eXp World Holdings, Inc. (EXPI) on Q2 2023 Results - Earnings Call Transcript
Operator: Good afternoon, and welcome to the eXp World Holdings Second Quarter 2023 Earnings Fireside chat via live stream and the EXPI campus, or Metaverse. My name is Denise Garcia, and I manage Investor Relations for eXp World Holdings. Today, we will begin our earnings fire side chat with prepared remarks from Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings; and CEO, eXp Realty; and Michael Valdes, Chief Growth Officer, eXp Realty, followed by a review of the second quarter 2023 financial highlights presented by Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings. Following our prepared remarks, we'll open the call to a Q&A session with eXp World Holdings covering analysts and questions submitted to eXp. Let's begin with a review of the forward-looking statements. There 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. Forward-looking statements are based on assumptions as of today, August 3, 2023, and the company undertakes no obligation to revise or update them. They say our filings with the SEC, including our most recently filed quarterly report on Form 10-Q for a discussion of specific risks that may affect our business performance and financial conditions. 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 just of you joining in the eXp campus today to see all 3 screens hit the stage zoom button to the right of your chat box to zoom into a specific screen, you can hit the plus icon above that screen. And if you happen to see no slides or a gray slide, hit the refreshed icon on the top right-hand corner of that screen to correct. While an eXp campus, should you need any help or have questions, please enter your comments in the chat box at the bottom on the left and a member of the team will contact you. For Slido, should you wish to ask a question during our presentation, you could enter your questions by scanning the QR code that's presented on the slide of screen. With your phone or go to slido.com and Type event code EXPI. From there, you can submit a question or vote up an existing question by giving a thumbs up. We'd also like that question to be asked. Gran 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, please go ahead.
Glenn Sanford: Can you hear us? I apologize. That was my bad. Everyone, thank you so much for coming today. Just as a quick review, eXp Realty is our cloud-based brokerage, and we have now 88,000 agents in 24 countries. We also have success enterprises, which we invested in, in 2020, I believe, and which is continuing to build out our coaching and training ecosystem. And Porbella is our Metaverse platform, along with a number of metaverse related entities inside of that company, which supports all of the things that we do as a company. We run with no physical offices, and we've been unable to grow all of our businesses without having to be dependent on bricks-and-mortar since inception, and Babel has been a big part of that story since we started using their platform in 2016. -- to actually look at a little bit of the highlights of the company. I'll take you through some of those before turning the call over to Michael Males to speak about growth in ancillary services and then Jeff Whiteside for a more detailed review of the financials. But the second quarter of 2023, we continued to grow a number of different parts of the business. But most importantly, we always work on the agent value proposition. That is eXp Realty being our largest business and the business that started almost 14 years ago with 24 agents, we've now grown to 88,000 agents worldwide. Our net income and adjusted EBITDA were both positive, and we continue to have solid financial profile with strong cash flow generation and a significant cash balance and 0 debt. And in international, also posted another record quarter, increasing 35% over Q2 last year and 42% year-to-date. Our core North American Realty business continues to be strong and profitable with unit growth and agent growth outperforming the industry. and North American or Realty, which is U.S. and Canada delivered $34 million of EBITDA in the quarter and $55 million year-to-date. This enables us to grow what we're doing at EXP and continues to strengthen our overall value prop. I believe this is also what's driving a meaningful increase in our quarter's NPS score, which increased from 68% in the second quarter of last year to 72% this year.\ And I'll talk a little bit about how we've continued to sort of build that out. We really do continue to invest in our agents, and that's really the big driver. When we think about what has been taking place over the last year or so, and we talked about this a little bit in the first quarter, early in the first quarter, we switched from cost cutting to actually more investment in actually growing out the ecosystem of EXP. And I think you're seeing that in both our agent Net Promoter Score, and you're also seeing in our employee Net Promoter Score, which has also been improving. And it really is around this whole idea of delighting the agent and supporting the agent. And so that -- we've also invested in a lot of traditional support services for our agents. So we now have 24-hour support for agents, whether it be transaction, new agent onboarding, et cetera. So there's a ton of support 24/7. We've also added a technology like Luna, which is our first AI-enabled tool that's built into a number of our different platforms, whether it be our workplace platform by Meda, our barbell and other places. So agents can get tons of support with a generative AI platform, which is doing a great job at providing first level support for agents and the range of questions and the accuracy and the support is pretty amazing what we've been able to do in a very short period of time. And so that really -- it's really increased dramatically that -- the use of that platform. We've also focused a lot on agent payouts and getting ages faster in some markets, especially in Canada, have been working on actually getting agents paid before even the company gets paid. And that has to do with some of the ways that that traditionally real estate has been done. And so we are bringing those fast pay features throughout the eXp ecosystem. We also now have -- from an NPS perspective, we have a 48-hour follow-up system. So if you're a detractor, meaning that you've given us a score of 0 to 6, we're following up with you very quickly. And we're building out any thematics from that so that we can continue to make sure that we're doing a great job. We've also added what our operations team is really proud of, which has the nobusters-hot line. So if you received a no from a part of the organization, you didn't actually believe should be now exabits actually incented to help you get those nodes turned into a yes. I talked a little bit about the 24-hour check-ins that we already have. And now we have a premier support desk for our agents, especially our icons and top producers and the like. So with that, let me actually, let's go to attrition and talk a little bit about that, and this is something we've been talking about now for about a year, I think, we've been talking about the attrition metrics. And our attrition right now, 75% of our attrition has been historically between 75% and 80% has been in the 0 to 2 category, and that's been for quite a number of years, and this quarter, no different. 75% of our agents were in that zero to two category. What's interesting to note is that our ES as a platform, we're actually improving for our top producing agents. So agents doing over 21 cells, and these are basically our Icon agents. We've actually become stickier since we started to report these metrics out. So originally, we're about, I think, 3.5x more sticky for the top producing agents than the bottom producing agents. We're now 4.4x as sticky. This is based on the number of agents in that cohort. So the agents churning there is significantly smaller as a percentage of that space than the other groups. So from a churn perspective, our top producing agents continue to have a very low churn -- so with that, let me go ahead and turn to Michael Valdes to talk about what we're doing to drive the agent value prop and ancillary services.
Michael Valdes: Glen, thank you so much. It's amazing. I'm sitting here and hearing our story of starting this 14 years ago with 24 agents, and it's extraordinary to think about that and where we've gone in such a short period of time. And really, it's my pleasure to talk about our last quarter with ancillary services and growth. So in the terms of ancillary services, our team is really focused on solutions that help our agents increase their value proposition and create amazing customer experiences for their end customers with products like home warranty, utility services, signed and home renovation pre-listing services. We're also in the process of a cost-conscious build-out of our mortgage business, and we're well positioned for growth. We're now licensed and operating in 42 states and success lending has actually tripled funded units and loan volume Q2 of 2023 over the same period last year. And we've launched our first local level EXP-endorsed title partnership with our top producing agents and already have 2 to 3 other JVs in near-term pipeline. So stay tuned for those announcements. And on our growth team, they're really focused on growing across all segments of our business. And we launched a couple of programs in Q2 to further drive the agent value proposition. The first thing that we launched was the BOOST program, which provides financial incentives to qualifying independent teams and brokerages that join EXP Realty. Now the program just launched on June 29. So it's still very early. But current applicants represent over 1,500 potential agents and over $3 billion of potential production. These candidates are moving through our approval process very quickly, and we have over 50 other candidates that are in various stages of our due diligence pipeline. And secondly, we reduced revenue share criteria to accelerate agent rewards at a time when other companies are actually rating their barrier to entry for many agents. We're committed to putting agents first and helping them focus on driving production. Now on the next slide, we're going to talk and turn our attention to what we've done on our growth-led events. So on the first one has been our top agent master mines. Now Leo Prihar, our Chief Strategy Officer and I have been on a bit of a roadshow following on what Glenn has done with his masterminds on our key events. And what we've been doing is meeting with our top agents, and these are the top-producing agents by production. We have been facilitating really deep discussions on core topics that are focused on driving growth, which has really been an amazing experience. And now we're actually proud to announce our very first EXPcontanada. This is the first Canadian conference that's in line with the country's strong growth trajectory. We have over 6,000 agents in Canada. This event will be taking place in Vancouver on September 6 through 8, and our speakers are going to focus on production, on technology and again, of course, on grow. Of course, we're doing our EXP con in Las Vegas on October 2 to 5, and our focus actually on that event will be on AI, which has been a key focus of ours. Glen alluded to our Apalon other deliverables that we've done. We're also going to be focusing on agent production, mindset and growth -- and finally, our regional rallies. These are our agent-led events, which will take place in November across the country. We're planning about 15 to 20 of them. It builds community. It celebrates milestones. It helps deliver education and training. Last year, we did -- gosh, I think about 3,000 or so agents that were touched during those rallies. So it's been incredible with our growth story. And with that, I'm going to let you get to the meat of this meeting with our CFO, Jeff Weinstein, to talk about our numbers. Jeff, over to you, sir.
Jeff Whiteside: All right. Well, thank you very much, Michael, and good afternoon all, and thank you for joining us today for our second quarter 2023 earnings call. Before I take you through the financials, I want to share a couple of data points regarding the current operating environment in residential real estate, continues to be under pressure as we all are aware. In terms of unit sales, Fannie May forecasted that Q2 2023, total home sales declined 17% year-over-year. This forecast compares to our business where we were minus 9% year-over-year decline in our ESP North American Realty business. And then in terms of agent count, so the unit sales and now we talked about agent, as account growth and our reported U.S. residential real estate agent declined in numbers by 1.1% from June year-over-year 2022 to 2023. And for us, North if our U.S. agents actually increased by 4% within our ESP North American Realty Group. ESP total agent count grew at 7% to $88,248, and we're now operating in 24 global markets year-over-year. So just at a higher level at the World Holdings level, highlight though as follows. Net income of $9.4 million, which was an increase of 1% year-over-year compared to the second quarter of 2022, while our revenue declined 13%. Operating income of $11.1 million reflect 8 basis points of year-over-year operating margin expansion. We also generated significant adjusted to $24.7 million, and that was driven primarily by North America Realty, which generated an adjusted EBITDA of $34.1 million, showcasing the resiliency of SB model well in a down market. And adjusted operating cash flow, which excludes customer deposits, was $64.6 million at the end of the second quarter in 2023. Now I'll review our Q2 financial feet segment on the next slide. On this slide, you can see our Q2 2023 segment revenue and adjusted EBITDA for our 4 business segments and a breakout of our corporate allocations. Our North American Realty segment is again the primary driver of revenue at $1.2 billion. And as I mentioned in the previous slide, the North American Realty segment remained profitable with $34 million in adjusted EBITDA. International Realty had another record quarter, increasing revenue by 35% year-over-year to $12 million. Gabella contributed a modest amount of revenue and improved its EBITDA loss by approximately $1.5 million year-over-year in the quarter. Our affiliate Services segment also contributed a modest amount of revenue. And with the corporate eliminations, we consolidate to $1.232 billion in revenue and $24.7 million in adjusted EBITDA in Q2. On the next slide, I'll review our financial details on a consolidated basis. lot of numbers on this slide, but -- and we talked about some of them already, but on a consolidated basis, we've increased our agent NPS as Glen was talking about from 68 to 72 quarter-over-quarter versus 2022, while also at the same time, adding agents despite a tougher macro environment, unit sales were $137,199, as referenced earlier, and that's a 9% drop versus a 17% drop in the industry. We saw our price per unit drop 8% from $30 $354,000. Revenue was $1.232 billion, as noted and decreased 13% year-over-year. Gross margin dollars decreased 10%, while gross margin percentage increased 30% due to lower transaction volume. SG&A decreased minus 11% due to slowdown in hiring, decreased marketing spend and a reallocation of agent growth incentive stock compensation expense that we discussed in detail in Q1. Net income grew 1% to 9.4%, as I mentioned. We generated $24.7 million in adjusted EBITDA. Our cash flow was $64.6 million, and we ended the quarter with $124.7 million of cash and cash equivalents in our bank. Finally, on this page, we increased our dividend 11% in the quarter to $0.05 was $0.45, and that's going to be effective in the next payout. So going to the next slide, we'll take a look at our year-to-date segment. And this slide details our segment revenue on a year-to-date basis and our adjusted EBITDA for each of our 4 business units. On a year-to-date basis, North American Realty is down 15% compared to our first half of 2022, with over $2 billion in revenue and $55 million in adjusted EBITDA. International Royalty revenue was up 42% year-to-date with a record $22.7 million of year-to-date with a record $22.7 million in revenue. And as you can see, we continue to invest in International Realty. Belle is up 3% year-to-date compared to the same time period last year and improved its EBITDA loss by approximately 55%. And revenue in the other segments is up 46% on a year-to-date basis, the $2.7 million with an adjusted EBITDA down 17% to 1.8%. And this is where we're investing again, as Michael mentioned, with some of the programs we have in his presentation. On my final slide, we'll look at agent and revenue growth over a rolling 5-year period. So the final chart here, the chart was getting pretty difficult to read. We had all almost from the beginning of time. So we've shortened it and the time line to a 5-year rolling basis, but the story is still the same. Historically, we've grown agents and revenue. And even with recent market conditions impacting revenue, we continue to increase EXP's agent count, which grew at 7% on a year-over-year basis this quarter. We continue to have 0 debt on our balance sheet and are proud of the results we produced for our investors over the short, medium and long term. Term for the second quarter of 2023, although our revenue decreased year-over-year driven by a volume slowdown across the industry, we outperformed the industry and while continuing to invest in future growth priorities and delivering profitability comparable to the second quarter 2022, when the revenue was higher. With that, I'll turn it over to Denise for Q&A.
Operator:
A - Denise Garcia: Great. Thanks, Jeff. So let me kick it off with a question for Glenn before we open the call to our covering analysts. First one, regarding NPS, we had just a big increase this quarter. What do you think has the biggest impact on driving NPS?
Glenn Sanford: I think there's been a number of things. One, we've been making an investment in growth since the beginning of Q1. And as I alluded to comments, that's been really helpful. But I think more important is the way our entire brokerage operation and organization has really rolled around supporting agents in real time. And with the rapid growth that we have had for many sequentially we were throwing bodies at the challenge and not being a systematic in how we solve for agent challenges. And I think one of the things that the slowdown of the housing market has given us is also given us the opportunity to retool and to really think particularly on what are the best ways to support agents that are out there listening and selling homes and providing them with the services that they need in real time. And so that, I think, has really worked well. And then also getting this down to the individual brokerage units for individual states, regions, cities, et cetera. I think there's been a really a buy in to understanding what that really means and how they are empowered to actually solve challenges even better than maybe they were before. Some of it has also required us to turn over some of our staff so that we have staff that's both confident, but then also staff that is truly engaged with the agent in a constructive way. And sometimes those 2 people don't live in the same body. So we've had to make different changes from time to time to make sure that we have the right people on the right seats on the bus.
Denise Garcia: Great. That makes sense. All right. Let's present up. Why don't we take our first question from John Campbell from CVS. John, go ahead.
John Campbell: Good afternoon. Thanks for having us. I want to touch on the lower revenue share criteria. I know you guys are obviously pretty hell bent on enhancing that agent value prop, we can see that pretty directly to the positive effects on the Asian NPS. So I get why you did it. But my question here is what led up to the change or maybe why now? And then Beth, just kind of separately, I'm thinking this is probably not going to have a huge influence on gross margin, but just kind of want to get your latest thoughts on what that impact might be.
Glenn Sanford: Yes. So we're continuing to listen to the agents and one of the -- and they are also -- our agents are in it to win long term with us as a brokerage platform. So we -- some of the feedback came from our agents as to things we could do to make the model a bit better from their perspective as they're out there growing their organizations inside of EXP. Jeff can certainly comment to the financial impact. But one of the things that hasn't changed at all is what we put in place in late 2019, which is our 50% of whole company dollar is paid out in the form of rev share. And so we adjust the rev share payout such that every month, we pay out exactly $0.50 a company dollar in the form of revshare regardless of any of the little inside minor tweaks that we might make. So -- that's kind of the initial commentary. And so John, so there is -- so there won't be any impact on the financials for the change. It's basically -- it's a reallocation of the 50%.
John Campbell: Got you. That makes sense. Okay. And then...
Glenn Sanford: To add one other thing. It also allows our leaders to focus within their own organizations to put more time into making them more productive as well, which will also increase the agent PPP.
John Campbell: Okay. Well, that makes sense. I appreciate that. And then on the AI work that you started, that sounds pretty interesting. It sounds like at least for now, that Luna is going to be geared more towards kind of that internal agent support. And Glenn, I know you guys have spent a lot of time and effort on kind of improving that onboarding process. I imagine that's going to be hugely helpful there. But I'm curious, Glenn, I mean, you do tend to think big, you've got pretty grand aspirations. So I'm curious what you think Luna might be able to become one day, if you ever really envision agents using that directly or if it's sitting one day in between agents and consumers. Yes. I mean there's elements of AI that's sitting between agents and consumers right now who are inside real estate, KB COR. We've got innovation work being done inside of Zucasausing AI. So there will be some AI components for sure between our web experience and the consumer experience, where I think there's a lot of really interesting stuff is with regard to transaction processing and brokerage review of contracts and sort of what does that look like -- in the future, we'll still have the same individuals that are required by law to be in place, but their roles are going to be significantly enhanced by AI. We heard even before we went down this road, but even a couple of years ago, where legal AIs were catching things legally at a higher rate than humans were in terms of just understanding of contracts and what's in there and all that. So AI is going to be hugely beneficial in the transaction process workflow over time. And then I do think that, that, again, simplifies both improve the engine experience. simplifies the brokerage management piece where it's more managed based on actual real estate law and based on what one person's maybe leaning to being conservative or liberal interpretation of what real estate law is. And so I think there's just a lot of good stuff that's going to come out of that from a brokerage throughput perspective. So I think there's a lot of good stuff that's going to come from AI. What it's going to be, I think it's very experimental at this point. We don't have enough data to say that it's when that's going to become a reality. But we are playing with it, and we've got a number of different teams working on various AI initiatives. Sure. Thanks, John. So why don't we take the next question from Matt Cilik from William Blair.
Matt Cilik: Glenn and Jeff. [indiscernible] I was wondering if you could provide some more color on your recent initiative to attract larger broker teams, thinking of things like the types of teams you're looking to attract, what the offer terms look like and what it could mean for agent growth over the near and long term?
Glenn Sanford: Yes. So we talked a little bit about -- Michael talked about the Boost program. And what we've done with the Boost program is we've actually memorialized a lot of the things that we were already doing when brokerages were looking to convert meaning that oftentimes, they would come in, but we'd have to sort of negotiate to some numbers. And sometimes they wouldn't even start the discussion because they didn't know if there was any flexibility around our model to really invite them in. So we've done a couple of things. One is, in order to get to the numbers stage, we actually have a cultural questionnaire that a broker owner needs to actually go through and answer. And it really has to do with the fact that we want them -- we know that there is a continuity of leadership need necessary for transitions from agents being underneath one broker or independent brokerage over to EXP. And that is that the leader they bought into needs to be bought into what we're doing here, and they need to be part of the growth story of EXP going forward. And if they're not committed to being part of the growth story of EXP, they're not culturally aligned. And we've done -- we have enough experience around this to have seen when people are culturally aligned and those that are culturally not and they're just dropping their agents off and hoping they make money off of revshare, et cetera. And so the whole idea is to really attract the right type of brokerage to EXP that wants to actually help grow EXP that understands our mission, vision and values around our agents and then are wanting to actually take a go on the journey with us growing EXP. And so that's really at the financials. We're able to provide some pretty good numbers to these broker owners because we're able to value the agents as individual agents even if they as broker owners weren't able to run profitable real estate brokerages because of a tougher market. And so we're able to give them some good transition money to actually transition their agents over. And as I think Michael alluded to, there's a number of agents in the pipeline. I don't know if you mentioned that number, but Michael, maybe you can talk a little bit more about how much has happened. Yes. What we have in the active pipeline has about 1,500 potential agents and close to $3 billion of production from what we have of people that have raised their hands already. And to Glenn's point, when we're looking at a market that's tightening at this time to really have an independent brokerage, they're running on thin margins as it is. And so when you're looking at their entire OpEx, when you look at our platform, we're a very viable solution for them, which allows them a global platform by which they can continue to grow their business, and those agents are very much attracted to that deliverable. So we do expect this to be a very viable part of our growth. That's a tremendous overview. Very helpful. I wanted to ask one on success lending. I know that success has been more of an expense line as you build out capabilities and market conditions remain challenging. But when do you think that could become accretive? And then as a second part of the question, just curious on how many loans are currently coming through on a monthly basis. Yes. The -- relative to when it should become accretive in all likelihood next year 2024, it will be accretive. This is -- there's definitely -- I think the loan apps are up 2 to 3x what they've been earlier this year. We're talking -- and maybe, Jeff, you've got the more specific numbers in terms of loans closed. I know those numbers are growing pretty rapidly on the platform. So -- but they are -- is growing rapidly on fairly small numbers at the moment. So maybe Jeff, you've got any more On a year-to-date units are somewhere around 500 units that have gone through the system and they're in different stages, but that's -- no, we were initially doing somewhere around 10 loans per month. So the rates are going up. And I would -- with Glenn's statement on, I think, next year, the business should be turning around and for the company. I'll jump back in the queue. Thanks, Matt. We also have a question e-mailed in from of our analysts who couldn't be on stage today, Tom White from D.A. Davidson. He asked, should we -- this is for you, Jeff. Should we expect a similar step-up for the remaining quarters of this year in terms of G&A expense? Or is this a good level to model the third and the fourth quarter?
Glenn Sanford: So to answer that question, Tom. So there's 2 things that happened from Q1 to Q2. The biggest drivers of the G&A going up was the the investors event that we had to our shareholders' event. So that was it was an increase in cost. And then the second one is the merit increases that hit in the second quarter. So if you look at what we have -- we did $85.4 million in SG&A. And that's around -- that's kind of around what we're seeing for the rest of the year. And again, we say this every time we talk about SG&A. If we have an opportunity to invest the cash to grow, we're going to do that. But that 85.4%is kind of in the range of what we're seeing... Great. All right. And I also had a follow-up question to that, which were -- what are the biggest sources of incremental operating expenses, investments since Q1? Are you mostly invested in the core U.S. brokerage? Is it international mortgage?
Glenn Sanford: Yes. So biggest investment that we have going right now is international kind of all the investments we have. So that would be above and beyond what we're doing in the core business. So look, we kind of look at the core business that we're going to fund that, and we're going to make sure we have the right NPS and the right support network in place to do that, both from a broker-dop standpoint, technology standpoint, but are above and beyond investment. The largest one is still going to international time. And that's kind of -- that hasn't changed from the last, I'd say, 4 quarters. All right. Great. Also, Alliance as a reminder, if you want to ask a question via Slido. There is the code up on the left-hand screen if you want to download that or go to slido.com, ESP and submit a question. We do have another question from one of our newest covering analyst, Soham Bosley at BTIG. He e-mailed in his questions as well, and he asked a question on agent productivity. He was asking about this metric that he continues to decline in line with some market transactions. So what steps are you taking to improve the agent productivity metric going forward? Yes. Well, we're definitely investing in technology and tools. The success side of the house, we've now partnered with with a number of top coaches and trainers, bringing them into our ecosystem. We've been doing touched on the master mines that we've been doing with our agents to help them be more productive. Our regional rallies are around production lotmost of our events are around production. And then we've got literally 80 hours of available training in world and online every single week for agents in various different parts of the business. We now have at least, I think, 2 different podcasts going on from members here. Actually, I think, Michael and I both do podcasts along with a number of other agent productivity podcast done by our agents for agents to help support agents. So -- there's a ton of coaching and training master mining going on, and that's where recall most of the business has been improved where agent is an intend contractor. So they have to opt in to a large extent, proving their business. But if they opt in, we have something for them to opt into to take their business to the next level. We also have a 30-, 60-, 90-day program that we've initiated as well as well as the kickstart program for those that are either new to EXP, new to the industry or both and also how they can have their path and journey to productivity. So everything that Glenn just said, we've got a very formalized plan for that and continue to do so as we continue to build the program out with our ESP University and other resources. And I think we have a follow-up question from John Campbell Stephen.
Q – Unidentified Analyst: I had a question that was kind of related to the one you just answered. On the agent productivity, I'm actually seeing the opposite. It looks like that you guys, from a transactions per agent standpoint, it looks like you outperformed the market by a pretty wide measure this quarter. I mean, obviously, it's down year-over-year. Just given transactions, it looks like you did outpace the market. My question here, and I've been kind of curious about this the last couple of quarters. You guys keep citing that about free force of attrition is largely coming from those agents doing 0 to 2 transactions. I would think maybe from a mix shift standpoint, that would be helpful for overall productivity. But also, what I'm curious about is how long do you think that you see that kind of heightened attrition in the lower end? I know it usually takes a little bit of time people have annual dues coming up, that usually could be kind of a moving point for them to maybe move off the platform. But I'm curious about how long do you think that ends up being a bit of a...
Glenn Sanford: Yes. Well, I think -- so 1/3 of our agents historically have joined our brand-new agents and about 80% of those agents historically haven't made it to their first renewal. So you can just think about that's a big amount of churn that comes from that group just automatically because -- and so that will continue to be the case. But because we are stickier, the more productive you are on the platform, there is a bit of a -- it will just improve over time just based on us continuing to support agents as long as we continue to be the best place for top producing agents to hang their license. So we think that, that will be the case. The other thing that happened is that over the last years or so, let's say, since Q1 of 2022, the 0 to 2 cohort has increased in terms of the size of people in that group from agents who previously maybe were selling 3 to 4 homes. And now they're having trouble finding doing even the 0 2. So down. And so when the housing market picks up, there's some of those gets who would be marginal in that 0 to 2 category are going to find it easier to do their third and fourth transaction and fifth transaction, et cetera. So right now, we're still in this market that's generally pretty tough. We haven't seen the attrition in the industry overall that would be reflective of the real estate transactions going on. So I certainly expect there to be a fair bit more attrition. And for a number of reasons, including having a pretty robust economy even considering the -- what's going on in the housing market. I think that just that as well supports the notion that part-time agents can still have another income and have a real estate license, not feel the need to hang it up. So there's just a few different dynamics that are going on. But I do expect that there's going to be fewer agents in the industry. In the next 12 months, we're seeing some pockets where renewals are being imposed based on a 6-month lagging renewal cycle, where we're seeing agents have to lead the business because they're refusing to pay their dues and they're not making any money. Right. With no other questions on Slido. I think it's a good time to remind everyone that our first EXPO Canada will take place in Vancouver, September 6 through 8 this year and the annual EXPO event that Michael had mentioned will be in Las Vegas, October 25. So please register at exponcanada.com or expecon.exP Realty to join us. And as always, please stay connected by visiting expworldholdings.com for the latest updates on AXP news, results and events. And additionally, you'll find a recording of this call and our latest investor presentation on the Investors section of the site. Thank you for joining us today. Denise Garcia This concludes eXp World Holdings second quarter 2023 earnings fireside chat. Thanks, everyone.+
