eXp World Holdings faced headwinds in the second quarter, as persistently slow real estate sales drove the company’s revenue down 13% year-over-year to $1.2 billion, executives disclosed on Thursday.
Despite the decline in revenue, the holding company for eXp Realty maintained profitability with a net income of $9.4 million, up from $1.5 million in the first quarter of 2023 and $9.3 million in Q2 2022.
The company’s adjusted operating earnings before interest taxes depreciation and amortization (EBITDA) declined 15% year-over-year to $38.1 million in Q2 2023, according to the official statement.
Amid a difficult housing market, transaction sides declined 9% to 137,199. Sales volume also declined 16% from the second quarter of 2022 to $48.6 billion.
However, eXp World Holdings Chief Executive Officer Glenn Sanford expressed his satisfaction in spite of the declines in revenue, sales and transactions. The company and its subsidiaries, which include eXp Realty, SUCCESS Enterprises, Virbela and other affiliated services, are in solid financial shape, declared its executives.
“Our net income and adjusted EBITDA were both positive, we continue to have a solid financial profile, we have a strong cash flow generation and a significant cash balance as well as zero debt,” said Sanford during the company’s webcast.
International Realty was the best performing segment in Q2
When broken down by segments, International Realty revenues increased 35% year-over-year to $11.99 million, reaching an all-time record. North American Realty revenues, on the other hand, fell by 13% year-over-year to $1.21 billion.
“North American Realty business continues to be strong and profitable with unit growth and agent growth outperforming the industry. It delivered $34 million of EBITDA in the quarter,” said Sanford.
Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings, acknowledged that high mortgage rates were expected to persist in the short term. However, he stated that consumer price inflation started to cool down in the U.S, eXp’s core North American market.
He further noted that “forward interest rate curves suggest that rates may now be at or near peak levels.”
As such: “We are optimistic that lower mortgage rates will unleash significant pent-up demand as affordability improves and buyers can once again meet seller price objectives.”
The company remains bullish on iterating its agent value proposition
During the webcast Thursday, Sanford touted eXp Realty’s growing value proposition among agents, pointing to a 7% increase in agent count to 88,248 as of June 30, 2023. Just yesterday, Daryl Owen, the founder of top California independent brokerage Nationwide Real Estate Executives, joined eXp Realty, taking 200 agents along with him.
Sanford highlighted the launch of several initiatives in Q2 that prioritize agent support. The brokerage revamped its eXpert Care Desk, which provides live support to agents 24/7. And in May, they launched Luna, the GPT-4 powered generative AI support agent.
Throughout the second quarter, eXp also made a series of notable announcements, including the launch of its Boost Program to financially incentivize independent teams and brokerages to join eXp Realty and its commitment to reduce its revenue share criteria.