So where we made a big investment. Before, it was really just we were using it primarily for us and obviously since clients came. Frame, I think is going to have an already has a natural fan base of users because of the way that it’s structured from teacher organizations to museums to all kinds of different places because it is much more accessible. So you you’ll see, a lot of that premium type service coming out of Frame, and we think there’s a good path to actually create a SaaS based platform that could be significant over time using Frame.
Denise Garcia: And next we’ll go to Tom White from D.A. Davidson.
Tom White: Glenn, you mentioned an expectation to return to agent growth at some point here. Could you maybe talk a little bit about your expectations around domestic agents in the next couple of quarters? If you look at, like, NAR member roles over the years, there tends to be kind of an uplift in licensed agents in the spring. Just curious if you’re seeing any signs that maybe your business will exhibit some of that? And I guess sort of related, just I was hoping you comment a little bit about the success or traction maybe that things like Accelerate and Thrive and those platforms may be getting? I mean, do you feel like they’re helping you go back on offense a little bit in domestic agents count, or do you still feel like you’re maybe a little bit on the defensive domestically given some of the competition, you touched on earlier?
Glenn Sanford: Yes. Well, domestically, I think it’s — I think that we’re in an industry right now that’s not going to see a huge number of new licensees, like we’ve seen, like, in 2021, maybe even 2022, with the decline in real estate transactions. You obviously, there’s a backdrop of what’s the industry going to look like in 2, 3, 4 years, I think, in a lot of people’s minds, even potential new licensees. So I think we’re kind of little bit of a slower growth. Obviously, if the Fed decides to reduce interest rates substantially and then that ultimately adds fuel to fire. Maybe we end up picking up more agents wanting to get in the business. So, I think the backdrop is we’re not going to see a lot of industry changes in terms of data count but Accelerate, Thrive, Boost, those are tools that we have now that are definitely helping.
We think that there’s probably more things we can do to be offensive in terms of growth. We’ve got some meetings actually coming up in early March, where we’re actually going over some things that we believe are going to do just that. So we’re excited to get those masterminded and rolled out. But, so I guess the long and short of it is it’s a little bit early too early to tell but we did, we have obviously seen more competition, no doubt. We’ve seen, less agents in the industry at large, which doesn’t help in terms of overall growth. But we’ve still obviously continued to grow market share, which is really the thing I mentioned a couple years ago. Let’s focus on market share because the market’s going to be tough. And then, but we think that there’s some ways to actually get ways to actually get good agent growth by creating some better ways to monetize from an agent’s perspective to be at eXp.
Tom White: Maybe just one quick follow-up or clarification. The $20 million in annualized benefit to your results that you called out in the press release, it made it sound like it was a combination of cost saves and kind of revenue enhancements. But then did I did you say in kind of the prepared remarks that cost adjustments will kind of be the bulk of that. Can you just maybe just clarify a little bit? I’m just trying to get a sense of, like, what your quarterly G&A might look like starting in starting in the first or second quarter?
Glenn Sanford: I mean, we’ve got an interesting backdrop of things going on. We’ve got obviously, we’re defending a ton of these commission based lawsuits, so there’s definitely what we call risk management. So there’s some risk management fees because we’re our just our legal costs are going up significantly. So we’re working on generating some additional revenue to pay some of that legal cost and then we made adjustment to the discount on the stock comp plan. Again, it’s a little bit non-cash, but at the same time, it’s still an item that actually plays a role in sort of our cost to operate and everything else. So we made a couple adjustments there, and then we do have new revenues coming down the pike as well. So, we don’t break all of it at this point.
I think those may be I don’t know how much visibility you’ve had to some of that, but we’ve got a couple small tweaks, which reducing costs on our stock comp, increasing a little bit of revenue on our risk management fees. And then we’ve got other business opportunities that are coming in. A lot of that are stuff that Leo’s been on underneath the Revenos and agent services, affiliate services even things like our and we’ve got some revenues that come from places like Clearwater and some partnership type stuff that we’ve got there, and then we’ve got others. So I don’t know, Leo, if you got any others that you want to touch on but those are just some that are on top of mind.
Leo Pareja: I mean, piggybacking on the first last question that was asked, believe it or not, even with the dark clouds ahead, the conversations have sped up with independence that probably would have considered folding into a national company and just maintaining it independently. So, there could be some growth that continues to materialize from the larger companies joining. The single agents have struggled the most and that’s where we’ve seen our most attrition. But on the profit improvement, it’s cost plus addition. So we’re hyper focused on unit economics, making sure that we’re, very efficient from an SG&A to unit standpoint. And just really focusing on, you know, now that we’re more of a mature enterprise running it as such. And so we’re just being very careful in holding everything accountable.
Denise Garcia: We’ve got time for one more question from Soham Bhonsle from BTIG.
Soham Bhonsle: I guess first one was just on the agent count up 2%. I was hoping you can maybe help us quantify the impact from the off boarding of agents in that number. And then sort of where agent count growth has been in North America versus international?
Kent Cheng : Maybe I can. Glenn you want me to answer the question?
Glenn Sanford: Yes. I think you’ve got the more granular data.
Kent Cheng : Yes. So we don’t provide, let’s say, our addition and termination. We are not provided. But what we can say is look at 2023 growth, too much all our agent growth is come from United States and Canada.
Soham Bhonsle: And then on the gross margin, I think last quarter, you talked about maybe being above 7.5% for this quarter. I think you came in a touch lighter than that. So I’m just wondering what’s driving that. Is that sort of any mix shift that’s happening within your base, you’re more productive agents doing more or is this sort of we have to pay a higher split in this sort of environment, which we’re hearing as well?
Kent Cheng : Yes. The major driver, right, even compared to if you look on the — if you like, we talk about the agents stock compensation, if including gross margin last year, right, which we stayed about 8% and Q4 2022 is 8%, Q4 2023 is 7.2%. So we do drop about 80 bases point. Majority, the really is the increase of the stock compensation. I mean, our stock comp — agent stock compensation in Q4 about $12.5 million versus Q4 ’22 $8 million. So that’s a major driver on that.
Soham Bhonsle: And then, Kent last one. For SG&A is the best way to think about it, I think there was about $8 million of one-time items this quarter. So that would say $78 million is sort of the normalized run rate and then we sort of take $5 million every quarter and sort of run with that going forward?
Kent Cheng: Yes. The key how I think about it, right, is now we don’t provide guidance. You think about $89.4, right? $8 million is one-time related to ESP comp and the provision on workforce reduction. So you’re based roughly 81, 82. If you do this more run rate, right, for four quarter, give you about $326 million that kind of cost. And, yes, Leo and Glenn talked about part of the significance cost saving or the profit improvement $20 million is SG&A. So I want to answer Tom’s question. So with some further reduction SG&A, now what you can expect is our SG&A cost will be lower in 2024 versus 2023.
Denise Garcia: Thank you. And thank you everyone for joining us today. As always, please stay connected by visiting expworldholdings.com for the latest updates on eXp news, results and events. Additionally, you’ll find a recording of this call and our latest investor presentation on the Investors section of the site. So this concludes the eXp World Holdings fourth quarter 2023 fireside chat. Thank you.
