eXp World Holdings Inc (EXPI) 2021 Q4 法說會逐字稿

Tom, we're happy to have you back as our moderator. In this initial segment, we will be talking and moving into a presentation that is a review of the 2021 financial highlights presented by Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings; followed by Jason Gesing, our CEO of eXp Realty, who will share our accelerated growth as well as operational excellence and agent employee satisfaction. Finally, we return to Tom White and our leadership team for Q&A.

Let's begin the earnings fireside chat 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 filing with the SEC, including our most recent quarterly report on Form 10-K, for a discussion of specific risks that may affect our business, performance and financial condition. We assume no obligation to update or revise any forward-looking statements or information.

As a reminder, today's call is being recorded, and a replay will also be made available on expworldholdings.com.

Now for a few logistics, and we'll get started. (Operator Instructions) As I mentioned, the last segment of our fireside chat is the Q&A. (Operator Instructions)

At this time, I would like to turn the fireside chat over to Glenn Sanford and Tom White to start the earnings conversation.

Hey, Tom. Are you there?

Yes. I'm here, Glenn. Want me to get -- kick things off here?

Yes. Why don't you go ahead and kick things off?

Terrific. Great. Well, good morning, everyone. Thanks for joining us, and thanks to the folks at EXPI for inviting me to host. I'm a research analyst at D.A. Davidson. I cover disruptive companies in the residential real estate space, and I've had the pleasure of covering eXp World Holdings since early 2018. I'm going to ask a question here of Glenn to kind of get things going, and then we'll go through a couple of presentations from Jeff and Jason, and then we'll circle back and do some more Q&A.

But I guess first off, Glenn, congrats on a really strong end to the year. Maybe just comment on kind of your high-level thoughts about how you thought the business performed last year, how you've managed to kind of sustain the growth that you've put up and really manage kind of your overall growth rate. Would just be curious to hear your high-level thoughts.

Oh, no. And thanks, Tom, for being here. It's been -- you've been following us for quite some time, and it's been a fun journey so far. One, I kind of want to just describe -- pay attention to just a couple of little stats. I know Jason is going to cover a bit of this in his section. But as of [tonight], we just went over 76,000 agents. So we brought -- we're continuing to grow at a very rapid rate. In fact, another interesting stat is that as of now, in the United States, 1 [in every] 25 realtors in the United States is actually an eXp agent. So we've obviously grown very fast.

But I think the key for our growth is really around being truly mission-driven. That's been kind of our -- I don't want to call our secret sauce, but it really is the driver for our growth. We're continuing to be the most agent-centric real estate brokerage on the planet, and that's really how we approach everything. We're approaching it from how do we truly build the market share and turning this industry into an industry that's really agent-led and agent-driven in that we want to provide the best opportunity for our agents and brokers.

And we also are enhancing that already exciting value proposition for agents. Something you'll hear a bit about later on this year and even now is how we're enhancing even our revenue share program. Our revenue share program pays out 50% of our company dollar, and we're actually enhancing that with profits from our affiliated and [corporate] services to actually pay out more than 50% of company dollar in 2022 to our agents and brokers who have helped us grow.

And even in 2021, we shared almost $170 million in revenue share and actually shared approximately $50 million in equity to our productive agents. Outside of them electing to receive equity and commission, that's actual awards to our agents. So we actually paid out approximately $220 million in additional benefits over and above the normal production of agents, which really dwarfs any other brokerage or brand that shares with their agents and brokers.

So we shared out more than anyone else. And in 2022, we expect to share more than anyone else on our rev share side by itself in 2022 than any other brokers that shares with their agents. So we're really excited about continuing to extend those benefits. And that really has been a big driver for our agent attraction and growth. We want to also help our agents with productivity and partnerships and then also adding more competitive moats.

I think last but not least, before turning it over to Jeff for more of the financials, is really around just continuing to be agile. Reimagining how our brokerage works at 500,000 agents versus where we are now and just figuring out what the philosophy is for supporting agents while providing them a higher-touch experience over time with our staff, that's probably our biggest thing being a cloud-based brokerage. And we use NPS really as a big driver for decision-making. But I think one of the places where we'll spend a lot of time in 2022 is just figuring out how to be even higher-touch brokerage for the agents and brokers that join us all over the world. So super excited about that.

With that, why don't I go ahead and turn it over to Jeff to talk a little bit about some of our financials?

Awesome. All right. Well, thank you very much, Glenn and Courtney. Really appreciate it. And thank you, Tom, for moderating today.

Good morning all, and thank you for joining us at our fourth quarter 2021 virtual fireside chat. EXPI had another phenomenal quarter in the fourth quarter of 2021 and full year 2021 of growth. And I'm proud on behalf of our team to share our results today, and we'll be talking about the fourth quarter and the full year 2021.

So on our first page, at a highlight level, starting with the revenue in Q4, our revenue was $1.1 billion, up 77% year-over-year. Our gross profit in Q4 was $83.1 million, an increase of 65% year-over-year. And our net income in Q4 was $15.5 million, which was an increase of 101% year-over-year. As noted, it includes in Q4 a $14.2 million income tax provision benefit primarily driven by our stock-based compensation deduction and the fact that we've shown sustainable profitability. So from a diluted share standpoint, earnings per share was $0.10, and that was up 100% year-over-year.

Now if I look at the -- our adjusted EBITDA, and so there is a bit of a difference this quarter on adjusted EBITDA. So the adjusted EBITDA as reported, it was $13.1 million, which was down 21%. But we did have a onetime legal settlement cost that we booked in Q4, and that was $10 million. So after that adjustment, our adjusted EBITDA would be at $23.1 million, which was up 39%.

And lastly, on the fourth quarter summary page, our operating cash flow was $48.5 million, an increase of 59% year-over-year quarter-over-quarter.

So now I'll just go back into the same highlights for the full year 2021, starting again with revenue. And our revenue for the full year was $3.8 billion, which was up 110% year-over-year. Our gross profit in 2021 was $296 million, and that's an increase of 85% year-over-year. Net income was $81.2 million in 2021, an increase of 162%. And as noted, again, we do have a tax benefit in that number. And in $81.2 million, there's a tax benefit of $47.5 million, again, primarily a benefit from our stock-based compensation deduction.

In the full year, our diluted earnings per share was $0.51, which is 143% year-over-year. If you just hold on that last chart, please, the full year numbers. And then our adjusted EBITDA was $78 million, up 35%. And then if you would back that $10 million onetime extraordinary charge, our adjusted EBITDA for the year will be $88 million, up 52% year-over-year. And finally, our full year operating cash flow was $247 million, and that's an increase of 106% year-over-year.

Now I'll just go over some of the highlights. When we look at our business, yes, 2 different sections. These are our key metrics. And in the chart, and chart's broken out into 2 categories, one is the operating metrics, and one is the financial metrics. So looking at our operating metrics for Q4 and full year 2021. As a reminder, and Glenn mentioned this previously, we run our business based on agent and employee net promotion scores, and we call that ANPS and ENPS. Our goal as a company is to hit a score about 70 or above and -- which is it's a world-class score. And when we do that, we find that, that predicts our agent growth, our retention and our employee satisfaction. So in our fourth quarter, our ANPS score was 69 versus 73. Our full year score was 71. Our fourth quarter ENPS was 78 over 75 with a full year score of 79. So very proud of both those scores.

In our realty model, adding productive agents to our platform drives unit sales, volume and revenue and then gross margin that feeds our business. So our agent count in Q4 was 71,137 with a growth rate of 72% year-over-year. As Glenn mentioned, we were up -- 75,000 today. And we've had many questions about the breakdown between international and domestic. And right as we sit here today, we've got about 11% of our agents are international versus 89% domestic.

As we move on to unit sales in Q4, our unit sales were 125,029, up 52% quarter-over-quarter, and our unit sales were up 86% on the full year 2021. Our price per unit was $359, up 19% in the quarter and 16% year-over-year full year. And our volume was $44.9 billion, up 82% quarter-over-quarter and $156 billion in 2021, which is 116% year-over-year growth.

Now looking at some of our financial metrics. We have covered some of these. So as summarized before, our revenue increased 77% in the quarter, 110% year-over-year. Gross margin was up 65% in the quarter and 85% year-over-year. And our SG&A, if we look at that Q4 over -- year-over-year was full basis as we continue to invest in our key focus areas of international growth, technology and productivity.

We've previously covered the next few lines, so I won't repeat that, in the results. And so just a couple more metrics. Our ending cash balance in 2021 was $108.2 million. Target as a company, an internal metric of about $100 million in cash after we cover expenses, operating expenses, investments and stock buybacks. So we continue to have positive operating cash flow with 0 debt on the balance sheet and another consecutive quarter of positive EBITDA earnings since Q3 2018.

And now some other highlights that I'll take you through. The first one would be we ended 2021, as I mentioned before -- and it's a real big deal for us. I mean if you understand NPS, a 70 score is very much world-class, and we're very proud of that. And I think that has a lot to do with our success in 2021 and before that. We achieved positive accumulated earnings and shareholder equity. And so what that's enabled us to do is pay more money back to our investors in the form of a cash dividend. So we paid cash dividend in Q4, and we declared another cash dividend, which will be paid on March 31. And finally, to offset dilution for our shareholders and our agents, we repurchased $30 million in common stock in Q4 and $172 million year-to-date in 2021.

On the right-hand side, investing in growth continues. eXp Realty, our domestic business is hitting what we kind of call a network effect, meaning that not too many years ago, there was a much smaller group of people that were influencing and growing the company. Now we literally have hundreds in the U.S. Fantastic leadership, agent leadership across the U.S., so you can see that that's kind of driving the numbers. Global expansion, 20 countries and growing. We recently announced New Zealand, Greek, Dominican Republic.

Commercial, as we look at this, as we see what's happening in the marketplace, we're really changing the commercial real estate brokerage model via technology, data and services. Our technology innovations and our investments continue, expanding the utilization of Frame VR. MLS coverage in plus 90% in exprealty.com. Last time I looked, there was about 1 million listings in there.

And finally, affiliated services and SUCCESS. We hired Jairek Robbins to run our SUCCESS business as President with a focus on building our coaching business. So really excited about that. And then SUCCESS Lending is licensed in 23 states.

So those -- that's the progress we've had in the last quarter and some great stuff that's happening that will absolutely affect our -- positively affect our operating margin down the road. Our 10-K will be released premarket tomorrow.

And now I would like to introduce our CEO of Realty, Jason Gesing. He'll expand on our agent growth, key drivers and our operational excellence. So welcome, Jason.

Thank you very much, Jeff, and good morning to everybody. I just want to start by saying thank you and congratulations to all of our agents and brokers and staff who really make this possible, make 2021 possible and who are driven by the mission right alongside us.

As Jeff noted, we've continued to grow at a really rapid and accelerated pace, 72% increase in agent growth year-over-year and total revenues of $3.8 billion. Today, we have built a metaverse community of more than 76,000 agents, brokers and staff who work together daily across geographies and in our eXp World.

We can attribute our growth, as we have in recent quarters, to a couple of different things. The first is really strong growth and performance inside of the United States. Jeff talked about the network effect, and we continue to bring on top performers in all markets, and they come with other folks. And so every time somebody comes over, people turn heads and they inquire about the company, they learn about the company, and ultimately, they join. And that just continues to grow.

Additionally, we've been able to expand globally by utilizing our platform. We've been able to, in 2021, add 9 countries to our footprint. And already this year, we've opened operations in the Dominican Republic. Greece and New Zealand are coming later in the quarter, and we've done this really without having to get on any planes or visit any of these markets.

And as Jeff noted, we also continue to expand the commercial division and, I think, with great success. We have a lot of agents who practice both on the residential and the commercial side. It's a great opportunity and offering for them on the realty side of the business, but we've really been focused on the pure commercial players, and we couldn't be more happy with the results. We continue to gain recognition, both some of the educational offerings that we provide in the commercial space and some tools that are new to market and best in class.

The bulk of my focus is going to be on operational excellence. I think going back to 2016, when we crossed 1,000 agents for the first time, we recognized that as important as any other factor, what really is going to drive and sustain growth is making sure that we're delivering great experiences for our agents. I should point out, by the way, on the growth side that our agent count number today in the United States puts us above brands like RE/MAX. I think we are now the third largest brand in the residential market in the United States and also the single largest brokerage by agent count in the United States as well. But all of that is a result of delivering better and industry-leading experiences for our agents.

And you'll hear about NPS a lot. I think another theme that you'll pick up in my remarks is really elevating our level of service to a concierge level of service in multiple areas of the business that are critical to an agent's success. So we're tracking NPS at the agent level to ensure their satisfaction from the time that they initially onboard into the company to the time where they're growing their business and developing new approaches to it and all the while as they're achieving the levels of success throughout the course of their careers at the company.

Our NPS for agents of 71 for the full year really reflects our commitment to our agents, and we do believe it continues to be one of our strongest differentiators in the marketplace. Contributing to the score are some significant operational improvements that we have made during 2021 and which we continue to make today, and we're excited about additional opportunities that we're working on presently for increased efficiency and support in the coming year.

Our focus always is on supporting our agents in ways that make their lives easier so they can focus on their business. I'll give you a couple of examples of these improvements. The first is that we've been able to enhance our agent support through what we call our eXpert Care Concierge service. So this team, our eXpert Care team really provides fast and efficient support services for our agents with respect to any eXp or work-related inquiries. So this isn't specific necessarily to onboarding or payment or anything like that. This is somebody who maybe wants to verify their ICON eligibility, they might be at risk of leaving because they've been misinformed about something, maybe they want to know where they can find out how to sign up for eXp Agent Healthcare. So they really address the needs of all of our agents.

And I can tell you that in 2021, we introduced some new support channels. So our agents are able to reach us now in numerous ways, including phone, e-mail, texting, our intranet workplace and now our newly constructed eXp World hub center here in the metaverse. And through all of those channels and all of those efforts, our concierge team in 2021 managed close to 300,000 inquiries from our agents. Notably, almost 1/3 of those were solved inside of eXp World. And as a result, that team helped to retain millions of dollars of revenue for its efforts and really represents an important retention and engagement tool.

Additionally, through streamlining of our programs and processes, we've been able to speed up support, which has resulted in a decrease in response time to agent issues of 64% and a decrease in resolution of those same issues of 33%.

Additionally, we've introduced a concierge level of service specific to our onboarding process, which really allows us to walk agents through all of the elements of getting set up at eXp. It has contributed to a dramatic increase in our onboarding NPS, which has more than doubled in 2021.

And also at the state level, we've introduced a concierge level of service into our broker state rooms, providing really a localized level of support that really saves our state managing brokers, our provincial managing brokers as well as administrative support coordinators considerable time as they help agents navigate questions, resources, tools, support. Maybe they're looking for multiple listing service or association paperwork, and all of that stuff is handled by our state-level concierge.

Also important that we focus on payments and that we achieve excellence on payments, that we pay our agents timely and accurately. And we're really excited about the progress we've made in 2021 and that we continue to make. We've added new resources and capabilities to simplify and speed up payments and transaction processing. Through overall staffing efficiencies, we've been able to decrease agent commission payment turnaround time by 45% year-over-year, and our agent NPS specific to transaction support in the United States now stands at 80 or was at 80 for 2021.

And coming up this year in 2022, we anticipate launching transaction coordination services at least across all of our states in the United States. Last year, we quietly piloted the service in 27 states. We're pleased with where we are and where we're going. And in addition to our revenue opportunity for the company, we really see this as a chance to meet the needs of our agents by freeing them from tasks that would otherwise divert their attention from building their business and serving their customers. We also think that the TC service can help mitigate compliance risk for the agent, for the broker and for the company because we're able to ensure that a file's requisite paperwork is complete, accurate and contained within the transaction folder. And we also believe that the service will really help us as we go to layer in and drive adoption of our affiliated services.

Additionally, we introduced a concierge level of service and concierge teams in our transaction department. That team managed more than 12,000 transaction-related inquiries and needs in 2021.

And this is sort of a big one from my perspective. Last year, we introduced a new platform capability that allows our agents in the United States to deposit earnest money checks and other escrow checks directly and digitally without having to drive to a bank, drive to their office or place in the mail. We discovered some delays particularly in Canada with the Royal Mail. And so in Canada, in addition to allowing agents to deposit their earnest money checks, we also make the platform available to cooperating brokers, cooperating agents and vendors. And so what that means for our Canadian agents is that they can get paid faster. Once the payment is issued and put into the platform, it immediately goes to the agent. So we've been able to speed up Canadian payment times, and that was a significant achievement over the last 12 months.

As we look ahead to this year, a couple of other things we're excited about. We're going to be launching a pre-onboarding solution for agents, teams and brokerages. This will clearly speed up the process by providing advanced information, access to tools, consultations, so new agents, brokers and teams can really hit the ground running on day 1, having already been familiarized with our tools and our technologies. So I mean the size and the size of the volume of the business that these teams and brokerages are bringing over is enormous, and we really need to make sure we're putting those folks in a position to have a good experience without any business interruption.

We're also planning to recognize greater efficiencies by utilizing where possible our existing teams and talent in these critical functional areas to provide great support and service to our agents in global markets while avoiding staffing redundancies and at the same time preserving the local flavor of and respecting the customs within each individual country.

Last, I want to touch upon employee NPS, which Jeff mentioned. We like to say around here that you can't have good agent NPS unless you have good employee NPS. And so we're particularly proud of our score of 79, and we think there's a direct correlation between the 2 scores. We've made some great advancements in our employee programs, probably reflected in the NPS score but also in some external recognition from companies like Glassdoor where last year, we placed 15 -- or excuse me, 4 out of 100 on Glassdoor's Best Places to Work for U.S. large companies with an overall company rating of 4.6. It was our fifth year in a row on Glassdoor's Best Places to Work U.S. list. Our current rating has improved to 4.8. We also placed 15 out of 25 on Glassdoor's Best Places to Work in Canada list with an overall company rating of 4.1.

We've really offered significant growth and development opportunities to our employees as we continue to expand globally and into new lines of business. So to provide opportunities for leadership for staff, we've launched our ONE eXp Leadership Development Program, which brings cohorts together to tackle a company initiative over the course of a 2-week program. Secondly, we continue to build our culture here in the metaverse. Our entire [workforce] is collaborative. They're connected. And this place really comes to life in eXp World where employees have the unique opportunity to engage and interact on a daily basis. Each month, more than 1,300 employees from around the globe join our all-hands meetings to discuss organizational updates, wins and strategy.

Finally, we're committed to providing world-class benefits that help attract and retain top talent. In 2021, this included expanded paid parental leave in the United States as well as enriched medical plan designs and expanded benefits options, which now also include new wellness resources and activities ranging from meditation applications to participation in group yoga classes in eXp World.

In closing, we're proud to have the most agent-centric brokers on the planet backed by very happy and talented employees. Tom, thank you for allowing me a few minutes. I'll turn it back to you.

Great. That was terrific. Thank you, Jason.

Okay. So now I guess we'll jump back into the kind of the Q&A here, Glenn. (Operator Instructions)

But Glenn, maybe first, a couple of questions just on kind of the state of the housing market. Last year was obviously another strong year for volumes despite pretty rapid home price appreciation and some pressure on inventory. But how do you think the market is kind of shaping up so far in 2022?

Well, I think the reality is we do -- we are on -- we've got interest rates supposedly going to go up next month with the Fed raising interest rates. We've already seen mortgage rating up a bit in anticipation of some of the rate increases. I think you've got still a lot of people buying homes. The question is at what level will the Fed raise interest rates, which, ironically, I thought that there was going to be -- we were going to be in a lower interest rate environment now. So that was -- my crystal ball broke a long time ago, and that was definitely the case last year when I sort of suggested we'd continue to have low interest rates this year.

But I think the reality is that we're likely going to see fewer transactions starting sometime maybe second half of 2022 than we've seen previously, I think, between interest rates and some other factors. That would be my prediction. And so we'll see some softening toward the latter half of the year, and then we'll just have to see how it goes into 2023.

Okay. And how should we think about -- or how should investors think about how the eXp model performs in that type of environment, sort of a slower industry growth or maybe even a year of maybe a contraction in the industry? I mean on one end, the platform, I feel like, might be relatively more appealing to agents just given kind of the economic value prop that agents have here. But would just be curious to hear your view on how you think the business kind of performs generally in the environment you described.

Yes. So we're uniquely positioned where a lot of our bricks-and-mortar counterpart competitors have had to answer, we'll say, the eXp model with either reducing the amount that they charge to agents or what have you. They haven't been able to. In fact, they're probably seeing the reverse happen in terms of their cost of their bricks-and-mortar footprint and some of the other expenses that it takes to run a brokerage. And so we were actually designed from day 1 to be a model that could increase or decrease its expenses really at whatever the market throws at us.

And sort of our case in point there would be what happened in Q1, Q2 of 2020, we were able to -- not that we were excited to do it, but we were able to reduce our expenses substantially and actually put up one of our best quarters, if not our best quarter ever, at that point in time because we're able to really contract a lot of the expenses it takes to run a brokerage while still adding a high quality of service for our agents.

And so our value prop for our agents doesn't change at all. In fact, I think it continues to get

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by almost 5,000 agents so far year-to-date, which are only quite 2 months in. So we're coming up on the 2-month mark. And so the idea that we can grow by some number, we think about something above 50% year-over-year is pretty predictable just based on our value prop. Now what could be a headwind is if the housing market takes a hit for some reason second half of the year, that might change it. But I think our market share continues to grow rapidly.

I think the other piece is, we've always wanted to focus on this idea of we're really about the agent, and as a company, we think everybody wins by making the agent the big focus. Now we also are -- [of the high-growth] companies that are out there of any note, we're also the only one that's been profitable consistently for now more years in a row. And I think that's part of just how do we think about the balance between being agent-centric and running a model that will be sustainable for the [long run] for our agents and brokers. And I think that's one of the things that if we do start to hit a slowdown, market starts to have issues, we don't need to go and raise money to continue to grow and sustain the brokerage, which is a pretty unique position for a high-growth company to be in.

And then also, we continue to think about, as our agents become larger and larger holders, we think about things like, how does that play -- how does the dividend play into that? And how does that enhance their agent value proposition as well? So for us, we think it's just an iterative process that [as] we pay attention and stay close to our agents, whether it be physically or through our regular surveys around NPS and just making sure that we're paying them, we think that this thing continues to grow as long as we're focused on the growth side.

Got it. Maybe just to follow up, I mean how do you think about the performance of the stock in terms of like the agent's overall value prop, all the kind of like, call it, sort of front-end monetization, right? You've got great splits, low fees, you've got the revenue share, and you continue to sort of make those benefits sweeter or enhance them for agents. One of the questions we get a lot from investors is, would you guys ever like raise the cap or do stuff like that, which might not benefit agents immediately, but it might benefit the stock, which would then -- agents are also shareholders in the company. So curious how you think about like the performance of the stock, I guess, relative to the broader portfolio of benefit

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place to increase margins comes from.

Great. Maybe I'll ask one more, and then I'll pose a couple of questions to Jeff. But can you just give us an update on SUCCESS Lending and how that launch is going and your latest thoughts on how you kind of drive adoption of the product with your agents?

Yes. So SUCCESS Lending, we're now licensed in probably about a dozen or so states. We've had our [first] loans that are being closed basically as we speak through the SUCCESS Lending platform and the relationship that we've built there. So it's coming together.

One unique piece is that we're actually hiring local, on-the-ground loan officers. So we've hired a group in Illinois. We're hiring folks in Colorado. We're hiring folks in Texas. We're hiring local, on-the-ground successful LO teams that can benefit from purchase business. For the last number of years, it's all been about refinancing. And now to the extent that they're looking for where can they get new purchase business, right now is actually a great time for us specifically to be going into the retail lending business with SUCCESS Lending because there's a lot of great talent out there that is looking for the type of access that eXp would provide with a partnership. So that's coming together quite well.

We're working on our integrations now with our real estate portal, our kvCORE platform. There's a platform that will be rolled out a little bit later this year for our agents that will create a seamless experience that will allow consumers to get preapproved during the home search process. Last year -- well, actually, we just got some data around our kvCORE platform. We have 38 million consumers that are in our instance of kvCORE, which is our real estate portal from an agent-to-consumer perspective. 10 million of those have active list researches and listing alerts going on. And in that, we think that introducing SUCCESS Lending is going to be a great way to create awareness and then also deal flow. So pretty excited about how that all comes together as the year goes on.

Terrific. Maybe I'll switch over to some financial questions, Jeff, yes, if you're available. I guess first on gross margins, they were up sequentially but down a little bit year-over-year. Could you talk maybe just about kind of the main drivers there? And how should we think about the trajectory of gross margins in calendar 2022?

Yes. So Tom, the pressure on the gross margins is coming from volume, you can see a massive volume in the business, and then in the increased price, kind of results in capping, a lot more capping going on in the business. I mean our focus really is on the gross margin dollars. So in fourth quarter, we're $83.1 million, up 65%. Year-to-date, $296 million, up 85%. And what I'm seeing -- I think what we're seeing as a business, it seems to be where the [lending] at the end of the year seemed to have kind of stabilized. That's kind of what it looks like. As we look into 2022, we're kind of seeing it around the same number.

But as Glenn said and as you know, I mean our model is designed to give back most of the revenue generated by the brokerage to the agents, whether it's in the form of commissions, rev share or equity, all right? And what we'll be working on is the affiliated services where we believe there's significant percentages in there from an operating margin standpoint to build higher margins across the business.

But to me, it looks like -- what we're seeing is they've kind of stabilized, we think, around this point in time. And I think if we do get back to a more seasonal relationship from a volume standpoint, it should go back to higher in Q1 and Q4, lower in Q2 to Q3, but who knows what's going to happen? But we're feeling pretty good right now in the volume (inaudible).

Yes. That's helpful. Is 2022 the year where some of the affiliated services like mortgage and maybe title might have a more appreciable impact on gross margins? Or are really the main drivers of growth -- and maybe I'd add to that list international, where I think your gross margin percentages are structurally kind of better than the domestic brokerage. Is this a year where those 3 things have an appreciable impact? Or is 2022 gross margin really going to be driven by kind of the volume and capping dynamics that you've just touched on?

Yes. I think in 2022, I mean we're going to make substantial progress in building these businesses, whether it be the mortgage, international and coaching and other affiliated services businesses. I don't think the impacts, we're going to see a material impact from a percentage on gross margin. I think that's going to show up in 2023. But I think we're going to make some major -- like I mentioned before, we hired Jairek Robbins to lead our business on the coaching side. So we feel very, very bullish that that's going to happen this year.

Mortgages, we're actually in 23 states right now. So -- and then international, as you can see, we're in the 20-plus countries. So we think that the real business is happening. As that -- for the margins to catch up, I think that's going to be more towards end of this year going into next year.

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