What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-04 · 80 added, 63 removed, 336 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

March 31, 2022

June 30, 2022

December 31, 2021

27 unchanged sentences

Accumulated earnings

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Total eXp World Holdings, Inc.

6 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

7 unchanged sentences

Equity in losses of unconsolidated affiliates

Total other expense, net

Total other (income) expense, net

Income before income tax expense

8 unchanged sentences

Other comprehensive income:

Foreign currency translation gain, net of tax

Foreign currency translation gain (loss), net of tax

Comprehensive income attributable to eXp World Holdings, Inc.

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Common stock:

Balance, beginning of quarter

Balance, beginning of period

Agent equity stock compensation

Balance, end of quarter

Balance, end of period

Treasury stock:

Balance, beginning of quarter

Balance, beginning of period

Repurchases of common stock

Balance, end of quarter

Balance, end of period

Additional paid-in capital:

Balance, beginning of quarter

Balance, beginning of period

Shares issued for stock options exercised

2 unchanged sentences

Stock option compensation

Balance, end of quarter

Balance, end of period

Accumulated earnings (deficit):

Balance, beginning of quarter

Balance, beginning of period

Dividends declared and paid

Balance, end of quarter

Accumulated other comprehensive income:

Balance, beginning of quarter

Foreign currency translation loss

Balance, end of quarter

Balance, end of period

Accumulated other comprehensive income (loss):

Balance, beginning of period

Foreign currency translation gain (loss)

Balance, end of period

Noncontrolling interest:

Balance, beginning of quarter

Balance, beginning of period

Transactions with noncontrolling interests

Balance, end of quarter

Balance, end of period

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

35 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Termination of lease liabilities

Property, plant and equipment purchases in accounts payable

9 unchanged sentences

This unique enabling platform helps businesses increase their effectiveness and reduce costs from operating in traditional “brick and mortar” office spaces.

Through various operating subsidiaries, the Company primarily operates a cloud-based real estate brokerage operating throughout the United States, most of the Canadian provinces, the United Kingdom (U.K.), Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, Greece, and the Dominican Republic.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

4 unchanged sentences

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 months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and six month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

26 unchanged sentences

Once the cash transfers from escrow, the Company reduces the respective customers’ deposit liability.

Restricted cash also includes cash held in escrow for acquisitions.

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

2 unchanged sentences

Balance, December 31, 2020

Balance, March 31, 2021

Balance, June 30, 2021

Balance, December 31, 2021

Balance, March 31, 2022

Balance, June 30, 2022

Recently Adopted Accounting Principles and Change in Accounting Principle

19 unchanged sentences

The Company analyzed uncollectible accounts for the three categories of receivables.

Receivables from real estate property settlements totaled $ 138,187 and $ 128,499 of which the Company recognized expected credit losses of $ 904 and nil , respectively as of March 31, 2022 and December 31, 2021.

As of March 31, 2022 and December 31, 2021 agent non-commission based fees receivable and short-term advances totaled $ 7,193 and $ 7,188 , of which the Company recognized expected credit losses of $ 1,513 and $ 2,198 , respectively.

Receivables from real estate property settlements totaled $ 147,824 and $ 128,499 of which the Company recognized expected credit losses of $ 904 and nil , respectively as of June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021 agent non-commission based fees receivable and short-term advances totaled $ 9,979 and $ 7,188 , of which the Company recognized expected credit losses of $ 1,902 and $ 2,198 , respectively.

The Company increases the allowance for expected credits losses when the Company determines all or a portion of a receivable is uncollectable.

The Company recognizes recoveries as a decrease to the allowance for expected credit losses.

Changes in the allowance were not material for the three months ended March 31, 2022 and the year ended December 31, 2021.

Changes in the allowance were not material for the six months ended June 30, 2022 and the year ended December 31, 2021.

PLANT, PROPERTY AND EQUIPMENT, NET

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

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

Property, plant, and equipment, net

For the three months ended March 31, 2022 and 2021, depreciation expense was $ 1,616 and $ 1,007 , respectively.

For the three months ended June 30, 2022 and 2021, depreciation expense was $ 1,954 and $ 1,189 , respectively.

For the six months ended June 30, 2022 and 2021, depreciation expense was $ 3,570 and $ 2,196 , respectively.

GOODWILL AND INTANGIBLE ASSETS

Goodwill was $ 12,945 and $ 12,945 as of March 31, 2022 and December 31, 2021.

Goodwill was $ 12,945 as of June 30, 2022 and December 31, 2021.

The Company has a risk of future impairment to the extent that individual reporting unit performance does not meet projections.

Additionally, if current assumptions and estimates, including projected revenues and income growth rates, terminal growth rates, competitive and consumer trends, market-based discount rates, and other market factors, are not met, or if valuation factors outside of the Company’s control change unfavorably, the estimated fair value of goodwill could be adversely affected, leading to a potential impairment in the future.

For the three months ended March 31, 2022, no events occurred that indicated it was more likely than not that goodwill was impaired.

For the three and six months ended June 30, 2022, no events occurred that indicated it was more likely than not that goodwill was impaired.

Definite-lived intangible assets were as follows:

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

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 March 31, 2022 and 2021 was $ 342 and $ 303 , respectively.

Amortization expense for definite-lived intangible assets for the three months ended June 30, 2022 and 2021 was $ 475 and $ 318 , respectively.

Amortization expense for definite-lived intangible assets for the six months ended June 30, 2022 and 2021 was $ 817 and $ 621 , respectively.

The Company has no indefinite-lived assets.

4 unchanged sentences

Included below is other information regarding leases for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other information

6 unchanged sentences

Additionally, the Company considered any historical and economic factors in determining if a lease renewal or termination option would be exercised.

As of March 31, 2022, expirations of lease obligations by fiscal year were as follows:

As of June 30, 2022, expirations of lease obligations by fiscal year were as follows:

Period Ending December 31,

5 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Shares of Common Stock)

12 unchanged sentences

The Company recognizes a 10 % discount on these issuances as an additional cost of sales charge during the periods presented.

During the three months ended March 31, 2022 and 2021, the Company issued 1,550,455 and 424,084 shares of common stock, respectively, to agents and brokers with a value of $ 38,500 and $ 21,402 , respectively, inclusive of discount.

During the three months ended June 30, 2022 and 2021, the Company issued 3,942,452 and 1,075,182 shares of common stock, respectively, to agents and brokers with a value of $ 48,335 and $ 38,451 , respectively, inclusive of discount.

During the six months ended June 30, 2022 and 2021, the Company issued 5,492,907 and 1,499,266 shares of common stock, respectively, to agents and brokers with a value of $ 86,835 and $ 59,853 , 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.

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.

1 unchanged sentence

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 March 31, 2022, the Company’s stock compensation attributable to the Agent Growth Incentive Program was $ 7,798 of which the total amount of stock compensation attributable to liability classified awards was $ 1,906 .

For the six months ended June 30, 2022, the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 17,028 of which the total amount of stock compensation expense attributable to liability classified awards was $ 4,451 .

Stock compensation expense related to the Agent Growth Incentive Program is included in general and administrative expense in the condensed consolidated statements of comprehensive income.

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

Balance, December 31, 2020

Stock grant liability increase year to date

Balance, March 31, 2021

Stock grant liability increase at December 31, 2021

1 unchanged sentence

Stock grants reclassified from liability to equity year to date

Balance, March 31, 2022

Balance, June 30, 2022

Stock Option Awards

During the three months ended March 31, 2022, and 2021, the Company granted 484,378 and 127,265 stock options, respectively, to employees with an estimated grant date fair value of $ 26.04 and $ 26.01 per share, respectively.

During the three months ended June 30, 2022, and 2021, the Company granted 288,007 and 66,739 stock options, respectively, to employees with an estimated grant date fair value of $ 11.64 and $ 26.77 per share, respectively.

During the six months ended June 30, 2022 and 2021, the Company granted 772,385 and 194,004 stock options, respectively, to employees with an estimated grant date fair value of $ 13.24 and $ 24.80 per share, respectively.

The fair value was calculated using a Black Scholes-Merton option pricing model.

6 unchanged sentences

The cost of the shares that are repurchased is funded from cash and cash equivalents on hand.

Repurchase Plan Amendment

On May 3, 2022, the Board authorized an increase to the Company’s stock repurchase program from $ 400 million of its common stock up to $ 500 million and approved a form of amendment to its Issuer Repurchase Plan, dated January 10, 2022, by and between the Company and Stephens Inc., to increase monthly repurchases from $ 10 million of its common stock per month up to $ 20 million which amendment was signed May 6, 2022.

For accounting purposes, common stock repurchased under the stock repurchase programs is recorded based upon the transaction date of the applicable trade.

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(Shares of Treasury Stock)

8 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income attributable to common stock

5 unchanged sentences

Earnings per share attributable to common stock- diluted

For the three months ended March 31, 2022 and 2021 total outstanding shares of common stock excluded 392,483 and 6,506 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Our quarterly tax provision is computed by applying the estimated annual effective tax rate to the year-to-date pre-tax income or loss and adjust for discrete tax items in the period.

Our provision for (benefit from) income taxes amounted to ( $ 5.15 ) million and $ 0.21 million for the three months ended March 31, 2022 and 2021, respectively, which represented effective tax rates of negative 137.97 % and positive 4.17 % , respectively.

The increase in income tax benefit was primarily attributable to the deductible stock-based compensation windfalls

For the three months ended June 30, 2022 and 2021 total outstanding shares of common stock excluded 1,485,139 and 152,950 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For six months ended June 30, 2022 and 2021 total outstanding shares of common stock excluded 692,237 and 62,889 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Our quarterly tax provision is computed by applying the estimated annual effective tax rate to the year-to-date pre-tax income or loss plus discrete tax items arising in the period.

Our provision for (benefit from) income taxes amounted to ( $ 3.49 ) million and ( $ 20.4 ) million for the six months ended June 30, 2022 and 2021, respectively, which represent an effective tax rates of negative 23.81 % and 95.1 % , respectively.

The decrease in income tax benefit was primarily attributable to the release of valuation allowance in 2021 and lower deductible stock based compensation in 2022.

FAIR VALUE MEASUREMENT

10 unchanged sentences

The Company values its money market funds at fair value on a recurring basis.

As of March 31, 2022 and December 31, 2021, the fair value of the Company’s money market funds was $ 43,387 and $ 43,386 , respectively.

As of June 30, 2022 and December 31, 2021, the fair value of the Company’s money market funds was $ 43,423 and $ 43,386 , respectively.

There have been no transfers between Level 1, Level 2 and Level 3 in the period presented.

2 unchanged sentences

From time to time, the Company is subject to potential liability under laws and government regulations and various claims and legal actions that may be asserted against us that could have a material adverse effect on the business, reputation, results of operations or financial condition.

Such litigation may include, but is not limited to, actions or claims relating to sensitive data, including proprietary business information and intellectual property and that of clients and personally identifiable information of employees and contractors, cyber-attacks, data breaches and non-compliance with contractual or other legal obligations.

Such litigation may include, but is not limited to, actions or claims relating to sensitive data, including proprietary

business information and intellectual property and that of clients and personally identifiable information of employees and contractors, cyber-attacks, data breaches and non-compliance with contractual or other legal obligations.

On November 19, 2021, the Company agreed to settle a class action lawsuit filed against the Company in 2018 alleging violations under the Telephone Consumer Protection Act.

17 unchanged sentences

The Company primarily operates as a cloud-based real estate brokerage.

The real estate brokerage business represents 99.2 % and 99.3 % of the total revenue of the Company for the three months ended March 31, 2022 and 2021, respectively.

The real estate brokerage business represents 99.1 % and 99.0 % of the total assets of the Company as of March 31, 2022 and December 31, 2021, respectively.

The real estate brokerage business represents 99.1 % and 99.5 % of the total revenue of the Company for the six months ended June 30, 2022 and 2021, respectively.

The real estate brokerage business represents 96.8 % and 99.0 % of the total assets of the Company as of June 30, 2022 and December 31, 2021, respectively.

The Company offers software subscriptions to customers to access its virtual reality software platform.

1 unchanged sentence

However, the operations and assets of the technology segment are not managed by the Company’s chief operating decision-maker as a separate reportable segment.

Services provided through First Cloud and Silverline are in the emerging stages of development as contributing segments and are not material to the Company’s total revenue, total net income or total assets as of March 31, 2022 and 2021, respectively.

The Company aggregates the identified operating segments for reporting purposes and has one reportable segment.

1 unchanged sentence

The Company primarily operates within the real estate brokerage markets in the United States and Canada.

During the previous two years, the Company expanded operations into the United Kingdom, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, Greece, and the Dominican Republic.

During the previous three years, the Company expanded operations into the United Kingdom, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, the Dominican Republic, Greece, and New Zealand.

The Company’s management analyzes geographical locations on a forward-looking basis to identify growth opportunities.

For the three months ended March 31, 2022 and 2021, approximately 8 % and 7 %, respectively, of the Company’s total revenue was generated outside of the U.S.

For both the six months ended June 30, 2022 and 2021, approximately 9 %, respectively, of the Company’s total revenue was generated outside of the U.S.

Assets held outside of the U.S.

were 11 % and 8 % as of March 31, 2022 and December 31, 2021

were 8 % as of June 30, 2022 and December 31, 2021

The Company’s technology services and affiliated services are currently provided primarily in the U.S.

1 unchanged sentence

Quarterly Cash Dividend

On April 29, 2022 , the Company’s Board of Directors declared a dividend of $ 0.04 per share which is expected to be payable on May 31, 2022 , to stockholders of record as of the close of business on May 31, 2022 .

The ex-dividend date is expected to be May 13, 2022.

On July 29, 2022 , the Company’s Board of Directors declared a dividend of $ 0.045 per share which is expected to be payable on August 29, 2022 , to stockholders of record as of the close of business on August 12, 2022 .

The ex-dividend date is expected to be August 11, 2022.

The dividend will be paid in cash.

Repurchase Plan Amendment

On May 3, 2022, the Board authorized an increase to the Company’s stock repurchase program from $400 million of its common stock up to $500 million and approved a form of amendment to its Issuer Repurchase Plan, dated January 10, 2022, by and between the Company and Stephens Inc., to increase monthly repurchases from $10 million of its common stock per month up to $20 million which amendment is expected to be signed May 6, 2022.

Zoocasa Acquisition

On July 1, 2022, the Company acquired Zoocasa Realty Inc.

and its key property, Zoocasa.com (“Zoocasa”).

Zoocasa is a consumer real estate search portal that offers proprietary home search tools, market insights and a connection to local real estate experts.

The acquisition expanded the Company’s online lead generation, home search and listings portal capabilities for its agents and brokers as well as for home buying and selling consumers across North America.

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 1. Financial Statements