Hi, everyone. My name is Denise Garcia, and I manage Investor Relations for eXp World Holdings. Welcome to eXp World Holdings Third Quarter earnings fireside chat via live stream and EXPI’s campus or metaverse. Today, we’ll begin with our earnings fireside chat with prepared remarks from Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings and CEO, eXp Realty; and Leo Pareja, Chief Strategy Officer, eXp Realty; followed by a review of the third quarter 2023 financial highlights presented by Jeff Whiteside, CFO, and Chief Collaboration Officer of eXp World Holdings. Following our prepared remarks, we’ll open the call to a Q&A session with eXp World Holdings covering analysts and questions submitted to eXp. Let’s begin with a review of the 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. 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, we’ll get started. For those of you joining in the EXPI campus today, to see all three screens, hit the stage zoom button to the right of your chat box. To zoom into a specific screen, you can hit the plus icon above that screen. If you happen to see no slides or a gray slide, hit the refresh icon on the top right hand corner of that screen to correct. While on EXPI campus, should you need any help or have any questions, please enter your comments in the chat box at the bottom on the left, and a member of the team will contact you. Slido, should you wish to ask a question during our presentation, you could enter your questions by scanning the QR code presented on the screen. With your phone or go to slido.com and type in the event code EXPI. From there, you could submit a question or vote up an existing question by giving a thumbs up. We’d also like to have that question asked. This screen will remain up on the left-hand side of the stage. Now I will turn the fireside chat over to our speakers before opening the call to your questions. Glenn, please go ahead. Hey Glenn, I think your mic might be off.

It is. Sorry about that. I had a lot of great things there. Hey, everyone. Thanks today for joining us on our call, during our third quarter. I’ll discuss some of our business strategy before getting into some of the highlights for the quarter and then passing on to Leo, and Jeff will take you through the through the financials. First, as you know, we began sharing business segment information on our fourth quarter earnings call last year. So, you can actually see the profitability of eXp North America, which, as you will note when reviewing the Q, really enables us to invest in the growth areas of the business that we think are worth investing in. So, eXp Realty includes, the U.S. and Canada, and we are the largest single real estate brokerage in the U.S. by transaction volume. So, I am really proud of that success that we’ve done in a really a very short period of time, 14 years. Our success in North America enables us to expand in international markets, where we operate in 24 markets today. We see international as the largest driver of future growth for the Company. And this quarter, we grew our revenues by 47% and reached a record $15 million in revenue. One item, to note is yesterday’s press release about homehunter.global, which is a partnership that we put together to actually create a differentiated consumer experience for buyers and sellers, who use the fragmented website network that most other countries have to help to streamline their search experience. So, we are excited about some of the new innovations there. While small today, Revenos and our other various affiliated services are gaining a lot of momentum and represent really meaningful incremental dollars and margin per transaction in the future. Leo will…

I just chatted with Glenn, it looks like he had a technical problem with his computer. He’s rebooting it. Denise, why don’t we just forward onto my slides, and then me and Jeff can take over and Glenn can come back in.

Yes. That sounds good. I think Jeff might be having technical issues. What we might want to do is pause for five minutes and reconvene and then come back on stage. Let’s go to the green room, and we will be back everyone, in about five minutes.

And if we jump to the next slide around outperforming the industry, we’ve continued to outperform the industry.

Apologies, Glenn, you cut off speaking about Frame. So, agent NPS hasn’t been addressed yet.

Okay. Thank you for that. So going back to Frame, this quarter -- well, and of course, we had a little hiccup with Virbela, and my connection. But in the next quarter, finance -- or when we do our next quarter financials, we’re actually going to do it in Frame. So you get a chance to actually see -- which is actually accessible via mobile as well as your desktop. And it doesn’t require the download. So pretty excited about that, going into next year. We’re going to be using Frame more and more internally for the Company. And then we’re also continuing to work on the NPS side of the business. And that’s really the big driver. That ultimately drives where we’re going. So, I talk about NPS all the time. We just added Fred Reichheld to the Board, who is actually the inventor of Net Promoter Score. We take it very seriously. And I think it’s one of the reasons why we’ve continued to put up good financial results, and to continue to grow. And you’ll see that we’ve got a few segments that we’ve broken out this quarter from a visual perspective, U.S., Canada, and global, and all are continuing to trend in the right direction. And overall, we have a 74 NPS score, which is indicative of that continued investment. So, we’ve got -- our operations team led by Patrick O’Neill, has really done a phenomenal job of building out a much more quality connection with our agents from an ops perspective. Our leadership team is in the field, doing lots of events. We’ve got regionals going on over the country right now this week and next week I’m traveling to a number of them. We’ve got our leadership team flying around as well. So we…

Thank you, Glenn. Thanks everybody for joining me here today. One of the things I’m most excited about is that we have the ability to retain our most productive agents, because we can listen to them. So, I take quite a bit of pride in that three of the C-suite folks who run this business were highly productive agents in Glenn, Michael, and myself. So, when agents come to us with ideas, we can iterate and launch very, very quickly. And we’re launching two programs in early of the fourth quarter, and I’m going to talk about those because I’m really excited about the potential that that drives for the agent value proposition and ultimately revenue. These programs demonstrate that we’re leaning in at moments when other companies are leaving, and we have the best solutions for independent brokers and large teams. Last week, we announced Thrive, a new program focused on incenting teams to join eXp through an equity participation. This program helped attract Justin Havre & Associates, which we just announced yesterday. Justin was Canada’s number one RE/MAX team five years straight, bringing a staggering record of $4 billion in sales since 2016 with him to eXp Realty, where he and his team of 60 agents and 18 support people just joined us. And we launched Boost in the third -- in September, and this has been phenomenal. So our first Boost recipient is the Bean Group in Boston. Michael Bean founded the Company in 2003, grew it to an independent brokerage of over 20 offices with hundreds of agents, more than $2 billion in annual sales when he joined us. In the last 45 days, his group has transitioned 425 of his agents with more to come. And then we just recently also announced our second Boost…

All right. Thank you, Leo. Thank you, Glenn, Denise. Appreciate it, and thanks for everybody joining us today. I am going to take you through our business financial highlights for the third quarter and provide more details on the third quarter by business segment before we open up the call to questions. So if we just stay with the first page there. In the third quarter, we continued to grow agents and now over 89,000 agents worldwide. As Glenn mentioned before, our NPS score increased to 74 from 71, which is a big deal for us as a company, and that’s what we pay really close attention to. And that’s how we run our company. International has the best quarter ever, growing 47% over Q3 last year. And we made further progress. You will see when you see the EBITDA numbers towards getting a breakeven in international. So it is getting more profitable as time goes on. Adjusted EBITDA was up 53% and we generated a positive GAAP net income during the quarter. We continue to run the business with zero debt, and we ended the quarter with a $120 million in cash. So, we pretty much started the year with about a $120 million of cash. We went through a year -- a much lighter year from a volume standpoint, and we’re still at that $120 million cash number. Turning to our core North American Realty segment. Adjusted EBITDA was -- it was up 21% year-over-year to $27 million. And we talked about this quite often through the years, is that, we’re very fortunate to have such a strong business that enables us to grow the platform and continue to strengthen our agent value proposition. So, they’re still doing extremely well and continue to grow. And as Glenn mentioned…

Thanks, Jeff. I’ll kick off with a question for Glenn before we open the call to our covering analysts. First, Glenn, can you share your initial reaction to the ruling on the sides of Burnett lawsuit that was announced on Tuesday?

Yes. Well, it’s been certainly a big part of everything that’s going on in terms of just conversations in the real estate industry. It’s one that we’re still kind of processing, just understanding the initial ruling. Of course, we built as a unique business model starting in 2014 -- or 2009. We’re now about 14 years old. Kind of grew up in a unique industry. I actually started out as a buyer’s agent for my first five years in the business, which is kind of interesting, because I see buyer agency as being a very valuable tool for buyers. And I’m concerned, quite frankly about what this might mean to buyers who may not be able to afford representation, if things change up too much. So, it’s definitely something that’s top of mind because I believed in buyer agency for all of my career in the industry. However, obviously a very competitive industry, there is always things going on. There is always disruptions and things are always changing. So at the end of the day, we are about really two things, we are about real estate agents being able to build rewarding careers in this industry of real estate, we want to make sure that we continue to provide the relevant tools, systems, training, coaching, what have you, and we couldn’t do this without representing consumers on both the list side and the buy side at the best of our abilities and to figure out how to do that. So now that’s really where our focus is. And obviously, it’s too soon to sort of comment on how we are going to navigate. I feel like we’ve been operating in a very, highly -- with high integrity in this industry, and we will continue to do so. And so now it is just a matter of seeing what next steps are in this business of real estate.

Great. Okay. Thank you. And so, I’ll go to the analysts. I think, Matt Filek, you had a question from William Blair.

Hey Glenn, Jeff, and Leo, you have Matt Filek on for Stephen Sheldon. Thank you for taking my questions. I wanted to start with one on gross profit. Gross profit and gross margins came in a little lighter than we had expected. And I was wondering if you could expand on the driving factors behind that along with how we should be thinking about gross margins looking ahead.

So, it was a little lower than we forecasted. But one of the things that happened in the quarter was we accelerated some of our icon awards. And basically, that’s going to be more of a onetime event that brought that percentage down, down to the 6.9%. So we were anticipating a little higher margin. I mean, we had about 7.5% last year at this point in time. And we think it is a one-time event to bring that percentage down, and we see it going back up in the fourth quarter into the 7.5% plus. That’s what we are forecasting as we sit here today.

Okay. Got it. That’s very helpful. And then one more quick one on modeling. I think in the past, you had talked about an $85 million run rate for SG&A, came in a little lighter than that. Should we expect that to be consistent going forward or how should we be thinking about that line item looking ahead?

Yes. I think the number is a little light, in a good way for us, in the quarter. I think what we see in Q4, we always book our EXPCON expenses, which is our biggest event of the year. That number is going to go a little higher in the fourth quarter. But on a run rate basis, that $85 million is a relatively safe number to be seeing on a run rate basis.

Perfect. Thank you, Jeff. And one more, if I may. I wanted to quickly ask about the recently announced partnership with HomeHunter. Can you talk about what that partnership entails, how HomeHunter is different than other search portals? And then, as a second part, do you plan on bringing the capabilities of HomeHunter to the United States at some point?

Yes. So great question. Your HomeHunter, so to kind of describe the challenge in most all markets outside the U.S. and Canada, there isn’t an MLS type relationship. Obviously, this is front of mind for everybody this week especially because of some of the stuff that’s come down from a legal perspective, but which makes it really fragmented in these other countries. You’re looking at countries where agents have to pay very significant advertising fees to advertise on multiple real estate websites to make sure that their properties get seen by the largest number of consumers. And it’s a whole bunch of pay to play just to get your properties out there. For the consumer, it’s really challenging. Because if you don’t see all of the websites that have all of the properties, then you’re not -- you may miss out on the property that really was the one that was most ideal for you and your situation. And so, what HomeHunter is it provides -- it’s a browser extension tool for consumers to actually organize across multiple portals in multiple markets and actually save and organize their searches, share their searches, share their searches with other agents. And so it’s really around making these searches a lot easier for local consumers. Now we’ve done some initial focus groups primarily with our agents in different markets. And what we’re hearing is that this is a tool that’s sorely needed for consumers and even agents to understand inventory that exists across multiple marketplaces. It wouldn’t really -- because the U.S. and Canada, who knows what happens in the future, but currently most all properties are available from virtually every website in the country. So, there’s really not a need for a tool like this in the U.S. and Canada. But you definitely need to have a tool like this internationally. And when I saw this demonstrated a number of years ago at Inman, I recognized that it wasn’t great for the U.S. and Canada at this time, but as we started to look at the pain points internationally, it made total sense. And they’ve invested a lot into it for the domestic market, but we think it’s going to really be a great tool for consumers in the international markets.

Our next question comes from Soham Bhonsle from BTIG. Go ahead.

Good afternoon, everyone. Can you hear me?

Yes, we can hear you.

Thanks for taking the questions. Maybe just a housekeeping one to start. Can we maybe get your mix of buy side versus sell side transactions historically, if you have that, just even a ballpark range?

So, we’re a little bit skewed to the sell side. Jeff can probably give you a little -- he might have better data, but you can think about as 65 or -- yes, 55% to 60% being list side and then the balance being buy side.

Yes. That’s about right.

And then Glenn, I think historically you’ve said, you sort of want to target that 250,000 agents or so in the U.S., but I guess given the recent events, does that sort of change your view on sort of the growth algorithm, so to speak, right, where maybe focus on agent recruiting over maybe profitability or do you start to think a little bit more about increasing profitability going forward to sort of drive the growth?

Yes. So, one of the things, obviously, if you look at obviously our segmented financials and you start -- the reason why we broke out North America is because North America is actually a profitable business unit for us. And the reason why we aren’t super profitable is because of the other things, international being one of them. So I think the path to the 250,000-agent range in the U.S. or North America, I mean, it’s -- I mean, these are goal numbers. I think, the path is there. It’s really around making sure that we provide the tools, systems and platforms for agents. Who knows what might happen in terms of organized real estate in general, and that could change the algorithm in that regard. But as it currently sits, I think that that would take us to somewhere around 15ish percent of the industry, so about 3, 4 times where we’re at right now. And I think that makes sense mentally for me based on how we’ve grown. Obviously, the higher interest rate slowing down people leaving the business pushes things out. But I think there’s always going to be a robust housing market and as long as we can build out a platform for agents, they’ll be here.

Right. I think, Jeff, just one more, I guess, with the lawsuit that came out on Tuesday, does it sort of change your appetite or thought process around buybacks going forward?

I mean, we’re talking about that internally. So, we haven’t made a decision, but it’s definitely something we’re looking at. But at this point in time, we haven’t made a decision.

And our next question comes from our analyst, John Campbell from Stephens.

On the agent count growth, I’m hoping you guys might be able to shed some light on maybe the moving parts. For starters, if we could just maybe go through the -- or unpack the U.S. versus Canada versus international growth. And then the recent growth trends, they seem to be a little bit lumpier. You guys are converting, doing a good job converting independent brokerages and then also just kind of bringing on larger teams. I’m wondering if that’s kind of the expectation moving forward, at least over the near term into the market rebounds.

It is definitely a big focus of us is focusing on the -- making sure, I mean, Boost and Thrive, they’re obviously focused at brokerages and large teams. And the largest part of our churn has been that low non-producing brand, new agent in the industry. And I think that’s really put pressure on us. That’s why -- even if our -- even if our numbers stay relatively flat into through Q4 and obviously, not sure when it’ll take back, most of that churn is still coming from the producers that don’t really put numbers up on the books. So, it is -- but we do think about what does it take to bring in a Bean Group or -- and we’ve got a number of brokerages. I don’t know if Leo, you have it, I know Michael Valdes would. But the number of brokerages that are currently coming through the Boost program, it’s pretty substantial, the number of people who are very interested in moving over. Because with the tough housing market, our Boost program is not that dissimilar than if they were to go and outright sell their brokerage, based on their EBITDA numbers. But we’re able to do it in a way that makes sense for them and makes sense for us for them to come over. So, it’s going to be -- we’re going to have a number of brokerages, I think, especially if the market continues to have issues that are going to want to come over, and this makes it easier. And by the way, we were already doing some version of Boost for every single brokerage that converted over prior. We just didn’t give it a -- we hadn’t given it a name. We’d have to negotiate with each and every one of them. What this does is, it actually makes everything more transparent and above board and actually sets our expectations on both sides of what does it mean to move your brokerage to eXp and to become part of the eXp ecosystem. And for us, it’s a filtering tool, because if they don’t go through the cultural alignment questionnaire, which is part of the beginning process, and that doesn’t match up with the type of brokerage of people that we want to be in business with, we don’t take it any further. So, it’s really helped us a lot, but it’s also made it us more visible as a viable place to move their brokerage.

Okay. That’s very helpful. And then, any kind of color on the agent growth by region?

Jeff, do you have any breakdowns? I know the U.S., I think it grew kind of somewhere sub a 1,000 this last quarter, and international...

Yes. I mean, most of the growth in the quarter was in the U.S. International is -- it’s relatively flat, but they are kind of working some of the bumps out along the way. And then Canada actually was pretty strong. So, those are kind of the three drivers. The U.S. commercial business is relatively flat. So, that’s not something we are aggressively going after at this point in time. We are still building the programs, building the business. But most of it John is driven by the U.S. in this quarter.

That’s helpful. And then on the class action suit, I mean, I know you guys have spent a lot of time, we have spent amount of time with investors on it. But it feels like we are at a stage where it’s almost like be careful what you ask for. Buyers end up having to pay for their own agents if listings are no longer cleanly and fully aggregated. We are going to go back in time and lose the market efficiency it feels like. So, Glenn, you talked to HomeHunter, which does sound very interesting. I wanted to get your take on eXp Exclusives. It seems like that might rise in importance if the market does go down that route. If it goes down that route in a hurry, it seems like you have got to a foothold to do something on your own. It’s almost like one of the main advantages you have is being a scaled largest brokerage in the U.S. So, I just kind of want to get your take on the strategy behind it, and what maybe it could be over time.

I think, Leo really worked on the eXp Exclusives quite heavily. And I worked on homehunter.global, two different pieces of the puzzle that ironically could be really significant long-term assets, depending on how fragmented the industry comp becomes from a consumer perspective. And so, it does feel like some of the efficiencies would -- if they went the other way, these would be tools that would definitely help us. And there are -- we are one single large brokerage. And so, the ability to do things internally and to provide benefits for consumers most on the sell side and the buy side is pretty significant when you think about the fact that we did do the most transactions of any single brokerage in the U.S., and you start to think about what does that mean in a changing market? I don’t really want to talk about it because I actually wouldn’t want to win that way because I think this industry needs a lot of the things that are in place for consumers. But if it goes a different way, I think we’re also well positioned.

Yes. I agree with you. And the last one here, we field some questions on this. I just wanted to see if we can clear the air on this, but we’ve had a couple questions about just sticking on the legal side, a case you’ve been named in personally. So, to what extent you can, maybe, if you can comment on that.

Yes. I think there was -- there definitely is a -- there is a lawsuit that’s been out there. I know that there’s been a New York Times writer that’s been pursuing a lot of people for months on end. Still don’t even know what the story might be. But just in all transparency, we believe that we had two bad actors in our agent base. We have 89,000 agents, and that they had acted significantly inappropriate. And to the point where there likely could have, and who knows, may still be some jail time associated with it. We had let one of the agents go as soon as there was charges brought up against him. We let the other one go when there was some things that came to light through the civil suit. And we -- but with 89,000 agents, there’s some bad actors. Bottom line is, I don’t want to say we don’t tolerate, but we investigate any of these things. And if we find credible evidence that says that people are doing things that are on the wrong side of the law, then we do release agents regularly for various different reasons. So, we take these things seriously. But we also believe that we as a company have acted appropriately through this whole thing. But we do care deeply about agents and people in general. So, if there’s things that are happening that shouldn’t be happening and we can help fix it, then we’re going to get in there and fix it. But we do know that there’s the lawsuit. We know that there’s a article being written and we’re not sure if it’s just because it gets headlines and gets readership or if there’s some angle that we haven’t even thought about. And hopefully, we get a chance to address it before it gets published if there is something that we need to address.

Our last question from our analyst Tom White at D.A. Davidson who couldn’t be on stage with us today, but he asked, you’ve launched a flurry of new initiatives over the past several months that appear to sweeten the economic value prop for agents to come to the eXp program. Can you talk about the impact that’s having on your domestic net agent additions? And what impact to margins can we expect from these various initiatives?

So, we’re just in the early stages of these taking place. One of the things I noted earlier is that even before we announced Boost, we were doing some version of Boost with each brokerage that was converted over. We just hadn’t made it overt. So the economics really don’t change too much with converting brokerages. We’ve got Accelerate, which helps agents unlock their level 2 and level 3s earlier on in their career for the first year. However, as our revenue share system is designed to pay out 50% of company dollar regardless, so it’s just part of the revenue share system. The Company retains 50% of company dollar to pay its bills and ultimately, lead to us being able to show a profit and invest in things to help grow the brokerage, which also helps grow agents, revenue share organizations. And then, the last program, Thrive, that’s probably the one that has a little bit more meat-on-the-bone for large agent teams. However, even with these large agent teams, we were still having to do some sort of special something to help them financially either pay for signs, get out of office leases or do something. And so, if you actually look at the numbers, these aren’t super -- there’s not -- I mean, there is definitely investment going into these things, but they shouldn’t fundamentally change our financials in a meaningful way. Jeff, would you agree? You’ve done more of the analysis.

Yes. I mean, I’d agree. And especially when we’re talking about that 50 -- our rev share pool, so that doesn’t change the margins at all. And then, there’s -- as you mentioned before, there’s a lot of these programs that we were doing informally before. So, we don’t expect, as we sit here today, any kind of material change in margins going forward. We do expect growth though, right, Leo?

Absolutely. I think the part that hasn’t been mentioned, but I’ll just point it out. The rough environment that’s affected everyone’s margins in compression and units and transactions can actually be a very interesting time for the smaller independent that’s in that tough range of 50 to almost 500 agents where the margins are so tight and they still have the less legacy brick-and-mortar systems. I mean, when Glenn alluded to it, I mean, we have ate a lot of interest in a very large pipeline, which I would say has grown disproportionately into the higher end, right? So as we can manage to convert much larger swaths of independence, that could give us some relief in the headwinds that we’re experiencing because 2024 from a transactional unit count, most economists are predicting very similar to 2023 as the interest rate environment is still tough. So, the expectation of transaction counts similar to 2023 is there, in a way, gives us a pretty interesting advantage to continue to grow agent count. But as Glenn alluded, even if we were to stay flat, by focusing on the highly productive, we continue to gain market share. And if the wins shift back, which they always do, that’ll put us in stronger footing.

Great. Thank you. So, one question. We’ve gotten some questions from the audience on Slido, most of which we’ve answered, although this would be the last question here that we haven’t answered directly, which is, can you elaborate on the strategies that eXp Realty is going to capitalize on emerging global real estate and how technology will play a role in shaping the company?

It’s hard to understand exactly. I mean, obviously one of the things we look at is that internationally real estate is super fragmented. I alluded to it earlier, and this is why we’re pretty excited about homehunter.global is that if we can help make the searching for a home easier for a consumer, then there’s a possibility that we can do other interesting things in terms of whether it be getting a mortgage internationally or any number of different things. Bottom line is everything is enabled today, and today’s economy is enabled by technology. So, it’s about what technology to adopt and when -- for me and for the company we’ve been investing more and more on the AI front. And we’ve got now some enterprise accounts through OpenAI, which we are excited about. And we are continuing to build out more and more infrastructure. We are starting to pump in big data. We are starting to use it with our NPS. We are looking at how can we make the right decisions in real time using technology, by watching what’s going on in real time. And so, I think at some level, we think that a brokerage becomes very algorithmic and managed by various parts of AI. Obviously, humans are involved in a lot of -- all of this, but I see, all the things going on, I just turned myself into an avatar, and so I now have my own digital twin that we can now program and speak in multiple languages and be able to do -- talk about the value prop in other countries and so -- in my voice on top of all that. So all the things are coming down the pipe in terms of enabling technologies. The thing we can’t do is pretend like, all the technology that we need to run this business exists today. I know another leader in the space said that, just recently that there is no need for agents to have new technology. And I have been a tech guy since I was 12 years old and I’ve heard that statement made time and time and time again. And anybody who truly believes that will go backwards, not forward. And so for us, it’s how do we continue to stay engaged in figuring out what’s going to give a consumer an edge, what’s going to give an agent an edge, what’s going to allow us to run more efficiently while providing a better experience for our agents and our consumers? And that’s the business right there. So, technology is front and center. And we need to -- and we will, but we need to continually invest in this globally, not just domestically.

Great. All right. Thank you, Glenn. And thank you everyone for joining. As always, please stay connected by visiting expworldholdings.com for the latest updates on eXp News, Results and Events. And additionally, you will find a recording of this call and our latest investor presentation on the Investors section of that site. Thank you for joining us today. And this concludes the eXp World Holdings third quarter 2023 earnings fireside chat.

Thank you very much.