Q4 2023 eXp World Holdings Inc Earnings Call

Operator: of our forward-looking statements. There will be a number of forward-looking statements made today that should be considered in conjunction with the cautionary statements contained in the company's SEC filings. Forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Please see our filings with the SEC, including our most recently filed annual report on Form 10-K and quarterly reports 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.

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There'll 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 recently filed annual report on Form 10-K, and quarterly reports on Form 10-Q for a discussion of specific risks that may affect our business performance and.

<unk> 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 replay. It will also be made available on E X P World Holdings Dot Com now for a few logistics and we'll get started.

Operator: As a reminder, today's call is being recorded, and a replay will also be made available on eXpWorldHoldings.com. Now for a few logistics, and we'll get started. For those of you joining us in person today, to zoom into a specific screen, you can click on that screen and then click Zoom In. If the content on the screen disappears or if you lose audio, simply refresh your page.

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While in frame if you need help just use the help button on the bottom right hand to link with tech support.

Should you wish to ask a question during our presentation you can enter your questions by scanning the QR code presented on this screen with your phone or go to slide O Dot com and type in the event code E X P. I from there you can submit a question or vote up an existing question by giving a thumbs up if you would like that question to be asked.

The screen will remain up on the left hand side of the stage.

Denise Garcia: Now I'll turn the fireside chat over to our speakers before opening the call to questions. Glenn, you may begin. All right. Thank you, Denise, and thank you, everyone. Thank you again. Obviously, this is the first event that we've done publicly for Frame VR, and this is a platform that we've actually been developing since 2019. Frame is actually the first Metaverse platform that works on desktop, mobile, and immersive hardware like the MetaQuest 3, and if you're lucky enough to have one, the Apple Vision Pro.

Now I'll turn the fireside chat over to our speakers before opening the call to questions Glen and you may begin.

Alright, Thank you Denise and thank you everyone.

Thank you were good obviously this is the first.

Prevent that we've done publicly four frame B R. And this was a platform you'd actually been developing.

Since 2019 frame is actually the first <unk> first platform that works on desktop mobile and.

<unk> three and if you're lucky enough to have won the Apple <unk> <unk>, it's kind of like square space for the spatial web we're really excited about the technology.

Glenn: It's kind of like Squarespace, but for the spatial web. We're really excited about the technology. In fact, it was presented by the CTO of Microsoft at Microsoft Build 2023, and Frame now powers eXp. World.

It was presented by the C. P O Microsoft at Microsoft Bill 2023, and frame now powers X P. Dot world, It's nowhere Brown, new browser base immerse of collaboration platform.

Glenn: It's now our new browser-based immersive collaboration platform. It's faster and easier for our staff and agents to collaborate online, and specifically, eXp agents can now create their own spaces and also meet with clients and, in reality, give remote home tours. Agents can look at 360 photos of properties, walk around Matterport scans, and navigate Google Street Views with others. And then, in terms of AI, which we've talked a little bit about, Frame actually uses AI to do real-time translations and closed captioning, but also to help people create their own custom spaces and 3D bots.

Faster and easier for our staff and agents to collaborate online.

Specifically your experiences can now create their own spaces and also meet with clients and even in reality remote home tours agents can look at 360 photos of properties walk around matter port scans and navigate Google Street views with others.

And then in terms of AI, which we've talked a little bit about frame actually uses a I to do real time translations and closed captioning, but also to help people create their own customers spaces in three D. But there's more to come near as of AI in three D.

Glenn: There's more to come in the areas of AI and 3D. We're just getting started, so stay tuned. Now I'll move on to our fourth quarter earnings call information. I'll start first with an overview of our business strategy before discussing our results for 2023 and the fourth quarter. As most of you are familiar, 2023 has been a difficult year with existing home sales in the U.S. at their lowest level in nearly 30 years.

We're just getting started so stay tuned.

Now I'll move onto our fourth quarter earnings call information.

So I'll start first with an overview of our business strategy prefer discussing our results for 2023 in the fourth quarter has most of your familiar 2023 has been a difficult year with existing home sales in the U S at their lowest level in nearly 30 years.

Glenn: Despite the industry slowdown, North American Realty continues to gain market share, which I'll discuss in more detail in a moment, but first, I want to touch on our business strategy. We began sharing business segment information on this call one year ago to show how the profitability of eXp North America enables us to invest in other growth opportunities across the business, and that dynamic will continue into 2023. In 2023, our North American realty segment generated 91 million of adjusted EBITDA, which allowed us to continue to drive our overall business growth initiatives forward. We're also EBITDA positive for the year when not adjusting for stock-based comp. Our success in North America has enabled us to expand into international markets where we operate in 24 markets, including South Africa, which is where I am today. It's 12.05 in the morning.

Despite the industry slowdown North American Realty continues to gain market share.

Which I'll discuss in more detail in a moment, but first I want to touch on our business strategy.

He began sharing a business segment information on this call one year ago to show how the profitability.

E X P. North America enables us to invest in other growth opportunities across the business.

And that dynamic continued also into 2023.

In 2023 are North American Realty segment generated 91 million of adjusted EBITDA, which allowed us to continue to drive our overall business growth initiatives forward.

We're also EBITDA positive for the year when not adjusting for stock based cop or success in North America has enabled us to expand in the international markets, where we operate in 24 markets include.

Including South Africa, which where I am today at 12 O five in the morning.

Are unique items.

<unk> about South Africa is where now.

Glenn: A unique thing about South Africa is that we're now the fastest growing real estate agency in South Africa, and we're actually the seventh largest now. So it's pretty cool to see in just a couple of short years the amount of impact here. There was an event last week here, and a lot of agents came together. So this year, one of our goals is definitely to be more visible internationally. In fact, we had our first eXp con in Lisbon, Portugal, in June of this year.

The fastest growing real estate estate agency in South Africa, and we're actually the seventh largest now so it's pretty pretty cool to see in just a couple a few short years the amount of impact here.

There's a <unk> last week that was here and a lot of agents came together. So this year one of our goals is to definitely be more visible internationally. In fact, we have our first E X P con in Lisbon, Portugal and.

In in June of this year we.

Glenn: We continue to see international realty as the largest driver of future growth for the company. We continue to break records in our international segment. In 2023, we grew international revenues 50% to 53.9 million. In Q4, we increased revenues by 67% year over year to 16 million while, at the same time, decreasing our losses on an adjusted EBITDA basis by 14% year over year. While revenues, revenues, and affiliate services still remain small, they're gaining momentum to represent opportunities for meaningful incremental revenue and margins per transaction in the future. eXp Realty North America and International represent our path to overall revenue growth powered by our cloud-based asset light model, which allows us to continue iterating on our superior agent value proposition. The business areas I'll discuss on the next slide represent our key sources of differentiation. We are constantly iterating to improve the agent value proposition by developing an ecosystem of personal development, health resources, and media like Success Magazine, and the recent appointment of Brian Ellington inside of eXp Realty as Chief Learning Officer, which I mentioned last quarter. We have many exciting things going on in training and education that Leo will highlight in a moment.

We continue to see international Realty as the largest driver of future growth for the company, we continue to break records and or international segment.

2023, we grew international revenues 50 per cent to $53.9 million.

Q for we increased revenues by 67% year over year $16 million, while at the same time decreasing our losses on and adjusted EBITDA basis by 14% year over year well.

Well revenues revenues and affiliate services are still remains small, they're gaining momentum represent opportunities for meaningful incremental revenue and margins per transaction in the future.

<unk> North America, and international represent our path to overall revenue growth powered by our cloud based asset late model, which allows us to continue iterating on our superior agent value proposition.

The business areas I'll discuss on the next slide represent our key sources of differentiation.

We are constantly iterating to improve the agent value proposition by developing an ecosystem of personal development <unk>.

Health resources and media like success magazine and the recent appointment Ah, Brian Ellington inside of E X P. <unk> cheap learning officer, which I mentioned last quarter, we have many exciting things going on in training and education that Leo will highlight in a moment.

Glenn: Our enabling technology platforms support our cloud-based brokerage model, and we also use AI and other machine learning technologies to improve transaction management workflow and eventually plan to use technology to build out an entirely new way of transacting business. We'll continue to invest in these resources to enhance the agent value proposition and ultimately increase the satisfaction of our agents as measured by agent NPS, which we'll discuss on the next slide. Bye.

Are enabling technology platform support our cloud based brokerage model and we also use AI and other machine learning technologies to improve transaction management workflow and eventually plan to use technology belted filled out an entirely new way of transacting business.

Will continue to invest these resources to enhance the agent value proposition and ultimately increase the satisfaction of our agents as measured by agent M. P. S.

Shall discuss on the next slide.

Uhm.

Glenn: One area that we've been highlighting focus on is NPS. In fact, we added Fred Reicheld, the creator of the Net Promoter System, to our board last year. It's very important for us because we believe NPS is a leading indicator of our future success. So I'm thrilled to share that agent NPS improved throughout 2023 to reach 73 for the year. And we actually had a fair, I call it an anomalous 77 because it was a little bit of an outlier for the fourth quarter, but it just shows the strength of our model and how well it resonates with our agents and brokers. I believe this is the result of constant iteration of our agent value proposition and our key sources of differentiation. I discussed this on the last slide.

One area that we've been highlighting focus focus is on N P. As in fact, we added Fred right held the.

Creator of net promoter system to our board last year.

It's very important for us.

Because we believe M. P S with a leading indicator of our future success. So I'm thrilled to share that agent M. P. S improved throughout 2023 to reach 73 for the year.

And we actually had a <unk> I called an anomalous 77, because it was a little bit of an outlier for the fourth quarter, but it just shows the strength of of our of our model and how well it resonates with our agents and brokers.

Believe this is the result of constantly duration our agent value proposition.

T sources of differentiation uhm.

I discussed on the last slide also last year operations team made many improvements in investments to reduce agents time spent on non revenue generating task to enable them to be more productive and a few examples are listed here, most notably improved onboarding a transaction support with applications like Luna we launched.

Glenn: Also, last year, our operations team made many improvements and investments to reduce agents' time spent on non-revenue-generating tasks to enable them to be more productive, and a few examples are listed here. Most notably, we improved onboarding and transaction support with applications like Luna. We launched ExpressPay and the Expert Care Desk. We expanded benefits within eXp Agent Healthcare powered by Clearwater to provide agents with exclusive access to industry-leading plans for themselves and their families with low co-pays, low-to-pocket costs, and zero-dollar deductibles.

Express pay and the expert care desk, we expanded benefits with an E X P agent health care powered by Clearwater to provide agents with exclusive access to industry, leading plans for themselves and their families with low copays low to pocket cost and zero dollar deductibles now over 2000 agents and their families get affordable quality health care.

Glenn: Now over 2,000 agents and their families get affordable, quality healthcare from eXp Agent Healthcare. We improved our marketing center in the U.S. and launched it also into all other countries. We also launched agent advisory councils in more jurisdictions. These operational improvements resulted in helping our agents get support, get paid, and get more business. Ultimately, we hope to improve our agents' lives with ongoing operational improvements. We will expand on our operational improvements and additional products in a moment. But first, I want to share some recognition and awards we've received for eXp and our agents on the next slide. Both eXp and its agents have been recognized widely for shared success. One award that I believe is driven by our high NPS scores is Glassdoor's Best Places to Work. We've made the list six years in a row in the U.S., and we moved up to number seven from number 15 in Canada. Also in 2023, our agent teams have been recognized across the industry, and eXp was named the number one growth leader across agent count, volume, and transactions at Realtrends, T3, and PowerBroker. Turning to the next slide.

From ESP agent healthcare.

We improved our marketing center in the U S and lodged also into all other countries. We also launched agent advisory Council's in more jurisdictions.

These operational improvements resulted in helping our agents get support get paid and get more business. Ultimately, we hope to improve our agents lives with ongoing operational improvements, we will expand on our operational improvements and additional products in a moment.

But first I want to share some recognition awards received <unk> E X P and our agents on the next slide.

Both E X P. M E X P agents have been recognized widely for our shared success.

One word that I believe is driven by her high N. P. S scores as glass doors best places to work.

We've made the list six years in a row and the U S and we moved up to.

The number seven from 15 in Canada.

Also in 2023, our agent teams had been recognized across the industry.

<unk> was named the number one growth later across agent count.

Volume and transactions at real Trans T three empower broker.

Turning to the next slide.

Glenn: We've been updating this table for over a year now, and the numbers keep proving that our platform is even stickier for productive agents in a down market. Consistent with previous quarters, the majority of our attrition is with lower-producing agents in the zero to two transactions per year category. With home sales in the U.S. and Canada at their lowest levels we've seen in decades, we proactively off-boarded many non-productive agents in the fourth quarter, such as agents that had no sides in the last 12 months and agents who also had not paid their fees. We ended the year with 87,515 agents, which was up 2 percent over 2022, but down 1.8 percent from Q3. This is the first time in our history that our agent count has declined quarter over quarter.

We've been updating this table for over a year now.

And the numbers keep proving that our platform is even stickier for productive agents in a down market.

Consistent with previous quarters, the majority of our attrition as with lower producing agents in the zero two transactions per year category.

With home sales in the U S and Canada at their lowest levels, we've seen in decades.

Proactively.

Afforded many nonproductive agents in the fourth quarter, such as agents that had no sides in the last 12 months and agents, which also not.

Paid their fees, we ended the year with 87515 agents, which was up 2% over 2022, but down 1.8% from Q3. This is the first time in our history their agent cows declined quarter over quarter.

Glenn: However, our agent value proposition remains strong, with big teams and agents joining worldwide and agent NPS at its highest it's ever been. I think that our high NPS scores will further drive retention of eXp's top agents, who are more likely than ever to recruit additional agents to the company. Our focus continues to be on building the future of real estate with the most productive agents in the industry so that, ultimately, when the market turns, we will be in an optimal position to gain an outside share of transactions in the market, which we'll discuss on the next slide. So this slide actually compares eXp U.S. residential sales transactions to the U.S. residential real estate industry, as measured by transaction sides on the left side and our market share on On the left, you can see that eXp Realty U.S. residential real estate transactions were down less than 2% year over year in Q4 and approximately 8% for the full year.

Cover our agent value proposition remains strong with big teams and agents joining worldwide an agent M. P. S at their highest it's ever been.

I think that our high M. P. S scores will further drive retention of agent <unk> top agents were more likely to never to recruit additional agents the company or.

Our focus continues to be to be on building the future of <unk>.

Real estate with the most productive agents in the industry. So that ultimately when the market turns will be an optimal position to gain an outside share of transactions in the market, which will discuss on the next slide.

So this slide actually compares E X P U S residential sales transactions to U S residential real estate industry.

As measured by transaction sites on the website and our market share in the right on the left you can see that your XP real T. U S residential real estate transactions were down less than 2% year over year.

And two four and approximately 8% for the for the full year. This compares to a U S residential real estate history, which was down over 10% year over year in queue for over 17% from 2023.

Glenn: This compares to a U.S. residential real estate industry that was down over 10% year over year and Q4 over 17% in 2023. As a result, we grew our transaction side market share, which I've talked about focusing on the last almost two years, 8.4% in 2023 and nearly 7% in Q4 to 4.2% in the U.S. Before turning it over to Leo, I'll conclude with a few takeaways from 2023 and why I'm so optimistic about eXp's prospects in 2024. On the next slide.

As a result, we grow our transactions side market share, which I've talked about focusing on the last almost two years, 8.4% in 2023.

Nearly seven per cent in Q4 to 4.2 per cent in the U S before turning it over to Leo.

Conclude with a few takeaways from 2023 and why I'm, So optimistic about E X peace prospects in 2024 on the next slide.

Glenn: We're entering 2024 with very strong momentum. To recap, our value proposition remains strong with high agent NPS scores at 73 for 2023 and 77 for Q4. Big teams and agents are joining worldwide, and we are retaining our most productive agents. We continue to grow our market share from 3.9% in 2022 to 4.2% in 2023, reflecting over 8% growth year over year. We're leveraging technology and increasing our operational efficiencies. And lastly, with 2023 behind us, we're entering 2024 in a position of strength with increased momentum. We have a solid vision for 2024, and now I'll turn it over to Leo, who will take you through our 2024 goals. Thank you, Glenn.

We're entering 2024 with very strong momentum to recap our value proposition remains strong with high agent N. P. S scores 73 for 2023 and 77 Q Q4.

Big teams and agents are joining worldwide and we are retaining our most productive agents. We continue to grow our market share from 3.9 per cent in 2022 to 4.2 per cent and 20 twenty-three reflecting over eight per cent growth year over year for leveraging technology and increasing our operational efficiencies and lastly with 2023.

<unk> behind US, we're entering 2024 in a position of strength with increased moment.

We have a solid vision for 2024, and now I'll turn it over to Leo who will take you through our 2024 goals.

Thank you Glenn.

Leo: If I were to characterize 2023, I would call it the year of operational excellence. No doubt it was a rough year and a tough one for the market. It's literally the worst year we've had since 1995, even worse than 2008.

If I were to characterize 2023, I would call. It the year of operational excellence no doubt it was a rough here and a tough one for the market. It's literally the worst here we've had since 1995, even worse in 2008. So what we've been focused on is what we can control with increased support for ESP agents. During these times by helping our agents reduce the time they spend on <unk>.

Leo: So what we've been focused on is what we can control with increased support for eXp agents during these times. By helping our agents reduce the time they spend on non-revenue-generating tasks, we can increase their productivity so they can do what they do best, which is sell real estate. In terms of operations, while we focus our efforts on three key areas, faster onboarding, faster access to service, and faster payments, as Glenn mentioned earlier, we're obsessed with supporting our agents and making incremental improvements that will make a big difference in their lives as we continue to do so in 2024. In an evolving real estate commission landscape, we launched eXp Exclusives, an initiative that could become increasingly important in this environment. Exclusives was literally launched last quarter, and we've had over 7,000 agents use the application. We're creating hundreds of unique listings only specific to our ecosystem.

Revenue generating task, we can increase your productivity. So they can do what they do best which is sell real estate in terms of operations, while we focus our efforts on three key areas faster onboarding faster access to service faster payments that Glenn mentioned earlier were obsessed with supporting our agents and making incremental improvements that will make a big difference.

And their lives as we continue to do so in 2024.

In an evolving real estate Commission landscape, we launched ESP exclusives and initiatives that could become increasingly important in this environment exclusive was literally launched last quarter and we've had over 7000 agents use the application with creating hundreds of unique listings only specific to our ecosystem we launch <unk>.

Leo: We launched eXp Luxury with astounding results. Already, we've had over 1,100 agents in the program and began expanding globally. We launched in five countries in 2023 with a plan to expand to every country in 2024. We've already expanded to Portugal, Spain, France, Italy, Germany, and Greece so far this year.

The X P luxury with an astounding results already we've had over 1100 agents in the program and <unk> began expanding globally, we have lunch in five countries and 23.

<unk> plan to expand to every country in 2024.

Alrighty extended to Portugal, Spain, France, Italy, Germany increase so far this year, we created a first of its kind collaboration with open door that I'm very excited about for a true instant offer for our agents and their sellers in the 50 plus markets they serve across the United States.

Leo: We created a first-of-its-kind collaboration with Open Door that I'm very excited about for a true instant offer for our agents and their sellers in the 50-plus markets they serve across the United States. Revenos has increased the number of leads we've delivered to agents by 250% compared to 2022, delivering over 22,800 leads that led to over $1.1 billion in closed volume in 2023. We also doubled down on our commitment to do more training and coaching programs by hiring Brian Ellington as our first ever Chief Learning Officer, as Glenn mentioned earlier.

Revenues has increased the number of leads we've delivered to agents by 250% compared to 22 need to delivering over 22800 <unk>.

That led to over 1.1 billion enclosed volume 2023.

We also doubled down on our commitment to do more training and coaching progress by hiring Brian Edlington as our first ever Chief Learning Officer escalate mentioned earlier.

Leo: We launched several programs that have been super well received, Accelerate for New Agents, and Boost to Attract Independent Brokers to eXp, which has already attracted some of the largest brokerages in the country to eXp, including The Bean Group in Boston and Justin Havren Associates in Calgary, Canada, that I discussed last quarter. And Thrive, a program focused on incentivizing teams to join eXp, partly through an equity incentive program. And we initiated a very important profitability improvement plan in the fourth quarter to reduce operational costs by approximately $20 million and identify new revenue opportunities in 2024, which I'll discuss in the next slide. In 2024, we will continue to innovate and drive efficient growth through a number of initiatives, starting with technology. We will continue to leverage our technology to improve operational efficiency and productivity. A great example is my eXp app, currently in beta, and it will become the center of the universe for our agency, with easy access to their commissions, settlements, revenue, and all of eXp technology services.

We launched several programs that have been super well received accelerated for new agents boost to attract independent brokers TXT, which has already attracted some of the largest brokerage you said the <unk>, including the bean grew up in Boston and just been having an associates in Calgary, Canada that I discussed last quarter and thrive a program focused on incentivising teams to joy.

<unk>, partly through the equity incentive program.

And we initiated a very important profitability improvement plan in the fourth quarter to reduce operational costs by approximately $20 million and identifying new revenue opportunities in 2024, which I'll discuss in the next slide.

In 2024, it we will continue to innovate and drive efficient growth through a number of initiatives starting with technology, we will continue to leverage our technology to improve operational efficiency and productivity.

Right example is my E X P. App currently in beta and it will become the center of the universe for ages.

With easy access to their commissions settlements Rapture and all of <unk> technology services, we expect to see dramatic improvements as we launch my <unk> in the next few months.

Leo: We expect to see dramatic improvements as we launch My eXp App in the next few months, with our goal to continue to make technology simple, mobile, and easily accessible in one place for our agents. We will be working with many more software deals and lead partners at no additional cost to our agents, including providing tracking information that our agents have been asking for. The success of the Luxury Division encouraged us to launch additional divisions this year, Farm and Ranch, Sports Entertainment, and Green, to help our agents further differentiate themselves from our competitors in all markets. While we expanded and hired Chief Learning Officer Brian Ellington, you can expect to see more announcements in training and coaching, including some familiar faces that we're partnering with in our eXp ecosystem. We're also launching a live streaming real estate radio station to further establish our agents as thought leaders in the space. This station will feature podcasts, content creators, and industry experts to discuss new trends, strategies, and tactics to grow agent businesses. And it's expected to be live soon.

With our goal to continue to make technology simple mobile and easily accessible for for one place for our agents, we will be working with many more software deals.

Lee partners at no additional cost of your agents, including providing tracking information that our agents have been asking for.

The success of the luxury division encourages to lunch additional divisions. This year farm and ranch Sports Entertainment and Green to help our agents further differentiate themselves from our competitors in all markets.

While we expand it and hired Chief Learning Officer, Brian now and you can expect to see more announcements and training coaching including some familiar faces that were partner within our ESP ecosystem.

We're also launching a live streaming real estate radio station to further stablish our agents as thought leaders in the space station that will feature podcast channels content creators and industry experts to discuss new strength strategies and tactics to grub agent businesses.

And it is expected to be live soon.

Kent: And last but not least, I'm personally focused on continuing to help our agents increase their productivity and operate their business more efficiently in 2024. We will be paying close attention to unit economics through SG&A to unit cost as a new KPI to measure efficiencies in 2024. On that note, I'll pass it along to Kent to provide additional insight into Q4 and 2023 financial results. Leo, thank you. Four quarter NPS increased to 77, which was an outstanding result of our investment in operational excellence in 2023. Due to our compelling agent value proposition, we increased our agent count by 2% year over year. While we offloaded a significant number of unproductive agents during the fourth quarter, resulting in a decrease in our agent count from the third quarter, we retained our most productive agent cohort.

And last but not least I'm personally focus on continuing to help our agents increase their productivity and operating business more efficiently in 2024, we will be paying close attention to your unit economics through and SG&A to unit cost as a new K P. I to measure efficiencies in 2024 on that note I'll pass it along to <unk> to provide additional.

<unk> insight into <unk> into Q4, and 2023 financial results.

<unk>. Thank you.

Full quota M.

M. P. S increased to 77, which wasn't outstanding is out of our investment in operation Excellence and 21 this week.

You too are compounded in ancient value proposition will increase our agent count by 2% year over year.

We all 40, a significant number of unproductive agent during the fourth quarter <unk> a decrease in our agent come from the third quarter would obtain our most productive agent cohort.

Kent: Our real estate transaction unit grew 6% year-over-year and outperformed the industry. This was really a remarkable outcome and thanks to the hard work of our more productive agents and dedicated staff. Our two most important financial objectives are revenue and adjustability. Our four-quarter revenue was $983 million, an increase of 5% year-over-year. We generated $0.5 million at just EBITDA compared to $3.6 million in the prior year. Reported gross profit was 71 million dollars, a decrease of 15 percent.

Real estate transaction unit grew 6% year over year outperformed the industry. This wasn't really a remarkable outcome and thanks for the hot wore off our higher put that this agents and dedicated staff.

Our two most important financial objective revenue and adjusted EBITDA.

Four quarter revenue was $983 million, an increase of 5% year over year regenerated 0.5 million dollar adjusted EBITDA compared to 3.6 million prior year quarter.

Reporting gross profit was $71 million a decrease of 15% you might call. We started to report agent grow incentive stock compensation expense in the <unk> in the previous year. The expense was reported in the South general and administrative expenses.

Kent: You might recall, we started to report age and growth incentive stock compensation expense in the course of sales in 2023. In the previous year, the expense was reported in sales, general, and administrative. If this expense had been excluded in both years, 2023 gross profit would have been consistent with last year. Reporting SG&A was $89.4 million, a 5% decrease from the fourth quarter of the prior year, primarily due to the above-mentioned reallocation of agent growth incentive stock compensation to the cost of sale. In addition, the fourth quarter included approximately $8 million of one-time costs related to ESP-CON and a provision for workforce reduction.

This expense has been excluded in both ears <unk> gross profit <unk> system with last year.

Reporting SG&A was $89.4 million, a 5% decrease from the fourth quarter in the prior year primary or anything to the above mentioned the allocation of agent grow incentive stock compensation to the cost us out in a.

Addition, the full quota, including approximately a million of one tonne cost <unk> and a position for war Fortunately <unk> now.

Kent: The net loss was $21.2 million in Q4 2023, compared to a net loss of $7.2 million in Q4 2022, driven by $9.2 million of impairment charge related to the Bella settlement and $8 million of one-time SG&A cost. As I mentioned previously, adjusted capital in cash flow was $42.3 million, and we repurchased $25.9 million of shares during the quarter. In the next slide, I will provide more detail about the driver of our revenue change in the fourth quarter. This chart helps to explain what drove the change in fourth-quarter revenue between 2022 and 2023. In 2022, revenue was $933.4 million, indicated by the bar on the left. In 2023, revenue was $983 million, indicated by the bar on the right. The year-over-year increase in revenue was 50 million, or 5%.

<unk> was $21.2 million <unk> compared to a net loss of 7.2 million in queue for <unk> to run by 9.2 million of impairment charge.

<unk> seven and a million dollar <unk> cost as I mentioned previously adjusting you've been a just a a company in cash flow was $42.3 million and will be purchased $25.9 million sure during the quarter in the next slide will provide more detail about the driver of.

Revenue change in the fourth quarter.

This chophouse two sprained what Joel that change in the fourth quarter revenue, we can 2022 and 2000 hundred sweet.

20th 22 revenue was $943.4 million indicated by the bar on the left <unk> revenue was 980 swimming dollars indicated by the bio on the right. The yoga you increase in revenue was $50 million or five per cent increase with a cheaper to go to a 45 million dollar increase in.

Kent: The increase was attributable to a $45 million increase in the North American royalty settlement, which consists of the U.S. and Canada, and a $6.5 million increase in international royalty settlement. I will dive into more detail of the $45 million revenue growth in North America royalty settlement, which included the bars under the heading North American royalty settlement revenue change plus $45 million. Our agent base grew 2% and contributed $21 million of additional revenue. However, according to NAR, Assistant Home Sales, and U.S. Census Bureau's new home sales data, U.S. residential home sales volume decreased approximately 8%, which pressured our agent production.

North America D O T seven which consists of the U S and Canada and a 615 minute an increase in international loyalty seven.

Dive into more detail after forty-five mail and revenue growth in North America T. Seven which included the boss under the heading North America Realty certain revenue change plus $45 million.

Our agent base grew 2% and contributed a $21 million of additional revenue. According to and they are insistent the home sells and U S Census Bureau, new home sales data U S residential home sells size decreased approximately 8%, which.

Pressure our agent production, we calculated the negative impact of lower homestyle, two hour revenue S $62.6 million.

Kent: We calculated the negative impact of lower home sales on our revenue as $62.6 million. Normalizing the impact of lower home sales of the overall markets and increasing our agent productivity over the prior year contributed 42 million revenue in higher home sales prices and more affordable, more favorable commission mix also brought in $30.8 million, incremental incremental revenue. Lastly, our focus on growing our lease rental and other ancillary services contributed to the additional 13.5 million revenue. I will discuss Salmon Financial for the quarter on the next slide. On the slide, you can see our Q4 2023 settlement revenue now just a bit down for each of our four business settlements and the breakdown of corporate and elimination. Our North America Realty Statement was primarily a driver of the revenue and profit of the company. Revenue was $965 million, an increase of 5% over the prior year. The Shelf EBITDA was $8.6 million. International Realty Statement revenue was $16.3 million, an increase of 67%. The Adjusted EBITDA loss was $3.6 million.

No more lies the impact of low home sells off the all of our markets and increase of our agent productivity over prior year contributed $42 million revenue increase.

Higher homes house prices and more affordable more favorable commission Ms. Also brought in <unk> <unk> a million dollars.

Incremental incremental revenue lastly, I'll focus on Goin', our lease rental and other ancillary services could you be any additional 13.5 million Avenue I will discuss seven financial for a quarter on the next slide.

On the Sly you can see all Q4 2023, seven revenue and adjusted EBITDA for each of our four business salmon and the breakdown of corporate and elimination.

North America Realty Salmon was primarily dry royalty revenue and profit the company revenue was $965 million, an increase of 5% over prior year shoveling EBITDA was $8.6 million.

International Realty Salmon revenue was $16.3 million, an increase of 67% adjusted EBITDA loss last $3.6 million, but download could you build a modest amount of revenue and he's adjusted EBITDA was $1.9 million. The other salmon, which is primarily success also can.

Kent: But Bella contributed a modest amount of revenue, and its adjusted EBITDA was $1.9 million. The other segment, which is primarily successful, also contributed a modest amount of revenue and generated a small adjusted EBIT dollar. On the next slide, I will recap the full year financial performance on a consolidated basis. And next slide, please.

Would you believe a modest amount of revenue and generate a small adjusted EBITDA loss on the next slide I will be kept a full year financial performance on a consolidator basis.

And next May I. Please.

Kent: Asian MPS was 73, an increase from 71 in 2022. We completed nearly half a million transaction units in 2023. Our real estate sale transaction unit growth outperformed the industry. 2023 full-year revenue was $4.3 billion, a decrease of 7% year-over-year. Adjusted EBITDA was $57.5 million, a decrease of 5% from the prior year.

H and M. P. S were 70, sweet and increased from 71 in one handy tool, we completed nearly half million transition unit in 2023.

The real estate transaction unit growth growth outperformed the industry 2023 full year revenue was $12.3 billion a decrease of 7% a.

<unk> adjusted EBITDA was $57.5 million a decrease of five per cent from prior year. However, we are able to maintain adjusted EBITDA relatively stable and phone number three level. Despite a significant market decline.

Kent: However, we are able to maintain Adjusted EBITDA relatively stable to 2023 levels despite a significant market decline; reported gross profit was $324 million, a decrease of 5% year over year. As I mentioned before, in 2023, we began including agent growth incentive stock compensation expense in the cost of sale. If this expense had been excluded from both costs of sale in both years, 2023 gross profit would have been consistent with 2022. Reported SG&A was $331.3 million, an 8% decrease from the prior year, primarily due to the above-mentioned allocation of stock compensation expense. If the expense has been excluded from both years, $233 SG&A has been flat compared to $222 SG&A. $223's net loss was $9 million, primarily due to $9.2 million of non-cash, one-time impairment charges recorded in the Vabela Assembly.

Reported gross profit.

$324 million, a decrease of 5% yoga year as I mentioned before in Taunton. This week will begin including agent grow incentive stock compensation expense and cost of cell.

Expanse has been escorted from both <unk> cost us out in both ears twentysomething between gross profit what has been consistent with content to.

<unk> was $331.3 million and 8% decrease from prior year, primarily due to the above mentioned on the allocation of stock compensation expense <unk> has been excluded from both here <unk> has been flat compared to <unk>.

<unk> net loss was $9 million, primarily due to an iPhone 12 million of non-cash one ton impairment charge before the end of a balance and then the declined net income Neil what's primary due to labella impairment charges increased agent Grove incentive stock compensation and a higher effective <unk>.

Kent: The declined net income year-over-year was primarily due to Vabela impairment charges, increased agent growth incentive stock compensation, and a higher effective, Finally, we repurchased $161 million of shares during the year. To give you some perspective of our share repurchase in 2023, we purchased 10.1 million shares, which is equivalent to 91% of the shares issued via our Agent Growth Incentive and Agent Equity Plan. And now I will take you through the full year 2022 to 2023 revenue change analysis. 2022 revenue was $4,498,000,000, as indicated by the bar on the left. In 2023, revenue was $4,281,000,000, indicated by the bar on the right. The year-over-year decline in revenue was $370,000,000.

S way.

Only <unk>.

The purchase $161 million sure I do in the year to give you some perspective of a shared the purchase and <unk>. We purchased 10.1 million shares which is equivalent to 91% sure issue. We are our agent grow incentive an agent equity plan.

And now I will tell you for the full year 2022 to <unk> Avenue <unk> analysis.

20th only two revenue was $4.498 billion indicated by the bar on the left turn how many sweet revenue was 4 billion 20 $81 million indicated by the bottle under right. The yoga year declining revenue was $370 million.

Kent: The North America royalty settlement contributed $333 million revenue decrease, partially offset by an $18 million revenue increase in the international royalties. Let me dive into more detail of the North America Realty Statement Revenue Change in 2023. Our agent base grew 2%, which contributed $280 million of additional revenue. According to NAR Assistant Home Sales and the U.S. Census Bureau's new home sales data, U.S. residential home sales sites decreased approximately 17.3 percent.

North America, <unk> 333 million revenue decrease partially offset by an $18 million revenue increase in the international Nobody 027, let me dive into more detail off the North American Eagle two seven revenue change in 2023.

Agent <unk>, 2%, which contributed 280 million.

Of additional revenue according to any or is this an home sells and U S Census Bureau, new home sales data you as soon as essential homestyle sites decreased approximately 17.3%, we calculated the negative impact of lower home sells to our revenue what's the reduction of 750.

Kent: We calculated the negative impact of lower home sales on our revenue with a reduction of $759 million. Normalizing the impact of lower home sales on overall markets, our Asian productivity improvement contributed an increase of 93 million revenue; higher home sales prices and a more affordable commission of more favorable commissionments brought in additional revenue of $11 million. Lastly, growing our lease, referral, and other ancillary services contributed $43 million revenue. In summary, due to our superior agent value proposition and the resilience and hard work of our agents and staff, our revenue growth outperforms the industry. Next, I will take you through our full year segment performance. 2023 North America realty segment revenue was $4.2 billion, decreased 7% year over year. Adjusted EBITDA was $91.1 million.

$9 million.

Normalize the impact of a low home sells of wall market, our agent to the activity improvement contribute to increase of 93 million revenue.

Home sales price and a more affordable Commission mix.

<unk> Sainvil Commission Ms brought in additional revenue $11 million lastly, growing our lease referral and other ancillary services contributing 40th female 11th. Additionally.

Summary, due to our superior ancient valid proposition and the <unk> the theaters and how war of our agent and stuff our revenue grill outperformed the industry.

Next I will tell you flew a <unk> performance.

<unk> North America Realty Salmon revenue $4.2 billion decreased 7% year over year, adjusted EBITDA was $91.1 million again.

Kent: Again, our core North American realty business was profitable. International Royalty Revenue was up 50% to a record $53.4 million in 2023. Due to our continued investment in the international realty business, adjusted EBITDA loss was $13.7 million.

<unk> North American Realtor business was profitable.

International royalty revenue.

Whereas up 50% to a record $53.4 million in 2003 due to our continuing investment in the international guarantee adjusted EBITDA loss was $13.7 million, but download revenue was down 14% in 2000 honestly why adjusted EBITDA loss improved by 41% yoga.

Kent: But bailout revenue was down 14% in 2023, while adjusted bailout loss improved by 41% year-over-year due to cost reduction actions. And revenue in the other segment was down 6% in 2023 to $4.8 million, with adjusted bailout loss of $3.8 million. And the next slide will summarize the highlights. This slide summarizes our highlights for the year, most of which I have discussed in the previous slide. What's important to point out is our plan for 2024 that Leo mentioned previously. At the end of the year, we identified approximately $20 million of cost saving and other profit improvement initiatives for 2024.

Due to cost reduction actions and revenue another segment of a stay on 6% and sometimes a sweet to her for a million dollar with adjusted EBITDA lost $3.8 million.

And next Flyer was summarize the highlights.

This fly summarize our highlights for the year, most of which I have discussed in the previous slice.

What's important to <unk> now is our plan for 294, the legal mentioned in previous at the end of the year, we identify approximately $20 million of cost savings and other profit improvement initiative 41 time before we will continue to monitor our business volume and cost space and identify edition.

Kent: We will continue to monitor our business volume and cost base and identify additional profit improvement opportunities throughout 2024. We're well positioned for 2024. I'm confident eXp will emerge from the current market downturn into a much stronger position to capitalise on future market growth opportunities. And with that, I will turn it back to Denise to take your question.

No profit improvement opportunity flew out on 24 well.

Well well positioned for towards 24, I'm confident ESP will emerge from current market downturn into a much stronger position to capitalize the future market growth opportunity and with that I will turn it back to the needs to tell you a question.

Alright, Thanks <unk> I'll.

Denise Garcia: I'll kick it off with a question for each speaker before we open the call to our analysts and questions from the audience. First, starting with you, Glenn, agent count grew 2% year over year, but it declined slightly from the third quarter. Can you discuss what happened to your agent count from the third quarter to the fourth quarter? Um, yeah, so I touched on it in my prepared remarks, but basically, we have a tough housing market and, as a result, agents have sold less real estate. That has been one aspect. So there's definitely been just industry churn. The other part was that we actually had a number of nonproductive agents that were on our rosters and weren't weren't contributing, and they cost every agent that's with eXp. There's a, there's a cost to have them involved in technology support and other things. So we, we did off-board them, but they hadn't sold real estate for a piece of real estate for over twelve months and hadn't been paying fees. In most cases, a similar length of time.

I'll I'll take it off with a question for each speaker before we open the call to our analysts few questions from the audience first starting with you Glenn agent Count grade two per cent you every year, but it declined slightly from the third quarter can you discuss what happened to your agent account from the third quarter to the fourth quarter.

Yeah, So I touched on it and my prepared remarks, but basically we.

Obviously, we have a tough housing market and as a result, you know agents.

So less real estate.

It's been one one aspect so there's definitely been just industry churn. The other part was that we actually had a number of nonproductive agents that were on our on our rosters headboard or contributing.

And they work cost every agent that's with the X P. There's a there's a there's a cost to have them involved technology.

<unk> and other things so we did off for them, but they hadn't sold real estate the poor.

Real estate for over 12 months and hasn't been paying fees. Most cases similar like at the time. So it was really just some trimming the the numbers to be really are productive agents, who were actually focused on being here.

Glenn: So it was really just trimming the numbers to be really our productive agents who are actually focused on being here, you know, moving forward. We expect our agent count to return to growth over time as we continue to sort of retain our highly productive agents and demonstrate, obviously, it's demonstrated really by strong agent satisfaction. But we're going back to the drawing board on a few different things that we're really excited to work on and hopefully be able to announce here in the not too distant future that we think are going to be really helpful as well. And now, I'll ask Leo a question.

Moving forward, we expect our agent count to return.

To growth over time, as we continued to retain our highly productive agents demonstrate obviously.

It's it's demonstrated really by her strong agent satisfaction, but we're <unk>.

Going back to the drawing board on a few different things that were really excited too.

Work on and hopefully be able to 10 ounce here in the not too distant future that we think it's gonna be really helpful as well.

Great got it and I'll ask <unk>. A question you mentioned a lot of initiatives E X P kicked off in 2023 that would improve the agents lives in and your plans for 2024 is there any one that truly differentiates E X PS value proposition from the competition.

Leo: You mentioned a lot of initiatives that eXp kicked off in 2023 that would improve agents' lives and your plans for 2024. But is there anyone that truly differentiates eXp's value proposition from the competition? Yeah, one of the strongest value propositions that gives us an advantage over everybody is scale. We've achieved scale profitability consistently, which allows us to reinvest and take advantage of new opportunities, and we're hyper focused on initiatives that are unique and unreplicatable due to our size and scale, whether that's technology that's proprietary and or substantially cheaper than retail all the way to just advantages like eXp exclusive due to size. A lot of our And then and then I'll wrap up with one for Kent.

Yeah, what are the strongest value propositions that gives us an advantage over everybody is scale. We we've achieved scaled profitability consistently which allows us to reinvest and take advantage of new opportunities, where hyper focused on initiatives that are unique in unreplicable due to our size and scale, whether that's you know technology.

Allergy, that's proprietary indoor substantially cheaper than retail all the way to just advantages like XP exclusively due to size a lot of our copycat competitors have undercard of economic model and have yet to prove any net profitability with no path forward.

Got it and then and then I'll wrap up like <unk> <unk> can you discuss the components as a 20 million dollar profit and treatment plan you mentioned.

Kent: Can you discuss the components of the $20 million profit improvement plan you mentioned? Yes, no. We're very excited about it. The $20 million profit improvement is really about impacting operating costs, which impact our cost of selling SG&A and also some additional revenue opportunities. All right.

Now we are very excited about it the $20 million profit improvement easily including.

Impact on operating costs, which are <unk> and all of a sudden additional revenue opportunity.

Denise Garcia: All right, I'll move over to our covering analysts and open up the call for John Campbell from Stevens. You can ask your question. Yeah, thanks, Denise. Hey, guys.

Alright.

Alright, I'm Gonna I'm Gonna is all very cute are covering analysts and then opened up the call for John Campbell from Stevens.

Yeah, Thanks, Denise Hey, guys Uhm.

John Campbell: Glenn, maybe a couple questions. I want to kind of stay on the topic of the decision to off-board the unproductive agents. I guess there are a few questions there. Why would this be the first one?

Maybe a couple a couple of questions on that kind of stay on the topic of the decision to offer the unproductive agents I guess a few questions are why why now would be the first one and then do you feel like this is kind of a one time cleanup effort or is this like <unk>, you're gonna have iterations over the next couple of months next several quarters and then I guess from a bigger picture does this just <unk>.

Glenn: And then do you feel like this is kind of a one-time cleanup effort, or are you going to have iterations over the next couple of months, next couple of quarters? And then, from a bigger picture, does this imply that you might have a minimum number of agents over a year or so? Is there a time frame? Is there a minimum that you might be exploring?

Ally that you might have a minimum for agents over a year or so is there a time frame is there a minimum that you might be exploring now.

Kent: Um, no, you know, it, We had really cleaned up a lot of our, we'll say our operations in the last year or so, and one thing that we had noted was a fairly significant, one, we'd cleaned up a whole bunch of what we call accounts receivable, which basically means there was a lot of things that we hadn't collected that needed to be collected. And in that, it sort of revealed as we kind of got more granular that we've got a group of agents who, for all intents and purposes, were just on our roster, but we're providing, there's a number of tools and technologies, so you figure out that each agent has a monthly cost, and they just, you know, we had worked with them, we had, you know, tried to get them in production, and a lot of them really effectively ghosted us as an organization, so they weren't even really communicating with us, so that was, that was, it was, so we did off-board some in Q4, we off-boarded a few more here in Q1, and, but I think we're pretty much done, and then, then it should be a much more, there shouldn't be like big blocks of agents off-boarded for this reason, because we do want to stay a little bit more up to speed on it, so that we don't show, you know, a higher agent count than truly active and productive with eXp. Okay, that's helpful.

No.

It.

We had really cleaned up a lot of our <unk> will say our operations in the last year or so and when one of the things that we had noted was a fair.

Fairly significant one we'd cleaned up a whole bunch of what were called accounts receivable, which basically means there was a lot of things that we hadn't collected that needs to be collected and in that it it sort of revealed as we kind of got more granular that we've got you know a group of agents.

<unk> problems as a purpose, we're just on our on our roster.

But there's you know we're providing there's there's a number tools and technology. So you figure out that each agent has a monthly cost.

And they just we'd worked with them we had tried to get them in production and a lot of really effectively ghosted us as an organization. So they weren't even really communicating with us. So that was that was it. It was so we did awkward so I'm in queue for we also ordered a few more here in Q1.

And but I think we're pretty much done and then then it should be a much more there there shouldn't be like big blocks of agents hop boarded for this reason because we do want to stay a little bit more.

Up to speed on it so that we don't show your higher agent count them truly active and productive with the X P.

Okay. That's helpful. And then maybe this is a question for <unk>, but on the gross margin you know hopefully, we'll get a solid rebounding U S housing this year I mean, it sounds like that would maybe apply a little bit of a underlying pressure on gross margin with with more capping you've got the you know the incentive programs in place like boost it seems like that's.

Glenn: And then maybe this is a question for Kent, but on gross margin, you know, hopefully, we get a solid rebound in US housing this year. I mean, it feels like that would maybe apply a little bit of underlying pressure on gross margin with more capping. You've got the, you know, the incentive programs in place like boost, seems like that's going to provide a little bit of an impact, at least this year, and then you'll lap that, and it kind of goes away. So maybe, Kent, you know.

<unk> fried it a little bit of an impact at least this year and then your lap that and it kind of goes away.

Kent: I don't know if you want to put a fine-tooth comb on it and, you know, give us some direction on where you think the growth margin goes exactly, or maybe this is a high level. Do you think it's up or down relative to 20%? Yeah, if you talk about like 2023, right, if you look at on the full-year basis, as I talked about, we, In 2023, we start to report the Asian growth incentive, expense in the cost of sale, right? If you take that out, right, light to light comparison on the full-year basis, actually, our gross margin percentage is higher, 23 was 1,022.

So maybe <unk> you know it.

I don't know if you want to put a fine tooth comb on it and you know give us some direction on where you think gross margin goes exactly or maybe just as high level. What do you think it's up or down relative to 23.

Yeah. If you they may call about like <unk> as I talk about is we.

In 2000, <unk>, we started to report the agents Cove incentive <unk>.

<unk> <unk> <unk>, if you take the outright lie to lie comparison on the free a base at your our gross margin percentage is higher <unk>.

And so so I would say is going forward I mean, our double date for the forecasts, but I'd be Colorado verbal when they see a cat, yes agent stock compensation, but in general we will expand our age our gross margin percentage more I'm more like similar like civil at this level.

Matt Feilich: And so I would say it's going forward. I mean, it's difficult to forecast, right, because of a lot of variables, when is your cap, yes, age, and stock compensation. But in general, we would expect our age, our gross margin percentage, to be more similar to this level, like 2020, 2024, and similar to 2023. Okay, and then also just to help pinpoint this for us, I guess, in what quarter was it 3Q where you started adding the agent growth incentive to gross margin and cost of goods? No, that's part of Q1 2023. Okay, so we're going to annualize that in 1Q24. Okay, that's all I know. Yeah. Thank you. Great. Thanks, John. We'll take our second question from Matt Feilich of William Blair. Matt, you may go ahead.

I put in 20 2024, similar to 103 level.

Okay, and then also just to help pinpoint this for US I guess and what quarter was it three Q, where you started adding the agent gross incentives into gross more into cost of goods.

No that's part of Q1 2023.

So we were gonna annualize that in <unk> 24, Okay. That's all yeah, yeah. Thank you.

Great. Thanks, John and we'll take our second question from that silent and trembling and Blair not you May go ahead.

Denise Garcia: Thank you, Denise. Hey, everyone. You have Matt Filek on for Steve and Sheldon.

Thank you Denise everyone you have <unk> for Steven Sheldon. Thank you for taking my questions and the opportunity to experience. The frame platform wanted to start with one an agent Groot how are you thinking about the agent growth potential in 2024, and how should we be thinking about the agent girls between the United States and.

Matt Filek: Thank you for taking my questions and the opportunity to experience the Frame platform. I wanted to start with one on agent growth. How are you thinking about agent growth potential in 2024? And how should we be thinking about agent growth between the United States and international markets? There's kind of a second part to that question.

International markets and it's kind of a second part to that question also curious if you feel agent grilled trends are being impacted by any sort of changes in the competitive landscape.

Glenn: Also curious if you feel agent growth trends are being impacted by any sort of changes in the competitive landscape. Yeah, so domestically, certainly we felt some competitive pressures. We were effectively the only cloud-based brokerage model for the first 11 years of our existence. Now there's a bunch, you probably know all the names, but there's Real, LPT, Epic, and there's a number of others as well.

Yeah, so certain domestically certainly we we felt some competitive pressures we were effectively you only cloud based brokerage model.

For the first 11 years of our existence now there's.

There's a bunch you probably know know all the names, but there's real L. P T <unk>.

There's a number of others as well so there's a there's a bunch of these these these mmm.

Glenn: So there's a bunch of these, for lack of a better term, copycat, cheaper versions of the model out there, and so we've definitely felt some pressure. Certainly agents; we've lost agents to some of these other models, and we've also gained agents back from some of those models already, even though they're pretty young in their lifecycles. So domestically, we probably will see some of that. But internationally, we are in a completely blue ocean.

Mmm for lack of a better term.

Copy Cat Mmm cheaper versions of the model and.

And so we we definitely felt some pressure certainly agents.

<unk>, we've had lost agents to some of these other models and we've also gained it back from from some of those models already even though they are pretty young and their lifecycle. So so domestically probably see some of that but internationally. We are in a completely blue ocean.

Glenn: I mentioned earlier that in South Africa, in just a couple of years, we've grown to about 1,200 agents, the seventh largest state agency in South Africa. But we're growing fast in South Africa, France, Dubai, and still the UK, which has been a really great market for us. We're getting traction in different markets. We also have some markets where we haven't really grown, and so we're either looking at leadership changes or just seeing if the model needs to be tweaked in some capacity. But we really expect that international is going to be our big growth in the coming years, and I'm super excited about it. These are anecdotal numbers because there are not statistics like NAR in most of these countries, but we figure there are approximately 20 million real estate professionals worldwide.

Yeah, I mentioned earlier that in South Africa in just a couple of years, we've grown to about 1200 agents seventh largest state agency.

In South Africa, but we're growing fast and so.

South Africa branch to buy still U K, which has been really great market for us we're getting we're getting traction in different parts. We also have some markets, where where we haven't really grown and so we were either looking at leadership changes or just seeing if the model needs to be tweaked in.

Some some capacity, but we really expect the international is gonna be.

Our our big growth in the next the next coming years and I'm Super excited about it.

It's really you know these are anecdotal numbers, because there's there's not statistics like N. A R and most of these countries.

But we figure there's there's approximately $20 million real estate professionals worldwide and if we go over the next 10 15 years can get to a similar market penetration that we have in the U S and Canada, then that puts us gives us a path.

Glenn: And if we, over the next 10, 15 years, can get to a similar market penetration that we have in the US and Canada, then that gives us a path to a potential million agents, which is a crazy number to think about under one umbrella. But because we're very unique in the way that we approach the model, we think there's a lot of growth potential there, and that's where we're spending a fair bit of time really figuring that piece out. That's very helpful; thank you, Glenn.

Two.

Two.

Potential million agents, which is a crazy number to think about under one umbrella, but because.

Because we were very unique in the way that we approached the model. We think there's a lot a lot of growth potential there and that's where we're spending a fair bit of time really figuring that peace out.

That's very helpful. Thank you Glenn quick clarification, well most of the international growth come from existing markets. I believe last time, we spoke the focus was on you know wrapping profitability and growth within the country's you're already and or do you expect to start.

Glenn: A quick clarification: will most of the international growth come from existing markets? I believe last time we spoke, the focus was on, you know, ramping profitability and growth within the countries you're already in, or do you expect to start entering new countries over the course of 2024? Yeah, we already have at least one or two countries that are fairly mature in the discussions to open up those new countries.

Entering new countries over the course of 2024.

Yeah, we we already have at least one or two countries that are fairly fairly mature in the in the discussions to open up those new countries.

Glenn: One country we expect to start with hundreds of agents on day one. And so we've got, you know, a number of good partners in terms of international markets. One of the things we're doing, though, is we're actually going back to the drawing board and how we actually operate international markets. We've now got enough experience running international markets to go back and retool in a way that we think is going to reduce our expenses to run an international market substantially. So in the early days of eXp, we could operate in a given state in the U.S. with a managing broker and then just the eXp back office staff.

One country, we expect Mmm Mmm Dewanna, we'll start with hundreds of agents.

And so we've got a number or a good partners.

In terms of international <unk>, one of the things we're doing though is we're actually going back to the drawing board and how we actually operate international marks from now I've got enough experience.

Oprah running international markets to go back and retool in a way that we think is going to reduce our expense uhm to run a international markets substantially. So in the early days of E X P. We could operate in a given state.

And the U S with the managing broker and and then just the E X P back office staff, but we could operate you know $10000 a month or so with no transactions.

Glenn: But we could operate, you know, $10,000 a month or so with no transactions. We think that there's a way to do some analog to that when we grow internationally so that our expense load is substantially lower so we can keep these markets open while the initial momentum in those countries takes place. And so we're excited to kind of regroup on a lot of that. And that's actually been, that was part of our strategic discussions late last year and going into this year. And we think we've got a good path to really operate these more efficiently with more entrepreneurial mindset country leaders.

We think that there's a way to do some an analog that when we grow internationally. So that our expense load is substantially lower so we can keep these markets open while the initial momentum in those countries take place so.

We're trying to kind of regroup on on a lot of that and that's actually been that was part of our strategic discussions late last year.

And going into this year and things.

I think we've got a good path to really operate these more efficiently with with more entrepreneurial mindset country leaders.

Glenn: Thank you. And then I will have one more, if I may. I was wondering if you could elaborate on the technical advantages of Frame compared to Verbella and maybe how those advantages enhance the value proposition for eXp agents. I know you talked about 3D home tours, which sounds interesting, but any additional color there would be helpful when we think about Frame compared to Verbella. Yeah, so Frame is, you know, I've referred to it in the past when we talked about it as really kind of your do-it-yourself metaverse, meaning that it doesn't, whereas Verbella was a fairly heavy application, you had to do, I didn't have to download a client.

Got it. Thank you and then one more if I may was wondering if you can elaborate on the technical advantages of frame compared to <unk> and maybe how those advantages enhance the value proposition for E. X P. Agents know you talked about three D home tours, which sounds interesting but any.

Additional color there would be helpful. When we think about frame compared to barbella.

Yeah, so frame is Ah.

I've referred to it in the past when we've talked about it is really kind of do it yourself <unk>, meaning that it doesn't whereas barbella was a fairly heavy how application you had to do I didn't have to download our client and and then those clients you know when you get into a large enterprises.

Glenn: And then, you know, those clients, you know, when you get into large enterprises, investment banks, etc., a lot of times, getting through the info security or InfoSec to actually get those things actually allowed or firewalls or other things would just prevent the application at the way that, you know, we envisioned it. When you're doing it through the web, it makes it much more accessible. We can string together rooms very easily, put in doors, and basically portals to other spaces. And you can go to FrameVR.io and start playing with it today. Like literally, you can go there, and you can set up your own space. You can go and build. You know? I don't know if there's auditoriums in there, but it probably is.

Banks et cetera, one time <unk> getting through the info security info SEC to actually get those things actually allowed or firewalls or other things.

Prevent the application at in the way that we envisioned it.

When you're doing it through the web it makes it much more accessible we can string together rooms, very easily put in doors and basically portals to other spaces and you can go to frame V. R. I O and start playing with it today like literally you can go there you can.

Set up your own space you can go and Bill you know I don't know if those auditoriums and there probably is but you can you've got.

Glenn: But you can you've got 50 plus spaces that you can choose from either offices to big campuses to, you know, lodges to what have you. And, you know, we have a lot of things going on behind the scenes just in the Metaverse arena. Mozilla Hubs, there's some stuff going on with them right now.

50, plus spaces that you can choose from either offices too big campuses too.

Mmm Mmm lodges too what have you and.

We.

There's a lot of things going on behind the scenes just in the <unk> Arena.

Uhm, Mozilla hubs or some stuff going on with them right now we've got we're actually because E X P is using this at a very high level where.

Glenn: We've got, we're actually, because eXp is using this at a very high level, we're, it's now really what I call enterprise ready. And that's why we sort of put it out there at this point. Burbell is a great platform. We do have a number of clients that use it, but it never really got the appeal on the enterprise level that we originally expected in 2020 after COVID hit when we made a big investment.

It's now really what I called enterprise ready and that's why we sort of put it put it out there at this point for Bell is a great platform that we do have a number of clients that use it but it it never really got had the appeal the enterprise level that we originally expected in 2020 after <unk>.

<unk>.

So what are we made a big investment before it was really just we were using it primarily for us and obviously some clients came.

Glenn: Before, it was really just us we were using it primarily for ourselves, and obviously, some clients came. Frame, I think, already has a natural fan base of users because of the way that it's structured, from teacher organizations to museums to all kinds of different places because it is much more accessible.

Frame I think is it gonna have it already has a natural fan base of users because of the way that it's structured from your teacher organizations to museums to all kinds of different places because of this.

Much more.

Glenn: So you'll see a lot of that freemium-type service coming out of Frame. And we think there is a good path to actually create a SaaS-based platform that could be significant over time using Frame. Very helpful. Thank you, Glenn and team. And next, we'll go to Tom White from D.A.

Accessible so you'll see a lot of that premium type service coming out of frame and and we think there's a good path to actually create a stash based platform that could be significant over time using <unk>.

Very helpful. Thank you Glenn in team.

And next to a little bit of Tom White from da Davidson Panic you have a question you can go ahead.

Tom White: Davidson. Tom, if you have a question, you can go ahead. Great. Thanks, guys.

Thanks, guys Uhm, Glenn you mentioned, an expectation to return to agent gross you know at some point here could you maybe talk a little bit about your expectations are in domestic agents in the next couple of quarters Uhm.

Glenn: Glenn, you mentioned an expectation to return to agent growth at some point here. Could you maybe talk a little bit about your expectations for domestic agents in the next couple of quarters? You know, if you look at, like, NAR member roles over the years, there tends to be kind of an uplift in licensed agents in the spring. Just curious if you're seeing any signs that maybe your business will exhibit some of that, and I guess sort of related. Just hoping you can comment a little bit about, you know, the success or traction maybe that things like Accelerate and Thrive and those platforms may be getting. I mean, do you feel like they're helping you kind of go back on offense a little bit with domestic agents?

If you look at like N. A R. A member rolls over the years that tends to be kind of a an uplifting and kind of licensed agents in the spring just curious if you're seeing any signs that maybe your business will exhibit some of that and I guess sort of related.

Just I was hoping you'd come in a little bit about you know the success or traction maybe that things like accelerating thrive in those platforms.

Maybe getting and do you feel like they're helping you kind of go back on offense, a little bit and domestic agents domestic agent can or do you still feel like maybe a little data on the defensive domestically give them some of the competition.

Glenn: Agent counter, do you still feel like you're maybe a little bit on the defensive domestically given some of the competition you touched on earlier? Yes, well, domestically, I think, you know, the it's, I think that we're in an industry right now that's not going to see a huge number of new licensees, like we've seen, like, in 2021, maybe even, even 2022, you know, with the decline in real estate transactions, you know, obviously, there's a lot, there's a backdrop of what the industry is going So I think we're kind of in this kind of little bit of slower growth. Obviously, the Fed decided to reduce interest rates substantially.

Such down earlier.

Yeah, well domestically I think the the <unk>.

Tara.

We're in an industry right now that's not going to see a huge number of new licensees like we've seen like in 20 2021, maybe even even 2022.

With the decline in real estate transactions.

Obviously, there's a lot there's a backdrop of what's the industry gonna look like in two or three or four years I think there's a lot of people's minds, even even potential new licensees. Sir I think we're kind of in this kind of little bit of a slower growth, obviously fed decides to reduce interest rates substantially in and then that all ultimately ads.

Glenn: And then that ultimately, you know, adds fuel to the fire; maybe, maybe we end up picking up more agents wanting to get in the business. So I think the backdrop is we're not going to see a lot of industry changes in terms of aid. You know, Accelerate, Thrive, Boost.

Fields of fire, maybe maybe we ended up picking up more agents wanted to get in the business. So I think.

The backdrop as as we're not gonna see a lot of industry changes in terms of an account but.

Uhm accelerate try boost those are tools that we have now that are definitely helping.

Glenn: Those are, you know, tools that we have now that are definitely helping. We think that there are probably more things we can do to be offensive in terms of growth. We've got some meetings coming up in early March where we're actually going over some things that we believe are going to do just that. So we're excited to get those mastered and rolled out. But so I guess the long and short of it is it's a little bit early, too early to tell. But we have obviously seen more competition, no doubt.

We think that there's probably more things we can do to be offensive in terms of growth.

We've got some some meetings actually coming up in early March we're we're actually going over some things that we believe are going to do just that so we're excited too.

Get those masterminded and rolled out but.

So I.

I guess, the the long and short of it is it's a little bit early too early to tell but we did we have obviously seen more competition no doubt we've seen less agents.

Glenn: We've seen fewer agents, you know, in the industry at large, which doesn't help in terms of overall growth. But we've still obviously continued to grow market share, which is really the thing I mentioned a couple of years ago. Let's focus on market share because the market's going to be tough.

And the industry large which doesn't help in terms of overall growth, but we've still obviously continue to grow market share, which is really kind of you know the.

The thing I mentioned, a couple of years ago was focus on market share because the market is going to be tough.

And then but we think that there's some ways to actually get.

Tom White: But we think that there are some ways to actually get good agent growth by creating some better ways to monetize from an agent's perspective to be at eXp. That makes sense. Thanks. Maybe just one quick follow-up or clarification. So the 20 million in annualized benefit to your results that you called out in the press release. It made it sound like it was a combination of cost saves and kind of revenue enhancements, but then did you say in kind of the prepared remarks that cost adjustments will kind of be the bulk of that? Can you maybe just clarify a little bit? I'm just trying to get a sense of what your quarterly kind of GNA might look like, you know, kind of starting in..., starting in the first or second quarter.

Good agent growth by creating some some better ways to monetize from agents perspective to B E X P.

That that makes sense. Thanks, maybe just one quick follow up or clarification. So the 20 million in annualized benefit T results that you called out in the in the press release and it made it sound like it's a combination of cost savings and kind of revenue enhancements, but then did did did you say.

The prepared remarks that that cost adjustments will kind of b b. The bulk of that can you just maybe just clarify a little bit I'm, just trying to get a sense of like what your quarterly kind of G&A might look like you know kind of starting in.

Starting in the first or second quarter.

Kent: Yeah, I mean, we've got, you know, an interesting backdrop of things going on. We've got, obviously, we're defending a ton of these commission-based lawsuits. So, there's definitely what we call risk management. So, there are some risk management fees because just our legal costs are going up significantly. So, we're working on, you know, generating some additional revenue to pay some of that legal cost, and then we made an adjustment to the discount on the stock comp plan. Again, you know, it's a little bit non-cash, but at the same time, it's still an item that actually plays a role in sort of our costs to operate and everything else. So, we made a couple of adjustments there. And then we do have, you know, we do have new revenues coming down the pike as well. So, we don't break all of it out at this point. I think those may be, I don't know how much visibility you've had on some of that.

Mmm, Yeah, I mean, we we've got an interesting backdrop of things going on we've got obviously we're defending.

Defending a ton of of these commission base lawsuits. So there's definitely what were called risk management. So there's some risk management.

Fees, because where are just started legal costs are going up significantly. So we're we're working on generating some additional revenue to pay some of that.

Illegal cost and then we made Ah adjustment to the the discount on the stock can't plan again.

Again.

Yeah, it's a little bit non-cash but at the same time, it's so <unk>.

Item that actually plays a role in sort of our costs to operate in.

And everything else. So we made a couple of judgments there and then we do have we do have new revenues coming down the pike as well so.

We don't break all of it out at this point I think those maybe I don't know how much visibility you've had to some of that but we've got a couple couple small tweaks on me, which mmm reducing costs on our <unk> start comp increasing a little bit of revenue on a risk management fees.

Glenn: But we've got a couple small tweaks on the, which are reducing costs on our stock comp, increasing a little bit of revenue on our risk management fees. And then we've got, you know, other business opportunities coming in. A lot of, you know, that is stuff that Leo's been underneath the revenues and agent services, affiliate services, you know, even things like our, you know, we've got some revenues that come from places like Clearwater and some partnership-type stuff that we've got there. And then we've got, you know, others. So, I don't know, Leo, if you've got any others that you want to touch on, but those are just some that are top of mind.

And then we've got you know other other business opportunities are coming in a lot of the stuff that Leo has been underneath the revenues.

And agent services affiliate services, you know even things like R.

We've got some some revenue set come from places like.

Clearwater and some partnership type stuff that we've we've got there and then we've got other so I don't know if <unk>, if you've got any others that you wanted to touch on but those are just some of the top of mind.

Leo: Yeah, I mean, piggybacking on the last question that was asked, you know, believe it or not, even with the dark clouds ahead, the conversations have sped up with independence that probably wouldn't have considered folding into a national company and just maintaining it independently. So, you know, there could be some growth that continues to materialize from the larger companies joining. But, you know, the single agents have struggled the most, and that's where we've seen the most attrition. But on the profit improvement, you know, it's cost plus addition. So we're hyper focused on unit economics, making sure that we're very efficient from an SG&A to unit standpoint and just really focusing on, you know, now that we're more of a mature enterprise, running it as such, and so we're just being very careful and holding everything accountable. Well, great. Thanks so much to the color guys, and I love the new frame VR.

Yeah, I mean, <unk> piggybacking on the first and last question that was asked you know believe it or not even with the dark clouds ahead. The conversations have sped up with independents that probably would've considered folding into a national company and just maintaining independently. So there could be some growth that continues to materialize from the large.

Your company is joining the single agents have struggled the most and that's why we seen her most attrition.

But on the property improvement.

It's it's it's cost plus addition, so we're we're hyper focused on you need economics, making sure that we're very efficient from <unk> to unit standpoint, and just really focusing on you know now that we're more of a mature enterprise.

Running it as such and so we're just being very careful in and holding everything with animals.

Great. Thanks, so much for the collar guys and I love the new frame via it's great appreciate it.

Tom White: It's great. I appreciate it. Thanks. Thanks.

Thanks. Thanks.

Denise Garcia: So we have time for one more question from Soham Bhonsle from BTIG. Soham, if you have a question, you can go ahead. Great. Good evening, everyone.

So we're gonna try for one more question from sell home, mostly from the Ivy T. I G. <unk>. If you have a question you can go ahead.

Good evening, everyone. I guess first one was just on the agent count up 2% I was hoping you can maybe help us quantify the impact from you know the onboarding of agents in that number and then served where agent <unk> growth has been in North America versus international.

Soham Bhonsle: I guess the first one was just on the agent count going up 2%. I was hoping you could maybe help us quantify the impact of, you know, the offboarding of agents in that number and then sort of where agent count growth has been in North America versus internationally, eXp World. Yeah, maybe I can, if you want me to answer the question. Yeah, you I think you've got the more granular data.

Yeah, maybe I can call you wanted me to answer the question.

<unk> you know I think you've got the more granular data.

Kent: Yeah, so we don't provide, let's say, our addition and termination, right? We have not provided, but what we can say is look at 2023 growth. Pretty much all our agent growth comes from the United States and Canada. Okay, and then on the gross margin, I think last quarter you talked about maybe being above seven and a half percent for this quarter. I think, you know, came in a touch lighter than that. So I'm just wondering, you know, what's driving that?

Yeah. So we don't have violated our addition, and termination why we have not provide about why we can say look at 2020th will grow pretty much all I <unk> come from the United States and Canada.

Okay, and then on the gross margin I think last quarter, you can talk to about maybe I'm being a month and a half percent for this quarter.

I think you know came in a touch lighter than that so I'm, just wondering what's driving that and that sort of any mixture. If that's happening within your base no more productive agents doing more or is just sort of you know you have to pay a higher explaining this sort of environment, which you know we're hearing as well.

Soham Bhonsle: Is that sort of a makeshift that's happening within your base, you know, more productive agents doing more? Or is it just sort of, you know, we have to pay a higher split in this sort of environment, which, you know, we're hearing as, Yeah, the major driver I even compared to if you look at the list on the if you like we talk about agent stock compensation, including the gross margin, last year, right, it was restated about 8%. And Q4 2020, I mean, Q4 2022 is 8%. Q4 2023 is 7.2%. So we do draw about 80 base points.

Yeah, the major driver I, even compared to if you look at the list on the if you like we talked about the age of the stock compensation is including the gross margin last year right restage about 8% and Q4 <unk> I'm in queue for <unk> Toys April Sam Q4 tons of history is 7.2%.

We do a job <unk> 80 based upon majorities eliminate the increase of the stock compensation <unk> agent stock compensation in Q4 by $12.5 million plus Q4, 22, Amelia So that's a major driver on that.

Kent: The majority of that really is the increase in stock compensation. Now stock agent stock compensation in Q4 was about 12.5 million, and in Q4 2022, it was 8 million. So that's a major driver of that. Okay, and then Kent, last one for SG&A, is the best way to think about it.

Okay, and then can't last one uhm for SG&A is the best way to think about anything is there was about 8 million of one time items as quarter. So that would say you know 78 million is who are the normalized one right and then.

Soham Bhonsle: I think there were about 8 million of one-time items this quarter. So that would say, you know, 78 million is sort of the normalized run rate. And then we sort of take 5 million every quarter and sort of run with that going forward. Yeah, that's how I think about it, right?

Take 5 million every quarter instead of run with that I'm going forward.

Yeah, that's how I think about it right now we don't provide guider anything about 89.4 right Emil one Pan <unk>, yes can calm the position on the war for seduction <unk> based roughly 80 182, if you'll do this one <unk> four four full quota give you about 312.

Kent: It's not we don't provide guidance, you think about 89.4, right? 8 million is one time related to ESP and the provision on workforce reduction, right? So your base is roughly 81, 82.

Soham Bhonsle: If you do this model run rate, right, for four, four quarters, it gives you about 326, right, million that kind of cost. And yes, you know, we know, Leo and Glenn talk about part of the significant cost saving or the profit improvement of 20 million is SG&A. So I want to answer Tom's question. So with some further reduction in SG&A, what you can expect is that our SG&A cost will be lower in 2024. What's 2024?

865 million, they kind of cough and yes, even though we <unk> talk about Paul the significant cost savings or the <unk>. So I wanted to answer Tom's question. So with <unk> now what you can expect is a shared a cough now will be Lola.

And 204 <unk>.

Kent: Great, thanks a lot. Thank you and thank you everyone for joining us today. As always, please stay connected by visiting eXpWorldHoldings.com for the latest updates on eXp news, results, and events. Additionally, you'll find a recording of this call and our latest investor presentation in the investors section of the site. So this concludes the eXp World Holdings fourth quarter 2023 fireside chat. Thank

Great. Thanks, a lot.

Thank you and thank you everyone for joining us today as always please stay connected by visiting <unk> Holdings Dot comforter latest updates on E. S. P news results and and then Additionally, you'll find the recording of this call and our latest investor presentation on the investors section of the site. So this concludes the X P wrote holding.

Fourth quarter 2023, alright, <unk>. Thank you.