eXp World Holdings Inc (EXPI) is a real estate technology company that is revolutionizing the industry through its innovative cloud-based brokerage model. Founded in 2008, the company has strategically positioned itself as a leader in the real estate technology space, offering a unique value proposition to both real estate agents and homebuyers/sellers.

Business Overview

eXp World Holdings, Inc. was incorporated in the State of Delaware on July 30, 2008. The company owns and operates a diversified portfolio of service-based businesses whose operations benefit substantially from utilizing their enabling technology platform. Specifically, they operate a cloud-based real estate brokerage in North America and other international locations, as well as related affiliated services that support the development and success of agents, entrepreneurs and businesses by leveraging innovative technologies and integrated services.

eXp's North American and international real estate brokerage has grown to become one of the largest real estate brokerage companies, with operations spanning across numerous countries and regions. The company's core subsidiary, eXp Realty, operates as a cloud-based real estate brokerage, providing a unique and innovative platform for real estate professionals.

In the first quarter of 2024, the company made a significant change to its business model. As customer demand for web-accessible platforms and AI solutions increased, eXp experienced a decline in demand for their application-based Virbela platform. Consequently, the company determined that Virbela qualified for reporting as discontinued operations. Prior to 2024, Virbela represented an operating and reporting segment for the company.

Following this change, eXp World Holdings restructured its reporting segments. Beginning in the first quarter of 2024, the remaining operations of Virbela did not meet the operating or reporting segment criteria. As a result, any operating results related to FrameVR.io technologies are now included in the Other Affiliated Services segment. The company has since reported operating results through three reportable segments: North American Realty, International Realty, and Other Affiliated Services.

The company's agent-centric model remains a key differentiator, providing agents with extensive support, training, and tools to help them grow their businesses. This includes a revenue share program, equity awards, and access to the company's virtual cloud office platform, FrameVR.io. In 2024, eXp issued 1.8 million shares to its agents, valued at an estimated $22 million, further demonstrating its commitment to empowering its agent network.

Financial Performance

Despite the challenges posed by the COVID-19 pandemic and a cooling real estate market, eXp World Holdings has demonstrated resilience in its financial performance. In fiscal year 2024, the company reported revenue of $4.57 billion, representing a 7% increase from the prior year. This growth was primarily driven by a 6% increase in real estate transactions and a 9% rise in sales volume.

The company's profitability has also been a focus, with eXp World Holdings reporting an adjusted EBITDA of $75.5 million in 2024, a 16% year-over-year increase. This was achieved through effective cost management and operational efficiency, despite facing headwinds in the broader real estate market.

For the most recent quarter (Q4 2024), revenue was $1.10 billion, representing an 11.7% year-over-year growth. This increase was primarily driven by higher home sales prices and improved agent productivity. However, the company reported a net loss of $9.51 million for the quarter.

In terms of cash flow, eXp generated $191.51 million in annual operating cash flow and $183.64 million in annual free cash flow for the fiscal year 2024. The company's strong cash position is reflected in its balance sheet, with $113.61 million in cash and cash equivalents as of December 31, 2024.

Segment Performance

North American Realty Segment: This segment, which includes real estate brokerage operations in the United States and Canada, generated $4.48 billion in revenue in 2024, up 6% from 2023. The increase was primarily due to higher average selling prices in the U.S. and overall real estate transactions in Canada, as well as improved agent productivity, partially offset by reductions in the agent base. Adjusted Segment EBITDA increased 9% to $99.25 million.

International Realty Segment: Revenue in this segment increased 63% to $88.15 million in 2024 compared to 2023, primarily due to increased real estate transactions driven by improved productivity in previously launched international markets. Adjusted Segment EBITDA improved to $9.48 million.

Other Affiliated Services Segment: This segment, which includes SUCCESS Magazine, FrameVR.io, and other ancillary ventures, saw revenue increase 27% to $6.11 million in 2024. The growth was primarily due to an increase in FrameVR.io technology revenue, partially offset by a decrease in coaching revenue. Adjusted Segment EBITDA for this segment decreased 28% to $4.88 million, mainly due to an increase in personnel costs.

International Expansion and Growth

One of the key growth areas for eXp World Holdings has been its international expansion. In 2024, the company's International Realty segment saw a 63% increase in revenue compared to the previous year, with a 72% surge in the fourth quarter alone. This highlights the strong traction the company is gaining in markets outside of North America.

eXp World Holdings has been strategic in its international expansion, leveraging its innovative cloud-based platform and agent-centric model to attract top talent and drive growth. The company recently announced plans to expand into Turkey, Peru, and Egypt, further solidifying its global footprint. In 2024, approximately 11% of total revenue was generated outside of the U.S., with operations spanning across various countries including the UK, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, the Dominican Republic, Greece, New Zealand, Chile, Poland, and Dubai.

Risks and Challenges

While eXp World Holdings has demonstrated impressive growth and financial performance, the company is not without its risks and challenges. The real estate industry as a whole is highly competitive, with the company facing competition from traditional brick-and-mortar brokerages, as well as emerging industry disruptors.

Additionally, the company's reliance on technology and virtual operations exposes it to cybersecurity risks and the potential for system disruptions. Regulatory changes, such as those related to agent classification and compensation models, could also impact the company's business model.

The company's international expansion also brings its own set of risks, including navigating different legal and regulatory environments, managing currency fluctuations, and adapting to local market conditions.

Legal and Regulatory Issues

In December 2024, eXp World Holdings and certain of its subsidiaries entered into a $34 million settlement agreement to resolve U.S. nationwide antitrust claims. This settlement remains subject to court approval and was reflected in the company's financial statements as a $34 million litigation contingency accrual.

Industry Trends

The U.S. residential real estate market faced challenges in 2024, with declining transaction volume. According to preliminary data from the National Association of Realtors, existing home sales decreased 0.7% compared to 2023. Elevated mortgage rates continued to negatively impact housing affordability, creating headwinds for the industry as a whole.

Liquidity and Capital Structure

eXp World Holdings maintains a strong financial position with no debt and a debt/equity ratio of 0. As of December 31, 2024, the company's current ratio and quick ratio were both 1.44, indicating a healthy short-term liquidity position. The company has not disclosed any available credit lines or facilities.

Future Outlook

While eXp World Holdings has not provided specific numerical guidance for 2025, the company has indicated a focus on continued growth and investment, particularly in international markets. The company's goal is to have over 50% of its agents in international markets within the next 5 years, underscoring its commitment to global expansion.

Additionally, eXp is looking to leverage AI and technology to enhance operational efficiency. The company has mentioned the potential to operate the business with 1/3 to 1/2 of the current staff headcount in the future, which could lead to significant cost savings and improved profitability.

Conclusion

eXp World Holdings' innovative cloud-based brokerage model, focus on agent empowerment, and strategic international expansion have positioned the company as a leader in the real estate technology space. While the company faces some industry-wide challenges, its strong financial performance, agent-centric culture, and continuous technology investments suggest a promising future.

As the real estate industry continues to evolve, eXp World Holdings is well-positioned to capitalize on the growing demand for digital real estate solutions. With its strong track record of growth and a clear vision for the future, the company appears poised to power the digital transformation of the real estate industry.