eXp World Holdings (EXPI) Q1 2022 Earnings Call Transcript

eXp World Holdings (EXPI -3.58%)
Q1 2022 Earnings Call
May 04, 2022, 10:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Courtney Chakarun

[Audio gap] earnings fireside chat via livestream and EXPI Campus are metaverse. My name is Courtney Chakarun and I'm the CMO of eXp World Holdings. Today we'll begin our earnings fireside chat with opening comments and a conversation between Glenn Sanford, founder, chairman and CEO of the eXp World Holdings; and John Campbell, managing director of Stephens. We are happy to welcome John back as our moderator.

Following this initial segment, we'll move into a presentation which includes a review of the Q1 2022 financial highlights, areas of investment presented by Jeff Whiteside, CFO and chief collaboration officer at eXp World Holdings, followed by Jason Gesing, our CEO of eXp Realty, who will dive deeper into our differentiated model, agent growth, and value proposition. We will then return to John Campbell and our leadership team for a continuation of the Q&A. And finally, I'll share details on our June 2022 eXp Shareholder Summit to bring our session to a conclusion. Let's review with a beginning of the forward-looking statements.

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 actual results to differ materially from these statements. Please see our filings with the SEC, including our most recent quarterly report on Form 10-Q, for 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 those of you joining in eXp Campus today. Did you have any questions here around the screens? You'll see three of the top. Hit the stage zoom button to the right of your chat box.

To zoom to a specific screen, you can hit the plus icon above the screen. If you happen to see no slides or a gray slide, hit the refresh icon button at the top right hand corner of that screen to correct. While in eXp Campus, should you need any help or have any questions, please put that in a chat box that you see below on the left and a member of the team will contact you privately. As mentioned, the last segment of our fireside chat is a continuation of the Q&A, and here is a way that we're able to be able to communicate and collaborate on some of these questions.

Want to ask a question during the presentation, you can enter your question by scanning the QR code presented on the screen or you can go to the phone and go to slido.com, and type in the event code EXPI. From there, you can submit your question and you can even vote up an existing question by giving it a thumbs up if you also like that question asked. This screen will remain up on the left-hand side of the stage. I would like to turn over the fireside chat to Glenn, our founder, to start the earnings conversation with opening remarks.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Hey, thank you, Courtney, and thanks, everyone, for attending. This quarter was another strong quarter, obviously finished just over a month ago but 2022 is starting solid for us. It's really driven to a large extent by our growth and our rapid expansion now into multiple countries. We've got really three different companies inside of eXp.

We've got eXp Realty, which is the primary driver, as most of you know, of the growth engine of the company, but it is enabled by our Virbela enterprise metaverse platform. We've been using this platform since 2016. Bought the company in 2018, not knowing that the metaverse was going to become a big play starting in 2020, 2021 with the pandemic and inside of Virbela, we've got another what we call Frame VR, which we're excited about that and certainly check it out at framevr.io. The other company is SUCCESS Enterprises, which is SUCCESS Magazine, SUCCESS Coaching, which is something we've now added to the SUCCESS Enterprises platform SUCCESS-based, our co-working venture, which is continuing to gain speed, our speakers bureau, and some other aspects.

We're also starting to leverage the name into the real estate business with our SUCCESS Lending platform. So with that, we're going to talk a little bit mainly about eXp Realty, since that's the big driver of the company. And the reality is that, the eXp Realty business model was really built for any market, up, down, sideways, what have you. Right now, we certainly are seeing the -- a little bit of impact with higher interest rates.

Inventory is actually lasting a little bit longer on the market than it was, say, the end of last year. But we're really in a position to, whether anything might come at us, whether it be a continued fast-growing market or a potential contraction maybe later on this year or early next year. So we'll see, obviously, what happens but we literally built this with our, enabling technology, Virbela. We've literally been able to grow to, 21-plus countries just out of the -- announced a couple additional countries yesterday.

I think that New Zealand's opening this week. So it's pretty, pretty cool in terms of just the growth rate, even though I think even NAR numbers have shown a little bit of a drop beginning of the year. We continue to grow our agent count. Month over month, we've never had a month in the history of the company where we've actually had the same amount or fewer agents than we had the month before.

And so we've continued to see continued growth in our agent count. Obviously, very growth driven. We continue to iterate on the agent value proposition. We use our net promoter score as a guiding beacon for all the decisions that we make inside the company.

And that really allows us to sort of not operate as much top down, but more as a team, understanding that NPS is a big driver to our agent growth, which then ultimately translates to their end customers having a great experience at listing and selling homes. The global network, 21 countries, and counting. We'll certainly announce some additional countries next quarter but that network has been growing dramatically, well in excess of 100% year-over-year growth in our global agent count. And we see a lot of opportunities as we continue to grow into multiple markets around the world.

This was an exciting quarter as well. You may have seen in the press release that we called out, the first billion dollar revenue first quarter. First quarter tends to be a slow quarter in in in real estate relative to the rest of the year. And with the company basically having been consistently profitable and cash flow positive, cash flow positive almost from inception, but profitable on an EBIDTA basis over the last three years and continuing to increase that profitability over time.

We really have this core that has this variable cost model associated with it that allows us to continue to be positive both on a cash flow and an earnings basis, we feel, for the foreseeable future. So obviously, we don't know exactly what markets will bring to us, but we feel very confident in our ability to pivot and be agile as the markets go up or down. So that's just growing. One of the things we're -- today actually, we just accepted an award at the T3 Summit in San Antonio for being the fastest-growing brokerage, according to their stats, and we've certainly had a number of those.

Another stat that we recently learned about, in fact, at the same event was in Houston, we're now the No. 1 brokerage by agent count and number of listings in the Houston Association of REALTORS is a pretty good indication of -- that we're actually breaking into large markets and becoming the No. 1 player in a lot of markets around the country. So there's a lot of smaller markets that we were already No.

1 in, but it was interesting to just have that call out by Bob Hale in the last 24 hours, just learning that particular stat. And I think this just continues to translate to the idea that we will be a major player across the U.S., Canada and all the other countries. We're the fast-growing brokerage in countries like U.K. and Mexico and India and a number of other countries as well as really this agent value proposition.

But the one that I'm really continue to be most proud of isn't as much the agent growth. I think the agent growth is a result of being just taking care of both our agents and our staff. Our Glassdoor scores were off the chain this last year. You may have noticed that we were actually in the top five large employers, according to Glassdoor.

And that, I think, is another leading indicator to our continued growth and excitement for the company. So I can cover a lot more but I'm going to maybe turn it over to John Campbell just for any remarks and any -- and some initial Q&A before we turn it over to the rest of the team.

John Campbell -- Managing Director, Real Estate Services

Yeah. Thanks, Glenn. It's great to be back in the virtual world again and hearing firsthand about the degree of success you guys just continue to see in the marketplace. And I know I say this every time, but it just feels like it's such early innings for you guys, I think, or, at a fraction of the penetration of total U.S.

agents or NAR agents. It seems like there's a lot of growth opportunity ahead for you guys. Obviously, you're performing well. The stock market is not treating you guys well.

It's nothing EXPI really specific. I think anything kind of housing related has been hit pretty hard. I mean, stocks obviously go up and down. Investors rotate in and out of sectors.

So it's not fun when you on the flip side of it, but you guys obviously keep doing your thing and it's not going to last forever. But obviously on the investor side of the world, we tend to look at multiples when we make stock calls. And for those who are not in the weeds on the investor side, I mean, that multiple is nothing more than a gauge of sentiment. You guys are we're basically finding the spread between the market value of the kind of enterprise as what's implied by the market price today.

We divide that by the earnings expectations. So just sizing up basically what investors are willing to pay for your earnings. As it sits today and based on our projections for you guys, I think the stock's at about nine times forward EBITDA. That multiple reached about 60 times early last year.

And even since 2018, you've averaged 24 times. So, you get that historical average multiple 24 times on the stock today, it's a $40 EXPI price. So that's well over double in value. Bigger picture, I think you'd be hard pressed to find many companies out in the entire market today trading at this type of multiple, with the disruptive characteristics that you guys have, kind of coupled with the top line in earnings growth.

So all that to say, I think we see a lot of upside still in the EXPI price from here. Just kind of need the investors to to move away from the Chicken Little kind of sky is falling mindset. But enough on all that, Glenn. I just wanted to maybe start off with one question.

Clearly is another good quarter for you guys, so let's just start off kind of with your high level thoughts on how things shook out, how that kind of fared relative to your expectations of what you'd point to as kind of the key fundamental drivers in the quarter.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah. Well, one thing, and we call this out in our press releases consistently and we really do focus on our Net Promoter Score as being the future or the leading indicator to how we're doing. And that KPI is still our -- internally, it's our rallying cry. It's when your NPS, goes down in different areas.

I think this last quarter or two, a lot of it was around Canada. So we focused a lot of work on improving our our NPS around a lot of Canadian activities. And this, in terms of -- and so when we think about it, we think about it more as a what is our model going to produce if we continue to create a great experience for agents. And then we have to do factor in a little bit of what the macroeconomics of the market are.

So I think macro wise, we're seeing a little bit of slowdown. And so that -- and from our perspective meant we grew a little bit slower than maybe we expected because I don't think anybody expected interest rates to jump as dramatic as they did in a shorter period of time. But we're starting to see that actually play out in our numbers a bit and we're starting to see a little bit of that sort of internal sort of slowdown. But obviously, our growth rate in terms of agent count continues to sort of propel us higher.

And so that's kind of our kind of our mix around Q1. The other piece is that in the U.S., where our growth rate is probably a little slower than we were expecting. And I think part of it is that NAR number is actually tough in the first quarter or so in terms of number of agents who are active to real tours. And so we grew with -- even though the number of of agents who are who are to real tours is actually reduced.

And so from our perspective, we feel really good about the numbers but again, there are some macroeconomic factors that that we're starting to see it actually play and we can sort of measurably see it against maybe some of our internal projections.

John Campbell -- Managing Director, Real Estate Services

And kind of sticking on the bigger pick, I mean, obviously, there's a big fear factor around U.S. housing. Like I was mentioning earlier, a multiple is essentially kind of a gauge of sentiment. The multiples are implying in a lot of these stocks that were going back to 1990 existing home sale levels.

So I don't think it's very surprising to hear a bit of a slowdown, obviously, with rates moving as they have. But, Glenn, I ask you this every time, but like kind of just throw your crystal ball out us and give us your sense for where the market heads over the next several quarters?

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah. So I've talked about this a little bit in the a couple of weeks ago and -- I was asked the same question by Brad Inman. And with the Fed projecting additional increases in interest rates and the desire to cool down the housing market at the at the Fed level, I think that does play into if they're serious, we're definitely going to see a slowdown in the market, Q3, Q4. That's my sort of prediction.

And then that going into to to next year. I think it's actually healthy for the market to slow down a bit. Certainly, from a home buyer perspective, there is a lot of inventory that are still -- we're still hearing reports of many consumers that are in multi-offer situations and can't buy the home that they're looking for because there might be 30 offers on that home and that number reduced a little bit. So now it might be ten or 12 offers on a home, but it's not enough yet.

We're in a balanced market. So I'm -- my guess is that the Fed's going to continue to raise interest rates a bit. We could, go 6% plus in interest rates. We're not that far away from that now.

And with that, certainly we've got, the other macro factors. Even things going on in Ukraine does create a lot of fear and uncertainty around what's going to happen. And maybe that does sort of slow down the market as well when people maybe want to preserve their their their cash or maybe not make a move at this point in time. So that kind of plays on both sides of the equation.

John Campbell -- Managing Director, Real Estate Services

Yeah. Makes sense. And just assuming I mean, just as a hypothetical, the market kind of rolls over pretty hard later this year. you guys have seen plenty of market swings.

Obviously, there hasn't been a dramatic down market, but you've seen the market swing around in 2014, late '18 and you've performed well, regardless of all that. So I just want to get your sense for how you think the EXPI model can kind of flex. And then also from an agent value proposition standpoint, what kind of stands out from the EXPI standpoint, if the market were to slow a bit?

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

One of the things that I point to is the second quarter of 2020. It wasn't a pleasant quarter. It was a time when COVID had really fundamentally changed everything for a short period of time. Transaction volume was down across the real estate industry.

And yet we turned out our most profitable quarter to date in that Q2. And the reason why was because we made the tough call. It wasn't a popular call. It was something that we didn't know relative to residential real estate, if it was going to be essential service, what was happening, all that.

But we reduced the cost to operate such that we turned out our best quarter ever. We were able to do it -- again, it wasn't pleasant, not something I would look forward to doing again. But we are actually able to adjust our cost to operate very, very quickly in a down market. So that was one where there was a real shock to the system.

And yet we were able to turn out a very, profitable quarter, which was really in our mind at the time, a self-preservation decision, because again we didn't know what was going to happen in Q3, Q4 and we thought this the market could could be going off a little bit of a cliff for a period of time. So that gives us that that flexibility in a good market, we should do well. In a bad market, we should capture market share and still do well is the way that I look at it.

John Campbell -- Managing Director, Real Estate Services

Yeah. Makes sense. So that's all the kind of high level questions I've got for now. And I think Jeff is going to do the financial rundown and I'll come back later with some more kind of in-quarter and financial questions later.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Awesome. And so, yeah, so welcome my good business partner, Jeff Whiteside. We've been working together since late 2018, I think. Anyway, it's been a while.

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

[Inaudible] It's been about four years. So thank you very much. Appreciate it.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

[Inaudible]

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

All right. Well, thanks, Glenn. Thanks, Courtney, and thank you, John, for moderating today. Good morning, all, and thank you for joining our first quarter 2022 virtual fireside chat.

On behalf of the team again, I'm really proud to share our results and highlights for Q1 2022. So if we look at our first page, the eXp World Holding delivered another strong performance in the first quarter of 2022. At a higher level, growth and agent count, transaction volume, revenue, net income, and cash flow continues to be compelling. We continue to invest in our future North America, international, technology, commercial, affiliate services, and global digital success.

We had zero debt on the balance sheet and the agility to adjust, where needed. As Glenn just talked about, we're built for good times and we're built for tough times. And so we're feeling great about going into whatever comes at us. Now we're leading change in the industry and we've got the best leadership team.

We're delivering exceptional shareholder value. So if we go to the second page, which is the -- at a highlight level, if you look at our financials and starting with revenue in Q1, our revenue was $1,010,000,000, up 73% versus Q1 2021. Our gross profit in Q1 was $83.5 million, an increase of 56% year over year. Our Q1 net income was $8.9 million, an increase of 83% year over year.

And as noted, our net income includes a $5.1 million income tax provision benefit, primarily driven by our stock-based compensation deduction. Q1, our diluted earnings per share was $0.06, and that's up 100% year over year. Our adjusted EBITDA in Q1 was $17.7 million. That's up 20% year over year.

And lastly, our Q1 -- on our summary page, our operating cash flow was $62.2 million, an increase of 53% year over year. So now if we just look at our key metrics, those of you that have been with us for a while, the charts broken into two categories, operating metrics and financial metrics. So looking at our operating metrics for Q1, as a reminder, we run our businesses, as Glenn just mentioned, on agent and employee Net Promoter Score. And our goal as a company is to keep that number above 70, which is really world class and we find it predicts our agent growth, retention and satisfied employees.

So we're down slightly in the quarter, but we're above 70. We're 71, 78. So we're in the range that we want to be. In a realty model, adding productive agents to our platform drives unit sales, volume revenue, and gross margin dollars.

So if you look at our age account, we ended the quarter at 78,196. That's first 50,333. So we're up 55%. So agent count was up 55%, a major growth in Florida, Texas, California, as well as an expansion globally.

We recently announced 80,000 agents. And to give to give you a split were approximately 88% in the U.S. and 12% globally. Going down to the units, our units was 114,305 or 73,878.

That's up 55%. Our price per unit was 3.62, up 9% year over year, and our volume in Q1 was 41.4 billion was 24.5 billion. And that was up 69% year over year. Now going to revenue.

The revenue, as I mentioned before, was up 73%, primarily driven by increased agents and transactions in North America. We look at our gross margin dollars, our gross margin dollars is 83.5 or 53.5, up 56%. And our gross margin grew $30 million based on increase on our transaction volume. Our gross margin percentage declined due primarily to higher price units and accelerated cabin.

If we look at our SG&A, our SG&A was 79.05 or 48.6, so it was up 63%. SG&A cost increased due to higher investments in FTE and growth support, international portfolio, technology, and affiliated services. As we look toward the next few lines here are -- we've got kind of gone through the operating income and the net income. So I'll just take you down to the bottom which is our operating cash flow.

You can see the operating cash flow increased 53% from $62.2 million to $40.6 million. And our cash and cash equivalents, so the money we have in the bank, after all our expenses and investment was at $130 million versus $108.2 million. So that's great results from a key metric standpoint in the quarter. Now if we look at some other Q1 investor highlights and milestones, on the last page, so in 2022 we taped -- so this was the 10th quarter in a row that we achieved positive GAAP net income.

Positive accumulated earnings at shareholder equity, so we mentioned in the press release that we are paying our third cash dividend in Q1 of 2022 and we are -- announced another dividend for this quarter, which is expected to be paid on May 31, 2022. Share buybacks, we repurchased about $30 million of common stock in Q1. The board approved an amendment to increase our stock repurchase program to $400 million -- from $400 million to $500 million, and increase our monthly repurchase from $10 million of the common stock month up to $20 million. So we have incredible confidence in the company going forward.

eXp real estate platform has now expanded to 21 global markets, as Glenn mentioned. Dominican Republic, Greece in the first quarter of 2022 announced plans to open three additional locations, including New Zealand, Chile, and Dubai in the near term future. So fantastic, strong quarter from our standpoint. We've delivered quarter after quarter and continuing.

We are really in a situation where we are in a position to take on whatever happens in the upcoming -- the headwinds. So now I'd like to give over to our CEO of eXp Realty, Jason Gesing, to cover our innovative model, agent growth, and value proposition. Good morning, Jason.

Jason Gesing -- Chief Executive Officer, eXp Realty

Hey, good morning, Jeff. Good morning, everybody. Good morning, Glenn. Thank you.

Thank you, John. I always feel privileged to be up here and I just say, first, I say nothing else. Congratulations once again to our agents, brokers and staff who really have made the most today possible and have been doing it all along. As Glenn mentioned in his remarks, eXp was built to thrive in all market conditions.

And in fact, Glenn founded the company really during and in response to the Great Recession and designed the operating model to be flexible, to be adaptable, and to thrive in downturns and strong markets. And so where the growth opportunity exists in part is that we believe for some time that when the next time market arrives, we're in a very unique and strong position to grow as a company, but also to help brokerage owners, who are in such a strong position remain in the business that can eliminate fixed cost, grow into markets that would otherwise be unattainable to them without great risk and expense, and then we can really leverage their network and credibility to grow their own organizations while also providing new opportunities for the agents in the brokerage and others in the industry. And what's really exciting to me, at least about this long held belief, is that now, today we've got countless examples of brokerage owners rejoined join us. They've migrated their agent base over completely.

They freed themselves from arduous supervisory obligations. They've grown into new countries and states, and all the while they're achieving greater levels of profitability and satisfaction, and that's a good market. So we really believe that we are a logical and very appealing destination for brokerage owners going forward when the market does turn. As you've also heard today, eXp continues to have a strong financial core with consistent positive cash flow and no long-term debt, which positions us well in these uncertain markets, and which stands in contrast to many of our competitors, who have mountains of debt and which have yet to reach profitability despite the strength of the market in 2020 and 2021.

And this potentially limits their opportunity to invest in growth. And in contrast, ours is a flexible cost model, centered as Glenn said, around the metaverse community, which now has more than 80,000 agents spread across the globe, and it eliminates operating burden based on brick-and-mortar occupancy. Additionally, our positive cash flow means that we can continue to make smart investments that accelerate, specifically a couple of examples not limited to these, but as [Inaudible] remote work, which continue to expand. We've launched eXp relocation services to provide expertise in U.S.

and international employee relocation. Since inception last year, the program has thus far generated more than 425 million, depending on closed volume, and has brought in more than 2,200 referrals. And what's notable about that is more than 900 of those 2,200 were made just this year, which we believe indicates the program's appeal as well as its momentum. Our I-buyer program, which we covered in previous sessions Express offers as a strong base with thousands of agents certified.

And we believe that as mortgage rates increase, there will be sellers in distress or under pressure and looking for options. And we believe that Express offers provides a cash option for this clientele with vetted third party investors while keeping the agent at the center of the transaction without us acquiring a single piece of property or taking any balance sheet risk. Additionally, we've launched a single global financial system that will improve our operational efficiency, increase internal controls, and support our scale and global footprint, which is helpful and important. Just to see on this slide coming up, we are one brokerage that's expanding globally and our continued growth in part can be attributed to the compensation model in these countries made possible by our utilization of the metaverse really allows us to build a strong, collaborative, environmentally friendly, and interpersonal community.

Despite headwinds affecting the broader housing market, we're well positioned to capture increased market share. In a slower market, our model is highly attractive to agents due to the competitive commission structure and additional learning opportunities provided through equity, revenue, share, and partner programs. And we saw this play out through COVID and post-COVID, including during the early stages of the pandemic when activity went into halt. Domestically, we are the 2021 growth leader for agent count sales volume and transaction size, and we continue to capture that momentum specifically.

Glenn mentioned the T3 award this morning. Their Real Estate Almanac has recently identified eXp Realty as the No. 1 growth leader year over year in volume transaction sites and agent count. In addition, RealTrends 500 recently identified us as the No.

1 brokerage in the country, its No. 1 top moving transactions, and its number -- top five year mover and sales percentage. Globally, we continue to expand, as folks have mentioned, got regional hubs in the EMEA region, the Caribbean and Latin American region and Asia Pacific, with coverage and operations now in all time zones. Also, with respect to our global efforts, we are today 42% above forecast for revenue and have increased agent growth 314% year over year as momentum continues to build in our new markets.

And as Jeff mentioned, international agent count now makes up about 12% of our total agents, up from 7% a year ago. Our eXp commercial business continues to focus on attracting top productive agents both in the U.S. and abroad. Their focus on productivity is resulting in strong increases in revenue four digit percentage increases year over year, triple digit increases in transaction volume.

And looking ahead, we're really excited. The commercial team is working to diversify the service offerings by strengthening their expertise to deliver great client service in a variety of commercial disciplines. And then lastly, I know you've heard it in prior calls. You heard it twice this morning, and you're going to hear it again because that important to us.

But we really do focus on value for the agent and utilize Net Promoter Scores as the critical measure of our efforts to build and continuously iterate on the best agent centric platform on the planet. Our NPS score of 71 ranks us among some of the best brains in the world, and as far as we can tell, well exceeds the industry average, which we believe is somewhere in the neighborhood of 30. As the first cloud or metaverse-based brokerage in the world, we provide location and time freedom. We enable our agents to do their best work when and where they need to while still providing great opportunities for collaboration, education, community, and connection in our vibrant campus, which we call the eXp World.

We offer robust compensation opportunities, not just in terms of caps and split some of these equity in revenue share, but also with other offerings that are important to you, such as healthcare, true healthcare for agents. Today we've got over 4100 agents enrolled in our healthcare offering. Total enrollment, which includes partner, spouses, and children, is up around 12,000. Health care for agents has been a chronic challenge for the industry, and we're pleased to have arrived at a solution because as an agent, if you're worried about your health, then you can't focus on your business.

And finally, we foster a culture of community through various initiatives, including our ever-growing One eXp diversity and inclusion initiative and our Icon Achiever program. On the staff side, our employee NPS scores continue to be very strong. It's our fifth straight consecutive year being listed on the Glassdoor Best Places to Work rankings for large companies. Today we're at No.

4 and ahead of many well-known household brands and names. John, back over to you. But thank you once again for letting me participate. Thank you.

John Campbell -- Managing Director, Real Estate Services

Yeah. Thanks, Jason. So getting back into the Q&A here. Let's let's start back off with what's one of the positive developments that kind of jumped out from the press release.

Glenn, you guys up your buyback authorization. As you just mentioned, you doubled -- you're doubling the pace of monthly buyback. So talk to us about what drove this decision from the board level.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

And so the couple of things. One, our stock buyback was limited to $10 million a month, which is actually why we came in with more cash on the balance sheet than -- so we bought back 33 million. And so the -- what we have with the board is an agreement to maintain $100 million in cash on the books because we feel that that for us is an adequate amount of cash in order to run the brokerage. So for us, it really was around creating an opportunity to buy back more.

Obviously, we -- it's not going to be a one-month situation. And given our growth rate and continued cash flow, we may need to increase that at some point in the future again, in order to get us back to that $100 million cash balance. So that's kind of where we're -- what we're kind of focused on is what's the appropriate speed. And then we just wanted to also show that, our commitment has been to, one, offset any dilution in the stock relative to our equity programs and in some respects, be able to actually reduce that and bring it back to prior period levels in terms of just number of shares issued outstanding and -- on a fully diluted basis, etc.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. I mean, I think you saw -- yes, I saw a 20% increase in the cash balance sequentially. So you are sitting with a really good balance sheet. Obviously, it's not fun to have your multiple under pressure in the public markets.

But on the on the flip side of that, on the M&A side of things, I mean, you can typically get some stuff, I think, at pretty attractive multiples. I don't know how much this has trickled into the private markets, probably holding up better than what the public markets are, but give us your thoughts about M&A. That hasn't been a huge focus of your story, but just give us your latest thoughts on that.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah, we -- so Kyle Kittleson heads up our M&A opportunities inside the company and he vets multiple opportunities certainly on a monthly basis. Sometimes we'll see different different opportunities even on a weekly basis. We really look at couple of things. One, synergy and culture.

80% of the time that M&A is done, it doesn't work because there's a cultural component that maybe doesn't fit. And so we really are looking at both of those from an M&A perspective. And so we've got, various different things we're looking at. We expect that we'll have some announcements around M&A in the next few months, not any huge M&A that's currently in the works, but certainly some small projects that we'll pull in.

But we really are as I will say, housing stocks in general are under pressure. We think there's going to be some opportunities to pick up some things at some reasonable valuations. They're a little crazy in the last couple of years and so we'll look opportunistically to see what we can pull in if it makes sense both financially and culturally.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. And then maybe one for Jeff here. On gross margins, obviously that's been a pretty big focus for investors over the last two or three years, but still a little bit of pressure year over year. I think almost all that's just cotton.

But you've grown it sequentially for, the second straight quarter. Before you kind of get in the moving parts there, just thinking about the full year gross margins, just help us out on this, if you can. If we were to assume that the average commission per agent kind of stayed the same with greater revenue growth, would you be able to see some gross margin expansion? Would it be flat year over year? Just let us also there.

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah, John. The -- one of the biggest things that we found and it's it's kind of obvious, but it's the price of the units. So as the housing prices have increased, we've seen our gross margins. I mean, if you look historically, we're around an average somewhere around the 8.5-ish, 8.4-ish across, since 2018.

So, I mean, if we see the business, as Glenn kind of pointed out, coming down and the volume coming down toward the end of the year, we think that will actually support the percentage. But, as I mentioned before, I mean, what we really focus on, we focus on the gross margin dollars that are coming into the business. And that's where that's where we make our investment from. So I'd say, historically, they're in the low eights and, we were at 8.3 in the quarter.

So, depending on what happens in the housing market, the prices, if the prices do stabilize, have come down and the way comes down, the gross margin percentage of the up. But we still have a pretty healthy -- a very healthy, actually, gross margin dollar return on the business.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. I think on the investor side, we tend to focus too much on percentages and  --

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah, I think so. I mean, you can see -- I mean the percentages -- obviously, we get big market share, right. So that's a big deal for us and investing in the future is a huge deal for us. So, we're really looking at that dollar figure and that dollar figure has grown substantially every quarter.

John Campbell -- Managing Director, Real Estate Services

Yeah. Percentages do not pay the bills, that's for sure. OK. Longer term, do you see a pathway back to the kind of low double digit margins or gross margins? You guys have done that in the past, but I don't know how much of an impact from ancillary services.

That's actually one of the questions from Slido here but just talk about kind of the impact of ancillary services and what that can do for gross margins.

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah. I mean, I -- I mean, as I said before, I mean, our gross margin, it's historically percentages as mean in Canada, lower eights. And I do believe that we all believe that there's a big opportunity for us in affiliated services and things like, other related business like transaction coordination, high quality lead generation, healthcare, mortgage, title, escrow. So, from what I've seen, there's a point or two over a long period, over the long term that we can have in this business.

Once we get -- you can see the numbers, the -- finish last year with a very high revenue number and that continues to grow. So we think the opportunity there as a percentage to two percentage in the long term to add to the operating margin.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. And then shifting gears to the operating expense side of the business. I guess just first, can you can you give us an update on what the variable kind of versus fix mix looks like today?

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah. I think most of our expenses are in supporting the brokerage. All right. So that's -- those are kind of variable expenses.

We have a lot of variable expenses. A huge piece of our expense is the growth of the business. And that's -- that comes in the form of revenue share. So as the business goes down, obviously, that goes down too.

So that's an automatic buffer on cost. And then we do have the ability, as Glenn mentioned before, when we had to react in 2020 that not something we need to do, but from a from a percentage of -- I'd say the majority of our costs are our variable costs in our business that we can take action on if we have to. But at the same time, we're working extremely hard across the business to increase our revenue in areas like international areas, like commercial areas, like affiliated services. So that's our that's our main focus right now is investing for growth.

And when we get to the other side of this, we think we're going to be in great shape, both in the real estate business and also along the affiliated services lines.

John Campbell -- Managing Director, Real Estate Services

Yeah, that's a good rundown. One of the things we do just to try to get a sense because as you mentioned, I think the fixed cost side of the model is a low, low percent of the kind of cost base, but there is a little bit of a leverage potential there, right. And you guys, we've looked at it typically on a fixed cost basis per agent. So how much fixed cost is required to support, agent basis that you're getting leverage on that for several years.

And then over the last probably year and a half, it's kind of gone the other way a little bit. It seems like that a lot of this investment, you kind of called some of this out, but maybe walk through some of those investment areas and why the spin there has been a little bit faster than revenue growth?

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah. I mean, one thing I would say is that the technology investment that we're taking on out will be taken out of the last couple years is all about getting more productivity across our business. So that SG&A -- that SG&A -- that direct SG&A cost to support growth can go down. So, Glenn, maybe a couple comments from your side in terms of the productivity and technology that we're working on across the business.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah. So we're definitely doing a fair bit of what we refer to as R&D to improve the transaction workflow process. So we've been making some investments around how to make the transaction workflow easier for the agent and also for our internal staff. So that's been some investments.

We're also investing heavily in the portal, Showcase IDX, building out exprealty.com, CA. And then international, we want to get to as many countries as we can -- as quickly as we can. And recognizing that it takes a little bit of time before they get to positive cash flow. But we we've already got to positive cash flow in a number of countries that we've expanded to because of our low cost to operate.

But we still want to continue to keep our foot on the gas to get to those countries, learn what we're going to learn, entering those new countries as quickly as we can so we can make the pivots and adjustments, so we can become major players. And we think that those are the investments and the -- that will pay dividends in future years, especially. Like we're really not focused so much on our, what we call, our short run results. We're really focused on how do we how do we actually achieve the aspirational goals of reaching, 500,000 agents in five years.

And that just takes, continual investment because we think, long term, five years, ten years. How do we truly become the largest, most agent-centric estate brokerage on the planet? And that's really our big driver. Short term, we'll maybe get the stock to do something in the quarter. But the long-term stock is the stuff that really creates, the generational growth engine that will propel you eXp into -- well into the future, and that's really where we continue to focus.

So I know that you in your role may look a little bit at the short term as a predictor. We really focus on sort of that long run view and what are the things that we need to put in place and how do we make those investments so that, five years, ten years from now, we're a super dominant player.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. I mean, I feel like that's the delicate dance with Wall Street, obviously. Investing for the long term while showing near-term results. It's just a balancing act for sure.

I want to hit you with one question. Don't mean for this all to be a zinger, but this is a question we get, quite often from investors. I've seen it in the chat box here. Someone's asking about it.

But Glenn, I believe you've got a standard kind of 10b5-1 plan that's dribbling outs on the share. So, how do you respond to the question, why sell here?

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah. So I prefer actually not to really be selling, but I have options that were set in 2012 that expire this year. And so, ironically, I made the mistake because I was very optimistic around the stock last year. So I took down about half of those options at a higher price.

That was a big taxable event for me. And so, a big portion of that sale or sales were literally to pay the taxes, which were something akin to $16-something million that was -- that came from just an exercise. And then trying to rebuild a little bit of just my own personal cash reserves for me personally. But that's been -- and I did it as a, I think, 9,000 shares a day because it was a really small amount as opposed to just doing one big whack of options, exercise, and sale.

So that was really kind of the idea. I'm not sure I would do it exactly the same way in the future, but that 10b5-1 plan is in place through, I think, September technically. The current one has a floor price of $15 a share. So if it's below $15, I'm not selling.

So that may create a different scenario. For some reason, the stock continues to be under pressure later on the year, but that was really the the whole idea. I still obviously control and own a big whack a lack of stock. Beyond that, that's really my core holdings.

But this is all around just stock options that expire later this year.

John Campbell -- Managing Director, Real Estate Services

Yeah, makes sense. There was a question in Slido. I'm also myself curious about this. Talk to us about SUCCESS lending, the number of loan officers, kind of how far off the ground you've gotten thus far and when you really expect it to start contributing?

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah, it's actually got some green shoots. It's third, third move into mortgage. And we've got 31-plus loan officers in a few different states started in Illinois. I think we've got some in Denver, got some in Arizona.

We're really building out the network of loan officers. There's approximately 30 transactions were done in each of the last couple of months, kind of working out the kinks in the system, the kind lending and which a lot of the Stearns lending team was now part time lending and also part of the JV. They've been really working diligently to create a really good process for our consumers and our agents. And so it's getting some momentum.

It's not huge yet but one of the neat parts of our model versus other lenders is that ours is almost exclusively purchase-based business. We're not relying on any refinance, which there is virtually no refinance going on in mortgage right now. So, we're in a really good position to start to build that. And then also, eventually have our own, more retail oriented success lending branches.

So really approaching it as a kind of a unique joint venture in that it's not exclusively eXp Realty-generated business. These loan officers are bringing in their own book of business. Glenn Stearns has made the statement that he'd like to see 50% of the loan volume actually come from non-eXp related sources. And so he's been really following that path and building up the pipeline of business from those loan officers.

And that he's done this before and this, I think, is the one that that the kind lending team and Glenn Stearns, especially has his heart really into. I feel like it's going in the right direction. And I would say, later on this year, third quarter, fourth quarter, I think you'll start -- we'll actually start to have measurable results, start to show up on our financials.

John Campbell -- Managing Director, Real Estate Services

OK. Great to hear. I've got one last kind of two part question here, big picture. And this is my last question on my side.

But first, you crossed a billion dollars of quarterly revenue last year. That was a pretty big event for you guys. You've now strung together three straight quarters of over a billion dollars, and including 1Q that is seasonally weaker. So you guys are on a really good path, but medium term, near-term, whatever you think, when is the next milestone, the $2 billion of revenue, when do you think you can cross that? And then the second part of that is, you guys have talked to the 500,000 agents in five years.

Let's just get your latest view on that kind of division on that front.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Yeah. Well, my best guess at the moment is that, 2023 we'll have our first $2 billion quarter. I mean, it's possible that it could happen this year, but certainly we've got some macro headwinds and other things. So 2023 is kind of my, first -- where I see a reasonable shot at that $2 billion in revenue in a quarter.

The 500,000 agents in five years. The again, I call it aspirational. I do believe there's a little bit of aspiration to it in terms of the time frame. But I think the number is an achievable number over time.

So I think that we will eventually be, half million agents. International is going to be a great part of our of our market but we love to have internal rallying cries and we love to have these internal sort of like where could we be if we continue to really focus on the agent value proposition and being sort of the most agent centric real estate brokerage on the planet. And we just think that if we do a great job, it's almost a field of dreams. If we build it, they will come.

And so we just continue to work on building the best real estate brokerage on the planet, being super, super focused on, Net Promoter Score. And as a result, that translates into all the other benefits of a well-run organization, which eventually, I think translates into some really solid agent count over time.

John Campbell -- Managing Director, Real Estate Services

Yeah, absolutely. I lied. I've got one more I'm going to squeeze in here. It's actually came in the chat box, and it's a question I was meaning to ask you earlier.

And this is actually for probably for Jeff here. But on the tax benefits, you've released valuation allowances a couple times. Just touch on us -- just touch on, the sustainability of that coming directly from the share issuance and if that should be expected over time.

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Yeah. I mean, it's hard -- as you probably know, John, it's hard to predict. We saw it in our numbers last year. And really what it is, it's the fact that we've sustainably generated net income that over a long period of time, we're now able to take a benefit on the compensation tax deduction.

So it's a function of that cost and it's a function of the stock price. So we -- I've had this question come up. I mean, it should repeat over the foreseeable future, but we really can't even calculate that until we get to the end of the quarter and find out where the stock price goes, what that cost is. But it's been consistently hitting our books for probably like the last three or four quarters.

And we see it continuing, at what level? We're not sure based on those two variables that I just mentioned, but that -- it's just a positive thing for our company that we've been within positive net income for so long. We can now take benefits like this compensation tax deduction. So that's all I can say right now. It's not something we could calculate or predict but it is something that should continue to some extent going forward in the near term.

John Campbell -- Managing Director, Real Estate Services

Absolutely. Well, that's a great rundown. And I appreciate you guys giving me the opportunity to join you again in the virtual world, especially on the heels of such a great quarter. Thanks for the time.

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

Awesome. And Courtney Chakarun, our chief marketing officer is going to wrap up this earnings call.

Courtney Chakarun

Thank you, Glenn. A reminder, we have our annual eXp Shareholders Summit next month. This event is hosted in Orlando, Florida. It's June 19th to the 21st.

You can actually look, if you're in eXp Campus on either side, see the agenda. You can also see in this presentation a QR code as well as going to our expshareholdersummit.com. This year's event is going to showcase company highlights, official business for our shareholders, our leadership, industry leading agents, as I see here today, sharing successes, and special guest features. So with that, we also have a virtual opportunity to view the general session in eXp Campus.

That's where we are today and a livestream link that will be made available on our home page, expworldholdings.com. Thank you for joining us today. This concludes the eXp World Holdings 2022 Q1 earnings fireside chat.

Duration: 57 minutes

Call participants:

Courtney Chakarun

Glenn Sanford -- Founder, Chairman, and Chief Executive Officer

John Campbell -- Managing Director, Real Estate Services

Jeff Whiteside -- Chief Financial Officer and Chief Collaboration Officer

Jason Gesing -- Chief Executive Officer, eXp Realty

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