Exp World Holdings (NASDAQ:AGNT) Q2 2026 Earnings Call

0:00 Afternoon, and welcome to the AGNT second quarter twenty twenty six earnings fireside chat via livestream and our metaverse on the web frame. My name is Denise Garcia, and I manage investor relations for AGNT, formerly EXP World Holdings. Today, we will begin our earnings fireside chat with remarks from Leo Pareja, CEO of EXP Realty Jesse Hill, Chief Financial Officer of AGNT and Glenn Sanford, Founder, CEO and Chairman of AGNT. Following our prepared remarks, we will open the call to a Q and A session with our speakers. Let's begin with a review of the forward looking statements. There will 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.

0:53 Please see our filings with the SEC, including our most recently filed annual report on Form 10 ks 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 agnt. Inc. Now for a few logistics and we'll get started. For those of you joining in frame today, welcome to our metaverse on the web. To zoom into a specific screen, you can click on that screen and then click zoom in. If the content on that screen disappears or if you lose audio, simply refresh your page or log out and reenter.

1:40 While in frame, if you need help, just use the help button at the bottom right to link with tech support.

1:47 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 with your mobile phone or go to slido.com and type in the event code AGNT. From there, you can submit a question or vote up an existing question by giving a thumbs up for that question to be asked. This screen will remain up on the right hand side of the stage. Now I'll turn the fireside chat over to our speakers before opening the call to questions. Leo, you may begin. Thanks, Denise. Before I get into the numbers, I just wanna ground everyone in what AGNT is today. AGNT is a global operating system for modern real estate entrepreneur and a multimodal platform where independent agents, franchise owners, and team leaders all find a home built for the way they wanna grow.

2:35 Two models, maximum optionality. That's the thesis behind everything I'll walk through today, which brings me how the multimodal platform actually comes together. EXp Realty remains the undisputed cloud based leader in our industry. NextHome offers a premier franchise experience. Together, these two brands expand our agent offering and let us serve a wider segment of the market than either brand could reach alone. NextHome is complementary growth engine that unlocks multimodal reach across distinct market segments. We have seasoned operators in both brands driving and aligned incentives. We share a global referral network connected eXp agents with next home franchisees worldwide, and we're consolidating back office, legal, technology resources, driving efficiencies across both brands.

3:24 We are witnessing the financialization of the real estate industry. Now across private equity and public company acquisitions, there's about 400,000 agents who find themselves at a franchise over the

3:50 next couple of years, they may no longer feel aligned with, and now we have an opportunity to convert entire franchises as those agreements come due. Now let's look at the platform built by agents for agents actually produced this quarter. This was a record revenue quarter, and it was built on agent success. We ended the quarter with 87,338 agents, up 6% year over year. Transactions grew even faster, over 132,000 real estate sale transactions, up 12% year over year. Revenue came in at $1,400,000,000 up 11% year over year. And productivity, transactions per agent, was up 6%. Put simply, record revenue driven by increased agent productivity. That's not just agent counting doing the work, that's our agents doing more and doing it better, which is exactly why retention of the best agents matters so much.

4:43 And that's our next slide. We continue to see our least productive cohorts churn out of the industry entirely, not just out of eXp. Sixty percent sixty seven percent of nonproductive agents in The US who left eXp actually left the industry altogether in q two. Meanwhile, we're growing productivity with teams. 41% of new q two agents joined on teams, and agents on teams are 78% more productive than individual agents. Our co sponsor program just hit a one year anniversary. Here's what we found. Agents with a co sponsor show 40% higher production and have 10% higher retention rate.

5:34 This was a deliberate strategy. Attract productive agents, put them in a structure that makes them more productive, and retain them. It's working. Now I want to shift gears and talk about how we're building the platform underneath all of this. Everything I just walked through is only possible because of the platform we're building underneath it. AGNT OS brings everything an agent needs to run their business together in one place. Instead of agents juggling a dozen disconnected logins and tools, AGNT OS, which operates the hub for eXp Realty Agents, is the operating system for the agent's business. No more needing to find where to log

6:13 in. All agents have to do is exprealty.com, log in as an agent, and you'll be taken to the hub. Then they can download the hub app to their phone. The app is available in both Apple and Android, group chats, text, Skyslope, myEXP, university, marketplace, and everything you need to run your business is now live directly inside the hub. This is the foundation for our AI native platform I wouldn't spend the rest of my time talking about. We're transforming eXp into an AI native platform. One built to give agents the tools they need to be productive and manage their business and to increase on their own operating efficiency at the same time. And it's working. I'll share some examples from the second quarter.

6:59 DocAI, our review assistant, has been trained on thousands of documents. It has now reviewed over 5,000,000 documents and validated 22,000 daily uploads at a score of 100%. Task center automation resulted in 19% year over year increase in files handled per transaction analyst. Our AI enhanced expert care now resolves the majority of incoming chats automatically. Carlo, our comprehensive advertising review logic operator to review agents' advertising and signage and log brokers' supervision automatically is now deployed across residential brokerage operations with commercial in progress. Broker Assistant delivers immediate, scalable after hour support for policies, procedures, and guidance across our state sites and eXp community hub. And FastCap, our AI powered agent development tool, features a role play accelerator that's been used over 2,800 times this quarter for scalable on demand skills development.

8:02 While we're building AI native tools here domestically, our international business has been building its own operating system, NexSys, which I'll show on the next slide. NexSys brings every tool our international agents use into one connected system, from a project management tool that keeps every transaction on track to our global property search platform, connecting buyers and sellers across borders in one seamless experience. This isn't six disconnected tools pulled together. It's one system, four foundations, one identity, one data layer, one AI layer, and built to scale from day one. And we're seeing the momentum we've created in our international business show up in the numbers. In the second quarter, international revenue grew 44% year over year, while at the same time, we cut our international operating loss by 57% year over year and reduced our adjusted EBITDA loss by 66% year over year.

8:55 This is the same pattern we're seeing domestically with AI native tooling. Give agents a better platform and the efficiency follows, which brings me to how I sum up the quarter. We're controlling the controllable, and it shows record revenue with increased operating efficiency. We're transforming into a multimodal AI native platform that give agents the tools they need to be productive and manage their business. And as I walk through, it's working. We like our position. We're playing offense on AI inefficiency and defense on the balance sheet. With that, I'll hand over the call to Jesse to walk through second quarter financial results. Jesse?

9:35 Thank you, Leo. And now I'll walk us through our consolidated operational and financial highlights for the second quarter twenty twenty six, beginning on the next slide. Starting with operational metrics on a consolidated basis, we ended the quarter with over 87,000 agents with continued low attrition among our most productive agent cohorts. Productivity per person or PPP was up over 6% at 5.5%, while volume increased 15% for the quarter. Higher PPP drove sales transactions up 12% year over year, resulting in over 132,000 sales transactions in the second quarter. On the next slide, I'll walk through our second quarter financials. Starting with revenue, we generated $1,400,000,000 in the second quarter, up 11% year over year at the high end of our guidance range, despite continued pressures in the macroeconomic environment.

10:29 Gross profit was $98,800,000 up 7% year over year. Prior investments in technology and process improvements are strengthening both our top and bottom lines, excluding onetime items. Operating income was $1,600,000 for the quarter, up 169% year over year compared to an operating loss position in the second quarter of twenty twenty five. Operating expenses were $97,200,000 $200,000 above the high end of our guidance range, primarily driven by onetime nonrecurring costs. Adjusted EBITDA was $25,700,000 for the quarter and above the high end of our guidance range of $21,000,000 and up 129% year over year. Finally, we ended the quarter with 111,200,000 in cash on the balance sheet, up 18% year over year.

11:17 On the next slide, I'll walk through our financial results by segment. The North America Realty segment continues to be our largest revenue and profit generator with revenue of $1,400,000,000 for the quarter, up 10% year over year and adjusted EBITDA of $30,700,000 up 55% year over year. International continues to be our fastest growing segment with revenue of $46,400,000 up 44% year over year. While we continue to invest in expansion, the segment posted an operating loss of $1,800,000 which was 57% improved year over year and a negative adjusted EBITDA of $1,300,000 which was 66% improved year over year.

11:58 Our other segment contributed 700,000 in revenue, roughly flat year over year, with an adjusted EBITDA improving 92% to a loss of 200,000 On a consolidated basis, that's $1,400,000,000 in revenue, up eleven percent $1,600,000 in operating income, up one hundred and sixty nine percent and $25,700,000 adjusted EBITDA, up 129% year over year.

12:22 On the next slide, I'll review our updated outlook for 2026 and the third quarter. Looking ahead, our focus remains on innovation, efficiency, growth and agent success, and we are providing our outlook for the third quarter and updating the full year 2026. Starting with the third quarter, we expect revenue in the range of 1,350,000,000 to $1,450,000,000 expenses in the range of 85,000,000 to $90,000,000 and adjusted EBITDA in the range of 17,000,000 to 22,000,000 For the year, we continue to expect revenue in the range of 4,850,000,000 to $5,150,000,000 as productivity gains continue to be offset by a challenging macroeconomic environment. We now expect operating expenses in the range of $355,000,000 to $365,000,000 and we have tightened the range of our adjusted EBITDA guidance to 50,000,000 to $60,000,000 for 2026.

13:13 We intend to stay financially flexible, reserving the right to invest where we see meaningful opportunities to support our agents, strengthen our technology platform and enhance long term shareholder value. And now I will turn the call over to Glenn to wrap it up before we open up the call to questions. Glenn? Hey. Thanks. Thanks, Jesse, and thanks, everyone, for being here. So first and foremost, you know, AGNT is the platform. It has, you know, really four businesses underneath of it. You know, eXp Realty, it is is still the engine. It's the most agent centric real estate brokers on the planet. And now we have two models. We have the the EXP Realty and and NextHome, which is the franchise structure for those agents or broker owners who want to run small teams, in some cases, larger enterprises on top of it.

14:08 But the agent is really still the center of the the relationship and their opportunities to grow whatever size business that they want to to grow. International, as you know, it's it's growing. It it's it's doing very, very well. And, you know, we added a number of countries last year, so we're excited about the continued growth. One of our stated goals is to be in 50 countries by 2030. And we think that that's a realistic goal, and we expect that that our continued investments will get us to new countries fairly rapidly. And if you look at countries like Peru, Ecuador, especially South America, of course, we've got our first eXp Con taking place in Colombia next year, we're making, you know, big investments in that.

15:02 Of course, Frame is the platform that we're in right now. It continues to literally create the communication and collaboration layer for the entire enterprise. And you can think about the idea that we have almost 90,000 people actually, over 90,000 when you think about staff and other people that use the platform that turn to frame on a regular basis to collaborate with with our overall enterprise. Success,

15:34 it's a cultural and and and training layer. Success Coaching has now had over a 100 people go through our Success certified coaching platform. And and we just launched that relaunched that this year. And with Matthew and Kristen Perry continue to serve in larger leadership roles at Success, we're excited about how that continues to roll out for the balance of the year. And today, I'm happy to announce that Amy Kosper has joined us as editor in chief for Success Magazine as well.

16:07 As we move toward 2027, we also have a bulk app in magazine subscription that we're going to be offering. We're already starting to offer to other large enterprises, but we're excited about the the work that this team is doing to really create some real opportunities in the Success Magazine ecosystem. One the things that I've talked about over time is the single thread leader model, but I wanna start to think about it as the AI enhanced leadership model. And originally, we were talking about, you know, agile org design, agile scale, aligned teams, and and, and now all of our staff have access to at least one, enterprise AI in their day to day work.

17:00 And this has really allowed us to build things like our hub,

17:05 build things like our doc AI, where we're using AI to not just read things in an OCR fashion, but to actually be opinionated about the things that it's it's advising the company on. And with the models improving the way they are, we're just in the early stages of seeing where AI can take us over the next next few years. Obviously, we invented the cloud based model back in 2009. You know, our competitors generally are still tethered to legacy offices, commission structures, and software and hardware stack that's that take years to move if they can even move off of them. We've had none of that to work around since we've been on the cloud since 2009.

17:53 We actually invented the term cloud based brokerage. We've been distributed and technology focused from day one, so AI has been a more natural transition given our infrastructure. We've talked a little bit about eXp hub. We've got AI Copilot for agent workflow. We've got a listing intelligence platform that we're continuing to build out. We now have an app store marketplace that was enabled because we built our entire replacement for Workplace by Facebook

18:25 given it went away. And now we've got the most robust communication platform that that is not tied to a SaaS contract. And and really, you know, this goes back to the idea that the name change really wasn't cosmetic. We referred obviously the eXp Realty as the most agent centric real estate brokerage and we've made AGNT platform much more over, and that's a moat we continue to invest in. With that, I'll turn it back to Denise for q and a. Thanks, Glenn. We'll kick it off with a question for each of our speakers before we turn the call to, the analysts and ask their questions.

19:11 Leo, can you give us an update on the macro and what you're expecting in the second half of twenty twenty six? Thanks, Denise. The back half of twenty twenty six is looking to have a continued uncertainty from several macro factors. We have sticky inflation, conflict in The Middle East, and as of last week, a a very strong emphasis on the weakening of the Japanese yen. This is certainly is translated into bond market pressure with a ten year treasury yielding climbing to its highest level since January 2025, roughly touching 4.7. Last week, the Fed held its federal Fed funds between three and a half and three quarters, signaling their ongoing concerns around inflation and geopolitical uncertainty. A weak Japanese yen is adding to the bond market pressure. We saw last Friday the US Treasury step in to support the Japan's weakening position.

19:58 Altogether, Fed's holding on rates, Middle Eastern driven energy and inflation pressure in the bond market, pricing shifts all point to the back half of twenty twenty six housing activity to track softer to year end.

20:12 Alright. Thanks, Leo. Jesse, one for you. You just had a record quarter despite a challenging backdrop. What drove the second quarter? Yeah. Thanks, Denise. And and we mentioned our our over 87,000 agent count. But what's more important, and we mentioned this nearly every quarter, is productive agents. And and we called out our PPP, our productivity per person, improved 6% year over year to 5.5 in q two. And across our sizable agent pace, even incremental improvements in agent productivity can result in outsized gains across the overall brokerage. And so we saw that translate into 15% increase in sales volume in Q2. And sales volume, of course, drives our revenue in the form of gross commission income. And then just just one other thing to add to this, along the same talk track, actually. We we saw a gain in market share. Our US brokerage in q two gained 3% in market share relative to the total US real estate market. So we're very we're proud of our record revenue quarter, but we're also happy to see gaining market share in the quarter as well.

21:19 And and one for you, Glenn. Can you can you speak to some of the initiatives in international that drove growth there? Yeah. Well, not the least of it is that, you know, last year, we opened up eight countries and a lot of those countries are actually growing quite quickly. So congratulations to everybody on the international team for the hard work that they're doing.

21:44 You know, we just finished eXp Con International in Paris just a few weeks ago. Well attended by agents from all over the world. The enthusiasm for the eXp model around the world is very tangible and it it it definitely was on full display. And things like our co sponsorship program or international sponsorship program is working really well where agents can work with in country agents to bring on the agents that they're looking to attract to the eXp model. Obviously, the legacy brokerage models internationally are even further behind than the domestic US and Canadian based brokerages.

22:31 There's still a lot of brokerages that are fifty fifty splits with their agents, no caps. And so our model is much more agent oriented and the commission splits definitely are are appealing. But then our our our worldwide model that's now backed by platforms like LYVVE, l y v v e, and its ability to basically act as a worldwide portal for eXp listings in all countries that we operate in. You know, last year, we started on, you know, a a lab experiment in international to build out Nexus. I remember when Felix started to build that out.

23:19 And it's truly become an AI operating system for all of the international countries providing things like CRM, valuation tools, marketing tools, transaction management tools. And this the platform that was built was built by a very small number of people using AI as the tooling infrastructure. So we're really talking about less than about four people overall, four or five people overall building the Nexus operating system, but they're able to build at scale for, you know, 27 ish countries around the world, multi language, multi modal, and and along with the live platform. So, you know, international is running very lean.

24:12 We'll continue to run lean and, of course, we're seeing, you know, a number of countries now turn profitable as we continue to invest in new countries, which will likely have more countries toward toward the end of the year announced and either launched or or opening up in early twenty twenty seven. So it's really been a big team effort that's really driven that international growth, but it's going very well. Thanks, Glenn. Just as a reminder for the audience, if you'd like to ask a question, you can go to slido.com and enter the event code agent, AGNT, and and ask a question there. Or you can use the QR code and and on your mobile device and and and ask a question in Slido that way.

24:59 For now, I'll go to the analysts on the stage that are joining us here. Tom White from DA Davidson. You can go ahead. Great. Thanks, Denise. Good evening, everyone. A couple if I could. I guess just on on agent count, so I think you said up 6%. Can you what was that kind of excluding NextHome? Is it if I remember, NextHome had, I think, roughly 5,000 agents. So it was kind of the the legacy business flattish? And maybe you can also just call out the impact of NextHome on on revenues in the quarter? Sure. I I can take that one, Tom. Thank you for the question. We shared, I believe, previously, the NextHome acquisition actually resulted in approximately 4,900 agents. So you're correct. There's a modest growth in the organic business in q two, but we did see some growth there in our in our own brokerage, 4,900 from NextHome, then a little over a 100 organic.

26:00 And for the second part of your question, if sorry. Can you remind me? Oh, just maybe help quantify what the contribution of NextHome did to to reported revenue in the quarter. Right. Right. Got it. So with NextHome, it's important to point out that it's a franchise model, and and and so we're not recording revenue in the same way. And and I'm explaining this for the full audience, Tom. I I think you know this, but we're not reporting revenue in the same way as we do our traditional US brokerage, which records revenue at gross commission income. Next home is the franchise model, and and we get revenue there in in different ways, franchise fees, notably. So it'll be smaller, more modest contribution, especially in the shorter term with NextHome. That one's more of a strategic bolt on to create the on ramp for the the multimodal sort of approach that we're we're taking this year and and going forward into the future to create multiple options for agents.

26:56 Modest contribution to our our revenue in q two and in the updated guidance. Short answer for you. Okay. That's great. Leo, the the AI native brokerage slide, I thought was interesting. I'm curious whether any of those, like, AI innovations that you talked about are have started to displace any kinda, like, legacy, maybe SaaS products that you guys had historically been paying for. And curious whether, you know you know, does that mean that there's kind of a a cost saving opportunity from you guys going forward? Or is it just about kinda AI helping everyone be be more efficient?

27:43 Yeah. I I think it's all of the above, Tom. Absolutely. So we you know, Meta gave us notice eighteen months ago that we were no longer gonna have access to Workplace. We shifted over to Slack's, Salesforce Slack product, and the agents really had a a a wanting of the previous enterprise feeling. And we really were able to build a ground up very quickly because of the AI software writing ability, and now it's super tailor made for us. But not only from an experience standpoint, but also in the financial result. And so, yes, I I you know, when when people think of AI, I think the real lift is on businesses of scale that do repetitive behavior like we do. So, you know, DocAI gives us the ability to actually, you know, meaningfully impact the workflow versus, like, these kind of, very aspirational AGNT, like, workflows that people pontificate on LinkedIn and other places. Like, this actually has meaningful impact into our daily life.

28:41 And then, you know, I I actually made a post on social media, like, two hours ago randomly enough where I I instructed agents to pull out their credit card bill and see all of the SaaS stuff they pay for on a reoccurring basis. And and SaaS could not could also just be like, you know, a a marketing martech thing that they do on a monthly basis that now could be replaced by a Claude skill. Right? And so I think the whole world is going through, like, what am I paying for? How does this add meaningful activity? So I think there's more than one way of looking at it, not not of just purely, like, I'm gonna replace Trello, but more like, hey. I'm I'm paying for an automation, and it could be as simple as, you know, Cloud Cowork can actually go into your email at noon and pull a a list of all the things you need to do. So I'm I'm I'm I'm always pragmatically, skeptical of everything, and so it's it show me, and let's continue to push the envelope and keep moving forward.

29:33 Great. Maybe just one last one for me, and then I'll I'll get back in the queue. But, Jesse, just on operating expenses, you know, they ticked up, I think, 8,500,000 ish or so versus the first quarter. Like, is is that the level that we should sort of think about for the next couple of quarters? Or or maybe maybe there was something kinda one time ish related to to to NextHome coming on board there? Just any kinda forward color on OpEx? No. Yeah. Thank you, Tom. We did we did hit the right end of our bookend, actually, 100 k over on on that, and we're all we're watching it very diligently. You you are correct, though. There are actually two one times in legal in particular. We note them in the queue that total to approximately $8,000,000. That said, you're asking about the the forward look. I would say, you know, you you use the guidance that we're providing. We we tightened actually even the bookends on on on our OpEx guidance for the back half of the year. So we wanna make sure that we're sharing that as transparently as possible and sharing what our modeling is showing with you all.

30:34 But we do see heightened legal costs continuing in the back half as also, and that's reflected in the guidance. Okay. Thank you very much. Appreciate it. And now I'll go to Mike Matt Filik from William Blair. Matt, you'd like to ask a question, you can. Thank you, Denise, and good evening, everyone. You have Matt Filik on for Steve and Sheldon. Appreciate the time. Somewhat related to Tom's first question, can you provide some more detail on how NextHome factors into the revised guidance? You delivered a pretty sizable adjusted EBITDA beat during the quarter, but then you narrowed the full year adjusted EBITDA range. So just trying to understand how that all pieces together.

31:22 Yeah. I can take that one. I'm actually glad for the double take. I regretted not explaining it a little bit further in detail. So we have revised the guidance. It now includes NextHome. I'll say there's hundreds of puts and takes into our internal modeling. Right? So we we did a lot of updates, but then we held the bookends on top line revenue, which is probably a part of what you're getting But NextHome now is included. When we say modest, we mean sub 10%, and you can think about that across categories, revenue, expense, key metrics. So NextHome is currently less than 10% of our business. I I look forward to the day where it grows beyond that, and we actually have to break it out and report it separately. But I'll I'll keep it to that high level for now. It's it's sub 10% to the contribution. It is reflected in the forward guidance, but it's not material to the overall business.

32:12 And then, Jesse, just as a quick follow-up to that, anything you can share about NextHome in terms of profitability? I don't think we're we're not breaking that out at this point in time. So, Leo, maybe do you wanna take it from the, like, the strategic play that we're we're going with next home in the multi model approach? Yeah. So I mean, Matt, I'm not sure that you're asking this, but this is the the question Jesse logged over to me. So when we look at the the financialization we're witnessing, so you've you've had private equity and public companies come together and now be multi brand. We we see a huge opportunity with upwards of 400,000 agents in franchises that may remain, you know, may be now curious as their franchise agreements come due. And so, you know, that next time acquisition was really important as a platform so we can now compete in the space that we think is gonna be ripe for opportunity. But as as Jesse commented earlier, the gross margin in that business is a completely different profile. So as right now, it's it's it's not adding meaningfully to the the contribution, but we we see that as a huge green shoot opportunity for both margin expansion, revenue expansion, and all of the opportunities that you can always click down on that. Okay. That's helpful, Leo. Thank you for that additional color.

33:25 And I'll switch gears for my last one. In the past, you've talked about using AI to reduce the cost of processing transactions. And we're just trying to get a read on what inning you would say you're in with those efforts, trying to understand how much opportunity may remain there. Yeah. I I I think the whole world is trying to solve that. I I definitely think directionally, there's still way more opportunity. And as every day, the models get stronger and better, there's also ways of improving the process. But I would say we're nowhere near to completely maximizing that opportunity. Okay. Very helpful. Thank you, Leo and team. I'll jump back in the queue. Alright. We have no further questions from the audience. So this concludes our second quarter earnings call. Thank you for joining and as always, stay up to date via our website, agnt.inc for the latest updates on news, results, and events. You could find a recording of this call and our latest investor presentation there too. Thank you all for your time.

34:28 Thanks, everyone. Thank you, everyone.