Okay. Let’s get started. Good afternoon and welcome to the eXp World Holdings Third Quarter 2024 earnings fireside chat via live stream and our Metaverse on the web, Frame. My name is Denise Garcia, and I manage Investor Relations for eXp World Holdings. Today, we will begin our earnings fireside chat with prepared remarks from Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings; Leo Pareja, CEO of eXp Realty; Wendy Forsythe, CMO of eXp Realty; Seth Siegler, Chief Innovation Officer of eXp Realty; and Kent Cheng, Principal Financial Officer and Chief Accounting Officer of eXp World Holdings. Following our prepared remarks, we will open the call to a Q&A session with our speakers. Let’s begin with a review of the forward-looking statements. 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 financial condition. We assume no obligation to update or revise any forward-looking statements or information. As a reminder, today’s call is being recorded, and a replay will also be made available on expworldholdings.com. Now for a few logistics, and we’ll get started. For those of you joining in Frame today, welcome to our metaverse on the web. [Operator instructions] Now I’ll turn the fireside chat over to our speakers before opening the call to questions. Glenn, you may begin.

Alright. Thanks, Denise, and thanks, everyone, for joining us today. It was a busy Q3, as you guys are aware. Obviously, we just came off of our big event in Miami EXPCON 2024. I know there were some investors and some analysts that were attending. It was pretty cool to get some notes even in the background from the event. I think one of our analysts actually sent me a note about our fun dance. So if you want to see something viral, go check that out. Anyway, this quarter, I want to just continue to refocus us on what we’re working on. Obviously, we’ve got eXp North America, and Leo is going to really talk about things that are going on and Wendy as well on eXp North America. On international, that’s where I’ve been focusing a ton of my time since July, and we’ve really turned things around in a major way. Obviously, we also have success enterprises and then, of course, where you’re actually seeing right now, which is FrameVR.io, which is truly our digital workplace. In fact, I am going to invite those of you who are interested to come by our international offices at some point at exp.world/international. So just keep that in the back of your mind, but you can come in, see how we operate, see how we work. We’re working 24/7 around the globe. But we’ve really just built this amazing platform where our agents are our singular focus. We’ve spent more than 15 years building out the eXp platform. We just went past our 15-year anniversary at the beginning of October, and we are doing some amazing things. Obviously, we think about things like our NPS, and we’ve got phenomenal scores on that. We like to think about the idea that…

Thanks, Glenn, and thanks to everyone who’s joining us today. I’m really thrilled with the number of quality independent brokers and teams we’ve brought on during this last quarter. This success is a direct result of a lot of the strategic growth that we’ve been focusing on at eXp. We’re very effectively aligned with our growth team and our marketing efforts to attract some of the most respected and highest-performing teams in the industry. These additions are not just a testament to our strategy, but also are significantly strengthening our eXp market position. Earlier this year, I spoke about key initiatives that are driving this launch – this growth. We talked about Booth, Thrive, Revenue Share 2.0, and I’m happy to say these programs are making a notable impact. On July 1, we launched Fast Start attraction bonus, and I’m proud to announce that in Q3 alone, we paid over $5 million to agents who are part of this initiative. We also announced more incentives at EXPCON last week to further support our ICOs and our productive agents. The ICON incentive program and revenue share capping incentive program are as follows. The ICON incentive program will credit ICON agents up to 30 frontline qualifying agents for 13 months, maximizing the revenue share potential for all seven levels, and the revenue share capping incentive program provides an additional revenue stream for agents that have capped by crediting them with 10 FLQA to maximize their earning potentials through levels 5 to 13 months. Both of those programs will start – started November 1. On the first quarter call, I mentioned that I promised conversations we’re having with small to midsized independents and anticipate an influx of new groups joining eXP with dozens or even hundreds of agents at a time. I’m pleased…

Thanks, Leo and hello, everyone. Thanks for joining us today. I joined eXp a little over 6 months ago. Having a background in real estate, I’ve watched eXp grow and innovate, and I’m excited to be part of the team building this next chapter of this amazing company. I’ll start with my first mandate, evolving the eXp brand. On the next slide, I’ll walk you through the key focus areas of the eXp 2.0 brand strategy to further align eXp’s image with its leadership position in innovation, technology, and agent empowerment. First, we focus on updating the brand aesthetic toward a more modern look and feel, and we call this our brand glow-up. We shifted away from the royal blue primary brand color to a dark navy, removed the outdated box logo treatment, and aligned all supporting product and program logos for an overall brand consistency. Second, we focused on increasing brand awareness of the eXp brand. On the next slide, I’ll walk you through some recent press coverage we’ve secured as part of increasing awareness of eXp initiatives. As part of our brand evolution, we’ve made tremendous strides in boosting our thought leadership and increasing media visibility. I am thrilled to share that we’ve appeared in over 7,700 articles across major media outlets such as the Wall Street Journal, CNBC, and CNN, along with top industry publications like Housing Wire, In The News and RIS Media. These appearances have generated over 14.7 billion views and impressions, giving us an incredible share of voice in the industry. This level of exposure is a clear reflection on the growing recognition of eXp’s leadership and the eXp brand. Establishing a strong brand voice is key as we continue to enhance our value proposition and create even more opportunities for our agents. One…

Awesome. Thanks, Wendy. And thanks, everybody. Super excited to be here today to get into our latest tech and innovation. We’re really pushing the boundaries and adopting AI-based technology across the entire business and really trying to redefine what’s possible in real estate tech, setting new standards for the industry itself. Here at eXp, we’ve always been on a relentless journey of innovation, always using technology to really empower agents and transform the way that we do things in the business. And we’re really focused on building a future where agents are equipped to be transformative in what they do, giving them the tools that they need to make that possible, and enabling them to thrive and succeed at unmatchable levels. That’s always our goal. So part of this journey is our unwavering focus on leveraging today’s most cutting-edge AI solutions to really revolutionize the business in four key areas that we think hold the most opportunity for growth and opportunity. So those four areas are agent productivity; operational efficiency and accuracy; internal empowerment and agility; and lastly, future applications. So to get into it, starting with agent productivity, our commitment to our agents means that we always need to be there for them whenever they need us. With AI now integrated into our existing expert care desk and the all-new Luna 2.0, we’ve really created an always-on support system that offers agents around-the-clock assistance and really empowers them with instant answers and support whenever they need it, wherever they’re located. Agents can also get real-time info and interaction with their own business via natural language chat using Luna, which is using NLP AI to deeply integrate into several of our existing eXp systems. In terms of operational efficiency and accuracy, we’re really leaning into the power of AI to…

Thank you, Seth. On the next slide, I will highlight several key metrics during the third quarter of 2024 that underscore our progress and strategic initiatives. Let’s start with our agent Net Promoter Score or aNPS. This quarter, we achieved aNPS of 76, which is a 2-point improvement compared to the third quarter of last year. This number continues to be strong as we continue to listen to our agents and invest in programs that drive their productivity through compensation incentives, sales and marketing and technology as the team discussed previously. Moving on to our agent network. Our agent count decreased 4% on a year-over-year base, reflecting both challenging market conditions in the U.S. and our strategic decision to offboard unproductive agents. This move is aligned with our focus on enhancing overall productivity and efficiency. Turning to our other operating metrics. Real estate sales transaction unit declined 1% year over year, while real estate sales volume increased by 5%. Realty cost per transaction decreased 1% as we focus on operating efficiency while continuing to invest in our agent. We believe we are among the most efficient company in our industry, and we remain focused on reducing our cost per transaction moving forward. Now let’s discuss our financial metrics. Revenue for the third quarter was $1.231 billion, a 2% increase year-over-year. Our Q3 revenue growth was due to higher real estate sales volume and an increase in agent productivity, which I will detail in the next slide. Third-quarter adjusted EBITDA was $23.9 million, up 15% year-over-year, driven by higher revenue and lower SG&A expenses relative to prior year quarter. Drilling down into our Q3 expenses. General and administrative expenses were $61.4 million, up 2% compared to the third quarter of 2023 due to higher employee-related expenses and increased legal costs related…

Great. Alright, Ken. Thank you. I’ll kick it off with a question for everyone on the team first before we open up to the general audience for questions. First, Glenn, can you talk about why you decided to expand into Turkey, Peru, and Egypt, in particular?

Yes. So some of these were conversations that were going on. Peru specifically was one that had been going on for a while. And I think the team was really looking to open up some new countries. So obviously, I jumped in in July. We’ve got a great partner in Peru with Ricardo. And then we had opportunities to look at a couple of other markets. Turkey, I don’t know if we shared it on our social media, but Yit is the gentleman opening up in Turkey. He has a large social media following, really strong real estate sales background, really kind of epitomizes what we’re looking for in a leader in Turkey, and so pretty excited about him. And then with Ahmad in Egypt, very well connected, build it – he has been building the MLS in Egypt, comes with a strong background in organized real estate and is really enthusiastic about opening it up. So we’re really building around strong leaders. And so these were three individuals who represented really the best of the best in these markets. And we’ve always say that we really focus on following leadership rather than focusing on the market. I think previously, we may have taken an approach, which was let’s open up markets because they’re good markets. Historically, in the U.S. and Canada, we opened up different states because we had good leaders. And so we’re going back to sort of that approach. And we’ve got a lot of other great conversations going on as well. So as we meet great leaders and they can put together the core groups and we can help them sort of dial in the value propositions that make sense, we are simplifying the opening up of new markets. So we’re going to really a two different cap system for international. So that will also play into sort of our rapid growth model. And we’re doing some standardizations around that, which, again, will play out well. We just announced last week, which is probably worth noting, our international sponsorship program where agents internationally can assist agents anywhere in the world to recruit in their country even if they’re not in their rev share group. So pretty excited about that. So anyway, just a lot of things that we’re doing on the international front that is pretty exciting.

Thanks. Alright. Next question is for Leo. Leo, can you discuss what’s driving the decrease in agent count?

Yes. So at our size and scale, we’re very susceptible to larger macroeconomic behavior from agent count. So more than half of the agents who’ve left eXp this year have left the industry in totality. 62% of nonproductive agents that left eXp left the industry. So if you segment it out, if anyone curious goes to the first page of the appendices, close to 77%, 78% of the people who left us had zero to two sales. But our retention on the more productive cohort of 21-plus sales has actually decreased. So our retention has increased. So we’re roughly 2% attrition in the more productive part of the cohort. So we’ve been really focused on that. The rallying cry for this year has been where the pro is going to grow, and it’s really starting to continue to show in the level of talent we’re attracting in a lot of the programs. So one of the programs I’m most excited about is called FastCAP that we rolled out and announced at eXpcon, where we’re early signs on brand-new agents, getting them into productivity in a 6-week accountability program. And then we’ve continued to roll out our Fast Track attraction bonus that we launched July 1. We got – since we’ve launched out the program, we’ve paid out $5 million, which, by the way, has no EBITDA impact. This is all part of the rev share bucket. So it still maintains the margins we’re enjoying. And so we’re very focused on growth throughout attraction. At eXpcon, we announced the ICON incentive program, where we open up all seven levels to give them credit for the 30 frontline qualifiers and then the capping one for the first five So they’re all designed to incentify and attract production. So at eXpcon, I gave a keynote where based on the economic data that we pull from Fannie and several other economists, we’re more bullish based on where rate cuts have been from starting the year to ending the year. So we’re bullish that 2025 will have an increased transactional count over ‘23 and ‘24, which will probably end the year either flat or lower than ‘23. So we’re bullish on all that fun stuff. Back to you, Wendy.

Great. Thanks. Yes, Wendy, let’s ask you a question. Thank you for joining us today. Can you discuss the time line and the budget for evolving the eXp brand and how you measure success?

Yes, absolutely. Thanks, Leo. Thanks, Denise. The good news is that we’ve completed the brand update that I talked about. We called it our Glow Up. But our brand is a living, breathing thing. It will continue to evolve in order to meet market needs, in order to meet our agents’ needs. So, we will always be looking at how we can continue to evolve and modernize the brand. The second part of your question, Denise, was sort of how do we monitor success and what measures do we use. And I think of marketing as having both elements of art and science. There is the art part of marketing that is very subjective. But what we really lean into is the science part of marketing, and that’s the numbers and looking at how are the marketing things that we are doing sort of performing. And we look at things like share of voice. We look at all of the analytics that are available to us from social media to really monitor kind of that science and that art part together. So, we always continue to do that and report those numbers. But as I have said, the beauty of eXp 2.0 is our branding evolution is ongoing and we will continue to add and improve as we move forward.

Great. Thank you. I want to remind everybody that you can ask a question on Slido. You can scan the code that’s behind me and ask your question there or you could go to slido.com and enter the code EXPI and ask a question there. I will open the mic to Jonathan Bass, our covering analyst at Stephens. Jonathan, if you would like to ask a question, you can go ahead.

Perfect. Thank you. Yes. This is Jonathan on for John. Thanks for taking my questions. So, in recent weeks and months, the NAR’s clear cooperation policy has become a big talking point within the industry. You have some brokerages and industry participants have come out calling for the policies, and then you have others who have come out and defended it. So, I am interested to get your guys’ take on it.

Yes. Thanks. I will jump in here. It’s Leo. I am actually probably one of the loudest executives on the defending side. And this is extremely top of mind to Glenn and I as we are battling portals in other countries that can kind of unilaterally change the pricing structure and really affect our bottom line. The U.S. system as it stands and then – sorry, the North American system because Canada’s system works the same way, is unique into itself on the global stage. We have the most complete, the most liquid, most accurate system that exists. And I think for us who practice real estate in this part of the world, we take it for granted sometimes like things like comps. And if something is active, it means active, with definition of a bedroom and bath count. So, we are extremely strong proponents. It is the best thing for the consumer specifically because it has a total marketplace with accurate data. And it also keeps the price of marketing at a very reasonable price, because you are not having to pay per impression and per month and how we get billed in other countries. So, I am a very loud proponent of it. I wrote an op ad piece probably in the last 30 days about it. And I am wheels up to Boston tomorrow, the following day to speak at NAR conference to a couple of thousand agents about my opinions on the subject. So, I think it’s very important that we defend and maintain the way we do business in North America.

Great. Thank you, Leo. Alright. We have another question from Tom White, our covering analyst at D.A. Davidson, who couldn’t be with us on the stage today. But he wanted to ask if you could, Glenn, maybe give us a general update on international, what are the agent trends, and what do you expect for 2025?

Yes. So one, what you will see, obviously, is the revenue is dramatically up year over year internationally, even though our agent count is fairly flat on an international basis. And the reason being is that during our initial years, under previous leadership, it was really focused on agent count. And we are – now we have changed our approach to productive agent count. So, we internally are now tracking our productive agents. I think I might have even mentioned even on the last call that we are working on eventually creating some more transparent metrics around that specific one because it’s an important one from our perspective. But what we do know is like one of the things that we are doing is in order to be an agent at eXp internationally, you need to have at least – really, it’s at least 1 year, we say 2 years of experience in the industry, partially because we are new into the market, but it also gives us a great reputation when we open up in a market that we are not just attracting brand new to the industry people, which is – can be a little bit damaging to a reputation if you have new agents that don’t know what they are doing. And given that internationally, there is very few rules in a lot of countries on how to actually operate, for us, attracting a professional agent is an important piece to the equation. I think what you are going to see is du are going to see us announcing more countries. You are going to see more investment in international expansion, which in reality will translate to higher expense, even though internally, we have got a number of countries that are now profitable inside of international. So,…

Great. And Tom had an additional question, who wanted to ask, with the two initiatives announced at eXpcon, the ICON incentive and the revenue share capping. Can you give some color as to how you expect those to impact gross margins going forward?

Yes. So, generally speaking, they shouldn’t affect gross margins going forward. We have always been a company that has really focused on being the most agent-centric real estate brokerage on the planet. And when we say agents, we are talking about the agents that are out there listing and selling real estate. And so this will make it more sticky and so on and so forth. These programs are specifically geared and there are some FAQs out there, but they are specifically geared to agents who are actually writing production and are actually running actual real estate teams. And so those are the ones that it’s geared toward. And then our revenue share platform pays out 50% of company dollar regardless domestically or 10% internationally until an agent caps. And when I say 10%, it’s 10% of the gross commission income internationally. It’s 50% or 10% of the gross commission income until an agent caps domestically in the entire GCI. And the – so it won’t actually impact what we pay out, so gross margins won’t change, but we do know it’s going to impact agents. We have already – I have already got lots of feedback from productive agents who are really happy about this. We also announced something at eXpcon, which was the international sponsorship program. I talked about that earlier, but that’s, I think going to be something we are going to look at and how we can use that even more domestically to create more growth as well.

Great. We have a couple of questions on Slido for either you or Leo. As agents are business planning for 2025, how do you see the housing market in the U.S. changing? And what should agents take into account as they look at 2025?

I will jump into that one. That’s one I have been answering.

Great. Go ahead.

Can you hear me?

Yes.

Yes. Okay. That’s one I have been answering for the media quite a bit. If we look at where rates started in Jan 1 to today, they have come down enough where if – and again, we just had a Fed cut a couple of hours ago. So, assuming rates hold and there is no increases, the typical spread between the 10-year treasury and mortgage rates is somewhere between 150 basis points to 200 basis points, and they have been trending to 250 basis points to 300 basis points. So, we have some hope that rates can continue to normalize now that we have the election behind us. So, the earliest predictions I have heard or have made based on the economist suggestions is that we could see about a 10% bump in total transaction count. So, if we end the year somewhere between 3.8 re-sale – 3.8 million re-sales with 700,000 new construction, we could hopefully see somewhere in that 4 million, 4.5 million transactional range for next year. And from – we play a finite game of transactions and with continued market share that could be great across the platform. So, what I am saying to agents quite a bit is actually to continue to focus on the basics. As the rates come down, it brings people back into the market that just couldn’t get there. So, there is a portion of consumers that are always making the choice between continuing to rent or enter the property ladder versus there are sellers who are still rate-locked. I think a stat I shared at eXpcon is something as high as 84% of all rates. All mortgages in this country are probably below 5%, 5.5%. So, there is that rate lock phenomenon that we have been experiencing that exacerbates the market. But the lower the rates come down, the more it will bring buyers back into the market and hopefully kind of defrost and thaw some of the sellers that are rate-locked. But we are bullish going into 2025 versus the feeling we had this time last year from ‘23 to ‘24.

Alright. Thanks, Leo. And one clarifying question. This is our last question on Slido. Does the agent count include the 2,900 agents from the acquisition in Q2?

Yes, including.

Great. Okay. Alright. Well, this concludes our earnings call for the third quarter. Thank you everyone for joining. As always, please stay connected by visiting eXp World Holdings for the latest updates on eXp news, results, and events. Additionally, you will find a recording of this call and our latest investor presentation on the Investors section of the site. This concludes the eXp World Holdings third quarter 2024 earnings fireside chat. Thank you.