Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Denise Garcia, Investor Relations. Please go ahead.
Thanks, operator. Good afternoon, and Welcome to AGNT's third quarter 2026 earnings conference call. Joining me today are Leo Pareja, AGNT's Chief Executive Officer, and Jesse Hill, AGNT's Chief Financial Officer. Following our prepared remarks, we will open the call for Q&A. Questions can be submitted via slido.com using event code AGNT, or simply scan the QR code in the supplemental materials available on AGNT's investor relations website at agnt.inc. But first, I will review the safe harbor statement. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. Forward-looking statements include all statements other than those of historical fact. These statements are not guarantees of future performance, but rather are subject to a variety of risks, uncertainties, and assumptions. Our actual results could differ materially from the expectations reflected in any forward-looking statements.
For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC website and on our investor relations website, as well as the risks and other factors discussed in today's earnings press release. Additional information is also available in our quarterly report on Form 10-Q for the quarter ended September 30th, 2026, which was filed today. In addition, references will be made to certain non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure, and all other financial measures are GAAP unless cited as non-GAAP. Information on non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measure, is available in the press release issued this afternoon and on our investor relations section of our website at agnt.inc.
Unless otherwise noted, reported figures are rounded, and comparisons for the third quarter of 2026 are to the third quarter of 2025. With that, I will turn the call over to Leo.
Thank you, Denise, and good afternoon, everyone. It's a pleasure to be speaking to you for the first time as the CEO of AGNT. I'm excited to lead this company to our next era of growth, and I'm looking forward to sharing our 2027 strategy on the next call when we wrap up the fourth quarter of 2026. Today, we'll cover a few items: our operating environment, where we're focused for the rest of this year, and how the third quarter reflects that focus. Let me start with the market, because it shapes everything. To be direct, it remains challenging, and we're planning accordingly. Existing home sales are on pace to land at or near 4 million again this year. Inventory is up about 7% from a year ago, but it's still below pre-COVID levels.
Mortgage rates are sitting above 7.3%, and Fannie Mae recently raised its 30-year fixed forecast to 7.4% for the fourth quarter and 7.5% throughout 2027. These are up from earlier projections below 7%. We should expect this market to stay difficult for a while, and we've said this to our agents. But we also want to make it clear about how we see it. This is not a market that's broken. It's a market that's resetting to normal after two record booms warped expectations. Life events still force people to move, and in a market that requires real skill, the agents who are doing the work are taking the share. That's where we're well-positioned. We have scale. We have a value stack for agents that we believe is unmatched. We have a competitive compensation structure and a strong agent base that's increasingly productive, and we're up for the challenge.
An important industry announcement I want to address. On October 26, AGNT, along with Keller Williams, HomeServices of America, and Real REMAX Group announced Open Real Estate, a national initiative to create a shared infrastructure for property listing data. The idea is simple. A brokerage or an agent would create a listing once using minimum set of standard fields, and it would be shared with participating members and distributed to local MLSs, home search sites, and other platforms. When listings are fragmented or kept out of view, buyers can miss homes and sellers can reach fewer potential buyers. Open Real Estate is designed to work alongside MLSs to combat market fragmentation, and it's open to every brokerage in America as a free participating member.
To be clear, Open Real Estate is a standalone company with its own board of managers and its own leadership, which will be built over the coming months. AGNT is one of the four founding equity members, but Open Real Estate is not a consolidating subsidiary of AGNT, and we do not expect to have material effect on our results. AGNT shares Open Real Estate's conviction that access, information, and transparency should be a benefit, not a barrier, to both buyers and sellers. With that, let's move on to where we're focused for the rest of the year. There are four key targets we're focused on to manage through this cycle and come out ahead: agents, innovation, operating efficiency, and margin expansion. Let me address each, starting with agents.
We believe AGNT is a global operating system for the modern real estate entrepreneur, and we've worked to build this since our inception. Most recently, with the acquisition of NextHome, we created a multi-model platform. Independent agents, team leaders, and franchise owners can all find a home built for the way they want to grow. We established two models this year, providing real estate professionals with maximum optionality. We've also made real strides in providing agents with the tools they need to run their business. The goal is simple: help agents sell and manage their business, get paid smoothly, and provide better training and support at every step. Our intention is to earn the right to continue to be the most agent-centric brokerage on the planet. Moving on to our next area of focus, innovation. Innovation is in our DNA.
We built the first cloud-based brokerage, and we intend to keep our lead as the technology innovators in the space. At eXpcon last month, we announced two things we want to highlight. Number one is MCP First, AI of Choice initiative. Most companies in our industry are building their own AI assistant, their own chatbot, their own login, and set new habits that agents are asked to adopt. We asked a different question. Why ask agents to change their habits at all? Our agents are already using AI they trust, whether that's Claude, GPT, or another tool. W e built MCP connectors that meet our agents natively wherever they are today. No new app to download, no new login to remember. An agent asks a question and gets the right answer where they are working natively. We're not trying to outbuild the largest frontier models in the world.
We're going to connect to them instead. Number two is AGNT OS, which stands for Agentic Operating Systems. Our stock ticker, AGNT, represents where the company is going. It's a full modernization of how eXp runs. AGNT first, from the ground up, built for a world you're actually operating in today. MCP is the front door. AGNT OS is the whole house. It's the full modernization of how we run, from how agents get paid, to how a transaction moves, to how they're supported from day one. And we're making this all easy to find in the Hub. The Hub is now a scaled enterprise-grade software built for AGNTs' specific needs. Every line of code is written by AI, and much of its ongoing iteration and maintenance runs through our Agentic software factory methodology, with stakeholders directly shaping its evolution.
Today, at the center of the community and the communication at AGNT, the Hub continues to grow steadily month-over-month, with nearly 3 million messages sent in just the last 90 days and more than 1,700 active community groups. Our new Hub MCP has received more than 1.2 million tool calls since its October 8th launch. As for the rest of the AGNT OS ecosystem takes shape with the Hub being at the center of it, we expect to see adoption increase. Here's why this matters to you as investors. These initiatives support three of our four pillars. On innovation, this puts us inside of the tools agents already use every day, rather than asking them to adopt something new and diverting their attention away from closing deals and putting a drag on their productivity.
On operating efficiency, modernizing the systems underneath the business should, over time, reduce friction in transaction processing and how agents are supported. These are early days, so we will be careful not to overpromise on timing or financial impact, but we are encouraged by the direction, and we will share our 2027 plans on our next call. Let me take you through our third quarter operating highlights. We ended the quarter with revenue, real estate transaction sales, agents, and transactions per agent up all year-over-year. Our agents are increasingly productive, even in a tough market, and we continue to retain our most productive agents. Consistent with Q2, over 90% of our attrition comes from the less productive cohort, and nearly half of the non-productive agents in the U.S. who left eXp also left the industry.
We continue to add agents on teams, with 44% of new agent joiners on teams in Q3. This is important because agents on teams are 77% more productive than individual agents. Another priority is margin expansion, and there are several places I would point to. First, International. We have consistently narrowed its operating losses and improved Adjusted EBITDA while expanding our presence worldwide. Jesse will provide additional detail on the third quarter business segment shortly. Second, our ancillary services, such as LuxVT and Revenos, are higher-margin businesses that help agents win in the luxury market and generate leads in any market. At eXpcon, we also announced Revenos Mortgage, powered by Newrez, a joint venture we expect to launch in early 2027. Third, franchise systems like NextHome.
NextHome is not yet a significant contributor to overall gross margin, but we believe it has the potential to drive gross margin up over time as we scale. We are operating with discipline, we are investing where we see real opportunity, and we are staying realistic about the market. With that, I will hand it over to Jesse.
Thank you, Leo, and good afternoon, everyone. I will walk through our consolidated operating and financial results for the third quarter. I will also provide more detail across our business segments and our outlook for the remainder of the year before opening up the call to questions. Starting with operational results, we ended the quarter with 87,457 agents, up 5% year-over-year. That figure includes the agents who joined us with NextHome acquisition in May. Real estate sales transactions were over 131,000, up 8% year-over-year, and sales volume was $59.3 billion, up 10% year-over-year, both including NextHome. NextHome is the heart of our strategy to build a multi-model platform, and it contributed to that growth. Excluding NextHome, transactions were up 1.7%, and productivity per person was 5.5%, up 6% year-over-year.
We're encouraged that the productivity gains and the transaction growth in our core business are showing up in our numbers, and we're pleased with how NextHome is adding a franchise platform and reach to agents who prefer that model as we continue to integrate it. Revenue was $1.4 billion, up 6% year-over-year, and within our guidance range of $1.35 billion-$1.45 billion, despite increased pressure from the macro environment during the quarter. Gross profit was $91 million, also up 6%. Operating expenses were $87.9 million, within our guidance range of $85 million-$90 million. Operating income was $3.1 million, down 23% from last year. This was primarily the result of heightened legal costs, which we expect to continue in the back half of the year, as we flagged on last quarter's call.
Adjusted EBITDA was $17.1 million, down 3% year-over-year, and within our guidance range of $17 million-$22 million. Finally, we ended the quarter with $111.4 million in cash, roughly flat with last year and up slightly from the second quarter, as we balance building our cash reserves against opportunistically buying back shares at these levels. We continue to build our cash reserves to preserve optionality, and we remain debt-free. North American Realty remains our largest operating segment. Revenue was $1.3 billion, up 5%. Operating income was $9.5 million, down 10%, and Adjusted EBITDA was $22.3 million, down 3%. International remains our fastest-growing segment. Revenue was $51.7 million, up 27%. While we continue to invest in expansion, the segment's operating loss was $1.9 million, a 14% improvement year-over-year, and Adjusted EBITDA was a loss of $1.3 million, an 18% improvement.
Our Other Affiliated Services segment contributed $0.7 million in revenue, with an Adjusted EBITDA loss of $0.5 million, a 58% improvement year-over-year. In total, that's $1.4 billion in revenue, $3.1 million in operating income, and $17.1 million in Adjusted EBITDA. Looking ahead, we remain focused on agent success, innovation, operating efficiently, and margin expansion. For the fourth quarter, we project revenue of $1.0 billion-$1.2 billion, operating expenses of $93 million-$97 million, and Adjusted EBITDA of negative $7 million to break even. Elevated mortgage rates have continued to pressure housing demand, and we have updated our top-line guidance accordingly. For the full- year, we now expect revenue in the range of $4.85 billion-$5.05 billion. As we approach year-end, we have increased visibility on Q4 operating expenses, as reflected in our updated OPEX and EBITDA guidance.
We now expect operating expenses in the range of $362 million-$367 million, and Adjusted EBITDA between $40 million-$47 million. While the current operating environment remains challenging, we continue to focus on our top priorities, including agents, innovation, operating efficiency, and expanding margins. We believe we are well-positioned to support these initiatives and drive shareholder value long-term. With that, Leo and I would be happy to take your questions.
Thank you. We will now begin the question-and-answer portion of today's call. As a reminder, you can submit questions anytime on slido.com using event code AGNT, or simply scan the QR code in the supplemental materials. To ask a question over the phone line during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. We will pause for a moment to allow questions to come through the queue, and I will hand it back to Denise for some kickoff questions.
Thanks, Danny. While we are waiting, I will kick it off with a couple questions that we received from our analysts. I will start with you, Leo. Leo, what are the initial startup costs of Open Real Estate, and what is the financial impact as the collaboration scales?
Thanks, Denise. First, some context. Open Real Estate is a collaboration among four founding members today, and it is not consolidated into our financial statement. Our exposure is limited to our share as one of those founding members. Our startup costs and our spend to date have been very modest and not material to AGNT. Going forward, costs will be borne out of all the founding members, not just AGNT alone. As the venture builds out in key leadership and moves ahead with the platform development and expected cost increase over the next two quarters, we do not expect that increase to be material to AGNT's results.
Okay, thanks. Jesse, one for you. Can you expand on your fourth quarter and full-year guidance? What has changed since you provided guidance in August?
Yeah, thank you, Denise. While our Q3 results were solid, our updated Q4 guidance reflects two primary factors, the macro headwinds that we are all seeing and elevated legal expenses that we are seeing here at AGNT. On the top line, rising interest rates continue to weigh significantly on housing demand, and we have seen that softening as we have headed into Q4 here. On the bottom line, legal costs are continuing to run high to our baseline due to several active matters that we believe are reaching peak activity in 2026. Both of these combined cause us to adjust our full-year Adjusted EBITDA guidance range accordingly. Just one more note on the legal cost. While we always expect to have some baseline of legal expenses, we are confident that 2026 is running above that baseline, and we believe it will normalize as we head into 2027.
Thank you. We have a question over the phone line from Stephen Sheldon with William Blair. Your line is open.
Hey, thanks for taking my questions. Just, I guess, as we think about the cost structure, the housing market has been weak. I guess if that continues through next year, are there things you could do to, I guess, protect the bottom line and the profit trajectory here? Maybe just kind of give us a refresh on the expense base, how much of that is kind of fixed versus variable. Would love detail there. Thanks.
Yeah, sure. Thank you for the question. We have communicated very high level before. We do not break it out, but when we show that unit economics in our key performance indicators that we track in the 10-Q. The fixed and variable split that you are asking for, it is generally 1/3, 2/3. That is a safe range. One-third variable, 2/3 fixed. We like to use internally the language direct and indirect. It is not exactly fixed in the sense of having a factory or a tractor. Even the indirect costs for us are slightly fungible, legal being an example here. Going forward, to answer your question, we intend to provide guidance in Q4 for 2027 when we have a stronger finger on the pulse for what interest rates are going to look like, what trends are looking like when we have closed out the year here.
But just initially, I can tell you we are really focused on operational efficiency and what we can do with our unit economics, and we're going to continue to focus on that as we head into 2027.
Got it. That's helpful. Then maybe just as a follow-up, I would love to get any detail on what you're seeing in the recruiting pipeline for agents, teams, et cetera. I think some peers have talked about industry agent churn picking up. I joined late, so apologies if I missed this, but just, yeah, I guess maybe talk about both what you're seeing in the pipeline, the ability to add gross agents, and then the trends you're seeing on the churn side, and if anything's directionally changing in any of those categories.
Thanks, Stephen. It's Leo. Yeah, so what we're seeing is pretty consistent. Over 90% of our attrition comes from the agents doing less than seven or so transactions. When we had the slides on the virtual world, I was able to point that out pretty clearly. 59% of the non-productive agents who left eXp left the industry in Q3. So 44% of all new agents joining us are joining on teams. D efinitely seeing a skew over the last five years, if you will. I can give you an anecdotal story with one of our top team leaders. I was on the phone with her the other day, and she said five years ago, 90% of the agents joining her team were brand new agents, and now she says 65% of them are actually pretty seasoned who are just tired. W e're really focused on productivity, programs like FastCAP.
We just won two gold awards competing with companies like 3M and Pepsi in training, is where we're really focused. I would actually give you a slightly different view of the churn. I feel like a lot of the inherent churn happened over the last three years, and the folks who are here are kind of the survivors of the process. But again, we're still seeing, I would say, seasonal year-over-year, quarter-over-quarter churn ratios. W e haven't seen an uptick, if you will, even though the industry continues to contract. In other calls, I've celebrated that flat in a contracting denominator basis feels really, really good. W e're more of the same, really tough macro, but we're really focused on productivity. I think I said 59%, I meant 49%. Yeah, tough macro. We're really focused on skills. That's the agent that's going to survive in this market.
Makes sense. Thank you.
Thank you. As a reminder, you can submit questions anytime on slido.com using event code AGNT or simply scan the QR code in the supplemental materials. To ask a question over the phone line during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. We will pause for a moment to allow questions to come through the queue. With no additional questions in the queue, we will wrap up today's call. Thank you to everyone who joined. A recording of this call and our latest investor presentation are available on our investor relations website at agnt.inc. Thank you and have a great evening.