Q2 2022 eXp World Holdings Inc Earnings Call

I'm the CMO of <unk> holdings today, we will begin our earnings fireside chat with opening comments and a conversation between <unk> Sanford founder Chairman and CEO of <unk> Holdings, and John Campbell, Managing director team, we're happy to welcome John <unk> as our moderator. Following this initial segment will move into our presentation, which includes a.

Review of the Q1 2022 financial highlight areas of investment presented by Jeff <unk>, CFO and Chief collaboration Officer of <unk> Holdings.

Followed by Jason guessing, our CEO of <unk>, who will dive deeper into our differentiated model agent growth and value proposition. We will then return to John Campbell, and our leadership teams or continuation of the Q&A and finally I'll share details on our June 2022, DXP shareholder summit to bring our session to conclusion, let's review with a beginning.

These 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.

Looking statements are subject to various risks and uncertainties that could cause 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 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 is being recorded and a replay will also be made available on ESP holdings will call <unk> Dot com.

Now for those of you joining and EMC, Kansas City.

Did you have.

Any questions here around the screen, you'll see three of the top hit the stage zoom button to the right of your chatbot to due to the specific screen you can hit the plus icon above the screen. If you haven't seen those slides are great slides, if the refresh icon button at the top right hand corner of that screen to correct wollen ecommerce should you need any help or have any.

Questions. Please put that in the chat box, which you see below on the left and a member of the team will contact you privately as mentioned last segment of our Fireside chat is a continuation of the Q&A and here is in ways that we're able to be able to communicate and collaborate on some of these questions.

Wanted to ask a question during the presentation you can answer your question by scanning the QR code presented on a screen or you can go to the phone and go to slide <unk> Dot com and tightened the event code ESP from there you can submit your question and you can even vote up an existing question by giving it a thumbs up if you also like that question asked this screen will remain up on the left hand side of the stage.

Tom I would like to turn over the fireside chat to Glenn our founder to start the earnings conversation with opening remarks.

Thank you Courtney and thank you Sir.

Everyone for attending.

This quarter was another strong quarter.

Obviously, you finished just over a month ago, but.

2022.

Starting.

<unk> for us, it's really driven to a larger share of our growth and our rapid expansion now into multiple countries, where we've got.

Really three different.

Three different companies inside of DXP, we got DXP royalty, which is.

The primary driver.

Most of you know of the of the growth engine of the company, but it is enabled by our rubella enterprise meta versus platform. We've been using this platform since 2016 and bought the company in 2018.

Knowing.

Pat.

The <unk> was going to become a big play.

In 2000, 22021, with the pandemic and inside of <unk>. We've got another one called <unk>, which excited about that and certainly checking out of <unk> Io and the other company has success.

Enterprises, which is a success magazine success coaching which is something we've now added to the success enterprises platform success space, our co working venture, which is continuing to gain speed.

Our speakers Bureau, and some others.

Aspects, we're also starting to leverage the name into the real estate business with our.

Successful lending platform, so with that we can talk a little bit maybe about DXP royalty since that's the big driver of the company.

And the reality is that the XP royalty business model was really built for any market up down sideways quite.

What have you that right now we certainly are seeing.

It will be a little bit of impact with higher interest rates.

Inventory.

Is actually lasting a little bit longer on the market then.

And then it was <unk>.

At the end of last year, but we're really in a position to weather any anything that might come at us whether it be a <unk>.

Our continued fast growing market or a potential contraction maybe later on this year or early next year. So we'll see obviously what happens, but we literally built this with our enabling technology for Belo, we've literally been able to grow too.

'twenty one.

Plus countries just out of that announced a couple of additional countries yesterday I think that New Zealand is opening this week, so it's pretty pretty cool in terms of just the.

The growth rate, even though I think even Henry our numbers have shown a little bit of a drops at the beginning of the year, we continue to grow our agent count.

Month over month, we've never had a month in the history of the company, where we've actually had the same amount or fewer agents than we had.

The month before and so we continue to see.

Continued growth in our agent count Rob.

Obviously very growth driven we continue to iterate on the agent value proposition.

We use our net promoter score as a.

As a guiding beacon for all of the decisions that we make inside the company and that really.

Allows us to not operate as much top down but more as a team.

Understanding that NPS is a big driver to our agent growth, which then ultimately translates to their end customers, having a great experience listing and selling homes the.

The global network.

41 countries.

And counting.

We'll certainly announce some additional countries.

Next quarter, but that network has been growing dramatically well in excess of 100% year over year growth in our global agent count.

And we see a lot of opportunities as we continue to grow into multiple markets around the world.

This was an exciting quarter as well you may have seen in the press release that we called out the first billion.

<unk> revenue first quarter first quarter tends to be a slow quarter.

In real estate.

Relative to the rest of the year end.

With with the company basically having been consistently profitable and cash flow positive cash flow positive almost from inception, but profitable on.

On EBITDA basis for the last three years.

And continuing to increase that profitability over time, we really have this this core that has this variable cost model associated with it that allows us to.

<unk>.

B P.

Positive both on a cash flow and earnings basically we feel.

For the foreseeable future so obviously.

Exactly what markets will bring to us, but we feel very confident in our ability to pivot and be agile as the markets go up or down so fastest growing one of the things.

We're.

Today actually we just accepted an award at the <unk> summit in San Antonio for being the fastest growing brokerage.

Accordingly, <unk> SaaS and we've certainly had a number of those another.

Stat that we recently.

Learned about in fact at the same event.

In Houston, we are now the number one brokerage by agent count and number of listings in the Houston Association of Realtors.

But a pretty good indication of that we're actually breaking into large markets and becoming the number one player in a lot of markets around the country. So there is a lot of smaller markets that we're already number one in.

It was interesting just to have that call out by Bob Hale.

In the last 24 hours, just learning that particular stat and and I think that's just continues to translate to the idea that we will be a major player.

The U S, Canada, and all the other countries, where the fast growing brokerage and in countries like the UK, Mexico, and India and a number of other countries as well as really as agent value proposition.

But the one that I'm really continue to be most proud of isn't as much the agent growth I think the agent growth as a result of.

And just.

Taking care of both our agents and our staff and our Glassdoor scores were off the chain. This last year. You may have noticed that we were actually in the top five large employers. According to the glass door and that I think is another leading indicator to our continued growth and excitement.

For for the company so.

A lot more but I'm going to maybe turn it over to John Campbell.

Any remarks, and any pension some initial Q&A before we turn it over to the rest of the team.

Yes, thanks Glenn.

Great to be back in the virtual world again in hearing firsthand about the degree of SaaS you guys just continue to see in the marketplace.

I say this every time, but it just feels like a sector early innings for you guys I think are.

At a fraction of the penetration of total U S agents or agents. It seems like there's a lot of growth opportunity ahead for you guys.

You are performing well the stock market is not treating you guys well.

Nothing <unk> really specific I think anything kind of housing related has been.

Hit pretty hard I mean stocks, obviously go up and down investors rotate in and out of sectors. So it's not fun when you're on the flip side of it but you guys, obviously keep doing youre seeing and its not going to last forever, but.

Obviously on the Investor side of the World, we tend to look at multiples when we make stock calls.

For those who are not in the weeds on the Investor side, I mean that multiple is nothing more than a gauge of sentiment you guys are basically finding the spread between the market value of the kind of enterprise is what's implied by the market price today, we divide that by the earnings expectation. So just sizing up.

Basically what investors are willing to pay for your earnings.

Today based on our projections for you guys and I think the stock's at about nine times forward EBITDA.

That multiple reached about 60 times early last year.

Even since 2018, you've averaged 24 times. So you put that historical average multiple 24 times on the stock today, it's a $40 <unk> price, so thats well over double in value.

Bigger picture I think you'd be hard pressed to find many companies out in the entire market today trading at this type of multiple.

With the disruptive characteristics that you guys have kind of coupled with the top line and earnings growth.

So all that to say I think we see a lot of upside still in the HDI price from here just kind of need the investors to move away from the chicken little kind of Sky's falling mindset, but I'd never want all that Glenn I just wanted to maybe start off with one question clearly is another good quarter for you guys. So, let's just start off kind of with your high level thoughts.

Housing shipped out how that kind of fared relative to your expectations of what you'd point to as kind of the key fundamental drivers in the quarter.

Yes.

One thing and we called this out in our press releases consistently and we really do focus on on our net promoter score as being the future or the leading indicator to how we're doing and that Kpis still are.

Internally, it's a rallying cry.

Our.

Our NPS.

It goes down in different areas.

I think this last this.

Last quarter or two a lot of it was around candidates we've spoken to a lot of work on improving our our NPS around a lot of Canadian activities in this in terms of.

And so when we think about it we think about it more as a.

What is our model going to produce if we continue to create a great experience for agents and then we have to do factor in a little bit of what the macroeconomics of the.

The market. So I think macro wise, we're seeing a little bit of slowdown and saw that.

From our perspective.

We grew a little bit slower than maybe we expected because I don't think anybody expected interest rates to jump as dramatic as they did in this short a period of time, but we're starting to see that actually play out in our numbers a bit and we're starting to see a little bit of that sort of internal sort of slowdown, but obviously our growth rate in terms of agent count continues to sort of propel us there. So.

That's kind of our kind of our mix all around.

Around Q1.

The other pieces that in the U S where are.

Our growth rate is.

Probably a little slower than we were expecting and I think part of it is that any of our numbers actually off in the first quarter or so in terms of number of agents, who are active real tours and so.

We grew with even though the number of agent.

<unk> agents, who are real towards actually reduced and so from our perspective, we feel really good about the numbers, but again there are some macroeconomic factors that that were starting to see it actually play and we can sort of measurably see it against maybe some of our internal predictions.

Yes, that's a good run down.

Sticking on the bigger picture and obviously Theres, a big fear factor around U S housing.

Like I was mentioning earlier, a multiple is essentially kind of a gauge of sentiment. The multiples are employing a lot of the stocks that were going back to 1990 existing home sales.

So I don't think it's very surprising to hear a bit of a slowdown obviously with rates moving as they have Glenn.

Ask you. This every time, but like kind of just through your crystal ball out us and give us your sense for where the market heads over the next several quarters.

Yes, so I've talked about this a little bit.

A couple of weeks ago.

Asked the same question by Brad in men and.

With the fed projecting additional increases in interest rates.

And the desire to cool down the housing market.

At the fed level I think that does play into if they're serious we're definitely going to see a slowdown in the market.

Three Q4, that's my sort of prediction.

And then that going into next year I think it's I think it's actually healthy.

For the market to slow down.

A bit certainly from a homebuyer perspective, there's a lot of inventory there's still we're still hearing reports of many consumers that are.

In multi offer situations and can't.

By the home that they are looking for because there might be 30 offers on that home in.

<unk> reduced a little bit so now it might be 10 or 12 offers on a home.

Its not enough yet.

We're in a balanced market.

My guess is that the fed's going to continue to to raise interest rates a bit we could.

<unk>.

<unk> Plaza and interest rates were not that far away from that now and with that certainly we've got the other macro factors, even even things going on in Ukraine does create a lot of fear and uncertainty around what's going to happen and maybe that does sort of slow down the market as well when people maybe want to preserve.

They are they are there.

Cash or maybe not make a move at this point in time, so that kind of plays on both sides of the equation.

Yes, it makes sense and just assuming I mean, just a hypothetical market kind of rolls over pretty hard later this year.

You guys have seen plenty of market swings, obviously, there hasnt been a dramatic down market, but <unk> seen the market swinging around in 2014 late 18 and.

<unk> performed well regardless of all that so I just want to get your sense for how you seek.

<unk> got a model kind of flat and then also from our agent value proposition standpoint, what kind of stands out.

From the X Gi standpoint.

If the market were to slow a bit.

One of the things that I point to is the second quarter of 2020, it wasn't it wasn't a pleasant quarter.

It was a time when COVID-19 had really fundamentally changed everything for a short period of time.

Transaction volume was down across real estate industry, and yet we turned out our most profitable quarter to date in that Q2 and the reason why was because we made the tough call wasn't it wasn't a popular call with something that we didn't know.

Relative to residential real estate. If it was can be essential service what was happening all of that but we reduced the cost to operate such that we turned out our best quarter ever we were able to do it.

Wasn't it wasn't pleasant not something I would look forward to doing again, but we are actually able to adjust our cost to operate very very quickly.

In a down market. So that was one where there was a real shock to the system and yet we were able to turn out a very.

Profitable quarter, which was really.

Our mind at the time.

Our self preservation decision because again, we didn't know what was going to happen in Q3, Q4, and we thought this market could be going off a little bit of a cliff for a period of time so.

So that gives us that flexibility.

Good market, we should do well in a bad market, we should capture market share and still do well is the way that I look at it.

Yes makes sense.

That's all of the kind of high level questions I've got nothing.

Nothing.

Jeff is going to do the financial rundown and I'll come back later with some more kind of in quarter and financial questions later.

Hey.

So yes, so broken.

A good.

Business partner, Jeff White side, we've been working together since.

Late.

2018, I think anyway, it's been a while.

Four years so.

Okay, Great I appreciate it.

Alright, well, thanks, Glen Thanks, Courtney and thank you John for moderating today.

And thank you for joining our first quarter of 2022 virtual fireside chat.

After the team again, I'm really proud to share our results and highlights for Q1.

Q1, 2022, so if we look at our first page ESP holdings delivered another strong performance in the first quarter of 2022.

At a high level growth in agent Count transaction volume revenue net income and cash flow continues to be compelling.

We continue to invest in our future.

North America International Technology commercial affiliate servicing global lead to success at.

Zero debt on the balance sheet, and the agility to adjust where needed.

As Glenn just talked about we are built for good times and they're built Ford tough times and so we are feeling great about going into whatever whatever comes at US we're leading change in the industry and we've got the best leadership team were delivering exceptional shareholder value.

So if we go to the second page.

Which is the highlight level if you look at our financials and starting with revenue in Q1, our revenue was 1.010 billion up 73% versus Q1 2021.

Our gross profit in Q1 was $3 5 million, an increase of 56% year over year.

Q1, net income was $8 9 million, an increase of 83% year over year and as noted our net income includes a $5 1 million income tax provision benefit primarily driven by our stock based compensation deduction Q.

Q1 diluted earnings per share was <unk>, <unk>, and that's up 100% year over year.

Our adjusted EBITDA in Q1 was $17 7 million, that's up 20% year over year and lastly, our Q1 some on a summary page our operating cash flow was $62 2 million, an increase of 53% year over year.

So now if we just look at our key metrics.

Those of you that have been with us for a while.

It's broken into two categories operating metrics and financial metrics.

So looking at our operating metrics for Q1 as a reminder, we run our business as Glenn just mentioned an agent and employee net promoter score.

And our goal as a company is to keep that number above 70.

Which which is really world class and we find it predicts our agent growth of retention and satisfied employees. So.

We're down slightly in.

In the quarter, but were above 70% 70, 178, so when the rates that we want to be.

And a royalty model, adding productive agents to our platform drives unit sales volume revenue and gross margin dollars.

If you look at our agent Count we ended the we ended the quarter at 78 196 as first $53 33.

The 5% so agent count was up 55% of major growth in Florida, Texas, California, as well as an expansion globally.

Recently announced 80000 agents and to get to give you a split where approximately 88% in the U S and 12% globally.

Going down to the units.

Our units was 114305 grew 73878, that's up 55%.

Our price per unit was $3 62 up 9% year over year and our volume in Q1 was $41 4 billion was $24 5 billion and that was up 69% year over year.

Now going to revenue the revenue as I mentioned before was up 73%, primarily driven by increased agents and transactions in North America.

We look at our gross margin dollars, our gross margin dollars of $83 $5 $53, five up 56% and our gross margin grew $30 million.

Based on increased on our transaction volume our gross margin percentage declined due primarily to higher priced units.

Accelerated capex.

If we look at our SG&A, our SG&A was 79.

Zero five was $48 six so it was up 63% <unk>.

SG&A costs increased due to higher investments in FTE and growth support international portfolio of technology and affiliated services.

As we look towards the next few lines here are.

Got it kind of gone through the operating income and the net income. So I'll just take you down to the bottom which is our operating cash flow you can see the operating cash flow increased 53% from $62 2 million to $46 million and our cash and cash equivalents of the money we have in the bank after all expenses and investment.

Was that a $130 million versus $108 2 million.

Yes.

That's great.

Great results from that from a key metric standpoint in the quarter.

Now if we look at some other Q1 investor highlights and milestones.

On the last page.

So in 2022. So this was the 10th quarter in a row that we achieved positive GAAP net income.

Positive accumulated earnings and shareholder equity So we mentioned in the press release.

But we are paying our third Peter third cash dividend in Q1 of 2022 and we are.

<unk> announced another dividend for this quarter, which is expected to be paid on May 31 2022.

Share buybacks.

<unk> repurchased about $30 million of common stock in Q1.

The board approved an amendment to increase our stock repurchase program, the $40 million from $400 million to $500 million and increase our monthly repurchase from $10 million of its common stock up to $20 million. So we have incredible confidence in the company going forward.

DXP real estate platform has now expanded to 21 global markets as Bob mentioned.

Dominican Republic reached in the first quarter of 2022 and announced plans to open three additional locations, including New Zealand Chilean Dubai.

In the near term feature so.

Fantastic strong quarter from our standpoint, we've delivered quarter after quarter and continuing we are really in a situation where we are in a position to.

To take on whatever happens in the upcoming but headwinds. So now I would like to go over to our CEO of DXP Realty, Jason guessing, who will cover our innovative model agent growth and value proposition. Good morning, Jason and good morning, Jeff. Good morning, everybody Glen. Thank you. Thank you John I always feel privileged to be up here and I'll just say.

First I say nothing else congratulations once again to our agents brokers and staff, who really have made.

Most appropriate today possible and had been doing it on a launch as Glenn mentioned in his remarks ESP was built to thrive in all market conditions and in fact, Glenn founded the company really during and in response to the great recession and designed the operating model to be flexible to be adaptable and to thrive in downturns in strong markets and so where the growth opportunity exists.

And part is that we believe for some time that when the next time market arise. We're in a very unique and strong position to grow as a company, but also to help brokerage owners who.

Physicians remain in the business.

Can eliminate fixed cost grow into markets that would otherwise be unattainable to them without great risk and expense and they can really leverage their network and credibility to grow their own organizations, while also providing new opportunities for the agency in the brokerage and others in the industry and what's really exciting to me at least about this long held belief is that now today, we've got patents exam.

ZIP brokerage office, but joined us they've migrated their agent base over completely as a prudent sjostrom.

Aren't you a supervisor supervisory obligations that grown into new countries and states.

All the while they are achieving greater levels of profitability and satisfaction and thats been a good market. So.

So we really believe.

That we are a logical and very appealing destination for brokerage owners going forward.

When the market does turn.

As you've also heard today ESP continues to have a strong financial quarter with consistent positive cash flow and no long term debt, which positions us well in these uncertain markets and which stands in contrast to many of our competitors who have mountains of debt Andrew Richard yet to reach profitability. Despite the strength of the market in 2020 in 2021.

This potentially limit your opportunity to invest in growth and in contrast, ours is a flexible cost model centered centered as Glenn said around a <unk> community, which now has more than 80000 agents spread across the globe and it eliminates operating burden based on brick and mortar occupancy.

Additionally, our positive cash flow excuse me means that we can continue to make smart investments that accelerator specifically a couple of examples not.

Not limited to these but typewritten remote workers.

<unk>.

Launched DXP relocation services provide expertise in U S and international employee relocation.

Inception last year. The program has thus far generated more than $125 million in pending and closed volume and has brought in more than 2200 referrals and what's notable about that is more than nine hundreds of those 2200 were made just this year, which we believe indication programs appeal as well as its momentum.

<unk> program, which are covered in previous sessions Express offers.

Strong base with thousands of agents certified and we believe that as mortgage rates increase there will be sellers in distress are under pressure and looking for options and we believe that express offerings provides a cash option for this clientele with third party investors, while keeping the agent at the center of the transaction that is acquiring a single piece of property or taking any balance sheet risk.

Additionally, we have launched a single global financial system that will improve our operational efficiency increase internal controls and support our quickly scaling global footprint, which is helpful and important just to see on this slide coming up.

We are one brokerage, it's expanding globally and our continued growth in part can be attributed to the compensation model in these countries made possible by our utilization of the <unk>.

Really allows us to build a strong collaborative environmentally friendly and interpersonal community.

Despite headwinds affecting the broader housing market, we're well positioned to capture increased market share.

Lower market our model is highly attractive to agents due to the.

Competitive commission structure and additional learning opportunities through equity.

Revenue share and partner programs.

We saw this play out through Covid and post COVID-19, including during the early stages dependent.

And to a halt.

Domestically, we are that 2021 growth leader for agent count sales volume in transaction sides, and we continue to capture that rent and specifically Glen mentioned the <unk> hundred 60, <unk> word. This morning, Theyre real estate Almanac has recently identified ESP royalty is the number one growth leader year over year in volume transaction sites in agent Count. In addition, real trends 500 recently.

<unk> is the number one into brokerage in the country. It's number one top recurring transactions and number of top five year movement.

Percentage.

Globally, we continue to expand as folks have mentioned that regional hubs in EMEA region, the Caribbean and Latin American region in Asia Pacific.

Coverage in operations now in all time zones also with respect to our global efforts today.

Today, 42% above forecast for revenue and have increased agent growth, 314% year over year as momentum continues to build in our new markets.

And as Jeff mentioned International agent now makes up about 12% of our total agents up from 7%.

Go.

Our ESP commercial business continues to focus on attracting top productive agents both in the U S and abroad. There focus on productivity is resulting in strong increases in revenues.

Sure.

Percentage increases year over year triple digit increases in transaction volume and looking ahead, we are really excited the commercial teams.

<unk> service offerings by strengthening their expertise to deliver a great.

Client service and a variety of commercial disciplines.

And then lastly.

I know you've heard it in prior calls you've heard twice. This morning, if youre going to hear it again, because it's that important to us but.

We really do.

Focus on value for the agent and utilized net promoter scores as the critical measure of our.

Efforts to build and continuously iterate on the most agent centric platform on the planet our NPS score of 71 ranks us among some of the best brands in the world and as far as we can tell well exceeds the industry average.

Which we've been somewhere in the neighborhood 30.

The first cloud met.

<unk> brokerage in the World, we provide location and time freedom, we enabled <unk> to do their best work, when and where they need to.

While still providing great opportunities for collaboration education community and connection in our fabric campus, which we call DXP World.

Offer robust compensation opportunities not just in terms of cats, and splits and northeast equity and revenue share, but also with other offerings that are important to our agents such as healthcare true health care for ratings today, we've got over 4100 agents enrolled in our health care offering total enrollment which includes partners spouses and children is up around 12000 <unk>.

Care for agents, who has been a chronic challenge for the industry and we're pleased to have arrived and solutions. This is an agent if you're worried about your health and you can't focus on new business and finally, we foster a culture of community through various initiatives, including our ever growing one NXP diversity and inclusion initiatives and our icon Achiever program.

On the SaaS side, putting NPS scores.

To be very strong, it's our fifth consecutive year being listed on the glass door Best places to work rankings for large companies.

Today, we are at number four and ahead of many well known household brands in niche.

John just back over to you, but thank you once again.

Thank you.

Yes, thanks, Jason so getting back into the Q&A here.

Let's let's start back off with one of the positive developments that kind of jumped out from the press release Glenn.

Glenn you guys upped your buyback authorization that you have.

As you just mentioned you doubled your doubling the pace of monthly buyback so talk to us about what drove this decision from the board level.

So the couple of things one.

Our stock buyback was limited to $10 million, a month, which is actually why we accumulate more cash on the balance sheet then.

So that.

So we bought back $33 million.

And so the the.

What we have with the board.

The agreement to maintain $100 million in cash on the books, because we feel that that for US is an adequate amount of cash in order to run the brokerage so for us it really was around.

Creating an opportunity to buyback more obviously, it's not going to be a one month situation and given our growth rate and continue to cash flow.

We may need to increase that at some point in the future again in order to get us back to the $100 million cash balance. So that's kind of where we're kind of focused on is what's the what's the appropriate speed.

And then just wanted to also show that our.

Our commitment has been to one offset any dilution.

In the.

And the stock relative to our equity programs.

And in some respects.

Ill be able to actually reduce that and bring it back to.

Prior period levels in terms of just the number of shares issued outstanding <unk>.

Fully diluted basis et cetera.

Yes, it makes sense I mean, I think you saw it yes, you saw a 20% increase in the cash balance sequentially.

So you're sitting with a really good balance sheet.

Obviously, it's not fun to have your multiple under pressure in the public markets, but.

On the flip side of that on the <unk>.

M&A side of things I mean, you can typically get some stuff I think pretty attractive multiples I don't know how much. This has trickled into the private markets, probably holding up better than what the public markets are but give us your thoughts about M&A that has just been a few.

Huge focus of your story, but just give us your latest thoughts on that.

Yes.

So Kyle Kittleson heads up our M&A opportunities.

The company and Heath.

Multiple opportunities.

Certainly on a monthly basis.

<unk> will see different different opportunities even on a weekly basis, and we really look at a couple of things one synergy and culture.

80% of the time that M&A is done.

It doesn't work because of there is a cultural component that maybe doesn't fit and so we really are looking at both of those from an M&A perspective, and so we've got various different things we're looking at.

We expect that we will have some some announcements around M&A in the next few months.

Not any.

Huge.

M&A. That's currently in the works, but certainly some small.

Projects that we'll pull in but we really are.

As I will say housing stocks in general are under pressure.

We think theres going to be some opportunities to pick up some things that some reasonable valuations. They are a little crazy in the last couple of years and so we'll we'll look opportunistically to see what we can pulled in if it if it makes sense both financially and culturally.

Yes, It makes sense and then maybe one for Jeff here on gross margins, obviously, that's been a pretty big focus for investors over the last two or three years, but still a little bit of pressure year over year I think almost all of that is just katherine but you've grown it sequentially for the second straight quarter.

Before we get kind of get the moving parts here just thinking about the full year gross margins just help us out on this if you can if we were to assume that the average commission per agent kind of stayed the same.

With greater revenue growth would you be able to see some gross margin expansion would it kind of be flattish year over year, just latest thoughts there.

Yes, John .

One of the biggest things that we found.

Kind of obvious but its the price of the units.

So as the housing prices have increased we have seen our gross margins.

I mean, if you look historically, we're around <unk>.

Average somewhere around 85 ish eight.

Four ish across since 2018.

I mean.

If we see the business as Glenn pointed out coming down and the volume coming down towards the end of the year that will actually support the percentage.

As I mentioned before I mean, what we really focus on we focus on the gross margin dollars that are coming into that into the business and that's that's that's where we make our investments from so I would say.

Historically in the low eights.

We were at eight three in the quarter.

So depending on what happens with the housing market prices.

Prices start to stabilize or come down and the volume comes down the gross margin percentages.

But we still have a pretty healthy very healthy actually gross margin dollar.

Return on the business.

Yes, it makes sense I think on the Investor side, we tend to focus too much on percentages and yes, I think so I mean, you can see I mean the <unk>.

Presented as well obviously, we had the same market share. So that's a big deal for us in investing in the future is a huge deal for us. So we're really looking at that dollar figure in that dollar figures. It has grown substantially in the quarter, yes percentages do not pay the bills thats for sure.

Okay longer term.

Do you see a pathway back to Tom.

Low double digit margins or gross margins.

You guys have done that in the past, but I don't know how much of an impact from ancillary services. That's actually one of the questions from slide out here, but just talk about kind of the impact of ancillary services and what that can do for gross margins.

Yes.

Yes.

As I said before I mean, our gross margin.

Storlie percentages as being in Canada lower H.

And I do believe that we all believe that there's a big opportunity for us and affiliated services in things like other related business transaction coordination.

High quality lead generation health.

Healthcare mortgage title escrow so.

From what I've seen there is a point or two over a long period over long term that we can add to this business. Once we get you can see the numbers.

It finished last year with it.

With a very high revenue number and that continues to grow. So we think the opportunity there as a percentage to two percentage in the long term to add to the operating margin.

Yes makes sense and then shifting gears to the Opex operating expense side of the business.

I guess just first can you can you give us an update on what the variable versus fixed mix looks like today.

Yes, I think most of our most of our expenses are in supporting the brokerage.

Alright, so thats those are kind of variable expenses, we have a lot of variable expenses.

<unk> piece of our expense is.

The growth of the business and that's that comes in the form of revenue share.

So as the business goes down obviously that goes down too so that's an automatic.

Buffer on cost and then we do have the ability as Glenn mentioned before.

When we had to react in 2020.

Not something we need to do but from a from a percentage of.

I would say the majority of our costs are variable costs in our business that we can take action on it we have to but at the same time, we're working extremely hard across the business to increase our revenue.

Areas like international areas like commercial areas like.

Affiliated services. So that's our that's our main focus right now is investing for growth.

And when we get to the other side of this we think is going to be great shape. Both in the real estate business and also we're also along the affiliated services lines.

Yes, that's a good run down one of the things we do just trying to get a sense because as you mentioned I think the fixed cost side of the model is a low low percent of the cost base, but there is a little bit of a leverage potential there right.

And you guys. We've looked at it typically on a fixed cost basis per agent so how much fixed cost.

Wired to support.

Agent basis that youre getting leverage on that for several years and then over the last probably year and a half you just kind of going the other way a little bit.

It seems like a lot of this investment you've kind of called this out but maybe walk through some of those investment areas.

Why.

The spin there has been a little bit faster than revenue growth.

Yes, I mean, one thing I would say is that the technology investment that we're that we're taking an hour and will be taken on for the last couple of years is all about getting more productivity.

Across our business, so that so that SG&A.

Direct SG&A costs to support the broker can go down so Glenn maybe maybe a couple of comments from your side in terms of the productivity and technology that.

We're working on across the business.

Yes, so we're definitely we're definitely doing a fair bit of what we refer to as R&D to improve the transaction workflow process. So we've been.

Making.

Some investments are around how to make the transaction workflow easier for the agent.

And also for internal staff, so thats been.

Some investments we're also investing heavily in the in the portal you will showcase itx building out <unk> Dot com CA.

And then and then international we want to get to as many countries as we as we can.

As quickly as we can and recognizing that it takes a little bit of time before they get to positive cash flow, but we've already got to positive cash flow in a number of countries that we can expand into.

We're a low cost operator, but we still want to continue to keep our foot on the gas to get to those countries.

Learn what we're going to learn entering those new countries.

We can so we can make the pivots and adjustments. So we can become a major players and we think that those will be investments in the.

That will pay dividends in future years, especially like we are we're really not focused.

So much on R. R.

Our short run results, we're really focused on how do we how do we actually.

Achieve.

Aspirational.

Our goals, reaching 500000 agents in five years.

That just takes continual investment because we think long term.

Five years 10 years, how do we.

Truly become.

The largest most agent centric real estate brokers on the planet and that's really our big driver short short term.

We'll maybe get the stock to do something.

In the quarter.

The long term stuff is the stuff that really creates the generational.

Hum.

Growth engine that will propel DXP into well into the future and Thats really where we continue to focus so.

I know that you and your role May look a little bit at the short term as a predictor.

We really focus on sort of that that long run view on what are the things that we need to put in place and how do we make those investments.

Five years 10 years from now.

We're super dominant player.

Yes makes sense.

Thats the delicate dance with Wall Street, obviously.

Investing for the long term, while showing near term results. It's just a balancing act for sure.

I want to I want to hit you with one question don't mean for it all to be a zinger, but this is a question we get quite often from investors I've seen it in the chat box here someone was asking about it but glenn.

I believe you've got a standard kind of <unk> five one plan dribbling out some share so.

How do you respond to the question why shell here.

Yes so.

Actually not to really be selling but I have.

Options that were set in 2012 that expire this year and so.

So so.

<unk>.

Ironically I made the.

A mistake because I was very optimistic around the stock last year. So I took down about half of those options.

At a higher price because a big taxable event for me and.

So big portion of that sale sales were literally to pay the taxes, which were something akin to $16 million that was that came from just an exercise and then and then trying to rebuild a little bit of just my own personal.

Tom.

Cash reserves.

For me personally, but that's been I did it has I think 9000 shares a day.

Because it was a really small amount as opposed to just doing one big whack of options exercised in sales. So that was really kind of the idea.

Not sure I would do it exactly the same way.

In the future, but that <unk>. One plan is in place through I think September .

Technically.

One has a floor price of $15 a share so those below 15, I'm not selling so that may create a different scenario if for some reason.

Stock continues to be under pressure later on the year, but that was really the whole idea.

Obviously control and own.

Lack of <unk>.

Beyond that that's really my core holdings, but this was all around just the stock options that expire later this year.

Yes makes sense.

There was a question on slide <unk>.

Also myself curious about this so talk to us about.

Lending.

The number of loan officers.

How far off the ground, you've gotten thus far and when you really expect it to start contributing.

Got it.

It's actually got some green shoots historic third third.

Move into into mortgage.

And we we've got.

31, plus.

Loan officers in a few different states started in Illinois, I think we've got some in Denver and Arizona, We're really building out the network of loan officers, there's approximately 30.

Transactions were done over the last couple of months kind of working out the kinks in the system.

Prime lending.

Which model.

Stearns lending team was now part of time lending and also part of the JV they've been really working diligently to create a really good process for our consumers and our agents and so.

It's getting it's getting some momentum.

So it's not huge yet, but one of the new parts of our model versus other lenders is that cars is almost exclusively purchase based business, we're not relying on any refinance which there is virtually no refinance going on in mortgage right. Now so we're in a really good position to.

Start to build.

And then also eventually have our own.

More retail oriented success lending branches so.

So we're really approaching it as a.

As a kind of a unique joint venture and that is not exclusively ESP Realty generated business. These loan officers are bringing in their own book of business. Glenn Sterns has made the statement that.

If you'd like to see 50% of the loan volume actually come from non <unk> related sources and so he has been.

Really following that path.

In building up the pipeline of business from those loan officers.

Listen.

Listen he has done this before.

I think as the one that kind of lending team windstorms, especially houses heart really into <unk>.

It's going the right direction I'd say later on this year third quarter fourth quarter, I think youll start will actually start to have a measurable.

Results start to show up on our financials.

Okay, great to hear.

One last kind of two part question here Big picture and this is my last question on my side, but.

First you crossed $1 billion of quarterly revenue last year that was a pretty big event for you guys. You've now strung together three straight quarters of over $1 billion and including <unk> that is seasonally weaker. So you guys are on a really good path but.

Medium term nearer term whatever you think.

When is the next milestone of $2 billion of revenue. When do you think you can cross that and then the second part of that is you guys had talked to the 500000 agents in five years, let's just get your latest view on that kind of decision on that front.

Yes.

Alright.

My My my Best guess at the moment is that 2023, we'll have our first $2 billion quarter I mean, it's possible that it could happen this year, but certainly we've got some macro headwinds and other things. So so 2023 is kind of my.

First.

See a reasonable shot at that $2 billion in revenue in a quarter.

Yes.

500000 agents in five years.

I call. It aspirational I do believe there is a little bit of aspiration to it in terms of the timeframe, but I think the number is.

<unk> number.

Over time, so I think that we will eventually be.

Million agents.

International is going to again, the great part of our of our of our market, but we love to have internal rallying cries and we love to have these internal sort of like where could we be if we continue to really focus on the agent value proposition and being sort of the most agent centric real estate brokerage on the planet.

And we just think that if we do a great job, it's almost a field of dreams, if we build it they will come and so we just continue to work on building the best real estate brokers on plant being Super Super focused on net promoter score and as a result that that translates into all of the other benefits of a well run.

<unk> organization.

<unk>, which eventually I think translates into some really solid agent count overtime.

Yes, absolutely.

I've got one more I'm going to squeeze in here.

It is actually came in the chat box and it's a question I was meaning to ask you earlier and this is actually for probably for Jeff here, but.

On the on the tax benefits, you've released valuation allowance. There is a couple of times just touch on US just touch on the <unk>.

Sustainability of that is coming directly from the App.

The share issuance that should be expected over time.

Yes.

As you probably know Jon is it's hard to predict.

We saw it in our numbers last year and really what it is it's the the fact that we have sustainably generate at net income.

Over over a long period of time, we're now able to take a benefit on the compensation tax deduction.

It's a function of that cost and it's a function of the stock price. So.

I've had this question come up yet.

It should.

Repeat over the foreseeable future, but we really can't even calculate that until we get to the end of the quarter to find out where the stock price goes what that cost is but.

It's been consistently hitting our books for probably like the last three or four quarters.

And we see it continuing.

What level were not sure based on those two variables that I just mentioned, but it's just it's a positive thing for our company.

We've seen positive net income for so long we can now take benefits like this compensation actions. Okay. So that's all I can say right now it's not something we can calculate or predict.

But it is something that should continue to some extent going forward in the near term.

Absolutely well, that's a great rundown and I. Appreciate you guys, giving me the opportunity to join you again in the virtual world, especially on.

The hills with such a great quarter. Thanks for the time.

Awesome. Thank you.

And Courtney check around our chief marketing officer is going to wrap up.

This earnings call.

Thank you Glenn and a reminder, we have our annual DXP shareholders next not this isn't interested in Orlando, Florida.

June 19th through the 20 <unk>. So you can actually look if you are an XP campus on either side to the agenda and you can also see in his presentation, a QR code as well as going to our DXP shareholder Dot Com. This year does that is going to showcase a company highlight as a business for our shareholders our leadership industry leading age.

As I sit here today.

Sharing successes.

Guests features and with that we also have the virtual opportunity to give you. The general session XD campus, that's where we are today and a livestream linked that will be made available on our homepage to execute <unk> dot com. Thank.

Thank you for joining us today. This concludes the DXP withholding 'twenty.

<unk> Q1 earnings Fireside chat.

Okay.

So Glenn do you want me to take the range I'd ask the better do you want to just make it quick.

Introduction of Liberty <unk>, Yes, once you I think.

That makes sense.

Yes.

Okay.

So Jim you want to come down or should I, just get it started right at the top of the out here.

Yes, I think we can we can go anytime now five o'clock.

Yeah.

Terrific.

We'll get started then good afternoon, everyone. Thanks for joining this fireside chat to discuss the fourth quarter earnings results for ESP World Holdings.

We've got DXP will 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 the Wall Street analyst that covers ESP I shares I think I'd add the distinct pleasure of being the very first analysts to pick up the stock for coverage as well back back in early 2018. So it's been very fun ride watching the business grow and getting to know the team just quicker.

In terms of the format for the call here.

We're going to jump in.

Glenn are going to make some quick intro comments.

Then I'm going to help kind of moderate a little fireside chat here 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 O Dot com.

Tag ESP I pose the question and we will 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 just to give a quick overview of the quarter.

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

Sorry, so just to get started in a few slides won't take too long so.

That would be us. So if we start with we're very excited to report a strong fourth quarter and 2020 and very proud of our results in the full year of 2020.

Especially considering the crazy it was with Covid and just really excited about going into 2021, but if you look at 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 as I said before we had from a revenue standpoint from a from a growth standpoint.

We had a great Q1.

We had a store, but we have 33% growth rate in Q2.

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 brokers, who joined us in ESP 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 25004 23 to <unk> 41313, and that was an increase of 63%.

Year over year agent count.

Our next metric that we look at is net.

Net income.

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

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.

82055.

Q4, and then for the entire year.

We did.

35000 transactions $3 22 in 2019 and were up 77% to do 238981 in the full year.

And finally from a volume from a volume standpoint.

Yep.

Okay.

Well I'm sorry.

And then finally, we.

Finished off with a.

A volume this year.

Okay.

Oh.

That was my volume numbers I'm sorry.

Annual transaction volume increased.

89% from 72.

From $38 2 billion to $72 2 billion, so great great numbers across the board I just want to say a couple of more things before I get before I finish my original comments so.

Some some big news on the material weaknesses front. So this this year the company remit remediated all of our material weaknesses in the business and you'll see that in our 10-K, we rebranded and updated D. Spi.

Real tea brands in our USPI Corporation.

Watch five new countries, Michael will get into that increase 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 for Bella and the commercial front end.

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

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

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

Q4 was there was a really good quarter for US we ended up making a lot of progress on a number of different fronts.

We ended up well we've done an acquisition earlier in the year with showcase itx and they were able to turn on in the fourth quarter, our Canadian portal DXP royalty dossier by.

Early this quarter they were they turned on ESP royalty dotcom 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 of our future as it relates to building a robust consumer experience, but also robust agent experience when it comes to lead Gen and then being up.

To integrate a lot of things that we.

I've been wanting to do for quite some time around things like affiliated services.

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

We also as.

Most people have noted we purchased success magazine.

We closed on that in.

December I believe it was.

Sure.

And that has been a really <unk>.

Interesting acquisition, we were the largest single customer 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 and.

If you think about 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.

We'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 so success magazine for US really represents a extension of a moat around ESP that will allow us to have certain.

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 XP World umbrella of companies helps.

Helps solve for that.

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

Feel like we are.

Now.

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 are the better worried about to deliver on those value props 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 41000 and change in agents.

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

<unk> B.

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 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 on 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 the plot.

And 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 got to talk review 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 comments there.

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

It's 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.

Would be curious to hear just your high level perspectives on on on how you know.

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

Yes, it really seemed like a new kind of inflection point in your growth would just be curious to hear about.

What you think.

Is driving that and what drove this kind of new inflection point for you guys.

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

The.

What is taking place in Q1 Q2 of 'twenty 'twenty with the pandemic and the Lockdowns and the fact that you know 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 poor 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 fee.

The other piece is that we've really got to a critical mass and 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.

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 so we were able to pivot.

In April of 2020, we reduced some staff.

Here's back more than we like go 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 having really a really strong.

Q2, even though revenues were up 33% we ended up significantly more profitable in Q2 than if we'd likely had a 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.

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

Purpose, because we launched this in 2009 initially when the market was tough and we said hey, we can't afford physical offices and so we ultimately were built for.

Both good economies and bad economies.

Makes sense. Thanks.

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

The business, but maybe just quickly start on some costs start with some questions on the.

The broader housing market and sort of the macro backdrop.

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 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.

Dan.

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

And so we're when we look at buyers.

That you have in common and everything else that goes along with it. So they can just buy more home for the same mortgage payment. So they're 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.

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

The stimulus is that that took place obviously, we've got another stimulus that is just the process.

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 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 is needs to be some interest rates increasing.

And then <unk>.

Most likely.

It may 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.

And.

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

Makes sense.

Ill.

We 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.

<unk> results are a great evidence of that given how robust and strong your fourth quarter is which typically isn't.

A huge quarter for real estate.

Do you think where we have another year here of.

I don't know maybe less seasonality.

As folks continue to.

Adjusted work from anywhere trends, there or what have you.

Or do you think we may be returned 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 biases the upside just in terms of just comparison comparative quarters. I think we you know Q3 was super strong last year. In Q4 was obviously really strong not just for us for everybody in the housing market, but I think that using that as the next backdrop and I think youre going to see some model.

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.

So if I look at Q4 for US was we were above Q3 normally I think in the last two 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 wouldn't.

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 just based on our growth rates will still be strong.

Okay. So let's give me, maybe we'll shift gears here and dig into some of the operational metrics for.

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

Obviously agent growth was super strong in 2020 and.

It seems to be an inflection up again here in the first quarter I think you said north of 48000 agents.

Can you, maybe just talk a little bit.

About the growth dynamics youre seeing sort of so far in early 'twenty 'twenty. One is it is it being driven by international to any significant.

Difficult degree and kind of how do you expect agent count to kind of play out for the balance of the year.

Yes, So certainly international is driving a little bit of that growth, there's no doubt about that.

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've started to see some competitors that are trying to very small, but they're trying to do similar things in.

But I think that's the key is that our models now accepted as one of the standard models and residential real estate and two years ago.

That would not have been 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.

Yep.

Five 3% U S.

Pedro 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 I'm, sorry, you kind of play with the numbers in <unk>.

International it could be a big big percentage of our <unk> 2021 numbers.

Of course, yes, I definitely want to dig into international a bit and can take advantage of Michael being here.

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

Are there any particular regions or or.

Competing brokerages that had been particularly fertile for you.

For you guys in terms of traction recently 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 bringing people who maybe were semi retired or kind of it sitting on the sidelines kind of back in bringing new agents.

Into the into the into the workforce.

Yes, well certainly with the best.

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

2005, 2006 2007, when the housing market was really hot we're seeing a lot of lot of people are getting their license because the 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 XP model, so, whereas the original normally you think of that.

Mainline brands Keller Williams Remax has being the brokerages that we bring over the most agents from.

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 tune is if we can't beat them join them and so a lot of the independent brokerages 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 the XP impact there.

They are 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 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 <unk> and we'll get to your questions here.

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 mix.

Decision there is 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.

Yes, so <unk>.

Net promoter score.

For those who aren't familiar it's.

A question on a scale of zero to 10 likelihood.

We refer a friend or colleague joined <unk> XP Realty and so that's the that's the basic question and from there you get you 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.

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.

A part of the business to on improving those scores. So we're we've got 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 as if our scores were around 60, then we werent growing that fast and when our scores were above <unk>.

70, we're actually we're growing faster and we retained a lot more of our agents. So we've really used.

70 of sort of the number that we don't want to dip below in any category of the business because we know that below 70 at least for us.

I don't want to say bad things start to happen, but we start to see us.

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 they gave us a nine or 10, they're going to tell us all the things we did right, but if they give us.

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 I didn't get a phone call back or I can't reach my broker or.

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 NPS 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. We're we've got a sustainable model.

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

The score is above 80, and you can see on the glass door. We're at four eight so we do the exact same thing we can figure out what's going on how we can make it better.

Fix things right away and we do that operationally as well as with employees.

Okay.

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

Glenn in the past you've given some.

I wouldn't call it guidance per se, but.

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

Domestic agent count up too.

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

At a conference recently, putting up some pretty robust domestic agent targets. 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 the numbers.

And for the way 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 going to 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.

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 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.

Internal aspirational goals of 100000.

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

The reality is is that a few things go right for us and we may in fact have suffered.

Close to that number at the end of this year.

But again, it's if there's a lot of things that have to go right, but if we start to get up into the 80000.

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

Yeah that would be maybe a couple on international.

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

Or traveling you guys, who are popping up all of these internet <unk>.

Our national markets. 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.

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 microphone share of absolutely Glenn I'll grab that.

And Tom. Thank you for the question and Youre 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.

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 counts. 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 thats where were 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.

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

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

<unk> for how you look to grow and expand 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 ESP last year in the beginning he started in in some of these markets we were entering.

Having to explain that the success that ESP had had in the markets. We're 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 ESP when we start talking about ESP. It's the idea that now we've got.

48000 ambassadors across the world that are telling the story and an organic format and the markets that we're entering now it's less about who is DXP and more about the cohesiveness that we're doing into that platform, where we serve in a local market via the idea that's really.

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 penetrate that we're in so that we have a local competitive advantage. So the idea that with that.

Giles is what has allowed us to be as successful as we have been as we enter these new markets.

Okay, maybe just a last one on international and 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 and.

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 say by the end of this year and I think Michael you were thrown 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 if this would be like a 50 50 type is.

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

<unk>.

Thanks, a lot.

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 we're 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 the.

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 could elaborate a little bit about some of the impacts there.

And how we should think about the trajectory of gross margins here over the balance of 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 ESP for there given cap here and so that created some pressure on our on our gross margins.

And then.

Alternatively.

Mentioned, a little bit about showcase itx.

Alternatively, we are really getting into a position where we.

We shouldn't 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.

Consumers in.

In a pre approval cycle get more properties through our express offers platform which has some.

Nice margins on it.

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 topic.

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.

Cap year's 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 that.

Kind of 10% gross margin target that you've talked about for core brokerage how do you feel I guess 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.

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

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 makes us together.

Ed.

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, it's attracting a large number of agents.

It's 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 our agents brokers and then and that's 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.

<unk> basis really focused on.

What does that 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 is there is 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.

There is something less than 10% on the top side or something less than 6% on the expense side, and we think that 4% still a.

A viable sort of net number as we continue to grow.

Okay.

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.

One was just on.

To that point, Glenn 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's the driver there was and how we should think about.

That line item in Opex.

Kind of going forward, yes, I think.

The way we look at it John is 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 in that.

It's kind of.

The number went down significantly in Q2 and Q3 of them went back up in Q4, 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'll invest to support our agents and support that the NPS and the NPS scores, but the seven one to seven five.

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

A number that you can look at going into 2021.

Okay, great Okay.

We're all for the year I'm talking about.

Understood. Thanks.

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.

Aside from Barbella 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 global MLS is is.

It's a unique.

The 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.

To consumers.

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

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.

Yep.

What we have right now is propeller success showcase itx DXP royalty those are for <unk>.

Primary.

Businesses and showcase <unk> is really an extension of ESB royalty.

We 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.

Next question.

Maybe Glen you touched on this but is there a hard date her start date for the integration of showcase itx 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 would 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 MLS ecosystem that DXP as a member of in each 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 web sites for 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 so it already exist.

And then we will 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 Glenn would be curious to hear you opine.

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

Against Zillow and the NAR.

What do you think the future of the MLS and.

In the U S.

So I don't really think that there's going to be a lot of difference quite frankly, I think 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 than potentially make more money, but I don't know that its actually truly a consumer benefit that being said the <unk>.

Idea is displaying buyer agency commissions, that's part of the <unk>.

It.

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 is a <unk>.

<unk> studied too much on Rex was lawsuit with <unk>.

Zillow, but.

I think that there they're trying to figure out.

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 reporting 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 Glen I don't know if you if you want to weigh in 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.

What can happen and of course, Tom you've probably even opine about what five times a stock split it gets announced and a lot of people jump into the stock and the stock splits.

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.

Making sure that agents were getting a meaningful number of shares when they were being awarded shares for various activities inside of ESP 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 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 than 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.

Yeah.

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 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's the other side of it is we do have these these other new business units to DXP, 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 that I've been involved with.

Success magazine lot of digital products so when.

When we think about other things that we can do.

We think that there are 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.

Pretty much the things that we've already talked about.

Okay.

There's a question on that then asked about buybacks and maybe Thats a good time for me to ask this question, which.

Kind of touches on that.

It's around capital deployment.

You guys are sitting on a pretty healthy cash position. These days certainly relative.

Significantly better than this time last year.

Just kind of curious about.

How youre thinking about deploying capital.

<unk>.

M&A share buybacks.

Further.

<unk> and kind of your existing businesses any any kind of color. You can you can share on what you guys might do with the cash on the balance sheet.

Yes.

So we look at our company.

As you know we have we still have zero.

Debt on balance sheet, and so we look at our year coming up we believe we have like we have as much capital as we need on the balance sheet and what we're 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. The newest significant acquisition. We do believe we have the opportunity to do that but there is no need at this point in time to raise incremental capital.

To go through 2021.

Okay.

That's 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.

Yes so.

A 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 868 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 is there is 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 talk 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, 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 is and you mentioned kind of conditioning consumers can you can you talk about a little bit about like I guess, maybe agent by Infor.

Your mortgage entitle offerings is it is it also a situation where you might have to say that condition or educate your agents on kind of the benefits of maybe using your mortgage and title offerings or is it is it a.

Situations or im trying to get consumers to.

Each of these products, yes, it's a little bit of both one.

We've got a.

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

That's in pretty good shape, where 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 are qualified for the out years.

Here's the benefits here.

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.

I've already had those pre conversations.

And have already connected them to a mortgage officers that they know to get them preapproved prequalified, so by getting the consumer earlier in the funnel, helping them get preapproved then when.

As those relationships continuing to develop our agents are more likely to say hey, once you fill out the mortgage piece on an ESP royalty dot com till we see what you were approved for or what you qualify for and and then if we can make sure that the relationships and the.

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 coal to using a mortgage product I think what we found in most other companies have found is that that's a more difficult ask because you're asking them to trust us.

Third party that they may not have ever used before too.

Hopefully get their client approved and if they if that.

Mess up.

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 the stuff lines up and we have to do it in the right order.

Sure It makes sense.

We've got about three minutes here NSE 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.

Your expectation for verbally intra industry efforts and growth for 2021 going forward, yes, we continue to work on it where we talked about that we were approaching $1 million a month in revenues.

On the propeller 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 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've used for bellow 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.

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

And I would add that we are investing heavily in it.

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

But campuses went from five to 49 in 2020 team suites went from 49 to three.

329, and one time events, which we did not have before yes, 71 major one time with that so it's taking time, we're building the team we're building a product and 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.

Growing agents, which means.

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.

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.

Now our broker according to that.

Question for you with a strategic move to protect our interest.

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

It was a critical component.

But you look at it five five to $6 5 million homes a year.

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

Reality is that.

As much of a zillow may make inroads and others make inroads.

We are 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.

Assisted by individuals that you know like in trusting and helping you through those transactions and I would add that we got a phenomenal group of agents leaders in 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 thats it.

Thanks, again for the opportunity to moderate really enjoyed it.

Really enjoyed watching you guys grew over the past year, Glenn and Geoff 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 have here.

We do this every quarter.

And so we're just excited that this.

This 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.

Hey, Courtney.

Yes.

Goodbye.

Without certain checking.

John I know you said.

Okay.

Yes.

Okay.

Thank you.

Yes.

Hello, Heather just a quick check before we go live.

We are on it.

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

<unk> 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 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.

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.

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

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

It 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.

Minder 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 stage zoom button to the right as your Capex zoom into a specific screen you can hit the plus icon that 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 into the chat box at the bottom left on a member of the team will contact you.

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 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.

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

John over to you.

Yes, thanks Glenn.

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

A quarter.

It's good to hostess again.

Picked up coverage of you guys back in 2018.

And as we.

We saw something kind of special underway for you guys.

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

Can you just put the net adds of 17000 over the last two quarters. So I mean, clearly you've got the flywheel spinning.

If you look at the overall agents as a percent of kind of in 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 <unk>.

Valuation for your stock and whether investors are giving you credit for it and you kind of compare that to what Redskins at right. Now if you look at Red Sands revenue multiple if you take out the eye buying.

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

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 on 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 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.

Honestly 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 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.

But our equity programs that we've been.

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

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.

Real key for US is to continue to iterate on the EBIT value proposition. So whether we think about you know how we develop a rev share how we developed our 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 billion in.

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

To look at paying paying out a dividend and then obviously the board would you.

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.

Mix. This 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.

As an additional stream so for us it really was a really cool differentiator and I think it also just highlights. The fact that we are running a profitable a.

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 hope we pay the dividend.

Yes makes sense.

Looking at this relative Jim I mean.

Uh huh.

You've got a lot of copycats out there.

Is it going to be more of that come 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 of 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.

Yes, so 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're not charging them up with pes and maybe they're paying up more money or whatever but you know it.

The end of the day Youll companies do have to eventually.

We build themselves to be profitable and and if they don't then then eventually the equity may.

It may not be worth that much at the end of the day and for US. 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 we.

We re cast a little bit of the Rev share model about.

A year and a half ago or so.

Where we committed to the 50% accompanied 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 input.

The financial statements, but the income statements and balance sheets against any company industry now and I think that where we're going to look great on on.

For basically every metric you can pick up.

Yes, absolutely.

No 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 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 didnt have.

Shareholders or ESP con.

In person because of Covid this year.

Shareholders was done in <unk>.

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 and what we realize is 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.

Youll level up so the company has.

I don't know what the number is now, but it's 60 70 hours a week of in World training. We've got some some in real life stuff going on at local levels sponsor.

Sponsored primarily by the brokers in that sort of thing, but then the agent led stuff is just amazing and I think thats really translating into something very special.

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

Different than 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 feels 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 off full force and kind of what's driving that.

It is yeah no for sure we continue to attract.

And I think that the the longer we are are we prove that we can.

Ill provide that infrastructure of 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.

Thinking about how do I break out of my just my local geography, and how do I actually monetize this in multiple markets.

XP really is.

The only platform that they can tap into that provides so many benefits for them to expand and 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.

Monetize.

Your business even better.

Yes, absolutely.

I think 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 just a quick quick quick story before I start.

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

And I started talking about it it's not $500 million, it's a half a billion right we've got to 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.

Q2 revenue was $1 billion so.

We were up 183% year over year.

Gross profit in Q2 was $79 9 million.

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

Our Q2 this is a pretty extraordinary for this quarter and it includes <unk>.

A $20 6 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 release the 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 diluted earnings per share is 24, or three 8%, which includes that tax benefit our adjusted EBITDA, which is a non-GAAP metric 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 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 top metric and basically we have a 70 in 2021 in Q2 and Thats a critical measurement on how we run our business and 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 a 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 we're at 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, and 431 up 164% versus last year and our price per unit as we're all experiencing and housing markets is up 70% at $3 49, I mentioned, the Glen I think when I came here I think our app.

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 a $1 billion for its $354 million up 183% gross margin was $80 million for 34.

Up 133%, a gross margin percentage was 8% with $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 volume makes up.

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 all.

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.

Cash equivalents, our cash in the bank after out there all of 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 state close other than units. So we've done 189.

309 units up.

132% on a year to date basis, and our volume is at 65 billion versus 2000 and $4 billion. So we're up 170 on a year to date basis.

Other metrics 158, 4 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.

Our operating cash flow of 101 was $36 million.

Bank balances 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 we've 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 DXP 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.

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

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

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 accumulative earnings so the <unk> <unk> per share.

As expected to be paid on August 30 to shareholders on record as of August 16th you have seen our recent press release, where we've established success lending. This is a new joint venture for us with kind of lending and we spent a ton of time, unless we want to make it the best possible value proposition for agents and then our shop 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 on 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 realty expansion, so we see what's happening in our domestic market in the U S. What we.

We're seeing really is a network effect so back in the day, we had a few large <unk>.

Fluids yours 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 some key countries right now and growing and that 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 so.

It's going well affiliate services mortgages are 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 <unk> growth.

The productivity of that 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 company is going to experience that soon.

Thank you very much.

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

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

Join us.

Thank you Jeff.

Glad to be here today.

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

Ground here.

The insights from based on proprietary research and generates.

Internal and external sources is strategy that underpins our findings as the only around uncovering a deeper understanding of the agent value proposition and brand for sections as well as a better understanding of consumer sentiment towards home ownership preferences and expectations related to the pandemic. These.

<unk> provide key insights that help our team build out the HP brand and collaboration agents enrich the overall value proposition.

Guide the priority <unk> of our investments in marketing and innovation.

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, what is 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 on national our agents value. If you look here on the left hand side.

Ownership and compensation and their development and this more emotive benefit of freedom.

With regard to ownership the equity component is highly valued.

It's a key component that something that <unk> talked to us a.

In addition, Q.

Quantitative research I'm talking to you. We also have a lot of qualitative research and leadership areas in 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 by Kristina.

And again it's.

Its life on the sense of what's happening real time.

Big course topics are building, a real estate business working with buyers and sellers and then now for the attribute of freedom, which is more subjective.

Talking to agents.

From being able to build their personal brand, we really do believe that the agent brand is here in.

And thats built in tandem with the EXLP, Brian last year, we built DXP brand and visual elements with the agents right. We were looking for about 90 days, where we traded and voted on the new logo, which is something that has historically important to ask the same thing we did when I started the company.

Freedom also means.

<unk> been able to operate across borders and boundaries right. So Keith 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 agent to 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 thats the attribute of innovation. So how do you read this is 81%.

Our agents will be selecting the atropine innovation is something that resonates with them right, which is a 10 point lift over the previous year.

This is really interesting because.

Valued on attribute this essentially is the virtual world that we're operating on right. So these are very correlated.

In terms of being collaborative and CFO those kind of like behind it. Since this is the real perception and agents out of our brand why that's important as these brand stores with these.

These brand scores have all increased year over year, that's a positive indicator of brand clarity alright.

Let's talk more about consumer insights, we've been talking to so far about what our agents perceptions and brand are and value prop.

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, and margin real estate trend study it focuses on achieving a deeper understanding of new homebuyers and owners and those interested in flying.

The research provides timely insights that consumers, they're recognizing the importance of agents and technology.

Reporting a shift in our perspective of homeownership at large which is related to the pandemic right. It's comparing before the pandemic now.

The key findings will find here.

This top level right it's.

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 that 80% in terms of the pandemic has changed their view on the importance of owning a hump on its driven a lot by the I understand it's a smart financial decision.

On savings.

You take a look 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 add agents 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 Hallmark.

<unk> and buyers are also more likely to ask about the real estate agents technology and resources towards.

Compared to before the pandemic. So the takeaway here is that there is a customer expectation that the real estate agency Tech savvy right. So as we move into the innovation update there there's an emphasis on technology to empower agents and new ways to connect with them and the consumers during these times and into the future.

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

Jeff joined US in mid 2019, he has been in the real estate industry for all of our key decades operating in numerous calls broker startup founders CTO.

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

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 and looking at the landscape.

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

James Thanks for the better while keeping agents at the center of things and Thats, a belief that I'm sure.

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

To build upon that and 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 but do the new innovation hub initiative, we're positioning to take that.

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 found.

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.

88, 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 shake of innovation you get buzzy headlines trendy Jack.

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.

Have an 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.

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

All of our innovation products.

In action, a nice mix of innovation and tech and innovation business as well.

For those that don't know <unk> buying as an alternative approach to selling a home for cash as opposed to the traditional listing process yet.

Sort of allows the seller to sell on their own terms.

Schedule.

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

Our channels from the agents that they needed a way to get a tool like.

Like that into their pockets, just 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 buying process and through the express offers.

Start to finish.

We actually maintain a network of <unk>.

Third party cash buyers in all 50 states so, whereas other companies typically they themselves do the buying ESB doesn't buy any houses in this we work with this network of.

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

The way that that is all structured sellers going to end up receiving multiple cash off version. The results have been good we've had thousands of properties submitted thousands of offers in response to that and all of this is enabled by the FERC proprietary check that we ended up building not to run this CRD XD in fact.

Ralph was lucky enough to actually write the code and build the initial version of the software thankfully today on 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.

<unk> taken it over and continue.

<unk> and <unk>.

And iterate and bring it forward.

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

Number one enhanced agents that 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 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 showcase our Dx team to build a really unique tool for consumers that could end up.

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

If we if we really know that just right.

That's experts to continue on the lead Gen.

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

That routes 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.

The Raleigh Genpact contract channel, So we're happy to keep providing solutions for that.

Success lending as you boss.

So I heard that is our 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.

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 are 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 ESG has always been an innovative company, but we're just taking that next step now we're 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 fine.

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

This is 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 that there's just more and more creative structure informality. So that's.

Fantastic.

I want to start off maybe just on the housing market in general I don't feel like we can 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 and 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 that was going.

Bob.

So I think from that perspective.

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

Sure.

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

The 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.

That's going to 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 operations of course, we did that with the entire executive team as well from day one.

So I think from a Covid perspective, I think we're.

To be well positioned 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 continued 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.

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 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.

The positive trends around the agent additions in <unk>.

And a team based approach kind of playing it playing out for you guys, but.

If we look at the other side I would like to 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.

Yes, so we don't really break it out too much.

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

But I believe that since last year.

Covid became part of our backdrop, our retention figures have went up pretty substantially so Jeff.

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.

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

Talking to earlier about this network effect 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 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 this 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 off of 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.

So theres a lot of the social media that was playing around that so I think that does play a little bit into it but 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 as a positive in the marketplace. So like today. If you go onto social media, you'll see a lot of social shares where agents because obviously the dividend.

Is something Thats unique.

It makes us stand out 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.

Anytime there are good things going on in stock price can be considered a good thing when its going up.

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 really excited and I think what the what the equity piece of the stock does is it makes us feel like their owners, which they are alright, so to do the right theme there kind of seen the long game and we've consistently delivered quarter after quarter up until Q2.

And I think people get 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.

Okay.

I think Thats fair and then your owners now with a 4% dividend increase.

Pay 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's 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 and 6000.

And I think we're probably around half of that is actually and in Canada.

<unk>.

It's.

One of the things that 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.

Checkout.

DXP I believe it's a DXP.

DXP Global Dot 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.

And so I'll give 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 that we're getting.

Solid traction in.

In countries like India, Mexico Medicaid.

South 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 theyre 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 foreign countries right now and as Glenn mentioned as we go and we learn we adapt.

Wanted to be the most competitive and also.

The benefits that we have for those agents globally and we're also seeing is were 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 you and I've talked about this before but talk.

About the split structure.

Our 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. We're you know we're an 80 20 model we cap out at 16000, we have some some some transaction fees.

Post capping.

So that were leased.

Our breakeven if not making a small amount on a per transaction basis post cap.

But internationally the the backdrop and a lot of countries as 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 a <unk>.

Something thats available to agents to help expand the brokerage and then you add the potential for equity and we got jumped through 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.

A 50% 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 margin is something some investors point to you guys. Some compression there obviously, but there is a clear explanation.

Our nation, obviously your agents are outperforming your tapping more 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.

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, Jonathan you need the capital 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 as 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 chefs and lead generation things Accordingly, we're 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 a stock Covid 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 Capex and the price per unit, but it 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 through 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.

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.

But that's around the 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 felt that.

Now turn to the mortgage JV was pretty interesting. So just talk to us about kind lending what drove that decision to pair 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.

The 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 Cardoen, who was in the second season of undercover billionaire and so <unk> got a chance to meet him.

<unk> learned 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 with the type of partner that we would love to have in that business.

Other part that I think was really key for US was is.

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

You announced a 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 are combining.

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 our agents brokers and their customers.

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

Joint ventures, 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 successful lending that is able to then leverage that 125 year history of personal development and Paul.

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

Yes, I mean, thats really exciting and even if you look at <unk>.

One of your competitors theyre doing over $100 million a year in their 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 to leave with.

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

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 changed 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 shiel.

510, plus countries, a year and to 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.

Okay.

And with that we conclude our Q2 'twenty Tom.

Tom We're happy to have you back as our moderator.

This initial segment, we will be talking in moving into a presentation. There is a review of the 2021 financial highlights presented by Jeff White side, 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 age.

And employee satisfaction.

Finally, we 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 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 from these statements. Please see our filings with the SEC, including our most recent quarterly.

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 <unk>.

<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 you chat box to zoom into a specific screen you can hit plus icon and thought 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 Wowing XP campus should you need any help perhaps.

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 with 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 tightened the event code E X pie from there you can submit a question or build up an existing question I gave it a thumbs up.

I'd also like that question asked the screen 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 and Tom late start the earnings conversation.

Hey, Tom are you are you there yet.

Here Glenn.

Wanted to kick things off here.

Don't want to 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>.

Joining me to host.

I'm the research analyst with da Davidson I cover disruptive companies in the residential real estate space and I've had the pleasure of covering ESP World Holdings.

Early 2018, I'm going to ask a 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 <unk>.

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

Congrats on a really strong and.

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 that <unk>.

You've put up.

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.

It's one kind of registrar and attention to just a couple little stacks.

Jason is going to cover a bit of this in his section, but as of midnight. We just went over 76000 agents. So we're.

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

<unk> hundred 25 real tours in the United States is actually DXP agent. 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.

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

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

Wed and an agent.

<unk> driven.

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 and 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 in equity.

Two our productive agents outside of them electing to receive.

Equity Commission.

Commission.

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 Asian attraction in growth.

We want to also help our agents' productivity and partnerships and then also adding more competitive moats I think last but not least before turning over to Jeff for more of the financials is really around just continuing to be agile re imagining our brokerage works at 500.

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 Scott Thats, probably our biggest thing being a cloud based brokerage.

We use NPS really has a big driver for decision, making but I think one of the places where we will spend a lot of time in 2022 is 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.

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, 2021, and full year 2021 of growth.

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

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 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 a 100% year over year.

Now if I look at <unk>.

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.

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.

Then we do have a tax benefit in that number and in 81. Two there is a tax benefit of $47 5 million again, primarily.

Benefit from our stock based compensation deduction.

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 will be $88 million up 52% year over year.

And finally, our full year operating cash flow was $247 million and Thats, 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.

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

We run our business based in an agent and employee net function scores and we call that E&ps and E&ps our goal as a company is to hit a score about.

70 or above.

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

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

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, we were up by 75.

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

Domestic and.

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

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% ordered 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 166, 16% year over year growth now.

Now looking at some of our financial metrics, we have covered some of these sort of summarized before our revenue increased 77% in order.

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

And 85%.

Year over year.

And our SG&A.

If we look at that Q4 over year over year was full full basis as we continue to invest in our key focus 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>.

<unk> as a company an internal metric of about $100 million in cash.

After we cover expenses operating expenses investments in 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 it's a real big deal for US I mean, if you. If you understand NPS of 70 scores 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.

On the right hand side.

Vesting and growth continues DXP realty domestic our domestic business is hitting what we cannot call hey, 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, Greece Dominican Republic.

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 VR ml.

<unk> coverage and plus 9%.

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

To run it.

Success 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 effect.

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.

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.

And 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 and continues to grow.

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. We've 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.

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.

Some of the educational offerings that we provide in the commercial space and some tools that are new to market 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 I should point out by the way.

Syed.

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

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.

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.

Yes.

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 on <unk>.

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.

Our 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 how 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.

Putting phone email texting or intranet workplace and now our newly constructed DXP World Hub Center here in the <unk>.

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 tool.

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, a 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 of DXP.

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 law.

Concierge.

Also important that we focus on payments and that we achieve excellence on payments that we pay <unk> is timely and accurately.

And 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 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 related 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.

It 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.

<unk> 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 are taking 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 existing 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.

Launched our <unk> XP leadership element program, which brings cohorts together to tackle the company initiatives over the course of a two week program. Secondly, we continue to build our culture here in the meta versus an entire works as collaborative they are connected and this place really comes to life in ESP World, where employees have the unique opportunity to engage and interact on a daily.

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 enriched 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.

By very happy intended employees, Tom. Thank you for allowing me a few minutes I will turn it back to you.

Great that was terrific. Thank you Jason.

Okay. So now I guess.

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.

Last year was obviously another strong year for for volumes despite.

The 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.

They're going to go up next month with the fed raising interest rates, we've already seen mortgage rates keep up with that.

In anticipation of some of the some of the rate increases.

I think you've got still a lot of people buying homes question is.

At what level will the fed raised interest rates, which ironically I thought that there was going to be we're going to be on a lower interest rate.

<unk> 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>.

Of 2022 than we've seen previously I think between.

Interest rates and some other factors.

<unk>.

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.

Should we think about or how should investors think about how the ESP model.

Performs.

In that type of environment sort of a slower industry growth or maybe even a year of.

Maybe a contraction in the industry I mean 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 would just be curious to hear your view on how you think the business kind of performs generally in the environment you described yes.

So yes.

We're uniquely positioned.

Where a lot of our bricks and mortar.

Counterpart competitors have had to.

Answer, we'll say the XP model with either reducing the amount that they turned to <unk> 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 all.

Whatever the market throws at us.

Sort of our case and 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 broker dwell 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.

Quite two months and so.

We're coming up on the two month Mark.

And so the idea is that we can grow by cell phone.

One number we think about something above 50% year over year is pretty predictable just based on our value value prop now what could be a headwind as the.

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.

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 angry about 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.

And I think Thats part of just how do we think about.

Sure.

Balanced 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 half half.

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 play out as a dividend play into that and how does that helps.

Their agent value proposition as well so for US we think it's an iterative process.

Pay attention and stay close to.

Two our agents, whether it be physically or through our our regular surveys around NPS S and just making sure that we're paying.

This thing continues to grow.

As long as where 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 rate you got paid 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.

Right.

Not benefit agents immediately but it might benefit the stock, which would then agents are also shareholders in the company. So just curious how you think about like 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 ill.

Pose a couple of questions suggest that 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>.

Loans that are being closed basically as we speak through the successful blending.

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 or hiring folks in Texas, we're hiring.

Local on the ground successful teams.

That can benefit from purchase business for the last <unk>.

Number of years, it's all been about refinanced 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 <unk>.

Integrations now with our our real estate portal.

<unk> K.

<unk> core platform.

The platform that will be rolled out a little bit later this year or 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 TV core platform, we have 38 million consumers.

Consumers that are in our.

Instincts.

Sure.

<unk>, which is our real estate portal from a consumer perspective.

$10 million of those have active list of searches and listing alerts going on and in that we think that introducing successful lending is going to be a great way to create awareness and then also.

Deal flow, so I'm pretty excited about how that all comes together as the year goes on.

Terrific.

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 2020.

Yes, so Tom the other pressure on our gross margins is coming from volume.

Massive volume in the business and then the increased price.

Kind of results and capping what more capping going on in the business I mean, our focus really is on the gross margin dollars.

In the fourth quarter were $83, one up 65% year to date $296 million up 85%.

And what I'm seeing I think what we're seeing as a business it seems to be where the landing at the end of the year seem to 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.

<unk> is in there from an operating margin standpoint to Bill Bill.

Higher margins across the business, 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.

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 right now.

On the volume.

Right.

Okay.

Yes, that's helpful.

Is 2022, the year, where some of the affiliated services like mortgage and and maybe title might have a more 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.

Then the domestic brokerage is this a 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.

Yes, I think 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.

They're affiliated services businesses I don't think the impacts 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 we acquired them.

IRA Robbins.

Two.

Lead our business on the cogent 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.

For the margins to catch up I think that's going to be more towards the end of this year going into next year.

Alright, Glenn that's our one minute orange life, a little bit in music.

Okay.

[noise].

Yes.

Alright ready to go.

Hi.

Hello, and welcome to the <unk>.

<unk> World Holdings' third quarter 2021 earnings Fireside chat via Livestream and <unk> are net of <unk>. My name is Cork and Shannon and I missed the amount of <unk> holdings.

Today, we will begin our Q3 earnings fireside chat with the conversation between Glen Handguard, founder and CEO of <unk> Holdings, ingesting agents 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 includes 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 EXE 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 to 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.

What you will see here is all three screens. If you want to see that you can sustain zoom button to the right of the Capex is due to a specific screen you can hit the plus icon button above that screen. If you happen to see notes provides a great slide hit the refresh icon at the top right hand corner of that screen to.

Correct, while <unk> virtual campus should you need anyhow or have any questions. Please.

To your comments from 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.

If you wish to ask any questions. During our presentation you can enter your questions by scanning a QR code presented on the screen with your phone or slight O dot com and type of event.

Q3, and there you can submit a question or even vote up an existing question by giving a thumbs up to indicate.

Also like that question <unk>.

This screen will remain up on the left hand side at this stage to that you can take your questions.

This time I would like to turn to fireside chat over to Glen Sanford and Justin Ages to start the earnings conversation.

Okay. Thank you very much for that intro and Justin.

<unk> P R.

<unk> World and Justin.

<unk> is one of our covering analysts from Baron Berg capital and Justin I'm going to kind of turn it over to you to ask some questions and then we'll we'll continue on.

With the various other presenters.

Great. Thanks, Glenn.

Introduction coordinated so it's great to be here with you and the rest of the management.

In this world that you 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 transactions, which is to me, especially impressive considering some of your competitors are experiencing and total revenue up.

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.

It's been kind of operating this meta burst for years.

Recently, there's been a lot of attention on virtual reality, where people are interacting with each other but how has <unk> pi as 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. So the biggest single cost to run our brokerage typically is the bricks and mortar cost alright.

<unk> technology, so what we looked at was virtual.

Virtual worlds for business back in 2009, we've been operating effectively now and the popularized term because of Facebook.

<unk>.

Literally since 2009, we've operated in 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 of <unk>.

Customers from universities to.

Large.

Enterprises to consulting companies et cetera that have 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.

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's a lot of future potentials, but it's been certainly the enabling technology that has allowed DXP to grow as rapidly and as <unk>.

Ubiquitously across the world as it has.

Great that makes a lot of sense.

Then onto the quarter, specifically can you just give us a high level about <unk> and the drivers of the financial and operational performance.

For us we.

We always come back to the 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.

Everything that goes on a real estate brokerage that's really created the drivers that continue 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.

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 traction our retention and then also <unk>.

<unk> an opportunity for agents to help us grow the business. So that's those are been the biggest drivers. We believe will continue to be huge drivers going well into the future.

Yeah, I agree with you and all of that that agent profit.

<unk> model and just 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 and transaction.

So.

My view and I think our collective view.

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.

Ted and others have done.

And as long as interest rates stay low.

Thanks.

Real estate prices in real estate transactions will continue to be.

Significantly so.

The perspective of not knowing what you know.

Where interest rates, specifically youre 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.

Yeah, I agree with that sentiment and it'll be interesting to see what the fed will do over.

Hi, Mark.

As I say you guys will continue to take share and part of taking chairs really related to your ability to attract agents as you touched on briefly in the beginning so can you speak to what they can better competitive environment has been and how you continue to find success.

Well competitively.

We kind of invented this new model a cloud.