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EW

EXP World Holdings, Inc. (EXPI)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 revenue was $933.4M with gross profit of $83.1M; diluted EPS was $(0.05) as the housing downturn pressured volumes but gross margin expanded 120 bps YoY to 8.9%, cushioning profitability via fewer agents hitting caps .
  • Adjusted EBITDA was $3.6M in Q4 (vs $13.1M in Q4 2021), while North American Realty remained profitable with $12.1M adjusted segment EBITDA despite industry home sales declines of >30% YoY .
  • Management introduced segment reporting, reiterated strong cash/liquidity (cash and equivalents $121.6M, no debt), and declared a $0.045 per share cash dividend for Q1 2023 (same as Q4 2022) .
  • Key catalysts: margin resilience from the revenue-share model in a down market, continued profitability of North America, and agent-centric investments (Revenos, luxury, Zoocasa, Frame VR) to drive share gains through the cycle .

What Went Well and What Went Wrong

What Went Well

  • North American Realty delivered $920.7M revenue and $12.1M adjusted segment EBITDA in one of the toughest quarters, underscoring model resilience; consolidated gross margin rose to 8.9% (+120 bps YoY) despite revenue declines .
  • Strong agent satisfaction: global Net Promoter Score reached 73 at year-end (world-class level), which management views as the best indicator of long-term value creation and growth .
  • Liquidity and capital returns: cash and equivalents of $121.6M with no debt; $204.7M distributed in FY22 via repurchases ($179.5M) and dividends ($25.2M), supporting shareholder value while funding growth investments .

What Went Wrong

  • Volumes and profitability compressed: Q4 units fell 15% YoY to 109,168 and transaction volume declined 16% YoY to $37.6B; consolidated adjusted EBITDA fell to $3.6M from $13.1M in Q4 2021 as macro headwinds intensified .
  • International and other segments remain investment mode: International Realty revenue grew to $9.8M but posted $(4.1)M adjusted segment EBITDA loss; Virbela and Other Affiliated Services also posted losses in Q4 .
  • GAAP profitability impacted: Q4 GAAP net loss was $(7.2)M; management noted higher personnel costs to support agent growth and continued SG&A investment despite cost actions .

Financial Results

P&L vs Prior Quarters

MetricQ2 2022Q3 2022Q4 2022
Revenue ($USD Millions)$1,415.1 $1,239.0 $933.4
Gross Profit ($USD Millions)$107.3 $93.1 $83.1
Diluted EPS ($USD)$0.06 $0.03 $(0.05)
Adjusted EBITDA ($USD Millions)$26.9 $12.3 $3.6
Gross Margin %N/AN/A8.9%

Year-over-Year Q4

MetricQ4 2021Q4 2022
Revenue ($USD Millions)$1,077.0 $933.4
Gross Profit ($USD Millions)~$83.1 (flat YoY per call) $83.1
Diluted EPS ($USD)$0.10 $(0.05)
Adjusted EBITDA ($USD Millions)$13.1 $3.6
Gross Margin %7.7% (120 bps lower per call) 8.9%

Segment Breakdown (Q4 2022)

SegmentRevenue ($USD Thousands)Adjusted Segment EBITDA ($USD Thousands)
North American Realty$920,663 $12,140
International Realty$9,777 $(4,124)
Virbela$2,304 $(958)
Other Affiliated Services$1,756 $(461)
Corporate expenses and otherN/A$(3,019)
Consolidated Adjusted EBITDAN/A$3,578

KPIs

KPIQ2 2022Q3 2022Q4 2022
Agents and brokers (period end)82,856 84,911 86,203
Transactions closed (units)150,032 138,354 109,168
Transaction volume ($USD Billions)$57.9 $50.4 $37.6
Global NPS (agent)68 71 73

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per share (cash)Q1 2023Q4 2022 dividend $0.045/share Q1 2023 dividend $0.045/share declared; payable Mar 31, 2023 Maintained
SG&A quarterly run-rateFY 2023Previously targeted ~$80M/quarter (2022 commentary) Indicated ~$93–$96M/quarter; “same kind of range that we saw this year” Raised
Gross margin trajectory1H 2023N/AExpect margin % to remain elevated in down market; will decline as volumes recover Informational
International expansion cadence2023 and beyondSlowed new country launches in 2H22 Plan to return to ~4–5 new countries per year towards year-end Raised pace later in year

Earnings Call Themes & Trends

TopicQ2 2022 (Prior-2)Q3 2022 (Prior-1)Q4 2022 (Current)Trend
Agent-centric innovationIntroduced Zoocasa acquisition; leadership hires to strengthen affiliated services and tech Launched Revenos, eXp Luxury, eXp Referral Division; focus on operating efficiency Doubling down on agent-centric model; NPS as North Star; initiatives in onboarding, payments, support Strengthening and scaling
Macro/industry conditionsRecord revenue but noted tax-related EPS headwind; preparing for challenging market Management confident in model as market slowed into seasonally weaker Q4 Q4 U.S. home sales down >30% YoY; interest rates peaked; margin % up due to cap dynamics Deteriorated in 2H; volume pressure
Segment reporting/visibilityN/AN/AIntroduced four operating segments; North America profitability highlighted Increased transparency
Technology platforms (Virbela/Frame)Virbela as cloud backbone N/AContinued investment in Virbela; accelerating shift toward web-based Frame VR over time Evolving to web-first
International expansionExpanded into New Zealand Expanded into Chile and Poland 22 markets; South Africa, UK, Australia near/breakeven; plan to resume 4–5 launches/year Building scale; selective investment
Capital returns/liquidity$50M repurchases; cash $134.9M ~$59.8M repurchases; cash $134.5M Cash $121.6M; $204.7M FY distributions; no debt Sustained returns; strong balance sheet

Management Commentary

  • “Our model was designed to withstand varying market conditions… uniquely positions us to continue investing in the agent experience in a down market.” – Glenn Sanford .
  • “North American business remained solidly profitable in the fourth quarter… now reporting segment-level financial information.” – Glenn Sanford .
  • “We generated $4.6 billion in revenue and over $242 million in Operating Cash Flow while maintaining a strong balance sheet with $122 million of cash and no debt.” – Jeff Whiteside (Operating Cash Flow definition note) .
  • “At a consolidated level, Q4 revenue was $933.4 million and $3.6 million in EBITDA… North American Realty generated $12.1 million in adjusted EBITDA.” – Jeff Whiteside .
  • “Gross margin percentages increased 120 basis points year-over-year to 8.9%… resulting in roughly a flat gross profit dollar relative to Q4 2021 despite ~$144 million lower revenue.” – Jeff Whiteside .

Q&A Highlights

  • Gross margin mechanics: In down markets fewer agents hit caps, lifting margin %; management expects margins to stay elevated if the first half remains challenged, then normalize as volumes recover .
  • SG&A run-rate: Indicated ~$93–$96M per quarter; team will invest strategically when opportunities arise and does not want to be “boxed into a number” .
  • Agent trends: U.S. agent count flattish exiting Q4/start of Q1; churn concentrated in low-production agents exiting the industry; share of market expected to continue rising .
  • International investment: Most of the $13.7M international adjusted EBITDA loss reflects new country opening costs; focus on improving productivity and margins in mature markets (UK, Australia, South Africa) .
  • Commercial segment: ~1,000 commercial agents; compelling cap structure vs traditional 50/50 models; infrastructure and referral brokerage built out to support growth .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2022 revenue and EPS were not retrievable due to data access limits at the time of request. As a result, a formal comparison to consensus cannot be provided here. We attempted to fetch quarterly and annual estimates, but the S&P Global API returned a “Daily Request Limit Exceeded” error [GetEstimates errors].
  • Based on management disclosures, investors should reassess models for: higher gross margin % in down markets, SG&A run-rate in the mid-$90M/quarter range, and sustained North America profitability even at lower volumes .

Key Takeaways for Investors

  • Margin resilience is a differentiator: The revenue-share/cap model cushions margins in downturns, evidenced by Q4 gross margin up 120 bps YoY to 8.9% despite revenue down 13% YoY .
  • Core profitability intact: North American Realty delivered $12.1M adjusted segment EBITDA in Q4; continued share gains should position EXPI well for recovery .
  • SG&A discipline with strategic flexibility: Expect ~$93–$96M per quarter in 2023, but management will invest to enhance agent experience and international productivity when ROI is attractive .
  • International optionality: Near- or profitable markets (UK, Australia, South Africa) plus planned reacceleration to 4–5 new countries per year create medium-term growth levers; near-term investment weighs on EBITDA .
  • Liquidity supports growth and returns: $121.6M cash, no debt, and ongoing dividends ($0.045/share) enable continued innovation while returning capital .
  • Near-term trading lens: Results reflect macro-driven volume pressure; watch for signs of transaction stabilization and margin normalization, as well as cadence of agent additions and SG&A trajectory to gauge earnings power recovery .
  • Medium-term thesis: Agent-centric platform, high NPS (73), and technology assets (Zoocasa, Revenos, Virbela/Frame) underpin durable share gains and profitability as volumes normalize .