Our Metaverse. My name is Courtney Keating, and I am the CMO of eXp World Holdings. Today, we will begin our earnings fireside chat with opening comments and a conversation between Glenn Sanford, Founder, Chairman, and CEO of eXp World Holdings, and Tom White, Managing Director and Senior Research Analyst from D.A. Davidson. We are happy to welcome Tom back as our moderator. Following this initial segment, we will move into a presentation which includes a review of the Q3 2022 and year-to-date 2022 financial highlights. Tom White, managing-
Courtney, you just cut out.
It looks like I've got a bit of an echo. Give me one moment, please. As said before, we will return for a continuation of the Q&A before concluding the fireside chat. 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 recent filed quarterly report on Form 10-Q and annual report on Form 10-K for a discussion of specific risks that may affect our business, performance, and financial condition. We assume no obligations 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 expworldholdings.com. Now for a few logistics as we will get started. For those of you joining in the eXp Campus today, see all screens. Hit the Stage Zoom button on the right of the chat box. To zoom into a specific screen, you can hit the plus icon above that screen. If you happen to see no slides or a gray slide, hit the refresh icon button on the top right-hand corner of that screen. While in eXp Campus, should you need any help or have any questions, please enter your comments into the chat box at the bottom on the left, and a member of the team will contact you. As mentioned, the last segment of our fireside chat is a continuation of our Q&A.
If you wish to ask a question, or during the presentation, you can enter that question by scanning the QR code presented on the screen with your phone or go to slido.com and type in the event code EXPI. From there, you can submit a question or vote up an existing question by giving a thumbs up if you would also like that question asked. This screen will remain up on the left-hand side of the stage. At this time, I would like to turn the fireside chat over to Glenn, our founder, and Tom White to start the earnings conversation and opening remarks. Over to you, Glenn.
Hey, thanks. Thanks, Courtney. Welcome, Tom. I think I'm hearing some audio on a microphone. Okay. No, that cleared up. Tom, obviously you've been covering us for quite some time, and I'm sure you've got some questions to kick things off, but obviously had a great quarter considering what's going on in the economy. I'll turn it over to you to kinda ask some questions.
Great. Terrific. Thanks, Glenn. Thanks, Courtney and Jeff and the rest of the team for asking me to host this quarter. I appreciate it. Yeah, Glenn, a lot of stuff to talk about. Looking forward to digging into it. Maybe just to kick things off sort of at high level here, maybe you just touch on maybe your highlights from the third quarter performance.
Yeah. We've been talking a little bit about what we were expecting in Q3, Q4, even at the beginning of the year as rates were going up and the Fed was raising rates. Sure enough, we have not been immune to what has been taking place. I think later on today we're gonna have another announcement as to what the Fed is going to do relative to interest rates, and there's some expectations around what that's going to be. Higher interest rates are a big indicator of a buyer's ability to buy at current prices based on the fact that 70% or so of buyers use a mortgage to purchase a property. With that, there's been a slowdown in the market.
And with that, we've also started to see what we'll call market attrition in that agents are, you know, in this mode of either not renewing or not getting licensed in to begin within the industry itself. We're actually making a little bit of a shift. We've talked about it for a while, which is that when the market does shift, we expect to pick up market of the Brendon Burchard's a much more robust space to impact, you know, large number of lives. With that, we think there's a lot of opportunities for growth. We go to the next slide here.
You know, we think about the idea that, you know, when we just in the coaching space, just to use that, we think about that as being a business that will be in the $50-$100 million a year range over time. It will take you know multiple years to get there. But it is something that we're focused on really building that out. We recently did a partnership with a company called Agent Academy, and working to do a sales mastery event in early January.
We have some big plans of how we can bring them into the fold in some capacity to build out the real estate vertical of coaching and training with, you know, a high-value coaching offering. We're building out all the other coaching and other offerings in that space. When we think about, you know, building out all these things, you see Revenos, that's actually our holding organization for all of our sort of referral-based opportunities that's led by Leo Pareja. Also, the eXp Solutions as a big marketplace that's also part of that same network that Leo's overseeing.
There's a lot of opportunities for leads for agents, but also then monetizing those leads and then turning those into more revenue opportunities for the company and in some cases, the agents themselves, based on you know what we're able to do. In some countries, we actually have a lot of ability to create aligned interests with our agents. In the U.S., it's a little bit tougher to do affiliate services, mainly just because of sort of the way the RESPA laws work, but we're still working on building out really cool platforms for them. We also launched just at eXpcon in October, we announced our eXp Luxury initiative, and so we've got some luxury branding and paths for actually really helping agents' market at a high level.
We announced our referral division and already talked a little bit about SUCCESS Coaching. One of the other pieces that we also launched in SUCCESS was, a is an initiative around SUCCESS Health, and that's around biohacking, biometrics, wearables, and we've already formed our first partnership with a company called Biome. That's going really well. We're gonna form some other partnerships with other large organizations to really bring a health and challenge-based health metrics to organizations, not just our eXp and SUCCESS community, but other organizations as well. We're excited about a lot of the various aspects of those businesses that we're gonna be able to continue to scale with.
We also just launched our first Discord community for SUCCESS. If anybody listening to this call is interested in what that community is, participating in some capacity, feel free to email me at glenn@success.com, Glenn with two N's, @success.com, with the subject line Discord. We'll definitely get you an invite into that community. You can check it out, become part of it. One thing that we've had is we've had questions come up quite a bit around our agent attrition by, you know, by levels. This is a subject that when we talk to investors, I think you even ask quite often the same question.
We've actually started to break this out. We've said anecdotally that we believe that the agents that were churning off of our platform, somewhere around 80% of our agents that were churning off were in that zero-two agent category. Turns out, you know, we were pretty close, 77.1% of the agents that are actually churning out of eXp, so agents that are, you know, leaving eXp, in most cases, they're leaving the industry. But that's where, you know, most of our churn is. We've also broken out some of the other levels just so you can see, you know, what percentage of our churn is happening.
We've done some additional metrics in the background, but our lowest producing agents are churning off based on the population of those agents. They're churning off about 4.5x as much as our highest producing agents. That is all in line, based on production levels. The higher production you are in the eXp ecosystem, the more sticky that we are as an organization. One of the other metrics that we're gonna break out in future time periods as well is attrition based on amount of time on the platform. We believe that that's actually again correlated to production levels. The higher your production, the more likely you're going to stay.
I think that's kind of shown a little bit in this in some of my commentary, but we're gonna start to break that out, you know, relative to, you know, how long have you been on the platform before you churn out. We think that that's going to be another metric that's gonna be interesting to investors. I'm looking forward to sharing more of that data because I think it would just show how sticky the eXp platform is, based on different production levels. With that, I'll turn it back over to you, Tom, to ask any other questions you have.
Great. Thanks for that, Glenn, and interesting new disclosures there that look forward to looking at those more closely. I know Jeff's gonna talk a little bit about kind of the financial performance in the quarter, but you know, you guys did release third quarter results this morning. Maybe briefly I would be curious to hear, you know, how did the key kind of financial metrics and operational metrics that you follow kind of match up to your expectations heading into the quarter, you know, for the last three months?
Yeah. You know, I think Jeff will definitely talk to a bit of this. I mean, one of the things that we've. It's a little bit different than say, Q2 of 2020. We saw that massive slowdown because of the sort of, we'll call it, the COVID pause. We didn't know how bad it was gonna be, so we literally, you know, cut a significant portion of our staff. Then we came out of that and literally, you know, then Q3, Q4 was really busy all the way through, really Q1, beginning of Q1 of this year. We had this really significant ramp.
We knew that as interest rates are going up, that we were going to need to halt hiring and then potentially shift the way that we work with our headcount to make it more of that variable-based elements. But we didn't approach it the same way that we did in 2020. I think one of the things that we're looking at is, you know, how do we moderate our expense load to match up with our transaction load?
Because the way I think about it is that we, once we get to sort of this next level of where the market sort of bottoms out at, we become again a fairly profitable organization, as a company because we are able to shift our resources in such a way that, you know, we should be able to be profitable in good markets and bad markets. Of course, we're in this shift, you know, that we'll be in for another couple few quarters, before we get to what we'll call that flattened level. Once we hit that, then I think we're gonna look really good just in terms of the way that we're structured as an organization. Hope that helps a little bit there.
Yeah. No, it does. Thank you. So, you know, you reference that, you know, obviously what's kind of happening in the broader housing market here, and, you know, the agents on your platform are gonna have kind of a different next few quarters than they've had, you know, the last kind of four to eight quarters or so. Wanted to talk a little bit about, you know, what you guys are doing to, you know, help your agents kind of weather this slowdown, you know, be it, you know, new products, new resources. You know, we're a few weeks off of the eXpcon event. You guys announced a flurry of new things, Revenos, referral division, luxury. Maybe.
It seems like those are all about kind of, you know, trying to give agents new tools, new ways to, you know, succeed in kind of a tough housing market. Maybe just talk a little bit about which of those you're sort of most excited about, and, you know, is it about kind of outright revenue contribution from these things? Is it more about agent retention or agent attraction? Maybe just walk through that a bit.
Yeah. Well, there's, you know, we focus on all of those things in various different initiatives. One of them that we announced was around our new referral division. That's the ability for an agent, and they're really gonna be that low-producing agent, that is looking at, say, 2023, saying, "Hey, the market's gonna be really slow. I've got to pay Realtor dues. I have to, you know, pay for MLS dues. I've got to pay for a bunch of stuff just to be in the business." We've got a referral division where if they're not going to be actively showing or listing property, they can actually hang their license there and actually reduce their fee exposure quite a bit and simply refer out transactions.
It gives them a place to hang their license during the slower periods. Certainly, if they've been here for a period of time and they've built a revenue share organization up, that would be maybe a place for some of them to move their license as well. That, I think, is one of the ways that we're working on the retention front. The other retention piece is really growth oriented. We believe that agents, you know, through training, coaching and just getting the basics of the business, blocking and tackling down, that they're gonna be more successful. We provide, you know, 70-80 hours a week of training in our campuses.
We've got, you know, these new partnerships with companies like Agent Academy, where for a very low dollar amount, I think it's $350, an agent can actually go to a three-day super intensive training platform, and they do that in person. The next one that we're involved in is in January in Fort Lauderdale. But they're gonna be able to really get in that environment to help them take their business to the next level. Even though the market is slowing, those who can figure out ways to drum up business are gonna do fine. So that I'm excited about. So those are a couple of them. Certainly, the things we're doing with Zoocasa, lead gen in Canada, we're doing that across Canada.
We're looking at, you know, how do we create more opportunities in the U.S. I know that underneath the revenues and some of our other opportunities that are coming from that, there's gonna be different things that agents are gonna get exposed to because we're one large brokerage, one large platform that some of these national players can just tie into. They don't need to negotiate with all kinds of franchises to get their business into the hands of active agents. We're excited about all of that.
Oh, that's great. I think now, maybe Jeff, if you're ready, might be a good time for you to walk through your content.
Absolutely. Thank you, Glenn. Thank you, Tom, and good morning, all. Thank you for joining our third quarter 2022 virtual fireside chat. On behalf of our agents, business units, and staff team, I'm proud to share our third quarter results and highlights with you today. As we look at the first page, summary, eXp delivered a solid third quarter with record revenue, continued growth in agent count, as Glenn mentioned, transaction volume and gross margin, and we continue to have very positive cash flow throughout the business. eXp Realty continues to grow market share with sustainable operating model and positive cash flow. Board of directors voted to pay $0.045 per share Q4 dividend. As Glenn mentioned before, we've successfully navigated numerous cycles of the economy and challenging markets.
You know, as you can see from the results in third quarter, we have done that again. We continue to have zero debt on our balance sheet, a variable cost structure and our organic growth model that has provided resilience as we move into the future year. One thing I wanted to clear up was that as we previously communicated, we entered 2022 after a very strong 2021 with annual SG&A plan of about $400 million for the year. All right. What we've done in the past is we've supported, we've actually hired ahead of the curve, supporting the anticipated growth, and that's kind of where that $400 million plan came from.
We saw the indication in Q1 pointed towards a weaker economy in the second half of 2022, we reduced our plan to about $360 million. We took about $40 million off our annual SG&A plan. As part of that $40 million annual reduction, we did adjust in Q3 our cost structure, resulting in about $20 million in annual savings. You're gonna see a little bit of that in Q4, but you're actually gonna see that as we move into 2023. You know, assuming negative industry growth rates in the short term, we're targeting a run rate of about $80 million in SG&A per quarter as we move into 2023. If we turn to the next page.
At a highlight level and starting with revenue in Q3, our revenue was $1.2 billion, up 12% first Q3 of 2021. Our gross profit in Q3 was $93.1 million, up 17% growth Q3 in 2021. Net income was $4.4 million, and that was down year-over-year growth 2021. That primarily driven by lower operating margin and lower tax benefits growth Q3 of 2021. In Q3, our diluted earnings per share was $0.03, and our adjusted EBITDA, a metric we use that excludes non-cash charges, i.e., stock compensation, was $12.3 million. Finally, on this page, looking at our Q3 operating cash flow, our cash flow was $64.1 million, an increase of 16% growth Q3 2021.
Now a look at our key metrics on chart three. Our key metrics as we've discussed before are broken down into two categories, operating metrics and financial metrics. Looking at our operating metrics, agent NPS was 71 and our employee NPS was 72. Both scores above our goal of 70 as a world-class NPS score. In our realty business, which continues to be the primary driver of financial results, adding productive agents to our platform drives unit sales, volume, revenue, gross margin dollars that we invest in our business, utilized to support our agents, staff, and return to our shareholders. Our agent count at the end of Q3 was 84,911, up 30% versus this time last year.
In terms of unit sales, we transacted 138,354 units in Q3, up 6% from this time last year. Our average price per unit was up 2% versus 2021. Our volume was $50.4 billion versus $46.6 billion, up 6%. I'm sorry, 8% growth Q3 2021. Now as we look at our financial metrics, we've highlighted revenue, gross margin dollars, net income, adjusted EBITDA, and operating cash flow on our previous page. Other financial metrics include gross margin percentage, which was 7.5%, it was 7.2% in Q3 2021. That was up 5% year over year. Our SG&A increased from $68.4 to $93.1, driven by higher personnel related expenses, technology and growth investments.
This quarter also contained severance costs of about $2 million, related to the actions we discussed on page 1. Our operating income was $26,000, versus $11.2 million in Q3, driven primarily by increased SG&A and investments. Finally, on our key metrics results, our cash balance in Q3 2022 was $134.5 million, versus $98.1 million in 2021, and that's an increase of 37%. If we look at track 4, some additional Q3 2022 milestones eXp, EXPI achieved positive GAAP net income for the 12th quarter in a row. We continued positive accumulated earnings and shareholder equity. We paid our 5th cash dividend in Q3 of 2022 and declared a dividend for Q4 in 2022.
I mentioned the 4.5 cents per share that was approved by our board of directors to be paid on November twenty-eighth to shareholders of record of November fourteenth. Then again, we continue to offset dilution via our share buyback, and we spent about $60 million in common stock in Q3 to offset dilution our agents. We returned about $7 million to shareholders in the form of dividends in Q3 of 2022. If we take a quick look at our year-to-date numbers, agents, basically, we talked about that already. Our units on a year-to-date basis are 402,961, and that's up 26% year-over-year. Our volume was 149.7 versus 111.2, up 35%.
Revenue growth on a year-to-date basis was 36%. We're coming in at almost $3.7 billion in revenue year to date. Our gross margin was $283.8, up 33%. Gross margin percentages based on, you know, a pretty strong first half of the year are 7.7% versus 7.9% of last year. SG&A, as I talked about before, has increased year-over-year to the tune of 48%. Our operating income, $16.1 million versus $32.6, was down 51% year-over-year. EBITDA, $57 million versus $64.9, down 12%. Our operating cash flow was $203.5 versus $156.8, up 30%.
Finally, our cash and cash equivalents, the amount of money we have in the bank was $134.5 versus $98.1. The cash, our cash balance is up 37% year over year. If we look at the next chart six, we're gonna take a quick look at our historical growth in agents and revenue from 2018 through Q3 2022. We have grown from $500 million in revenue in 2018 with 15,000 agents, $3.7 billion in revenue year to date 2022 with +85,000 agents.
As Glenn mentioned, as we started the conversation today, although, you know, there will clearly be challenges in our economy in the short term, we believe we have a long road of material growth opportunities ahead of us at EXPI and remain confident in our ability to gain market share over the long term. Thank you for your time, and I will pass it back to Tom and Glenn for some Q&A.
Great. Thanks, Jeff. That was great. A lot of detail in there. Maybe just to kick things off, Jeff, I mean, I guess just from your seat as the CFO and kind of looking at all the financial metrics and data, like what are the one or two things that maybe stood out to you the most in terms of the performance of the company in the quarter?
Yeah, I think the thing that stood out to me the most, Tom, was basically the continuation and the success of our organic growth model. I mean, the events, including eXpcon that you mentioned before, the agent events that we're having across the country and across the world. I think that's we've got to a level where, you know, this organic growth model just keeps going, you know, day after day, week after week, quarter after quarter. I think that's the highlight, and I think that's gonna be the major competitive advantage that's gonna get us across, you know, through these times and really shine as the economy picks up again.
Great. Circling back on the commentary on operating expenses, thank you for clarifying that and sort of what the new run rate is. I think investors have been focused on the trends there. Could you maybe just talk a little bit about, you know, where are the areas where you're either, you know, making cuts or driving, you know, big efficiencies and, you know, how much more room potentially do you have to further drive efficiencies in operating expenses? You know, let's say if the housing market, you know, takes another leg down or, you know, is softer for even a longer period of time than maybe folks think.
Yeah. I mean, you know, first of all, you know, we're decreasing our spend across all the areas of the business where we have increased capacity and growth. As I mentioned before at times, historically, we've hired ahead of the curve, and we've invested ahead of the curve from a capacity standpoint for the realty business. We stopped doing that in Q1 of this year. All right. There's opportunity in that area, and that's where a lot of the current savings is gonna come from. We're also looking around our business as we do on a continual basis, and look at our business units to see what makes sense from an investment standpoint and, you know, what's changing, all right, and shifting resources.
I think that there's a tremendous amount of opportunity for us from a productivity standpoint. Patrick and the brokerage team is making huge strides that I think we're gonna see, you know, in the first half of next year. I think there's opportunity there. You know, if the volume of the industry continues to decline the way it's predicted as we sit here today, I mean, we do have the ability to decrease our cost structure to reflect and to match that volume that's in the industry.
Great. That's helpful. Maybe moving up the income statement a little bit, gross margins, I noticed that they were up a few hundred basis points on a year-over-year basis. Can you maybe just talk a little bit about... Obviously, there are a bunch of different things that can impact gross margin, but, you know, in the third quarter and over the next few quarters, you know, what are the main kind of drivers that are gonna move gross margins around? And, you know, can we anticipate that we're gonna see kind of further gross margin expansion here over the next few quarters?
Yeah. I think what we're gonna see is if as volumes go down, the actual gross margin percentage, as you saw in the quarter, actually goes up. All right? What we focus on is the dollars, but the answer to your specific question on the percentage is, I mean, we do believe that's gonna go up towards about an 8% range. That's, you know, the functions is it's the volume, it's capping, and it's price. As volume comes down, price comes down, the percentages actually go up. We do see that going towards about 8% in the near term.
Okay. I guess maybe last one for you, Jeff, and then we can open it up and get Glenn back. I guess, you know, outside of operating expenses, which you kinda touched on, I mean, when you think about how to manage the business through a challenging housing market, what are you kinda most focused on, from a financial perspective?
Yeah. We're focused on making sure we're matching our capacity from a cost standpoint with what volume's coming through the front door. We're also, at the same time, looking for other opportunities from a revenue standpoint. Glenn mentioned, you know, there's a lot of things around affiliated services. I know we've talked about that for years, but we're actually you know, we have very specific programs to increase our operating margin via affiliated services. We're looking at you know, huge productivity opportunities across our business on the brokerage side. Then, at the same time, you know, we're looking you know, as we hit an environment, you know, if it's as down as people predict it could be, I mean, we just gotta look at our business differently.
Things that we were able to put into our cost structure before, we might not be able to put in our cost structure in that environment. We do have the opportunity to decrease cost structure, Tom, and I think we have the opportunity to increase margin through other sources and then gain that productivity.
Great. Yeah, maybe we'll bring Glenn in here to join us again. Good segue there, Jeff, as far as touching on affiliated services. Wanted to maybe just get an update from you guys. You know, where do things stand right now as it relates to, you know, kinda the key affiliated services that you guys are investing in and are focused on? And, you know, when can investors maybe look forward to those having, you know, a more appreciable impact on the income statement?
One that we've been, you know, investing in now for over a year is the SUCCESS Lending joint venture. That one, we actually are. It's an interesting one to be investing in in a slowing, especially, you know, dramatically slowing mortgage market. The nice thing about where we're at is that we're continuing to grow SUCCESS Lending, whereas almost everybody who is established are shrinking their lending platform. We're actually in a really interesting place to be able to actually attract productive loan officers onto the platform. It doesn't mean that we're profitable in that segment yet. I think we're actually investing another. I think there was a little bit of a cash call, just a small one, about a half million dollars in it.
I think it's our first cash call, but it's just because the market has slowed more dramatically than we'd anticipated when we launched this in 2021. Where we're optimistic around it is that we're getting a lot of really good loan officers in the seats, geographically distributed around the country, and then creating opportunities to get them loan business. We're in this, you know, we'll call it a little bit of a slowdown, pause. You know, every time the rates go up, we see mortgage applications decline.
We've seen that happen five times so far this year. I think today's announcement will make it the sixth. That has definitely dampened that. I think where we're looking at is we are in a market that's, you know, dramatically slowing. But we're actually forming these businesses in a down market, we're actually better positioned to build out the infrastructure, for when the market, you know, gets back to normal. I actually think we're growing it at exactly the right time, 'cause it's actually tougher to grow, in some respects in a, in a upmarket because loan officers, they're doing a lot of business, and now they're actually looking for where's the opportunity.
That specific JV actually is a pretty good one. And then we're just continuing to work on the other initiatives, you know, I mean, title, and escrow. We're looking at, you know, escrow opportunities in California. We're looking at, you know, title and escrow opportunities across the U.S. We're gonna have some things to announce probably early in the year around some of that stuff that we'll be excited to share.
Yeah, Tom, I'd add that, you know, from an operating margin standpoint, I think, you know, in the second half of next year, we'll be able to point to a number of successful programs that the team is working on very hard right now. I think they're gonna start becoming material in the second half of next year.
Okay. That's great. You know, I guess you can consider it an affiliated services, but I wanted to double-click on the SUCCESS brand and specifically kind of the coaching and training part of it. Glenn, I think you mentioned a little bit earlier in your prepared remarks that, you know, you guys thought this could be kind of a $50 million-$100 million business in a few years. Can you just talk a little bit about like, you know, how it gets-
Yeah.
There? Like, you know, the building blocks of that.
Yeah, for sure. You know, we've been evaluating. We just finished a meet up of some of the folks involved at SUCCESS, Jairek Robbins, Marcus Truan, our head coach. Courtney is also the chief operating officer over on the SUCCESS side as well. We're working diligently on this. We were looking at, you know, where is a lot of our traction, and our SUCCESS Coaching certification program is something that's getting a ton of traction. We actually are booked out till February, March for coaches wanting to get certified because, and it's the brand and the history of the brand that makes it so compelling to become a SUCCESS Certified Coach.
We currently are certifying 30 coaches a month through that, and they're investing between $5,000 and $6,000 to go through the coaching certification. We believe that, you know, sometime in 2023, we're gonna be able to increase the number of coaches getting certified to closer to 100 to 150 coaches a month going through coaching certification. We have on the backside the revenues from delivering actual coaching through relationships that the coaches generate or relationships that Success generates. There'll be for those who are on the Success coaching team, which is different than the certification, but if they're actually on the team, you know, that should be a pretty significant revenue stream as well.
We've got, you know, partnerships that we currently have, like on the Agent Academy, where there'll be some revenue or profit sharing that comes from some of those activities. We're still in the throes of figuring out what that looks like. We're starting to have partnership conversations with other companies. We had a conversation here recently with an organization with over 400,000 members in their community that they're looking to outsource some coaching, group coaching to SUCCESS to help coach, you know, members of their organization.
That opportunity might be a little bit too big for us to completely match today, but we believe that there's lots of those opportunities that we'll be able to go in, build a coaching curriculum training relative to the goals that that organization has and be able to bring a number of already pre-vetted SUCCESS Certified Coaches to that. The coaching piece, we think is just the certification process is a multimillion-dollar a year enterprise, and then the coaching beyond that is again a large enterprise, yet we're just on the early stages of this. We've been working on it now for less than a year. Marcus Truman, our head coach, just joined us six months ago.
We're now putting in a lot of the scaling infrastructure that will be pretty meaningful over time.
Good. That's helpful. Thank you. A few more minutes here, and maybe we can, you know, talk about agents a little bit more. You know, at eXpcon, at the investor meeting there, you know, you guys sounded pretty confident that you expect to be able to kinda continue to grow agent count, kind of, you know, through this year and presumably kind of into next, regardless of kinda what the market is doing. Can you maybe just you know, it's only, I guess, been a couple of weeks since then, but it's a rapidly evolving backdrop here.
Maybe just kinda give us an update on how things are going on the agent count side of things, and are you still confident there? Maybe just touch on like NPS, like, you know, how do you kinda see agent NPS holding up in a slower market?
Yeah. One thing to note is our NPS was actually up versus Q3 last year. I think we're 71 versus 69 on our NPS. The way we look at NPS is we think about the idea that if we're over 70, we're really in a good place NPS wise. You know, it's not a number that normally you can get to 100. You know, our NPS and then our employee NPS combined has resulted in us being I think number 4 employer as recognized by Glassdoor for best places to work. Our focus on building the most agent-centric real estate brokerage on the planet and truly doing that, like not just being a phrase that we use for marketing purposes, but we actually iterate around that.
That yields a high NPS score, which results in agents wanting to be with us. What we're having right now is we're having this large amount of churn, especially in that low production category of agents. We're also starting to really see agents that are higher producing taking a serious look at eXp. You know, they could be doing $400 million, $500 million, $600 million, $800 million a year of historical production, say 2021. 2022 might be down for them, too, in a lot of cases. They're down 20%, 30% in terms of their team volume. We're really the place that a lot of these people are moving to because of that sort of focus on that. If our NPS numbers are below 60, then we're in any category.
That could be onboarding, it could be transaction services, it could be support, it could be whatever it is. In those areas, we bring a sort of all hands- on deck kind of approach to that because we know how critical NPS is, and that's our way of understanding where the pain points are in the organization. When we think about the number of agents that we'll have toward the end of the year, and we're in November, you know, we're 85, going on about 86 thousand agents.
We look at that, you know, that takes us off of our original projected pace of going over 100,000 by the end of the year and puts us in a position where we're now looking at, you know, 87,000, 88,000, 89,000 agents toward the end of the year. That's kind of where we're trending at the moment. We like to be very transparent with our numbers. That's why we put in the bottom of every one of our presses releases our agent count, because it allows you to just see what's going on in terms of moderated growth rate. If you wanna build a chart out as an investor, you can easily sort of look at, you know, what that looks like.
You can see that, you know, our growth rate right now is moderated from an agent count perspective. We think that that's why we're shifting to market share in the short run while the market sort of does its thing, because we know we're picking up market share even if our agent count isn't going up dramatically.
Okay. That's helpful. Maybe I just you guys shared the new disclosures around attrition and, you know, of the folks that attrit, kind of breaking it out by productivity level. Glenn or Jeff, can you maybe just give us a little bit of a sense. You know, there's some quarters I think that you guys in your slideshow, gross adds and net adds. Just trying to get a sense of like, I guess just that dynamic. You know, how is like gross addition going and, you know, relative to attrition?
Yeah.
Jeff, you
Yeah. So the gross additions, you know, are relatively strong compared to other quarters, although there's a lot less people entering the industry right now. What's happening, what we're seeing, Tom, though, is there's more people leaving the industry. I think that's what we're gonna see when we see NAR data that comes out. What's happened from a trending standpoint is our additions have gone down slightly, but they're still relatively strong from a growth standpoint. The terminations have gone up over the last quarter, two quarters as people exit the industry.
Okay. That's great. And then maybe just last one from my side here. Talk a little bit about kinda teams and independent brokerages. You know, it seems like that might be a fertile kinda hunting ground, if you will. You know, specifically these independent brokerages that have significant overhead, presumably are on kind of like a legacy type business model and are gonna maybe struggle when volumes decline. Like, how do you guys make sure that you make the most of the opportunity to go after those maybe kind of vulnerable teams and try and get them to port over? Like, what's the, I mean, the pitch to the agents would seem super compelling.
You know, what's the pitch to like the brokerage owner, and how do you make sure you make the most of the opportunity there?
Our basic pitch is that they can if they convert their brokerage over to eXp, that in most cases, they'll actually net more in moving their brokerage to eXp than they do running their own brokerage. We look at it based on the economics of a brokerage. You've got your fixed bricks and mortar expenses, and then you've got your staffing expenses to support that. If you're a small brokerage, you know, spreading those expenses over your agent count, most small brokerages and actually a lot of even mid-size and larger brokerages, they're right now losing money.
If they have an opportunity to get out from underneath their leases and move their agents to eXp, they'll immediately go from losing money to actually making money. The upside around our aligned compensation model of helping eXp grow allows them to still have the upside, in some cases, in most cases, more upside growing eXp than they did, you know, running their individual office or brokerage. That's really the piece. I mean, they're hurting right now. There, you know, we're in November, December, January, and those brokerages will be feeling a lot of pressure financially.
I suspect that we're gonna see a number of broker owners, and we saw this in the 2008, 2009 period, 2007, where we're gonna see a lot of broker owners that unfortunately will have to declare bankruptcy just because the economy from their perspective and the way that they've run their brokerage and no fault to them, it just is the economics for them do not work in a down market. That's where we find ourselves. They're going to be looking for a home.
It's really trying to meet them where they're at, help them with a soft on-ramp onto the eXp platform, and then help them help their agents actually create a different type of career path than they had in the brokerage model that they had previously. That's really the pitch and the conversations. Then when we think about large teams, obviously, you know, I think they're looking at their influence, having built large, credible real estate teams that in some cases are known throughout the country as being highly productive agents and teams. They're able to then leverage their personas in the industry to actually grow a network of agents through the country.
For them, it becomes an additional revenue stream to their already reasonably, if not very successful real estate practice.
That's great. We're running short on time here, but we did get some questions from the audience that maybe we can do just a quick little speed round here, Glenn and Jeff. First one is, can you explain why net income went from $23.8 million last year to $4.4 million? Is the first one. Second is an update on international agent count. What's the latest there? Someone asking Glenn why the recent stock sales on your part.
Yeah. I can take the first one. You know, so basically there's two drivers to the lower net income year-over-year. One is, you know, our investment from an SG&A standpoint was higher this year. Another big deal is that we have lower tax benefits this year, based on the deductions that we can take. It's two drivers, Tom. One is the lower operating margin based on higher investments, and the second one is lower tax benefits year-over-year, both in Q3 and on a year-to-date basis.
Yeah. I'll take the other two there. You know this, but I had expiring options that expired at the end of, I believe it was the end of September of 2022. That was the last stock sales was to make sure that I made it before my options actually expired. Currently, I have no plans in place to sell more shares. That was in conjunction with my stock options that were set in 2012. That was that.
That was actually, if you look at my sales, I believe 100% of the sales that took place in 2022 were all related to expiring stock options. Then the other piece was around international agent count. Our U.S. agent count, I think we looked at it, was year-over-year about 23% growth. Our agent base over the Q3 to Q3 was 30%. The balance of that was international agent growth. That was a combination of Canada and other markets. We're now in excess of 10 or 11 thousand, maybe 12,000 agents internationally, including Canada. That's the fastest growing part of our organization.
I believe it's well in excess of 100% year-over-year growth rate as a category. We expect that international is going to be a significant growth area for the company as we grow new markets. We've talked about in the past, but we've been the fastest growing brokerage in the UK, South Africa, India. Actually, most of the markets that we go into, Mexico. Most of those markets that we go into, we become fairly quickly the fastest growing brand in the country. We're already in I think the top 12 or 13 estate agencies in South Africa now, and by brands. We're seeing you know us grow into fairly large sizes fairly quickly. That's been an exciting growth piece of the model.
Okay. Terrific, guys. I think we've used the full 60 minutes here. I just wanted to thank you again for giving me the opportunity to host. Really appreciated the discussion. I'll pass it back to you guys for any closing comments.
Thank you very much, Tom. Really appreciate your help.
Thanks, Tom.
All right, all. Thank you. As a reminder, please visit expholdings.com for the latest updates on eXp news, results, and events. Additionally, you will find the recording of this call and our latest investor presentation. Thank you for joining today. This concludes the eXp World Holdings Q3 2022 Earnings Fireside Chat.
Thank you all very much.