New Stock Review: EXPI

EXP World Holdings INC (NASDAQ: EXPI)

Headquarters: Bellingham, WA
Founded: 2009
Employees End of 2Q 2020: 571
Shares outstanding: 68.5M Float: 26.7M
Insider Holdings: 58%
Revenues: 1B
Market Cap: 2.7B
Cash: 63.5M
Debt: 0

eXp World Holdings, Inc. is the holding company for a number of companies most notably eXp Realty. As a full-service real estate brokerage, eXp Realty provides 24/7 access to collaborative tools, training, and socialization for real estate brokers and agents through its 3-D, fully-immersive, cloud office environment. eXp Realty and eXp Realty of Canada also feature an aggressive revenue sharing program that pays agents a percentage of gross commission income earned by fellow real estate professionals who they attract into the Company.

Through various operating subsidiaries, the Company primarily operates a cloud-based real estate brokerage operating throughout the United States and most of the Canadian provinces, as well as an emerging innovation and technology services company that supports the real estate brokerage operations and third party customers operating in a number of industries. In the fourth quarter of 2019, the Company began real estate brokerage operations in the United Kingdom (U.K.) and Australia. The Company focuses on a number of cloud-based technologies in order to grow an international brokerage without the burden of physical bricks and mortar or redundant staffing costs. eXp World Technologies, LLC, a wholly-owned direct subsidiary of the Company, represents its innovation and technology division, which now holds the VirBELA brand. VirBELA is an immersive technology platform for businesses, events, and education that provides a virtual experience for workers, attendees, students, and other users to communicate, collaborate, meet, and socialize.…

-Second-quarter 2020 Financial Results Summary

-Revenue increased 33% in the second quarter of 2020 to $354 million, compared to $267 million in the second quarter of 2019.

-Gross profit grew 55% to $34.4 million in the second quarter of 2020, compared to $22.1 million in the second quarter of 2019. Gross profit is calculated as revenues less commission and other agent-related costs.

-Net income was $8.3 million, or $0.11 per diluted share in the second quarter of 2020, compared to a net loss of $2.2 million, or $(0.04) per diluted share, in the second quarter of 2019.

-Adjusted EBITDA (a non-GAAP financial measure) was $13.6 million in the second quarter of 2020, compared to $3.8 million in the second quarter of 2019.

-Cash flow from operations increased 57% to $28.5 million in the second quarter of 2020, compared to $18.1 million in the second quarter of 2019.

exp Realty is Global “Cloud-based” Real Estate Brokerage

Real Estate Brokerage - eXp Realty launched in October 2009 with a small number of real estate agents in two states and ended the fiscal year 2019 with a team of over 25,400 real estate professionals, operating throughout the United States and most of the Canadian provinces. In the fourth quarter of 2019, we expanded operations in the United Kingdom (U.K.) and Australia. Except for certain employees who hold active real estate licenses, virtually all of our real estate professionals are independent contractors.

-Accounts for the majority of EXPI revenue and earnings
-Delivers a unique agent value proposition, including an attractive commission structure, revenue share and equity
-Cost advantages of a virtual workplace vs traditional “bricks and mortar”
-Currently operating in the US, Canada, UK and Australia

2018-2020 Glassdoor Best Places to Work

32k+ Real Estate Professionals

1 of fastest growing real estate brands in North America due to their unique growth model which is a cloud based brokerage allowing for rich compensation structure for agents.

The revenue sharing program attracts agents to the brokerage, highly attractive commission structure. Agent receives an 80/20 split on first $80k gross commission income and keeps 100% of commission for remainder of year.

Equity awards through incentive program, gets agents pulling rope same way as company.…

eXp, one of the fastest-growing, global residential real estate companies and a subsidiary of eXp World Holdings (Nasdaq: EXPI), today announced it intends to expand real estate operations to France, India, Mexico, Portugal and South Africa by the end of 2020.

VirBela is Collaboration and Virtual Workplace Tech Company
Focused on the future of work, fostering company culture and collaboration with a virtual workplace solution

In November 2018, the Company completed its asset acquisition of VirBELA, LLC’s (“VirBELA”) core group of products and services. The Company also launched eXp World Technologies, LLC, its innovation and technology division, which now holds the VirBELA brand. VirBELA continues to offer a modern, cloud-based environment focused on education and team development with clients in various industries from government to retail. The unique virtual collaborative work environment from VirBELA provides service-based businesses with distinct advantages in managing costs, attracting talent, and scaling operations without the burden of “brick and mortar” office locations. This technology provides eXp Realty with a primary source of differentiation and competitive advantage.

-Powers the eXp Realty operating model

  • Enables companies to operate entirely remotely
    -Hundreds of global customers utilize the virtual collaboration tech, including Deloitte, Stanford, and most recently the NBA…

Kaplan joined VirBELA as a strategic advisor in April, streamlining enterprise sales and customer success. During his first three months, the team closed more than 20 enterprise deals, which helped to accelerate the company’s revenue growth by 260% in the second quarter of 2020.

Showcase IDX is a real estate search, consumer engagement and lead generation platform for agents.…

Express Offers is a home buying platform connecting buyers and seller to expediite the sales transaction

Title, Escrow, and Settlement Services – During the year ended December 31, 2019, the Company entered into an agreement with a third-party investment firm to form a joint venture to offer title, escrow and settlement services in the United States. The joint venture, Silverline Title & Escrow, LLC is 50% owned by eXp Silverline Ventures, LLC, an indirect subsidiary of eXp and 50% owned by the third-party business partner. Operations in this area are currently in a nascent state.

Mortgage Brokerage Services - During the year ended December 31, 2019, the Company made capital contributions in consideration for at least a minimum 50% ownership interest in First Cloud Investment Group, LLC (“First Cloud”) with the remaining ownership interest held by certain of our independent agents and brokers. First Cloud was organized for the purpose of managing IntroLend First Cloud, LLC (“IntroLend First Cloud”), an indirect wholly-owned subsidiary of the Company created to provide mortgage origination to end-consumers. The Company will always retain at least 50% of the outstanding equity ownership units in First Cloud. Operations in this area are currently in a nascent state.

I believe that this company is utilizing the “cloud” technology to displace traditional real estate brokerages. They have a lower cost structure, so they can “share” a greater percentage of the profits with the real estate agents. This sharing is driving many agents to want to adopt or work with EXPI. I see this as a disruption of a traditional business by implementing new technologies.

It is the same as when electricity was invented and people coupled it with the drill or the wash board to make new items such as the electric drill or the washing machine. New technology allows for displacement or disruption. EXPI is able to share the savings with the realtors which is driving business to EXPI.

I bought a small amount of EXPI today, consisting of less than 1% of my portfolio. I plan on continuing to research the company. However I like what I see so far and wanted to bring it to the board for further discussion.


I have a good friend who has been an agent for several years now, and he is always touting the company and its disruption. I understand how this model is much better for him, the agent. What I cannot understand is how this new model would benefit me, the buyer or the seller. To me, they are disrupting the wrong spot in this space and not benefiting the end customer. That has kept me from investing in them so far. Watching this thread to see if I can be proven wrong.


Hello everyone. This is a topic that I can contribute to (finally). My background is in Real Estate and I have run a RE office as well. Let me see if I can shed some light on how offices make money and why I would not touch EXP.

First, let’s talk about how a typical office makes money. This includes EXP, Coldwell Banker, KW, C21, and ReMax. Some of these companies are private or combined yet the way they make money is very similar. For example, Coldwell Banker and C21 are owned by the same parent company. KW is privately held.

RE offices make their monies at the local level through “the split”. Typically 70/30% with 70% to the agent and 30% to the office. This ratio typically changes with the agent ‘caps’ in their 12-month fiscal year. Upon capping the agent will typically receive somewhere between 95 to 100% of the commission. At the point of capping the agent is no longer financially contributing to the income of the office. Every agent “rolls over” each fiscal year and starts contributing back to the office via the 70/30% split.

The most important part of this conversation is how the parent company makes its monies from the local franchise agreement. EXP et al. at the corporate level make their money through a ‘royalty’. This varies from brand to brand and can be buried within other expenses. KW is probably the most simple to explain. Their royalty is 6% of every transaction until you cap. Then at the end of your agent fiscal year, you roll over and start paying the 6% royalty. C21, Coldwell Banker and EXP have similar but different structures. We can quibble over the difference however, they are minor within this discussion

In other words, each one of these parent companies is rewarded most by the number of agents contributing to the royalty not the number of transactions. Agents are tough to scale.

EXP’s competitive advantage is they have what amounts to state-wide offices instead of city-based office. This keeps their expenses low so their ‘cap’ can be lower than other brokerages. This is appealing to agents as their goal is to cap as quickly as possible so they get 100% of their check.

The relevant part of this discussion here is there is the exact same number of agents whether you have a local brokerage or a statewide. That is not a competitive advantage for the company

EXP’s tech allows them to have a statewide brokerage, however, they have not disrupted the industry.

How did I say that so confidently? The commissions charged to sellers. Their commission to the sellers is exactly the same as C21, Coldwell, ReMax. In a true disruption, the cost to the buyer of services goes down or the type of services offered for the same price increases significantly. That is not happening here.

The only company that I see disrupting the RE market is Redfin or Zillow and even that is challenging. Their tech is allowing them to reduce the friction in a sale through their ‘iBuyer’ program. Think Ebay’s buy it now button except for houses.

A SaaS offering that has 70% margins and scales infinity is considerably more predictable than the RE industry that is based on agent count, the economy, interest rates (that are truly low right now), and other factors outside their control.

Thank you everyone for all of the efforts put into this board. Hopefully, I added some value.


I’m not sure why the fact that EXPI is not totally disrupting the real estate market is a strike against them on whether they are a good investment. Look, I’d like just as much as anyone for them or another company to disrupt things by drastically lowering the commissions paid by home sellers. I was hoping for years that Zillow might do that.

But if the EXPI is “only” disrupting things at the top end (i.e. relationships between agents and parent companies), that seems like a good reason to see whether other financial characteristics make it a good investment.

I don’t have a position in EXPI, but appreciate it being brought to the board. It seems to be worth looking into.



Thanks for the great insight. I was reading up some more on EXPI today.

Here are some of their numbers:

Revenue Growth 96% YOY 2019

2014 13m
2015 23m
2016 54m
2017 156m
2018 500m
2019 980m

2020 Q1 271m 73% yoy

Gross Profit 107% YOY 2019
2014 2.3m
2015 3.3m
2016 7.1m
2017 16.5m
2018 40.4m
2019 84.1m

2020 Q1 28m 93% yoy

Cash Flow from Operations 127% YOY

2014 200k
2015 300k
2016 1m
2017 4.6m
2018 24.3m
2019 55.2m 127% YOY

2020 Q1 17.5m 163% yoy

Agent count increase 63% in 2019

2014 466
2015 858
2016 2401
2017 6511
2018 15570
2019 25423

2020 Q1 28,449 59% yoy

They only have a 10% margin, which is obviously a lot lower than software.

Jeff Whiteside – Chief Financial Officer

Yeah. As we’ve talked about before, John, we have a commitment to our agents to share half the company dollar for revenue share to grow the company. And that kind of went the other way. It started last year. So, we got that back to that 15%. And our goal as a company has been to get to the 10% gross margin. And that’s one of the biggest factors. And we got that in place. That makes a lot of sense now.

And I’d say the second thing – second big thing we’ve done and it kind of goes down to profitability more than gross margin is that, from an SG&A standpoint, for instance, we had as a percentage of revenue in Q2 of 2019, it was 9.1%. In '20, it was 7.4%. On a year-to-date basis in '20, it’s 8.6%. And it’s 10.6% in '19. So, we get benefit from both the – just tweaking to get back to where we always want it to be, and that’s from Glenn’s vision, that’s where we needed to be.

And as you know, we invest a lot into the growth of the company. So, getting to the 10% margin, controlling the costs – and I’ll tell you right now. It has benefited us from a net income, a GAAP net income basis. But at the same time, we’re starting to invest heavily again in the company, in the staff, in the teams and in growth. So, we’re not going to sacrifice any kind of growth in investment for profitability. But the way that we have the percentages right now, we can see that continuing into the future.

However the real estate business may in long run fund a software company. VirBELA is interesting. It grew revenues 260% last quarter yoy. In reading some of the conference call they feel that they are in front of the market. They consider VirBELA superior to even Zoom’s product offering (I am not saying it is but it does peak my interest in learning more).

John Campbell – Stephens Inc. – Managing Director

Yeah, that’s really helpful. And so, Glenn, you spent a lot of your time and kind of directed your attention to VirBELA. The co-founder in your press release this morning, I think he freaking nailed it when he said – he said, this is the moment in time that will forever alter how we approach connection in aspects of life moving forward and VirBELA is at the forefront. I think he – I think that was absolutely spot on. You guys also said that the growth for VirBELA was up, I think, 260% versus last quarter. So, lot of good traction there. Just talk to us about, obviously, how the pandemic is helping boost the value prop there and then talk to us about kind of the opportunity you see over the next several quarters to maybe even a couple of years out.

Glenn Sanford – Founder and Chief Executive Officer

Yeah. So, pre-COVID, we were working – we knew that there was a business in VirBELA. We were still looking forward, to some extent, market traction, but we knew it because of the amount of lift that VirBELA gave eXp Realty. The reality is that we run on an entirely different economic backdrop in eXp Realty and it’s because of the way that VirBELA fosters collaboration, engagement and, ultimately, has allowed us to scale very rapidly.

So, we’ve always recognized that VirBELA for us was the secret and not-so-secret sauce to being able to create this collaborative environment that’s allowed us to scale. And so, we knew customers would gravitate toward it, but we were investing in it just as much to enhance the ability for eXp to expand as we were from a consumer perspective.

Obviously, with COVID, we went from 20-odd employees to now over 100 employees on the VirBELA side because we have so many customers that are looking to – where does my team work if I have to be remote for a period of time with my team, where do they – how do they ultimately collaborate and work together.

Zoom fatigue ultimately is real. And so, we’ve had multi-billion dollar companies, the mining company, Rio Tinto is a client of ours. We’ve got events companies, the largest – one of the largest events companies in the AR/VR space in France, Laval Virtual, an event firm, have been using our platform. Just recently, ASU, Arizona State University, just did a learning man on the VirBELA campus and got rave reviews and we’ve seen numerous universities and other educational institutions starting to step up and set up their own campuses and to be able to manage remote learning.

We’ve got some of the largest consulting companies in the world that are advising their clients. Some of them being universities, some of them being major enterprises that this is, at a minimum, a contingency platform for them to run their business and, at best, it could literally change the economics. And we’ve had numerous customers that have literally given up their physical bricks and mortar footprint because they see the power of the VirBELA platform.

And last, but not least, we announced a month ago or so, the partnership with HTC where they are pre-installing through the HTC, the VIVE suite, VirBELA on, I think, it’s over a 1 million business-ready HP laptops and HTC has their own HTC campus based on VirBELA where they’re effectively a reseller of the platform.

So, with that is huge amount of growth. Unfortunately, in the short run, the numbers of VirBELA are relatively small, given the market opportunity because we think that, over time, VirBELA itself is a company that’s quite a bit different than eXp Realty, that ultimately has lots of runway and lots of potential.

Jeff Whiteside – Chief Financial Officer

And, John, just – as you know, we run our entire global operation on this platform. So, when people compare us to Zoom, Zoom is obviously a great tool for communication, but we run our entire international brokerage and other businesses on this platform. And I’d also say too that this is a rare – VirBELA is a rare situation where the product is actually way ahead of the market. So, in a lot of software companies that I’ve seen, is that the product is trying to catch up to what the customer wants. In our particular case, we have a rock solid product that we’ve been using as a company for years and growing our business, as you can see. And so, the product is really ahead of the marketplace. And now the market is catching up. So, exciting times for VirBELA for sure.

The real estate side of the business is throwing off cash, while the overall company may have a software that is in front of the Covid wave. I really do not know but I find it interesting enough that I want to continue to research.


Of course… I am glad I can add a perspective.

It should be noted that real estate sales have been very active over the last 24 months. Even during COVID agents have been very busy. In California, agents were designated as essential so sales continued.

Combine this with a very large exodus from the big city to smaller cities because of the work from home movement AND from smoke-filled CA to other parts of the US, I would expect EXP to do very well in the next few quarters. In areas where I have familiarity, there is 1-2 months’ worth of inventory. A typical balanced market has 5-7 months of inventory. Also, sub 3% interest rates have caused prices to increase and people that were on the fence to move. This is all good for all real estate companies

Trek24 had some very good points too.

It is tough to argue with the numbers, cashflow that is being thrown off, and the growth that is happening.



Feel like expi is a mlm company.

Here is something I found from exp company website.

Revenue share at eXp Realty works like this. If and when you recruit an agent to the company, you share in the revenue that agent brings in indefinitely as long as you and that agent are with the company. Additionally, if that agent attracts another agent to the company, you share in that revenue as well. This goes on for 7 generations, or levels.…


They do have a mlm feature that can be part of the compensation package in addition to revenue share and achievement awards. Not unusual in the RE space. Recruiting is not mandatory or pushed on agents.
Split is 80/20 with 16k cap. Agents pay a $85/mo technology fee for kvcore, skyslope, digital marketing tools, a personal website builder, 25 live training events per week via virbella, workplace by facebook for help or collaboration.

Altogether this is a very attractive offer. I disagree that agent count is hard to scale. They have roughly doubled agent counts every year. With estimated 1.2m agents in the US, they have a large TAM to grow into. What I have witnessed through my research is an almost cultish exuberance amongst RE agents who’ve joined this company. Won GlassDoor “best places to work” 3yrs in a row.

Exp does have a ibuyer program called express offers (

Addressing the competitive advantage to the home owner/seller. Teams/agents at exp are licensed businesses who pay a commision and tech fees for use of the software platform–essentially saas. They do what they want. With lower overhead, depending on the market, an agency can lower its commission if they choose to.

I leave you with a pair of videos that provide insight into the platform and the companies international plans.

eXp Realty Cloud Based Brokerage vs Brick and Mortar Office
Michael Valdes on international expansion