Glenn Sanford: Okay. Sure. Yeah. So going into Q2, obviously, we rolled out what we talked about, REV Share 2.0. So that, we believe, is going to be helpful for — on the growth side. On the offboarding side, it’s still a pretty tough market. A lot of our agents that we were offboarding and have offboarded and those who have voluntarily offboarded, a lot of them were behind on their fees, their MLS dues and other things that are obligation to them and they weren’t selling any homes. So it was just natural that there was some attrition. What I found — and this is just anecdotal, but I believe that even NAR quit a couple of months ago of publishing their numbers of members because I think their numbers are dwindling at the moment.
So I think there’s some industry attrition going on at the moment that’s affecting us. And obviously, we’re still — we’re seeing our productive agents sticking with us for the most part, which is why you’re seeing volumes pick up and transaction counts pick up as the lower production. Anything you want to add there, Leo?
Leo Pareja: Yeah. We’re — and again, people need to remember that when you don’t stay current with your MLS and association dues, once you get turned off, we have to offboard you. And so we have the larger denominator. And so the churn that’s endemic to this market cycle is going to be present. But the one thing I will say that I’m having, and so is Glenn, very promising conversations with small- and mid-sized independents, where the fear of the changing model rules to — from the NAR settlement, we’ll probably see some more activity of independents joining us in larger numbers, 50, 100, 200, 500 agents at a time.
Denise Garcia: Great. All right.
Jonathan Bass: Thank you for the color there.
Denise Garcia: Go ahead, Jonathan, did you have another add-on, follow-on to that question?
Jonathan Bass: Yeah, if I could. If I could add one more, if I could, maybe switching topics. Could you guys maybe elaborate on how EXPI and your agents are preparing for the mandated bio rep agreement rule change that’s expected to come this summer? What are the discussions you’re having with agents? And what are you…
Leo Pareja: Yeah. I’ll jump into that. We’re being extremely proactive. I want to say we’re probably the leading scaled company who’s been very proactive. A couple of weeks ago, we rolled out a one-page bio representation agreement that becomes only binding for one property and basically one day. The one thing I keep reminding agents, because I’m probably talking to 300 at a time a couple of times a day just to make sure that they’re well prepared, is that nobody knows what’s actually going to happen. The final settlement needs to be completely fleshed out. The DOJ could opine. But it’s really operationalizing the change. And so what we’re doing is we’re preparing our agents with the most tactical scripts, tools, bio presentations.
We’ve even gotten it down to a slogan of treat your buyers like you treat your sellers. And what we’re encouraging them to do is to start being prepared today. So we’ve given them the forms and the tools that we think will help get them through the transition and making sure that the objections and the concerns that come up, we’ve already roleplayed, we’ve already prepared them for it. And the one advantage that we have as a company is we’re the largest scaled by transaction count. According to RealTrends last year, we did 355,000 sites. That’s 40% more than number two. And so what we have is this phenomenal collaborative feedback loop. So as our agents are in the field dealing with consumers directly, we’ll be able to support their change.
And the one thing I keep saying to agents is we’re a platform to allow real estate practitioners to build the size of business they want. And so what that means as long as it’s legal and the ethical and it falls within the rules, we’re here to support whatever type of business they would like to innovate on. And in a couple of years, we’ll probably have a new normal. But we’re very prepared proactively to guide them through the, I’m calling it, the messy middle as we adjust to the new rules of engagement.
Jonathan Bass: That’s great. Thank you, guys.
Denise Garcia: Sure. And we’ll move on. Tom White from D.A. Davidson. Do you have a question?
Tom White: Yeah. A couple, if I could. Glenn, Leo, I was hoping maybe you could share some directional thoughts on how you’re feeling about your transaction growth in the second quarter. There have been some other companies in this space that have highlighted the recent uptick in mortgage rates. Just a little bit of kind of directional color there. And then maybe one for Kent. Operating expenses, specifically kind of G&A plus that new tech and dev line, is that kind of the new level we should think about in terms of like absolute dollars over the next few quarters? Is that a good way to model it kind of from what we saw in the first quarter? Thanks.
Leo Pareja: I could take the directional one. Quarter-over-quarter, it’s looking like a flat year transactionally for the country. So I would venture to bet that what we saw in Q1 is probably pretty representative of Q2. And again, as we shared throughout the other slides, we’re really focused on the productive agents. And again, what I actually tell agents is in a market like this, thriving looks like surviving. And so sometimes this is just a market expansion moment. And then once rates, and we get more back to a normalized transactional volume here of 5.5 million, 6 million transactions, which over a 30 year period is probably more average, that will actually pay dividends for us.
Kent Cheng: Yeah. Maybe to add on the unit side, right, Tom. It’s typical, you see that Q1 is very — is slowest season, right? When you get to Q2 spring season, just the seasonality, the revenue will pick up in the second quarter.
Tom White: Okay. Great. Maybe one last one, if I could slip it in. Any chance you can update us on how you’re thinking about a potential settlement of the NAR lawsuit. Some of your brokerages have settled recently. I noticed that litigation contingency pop up on the P&L. So anything you can share there would be helpful. And then I’ll get back in the queue. Thanks.
Glenn Sanford: Yeah. So I’ve spent a fair bit of time, I know Leo does as well, talking through what’s going on in the industry from a settlement perspective or a litigation perspective. We’re still fairly early on in our — in the suits that we’re named to — I think there’s 10 suits that we’re named to in the U.S. We’re still trying to figure out whether there’s consolidation of that. Where does this all set? I think we’re maybe the last of the large brokerages that haven’t settled yet and are presently not in a settlement discussion at the moment. But obviously, we’re open to those conversations. We’ve had some in the past. But right now, we’re still looking at what’s going on. Obviously, you had Douglas Elliman, you had, of course, HomeServices.
Of course, they were on the hook, so to speak, for the previous judgment. And they were kind of the last one in there, so — but it’s still early on. We’ve still got a couple three years of work to do before it gets into some sort of trial situation is the way that we’re looking at it. So we’re watching on a day-by-day basis. And if there’s an opportunity to settle for a number that makes sense for us, then we’ll take that opportunity. But if not, we think we’ve got very good arguments on our side of the equation if we were to go sort of the distance, so to speak.
Kent Cheng: All right. Tom, you also asked about SG&A, right, [indiscernible] the rest of the year. Barring from any unforeseen, right, or one-time item, you can assume our Q1 SG&A, essentially it’s more like general direction, what we’re going to see in the future.
Denise Garcia: All right, I’ll move on. Moving on to Matt Filek from William Blair. Do you have a question?
Matt Filek: I do. Thank you, Denise. Hi, everyone. You have Matt [indiscernible] Sheldon. Thank you for the questions. To start here, what could the recent changes to the revenue share model mean to company financials, particularly gross margins?
Kent Cheng: Yeah. Short answer, no change, right?
Glenn Sanford: Yeah. I mean, that’s the short answer. The short answer is that it’s how we’re paying out the 50% of company dollar is really what it comes down to. And we’ve done it in a way that helps agents in the company that are working to grow the company. And so we’ve really just created what we refer to as a model that our agents feel is more aligned with what their interests are over the long haul. So generally, we’re paying out the same numbers. We’re just doing it slightly differently, which our agents are excited about.
Matt Filek: Got it. Thank you for clarifying that, Glenn. And then since Leo is taking over as the CEO of eXp Realty, and congrats on that opportunity, Leo, Glenn, can you provide some more detail on how you plan to allocate your time? It sounds like macro level opportunities will be a core focus. But any additional color on what that entails would be helpful.
Glenn Sanford: Yeah. So there’s — when I look at macro, obviously, we’ve got a few subsidiaries, SUCCESS Enterprises, FrameVR.io. We’ve got some other business that we made either strategic investments in or — and other business that we think could be synergetic to eXp. So it’s really working on a number of these opportunities. There are some things that I think are pretty exciting that I don’t want to talk about yet, so they’re non-public. But there are some areas where, I think, leveraging eXp Realty’s scale and what we’ve been able to accomplish, there are some things that could create some nice aligned synergies that are maybe out — which are, in fact, outside of the core of realty, so not the traditional affiliated services, but other services that we think could really align well and could be profitable in their own right.
Matt Filek: All right. Thank you, Glenn. Very helpful.
Denise Garcia: And then last, Soham Bhonsle at BTIG. Would you like to ask a question.
Soham Bhonsle: Good evening. Maybe first one for you, Leo. Last fall, you introduced the Boost and Accelerate program. So I’m just curious how those have fared so far. And then if you could just expand on what’s incremental here with the Fast Start and the REV Share 2.0 program, that would be great.
Leo Pareja: Yeah. No, it’s definitely opened up lines of communication. Tomorrow, we’re filing a press release of a 500-person brokers that joined us here in Miami, 20-year independents, who just — the interesting talk track that I keep hearing over and over again is, I’ve been grinding at it for years and years, and this upcoming climate is just giving me the opportunity to think through, do I want the liability? And we’re really positioned as a platform to allow these real estate entrepreneurs to continue to grow according to their people. They give us their back end. They give us their liability. And then they can focus on pouring in. And a lot of times, once they get rid of their fixed liabilities in the real estate, it becomes a more profitable enterprise to be in business with us.
And so by introducing Boost, it gave us a very powerful talk track. And I’m in active negotiations with companies ranging of all sizes that I feel like last summer, I would not have an opening to. So it’s really been a huge catalyst to having conversations. And then with REV Share 2.0, I think it’s going to give a shot in the arm to the folks who are great at attracting. And one of the beautiful things about this company is it’s very much agent-led from a voice standpoint. So when we designed REV Share 2.0, it was strictly with the input of the feedback loop of the agents in the field who are competing for talent. And so we’re pretty excited that it’s going to help us attract the smartest and brightest folks in the industry.
