Stock Story -
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 reading the original article on StockStory.
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
Real Estate ServicesTechnology 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.
Cash Is KingIf 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.
