What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-03 compared with 2021-08-04 · 100 added, 95 removed, 237 unchanged (45% of the section changed)

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By building partnerships and strategically deploying capital, we seek to grow the business and enter into attractive verticals and associated businesses.

Throughout 2020 and the first half of 2021, we made progress in achieving our strategic goals, including an 87% increase in our agent count, going from 31,091 agents as of June 30, 2020 to 58,263 agents as of June 30, 2021.

Throughout 2021, we continued to make progress in achieving our strategic goals, including an 82% increase in our agent count, going from 35,877 agents as of September 30, 2020 to 65,269 agents as of September 30, 2021.

The expected outcome of these activities will be to better position us to deliver on our full potential, to provide a platform for future growth opportunities, and to achieve our long-term financial goals.

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

For the period ended June 30, 2021, the COVID-19 pandemic has continued to be contained due to the rate of inoculation and efficacy of vaccines.

However, there is still volatility and uncertainty surrounding the outlook of the global economy due to inconsistencies in

lifting restriction across geographic markets and new variants to the virus.

We believe that the economy will continue to rebound depending on the continued pace, rate, and effectiveness of lifting public health restrictions on businesses and individuals and how quickly people become comfortable engaging in public activities.

For the period ended September 30, 2021, the COVID-19 pandemic has continued to be contained due to the rate of inoculation and efficacy of vaccines.

However, there is still volatility and uncertainty surrounding the outlook of the global economy due to inconsistencies in lifting restrictions across geographic markets and new variants to the virus.

We believe that the economy will continue

to rebound depending on the continued pace, rate, and effectiveness of lifting public health restrictions on businesses and individuals and how quickly people become comfortable engaging in public activities.

According to National Association of Realtors (“NAR”), the housing market is past the recovery phase from the initial downturn during the beginnings of the COVID-19 pandemic.

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The sizable shift to remote work, which has led to current homeowners looking for larger homes and vacation homes, and the continued historic low interest rates have accelerated housing demand.

These low mortgage rates are also allowing more buyers to enter the market.

According to NAR housing statistics, existing home sales decreased for the fourth consecutive month as of May 2021, while the existing-home median price reached a historic record high of $350.3 as of May 2021 (preliminary).

We expect the decline in sales is due, in part, to the continued inventory shortage of homes.

As of September 2021, existing home sales increased 7% on a seasonally adjusted annual rate.

This is mostly driven by some improvement in supply;

however, housing inventory is still down year-over-year.

While the demand is driving home prices up, more buyers are waiting on more inventory and prices to stabilize.

According to NAR housing statistics, total housing inventory at the end of September 2021 was down 13.0% from the same time in prior year with only 2.4 months of inventory supply, while the existing-home median price reached a historic record high of $352.8 as of September 2021, which is a 13.3% increase from the same period in 2020.

The demand for homebuying remains high.

NAR reported that pending home sales rebounded in May by 8%, which is a positive indicator of continued housing demand.

NAR reported that pending home sales rebounded in August by 8%, which is a positive indicator of continued housing demand.

This NAR index measures housing contract activity and is based on signed real estate contracts for existing single-family homes and condos.

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The Company is positioned to continue to grow in light of a series of fluctuations in economic activity.

The Company continued its growth trajectory through the second quarter of 2021 with a year-over-year increase in revenue of 153% and an increase in agent count of 87%.

However, depending on the continued course of the COVID-19 pandemic, specifically in key areas of operations and the spread of new variants, it is too early to predict the full extent the effects the COVID-19 pandemic will have on the Company as we progress through the remainder of 2021.

The Company continued its growth trajectory through the third quarter of 2021 with a year-over-year increase in revenue of 127% and an increase in agent count of 82%.

However, the Company continues to monitor the continued course of COVID-19, specifically in key areas of operations and the spread of new variants and the overall economic conditions affecting the real estate market through the end of 2021.

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

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Throughout 2020 and into 2021, increased demand and low mortgage interest rates caused inventory levels to decline to record lows.

With government-implemented actions in response to COVID-19 in 2020 and into 2021 and overall uncertainty, fewer individuals are listing their homes.

Additionally, construction of new homes has slowed for a significant period of time and supply is not keeping up with current demand.

With continued overall uncertainty of the overall economy, fewer individuals are listing their homes.

Additionally, construction of new homes has slowed due to increased costs of raw materials, tight labor market, and delays in the supply chains as the global economy continues to recover.

Due to these factors, and others, year-over-year inventory has decreased further.

According to NAR, inventory of existing homes for sales in the U.S.

was 1.23 million as of May 2021 (preliminary) compared to 1.5 million at the end of May 2020.

According to NAR, inventory of existing homes for sale in the U.S.

was 1.27 million as of September 2021 (preliminary) compared to 1.46 million at the end of September 2020.

NAR indicated the need for new home construction due to the high demand of homes and the record-low inventory levels.

Mortgage Interest Rates

According to NAR, mortgage interest rates on commitments for 30-year, conventional, fixed-rate mortgages averaged 3.1% for the second quarter of 2021 compared to 3.2% for the second quarter of 2020.

Mortgage rates are forecasted to increase minimally to 3.2% throughout the second half of 2021.

According to NAR, mortgage interest rates on commitments for 30-year, conventional, fixed-rate mortgages averaged 2.9% for the third quarter of 2021 compared to 3.0% for the third quarter of 2020.

Mortgage rates are forecasted to increase minimally to 3.3% throughout the end of 2021, with an expected increase in interest rates in 2022 to 3.6%.

Low mortgage rates are expected to continue to contribute to overall high demand for homebuying.

Housing Affordability Index

According to NAR, the composite housing affordability index decreased to 151.7 for May 2021 (preliminary) from 180.0 for May 2020.

The housing affordability index continues to be at historically favorable levels.

According to NAR, the composite housing affordability index decreased to 151.3 for August 2021 (preliminary) from 165.8 for August 2020.

The housing affordability index continues to be at favorable levels.

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.

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Home Sales Transactions

According to NAR, seasonally adjusted existing home sale transactions increased to 5.8 million for May 2021 (preliminary) compared to 4.0 million for May 2020.

According to NAR, seasonally adjusted existing home sale transactions increased to 6.3 million for September 2021 (preliminary) compared to 6.4 million for September 2020.

NAR anticipates transactions to continue with current pace;

however, due to low inventory levels, recovery may not be sustainable.

According to NAR, the nationwide existing home sales median price for May 2021 (preliminary) was $350.3 compared to $283.5 in May 2020.

Due to low supply and high demand, the average sale price is expected to continue to increase through the remainder of 2021.

According to NAR, the nationwide existing home sales median price for September 2021 (preliminary) was $352.8 compared to $311.5 in September 2020.

Due to low supply and high demand, the average sale price is expected to continue to increase, year over year, through the end of 2021.

KEY BUSINESS METRICS

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except transactions and agent count)

$ 111,248,926

Adjusted EBITDA

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Our strength is attracting real estate agent and broker professionals that contribute to our growth.

Brokerage real estate transactions are recorded when our agents and brokers represent buyer and/or sellers in the purchase or sale, respectively, of a home.

Brokerage real estate transactions are recorded when our agents and brokers represent buyers and/or sellers in the purchase or sale, respectively, of a home.

The number of real estate transactions is a key driver of our revenue and profitability.

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We continue to increase our agents and brokers significantly in the United States and Canada through the execution of our growth strategies.

Since 2019, we expanded operations to U.K., Australia, South Africa, Portugal, France, India, Mexico, Puerto Rico, Brazil, Italy, Spain, Colombia, Israel, Panama and Hong Kong.

Since 2019, we expanded operations to the U.K., Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama and Germany.

The rate of growth of our agent and broker base is difficult to predict and is subject to many factors outside of our control, including macroeconomic factors affecting the real estate industry in general.

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Settled home sales transactions and volume resulted from closed real estate transactions and typically change directionally with changes in the market’s existing home sales transactions as reported by NAR, as disproportionate variances are representative of company-specific improvements or shortfalls to the norm.

Our home sale transactions growth was directly related to the growth of our agent base over the prior comparative period.

Our home sale transaction growth was directly related to the growth of our agent base over the prior comparative period.

We utilize gross margin, a financial statement measure based on U.S.

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Commissions and other agent-related costs represent the cost of sales for the Company.

The cost of sales does not include depreciation or amortization expenses as the Company’s assets are not directly used in the production of revenue.

The cost of sales does not include depreciation, amortization, or stock compensation expenses as the Company’s assets are not directly used in the production of revenue.

Gross margin is based on the information provided in our results of operations or our consolidated statements of comprehensive income (loss), and is an important measure of our potential profitability and brokerage performance.

For the three months ended June 30, 2021 and 2020, gross margin was 8.0% and 9.7%, respectively.

For the six months ended June 30, 2021 and 2020, gross margin was 8.4% and 10.0%, respectively.

Gross margin decreased year-over-year which is mostly attributable to an increase in agent commission costs associated with increase productivity and home sale price.

Rising home prices and increased demand also contributed to agents reaching their commission capping requirements sooner, entitling them to a higher percentage of the home sale commission.

For the three months ended September 30, 2021 and 2020, gross margin was 7.2% and 8.3%, respectively.

For the nine months ended September 30, 2021 and 2020, gross margin was 7.9% and 9.2%, respectively.

Gross margin decreased year-over-year primarily due to rising home prices and increased demand which resulted in agents reaching their commission capping requirements sooner, entitling them to a higher percentage of the home sale commission.

We continue to monitor our gross margin through efforts to improve our cost structure.

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

Adjusted EBITDA has grown significantly for the three and six months ended June 30, 2021 and 2020 due to our revenue growth and improved leverage of our cost structure.

Adjusted EBITDA has grown significantly for the three and nine months ended September 30, 2021 and 2020 due to our revenue growth and improved leverage of our cost structure.

RECENT BUSINESS DEVELOPMENTS

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Global Expansion of Our Real Estate Cloud Brokerage

During the fourth quarter of 2020, the Company initiated operations in South Africa, India, Mexico, Portugal and France.

In addition, operations commenced in Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, and Israel in the first half of 2021.

continues to pursue growth opportunities into new global markets.

During the fourth quarter of 2020, the Company expanded into South Africa, India, Mexico, Portugal and France.

In addition, the Company expanded into Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, and Germany in the first nine months of 2021.

The Company continues to pursue growth opportunities into new global markets.

In addition to the international expansion, the Company also continues to focus on growth in the United States and existing international markets.

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An NPS above 50 is considered excellent.

The Company’s cumulative agent NPS was 70 in the second quarter of 2021.

The Company’s cumulative agent NPS was 71 through the third quarter of 2021.

Whether the overall question is "How likely are you to recommend eXp to your colleagues, friends, or family?"

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In 2019, we released a new product centered on the concept of an open campus whereby small and independent organizations may utilize sub spaces as part of a larger campus similar to collaborative environments that currently exist in the physical brick-and-mortar world.

In the first quarter of 2020, Virbela began offering virtual events in conjunction with Event Farm, Inc.

In the first quarter of 2020, Virbela began offering virtual events services.

Given the current environment due to the COVID-19 pandemic, there is an acute need for virtual workplace collaboration.

For the period ended June 30, 2021, Virbela continues to see growing demand from organizations exploring remote and hybrid operating models and as a result continues to introduce new products and features including the imminent commercial release of FRAME, a browser-based instant virtual collaboration tool.

FRAME, currently in beta, is built to give users frictionless avatar-based virtual collaboration across multiple devices.

For the period ended September 30, 2021, Virbela continues to see growing demand from organizations exploring remote and hybrid operating models, including global Fortune-2000 firms with the need to connect distributed teams.

As a result, Virbela continues to invest in product and infrastructure improvements, along with new feature development.

Lastly, we expect to continue to service existing and new business-to-business enterprise-level contracts in the coming year.

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Results of Operations

Three Months Ended June 30, 2021 compared to the Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 compared to the Three Months Ended September 30, 2020

Three Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

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

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Operating income

Other (income) expense, net

Other expense

Other expense, net

Equity in losses of unconsolidated affiliates

Other expense, net

Total other expense, net

Income before income tax expense

Income tax (benefit) expense

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GAAP Financial Measures.”

Our total revenues were $999.9 million for the three months ended June 30, 2021 compared to $353.5 million for the same period in 2020, an increase of $646.4 million, or 183%.

Total revenues increased for the second quarter of 2021 primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2020.

Additionally, the average home sale price for eXp closed transactions increased 17% to $348 during the three months ended June 30, 2021 from $297 for the same period in 2020.

Our total revenues were $1.1 billion for the three months ended September 30, 2021 compared to $564.0 million for the same period in 2020, an increase of $546.5 million, or 97%.

Total revenues increased for the third quarter of 2021 primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2020.

Additionally, the average home sale price for eXp closed transactions increased 15% to $359 during the three months ended September 30, 2021 from $313 for the same period in 2020.

Commission and Other Agent Related Costs

Commission and other agent-related costs were $920.0 million for the three months ended June 30, 2021 compared to $319.2 million for the same period in 2020, an increase of $600.8 million, or 188%.

Commissions and other agent related costs increased as a result of a higher volume of settled real estate transactions due to a growing agent base.

Commission and other agent-related costs were $1.0 billion for the three months ended September 30, 2021 compared to $517.2 million for the same period in 2020, an increase of $513.8 million, or 99%.

Commissions and other agent related costs increased as a result of an increase in our agent count and closed transactions compared to the same period in 2020.

Rising home prices and increased demand also contributed to agents reaching their commission capping requirements sooner, entitling them to a higher percentage of the home sale commission.

General and Administrative Expense

General and administrative expenses were $60.7 million for the three months ended June 30, 2021 compared to $25.2 million for the same period in 2020, an increase of $35.6 million or 141%.

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

General and administrative expenses increased primarily as a result of an increase of $20.2 million in compensation and personnel related expenses including salaries, employee benefits, and payroll taxes and processing, an increase of $3.6 million in computer and software expenses, and an increase of $4.5 million in stock compensation

General and administrative expenses were $64.6 million for the three months ended September 30, 2021 compared to $30.1 million for the same period in 2020, an increase of $34.5 million or 114%.

General and administrative expenses include costs related to wages,

including stock compensation, and other general overhead expenses.

General and administrative expenses increased primarily as a result of an increase of $21.3 million in compensation and personnel related expenses including salaries, employee benefits, and payroll taxes and payroll processing fees, an increase of $3.3 million in computer and software expenses, and an increase of $4.7 million in stock compensation expense.

These increased costs are a result of the Company’s growth in agent count and real estate transaction volumes, and the investment of employee and technology in supporting the growth in 2021.

Sales and Marketing

Sales and marketing expenses increased to $2.7 million from $0.9 million for the three months ended June 30, 2021 compared to the same period in 2020.

This is due to an increase of $1.6 million in advertising and lead capture costs as we continue to expand our real estate operations and software services.

Sales and marketing expenses increased to $3.8 million for the three months ended September 30, 2021 compared to $1.5 million the same period in 2020.

This is due to an increase of $1.2 million in advertising as we continue to expand our real estate operations and software services.

Other Expense

There were no significant changes in other expense for the three months ended June 30, 2021 compared to the same period in 2020.

There were no significant changes in other expense for the three months ended September 30, 2021 compared to the same period in 2020.

Income Tax Benefit (Expense)

The Company’s provision for (benefit from) income taxes amounted to ($20.6) million and less than $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which represented effective tax rates of negative 125.8% and 0.7%, respectively.

The decrease in income tax expense was primarily attributable to the release of the valuation allowance.

Six Months Ended June 30, 2021 compared to the Six Months Ended June 30, 2020

Six Months Ended

June 30, 2021

June 30, 2020

The Company’s provision for (benefit from) income taxes amounted to ($12.9) million and $0.2 million for the three months ended September 30, 2021 and 2020, respectively, which represented effective tax rates of negative 117.90% and 1.38%, respectively.

The increase in income tax benefit was primarily attributable to the release of the valuation allowance and higher deductible stock-based compensation.

Nine Months Ended September 30, 2021 compared to the Nine Months Ended September 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

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

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Total other expense, net

Income before income tax (benefit) expense

Income before income tax expense

Income tax (benefit) expense

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GAAP Financial Measures.”

Our total revenues were $1,583.7 million for the six months ended June 30, 2021 compared to $624.9 million for the same period in 2020, an increase of $958.8 million, or 153%.

Total revenues increased for the first half of 2021 primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2020.

Additionally, the average home sale price for eXp closed transactions increased 16% to $341 during the six months ended June 30, 2021 from $294 for the same period in 2020.

Our total revenues were $2.7 billion for the nine months ended September 30, 2021 compared to $1.2 billion for the same period in 2020, an increase of $1.5 billion, or 127%.

Total revenues increased for the nine month period primarily as a result of an increase in real estate brokerage commissions, which is directly attributable to increases in our agent count and closed transactions compared to the same period in 2020.

Additionally, the average home sale price for eXp closed transactions increased 15% to $348 during the nine months ended September 30, 2021 from $303 for the same period in 2020.

Commission and Other Agent Related Costs

Commission and other agent-related costs were $1,450.3 million for the six months ended June 30, 2021 compared to $562.6 million for the same period in 2020, an increase of $887.7 million, or 158%.

Commissions and other agent related costs increased as a result of a higher volume of settled real estate transactions due to a growing agent base.

Commission and other agent-related costs were $2.5 billion for the nine months ended September 30, 2021 compared to $1.1 billion for the same period in 2020, an increase of $1.4 billion, or 130%.

Commissions and other agent related costs increased as a result of an increase in our agent count and closed transactions compared to the same period in 2020.

Rising home prices and increased demand also contributed to agents reaching their commission capping requirements sooner, entitling them to a higher percentage of the home sale commission.

General and Administrative Expense

General and administrative expenses were $107.0 million for the six months ended June 30, 2021 compared to $52.0 million for the same period in 2020, an increase of $55.0 million or 106%.

General and administrative expenses were $171.6 million for the nine months ended September 30, 2021 compared to $82.1 million for the same period in 2020, an increase of $89.5 million or 109%.

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

General and administrative expenses increased primarily as a result of an increase of $32.0 million in personnel related expenses including salaries, employee benefits, and payroll taxes and processing, an increase of $5.8 million in computer and software expenses, and an increase of $8.5 million in stock compensation expense.

General and administrative expenses increased primarily as a result of an increase of $53.3 million in personnel related expenses including salaries, employee benefits, and payroll taxes and payroll processing fees, an increase of $9.1 million in computer and software expenses, and an increase of $13.2 million in stock compensation expense.

These increased costs are a result of the Company’s growth in agent count and real estate transaction volumes, and the investment of employee and technology in supporting the growth in 2021.

Sales and Marketing

Sales and marketing expenses increased to $4.9 million from $1.8 million for the six months ended June 30, 2021 compared to the same period in 2020, an increase of $3.1 million or 170%.

Sales and marketing expenses increased to $8.7 million from $3.3 million for the nine months ended September 30, 2021 compared to the same period in 2020, an increase of $5.4 million or 162%.

This is due to an increase of $2.0 million in advertising and lead capture costs as we continue to expand our real estate operations and software services.

Other Income (Expense)

There were no significant changes in other income (expense) for the six months ended June 30, 2021 compared to the same period in 2020.

Other Expense

There were no significant changes in other expense for the nine months ended September 30, 2021 compared to the same period in 2020.

Income Tax Benefit (Expense)

The Company’s provision for (benefit from) income taxes amounted to ($20.38) million and less than $0.1 million for the six months ended June 30, 2021 and 2020, respectively, which represented an effective tax rate of negative 95.1% and 0.8%, respectively.

The decrease in income tax expense was primarily attributable to the release of the valuation allowance.

The Company’s provision for (benefit from) income taxes amounted to ($33.3) million and $0.3 million for the nine months ended September 30, 2021 and 2020, respectively, which represented an effective tax rate of negative 102.46% and 1.22%, respectively.

The decrease in income tax expense was primarily attributable to the release of the valuation allowance and higher deductible stock-based compensation.

GAAP FINANCIAL MEASURES

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

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 and provides better transparency into our results of operations.

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 and provides better transparency into our results of operations.

We are presenting the non-U.S.

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GAAP financial measure, for each of the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Other (income) expense, net

Three Months Ended September 30,

Nine Months Ended September 30,

Other expense, net

Income tax (benefit) expense

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(1) Amortization of stock liability is included in the “Other expense (income)” line item.

(2) This includes agent growth incentive stock compensation expense and stock compensation expense related to non-controlling interest.

(2) This includes agent growth incentive stock compensation expense and stock compensation expense related to business acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

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Our current capital deployment strategy for 2021 is to utilize excess cash on hand to support our growth initiatives into select markets and enhance our technology platforms and for repurchases of our common stock.

As of June 30, 2021, the Company is not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

In addition, the Company has no known material cash requirements as of June 30, 2021 relating to capital expenditures, commitments, or human capital (except commissions to agents and brokers concurrent with settled real estate transactions).

As of September 30, 2021, the Company is not party to any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

In addition, the Company has no known material cash requirements as of September 30, 2021 relating to capital expenditures, commitments, or human capital (except commissions to agents and brokers concurrent with settled real estate transactions).

The cash requirements for the upcoming fiscal year relating to our leases and our debt associated with acquisitions is insignificant.

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Our future capital requirements will depend on many factors, including our level of investment in technology, our rate of growth into new markets, and cash used to repurchase shares of the Company’s common stock.

Our capital requirements may be affected by factors which we cannot control such as the changes in the residential real estate market, interest rates, and other monetary and fiscal policy changes to the manner in which we currently operate.

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.

Our capital requirements may be affected by factors which we cannot control such as the changes in the

residential real estate market, interest rates, and other monetary and fiscal policy changes to the manner in which we currently operate.

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.

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If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would likely suffer.

As of June 30, 2021, our cash and cash equivalents totaled $107.4 million.

As of September 30, 2021, our cash and cash equivalents totaled $98.1 million.

Cash equivalents are comprised of financial instruments with an original maturity of 90 days or less from the date of purchase;

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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 June 30, 2021 and December 31, 2020:

June 30, 2021

The following table presents our net working capital as of September 30, 2021 and December 31, 2020:

September 30, 2021

December 31, 2020

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Net working capital

For the six months ended June 30, 2021, net working capital increased to $126.2 million, or 9%, compared to December 31, 2020 primarily due to an increase in agent and commission receivables directly related to the increase in revenue.

The following table presents our cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

For the nine months ended September 30, 2021, net working capital increased to $116.7 million, or 1%, compared to December 31, 2020 primarily due to an increase in agent and commission receivables directly related to the increase in revenue.

The following table presents our cash flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Cash provided by operating activities

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Net change in cash, cash equivalents and restricted cash

For the six months ended June 30, 2021, cash provided by operating activities increased $121.4 million compared to the same period in 2020.

For the nine months ended September 30, 2021, cash provided by operating activities increased $109.2 million compared to the same period in 2020.

The change resulted primarily from the increased real estate transactions volume, increase in customer deposits, and higher participation by our agents and brokers in our agent stock compensation programs.

For the six months ended June 30, 2021, cash used in our investing activities increased due to higher capital expenditures and acquisition-related payments.

For the six months ended June 30, 2021, the increase in cash flows used in financing activities primarily were related to repurchases of our common stock, partially offset by proceeds received from the exercise of stock options.

For the nine months ended September 30, 2021, cash used in our investing activities increased due to higher capital expenditures and acquisition-related payments.

For the nine months ended September 30, 2021, the increase in cash flows used in financing activities primarily were related to repurchases of our common stock and payment of cash dividend, partially offset by proceeds received from the exercise of stock options.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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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