We are coming to you live from Nashville. This is the final day of the Stephens Conference. This is our final Fireside Chat session. We're thrilled to have eXp World Holdings here, ticker EXPI, on the stage representing EXPI, the founder and CEO, Glenn Sanford. We've got the CEO of eXp Realty, Leo Pareja, and then the CAO and interim CFO, Kent Cheng. I think you guys know the drill here. We're going to run through some Fireside Chat questions here on the stage and make this kind of fluid and conversational, and then if there's any questions in the audience, we'll certainly kick it off over to you guys, but Glenn, maybe let's just start off with the kind of big picture questions. These are questions we have made somewhat of a tradition.
We kind of poll all of our real estate-related companies and try to get to somewhat of a consensus view around kind of the outlook for housing and interest rates and everything, so let's start off with U.S. housing, whether you think that's up sharply next year, up modestly, neutral, down modestly, or down sharply.
Yeah, actually, I'm going to defer to Leo because he spends more time. I've shifted to international, but he's like all over sort of the domestic stuff.
OK. Yeah, so our prediction is very much in line with some of the macro assumptions put out by Fannie Mae. So from a transactional standpoint, we're assuming 2024 ends at somewhere between 3.8 and 3.9 million total transactions sold, which would be a bottom since 1995, so worse than 2008, 2009, and 2010. So we're predicting a reprieve and going back up probably about 10% on resale. 700,000 were new construction in 2024 that outperformed 2023 by about 100,000 homes. And that was a bright spot above traditional numbers in new construction. We're hoping to see similar numbers for 2025 on new construction. And if we're using new starts and permit pulls as indicators, it's looking like new construction will still be powerful.
But just even the year-over-year increase in inventory, I mean, at the macro, we've seen as high as 34% year-over-year increase levels on inventory, which is a lagging indicator. So we should see that increase in transaction count. And if you take just pure January start to end of year, the rates have come down modestly, which adds affordability reprieve for folks that could have probably been priced out of certain markets. So on the whole, we're optimistic for 2025 from both inventory levels as well as affordability. Nothing close to kind of historic averages in the 5 million range, but certainly better than we've experienced in 2023 and 2024.
Yeah, that's helpful. So on mortgage rates, I mean, obviously, we got a pump fake in September. I mean, it feels like the bottom was falling out of rates was a great, and then they climbed right back up. So give us your view on the 30-year mortgage rate next year.
So the misnomer, I think, at least in the public sense, is that the Fed controls that. It's historically more correlated to the 10-year Treasury. And typically, it's about 150-200 basis points spread. We, in the last couple of years, have a dislocation where it's closer to the 300-point spread. So just based on that, we have the ability to float down. So even though with that 50 basis point cut, we didn't see the correlation that people expected. Some of the interpretation was we had a polarized election coming up with still some geopolitical issues abroad that kind of affect that spread. But assuming that everything holds steady state, rates in the mid-sixes, still be rates in the mid-sevenths. So we're still optimistic.
OK. Home prices.
At national, pretty much flat. Hyper-localized, which real estate always is. It's market by market. So you have the outlier examples of Boise, Idaho, and Austin that were boom towns post-COVID or during COVID. And they're actually decreasing in home pricing. But then you have South Florida, which is very different than Central Florida. The whole Northeast as a whole has been faring better. But the simple boiled-down correlation is increased inventory will soften pricing. Decreased inventory will hold or appreciate.
OK. Politics, I hate any kind of conversation, argument, debates on politics. And we're coming close to Thanksgiving, so I don't recommend you talking politics at the table. But taking feelings aside, looking at the political environment with the change, do you view that as good, bad, or maybe neutral to U.S. housing?
I think for the housing industry, it will be a reprieve from the legislative DOJ standpoint. So it could remove complexity from kind of the dynamics of the DOJ reopening existing cases, which are presently heading to the Supreme Court. So that could be a meaningful effect to our space.
OK. One of the last ones here, what you view as a normalized market? I think everybody's got different views. I don't know what normal really is anymore, but what you view as a normalized market and how long do you think it takes to get there?
Yeah, so this is a funny one because if you look peak to trough from the last 30 years, we agree that a low is 4 and a high is 7. So normalized only feels like you kind of pinpointed in the rearview mirror 18 months from that middle. It's like, oh, like 2022 was a normalized market, but it didn't feel like that because we were experiencing a 30% year-over-year drop. So it didn't feel normal by any stretch of the imagination. But historically speaking, it has been a normalized year. So I mean, I think we're still several years out. The affordability price index, in my opinion, has three legs. So it's inventory, demand. So that one's strong. 12,000 Americans are turning 35 years old every single day, which is kind of the ideal demographic for purchasing home. And then the third part is always the cost.
So that's still strong. As long as rates stay where they're at, there's still a lot of pent-up demand that can't be maximized.
Yeah. We're going to definitely get deeper into this. But there's NAR settlement kind of driven changes in the market, which we'll, again, we're going to unpack in a second. But a year from now, the effect on real estate commissions.
So far, with the data that's been published, it's been insignificant. It's been about a 10 basis point move. Like you said, I think it's very interesting to see where we're at in Q2 or 3 of 2025. We hold that the last mile and the complexity still requires agents, and that's not changing. There is the opportunity for downward pressure, but not in a meaningful way.
OK. All right. Taking us to today, existing home sales are out. They were up year over year for the first time since August 2021. Rates have come back up. I would think the October closings were affected by lower rates in September. They've come back up. All the demand indicators, everything we're seeing is actually that activity is hanging on and things look still pretty good. I'm curious about what you're seeing in the system and kind of how you guys feel about how we're going to close the year.
We do see a little bit of potential recovery in Q4, right? So I think we are pretty tied to the general market. So the expectation is we see some low single digit that kind of recover year over year in Q4.
OK. Helpful. All right. So let's get into the industry practice changes. Leo, you in particular have kind of stood out as a voice in the space. For those who are fairly new, talk about the industry practice changes, why they came about, and how you guys have reacted to that thus far.
Yeah, so the industry changes were a result of a plaintiff attorney class settlement, right, where there was agreed-upon behavioral changes. And the most meaningful one was the cooperative compensation through the MLS infrastructure. So Paragraph 19 of the actual settlement agreement deletes that process altogether. So the active offering of cooperative compensation is no longer allowed through the mechanism of the MLS. So we took a stance where we actually stopped doing it from the listing agent to collect enough money for both sides and market it. So we took a stance that the seller needs to be an active participant in the negotiation, which means they can still actually offer it right from the beginning, but it's through a different mechanism of seller to broker versus broker to broker. Or they can choose to say, put it in the offer, let's make it negotiable.
Or they could just say no comment and just see what happens. So we took a leading position, frankly, because we just operate at scale. So 50 states, we didn't have the luxury of kind of waiting to see what would happen. So mid-summer, probably 30 days out from the settlement, we actually created our own forms, not only on the buy side, which we did early on in the process, but also on the seller side to really control the experience so agents could be trained and articulate the shifts without too much breakage.
OK. Yeah, so we ran a quarterly agent survey, and I think you guys probably saw this from our last published survey, but the response, we asked a question about how well braced or how well prepared agents felt they were for the industry changes, and the results were remarkable. I mean, it was 90% or so said that the brokers, you guys and everybody else, your peers, your competitors, did a great job of preparing, so it sounds like that agents are prepared. It sounds like things really haven't been disruptive, but as far as what you can see from your agent base, how disruptive it's been, and then are you still seeing actors out there that are bad actors, right? Or are you seeing any kind of questionable activity?
Highly localized, just more parochial folks who just want to stick to the past, but not at scale. So the two subsequent weeks after August 17 were a little confusing. But at scale, it feels very normalized. Again, there were some probably counties or specific MLSs that made it a little confusing because they really didn't change much. And that's the best example of why we chose to take it upon ourselves to write our own contracts. But almost every week, I read or hear that announcement where an entire state or municipality is updating to a policy that's almost identical to ours. And you noted that we open source our contracts. And so anecdotally, we hear that double-digit percentages of small state attendees are actually using our forms, which is what we wanted, right?
Because of our scale and margin, we were able to invest and open source that for a lot of others.
Yeah, that's great. And speaking of that, I mean, the state of change was fairly dramatic. You guys, again, have braced your agents for it. And it seems like you have battened down the hatches and you've kind of braved the storm, right? There's still more to go for sure. But talk about your kind of independence out there, right, the competition. It seems like that there's more and more broker conversions, more and more kind of flight to safety, if you will. Maybe talk about that and the impact that could have to recruiting over time.
Yeah. I mean, it was a meaningful shift that I think created a lot of fear. So I've actually described it as a Y2K moment versus some other projected thing that people didn't take seriously and that was a catastrophic event happen. In 23 years in the industry, I've never seen agents collectively pay attention and learn something at scale because it was a move your cheese moment. So I think that there's a lot of small and mid-sized regional players, and I predicted that in Q1, and it's really playing out where folks are probably having an existential moment of, do I want to move forward with the risk profile of the industry? Because our model is very accretive to where they convert to us over probably a three-year period.
Their net income is equal to or greater than without the liability and long-term trailing brick-and-mortar liability in addition to the legal one.
Yeah. OK. One more on the industry side. And then I want to definitely start getting the model, obviously. But Clear Cooperation Policy. That is the hotly debated topic right now. Again, Leo, you've been front and center, and you've taken a pretty firm stance. So talk to us, for those who are new, what Clear Cooperation Policy is, why you defend it, and maybe even if it does go away, how that might actually benefit you guys.
Yep. Clear Cooperation Policy was enacted in 2020 by NAR to standardize a policy. So almost all MLSs have a version of a participation rule. NAR just made it standardized in the sense it's one day, 24 hours of public advertising. You must have it in the database, which is the MLS. So other states had varying interpretations a week, two weeks, or an exclusion of some sort. That was a response to actual homeowner litigation, right? So like San Francisco is a very good example of where single independents had double-digit % of share. And sellers felt that they were coerced or left dollars on the table because it wasn't exposed to the most amount of eyeballs. So Clear Cooperation just normalizes that if you participate in the marketplace, you will stick your property within 24 hours of publicly displaying it.
That clause has an exclusion, which is called the inter-office advertising, where it's non-public, it's behind a paywall, and you can only market it to other licensees within your firm. It kind of took center stage when some competitors decided that this is the hill they want to die on, and let's get rid of it so they can create unique inventory that's not available and use that as a market competitive advantage. Our position is that the industry in North America is beautiful because we're competing on price and service and value versus inventory. And you don't have to go too far. Commercial behaves that way in the United States. And abroad, in the other 22 countries that we operate outside of North America, it's a horrible consumer experience, right?
If you were to join us in the south of France and you wanted to see properties in Nice, you'd have to go to eight to 10 different websites to work with one of our agents prior to actually getting a somewhat accurate picture of the available inventory. And you still might not find all of it, right? So if CCP goes away, there is still the possibility of local MLSs still having a very similar version. But assuming that it goes away completely, in the U.S., I've actually gone on record to say that we're the biggest net beneficiary of pure transactional account. So it becomes a competitive advantage. But I'm going on the record to say I prefer it doesn't because I think it's at the sacrifice of the consumer experience.
Yeah. So how much do you think the other side of that argument is guided by self-interest?
100%. I think all the arguments are nonsensical, and they'd be easy to be debated.
Yeah. Do you feel like from a legal standpoint that it opens up potential exposure areas?
Absolutely. I think by definition, if one group of people controls inventory that's only available to be viewed by that group of people, by definition, you're going to hurt groups of people that should have access to that.
Yeah, from a fair housing standpoint.
100%. By the 1968 seven protected classes, I think we're opening up Pandora's box.
Yeah. You were not mincing words. Pretty clear. Appreciate that clarity. OK. Before we move deeper in the model, Glenn, I want to get you to hop in here. eXpCON, that's your big annual event. What were the kind of key takeaways and big annual kind of powwow for you guys? What were the big kind of takeaways coming out of it? And just broadly, agent sentiment, excitement levels.
eXpCON, this one was ranked the highest of, I think, all of the eXpCONs that we've done. We take an NPS score at the end of it. And I think it came out at 83, if I'm not mistaken, which is a really high NPS score in general. We enhanced our revenue share model. We added extra benefits to our agents domestically. We added , which Leo worked on. And then we added Canva to every agent across the globe has that. And then we focused a fair bit. We announced three new countries that we're growing into. So that's a big one. International took center stage. It was the biggest part of our trade floor, trade show floor. International had the most attention. And that's actually where I've been focusing my time since July.
We think we'll have more countries on the way that we'll be announcing pretty soon that we'll be opening up as well in 2025. So that was a lot of it. We really wanted to put a line in the sand that we are the standard we've set the new standard in the industry. We're continuing to innovate and continue to do new stuff all the time. Then one of the statements that we made is that everything we do is always in beta to really foster this continual innovation mindset among our agents, brokers, and staff. I think all in all, it went phenomenally well.
Great. Good to hear. One more kind of big picture. Then I want to start unpacking the model a bit here. But last month was your 15-year anniversary. You guys obviously started with you as one agent, right?
Right.
You guys have grown to be one of the largest brokerages in the U.S.
In the world.
In the world, right. Be clear about that. What are you most proud of? You look back these last 15 years. What has been the big kind of aha moment for you?
Well, so when you build a business plan, there's what you see on paper. And then there's the actual impact to human beings' lives. And you don't really understand that when you build it. I started a ton of businesses, most of them cratered spectacularly. But there's the business plan, and then there's the execution. And a lot of times, you don't really realize what you're building when you're putting it together. I knew why I would be an agent at EXP had it existed in 2009. And I wouldn't have started EXP had it existed because fundamentally, there wasn't a way off the hamster wheel of selling real estate in the industry at the time.
And what has taken place is the number of people, and Leo, of course, gets this comment all the time as well, but the number of people where either the revenue share or the equity or the collaboration or the community literally changes an agent's life. And I think about it in two aspects. One is the actual measurable change from a financial dollars and cents point of view. But then there's the other change that takes place around being around like-minded individuals that are growth-oriented and how that impacts you as a human being. And both of those, I think I underestimated the impact that eXp would make in agents' lives.
It's the reason why we keep on showing up each and every day and the reason why our tagline has remained generally the same, which is we are and continue to be the most agent-centric real estate brokerage on the planet because 80% of real estate agents, like many independent contractors across the vast swath of independent contractorship, don't really have a way toward long-term retirement. We're the first company to introduce meaningful rev share, first company to introduce equity, first company to introduce a health care option for real estate professionals, and so those three elements fundamentally change what every new entrant into the industry. If they don't offer those things, they really don't have a great platform to compete from.
Yeah. OK. So talking about the model a little bit here, obviously, agent count growth is very important. It's not the end-all, be-all. You guys at one point were growing triple-digit agent growth. You've actually declined a little bit sequentially. So talk about what drove the spike in agent count and then what has triggered a little bit of attrition of late, and then how you're expecting, how you're thinking about return to agent growth, maybe when that comes, how you're thinking about the outlook?
Yeah. So I think about it in kind of two aspects. One is we have, to some extent, become reflective of the industry just by sheer size. We're 4.2% of agents in the U.S., which is a meaningful market share. So that means that we are impacted by macro trends more in the market than when we were a very fractional size of the market. Single largest real estate brokerage by agent count and transaction count, that makes us akin to the market and market pressures. So that's domestic. And to some extent, domestically in the U.S. especially, the industry has changed where it's become a bit of a red ocean versus a blue ocean. It's not super red. I mean, we still are taking players from all the legacy brands, effectively the dinosaurs that are teaching dinosaurs how to be better dinosaurs.
We're taking all the people who actually want to be at a modern brokerage with a modern tech stack. But there are other entrants that are sort of making it a little bit more red. Where I think about where the growth is coming from, one, domestically, we think about the idea that we should be able to get to 10% market share at some point in time. So that means that we could go from 4.2%-10%, which means we could go to 150,000 agents plus or minus. But internationally, if you look at our growth rates, which I know you have, we're actually growing. Our revenues are growing quickly. Our agent count has been fairly static because we've been starting to move from agent count as a metric to productive agent count. And that's why you're seeing the rapid run-up of revenues internationally.
Now that we're really putting a significant focus on international, we actually think that if you look at that, that's where you're going to see the triple-digit growth inside of our model. We think that there's actually more TAM outside of North America than there is inside of North America. There's a few data points around this. One, there are some brands. RE/MAX has more agents outside of North America than inside of North America. There's a number of other brands. But then if you start to think about the fact that we look a little bit like network marketing companies or direct sales companies, domestically, they all started here, had massive growth here.
But they're so much larger outside of North America that when we start to think about where we're at five years from now and beyond, we think that international is going to be by far the largest segment of the company. And so now, as those numbers, which are growing fairly rapidly, become a meaningful part of the denominator and the numerator, but as it becomes more and more of that, you're going to see that translate into overall growth. But domestically, we'll grow as well.
OK. It's helpful. Just taking a step back on the business model and what you kind of view as competitive moats. I mean, if imitation is a sincerest form of flattery, I feel like you guys have to be all kinds of flattered, right? There's lots of copycat models out there.
Yeah. We're like 30-40 times flattered.
Right. So talk to us about why you think you're differentiated.
Well, so I think about this is that when you look at us as a company, I actively listed and sold real estate, built a real estate team, and scaled that into an actual brokerage. Leo did the same thing. He started as an individual agent, was a top agent for multiple years at Keller, ended up eventually owning market centers, and he's been on that journey. You look at Wendy Forsythe, our Chief Marketing Officer, very similar journey that she took in her career, and you look at who is sort of in that place. We actually understand what it means to run a real estate brokerage. You look at most of our copycat competitors, and certainly, I think the two largest, the two founders have never sold a piece of real estate in their life. They've never actually been a real estate agent.
Everything that they're doing is copying us because they saw it work with us. There's little to no innovation other than maybe a shiny object here or there. We actually can empathize with our agents and actually come up with defensible new products and services, which we're continuing to do from a place of actually understanding the industry. The reason why we were able to take a lead in what took place relative to the changes post-NAR and why we were a leading voice is because we actually understood what it meant to be a real estate agent. Why did every one of those other players take so long? It's because they actually don't understand the real estate industry. They just see it as a way to make money by copying what eXp did.
Yeah. Makes sense. Going back to the agent count, you guys have provided a lot of clarity on earnings calls around production and attrition by tiers, right? Maybe run us back through the degree of attrition you're seeing in kind of that lower-tier agent, what that's looked like the last couple of quarters, and when we might see that kind of waning off.
Yeah. So Q3, we had 77.9% of the attrition that took place was in the zero to two agent category. And what that's really important is because 61% of the ones we lost, we lost to a job. They didn't actually go to a competitor. So finite game we play in the sense of total denominator is a very big impact of total transactions. But the really interesting one is on the other side of that barbell, our 21-plus transaction cohort actually dropped to 2.1. So probably the stickiest the platform's ever been. Our per agent productivity has actually gone up. And we actually see it across the board where our top teams have even been up 10%, 20% in their local market. So I think that the metric that Glenn just referenced of productive agent count is what we're focused on.
We've had several wins in the last two quarters where some of the biggest, most performant either teams or team merges have chosen us over everybody else when they've had the opportunity to meet with the Glenn and Leo of every company. So we feel that our very specific focus on operational excellence from paying agents in real time, which hasn't been done before, to the very SaaS kind of driven metrics of obsession with service. We have an agent care line that's 30-second hold times 24 hours, seven days a week, with an average NPS score of 85 with a 95% SLA. So we've doubled down. You asked Glenn the question earlier of what makes us unique. His answer on the leadership team is the one I actually give as just a collection of human beings.
We now know that anyone can go to a website, hit copy, paste, and say, "We're the new eXp" from a proposed value proposition. But what they can't replicate is the collection of human beings. Our top 250 teams in 2023 sold north of 69,000 homes. If you were to take our top teams and make them a standalone brokerage in the United States, they would have been number six. So we attract this tribe of high performers. And I think that's what makes us unique in the sense of when we hold a mastermind in other parts of the industry, people would have to pay tens of thousands of dollars to get into that room to have the conversations and the level of their scores we can have.
Yeah. And it's a great rundown. And the reason I ask about the attrition by tier is I think it's pretty clear to see. I mean, and I've been guilty of this. We've been pushing agent growth, agent growth, agent growth. It's all agents are not created equal. And I think it's very clear to see you guys. I think agent count was down 4% year over year, and the quarter revenue was up. And it's productivity from the agents that matter the most for you guys. So I even hesitate to even ask about overall agent count growth. But as you look out in the next year, do you feel like you're back on a path to start growing agents again overall?
If the assumption holds true that transaction count go up, agent count kind of disbursement will probably happen. But again, our sole focus is on productive agents, which I think was a really big aha that we had in our international segment. We grew agent count dramatically overseas. But we don't have the really kind of take-it-for-granted metric of, in the US and Canada, you have to be licensed. That becomes a barrier of entry. So Glenn's brought a lot of rigor to our systems overseas, where we now require all agents, independent of country, to be full-time and in the business for two years. So our per-person productivity is going to continue to increase. Again, in the US, we don't have requirements other than legal licensing. But our focus in systems and training is all about productivity.
OK. All right. It seems like we're I mean, you're on a good path for revenue growth next year, I mean, especially if you're right, Leo, and you can get 10% growth in transactions. I think you guys, from a transaction per agent standpoint, because of the denominator change, you're out punching your weight or out punching the industry right now. So it seems like you're positioned for good growth next year. Thinking about moving maybe you want to jump in here. But thinking about the setup for next year, if we can get a little bit of growth, broadly, what would you expect if you had modest growth next year, maybe 10% growth, whatever it is? What maybe should investors be thinking about for gross margin?
I would say the gross margin, there are a lot of factors, impact, right? It's how many agent cap and then the productivity. I would say in general, I would say maybe similar kind of level like what we have to see.
To this year?
Yeah. Similar. Yeah.
The reason I ask that is when you guys, you're constantly iterating on the agent value problem. When you announce these new revenue shares, you enhance it. You look at that from the agent standpoint, they're clapping like, "Who are?" From an investor standpoint, you're like, "Ooh, what does that mean for gross margin?" I guess some of the changes you've made, how influential that's going to be to gross margin?
The change in the revenue share really don't impact gross margin because the revenue share, we cap at 50% of a company dollar. So a little bit more like distribution among the agents.
It's not just a cap. That's actually a commitment.
Yeah.
Yeah. So we commit to pay out 50% of basically, internationally, it's a little bit different. But domestically, 50% of the company dollar gets paid out in rev share. So it's not a cap. That's what we pay out.
OK. Makes sense. Other side of the financials, or if you just think about the P&L, I mean, one of the big pushbacks in the story in the past was around share count dilution or share count creep, right? You guys have really been able to taper that, where it basically hasn't moved in several quarters, even years, even. Talk about the changes you made and what allowed you to kind of stymie that.
I think this year, we really take the opportunity early this year when the share price is low. We're a little bit aggressive to be first share. If you look at year to date as of end of Q3, our outstanding share actually reduced by more than one million number of shares. So it's outstanding share actually is shrunk. And yeah, this is what we do. We really use our cash from operation to buy back share, to return the money back to the shareholder, basically.
OK. From an operating expense standpoint, you guys announced a $20 million kind of profit enhancement initiative this year. Maybe unpack that. How successful have you been? Have you been able to hit your target? Just broadly kind of unpack that.
No, we hit the target.
OK.
Because we really sometimes hit our gross margin. Sometimes it's hit the reduction this year and next. So we really on track. Actually, we accomplished it, actually.
OK. And as you think about next year, I'm sure you're probably still going through the planning and thinking about the budget. But from just a broad level, if you get modest industry growth, how we should be expecting OpEx or their planned investment initiatives just broadly?
I would say for the industry recovery, you're going to get the gross margin dollar. Then we definitely will leverage our cost base. I mean, we invest quite a bit in the technology side, the AI side. So the goal is really leverage the base SG&A to grow without increasing our costs initially. Now, of course, you do a little bit of inflation time. I would take consideration there's inflation out there. But the general is we really want to use technology to really manage the cost. Drive the support of growth revenue without significant increase of cost, definitely.
So you guys have also talked about, and Glenn, go ahead if you had something.
Yeah. And one of the things I want to just double-click on is we actually do believe that we are already starting to get a lift from the use of AI. And our early indications are that we are getting, for those using the AI in their roles, that we're getting 25%, 50%, 75%, 100% output increase. And quality of output is going up as well. And that's going through each, whether it be business planning, whether it be how we're actually doing the work, whether it be in automation. All of these things are starting to actually have measurable impacts inside the organization. So we just did a hackathon at eXpCON where OpenAI co-hosts that with us. And we had some prizes and some things that went along with that.
But that was to, again, put additional attention on how important we believe AI is going to be in how we do the business. And if we start to play that out over the next two, three, four years, it fundamentally changes what it means. The way I've actually thought about it is if we are all using it, we shouldn't be getting rid of people. We should just be getting rid of the people who aren't embracing it. Because if you're using it, you're going to come up with the next innovation faster while using AI that we can then implement and put in production, which will either create us opportunities or lower our cost to operate. So that's the way I'm thinking about it. And that's the way I'm challenging the company to think about it.
We're already starting to do things like measuring per employee the use of AI per employee as a meaningful internal metric of AI adoption, which we think will naturally translate to all kinds of good outcomes.
Yeah, for sure. And kind of related to that, I mean, you guys have placed a pretty big focus on cost per transaction or being more efficient, if you will. What is that metric? What is the average cost per transaction now? And how much lower do you feel like you could potentially get it?
Like Q3, right? Q3, our cost per transaction, I think roughly about $400. Let me give you that number here.
4?
Yeah.
Four or something. High 4s normal is the mid-price.
Yeah. Yeah, 494. And then it's a 1% decline was per year. Yeah.
Broadly speaking, how much do you think you can? Is there a metric? Is there a North Star that you're kind of managing to bring that lower?
I give you my North Star, which is.
A dollar.
Yeah. If Amazon can get a book to my house for $3.75, we ought to be able to clear a transaction for $75. So that's my internal metric. And that's my sort of North Star. I don't know if we're going to get there. But idealistically, I think that automation and the way all this other stuff works, literally, I think we could get down to 25% of our current costs.
Yeah. That's great. Good to hear. OK. We've got time for maybe a question or two from the audience if you guys have anything. OK. Parting words here, Glenn or Leo, both of you guys, either one. What is the one thing you think investors are missing the most or the most underestimated side of your story?
I would say watch international. For me, that is where we're right now, it's growing 60% year over year. It's a small number that gets buried in what we're doing. But as that starts to mature, it's going to make a meaningful long-term impact in where we're going. So I'd say watch international. Leo?
The distinction that we're actually the operator, not a franchising company, right? I'm almost always lumped in conversations with the legacy players that are actually brands. And so we're competing with a local kind of family-owned three-person shop that's 40 or 50 people. When agents join our organization, I mean, their support by people count almost goes up 10x, let alone the technology and infrastructure they have for additional training. And where I'm excited is in the 2.0 version. We're no longer that little startup that's figuring it out. We're fully skilled. We're operationally excellent. And we're really, really pouring into the infrastructure for whether it's brand new agent training to how do we take you from $100 million-$200 million.
Yeah. That's great. Well, thanks for the time. Thanks for being here in person in Nashville, and thanks to those in the webcast land for taking part in this as well.
Thank you.
Thank you.