Good afternoon, everyone. Thanks for joining this fireside chat to discuss the fourth quarter earnings results for eXp World Holdings. We've got eXp World Holdings' CEO, Glenn Sanford; and CFO, Jeff Whiteside with us today. My name is Tom White. I'm a research analyst at D.A. Davidson, which is a full-service investment bank.

I'm one of these Wall Street analysts that covers EXPI shares. I think I have the distinct pleasure of being the very first analyst to pick up the stock for coverage as well back in early 2018. So it's been a very, very fun ride watching the business grow and getting to know the team. .

Just quickly in terms of the format for the call here, we're going to -- Jeff and Glenn are going to make some quick intro comments, then I'm going to help kind of moderate a little fireside chat here, and then we'll open it up to Q&A. [Operator Instructions].

So maybe we'll kick things off here. Jeff, I don't know if you want to go first. It sounds like you have some slides just to give a quick overview of the quarter. .

Yes. I do, Tom. Thanks very much, and thanks very much for hosting. Welcome, everybody. Good afternoon, good evening, and thank you for joining us in our Q4 2020 summary. .

So just to get started, I've got a few slides. It won't take too long. So that's -- that would be us. So if we start with -- we're very excited to report a strong fourth quarter in 2020. I'm very proud of our results in the full year of 2020, especially considering that the crazy year was with COVID. And we're just really excited about going into 2021.

But to look at the fourth quarter revenue, the revenue increased in the fourth quarter by 122%. And that went from $274 million in Q4 2019 to $609.3 million in Q4. So when we look at the full year revenue, we are going from an increase of 84% from $980 million to $1.8 billion in revenue. So that was a great year.

As I said before, we had -- from a revenue standpoint and from a growth standpoint, we had a great Q1. A lot of -- we had a stall, but we had 33% growth rate in Q2. And then the second half of the year was extremely strong for us from a revenue standpoint. .

And our revenue is based on primarily the agent count in the business. We had rapid agent growth in Q4. The number of agents and brokers who joined us in eXp in Q4 increased 15% to 41,313 compared to 35,877 at the end of Q3. That was a net add of 5,336 (sic) [ 5,436 ].

And for a full year, our number went from 25,423 to 41,313, and that was an increase of 63% year-over-year agent account. .

Our next metric that we look at is net income. And in Q4, our net income increased to $7.7 million from $0.8 million in Q4 of 2019. And for the full year, our net income was $31 million, and that was compared to $9.6 million in 2019. .

Record transactions in Q4, and we went from -- in Q4, the record transactions went from 38,611 to 82,055, Q4. And then for the entire year, we did 135,322 transactions in 2019, and we're up 77% to do 238,981 in the full year. .

And finally, from a volume standpoint -- okay, 1 second. And then we finally, we finished off with a volume this year of -- where is my volume number? I'm sorry about that. Annual transaction volume increased 89% from $38.2 billion to $72.2 billion. .

So great numbers across the board. I just want to say a couple more things before I get -- before I finish my original comments. So some big news on the material weaknesses front. So this year, the company remediated all of our material weaknesses in the business, and you'll see that in our 10-K.

We rebranded and updated the EXPI realty brands and our EXPI corporation. We launched 5 new countries -- Michael will get into that, increased the stock buyback to do -- to offset dilution.

And we still have 0 debt on the balance sheet, completed acquisitions in Showcase IDX, and continue to build a great product in VirBELA in the commercial front end.

And then -- and finally, we really significantly strengthened our leadership team across the entire business and especially in the brokerage, international, marketing areas, commercial, finance and technology. .

So those are some opening comments, Tom.

Glenn, would you like to say a few words?.

Yes. I'll touch on a few things. This last -- Q4 was a really good quarter for us. We ended up making a lot of progress on a number of different fronts. We ended up -- we had done an acquisition earlier in the year with the Showcase IDX, and they were able to turn on, in the fourth quarter, our Canadian portal, exprealty.ca.

Early this quarter, they turned on exprealty.com. They're early stages in the development of our community portal, but we were able to get off of a third-party vendor.

So we're able to now control sort of our future as it relates to building a robust consumer experience and also a robust agent experience when it comes to lead gen and then being able to integrate a lot of the things that we have been wanting to do for quite some time around things like affiliate services, incorporating things like our Express Offers platform, et cetera, all into one, unified consumer and agent platform.

So that was really strong on the eXp Realty side. .

We also -- as most of you all have noted, we purchased SUCCESS magazine. We closed on that in December, I believe it was, of -- and that has been a really interesting acquisition. We were the largest single customer of SUCCESS magazine.

And we've been doing that because we've been mailing the magazine to our agents and brokers for the better part of a couple of years. And we -- if you think about sales in general, not to mention real estate sales, real estate sales and all sales is, to some extent, an extension of personal development. You're learning sales scripts.

You're learning a lot of things about yourself, how to handle rejection, how to prospect, how to do those things that make sales, sales. And so SUCCESS magazine, for us, really represents an extension of a moat around eXp that will allow us to have certain things that are highly proprietary to us.

And having the longest-running personal development brand in the history of personal development inside of the eXp World umbrella of companies helps solve for that. .

Jeff touched on the fact that our team is working really, really well together.

I feel like we are now -- and it shows up in our internal Net Promoter Scores, our employee Net Promoter Scores, our Glassdoor scores and everything else, but we really do have a team that enjoys building this company together, which I think is, in my mind, very much of a leading metric on how we're going to do in future quarters and future years.

The more that we enjoy building this company for our customers and our agents and our brokers, the better we're going to be able to deliver on those value props. .

And so obviously, Michael will talk a lot about international, and you'll find that he's somebody who is really passionate about growing that side of the business, but Q4 was great. .

We ended up 41,000 and change in agents. You may have noted in the press release that we put out, accompanying the Q4 and year-end earnings that went out earlier this morning, that we crossed over 48,000 agents, so a net add of effectively 7,000 agents so far year-to-date.

And so that's an incredible feat when we think about just the speed of growth and the continued acceleration of growth and how the value proposition really matches up with our agents, brokers and staff. .

And then, of course, VirBELA is there as another platform that we really -- I mean obviously, you're in the platform now, and we're continuing to improve the platform. We're continuing to get some pretty iconic customers and clients through that platform.

But more importantly, we're able to use this platform to actually enable our ability to scale, collaborate, build community and ultimately deliver the results that we have for agents, brokers and staff, which ultimately translates to the numbers that you got to review. .

So that -- with that, I'll turn it over to Tom and... .

Good. Terrific. Appreciate it, guys. Thanks for the comments there. First off, I guess I just wanted to say to both, congrats on a great end to the year. It was a crazy year. It was a challenging year, but it also seemed to be a pretty transformational year for the real estate industry overall and specifically for you guys. .

Maybe just to kick things off, Glenn, I'd be curious to hear just your high-level perspectives on how you, I guess -- I imagine you're pretty proud about how the business performed last year given the pandemic. It really seemed like a new kind of inflection point in your growth. I would just be curious to hear about what you think is driving that.

And what drove this kind of new inflection point for you guys?.

Yes.

So first and foremost, I think the fact that the -- what had taken place in Q1, Q2 of 2020 with the pandemic and the lockdowns and the fact that real estate agents weren't able to easily go in and out of offices, there was a lot of additional overhead just to go to physical offices, played obviously well for a company that doesn't have physical offices for in a traditional sense.

We've got the virtual office, and so that's obviously allowed our agents and brokers to work together. .

I think the other piece is that we've really got to a critical mass. And the quality of agents that we've been attracting have been phenomenal. And that's continued to lend itself to continued growth in the model. I think the other piece is that we've -- we figured out how, early on, to build a real estate brokerage that could pivot if needed.

And so we were able to pivot in April of 2020. We reduced some staff. We hired back more than we let go because Q3, Q4 was stronger than we thought it might be in April of 2020. But we were able to scale down and scale back up very quickly, which resulted in us having really -- a really strong Q2.

Even though revenues were up 33%, we ended up significantly more profitable in Q2 than if we likely had a model that -- where we were continuing to expand because we would have been investing in future expansion, but we were able to reduce staff quickly, circle the wagons and ultimately put ourselves in a position to be able to scale back up once we knew that things were not going to be as dire as the potential could have been.

.

And I think that's the thing that we have going for us that, again, our other large competitors don't have going for them. It's that in a downturn, there's a lot of fixed expenses that they won't be able to get out from under.

And for us, we built it this way on purpose because we launched this in 2009 initially when the market was tough, and we said, "Hey, we can't afford physical offices." And so we ultimately were built for both good economies and bad economies. .

Makes sense. Thanks. A ton of stuff that I want to dig into here about the business. But maybe just quickly, we'll start on -- start with some questions on kind of the broader housing market and sort of the macro backdrop. And obviously, last year was, I think, a surprisingly strong year for residential real estate volumes.

I don't think many people expected how healthy and robust the market would kind of snap back after the initial days of the pandemic.

Can you maybe share your view on what you think kind of drove that snapback, that expansion in the market last year and how you think the market looks kind of entering 2021?.

Yes. So first and foremost, interest rates dropped to historic lows into -- I think we're still sub-3% on mortgage -- 30-year fixed mortgage rates. And even in the Great Depression, I don't think that it got down to 3%. I think that was sort of the historic low even at that point in time.

And so we're -- when we look at buyers that have income and everything else that goes along with it, they can just buy more home for the same mortgage payment. So they're looking at the opportunities to buy homes while interest rates are really low and locking in the property that they would like to live in.

And so I think that was probably the biggest thing with all of the Fed doing, all the stuff that it was doing, the stimuluses that took place. Obviously, we got another stimulus that is just in the process of getting fully passed, and then that will get out to everyone.

But those stimuluses plus low interest rates, I think, were big drivers in the housing market, along with a lot of other things. I think the stock market benefited from those same things in general. .

I think 2021, as we get -- as we start to work out of where we're at, I think there needs to be some interest rates increasing. And then most likely -- I'm certainly not -- I don't know the crystal ball is working exactly right, but I suspect there's not going to be much more in the way of stimulus.

So that would suggest that later on in this year that we'll start to see some moderation of the housing market. But it's a combination of low interest rates and stimulus that I think were the big drivers in 2020. .

Makes sense. What about -- we get a lot of questions from investors around seasonality of residential real estate. And obviously, last year was sort of very atypical in terms of the typical seasonality we see in this industry.

Your results are great evidence of that given how robust and strong your fourth quarter is, which typically isn't a huge quarter for real estate.

Do you think we're -- we have another year here of, I don't know, maybe less seasonality as folks continue to adjust to work-from-anywhere trends or what have you? Or do you think we maybe return to normal seasonality at some point? Or do you think this is -- it may be possibly sort of a new normal?.

Yes. I think Q1 and Q2 are going to see -- just in terms of year-over-year numbers, are going to see strong biases, the upside just in terms of just comparative quarters. I think we -- Q3 was super strong last year, and Q4 was obviously really strong not just for us but for everybody in the housing market.

But I think that using that as the next backdrop, then I think you're going to see some moderation in the growth in Q3 and Q4 just because the growth that you're measuring against was so strong in 2020. And so those -- that -- so if I look at -- Q4 for us was we were above Q3.

Normally, I think in the last 2 years prior, our Q4 was actually below our Q3 numbers. And that was because of the seasonality. And I think if we look at this year, nobody knows exactly what's going to go on, but I wouldn't be surprised if Q4 is, again this year, less than Q3.

And Q3 will be somewhat tempered compared to Q3 last year even though, just based on our growth rate, it should still be strong. .

Okay. That's great. Maybe we'll shift gears here and dig into some of the operational metrics for the business. And for you guys, the main area to start, obviously, is agents and agent count. And obviously, agent growth was super strong in 2020. And it seems to be inflecting up again here in the first quarter. I think you've said north of 48,000 agents.

Can you maybe just talk a little bit about the growth dynamics you're seeing sort of so far in early 2021? Is it being driven by international to any significant degree? And kind of how do you expect the agent count to kind of play out for the balance of the year?.

Yes. So certainly, international is driving a little bit of that growth. There's no doubt about that. The other part is that our model is -- I think based on sort of the -- what took place in 2020, our model is now recognized as a totally viable and legitimate model for the entire industry.

I think -- we started to see some competitors that are trying to -- very small, but they're trying to do similar things and -- but I think that's the key. It's that our model is now accepted as one of the standard models in residential real estate. And 2 years ago, that would not have been the commentary.

The commentary would have been a fair bit different, but now it certainly is the case. So that plus international. International is going to be a big portion of our growth story for the foreseeable future. We're 2.5%, 3% U.S. agent base at eXp.

And you sort of think about, does that grow 50% potentially year-over-year? And then what is international then sort of add to that mix? And so you kind of play with the numbers, and international could be a big percentage of 2021 numbers. .

Cool. Yes. I definitely want to dig into international a bit and kind of take advantage of Michael being here. .

Maybe just sticking with agents, domestic agents for a bit, any kind of update on what the typical new eXp agent looks like? Are there any particular regions or competing brokerages that have been particularly fertile for you guys in terms of attraction recently? And also curious whether you're seeing growth in the overall U.S.

agent population just due to the strength in the market.

I mean are -- is it bringing people who maybe were semi-retired or kind of sitting on the sidelines, kind of back or bringing new agents into the workforce?.

Yes. Well, certainly, with the housing market in general, there's a lot of people who are getting their license. We saw this take place in 2005, 2006, 2007 when the housing market was really hot. We're seeing a lot of people getting their license because the business has been really good the last few years. And so there definitely is that. .

I think in the months of January and February this year, I think we ended up converting somewhere between 14 and 17 independent brokerages to the eXp model. So -- whereas normally, you'd think of the mainline brands, Keller Williams, RE/MAX, as being the brokerages that we bring over the most agents from.

The reality is that we're starting to really pull in a lot of the independent brokerages that are looking for the -- they're -- basically, the tune is if we can't beat them, join them.

And so a lot of the independent brokerages are going, "We can't offer the same types of benefits to our agents that eXp provides." And eXp, because it does run on fairly low margins, they don't see that they're giving up a whole bunch by coming over to eXp.

In fact, they're probably, on a net basis, gaining when they look at all the value they're able to bring to their agents by joining this platform. So we're seeing a lot of independent brokerages, and I think that's where we'll see a lot more growth in 2021 as well. .

Okay. Great. [Operator Instructions] Glenn, I want to touch on the Net Promoter Score and the importance of that metric to how you guys run the business and how management makes decisions. There's a big uptick there in Net Promoter Score.

Can you maybe just talk a little bit about what that improvement means, you think, and again, how you guys kind of use it for internal decision-making?.

Yes. So Net Promoter Score, for those who aren't familiar, it's the question, on a scale of 0 to 10, how likely is that you'll refer a friend or colleague join eXp Realty? And so that's the basic question. And from there, you get a score. And from that score, we're able to then make decisions as a team to help improve that score.

And so when we think about agent experience, whether it be on transactions, onboarding, just overall eXp, we measure multiple places along the agent life cycle. And what it does, quite frankly, is it allows us to work as a team rather than having just to mandate, here's our priorities from sort of a corporate top-down perspective.

And so by using the Net Promoter, that allows any team to work on a part of the business to -- on improving those scores. .

So we're -- we've got good scores now, got some of the best scores we've ever had in the history of eXp. And one thing that we noted back in around 2016, 2017 is if our scores were around 60, then we weren't growing that fast. And when our scores were above 70, we actually were growing faster and we retained a lot more of our agents.

So we've really used 70 as sort of the number that we don't want to dip below in any category of the business because we know that below 70, at least for us -- I don't want to say bad things start to happen, but we start to see some pain points where agents might leave us that we'll sit there and go, "Man, we should have solved that particular challenge.".

So for us, just using that basic score and then asking the second question, which is, "What influenced you to give us that score?" And if obviously they gave us a 9 or 10, they're going to tell us all the things we did right. But if they give us a 7 or 8 or a 6 or below, they'll tell us things that we can improve.

And if we see enough of that data show up in our scores, meaning that, "I didn't get a phone call back," or "I can't reach my broker," or you see these different themes show up, then it allows our team to go and actually work on solving real issues that make real impact to our agents.

And I know Jeff's all over NPS and works with the team really closely on it, and I think it's probably the #1 metric other than making sure we're -- we've got a sustainable model. .

Yes. And I'd add, Tom, that we do the same thing for employees. So our eNPS score, which is our employee NPS score, we do the exact same thing. And the score is above 80. And you can see on the Glassdoor, we're at 4.8. So we do the exact same thing. We figure out what's going on, how we can make it better and fix things right away.

And we do that operationally as well as with employees. .

Okay. Maybe just one more on agents and then we can -- I want to shift over to international for a bit and then maybe talk about some of the financials.

But Glenn, in the past, you've given some -- I guess I won't call it guidance per se but sort of internal targets maybe about what you think you can get domestic agent count up to -- over a 1-year, 3-year, 5-year period.

Any kind of update there on your current thoughts? I think I caught you at a conference recently, putting out some pretty robust domestic agent targets. So I just wanted to see if I can get you to clarify or confirm this. .

Yes. So for us, when I do the numbers for -- the way I've done the math since the beginning is I believe that our model will grow at 50% year-over-year for quite some time without any -- obviously, we've still got to do good work, but if we actually work on the model, we should grow in excess of that.

And so when I look at the model, right now, my thought is domestically, we should be growing somewhere around 60% to 70% this year. And internationally, we're going to grow really exponentially because there's a much smaller number of agents, but the value prop is really matching up well in these different countries. .

So you sort of add those 2 numbers together. And I know that this year, the internal aspirational goal is 100,000. I'm still -- I still feel like that's a little bit aspirational, but it's less aspirational than when I was talking about it in Q4 last year.

The reality is that a few things go right for us and we may, in fact, have something pretty close to that number at the end of this year. But again, it's -- there's a lot of things that have to go right. But we start to get up into the 80,000-plus agent range.

I feel like that's a pretty doable number even though that still represent a big growth rate for 2021. .

Yes. That would be amazing. Maybe a couple on international. So that was another thing, I think, that stood out to me last year. It was just that in a year when nobody was getting on planes or traveling, you guys were popping up all these new international markets.

And so maybe -- I know it's early for a lot of these, but maybe you guys can talk a little bit about which of these new geographies you're kind of most excited about either because like structurally, on paper, they just look really appealing or attractive for a model like yours or just in terms of what you're seeing in terms of early agent momentum.

.

Yes, Michael. Go for it. .

Sure. Absolutely, Glenn, I'll grab that. And Tom, thank you for the question. And you're right. You were just starting to describe what the accomplishments were last year. And imagine this. We opened South Africa, India, Mexico, Portugal and France all within a span of 2 months without ever getting on a plane in the middle of a pandemic.

That is probably something that's not been accomplished in our industry. So this is something where the model became proven on a global scale. There are some incredible markets that we've entered. I think that what we've done in India, in Mexico, in Brazil, which we just opened 1.5 weeks ago, these are huge markets.

These are markets with a very large number of agent counts. These are numbers where everyone has already started to adopt, in a very large way, our platform. .

And so I think if we start talking about markets which we are excited about, we're excited about all the markets that we enter. But I think that where we're looking at is things that have a large number of agents in market that have a large market size, a large size of population and a very healthy real estate market in and of itself.

So I think Brazil, India and Mexico would be markets that, I would say, to really keep a keen eye on. .

Okay. Terrific.

And then can you just talk a little bit about how you overcome maybe the obstacles of being a brand-new brokerage in some of these markets? Is the goal -- is the sort of the strategy around expanding in these markets all that different from what you guys have done in the U.S.? Or is it very much like kind of a local market by local market thing? You've got to win over or attract a high-profile agent who people pay attention to and then it sort of builds.

Or is there a different kind of strategy for how you look to grow and expand in these new markets?.

I think it's a combination of a few things, Tom. I think that the idea is that we're building a very substantial global brand. When I joined eXp last year, in the beginning, you started in some of these markets we were entering, having to explain the success that eXp had had in the markets that they were already in.

We don't need to do that anymore, and it's extraordinary that that's happened in such a quick period of time. It's the idea that everyone knows eXp when we start talking about eXp. It's the idea that now we've got 48,000 ambassadors across the world that are telling the story in an organic format.

And the markets that we're entering now, it's less about who is eXp and more about the cohesiveness that we're doing into that platform where we serve in a local market. .

The idea that's really been great with this model is our agility. We actually have the core model of what eXp is with a very generous commission split with the stock options and with the ability to create a revenue share. All of those things remain the same.

However, the model itself and the numbers all differ in the country that we're in so that we have a local competitive advantage. So the idea that with that agile is what has allowed us to be as successful as we have been as we've entered these new markets. .

Okay. Maybe just a last one on international then I'll shift to some financial questions and then we can go to some of the audience questions. I think it was back in November when we were speaking, Michael and Glenn. The topic was kind of international agent mix.

Like what percentage of EXPI's overall agent count would be -- could be international, say, by the end of this year. And I think, Michael, you were throwing out maybe like 25% like of 100,000 agents ending the year. Curious if you have any kind of updated views on what your agent mix looks like, U.S.

versus international, say, either exiting this year or maybe in 3 years or 5 years? I mean, could this be -- I don't know. Could this be like a 50-50 type of business in terms of agent count in 5 years? Or is that... .

I think that if we're looking at a 5-year time frame, it absolutely can be. It's the number of agents that are across the globe. It allows us the possibility to get there with really an internal goal that we have. We're certainly looking at north of that 20% number. We are very much on track for that.

And we are still very, very bullish on what we're doing. We're -- as we say, we're just getting started, and the reception has been extraordinary around the globe. .

Okay. Great. Maybe I'll dig into just a couple of questions about the financials and maybe starting with gross margins. They were up nicely on a year-over-year basis for the year, but in the fourth quarter, they declined a bit year-over-year.

And I think, Glenn, you've talked -- maybe you can elaborate a little bit about some of the impacts there and how we should think about the trajectory of gross margins here over the balance of 2021. .

Yes. So our gross margins are highly influenced by the sales volume and agents capping. And coming out of a really strong Q3 and then having a follow-on, really strong Q4, put a lot of agents in a position where they basically paid the most money they'll pay to eXp for their given cap year. And so that created some pressure on our gross margins. .

And then alternatively -- I mentioned a little bit about Showcase IDX. Alternatively, we're really getting into a position where we should be able to actually increase a little bit of the gross margins.

I don't know what percentage that is, but I think that there's going to be some margin expansion once we're able to get consumers in a pre-approval cycle, get more properties through our Express Offers platform, which has some nice margins in it, and then also get some of the other services, title, escrow, et cetera, through the mix.

And so this -- by -- most likely by Q3, we'll actually have those services actually built into our consumer platform, and that should start to play out into Q3, Q4, being able to increase some of those margins from there. .

And Tom, on the topic, I mean it was an extraordinary year in Q4 because usually, as you know, the margins go back up in Q4, but the volume was just huge, and that was the pressure on margins in Q4. .

Okay. And just, I guess, over the next couple of quarters, not to be so short-term focused, but obviously, the first quarter looks to be like another strong year.

I mean how should we think about, I guess, the kind of the timing for when agents' cap years resets? And I guess -- I remember a couple of years ago, you guys implemented some changes to make sure that you were really kind of optimizing around the rev share and doing so in a way that would enable you to hit or at least kind of approach that kind of 10% gross margin target that you talked about for core brokerage.

How do you feel -- I guess like outside of the big spike in volume because of the robustness of the market, how are you feeling about being able to get to like a 10% gross margin in core brokerage before some of the ancillary stuff?.

Yes. I think it's -- I think we've backed off.

And we really -- I think even starting in early 2020, we really backed off the top line number of 10% gross margin for core brokerage just because as we learned more about how all this mixes together, it would be tough to get there if we didn't fundamentally change the model, which we don't have any interest in doing because our model makes sense.

It's attracting a large number of agents. It's the -- really the best model in the industry. And for us to get to 100,000, 200,000, 300,000, 500,000, whatever the number is eventually, we need to make sure that we're highly competitive for our agents and brokers. .

And then -- and there's the other side which is the mortgage, the title, escrow and other services, which would be where we would expand gross margins. But we do think that on the -- on a net margin basis, we're really focused on what is that -- what are all the things that we can do to get that to closer to 4% on a net basis.

And so when we sort of look at that, we think that there's a path there that's a lot more viable because we really were talking about the 10 6 4 model. We think that there's something less than 10% on the top side, there's something less than 6% on the expense side, and we think that 4% is still a viable sort of net number as we continue to grow. .

Okay. A question from an investor just on financials, and then we'll get to some of these Slido questions which look interesting, too. But the question was just on -- to that point, Glenn, about G&A and some efficiencies there. It looked like G&A ticked up a little bit quarter-over-quarter.

Can you maybe talk a little bit about, Jeff, what the driver there was and how we should think about that line item in OpEx kind of going forward?.

Yes. I think the way we look at it, Tom, is that we started off the year at 10.3% of revenue, and we ended the whole year at 7.1%. So we got about a 24% productivity on the SG&A. So that -- and that's kind of -- the number went down significantly in Q2 and Q3 then went back up in Q4 as we added more people.

So as we look at it, we think we can run somewhere around that 7% to 7.5% SG&A line. And so that's how I would look at it. So we are getting productivity. We have -- we're not spending more than we need to, but we will spend and we will invest to support our agents and support that -- the NPS and the eNPS scores.

But the 7.1% to 7.5%, it looks like that seems to be a bit of a number that you can look at going into 2021. .

Okay. Great. .

Overall for the year, I'm talking about. .

Understood. I'm not sure if you guys can see the Slido screen, but I'm looking at it right now. It looks like -- maybe we'll just go top to bottom here from what I see. It says, "Aside from VirBELA, SUCCESS and IDX, are we considering expanding into different businesses? Have we considered the creation of a global MLS to help global agents?".

Yes. So global MLS is a -- it's a unique idea that we could look at doing when we get to some sort of critical mass. We'll have some internal marketplaces and some internal ways to advertise properties to consumers in our websites. But the reality is that most consumers know where they want to search.

And so when you think about a global MLS, as we build out exprealty.com to feature all our properties across all the markets that we serve, it will serve some of that function. But for the most part, what we have right now is VirBELA, SUCCESS, Showcase IDX, eXp Realty. Those are our 4 primary businesses.

And Showcase IDX is really the extension of eXp Realty. And we don't really have a large appetite for expanding outside of those general spaces. Obviously, mortgage, title, escrow inside of realty would make a lot of sense.

But I think we've got more than enough stuff to work on for the next year, and so I don't expect us to do any other businesses this year. .

Okay. Next question. And I think maybe, Glenn, you touched on this, but is there a hard date -- a hard start date for the integration of Showcase IDX into the eXp platform? And Glenn, maybe I'd just add.

Can you give maybe a little bit more color for investors just what exactly will it look like and what it will mean for the core brokerage business?.

Yes. So Showcase IDX is -- they're a technology team that builds consumer-facing websites featuring homes that are part of the MLS ecosystem that eXp is a member of in each of the markets that we're in. So U.S.

and Canada have very robust MLSs, and so we're able to tap into that data and then we're able to create rich displays of that data, add in potentially some other data sources to create a unique consumer experience, and then consumers would search those websites very similar to the way that we did searches for Zillow, Redfin, realtor.com and lots of other websites that future properties.

But they would be able to use that. And they're already using it. So we already have Showcase-powered exprealty.ca, exprealty.com. And so it already exists.

The -- and then we'll just be enhancing a lot of the features and functionalities as we go along both for consumers and then ultimately as well for agents and brokers that are working with consumers on those platforms. .

Okay. I'm going to skip down to the one -- the question about the NAR-DOJ settlement. And Glenn, would be curious to hear you opine on that. .

And also curious to hear if you have any thoughts about the latest lawsuit. I think it was filed by REX against Zillow and the NAR. What do you think the future of the MLS in the U.S.

is?.

Yes. So I don't really think that there's going to be a lot of difference quite frankly. I think there's different players that would benefit from MLSs sort of getting disrupted in some way. I don't actually think consumers are those -- are included in that mix. I think there are companies that have different models that they if.

[Audio Gap].

websites, then they potentially make more money but know that, that it's actually truly a consumer benefit. That being said, the idea of displaying buyer agency commissions, that's part of the MLS. It makes sense. It's now being done by most brokerages around the U.S. that displays that. I don't think that actually changes anything fundamentally. .

I think there's -- and I haven't studied too much on REX' lawsuit with Zillow, but I think that they're trying to figure out and litigate their way into an industry. And I'm not sure that that's -- that, that approach ultimately will work for them and -- but that doesn't mean that they're going to stop working on those fronts. .

Okay. There's a question here about what's happened in the stock in recent weeks, I guess coincidental with the stock split. Glenn, I don't know if you want to weigh in on that or not. .

Yes. Well, a couple of things. One, on an adjusted basis, when we announced the stock split, the stock was actually trading at a lower price than it is today. So when the stocks got announced, there was -- a lot of times, what can happen. And of course, Tom, you probably even opined on it.

But a lot of times, a stock split gets announced and a lot of people jump into the stock, then the stock splits. People have twice as many shares as they had before. They sell a few shares. It puts pressure on the stock. .

But on balance, the thing that we were trying to solve for was making sure that agents were getting a meaningful number of shares when they were being awarded shares for various activities inside of eXp.

And with the stock price going up and getting close to that $70, $80 a share range, which was when we announced it, it really was -- put us in a little bit of a quandary as to an agent may be getting awarded 2.3 shares or something for an activity or, if the stock continued to go up, even being fewer shares than that.

And that just -- there seemed to be an opportunity to increase the number of shares and to keep it in a more modest range. .

Okay. There's a question here about how you guys are going to grow your margins over time to increase net income. I think in some of the prior answers, you've touched on some of the things here. But maybe you can respond to that one. .

Yes. I think we did pretty much cover that. I think there's -- the other side of it is we do have these other new or business units to eXp, including SUCCESS magazine. The personal development space is -- it's a $14 billion a year industry just in the U.S. alone. We have the longest-running personal development brand.

It's pretty -- there's a really high-margin business, as I've learned even in the last 5 months that I've been involved with the SUCCESS magazine, a lot of digital products. So we think about other things that we can do. We think that there are some really, really cool things that we can do in that business that we'll eventually add to the mix.

But on the core brokerage, it's pretty much the things that we've already talked about. .

Okay. There's a question that asked about buybacks, and maybe that's a good time for me to ask this question which kind of touches on that. And it's around capital deployment. And you guys are sitting on a pretty healthy cash position these days, certainly significantly better than this time last year.

Just kind of curious about how you're thinking about deploying capital M&A, share buybacks, further investments in kind of your existing businesses. Any kind of color you can share on what you guys might do with the cash on the balance sheet. .

Yes. I'll take that. So we look at our company. As you know, we have -- we still have 0 debt on the balance sheet. And so we look at our year coming up. We believe we have a lot -- we have as much capital as we need on the balance sheet, but what we're trying to do is offset the agent equity plans from a dilution standpoint.

So that's why we've increased the buyback, but we feel with that increase in the buyback and with the cash that's generated from the business naturally, we have enough capital on the balance sheet.

And I think if -- we've had many discussions that if we need it, more capital on the balance sheet to do a significant acquisition, we do believe we have the opportunity to do that. But there's no need, at this point in time, to raise incremental capital to go through 2021. .

Okay. Sounds good. The question about the P&L impact for Showcase and SUCCESS, Glenn, you just sort of touched on SUCCESS a bit, but maybe you could talk a little bit more about how Showcase impacts the financial model. I'd be curious to hear that. .

Yes. So a couple of things that you can look at Showcase. In the short run, being something we're investing in, we've grown the team on Showcase from the 8 -- 6 to 8 people that came over. We're increasing that likely upwards of 30 people, engineers and others, to actually build out this robust consumer platform. .

Alternatively, once all of that gets built out, we are also a big customer using a third-party platform called kvCORE by Inside Real Estate. And we believe that we can reduce the expenses that we're spending there for a third-party platform. And so in the short run, I think there's investment that's taking place.

In the longer run, we think that there'll be an offset. And then more importantly, over the midterm, we're going to actually be able to create new revenue opportunities through actually controlling our own portal.

So that's where we talked about Q3, Q4, being able to condition consumers around mortgage, title, escrow and other services that eXp provides will be much easier when we can control the ecosystem. And we're generating thousands of leads a month already through that platform, which is great to see.

But eventually, we believe that once it's built out, it will generate hundreds of thousands of leads for agents and brokers on a monthly basis. .

Okay. Maybe just a quick follow-up on that and specifically how Showcase maybe will help you drive attach rates for some of the ancillaries. And you mentioned kind of conditioning consumers.

Can you talk about -- a little bit about, like, I guess, maybe agent buy-in for your mortgage and title offerings? Is it also a situation where you might have to sort of condition or educate your agents on kind of the benefits of maybe using your mortgage and title offerings? Or is it really more a situation around trying to get consumers to use these products?.

Yes. It's a little bit of both. One, we've got to have good products. We've got Silverline Title & Escrow, which I think is -- that's in pretty good shape. Our mortgage is -- our partnerships right now aren't as strong as we'd like them to be. So we're still continuing to work on what that will look like as we go forward.

But the idea is that as consumers hit our website that they would be prompted with, "Have you got preapproved? Do you know what you're qualified for? Here's the benefits. Here's the rates that are currently available to you." And so that's one stage of the exercise. .

And then because of that, if consumer -- if the agents already know that the consumer has qualified for a loan and that the prework has already been done and we can create the right interface with the agent, then the buy-in is a lot easier than trying to go to an agent that's working with somebody in their existing database, have already had those pre-conversations and have already connected them to a mortgage officer that they know to get them preapproved or prequalified.

So by getting the consumer earlier in the funnel, helping them get preapproved, then when -- as those relationships continue to develop, agents are more likely to say, "Hey, why don't you fill out the mortgage piece on exprealty.com to at least see what you're approved for or what you qualify for?" And then if we can make sure that the relationships and the touches with the agent and the consumer are strong, then again, it should be much easier.

.

But if we were to ask an agent to go from cold to using a mortgage product, I think what we found and most other companies have found is that's a more difficult ask because you're asking them to trust a third party that they may not have ever used before to hopefully get their client approved.

And if they -- if that -- they mess up, not just the consumer suffers. The agent suffers because they were potentially expecting to actually get paid at the end of the transaction. So we got to make sure that all this stuff lines up, and we have to do it in the right order. .

Terrific. Makes sense. So we got about 3 minutes here, and I see 3 interesting questions here remaining on the Slido.

So Glenn, I don't know if you want to do a little bit of a speed round, and Jeff, and maybe just hit these last 3 questions here? Can you see them?.

Yes. So the first one, what's your expectation for VirBELA industry efforts and growth for 2021 going forward. .

Yes, we continue to work on it. We're -- we talked about that we were approaching $1 million a month in revenues on the VirBELA platform. There's still work that needs to get done for us to fully get there. We're not far away from that. But it's a unique platform for companies that aren't like us. For us, we see the benefits every day.

We would use something -- we'd use VirBELA or something like it for as long as I can think about running the company going forward because of the -- what it does for us. But that's not the same, unfortunately, for as many companies out there. So it's still a lot of work making that happen. .

Yes. And we -- yes. And I would add that we're investing heavily in it. It's massive for us as a company. Just to give you a couple of stats quickly, private campuses went from 5 to 49 in 2020. Team suites went from 49 to 329. And onetime events, which we did none of before, is 71 major, onetime event. So it's taking time.

We're building the team, we're building the product, and we still are huge believers in the product. .

Great. The next question, guys, is how will rising interest rates or a downturn in the market affect your revenue and income. .

Yes. So it certainly is going to have an impact on everybody in the real estate space. The differences that I think -- what we have is a model that's growing agents, which means the revenue that comes from that agent base can offset, to a large extent, some of the slowdown in the market. And we saw that even in Q2.

Almost all of our competitors saw a reduction -- a net reduction in revenue. We were still up 33% even in Q2. So we're just better positioned just because the value prop works. .

Good. And then just last one, everyone's favorite question around Zillow. Zillow is now a broker. According to the questioner, "What's our strategic move to protect our interest?".

Yes. So it's to iterate, iterate, iterate and just continue to make sure that we've got good consumer experience. That's why Showcase is a critical component. But you look at 5.5 million, 6.5 million homes a year, almost every 1 of those is assisted by an agent, 1.4 million realtors.

The reality is that as much as Zillow may make inroads and others make inroads, we're still in an industry that, for the foreseeable future, for as long as I think any of us will be in the real estate business, there'll still be a high percentage of the business that's assisted by individuals that you know, like and trust in helping you through those transactions.

.

And I would add that we got a phenomenal group of agents, leaders and growth people in this company right now, and we're attracting more and more every day. So we got a great team that's going to market. .

Perfect, guys. Well, I think that takes the hour. Thanks again for the opportunity to moderate. I really enjoyed it, really enjoyed watching you guys grow over the past year. Glenn and Jeff, I'll pass it off to you if there are any final comments. .

No. Thanks again, everyone, for showing up and being part of the investor call that we have here. We do this every quarter. And so we're just excited that this room continues to grow and that so many people are paying attention to what we're doing. So thanks, everyone, for coming here. And thanks, Tom. Thanks, Jeff. Thanks, Michael.

And again, thanks, everyone. .

Thank you..