eXp World (NASDAQ:EXPI) Posts Better-Than-Expected Sales In Q4
Real estate technology company eXp World (NASDAQ:EXPI) announced better-than-expected results in Q4 FY2023, with revenue up 5.3% year on year to $983 million. It made a GAAP loss of $0.14 per share, down from its loss of $0.05 per share in the same quarter last year.
Is now the time to buy eXp World? Find out by accessing our full research report, it's free.
eXp World (EXPI) Q4 FY2023 Highlights:
Revenue: $983 million vs analyst estimates of $958.7 million (2.5% beat)
EPS: -$0.14 vs analyst estimates of -$0.05 (-$0.10 miss)
Free Cash Flow of $31.45 million, up 45.7% from the previous quarter
Gross Margin (GAAP): 7.2%, down from 8.9% in the same quarter last year
Agents and Brokers: 87,515
Market Capitalization: $1.71 billion
Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
Real Estate Services
Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
Sales Growth
A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one may grow for years. eXp World's annualized revenue growth rate of 53.6% over the last five years was incredible for a consumer discretionary business.
Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. eXp World's recent history shows its momentum has slowed as its annualized revenue growth of 6.5% over the last two years is below its five-year trend. We can better understand the company's revenue dynamics by analyzing its number of agents and brokers, which reached 87,515 in the latest quarter. Over the last two years, eXp World's agents and brokers averaged 21.7% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company's agents and brokers were less productive.
This quarter, eXp World reported solid year-on-year revenue growth of 5.3%, and its $983 million of revenue outperformed Wall Street's estimates by 2.5%. Looking ahead, Wall Street expects sales to grow 11% over the next 12 months, an acceleration from this quarter.
Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Cash Is King
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, eXp World has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 4.5%, subpar for a consumer discretionary business.
eXp World's free cash flow came in at $31.45 million in Q4, equivalent to a 3.2% margin and up 54.3% year on year.
Key Takeaways from eXp World's Q4 Results
It was good to see eXp World beat analysts' revenue expectations this quarter. Despite weakness in the residential real estate market, eXp World stated it gained market share during the quarter. The company also released a large number of its unproductive agents during the quarter, explaining why its agent and broker count came in lower than analysts' estimates. On the profitability side, things were less rosy as the company missed analysts' EBITDA and EPS estimates. Overall, this was a mixed quarter for eXp World. The stock is up 2% after reporting and currently trades at $11.29 per share.
So should you invest in eXp World right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
