EXPI Q2 Deep Dive: Agent Productivity Rises, Margins Face Headwinds Amid Strategic Investments

Real estate technology company eXp World (NASDAQ:EXPI) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 1.1% year on year to $1.31 billion. Its non-GAAP profit of $0.05 per share was 60.4% below analysts’ consensus estimates.

Is now the time to buy EXPI? Find out in our full research report (it’s free).

StockStory’s Take

eXp World’s Q2 results triggered a negative market reaction, with management citing a challenging real estate environment and the impact of strategic investments as key reasons for underperformance. CEO Leo Pareja pointed to improved agent productivity and retention, noting, “Sales transactions per agent are up 4% year-over-year,” while CFO Jesse Hill highlighted one-time expenses and ongoing efforts to streamline operations. Management also acknowledged pressure on operating margins due to a higher proportion of productive agents reaching their compensation cap, and continued investment in technology and international expansion.

Looking ahead, management is focused on driving growth through new market entries, expanded agent programs, and technology-driven productivity improvements. International Managing Director Felix Bravo emphasized the importance of launching in new countries and onboarding productive agents, while Pareja described the company’s approach as “cautiously optimistic” given ongoing macroeconomic uncertainty. Hill signaled that margin improvement will depend on scaling new affiliate programs, and Glenn Sanford, Founder and Chairman, called for patience as international investments ramp up, stating, “We fundamentally are going to continue to invest until we get to a scale where we don’t have more places to invest.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to higher agent productivity, expanded team initiatives, and ongoing investment in technology and global expansion, while also addressing headwinds from industry trends and elevated operating expenses.

• Agent productivity focus: Management reported a 4% increase in sales transactions per agent and a 9% rise in the number of top-performing “icon agents,” emphasizing that recent programs have attracted a more productive agent cohort.
• Team-based recruitment: Nearly half of new agents joined as part of teams, which are, according to Pareja, 79% more productive than individuals. The cosponsor program, launched globally, has strengthened team-based recruitment and collaboration across 22 countries.
• Strategic tech investments: Investments in AI tools, customer relationship management (CRM) options, and partnerships with platforms like Canva have aimed to boost agent efficiency and brand-building, with management citing a fivefold increase in design activity and faster design turnaround times.
• International growth momentum: The company opened operations in three new countries—Peru, Turkey, and Ecuador—this year, with each market exceeding early onboarding and transaction goals. Management noted a 59% year-over-year revenue increase in international markets, driven by productive agent growth.
• Operating expense headwinds: CFO Jesse Hill identified $6 million in one-time strategic expenses in the quarter, including severance and automation investments, and signaled that ongoing cost discipline and back-office efficiencies are expected to improve margins in the second half of the year.

Drivers of Future Performance

Management’s outlook centers on expanding productive agent teams, investing in technology, and scaling international operations, while acknowledging persistent macroeconomic and margin pressures.

• Agent and team retention: Management aims to increase productive agent count through targeted programs like the cosponsor initiative and CRM of Choice, focusing on attracting high-performing teams and reducing churn among top producers, which is expected to support transaction volume even if overall market activity remains flat.
• International market expansion: Plans to enter new countries—including Egypt, Japan, and South Korea—are intended to diversify revenue streams and build a global presence, though management cautions that profitability from international operations may remain limited for several years as investments continue.
• Margin management and automation: While current gross margins are pressured by a high percentage of agents reaching their compensation cap, the company expects future margin improvement through automation, back-office efficiencies, and growth in affiliate programs such as Land & Ranch and SUCCESS Enterprises. However, management also notes that broader industry headwinds, like stable or rising interest rates, could limit near-term margin gains.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the pace of agent and team recruitment, especially in newly launched and planned international markets; (2) the impact of AI and automation investments on operational efficiency and gross margins in the second half of the year; and (3) the growth and profitability of new affiliate programs such as Land & Ranch and SUCCESS Enterprises. Execution in these areas will be key to sustaining future revenue and margin improvement.

eXp World currently trades at $10.21, down from $10.84 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

High Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.