eXp World Holdings, Inc.

Good afternoon everyone and welcome to the eXp World Holdings fourth quarter and full year 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'll begin 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 fourth quarter and full year 2023 financial highlights presented by Kent Chang, 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 eXp World Holdings covering analysts and questions submitted to eXp. But first, let me begin with a review of our 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 us in Frame today, to zoom into a specific screen, you can click on that screen and then click Zoom In. If the content on the screen disappears, or if you lose audio, simply refresh your page. While in Frame, if you need help, just use the Help button on the bottom right hand to link with tech support. Should you wish to ask a question during our presentation, you can enter your questions by scanning the QR code presented on this screen with your phone or go to slido.com and type in the event code EXPI. From there, you can submit a question or vote up an existing question by giving a thumbs up if you would like that question to be asked. This screen will remain up on the left hand side of the stage. Now I'll turn the fireside chat over to our speakers before opening the call to questions. Glenn, you may begin.

All right. Thank you, Denise, and thank you, everyone. Thank you again. Obviously, this is the first event that we've done publicly for Frame VR, and this is a platform we've actually been developing since 2019. Frame is actually the first metaverse platform that works on desktop, mobile, And immersive hardware like the MetaQuest 3, and if you're lucky enough to have one, the Apple Vision Pro. It's kind of like Squarespace, but for the spatial web. We're really excited about the technology. In fact, it was presented by the CTO of Microsoft at Microsoft Build 2023. And Frame now powers exp.world. It's now our new browser-based immersive collaboration platform. It's faster and easier for our staff and agents to collaborate online. And specifically, eXp agents can now create their own spaces and also meet with clients and even, in reality, give remote home tours. Agents can look at 360 photos of properties, walk around Matterport scans, and navigate Google Street Views with others. And then in terms of AI, which we've talked a little bit about, Frame actually uses AI to do real-time translations and closed captioning, but also to help people create their own custom spaces and 3D bots. There's more to come in areas of AI and 3D. We're just getting started, so stay tuned. Now I'll move on to our fourth quarter earnings call information. So I'll start first with an overview of our business strategy before discussing our results for 2023 in the fourth quarter. As most of you are familiar, 2023 has been a difficult year with existing home sales in the US at their lowest level in nearly 30 years. Despite the industry slowdown, North American Realty continues to gain market share, which I'll discuss in more detail in a moment. But first, I want to touch on our business strategy. We began sharing business segment information on this call one year ago to show how the profitability of EXP North America enables us to invest in other growth opportunities across the business, and that dynamic continued also into 2023. In 2023, our North American Realty segment generated 91 million of adjusted EBITDA, which allowed us to continue to drive our overall business growth initiatives forward. We're also EBITDA positive for the year when not adjusting for stock-based comp. Our success in North America has enabled us to expand into international markets where we operate in 24 markets, including South Africa, which is where I am today. It's 12.05 in the morning. A unique item about South Africa is we're now We're the fastest growing real estate estate agency in South Africa. And we're actually the seventh largest now. So it's pretty, pretty cool to see in just a couple of few short years, the amount of impact here. There's an event last week that was here and a lot of agents came together. So this year, one of our goals is to definitely be more visible internationally. In fact, we have our first EXP con in Lisbon, Portugal in June of this year. We continue to see international realty as the largest driver of future growth for the company. We continue to break records in our international segment. In 2023, we grew international revenues 50% to $53.9 million. In Q4, we increased revenues by 67% year over year to $16 million, while at the same time decreasing our losses on an adjusted EBITDA basis by 14% year over year. While revenues and affiliate services still remain small, they're gaining momentum and represent opportunities for meaningful incremental revenue and margins per transaction in the future. eXp Realty North America and international represent our path to overall revenue growth powered by our cloud-based asset light model, which allows us to continue iterating on our superior agent value proposition. The business areas I'll discuss on the next slide represent our key sources of differentiation. We are constantly iterating to improve the agent value proposition by developing an ecosystem of personal development, health resources and media like Success Magazine, and the recent appointment of Brian Ellington inside of eXp Realty as Chief Learning Officer, which I mentioned last quarter. We have many exciting things going on in training and education that Leo will highlight in a moment. Our enabling technology platforms support our cloud-based brokerage model, and we also use AI and other machine learning technologies to improve our transaction management workflow and eventually plan to use technology to build out an entirely new way of transacting business. We'll continue to invest these resources to enhance the agent value proposition and ultimately increase the satisfaction of our agents as measured by Agent NPS, which I'll discuss on the next slide. One area that we've been highlighting focus is on NPS. In fact, we added Fred Reicheld, the creator of Net Promoter System to our board last year. It's very important for us because we believe NPS is a leading indicator of our future success. So I'm thrilled to share that Agent NPS improved throughout 2023 to reach 73 for the year. And I called it an anomalous 77 because it was a little bit of an outlier for the fourth quarter, but it just shows the strength of our model and how well it resonates with our agents and brokers. I believe this is the result of constant iteration of our agent value proposition and our key sources of differentiation. I discussed on the last slide. Also last year, our operations team made many improvements and investments to reduce agents' time spent on non-revenue generating tasks to enable them to be more productive. And a few examples are listed here. Most notably, we improved onboarding and transaction support with applications like Luna. We launched Express Pay and the Expert Care Desk. We expanded benefits within eXp Agent Healthcare powered by Clearwater to provide agents with exclusive access to industry leading plans for themselves and their families with low copays, low to pocket costs and zero dollar deductibles. Now over 2000 agents and their families get affordable quality healthcare from eXp Agent Healthcare. We improved our marketing center in the US and launched also into all other countries. We also launched agent advisory councils in more jurisdictions. These operational improvements resulted in helping our agents get support, get paid, and get more business. Ultimately, we hope to improve our agents' lives with ongoing operational improvements. Leo will expand on our operational improvements and additional products in a moment. But first, I want to share some recognition awards we've received for eXp and our agents on the next slide. Both eXp and eXp Agents have been recognized widely for our shared success. One award that I believe is driven by our high NPS scores is Glassdoor's Best Places to Work. We've made the list six years in a row in the US and we moved up to number seven from 15 in Canada. Also in 2023, our agent teams have been recognized across the industry and eXp was named the number one growth leader across agent count volume and transactions at Real Trans T3 and Power Broker. Turning to the next slide. We've been updating this table for over a year now, and the numbers keep proving that our platform is even stickier for productive agents in a down market. Consistent with previous quarters, the majority of our attrition is with lower producing agents in the zero to two transactions per year category. With home sales in the US and Canada at their lowest levels we've seen in decades, we proactively off-boarded many non-productive agents in the fourth quarter, such as agents that had no sides in the last 12 months and agents which also not that paid their fees. We ended the year with 87,515 agents, which was up 2% over 2022, but down 1.8% from Q3. This is the first time in our history that our agent count has declined quarter over quarter. However, our agent value proposition remains strong with big teams and agents joining worldwide and agent NPS at their highest it's ever been. I think that our high NPS scores will further drive retention of eXp's top agents who are more likely than ever to recruit additional agents to the company. Our focus continues to be on building the future of real estate with the most productive agents in the industry so that ultimately when the market turns, we'll be in optimal position to gain an outside share of transactions in the market, which we'll discuss on the next slide. So this slide actually compares eXp US residential sales transactions to US residential real estate industry. as measured by transaction sides on the left side and our market share on the right. On the left, you can see that eXp Realty US residential real estate transactions were down less than 2% year over year in Q4 and approximately 8% for the full year. This compares to a US residential real estate industry, which was down over 10% year over year and Q4 over 17% in 2023. As a result, we grew our transaction side market share, which I've talked about focusing on the last almost two years, 8.4% in 2023 and nearly 7% in Q4 to 4.2% in the US. Before turning it over to Leo, I'll conclude with a few takeaways from 2023 and why I'm so optimistic about eXp's prospects in 2024 on the next slide. We're entering 2024 with very strong momentum. To recap, our value proposition remains strong with high agent NPS scores at 73 for 2023 and 77 for Q4. Big teams and agents are joining worldwide. and we are retaining our most productive agents. We continue to grow our market share from 3.9% in 2022 to 4.2% in 2023, reflecting over 8% growth year over year. We're leveraging technology and increasing our operational efficiencies. And lastly, with 2023 behind us, we're entering 2024 in a position of strength with increased momentum. We have a solid vision for 2024. And now I'll turn it over to Leo, who will take you through our 2024 goals.

Thank you, Glenn. If I were to characterize 2023, I would call it the year of operational excellence. No doubt it was a rough year and a tough one for the market. It's literally the worst year we've had since 1995, even worse than 2008. So what we've been focused on is what we can control with increased support for eXp agents during these times. By helping our agents reduce the time they spend on non-revenue generating tasks, we can increase their productivity so they can do what they do best, which is sell real estate. In terms of operations, while we focus our efforts on three key areas, faster onboarding, faster access to service, faster payments that Glenn mentioned earlier, we're obsessed with supporting our agents and making incremental improvements that will make a big difference in their lives as we continue to do so in 2024. In an evolving real estate commission landscape, we launched eXp Exclusives, an initiative that could become increasingly important in this environment. Exclusives was literally launched last quarter, and we've had over 7,000 agents use the application. We're creating hundreds of unique listings only specific to our ecosystem. We launched eXp Luxury with an astounding results. Already, we've had over 1,100 agents in the program and began expanding globally. We've launched in five countries in 2003. with a plan to expand to every country in 2024. We've already expanded to Portugal, Spain, France, Italy, Germany, and Greece so far this year. We created a first of its kind collaboration with Open Door that I'm very excited about for a true instant offer for our agents and their sellers in the 50 plus markets they serve across the United States. Revenos has increased the number of leads we've delivered to agents by 250% compared to 2022, delivering over 22,800 leads that led to over 1.1 billion in closed volume in 2023. We also doubled down on our commitment to do more training and coaching programs by hiring Brian Ellington as our first ever Chief Learning Officer, as Glenn mentioned earlier. We launched several programs that have been super well received, Accelerate for New Agents, Boost to Attract Independent Brokers to eXp, which has already attracted some of the largest brokerages of the country to eXp, including the Bean Group in Boston and Justin Haver and Associates in Calgary, Canada that I discussed last quarter, and Thrive, a program focused on incentivizing teams to join eXp partly through an equity incentive program. And we initiated a very important profitability improvement plan in the fourth quarter to reduce operational costs by approximately $20 million and identifying new revenue opportunities in 2024, which I'll discuss in the next slide. In 2024, we will continue to innovate and drive efficient growth through a number of initiatives, starting with... Technology, we will continue to leverage our technology to improve operational efficiency and productivity, a great example is my exp APP currently in beta and it will become the Center of the universe for our agents. With easy access to their commissions settlements rapture and all of exp technology services, we expect to see dramatic improvements as we launch my exp in the next few months. with our goal to continue to make technology simple, mobile, and easily accessible for one place for our agents. We will be working with many more software deals, lead partners at no additional cost to our agents, including providing tracking information that our agents have been asking for. The success of the luxury division encourages us to launch additional divisions this year, Farm and Ranch, Sports Entertainment, and Green to help our agents further differentiate themselves from our competitors in all markets. While we expanded and hired Chief Learning Officer Brian Ellington, you can expect to see more announcements in training and coaching, including some familiar faces that we're partnering with in our eXp ecosystem. We're also launching a live streaming real estate radio station to further establish our agents as thought leaders in the space. This station will feature podcast channels, content creators, and industry experts to discuss news, trends, strategies, and tactics to grow agent businesses, and it's expected to be live soon. And last but not least, I'm personally focused on continuing to help our agents increase their productivity and operating business more efficiently in 2024. We will be paying close attention to unit economics through an SG&A to unit cost as a new KPI to measure efficiencies in 2024. On that note, I'll pass it along to Kent to provide additional insight into Q4 and 2023 financial results. Leo, thank you.