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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-06 · 124 added, 228 removed, 93 unchanged (79% of the section changed)

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 Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025 (the “Quarterly Report”) and consolidated financial statements and related notes appearing in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”).

Management’s Discussion and Analysis of Financial Conditions and Results of Operations (“MD&A”) contain forward-looking statements.

Our actual results could differ materially from those anticipated in these forward-looking statements.

See “Cautionary Note Regarding Forward Looking Statements” in this Quarterly Report, Part I, Item 1A Risk Factors of the 2024 Annual Report, and Part II, Item 1A 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:

● Market Conditions and Industry Trends

● Key Business Metrics

● Results of Operations

● Business Segment Disclosures

GAAP Financial Measures

● Liquidity and Capital Resources

● Critical Accounting Policies and Estimates

The following discussion should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and consolidated financial statements and related notes appearing in our 2025 Annual Report.

This MD&A contains forward-looking statements.

See the Cautionary Note Regarding Forward-Looking Statements at the beginning of this Quarterly Report for important information regarding such statements, including risks and uncertainties that could cause actual results to differ materially from those expressed or implied.

We undertake no obligation to publicly update or revise any forward-looking statements except as may be required by law.

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

eXp World Holdings, Inc.

(the “Company,” “eXp” or “we”) was incorporated in Delaware on July 30, 2008 and launched the first cloud-based real estate brokerage offering agent-centric commission structure, revenue sharing, and agent equity opportunities in 2009.

Today, the Company operates a diversified portfolio of service-based businesses whose operations benefit substantially from utilizing our enabling technology platform.

The Company operates a diversified portfolio of service-based businesses whose operations benefit substantially from utilizing our enabling technology platform.

A substantial portion of our revenue is derived from commissions received by our residential real estate brokerages which provide a full suite of brokerage and adjacent services (such as mortgage, title, and content creation) to our real estate agents and brokers.

Our real estate agents and brokers affiliate their real estate licenses with us and operate their businesses utilizing our cloud-based technology platform to enhance their real estate businesses and optimize efficiencies.

Our enabling and innovative technology platform is a robust suite of cloud-based applications and software services tailored for our real estate agents and brokers and targets business operations such as customer relationship management, marketing, client services, and brokerage functionalities.

We succeed when our real estate professionals succeed, and we remain focused on being the most agent-centric business on the planet.

Acquisitions have not been a material element of our ongoing business, but we continue to seek opportunities to expand and enhance our portfolio of solutions and believe we are well-positioned to capture additional revenues from such solutions.

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 attractive verticals and adjacent markets.

The Company’s primary emphasis is on achieving operational excellence for our real estate agents, which we monitor using the agent net promoter score (“aNPS”).

We remain focused on investing in technology and people who are key to the continued growth of the Company.

Our sustainable revenue share plan (the “Revenue Share Plan”), whereby we pay real estate professionals affiliated with the Company a portion of the Company’s brokerages’ commission for their contribution to Company growth continues to be critical to attracting and retaining our most productive agents.

The supplementary income distributed to the sponsor under the Revenue Share Plan is exclusively derived from the Company's portion of the transaction commission and is not earned on transactions for which the Company does not receive a commission (e.g., when a Front-Line Qualifying Agent has capped and earns 100% of commission on its closed transactions).

The Revenue Share Plan does not impact or reduce the commission earned by the agent on the transaction.

The Company’s costs incurred under the Revenue Share Plan are included as commissions and other agent-related costs in the consolidated statements of comprehensive income.

The Revenue Share Plan is integral to our growth strategy, fostering a collaborative brokerage that aligns with our core values of sustainability and collaborative success.

Regular evaluations are conducted to ensure the plan’s continued alignment with the Company’s overarching objectives and for regulatory compliance.

On May 6, 2026, we expanded our portfolio through the acquisition of NextHome, representing our initial entry into the franchised real estate brokerage model.

Through NextHome, we now also serve independent real estate professionals and brokerages who operate under the NextHome franchise system, broadening the range of affiliation models through which agents and brokers can access our ecosystem of services and support.

Our enabling and innovative technology platform is a robust suite of cloud-based applications and software services tailored for our real estate agents, brokers, and professionals and targets business operations such as customer relationship management, marketing, client services, and brokerage functionalities.

We succeed when our real estate professionals succeed, and we remain focused on being the most agent-centric business on the planet – built by agents, built for agents.

MARKET CONDITIONS AND INDUSTRY TRENDS

Our business is dependent on the levels of home sales transactions and prices, which can vary based on economic conditions within the markets in which we operate.

Changes in these conditions can have a positive or negative impact on our business.

The economic conditions influencing housing markets primarily include economic growth, interest rates, unemployment, consumer confidence, mortgage availability and supply and demand.

In periods of economic growth, rising consumer confidence and lower interest rates, demand typically increases resulting in higher home sales transactions and home sales prices.

Conversely, in periods of economic recession, declining consumer confidence and higher interest rates, demand typically decreases, resulting in lower home sales transactions and home sale prices.

Additionally, regulations imposed by local, state and federal government agencies and geopolitical instability can also negatively impact the housing markets in which we operate.

Over the last several quarters, several macroeconomic conditions have been contributing to the slowdown in the U.S.

residential real estate market, which directly impacts our business and financial results.

These conditions include, but are not limited to rising inflation, continued higher mortgage interest rates, volatility in the U.S.

equity markets, changes in trade policy, including the imposition of new tariffs, and responses to such tariffs, and continued political unrest around the world.

While the current environment is challenging, the Company continues to believe it is well positioned to strengthen its competitive position over the long term.

Our robust agent support infrastructure continues to drive engagement, retention and productivity.

Additionally, we continue to offer agents a low-cost, high-engagement model, which affords agents and brokers increased income and equity ownership opportunities while offering a scalable solution to brokerage owners who want to survive and thrive during market fluctuations.

We have an efficient operating model with lower fixed costs driven by our cloud-based model, with no brick-and-mortar locations.

National Housing Inventory

During the third quarter of 2025, the continued higher mortgage rates and higher home prices have contributed to a rise in inventory levels, as measured in months of supply.

According to National Association of Realtors (“NAR”), inventory of existing homes for sale in the U.S.

was 1.55 million as of September 2025 (preliminary) compared to 1.36 million at the end of September 2024.

This represents 4.6 months of inventory in 2025 compared to 4.2 months of inventory in the prior year period.

Mortgage Interest Rates

The current mortgage rates continue to negatively impact the demand for homebuying, however mortgage rates during the third quarter of 2025 declined from the second quarter of 2025.

Based on Freddie Mac data, the average rate for a 30-year, conventional, fixed rate mortgage was 6.30% in September 2025 compared to 6.77% in June 2025.

The 30-year fixed rate mortgage was 6.08% in September 2024.

Housing Affordability Index

According to NAR, the composite housing affordability index increased slightly to 100.5 for August 2025 (preliminary) from 99.1 for August 2024.

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.

Existing Home Sales Transactions and Prices

According to NAR, existing home sale transactions were at an annual rate of 4.06 million in September 2025 (preliminary) compared with 3.90 million in September 2024, an increase of 4.1%.

According to NAR, the nationwide existing home median sales price for September 2025 (preliminary) was $415,200 compared to $406,700 in September 2024, an increase of 2.1%.

Our performance is closely tied to housing market activity, which is influenced by economic conditions such as employment, consumer confidence, mortgage availability, interest rates, and the balance of supply and demand.

Periods of economic growth and lower interest rates generally support higher home sales activity, while rising rates, affordability constraints, increased unemployment, or broader economic slowdowns may reduce transaction volumes and pricing.

Regulatory developments, geopolitical events, and shifts in consumer sentiment can also affect housing demand.

In the first quarter of 2026, U.S.

home sales declined 1% compared to the first quarter of 2025, and home sales prices increased 1.4%, according to the National Association of Realtors (“NAR”).

Inventory levels remain constrained, at 4.1 months of supply, consistent with inventory levels in March 2025.

These conditions may continue to limit transaction volumes in the near term.

Despite these challenges, we believe the Company is positioned for growth with a strong base of agents, an efficient cloud-based operating model, and low fixed costs.

This structure allows us to adapt quickly to market changes while supporting long-term productivity and retention.

Legal & Regulatory Environment

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The following table outlines the key business metrics that we periodically review to track the Company’s performance:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Real estate sales transactions

Real estate sales volume

$ 145,231,091

$ 139,869,084

Other real estate transactions

Real estate per transaction cost

Operating (loss)

Adjusted EBITDA (1)

(1) Adjusted EBITDA is not a measurement of our financial performance under generally accepted accounting principles in the U.S.

GAAP”) and should not be considered as an alternative to net (loss) income from continuing operations, operating (loss) income, or any other measures derived in accordance with U.S.

For a definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to net (loss) income from continuing operations and a discussion of why we believe Adjusted EBITDA provides useful information to investors, see “Non-U.S.

Operating income (loss)

Consolidated adjusted EBITDA (1)

(1) Consolidated adjusted EBITDA is a non-U.S.

GAAP financial measure.

For a definition, reconciliation to net income (loss), and discussion of why management believes this measure is useful, see “Non-U.S.

GAAP Financial Measures”.

Revenues and Adjusted EBITDA are key financial measures, and we review these measures to evaluate and drive our core operating performance.

Agent net promoter score (“aNPS”)

aNPS is a scale-based measure of customer satisfaction and an aNPS above 50 is considered excellent.

aNPS plays a crucial role in attracting and retaining agents and teams, especially during a period marked by continued market challenges and higher mortgage rates.

Despite the challenging market conditions, the Company’s aNPS was 75 and 76 for the three and nine months ended September 30, 2025, respectively, compared to 76 and 75 for the same periods of 2024, respectively.

We remain focused on empowering our agents, increasing their productivity, and maintaining strong engagement through our agent-centric initiatives.

Additionally, in response to industry changes as a result of U.S.

antitrust lawsuits, the Company led the industry by introducing new listing agreements and buyer representation forms for its agents and the industry.

These programs and efforts underscore our commitment to fostering agent success by lowering barriers, increasing earning opportunities, and creating a collaborative, growth-oriented environment.

By continually evolving to meet the needs of our agents and employees, the Company remains well-positioned to continue to drive growth.

One of our key strengths is attracting real estate agents and broker professionals that contribute to our growth.

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 actions taken by our competitors and macroeconomic factors affecting the real estate industry in general including interest rates, transaction volume trends in the U.S., and industry practice changes.

The number of agents declined (2)% in the first nine months of 2025, compared to the same period of 2024, however, the decline in agents has continued to slow over the last few quarters.

We remain committed to retaining our most productive agents in the U.S.

and Canada through the execution of our growth strategies and the end-to-end suite of services we offer our agents.

The Company utilizes aNPS as a key metric to measure agent satisfaction.

We believe an aNPS above 50 is indicative of excellent agent satisfaction.

For the three months ended March 31, 2026, our aNPS was 67, compared to 78 for the same period in 2025.

We remain committed to our agent-centric model by enhancing productivity and maintaining high levels of engagement across our global networks.

We believe our ability to attract and retain a diverse and professional agent base is a key driver of our long-term success.

While our total agent count has experienced recent declines amidst a challenging macroeconomic environment, we remain deeply focused on the retention and support of our agents and teams across all levels of production.

The scale of our agent base remains subject to factors beyond our control, including elevated mortgage rates, suppressed transaction volumes, and evolving industry practices.

Despite these headwinds, we continue to prioritize a comprehensive value proposition that supports agent productivity, operational efficiency, and long-term professional growth for our entire network.

The number of agents increased in the first three months of 2026, compared to the same period in 2025.

We remain committed to retaining our agents in the U.S., Canada, and internationally through the execution of our growth strategies and the end-to-end suite of services we offer our agents.

Real estate sales transactions and volume

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Our real estate sales transactions and volume typically fluctuate with changes in the market’s existing home sales transactions as reported by NAR;

however, company-specific initiatives influence the transaction volume and productivity of our agents.

For the three and nine months ended September 30, 2025, compared to the same periods of 2024, our real estate sales transactions increased 3.1% and decreased (0.1%), respectively.

For the three and nine months ended September 30, 2025, compared to the same periods of 2024, transaction volume increased 6.5% and 3.8%, respectively.

The improvements in transactions and volume are due to increased home sale prices, and increased agent productivity.

however, company-specific initiatives influence the transaction volume and productivity

of our agents.

For the three months ended March 31, 2026, compared to the same period in 2025, our real estate sales transactions increased 2.2%.

For the three months ended March 31, 2026, compared to the same period in 2025, transaction volume increased 5.5%.

The improvements in transactions and volume are due to increased agent productivity and increased home sale prices.

Other real estate transactions

Other real estate transactions are recorded for leases, rentals and referrals that are undertaken by our agents and brokers.

The decrease in other real estate transactions for the three and nine months ended September 30, 2025 compared to the same periods of 2024 reflects the challenging market conditions.

The increase in other real estate transactions for the three months ended March 31, 2026 compared to the same period in 2025.

Real estate per transaction cost

Real estate per transaction cost is measured as selling, general and administrative, sales and marketing and technology and development expenses resulting from our services that directly support our agents and brokers, divided by total transactions (real estate sales and other).

Real estate per transaction cost increased 5.9% and 14.9% for the three and nine months ended September 30, 2025, respectively, compared to the same periods of 2024, primarily due to increased personnel and technology costs, such costs have been moderating in the third quarter of 2025.

Real estate per transaction cost decreased (5)% for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to operational efficiency gains from higher transaction units and reduced personnel expenses, employee stock compensation, and marketing expenses.

Revenues represent the commission revenue earned by the Company for closed brokerage real estate transactions.

The Company’s revenues increased 6.9% and 3.2% for the three and nine months ended September 30, 2025, respectively, compared to same periods of 2024, primarily due to higher home sales prices in North America and increased international production, and improved productivity in North America for the third quarter of 2025.

Gross profit in the third quarter of 2025 was $86.2 million compared to $87.7 million in the third quarter of 2024.

Gross profit for the nine months ended September 30, 2025 was $255.0 million compared to $263.5 million in the first nine months of 2024.

Gross profit decreased in 2025 due to increased agent commissions and other agent-related costs due to sales commission capping and lower fees from the lower number of agents.

The Company’s revenues increased 5% for the three months ended March 31, 2026, compared to same period in 2025, primarily due to higher home sales prices in North America, increased international production, and improved productivity in North America for the first quarter of 2026.

Gross profit in the first quarter of 2026 was $75.3 million compared to $76.1 million in the first quarter of 2025.

Gross profit decreased in 2026 due to increased agent commissions, productivity awards, and other agent-related costs due to sales commission capping and lower fees from the reduced number of agents.

Operating Income (Loss)

Operating income in the third quarter of 2025 was $4.0 million compared to ($8.3) million in the third quarter of 2024.

Operating (loss) for the nine months ended September 30, 2025 was ($8.7) million compared to ($8.0) million in the first nine months of 2024.

Operating (loss) in the three and nine months of 2024 included the litigation contingency accrual of $18.0 million and $34 million, respectively.

The operating loss in the first nine months of 2025 reflects increased agent commissions and other agent-related costs due to sales commissions capping and lower fees from lower number of agents, and higher operating costs related to personnel, litigation and technology costs.

Adjusted EBITDA

Management reviews Adjusted EBITDA, which is a non-U.S.

Operating loss in the first quarter of 2026 was ($8.8) million compared to ($10.4) million in the first quarter of 2025.

The decrease in the operating loss in 2026 reflects actions taken to reduce operating costs in the second half of 2025, partially offset by increased legal expenses in connection with the Company’s ongoing efforts to resolve legacy litigation matters, including the NAR settlement and other claims.

Consolidated Adjusted EBITDA

Management reviews consolidated adjusted EBITDA, which is a non-U.S.

GAAP financial measure, to understand and evaluate our core operating performance.

Adjusted EBITDA, for the three months ended September 30, 2025 was $17.7 million compared to $23.9 million for the three months ended September 30, 2024.

Adjusted EBITDA, for the nine months ended September 30, 2025 was $31.1 million compared to $67.8 million for the same period of 2024.

The decrease in Adjusted EBITDA in 2025 reflects increased agent commissions and other agent-related costs, and higher operating costs.

For the three months ended March 31, 2026, consolidated adjusted EBITDA increased by $1.9 million, compared to the same period in 2025.

The increase in consolidated adjusted EBITDA reflects an improvement in operating results related to actions taken to reduce operating costs in 2025, which offset increased agent capping and lower agent fees.

RESULTS OF OPERATIONS

The following table reflects the results of each of our operations during the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

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

The following table reflects the results of each of our operations during the three months ended March 31, 2026 and 2025:

Three Months Ended

March 31, 2026

March 31, 2025

Statement of Operations Data:

Operating expenses

Commissions and other agent-related costs

Operating expenses

General and administrative expenses

1 unchanged sentence

Sales and marketing expenses

Litigation contingency

Total operating expenses

1 unchanged sentence

Other (income) expense

Other (income), net

Equity in losses of unconsolidated affiliates

Other (income), net

Other (income) expense, net

Equity in (income) losses of unconsolidated affiliates

Total other (income) expense, net

Income (loss) before income tax expense

Income tax expense (benefit)

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Income tax (benefit) expense

Net income (loss)

Adjusted EBITDA (1)

(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 (loss) from continuing operations, operating income (loss) or any other measures derived in accordance with U.S.

For a definition of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations and a discussion of why we believe Adjusted EBITDA provides useful information to investors, see “Non-U.S.

GAAP Financial Measures.”

The following tables and discussion reflect the changes in the results of each of our income statement line items between the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30

Nine Months Ended September 30

For both the three and nine months ended September 30, 2025 total revenues increased, primarily as a result of U.S.

increased home sales prices, and increased productivity in the third quarter of 2025, and increased Canadian and international transactions.

Three Months Ended September 30

Nine Months Ended September 30

Commissions and Other Agent-Related Costs

For the three and nine months ended September 30, 2025 and 2024 commissions and other agent-related costs increased primarily due to increased sales commissions capping and lower agent fees from the lower number of agents.

For the three months ended March 31, 2026 and 2025, commissions and other agent-related costs increased primarily due to increased sales commissions capping and lower agent fees from the lower number of agents.

Commissions and other agent-related costs include sales commissions, revenue share and stock-based compensation paid to our agents.

Three Months Ended September 30

Nine Months Ended September 30

General and Administrative Expenses

For the three and nine months ended September 30, 2025, general and administrative expenses increased compared to the same periods of 2024, due to increased employee-related and litigation expenses;

such expenses have been moderating in 2025.

For the three months ended March 31, 2026, general and administrative expenses decreased compared to the same period in 2025, due to decreased employee-related expenses, partially offset by increased litigation expenses.

General and administrative expenses include costs related to wages, employee stock-based compensation, and other general overhead expenses.

Three Months Ended September 30

Nine Months Ended September 30

Technology and Development Expenses

For the three and nine months ended September 30, 2025, technology and development expenses increased compared to the same periods of 2024, primarily due to increased technology expenses related to agent support.

For the three months ended March 31, 2026, technology and development expenses increased compared to the same period in 2025, primarily due to increased technology expenses related to agent support.

These expenses include employee-related costs and other expenses for the maintenance and development of the technology used by both our agents and our employees.

Three Months Ended September 30

Nine Months Ended September 30

Sales and Marketing Expenses

For the three and nine months ended September 30, 2025, sales and marketing expenses decreased compared to the same periods of 2024 due to decreased advertising in the U.S.

For the three months ended March 31, 2026, sales and marketing expenses decreased compared to the same period in 2025 due to efficiencies gained from our CRM of choice program in the U.S.

and Canada residential real estate market.

Three Months Ended September 30

Nine Months Ended September 30

Other (income), net

For the three and nine months ended September 30, 2025, total other (income) expense, net decreased primarily due to decreased interest income when compared to 2024.

Other (Income) Expense, Net

For the three months ended March 31, 2026, total other (income) expense, net decreased primarily due to decreased interest income when compared to the same period in 2025.

Total other (income) expense, net includes interest income earned on cash and cash equivalents, and (earnings) losses related to equity investments.

Three Months Ended September 30

Nine Months Ended September 30

Income tax expense (benefit)

The Company’s provision for income tax expense (benefit) amounted to $0.9 million and $(1.3) million for the three months ended September 30, 2025 and 2024, respectively, which represented effective tax rates of 21.0% and 17.1%, respectively.

The provision for income tax expense was primarily attributable to stock-based compensation shortfalls, research and development credit and non-deductible executive compensation.

The Company’s provision for income tax expense (benefit) amounted to $3.1 million and $3.5 million for the nine months ended September 30, 2025 and 2024, which represent effective tax rates of (45.5%) and (69.6%), respectively.

The effective tax rate differs from our statutory rates in both periods primarily due to foreign and domestic mix of earnings, and stock-based compensation.

Income Tax (Benefit) Expense

The Company’s provision for income taxes was a benefit of $(3.6) million and an expense of $1.7 million for the three months ended March 31, 2026 and 2025, respectively.

The benefit for the three months ended March 31, 2026 was primarily driven by the pre-tax loss for the quarter, partially offset by stock-based compensation shortfalls and non-deductible executive compensation.

BUSINESS SEGMENT DISCLOSURES

See Note 7 – Segment Information to the unaudited condensed consolidated financial statements for additional information regarding our business segments.

The following table reflects the results of each of our reportable segments during the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

The following table reflects the results of each of our reportable segments during the three months ended March 31, 2026 and 2025:

March 31, 2026

March 31, 2025

Change 2026 vs.

Statement of Operations Data:

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Other Affiliated Services

Segment eliminations

Corporate expenses and other

Total Consolidated Revenues

Adjusted Segment EBITDA (1)

Segment Adjusted EBITDA (1)

North American Realty

1 unchanged sentence

Other Affiliated Services

Total Adjusted Segment EBITDA

Corporate expenses and other

Total Reported Adjusted EBITDA (1)

(1) Adjusted Segment EBITDA and Adjusted EBITDA are not measurements of the Company’s financial performance under U.S.

GAAP and should not be considered as alternatives to financial information prepared derived in accordance with U.S.

For a reconciliation of Adjusted Segment EBITDA and Adjusted EBITDA to (loss) income before income taxes and net (loss) income from continuing operations, the most directly comparable U.S.

GAAP measure, and a discussion of why management believes Adjusted Segment EBITDA and Adjusted EBITDA are useful, see “Non-U.S.

GAAP Financial Measures.”.

The following table reflects the changes in the revenues and adjusted EBITDA for each of our reportable segments during the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30

Nine Months Ended September 30

Statement of Operations Data:

North American Realty

International Realty

Other Affiliated Services

Segment eliminations

Total Consolidated Revenues

Adjusted Segment EBITDA (1)

Total Segment Adjusted EBITDA (1)

Operating Income (Loss)

North American Realty

1 unchanged sentence

Other Affiliated Services

Total Adjusted Segment EBITDA

Corporate expenses and other

Total Reported Adjusted EBITDA (1)

(1) Adjusted Segment EBITDA and Adjusted EBITDA are not measurements of the Company’s financial performance under U.S.

GAAP and should not be considered as alternatives to financial information prepared derived in accordance with U.S.

For a reconciliation of Adjusted Segment EBITDA and Adjusted EBITDA to (loss) income before income taxes and net (loss) income from continuing operations, the most directly comparable U.S.

GAAP measure, and a discussion of why management believes Adjusted Segment EBITDA and Adjusted EBITDA are useful, see “Non-U.S.

Total Consolidated Operating Income (Loss)

(1) Segment adjusted EBITDA is a non-U.S.

GAAP financial measure.

Management evaluates segment performance based on revenue, segment adjusted EBITDA, and operating income (loss).

For a definition, reconciliation to net income (loss), and discussion of why management believes this measure is useful, see “Non-U.S.

GAAP Financial Measures”.

North American Realty revenues increased in the third quarter and first nine months of 2025 compared to the same periods in 2024 primarily due to increased home sale prices and increased sales volume in the US and Canada.

Adjusted North American Realty EBITDA decreased in the third quarter and first nine months of 2025 compared to the same periods in 2024, due to increased commissions and other agent-related costs and increased operating costs.

International Realty revenues increased in the third quarter and first nine months of 2025 compared to the same periods in 2024 primarily due to increased real estate transactions driven by improved agent production and opening new markets.

Adjusted International EBITDA loss improved in the third quarter and first nine months of 2025, respectively, compared to the same periods in 2024.

The decreased loss in 2025 is due to increased revenues and improved business efficiencies in markets already entered.

Other Affiliated Services revenues decreased in the third quarter and the first nine months of 2025, compared to the same periods of 2024, due to lower SUCCESS® Magazine revenues.

Other Affiliated Services adjusted EBITDA decreased due to lower revenues and increased costs.

Corporate expenses and other contain the costs incurred to operate the corporate parent of eXp Realty, LLC, a wholly owned subsidiary of the Company.

North American Realty revenue increased 5% in the first quarter of 2026 compared to the same period in 2025, primarily due to an increase in agent productivity and home sale prices in the U.S.

and partially offset by lower transactions in Canada.

North American Realty adjusted EBITDA as well as operating income (loss) improved in the first quarter of 2026 compared to the same period 2025 due to increased revenues, and lower operating costs, which offset increased commissions and other agent-related costs as a result of increased capping and lower agent fees.

International Realty revenue increased 27% in the first quarter of 2026 compared to the same period in 2025, primarily due to increased real estate transactions driven by increased productivity in previously launched markets, as well as the strategic launch of several new markets during 2025.

International Realty adjusted EBITDA and operating income (loss) decreased by 50% and 57%, respectively, in the first quarter of 2026 compared to the same period in 2025 primarily due to higher costs of entering new countries and increased costs to support the continued growth.

Other Affiliated Services revenue increased 4% in the first quarter of 2026 compared to the same period in 2025, due to increased SUCCESS ® Magazine revenues.

Other Affiliated Services adjusted EBITDA and operating loss improved in the first quarter of 2026 compared to the same period in 2025 due to increased revenues and lower costs.

Corporate expenses and other contain the costs incurred to operate the Company.

GAAP FINANCIAL MEASURES

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with U.S.

GAAP, we use Adjusted EBITDA, a non-U.S.

GAAP financial measure, to understand and evaluate our core operating performance.

This non-U.S.

GAAP financial measure, which may be different than similarly titled measures used by other companies, is presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S.

We define the non-U.S.

GAAP financial measure of consolidated Adjusted EBITDA to mean net income (loss) from continuing operations, excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, litigation contingency expenses, stock-based compensation expense, stock option expense and other items not core to the operating activities of the Company.

Adjusted Segment EBITDA is defined as consolidated income (loss) before income taxes plus depreciation, amortization and stock-based compensation expense, stock option expense, and other (income) expense, net.

We believe that consolidated Adjusted EBITDA and Adjusted Segment EBITDA provides useful information about our financial performance, enhances the overall understanding of our past performance and future prospects and allows for greater transparency with respect to a key metric used by our management for financial and operational decision-making.

We believe that Adjusted Segment EBITDA helps identify underlying trends in our business that otherwise could be masked by the effect of the expenses that we exclude in Adjusted Segment EBITDA.

In particular, we believe the exclusion of stock-based compensation, provides a useful supplemental measure in evaluating the performance of our underlying operations and provides better transparency into our results of operations.

We are presenting the non-U.S.

GAAP measure of Adjusted EBITDA to assist investors in seeing our financial performance through the eyes of management, and because we believe this measure provides an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S.

There are a number of limitations related to the use of Adjusted EBITDA compared to net income (loss) from continuing operations, the closest comparable U.S.

GAAP measure.

Some of these limitations are that:

● Adjusted EBITDA excludes stock-based compensation expense related to our agent growth incentive program and stock option expense, which have been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy;

● Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets, amortization of intangible assets, and impairment charges related to these long-lived assets, and, although these are non-cash charges, the assets being depreciated, amortized, or impaired may have to be replaced in the future.

The following table presents a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations, the most comparable U.S.

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S.

GAAP, we use consolidated adjusted EBITDA and segment adjusted EBITDA, non-U.S.

GAAP financial measures, to understand and evaluate our core operating performance.

These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S.

We define consolidated adjusted EBITDA as net income, excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based compensation expense, stock option expense, and other items not core to the operating activities of the Company.

Segment adjusted EBITDA is defined consistently, excluding depreciation and amortization, interest expense, income taxes, stock compensation expense, stock option expense, and other non-core items.

We believe these measures provide useful information about our financial performance, help identify underlying trends that could otherwise be masked by excluded expenses, and allow for greater transparency with respect to key metrics used by management for financial and operational decision-making.

In particular, we believe the exclusion of stock and stock option expenses provides a useful supplemental measure in evaluating the performance of our underlying operations.

Consolidated adjusted EBITDA and segment adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S.

Limitations of these measures compared to net income include:

● Consolidated adjusted EBITDA and segment adjusted EBITDA exclude stock-based compensation expenses related to our agent growth incentive program and stock option expense, which have been and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy;

● Consolidated adjusted EBITDA and segment adjusted EBITDA exclude certain recurring, non-cash charges such as depreciation of fixed assets, amortization of intangible assets and impairment charges related to these long-lived assets and, although these are non-cash charges, the assets being depreciated, amortized, or impaired may have to be replaced in the future.

The following table presents a reconciliation of consolidated adjusted EBITDA to net income (loss), the most comparable U.S.

GAAP financial measure, for each of the periods presented:

Three Months Ended September 30,

Nine Months Ended September 30,

Net income (loss) from continuing operations

Other (income), net

Income tax expense (benefit)

Three Months Ended March 31,

Net income (loss)

Total other (income) expense, net

Income tax (benefit) expense

Depreciation and amortization

Litigation contingency

Stock-based compensation expense (1)

Stock option expense

Adjusted EBITDA

Other stock-based compensation expense

Consolidated adjusted EBITDA

(1) This includes agent growth incentive stock-based compensation expense.

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Our ability to generate sufficient cash flow from operations or to access certain capital markets, including banks, is necessary to fund our operations and capital expenditures, repurchase our common stock, and meet obligations as they become due.

Currently, our primary use of cash on hand is to sustain and grow our business operations, including, but not limited to, commission and revenue share payments to agents and brokers and cash outflows for operating expenses and dividend payments.

In addition, except for the $34 million antitrust litigation contingency accrual recorded for the year ended December 31, 2024 (of which $17 million was paid during the second quarter of 2025;

see Note 11 – Commitments and Contingencies to the unaudited condensed consolidated financial statements for additional information regarding the antitrust litigation), the Company has no known material cash requirements as of September 30, 2025 relating to capital expenditures, commitments, or human capital (except as passthrough commissions to agents and brokers concurrent with settled real estate transactions).

Currently, our primary use of cash on hand is to sustain and grow our business operations, including, but not limited to, making commission and revenue share payments to agents and brokers and cash outflows for operating expenses and dividend payments.

In addition, the Company has no known material cash requirements as of March 31, 2026 relating to capital expenditures, commitments, or human capital (except as passthrough commissions to agents and brokers concurrent with settled real estate transactions).

The Company intends to use available cash to pay the remaining $17 million antitrust litigation settlement amount.

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In order to support and achieve our future growth plans, we may need or seek advantageously to obtain additional funding through equity or debt financing.

We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next twelve months.

We believe that our current operating structure

will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next twelve months.

Net Working Capital

Net working capital is calculated as the Company’s total current assets less its total current liabilities.

The following table presents our net working capital as of September 30, 2025 and December 31, 2024:

September 30, 2025

The following table presents our net working capital as of March 31, 2026 and December 31, 2025:

March 31, 2026

December 31, 2025

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Net working capital

For the nine months ended September 30, 2025, net working capital increased by $17.6 million, compared to December 31, 2024 due to an increase in net accounts receivable and accrued expenses, due to increased revenue and related activity in the third quarter compared to 2024.

The following table presents our cash flows for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

As of March 31, 2026, net working capital increased by $12.2 million, compared to net working capital as of December 31, 2025 due to an increase in net accounts receivable, due to the timing of receivable collections, partially offset by an increase in accruals for customer deposits.

The following table presents our cash flows for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

Net cash provided by operating activities

Net cash used in investment activities

Net cash used in investing activities

Net cash used in financing activities

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Net change in cash, cash equivalents and restricted cash

For the nine months ended September 30, 2025, net cash provided by operating activities decreased ($73.0) million compared to the same period in 2024.

The decrease in cash provided by operating activities was primarily driven by the payment of the previously accrued litigation contingency of $17 million, lower agent equity compensation and changes in working capital.

For the nine months ended September 30, 2025, net cash used in investing activities increased due to cash used for investments in affiliates and other assets and purchases of property and equipment compared to the same period of 2024.

For the nine months ended September 30, 2025 and 2024 net cash flows used in financing activities decreased $69.6 million compared to the same period in 2024, due to lower stock repurchases.

For the three months ended March 31, 2026, net cash provided by operating activities decreased ($19.3) million compared to the same period in 2025.

The decrease in cash provided by operating activities was primarily driven by lower agent equity compensation and changes in working capital.

As of March 31, 2026, the Company has accrued the remaining $17.0 million installment of the antitrust litigation settlement, which it intends to pay from available cash on or before June 27, 2026.

For the three months ended March 31, 2026, net cash used in investing activities decreased due to lower cash used for investments in affiliates and other assets and purchases of property and equipment compared to the same period in 2025.

For the three months ended March 31, 2026, net cash flows used in financing activities decreased compared to the same period in 2025, due to no stock repurchases in the first quarter of 2026.

Acquisitions have not been a material element of our ongoing business, but we continue to seek opportunities to expand and enhance our portfolio of solutions, access new revenue streams, or otherwise complement or accelerate the growth of our existing operations .

We may fund acquisitions or investments in complementary businesses with various sources of capital, including existing cash balances and cash flow from operations.

Acquisitions during the first nine months of 2025 have not had a material impact on cash flow.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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For additional information regarding our critical accounting policies and estimates, see the Critical Accounting Policies and Estimates section of Part II, Item 7 Management’s Discussion and Analysis of Financial Conditions and Results of Operations included in our 2025 Annual Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposures to market risk since December 31, 2024.

For details on the Company’s market risks relating to interest rates and foreign currency exchange rates, see Part II, Item 7A Quantitative and Qualitative Disclosures About Market Risks in our 2024 Annual Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis