Real estate technology company eXp World (NASDAQ:EXPI) reported Q4 CY2024 results beating Wall Street’s revenue expectations, with sales up 11.7% year on year to $1.10 billion. Its non-GAAP loss of $0.03 per share was $0.02 below analysts’ consensus estimates.
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eXp World (EXPI) Q4 CY2024 Highlights:
- Revenue: $1.10 billion vs analyst estimates of $1.03 billion (11.7% year-on-year growth, 6.5% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of -$0.02 ($0.02 miss)
- Adjusted EBITDA: $7.69 million vs analyst estimates of $3.88 million (0.7% margin, 97.9% beat)
- Operating Margin: -1%, up from -2.8% in the same quarter last year
- Free Cash Flow Margin: 1.2%, down from 3.2% in the same quarter last year
- Market Capitalization: $1.74 billion
“At eXp, we redefine what’s possible in real estate, with our agent-centric platform offering unlimited growth opportunities for agents,” said Glenn Sanford, eXp World Holdings Founder, Chairman and CEO.
Company Overview
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 sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, eXp World’s sales grew at an incredible 36.1% compounded annual growth rate over the last five years. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. eXp World’s recent history shows its demand slowed significantly as its revenue was flat over the last two years. 
This quarter, eXp World reported year-on-year revenue growth of 11.7%, and its $1.10 billion of revenue exceeded Wall Street’s estimates by 6.5%.
Looking ahead, sell-side analysts expect revenue to grow 6.1% over the next 12 months. Although this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector.
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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.
eXp World has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.4%, lousy for a consumer discretionary business.
eXp World’s free cash flow clocked in at $13.71 million in Q4, equivalent to a 1.2% margin. The company’s cash profitability regressed as it was 1.9 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.
Key Takeaways from eXp World’s Q4 Results
We were impressed by how significantly eXp World blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed significantly. Overall, this quarter had some key positives. The stock traded up 10.1% to $12.51 immediately after reporting.
Sure, eXp World had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
