EXPI Numbers

[Retirementdough]

I have presented some information on the board in the past on EXPI.

I went thru and put together some numbers that I think are eye opening. Earnings are on November 10th.

**Residential Revenue   Revenue     Gross Profit	Net income  Revenue/              Gross Profit/**
 **transaction volume                                         Transaction Volume    Revenue**

Q3 2020	   23,600,000,000					
Q2 2020	   13,000,000,000     354,000,000   34,400,000	 8,300,000	2.72%	            9.72%
Q1 2020	   11,000,000,000     271,000,000   28,000,000	   200,000	2.46%	           10.33%
Q4 2019	   11,000,000,000     274,000,000   24,400,000	   800,000	2.49%	            8.91%
Q3 2019	   11,100,000,000     282,000,000   23,000,000	(1,800,000)	2.54%	            8.16%
Q2 2019	   10,300,000,000     266,700,000   22,100,000	(2,200,000)	2.59%	            8.29%
Q1 2019	    5,800,000,000     157,000,000   14,500,000	(6,300,000)	2.71%	            9.24%
Q4 2018	    6,000,000,000     150,400,000   10,300,000	(5,200,000)	2.51%	            6.85%
Q3 2018	    6,200,000,000     157,200,000   11,500,000	(4,600,000)	2.54%	            7.32%
Q2 2018	    5,300,000,000     130,500,000   12,400,000	(1,900,000)	2.46%	            9.50%
Q1 2018	    2,300,000,000      62,000,000    6,300,000	(10,700,000)	2.70%	           10.16%
						
					                   Average      2.57%	            8.85%
						
Q3 2020 Guestimate	      606,860,943   53,682,931	 28,000,000		
	YoY increase	           115.2%	133.4%	   1,655.6%		
	QoQ increase	            71.4%	 56.1%	     237.3%		

EXPI pre-announced this past week their Q3 residential revenue transactional volume numbers. You can see that revenue averages 2.57% of this this number. If you take 2.57% of the residential revenue transactional volume it gives you a predicted revenue number of 606m for Q3. That would be a 115% year over year revenue number and a 71.4% increase Q2 to Q3. Gross profit is ~9% of revenue number which would give you ~53.6m or 133% increase year over year or 56% Q2 to Q3.

The net income number is more of uncalculated guess on my part. I assume they need 25m to cover their expenses (it could be more than that) this is truly more guess.

The real estate market is hot which is definitely helping their numbers, but they are growing rapidly, they are using technology to disrupt a traditional market. They have a competitive advantage and are using it to become a global company. I see bigger things ahead.

Any feedback on my assumptions is welcomed. Thanks.

[PDev12]

Retirementdough,

Thanks for posting your thoughts and information on EXPI. I have a small position in the company - I’ve been adding a little bit over time for close to a year - and it’s probably the position I’m most interested in right now. I’m interested because, as you mentioned, it’s a company that seems to offer a disruption to real estate. I am no expert on real estate but when I look at the hoopla around Redfin and Zillow I can’t help but think that EXPI will be just as successful, if not more so, with their approach. My sense is that when many people think of “disrupting” how people buy and sell homes, they think the disruption will come by basically removing agents / brokers from the equation and therefore the process will be cheaper and easier. There are so many moving parts to a home purchase though that I think there will always be a role for the real estate pro so I think EXPI’s emphasis on making the real estate professional’s business more efficient / profitable is one that could pay off. I also like what I know about the management (founder led and high approval ratings from a happy workforce that is given opportunities to buy into the business)

The other aspect of the business I’m trying to get a better understanding of is their virBELLA offering. For those who don’t know it and are interested, here is a link to the website: https://www.virbela.com/

As the website says it, “builds immersive virtual worlds for events, learning, and work.” This business has multiplied since the pandemic and I read somewhere (The last call maybe?) that they are considering spinning it off from EXPI. Obviously, COVID has more people interested in this kind of service. I can’t tell though if its success is totally dependent on COVID or if this is something (like video conferencing and Zoom I believe) that can really become something schools, businesses, and groups of all kinds might use more and more to meet and create a kind of virtual space beyond COVID times. Other than fiddling around on the website I haven’t gained much insight. Deidre Willard who works for the MF Real Estate service often hosts a FOOL TV Zoom session and she mentioned once that she was going to be attending a virtual conference through virBELLA. I was hoping to hear of her experience but I never did. I also sent in a suggestion to the Motley Fool’s Industry Focus podcast to do a deep dive on EXPI and they did. Jason Moser and Matt Frankel gave a lot of good information. Here’s a link:
https://www.fool.com/podcasts/industry-focus/2020-10-05-fina…

So, between their cloud service for brokers and this virtual meetings business, EXPI seems like the classic example of a company well positioned during this pandemic. I’m sorry I can’t offer more expertise / better insight. I’m really interested to see where EXPI goes from here.

PD
(I Just started reading the Saul board in the past month - can’t get enough of it!)

[Retirementdough]

PD,

Virbela is super interesting. I posted some for the c.c. on my post #71905 if you want to read up more on it. They just announced its revenues were up 360% this Q, should be Q to Q comparison as the last Q it was up 260% versus previous quarter, so I am assuming the same Q to Q comparison.

It only represents 1% of their revenue, so it is still really small part of their business. However its margins are much better than the real estate brokerage margins (10%).

If anyone is interested in this company the Virbela component is super interesting. Need to read the c.c. quotes that I posted. In my opinion interesting company without that business, but do to the times the Virbela makes it even more interesting.

p.s. I actually went to website a few weeks ago and started making an avatar to walk around virtual campus but got side tracked. I believe it is open to anyone.

[PDev12]

Interesting breakdown on revenue and margins.

I had the same experience playing with virbela. I can see it being something that can be really useful. I can also see it being something that gets kind of old for people using it - I guess it has to do with how effectively a company uses it.

This article gave me a better understanding of its value to users. https://www.geekwire.com/2020/work-play-inside-two-companys-…

I thought this was an interesting bit of the article: “I believe fundamentally that corporate offices that have any sort of geographically dispersed organization would be well served by putting this kind of infrastructure in the center of the organization,” Sanford said. “All of a sudden you’re now way more connected to your distributed teams.”

“He estimates that being a fully virtual company saves eXp Realty $30 million a year.”

I imagine there will be more and more geographically dispersed organizations - even after COVID. Any company that can serve that market should have a large TAM.

[motto1628]

Thank you, retirementdoug!

I just read the MF deep dive article and am quite intrigue (in addition to what you and PDev12 have mentioned) by their employee stock compensation plan by giving realtors shares in the company.

Add this to:

1. a high net promoter score (not sure the number as MF didn’t provide it)
2. a high glassdoor rating for the CEO
3. substantial insider ownership (majority)
4. a crazy real estate market
5. a recent pull back in the stock price
6. earnings release due Nov. 9 (short term upside potential),

I’m looking to put allocate some money to this investment.

[ExponentialForvr]

First post here, let me know if anything is wrong with this post: content, format …

I have been lurking around this message board for the past 2 months or so.
Thank you so much to Saul, and others, for providing such a high quality forum!

I have discovered EXPI about 4 months ago and it has grown to become my 3rd largest position.

Number-wise, beyond the 100%+ annual revenue growth in the last few years,
the most important factor in my opinion is that is has become operating margin positive in the last 4 quarters.
Operating margin for the last 3 years:
-14.1%
-4.4 %
-0.92 %
Operating margin for the last 5 quarters:
-0.71%
0.36%
0%
2.26%
2.66%

When a high growth company becomes profitable, the earnings, first of course become positive, then typically grow insanely fast. There is a high likelihood that this is happening here.
Considering that the market cap divided by expected sales in 2021 is 1.25, this seems like a very undervalued stock!
I am considering backing up the truck and loading a bunch of shares on this one.

[TMFTiptree]

It is an interesting company, to be sure.

But, I must assume it is actually buying and selling properties, not providing a platform for other to do so. It’s gross margins are only 8.5%, which is low even for a heavy manufacturing company.

If it is just an on-line international real estate brokerage, then sure, there will be growth as it competes as the low-cost provider in a fractured service industry. But I am not sure it is worth “backing the truck up” for. EXPI will have to contend with the Redfins, OpenDoors, and Zillows of the world out there.

Tiptree, Fool One guide