By David Marden
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05 Sep, 2023
Exploring eXp Realty's Remarkable Growth and Financial Insights (2023) eXp World Holdings, the parent company of eXp Realty, operates a revolutionary cloud-based real estate brokerage and technology platform, redefining the real estate industry. Founded in 2009, eXp Realty stands out with its unique cloud-based model that enables agents to work remotely, eliminating the need for physical offices. Furthermore, it offers agents the opportunity to earn equity awards for achieving production targets and contributing to the company's expansion. Key Statistics About eXp eXp has built a global presence with over 71,000 agents spanning across the United States, Canada, the United Kingdom, Australia, South Africa, India, Mexico, Portugal, and more as they continue their international expansion. In 2021, eXp agents facilitated transactions for both buyers and sellers in an impressive 440,000 real estate deals. eXp Realty has emerged as one of the fastest-growing players in the real estate industry, with a remarkable revenue growth trajectory. From a revenue of $156 million in 2017, it surged to a staggering $3.8 billion in 2021, marking a phenomenal 24x increase and solidifying its position as one of the largest real estate companies. eXp Realty's Revenue Growth The lion's share of eXp World Holdings' revenue currently originates from its eXp Realty business unit. This revenue predominantly comes from licensed brokerage activities, specifically real estate transactions where eXp earns commissions, which are then shared with its agents and brokers. In 2021, eXp Realty generated a substantial $3.7 billion in revenue, a significant leap from $1.8 billion in 2020. Here's a breakdown of eXp's revenue growth from 2017 to 2021: Year Annual Revenue 2017:$156 million 2018:$500 million 2019:$980 million 2020:$1.79 billion 2021:$3.77 billion Source: eXp eXp's Expenditure Profile eXp Realty's total operating expenses in 2021 amounted to $3.7 billion. These expenses primarily encompass commissions and other agent-related costs, sales marketing, and general & administrative expenditures. Let's delve into the breakdown of total operating expenses since 2017: Year Total Operating Expenses 2017:$178 million 2018:$523 million 2019:$989 million 2020:$1.77 billion 2021:$3.74 billion Source: eXp Commissions and Agent-Related Expenses Notably, a substantial portion of eXp's total expenses, approximately 92%, is allocated to commissions and other agent-related costs, totaling nearly $3.5 billion in 2021. These expenses experienced a substantial year-over-year increase of 2.12x in 2021 compared to 2020. This surge in expenses directly correlates with the rise in revenue, as commissions rise when eXp agents represent more clients in real estate transactions. Let's examine eXp's commission and agent-related expenses over the years: Year Commissions & Agent Expenses 2017:$140 million 2018:$460 million 2019:$896 million 2020:$1.64 billion 2021:$3.48 billion Source: eXp Sales and Marketing Expenditures In 2021, eXp Realty's sales and marketing expenses reached $122 million, indicating a significant 2.3x increase from the previous year. These expenses constituted approximately 3.5% of the company's total expenditures. Here's a summary of eXp's sales and marketing expenses since 2017: Year Sales & Marketing Expenses 2017:$1.57 million 2018:$2.96 million 2019:$3.80 million 2020:$5.22 million 2021:$12.20 million Source: eXp General & Administrative Costs eXp Realty's general and administrative expenses in 2021 amounted to $250 million, demonstrating a substantial 2x increase compared to $123 million in 2020. These expenses represented nearly 6.7% of the company's total expenditures. Here's a table illustrating the evolution of G&A expenses over time: Year General & Administrative Expenses 2017:$35.7 million 2018:$57.6 million 2019:$89 million 2020:$123 million 2021:$250 million Source: eXp eXp's Financial Performance eXp Realty achieved profitability in 2020, posting a net income of $30.9 million. Impressively, in 2021, the company further bolstered its financial position, with a net income of $81.1 million, marking a remarkable year-over-year increase of 2.6x. Here's an overview of eXp's net income and losses by year: Year Net Income (Loss) 2017:($221 million) 2018:($224 million) 2019:($96 million) 2020:$310 million 2021:$812 million Source: eXp eXp Realty's Market Share eXp agents significantly increased their presence in the U.S. residential real estate market in 2021, representing buyers or sellers in 2.9% of transactions, up from 2.1% in 2020. Notably, eXp Realty emerged as the top performer in terms of transaction side percentage growth, surging from 238,981 U.S. transaction sides in 2020 to 355,627 in 2021, marking an impressive 49% increase. Here's a representation of eXp's growing market share over the years: Year Market Share 2017:0.2% 2018:0.7% 2019:1.2% 2020:2.1% 2021:2.9% Sources: eXp, NAR eXp Realty's Industry Ranking In 2021, eXp Realty secured the position of the third-largest brokerage in the United States in terms of closed transaction sides. With 355,627 sides, they trailed behind Home Services of America with 388,098 sides and Realogy with 376,892 sides. Here's a table illustrating eXp's ranking among real estate companies in the United States by transaction sides: Company Transaction Sides (U.S.) Home Svcs. of Amer. 388,098 Anywhere:376,892 eXp:355,627 Compass:224,067 Hanna Holdings:124,016 Redfin:76,680 Source: RealTrends eXp Realty's Transaction Growth Transactions are a pivotal metric for evaluating the performance of eXp agents, as they directly involve helping clients buy and sell homes. Over the past five years, eXp Realty has witnessed remarkable growth, with global transactions soaring from 25,299 in 2017 to an astounding 444,367 in 2021, signifying an incredible 17.6x increase. Here's a table displaying eXp's transaction count by year: Year eXp Worldwide Transactions 2017:25,299 2018:74,678 2019:135,322 2020:238,981 2021:444,367 Source: eXp eXp Realty's Fees and Commission Structure At eXp Realty, agents receive an attractive 80/20 commission split with an annual cap of $16,000 on gross commissions paid to the company. In simpler terms, agents pay $16,000 of their first $80,000 earned in commission and subsequently retain 100% of their commissions, minus a capped transaction fee. In comparison to other brokerages, eXp's commission split and agent cap are notably generous. However, it's worth considering that this structure may lead to fewer resources being available for agents, especially in terms of training and support. While new agents might face challenges, experienced agents with a substantial client base can benefit from a more favorable revenue split compared to competitors. Upon joining eXp Realty, agents are required to pay a $149 Startup Fee and an $85 monthly fee, covering essential resources such as educational materials and lead generation tools. Furthermore, after reaching the $16,000 commission cap, agents incur a flat $250 transaction fee for the next 20 transactions, followed by a $75 fee thereafter. Additionally, each transaction is subject to a $25 broker review fee and a $40 risk management fee. eXp Realty's Business Model eXp Realty follows a traditional agent-centric brokerage model similar to Compass. In exchange for a favorable commission split, eXp's realtors are responsible for marketing expenses and generating their own deals, which may involve lead generation and leveraging their sphere of influence. Unlike some competitors such as Redfin, which retains leads in-house, or Zillow, which sells its leads, eXp Realty does not generate substantial website traffic or funnel internal leads to its agents. Additionally, eXp Realty does not operate under a franchise model, distinguishing it from companies like Anywhere (formerly Realogy). eXp Realty employs an aggressive commission strategy to attract new agents while incentivizing existing agents to recruit new ones through its revenue-sharing program. This approach has been instrumental in the company's rapid agent count growth, as discussed below. eXp Realty's Revenue Sharing Program Under eXp Realty's revenue-sharing program, when one agent brings another agent to the brokerage, they earn 3.5% of the new agent's gross commission until the commission cap of $16,000 is reached in a given year. This revenue-sharing arrangement continues as long as both agents remain with the company. Furthermore, when the recruited agents go on to recruit additional agents, the agents who initially referred them also earn small commissions on the agents they've brought in. eXp Realty and Multi-Level Marketing While eXp Realty primarily operates as a real estate brokerage facilitating property transactions, its revenue-sharing program does bear similarities to multi-level marketing (MLM) models commonly associated with companies that sell branded products. This structure allows eXp Realty to significantly reduce marketing expenses for attracting and retaining agents. eXp Realty's Workforce As of the most recent data available, eXp Realty employs 1,669 full-time (non-agent) employees. This represents an 85% year-over-year increase from the 900 employees recorded in 2020. Here's a breakdown of employee growth over the years: Year eXp Employees 2017:184 2018:354 2019:634 2020:900 2021:1,669 Source: Macrotrends The Size of eXp Realty's Agent Network Sales agents form the majority of eXp Realty's workforce, totaling over 71,000 agents in 2021. This is a significant figure, considering that there are approximately 1,566,354 Realtors in the United States. The growth in the number of agents at eXp Realty is a key indicator of the company's business expansion. Over the period from 2017 to 2021, the number of agents has increased by nearly 11x. Here's an overview of how eXp Realty's agent count has evolved over time: Year eXp Agent Count 2017:6,511 2018:15,570 2019:25,423 2020:41,313 2021:71,137 Source: eXp Conclusion In conclusion, eXp Realty has emerged as an innovative and rapidly growing force within the real estate sector. Its impressive financial performance and exponential growth in agent count and transactions reflect its prowess in the industry. As we look ahead, it will be fascinating to see if eXp Realty can sustain its exceptional growth and profitability in the years to come.