eXp World Holdings Reports Q4 and Full-Year 2022 Results

2022 Revenue of $4.6 Billion, up 22% Year Over Year

Segment Reporting Introduced Highlighting Profitable Q4 in North American Realty

Company Declares Cash Dividend for Q1 2023 of $0.045 per Share of Common Stock

Glenn Sanford Returns as CEO of eXp Realty to Drive Next Phase of Agent-Centric Growth

BELLINGHAM, Wash. — Feb. 28, 2023 — eXp World Holdings, Inc. (Nasdaq: EXPI), (or the “Company”), the holding company for eXp Realty®, eXp Commercial, Virbela, and SUCCESS® Enterprises, today announced financial results for the fourth quarter and fiscal year ended Dec. 31, 2022. Beginning in the fourth quarter, the Company has revised its operating segments providing greater transparency into the drivers of its financial performance.

Fourth Quarter and Full-Year 2022 Consolidated Financial Highlights as Compared to the Same Year-Ago Period:

• Revenue increased 22% to $4.6 billion in 2022 with revenue of $933 million in the fourth quarter of 2022.


• Gross profit increased 24% to $366.9 million in 2022 with gross profit of $83.1 million in the fourth quarter of 2022.


• Net income of $15.4 million in 2022 with net loss of $(7.2) million in the fourth quarter of 2022.


• Earnings per diluted share of $0.10 in 2022 with a loss per diluted share of $(0.05) in the fourth quarter of 2022.


• Adjusted EBITDA (a non-GAAP financial measure) of $60.5 million in 2022. Adjusted EBITDA was $3.6 million in the fourth quarter of 2022 compared to $13.1 million in the fourth quarter of 2021.


• As of Dec. 31, 2022, cash and cash equivalents totaled $121.6 million, compared to $108.2 million as of Dec. 31, 2021.


• Distributed $204.7 million to shareholders in fiscal 2022, including approximately $179.5 million of common stock repurchases and $25.2 million of cash dividends.


• The Company paid a cash dividend for the fourth quarter of 2022 of $0.045 per share of common stock on Nov. 14, 2022. On Feb. 9, 2023, the Company’s Board of Directors declared a cash dividend of $0.045 per share of common stock for the first quarter of 2023, expected to be paid on March 31, 2023 to stockholders of record on March 13, 2023.

Management Commentary

“I am excited to return as CEO of eXp Realty to drive our next phase of growth by doubling down on agent-centric innovation,” said Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings. “Our model was designed to withstand varying market conditions, which uniquely positions us to continue investing in the agent experience in a down market. In turn, we maximize long-term growth and profitability.”

“Thanks to the hard work of our agents and our industry-leading operating efficiency, our core eXp Realty North American business remained solidly profitable in the fourth quarter despite the market downturn. In line with how we manage our business, we are now reporting segment-level financial information, which also provides transparency into the financial performance of our core business and the investments we are making to reinforce and extend our position as the most agent-centric brokerage on the planet.”

“We believe Net Promoter Score (NPS) is the best way to measure our success, and we were thrilled to end the year with a global agent NPS score of 73, a level which rivals the most loved consumer brands in the world. As market conditions improve, we expect our unrelenting focus on agent success to deliver lasting growth and the potential for significant wealth creation for our brokers, agents and shareholders in the years ahead,” concluded Sanford.

“In 2022, we generated $4.6 billion in revenue and over $242 million in Operating Cash Flow⁽¹⁾ while maintaining a strong balance sheet with $122 million of cash and no debt,” said Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings. “Moving forward, eXp’s profitable North American Realty segment will enable us to continue investing in the eXp platform to accelerate agent success and drive long-term, profitable growth.”

Fourth Quarter and Full-Year 2022 Operational Highlights as Compared to the Same Year-Ago Period:

• Agents and brokers on the eXp Realty platform increased 21% to 86,203 as of Dec. 31, 2022.


• Real estate transactions closed increased 15% to 511,859 in 2022 and decreased 13% year over year to 109,168 in the fourth quarter of 2022.


• Real estate transaction volume increased 20% to $187.3 billion in 2022 and decreased 16% year over year to $37.6 billion in the fourth quarter of 2022.


• eXp Realty expanded into six new international locations in 2022, including the Dominican Republic, Greece, New Zealand, Chile and Poland. In late 2022, eXp Realty announced operations in Dubai, which is expected to be fully operational in 2023.


• eXp Realty ended 2022 with a global Net Promoter Score of 73, a measure of agent satisfaction, as part of the Company’s intense focus on improving the agent experience.

^{(1) Operating Cash Flow presented is net cash provided by operating activities excluding change in customer deposits.}

Fourth Quarter and Full-Year 2022 Results – Virtual Fireside Chat

The Company will hold a virtual fireside chat and investor Q&A with eXp World Holdings Founder and CEO Glenn Sanford and CFO Jeff Whiteside on Tuesday, Feb. 28, 2023 at 2 p.m. PT / 5 p.m. ET.

The investor Q&A is open to investors, current shareholders and anyone interested in learning more about eXp World Holdings and its companies. Submit questions in advance for inclusion to [email protected].

Date: Tuesday, Feb. 28, 2023

Time: 2 p.m. PT / 5 p.m. ET

Location: EXPI Campus. Join at https://expworldholdings.com/contact/download/

Livestream: expworldholdings.com/events

About eXp World Holdings, Inc.

eXp World Holdings, Inc. (Nasdaq: EXPI) is the holding company for eXp Realty®, Virbela and SUCCESS® Enterprises. eXp Realty is the fastest-growing real estate company in the world with more than 86,000 agents in the United States, Canada, the United Kingdom, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai and continues to scale internationally. As a publicly traded company, eXp World Holdings provides real estate professionals the unique opportunity to earn equity awards for production goals and contributions to overall company growth. eXp World Holdings and its businesses offer a full suite of brokerage and real estate tech solutions, including its innovative residential and commercial brokerage model, professional services, collaborative tools and personal development. The cloud-based brokerage is powered by Virbela, an immersive 3D platform that is deeply social and collaborative, enabling agents to be more connected and productive. SUCCESS® Enterprises, anchored by SUCCESS® magazine and its related media properties, was established in 1897 and is a leading personal and professional development brand and publication.

For more information, visit https://expworldholdings.com.

Use of Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, which is a non-U.S. GAAP financial measure and may be different than similarly titled measures used by other companies. It is presented to enhance investors’ overall understanding of the company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.

The company’s Adjusted EBITDA provides useful information about financial performance, enhances the overall understanding of past performance and future prospects, and allows for greater transparency with respect to a key metric used by management for financial and operational decision-making. Adjusted EBITDA helps identify underlying trends in the business that otherwise could be masked by the effect of the expenses that are excluded in Adjusted EBITDA. In particular, the company believes the exclusion of stock and stock option expenses provides a useful supplemental measure in evaluating the performance of operations and provides better transparency into results of operations.

The company defines the non-U.S. GAAP financial measure of Adjusted EBITDA to mean net income (loss), excluding other income (expense), income tax benefit (expense), depreciation,  amortization, impairment charges, stock-based compensation expense, and stock option expense. Adjusted EBITDA may assist investors in seeing financial performance through the eyes of management, and may provide an additional tool for investors to use in comparing core financial performance over multiple periods with other companies in the industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to Net Income (Loss), the closest comparable U.S. GAAP measure. Some of these limitations are that:

• Adjusted EBITDA excludes stock-based compensation expense and stock option expense, which have been, and will continue to be for the foreseeable future, significant recurring expenses in the business and an important part of the compensation strategy; and


• Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets, amortization of acquired intangible assets, and impairment charges related to these long-lived assets, and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.

Safe Harbor Statement

The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. These statements include, but are not limited to, statements about the continued growth of our agent and broker base; expansion of our residential real estate brokerage business into foreign markets; and revenue growth and financial performance. Such forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to revise or update them. Such statements are not guarantees of future performance. Important factors that may cause actual results to differ materially and adversely from those expressed in forward-looking statements include changes in business or other market conditions; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the company’s Securities and Exchange Commission filings, including but not limited to the most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K.

Media Relations Contact:

eXp World Holdings, Inc.

[email protected]

Investor Relations Contact:

Denise Garcia

[email protected]

The following tables reflects Revenues and Adjusted Segment EBITDA by reportable segments:

Source: eXp World Holdings Reports Q4 and Full-Year 2022 Results

https://www.creconsult.net/market-trends/exp-world-holdings-reports-q4-and-full-year-2022-results/

Lending Guru Charles Rho Gives Advice on How to Prepare During a Down Market

After 17 years with General Electric Capital, closing on more than $11 billion in transactions, Charles Rho was recruited by CBRE in 2014 to launch a new division for commercial business lending.

Big stuff, but the right man for the job.

Since then, Rho started his own lending firm, VelocitySBA, which has risen to the Top 50 out of 1,600 small business lenders in the United States. His next goal is to put VelocitySBA in the Top 5 nationwide of all small business lenders.

In a recent conversation with Jim Huang, President of eXp Commercial, Rho laid out advice about how any market – even a recession – can be navigated successfully, as long as you are prepared.

Here are the key points Charles Rho made about handling the coming market shift during his talk with Jim Huang:

We Are Entering a Recessionary Period Right Now

“If you look at all the indicators right now with the interest rate movement, inflation, GDP, you will see a general consensus that we are headed for a downturn. Top leaders in banking and other industries acknowledge this is happening. They’re tightening their expenses, starting to lay off employees as well. We've had a number of national banks lay off quite a few workers and really start to get ready for the recession. That's forthcoming,’’ he said.

“My view is that we will probably get into a recessionary period starting (in January 2023) through March. And I believe that the recession will last at a minimum probably 12 to 16 months. So for the next two years, I think we are headed for some tough times,’’ he said.

“That’s why being out in front of your customers, being out in front of your people and directing the organization by making sure you have controls in place will be absolutely critical.”

Understand Your Numbers, Have Control of Expenses and Cash Reserves

“As small business owners, whether you're brokers or you're representing a small business owner who's looking to purchase another small business or looking to purchase real estate, we all need to prepare just as the larger institutions are preparing.

“I'm not advocating that we go out and lay off a bunch of folks, but we do need to understand our numbers. We need to have good control of our expenses, good control of our cash reserves to make sure that we are prepared for the next 12, 18 and 24 months. That may be a bit of a challenging time for all of us.”

GE Capital Taught Rho How To Be Nimble

“While GE is a huge conglomerate, the reason GE was very successful, including GE Capital Businesses, was that each business unit was its own balance sheet. Each business was able to operate like a small business. We were able to react quickly. We were able to pivot in the market based on market conditions. We were able to quickly launch products, and that entrepreneurial spirit was able to propel GE Capital's Businesses to become very specialized and to become No. 1 or No. 2 in their specialty finance area.”

Identify Your Strategic Advantage

Everyone needs a sound business plan when they launch, but Rho said that’s not enough.

“A business plan should be an ongoing process, updated on an annual basis so that you're always projecting out 3-to-5 years. This helps you to align your focus where you know and direct the business to where you need to go. This is what I do on an annual basis. Sometimes we update the business plan once or twice a year if we need to pivot because of a changing environment,’’ he said.

Identifying your strategic advantage is the key to developing your business plan.

“We all have competitors. And we all have to understand who our audience is. What is it that you're selling? And based on that, what is my strategic advantage? That is a key component that I sometimes see is missing from business owners. They don’t understand what their key advantage is and they don't understand who their competition is. That’s how to take a business to the next level. What is my strategic advantage?”

Review Everyone in Your Organization

Rho said ranking every employee based on their experience and skill set is a key part of creating a 3-to-5-year business plan. You have to know what their capacities are, what their potential is. These are the people upon whom your business plan rests. This is your team.

Always Consider Your Economic Climate

Given the projected downturn, Rho said it is critical to understand your profit and loss statement, and to have your cash-flow projections. Rho said he did that for his business, with scenarios that kept revenue “normal” to a worst-case scenario projecting a 50% downturn in revenue.

“You need to go through some case scenarios or assumptions. If there’s a downturn and my revenue falls off by 30%, what does that do to my cash? What if the revenue falls by 50%, how does that impact my cash flow, my income statement?”

Key Factors To Survive a Recession

Be liquid. Preserve cash. Understand your P&L and how your revenues may be impacted. You need to then understand how much cash and liquidity is needed to survive through a recession.

Expense control. If your revenues fall by 30%, are you able to maintain your expenses as it lies today or do you need to trim expenses?

Secure a line of credit. If you own real estate, if you own a business, Rho said you should “immediately secure a line of credit before the real estate devalues further.” Acting swiftly means you can secure credit against today’s values before your business potentially suffers a revenue decline.

Watch out for government stimulus: Depending on how deep the recession may get, the government could mirror its use of the SBA program during the Covid pandemic, when they introduced the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) and PPP loans (Paycheck Protection Program).

Be opportunistic. If you expense control and secure credit, you will be able to be opportunistic and be able to transact on deals that may exist in the market, or create deals in the market.

When Banks See Distressed Portfolios, Tap Into SBA Lenders for Better Terms

Rho said commercial real estate agents should make sure their borrowers or buyers are prepared and ready to go.

“It happens in every recession. Bank lenders pull back from lending because they're concerned about their portfolio. They go into portfolio management mode, making sure their portfolio of loans stay healthy and that loans don't go delinquent,’’ he said.

Look for lenders who will continue to provide SBA financing during the downturn. These tend to be lenders willing to work within the community for more favorable terms.

“If you're financing the acquisition of a business, or you're looking for working capital equipment loans, those are going to be typically done on a 10-year term. Real estate is going to be a 25-year maximum term. What you'll notice if you're used to working with banks, bank loans have a much shorter term,’’ Rho said.

“The advantage of SBA loan is that you have a longer term and that allows the small business owner or the borrower to really reduce the monthly payment so that you can focus more cash flow into the business rather than into the debt payment.’’

Tips For Helping People Secure Loans From SBA Lenders

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  • Look for loans with no balloon, no need for refinancing and no prepayment penalty.
  
  
  
  

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  • SBA lenders look at the strength or weakness of the business owner and their ability to repay the loan. That includes the ability to service the debt and a credit score of 680 or above.
  
  
  
  

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  • Lenders examine a small business owner’s experience and want to see no criminal background, no bankruptcies.
  
  
  
  

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  • A detailed business plan is very important.
  
  
  
  

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  • Post-closing liquidity is necessary to ensure working capital for at least six to 12 months.
  
  
  
  

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  • Commercial real estate agents can direct customers seeking to start new or expand business to a Certified Public Accountant. Demonstrating a financial history via tax returns, personal financial statement, and there's an SBA application form 1919.
  
  
  
  

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  • Contact a volunteer at Score, a service of the U.S. Small Business Administration to help draw up a business plan.
  
  
  
  

“There are individuals at this Score program that mentor, that help write business plans and help secure financing based on the needs of the small business owners. So take a look at these resources. These are available for anyone who are interested in finding out about what all the resources are available through the federal agencies,’’ Rho said.

“There are also state agencies, like Calcap in California, or the Texas Economic Development office. There are resources,’’ Rho said.

Opportunities Exist for Businesses Positioned and Prepared to Play Offense

When real estate agents or business owners realize the market is shifting, Rho said there are plenty of ways to be prepared, like having a strategic plan and knowing what resources are out there.

“I think what's critically important is to really understand where your business is, where your operation resides today and where it needs to go in the next 12, 24 months, and 36 months. Take a look at what the potential downside and the upside can be during a recession. And I will tell all of you guys right now I am expecting a recession,’’ Rho said.

“But there are two ways you can play this, at least as a lending company: Hunker down and play defense, or try to play offense and look for opportunity. That means understanding what your strategy is and what’s your competition.Those who can control their expenses will survive through a recession. And not only will they survive, they will come out stronger and essentially your field of competitors will shrink in a recession.’’

Source: Lending Guru Charles Rho Gives Advice on How to Prepare During a Down Market

https://www.creconsult.net/market-trends/lending-guru-charles-rho-gives-advice-on-how-to-prepare-during-a-down-market/

@properties Implements 1% Broker Fee On Transactions

@properties Christie’s International Real Estate is going into wartime mode with a new fee on agent commissions, The Real Deal has learned.

The Chicago-based brokerage’s co-CEOs Thad Wong and Mike Golden told agents Wednesday it’s tacking on an agent services fee of 1 percent of gross commission income, according to a company-wide email reviewed by TRD.

The move applies to all transactions closed on or after April 1, and comes during a sustained market slowdown in an era of high-interest rates, an environment in which many residential brokerages have been pushed into tough decisions.

“Brokerage revenues are down, and expenses are way up,” Golden and Wong said in the company-wide email. “Inflation has hit everyone, including @properties, and today it costs significantly more to run a large brokerage firm than it did just a couple of years ago.”

The agent services fee will come off the top of all transactions and will be shared between the agent and the company depending on previously established splits. For example, if the commission was $100, the additional fee would be $1, but if the agent’s split is 75/25, the agent would only pay 75 cents.

“While we never thought we would have to institute a fee, it is the most responsible thing we can do, and we think it is very fair given the value @properties provides,” the email said. “We also worked incredibly hard to keep this fee as low as possible.”

The fee only applies to company-owned @properties offices, not its franchises or franchisees of Christie’s International Real Estate, whose brand rights are owned by @properties.

In an interview Thursday, Wong said the company is preparing for a declining market.

“I don’t know if we’ve seen the worst, or if the worst is coming — you have to be prepared,” he said. “If you’re not talking about your plans when things slow down, you’re making a mistake.”

“[Fees are] not uncommon in the industry — it’s uncommon for us,” he added.

The company is also increasing its MLS fee for transactions that include an outside broker to $495 from $250, a move which @properties says will bring it in line with other brokerages. The MLS fee for transactions with the company’s agents on both sides remains at $250.

This earnings season has shown how great the challenge is for residential brokerages.

Anywhere Real Estate — the parent company of Corcoran, Coldwell Banker, Century 21 and Sotheby’s International Realty — and Redfin posted big losses in the fourth quarter, with signals that the first quarter this year will be much of the same. Compass posted a net loss of $158 million in the fourth quarter, up from $154 million in the third quarter but slightly improved over the $175 million lost in the same period of 2021.

Source: @properties Implements 1% Broker Fee On Transactions

https://www.creconsult.net/market-trends/properties-implements-1-broker-fee-on-transactions/

Off-Market Multifamily Sellers Are Leaving A Ton Of Money On The Table

Off-Market Multifamily Sellers Are Leaving A Ton Of Money On The Table

Marketing a property can increase the sale price by up to 23%, which runs counter to the idea that off-market deals can achieve higher values because a buyer will be more aggressive to seal a trade.

The perception is when a seller has one buyer vying for an asset, that buyer is more aggressive and willing to pay a premium because they don’t want the seller to get into a bidding war for the property. Our research found the opposite.

This is a sign it is in the best interests of owners to undergo a marketing campaign for their properties. Growing allocations from institutional investors toward real estate are still driving a sizable pool of investors into bidding for multifamily assets, and a full campaign is what drives the premiums.

The job of a broker to create a competitive environment on behalf of the seller. Putting a building on the market determines the strongest buyer.

That may not be necessarily based on price alone. If one buyer has a higher-priced offer but weak financial backing, versus a buyer with a stronger track record, taking a lower offer is the way to go. It’s our job to give the seller those options and we do that by marketing properties and generating the highest number of qualified offers possible.

There are numerous case studies where a seller received an off-market bid, put it on the market, and the off-market buyer still bought the asset but at a higher price.

 

Have you thought of selling your property and would like to know what it's worth? Request a valuation for your property below:

Request Valuation

eXp Commercial Chicago Multifamily Brokerage focuses on listing and selling multifamily properties throughout the Chicago Area and Suburbs.

We don’t just market properties; we make a market for each property we represent. Each offering is thoroughly underwritten, aggressively priced, and accompanied by loan quotes to expedite the sales process. We leverage our broad national marketing platform syndicating to the top CRE Listing Sites for maximum exposure combined with an orchestrated competitive bidding process that yields higher sales prices for your property.

 

https://www.creconsult.net/market-trends/off-market-multifamily-sellers-are-leaving-a-ton-of-money-on-the-table/

Rent Growth Climbs Slightly in February | National Apartment Association

Rent growth ticks back up in February.

Rent growth is back in positive territory after five straight months of declines. The latest Apartment List National Rent Report increased by 0.3% during February.

Year-over-year rent growth is at 3%, the lowest since April 2021. The average rate for year-over-year rent growth was 2.8% from 2018 to 2019.

There’s usually a jump in rent growth in February, so the increase this year is no surprise. “It’s typical to see prices dip and fall…but things normally begin to pick back up around this time of year, and rent growth then tends to accelerate until the early summer peak,” according to the report.

Rents dropped 3.4% from August 2022 through January 2023, the steepest five-month slip in the report’s history dating to 2017.

During the past six months, rent growth has been flat in the fastest-growing markets. Miami, at 0% growth, followed by Memphis, Tenn., Houston, and Oklahoma City at -1%. Oklahoma City also witnessed the fastest growth during the past 12 months with a 7% increase—the same jump was seen in Hartford, Conn., and Indianapolis. Tampa, Fla., Tucson, Ariz., and Miami have grown above 35% rent since March 2020.

Seattle and Rochester, N.Y., each posted -8% rent growth during the past six months. Las Vegas and Phoenix were at -3% during the past 12 months, and San Francisco has the slowest growth since March 2020 at -5%.

 

Source: Rent Growth Climbs Slightly in February | National Apartment Association

https://www.creconsult.net/market-trends/rent-growth-climbs-slightly-in-february-national-apartment-association/

1120 E Ogden

Retail / Office Space For Lease | 3,674 SF | $20/SF NNN
1120 E Ogden Ave, Suite 101 | Naperville, IL 60563
Broker: Randolph Taylor rtaylor@creconsult.net | 630.474.6441

https://www.creconsult.net/retail-office-for-lease-1120-e-ogden-ave-suite-101-naperville-il-60563/?wpo_all_pages_cache_purged=1

9301 Golf

Golf Sumac Medical Offices For Lease | 998 - 2,853 SF | $28/SF MG
9301 West Golf Rd | Des Plaines, IL 60016
Broker: Randolph Taylor rtaylor@creconsult.net | 630.474.6441
https://www.creconsult.net/golf-sumac-professional-building-medical-office-space-for-lease-9301-golf-rd-des-plaines-il-60016/