[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section details the company's quarterly report filing, registrant status, and common stock information [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report (Form 10-Q) filed by EXP WORLD HOLDINGS, INC. for the period ended June 30, 2022. The registrant is a Delaware corporation with IRS Employer Identification No. 98-0681092, and its common stock is registered on NASDAQ - The report is a Quarterly Report (Form 10-Q) for the period ended June 30, 2022[2](index=2&type=chunk) - EXP WORLD HOLDINGS, INC. is a Delaware corporation with its common stock listed on NASDAQ[2](index=2&type=chunk) [Registrant Status](index=1&type=section&id=Registrant%20Status) The registrant is a large accelerated filer and has filed all required reports and interactive data files. As of June 30, 2022, there were 151,798,879 shares of common stock outstanding - The registrant is classified as a **large accelerated filer**[3](index=3&type=chunk) - The registrant has filed all required reports and interactive data files during the preceding 12 months[2](index=2&type=chunk) Common Stock Outstanding | As of Date | Shares Outstanding | | :--------- | :----------------- | | June 30, 2022 | 151,798,879 | [Forward Looking Statements](index=4&type=section&id=Forward%20Looking%20Statements) This section provides a disclaimer regarding forward-looking statements, emphasizing inherent risks and uncertainties [Disclaimer and Nature of Statements](index=4&type=section&id=Disclaimer%20and%20Nature%20of%20Statements) This section highlights that the report contains forward-looking statements, which are not historical facts but current expectations subject to known and unknown risks and uncertainties. Investors are cautioned not to place undue reliance on these statements, as actual results may differ materially - Forward-looking statements are based on current expectations and assumptions, not historical facts, and involve known and unknown risks and uncertainties[10](index=10&type=chunk) - Investors should not place undue reliance on these statements, which are not guarantees of future performance, and actual future results may differ materially[10](index=10&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[10](index=10&type=chunk) [PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and controls [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of comprehensive income, stockholders' equity, and cash flows, along with detailed notes on business description, accounting policies, credit losses, assets, equity, and subsequent events for the periods ended June 30, 2022 and December 31, 2021 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Condensed Consolidated Balance Sheets (In thousands) | ASSETS (June 30, 2022) | Amount ($) | | :--------------------- | :--------- | | Cash and cash equivalents | 134,898 | | Restricted cash | 105,883 | | Accounts receivable, net | 154,997 | | Prepaids and other assets | 7,822 | | **TOTAL CURRENT ASSETS** | **403,600**| | Property, plant, and equipment, net | 19,906 | | Operating lease right-of-use assets | 2,265 | | Other noncurrent assets | 1,943 | | Intangible assets, net | 7,071 | | Deferred tax assets | 59,719 | | Goodwill | 12,945 | | **TOTAL ASSETS** | **507,449**| | LIABILITIES AND EQUITY (June 30, 2022) | Amount ($) | | :----------------------------------- | :--------- | | Accounts payable | 5,971 | | Customer deposits | 93,566 | | Accrued expenses | 147,393 | | Current portion of lease obligation - operating lease | 213 | | **TOTAL CURRENT LIABILITIES** | **247,143**| | Long-term payable | 2,714 | | Long-term lease obligation - operating lease, net of current portion | 720 | | **TOTAL LIABILITIES** | **250,577**| | Total eXp World Holdings, Inc. stockholders' equity | 255,703 | | Equity attributable to noncontrolling interest | 1,169 | | **TOTAL EQUITY** | **256,872**| | **TOTAL LIABILITIES AND EQUITY** | **507,449**| Condensed Consolidated Balance Sheets (YoY Changes, In thousands) | Item | June 30, 2022 ($) | Dec 31, 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :---------------- | :--------------- | :--------- | :--------- | | **TOTAL ASSETS** | **507,449** | **413,826** | **93,623** | **22.6%** | | Cash and cash equivalents | 134,898 | 108,237 | 26,661 | 24.6% | | Restricted cash | 105,883 | 67,673 | 38,210 | 56.5% | | Accounts receivable, net | 154,997 | 133,489 | 21,508 | 16.1% | | **TOTAL CURRENT ASSETS** | **403,600** | **319,315** | **84,285** | **26.4%** | | **TOTAL LIABILITIES** | **250,577** | **190,293** | **60,284** | **31.7%** | | Customer deposits | 93,566 | 67,673 | 25,893 | 38.3% | | Accrued expenses | 147,393 | 111,672 | 35,721 | 32.0% | | **TOTAL EQUITY** | **256,872** | **223,533** | **33,339** | **14.9%** | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's financial performance, including revenues, expenses, and net income over specific periods Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenues | 1,415,060| 999,887 | 415,173 | 41.5% | | Commissions and other agent-related costs | 1,307,810| 919,970 | 387,840 | 42.2% | | General and administrative expenses | 91,391 | 60,721 | 30,670 | 50.5% | | Sales and marketing expenses | 4,210 | 2,683 | 1,527 | 56.9% | | Total operating expenses | 1,403,411| 983,374 | 420,037 | 42.7% | | Operating income | 11,649 | 16,513 | (4,864) | (29.5)% | | Income before income tax expense | 11,020 | 16,458 | (5,438) | (33.0)% | | Income tax (benefit) expense | 1,661 | (20,585) | 22,246 | (108.1)% | | Net income | 9,359 | 37,043 | (27,684) | (74.7)% | | Net income attributable to eXp World Holdings, Inc. | 9,359 | 37,050 | (27,691) | (74.7)% | | Earnings per share Basic | 0.06 | 0.25 | (0.19) | (76.0)% | | Earnings per share Diluted | 0.06 | 0.24 | (0.18) | (75.0)% | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenues | 2,425,791| 1,583,720| 842,071 | 53.2% | | Commissions and other agent-related costs | 2,235,077| 1,450,317| 784,760 | 54.1% | | General and administrative expenses | 166,713 | 107,021 | 59,692 | 55.8% | | Sales and marketing expenses | 7,910 | 4,940 | 2,970 | 60.1% | | Total operating expenses | 2,409,700| 1,562,278| 847,422 | 54.2% | | Operating income | 16,091 | 21,442 | (5,351) | (24.9)% | | Income before income tax expense | 14,735 | 21,515 | (6,780) | (31.5)% | | Income tax (benefit) expense | (3,488) | (20,374) | 16,886 | (82.9)% | | Net income | 18,223 | 41,889 | (23,666) | (56.5)% | | Net income attributable to eXp World Holdings, Inc. | 18,241 | 41,896 | (23,655) | (56.5)% | | Earnings per share Basic | 0.12 | 0.29 | (0.17) | (58.6)% | | Earnings per share Diluted | 0.12 | 0.27 | (0.15) | (55.6)% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity, including common stock, treasury stock, and accumulated earnings Condensed Consolidated Statements of Stockholders' Equity (Six Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | Change ($) | | :----------------------------------- | :------- | :------- | :--------- | | Common stock, end of period | 2 | 1 | 1 | | Treasury stock, end of period | (289,829)| (126,906)| (162,923) | | Additional paid-in capital, end of period | 509,476 | 295,035 | 214,441 | | Accumulated earnings, end of period | 37,007 | 2,734 | 34,273 | | Accumulated other comprehensive income (loss), end of period | (953) | 318 | (1,271) | | Noncontrolling interest, end of period | 1,169 | 1,015 | 154 | | **Total equity** | **256,872**| **172,197**| **84,615** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, In thousands) | Activity | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Net cash provided by operating activities | 165,298 | 167,425 | (2,127) | (1.3)% | | Net cash used in investing activities | (8,077) | (7,109) | (968) | 13.6% | | Net cash used in financing activities | (91,209) | (87,136) | (4,073) | 4.7% | | Effect of changes in exchange rates on cash, cash equivalents and restricted cash | (1,141) | 71 | (1,212) | (1707.0)% | | Net change in cash, cash equivalents and restricted cash | 64,871 | 73,251 | (8,380) | (11.4)% | | Cash, cash equivalents and restricted cash, ending balance | 240,781 | 201,175 | 39,606 | 19.7% | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=9&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) eXp World Holdings, Inc. operates a cloud-based real estate brokerage and a technology platform business, rapidly expanding in the US and internationally. The interim financial statements are unaudited and prepared in accordance with U.S. GAAP for interim information - eXp World Holdings, Inc. operates a cloud-based real estate brokerage and a technology platform business, enabling remote operations[29](index=29&type=chunk) - The real estate brokerage is one of the largest and fastest-growing in the US and is expanding internationally, including Canada, UK, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, The Dominican Republic, Greece, and New Zealand[29](index=29&type=chunk) - The accompanying interim unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information[29](index=29&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's significant accounting policies, including principles of consolidation for subsidiaries and variable interest entities, equity method for joint ventures, and the use of estimates for various financial statement items. It also covers policies for restricted cash and the impact of recently adopted and issued accounting pronouncements - The company consolidates wholly-owned subsidiaries and variable interest entities where it is the primary beneficiary; uses the equity method for joint ventures and the cost method for investments under 20% ownership without significant influence[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Management makes estimates and assumptions for allowance for credit losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances[34](index=34&type=chunk)[36](index=36&type=chunk) - Restricted cash primarily consists of cash held in escrow for real estate buyers, with a corresponding customer deposit liability, and cash held for acquisitions[38](index=38&type=chunk) - The adoption of ASU 2019-12 (Income Taxes) had no material impact, and ASU 2021-08 (Business Combinations) will be applied prospectively for future business combinations[39](index=39&type=chunk)[40](index=40&type=chunk) [3. EXPECTED CREDIT LOSSES](index=11&type=section&id=3.%20EXPECTED%20CREDIT%20LOSSES) The Company estimates current expected credit losses (CECL) using an aging schedule method for three categories of receivables: agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements. Allowances for credit losses were recognized, with changes not material for the six months ended June 30, 2022 - The Company uses the aging schedule method to estimate current expected credit losses (CECL) for three categories of receivables: agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements[41](index=41&type=chunk) Expected Credit Losses on Receivables (In thousands) | Receivable Category | June 30, 2022 ($) | Dec 31, 2021 ($) | | :------------------ | :---------------- | :--------------- | | Real estate property settlements | 147,824 | 128,499 | | Expected credit losses (real estate) | 904 | 0 | | Agent non-commission based fees and short-term advances | 9,979 | 7,188 | | Expected credit losses (agent fees/advances) | 1,902 | 2,198 | - Changes in the allowance for expected credit losses were not material for the six months ended June 30, 2022[45](index=45&type=chunk) [4. PLANT, PROPERTY AND EQUIPMENT, NET](index=13&type=section&id=4.%20PLANT,%20PROPERTY%20AND%20EQUIPMENT,%20NET) The Company's net plant, property, and equipment increased to $19.9 million as of June 30, 2022, from $15.9 million at December 31, 2021, primarily driven by an increase in computer hardware and software. Depreciation expense also increased year-over-year Plant, Property and Equipment, Net (In thousands) | Item | June 30, 2022 ($) | Dec 31, 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :---------------- | :--------------- | :--------- | :--------- | | Computer hardware and software | 30,200 | 20,824 | 9,376 | 45.0% | | Total depreciable property and equipment | 30,226 | 20,850 | 9,376 | 45.0% | | Less: accumulated depreciation | (15,270) | (11,711) | (3,559) | 30.4% | | Depreciable property, net | 14,956 | 9,139 | 5,817 | 63.6% | | Assets under development | 4,950 | 6,763 | (1,813) | (26.8)% | | **Property, plant, and equipment, net** | **19,906** | **15,902** | **4,004** | **25.2%** | Depreciation Expense (In thousands) | Period | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Three months ended June 30 | 1,954 | 1,189 | 765 | 64.3% | | Six months ended June 30 | 3,570 | 2,196 | 1,374 | 62.6% | [5. GOODWILL AND INTANGIBLE ASSETS](index=13&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill remained stable at $12.9 million as of June 30, 2022, with no impairment events. Definite-lived intangible assets decreased slightly to $7.1 million, primarily due to amortization, which increased year-over-year - Goodwill remained at **$12,945 thousand** as of June 30, 2022, with no impairment events identified[46](index=46&type=chunk) Definite-Lived Intangible Assets, Net (In thousands) | Item | June 30, 2022 ($) | Dec 31, 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :---------------- | :--------------- | :--------- | :--------- | | Trade name | 2,171 | 2,314 | (143) | (6.2)% | | Existing technology | 561 | 744 | (183) | (24.6)% | | Customer relationships | 1,439 | 1,534 | (95) | (6.2)% | | Licensing agreement | 64 | 100 | (36) | (36.0)% | | Intellectual property | 2,836 | 2,836 | 0 | 0.0% | | **Total intangible assets** | **7,071** | **7,528** | **(457)** | **(6.1)%** | Amortization Expense for Definite-Lived Intangible Assets (In thousands) | Period | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Three months ended June 30 | 475 | 318 | 157 | 49.4% | | Six months ended June 30 | 817 | 621 | 196 | 31.6% | [6. LEASES](index=13&type=section&id=6.%20LEASES) The Company's lease portfolio consists primarily of office leases with a weighted-average remaining lease term of 7.3 years and a weighted-average discount rate of 5.061% as of June 30, 2022. Operating lease expenses and short-term lease expenses increased significantly year-over-year - The Company's lease portfolio consists of office leases with terms ranging from less than one year to seven years, with a weighted average lease term of three years[47](index=47&type=chunk) Lease Information (In thousands) | Item | Three Months Ended June 30, 2022 ($) | Three Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2021 ($) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating lease expense | 97 | 84 | 206 | 202 | | Short-term lease expense | 260 | 10 | 282 | 26 | | Cash paid for operating leases | 60 | 84 | 131 | 202 | Weighted-Average Lease Terms and Rates | Item | June 30, 2022 | June 30, 2021 | | :----------------------------------- | :------------ | :------------ | | Weighted-average remaining lease term (years) – operating leases | 7.3 | 3.6 | | Weighted-average discount rate – operating leases | 5.061% | 4.855% | [7. STOCKHOLDERS' EQUITY](index=14&type=section&id=7.%20STOCKHOLDERS'%20EQUITY) This section details changes in stockholders' equity, including common stock issuances through agent equity and growth incentive programs, stock option grants, and the company's stock repurchase plan. The Agent Equity Program allows agents to receive 5% of commissions in common stock at a discount, while the Agent Growth Incentive Program awards stock based on performance milestones Common Stock Issued (Shares) | Item | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of quarter | 158,300,605 | 147,934,768 | 155,516,284 | 146,677,786 | | Shares issued for stock options exercised | 639,861 | 1,797,132 | 1,363,055 | 2,344,908 | | Agent growth incentive stock compensation | 403,652 | 339,904 | 914,324 | 625,026 | | Agent equity stock compensation | 3,942,452 | 1,075,182 | 5,492,907 | 1,499,266 | | Balance, end of quarter | 163,286,570 | 151,146,986 | 163,286,570 | 151,146,986 | [Agent Equity Program](index=14&type=section&id=Agent%20Equity%20Program) This program allows agents to receive a portion of their commissions in common stock at a discount, fostering agent ownership - Agents and brokers can elect to receive **5% of commissions earned** in common stock at a **10% discount**[52](index=52&type=chunk) Agent Equity Program Stock Issuances (Shares and Value in thousands) | Period | Shares Issued (2022) | Value (2022 $) | Shares Issued (2021) | Value (2021 $) | | :----------------------------------- | :------------------- | :------------- | :------------------- | :------------- | | Three months ended June 30 | 3,942,452 | 48,335 | 1,075,182 | 38,451 | | Six months ended June 30 | 5,492,907 | 86,835 | 1,499,266 | 59,853 | [Agent Growth Incentive Program](index=14&type=section&id=Agent%20Growth%20Incentive%20Program) This program awards common stock to agents and brokers based on attraction and performance benchmarks, vesting over time - Agents and brokers can receive common stock awards based on agent attraction and performance benchmarks, typically vesting after performance and three years of service[53](index=53&type=chunk)[55](index=55&type=chunk) Agent Growth Incentive Program Stock Compensation Expense (Six Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | | :----------------------------------- | :------- | :------- | | Stock compensation expense attributable to AGIP | 17,028 | 11,312 | | Stock compensation expense attributable to liability classified awards | 4,451 | N/A | [Stock Option Awards](index=16&type=section&id=Stock%20Option%20Awards) This section details the stock options granted to employees, including the number of options and their fair value Stock Options Granted to Employees | Period | Options Granted (2022) | Fair Value per Share (2022 $) | Options Granted (2021) | Fair Value per Share (2021 $) | | :----------------------------------- | :--------------------- | :---------------------------- | :--------------------- | :---------------------------- | | Three months ended June 30 | 288,007 | 11.64 | 66,739 | 26.77 | | Six months ended June 30 | 772,385 | 13.24 | 194,004 | 24.80 | [Stock Repurchase Plan](index=16&type=section&id=Stock%20Repurchase%20Plan) This section outlines the company's stock repurchase activities, including the authorized amount and shares repurchased - The Board approved an increase to the stock repurchase program from **$400 million to $500 million** on May 3, 2022, and increased monthly repurchases from **$10 million to $20 million**[58](index=58&type=chunk) Common Stock Repurchases (Three Months Ended June 30, 2022) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Approximate Dollar Value Remaining ($) | | :----------------------------------- | :--------------------- | :------------------------------- | :------------------------------------- | | April 1, 2022 - April 30, 2022 | 611,955 | 16.78 | 168,425,444 | | May 1, 2022 - May 31, 2022 | 1,448,783 | 13.92 | 148,468,912 | | June 1, 2022 - June 30, 2022 | 1,543,213 | 12.98 | 128,530,534 | | **Total** | **3,603,951** | **14.56** | | [8. EARNINGS PER SHARE](index=16&type=section&id=8.%20EARNINGS%20PER%20SHARE) Basic EPS is calculated based on net income attributable to eXp stockholders divided by basic weighted-average shares outstanding, while diluted EPS accounts for potential common shares using the treasury stock method. Both basic and diluted EPS decreased significantly for the three and six months ended June 30, 2022, compared to the prior year - Basic EPS is computed using net income attributable to eXp stockholders and basic weighted-average shares outstanding[59](index=59&type=chunk) - Diluted EPS includes the effect of all dilutive potential common shares and common share equivalents, using the treasury stock method for unvested stock awards and unexercised options[59](index=59&type=chunk) Earnings Per Share (Three Months Ended June 30) | Item | 2022 | 2021 | Change | Change (%) | | :----------------------------------- | :--- | :--- | :----- | :--------- | | Net income attributable to common stock ($ thousands) | 9,359| 37,050 | (27,691)| (74.7)% | | Weighted average shares - basic | 150,783,418| 145,584,495| 5,198,923| 3.6% | | Weighted average shares - diluted | 155,816,038| 157,288,672| (1,472,634)| (0.9)% | | Earnings per share - basic ($) | 0.06 | 0.25 | (0.19) | (76.0)% | | Earnings per share - diluted ($) | 0.06 | 0.24 | (0.18) | (75.0)% | Earnings Per Share (Six Months Ended June 30) | Item | 2022 | 2021 | Change | Change (%) | | :----------------------------------- | :--- | :--- | :----- | :--------- | | Net income attributable to common stock ($ thousands) | 18,241| 41,896 | (23,655)| (56.5)% | | Weighted average shares - basic | 150,049,170| 144,973,139| 5,076,031| 3.5% | | Weighted average shares - diluted | 156,579,590| 158,096,735| (1,517,145)| (1.0)% | | Earnings per share - basic ($) | 0.12 | 0.29 | (0.17) | (58.6)% | | Earnings per share - diluted ($) | 0.12 | 0.27 | (0.15) | (55.6)% | [9. INCOME TAXES](index=18&type=section&id=9.%20INCOME%20TAXES) The Company's income tax provision shifted from a benefit in 2021 to an expense in 2022 for the three months ended June 30, and a reduced benefit for the six months ended June 30, 2022. This change was primarily due to the release of a valuation allowance in 2021 and lower deductible stock-based compensation in 2022 Income Tax (Benefit) Expense and Effective Tax Rates (In millions) | Period | Income Tax (Benefit) Expense (2022 $) | Effective Tax Rate (2022) | Income Tax (Benefit) Expense (2021 $) | Effective Tax Rate (2021) | | :----------------------------------- | :------------------------------------ | :------------------------ | :------------------------------------ | :------------------------ | | Three months ended June 30 | 1.66 | 15.16% | (20.585) | (125.8)% | | Six months ended June 30 | (3.49) | (23.81)% | (20.374) | 95.1% | - The decrease in income tax benefit was primarily attributable to the release of valuation allowance in 2021 and lower deductible stock-based compensation in 2022[62](index=62&type=chunk)[105](index=105&type=chunk) [10. FAIR VALUE MEASUREMENT](index=18&type=section&id=10.%20FAIR%20VALUE%20MEASUREMENT) The Company measures the fair value of its financial instruments using a three-level hierarchy. As of June 30, 2022, the Company held money market funds valued at $43.4 million, classified as Level 1 assets, with no Level 2 or Level 3 financial assets or liabilities - The fair value hierarchy prioritizes inputs into Level 1 (quoted market prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[63](index=63&type=chunk) Fair Value of Money Market Funds (In thousands) | As of Date | Fair Value ($) | | :--------- | :------------- | | June 30, 2022 | 43,423 | | Dec 31, 2021 | 43,386 | - The Company's money market funds are considered **Level 1 assets**, and there were no transfers between levels or any Level 2 or Level 3 financial assets/liabilities in the period[63](index=63&type=chunk) [11. COMMITMENTS AND CONTINGENCIES](index=18&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company is subject to various legal claims and actions, including a class action lawsuit settled for $10.0 million in November 2021, pending judicial approval. Additionally, the Company has capital commitment liabilities totaling $3.25 million related to SUCCESS Lending's mortgage warehouse credit facilities, which are off-balance sheet arrangements - The Company agreed to settle a class action lawsuit under the Telephone Consumer Protection Act for **$10.0 million**, subject to judicial review and approval[65](index=65&type=chunk) - SUCCESS Lending, an indirect subsidiary and unconsolidated joint venture, entered into Mortgage Warehouse Agreements with Flagstar Bank FSB and Texas Capital Bank, providing revolving credit lines up to **$25 million each**[65](index=65&type=chunk) - The Company has capital commitment liabilities under Capital Maintenance Agreements for SUCCESS Lending, limited to **$2.0 million** with Flagstar Bank FSB and **$1.25 million** with Texas Capital Bank, representing off-balance sheet arrangements[65](index=65&type=chunk) [12. SEGMENT INFORMATION](index=20&type=section&id=12.%20SEGMENT%20INFORMATION) The Company operates primarily as a cloud-based real estate brokerage, which constitutes the vast majority of its revenue and assets. While it identifies technology and affiliated services as operating segments, they are not material enough to be reported separately, resulting in one reportable segment - The Company primarily operates as a cloud-based real estate brokerage, representing **99.1% of total revenue** and **96.8% of total assets** for the six months ended June 30, 2022[67](index=67&type=chunk) - Technology and affiliated services (e.g., First Cloud, Silverline) are in emerging stages and not material to total revenue, net income, or assets, leading to one reportable segment[67](index=67&type=chunk) [Operating Segments](index=20&type=section&id=Operating%20Segments) The company's real estate brokerage business dominates revenue and assets, making other segments immaterial for separate reporting - The real estate brokerage business accounts for **99.1% of total revenue** for the six months ended June 30, 2022, and **96.8% of total assets** as of June 30, 2022[67](index=67&type=chunk) - Technology services (e.g., virtual reality software platform) and affiliated services (e.g., First Cloud, Silverline) are not managed as separate reportable segments due to their immaterial contribution to total revenue, net income, or assets[67](index=67&type=chunk) [Geographical Information](index=20&type=section&id=Geographical%20Information) The company primarily operates in the US and Canada, with recent international expansion, and a small portion of revenue and assets outside the US - The Company primarily operates in the United States and Canada, with recent expansions into numerous international markets including The Dominican Republic, Greece, and New Zealand in 2022[68](index=68&type=chunk) - Approximately **9% of total revenue** for both six-month periods ended June 30, 2022 and 2021, was generated outside of the U.S.[68](index=68&type=chunk) - Assets held outside of the U.S. were **8%** as of June 30, 2022 and December 31, 2021[68](index=68&type=chunk) [13. SUBSEQUENT EVENTS](index=22&type=section&id=13.%20SUBSEQUENT%20EVENTS) Subsequent to June 30, 2022, the Company declared a quarterly cash dividend of $0.045 per share payable on August 29, 2022, and acquired Zoocasa Realty Inc. on July 1, 2022, to expand its online lead generation and home search capabilities - On July 29, 2022, the Board declared a quarterly cash dividend of **$0.045 per share**, payable on August 29, 2022[71](index=71&type=chunk) - On July 1, 2022, the Company acquired Zoocasa Realty Inc. and Zoocasa.com to expand online lead generation, home search, and listings portal capabilities in North America[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, covering an overview of its business, market conditions, key performance metrics, recent business developments, detailed analysis of financial results, non-GAAP measures, liquidity, and critical accounting policies [Overview](index=22&type=section&id=Overview) eXp World Holdings focuses on empowering the new economy through its cloud-based real estate brokerage, eXp Realty, and technology platforms. The company's strategy is organic growth in North America and international markets by increasing its independent agent and broker network, leveraging customer-focused efficiencies, and strategic capital deployment - eXp World Holdings operates one of the world's fastest-growing real estate brokerages, eXp Realty, with a focus on being agent-centric through a generous commission model and cloud-based collaboration suite[74](index=74&type=chunk) - The company's strategy is to grow organically in North America and international markets by increasing its independent agent and broker network, leveraging cloud-based operations for efficiency and market share[76](index=76&type=chunk) - Agent count increased by **42%** from 58,263 agents as of June 30, 2021, to **82,856 agents** as of June 30, 2022[76](index=76&type=chunk) [Market Conditions and Industry Trends](index=23&type=section&id=Market%20Conditions%20and%20Industry%20Trends) The real estate market experienced a slowdown in the first half of 2022 due to rising interest rates and home prices, impacting affordability and leading to decreased existing home sales transactions. Despite these challenges, the Company maintained growth in revenue and agent count, leveraging its low-cost, high-engagement model - The housing market slowed in the first six months of 2022 due to rising interest rates and home prices, impacting affordability[78](index=78&type=chunk) - Existing home sales decreased by **14.2%** year-over-year in June 2022, while the median home sale price increased by **13.4% to $416.0 thousand**[78](index=78&type=chunk) - Despite market slowdown, the Company achieved a **53% year-over-year increase in revenue** and a **42% increase in agent count** for the first six months of 2022[78](index=78&type=chunk) [National Housing Inventory](index=23&type=section&id=National%20Housing%20Inventory) US housing inventory increased in June 2022 due to higher mortgage rates and home prices - Housing inventory increased to **1.3 million existing homes** for sale in the U.S. as of June 2022, up from 1.2 million in June 2021, driven by increased mortgage rates and higher home prices[79](index=79&type=chunk) [Mortgage Interest Rates](index=23&type=section&id=Mortgage%20Interest%20Rates) The average 30-year fixed-rate mortgage sharply increased to 5.5% in June 2022, negatively impacting homebuying demand - The average rate for a 30-year, conventional, fixed-rate mortgage sharply increased to **5.5% in June 2022**, compared to 3.0% in all of 2021, negatively impacting homebuying demand[80](index=80&type=chunk) [Housing Affordability Index](index=23&type=section&id=Housing%20Affordability%20Index) The housing affordability index declined significantly in May 2022 due to rising mortgage rates and low inventory - The composite housing affordability index decreased to **102.5 for May 2022** (preliminary) from 148.2 for May 2021, indicating declining affordability due to increasing mortgage rates and low inventory[81](index=81&type=chunk) [Home Sales Transactions](index=24&type=section&id=Home%20Sales%20Transactions) Existing home sales decreased in June 2022, while the median price continued its upward trend for 124 consecutive months - Seasonally adjusted existing home sale transactions decreased to an annual rate of **5.1 million in June 2022** (preliminary) from 6.0 million in 2021[81](index=81&type=chunk) - The nationwide existing home sales median price for June 2022 (preliminary) was **$416.0 thousand**, up from $367.0 thousand in June 2021, marking 124 consecutive months of year-over-year increases[81](index=81&type=chunk) [Key Business Metrics](index=25&type=section&id=Key%20Business%20Metrics) The Company tracks agent count, transactions, volume, revenue, gross profit, gross margin, and Adjusted EBITDA to assess performance. Significant growth was observed in agent count, transactions, volume, and revenue, while gross margin decreased due to agents reaching commission capping requirements sooner. Adjusted EBITDA increased for the six months ended June 30, 2022 Key Business Metrics (Three Months Ended June 30, In thousands, except transactions and agent count) | Metric | 2022 | 2021 | Change | Change (%) | | :----------------------------------- | :------- | :------- | :----- | :--------- | | Agent count | 82,856 | 58,263 | 24,593 | 42.2% | | Transactions | 150,032 | 115,431 | 34,601 | 30.0% | | Volume ($) | 57,894,767| 40,117,368| 17,777,399| 44.3% | | Revenue ($) | 1,415,060| 999,887 | 415,173| 41.5% | | Gross profit ($) | 107,250 | 79,917 | 27,333 | 34.2% | | Gross margin (%) | 7.6% | 8.0% | (0.4)% | (5.0)% | | Adjusted EBITDA ($) | 26,914 | 26,988 | (74) | (0.3)% | Key Business Metrics (Six Months Ended June 30, In thousands, except transactions and agent count) | Metric | 2022 | 2021 | Change | Change (%) | | :----------------------------------- | :------- | :------- | :----- | :--------- | | Agent count | 82,856 | 58,263 | 24,593 | 42.2% | | Transactions | 264,337 | 189,309 | 75,028 | 39.6% | | Volume ($) | 99,274,268| 64,625,224| 34,649,044| 53.6% | | Revenue ($) | 2,425,791| 1,583,720| 842,071| 53.2% | | Gross profit ($) | 190,714 | 133,403 | 57,311 | 42.9% | | Gross margin (%) | 7.9% | 8.4% | (0.5)% | (6.0)% | | Adjusted EBITDA ($) | 44,627 | 41,810 | 2,817 | 6.7% | - Gross margin decreased year-over-year primarily due to rising home prices and increased demand, leading agents to reach commission capping requirements sooner and receive a higher percentage of commission[84](index=84&type=chunk) [Recent Business Developments](index=27&type=section&id=Recent%20Business%20Developments) The Company continued its global expansion, enhanced agent and employee experience through NPS, reinforced agent ownership programs, developed its Virbela metaverse technology, and expanded affiliate and media services, including the formation of SUCCESS Lending [Real Estate Brokerage Initiatives](index=27&type=section&id=Real%20Estate%20Brokerage%20Initiatives) The company expanded globally, improved agent and employee experience using NPS, and strengthened agent ownership programs - The Company expanded its real estate cloud brokerage operations into The Dominican Republic, Greece, and New Zealand during the first and second quarters of 2022, continuing its global growth[88](index=88&type=chunk) - The Company adopted Net Promoter Score (NPS) principles to improve agent and employee experience, achieving an agent NPS of **68 in Q2 2022**, leading to improvements in agent onboarding, commission processing, and employee benefits[89](index=89&type=chunk) - Agent ownership is fostered through an equity incentive program where agents can receive common stock awards based on production and agent attraction benchmarks, and elect to receive **5% of commissions** in common stock at a discount[90](index=90&type=chunk) [Technology Products and Services](index=27&type=section&id=Technology%20Products%20and%20Services) eXp World Technologies continues to develop its Virbela metaverse platform, focusing on enterprise readiness and launching Frame into beta - eXp World Technologies, LLC (World Tech) continues to develop the Virbela enterprise metaverse technology, focusing on enterprise readiness (scale, reliability, security, privacy) and released Frame, a browser-accessible metaverse collaboration technology, into beta[91](index=91&type=chunk) - In 2022, the Company expects to continue servicing existing and new B2B enterprise contracts, solidify channel partnerships, and bring the Frame product out of beta[91](index=91&type=chunk) [Affiliate and Media Services](index=27&type=section&id=Affiliate%20and%20Media%20Services) Acquisitions and partnerships have enabled the company to offer complementary services, including the formation of SUCCESS Lending for mortgage services - Acquisitions and partnerships have enabled the Company to offer complementary services such as mortgage origination, title, escrow, and settlement services[92](index=92&type=chunk) - In July 2021, the Company formed SUCCESS Lending, LLC, a residential lending joint venture, to provide enhanced mortgage services and products to customers[94](index=94&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) The Company experienced significant revenue growth for both the three and six months ended June 30, 2022, driven by increased agent count, closed transactions, and rising home prices. However, net income and operating income decreased due to higher operating expenses, particularly general and administrative costs, and a shift from income tax benefit to expense [Three Months Ended June 30, 2022 compared to the Three Months Ended June 30, 2021](index=29&type=section&id=Three%20Months%20Ended%20June%2030,%202022%20compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202021) This section compares the company's financial performance for the three months ended June 30, 2022, against the same period in 2021 Financial Performance (Three Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenues | 1,415,060| 999,887 | 415,173 | 42% | | Commissions and other agent-related costs | 1,307,810| 919,970 | 387,840 | 42% | | General and administrative expenses | 91,391 | 60,721 | 30,670 | 51% | | Sales and marketing expenses | 4,210 | 2,683 | 1,527 | 57% | | Total operating expenses | 1,403,411| 983,374 | 420,037 | 43% | | Operating income | 11,649 | 16,513 | (4,864) | (29)% | | Income before income tax expense | 11,020 | 16,458 | (5,438) | (33)% | | Income tax (benefit) expense | 1,661 | (20,585) | 22,246 | (108)% | | Net income | 9,359 | 37,043 | (27,684) | (75)% | [Revenue](index=29&type=section&id=Revenue_3M) Total revenues increased significantly due to higher agent count, closed transactions, and rising home prices - Total revenues increased by **$415.2 million (42%) to $1.415 billion** for the three months ended June 30, 2022, primarily due to increases in agent count, closed transactions, and rising home prices[95](index=95&type=chunk) [Commission and Other Agent Related Costs](index=29&type=section&id=Commission%20and%20Other%20Agent%20Related%20Costs_3M) Commission and agent-related costs rose due to increased agent count, transactions, and agents reaching commission caps sooner - Commission and other agent-related costs increased by **$387.8 million (42%) to $1.308 billion**, driven by higher agent count, closed transactions, and agents reaching commission capping requirements sooner due to rising home prices[95](index=95&type=chunk) [General and Administrative Expense](index=31&type=section&id=General%20and%20Administrative%20Expense_3M) General and administrative expenses increased significantly, primarily due to higher compensation, agent-related events, and software costs - General and administrative expenses increased by **$30.7 million (51%) to $91.4 million**, mainly due to a **$19.6 million increase in compensation and personnel expenses**, **$3.9 million in agent-related seminars/conferences**, **$1.7 million in computer/software**, and **$3.9 million in stock compensation**[98](index=98&type=chunk) [Sales and Marketing](index=31&type=section&id=Sales%20and%20Marketing_3M) Sales and marketing expenses increased due to expanded advertising for real estate operations and software services - Sales and marketing expenses increased by **$1.5 million (57%) to $4.2 million**, attributed to increased advertising for real estate operations and software services expansion[99](index=99&type=chunk) [Income Tax Benefit (Expense)](index=31&type=section&id=Income%20Tax%20Benefit%20(Expense)_3M) The company shifted from an income tax benefit to an expense, primarily due to the release of a valuation allowance in the prior year - The Company recorded an income tax expense of **$1.66 million (15.16% effective rate)** for Q2 2022, compared to a **$20.6 million benefit (-125.8% effective rate)** in Q2 2021, primarily due to the release of a valuation allowance in 2021[101](index=101&type=chunk) [Six Months Ended June 30, 2022 compared to the Six Months Ended June 30, 2021](index=32&type=section&id=Six%20Months%20Ended%20June%2030,%202022%20compared%20to%20the%20Six%20Months%20Ended%20June%2030,%202021) This section compares the company's financial performance for the six months ended June 30, 2022, against the same period in 2021 Financial Performance (Six Months Ended June 30, In thousands) | Item | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Revenues | 2,425,791| 1,583,720| 842,071 | 53% | | Commissions and other agent-related costs | 2,235,077| 1,450,317| 784,760 | 54% | | General and administrative expenses | 166,713 | 107,021 | 59,692 | 56% | | Sales and marketing expenses | 7,910 | 4,940 | 2,970 | 60% | | Total operating expenses | 2,409,700| 1,562,278| 847,422 | 54% | | Operating income | 16,091 | 21,442 | (5,351) | (25)% | | Income before income tax expense | 14,735 | 21,515 | (6,780) | (32)% | | Income tax (benefit) expense | (3,488) | (20,374) | 16,886 | (83)% | | Net income | 18,223 | 41,889 | (23,666) | (56)% | [Revenue](index=32&type=section&id=Revenue_6M) Total revenues increased significantly due to higher agent count, closed transactions, and rising home prices - Total revenues increased by **$842.1 million (53%) to $2.426 billion** for the six months ended June 30, 2022, driven by higher agent count, closed transactions, and rising home prices[103](index=103&type=chunk) [Commission and Other Agent Related Costs](index=32&type=section&id=Commission%20and%20Other%20Agent%20Related%20Costs_6M) Commission and agent-related costs rose due to increased agent count, transactions, and agents reaching commission caps sooner - Commission and other agent-related costs increased by **$784.8 million (54%) to $2.235 billion**, due to increased agent count, closed transactions, and agents reaching commission capping requirements sooner[103](index=103&type=chunk) [General and Administrative Expense](index=32&type=section&id=General%20and%20Administrative%20Expense_6M) General and Administrative expenses increased significantly, primarily due to higher compensation, agent-related events, and software costs - General and administrative expenses increased by **$59.7 million (56%) to $166.7 million**, primarily due to a **$37.8 million increase in compensation and personnel expenses**, **$4.7 million in agent-related seminars/conferences**, **$4.3 million in computer/software**, and **$6.6 million in stock compensation**[103](index=103&type=chunk)[105](index=105&type=chunk) [Sales and Marketing](index=34&type=section&id=Sales%20and%20Marketing_6M) Sales and marketing expenses increased due to expanded advertising for real estate operations and software services - Sales and marketing expenses increased by **$3.0 million (60%) to $7.9 million**, driven by increased advertising for expanding real estate operations and software services[105](index=105&type=chunk) [Income Tax Benefit (Expense)](index=34&type=section&id=Income%20Tax%20Benefit%20(Expense)_6M) The company recorded a reduced income tax benefit, primarily due to the prior year's valuation allowance release and lower deductible stock compensation - The Company recorded an income tax benefit of **($3.49) million (-23.81% effective rate)** for the six months ended June 30, 2022, compared to a **($20.4) million benefit (95.1% effective rate)** in 2021, primarily due to the release of a valuation allowance in 2021 and lower deductible stock-based compensation in 2022[105](index=105&type=chunk) [Non-U.S. GAAP Financial Measures](index=34&type=section&id=Non-U.S.%20GAAP%20Financial%20Measures) The Company uses Adjusted EBITDA, a non-U.S. GAAP financial measure, to evaluate core operating performance, excluding items like other income/expense, income tax, depreciation, amortization, impairment, and stock-based compensation. Adjusted EBITDA increased for the six months ended June 30, 2022, reflecting revenue growth and improved cost leverage - Adjusted EBITDA is defined as net income (loss) excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based compensation expense, and stock option expense[106](index=106&type=chunk) - Adjusted EBITDA provides useful information for understanding financial performance, identifying underlying business trends, and comparing performance across periods and with industry peers[106](index=106&type=chunk) Adjusted EBITDA Reconciliation (In thousands) | Item | Three Months Ended June 30, 2022 ($) | Three Months Ended June 30, 2021 ($) | Six Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2021 ($) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Net income | 9,359 | 37,043 | 18,223 | 41,889 | | Other (income) expense, net | 629 | 55 | 1,356 | (73) | | Income tax (benefit) expense | 1,661 | (20,585) | (3,488) | (20,374) | | Depreciation and amortization | 2,429 | 1,507 | 4,387 | 2,817 | | Stock compensation expense | 9,230 | 5,840 | 17,028 | 11,312 | | Stock option expense | 3,606 | 3,128 | 7,121 | 6,239 | | **Adjusted EBITDA** | **26,914** | **26,988** | **44,627** | **41,810** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity is primarily from cash on hand and operating cash flows, which have strengthened due to transaction volume growth. Excess cash is used for growth initiatives, technology platforms, and stock repurchases. Net working capital increased by 18% to $156.5 million, while cash provided by operating activities slightly decreased, and cash used in financing activities increased due to cash dividends - Primary liquidity sources are cash and cash equivalents and cash flows from operations, strengthened by transaction volume growth and improved cost leverage[109](index=109&type=chunk) - Current capital deployment strategy for 2022 includes using excess cash for growth initiatives in select markets, enhancing technology platforms, and repurchasing common stock[109](index=109&type=chunk) - The Company believes existing cash balances and operating cash flows will be sufficient for operating requirements for at least the next twelve months and beyond[109](index=109&type=chunk) [Net Working Capital](index=35&type=section&id=Net%20Working%20Capital) Net working capital increased by 18% due to higher agent and commission receivables linked to revenue growth Net Working Capital (In thousands) | Item | June 30, 2022 ($) | Dec 31, 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :---------------- | :--------------- | :--------- | :--------- | | Current assets | 403,600 | 319,315 | 84,285 | 26.4% | | Current liabilities | (247,143) | (186,814) | (60,329) | 32.3% | | **Net working capital** | **156,457** | **132,501** | **23,956** | **18.1%** | - Net working capital increased by **$24.0 million (18%)** for the six months ended June 30, 2022, primarily due to an increase in agent and commission receivables linked to revenue growth[110](index=110&type=chunk) [Cash Flows](index=37&type=section&id=Cash%20Flows) Cash provided by operating activities slightly decreased, while cash used in financing activities increased due to cash dividends Cash Flows (Six Months Ended June 30, In thousands) | Activity | 2022 ($) | 2021 ($) | Change ($) | Change (%) | | :----------------------------------- | :------- | :------- | :--------- | :--------- | | Cash provided by operating activities | 165,298 | 167,425 | (2,127) | (1.3)% | | Cash used in investment activities | (8,077) | (7,109) | (968) | 13.6% | | Cash used in financing activities | (91,209) | (87,136) | (4,073) | 4.7% | | Net change in cash, cash equivalents and restricted cash | 64,871 | 73,251 | (8,380) | (11.4)% | - Cash provided by operating activities decreased by **$2.1 million**, mainly due to increased real estate transactions and agent stock compensation, offset by a decrease in customer deposits[112](index=112&type=chunk) - Cash used in financing activities increased primarily due to the payment of cash dividends in the first half of 2022, which were absent in the first half of 2021[112](index=112&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There were no material changes to the Company's critical accounting policies or estimates since the Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes occurred in critical accounting policies or estimates since the 2021 Annual Report on Form 10-K[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the Company's exposures to market risk, including interest rate and foreign currency exchange risks, since December 31, 2021 - No material changes in market risk exposures (interest rate and foreign currency exchange) have occurred since December 31, 2021[114](index=114&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022. A material change in internal control over financial reporting occurred with the replacement of the Intacct ERP system with Oracle ERP on April 1, 2022, which is undergoing post-implementation monitoring - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2022[116](index=116&type=chunk) - The Company replaced its Intacct cloud-based ERP system with a hosted, cloud-based Oracle ERP system on April 1, 2022, which is reasonably likely to have a material effect on internal control over financial reporting[117](index=117&type=chunk) - Post-implementation monitoring and process modifications are ongoing to maintain effective internal control over financial reporting for the new Oracle ERP system[117](index=117&type=chunk) [PART II OTHER INFORMATION](index=39&type=section&id=PART%20II%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The Company is routinely involved in litigation incidental to its business, including potential class actions. While provisions are made for probable and estimable claims, litigation is inherently unpredictable, and adverse resolutions could materially impact financial condition, results of operations, or cash flows - The Company is involved in routine litigation, including potential class or collective actions, and accrues for legal claims when payments are probable and estimable[122](index=122&type=chunk) - Litigation is unpredictable, and adverse resolutions, including judgments, penalties, or settlements, could materially affect the Company's financial condition, results of operations, or cash flows[122](index=122&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section highlights risks related to the Company's business and operations, particularly concerning SUCCESS Lending, an unproven business model facing regulatory, compliance, consumer trend, and macroeconomic risks. Its reliance on third-party warehouse credit facilities, guaranteed by eXp, and lack of sole control over SUCCESS Lending pose significant financial risks - SUCCESS Lending, an unproven business model, faces significant risks including ongoing compliance with a complex regulatory environment, increasing client and loan numbers, obtaining favorable funding, and navigating macroeconomic changes[124](index=124&type=chunk)[125](index=125&type=chunk) - SUCCESS Lending relies on third-party warehouse credit facilities from Flagstar Bank FSB and Texas Capital Bank, totaling up to **$50 million**, which are guaranteed by eXp through Capital Maintenance Agreements with limited liabilities of **$2.0 million** and **$1.25 million**, respectively[126](index=126&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) - The Company does not have sole control of SUCCESS Lending, and potential losses or liabilities may require additional capital contributions, adversely affecting financial condition[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on the Company's common stock repurchases under its publicly announced plans. For the quarter ended June 30, 2022, the Company repurchased 3,603,951 shares at an average price of $14.56 per share, with approximately $128.5 million remaining under the authorized repurchase program Issuer Purchases of Equity Securities (Quarter Ended June 30, 2022) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Approximate Dollar Value Remaining Under Plans or Programs ($) | | :----------------------------------- | :--------------------- | :------------------------------- | :----------------------------------------------------------- | | April 1, 2022 - April 30, 2022 | 611,955 | 16.78 | 168,425,444 | | May 1, 2022 - May 31, 2022 | 1,448,783 | 13.92 | 148,468,912 | | June 1, 2022 - June 30, 2022 | 1,543,213 | 12.98 | 128,530,534 | | **Total** | **3,603,951** | **14.56** | | - The stock repurchase program was increased to **$500.0 million**, with monthly repurchases increased to **$20.0 million**, as authorized by the Board on May 3, 2022[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no defaults upon senior securities to report - No defaults upon senior securities were reported[133](index=133&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[132](index=132&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported in this section[135](index=135&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, XBRL instance documents, and various agreements such as the Restated Certificate of Incorporation, Restated Bylaw

expi WORLD HOLDINGS, INC. Investor Presentation May 2022 Safe Harbor 2 The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Such forward-looking statements speak only as of the date hereof, and the company u ...

Financial Data and Key Metrics Changes - Revenue for Q1 2022 was $1.010 billion, up 73% compared to Q1 2021 [43] - Gross profit increased to $83.5 million, a 56% year-over-year rise [43] - Net income reached $8.9 million, an 83% increase year-over-year [43] - Adjusted EBITDA for Q1 was $17.7 million, up 20% year-over-year [43] - Operating cash flow increased by 53% to $62.2 million [50] Business Line Data and Key Metrics Changes - Agent count grew to 78,196, representing a 55% increase year-over-year [45] - Units sold increased to 114,305, up 55% from the previous year [47] - Transaction volume for Q1 was $41.4 billion, a 69% increase year-over-year [47] - The company reported a gross margin of $83.5 million, up from $53.5 million [48] Market Data and Key Metrics Changes - The company operates in 21 countries, with significant growth in agent count and transactions in North America [53] - International agent count now makes up about 12% of total agents, up from 7% a year ago [66] Company Strategy and Development Direction - The company is focused on expanding its global footprint and enhancing its technology platform [10][12] - Emphasis on agent value proposition and maintaining a high Net Promoter Score (NPS) to drive growth [16][44] - Plans to continue investing in technology and international markets to support long-term growth [92][93] Management's Comments on Operating Environment and Future Outlook - Management anticipates a potential slowdown in the housing market due to rising interest rates [35] - The company believes it is well-positioned to adapt to market changes and maintain profitability [19][38] - Management expressed confidence in the company's ability to pivot and remain agile in various market conditions [19][39] Other Important Information - The company has zero debt and a strong cash position, allowing for flexibility in operations [42] - The board approved an increase in the stock repurchase program from $400 million to $500 million [52] - The company has been recognized as the fastest-growing brokerage in various markets [20][22] Q&A Session Summary Question: What were the key fundamental drivers in the quarter? - Management highlighted the importance of Net Promoter Score as a leading indicator of performance and noted some slowdown due to macroeconomic factors [30][32] Question: How does the company plan to handle potential market downturns? - Management indicated that the company has successfully navigated past downturns and can adjust operational costs quickly [38][39] Question: What drove the decision to increase the stock buyback authorization? - The decision was based on maintaining a strong cash balance while offsetting dilution from equity programs [75][76] Question: What are the company's thoughts on M&A opportunities? - Management is exploring M&A opportunities, focusing on cultural fit and synergy, with potential announcements in the coming months [79] Question: How does the company view gross margins moving forward? - Management expects gross margins to stabilize or improve depending on market conditions and continued focus on revenue growth [80][82]

[Forward Looking Statements](index=4&type=section&id=Forward%20Looking%20Statements) This section contains cautionary statements regarding future expectations and risks, emphasizing that actual results may differ materially from projections [PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls for the reporting period [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents the unaudited condensed consolidated financial statements for eXp World Holdings, Inc. for the quarter ended March 31, 2022, including the balance sheets, statements of comprehensive income, statements of stockholders' equity, and statements of cash flows, along with their accompanying notes. The financial statements reflect the company's strong growth in revenue and net income, alongside strategic investments and changes in equity and cash flow positions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets | Metric | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------- | :--------------------------- | :------------------------------ | :------------------- | :--------- | | Total Current Assets | 399,342 | 319,315 | 80,027 | 25.06% | | Total Assets | 502,140 | 413,826 | 88,314 | 21.34% | | Total Current Liabilities | 253,109 | 186,814 | 66,295 | 35.59% | | Total Liabilities | 256,602 | 190,293 | 66,309 | 34.85% | | Total Equity | 245,538 | 223,533 | 22,005 | 9.84% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's financial performance over a period, including revenues, expenses, net income, and earnings per share Condensed Consolidated Statements of Comprehensive Income | Metric | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------------- | :--------- | | Revenues | 1,010,731 | 583,833 | 426,898 | 73.12% | | Total Operating Expenses | 1,006,289 | 578,904 | 427,385 | 73.82% | | Operating Income | 4,442 | 4,929 | (487) | -9.88% | | Income before Income Tax Expense | 3,715 | 5,057 | (1,342) | -26.54% | | Income Tax (Benefit) Expense | (5,149) | 211 | (5,360) | -2540.28% | | Net Income | 8,864 | 4,846 | 4,018 | 82.91% | | Net Income Attributable to eXp World Holdings, Inc. | 8,882 | 4,846 | 4,036 | 83.28% | | Basic Earnings Per Share | $0.06 | $0.03 | $0.03 | 100.00% | | Diluted Earnings Per Share | $0.06 | $0.03 | $0.03 | 100.00% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity accounts, including common stock, treasury stock, additional paid-in capital, and accumulated earnings Condensed Consolidated Statements of Stockholders' Equity | Metric | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Balance, beginning of quarter (Common Stock) | $1 | $1 | | Agent equity stock compensation | $1 | $0 | | Balance, end of quarter (Common Stock) | $2 | $1 | | Balance, beginning of quarter (Treasury Stock) | ($210,009) | ($37,994) | | Repurchases of common stock | ($29,956) | ($34,009) | | Balance, end of quarter (Treasury Stock) | ($239,965) | ($72,003) | | Balance, beginning of quarter (Additional Paid-in Capital) | 401,479 | 218,491 | | Agent equity stock compensation | 38,500 | 21,402 | | Balance, end of quarter (Additional Paid-in Capital) | 450,570 | 248,633 | | Balance, beginning of quarter (Accumulated Earnings) | 30,510 | (39,161) | | Net income | 8,882 | 4,846 | | Dividends declared and paid | (5,859) | - | | Balance, end of quarter (Accumulated Earnings) | 33,533 | (34,315) | | Total Equity | $245,538 | $143,613 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------------------- | :--------- | | Net Cash Provided by Operating Activities | 111,507 | 78,919 | 32,588 | 41.30% | | Net Cash (Used In) Investing Activities | (4,684) | (3,757) | (927) | 24.67% | | Net Cash Used In Financing Activities | (35,743) | (32,636) | (3,107) | 9.52% | | Net Change in Cash, Cash Equivalents and Restricted Cash | 71,121 | 42,573 | 28,548 | 67.05% | | Ending Balance of Cash, Cash Equivalents and Restricted Cash | 247,031 | 170,497 | 76,534 | 44.89% | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Description of Business and Basis of Presentation](index=9&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core operations as a cloud-based real estate brokerage and the accounting principles used for financial reporting - eXp World Holdings, Inc. operates a cloud-based real estate brokerage and a technology platform business, enabling remote operations. Its real estate brokerage is one of the largest and fastest-growing in the U.S. and is expanding internationally, operating in over **20 countries**[29](index=29&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies and estimates applied in preparing the interim financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim financial information, with estimates made for areas like credit losses, legal contingencies, income taxes, and stock-based compensation[29](index=29&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) - The company adopted ASU 2019-12 (Income Taxes) with no material impact and reviewed ASU 2021-08 (Business Combinations) for future application[39](index=39&type=chunk)[40](index=40&type=chunk) [3. Expected Credit Losses](index=11&type=section&id=3.%20Expected%20Credit%20Losses) This note details the methodology and amounts for estimating current expected credit losses on various receivable categories - The Company estimates current expected credit losses (CECL) using an aging schedule method, categorizing receivables into agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements[41](index=41&type=chunk) Expected Credit Losses by Receivable Category | Receivable Category | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------ | :--------------------------- | :------------------------------ | | Real estate property settlements | 138,187 | 128,499 | | Expected credit losses (RE) | 904 | 0 | | Agent non-commission fees & short-term advances | 7,193 | 7,188 | | Expected credit losses (Agent) | 1,513 | 2,198 | [4. Plant, Property and Equipment, Net](index=13&type=section&id=4.%20Plant%2C%20Property%20and%20Equipment%2C%20Net) This note provides a breakdown of the company's property, plant, and equipment, including depreciation details Plant, Property and Equipment, Net | Asset Category | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :----------------------------- | :--------------------------- | :------------------------------ | | Computer hardware and software | 24,519 | 20,824 | | Furniture, fixture, and equipment | 26 | 26 | | Total depreciable property and equipment | 24,545 | 20,850 | | Less: accumulated depreciation | (13,328) | (11,711) | | Depreciable property, net | 11,217 | 9,139 | | Assets under development | 7,807 | 6,763 | | Property, plant, and equipment, net | 19,024 | 15,902 | | Depreciation expense (3 months) | 1,616 | 1,007 | [5. Goodwill and Intangible Assets](index=13&type=section&id=5.%20Goodwill%20and%20Intangible%20Assets) This note presents the carrying amounts of goodwill and other intangible assets, along with amortization expenses - Goodwill remained stable at **$12,945 thousand** as of March 31, 2022, with no impairment events identified during the quarter[45](index=45&type=chunk) Goodwill and Intangible Assets | Intangible Asset Category | March 31, 2022 Net Carrying Amount ($ thousands) | December 31, 2021 Net Carrying Amount ($ thousands) | | :------------------------ | :----------------------------------------------- | :-------------------------------------------------- | | Trade name | 2,243 | 2,314 | | Existing technology | 557 | 744 | | Non-competition agreements | 0 | - | | Customer relationships | 1,486 | 1,534 | | Licensing agreement | 82 | 100 | | Intellectual property | 2,836 | 2,836 | | Total intangible assets | 7,204 | 7,528 | | Amortization expense (3 months) | 342 | 303 | [6. Leases](index=13&type=section&id=6.%20Leases) This note describes the company's lease arrangements, including lease terms, expenses, and future obligations - The Company's lease portfolio consists of office leases with terms ranging from less than one year to seven years, with a weighted average lease term of **three years**[46](index=46&type=chunk) Lease Metrics | Lease Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease expense ($ thousands) | 109 | 96 | | Short-term lease expense ($ thousands) | 22 | 96 | | Cash paid for operating leases ($ thousands) | 71 | 16 | | Weighted-average remaining lease term (years) | 7.1 | 3.8 | | Weighted-average discount rate | 5.048% | 4.481% | Future Lease Obligations | Period Ending December 31, | Lease Obligations ($ thousands) | | :------------------------- | :------------------------------ | | Remaining 2022 | 201 | | 2023 | 163 | | 2024 | 90 | | 2025 | 90 | | 2026 | 90 | | 2027 and thereafter | 405 | | Total lease payments | 1,039 | | Less: interest | (22) | | Total operating lease liabilities | 1,017 | [7. Stockholders' Equity](index=14&type=section&id=7.%20Stockholders%27%20Equity) This note details changes in common stock, treasury stock, and equity compensation programs affecting stockholders' equity Common Stock Shares Issued | Common Stock Shares Issued | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Balance, beginning of quarter | 155,516,284 | 146,677,786 | | Shares issued for stock options exercised | 723,194 | 547,776 | | Agent growth incentive stock compensation | 510,672 | 285,122 | | Agent equity stock compensation | 1,550,455 | 424,084 | | Balance, end of quarter | 158,300,605 | 147,934,768 | - The Agent Equity Program (AEP) allows agents to receive **5% of commissions in common stock**, with **1,550,455 shares issued in Q1 2022** (valued at **$38.5 million**), a significant increase from 424,084 shares in Q1 2021 (**$21.4 million**)[51](index=51&type=chunk) - The Agent Growth Incentive Program (AGIP) awards common stock based on agent attraction and performance, with stock compensation expense of **$7.8 million in Q1 2022**[52](index=52&type=chunk)[54](index=54&type=chunk) Treasury Stock Shares Repurchased | Treasury Stock Shares Repurchased | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Balance, beginning of quarter | 6,751,692 | 2,534,494 | | Repurchases of common stock | 1,132,048 | 500,910 | | Balance, end of quarter | 7,883,740 | 3,035,404 | [8. Earnings Per Share](index=16&type=section&id=8.%20Earnings%20Per%20Share) This note provides the calculation of basic and diluted earnings per share, reflecting net income attributable to common stock Earnings Per Share Calculation | EPS Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common stock ($ thousands) | 8,882 | 4,846 | | Weighted average shares - basic | 149,226,166 | 144,354,991 | | Dilutive effect of common stock equivalents | 7,616,555 | 14,367,135 | | Weighted average shares - diluted | 156,842,721 | 158,722,126 | | Earnings per share attributable to common stock - basic | $0.06 | $0.03 | | Earnings per share attributable to common stock - diluted | $0.06 | $0.03 | - Basic and diluted EPS both increased from **$0.03 in Q1 2021 to $0.06 in Q1 2022**, reflecting higher net income[62](index=62&type=chunk) [9. Income Taxes](index=17&type=section&id=9.%20Income%20Taxes) This note presents the provision for income taxes and the effective tax rate, explaining significant changes Income Tax Information | Income Tax Metric | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Provision for (benefit from) income taxes | (5,149) | 211 | | Effective tax rate | -137.97% | 4.17% | - The significant increase in income tax benefit in Q1 2022 was primarily due to deductible stock-based compensation windfalls[59](index=59&type=chunk) [10. Fair Value Measurement](index=17&type=section&id=10.%20Fair%20Value%20Measurement) This note describes the fair value hierarchy and measurements for financial assets, specifically money market funds - The Company holds money market funds, classified as Level 1 assets, with fair values of **$43,387 thousand** as of March 31, 2022, and **$43,386 thousand** as of December 31, 2021. No transfers between fair value levels occurred[60](index=60&type=chunk) [11. Commitments and Contingencies](index=17&type=section&id=11.%20Commitments%20and%20Contingencies) This note discloses the company's legal proceedings, class action settlements, and capital commitments related to joint ventures - The Company agreed to settle a class action lawsuit for **$10.0 million** in November 2021, subject to judicial review[65](index=65&type=chunk) - SUCCESS Lending, an unconsolidated joint venture, entered into Mortgage Warehouse Agreements with Flagstar Bank FSB and Texas Capital Bank, providing revolving credit lines up to **$25 million each**. eXp World Holdings, Inc. has capital commitment liabilities of **$2.0 million** and **$1.25 million**, respectively, under related Capital Maintenance Agreements[65](index=65&type=chunk) [12. Segment Information](index=19&type=section&id=12.%20Segment%20Information) This note provides financial information by operating segment, highlighting the primary cloud-based real estate brokerage business and international operations - The Company primarily operates as a cloud-based real estate brokerage, accounting for **99.2% of total revenue in Q1 2022** and **99.1% of total assets** as of March 31, 2022[67](index=67&type=chunk) - International operations generated approximately **8% of total revenue in Q1 2022**, up from 7% in Q1 2021, with assets held outside the U.S. at **11%** as of March 31, 2022[67](index=67&type=chunk) [13. Subsequent Events](index=21&type=section&id=13.%20Subsequent%20Events) This note reports significant events occurring after the balance sheet date, including dividend declarations and stock repurchase program updates - On April 29, 2022, the Board declared a cash dividend of **$0.04 per share**, payable May 31, 2022[69](index=69&type=chunk) - On May 3, 2022, the Board increased the stock repurchase program authorization from **$400 million to $500 million** and approved increasing monthly repurchases from **$10 million to $20 million**[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three months ended March 31, 2022, compared to the same period in 2021. It highlights significant revenue growth driven by agent expansion and market conditions, discusses key business metrics, recent strategic developments, and analyzes financial performance, liquidity, and capital resources [Overview](index=21&type=section&id=OVERVIEW) This section provides a high-level description of the company's business model, strategic focus, and key operational highlights - eXp World Holdings operates a cloud-based real estate brokerage, eXp Realty, focusing on an agent-centric model with a generous commission structure and a proprietary cloud-based platform[72](index=72&type=chunk) - The Company's strategy is organic growth in North America and international markets by expanding its independent agent and broker network, leveraging cloud-based operations for efficiency and market share[74](index=74&type=chunk) - Agent count increased by **55% year-over-year**, from 50,333 agents as of March 31, 2021, to **78,196 agents** as of March 31, 2022[74](index=74&type=chunk) [Market Conditions and Industry Trends](index=22&type=section&id=MARKET%20CONDITIONS%20AND%20INDUSTRY%20TRENDS) This section analyzes the impact of broader housing market conditions and industry trends on the company's performance - The housing market experienced a slowdown in Q1 2022 due to rising interest rates and home prices, with existing home sales decreasing and inventory levels reaching historic lows[76](index=76&type=chunk) Key Housing Market Indicators | Indicator | March 2022 (Preliminary) | March 2021 | | :---------------------------- | :----------------------- | :--------- | | Existing Home Sales (seasonally adjusted, millions) | 5.8 | 6.0 | | Median Home Price | $375.3 thousand | $326.3 thousand | | Housing Inventory (millions) | 0.95 | 1.05 | | Mortgage Interest Rates (30-year fixed) | 3.8% (Q1 2022 average) | 2.9% (Q1 2021 average) | | Housing Affordability Index | 135.4 (February 2022) | 170.4 (February 2021) | - Despite market slowdowns, the Company achieved a **73% year-over-year revenue increase** and **55% agent count growth** in Q1 2022, leveraging its low-cost, high-engagement business model[76](index=76&type=chunk) [Key Business Metrics](index=23&type=section&id=KEY%20BUSINESS%20METRICS) This section presents and discusses critical operational and financial metrics driving the company's performance Key Business Metrics (Three Months Ended March 31) | Metric | 2022 | 2021 | Change | Change (%) | | :---------------------- | :------------- | :------------- | :------------- | :--------- | | Agent count | 78,196 | 50,333 | 27,863 | 55.36% | | Transactions | 114,305 | 73,878 | 40,427 | 54.72% | | Volume | $41,379,500 | $24,507,856 | $16,871,644 | 68.84% | | Revenue | $1,010,731 | $583,833 | $426,898 | 73.12% | | Gross profit | 83,464 | 53,486 | 29,978 | 56.05% | | Gross margin (%) | 8.3% | 9.2% | -0.9% | -9.78% | | Adjusted EBITDA (1) | 17,709 | 14,820 | 2,889 | 19.49% | - Gross margin decreased from **9.2% to 8.3% year-over-year**, primarily because rising home prices and increased demand led agents to reach commission capping requirements sooner, entitling them to a higher percentage of the home sale commission[84](index=84&type=chunk) [Recent Business Developments](index=25&type=section&id=RECENT%20BUSINESS%20DEVELOPMENTS) This section highlights recent strategic initiatives, global expansion, agent programs, and technology advancements - The Company continued its global expansion, commencing operations in **Greece and the Dominican Republic** in Q1 2022, adding to its presence in over **20 countries**[86](index=86&type=chunk) - eXp achieved an agent Net Promoter Score (NPS) of **71 in Q1 2022**, indicating high agent satisfaction and strong organic growth potential[87](index=87&type=chunk) - The Agent Equity Program and Agent Growth Incentive Program continue to be key elements in attracting and retaining agents by offering common stock awards based on commissions and performance benchmarks[88](index=88&type=chunk) - The Virbela enterprise metaverse technology is being developed to support eXp subsidiaries and enterprise customers, with a new product 'Frame' in beta for metaverse collaboration[89](index=89&type=chunk)[91](index=91&type=chunk) - The Company expanded its affiliate and media services, including mortgage origination, title, escrow, and settlement services, through acquisitions and partnerships like the SUCCESS Lending joint venture[92](index=92&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's revenues, expenses, and net income for the reporting period Statement of Operations Data (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Revenues | 1,010,731 | 583,833 | 426,898 | 73% | | Commissions and other agent-related costs | 927,267 | 530,347 | 396,920 | 75% | | General and administrative expenses | 75,322 | 46,300 | 29,022 | 63% | | Sales and marketing expenses | 3,700 | 2,257 | 1,443 | 64% | | Total operating expenses | 1,006,289 | 578,904 | 427,385 | 74% | | Operating income | 4,442 | 4,929 | (487) | (10)% | | Income before income tax expense | 3,715 | 5,057 | (1,342) | (27)% | | Income tax (benefit) expense | (5,149) | 211 | (5,360) | (2,540)% | | Net income | 8,864 | 4,846 | 4,018 | 83% | | Net income attributable to eXp World Holdings, Inc. | 8,882 | 4,846 | 4,036 | 83% | | Basic Earnings Per Share | $0.06 | $0.03 | $0.03 | 100% | | Diluted Earnings Per Share | $0.06 | $0.03 | $0.03 | 100% | - Revenue increased by **73% to $1.0 billion**, driven by higher agent count, closed transactions, and rising home prices. Commissions and agent-related costs rose **75%** due to increased activity and agents reaching commission caps sooner[95](index=95&type=chunk) - General and administrative expenses increased by **63% to $75.3 million**, mainly due to higher compensation, personnel-related expenses, computer/software costs, and stock compensation, reflecting company growth and technology investments[96](index=96&type=chunk) - The Company recorded an income tax benefit of **$5.15 million in Q1 2022**, a significant change from an expense of **$0.21 million in Q1 2021**, primarily attributable to deductible stock-based compensation windfalls[97](index=97&type=chunk) [Non-U.S. GAAP Financial Measures](index=29&type=section&id=NON-U.S.%20GAAP%20FINANCIAL%20MEASURES) This section reconciles non-GAAP financial measures, such as Adjusted EBITDA, to their most directly comparable GAAP counterparts - Adjusted EBITDA is used as a non-U.S. GAAP measure to evaluate core operating performance, excluding items like other income/expense, income tax, depreciation, amortization, impairment, and stock-based compensation[98](index=98&type=chunk) Adjusted EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | | Net income | 8,864 | 4,846 | | Other (income) expense, net | 727 | (128) | | Income tax (benefit) expense | (5,149) | 211 | | Depreciation and amortization | 1,958 | 1,310 | | Stock compensation expense | 7,798 | 5,472 | | Stock option expense | 3,511 | 3,109 | | Adjusted EBITDA | $17,709 | $14,820 | - Adjusted EBITDA increased by **19% to $17.7 million** in Q1 2022, reflecting revenue growth and improved cost leverage[85](index=85&type=chunk)[103](index=103&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to meet short-term and long-term obligations, including cash flows and working capital - Primary liquidity sources are cash and cash equivalents and cash flows from operations, which have strengthened due to transaction volume growth and improved cost leverage[101](index=101&type=chunk) - Current capital deployment strategy for 2022 includes supporting growth initiatives, enhancing technology platforms, and repurchasing common stock[101](index=101&type=chunk) Net Working Capital | Metric | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :---------------------- | :--------------------------- | :------------------------------ | | Current assets | $399,342 | $319,315 | | Current liabilities | (253,109) | (186,814) | | Net working capital | $146,233 | $132,501 | - Net working capital increased by **10% to $146.2 million** as of March 31, 2022, primarily due to increased agent and commission receivables linked to revenue growth[105](index=105&type=chunk) Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | | :---------------------------------- | :----------------- | :----------------- | | Cash provided by operating activities | $111,507 | $78,919 | | Cash used in investment activities | (4,684) | (3,757) | | Cash used in financing activities | (35,743) | (32,636) | | Net change in cash, cash equivalents and restricted cash | $71,121 | $42,573 | - Cash provided by operating activities increased by **$32.6 million**, driven by higher real estate transaction volume, customer deposits, and agent stock compensation program participation[105](index=105&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms that there were no material changes to the company's critical accounting policies or estimates - There were no changes to the Company's critical accounting policies or estimates as reflected in its 2021 Annual Report[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no material changes in the Company's exposures to market risk since December 31, 2021, referring to the 2021 Annual Report for detailed information on interest rate and foreign currency exchange risks - No material changes in market risk exposures (interest rate and foreign currency exchange) have occurred since December 31, 2021[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures as of March 31, 2022, based on an evaluation by management, including the CEO and CFO. It also states that no material changes occurred in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were deemed effective at the reasonable assurance level as of March 31, 2022[110](index=110&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[111](index=111&type=chunk) [PART II OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) This part provides additional information on legal proceedings, risk factors, equity sales, and other disclosures not covered in the financial statements [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) This section outlines the Company's involvement in routine litigation and potential liabilities. It notes that while the Company accrues for legal matters, litigation is inherently unpredictable and adverse resolutions could materially impact financial condition. No specific new material proceedings are detailed beyond the general statement - The Company is involved in ordinary routine litigation incidental to its business and accrues for legal claims when payments are probable and estimable[113](index=113&type=chunk) - Litigation is inherently unpredictable, and adverse resolutions, including class action lawsuits, government investigations, and regulatory proceedings, could have a material adverse effect on the Company's financial condition, results of operations, or cash flows[113](index=113&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20RISK%20FACTORS) This section updates the Company's risk factors, primarily focusing on new risks associated with SUCCESS Lending, an unconsolidated joint venture. It highlights the nascent and unproven business model of SUCCESS Lending, including regulatory, compliance, consumer trends, macroeconomic risks, and reliance on third-party warehouse credit facilities, which are guaranteed by eXp World Holdings, Inc [Risks Related to our Business and Operations](index=33&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Operations) This section details specific risks associated with the company's operations, particularly those related to its joint ventures and financial commitments - SUCCESS Lending, an unconsolidated joint venture, is a nascent and unproven business model facing regulatory, compliance, consumer trends, and macroeconomic risks[114](index=114&type=chunk)[115](index=115&type=chunk) - SUCCESS Lending relies on third-party warehouse credit facilities from Flagstar Bank FSB and Texas Capital Bank, with eXp World Holdings, Inc. providing capital maintenance agreements limiting its commitment to **$2.0 million** and **$1.25 million**, respectively[116](index=116&type=chunk)[120](index=120&type=chunk) - The Company does not have sole control of SUCCESS Lending, and potential losses or liabilities from the joint venture may require additional capital contributions from eXp, adversely affecting its financial condition[120](index=120&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details the Company's common stock repurchase activities for the quarter ended March 31, 2022, under its publicly announced stock repurchase program. It provides information on the number of shares purchased, average price paid, and the remaining value authorized for repurchases [Issuer Purchases of Equity Securities](index=35&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section provides details on the company's common stock repurchase activities during the reporting period Issuer Purchases of Equity Securities (Q1 2022) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum dollar value of shares that may yet be purchased under the plans or programs | | :----------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------- | | 1/1/2022 - 1/31/2022 | 350,920 | $27.81 | 350,920 | $198,368,431 | | 2/1/2022 - 2/28/2022 | 364,855 | $27.43 | 364,855 | $188,382,016 | | 3/1/2022 - 3/31/2022 | 416,273 | $24.00 | 416,273 | $178,394,784 | | Total | 1,132,048 | $26.41 | 1,132,048 | | - The Company repurchased **1,132,048 shares of common stock** at an average price of **$26.41 per share** during Q1 2022, as part of its stock repurchase program[121](index=121&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the period[122](index=122&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company's operations[122](index=122&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - No other information is reported in this section[123](index=123&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, agreements related to SUCCESS Lending, stock repurchase plan amendments, and certifications Key Exhibits Filed | Number | Description | | :------ | :-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | 3.1 | Restated Certificate of Incorporation | | 3.2 | Restated Bylaws | | 10.1 | Master Repurchase Agreement, dated March 29, 2022, by and among SUCCESS Lending, LLC, Flagstar Bank FSB, and Buyers | | 10.2 | Mortgage Warehouse Agreement, effective April 8, 2022, by and between SUCCESS Lending, LLC and Texas Capital Bank | | 10.3 | Issuer Repurchase Plan, dated January 10, 2022, by and between eXp World Holdings Inc. and Stephens Inc. | | 10.4 | First Amendment to eXp World Holdings, Inc. Stock Repurchase Program | | 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | Inline XBRL Instance Document | | 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File Number: 001-38493 | --- | |-------| | | | | | | | | EXP WORLD HOLDINGS, INC. (Exact name of registrant as specified in its charter) Dela ...

eXp World Holdings, Inc. (NASDAQ:EXPI) Q4 2021 Earnings Conference Call February 24, 2022 11:30 AM ET Company Participants Courtney Chakarun - Chief Marketing Officer Glenn Sanford - Founder & Chief Executive Officer Jeff Whiteside - Chief Financial Officer & Chief Collaboration Officer Jason Gesing - Chief Executive Officer, eXp Realty Conference Call Participants Tom White - D.A. Davidson Courtney Chakarun Tom, we're happy to have you back as our moderator. In this initial segment, we will be talking and ...

eXp World Holdings, Inc. (NASDAQ:EXPI) Q3 2021 Earnings Conference Call November 3, 2021 11:30 AM ET Company Participants Courtney Chakarun – Chief Marketing Officer-eXp World Holdings Glenn Sanford – Founder and Chief Executive Officer Jeff White – Chief Financial Officer and Chief Collaboration Officer-eXp World Holdings Jason Gesing – Chief Executive Officer, eXp Realty Conference Call Participants Justin Ages – Berenberg Capital Markets Courtney Chakarun Hello and welcome to the eXp World Holdings' Thir ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to ______________________ Commission File Number: 001-38493 EXP WORLD HOLDINGS, INC. (Exact name of registrant as specified ...

eXp World Holdings, Inc. (NASDAQ:EXPI) Q2 2021 Earnings Conference Call August 4, 2021 11:30 AM ET Company Participants Courtney Chakarun - Chief Marketing Officer, eXp World Holdings Glenn Sanford - Founder & Chief Executive Officer, eXp World Holdings John Campbell - Managing Director, Stephens Inc. Jeff Whiteside - Chief Financial Officer & Chief Collaboration Officer, eXp World Holdings Seth Siegler - Vice President, Technology Innovation, eXp World Holdings Conference Call Participants Courtney Chakaru ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to ______________________ Commission File Number: 001-38493 EXP WORLD HOLDINGS, INC. (Exact name of registrant as specified in it ...