our results today, and we'll be talking about the fourth quarter and the full year 2021, so on a first page at.

At highlight level, starting with the revenue in Q4, our revenue was $1 1 billion.

Up 77% year over year.

Gross profit in Q4 was $83 1 million, an increase of 65% year over year.

And our net income in Q4 was $15 5 million, which was an increase of 101% year over year as noted and includes eight in Q4 of $14 2 million.

Income tax provision benefit primarily driven by our stock based compensation deduction and the fact that we shown sustained sustainable profitability.

From a diluted.

From a diluted share standpoint earnings per share was <unk> 10.

And that was up 100% year over year.

If I look at.

Our adjusted EBITDA.

So there is a bit of a difference this quarter on adjusted EBITDA. So the adjusted EBIT as reported.

It was $13 $1 million, which was down 21%, but we did have a onetime legal settlement costs that we booked in Q4 and that was $10 million. So after that adjustment our adjusted EBITDA would be at $23 1 million, which was up 39%.

And lastly on the fourth quarter summary page, our operating cash flow was $48 5 million, an increase of 59% year over year quarter over quarter. So now I'll just go back into the same highlights for the full year 2021, starting again with revenue.

And our revenue for the full year was $3 8 billion.

Which was up 110% year over year.

Gross profit in 2021 was $296 million.

And that's an increase of 85% year over year net income was $81 2 million in 2021, an increase of $1 62, and as noted again, we do have a tax benefit in that number and in 81. Two there is a tax benefit of $47 5 million again, primarily.

Benefits from our stock based compensation deduction.

In the full year, our diluted earnings per share was <unk> 51.

Which is 143% year over year.

On that last chart. Please.

The full year numbers.

And then our adjusted EBITDA was $78 million up 35% and then if you would back that $10 million onetime extraordinary charge, our adjusted EBITDA for the year.

$88 million up 52% year over year and.

And finally our.

Full year operating cash flow was $247 million.

That's an increase of 106% year over year.

Now I will just go over some of the.

The highlights when we look at our business.

We have two different cycles.

These are our key metrics and in the chart charge broken up into two categories. One is the operating metrics and what is the financial metrics looking at our operating metrics for Q4 and full year 2021, as a reminder, and Glenn mentioned this previously.

We run our business based on agent and employee net promoter scores and we call that ANP has an NPS our goal as a company is to hit a score about.

70 or above.

Which is a world class score and when we do that we find that that predicts our agent our retention in our employee satisfaction. So in our fourth quarter. Our <unk> score was <unk> 69 or.

<unk> 73, a full year score was 71, our fourth quarter NPS was $78 75 with a full year score of 79, so very proud of both those scores.

And our royalty model, adding productive agents to our platform drives unit sales volume and revenue and then gross margin that feeds our business. So our agent count in Q4 was 71137 with a growth rate of 72% year over year as Glenn mentioned in Europe by <unk> 75.

<unk> thousand today, and we've had many questions about the breakdown between international and.

Domestic and <unk>.

As we sit here today, we've got about 11% of our agents are international versus 89% domestic as.

As we move on to unit sales in Q4, our unit sales were 125029 up 52% quarter over quarter and our.

Our unit sales were up 86% on a full year 2021, our price per unit was $3 59 up 19% order and 60% year over year full year.

And our volume was $44 9 billion up 82%.

Quarter over quarter and 156 billion.

In 2021, which is 160 260, 16% year over year growth now.

Now looking at some of our financial metrics. We have covered some of these are summarized before our revenue increased 77% in the order.

10% year over year gross margin was up 65% quarter.

At 85%.

Year over year.

And our SG&A.

If we look at that Q4 over year over year was four four basis as we continue to invest in our key focused areas of international growth technology productivity.

We've previously covered the next few lines, so I won't repeat that in the results and so I'll just couple more metrics, our ending cash balance in 2021 was 108 million point to <unk>.

As a company an internal metric of about $100 million in cash.

After we cover expenses operating expenses investments and stock buybacks. So we continue to have positive operating cash flow with zero debt on the balance sheet and another consecutive quarter of positive EBITDA earnings since Q3 2018.

And now some other highlights.

I'll take you through.

The first one would be.

We ended 2021 as I mentioned before this is a real big deal for US I mean, if you if you understand.

Yes, 70 score very much world class and we're very proud of that and I think that's that has a lot to do with our success in 2021 and before that.

Achieve positive accumulated earnings and shareholder equity and so what that's enabled us to do is pay more money back to our investors in the form of cash dividend. So we paid cash dividend in Q4, and we declared another cash dividend, which will be paid on March 31, and finally to offset dilution for our shareholders.

And our agents, we repurchased $30 million in common stock in Q4 at $172 million year to date.

In 2021.

On the right hand side.

Vesting growth continues DXP realty domestic our domestic business is hitting what we call our network effect, meaning that not too many years ago. There was a much smaller group of people that were influencing in growing the company that we literally have hundreds in the U S Fantastic leadership agent leadership Cros.

So you can see that that's kind of driving the numbers global expansion 20 countries and growing we recently announced New Zealand Reese Dominican Republic.

So as we look at this.

We see what's happening in the marketplace, we're really changing the commercial real estate brokerage model via technology data and services, our technology innovations and our investments continue expanding utilization of frame Dr ml.

MLS coverage and plus 9%.

DXP Realty Dot Com last time I looked it was about 1 million three listings in there and finally affiliated services and success, we hired Gerrick Robbins.

To run it.

Successful business as president with a focus on building our coaching business. So really excited about that.

And then success lending is licensed in 23 states. So those that's the progress we've had in the last quarter and some some great stuff that's happening that will absolutely affect our.

Positively affect our operating margin down the road.

Our 10-K will be released pre market tomorrow.

And now I would like to introduce our CEO of Realty, Jason guessing who will expand on our agent growth key drivers.

Our operational excellence welcome Jason.

Thank you very much Jeff and good morning to everybody I just want to start by saying, Thank you and congratulations to all of our agents and brokers and staff, who really make this possible make 2021 possible and two are driven by the mission right alongside us.

As Jeff noted we've continued to grow at a really rapid and accelerated pay 72% increase in agent growth year over year and total revenues of $3 8 billion. Today, we have built a meta versus community of more than 76000 agents brokers and staff, who work together daily across geographies and in our ESP World.

We can attribute our growth as we have.

In recent quarters to a couple of different things. The first is really strong growth and performance inside of the United States, Jeff talked about the network effect and we continue to bring on top performers in all markets.

They come with other folks and so every time somebody comes over people turn heads and inquire about the company. They learned about the company and ultimately they joined and that just continues.

It tends to grow.

Additionally, we have been able to expand globally by utilizing our platform we've been able to do in 2021 add nine countries to our footprint and already this year.

Opened operations in the Dominican Republic, Greece, and New Zealand are coming later in the quarter and we've done this really without having to get on any planes you visit any of these markets.

And as Jeff noted, we also continue to expand the commercial division and I think with great success.

We have a lot of agents, who will practice both on the residential and the commercial side is a great opportunity and offering for them on the royalty side of the business, but we've really been focused on the pure commercial players.

And we couldnt be more happy with the results. We continue to gain recognition of some of the educational offerings that we provide in the commercial space and some tools that are new to market and best in class.

The bulk of my focus is going to be on operational excellence I think going back to 2016, we crossed 1000 agents for the first time, we recognize that.

As important as any other factor what really is going to drive and sustain growth is making sure that we're delivering great experiences for our agents.

Should point out by the way on the growth side.

Our agent count number today in the United States puts us above brands like Remax I think we are now.

Third largest brand.

In the residential market in the United States and also the single largest brokerage brokerage by agent count in the United States as well.

But all of that is as a result of delivering better than industry, leading experiences for our agents and you'll hear about NPS a lot I think another theme that youll pick up in my remarks is really elevating our level of service to our concierge level of service in multiple areas of the business that are critical to <unk> success. So.

We're tracking NPS at the agent level to ensure their satisfaction from the time that they initially onboard into the company to the time, where theyre growing their business and developing new approaches to it and all of the wireless they are achieving the levels of success.

Throughout the course of their careers at the company, our NPS for agents or <unk> 71 for the full year really reflects our commitment to our agents and we do believe it continues to be one of our strongest differentiators in the marketplace contributing to the score or some significant operational improvements we have made during 2021 and which we continue to make today and we're excited about.

Additional opportunities that we're working on presently for increased efficiency and support in the coming year. Our focus always is on supporting our agency ways that make their lives easier. So they can focus on their business I'll give you a couple of examples of these improvements. The first is that we've been able to enhance our agent support through what we call our expert care Concierge service.

So this team Rx for care team really provides fast and efficient support services for our agents with respect to any ESP or work related inquiries. So this isn't specific necessarily the onboarding of payment or anything like that this is somebody who maybe wants to verify their icon eligibility they might be at risk of leaving because they've been misinformed about something that maybe you don't want to know where they can find out.

To sign up for ESD agent healthcare.

They really address the needs of all of our agents that I can tell you that in 2021, we introduced some new support channels. So our agents are able to reach it now.

In numerous ways, including phone email texting or intranet workplace and now our newly constructed DXP World Hub Center here in the <unk>.

And through all of those channels and all of those efforts our concierge team in 2021 managed to close to 300000 inquiries from our agents, notably almost one third of those were solved inside of ESP World.

And as a result that team helps retain millions of dollars of revenue through its efforts and really represents an important retention and engagement tools. Additionally.

Additionally.

Through streamlining of our programs and processes, we have been able to speed up support which has resulted in a decrease in response time to agent issues of 64% and a decrease in resolution of those same issues of 33%. Additionally, we've introduced a concierge level of service specific to our Onboarding process, which really allows us.

To walk agents through all of the elements of getting set up an ESP. It has contributed to a dramatic increase in our Onboarding NPS, which has more than doubled in 2021.

And also at the state level, we've introduced the concierge level of service into our broker state rooms.

Putting a really a localized level support that really saves our state managing brokers at provincial managing brokers as well as administrative support coordinate coordinators considerable time as they help agents navigate questions resources tools support maybe they're looking for multiple listing service or association paperwork and all of that stuff is handled by our state.

Level concierge.

Also important that we focus on payments and that we achieve excellence on payments that we pay our payout rate as timely and accurately.

We're really excited about the progress we've made in 2021 and that we continue to make.

We've added new resources and capabilities to simplify and speed up payments and transaction processing.

Through overall staffing efficiencies, we've been able to decrease agent Commission payment turnaround time by 45% year over year, and our agent MTS specific to transaction support in the United States now stands at 80 or was it 80 for 2021.

Coming up this year in 2022, we anticipate launching.

Transaction coordination services at least across all of our states in the United States last year were quietly pilot into service in 2007 States. We're pleased with where we are and where we're going.

And in.

In addition to our revenue opportunity for the company and we really see this as a chance to meet the needs of our agents by freeing them from tasks that would otherwise divert their attention for building their business and serving their customers.

We also think that the PC service can help mitigate compliance Chris for the agent for the broker and for the company because we're able to ensure that our files requisite paperwork is complete accurate and contained within the transaction folder.

And we also believe that the service will really help us as we go to layer in and drive adoption of America services.

Additionally, we introduced a concierge level of servicing <unk> and our transaction department that.

That team manages more than 12000 transaction related inquiries and needs in 2021, and this sort of a big one from my perspective last year, we introduced a new platform capability that.

<unk> allows our agents in the United States the deposit earnest money checks at other escrow checks directly and digitally without having to drive to drive to their office or placed in the mail.

Discovered some delays, particularly in Canada with the Royal Mail and <unk>.

So in Canada.

In addition to allowing.

Allowing agents deposit earnest money checks, we also make the platform available to cooperating brokers cooperating agents and vendors and so what that means for our Canadian agencies as they can get paid faster.

Once the payment is issued and put into the platform. It immediately goes to the agent. So we have been able to speed up Canadian payment times and that was that was a significant significant excuse me achievement over the last 12 months as.

As we look ahead to this year a couple of other things we're excited about.

It's going to be launching a pre onboarding solution for agents teams and brokerages.

<unk> really speed up the process by providing advanced information access to tools consultations. So new agents brokers and teams can really hit the ground running on day, one having already been familiarized with our tools and our technologies.

Size and the size of the volume of the business at these teams in brokerage as you're bringing over is enormous and we really need to make sure. We're putting those folks in a position to have.

Good experience without any business interruption.

So our planning to recognize greater efficiencies by utilizing where possible our existing teams and talent in these critical functional areas to provide great support and service to our agents and global markets, while avoiding staffing redundancies and at the same time preserving the local flavor of and respecting the customer's within each individual country.

Lastly, I want to touch upon employee NPS, which Jeff mentioned, we'd like to say around here that you can have good agent mps's unless you have good employee NPS and so we're particularly proud of our score of 79.

And we think Theres a direct correlation between the two scores we've.

We've made some great advancements in our employee programs.

Probably reflected in the MBS score, but also in some external recognition from companies like Glassdoor, where last year, we placed 15 or excuse me four out of 100 and glass doors Best places to work for U S. Large companies with an overall company rating of four six it was our fifth year in a row on glass doors best places to work.

<unk> list. Our current rating has improved to $4. Eight we also placed 15 out of 25% on glass doors Best places to work in Canada list with an overall company rating of $4 one.

Yeah.

We've really offered a significant in growth and development opportunities to our employees as we continue to expand globally and into new lines of business. So.

To provide opportunities for leadership for staff.

We launched our <unk> leadership element program, which brings cohorts together to tackle accompanying initiatives over the course of a two week program. Secondly, we continue to build our culture here in the meta versus.

Entire works as collaborative they're connected and this place really comes to life in ESP World, where employees have the unique opportunity to engage and interact on a daily basis.

Each month more than 1300 employees from around the globe join our all hands meetings to discuss organizational updates wins and strategy.

Finally, we're committed to providing world class benefits that help attract and retain top talent. In 2021. This included extended paid parental leave in the United States as well as enrich medical plan designs and expanded benefits options, which now also include new well Miss resources and activities ranging from meditation applications to participation in group yoga classes.

DXP World and closing.

We're proud to have the most agent centric brokerage on the planet backed by very happy and talented employees. Tom. Thank you for allowing me a few minutes I'll turn it back to you.

Great that was terrific. Thank you Jason.

Okay. So I guess, we'll jump back into the kind of the Q&A here.

Glenn.

And I just want to remind folks if you are listening and want to pose a question you can submit it via slide, though but Glenn maybe first a couple of questions just on kind of the the state of the housing market.

Sure.

Last year was obviously another strong year for for volumes despite.

Pretty rapid home price appreciation and some pressure on inventory, but how do you think the market is kind of shaping up so far.

In 2022.

Well I think.

The reality is as we do we are on.

We've got interest rates.

Is it going to go up next month.

Ed raising interest rates, we've already seen mortgage rates keep up with that.

In anticipation of some of the some of the rate increases.

You've got still a lot of people buying homes question is at what level will the fed raised interest rates, which ironically.

That there was going to be we're going to be on a lower interest rate.

Environment now so that was.

My Crystal ball broke a long time ago and that was definitely the case last year when I sort of suggested we've continued to have low interest rates this year.

But I think the reality is is that we're likely going to see.

Fewer transactions.

Starting sometime maybe second half of <unk>.

2022 than we've seen previously I think between.

Interest rates and some other factors.

That would be my prediction.

And so we will see some softening towards the latter half of the year and then we'll just have to see how it goes into 2023.

Okay, and how should we think about or how should investors think about how the ESP model.

Performs.

In that type of environment sort of slower industry growth or maybe even a year of.

Maybe a contraction in the industry.

On one hand, the platform I feel like might be relatively more appealing to agents, just given kind of the economic value prop that.

Agents have here.

But just be curious to hear your view on on how you think the business kind of performs generally in the environment you described yes.

So we're yes.

We're uniquely positioned.

Where a lot of our bricks and mortar.

Counterpart competitors have had to.

Answer.

The XP model with either reducing the amount that they charged to agents or what have you. They havent been able to in fact, we probably see the reverse happen in terms of their cost of their bricks and mortar footprints in some of the other answers that it takes to run a brokerage and so we.

We were actually designed from day, one to be a model that could.

Increase or decrease its expenses really at.

Whatever the market throws at us.

It's sort of a case there would be what happened in Q1 Q2 of 2020.

We were able to not that we were excited to do it but we were able to reduce our expenses substantially and actually put up one of our best quarters, if not our best quarter ever at that point in time, because we're able to fully.

Contract a lot of the expenses it takes to run a brokerage while starting.

Quality of service for agents and so our value prop for our agents doesn't change at all in fact, I think it continues to get by almost 5000 agents so far year to date, which are only.

Two months and so.

We're coming up on the two month Mark.

And some of the ideas that we can grow by Samsung number we think about something above 32% year over year is pretty predictable just based on our value value prop now what could be a headwind is that.

Housing market takes a hit for some reason second half of the year that might change it but I think our market share continues to grow rapidly.

The other pieces, we've always wanted to focus on this idea.

Really about the agents.

And as a company.

We think everybody wins by making the agent.

The Big focus now we also are.

Companies that are out there or any any note. We're also the only one that's profitable consistently for now four years in a row.

Yes.

And I think Thats part of just how do we think about.

<unk>.

The balance between.

Agent centric and were running a model that will be sustainable for the long run for agents and brokers and I think thats one of the things that.

If we do start to hit a slowdown market starts to have <unk>.

Have issues, we don't need to go and raise money to continue to grow and sustain the brokerage which is a pretty unique position for a high growth company to be in.

And then also we continue to think about as our agents become larger and larger holders. We think about things like how does that how does the dividend play into that and how does that enhance their agent value proposition as well. So we think it's an iterative process.

Tension and stay close to.

Two our agents, whether it be physically or through our our regular surveys around MTS test and just making sure that we're paying.

This thing continues to grow.

As long as we are.

We're focused on on the growth side.

Got it.

Maybe just a follow up I mean, how do you think about the performance of the stock.

In terms of like the agents overall.

Value prop.

All of the kind of I call it sort of front end monetization right you've got mid splits low fees, you've got you've got the revenue share.

And you continue to sort of make.

Those benefits sweeter or enhance them for agents one of the questions. We get a lot from investors is would you guys ever like raised the cap or do stuff like that which.

Mike.

Not benefit agents immediately, but it might benefit the stock which would then.

<unk> are also shareholders in the company. So just curious how you think about like the the performance of the stock I guess relative to the broader portfolio of benefits place to increase margins comes from.

Great.

One more and then.

Pose a couple of questions to suggest but can you just give us an update on unsuccess lending and how that launch is going in.

Your latest thoughts on how you kind of drive adoption.

Of the product with your agents.

Yes, so successful lending were now licensed in probably about a dozen dozen or so states we have our <unk>.

<unk> that are being closed basically as we speak through the successful lending.

Our platform.

And the relationship that we built there so it's coming together.

One unique pieces that we're actually hiring local on the ground loan officers. So we've hired a group in Illinois, we are hiring folks in Colorado, we're hiring folks in Texas, we're hiring.

Local on the ground successful Hello teams that can benefit from purchase business for the last <unk>.

Number of years, it's all been about refinance and now.

To the extent that they are looking for where can make it.

New purchase business.

We've got right now is actually a great time for us specifically to be going into the retail lending business was successful lending because theres a lot of great talent out there that is looking for the type of access that DXP would provide.

With.

Partnership, so thats coming together quite well.

We're working on our inter.

Integrations now with our our real estate portal.

<unk> <unk>.

<unk> core platform.

As a platform that will be rolled out a little bit later this year for agents that will create a seamless experience that will allow consumers to get preapproved.

During during the.

The home search process.

Last year actually we just got some data around our kv core platform, we have 38 million consumers.

Consumers that are in our.

Instincts.

Sure.

<unk>, which is our real estate portal from agent to consumer perspective.

$10 million of those have active list of searches and listing alerts going on and in that we.

Introducing successful lending is going to be a great way to.

Awareness and then also.

Deal flow, so I'm pretty excited about how that all comes together as the year goes on.

Terrific.

Maybe I'll switch over to some financial questions Jeff.

Yeah, it's available I guess first on gross margins they were up sequentially, but down a little bit year over year.

Could you talk maybe just about kind of the main drivers there and how should we how should we think about the trajectory of gross margins.

In calendar 2022.

Yes, so Tom the other pressure on the gross margins is coming from volume.

Massive volume in the business and then the increased price got it.

Results in capping what more cabin going on in the business I mean, our focus really is on the gross margin dollars.

So in the fourth quarter were $83, one up 65% year to date $296 million up 85%.

And what I'm seeing and I think what we're seeing as a business it seems to be where the landing at the end of the year seem to have kind of stabilized.

That's kind of what it looks like as we look into 2022, we're kind of seeing it around the same number.

But as Glenn said and as you know our model is designed to give back most of the revenue generated by the brokerage to the agents whether it's in the form of commissions Rev share equity alright, and what we'll be working on is the affiliated services, where we believe there is significant.

Percentage is there from an operating margin standpoint, bill billed higher margins across our businesses, but to me it looks like or what we're seeing is they've kind of stabilized. We think around this point in time and I think if we do get back to a more seasonal relationship from a volume standpoint.

It should go back to hiring in Q1, and Q4 lower than Q2, Q3, but who knows what's going to happen but.

We're feeling pretty good and the volume.

Yes.

Right.

Okay.

Yes.

Helpful.

Is 2022, the year, where some of the affiliated services like mortgage and and maybe title might have an appreciable impact on on gross margins or are really the main drivers of Greg maybe I'd add to that list International where I think your gross margin percentages are structurally kind of.

Better than the domestic brokerage is this the year, where those three things.

Have an appreciable impact or is 2022 gross margin really going to be driven by kind of the volume and end cap and dynamic that you.

Just touched on.

I think in 2022, I mean, we're going to make substantial progress in building these businesses, whether it be the mortgage international and coaching and other affiliated services businesses I don't think the impact we're going to see a material impact from a percentage on gross margin I think that's going to show up in 2023.

But I think we're going to we're going to make some major like I mentioned before.

Gerrick Robbins.

<unk>.

Lead our business on the coating side. So we feel very very bullish that that's going to happen this year mortgages.

In 23 states right now.

So and then international as you can see we're in the 20 plus countries. So we think that the real business is happening is it.

For the margins to catch up I think that's going to be more towards the end of this year going into next year.

Okay.

Alright, Glenn that's our one minute warning like a little bit in music.

Okay.

Okay.

Yes.

Alright, right now.

Yes.

Hello, and welcome to the <unk>.

<unk> World Holdings' third quarter 2021 earnings Fireside chat via live stream and <unk> are net of <unk>. My name is Courtney chairman and I'm, the CMO DXP World Holdings' game.

Today, we will begin our Q3 earnings fireside chat with the conversation between Glen Handguard, founder and CEO of <unk> Holdings, and Justin Ages and analysts at Ehrenberg capital market covering the intersection.

Knowledge emails.

Following the initial 10% to 15 minutes segment, we're going to move into a 20 minute presentation, which included a review of the Q3 financial highlights presented by Jack White, CFO and Chief collaboration Officer of DXP World Holdings, followed by Jason Guessing RCM.

Our CEO of <unk> royalty, who will share drivers of accelerated growth and unique value proposition. Finally, we'll return to Jeff <unk> and our leadership like henman continuation of the Q&A, let's begin the earnings Fireside chat with a review of the forward looking statements.

There will be a number of forward looking statements made today should be considered in conjunction with the cautionary statements contained in the company's SEC filings forward looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Please see our filings with the SEC, including our most.

Recent quarterly report on Form 10-Q for a discussion on specific risks that may affect our business performance and financial condition, we assume no obligation to update or revise any forward looking statements or information as a reminder, today's call is being recorded and a replay will also be made available on ESP.

<unk> Holdings Dot Com now for a few logistics as we get started for those of you joining an ESP World Holdings are virtual.

Campus, what you will see here is all three screen. If you want to see that you can hit the stage zoom button to the right of the chat box is due to a specific screen you can hit the plus icon button above that screen. If you happen to see no slides are a great slide hit the refresh icon at the top right hand corner of that screen.

Correct, while <unk> virtual campus should you need any help or have any questions. Please.

To your comments in the chat box at the bottom on the left and a member of the team will contact you mentioned the last segment of our Fireside chat is a continuation of our Q&A.

Do you wish to ask any questions. During our presentation you can enter your questions by scanning the QR code presented on the screen with your phone or go to slide <unk> Dot com and type of event.

<unk> P. I Q3 from there you can submit a question or even vote up an existing question by giving a thumbs up to indicate that you would also like that question.

This screen will remain up on the left hand side of the stage. So that you can take your questions.

This time I would like to turn to fireside chat over to Glen Sanford Congested ages to start the earnings conversation.

Okay. According to you. Thank you very much for that intro and Justin.

Two <unk> P R.

<unk> World and Justin.

<unk> is one of our covering analysts from Baron Berg capital and Justin I'm going to turn it over to you.

Ask some questions and then we'll we'll continue on.

With the various other presenters.

Great. Thanks, Glen and to the introduction coordinator so it's great to be here with you and the rest of the management.

In this world that you've created and congratulations on what I would describe as a strong quarter, you know agent count up over 80% transaction volume up.

Almost 100% and importantly, fueled by within transaction, which is to me, especially impressive considering some of your competitors are experiencing and total revenue.

Over 90% as well so I think just another quarter of solid results really speaks to what youre doing in terms of enabling and incentivising agents in growing the brokerage.

I think that all resonates in the industry and attract more talent strategy, even more success, but onto the first question as we start here on the <unk>.

Campus I think it bears mentioning that <unk> has.

Been kind of operating this method versus for years and recently, there's been a lot of attention on virtual reality, where people are interacting with each other but how has <unk> and virtual campesino benefited customers just because you guys seem to be at the forefront of that.

Yes, so we back in 2009, we looked at.

One how to run a profitable real estate brokerage in good times and bad times.

Single cost to run our brokerage typically is the bricks and mortar cost I'd come out technology. So when we looked at was.

Virtual worlds for business back in 2009, we've been operating effectively now and the popularized term because of Facebook.

Meta burst.

Literally since 2009, we've operated a number of different platforms.

And started on the <unk> platform. The one we're in now in 2016, and we actually bought the company in late 2018, and and now we've got a number.

Customers from universities to.

Large.

Enterprises to consulting companies et cetera.

<unk> adopted are using have used especially since COVID-19.

Really impacted the marketplace last year. So it's been a really interesting last 18 months.

Relative to the use of other people using the platform, but for US we've continued to mature it and we've got another platform called <unk>, which is an entirely web based accessible platform, which we're actually really excited about as well and we think there is a lot of future potential, but it's been certainly.

The enabling technology that has allowed DXP to grow as rapidly and as ubiquitous way across the world as it has.

Yes, great that makes a lot of sense.

And then onto the quarter, specifically can you just give us a high level about <unk> and the drivers of the financial.

Operational performance.

For us, we always come back to the <unk>.

Value proposition.

And.

Again back in 2009, the Big thing was to think about agents as being the most important part of the real estate brokerage not the broker owner not the franchise or Napa brand, but the real estate agent and by retooling, our comp model to really recognize the agent as being central to.

And that goes on a real estate brokerage that's really created the drivers there.

<unk> to propel us forward, a revenue sharing model, where we're sharing.

Tens of millions of dollars every month in the warmer revenue share our equity plan, where we've shared based on today's valuation well in excess of $1 billion worth of equity to our agents and brokers that has been a huge driver both the <unk>.

<unk> our retention and then also.

Creates an opportunity for agents to help us grow the business. So that's those are the biggest drivers and we believe we will continue to be huge drivers going well into the future.

Yes, I agree with you and all about that agent profit position model and how it's driving growth.

And then in terms of the housing market can you give us a flavor of your view for the near term and over the longer term both in terms of home price appreciation.

The transaction.

So.

My view and I think our collective view is that real estate has been and continues to be something that is very much.

<unk> by monetary Paul I'll see whether it be interest rates or.

Quantitative easing or whatever those things are that the.

The fed and others have done.

And as long as interest rates stay low.

We think that real estate prices in real estate.

Fans actions will continue to be.

Significantly so.

From the perspective of not knowing what you know where interest rates specifically are going to go.

I have a personal view that interest rates that there is inherent need to keep interest rates low for a whole variety of reasons at a macro level and so from that perspective, I think that we're going to continue to see a robust housing market going into 2022 and potentially even beyond that.

Yes, I agree with that sentiment and it'll be interesting to see what the fed will do over.

Timeline.

As I say you guys will continue to take share and part of taking share really related to your ability to attract agents as you touched on briefly in the beginning so can you speak to what the competitive environment has been and how you continue to find success.

Well competitively.

We kind of invented this new model, a cloud based real estate brokerage and so.

So we really innovated on a number of different factors.

First one to create a meaningful revenue sharing program first one to actually provide an equity plan.

Actually make those publicly traded shares first company and still the only company operating in the <unk>, which then allows us to actually organized and collaborate and build community in unique and interesting ways without having to have the.

<unk>.

The cost and the constraints and physical bricks and mortar so those have been really.

So very compelling of course.

We think about the idea that we've been doing this so long that we're now over 67000, maybe jumps getting close to 68000 worldwide faster growing real estate company in the history of residential real estate and we think that that first mover advantage. We will continue to play out well for us and and we've also built a model that is.

Over the long haul.

Since at least Q4 2019 going forward, we've been profitable and that's resulted in our ability now to actually pay a dividend which again.

Sets us apart from other companies.

You may have a hard time, reaching some net net profitability.

And distributing that a meaningful way to their agents.

Yes, I think the dividend definitely plays a role in attracting agents.

And of that agent.

Incentive compensation.

And along those lines, maybe you could take it a step further and talk about what <unk> is doing to ensure that competitors cannot copy our business model and the success. I mean, you do have the first mover advantage and no.

Physical presence, but you know.

What are you doing to kind of ensure that moat.

Continues to stay.

Yes, we've done certainly a number of things.

Last year was an interesting year in terms of some of the acquisitions that we did success.

<unk> and success enterprises.

That's the longest standing personal development brand in the history of personal development, which ties in well with.

Real estate professionals.

We've expanded that brand, where we're creating opportunities for agents and brokers too.

Potentially one.

Success co work franchises, which is kind of an interesting juxtaposition against our cloud based business model. There is the ability for people to actually stand up their own co working locations, which can be a really good environment for connecting with with other business people and other people in their local local community.

And it's not a real estate office, but it's truly a co working company with with coaching and a cafe and some other things. So we're continuing to really innovate and try new things and I think thats really one of the things that sets us apart is that we have not stopped innovating.

Innovating and trying new things. So we've got success lending is also.

A joint venture that we put together and this month in November we're in a great position to actually start to originate loans through successful lending and were creating unique ways for agents to tie into that model as well and we think that just being a long term profitable.

The company that puts agents first.

Is the best way to build a moat in the industry.

Yes, I think that.

Has played out and it seems like you.

You are taking the steps in building on kind of your innovative DNA to continue to grow and defend the company and you mentioned success lending and so I just wanted to touch on that for a second because I know, it's still early days and you are seeing positive signs there.

Then the other kind of service that you have maybe you could just touch upon your eye by our model and how it differs especially in juxtaposition to today's news out of Avnet Zillow.

Yes.

I think.

Touched a little bit on successful lending we're open now technically in about six five or six states. We've got another five or six states that are in the process of opening up.

As we speak we've got our first loan officer, we've got with.

With president of that Division.

Accepted an offer and so we make some announcements next week about about that.

DXP con so I think that'll be a good place to learn a little bit more as we share more on successful lending.

Obviously yesterday big Big Big News in that obviously zillow decided to exit the <unk> space.

It's interesting last year and during the downturn.

From Covid Zillow.

Redfin I'm not sure I don't remember would open door did specifically I think they were the same but everybody quit buying homes in the second quarter of 2001 because of Covid. We had a platform called express offers where we actually continue to operate and we actually transacted business, we actually put.

Sellers together with with instant buyers through our own marketplace without taking any balance sheet risk and so we basically approached it from the perspective of let's build a marketplace. Let's connect people there are always going to be people, who need to sell want to sell don't want to go through the hassle of actually listing their home for sale on a traditional way.

And they're going to be looking for a place to to sell and so we've we actually.

Working with our team and doing some reviews, even this last week.

Our <unk> platform <unk> has actually been profitable.

As a as a.

Platform versus.

Because we didn't take balance sheet risk and because we've got built in margin.

As buyers buy properties.

Through that and then it becomes great listing tool for our agents to be able to go in and show a fully marketed listing might be a better option than going with the with the incident.

Instant sale.

And that makes a lot of sense and I'm probably in the marketplace at least at this point in time seems to be one.

Better ways to go in terms of the buying model and being profitable.

Factor is definitely what I think will make some competitor.

MBS.

Lastly, before we get into the presentations.

Can you just comment on that commercial segment I know switching gears a little bit are you seeing the model kind of resonate in the same way that you've seen in the residential segment.

Yes, commercial's, a little bit there is definitely a smaller number of agents across the country.

We've got well in excess of a thousand RASM Marshall agents, meaning.

Once they're under the residential brand, but also solid commercial.

We're coming up to about 500 agents.

On the commercial side.

And it's a good growing segment.

The business.

That we think that will cross pollinate and have other opportunities to go.

And fourth between residential and commercial.

Again fairly early days I mean, we've been doing this for a little over a year on the commercial side with a true commercial leader with Jim Wong and the team that he's assembled on the commercial side.

We think that has the significant potential to make the same sorts of impact over time.

Yes, it could be royalty has done in the residential side.

Yeah, that's great so confident in growing segments.

We can turn it over to the rest of the team kind of percent on the quarter. Okay.

Next up is Jeff White site.

Alright, Thank you very much Glen Thank you Justin for joining us today.

Good morning, all and thank you for joining our third quarter of 2021 virtual Fireside chat Courtney I think it's getting a little it's been a little Javier So could you turn the fireplace al I appreciate that absolutely had another we haven't we had another strong quarter of growth and I'm proud on behalf of DXP team to share our third quarter results will be to that.

On our highlights page that you see in front of you.

Starting with revenue Q3 revenue was $1 1 billion and if you've been following us we'd really like to $1 billion.

At DXP are 97% year over year, so an incredible growth continues here.

Gross profit in Q3 was $79 5 million, an increase of 70% year over year. Our Q3 net income was $23 8 million and that's up 60% year over year and you can see in our footnote you can see in the financials that included a $12 9 million.

<unk> from income tax provision, primarily driven by the stock based compensation.

Obviously, we went through this last quarter and basically since we've shown consistent profitability in our company. We now have deductions and a major cost area of our business and that would be stock compensation. So that's a positive for our net income.

Diluted earnings per share was 15%.

Per share and Thats, plus 50% versus last year.

Our adjusted EBITDA was $23 $1 million up 6% year over year and lastly on the summary page of Q3 operating cash flow was 50 $455 4 million.

An increase of 44% from the same period last year.

So now if we look at our key operating metrics and financial metrics.

This chart is broken into two categories operating metrics and financial metrics and looking at our operating metrics in Q3 and as a reminder, we had ESP we run our business based on agent and employee net promoter scores so that youll see a NPS in NPS and <unk>.

From our experience in how we run the business, we find that by measuring agent employee feedback scores were able to focus on our response, our resources on fixing and improving key areas that are critical to our business success.

Determine that if we keep the scores.

Around 70 plus growth.

<unk> and employee satisfaction are all trending positively and Glenn started this a long time ago.

Big disciples of this right now and.

What you're going to see a 70 score.

We went through this before by the plus 70 score is.

World Class.

In terms of satisfaction, both from our agents and our employees. So in our third quarter. Our A&P score was 69, yes, that's a little lower than our goal.

73 year over year, but on a year to date basis with 71. So we're feeling pretty good there are third quarter NPS score was 79% and so on a year over year basis, <unk> 80 versus 72. So the score is slightly down from where we want it to be so we're working on a number of things.

From a process standpoint in our business, but overall the 71 year to date and the 80 year to date feels very good and you can see the results.

<unk>.

On the metric page.

So in our royalty business and our model, adding productive agents to our platform drives unit sales.

Volume and revenue in our agent Count as was mentioned before in Q3 ended at 65269 versus <unk> 35877, with a growth rate of 82% and just to give you a bit of a breakdown Glen mentioned that where we're above 67000, right now and when you look at our.

Our profile, we're about 10% global.

Michael and the team are doing a fantastic job I mean, it's it.

It's rolling out well you're going to see.

Significant growth in the future, 10% Global and then we've got about 500.

Pure commercial agents in our company right now and this is a big season for for additions in that areas of Jim and the team are working hard on.

That number.

So in terms of unit sales Q3 was 130020.

Nine for 75392, and Thats up 72% year over year, and 103% year to date.

Price per unit as mentioned before is up 15%. So are our average price per unit is $358600, so thats up 15% quarter and 15% year to date.

Volume Q3 was at $46 6 billion versus $23 6 billion up 97% year over year.

134% year to date, so our volume on a year to date basis. As you can see is $111 $2 billion. So fantastic results.

From a growth perspective.

And the company in Q3 and on a year to date based basis.

Now I will go to our financial metrics were at the bottom of the page and if we're just looking at our revenue as we mentioned $1 1 billion was $564 million up 97% in the quarter.

Two 7 billion versus $1 2 billion.

We're up 127% year to date on revenue.

Gross margin was $79 $5 million in Q3, and that's a 70% growth in dollars year over year and now as a percentage it was seven 2% in <unk>.

Q3, 2021 versus $46 8 million and eight 3% in Q3 of 2020, we did see a downward pressure in our gross margin percentage in Q3 and that was primarily driven by increased volume.

Increased capping and increased unit prices.

So as we as we move down the P&L to the SG&A Youll.

You'll see that our SG&A was $68 4 million versus 31 6 million in the quarter Thats up 116, <unk> hundred 16% and 180, <unk> 85, which is up 111 and Todd touched on that obviously that goes down to our operating income. So our operating income was $11 2 million was fifth.

$8 $2 million, so year over year, we had a decline of 26% year to date operating income was $32 six versus 20 382 were up on a year to date basis by 37%. So we did see downward pressure on operating income in Q3, and it was driven by incremental investment in our growth areas.

Alright.

Our big growth areas and I'll touch on this a little more on the next page, but global residential expansion commercial expansion technology investments success affiliated service investments. So in the quarter, we invested roughly $10 million in those areas and these are all big future growth areas for our company.

And then on a year to date basis, we invested about $25 million in these growth areas.

So.

We're very fortunate in our copies of our core business in the U S.

Canada really doing very very well, so given us the opportunity to make these investments and that's why we're seeing a bit of a dip in the operating income line, but we believe that that will pay off in a big way into the future.

Net income is $23 8 million for.

It was $14 nine till up 60% year over year in the quarter, and 65, 7% versus $23 three up 182% year over year.

Year to date.

Adjusted EBITDA you can see is $23 8 million was $21 eight up 6% and $64 $9 40 versus 41 point.

Two.

Up 50% on a year to date basis. So we've had as Glenn mentioned before we'd have positive adjusted EBITDA. Since Q3 of 2018, we continued positive net income of the company.

Since Q4, 2019, and as we look at operating cash flow.

See that we are at $55 four versus $38 5 million up 44% in the quarter and $1 $56 $8 $74, one up 112% in the in the year and then.

The positive operating cash flow continues and the company with the investment and with zero debt on the balance sheet. So we have zero debt on the balance sheet and we're able to fund our business invest in our business through our buybacks and we still have a very healthy balance as a company you can see our cash equivalent number of $98 one.

We have decided as a leadership team and a board that we beat that number around $100 million.

No.

That's where it is after all these investments and so we're feeling very good about the growth in the company. We're feeling very good about the investment where we're putting our money for.

For future growth and we have a very healthy healthy balance sheet same time.

And now on to some recent highlights more.

Focused growth areas.

So my last page here is.

Recent highlights include the following.

Paid our first cash dividend in Q3.

We have declared a dividend for Q4 that has to be approved by the board.

We've done that so very we've achieved positive accumulated earnings and shareholder equity.

For the <unk> <unk> per share was paid in Q3 and will be paid again.

In Q4, we've established success as Glenn.

<unk> talked about.

<unk> of the state's up when we're starting to make sure the staff in place and we're going to start promoting that in a big way and our share buyback as we have continued.

With our with our efforts to offset the dilution of the company.

And we repurchased $53 2 million of common stock in Q3. So those are the highlights on the right hand side of the page the great growth as I mentioned before in performance from our U S. Royalty business has enabled us to invest in key future growth areas that include Realty again on the domestic front from a marketing and productivity.

For scale all sorts of tech.

Technology investments going into our U S business Global expansion you heard a lot about it.

We're at 70 countries right now it seems doing a fantastic job.

Getting the right people in place, we're starting to get scale in some of these some of the bigger countries will continue to grow that as time goes on and then commercial as Glenn talked about will build awareness education and growing our agent count at the same time from a technology innovation standpoint.

We continue to invest and rubella in frame.

As you've heard all the all the cross recently I mean, we've been doing this for a long time and run our business and the results that you see are really on the back of this virtual platform of rebel so.

We continue to invest there Alex and team are doing a fantastic job showcase we're investing in our <unk> business agents tool and portals can be a lot of new new things coming out of that group this year actually 2022.

And mobile apps and the international revenue share is something that we're doing in our core.

Our core technology needs that we've added.

To support our agents and finally affiliated services with us.

Now, we're coming up with brand new lead generation Terry routing.

Scale Cogent, we're scaling a coaching program right now and we go on into a digital expansion as we speak.

So overall very very happy with our results I'm very fortunate to be able to invest in growth for the future and we believe very heavily but thats going to continue.

As time goes on so the point in time, I would like to introduce Jason guessing.

Who's our CEO of <unk> Realty and he'll expand on our agent growth and key drivers of success.

Eric Thank you very much Jeff I appreciate it good morning, everybody to be here and I will just provide a little bit more context in terms of our growth trajectory that Jeff shared in the curve.

Jeff mentioned were up 82% year over year in our Asia more.

More than 70 67000 agents across the globe.

If you look at it there's really three primary drivers as Jeff mentioned, the first is U S residential performance.

But we've really been able to continue to attract top producing agents and teams and that's really what it boils down to and if you really want to get a flavor for the type of person. That's joining the company I would encourage you to go to life Dot DXP royalty Dot com, where you can see profiles a number of the folks that have joined US recently other members of the community just yesterday, we get a profile on a 28 year.

Gentlemen out of Arizona team of 12 is $200 million in volume dominates this local market and he came here because this is a company. He said that recognizes the agent and the agent first and for his team members, who have been opportunities in things like equity like ownership and access to health care, which is an important piece in an industry where many.

Or left.

Got it.

And the other thing too is that every time, we add some bernie and influence or somebody who has been very successful in the business for our own store local neighborhood. It really triggers the network effect of to grow at an even more and greater accelerated rate, sometimes thats because the people who are out there and they are attracting agents they want to make part of their business.

But sometimes it's just because somebody learns about the gentleman I referred to just a moment ago found out about ESP, because somebody else and as market joined and that prompted him.

Else to ask questions, what is ESP, which is all about and ultimately the more questions. You asked the more interesting achieved.

The more determined use to make this the price variance future here, obviously the way we operate we've got an innovative model we have an innovative platform here. It is.

Really allowed us to expand globally.

I am where initially when COVID-19 rod, we werent sure that we could and I would submit.

The way that probably nobody else can.

In the last year, we've added 10 countries to the footprint. Most recently in the third quarter, we had a Panama in Germany.

We think Germany is a great market I think I read.

Somewhere.

Last 10 years as the seven largest cities in Germany have grown upwards of 123% so.

Good markets and we're finding great leaders.

And then on commercial I do want to say that.

Go to some of these industry conferences at Jim One is really a critical later done a great great job.

Commercial typically lags the residential industry in terms of innovation and technology by a number of years. In addition.

Historically commercial agents have earned a much smaller percentage of the overall commission dollars.

And folks in residential and so we are really a very compelling offer for true call agents.

And if you go into some of the industry conferences, whether its ICSC or <unk>. They are they are speaking about ESP commercial from the stage and they are describing it as the future of the industry. So we think we have a great advantage their platform.

That we have is just an inch.

Incremental and creating that awareness and that success.

Quarterly, we're having symposia that Jim and Stephanie Youre, putting together we've had I think the first one was about 500 agents now we are looking for about 7000 registrants and they come in here they saw they get exposure to the rubella.

They understand how the world works and Theyre getting certifications. So those have been great events for us in order to create awareness will say our buyer platform is thriving at the moment, we have more than 6700 agents, who are participating in a certified theyre able to submit properties on the platform. They are receiving offers from buyers.

And.

I'll also point out that within the last year.

Earlier in the year, we started very quietly we started a relocation division.

We're really excited about how that's grown we're gaining great traction there and I think that we're set up in structured as one big company to really serve.

The need to relocate relocation very very well.

Jeff talked about.

I forgot on the next slide.

NPS metrics I think the thing here not to belabor it but it's important to understand that the value prop really impacts NPS as well of course, we've got a whole team that.

Conducting the surveys they're closing the loop, but when they get feedback.

But the value prop has a lot to do with it so.

One of the things here with our ownership our agents they see unlimited upside, but they have to earn its right to get the stock to either have to sell a property that they have to help the company grow.

And once they do that there is really no limit and if you compare that to some other companies who are maybe will offer.

Signing bonuses upfront with a fixed period of years, it's a one time benefit and then essentially what we've seen is that a lot of the agents at these companies.

The lockup period, and they're looking for a new opportunity and I think because our agents are earning their equity because they're earning everything youre doing there really invested in agent ownership.

For us culturally and in terms of our growth has been an absolute key driver and one that I always like to talk about.

And I just wanted to savor Bella.

Has just been phenomenal for us.

It really has allowed us new agents real estate agents are beautiful people they want to be around other plate don't like to work in isolation and.

In the last two years, we've demonstrated more than we ever have before that this environment, that's where Bella really allows.

The type curve.

Inner office then.

Collaboration among colleagues I think last week, our agent experienced team at a Halloween costume party.

And so that's just one example of the types of things that we're doing here.

Along with the 100 hours of training and all sorts of stuff. So.

I think at that point.

I think that's pretty much everything and not a lot.

I'll turn it back over to Justin and thank you very much for having an opportunity to be part of it.

Awesome.

I think it's a U.

Jeff.

Justin to to do the Q&A.

Yeah, great. Thanks, Thanks for the presentation.

Just wanted to start.

On the financial side, so pretty impressive Jeff.

Can you kind of dig into what's really driving the top line and then we've talked about attracting agents and how do you.

See that tracking going forward.

Thanks, Josh I appreciate it.

Yes.

We went through some numbers even as recently as this morning.

And as you can see the agent count the productive of agent count absolutely drives revenue.

To put a perspective, we did it.

$5 billion in 2018, and Thats an entire year. So now we are.

On a year to date basis, we're up $2 7 billion.

And I think that if even if you take a 50% growth rate right at 82% year to date, if you take a 50.

So the growth rate over five year period, you are up over 500000 agents. So I think between the U S. One thing I've talked about before is this kind of network effects.

I came back when I was here in 2018.

A few very very successful attractors influences on our business and now after traveling through the country and seeing what's going on.

Could you speak to us so hundreds of their <unk>.

Strong.

Our agent leaders in the communities across the U S and then as we've talked about.

The opportunity international for Us.

Is tremendous and we just we're just getting traction there right now so we're very confident that this is going to continue from a value proposition to the agents, both domestically and globally and we can see this kind of growth rate continuing as far as we can see.

Yes, that's great and then we can definitely see how thats going to kind of drive, especially.

The cabinet okay.

The U S and international.

And then switching to some of the cost lines and gross margin and <unk>.

Particular, I know you touched upon kind of what that's driving and what bumps that up but maybe you could just.

I'll discuss that a little further and where that's been trending and where you expect it to go.

Yes, sure I mean traditionally prior prior to Covid.

We used to have a seasonality to the business, where we would have higher margins Q1 at Q4 volumes go down.

And you see what we're seeing now is the volumes being huge across the entire industry and the reason the gross margin moved down slightly.

It is a direct result of the number of agents, having success with our model and capping. In addition to the volume and then in addition to the price.

Per unit.

So.

We're we're kind of seeing us so.

So far in Q4, although we don't.

As we look at it we're seeing more seasonality going into Q4, a little bit we're seeing some slowdowns across our markets, although we can't crystal ball, but we're seeing it getting a little more normal whatever that is going to be and gross and gross margins going up slightly in the fourth quarter as volume.

Down when it gets to more of a traditional model, so thats kind of whats going on.

I mean, what it's doing for US though is as you can see it is it's really driving market share. So I think.

Not too distant future, we will be able to talk about market share and where we are and things like that.

But thats kind of whats happening as Glenn mentioned earlier today I mean, what we'll do on all sorts of things in the business from an investment standpoint to grow our margins both internet Ashley and domestically and then on top of that finding the right opportunities to add incremental operating margins for the business things like affiliated services and other services.

We can provide.

In our company.

Yes, I guess, it's kind of you know.

A little bit on the one hand, it could have been on to on the other you see Canada. The more normalized approach and then margins ticking up against.

Okay.

As a pressure from the agents and then can you provide us an because I know investors are interested in what percent of agents are capping and and.

Where do you see it staying around there I know and as we've talked quarter to quarter. There is obviously going to be a little fluctuation, but just in general terms, yes, I mean, we actually don't break that out right now just in the financials because the growth of the company I mean, we're still I think we added 11000 agents or what it was gross so we still don't.

Have a stable number to report on that.

And we don't do that but.

Obviously, there is a there was an increase of probably now somewhere around 30% more agents cabinet tapping.

As we've seen in the past.

Does the market because of the volume in the market.

I think as we get more normal.

I'm not even sure when we normalize on growth, but because we have so many new people coming on and so many thousands of new agents don't really stick we don't stick.

Don't put a stick in the sand and say this is the number because the growth was just.

Beyond having a reasonable number on that but I think save them, 30% more agents or <unk> than they were prior to the volume going through the roof.

Hi, Thanks for that and I appreciate the color there.

And then just my last question really for you or the rest of the team can kind of weigh in on these investments that you're making.

One panamax safety the most is it something about productivity or teaming.

Teaming up agents.

To learn from each other and grow from there so just getting your thoughts around that.

Glenn you want to take that one.

Certainly.

From.

Just an agent attraction perspective, I mean, we've been investing in a number of different lead gen.

Initiatives and I think that lead generation is always something thats.

At the agent level, so between our showcase AVX investment, which is building out <unk> Dot Com Express offers.

Actually launched the platform.

Maybe two quarters ago called success experts, which is our lead gen.

Platform person displaced folks that were displaced by Dave Ramsey's organization.

But we continue to invest in sort of lead Gen and then being able to create opportunities for agents to be in front of consumers.

From my perspective, that's the biggest driver from an agent perspective.

From a overall company perspective, I think the big investment that I'm. Most excited about is successful lending.

That in my mind.

We can figure it out.

I say that but I think we've got a path to figuring it out this time around we've done we went kind of approach mortgage twice before and we've learned a lot from both of those.

Those experiences, but I think that we've got an opportunity to crack the code on on having an in house lending opportunity that can get some traction and if that does get traction that will meaningfully move the needle from a gross margin perspective and that profitability perspective. So we're again.

We're early stages, we're just going to be announcing our.

First loan officer.

Division President.

And all of that next week at DXP Con, but we're really excited about what that might look like.

Yes, I think theres definitely okay.

Sort of value.

Adding services and their products and then as you mentioned that'll lead Gen initiatives.

And then building off of that and I guess switching to.

Questions about agents, specifically and maybe more for Jason.

So what would you say are the biggest drivers of panel agent attraction and retention. Obviously, you have the incentives and address the dividend and also the award and then second part of that just taking a question from the slide out.

What is your roadmap look like to get agent and employee net promoter scores even higher.

Yes. Thank you I think first of all.

To get we have put in place so Rebecca HSN oversees a team that.

It really is focused on as NPS and part of that team is to make sure that when feedback comes in that is anything less than a seven or an eight where we're following up that members of the team are closing the loop as they say and addressing the concern.

And I think continued focus on that and also identifying other areas, where we might be able to introduce the survey right Theres always more and more experiences that our agents are experience going through as part of the ecosystem and I think if we're good about identifying which are the ones that impacting loan growth experienced the most and can integrate surveys. There then.

Tours.

Hopefully you get the scores, even a little bit higher.

For me the big Big drivers of growth.

The agent ownership, we've had a great model we've had.

Our strong revenue sharing model all throughout the time of our existence, but really it was when we introduced agent ownership.

In 2014 2015 that from my perspective, we're really really started to grow you know theres a lot of power.

And having people who are owners.

And have a great deal of diversity in their experience and this is one of those industries where people come from it.

Two it from medical Education, we've got a cardiologist that's an agent with us in New York City and so there is so much diversity of background and experience and now you have the global components. So this is now a multilingual environment its a multicultural environment.

And that all of that.

Together as fellow owners and where everybody is really driven to build the very best company. They can because they own a piece of it and that itself is a really really.

Large impetus for growth I think it's a great driver.

One that I think.

It is preliminary.

Very proud of it.

Yeah. Thanks, Jason I think that kind of gets back to this virtuous cycle of that more commonly like the platform and then more agent in Spain, and more calm and that drag.

Drives more success.

In terms of.

Recruitment can you give us a little detail on the composition of agents, who joined <unk> from word of mouth versus those that are recruited a little of that sure. Yes. I mean, it really is all word of mouth occasionally we will get an agent that inquires.

Without having spoken with anybody and we've got an eye an inside sales team that will follow up with that agent and then get that prospect in the hands of one of our agents, who who doesn't have anybody yet so.

But you wont see we don't have or ties on billboards were not on TV, we're not competing with our agents. So it really is all of our markets all organic and that's what makes it so powerful obviously as a company we're supporting that in whatever way, we can we're offering resources and tools, we've got marketing and training efforts that are really helping agents attract and program businesses.

We're using social media to drive awareness thought leadership and our conventions over the I think our last three big conventions, we had inside of our Bella they've been phenomenal events as Glenn mentioned in Las Vegas next week.

And these events are really.

They are great in so many ways, but for me they've always demonstrated more than anything else that the relationships that take group inside of rubella.

Translate so well into real life conversations pick up where they left off.

But it's all word of mouth and I will say that.

Those events, we have a lot of people that will bring guests to those events and I would say that the overwhelming majority of those people that come as guests ultimately ended up joining in.

So they are great for us as well.

Yes, I think thats kind of hard to argue with the results.

And the agent growth average soon.

Switching to international.

In the prepared remarks, I think it was mentioned around 10% of the basis and our national.

Can you just refresh how many countries you're currently in and where do you see how many countries by the end of the year and maybe into the first half of 2022, well I think we're in 18 today with the addition of Panama in Germany. There is a number of other markets that we're looking at but we haven't announced them yet, but we're we're always considering new markets.

I really compliment that aligns with our business growth strategy. So as we build a global brand, we're looking to see what strategic countries contribute to us, creating global footprint that really maximizes agent count.

Revenue in transactions, but you mentioned adjusting the 10% just for a little bit of perspective.

It took us from 2009 to leap day of June of 2016 February 25, 2016 to hit 1000 agents in the United States and we launched in India in November of 2020, So just one year ago and we're already over it.

So the model is resonating globally.

I think in addition to all of the benefits that we've all discussed here today Rev share equity the tools and the training. There is so much knowledge to be shared about how to approach the practice of real estate in this market versus that market and what can an agent in France learn from an agent in California that might help them.

Because everybody is aligned everybody wants the same thing everybody is a fellow owner.

That help us in abundance.

But couldn't be more excited about international.

As Mike by the way that it's Mike.

That's the investment that we're making that excites me the most.

Alright, thanks for that that color so it sounds like.

On the agent growth is nearing that.

The U S and that's all driven by <unk>.

In putting.

Putting agents at the at the core of the business.

Can you just touch on what the fundamentals are alike in international countries and what I mean by that is obviously you go in expecting a return but.

Commission structures, similar more or less in cost basis as well within our model Commission structures will vary a little bit country to country.

The bedrock for the same the core brand deliverables competitive spreads ability to reach 100% for having a capex model.

Stock, we're where we're allowed to issue it and the ability to build a growth.

Mobile organization.

So.

That.

Antibody.

Okay.

Can you just restate the question I apologize.

No.

You are protecting.

Sure.

This is the U S and.

In terms of the return profile that you're expecting.

Yes, so outside.

Outside of our model and a very again you look at the countries and sort of the state of affairs. In these countries varies greatly if we look at the United Kingdom, which was the first country that we went into back and this was 22018.

Agents with state agents in the United Kingdom are accustomed to receiving a stipend that's just enough to maybe pay the bill.

And after that when it comes into the State agency. The agent is going to end up with about five or 10% at most and so.

We come in we offer 70% with a cap and model and revenue share and equity and it takes a little bit of an adjustment for that that state agent who's accustomed to getting the statement, but if they are able to pull it together and are able to stick through it it's a long sales cycle in the UK.

They come out on the other side and they are.

We're more excited about their business and they've ever been.

Heck of a lot more money.

Alright. Thanks.

Makes sense and then you mentioned in your prepared remarks about the relocation business and how youre excited about better.

So what's driving that decision to get in to the business end and do you see kind of synergies down the road that.

You have obviously people are looking for houses people looking to sell houses all part of the relocation.

So if you could just comment on that please yes, so we decided to move forward because the right opportunity for them is that this is a great example of our agent one of our agents came to me and said you know like I've got this for.

And who's done relocation on a national basis, and a number of different organizations.

So that leads to a conversation.

That's sort of eliminates the opportunity and if you've got the right people and then you go and pursue the opportunities we're building great relationships.

Whether those are extending relationships our relationships with various organizations. Our agents are excited about this.

And with the future of work I guess very much still I.

I guess up in the air in terms of whether people are going to be an office or not being an office. We do know that a lot of people have moved out of urban areas they've moved to more outlying areas because of remote work. So I think the opportunities for relocation.

Right over time.

Yes.

Great. That's helpful. And then just turning to a couple of questions from the audience.

Management team I'm, just going to read this one in the history of turning our largest opex into assets like SaaS and Barbella kv core something that you can build internally is that a large expense.

So I'll touch on that.

It is it is technically it's something we can.

And build internally kv quarters are pretty mature product.

<unk> bought showcase IMAX with with some of the ideas.

Rebuilding.

Functionality over time.

And.

And so we're probably in terms of actually having a.

Product that could be at parity with <unk>.

With.

With <unk> core, we're probably still another year out even though.

<unk>, we now have.

Hum.

Probably 80%, 90% of the listings in United States is now featured on <unk> Dot Com, which as Brian noted the showcase platform and with that we've got a lot of really unique.

Enhancements that will be different from.

What would be.

And an agent sort of CRM lead generation style platform. So we're pretty excited about.

What we're able to do a showcase but we're also excited about our continued relationship with.

With inside real estate and <unk> core because we have I think.

<unk> talked to Joe there.

Last week.

We have something.

Like 20 million contacts.

Potentially consumers that have been generated into the cave core platform.

Which is a lot of a lot of lot of <unk>.

Potential business, that's locked up in that platform in that ecosystem, which may make more sense to continue to.

Sure then to just move over to a different platform.

Alright I appreciate the.

The incremental color there and just last because we are bumping up against time I'll just read this one so SaaS software sales are long and expensive process outside of Exar's core capability to how do you plan to grow our Bella and any plans to break out the revenues expenses related to that.

Yes, so last year.

When we bought propeller, we bought it we bought it for the primary reason is that it had truly enabled us to build at the time a company in the one hundreds of millions of dollars.

Market value.

Now in the billions not single, enabling technology allowed us to get to where we're at today.

Quickly as we did.

Covid kind of create an opportunity to start to sell it with number of customers that we're supporting on the on the propeller platform.

We think that collaboration technology is something that we need to invest in for ourselves, but also through that be able to offer it to other customers.

And this whole frame VR dot Io in my mind sort of represents the next generation of power Charlie.

Mobile oculus ready out of the box.

And with it.

Features and functions of our propeller are slowly, but surely getting to the similar type of scale, while frames and data I think that the.

The cool thing about crane versus per Bella is that frame.

Should be able to be very much of an e-commerce transaction without much.

Needed work.

Bella itself.

Custom client to vote for each particular customer so there's a lot more work involved whereas frame BR. We think really represents something that can just be bought and used.

By anyone from a from an educational institution of an elementary school.

Which we do have schools using it too to enterprises <unk> and then lastly, I'm just did an event in <unk>.

And frame PR and we've got a number of other companies that have done similar types of things. So we think the future.

Uh huh.

Immersive technology.

It will include both types, but I think <unk> represents another step forward and with that will come much more of a of a SaaS like sales model that.

That could be pretty exciting again, if we can figure it out.

Yes pretty tough to argue with.

The World is moving.

So that does it for the questions I want to thank you for having me and I'll turn it back over to you. So you can.

And a close us out.

Awesome. Thanks, Thanks, Justin and coordinate any any last words.

Thank you for joining US today. This concludes DXP World Holdings, Q3, 2021 earnings Fireside chat remember a replay will also be made available.

This year this coming year. We started then to about 997 and Nobel and we went into real estate.

Yes, we're super excited to be with the ESP, we had always had a good real estate job, but we never really had a good real estate business until we found the tools. The ESP has to offer in one of my favorite parts is actually decide conversations because we work as a collaborative experience of DXP, where we're going to try to help poor until all of you who are out there to try to get you.

<unk> to be an icon agent and if youre out there and you're watching as you don't know what the icon agent program means what that means is.

ESP actually compensates you that gives you your $16000 cap back in company stock and so we're super excited to be on this up.

Up here with with everyone and I think what's going to happen since Mike's not here I'm going to step away from safety, a little bit here and I'm going to go ahead and moderate if everybody on the screen on the stages, Okay with that I will just take over is that call with everybody.

Yes.

Alright, so let's do so I want to thank everybody for coming and getting in here today, what would be great. For you is if you could find just one thing that you could take today from these superstars and implement into your business to help grow your business because of the DSP. We know this as all of us being business owners when one agent wins, we all win so we're all looking to <unk>.

Help each other so I'm going to start with some questions and I'm just going to work on the stage here as you people are looking at from left to right. So it'll go Lindsay Carina and then Craig and then Stacy and so we'll start off real quick here.

Let's talk about prioritizing what is your number one priority you do every single day, everybody appears that agent, we know that we get super busy as agents, we get bogged down in the day to day activities of it but if you could only have one thing that you could do Lindsay what would be that one thing that you would.

Do no matter what.

Is this on a professional level on a personal level I think you are the brand right as the Reorders. So yes, he's a personal or professional gulfport, yes.

Yes.

I Love all my people.

Obviously, a team leader, but I add the.

Goal of making everybody on the team achieve their goals. So every morning, we start out with Ebola and gratitude.

And every agent on the team kept on video we operate in communication systems.

And just quickly shoot a quick video will get their agents comfortable putting themselves out there and it's one goal from that theyre going to focus on them or we're all going to focus on personally professionally everyday and one gratitude. So something we're grateful for something Thats happened something that we want to shout out at somebody.

The team did and it's called our Golan gratitude and we do it every day Monday through Friday.

That's great answer on that I love It the trainer Youre next by the way create a great job by moderating the last session on that.

There will be an up there can be tricky and you handle it like a pro so great job same question to you Kareena.

Well, thank you for those kind words so.

Because of labor and how it finished jewelry membrane I have I know my numbers pretty well, we keep it on an excel spreadsheet.

So as soon as I get into the office, we had our morning meeting and I sit down with two key people in the company.

Mark Brown, who is our client service manager and Melinda Johnston key Melissa Johnson is in charge of our database follow up actually as a lifting specialist mark handle transactions as soon as they go under contract he handles their relationship from when.

It goes on the contract to closings, we can focus.

On the bigger nuggets of getting more people.

Turning to more people and getting more contracts. So we go over all of our transactions.

That are pending that are in the process and check make sure everything is.

There are no loose ends and go over our listings everything so we know what's going on if theres any fire you've got to put out we know what we've got to do that day. Then we look at our calendar is he who is doing what when appointment so on and so forth.

Once we know where we are standing in the morning, everybody goes off to do their own thing I do my own thing and then massive routines. So we always know what's going on every 24 hours. We know if there's any changes we are on it.

I Love. It you can't have you can't hit a target that you don't know what it is right you got to have it so thats great Great I Love It Craig same question to you.

Yes.

While selling.

We've been blessed since we've been at DXP, we've been able to kind of step.

Pretty much out of production and we built we still work on some bigger deals with like builders and developers and larger commercial deals but for the most part.

US to work on the business instead of being in the business as much and what that has allowed us to do is support our staff.

As well as planned forward. So I mean, we support our operations manager or we have a trainer coach on our team we have marketing and distribution. We also have a client Sierra which basically loves on all of the agents sphere, along with them and so as a group or <unk>.

Support staff supports our agents, but that's allowed us to basically support our support staff.

Most first and foremost plan for the future and be able to always be ahead of the curve, which has allowed us to really.

Almost we tripled our production since we've been in ESP.

And these four years and I think a big part of it has to do it.

We were able to set up our team structure and support from the top down.

Great job Craig I can see why you are four time icon and Stacy three time icon working on your fourth one right now what about you.

So I know a lot of we have a lot of teams up here it sounds like and people think that Jim and I are actually Athena. We're not we have the best of both world, where <unk> been agents I'm, an independent agent did about 60.

Last year after year.

I focus on the production side and Jim Buckley, who is on the recruiting so with production. After 25 years in the business. Our lead Gen literally is our sphere of influence.

Clients friends families. Every morning, I was really one purpose of my social media this past year and I got rid of all the junk people on their if they haven't they haven't virus into their your license all real estate I really don't need them on our social media or social media or mine is full of all where I think we've done how many houses 1500 houses Simpson Vince.

Following so every morning I'm in social media lead generation because for us that literally fills our playbook.

That's fine.

Inside joke about the social media because the Facebook kicked me off putting in Facebook jail, considering apparently on too opinionated on there. So all right. Let's go on let's say with a fun question right and you have got a great question I'm going to ask each one of you and that says we know the leaders our readers right you've got to be constantly improving yourself you are the <unk>.

In some of the write down the line again the same order what are you reading right now I'd love to hear it.

I'm reading a book that was recommended to me, it's called the Shadow effect.

More of a personal development up until midnight.

Yes, several people actually within the ESP organization recommended and do that.

So far it's been really a great book.

Anyone else with Red hat.

Beautiful if you guys want to type those in the chip outside your Sam Karina.

So for me because.

Hum a type a personality.

I am intensely involved day to day lots of things going on I don't have time to really have a luxury of relaxing or reading a book, but what I do.

Is it I read as much as I can on everything that comes out on inland.

I find that.

Get a lot of information there useful information so when they get a chance to have a stack of like maybe 25 articles that have been.

Collecting for the past three or four months that I have not been able to get to because I've been so busy so I'm going to take that on my Christmas vacation and I want to get through all of them.

Beautiful correct, how about your what are you read them.

Did you say my kind of broker.

You Craig go ahead.

Kind of.

I'm not much of a reader believe it or not but.

Love podcasts, I'm always trying to increase my knowledge and life.

Business and real estate overall success.

I listen to a lot of different podcasts.

I tried to read up on in the news obviously to stay in.

And I know with the the industry.

I like being very broad and then I try to.

Take what they're talking about and apply it to our business My life.

In real estate.

From a real estate standpoint, I like an investment staff deeper pockets.

Podcasts.

Some Gary every once in a while I can approach the things Hello, Joe Rogan is awesome.

A lot of really interesting people an interesting topics.

Our very broad so you can apply that just to general lifestyle business and apply it to what we're doing so that's kind of how I approach.

I liked that Craig you had a question in the chat box if you want to type in there some of your favorite podcasts and things from that its great Stacey how about you what what are you reading right.

Following a little bit as I am out of the two will open up the book reader, but every morning, I view I'm warning letter.

Okay.

Thank you <unk>.

A couple of paragraphs that really gets here.

So I always from my download I love that and I learned the other day when I was doing one of these icon zoom panels now we don't just use our prices or zoom panels, you can get on and was moderating that I love. After 25 years I could still learn something all the time, Craig I think your microphone and.

What I learned was this as Reorders. We are just swap right. We don't have any time, but you have to constantly be improving yourself is turned on to an app called Blink and I'll put it down the chatbot blanket they take business books or meditation most of whatever digitally and then condensed down to 15 minutes.

And you can have it in a visual where you can read it or it's an audio while you're driving and I'll take an entire business book and shrink it down I thought it was awesome. It was a great great recommendation from an agent out of Kentucky, and I'm going to Miss her name on here, but she's doing over 100 transactions a year now Mike. This is a woman I should be listening to and Blake is soft.

I'll put that in there so let's go to the next question was the write down the line again and this is a great one.

Take two minutes no more than.