eXp World (EXPI)

Real estate technology company eXp World (NASDAQ:EXPI) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 6.9% year on year to $1.32 billion. Its GAAP profit of $0.02 per share was in line with analysts’ consensus estimates.

Company Overview

Founded in 2009, eXp World (NASDAQ:EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.

Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.

eXp World's primary competitors include Realogy Holdings (NYSE:RLGY), Zillow (NASDAQ:ZG), Redfin (NASDAQ:RDFN), and Compass (NYSE:COMP).

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, eXp World’s 26.2% annualized revenue growth over the last five years was excellent. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. eXp World’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.2% over the last two years was well below its five-year trend.

This quarter, eXp World reported year-on-year revenue growth of 6.9%, and its $1.32 billion of revenue exceeded Wall Street’s estimates by 5.9%.

Looking ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months, a slight deceleration versus the last two years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.

eXp World’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same. The company broke even over the last two years, inadequate for a consumer discretionary business. Its large expense base and inefficient cost structure were the main culprits behind this performance.

In Q3, eXp World’s breakeven margin was in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for eXp World, its EPS declined by 22% annually over the last five years while its revenue grew by 26.2%. This tells us the company became less profitable on a per-share basis as it expanded.

In Q3, eXp World reported EPS of $0.02, up from negative $0.06 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast eXp World’s full-year EPS of negative $0.12 will flip to positive $0.07.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

eXp World has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.4%, lousy for a consumer discretionary business.

eXp World’s free cash flow clocked in at $26.56 million in Q3, equivalent to a 2% margin. The company’s cash profitability regressed as it was 1.6 percentage points lower than in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

eXp World’s five-year average ROIC was negative 35.7%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer discretionary sector.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

eXp World is a well-capitalized company with $186.4 million of cash and no debt. This position is 11.8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was encouraging to see eXp World meet analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 4% to $10.09 immediately after reporting.

Updated: December 4, 2025 at 9:05 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in eXp World.

We cheer for all companies serving everyday consumers, but in the case of eXp World, we’ll be cheering from the sidelines. First off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, eXp World’s number of transactions has disappointed, and its declining EPS over the last five years makes it a less attractive asset to the public markets.

eXp World’s EV-to-EBITDA ratio based on the next 12 months is 24.9x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $13 on the company (compared to the current share price of $11.11).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.