AGNT, Inc (AGNT) Earnings Call Transcript & Summary

Good afternoon, and welcome to the AGNT Second Quarter 2026 Earnings Fireside chat via live stream and our metaverse on the web, Frame. My name is Denise Garcia, and I manage Investor Relations for AGNT, formerly eXp World Holdings. Today, we will begin our earnings fireside chat with remarks from Leo Pareja, CEO of eXp Realty; Jesse Hill, Chief Financial Officer of AGNT; and Glenn Sanford, Founder, CEO and Chairman of AGNT. Following our prepared remarks, we will open the call to a Q&A session with our speakers. Let's begin with a review of the forward-looking statements. There will be a number of forward-looking statements made today that should be considered in conjunction with the cautionary statements contained in the company's SEC filings. Forward-looking statements are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Please see our filings with the SEC, including our most recently filed annual report on Form 10-K and quarterly reports on Form 10-Q for a discussion of specific risks that may affect our business, performance and financial condition. We assume no obligation to update or revise any forward-looking statements or information. As a reminder, today's call is being recorded, and a replay will also be made available on agnt.inc. Now for a few logistics, and we'll get started. For those of you joining in Frame today, welcome to our metaverse on the web. [Operator Instructions] Now I'll turn the fireside chat over to our speakers before opening the call to questions. Leo, you may begin.

Thanks, Denise. Before I get into the numbers, I just want to ground everyone in what AGNT is today. AGNT is a global operating system for modern real estate entrepreneur and a multimodel platform where independent agents, franchise owners and team leaders all find a home built for the way they want to grow, 2 models, maximum optionality. That's the thesis behind everything I'll walk through today, which brings me how the multimodel platform actually comes together. eXp Realty remains the undisputed cloud-based leader in our industry. NextHome offers a premier franchise experience. Together, these 2 brands expand our agent offering and let us serve a wider segment of the market than either brand could reach alone. NextHome is a complementary growth engine that unlocks multimodel reach across distinct market segments. We have seasoned operators in both brands driving execution and aligned incentives. We share our global referral network connecting eXp agents with NextHome franchisees worldwide. And we're consolidating back office, legal, technology resources, driving efficiencies across both brands. We are witnessing the financialization of the real estate industry. Now across private equity and public company acquisitions, there's about 400,000 agents who find themselves at a franchise over the next couple of years, they may no longer feel aligned with, and now we have an opportunity to convert entire franchises as those agreements come due. Now let's look at the platform built by agents for agents actually produced this quarter. This was a record revenue quarter, and it was built on agent success. We ended the quarter with 87,338 agents, up 6% year-over-year. Transactions grew even faster over 132,000 real estate sale transactions, up 12% year-over-year. Revenue came in at $1.4 billion, up 11% year-over-year and productivity, transactions per agent was up 6%. Put simply, record revenue driven by increased agent productivity. That's not just agent count doing the work, that's our agents doing more and doing it better, which is exactly why retention of the best agents matter so much, and that's our next slide. We continue to see our least productive cohorts churn out of the industry entirely, not just out of eXp. 67% of nonproductive agents in the U.S. who left eXp actually left the industry altogether in Q2. Meanwhile, we're growing productivity with teams. 41% of new Q2 agents joined on teams and agents on teams are 78% more productive than individual agents. Our cosponsor program just hit a 1-year anniversary. Here's what we found. Agents with a cosponsor show 40% higher production and have 10% higher retention rate. This was a deliberate strategy, attract productive agents, put them in a structure that makes them more productive and retain them. It's working. Now I want to shift gears and talk about how we're building the platform underneath all of this. Everything I just walked through is only possible because of the platform we're building underneath it. AGNT OS brings everything an agent needs to run their business together in one place. Instead of agents juggling a dozen disconnected log-ins and tools, AGNT OS, which operates the Hub for eXp Realty agents is the operating system for the agent's business. No more needing to find where to log in. All agents have to do is exprealty.com, log into an AGNT and you'll be taken to the Hub. Then they can download the Hub app to their phone. The app is available on both Apple and Android, group chats, text, SkySlope, My eXp, University, Marketplace and everything you need to run your business is now live directly inside the Hub. This is the foundation for our AI native platform, I want to spend the rest of my time talking about. We're transforming eXp into an AI native platform, one built to give agents the tools they need to be productive and manage their business and to increase on their own operating efficiency at the same time, and it's working. I'll share some examples from the second quarter. Doc AI, our review assistant has been trained on thousands of documents. It has now reviewed over 5 million documents and validated 22,000 daily uploads at a score of 100%. Task center automation resulted in 19% year-over-year increase in files handled per transaction analyst. Our AI enhanced eXpert Care now resolves the majority of incoming chats automatically. CARLO, our Comprehensive Advertising Review Logic Operator to review agents advertising and signage and log broker supervision automatically is now deployed across residential brokerage operations with commercial in progress. Broker Assistant delivers immediate, scalable after-hour support for policies, procedures and guidance across our state sites and eXp community hub. And FastCAP, our AI-powered agent development tool features a role play accelerator that's been used over 2,800 times this quarter for scalable on-demand skills development. While we're building AI native tools here domestically, our international business has been building its own operating system, Nexus, which I'll show on the next slide. Nexus brings every tool our international agents use into one connected system from a project management tool that keeps every transaction on track to our global property search platform, connecting buyers and sellers across borders in one seamless experience. This isn't 6 disconnected tools but together. It's one system, 4 foundations: one identity, one data layer, one AI layer and built to scale sfrom day 1. And we're seeing the momentum we've created in our international business show up in the numbers. In the second quarter, international revenue grew 44% year-over-year, while at the same time, we cut our international operating loss by 57% year-over-year and reduced our adjusted EBITDA loss by 66% year-over-year. This is the same pattern we're seeing domestically with AI native tooling, give agents a better platform and the efficiency follows, which brings me to how I sum up the quarter. We're controlling the controllable, and it shows record revenue with increased operating efficiency. We're transforming into a multimodel AI native platform that give agents the tools they need to be productive and manage their business. And as I walk through, it's working. We like our position. We are playing offense on AI inefficiency and defense on the balance sheet. With that, I'll hand over the call to Jesse to walk through second quarter financial results. Jesse?

Thank you, Leo. And now I'll walk us through our consolidated operational and financial highlights for the second quarter 2026, beginning on the next slide. Starting with operational metrics on a consolidated basis, we ended the quarter with over 87,000 agents with continued low attrition among our most productive agent cohorts. Productivity per person or PPP, was up over 6% at 5.5, while volume increased 15% for the quarter. Higher PPP drove sales transactions up 12% year-over-year, resulting in over 132,000 sales transactions in the second quarter. On the next slide, I'll walk through our second quarter financials. Starting with revenue, we generated $1.4 billion in the second quarter, up 11% year-over-year at the high end of our guidance range despite continued pressures in the macroeconomic environment. Gross profit was $98.8 million, up 7% year-over-year. Prior investments in technology and process improvements are strengthening both our top and bottom lines, excluding onetime items. Operating income was $1.6 million for the quarter, up 169% year-over-year compared to an operating loss position in the second quarter of 2025. Operating expenses were $97.2 million, $200,000 above the high end of our guidance range, primarily driven by onetime nonrecurring costs. Adjusted EBITDA was $25.7 million for the quarter and above the high end of our guidance range of $21 million and up 129% year-over-year. Finally, we ended the quarter with $111.2 million in cash on the balance sheet, up 18% year-over-year. On the next slide, I'll walk through our financial results by segment. The North America Realty segment continues to be our largest revenue and profit generator with revenue of $1.4 billion for the quarter, up 10% year-over-year and adjusted EBITDA of $30.7 million, up 55% year-over-year. International continues to be our fastest-growing segment with revenue of $46.4 million, up 44% year-over-year. While we continue to invest in expansion, the segment posted an operating loss of $1.8 million, which was 57% improved year-over-year and a negative adjusted EBITDA of $1.3 million, which was 66% improved year-over-year. Our other segment contributed $0.7 million in revenue, roughly flat year-over-year with an adjusted EBITDA improving 92% to a loss of $0.2 million. On a consolidated basis, that's $1.4 billion in revenue, up 11%, $1.6 million in operating income, up 169% and $25.7 million of adjusted EBITDA, up 129% year-over-year. On the next slide, I'll review our updated outlook for 2026 and the third quarter. Looking ahead, our focus remains on innovation, efficiency, growth and agent success, and we are providing our outlook for the third quarter and updating the full year 2026. Starting with the third quarter, we expect revenue in the range of $1.35 billion to $1.45 billion, expenses in the range of $85 million to $90 million and adjusted EBITDA in the range of $17 million to $22 million. For the year, we continue to expect revenue in the range of $4.85 billion to $5.15 billion as productivity gains continue to be offset by a challenging macroeconomic environment. We now expect operating expenses in the range of $355 million to $365 million, and we have tightened the range of our adjusted EBITDA guidance to $50 million to $60 million for 2026. We intend to stay financially flexible, preserving the right to invest where we see meaningful opportunities to support our agents, strengthen our technology platform and enhance long-term shareholder value. And now I will turn the call over to Glenn to wrap it up before we open up the call to questions. Glenn?

Thanks, Jesse, and thanks, everyone, for being here. So first and foremost, AGNT is the platform. It has really 4 businesses underneath of it. eXp Realty is still the engine. It's the most agent-centric real estate brokerage on the planet. And now we have 2 models. We have the eXp Realty and NextHome, which is the franchise structure for those agents or broker owners who want to run small teams and in some cases, larger enterprises on top of it. But the agent is really still the center of the relationship and their opportunities to grow whatever size business that they want to grow. International, as you know, it's growing. It's doing very, very well. And we added a number of countries last year. So we're excited about the continued growth. One of our stated goals is to be in 50 countries by 2030. And we think that, that's a realistic goal. And we expect that our continued investments will get us into new countries fairly rapidly. And if you look at countries like Peru, Ecuador, especially South America, and of course, we've got our first eXp Con taking place in Colombia next year, we're making big investments in that. Of course, Frame is the platform that we're in right now. It continues to literally create the communication and collaboration layer for the entire enterprise. And you can think about the idea that we have almost 90,000 people, actually over 90,000 when you think about staff and other people that use the platform that turn to Frame on a regular basis to collaborate with our overall enterprise. SUCCESS. It's a cultural and training layer. SUCCESS Coaching has now had over 100 people go through our SUCCESS-certified coaching platform. And we just launched that -- relaunched that this year. And with Matthew and Kristen Berry continue to serve in larger leadership roles at SUCCESS, we're excited about how that continues to roll out for the balance of the year. And today, I'm happy to announce that Amy Cosper has joined us as Editor in Chief for SUCCESS Magazine as well. As we move towards 2027, we also have a bulk app and magazine subscription that we're going to be offering. We're already starting to offer to other large enterprises, but we're excited about the work that this team is doing to really create some real opportunities in the SUCCESS magazine ecosystem. One of the things that I've talked about over time is the single-threaded leader model, but I want to start to think about it as the AI-enhanced leadership model. And originally, we were talking about agile org design, agile scale, aligned teams. And now all of our staff have access to at least one enterprise AI in their day-to-day work. And this has really allowed us to build things like our Hub, build things like our Doc AI, where we're using AI to not just read things in an OCR fashion, but to actually be opinionated about the things that it's advising the company on. And with the models improving the way they are, we're just in the early stages of seeing where AI can take us over the next few years. Obviously, we invented the cloud-based model back in 2009. Our competitors generally are still tethered to legacy offices, commission structures and software and hardware stack that take years to move if they can even move off of them. We've had none of that to work around since we've been on the cloud since 2009. We actually invented the term cloud-based brokerage. We've been distributed and technology focused from day 1. So AI has been a more natural transition given our infrastructure. We've talked a little bit about eXp Hub. We've got AI copilots for agent workflow. We've got a listing intelligence platform that we're continuing to build out. We now have an App Store marketplace that was enabled because we built our entire replacement for Workplace by Facebook, given it went away. And now we've got the most robust communication platform that is not tied to a SaaS contract. And really, this goes back to the idea that the name change really wasn't cosmetic. We referred obviously to eXp Realty as the most agent-centric real estate brokerage -- and we've made AGNT platform much more over, and that's a moat we continue to invest in. With that, I'll turn it back to Denise for Q&A.

We'll kick it off with a question for each of our speakers before we turn the call to the analysts and ask their questions. Leo, can you give us an update on the macro and what you're expecting in the second half of 2026?

Thanks, Denise. The back half of 2026 is looking to have a continued uncertainty from several macro factors. We have sticky inflation conflict in the Middle East. And as of last week, a very strong emphasis on the weakening of the Japanese yen. This is certainly has translated into bond market pressure with the 10-year Treasury yield climbing to its highest level since Jan of 2025, roughly touching 4.7%. Last week, the Fed held its federal funds rate between 3.5% and 3.75%, signaling their ongoing concerns around inflation and geopolitical uncertainty. A weak Japanese yen is adding to the bond market pressure. We saw last Friday, the U.S. Treasury step in to support the Japan's weakening position. Altogether, Fed's holding on rates, Middle Eastern-driven energy and inflation pressure in the bond market, pricing shifts all point to the back half of 2026 housing activity to track softer to year-end.

All right. Jesse, one for you. You just had a record quarter despite a challenging backdrop. What drove the second quarter?

Yes. Thanks, Denise. And we mentioned our over 87,000 agent count. But what's more important, and we mentioned this nearly every quarter is productive agents. And we called out our PPP, our productivity per person improved 6% year-over-year to 5.5 in Q2. And across our sizable agent base, even incremental improvements in agent productivity can result in outsized gains across the overall brokerage. And so we saw that translate into 15% increase in sales volume in Q2. And sales volume, of course, drives our revenue in the form of gross commission income. And then just one other thing to add to this along the same talk track actually, we saw a gain in market share. Our U.S. brokerage in Q2 gained 3% in market share relative to the total U.S. real estate market. So we're very -- we're proud of our record revenue quarter, but we're also happy to see gaining market share in the quarter as well.

And one for you, Glenn. Can you speak to some of the initiatives in international that drove growth there?

Yes. Well, not the least of it is that last year, we opened up 8 new countries, and a lot of those countries are actually growing quite quickly. So congratulations to everybody on the international team for the hard work that they're doing. We just finished eXp Con International in Paris just a few weeks ago, well attended by agents from all over the world. The enthusiasm for the eXp model around the world is very tangible, and it definitely was on full display. And things like our co-sponsorship program, our international sponsorship program is working really well where agents can work with in-country agents to bring on the agents that they're looking to attract to the eXp model. Obviously, the legacy brokerage models internationally are even further behind than the domestic U.S. and Canadian-based brokerages. There's still a lot of brokerages that are 50-50 splits with their agents, no caps. And so our model is much more agent-oriented and the commission splits definitely are appealing. But then our worldwide model that's now backed by platforms like LYVVE, L-Y-V-V-E, and its ability to basically act as a worldwide portal for eXp listings in all countries that we operate in. Last year, we started on a lab experiment in international to build out Nexus. I remember when Felix started to build that out. And it's truly become an AI operating system for all of the international countries providing things like CRM, valuation tools, marketing tools, transaction management tools. And this -- the platform that was built was built by a very small number of people using AI as the tooling infrastructure. So we're really talking about less than about 4 people overall, 4 or 5 people overall building the Nexus operating system, but they're able to build at scale for 27-ish countries around the world, multi-language, multimodal and along with the LYVVE platform. So international is running very lean. We'll continue to run lean. And of course, we're seeing a number of countries now turn profitable as we continue to invest in new countries, which will likely have more countries toward the end of the year announced and either launched or opening up in early 2027. So it's really been a big team effort that's really driven that international growth, but it's going very well.

[Operator Instructions] For now, I'll go to the analysts on the stage that are joining us here. Tom White from D.A. Davidson.

A couple, if I could. I guess just on agent count, I think you said up 6%. Can you -- what was that kind of excluding NextHome? Is it -- if I remember, NextHome had, I think, roughly 5,000 agents. So was kind of the legacy business flattish? And maybe you can also just call out the impact of NextHome on revenues in the quarter?

Sure. I can take that one, Tom. Thank you for the question. We shared, I believe, previously, the NextHome acquisition actually resulted in approximately 4,900 agents. So you're correct. There's a modest growth in the organic business in Q2, but we did see some growth there in our own brokerage, 4,900 from NextHome and then a little over 100 organic. And for the second part of your question, sorry, can you remind me?

Just maybe help quantify what the contribution of NextHome did to reported revenue in the quarter.

Right, right. Got it. So NextHome, it's important to point out that it's a franchise model. And so we're not recording revenue in the same way, and I'm explaining this for the full audience, Tom. I think you know this, but we're not reporting revenue in the same way as we do our traditional U.S. brokerage, which records revenue at gross commission income. NextHome is the franchise model, and we get revenue there in different ways, franchise fees notably. And so it will be smaller, more modest contribution, especially in the shorter term with NextHome. That one is more of a strategic bolt-on to create the on-ramp for the multimodal sort of approach that we're taking this year and going forward into the future to create multiple options for agents. Modest contribution to our revenue in Q2 and the updated guidance, short answer for you.