eXp World Holdings (NASDAQ:EXPI) reported earnings on Nov. 3, 2021, beating Wall Street estimates on both the top and bottom lines. Nonetheless, shares were flat after the report. 

eXp reported rapid growth in almost all metrics of the business and even beat what analysts were hoping for. Here's what eXp reported, and why you should consider adding or starting a position in eXp today. 

Two people getting a set of house keys from a third.

Image source: Getty Images.

What went right

A lot went right for the company in its third quarter. For those unfamiliar, eXp is an online-based real estate company that is growing rapidly, both domestically and internationally. The virtually based company operates in 16 countries, Puerto Rico, and Hong Kong.

eXp has been able to grow so rapidly because of its ability to attract so many real estate agents. It does this through its appealing commission splits and stock-based compensation. Agents can earn up to $1,000 in stock in their first year with eXp, and they receive 80% of their gross commissions on the first $80,000 of sales, which is much higher than competitors' standards of 70% on the first $140,000. After $80,000, eXp agents receive 100% of the commission. 

Revenue grew 97% compared to the year-ago quarter and 10% sequentially to $1.1 billion -- beating Wall Street estimates of $1.0 billion -- and eXp's agent count grew 87% to over 65,000 agents. Residential transaction volume was up 97% to $46.6 billion, while homes sold during the third quarter were over 130,000.

eXp announced that SUCCESS Lending -- the company's new joint venture mortgage service with Kind Lending -- was approved to launch in Colorado, Illinois, and Tennessee. The company also announced it received a net promoter score (NPS) -- a score from -100 to 100 based on customer satisfaction with 70 being considered "world-class" -- of 69. 

Q3 gross profit increased by 70% from the year-ago quarter to $80 million, and net income rose 60% to $24 million or $0.15 per share -- beating Wall Street estimates of $0.11. To reduce share dilution from the shares given to agents for the immense incentives, eXp repurchased $53 million in stock in Q3. It also declared a dividend, adding to its amazing agent incentives. This dividend -- which shareholders received the last quarter as well -- encourages agents to become eXp owners and stay loyal to eXp as agents because of their part-ownership. 

This earnings beat was especially impressive considering increasing pressure from i-buying, which was especially popular during the past six months -- although this concept has cooled down recently as companies realized i-buying is harder than originally thought. Nonetheless, i-buying picked up drastically over the past six months among consumers, making it harder for eXp's business. Therefore, the earnings beat and strong growth are astounding. 

What was lacking

Quite frankly, there wasn't a lot that was wrong with eXp's earnings. Viewed with a critical lens, investors saw that this quarter had slower growth in revenue and profit than in previous quarters. In Q2, revenue grew 183% and gross profit grew 133%, which was much faster than in Q3. The likely culprit, however, was that the company had easy comparables last quarter considering it was being compared to Q2 2020 -- a very bad quarter for in-person real estate transactions. 

Another potential cause might be that income decreased quarter over quarter. Even though revenue and transaction volume increased sequentially, gross profit was flat quarter over quarter and net income fell nearly 35%. This fall was due to a lack of tax benefits -- in Q3 eXp received $13 million in tax provisions compared to $21 million in Q2. Nonetheless, net income would have been down by $5 million even factoring in the tax benefits. 

Even considering these factors, the company's growth is still outstanding. While growth might be slowing, eXp still reported 97% revenue growth, which almost any public company would kill for. While some metrics of its growth might have stagnated sequentially, the key factors in the company's future growth and adoption -- revenue, agent count, and volume -- all increased sequentially, showing good signs for its continued growth.

eXp also continued its international expansion efforts by entering two new countries in the quarter, another important factor for the company. 

Where eXp could go from here

The name of the game for eXp is broad growth. Its goal is to find adoption in the international markets it expands into while gaining market share domestically. eXp does that by giving out the best incentives to agents -- increasing the agent count on the platform and thus increasing the company's volume and market share.

eXp is an underrated player in the real estate space, trading at less than three times sales while rivals Zillow (NASDAQ:Z)(NASDAQ:ZG) and Redfin (NASDAQ:RDFN) both trade near five times sales. That is 67% higher than eXp, but Zillow only had 45% more trailing-12-month revenue during Q2 than eXp, and Redfin had less than half of eXp's trailing-12-month revenue. 

This company is drastically increasing its revenue and volume while competitors have begun to lag behind eXp's growth. This, combined with its intense international expansion efforts, points to a company that is poised to continue growing rapidly for many years to come. eXp still remains one of my favorite plays in the real estate industry, and this quarter only reinforces my enthusiasm. That's why I see today as a buying opportunity after shares dipped 10%. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.