EXP World Holdings, Inc. [EXPI] Filings

10-Q 1 expi-20230930x10q.htm 10-Q

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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, 2023

☐ 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)


Delaware		98-0681092
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

2219 Rimland Drive, Suite 301, Bellingham, WA		98226
(Address of principal executive offices)		(Zip Code)
(360) 685-4206
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


(Title of Each Class)	(Trading Symbol)	(Name of each exchange on which registered)
Common Stock, $0.00001 par value per share	EXPI	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 153,798,815 shares of the registrant’s Common Stock, $0.00001 par value, outstanding as of September 30, 2023.

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TABLE OF CONTENTS


		Page
	Forward Looking Statements	3

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains statements that are not historical fact and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not based on historical facts but rather represent current expectations and assumptions of future events. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Many of these risks and other factors are beyond our ability to control or predict. Forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “could,” “can,” “would,” “potential,” “seek,” “goal” and similar expressions of the future. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, including, but not limited to:

●

the impact of macroeconomic conditions on the strength of the residential real estate market;

●

the impact of monetary policies of the U.S. federal government and its agencies on our operations;

●

the impact of changes in consumer attitudes on home sale transaction volume;

●

the impact of excessive or insufficient home inventory supply on home sale transaction value;

●

our ability to effectively manage rapid growth in our business;

●

our ability to attract and retain additional qualified personnel;

●

changes in tax laws and regulations that may have a material adverse effect on our business;

●

our ability to protect our intellectual property rights;

●

the impact of security breaches, interruptions, delays and failures in our systems and operations on our business;

●

financial condition and reputation;

●

our ability to predict the demand or growth of our new products and services;

●

our ability to maintain our agent growth rate; and

●

the effect of inflation and rising interest rates on real estate transaction values and our operating results, profits and cash flows.

Other factors not identified above, including those described under the heading “Risk Factors” in Part I, Item 1A, and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, may also cause actual results to differ materially from those described in our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control. You should consider these factors in connection with considering any forward-looking statements that may be made by us.

Forward-looking statements are based on currently available operating, financial and market information and are inherently uncertain. Investors should not place undue reliance on forward-looking statements, which speak only as of the date they are made and are not guarantees of future performance. Actual future results and trends may differ materially from such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future developments or otherwise, except as may be required by law.

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PART 1 – FINANCIAL INFORMATION

Item 1.FINANCIAL STATEMENTS (UNAUDITED)

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(UNAUDITED)


	September 30, 2023	December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 120,141	$ 121,594
Restricted cash	54,000	37,789
Accounts receivable, net of allowance for credit losses of $1,803 and $4,014, respectively	113,344	87,262
Prepaids and other assets	12,325	8,468
TOTAL CURRENT ASSETS	299,810	255,113
Property, plant, and equipment, net	13,862	18,151
Operating lease right-of-use assets	14	2,127
Other noncurrent assets	7,598	1,703
Intangible assets, net	11,458	8,700
Deferred tax assets	65,241	68,676
Goodwill	24,879	27,212
TOTAL ASSETS	$ 422,862	$ 381,682

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$ 9,322	$ 10,391
Customer deposits	54,210	37,789
Accrued expenses	108,385	78,944
Current portion of lease obligation - operating lease	14	175
TOTAL CURRENT LIABILITIES	171,931	127,299
Long-term payable	5	4,697
Long-term lease obligation - operating lease, net of current portion	-	694
TOTAL LIABILITIES	171,936	132,690

EQUITY
Common Stock, $0.00001 par value 900,000,000 shares authorized; 180,883,383 issued and 153,798,815 outstanding at September 30, 2023; 171,656,030 issued and 152,839,239 outstanding at December 31, 2022	2	2
Additional paid-in capital	757,006	611,872
Treasury stock, at cost: 27,084,568 and 18,816,791 shares held, respectively	(519,635)	(385,010)
Accumulated earnings	11,968	20,723
Accumulated other comprehensive income	416	236
Total eXp World Holdings, Inc. stockholders' equity	249,757	247,823
Equity attributable to noncontrolling interest	1,169	1,169
TOTAL EQUITY	250,926	248,992
TOTAL LIABILITIES AND EQUITY	$ 422,862	$ 381,682

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except share amounts and per share data)

(UNAUDITED)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Revenues	$ 1,214,513	$ 1,238,975	$ 3,298,056	$ 3,664,766
Operating expenses
Commissions and other agent-related costs	1,130,888	1,145,853	3,044,858	3,380,930
General and administrative expenses	78,568	89,460	232,876	256,173
Sales and marketing expenses	3,194	3,636	9,035	11,546
Total operating expenses	1,212,650	1,238,949	3,286,769	3,648,649
Operating income	1,863	26	11,287	16,117
Other (income) expense
Other (income) expense, net	(708)	(78)	(2,887)	394
Equity in losses of unconsolidated affiliates	354	329	839	1,213
Total other (income) expense, net	(354)	251	(2,048)	1,607
Income (loss) before income tax expense	2,217	(225)	13,335	14,510
Income tax (benefit) expense	868	(4,627)	1,111	(8,115)
Net income	1,349	4,402	12,224	22,625
Net income attributable to noncontrolling interest	-	-	-	18
Net income attributable to eXp World Holdings, Inc.	$ 1,349	$ 4,402	$ 12,224	$ 22,643

Earnings per share
Basic	$ 0.01	$ 0.03	$ 0.08	$ 0.15
Diluted	$ 0.01	$ 0.03	$ 0.08	$ 0.14
Weighted average shares outstanding
Basic	153,392,005	151,826,315	153,065,727	150,622,845
Diluted	158,183,888	155,915,307	156,834,985	156,434,440
Comprehensive income:
Net income	$ 1,349	$ 4,402	$ 12,224	$ 22,625
Comprehensive loss attributable to noncontrolling interests	-	-	-	18
Net income attributable to eXp World Holdings, Inc.	1,349	4,402	12,224	22,643
Other comprehensive income:
Foreign currency translation gain (loss), net of tax	(527)	(521)	180	(1,662)
Comprehensive income attributable to eXp World Holdings, Inc.	$ 822	$ 3,881	$ 12,404	$ 20,981

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(UNAUDITED)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Common stock:
Balance, beginning of period	$ 2	$ 2	$ 2	$ 1
Agent equity stock compensation	-	-	-	1
Balance, end of period	2	2	2	2
Treasury stock:
Balance, beginning of period	(463,738)	(289,829)	(385,010)	(210,009)
Repurchases of common stock	(55,897)	(59,815)	(134,625)	(139,635)
Issuance of treasury stock, for acquisition	-	4,800	-	4,800
Balance, end of period	(519,635)	(344,844)	(519,635)	(344,844)
Additional paid-in capital:
Balance, beginning of period	701,806	509,476	611,872	401,479
Shares issued for stock options exercised	3,507	1,443	4,761	2,220
Agent growth incentive stock compensation	10,238	8,523	28,142	21,793
Agent equity stock compensation	38,897	44,395	104,548	131,230
Stock option compensation	2,558	3,757	7,683	10,872
Balance, end of period	757,006	567,594	757,006	567,594
Accumulated earnings:
Balance, beginning of period	18,138	37,007	20,723	30,510
Net income attributable to eXp World Holdings, Inc.	1,349	4,402	12,224	22,643
Dividends declared and paid	(7,519)	(6,793)	(20,979)	(18,537)
Balance, end of period	11,968	34,616	11,968	34,616
Accumulated other comprehensive income (loss):
Balance, beginning of period	943	(953)	236	188
Foreign currency translation gain (loss)	(527)	(521)	180	(1,662)
Balance, end of period	416	(1,474)	416	(1,474)
Noncontrolling interest:
Balance, beginning of period	1,169	1,169	1,169	1,364
Net loss	-	-	-	(18)
Transactions with noncontrolling interests	-	-	-	(177)
Balance, end of period	1,169	1,169	1,169	1,169
Total equity	$ 250,926	$ 257,063	$ 250,926	$ 257,063

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(UNAUDITED)


	Nine Months Ended September 30,
	2023	2022
OPERATING ACTIVITIES
Net income	$ 12,224	$ 22,625
Reconciliation of net income to net cash provided by operating activities:
Depreciation expense	6,299	5,699
Amortization expense - intangible assets	1,849	1,455
Loss on disposition of business	472	361
Allowance for credit losses on receivables/bad debt on receivables	(2,211)	588
Equity in loss of unconsolidated affiliates	839	1,213
Agent growth incentive stock compensation expense	29,912	22,828
Stock option compensation	7,659	10,872
Agent equity stock compensation expense	104,548	131,230
Deferred income taxes, net	3,435	(10,845)
Changes in operating assets and liabilities:
Accounts receivable	(23,401)	13,603
Prepaids and other assets	(3,966)	(3,003)
Customer deposits	16,421	(16,135)
Accounts payable	(1,069)	1,952
Accrued expenses	28,039	4,770
Long term payable	(4,692)	-
Other operating activities	158	111
NET CASH PROVIDED BY OPERATING ACTIVITIES	176,516	187,324
INVESTING ACTIVITIES
Purchases of property, plant, equipment	(4,193)	(9,222)
Proceeds from sale of business	330	-
Acquisition of business, net of cash acquired	-	(9,668)
Investments in unconsolidated affiliates	(5,525)	-
Capitalized software development costs in intangible assets	(1,930)	-
NET CASH USED IN INVESTING ACTIVITIES	(11,318)	(18,890)
FINANCING ACTIVITIES
Repurchase of common stock	(134,625)	(139,635)
Proceeds from exercise of options	4,761	2,221
Transactions with noncontrolling interests	-	(425)
Dividends declared and paid	(20,979)	(18,537)
NET CASH USED IN FINANCING ACTIVITIES	(150,843)	(156,376)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	403	(771)
Net change in cash, cash equivalents and restricted cash	14,758	11,287
Cash, cash equivalents and restricted cash, beginning balance	159,383	175,910
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$ 174,141	$ 187,197
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$ 2,382	$ 2,933
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Termination of lease obligation - operating lease	855	-
Issuance of treasury stock, for acquisition	-	4,800
Contingent consideration for disposition of business	1,209	-
Property, plant and equipment increase due to transfer of right-of-use lease asset	1,100	-
Property, plant and equipment purchases in accounts payable	27	20

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The accompanying notes are an integral part of these condensed consolidated financial statements.

eXp World Holdings, Inc.

Notes to the Condensed Consolidated Financial Statements

(UNAUDITED)

(Amounts in thousands, except share amounts and per share data or noted otherwise)

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

eXp World Holdings, Inc. (“eXp,” or, collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) owns and operates a diversified portfolio of service-based businesses whose operations benefit substantially from utilizing our technology platform. We strategically prioritize our efforts to grow our real estate brokerage by strengthening our agent value proposition, developing immersive and cloud-based technology to enable our model and providing affiliate and media services supporting those efforts. Our real estate brokerage is now one of the largest and fastest-growing real estate brokerage companies in the United States and Canada and is rapidly expanding internationally.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023 (“2022 Annual Report”).

In our opinion, the accompanying interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Effective in December 2022, the Company revised the presentation of segment information to reflect changes in the way the Company manages and evaluates the business. As such, we now report operating results through four reportable segments: North American Realty, International Realty, Virbela and Other Affiliated Services, as further discussed in Note 11 – Segment Information. Accordingly, certain amounts in the prior years’ consolidated financial statements have been revised to conform to the current year presentation. See additional information in Note 11 – Segment Information.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying interim unaudited condensed consolidated financial statements include the accounts of eXp and its consolidated subsidiaries, including those entities in which we have a variable interest of which we are the primary beneficiary. If the Company has a variable interest in an entity but it is not the primary beneficiary of the entity or exercises control over the operations and has less than 50% ownership, it will use the equity method or the cost method of accounting for investments. Entities in which the Company has less than a 20% investment and where the Company does not exercise significant influence are accounted for under the cost method. Intercompany transactions and balances are eliminated upon consolidation.

Variable interest entities and noncontrolling interests

A company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) and must consolidate the entity if the company has both: (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Joint ventures

A joint venture is a contractual arrangement whereby the Company and other parties undertake an economic activity through a jointly controlled entity. Joint control exists when strategic, financial, and operating policy decisions relating

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to the activities require the unanimous consent of the parties sharing control. Joint ventures are accounted for using the equity method and are recognized initially at cost.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for credit losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Reclassifications

When necessary, the Company will reclassify certain amounts in prior-period financial statements to conform to the current period’s presentation. No reclassifications occurred during the current period.

Restricted cash

Restricted cash consists of cash held in escrow by the Company on behalf of real estate buyers. The Company recognizes a corresponding customer deposit liability until the funds are released. Once the cash transfers from escrow, the Company reduces the respective customers’ deposit liability.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows.


	Cash and cash equivalents	Restricted cash	Total
Balance, December 31, 2021	$ 108,237	$ 67,673	$ 175,910
Balance, September 30, 2022	$ 134,545	$ 52,652	$ 187,197
Balance, December 31, 2022	$ 121,594	$ 37,789	$ 159,383
Balance, September 30, 2023	$ 120,141	$ 54,000	$ 174,141

3.	EXPECTED CREDIT LOSSES

The Company is exposed to credit losses primarily through trade and other financing receivables arising from revenue transactions. The Company uses the aging schedule method to estimate current expected credit losses (“CECL”) based on days of delinquency, including information about past events and current economic conditions. The Company’s accounts receivable is separated into three categories to evaluate allowance under the CECL impairment model. The receivables in each category share similar risk characteristics. The three categories include agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectable. The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

Receivables from real estate property settlements totaled $107,133 and $79,135 of which the Company recognized expected credit losses of $25 and $3,127, respectively as of September 30, 2023 and December 31, 2022. As of September 30, 2023 and December 31, 2022 agent non-commission based fees receivable and short-term advances totaled $8,014 and $12,141, of which the Company recognized expected credit losses of $1,778 and $887, respectively.

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4.	PLANT, PROPERTY AND EQUIPMENT, NET

Plant, property and equipment, net consisted of the following:


	September 30, 2023	December 31, 2022
Computer hardware and software	$ 36,528	$ 34,206
Furniture, fixture, and equipment	2,252	20
Total depreciable property and equipment	38,780	34,226
Less: accumulated depreciation	(25,675)	(19,282)
Depreciable property, net	13,105	14,944
Assets under development	757	3,207
Property, plant, and equipment, net	$ 13,862	$ 18,151

For the three months ended September 30, 2023 and 2022 depreciation expense was $2,136 and $2,129, respectively. For the nine months ended September 30, 2023 and 2022, depreciation expense was $6,299 and $5,699, respectively.

5.	GOODWILL AND INTANGIBLE ASSETS

Goodwill was $24,879 as of September 30, 2023 and $27,212 as of December 31, 2022. As of September 30, 2023, the Company recorded cumulative translation adjustment of $23 related to Canadian goodwill. During the third quarter of 2023, the Company disposed of its Showcase Web Sites LLC business, which resulted in a reduction of goodwill of $2,310, this business was included in the North American Realty segment. The Company has a risk of future impairment to the extent that individual reporting unit performance does not meet projections. Additionally, if current assumptions and estimates, including projected revenues and income growth rates, terminal growth rates, competitive and consumer trends, market-based discount rates, and other market factors, are not met, or if valuation factors outside of the Company’s control change unfavorably, the estimated fair value of goodwill could be adversely affected, leading to a potential impairment in the future. For the three and nine months ended September 30, 2023, no events occurred that indicated it was more likely than not that goodwill was impaired.

Definite-lived intangible assets were as follows:


	September 30, 2023			December 31, 2022
	Gross	Accumulated	Net Carrying	Gross	Accumulated	Net Carrying
	Amount	Amortization	Amount	Amount	Amortization	Amount
Trade name	$ 3,242	($ 970)	$ 2,272	$ 3,459	($ 841)	$ 2,618
Existing technology	8,754	(3,639)	5,115	3,995	(2,458)	1,537
Non-competition agreements	460	(125)	335	461	(125)	336
Customer relationships	1,655	(617)	1,038	1,895	(551)	1,344
Licensing agreement	208	(208)	-	210	(181)	29
Intellectual property	2,836	(138)	2,698	2,836	-	2,836
Total intangible assets	$ 17,155	($ 5,697)	$ 11,458	$ 12,856	($ 4,156)	$ 8,700

Definite-lived intangible assets are amortized using the straight-line method over an asset’s estimated useful life. Amortization expense for definite-lived intangible assets for the three months ended September 30, 2023 and 2022 was $654 and $638, respectively. Amortization expense for definite-lived intangible assets for the nine months ended September 30, 2023 and 2022 was $1,849 and $1,455, respectively. The Company has no indefinite-lived assets.

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6.STOCKHOLDERS’ EQUITY

The following table represents a share reconciliation of the Company’s common stock issued for the periods presented:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Common stock:
Balance, beginning of quarter	177,900,083	163,286,569	171,656,030	155,516,284
Shares issued for stock options exercised	610,132	681,139	802,939	2,044,193
Agent growth incentive stock compensation	387,999	1,184,446	1,774,438	2,098,770
Agent equity stock compensation	1,985,169	3,410,310	6,649,976	8,903,217
Balance, end of quarter	180,883,383	168,562,464	180,883,383	168,562,464

The Company’s equity programs described below are administered under the stockholder approved 2015 Equity Incentive Plan. The purpose of the equity plan is to retain the services of valued employees, directors, officers, agents, and consultants and to incentivize such persons to make contributions to the Company and motivate excellent performance.

Agent Equity Program

The Company provides agents and brokers the opportunity to elect to receive 5% of commissions earned from each completed real estate transaction in the form of common stock (the “Agent Equity Program” or “AEP”). If agents and brokers elect to receive portions of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable. The Company recognizes a 10% discount on these issuances as an additional cost of sales charge during the periods presented.

During the three months ended September 30, 2023 and 2022, the Company issued 1,985,169 and 3,410,310 shares of common stock, respectively, to agents and brokers with a value of $38,897 and $44,395, respectively, inclusive of discount. During the nine months ended September 30, 2023 and 2022, the Company issued 6,649,976 and 8,903,217 shares of common stock, respectively, to agents and brokers with a value of $104,548 and $131,230, respectively, inclusive of discount.

Agent Growth Incentive Program

The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks (the “Agent Growth Incentive Program” or “AGIP”). The incentive program encourages greater performance and awards agents with common stock based on achievement of performance milestones. Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the Company. Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of performance metrics. As such, the awards are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved.

For the three months ended September 30, 2023 and 2022 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $11,764 and $5,800, respectively, of which the total amount of stock compensation attributable to liability classified awards was $1,458 and ($985), respectively. For the nine months ended September 30, 2023 and 2022 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $29,912 and $22,828, respectively, of which the total amount of stock compensation attributable to liability classified awards was $2,796 and $3,466, respectively.

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The following table illustrates changes in the Company’s stock compensation liability for the periods presented:


		Amount
Balance, December 31, 2022		$ 3,885
Stock grant liability increase year to date		2,796
Stock grants reclassified from liability to equity year to date		(1,094)
Balance, September 30, 2023		$ 5,587

Stock Option Awards

Stock options are granted to directors, officers, certain employees and consultants with an exercise price equal to the fair market value of common stock on the grant date and the stock options expire 10 years from the date of grant. These options typically have time-based restrictions with equal and periodically graded vesting over a three-year period.

During the three months ended September 30, 2023 and 2022 the Company granted 445,380 and 394,657 stock options, respectively, to employees with an estimated grant date fair value of $10.71 and $8.50 per share, respectively. During the nine months ended September 30, 2023 and 2022, the Company granted 1,973,943 and 1,167,042 stock options, respectively, to employees with an estimated grant date fair value of $8.87 and $11.21 per share, respectively. The fair value was calculated using a Black Scholes-Merton option pricing model.

Stock Repurchase Plan

In December 2018, the Company’s board of directors (the “Board”) approved a stock repurchase program authorizing the Company to purchase up to $25.0 million of its common stock, which was later amended in November 2019 increasing the authorized repurchase amount to $75.0 million. In December 2020, the Board approved another amendment to the repurchase plan, increasing the total amount authorized to be purchased from $75.0 million to $400.0 million. In May 2022, the Board approved an increase to the total amount of its buyback program from $400.0 million to $500.0 million. In June 2023, the Board approved an increase to the total amount of its buyback program from $500.0 million to $1.0 billion. Purchases under the repurchase program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and number of shares repurchased depends upon market conditions. The repurchase program does not require the Company to acquire a specific number of shares. The cost of the shares that are repurchased is funded from cash and cash equivalents on hand.

10b5-1 Repurchase Plan

The Company maintains an internal stock repurchase program with program changes subject to Board consent. From time to time, the Company adopts written trading plans pursuant to Rule 10b5-1 of the Exchange Act to conduct repurchases on the open market.

On January 10, 2022, the Company and Stephens Inc. entered into a form of Issuer Repurchase Plan (“Issuer Repurchase Plan”) which authorized Stephens to repurchase up to $10.0 million of its common stock per month. On May 3, 2022, the Board approved and on May 6, 2022, the Company entered into a form of first amendment to the Issuer Repurchase Plan to increase monthly repurchases from $10.0 million of its common stock per month up to $20.0 million. On September 27, 2022, the Board approved, and the Company entered into, a form of second amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $20.0 million of its common stock per month to $13.3 million, in anticipation of volume decreases in connection with the contraction in the real estate market. On December 27, 2022, the Board approved, and the Company entered into, a form of third amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $13.3 million of its common stock per month to $10.0 million, in connection with ongoing contractions in the real estate market. On May 10, 2023, the Board approved and, on May 11, 2023, the Company entered into, a form of fourth amendment to the Issuer Repurchase Plan, to increase the monthly repurchase amounts during 2023 due to actual and projected changes in the Company’s cash and cash equivalents; specifically, to permit purchases of up to: (i) $17.0 million during May 2023, (ii) $22.0 million during June 2023, (iii) $18.67 million during any calendar month commencing July 1, 2023 through and including September 30, 2023, and (iv) $12.0 million during any calendar month commencing October 1, 2023 through and including December 31, 2023. On June 26, 2023, the Board approved, and the Company entered into, a form of fifth amendment to the Issuer Repurchase Plan to increase the maximum aggregate buyback from $500.0 million to $1.0 billion in accordance with the repurchase program limit.

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For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the settlement date of the applicable trade. Such repurchased shares are held in treasury and are presented using the cost method. These shares are considered issued but not outstanding.

The following table shows the share changes in treasury stock for the periods presented:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Treasury stock:
Balance, beginning of quarter	24,311,897	11,487,691	18,816,791	6,751,692
Repurchases of common stock	2,761,943	4,716,026	8,257,049	9,452,025
Forfeiture to treasury stock for acquisition	10,728	-	10,728	-
Issuance of treasury stock for acquisition	-	(343,331)	-	(343,331)
Balance, end of quarter	27,084,568	15,860,386	27,084,568	15,860,386

7.EARNINGS PER SHARE

Basic earnings per share is computed based on net income attributable to eXp stockholders divided by the basic weighted-average shares outstanding during the period. Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. The Company uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options.

The following table sets forth the calculation of basic and diluted earnings per share attributable to common stock during the periods presented:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Numerator:
Net income attributable to eXp World Holdings, Inc.	$ 1,349	$ 4,402	$ 12,224	$ 22,643
Denominator:
Weighted average shares - basic	153,392,005	151,826,315	153,065,727	150,622,845
Dilutive effect of common stock equivalents	4,791,883	4,088,992	3,769,258	5,811,595
Weighted average shares - diluted	158,183,888	155,915,307	156,834,985	156,434,440
Earnings per share:
Earnings per share attributable to common stock- basic	$ 0.01	$ 0.03	$ 0.08	$ 0.15
Earnings per share attributable to common stock- diluted	$ 0.01	$ 0.03	$ 0.08	$ 0.14

For three months ended September 30, 2023 and 2022 total outstanding shares of common stock excluded 192,684 and 1,315,861 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For nine months ended September 30, 2023 and 2022 total outstanding shares of common stock excluded 679,425 and 845,162 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

8.INCOME TAXES

Our quarterly tax is computed by applying the estimated annual effective tax rate to the year-to-date pre-tax income or loss plus discrete tax items arising in the period. Our provision for income tax expense (benefit) amounted to $1,111 and ($8,115) for the nine months ended September 30, 2023 and 2022, which represent effective tax rates of positive 8.31% and negative 56.22%, respectively. The increase in the provision for income tax expense is primarily attributable to income from operations, lower deductible stock-based compensation windfalls and return to provision true-ups in various jurisdictions. The effective tax rate differs from our statutory rates in both periods primarily due to the impact of the stock- based compensation and R&D tax credit.

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9.FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

●

Level 1 – Inputs are quoted market prices in active markets for identical assets or liabilities (these are observable market inputs).

●

Level 2 – Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability (includes quoted market prices for similar assets or identical or similar assets in markets in which there are few transactions, prices that are not current or prices that vary substantially).

●

Level 3 – Inputs are unobservable inputs that reflect the entity's own assumptions in pricing the asset or liability (used when little or no market data is available).

The Company holds funds in a money market account, which are considered Level 1 assets. The Company values its money market funds at fair value on a recurring basis.

As of September 30, 2023 and December 31, 2022, the fair value of the Company’s money market funds was $45,666 and $44,062, respectively.

There have been no transfers between Level 1, Level 2 and Level 3 in the period presented. The Company did not have any Level 2 or Level 3 financial assets or liabilities in the period presented.

10.COMMITMENTS AND CONTINGENCIES

From time to time, the Company is subject to potential liability under laws and government regulations and various claims and legal actions that may be asserted against us that could have a material adverse effect on the business, reputation, results of operations or financial condition. Such litigation includes, but is not limited to, actions or claims relating to cyber-attacks, data breaches, the Real Estate Settlement Procedures Act (“RESPA”), the Telephone Consumer Protection Act of 1991 and state consumer protection laws, antitrust and anticompetition, worker classification, timely filing required SEC filings and non-compliance with contractual or other legal obligations.

As of September 30, 2023, there were no matters pending or, to the Company’s knowledge, threatened that the Company believed could have a material adverse impact on the business, reputation, results of operations, or financial condition.

There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial stockholder is an adverse party or has a material interest adverse to the Company’s interest.

11.SEGMENT INFORMATION

The reportable segments presented below represent the Company’s segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its segments.

Management evaluates the operating results of each of its reportable segments based upon revenue and Adjusted EBITDA. Adjusted Segment EBITDA is defined by us as operating profit plus depreciation and amortization and stock-based compensation expenses. The Company’s presentation of Adjusted Segment EBITDA may not be comparable to similar measures used by other companies. The Company’s four reportable segments are as follows:

●

North American Realty: includes real estate brokerage operations in the United States and Canada, as well as lead-generation and other real estate support services provided in North America.

●

International Realty: includes real estate brokerage operations in all other international locations.

●

Virbela: includes Virbela enterprise metaverse technology and the support services offered by eXp World Technologies.

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●

Other Affiliated Services: includes our SUCCESS^® Magazine and other smaller ventures.

The Company also reports corporate expenses, as further detailed below, as “Corporate and other” which include expenses incurred in connection with business development support provided to the agents as well as resources, including administrative, brokerage operations and legal functions.

All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Audited Consolidated Financial Statements included herein. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. The following table provides information about the Company’s reportable segments and a reconciliation of the total segment Revenues to consolidated Revenues and Adjusted Segment EBITDA to the consolidated operating profit and Goodwill (in thousands). Financial information for the comparable prior periods presented have been revised to conform with the current year presentation.


	Revenues
	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
North American Realty	$ 1,198,207	$ 1,226,368	$ 3,254,666	$ 3,632,276
International Realty	14,896	10,146	37,644	26,148
Virbela	1,720	2,328	5,694	6,181
Other Affiliated Services	979	1,417	3,729	3,298
Revenues reconciliation:
Segment eliminations	(1,289)	(1,284)	(3,677)	(3,137)
Consolidated revenues	$ 1,214,513	$ 1,238,975	$ 3,298,056	$ 3,664,766


	Adjusted EBITDA
	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
North American Realty	$ 27,171	$ 22,445	$ 82,496	$ 91,115
International Realty	(2,647)	(4,614)	(10,105)	(9,584)
Virbela	(1,297)	(3,197)	(3,789)	(8,684)
Other Affiliated Services	(918)	(563)	(2,767)	(2,139)
Corporate expenses and other	(3,359)	(1,722)	(8,829)	(13,737)
Consolidated Adjusted EBITDA	$ 18,950	$ 12,349	$ 57,006	$ 56,971

Operating Profit Reconciliation:
Depreciation and amortization expense	2,790	2,767	8,148	7,154
Stock compensation expense	11,764	5,800	29,912	22,828
Stock option expense	2,533	3,756	7,659	10,872
Consolidated operating profit	$ 1,863	$ 26	$ 11,287	$ 16,117


	Goodwill
	September 30, 2023	December 31, 2022
North American Realty	$ 14,244	$ 16,577
International Realty	-	-
Virbela	8,248	8,248
Other Affiliated Services	2,387	2,387
Segment total	24,879	27,212
Corporate and other	-	-
Consolidated total	$ 24,879	$ 27,212

The Company does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.

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12.SUBSEQUENT EVENTS

Quarterly Cash Dividend

On October 25, 2023, the Company’s Board of Directors declared a dividend of $0.05 per share which is expected to be payable on November 30, 2023, to stockholders of record as of the close of business on November 16, 2023. The ex-dividend date is expected to be on or around November 15, 2023. The dividend will be paid in cash.

Antitrust Litigation

Gibson v. National Association of Realtors was filed on October 31, 2023 in the United States District Court for the Western District of Missouri, Western Division, naming the National Association of Realtors, the Company, Compass, Inc., Redfin Corporation, Weichert Realtors, United Real Estate, Howard Hann Real Estate Services, and Douglas Elliman, Inc. as defendants. The Company disputes the allegations against it, and intends to vigorously defend the action. An estimate of the possible loss or range of loss cannot be made at this time.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report. Management’s Discussion and Analysis of Financial Conditions and Results of Operations contain forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements. See “Item 1 A. – Risk Factors” in our 2022 Annual Report and “Item 1 A. – Risk Factors” in this Quarterly Report for a discussion of certain risks, uncertainties and assumptions associated with these statements.

This MD&A is divided into the following sections:

●

Overview

●

Market Conditions and Industry Trends

●

Key Business Metrics

●

Results of Operations

●

Business Segment Disclosures

●

Non-U.S. GAAP Financial Measures

●

Liquidity and Capital Resources

●

Critical Accounting Policies and Estimates

All dollar amounts are in USD thousands except share amounts and per share data and as otherwise noted.

OVERVIEW

eXp World Holdings empowers the new economy through its people, technology platforms and personal and professional development solutions. Through our brokerage, eXp Realty, we operate one of the world’s fastest-growing real estate brokerages. We are focused on being the most agent-centric company on the planet and offer our agents a generous commission model, and a thriving community built on our proprietary and unique cloud-based brokerage and collaboration suite.

eXp manages its operations in four operating business segments: North American Realty; International Realty; Virbela; and Other Affiliated Services.

While we do not consider acquisitions a critical element of our ongoing business, we seek opportunities to expand and enhance our portfolio of solutions.

Strategy

Our strategy is to grow organically in North America and certain international markets by increasing our independent agent and broker network. Through our cloud-based operations and technology platform, we strive to achieve customer-focused efficiencies that allow us to increase market share and attain strong returns as we scale our business within the markets in which we operate. By building partnerships and strategically deploying capital, we seek to grow the business and enter into attractive verticals and associated businesses.

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Throughout 2022, and during the first nine months of 2023, we continued to make progress in achieving our strategic goals, including a 5% increase in our agent count, going from 84,911 agents as of September 30, 2022 to 89,156 agents as of September 30, 2023. The increase in our agents occurred even though, according to the National Association of Realtors (“NAR”), real estate industry agents declined 1.3% from September 2022 to September 2023. The expected outcome of these activities will be to better position us to deliver on our full potential, to provide a platform for future growth opportunities, and to achieve our long-term financial goals.

MARKET CONDITIONS AND INDUSTRY TRENDS

In September of 2023, the existing home sales market declined 15.4%, compared to September of 2022 according to the NAR. Due to reduced affordability driven by higher interest rates and increasing inflation, the market began a contraction trend in the third quarter of 2022, that is continuing into the third quarter of 2023.

The Company believes it continues to be well positioned to gain market share in the current economic climate. We have a strong base of agent support, which should drive organic market share growth, through greater retention and productivity. Additionally, we have an efficient operating model with lower fixed costs driven by our cloud-based infrastructure, with no brick-and-mortar locations.

Regardless of whether the housing market continues to slow or begins to recover, we believe that we are positioned to leverage our low-cost, high-engagement model, affording agents and brokers increased income and ownership opportunities while offering a scalable solution to brokerage owners looking to survive and thrive during fluctuations in economic activity.

National Housing Inventory

According to NAR, inventory of existing homes for sale in the U.S. was 1,130,000 as of September 2023 (preliminary) compared to 1,230,000 at the end of September 2022.

Mortgage Interest Rates

The sharp increase in mortgage rates have continued to negatively impact the demand for homebuying. Based on Freddie Mac data, the average rate for a 30-year, conventional, fixed rate mortgage was 7.3% in September 2023 vs 6.7% in September 2022.

Housing Affordability Index

According to NAR, the composite housing affordability index decreased to 91.7 for August 2023 (preliminary) from 110.5 for August 2022. When the index is above 100, it indicates that a family earning the median income has sufficient income to purchase a median-priced home, assuming a 20% down payment and ability to qualify for a mortgage. The housing affordability index has been declining year over year due to increasing mortgage rates.

Existing Home Sales Transactions and Prices

According to NAR, seasonally adjusted existing home sale transactions decreased to an annual rate of 3.96 million in September 2023 (preliminary) compared to 4.68 million in September 2022 a decrease of 15.4%.

According to NAR, the nationwide existing home sales median price for September of 2023 (preliminary) was $394,300 compared to $383,500 in September 2022, an increase of 2.8%. Housing inventory was also up to 3.4 months of inventory compared to 3.2 months last year.

Legal & Regulatory Environment

See Part II., Item 1 of this Quarterly Report for a discussion of the current legal environment and how such environment could potentially impact our business, results of operations, or financial condition.

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KEY BUSINESS METRICS

Management uses our results of operations, financial condition, cash flows, and key business metrics related to our business and industry to evaluate our performance and make strategic decisions.

The following table outlines the key business metrics that we periodically review:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022

	(in thousands, except transactions and agent count)
Performance:
Agent count	89,156	84,911	89,156	84,911
Real estate sales transactions	118,626	124,774	325,004	363,699
Other real estate transactions	20,854	13,580	53,980	38,992
Volume	$ 48,526,164	$ 50,392,432	$ 130,337,913	$ 149,666,700
Revenue	$ 1,214,513	$ 1,238,975	$ 3,298,056	$ 3,664,766
Gross profit	83,625	93,122	253,198	283,836
Gross margin (%)	6.9%	7.5%	7.7%	7.7%
Adjusted EBITDA⁽¹⁾	18,950	12,349	57,006	56,971

(1)

Adjusted EBITDA is not a measurement of our financial performance under generally accepted accounting principles in the U.S. and should not be considered as an alternative to net income, operating income, or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-U.S. GAAP Financial Measures”.

We periodically evaluate trends in certain metrics to track the Company’s performance.

Our strength is attracting real estate agent and broker professionals that contribute to our growth. Real estate sales transactions are recorded when our agents and brokers represent buyers and/or sellers in the purchase or sale, respectively, of a home. Other real estate transactions are recorded for leases, rentals and referrals. The number of real estate transactions is a key driver of our revenue and profitability. Transaction volume represents the total sales value for all transactions and is influenced by several market factors, including, but not limited to, the pricing and quality of our services and market conditions that affect home sales, such as macroeconomic factors, local inventory levels, mortgage interest rates, and seasonality. Real estate transaction revenue represents the commission revenue earned by the Company for closed brokerage real estate transactions.

We continue to increase our agents and brokers in the United States, Canada, and certain international locations through the execution of our growth strategies. The rate of growth of our agent and broker base is difficult to predict and is subject to many factors outside of our control, including macroeconomic factors affecting the real estate industry in general.

Settled home sales transactions and volume result from closed real estate transactions and typically change directionally with changes in the market’s existing home sales transactions as reported by NAR, with disproportionate variances are representative of company-specific performance. Our home sale transaction performance was directly related to the performance of our agent base over the prior comparative period.

We utilize gross profit and gross margin, financial statement measures based on generally accepted accounting principles in the U.S. (“U.S. GAAP”) to assess the Company’s financial performance from period to period.

Gross profit is calculated from U.S. GAAP reported amounts and equals the difference between revenues and cost of sales. Gross margin is the calculation of gross profit as a percentage of revenues. Commissions and other agent-related costs represent the cost of sales for the Company. The cost of sales does not include depreciation or amortization expenses as the Company’s assets are not directly used in the production of revenue. Gross profit is based on the information provided in our results of operations or our consolidated statements of comprehensive income and is an important measure of our potential profitability and brokerage performance. For the three months ended September 30, 2023 and 2022 gross profit was $83.6 million, and $93.1 million, respectively and gross margin was 6.9% and 7.5%, respectively. For the three months ended September 30, 2023, gross profit and gross margin decreased year-over-year primarily due to decreased revenue related to the slowdown in the housing market and higher agent stock-based compensation costs in 2023.

For the nine months ended September 30, 2023 and 2022, gross profit was $253.2 million, and $283.8 million, respectively and gross margin was 7.7% for each of the nine month periods. Gross profit decreased in the first nine

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months of 2023 compared to 2022 due to lower revenue related to the slowdown in the housing market. Gross margin was 7.7% for both periods, because of the lower increase in commissions and agent-related costs due to a lower percentage of agents reaching their commissions capping requirements offset by higher agent stock-based compensation expense in 2023.

Management also reviews Adjusted EBITDA, which is a non-U.S. GAAP financial measure, to understand and evaluate our core operating performance. Adjusted EBITDA increased slightly for the first nine months of 2023 and increased for the three months ended September 30, 2023 compared to the same periods in 2022 due to lower operating costs.

Agent and Employee Experience

The Company has embarked on an initiative to better understand both its agents’ and employees’ experiences. In doing so, we have adopted many of the principles of the Net Promoter Score® (“NPS”) across many aspects of our organization. NPS is a measure of customer satisfaction and is measured on a scale between -100 and 100. An NPS above 50 is considered excellent. The Company’s agent NPS was 74 in the third quarter of 2023.

The NPS measure is an important vehicle for delivering on our core value of transparency. While we strive for high satisfaction, it is equally important to investigate a low or unfavorable trending of NPS. As NPS scores are often leading indicators to agents’ and employees’ future actions, we are able to learn quickly what may be a ‘pain point’ or product that is not meeting its desired objective. We then take that information and translate it into action with an effort to remediate the specific root cause(s) driving the lower score. Our fast and iterative approach has already led to improvements in parts of our business such as agent onboarding, commission transaction processing, and employee benefits.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2023 compared to the Three Months Ended September 30, 2022


	Three Months Ended	% of	Three Months Ended	% of	Change 2023 vs. 2022
	September 30, 2023	Revenue	September 30, 2022	Revenue	$	%

	(In thousands, except share amounts and per share data)
Statement of Operations Data:
Revenues	$ 1,214,513	100%	$ 1,238,975	100%	($ 24,462)	(2)%
Operating expenses
Commissions and other agent-related costs	1,130,888	93%	1,145,853	92%	(14,965)	(1)%
General and administrative expenses	78,568	6%	89,460	7%	(10,892)	(12)%
Sales and marketing expenses	3,194	-%	3,636	-%	(442)	(12)%
Total operating expenses	1,212,650	100%	1,238,949	100%	(26,299)	(2)%
Operating income	1,863	-%	26	-%	1,837	7065%
Other (income) expense
Other (income) expense, net	(708)	-%	(78)	-%	(630)	(808)%
Equity in losses of unconsolidated affiliates	354	-%	329	-%	25	8%
Other (income) expense, net	(354)	-%	251	-%	(605)	(241)%
Income (loss) before income tax expense	2,217	-%	(225)	-%	2,442	1085%
Income tax expense	868	-%	(4,627)	-%	5,495	119%
Net income	1,349	-%	4,402	-%	(3,053)	(69)%
Add back: Net loss attributable to noncontrolling interest	-	-%	-	-%	-	-%
Net income attributable to eXp World Holdings, Inc.	1,349	-%	4,402	-%	(3,053)	(69)%
Adjusted EBITDA⁽¹⁾	$ 18,950	2%	$ 12,349	1%	$ 6,601	53%
Earnings per share
Basic	$ 0.01		$ 0.03		($ 0.02)	(67)%
Diluted	$ 0.01		$ 0.03		($ 0.02)	(67)%
Weighted average shares outstanding
Basic	153,392,005		151,826,315
Diluted	158,183,888		155,915,307

(1)

Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to net income and a discussion of why we believe Adjusted EBITDA provides useful information to investors, see “Non-U.S. GAAP Financial Measures.”

In addition to the financial information noted above, the Company had:

●

As of September 30, 2023, cash and cash equivalents totaled $120.1 million. The Company repurchased $55.9 million of common stock during the third quarter of 2023.

●

The Company paid a cash dividend for the third quarter of 2023 of $0.05 per share of common stock on September 4, 2023. On October 25, 2023, the Company’s Board of Directors declared a cash dividend of $0.05 per share of common stock for