EXP World Holdings, Inc. [EXPI] Filings

10-Q 1 expi-20240630x10q.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 June 30, 2024

☐ 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 153,733,373 shares of the registrant’s Common Stock, $0.00001 par value, outstanding as of June 30, 2024.

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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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

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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;

●

the impact of adverse outcomes in litigation and regulatory actions against us and other companies and agents in our industry on our business; and

●

the effect of inflation and continuing high 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, 2023 (the “2023 Annual Report”), 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)


	June 30, 2024	December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 108,395	$ 125,873
Restricted cash	85,126	44,020
Accounts receivable, net of allowance for credit losses of $1,527 and $2,204, respectively	133,896	85,343
Prepaids and other assets	7,082	9,275
Current assets of discontinued operations	1,068	1,964
TOTAL CURRENT ASSETS	335,567	266,475
Property, plant, and equipment, net	11,789	12,967
Other noncurrent assets	10,815	7,410
Intangible assets, net	5,965	7,012
Deferred tax assets	66,916	69,253
Goodwill	19,673	16,982
Noncurrent assets of discontinued operations	6,706	5,569
TOTAL ASSETS	$ 457,431	$ 385,668

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$ 11,529	$ 8,788
Customer deposits	86,496	44,550
Accrued expenses	122,497	86,483
Litigation contingency	16,000	-
Other liabilities	23	10
Current liabilities of discontinued operations	560	1,809
TOTAL CURRENT LIABILITIES	237,105	141,640
Long-term payable	-	20
TOTAL LIABILITIES	237,105	141,660

EQUITY
Common Stock, $0.00001 par value 900,000,000 shares authorized; 189,947,235 issued and 153,733,373 outstanding at June 30, 2024; 183,606,708 issued and 154,669,037 outstanding at December 31, 2023	2	2
Additional paid-in capital	883,704	804,833
Treasury stock, at cost: 36,213,862 and 28,937,671 shares held, respectively	(626,825)	(545,559)
Accumulated deficit	(35,100)	(16,769)
Accumulated other comprehensive (loss) income	(1,455)	332
Total eXp World Holdings, Inc. stockholders' equity	220,326	242,839
Equity attributable to noncontrolling interest	-	1,169
TOTAL EQUITY	220,326	244,008
TOTAL LIABILITIES AND EQUITY	$ 457,431	$ 385,668

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 (LOSS)

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

(UNAUDITED)


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Revenues	$ 1,295,244	$ 1,231,116	$ 2,238,298	$ 2,079,569
Operating expenses
Commissions and other agent-related costs	1,197,668	1,135,615	2,062,414	1,912,453
General and administrative expenses	61,160	64,917	123,742	119,543
Technology and development expenses	14,848	14,888	29,609	28,948
Sales and marketing expenses	3,031	2,860	6,170	5,787
Litigation contingency	-	-	16,000	-
Total operating expenses	1,276,707	1,218,280	2,237,935	2,066,731
Operating income	18,537	12,836	363	12,838
Other (income) expense
Other (income) expense, net	(1,749)	(1,294)	(2,937)	(2,168)
Equity in losses of unconsolidated affiliates	374	143	523	485
Total other (income) expense, net	(1,375)	(1,151)	(2,414)	(1,683)
Income before income tax expense	19,912	13,987	2,777	14,521
Income tax expense	8,146	2,632	4,841	1,174
Net income (loss) from continuing operations	11,766	11,355	(2,064)	13,347
Net income (loss) from discontinued operations	617	(1,933)	(1,192)	(2,472)
Net income (loss)	$ 12,383	$ 9,422	($ 3,256)	$ 10,875

Earnings (loss) per share
Basic, net income (loss) from continuing operations	$ 0.08	$ 0.07	($ 0.01)	$ 0.09
Basic, net income (loss) from discontinued operations	$ 0.00	($ 0.01)	($ 0.01)	($ 0.02)
Basic, net income (loss)	$ 0.08	$ 0.06	($ 0.02)	$ 0.07
Diluted, net income (loss) from continuing operations	$ 0.08	$ 0.07	($ 0.01)	$ 0.09
Diluted, net income (loss) from discontinued operations	$ 0.00	($ 0.01)	($ 0.01)	($ 0.02)
Diluted, net income (loss)	$ 0.08	$ 0.06	($ 0.02)	$ 0.07
Weighted average shares outstanding
Basic	153,580,879	153,249,120	154,160,607	152,899,883
Diluted	155,984,147	156,693,959	154,160,607	156,119,627
Comprehensive income (loss):
Net income (loss)	$ 12,383	$ 9,422	($ 3,256)	$ 10,875
Other comprehensive income (loss):
Foreign currency translation gain (loss), net of tax	(898)	64	(1,787)	707
Comprehensive income (loss) attributable to eXp World Holdings, Inc.	$ 11,485	$ 9,486	($ 5,043)	$ 11,582

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 June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Common stock:
Balance, beginning of period	$ 2	$ 2	$ 2	$ 2
Balance, end of period	2	2	2	2
Treasury stock:
Balance, beginning of period	(578,591)	(414,926)	(545,559)	(385,010)
Repurchases of common stock	(48,234)	(48,812)	(81,266)	(78,728)
Balance, end of period	(626,825)	(463,738)	(626,825)	(463,738)
Additional paid-in capital:
Balance, beginning of period	841,576	650,383	804,833	611,872
Shares issued for stock options exercised	75	946	1,052	1,253
Agent growth incentive stock compensation	9,495	9,236	17,403	17,903
Agent equity stock compensation	30,588	38,876	56,456	65,652
Stock option compensation	1,970	2,365	3,960	5,126
Balance, end of period	883,704	701,806	883,704	701,806
Accumulated (deficit) earnings:
Balance, beginning of period	(39,993)	15,580	(16,769)	20,723
Net income (loss)	12,383	9,422	(3,256)	10,875
Dividends declared and paid ($0.05 and $0.045 per share of common stock in Q2 2024 and Q2 2023, respectively)	(7,490)	(6,864)	(15,075)	(13,460)
Balance, end of period	(35,100)	18,138	(35,100)	18,138
Accumulated other comprehensive income (loss):
Balance, beginning of period	(557)	879	332	236
Foreign currency translation gain (loss)	(898)	64	(1,787)	707
Balance, end of period	(1,455)	943	(1,455)	943
Noncontrolling interest:
Balance, beginning of period	-	1,169	1,169	1,169
Transactions with noncontrolling interests	-	-	(1,169)	-
Balance, end of period	-	1,169	-	1,169
Total equity	$ 220,326	$ 258,320	$ 220,326	$ 258,320

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)


	Six Months Ended June 30,
	2024	2023
OPERATING ACTIVITIES
Net income (loss)	($ 3,256)	$ 10,875
Reconciliation of net income (loss) to net cash provided by operating activities:
Depreciation expense	3,950	4,163
Amortization expense - intangible assets	1,413	1,195
Allowance for credit losses on receivables/bad debt on receivables	(677)	(2,470)
Equity in loss of unconsolidated affiliates	523	485
Agent growth incentive stock compensation expense	18,157	18,148
Stock option compensation	3,975	5,126
Agent equity stock compensation expense	56,456	65,652
Deferred income taxes, net	2,337	3,370
Changes in operating assets and liabilities:
Accounts receivable	(48,871)	(45,266)
Prepaids and other assets	1,841	367
Customer deposits	41,946	50,854
Accounts payable	2,741	(3,069)
Accrued expenses	35,243	49,273
Long term payable	-	(4,692)
Litigation contingency	16,000	-
Other operating activities	23	157
NET CASH PROVIDED BY OPERATING ACTIVITIES	131,801	154,168
INVESTING ACTIVITIES
Purchases of property, plant, equipment	(2,772)	(3,433)
Purchase of business	(3,150)	-
Investments in unconsolidated affiliates	(3,938)	(5,350)
Capitalized software development costs in intangible assets	(509)	(1,179)
NET CASH USED IN INVESTING ACTIVITIES	(10,369)	(9,962)
FINANCING ACTIVITIES
Repurchase of common stock	(81,266)	(78,728)
Proceeds from exercise of options	1,052	1,253
Transactions with noncontrolling interests	(1,169)	-
Dividends declared and paid	(15,075)	(13,460)
NET CASH USED IN FINANCING ACTIVITIES	(96,458)	(90,935)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(1,346)	620
Net change in cash, cash equivalents and restricted cash	23,628	53,891
Cash, cash equivalents and restricted cash, beginning balance	169,893	159,383
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$ 193,521	$ 213,274
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for income taxes	$ 1,542	$ 1,833
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Termination of lease obligation - operating lease	-	837
Property, plant and equipment increase due to transfer of right-of-use lease asset	-	1,100

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

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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.

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 U.S. GAAP 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, 2023, filed with the SEC on February 22, 2024 (“2023 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 three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

In the first quarter of 2024, the Company determined that there has been a significant change to the Virbela business model. As our customers evolve post-COVID, including return-to-work-offices, and in light of ongoing internal and external demand for web-accessible platforms and artificial intelligence solutions, we have experienced a decline in demand for our application-based platform, Virbela, and a rising interest in our web-accessible platform, Virbela Frame^®. Accordingly, the Company has begun the process of winding down the Virbela business, which includes closing out current contracts, and reducing its external customers and internal employee support. Further, the technology is being replaced with Virbela Frame^® technology that will be primarily utilized internally within the Company. The Company expects the process to wind down the Virbela business to be completed by the fourth quarter of 2024. As a result of this change, the Company determined that winding down of the Virbela business qualifies for reporting as discontinued operations in the Company’s condensed consolidated balance sheet and the Company’s condensed consolidated statements of comprehensive income (loss).

Prior period financial statement information has been reclassified to reflect Virbela as discontinued operations. For more information See Note 3 – Discontinued Operations.

In prior years, Virbela represented an operating and reporting segment under ASC 280. As a result of the Company’s decision to wind down the Virbela business in the first quarter of 2024, the Company determined that the remaining operations of Virbela do not meet the operating or reporting segment criteria; therefore, any operating results related to Virbela and Virbela Frame® technologies are included in the Other Affiliated Services segment beginning in the first quarter of 2024. All prior period segment disclosure information has been reclassified to conform to the current reporting structure in this Form 10-Q.

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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 does not exercise 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 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. Joint ventures are typically included in the Other Affiliated Services unless the joint venture specifically supports one of the reportable segments.

The Company has several joint venture investments. The operations of these joint ventures are not material to the Company’s financial position or results of operations.

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. Prior year segment and financial statement information has been reclassified to reflect Virbela as discontinued operations.

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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 amounts shown on the condensed consolidated statements of cash flows.


	Cash and cash equivalents	Restricted cash	Total
Balance, June 30, 2023	$ 124,714	$ 88,560	$ 213,274
Balance, December 31, 2023	$ 125,873	$ 44,020	$ 169,893
Balance, June 30, 2024	$ 108,395	$ 85,126	$ 193,521

3.	DISCONTINUED OPERATIONS

In accordance with ASC 205-20, the results of the Virbela business are presented as discontinued operations in the condensed consolidated statements of comprehensive income and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of the Virbela segment as assets and liabilities of discontinued operations in the condensed balance sheets. The following tables present the information for Virbela’s operations for the three and six months ended June 30, 2024 and 2023, and the balance sheet information as of June 30, 2024 and December 31, 2023 (in thousands).


ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS
(Unaudited)

	June 30, 2024	December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 684	$ 991
Accounts receivable, net of allowance for credit losses of $194 and $99, respectively	289	626
Prepaids and other assets	95	347
TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS	1,068	1,964
Property, plant, and equipment, net	7	11
Intangible assets, net	2,753	3,469
Deferred tax assets	3,946	2,089
TOTAL ASSETS OF DISCONTINUED OPERATIONS	$ 7,774	$ 7,533

LIABILITIES
CURRENT LIABILITIES
Accounts payable	$ 7	$ 110
Accrued expenses	553	1,699
TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS	560	1,809
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS	$ 560	$ 1,809

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INCOME STATEMENT OF DISCONTINUED OPERATIONS
(Unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Revenues	$ 4	$ 1,811	$ 653	$ 3,974
Operating expenses
Cost of revenue	910	796	1,589	1,517
General and administrative expenses	309	2,578	2,074	5,308
Technology and development expenses	99	158	215	509
Sales and marketing expenses	1	18	(2)	54
Total operating expenses	1,319	3,550	3,876	7,388
Operating (loss)	(1,315)	(1,739)	(3,223)	(3,414)
Other income
Other income, net	(6)	(5)	(23)	(11)
Total other income, net	(6)	(5)	(23)	(11)
(Loss) before income tax expense	(1,309)	(1,734)	(3,200)	(3,403)
Income tax benefit (expense)	1,926	(199)	2,008	931
Net income (loss) from discontinued operations	$ 617	($ 1,933)	($ 1,192)	($ 2,472)

4.	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 estimates 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 $128,814 and $81,004 of which the Company recognized expected credit losses of $88 and $-, respectively as of June 30, 2024 and December 31, 2023. As of June 30, 2024 and December 31, 2023, agent non-commission based fees receivable and short-term advances totaled $7,092 and $7,268, of which the Company recognized expected credit losses of $1,439 and $2,204, respectively.

5.	PLANT, PROPERTY AND EQUIPMENT, NET

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


	June 30, 2024	December 31, 2023
Computer hardware and software	$ 38,830	$ 37,444
Furniture, fixture, and equipment	2,221	2,254
Total depreciable property and equipment	41,051	39,698
Less: accumulated depreciation	(31,451)	(27,733)
Depreciable property, net	9,600	11,965
Discontinued operations	(7)	(11)
Assets under development	2,196	1,013
Property, plant, and equipment, net	$ 11,789	$ 12,967

For the three months ended June 30, 2024 and 2023, depreciation expense was $1,891 and $2,096, respectively. For the six months ended June 30, 2024 and 2023 depreciation expense was $3,950 and $4,163, respectively.

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6.	GOODWILL AND INTANGIBLE ASSETS

Goodwill was $19,673 as of June 30, 2024 and $16,982 as of December 31, 2023. During the second quarter of 2024, the Company acquired a small real estate business, resulting in recording goodwill of $3,150. As of June 30, 2024, the Company recorded cumulative translation adjustment of ($459) related to Canadian goodwill. 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 six months ended June 30, 2024, no events occurred that indicated it was more likely than not that goodwill was impaired. The following tables present definite-lived intangible assets as of June 30, 2024 and December 31, 2023, in thousands:


	June 30, 2024
	Gross	Accumulated	Net Carrying
	Amount	Amortization	Amount
Trade name	$ 2,655	($ 1,393)	$ 1,262
Existing technology	3,345	(1,498)	1,847
Non-competition agreements	458	(347)	111
Customer relationships	1,284	(698)	586
Licensing agreement	210	(210)	-
Intellectual property	2,836	(677)	2,159
Total intangible assets	$ 10,788	($ 4,823)	$ 5,965


	December 31, 2023
	Gross	Accumulated	Net Carrying
	Operations	Amortization	Amount
Trade name	$ 2,672	($ 1,030)	$ 1,642
Existing technology	3,263	(1,122)	2,141
Non-competition agreements	468	(125)	343
Customer relationships	1,285	(652)	633
Licensing agreement	210	(210)	-
Intellectual property	2,836	(583)	2,253
Total intangible assets	$ 10,734	($ 3,722)	$ 7,012

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 June 30, 2024 and 2023 was $1,073 and $683, respectively. Amortization expense for definite-lived intangible assets for the six months ended June 30, 2024 ended and 2023 was $1,413 and $1,195, respectively.

7.STOCKHOLDERS’ EQUITY

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Common stock:
Balance, beginning of quarter	186,361,476	174,532,043	183,606,708	171,656,030
Shares issued for stock options exercised	14,286	79,599	225,444	192,807
Agent growth incentive stock compensation	678,825	730,003	1,032,513	1,386,439
Agent equity stock compensation	2,892,648	2,558,438	5,082,570	4,664,807
Balance, end of quarter	189,947,235	177,900,083	189,947,235	177,900,083

The Company’s equity programs described below are administered under the stockholder approved 2015 Equity Incentive Plan, as amended. 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

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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 prior to February 29, 2024, and a 5% discount on these issuances beginning as of March 1, 2024, as an additional cost of sales charge during the periods presented.

During the three months ended June 30, 2024 and 2023, the Company issued 2,892,648 and 2,558,438 shares of common stock, respectively, to agents and brokers with a value of $30,588 and $38,876, respectively, inclusive of discount. During the six months ended June 30, 2024 and 2023, the Company issued 5,082,570 and 4,664,807 shares of common stock, respectively, to agents and brokers with a value of $56,456 and $65,652, 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 granted 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 June 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $9,329 and $8,488, respectively, of which the total amount of stock compensation attributable to liability classified awards was $638 and $345, respectively. For the six months ended June 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $18,157 and $18,148, respectively, of which the total amount of stock compensation attributable to liability classified awards was $1,288 and $1,338, respectively.

Agent Thrive Program

Announced in October 2023, the Thrive program provides a stock incentive to the individual teams of leaders of culturally aligned teams that join the Company as part of the program. After affiliating with the Company, the team leader becomes eligible to receive an award of the Company’s common stock through team performance benchmarks. Awards typically vest after production 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 production metrics. As such, the awards are classified as liabilities until the number of share awards becomes fixed once the production metric is achieved.

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


		Amount
Stock grant liability balance at December 31, 2022		$ 3,885
Stock grant liability increase year to date		3,832
Stock grants reclassified from liability to equity year to date		(2,717)
Balance, December 31, 2023		$ 5,000
Stock grant liability increase year to date		1,288
Stock grants reclassified from liability to equity year to date		(806)
Balance, June 30, 2024		$ 5,482

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 June 30, 2024 and 2023, the Company granted 322,082 and 1,440,010 stock options, respectively, to employees with an estimated grant date fair value of $6.35 and $8.35 per share, respectively. The fair value was calculated using a Black Scholes-Merton option pricing model. During the six months ended June 30, 2024 and 2023 the Company granted 675,738 and 1,528,563 stock options, respectively, to employees with an estimated grant date fair

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value of $6.63 and $8.34 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 a stock repurchase program with program changes subject to Board consent. In June 2023, the Board approved increasing the stock repurchase program to $1.0 billion. 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., a financial services firm that acts as an agent authorized to purchase shares on behalf of the Company, entered into a form of Issuer Repurchase Plan (“Issuer Repurchase Plan”) which authorized Stephens to repurchase common stock of the Company, which is amended from time to time to adjust the monthly repurchase amount. Most recently, on June 19, 2024, the Board approved, and the Company entered into an eighth amendment to the Issuer Repurchase Plan which provides for the repurchase of up to (i) $15.0 million during the calendar month commencing June 1, 2024 through and including June 30, 2024, (ii) $11.7 million during the calendar months commencing July 1, 2024 through and including September 30, 2024, and (iii) $8.3 million during the calendar months commencing October 1, 2024 through and including December 31, 2024.

For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the applicable trade date. 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 June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Treasury stock:
Balance, beginning of quarter	31,514,913	21,089,622	28,937,671	18,816,791
Repurchases of common stock	4,698,949	3,222,275	7,276,191	5,495,106
Balance, end of quarter	36,213,862	24,311,897	36,213,862	24,311,897

8.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 Segment EBITDA. Adjusted Segment EBITDA is defined by us as a segment’s operating profit (loss) from continuing operations plus depreciation and amortization, litigation contingency and stock-based compensation expenses. The Company’s presentation of Adjusted Segment EBITDA may not be comparable to similar measures used by other companies. Historically, the Company has reported results for four reportable segments. In the first quarter of 2024, the Company determined that the Virbela segment qualified for reporting as discontinued operations. In prior years, Virbela represented an operating and reporting segment under ASC 280. Going forward, the remaining operations of Virbela will not meet the operating or reporting segment criteria, therefore, any operating results related to Virbela technology will be included in the

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Other Affiliated Services segment. Prior year segment information has been reclassified to remove Virbela from the segment disclosure, in accordance with discontinued operations treatment.

The Company’s three 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.

●

Other Affiliated Services: includes our SUCCESS^®Magazine, Virbela Frame^® technology, 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 Condensed 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 (loss) from continuing operations and Goodwill (in thousands). Financial information for the comparable prior periods presented have been revised to conform with the current year presentation.


	Revenues		Revenues
	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
North American Realty	$ 1,274,621	$ 1,219,345	$ 2,201,758	$ 2,056,459
International Realty	20,316	11,991	35,912	22,748
Other Affiliated Services	1,467	1,072	3,255	2,749
Revenues reconciliation:
Segment eliminations	(1,160)	(1,292)	(2,627)	(2,387)
Consolidated revenues	$ 1,295,244	$ 1,231,116	$ 2,238,298	$ 2,079,569


	Adjusted EBITDA		Adjusted EBITDA
	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
North American Realty	$ 38,503	$ 34,122	$ 56,312	$ 55,325
International Realty	(2,376)	(3,782)	(5,731)	(7,458)
Other Affiliated Services	(988)	(1,168)	(1,755)	(1,849)
Corporate expenses and other	(2,325)	(2,325)	(4,968)	(4,548)
Consolidated Adjusted EBITDA	$ 32,814	$ 26,847	$ 43,858	$ 41,470

Operating Profit Reconciliation:
Depreciation and amortization expense	2,963	3,143	5,363	5,358
Litigation contingency	-	-	16,000	-
Stock compensation expense	9,329	8,488	18,157	18,148
Stock option expense	1,985	2,380	3,975	5,126
Consolidated operating profit	$ 18,537	$ 12,836	$ 363	$ 12,838


	Goodwill
	June 30, 2024	December 31, 2023
North American Realty	$ 17,286	$ 14,595
International Realty	-	-
Other Affiliated Services	2,387	2,387
Segment and consolidated total	19,673	16,982

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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9.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: