eXp(US:EXPI)2025-05-06 20:10PART I – FINANCIAL INFORMATION This part presents the company's unaudited interim financial statements and management's analysis of financial performance and condition Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025 Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and equity at the end of the reporting period compared to the prior year-end Condensed Consolidated Balance Sheets (March 31, 2025 vs. December 31, 2024) | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | ASSETS | | | | Cash and cash equivalents | $ 115,655 | $ 113,607 | | Restricted cash | $ 66,569 | $ 54,981 | | Accounts receivable, net | $ 104,045 | $ 87,692 | | TOTAL CURRENT ASSETS | $ 300,924 | $ 267,972 | | TOTAL ASSETS | $ 435,783 | $ 390,722 | | LIABILITIES | | | | Accounts payable | $ 10,109 | $ 10,478 | | Customer deposits | $ 67,345 | $ 55,660 | | Accrued expenses | $ 112,111 | $ 85,661 | | Litigation contingency | $ 34,000 | $ 34,000 | | TOTAL CURRENT LIABILITIES | $ 223,803 | $ 185,853 | | TOTAL LIABILITIES | $ 223,803 | $ 185,853 | | EQUITY | | | | TOTAL EQUITY | $ 211,980 | $ 204,869 | Condensed Consolidated Statements of Comprehensive (Loss) Summarizes revenues, expenses, and net loss for the reporting period compared to the prior year period Condensed Consolidated Statements of Comprehensive (Loss) (Three Months Ended March 31, 2025 vs. 2024) | Metric (in thousands, except per share) | 2025 | 2024 | | :------------------------------------ | :----------- | :----------- | | Revenues | $ 954,906 | $ 943,054 | | Total operating expenses | $ 965,282 | $ 961,228 | | Operating (loss) income | $ (10,376) | $ (18,174) | | (Loss) income before income tax expense | $ (9,353) | $ (17,135) | | Income tax (benefit) expense | $ 1,671 | $ (3,305) | | Net (loss) income | $ (11,024) | $ (15,639) | | Basic, net (loss) income per share | $ (0.07) | $ (0.10) | | Diluted, net (loss) income per share | $ (0.07) | $ (0.10) | | Comprehensive (loss) | $ (10,711) | $ (16,528) | Condensed Consolidated Statements of Stockholders' Equity Outlines the changes in stockholders' equity during the reporting period, including stock repurchases and dividends Condensed Consolidated Statements of Stockholders' Equity (Three Months Ended March 31, 2025 vs. 2024) | Metric (in thousands) | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Treasury stock, beginning of period | $ (686,680) | $ (545,559) | | Repurchases of common stock | $ (4,982) | $ (33,032) | | Additional paid-in capital, end of period | $ 993,164 | $ 841,576 | | Net (loss) income | $ (11,024) | $ (15,639) | | Dividends declared and paid | $ (7,602) | $ (7,585) | | Total equity, end of period | $ 211,980 | $ 222,437 | Condensed Consolidated Statements of Cash Flows Reports the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2025 vs. 2024) | Metric (in thousands) | 2025 | 2024 | | :---------------------------------------- | :----------- | :----------- | | Net (loss) income | $ (11,024) | $ (15,639) | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $ 39,838 | $ 60,654 | | NET CASH USED IN INVESTING ACTIVITIES | $ (14,247) | $ (5,245) | | NET CASH USED IN FINANCING ACTIVITIES | $ (12,284) | $ (40,809) | | Net change in cash, cash equivalents and restricted cash | $ 13,636 | $ 14,011 | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE | $ 182,224 | $ 183,904 | Notes to the Condensed Consolidated Financial Statements Provides detailed explanations of the accounting policies and specific items in the financial statements 1. Description of Business and Basis of Presentation The company operates a diversified portfolio of service-oriented businesses focused on real estate brokerage operations - eXp World Holdings, Inc operates a diversified portfolio of service-oriented businesses, primarily focusing on expanding real estate brokerage operations through an advanced technology platform25 - The company is managed as three reportable segments: North American Realty, International Realty, and Other Affiliated Services29 2. Summary of Significant Accounting Policies Outlines the key accounting principles and estimates used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and include accounts of eXp and its consolidated subsidiaries2630 - Management makes estimates and assumptions for financial reporting, including credit losses, legal contingencies, and revenue recognition33 Reconciliation of Cash, Cash Equivalents, and Restricted Cash (in thousands) | Metric | March 31, 2024 | December 31, 2024 | March 31, 2025 | | :---------------------- | :------------- | :---------------- | :------------- | | Cash and cash equivalents | $ 109,169 | $ 113,607 | $ 115,655 | | Restricted cash | $ 74,735 | $ 54,981 | $ 66,569 | | Total | $ 183,904 | $ 168,588 | $ 182,224 | 3. Expected Credit Losses Details the methodology for estimating current expected credit losses on receivables - The Company estimates current expected credit losses (CECL) using an aging schedule method for various receivable categories37 Receivables and Expected Credit Losses (in thousands) | Category | March 31, 2025 (Receivables) | March 31, 2025 (ECL) | December 31, 2024 (Receivables) | December 31, 2024 (ECL) | | :------------------------------------- | :--------------------------- | :------------------- | :------------------------------ | :---------------------- | | Real estate property settlements | $ 97,775 | $ 24 | $ 82,300 | $ 34 | | Agent non-commission based fees & short-term advances | $ 8,461 | $ 2,170 | $ 6,980 | $ 1,555 | 4. Property and Equipment, Net Presents the breakdown and changes in the company's property and equipment assets - Depreciation expense for the three months ended March 31, 2025, was $1,945 thousand, a decrease from $2,059 thousand in the same period of 202440 Property and Equipment, Net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Computer hardware and software | $ 46,048 | $ 44,079 | | Furniture, fixture, and equipment | $ 2,205 | $ 2,205 | | Total depreciable property and equipment | $ 48,253 | $ 46,284 | | Less: accumulated depreciation | $ (37,220) | $ (35,262) | | Depreciable property and equipment, net | $ 11,033 | $ 11,022 | | Assets under development | $ 1,176 | $ 593 | | Property and equipment, net | $ 12,209 | $ 11,615 | 5. Goodwill and Intangible Assets Discloses the carrying amounts and changes in goodwill and other intangible assets - Goodwill increased slightly to $17,263 thousand as of March 31, 2025, from $17,226 thousand at December 31, 202441 - Amortization expense for definite-lived intangible assets was $616 thousand for the three months ended March 31, 2025, an increase from $340 thousand in the prior year period43 Intangible Assets, Net (in thousands) | Category | March 31, 2025 (Net Carrying Amount) | December 31, 2024 (Net Carrying Amount) | | :---------------------- | :----------------------------------- | :-------------------------------------- | | Trade name | $ 1,026 | $ 1,099 | | Existing technology | $ 2,825 | $ 2,785 | | Non-competition agreements | $ 155 | $ 189 | | Customer relationships | $ 1,371 | $ 1,508 | | Licensing agreement | $ - | $ - | | Intellectual property | $ 874 | $ 875 | | Total intangible assets | $ 6,251 | $ 6,456 | 6. Stockholders' Equity Details components of stockholders' equity, including common stock programs and share repurchases - The Agent Equity Program (AEP) allows agents to receive 5% of commissions in common stock, with the discount changed from 10% to 5% as of March 1, 202445 - The Agent Growth Incentive Program (AGIP) awards common stock to agents based on attraction and performance benchmarks, with awards typically vesting after three years of service47 - The Board approved an increase to the Stock Repurchase Program from $500.0 million to $1.0 billion in June 2023, with $4,982 thousand in shares repurchased in Q1 20255457 Common Stock Issued (Shares) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Balance, beginning of period | 195,028,207 | 183,606,708 | | Shares issued for stock options exercised | 56,412 | 211,158 | | Agent growth incentive stock-based compensation | 446,657 | 353,688 | | Agent equity stock-based compensation | 2,004,995 | 2,189,922 | | Balance, end of period | 197,536,271 | 186,361,476 | 7. Segment Information Provides financial data for the company's three reportable operating segments - The Company operates three reportable segments: North American Realty, International Realty, and Other Affiliated Services, with performance evaluated based on revenues and Adjusted Segment EBITDA596063 Segment Revenues (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | North American Realty | $ 923,048 | $ 927,137 | | International Realty | $ 31,657 | $ 15,596 | | Other Affiliated Services | $ 827 | $ 1,788 | | Consolidated revenues | $ 954,906 | $ 943,054 | Adjusted Segment EBITDA (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------ | :-------------------------------- | :-------------------------------- | | North American Realty | $ 7,736 | $ 17,807 | | International Realty | $ (1,615) | $ (3,355) | | Other Affiliated Services | $ (1,455) | $ (767) | | Corporate expenses and other | $ (2,509) | $ (2,643) | | Consolidated Adjusted EBITDA | $ 2,157 | $ 11,042 | 8. Earnings Per Share Presents the calculation of basic and diluted earnings per share from continuing operations - Total outstanding shares of common stock excluded from diluted EPS computation due to anti-dilutive effect were 3,424,959 shares in Q1 2025 and 3,212,244 shares in Q1 202466 Earnings Per Share (Three Months Ended March 31, 2025 vs. 2024) | Metric | 2025 | 2024 | | :----------------------------------------- | :----------- | :----------- | | Net (loss) income from continuing operations | $ (11,024) | $ (13,830) | | Weighted average shares - basic | 154,738,167 | 154,740,334 | | Net (loss) income from continuing operations per share - basic | $ (0.07) | $ (0.09) | | Net (loss) income from continuing operations per share - diluted | $ (0.07) | $ (0.09) | 9. Income Taxes Explains the components of income tax expense and the effective tax rate - The effective tax rate differs from statutory rates primarily due to the foreign and domestic mix of earnings and stock-based compensation67 Income Tax Expense (Benefit) and Effective Tax Rates | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Income tax (benefit) expense (in thousands) | $ 1,671 | $ (3,305) | | Effective tax rate | (17.9)% | 18.0% | 10. Fair Value Measurement Discloses the fair value of financial assets and liabilities categorized by valuation methodology - The Company holds money market funds, classified as Level 1 assets, with fair values of $33,800 thousand as of March 31, 202569 - In the first quarter of 2025, the Company acquired $11,000 thousand of Level 3 assets at fair value71 11. Commitments and Contingencies Describes significant legal proceedings, commitments, and potential liabilities - The Company is subject to various legal actions, with a $34,000 thousand litigation contingency accrual recorded for a U.S. antitrust settlement7273 - The U.S. antitrust settlement resolves claims nationwide against the Company and its agents, with the settlement amount to be deposited in installments7374 - The Company continues to defend against a Canadian antitrust lawsuit and a derivative lawsuit, with no accruals recorded for these matters as of March 31, 20257576 12. Subsequent Events Reports material events that occurred after the balance sheet date but before the financial statements were issued - On May 5, 2025, the Board declared a cash dividend of $0.05 per share, payable on June 4, 202577 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and key business drivers Overview Describes the company's cloud-based real estate brokerage model, agent-centric value proposition, and growth strategy - eXp World Holdings, Inc operates a cloud-based real estate brokerage offering an agent-centric commission structure, revenue sharing, and agent equity opportunities808284 - The Sustainable Revenue Share Plan is critical for attracting and retaining productive agents by providing supplementary income8586 Market Conditions and Industry Trends Discusses the impact of macroeconomic factors and real estate market trends on the company's business - The business is highly dependent on home sales transactions and prices, influenced by economic growth, interest rates, and consumer confidence8788 - Current challenging market conditions include rising inflation and higher mortgage interest rates (6.7% in March 2025)8992 - Existing home sales transactions decreased by 2.4% to an annual rate of 4.0 million in March 2025, while the average price increased by 2.7% to $403,70094 - Housing inventory increased to 4.0 months in March 2025 from 3.2 months in March 20249193 Key Business Metrics Presents and analyzes key performance indicators used to evaluate the business - Agent NPS increased to 78 in Q1 2025 from 73 in Q1 2024, indicating improved agent satisfaction99100 - Agent count declined by 5% in Q1 2025, primarily due to off-boarding less productive agents102 - Real estate per transaction cost increased by 13% due to higher personnel, litigation, and technology costs106 Key Business Metrics (Three Months Ended March 31, 2025 vs. 2024) | Metric | 2025 | 2024 | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | | Agent NPS | 78 | 73 | +6.8% | | Agent count | 81,904 | 85,780 | -4.5% | | Real estate sales transactions | 89,643 | 91,780 | -2.3% | | Real estate sales volume | $ 38,641,084 | $ 37,154,750 | +4.0% | | Other real estate transactions | 18,015 | 19,196 | -6.2% | | Real estate per transaction cost | $ 734 | $ 650 | +12.9% | | Revenues | $ 954,906 | $ 943,054 | +1.3% | | Operating (loss) | $ (10,376) | $ (18,174) | +42.9% | | Adjusted EBITDA | $ 2,157 | $ 11,042 | -80.5% | Results of Operations Provides a detailed analysis of the company's financial results for the quarter - Revenues increased 1% due to higher home sales prices and increased international transactions107111 - Operating loss improved by 43% to ($10.4) million in Q1 2025, primarily due to the absence of the $16 million litigation contingency accrual present in Q1 2024108111 - Adjusted EBITDA decreased by 80% to $2.2 million, driven by increased agent commissions and higher operating costs109111 Statement of Operations Data (Three Months Ended March 31, 2025 vs. 2024) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Revenues | $ 954,906 | $ 943,054 | $ 11,852 | 1% | | Commissions and other agent-related costs | $ 878,771 | $ 864,746 | $ 14,025 | 2% | | General and administrative expenses | $ 66,871 | $ 62,582 | $ 4,289 | 7% | | Technology and development expenses | $ 16,805 | $ 14,761 | $ 2,044 | 14% | | Sales and marketing expenses | $ 2,835 | $ 3,139 | $ (304) | (10)% | | Litigation contingency | $ - | $ 16,000 | $ (16,000) | (100)% | | Operating (loss) income | $ (10,376) | $ (18,174) | $ 7,798 | 43% | | Net (loss) income | $ (11,024) | $ (15,639) | $ 4,615 | 30% | | Adjusted EBITDA | $ 2,157 | $ 11,042 | $ (8,885) | (80)% | Business Segment Disclosures Analyzes the financial performance of each of the company's business segments - North American Realty revenues slightly decreased, and Adjusted EBITDA decreased by 57% due to lower sales volumes and increased costs119 - International Realty revenues surged by 103%, and Adjusted International EBITDA improved by 52% due to increased transactions and better efficiencies120 - Other Affiliated Services revenues decreased by 54% due to lower SUCCESS® Magazine revenues, leading to a 90% decrease in Adjusted EBITDA121 Non-U.S. GAAP Financial Measures Defines and reconciles non-U.S. GAAP financial measures, such as Adjusted EBITDA, to their closest U.S. GAAP equivalents - Adjusted EBITDA is a non-U.S. GAAP measure used to evaluate core operating performance, excluding items like stock-based compensation and litigation contingency122123 Reconciliation of Adjusted EBITDA to Net (Loss) Income from Continuing Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income from continuing operations | $ (11,024) | $ (13,830) | | Total other (income) expense, net | $ (1,023) | $ (1,039) | | Income tax (benefit) expense | $ 1,671 | $ (3,305) | | Depreciation and amortization | $ 2,561 | $ 2,399 | | Litigation contingency | $ - | $ 16,000 | | Stock-based compensation expense | $ 8,119 | $ 8,827 | | Stock option expense | $ 1,853 | $ 1,990 | | Adjusted EBITDA | $ 2,157 | $ 11,042 | Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations - Primary liquidity sources are cash and cash equivalents and cash flows from operations, which are believed to be sufficient for the next twelve months126129 - Net working capital decreased by $5.0 million (6%) to $77,121 thousand as of March 31, 2025130 - Net cash provided by operating activities decreased by $20.8 million to $39,838 thousand in Q1 2025, driven by lower operating results131 - Net cash used in investing activities increased to $14,247 thousand, while net cash used in financing activities decreased by $28.5 million due to lower stock repurchases132 Critical Accounting Policies and Estimates Highlights the accounting policies and estimates that are most critical to the company's financial reporting - There were no material changes to the critical accounting policies or estimates as reflected in the 2024 Annual Report135 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states there have been no material changes in the company's exposure to market risk since December 31, 2024 - No material changes in market risk exposure since December 31, 2024, with details available in the 2024 Annual Report136 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025 - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025138 - No changes in internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect internal control139 PART II – OTHER INFORMATION This part contains disclosures on legal proceedings, risk factors, stock repurchases, and other required information Item 1. Legal Proceedings This section refers to Note 11 for details on legal proceedings and their potential material adverse effects - Legal proceedings are inherently unpredictable and could result in judgments, penalties, or settlements materially in excess of accrued amounts141 Item 1A. Risk Factors This section highlights key risks affecting the company, including market dependence and significant stockholder influence - The company's profitability is closely tied to the strength of the residential real estate market, which is cyclical and affected by macroeconomic conditions143 - Glenn Sanford and Penny Sanford beneficially own approximately 27.19% and 17.35% of the common stock, respectively, allowing them to significantly influence management decisions144 - The company's stock price has been and is likely to remain volatile due to various factors, including operating performance and market conditions145147 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases under its $1.0 billion stock repurchase program - As of March 31, 2025, approximately $284,128,314 remained authorized for repurchase under the $1.0 billion stock repurchase program148 Issuer Purchases of Equity Securities (Quarter Ended March 31, 2025) | Period | Total number of shares purchased | Average price paid per share | | :---------------- | :------------------------------- | :--------------------------- | | 1/1/2025-1/31/2025 | 132,475 | $ 11.29 | | 2/1/2025-2/28/2025 | 138,715 | $ 10.79 | | 3/1/2025-3/31/2025 | 201,129 | $ 9.91 | | Total | 472,319 | $ 10.66 | Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred149 Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable150 Item 5. Other Information This section reports no adoption or termination of Rule 10b5-1 trading arrangements by directors or officers - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025151 Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including organizational documents and certifications - The exhibits include the Restated Certificate of Incorporation and Bylaws, offer letter amendments, and various Equity Incentive Plans153 - Certifications from the CEO and Interim CFO pursuant to Rule 13a-14(a) and 18 U.S.C. 1350 are also included153154