Q3 2023 eXp World Holdings Inc Earnings Call

Participants

Glenn Darrel Sanford; Founder, Chairman, CEO & Treasurer; eXp World Holdings, Inc.

Jeff Whiteside; CFO & Chief Collaboration Officer; eXp World Holdings, Inc.

Leo Pareja; Chief Strategy Officer & President of Affiliated Services; eXp Realty, LLC

John Robert Campbell; MD & Research Analyst; Stephens Inc., Research Division

Matthew R. Filek; Research Analyst; William Blair & Company L.L.C., Research Division

Soham Bhonsle

Denise Garcia

Presentation

Denise Garcia

All right. Well, let's get started. Hi, everyone. My name is Denise Garcia, and I manage Investor Relations for eXp World Holdings. Welcome to eXp World Holdings third quarter earnings fireside chat via livestream in EXPI's campus or Metaverse.
Today, we'll begin with our earnings fireside chat with prepared remarks from Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings and CEO, eXp Realty; and Leo Pareja, Chief Strategy Officer, eXp Realty; followed by a review of the third 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 Q&A session -- 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.
Great. 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. Please see our filings with the SEC, including our most recently filed annual report on Form 10-K 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 expworldholdings.com.
Now for a few logistics [and] we'll get started. For those of you joining in the EXPI campus today, (inaudible) 3 screens in this page Zoom button to the right of your chat box. To zoom into a specific screen, you can hit the plus icon above that screen. If you happen to see no slides or a gray slide, hit the refresh icon on the top right-hand corner of that screen to correct. While in EXPI campus, should you need any help or have any questions, please enter your comments in the chat box at the bottom on the left, and a member of the team will contact you.
Should you wish to ask a question during our presentation, you could enter your questions by scanning the QR code presented on the screen with your phone or go to slido.com and type in the event code, EXPI. From there, you could submit a question or vote up an existing question by giving a thumbs up. We'd also like to have that question asked. This screen will remain up on the left-hand side of the page.
Now I'll turn the fireside chat over to our speakers before opening the call to your questions. Glenn, you can go ahead.
Glenn, I think your mic might be off.

Glenn Darrel Sanford

It is. Sorry about that. I had a lot of great things there. Hey, everyone, thanks today for joining us on our call during our third quarter. I'll discuss some of our business strategy before getting into some of the highlights for the quarter and then passing on to Leo and Jeff, who will take you through the financials.
First, as you know, we began sharing business segment information on our fourth quarter earnings call last year. So you can actually see the profitability of eXp North America, which as you'll know when reviewing, the Q really enables us to invest in the growth areas of the business that we think are worth investing in. So eXp Realty includes U.S. and Canada, and we're the largest single real estate brokerage in the U.S. by transaction volumes. So I'm really proud of that success that we've done in really a very short period of time, 14 years.
Our success in North America enables us to expand in international markets where we operate in 24 markets today. We see international as the largest driver of future growth for the company. And this quarter, we grew our revenues by 47% and reached a record $15 million in revenue.
One item to note is yesterday's press release about homehunter.global, which is a partnership that we put together to actually create a differentiated consumer experience for buyers and sellers who use the fragmented website network that most other countries have to help streamline their search experience. So we're excited about some of the new innovations there.
While small today, Revenos and our other various affiliate services are gaining a lot of momentum and represent really meaningful incremental dollars and margin per transaction in the future. Leo will discuss a few of those programs we've added recently and the traction we're generating. These are -- these represent our path to growth and overall revenue generation. While the business areas on the next slide have enabled us to drive the agent value proposition, build out a cloud-based asset-light model and ultimately drive the success of North America and the international realty businesses.
So on to the next slide. We are constantly iterating to improve the agent value proposition by developing an ecosystem of personal development, health resources and media like Success Magazine. And [as] this past quarter, on the eXp Realty side, we actually appointed Bryon Ellington inside of eXp Realty as our Chief Learning Officer, responsible for developing custom agent-driven training and coaching while preserving the other aspects of personal development to the Success brand.
Our enabling technology platform, obviously, Virbela where you are now, and in the future, (inaudible) support our cloud-based brokerage model that allows us to engage and interact and have a sense of place while running entirely remote. This next quarter -- well, this quarter Frame is really getting to that enterprise-ready scale. And in next quarter, when we do our next earnings call, we'll be hosting that earnings call actually in Frame, so users can access the call within their browser or on mobile rather than having to download the Virbela software to their personal computer. So we're really excited to do that with you and to see how we can actually make eXp even more (technical difficulty)

Leo Pareja

I just chatted with Glenn. It looks like he had a technical problem with his computer. He's rebooting it. Denise, why don't we just [forward] on to my slides, and then me and Jeff can take over and Glenn can come back in?

Denise Garcia

Yes, that sounds good. I think Jeff might be having technical issues. What we might want to do is pause for 5 minutes and reconvene, and then come back on stage.

Leo Pareja

Sounds [good].

Denise Garcia

Okay. Great. Let's go to the green room, and we'll be back to everyone in about 5 minutes.

Glenn Darrel Sanford

And if we jump to the next slide around outperforming the industry, we've continued to outperform the industry…

Denise Garcia

Apologies, Glenn, you cut off speaking about Frame. So [Agent NPS] hasn't been addressed yet.

Glenn Darrel Sanford

Okay. So, thank you for that. So, going back to Frame, this quarter -- well, and this -- of course, we had a little hiccup with Virbela and my connection. But in the next quarter -- when we do our next quarter financials, we're actually going to do it in Frame. So you get a chance to actually see -- which is actually accessible via mobile as well as your desktop, and it doesn't require the download. So pretty excited about that going into next year. We're going to be using Frame more and more internally for the company.
And then we're also continuing to work on the NPS side of the business. And that's really the big driver. That ultimately drives where we're going. So we -- I talk about NPS all the time. We just added Fred Reichheld to the Board who is actually the inventor of [our] Net Promoter Score, and we take it very seriously. And I think it's one of the reasons why we've continued to put up good financial results and to continue to grow. And you'll see that we've got a few segments that we've broken out this quarter from a digital perspective, U.S., Canada and global, and all are continuing to trend in the right direction. And overall, we have a 74 NPS score, which is indicative of that continued investment.
So we've got our operations team led by Patrick O'Neill who has really done a phenomenal job of building out a much more quality connection with our agents from an ops perspective. Our leadership team is in the field doing lots of events. We've got regionals going on over the country right now this week and next week, I'm traveling to a number of them. We've got our leadership team playing around as well. So we continue to really invest in the agents, which ultimately leads to our long-term value prop.
It's no secret that we continue to operate in a challenging market. U.S. residential transactions continue to be pressured by rising mortgage rates, which recently exceeded 8%. And overall, real industry transactions were down over 15% year-over-year during the third quarter and nearly 20% year-to-date and eXp Realty's U.S. residential real estate transactions were down 8.6% in Q3, which was 43% better than the industry. While industry transactions have decreased year-over-year, and -- in the third quarter, we've maintained a market share of 4.2% in the U.S., which really means we've increased our market share by around 8.7% on a transaction basis.
So this performance is largely due to our continued ability to increase loyalty scores with our agents AKA our -- and Net Promoter Score and retain productive agents, which I'll discuss in the next slide.
Consistent with previous quarters, and we started to do this quarters ago, we started to show the churn rate based on cohorts. And most of our attrition really is taking place with those agents doing few to no transactions. That's a 0 to 2 transaction per year category, and also is the category which has the shortest tenure in the business and on the eXp platform in general. These are new agents and there's -- 80% of agents don't make it through their first renewal in -- relative to the real estate license.
So there's a lot of churn there. However, if you look at overall, our most productive agents actually continue to be stickier and stickier on the platform. And so they're 4.5 times less likely -- or the lowest producing agents are 4.5 times more likely to drop out than our top producing agents. And this is a fairly linear progression. So if you look at 3 to 7, 8 to 12, 13 to 20, each one of them gets better and better in terms of stickiness of the platform.
So -- and now I'll go ahead and turn it over the call to Leo so he can talk about how we continue to improve the agent value prop and to grow the business through new programs and ancillary services.

Leo Pareja

Thank you, Glenn. Thanks, everybody, for joining me here today. One of the things I'm most excited about is that we have the ability to retain our most productive agents because we can listen to them. So I take quite a bit of pride in that 3 of the C-suite folks who run this business who are highly productive agents, and Glenn, myself. So when agents come to us with ideas, we can iterate and launch very, very quickly. We're launching 2 programs in early of the fourth quarter, and I'm going to talk about those because I'm really excited about the potential that, that drives for the agent value proposition ultimately -- and ultimately, revenue.
These programs demonstrate that we're leaning in at moments when other companies are leaving and we have the best solutions for independent brokers and large teams. Last week, we announced Thrive, a new program focus on incenting teams to join eXp through an equity participation. This program helped attract Justin Havre and associates, we just announced yesterday. Justin was Canada's #1 RE/MAX team 5 years straight, bringing a staggering record of $4 billion in sales since 2016 with them to eXp Realty, where he and his team of 60 agents and 18 support people have just joined us.
And we launched Boost in the third -- in September, and it's been phenomenal. So our first Boost recipient is The Bean Group in Boston, Michael being founder of the company in 2003, grew it to an independent brokerage of over 20 offices with hundreds of agents, more than $2 billion in annual sales when he joined us. In the last 45 days, this group has transitioned 425 of those agents with more to come. And then we just recently also announced our second Boost recipient, which is equity Forbes Global Property affiliates that's owned by Mike and Tara Shapiro and Karen Weinberg. They were formally the second largest Sotheby's affiliate by volume in the Southern California region. And when they sold the Sotheby's affiliate, they were doing about $7 billion in business.
So Tara comes with a very storied history in Newport Beach. And since she joined about 1 month ago, about 65 agents have transitioned with [him] from side. So we're extremely excited of what the Boost program is delivering as we imagined it.
The second program that I'm extremely excited and energized around is eXp Exclusives. We launched on October 3, and we're getting thousands of downloads from our agents. It goes without saying that I'm a firm believer that the highest form of marketing a property is exposing it to many eyeballs as possible through the MLS and syndicating to portals.
But with that said, we understand that there are situations where seller may not want to enter our property times due to restrictions and showing it with unique scenarios. For example, a new construction property that's not safe to enter, a tenant occupied property where the seller doesn't want people on the door and disrupting their tenants.
So our agents have asked -- I would say that, that was the [#1] requested technology feature, whatever we want to categorize it as, since I joined the company. And we are living through unprecedented times. The low inventory is something that hasn't been seen in recent history. So eXp Exclusives is an example of iterating fast and helping serve our customers, which are the agents with the best class of tools so they can serve their customers, the clients.
So I want to quickly give you guys an update on Revenos. Now, it's a corporate referral program that I announced about this time last year, that's gained fantastic momentum since we launched it. While still early, we're building tremendous traction as evidenced by year-over-year traction growth of 84% in closings and about a 5x growth on the top of the funnel in the referrals. Revenos is helping us better monetize our transactions while adding incremental margin. And although it's still early, I'm excited about the growth trajectory of the solution.
Most of what I've discussed in this slide is still early days. But what's exciting that we can see on this next slide is that we're starting to get the recognition that we should for our size and scale. I think for the first chapter of our story, we've been known for our organic growth model. And a lot of times agents just saw us focusing on recruiting, but it goes without saying, we are now the leader in so many categories. We're the #1 growth leader in year-over-year sales volume, transaction volume and agent count by T3, T360, #1 in size, #1 top mover in [size] in sales volume and we're the #1 independent brokerage according to RealTrends 500, and we're the #1 brokerage in transactions and sales volume by the power broker and its list, and it's nice to be recognized by our industry for all of our hard work.
I'm excited about all the new agents and teams and independent brokers that are joining while adding to this momentum and building in this time, that's so important to the future of our growth.
So with that, I'll hand it over to Jeff to discuss our third quarter financials before opening up the call for questions and answers with everybody. Thank you.

Jeff Whiteside

All right. Well, thank you, Leo. Thank you, Glenn, Denise. Appreciate it, and thanks for everybody joining us today.
I'm going to take you through our business financial highlights for the third quarter and provide more details on the third quarter by business segment before we open up the call to questions. So if we just stay with the first page there, in the third quarter, we continue to grow agents and now over 89,000 agents. Worldwide, as Glenn mentioned before, our NPS score increased to 74 from 71, which is a big deal for us as a company, and that's what we pay really close attention to, and that's how we run our company.
International has the best quarter ever, growing 47% over Q3 last year. And we made further progress, you'll see when you see the EBITDA numbers towards getting a breakeven in international. So it's getting more profitable as time goes on. Adjusted EBITDA was up 53%, and we generated a positive GAAP net income during the quarter. We continue to run the business with 0 debt, and we ended the quarter with $120 million in cash. So we pretty much started the year with about $120 million of cash. We went through a year -- a much lighter year from a volume standpoint, and we're still at that $120 million cash number.
Turning to our core North American Realty segment. Adjusted EBITDA was 21% -- it was up 21% year-over-year to $27 million. And we talked about this quite often through the years is that we're very fortunate to have such a strong business that enables us to grow the platform and continue to strengthen our agent value proposition. So they're still doing extremely well and continue to grow. So we -- as Glenn mentioned also, a very, very difficult, challenging market. And so the overall results of the company, we're very proud of.
If we go the next page, please. And when we look at some of the market conditions. So just a couple of comparables before we get into our specifics on our numbers. In Q3 2023, total home sales declined 15%. So if you compare that decline of 15% to our U.S. residential sales transactions, we declined at 9%. And then if you look at our North American business, which includes the U.S. and Canada, we declined at minus 6% versus that minus 15%. So we are doing better than the market. Obviously, we want to get back on a higher growth rate. But compared to the market, we're doing well.
Additionally, when we think about real estate agent count, in our statistics that we see is that the agent count declined 1.3%, and our year-over-year increase in U.S. was 2%. And our overall year-over-year increase was 5% on a global basis. If we look at the eXp World Holdings level, net income was $1.3 million, decreased 69% year-over-year compared to the third quarter of last year, but that was entirely based on a tax benefit that we can get in this quarter of this year. So last year, we were basically breakeven in the quarter. So this year, we were at $1.3 million of net income. And operating income was $1.9 million, and that actually reflected a 15 basis points year-over-year operating margin expansion.
We also generated $19 million of adjusted EBITDA in the quarter, driven by North American Realty and adjusting operating cash flow was $56.7 million for the quarter, right? So now -- what I'm going to move over now is to review our quarter financials by segment.
And on this slide, you can see our Q3 2023 segment revenue and adjusted EBITDA for each of our 4 business segments and we break out our corporate allocations on the far right. Our North American Realty segment, again, a primary driver of revenue at $1.2 billion. The North American Realty segment remained profitable on an adjusted EBITDA basis of $27 million. International Realty, as I mentioned before, we had another record quarter, increasing revenue to 47% -- by 47% year-over-year and then a positive 43% year-over-year variance in adjusted EBITDA. And that kind of shows you that we're getting towards that breakeven status that we're looking for.
Virbela contributed modest amounts of revenue and improved its EBITDA loss by approximately $1.9 million. The other segment, which is primarily SUCCESS, also contributed modest amounts of revenue as it continues to build out their programs.
On the next slide, I'll review our financial details on a consolidated basis. So we mentioned the NPS at the top, the -- going from 71 to 74. Our units sold were up 1%. Our total units sold were up 1% year-over-year at 139,480. While our price per unit and our volume were both down 4%. Our revenue was $1.214 billion versus $1.239 billion, a decrease of minus 2% year-over-year. Gross margin dollars decreased by 10%, while our gross margin percentage decreased by minus 8%. SG&A decreased minus 12% due to reallocation of our agent growth incentives that we've talked about through the last couple of quarters, and a slowdown in our hiring.
Net income decreased, as I mentioned before, but that was primarily driven -- solely driven by a tax benefit that we got in Q3 of '22. We generated $19 million in adjusted EBITDA, adjusted operating cash flow of $56.7 million, and we ended the quarter with $120.1 million in cash and cash equivalents. Finally, we repurchased $55.9 million of stock during the quarter.
Now I will take you through our 2023 year-to-date results by segment. So this is a year-to-date chart, the same 4 segments [and] the corporate eliminations. And you'll see, on a year-to-date basis, our North American Realty is down 10% compared to the first 9 months of 2022 with over $3.2 billion in revenue and $82.5 million of adjusted EBITDA. International Realty revenues up 44% year-to-date to a record $37.6 million. And as you can see, we continue to invest in International Realty, it is our big growth area of the company.
Virbela's revenue was down 8% year-to-date compared to the same period of 2022, but has improved its EBITDA loss by about 56% year-over-year. And revenue in the other segments is up 13% to-date to $3.7 million, and our adjusted EBITDA was down 29% to a loss of $2.8 million adjusted EBITDA as we invest in these programs to drive our growth.
Now on the next and the final slide before we get to questions, we'll look at our agent revenue growth over a rolling 5-year period. And as you can see, we've had extraordinary growth for the first 4 years. We've -- it's been a very tough market for everybody. But as you can see from the chart, we're starting to come back up. And historically, we've grown at a much higher rate. But even in our recent market conditions impacting revenue, we've continued to increase the eXp's agent count, which grew 5%, as I mentioned before. So overall, a strong quarter for us in a very tough environment.
And with that, I'll turn it back to Denise for Q&A.

Question and Answer Session

Denise Garcia

Thanks, Jeff. I'll kick off with a question for Glenn before we open the call to our covering analysts. First, Glenn, can you share your initial reaction to the ruling on the side of (inaudible) that was announced on Tuesday?

Glenn Darrel Sanford

Yes. Well, it's been certainly a big part of everything that's going on in terms of just conversations in the real estate industry. It's one that we're still kind of processing, just understanding the initial ruling. We -- of course, we built as a unique business model starting in 2014 -- 2009, we're now about 14 years old, kind of grew up in a unique industry. I actually started out as a buyer's agent for my first 5 years in the business, which is kind of interesting because I see buyer agency as being a very valuable tool for buyers. And I'm concerned, quite frankly, about what this might mean to buyers who may not be able to afford representation if things change up too much.
So it's definitely something that's top of mind because I believe in buyer agency for all of my career in the industry. However, obviously, a very competitive industry. There's always things going on. There's always disruptions and things are always changing. So at the end of the day, we're about really 2 things. We're about real estate agents being able to build rewarding careers in this industry in real estate. We want to make sure that we continue to provide the relevant tools, systems, training, coaching, what have you. And we're -- we couldn't do this without representing consumers on both the list side and the buy side at the best of our abilities and to figure out how to do that.
So that's really where our focus is. And obviously, it's too soon to sort of comment on how we're going to navigate. I feel like we've been operating in a very highly -- with high integrity in this industry, and we will continue to do so. And so now it's just a matter of seeing what next steps are in this business of real estate.

Denise Garcia

And so I'll go to the analyst. I think Matt Filek, you had a question -- from William Blair.

Matthew R. Filek

You have Matt Filek on Stephen Sheldon. I wanted to start with, one, on gross profit. Gross profit and gross margins came in a little lighter than we had expected. And I was wondering if you could expand on the driving factors behind that, along with how we should be thinking about gross margins looking ahead?

Jeff Whiteside

Yes, Matt. So -- yes, so it was a little lower than we forecasted. But one of the things that happened in the quarter was we accelerated some of our Icon awards. And basically, that's going to be more of a one-time event that brought that percentage down, down to the 6.9%. So we were anticipating a little higher margin. I mean, we had about -- we had 7.5% last year at this point in time. And we think it's a one-time event to bring that percentage down and we see it going back up in the fourth quarter -- into the [7.5%] plus. That's what we're forecasting, as we said today.

Matthew R. Filek

And then one more quick one on modeling. I think in the past, you had talked about an $85 million run rate for SG&A came in a little lighter than that. Should we expect that to be consistent going forward? Or how should we be thinking about that line item looking ahead?

Jeff Whiteside

Yes. I think the number is a little light in a good way for us in the quarter. I think what we see in Q4, we always book our eXp Con expenses, which is our biggest event of the year. So that number is going to go a little higher in the fourth quarter, but it's on a run rate basis. That $85 million is a relatively safe number to be seeing on a run rate basis.

Matthew R. Filek

And one more, if I may. I wanted to quickly ask about the recently announced partnership with HomeHunter. Can you talk about what that partnership entails, how HomeHunter is different than other search portals? And then as a second part, do you plan on bringing the capabilities of HomeHunter to the United States at some point?

Glenn Darrel Sanford

Yes. So great question. HomeHunter -- so to kind of describe the challenge in most [all] markets outside the U.S. and Canada, there isn't an MLS type relationship. Obviously, this is front of mind for everybody this week, especially because of some of the stuff that's come down from a legal perspective. But it's -- which makes it really fragmented in these other countries. You're looking at countries where agents have to pay very significant advertising fees to advertise on multiple real estate websites to make sure that their properties get seen by the largest number of consumers, and it's a whole bunch of [paid] (technical difficulty) just to get properties out there.
For the consumer, it's really challenging because if you don't see all of the websites that have all of the properties, then you're not -- you may miss out on the property that really was the one that was most ideal for you and your situation. And so what HomeHunter is, it provides a -- it's a browser extension tool for consumers to actually organize across multiple portals in multiple markets and actually save and organize their searches, share their searches with other agents. And so it's really around making the search a lot easier for local consumers. Now we've done some initial focus groups, primarily with our agents in different markets. And what we're hearing is that this is a tool that's [sorely] needed for consumers and even agents to understand inventory that exists across multiple marketplaces.
It wouldn't really -- because of the -- in U.S. and Canada -- who knows what happens in the future, but currently, most all properties are available from virtually every website in the country. So there's really not a need for a tool like this in the U.S. and Canada, but you definitely need to have a tool like this internationally. And when I saw this demonstrated a number of years ago at [Inman], I recognized that it wasn't great for the U.S. and Canada at this time. But as we started to look at the pain points internationally, it made total sense, and they've invested a lot into it for the domestic market, but we think it's going to really be a great tool for consumers in the international markets.

Denise Garcia

Our next question comes from Soham Bhonsle from BTIG.

Soham Bhonsle

Maybe just a housekeeping one to start. Can you maybe get your mix of buy-side versus sell-side transactions historically, if you have that, just even a ballpark range?

Leo Pareja

So we're a little bit skewed to the sell side. Jeff can probably give you a little -- he might have better data, but we're -- you think about it as 65% or -- yes, 60% -- 55% to 60% being list side and then the balance being buy side.

Jeff Whiteside

Yes, that's about right.

Soham Bhonsle

And then Glen, I think historically, you've said you sort of want to target that 250,000 agents or some in the U.S. But I guess given the recent events, does that sort of change your view on sort of the growth algorithm, so to speak, where you may be focused on agent recruiting over maybe profitability? Or do you start to think a little bit more about increasing profitability going forward to sort of drive the growth?

Glenn Darrel Sanford

Yes. So one of the things, obviously, -- if you look at, obviously, our segmented financials, the reason why we broke out North America is because North America is actually a profitable business unit for us. And the reason why we aren't super profitable is because of the other things, international being one of them. So I think the path to the 250,000 agent range in the U.S. or North America, I mean it's -- I mean these are goal numbers. I think the path is there. It's really around making sure that we provide the tools, systems and platforms for agents.
Who knows what might happen in terms of organized real estate in general, and that could change the algorithm in that regard. But as it currently sits, I think that, that would take us to somewhere around 15-ish percent of the industry, so about 3, 4 times where we're at right now. And I think that makes sense mentally for me based on how we've grown. Obviously, the higher interest rates slowing down, people leaving the business pushes things out, but I think there's always going to be a robust housing market. And as long as we can build out a platform for agents, they'll be here.

Soham Bhonsle

And then just one more. I guess with the lawsuit on -- that came out on Tuesday, does it sort of change your appetite or thought process around buybacks going forward?

Jeff Whiteside

I mean we're talking about that internally. So we haven't made a decision, but it's definitely something we're looking at. But at this point in time, we haven't made a decision.

Denise Garcia

And our next question comes from analyst, John Campbell from Stephens.

John Robert Campbell

On the agent count growth, I'm hoping you guys might be able to shed some light on maybe the moving parts for starters. If we could just maybe go through the -- or unpack the U.S. versus Canada versus international growth? And then the recent growth trends, they seem to be a little bit lumpier. You guys are converting -- you're doing a good job converting independent brokerages, and then also just kind of bringing on larger teams. I'm wondering if that's kind of the expectation moving forward, at least over the near term to the market rebounds?

Leo Pareja

It is definitely a big focus of us is focusing on the -- making sure -- I mean Boost and Thrive, they're obviously focused at brokerages and large teams. And the largest part of our churn has been that low, nonproducing brand-new agent in the industry. And I think that's really put pressure on us. That's why even if -- even our numbers stay relatively flat into -- through Q4 and obviously -- I'm not sure when it will take back. Most of that churn is still coming from the producers that don't really put numbers up on the books.
So it is -- but we do think about what does it take to bring in a Bean Group or -- and we've got a number of brokerages. I don't know if Leo you have it, I know Michael Valdes would, but the number of brokerages that are currently coming through the Boost program is pretty substantial, the number of people who are very interested in moving over, because with the tough housing market, our Boost program is not that dissimilar than if they were to go and outright sell their brokerage based on their EBITDA numbers. But we're able to do it in a way that makes sense for them and makes sense for us for them to come over.
So it's going to be -- we're going to have a number of brokerages, I think, especially if the market continues to have issues that are going to want to come over and this makes it easier. And by the way, we were already doing some version of Boost for every single brokerage that converted over prior. We just didn't give it -- we hadn't given it a name, we'd have to negotiate with each and every one of them. What this does is it actually makes everything more transparent and above board and actually sets expectations on both sides, what does it mean to move your brokerage to eXp and to become part of the eXp ecosystem.
And for us, it's a filtering tool because if they don't go through the cultural alignment questionnaire, which is part of the beginning process and that doesn't match up with the type of brokerage of people that we want to be in business with, we don't take it any further. So it's really helped us a lot, but it's also made us more visible as a viable place to move their brokerage.

John Robert Campbell

And then any kind of color on the agent growth by region?

Leo Pareja

Jeff, do you have any breakdowns? I know the U.S., I think it grew somewhere sub 1,000 this last quarter in international.

Jeff Whiteside

Yes. I mean, most of the growth in the quarter was in the U.S. International is -- it's relatively flat, but they're kind of working some of the bumps that are along the way. And then Canada actually was pretty strong. So those are kind of the 3 drivers. U.S. -- the U.S. commercial business is relatively flat. So that's not something we're aggressively going after at this point in time. We're still building the programs and building the business. But most of it, John, is driven by the U.S. in this quarter.

John Robert Campbell

And then on the class action suits, I mean, I know you guys have spent a lot of time. We have spent [into] and [out of] time with investors on it. But it feels like we're at a stage where it's almost like, be careful what you ask for, buyers end up having to pay for their own agents, if listings are no longer cleanly and fully aggregated. We're going to go back in time and lose the market efficiency it feels like. So Glenn, you talked to HomeHunter, which does sound very interesting. I wanted to get your take on eXp Exclusive. It seems like that might rise in importance if the market does go down that route, if it goes down that route in a hurry. It seems like you've got a foothold to do something on your own. It's almost like one of the main advantages you have as being a scaled largest brokerage in the U.S. So I just kind of want to get your take on the strategy behind it and what maybe it could be over time?

Glenn Darrel Sanford

Yes. I mean, I think Leo really worked on the eXp Exclusives quite heavily. And I worked on the HomeHunter Global, 2 different pieces of the puzzle that ironically could be really significant long-term assets depending on how fragmented the industry becomes from a consumer perspective. And so it does feel like the some of the efficiencies would -- if they went the other way, these will be tools that would definitely help us. And there are -- we are one single large brokerage. And so the ability to do things internally and to provide benefits for consumers, both on the sell side and the buy side, is pretty significant when you think about the fact that we did do the most transactions of any single brokerage in the U.S. and you start to think about what does that mean in a changing market.
I don't really want to talk about it because I actually wouldn't want to win that way because I actually -- I think this industry needs a lot of the things that are in place for consumers. But if it goes a different way, I think we're also well positioned.

John Robert Campbell

Yes, I agree with you. And the last one here, we [filled] some questions on this. I just want to see if we can clear the air on this, but we've had a couple of questions about just sticking on the legal side, a case you've been named in personally. So to what extent you can, maybe if you can comment on that?

Glenn Darrel Sanford

Yes. I think there was -- yes, there definitely is a -- there's a lawsuit that's been out there. I know that there's been a New York Times writer that's been pursuing a lot of people for the last months on and still haven't -- don't even know what the story might be. But we -- and just in all transparency, we believe that we had 2 actors -- 2 bad actors in our agent base. We have 89,000 agents and that they had acted significantly inappropriate and to the point where they're -- likely could have, and who knows may still be some jail time associated with it.
We had let one of the agents go as soon as there was charges brought against him. We let the other one go when there were some things that came to light through the civil suit. And we -- but with 89,000 agents, there's some bad actors. Bottom line is we -- I don't want to say we don't tolerate, but we investigate any of these things. And if we find credible evidence that says that people are doing things that are on the wrong side of the law, then we do release a lot -- agents regularly for various different reasons. So we take these things seriously, and -- but we also believe that we, as a company, have acted appropriately through this whole thing, but we do care deeply about agents and people in general.
So if there's things that are happening that shouldn't be happening and we can help fix it, then we're going to get in there and fix it. But we do know that there's the lawsuit. We know that there's an article being written and we're not sure if it's just because it gets headlines and gets readership or if there's some angle that we haven't even thought about, and hopefully, we get a chance to address it before it gets published, if there is something that we need to address.

Denise Garcia

And our last question from our analysts, Tom White at D.A. Davidson. He couldn't be on stage with us today, but he asked, you've launched a flurry of new initiatives over the past several months, would appear to sweeten the economic value prop for agents to come to the eXp program. Can you talk about the impact that's having on your domestic net agent additions? And what impact to margins can we expect from these various initiatives?

Glenn Darrel Sanford

Yes. So we're just in the early stages of these taking place. One of the things I noted earlier is that even before we announced Boost, we were doing some version of Boost with each brokerage that was converted over. We just hadn't made it over. So the economics really don't change too much with converting brokerages. We've got Accelerate which helps agents unlock their level 2 and level 3 as earlier on in their career for the first year. However, as our revenue share system is designed to pay out 50% of company dollar regardless. So it's just part of the revenue share system. The company retains 50% of a company dollar to pay its bills and ultimately lead to us being able to show a profit and invest in things to help grow the brokerage, which also helps grow agents revenue share organizations.
And then the last program Thrive, that's probably the one that has a little bit more meat on the bone for large agent teams. However, even with these large agent teams, we were still having to do some sort of special something to help them financially that pay for signs, get out of office leases or do something. And so if you actually look at the numbers, these are super -- there's not -- I mean, there is definitely investment going into these things, but they shouldn't fundamentally change our financials in a meaningful way.
Jeff, would you agree -- you've done more of the analysis.

Jeff Whiteside

Yes. I mean I'd agree, and especially when we're talking about that [50%] -- our rev share pool, that doesn't change the margins at all. And then there's -- as you mentioned before, there's a lot of these programs that we were doing informally before. So we don't expect, as we sit here today, any kind of material change in margins going forward. We do expect growth, though, right, Leo?

Leo Pareja

Absolutely. I think the part that hasn't been mentioned, but I'll just point it out, the rough environment that's affected everyone's margins and compression in units and transactions can actually be a very interesting time for the smaller independent that's in that tough range of 50 to almost 500 agents, where the margins are so tight, and they still have the less legacy brick-and-mortar systems.
I mean, when Glenn alluded to it -- I mean we have made a lot of interest in a very large pipeline, which I would say has grown disproportionately into the higher end, right? So as we can manage to convert much larger slots of independents that could give us some relief in the headwinds that we're experiencing, because -- 2024 from a transactional unit count, most economists are predicting similar to 2023 as the interest rate environment is still tough. So the expectation of transaction counts similar to 2023 is there, in a way, gives us a pretty interesting advantage to continue to grow agent count.
But as Glenn alluded, even if we were to stay flat by focusing on the highly productive, we continue to gain market share. And if the wins shift back, which they always do, that will put us in a stronger footing.

Denise Garcia

So one question. We've gotten some questions from the audience on Slido, most of which -- we've answered all -- this happen this be the last question here that we haven't answered directly, which is, can you elaborate on the strategies that eXp Realty is going to capitalize on emerging global real estate and how technology will play a role in shaping the company?

Glenn Darrel Sanford

It's hard to understand exactly. I mean, obviously, one of the things we look at is that internationally, real estate is super fragmented. I alluded to it earlier, and this is why we're pretty excited about HomeHunter Global is that if we can help make the searching for a home easier for a consumer, then there's a possibility that we can do other interesting things in terms of whether it'd be getting a mortgage internationally or any number of different things. Bottom line, everything is -- enabled today in today's economy is enabled by technology.
So it's about what technology to adopt and when. For me and for the company, we've been investing more and more on the AI front. And we've got now some enterprise accounts through open AI, which we're excited about. And we're continuing to build out more and more infrastructure. We're starting to pump in big data, we're starting to use it with our NPS, and we're looking at how can we make the right decisions in real time using technology by watching what's going on in real time. And so I think the -- in some level, we think that a brokerage becomes very algorithmic and managed by various parts of AI. Obviously, humans are involved in a lot of -- all of this, but I see all the things going on.
I just turned myself into an Avatar and so I now have my own digital twin that we can now program and speak in multiple languages and be able to do -- talk about the value prop in other countries. And so -- and in my voice on top of all that. So just all the things that are coming down the pipe in turn enabling technologies. The thing we can't do is pretend like all the technology that we need to run this business exists today. I know another leader in the space said that just recently -- that there's no need for agents to have new technology. And I've been a tech guy since I was 12 years old, and I've heard that statement made time and time and time again.
And anybody who believe truly believes that will go backwards not forward. And so for us, it's how do we continue to stay engaged in figuring out what's going to give a consumer an edge, what's going to give an agent an edge, what's going to allow us to run more efficiently while providing a better experience for our agents and our consumers. And that's the business right there. So technology is front and center, and we need to -- and we will, but we need to continually invest in this globally, not just domestically.

Denise Garcia

Great. All right. Thank you, Glenn, and thank you, everyone, for joining. As always, please stay connected by visiting expworldholdings.com for the latest update on eXp news results and events. And additionally, you'll find a recording of this call and our latest investor presentation on the Investors section of that site. Thank you for joining us today, and this concludes the eXp World Holdings Third Quarter 2023 Earnings Fireside Chat. Thank you very much.