eXp World (EXPI) Q2 Profit Falls 113%

eXp World (EXPI -12.75%), a real estate brokerage known for its cloud-based, agent-centric business model, released its second-quarter results on July 31, 2025, for fiscal 2025. The company reported revenue (GAAP) of $1.31 billion, just ahead of analyst estimates of $1.30 billion (GAAP), but earnings per share (EPS) (GAAP) fell short at $(0.01), well below the $0.10 GAAP EPS anticipated by analysts. This miss signaled a reversal from the prior year when EPS (GAAP) stood at $0.08 in Q2 2024. The quarter was characterized by modest revenue growth, higher operational costs, and a sizeable decline in profitability, even as agent engagement and international expansion remained focus points.

Source: Analyst estimates for the quarter provided by FactSet.

Understanding eXp World’s Business and Key Success Areas

eXp World operates as a virtual-first, cloud-based real estate brokerage. It connects real estate agents and brokers on a global platform using technology instead of a network of physical offices. This enables it to offer scalability and cost benefits, as well as flexibility to adapt to new markets.

The company is focused on five main areas: developing its technology platform (such as FrameVR.io for virtual collaboration), expanding internationally, running agent-centric programs like ICON Incentive, maintaining strict regulatory compliance and handling legal challenges, and driving sustainability through its virtual operations. Success in these areas is closely linked to enhancing agent productivity, supporting global launches, and managing operating costs while adapting to regulatory changes.

Key Developments and Financial Trends in the Quarter

During the quarter, revenue (GAAP) grew by 1% compared to the prior-year period, landing above analyst predictions. However, the improvement in the top line was offset by a sharp decrease in earnings. The company reported a GAAP net loss of $2.3 million, a reversal from net income (GAAP) of $12.38 million in Q2 2024. Adjusted EBITDA, which offers a view into core profitability by excluding items like stock compensation and certain legal costs, fell 65.9% year over year from $32.8 million to $11.2 million (non-GAAP). This margin pressure reflected a 20% rise in adjusted operating costs (non-GAAP), now at $95.0 million, due to ongoing investments in technology, operational streamlining, and severance costs.

Sales metrics revealed that the number of agents and brokers on the platform declined 5% to 82,704, and total real estate transactions fell 2% to 118,612. Despite those lower figures, real estate sales volume rose 1% to $52.5 billion, pointing to higher productivity per agent or larger transactions. Management attributed these results to its agent-focused technology platform and new incentive programs, highlighting the ability to retain higher-performing agents even as total counts fell. International expansion efforts also continued, with operations in 28 countries and launches in Turkey and Peru, as well as preparations for launch in Egypt. The company did not provide segmented financial results for international operations this quarter, but previous disclosures suggested the segment remains a growth driver.

The quarter also included one-time events, such as a $17.0 million payment related to an antitrust settlement, which contributed to a reduction in cash and cash equivalents (GAAP) from $108.4 million as of June 30, 2024 to $94.6 million as of June 30, 2025. This one-off legal expense, alongside severance and higher investment spending, dragged down both adjusted operating cash flow (non-GAAP) fell to $13.4 million from $60.4 million in Q2 2024 and free cash available for reinvestment. The company distributed $32.6 million to shareholders, including $24.9 million in stock repurchases and $7.7 million in cash dividends. The board declared a $0.05 per share dividend for the quarter, consistent with the prior period.

In terms of technology and agent services, eXp continued to invest in its proprietary and partner platforms. These include FrameVR.io, a virtual collaboration suite, and integrations with Canva and Sisu to help agents with branding, marketing, and business productivity. As noted in previous statements by management, these technology enhancements aim to provide agents with a suite of tools to increase efficiency and foster collaboration. The co-sponsor program, a new agent incentive, was highlighted as an additional way to boost engagement and collaborative agent development.

Aside from legal settlements, no new sustainability initiatives were outlined in the period, though the company maintains its low-carbon, virtual operational model. Cash flow from operating activities (GAAP) dropped to $36.1 million, and adjusted operating cash flow—a non-GAAP measure that nets out large customer deposits that may distort results—fell 77.8% year-over-year. The cash balance at quarter-end was further impacted by legal settlement outflows.

eXp World’s capital expenditures, comprising investments in property, equipment, and technology, as well as continued stock repurchases, were balanced by positive operating cash flows, with total assets (GAAP) rose to $481.2 million as of June 30, 2025 and equity (GAAP) was $218.4 million as of June 30, 2025.

Looking Ahead: Management’s Outlook and Investment Themes

Management did not offer explicit financial guidance for the next quarter or the remainder of fiscal 2025. In its commentary, leadership reiterated its focus on driving long-term growth through technology, international expansion, and agent experience, while reviewing cost structure for greater efficiency. No solid predictions were given on revenue, profit, or margin trends for the coming periods.

Investors and industry observers should keep an eye on several ongoing trends. These include whether rising productivity among remaining agents can offset declining overall agent and transaction counts, and whether cost measures can rein in adjusted operating expenses after their recent jump. The performance of international markets and the payback from current technology investments are also worth tracking in future quarters. The company continues to pay a $0.05 per-share quarterly dividend, unchanged from previous periods.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.