What changed in this filing

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Item 1. Business

2023-02-28 compared with 2022-02-25 · 135 added, 198 removed, 68 unchanged (83% of the section changed)

eXp World Holdings, Inc.

(“eXp,” or, collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) owns and operates a cloud-based real estate brokerage and a technology platform business that enables a variety of businesses to operate remotely.

Our real estate brokerage is now one of the largest and fastest-growing real estate brokerage companies in the United States and is rapidly expanding internationally.

Our technology platform business develops and uses immersive technologies that enable and support virtual workplaces.

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 and Germany.

(“eXp,” or, collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) owns and operates a diversified portfolio of service- based businesses whose operations benefit substantially from utilizing our enabling technology platform.

We strategically prioritize our efforts to grow our real estate brokerage by strengthening our agent value proposition, developing immersive and cloud-based technology to enable our model and providing affiliate and media services supporting those efforts.

The following are changes in our business in the most recent fiscal year:

Real Estate Brokerage – In addition to maintaining operations in all locations, in 2021 the Company continued its international growth with the expansion into Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama and Germany.

Except for certain employees who hold active real estate licenses, virtually all of our real estate professionals are independent contractors.

Mortgage Lending – In July 2021, the Company entered into a joint venture with Kind Partners, LLC, a subsidiary of Kind Lending, LLC, forming SUCCESS Lending, LLC (“SUCCESS Lending”), a residential mortgage service company.

The operations are currently in a nascent state.

Details regarding the development of our businesses prior to 2021 are incorporated by reference herein from Part I of our Annual Report on Form 10-K dated March 11, 2021 (Commission File No.

Operations and Revenue Streams

Our operations support the purchase and sale of homes through leveraging innovative technologies and integrated services.

In our current state, almost all of our revenue and profit or loss are generated by our cloud-based real estate brokerage and wholly-owned subsidiary, eXp Realty ® , LLC (“eXp Realty”).

Because we do not have significant standalone contributions of revenue and profit or loss from our other businesses, we operate and manage the Company as one business unit.

In the future, we believe there is strong potential for multiple significant revenue and profit opportunities that may be organized into distinct business units in order to increase our management effectiveness.

Over the long term, we envision owning and operating a diversified portfolio of service- based businesses whose operations benefit substantially from utilizing our enabling technology platform.

Within the Company today, we strategically prioritize our efforts to grow our real estate brokerage, develop immersive and cloud-based technology products and services, nurture affiliate and media services (and our eXp Partners program) related to real estate transactions, and strengthen and iterate on our enabling technology platform.

Together with our other real estate brokerage subsidiaries, eXp Realty is a leading, rapidly growing, cloud-based international real estate brokerage company.

We disrupt from within the traditional real estate markets in which we operate for the benefit of agents and brokers through innovation, use of cloud-based technology, and development of world-class agent and broker attraction and retention practices.

We generate revenue primarily by serving as a licensed broker for the purpose of processing residential and commercial real estate transactions, from which we earn commissions.

Real Estate Brokerage Expansion – In addition to maintaining operations in all locations, in 2022 the Company continued its international growth with expansion into the Dominican Republic, Greece, New Zealand, Chile and Poland.

In addition, in late 2022, we announced operations in Dubai, which is expected to be fully operational in 2023.

Except for certain employees who hold active real estate licenses, virtually all our real estate professionals are independent contractors.

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

–, an Ontario, Canada company (“Zoocasa”).

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

Zoocasa has been included in the North American Realty segment since its key asset, Zoocasa.com, provides quality real estate referrals for the North American real estate markets.

New Programs and Services – During 2022, the Company launched various new ancillary programs and services to support the development and success of its agents, brokers and customers, including eXp Luxury™, Revenos™, SUCCESS ® Health and SUCCESS ® Coaching.

Details regarding the development of our businesses prior to 2022 are incorporated by reference herein from Part I of our Annual Report on Form 10-K dated February 25, 2022 (Commission File No.

Business Segments

Due to growth in international operations and changes to the North American markets, the Company began operating and managing the Company as four operating and reportable business segments beginning in December 2022, in order to increase our management effectiveness.

The reportable segments are North American Realty, International Realty, Virbela and Other Affiliated Services.

Our business segments bring together related eXp technologies and services to support the success and development of agents, entrepreneurs and businesses and provide them remote business solutions.

Both the North American Realty and the International Realty segments generate revenue primarily by serving as a licensed broker for the purpose of processing residential and commercial real estate transactions, from which we earn commissions.

The Company in turn pays a portion of the commissions earned to the real estate agents and brokers.

Our mission is to deliver maximum value to our shareholders, agents, brokers and staff, while building an international brand as the leading cloud-based brokerage.

Our cloud-based solutions provide primarily residential and commercial real estate agents and brokers the collaborative tools to seamlessly support and facilitate buying and selling activities by consumers throughout the home purchase process.

Our model is designed to:

● Provide the opportunity for homebuyers to successfully experience homeownership and for homeowners to realize the best outcomes possible through the sale of their homes.

Our licensed agents and brokers primarily use our proprietary cloud-based transaction processing and home search and tour tools to help homebuyers find, visit and close on the house that meets their needs, and to help homeowners efficiently market and sell their homes without the effort — and additional costs — associated with the typical home selling process.

● Provide a business opportunity for our agents and brokers.

We provide an entrepreneurial business opportunity for individuals to aid in the purchase and sale of residential homes.

Low entry fees as well as the ability to select their own schedules and time

commitments allow our agents and brokers to supplement their income by starting their own independent businesses, while also providing opportunities for strong leaders to build their own agency teams and grow under our brokerage brand on a full-time basis.

Our compensation structure (fees and share-based), technology, sales support and back-office processing are designed to enable agents and brokers to successfully grow their independent businesses without the fixed costs inherent with a traditional brick-and-mortar brokerage.

● Provide stock ownership opportunities for our agents and brokers.

Through our agent equity programs, our agents and brokers have a unique choice to attain a greater vested interest in eXp through the acceptance of equity awards of eXp stock as part of their compensation packages.

These programs allow successful agents and brokers to become stakeholders in the brand they represent and align our goals across the distribution network.

Brokerage Offices and Services in Our Virtual World

eXp offers an innovative cloud-based brokerage model, which reduces costs to our agents and brokers.

The model features low entry fees, stock ownership opportunities for agents and brokers and a revenue sharing plan through which agents and brokers can earn commission from transactions conducted by agents and brokers they’ve attracted to eXp.

● North American Realty :

Together with our other real estate brokerage subsidiaries, eXp Realty, LLC (“eXp Realty”) is a leading, rapidly growing, cloud-based real estate brokerage company in the United States and Canada.

We disrupt the traditional real estate model within the markets in which we operate for the benefit of agents and brokers through innovation, use of cloud-based technology and development of world-class agent and broker attraction and retention practices.

In 2022, we devoted significant efforts to the ongoing expansion of eXp Solutions™ for our agents, including the launch of Revenos™ and the development and improvement of proprietary software to source quality leads for agents.

Our North American Realty segment also includes lead-generation and other real estate support services in North America and Canada.

The United States and Canada operating segments are aggregated into one operating segment due to similarities in the markets, economics and management strategy.

● International Realty:

We expanded our business into Australia and the United Kingdom in 2019, into South Africa, India, Mexico, Portugal and France, during 2020 and into Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama and Germany in 2021.

During 2022 we commenced operations in The Dominican Republic, Greece, New Zealand, Chile and Poland.

In addition, in late 2022, we announced operations in Dubai, which are expected to be fully operational in 2023.

Throughout our international operations, we disrupt the traditional real estate model for the benefit of agents and brokers through innovation, use of cloud-based technology and development of world-class agent and broker attraction and retention practices.

We operate over the internet and rely on cloud-based technologies to provide our residential real estate brokerage services.

Through various platforms, buyers search real-time property listings, and sellers list properties and gain exposure across the various geographic markets in which we operate.

We also provide buyers and sellers access to a network of professional, consumer-centric agents and brokers.

Additionally, we deliver marketing, training and other support services to our brokers and agents through a combination of proprietary technology enabled services, as well as technology and support services contracted to third parties.

Our brokers and agents leverage our technology, services, data, lead generation and marketing tools to represent residential real estate buyers and sellers to list, find and consummate the purchase or sale of a home.

Internally, we use our technology to provide agents, teams of agents, and brokerage owners with opportunities for increased profitability, reduced risk, and greater levels of professional development while fostering an organizational culture that values collaboration, strength of community, and commitment to serving the consumer’s best interests.

We provide agents, teams of agents, and brokers with the systems, support, professional development and infrastructure to help them succeed in unpredictable and, at times, challenging economic conditions.

This includes delivering 24/7 access to collaborative tools and training for real estate agents and brokers.

We have adopted a number of cloud-based technologies.

Among other technologies we use to operate our business, our 3D, fully-immersive, cloud office, has virtual conference rooms, training centers, and individual offices in which our management, staff, agents and brokers all work on a daily basis learning from, sharing with, transacting business with, and socializing with colleagues from different geographic regions by utilizing avatars in the Virbela platform.

In these virtual spaces agents and brokers meet for state-based sales meetings, attend live interactive training and classes, review commission disbursement authorization forms, build websites and online branding materials, and work on purchase and sales agreements.

Further, in these virtual spaces new managing brokers are evaluated and approved, our management meets to discuss strategy and vision, and personnel interviews are conducted.

In addition, we have face-to-face meetings, conferences, presentations, retreats and other physical interactions where circumstances warrant.

We also provide physical space to brokers and agents when required, primarily through third-parties to provide access to offices, workspace and meeting rooms at locations worldwide.

Our cloud office has fully staffed transaction and administration, web development, search engine optimization and technical support teams.

Consequently, our cloud office serves as our primary company office for brokers, agents, management and staff and provides agents, teams of agents and brokers with a full suite of back-office functions, live training, education, coaching and mentoring that places a premium on engagement, discussion and collaboration, transaction support, broker support;

and technical support.

The utilization of this cloud office platform permits us to more easily serve and extend our geographic reach.

Furthermore, we allow our agents and brokers, some of whom are former real estate brokerage owners, to leverage our infrastructure to reduce their fixed costs and to be empowered to build scalable teams of agents in any of the markets that we serve while preserving and enhancing the agents and brokers’ personal brands.

In this way our agents and brokers can attract agents and build a co-brand in any markets currently served by the Company without any additional capital requirements.

Agent and Broker Training and Communication

eXp Realty has held firm in its belief that each individual agent delivers value to individual homebuyers and sellers in different ways depending upon the knowledge, skills or niche of the agent and the needs and wants of the consumer.

Numerous real estate coaches provide training and classes to brokerages on a vendor basis or to individual agents outside of their brokerage relationship in the most cost-effective way to strengthen their skills and help them succeed.

The needs of individual agents vary, as do the methods of instruction that are most effective for their learning.

This approach aims to offer coaching that draws upon, highlights, promotes and supports some of the best coaches in the industry based upon their individual talents and the corresponding fit to the particular needs of our individual, entrepreneurial professionals.

Fee Structure

The lower overall cost of operating our cloud office has enabled us to offer our agents and brokers a higher split of the gross commissions generated from real estate transactions than most traditional real estate brokerages.

This higher fee split along with our unique delivery of support services and the flexibility it provides for brokers and agents has facilitated our growth over the past several years.

We also differentiate ourselves by not charging our agents and brokers royalties or franchise fees.

Our agents pay a low monthly cloud brokerage fee and various transaction processing fees.

Revenue Sharing Plan

Our cloud office has enabled us to introduce and maintain a revenue sharing plan whereby each of our agents and brokers can participate.

As part of this revenue sharing plan, our agents and brokers can receive commission income resulting from completed real estate transactions consummated by the agents and brokers whom they have attracted to our company.

Consistent with our commitment to enabling and empowering agents and brokers in pursuit of building a scalable business and organization, our revenue sharing plan allows brokers and agents a financial mechanism to build teams across geographic borders.

Our revenue sharing plan provides an opportunity where agents and brokers can potentially earn additional income while focusing on the growth of the eXp brokerage brand and their individual agencies.

Our brokers and agents leverage our technology, services, data, lead generation and marketing tools to represent residential real estate buyers and sellers.

Among other technologies we use to operate our business, our proprietary 3D, fully-immersive, cloud office, has virtual conference rooms, training centers and individual offices in which our management, employees, agents and brokers all work on a daily basis learning from, sharing with, transacting business with and socializing with colleagues from different geographic regions by utilizing avatars in the Virbela platform.

Virbela is an immersive technology company that specializes in building virtual worlds and environments for work, education and events.

Its portfolio of metaverse and virtual reality (VR) offerings includes Virbela ® and Frame™.

eXp Realty created a virtual campus — called eXp World — using Virbela’s software which provides 24/7 access to collaboration tools, training and social communities for the company’s real estate agents and employees across our many locations.

● Other Affiliated Services :

Includes key assets such as SUCCESS ® magazine, SUCCESS ® Coaching and SUCCESS ® Health, which provide training, classes, resources, and tools to empower our agents, brokers, staff, and customers to excel and empower their professional development.

Markets and Customers

Real Estate Brokerage :

Our clients are primarily residential homeowners and homebuyers in the markets in which we operate as serviced by our international network of independent agents and brokers.

These customers are sellers or purchasers of new or existing homes and engage us to aid in the facilitation of the closing of the real estate transaction, including, but not limited to, searching, listing, application processing and other pre- and post-close support.

Based on current market information, sales of existing residential properties represent a large majority of home sales in the U.S.

This provides our agents and brokers with greater opportunities to represent the buy or sell — and sometimes both — sides of a real estate transaction.

In addition, we help our customers fulfill their needs by providing ancillary transaction — related services.

Our experienced agents and brokers are well suited to support our customers’ needs with a high level of professionalism, knowledge and support as they endeavor on one of the largest transactions they will most likely experience.

Real Estate Industry Overview

eXp Realty primarily operates in the U.S.

residential real estate market.

Our North American Realty segment is comprised of operations in the U.S.

and Canadian residential real estate markets.

Through our network of independent agents and brokers, we have brokerages in all 50 states in the U.S.

residential real estate market, residential real estate markets in most of the Canadian provinces, and, to a lesser extent, in parts of the U.K., Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama and Germany.

As our principal operating market, the U.S.

residential real estate market for existing homes, seasonally adjusted, accounted for approximately 6.2 million homes sold with a median existing home sales price of $0.4 million in 2021, the highest levels since 2006, based on data released by the National Association of Realtors.

The overall health of the U.S.

residential real estate market, including demand for homes, is driven largely by, among other factors, the inventory of existing homes, the affordability of housing, macroeconomic factors (e.g., U.S.

Federal Reserve rates, unemployment rates, job growth, etc.), governmental policies (e.g., tax deduction and credits, regulatory initiatives, etc.), demographic trends (e.g., customer tastes and perceptions, buy versus rent preferences, income growth, marriage rates, etc.), mortgage rates and financing availability.

Although the housing market in the U.S.

is cyclical as evidenced most recently during the recession of the late 2000’s and subsequent recovery since 2012, we believe that the residential real estate market will continue to grow due to expected increases in the formation of new households and the relatively low interest rate environment incentivizing homebuying.

residential real estate market and residential real estate markets in most of the Canadian provinces.

residential real estate market for existing homes, seasonally adjusted, accounted for approximately 4.02 million homes sold with a median existing home sales price of $0.4 million in 2022, based on data released by the National Association of Realtors.

Our International Realty segment operates in the U.K., Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama and Germany, the Dominican Republic, Greece, New Zealand, Chile and Poland.

In late 2022, we announced operations in Dubai, which is expected to be fully operational in 2023.

Our International Realty segment represented 0.8% of total consolidated revenues in 2022.

Our innovative technologies are used primarily by our brokerage real estate agents and their clients within our U.S., Canadian and international markets.

Additionally, eXp World Technologies, LLC ("World Tech") has continued to innovate the Virbela portfolio, expanding the product offering to agents, teams and other global companies and organizations who can benefit from having their own, always-on virtual environment for workplace collaboration.

Other Affiliated Services:

We provide affiliated services to our agents, brokers and customers that support their professional efforts and personal betterment.

Under its ownership, the Company has built upon SUCCESS ® magazine and its related media properties to develop a robust SUCCESS ® brand of innovative personal and professional development tools, including SUCCESS ® Health, SUCCESS ® Coaching and SUCCESS ® Space.

Our real estate brokerage competes with local, regional, national and international residential real estate brokerages with respect to the sale of homes and to attract and retain agents, teams of agents, brokers and consumers — both home sellers and buyers.

We compete primarily on the basis of our service, culture, collaboration, utilization of cloud-based systems and technologies that reduce costs, while providing relevant and substantial professional development opportunities for our agents and brokers with an opportunity to generate more business and participate in the growth of our company.

Residential real estate brokerage companies typically realize revenues in the form of a commission based on a percentage of the price of each home purchased or sold, which can vary based on industry standards, geographical location and specific customer-agent negotiations, among other factors.

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When home prices and the volume of home sale transactions increase (decrease), commissions generally will also increase (decrease).

However, we are positioned to earn commissions on either — or both — of the buy side or sell side of residential real estate transactions, as well as the ability to receive other fees for complimentary services provided during the close process.

residential real estate market was briefly impacted by the COVID-19 pandemic during the spring of 2020, however, the market rebounded sharply with the number of U.S.

homes sold and the U.S.

median home sales price in 2020 increasing materially over 2019 based on data released by the National Association of Realtors.

Among other factors, the historically low mortgage rate environment

and increasing demand for remote workspace supported strong demand in the housing market throughout 2021.

Similarly, the Company had a strong performance over the same period of time, achieving a record number of home sales and a record amount of growth in agent count.

We compete with local, regional, national and international residential real estate brokerages with respect to the sale of homes and to attract and retain agents, teams of agents, brokers and consumers—both home sellers and buyers.

We believe that we are the only national real estate brokerage presently using a 3D immersive office environment in place of physical brick and mortar offices.

However, we are positioned to earn commissions on either — or both — of the buy side or sell side of residential real estate transactions, as well as the ability to receive other fees for complementary services provided during the close process.

We believe that we are the only international real estate brokerage presently using a 3D immersive office environment in place of physical brick-and-mortar offices.

Additionally, this innovative operational structure coupled with our distribution model allows us to effectively enter new markets with speed and flexibility and without much of the investment and cost associated with establishing a traditional brokerage.

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As such, we believe that we are well-positioned in our competitive landscape.

In November 2018, eXp World Technologies, LLC (“World Tech”) acquired substantially all the assets of Virbela, LLC (“Virbela”).

Virbela is a technology company that specializes in building 3D virtual worlds for work, education, and events.

eXp Realty’s current cloud campus—called eXp World—was created using Virbela’s software and provides 24/7 access to collaboration tools, training, and social communities for the company’s real estate agents and staff across our many locations.

In December 2020, a Virbela virtual world was deployed for SUCCESS to allow staff, contractors, and consultants to meet, collaborate, and host events in real time across various locations.

World Tech has continued to innovate the Virbela platform, expanding the product offering to agents, teams and others who could benefit from their own, always-available environments for collaboration.

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

For the year ended December 31, 2021, Virbela continued 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.

We expect to continue to service existing and new business-to-business enterprise level Virbela contracts in the coming year.

Software Development

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To further expand our products and service offerings, we offer an on-demand, home tour mobile application that enables home shoppers to request immediate access to properties exclusive to eXp Realty agents in certain markets.

Our operational model and growth strategies necessitate the internally-developed technologies used to support our operations now and in the future, as well as requires us to, at times, consider existing and emerging technology companies for acquisition, partnerships and other collaborative relationships.

Our operational model and growth strategies necessitate the proprietary technologies used to support our operations now and in the future, as well as requiring us to, at times, consider existing and emerging technology companies for acquisition, partnerships and other collaborative relationships.

Intellectual Property

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“eXp Realty” is one of our registered trademarks in the United States.

We have also placed the marks “3D MLS”, “3D Listing Service” and “RE Tech Campus” on the United States Patent and Trademark Office’s Supplemental Register.

We also own the rights to the domain names used by our domestic and international brokerages:

http://exprealty.com, http://exprealty.ca, http://exp-uk.co.uk, http://expaustralia.com.au, http://expsouthafrica.co.za, http://expglobalindia.co.in, http://expmexico.mx, http://expportugal.com, http://expfrance.fr, http://exppuertorico.pr/, http://expglobalbrasil.com, http://expitaly.it, http://exphk.hk, http://expcolombia.co, http://expglobalspain.com, http://expisrael.co.il, http://exppanama.com, and http://expgermany.de.

Additionally, we own registered trademarks and the rights to domain names which are leveraged in our other business segments and in connection with services that complement our real estate brokerage, such as the “SUCCESS” trademark and http://success.com.

While there can be no assurance that registered trademarks will protect our proprietary information, we intend to assert our intellectual property rights against any infringement.

Although any assertion of our rights could result in a substantial cost and diversion of

management effort, we believe the protection and defense against infringement of our intellectual property rights are essential to our business.

Environmental Impact

As a company dedicated to disrupting the traditional industry model, eXp understands the importance of ingraining environmental, social and governance (ESG) best practices across the organization.

In 2022, we will take important steps to understand our opportunities to create meaningful change, beginning with a materiality assessment – a process to define the topics that matter most to our business and stakeholders.

Building on the identified material topics, eXp will develop a strong impact position, strategy, and targets to embed environment (as well as social and governance) topics in our business.

We have also placed the marks “3D MLS”, “3D Listing Service” and “RE Tech Campus” on the United States Patent and Trademark Office’s Supplemental Register, among others.

We also own the rights to key domain names used by our domestic and international brokerages:

(e.g., https://exprealty.com and https://exprealty.ca).

Other proprietary brands key to our suite of services include Revenos, eXp Luxury, SUCCESS Coaching and SUCCESS Health.

We have also engaged various third parties to extend enterprise licenses for critical transaction management, CRM and other proprietary software.

While there can be no assurance that registered trademarks and other intellectual property rights will protect our proprietary information, we intend to assert our intellectual property rights against any infringement.

Although any assertion of our rights could result in a substantial cost and diversion of management effort, we believe the protection and defense against infringement of our intellectual property rights are essential to our business.

Seasonality of Business

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Spring and summer seasons historically reflect greater sales periods and, in turn, higher revenues and operating results in comparison to fall and winter seasons.

Notwithstanding seasonality, the 2021 real estate market is the strongest real estate market in 15 years based on data released by the National Association of Realtors.

The Company has historically experienced higher revenue during the second and third quarters of its fiscal year due in part to seasonal industry patterns.

By contrast, our technology and affiliate services segments experience generally consistent revenue during the year, with some increased adoption around the Company’s spring and fall events.

Government Regulation

We serve the residential real estate industry which is regulated by U.S.

federal, international, state, provincial and local authorities as well as private associations or state sponsored associations or organizations.

Real Estate Regulation

We primarily serve the residential real estate industry, which is regulated by federal, international, state, provincial and local authorities as well as private associations or state sponsored associations or organizations.

We are required to comply with federal, state, provincial and local laws, as well as private governing bodies’ regulations, which combined results in a highly-regulated industry.

We are also subject to U.S.

federal, international, state, and provincial regulations relating to employment, contractor, and compensation practices.

We are also subject to federal, international, state and provincial regulations relating to employment, contractor and compensation practices.

Except for certain employees who have an active real estate license, virtually all real estate professionals in our brokerage operations have been retained as independent contractors, either directly or indirectly through third-party entities formed by these independent contractors for their business purposes.

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These regulations and guidelines are subject to judicial and agency interpretation.

Real Estate Regulation – International

In countries outside of the United States, there are a variety of existing or contemplated governmental laws and regulations with which we are required to comply.

Real estate and brokerage licensing laws and requirements vary from country to country.

In general, all individuals and entities lawfully conducting businesses as real estate brokers, agents or sales associates must be licensed in the country, state, province or locale in which they carry on business and must at all times be in compliance.

In each of the countries where we have operations, we assign appropriate personnel to manage and comply with applicable laws and regulations.

Real Estate Regulation – U.S.

The Real Estate Settlement Procedures Act of 1974, as amended, (“RESPA”) requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process.

RESPA also protects borrowers against certain abusive practices, such as kickbacks, and places limitations upon the use of escrow accounts.

RESPA also requires detailed disclosures concerning the transfer, sale, or assignment of mortgage servicing, as well as disclosures for mortgage escrow accounts.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) moved authority to administer RESPA from the Department of Housing and Urban Development to the Consumer Financial Protection Bureau (“CFPB”).

The Dodd-Frank Act increased regulation of the mortgage industry, including but not limited to:

(i) generally prohibiting lenders from making residential mortgage loans unless a good faith determination is made of a borrower’s creditworthiness based on verified and documented information;

(ii) enacting regulations to help assure that consumers are provided with timely and understandable information about residential mortgage loans and to protect consumers against unfair, deceptive and abusive practices;

and (iii) establishing minimum national underwriting guidelines for residential mortgages that lenders will be allowed to securitize without retaining any of the loans’ default risk.

In February 2019, the CFPB released a five-year strategic plan indicating that the CFPB intends to continue to focus on protecting consumer rights while engaging in rulemaking to address unwarranted regulatory burdens.

Under the current strategic plan, the CFPB would (i) provide “clear rules of the road” through rulemaking and amendments;

(ii) foster a “culture of compliance” among businesses;

(iii) engage in “vigorous enforcement”;

and (iv) educate consumers to make the best financial decisions.

Additionally, in a recent regulatory agenda, the CFPB indicated that it planned to review “inherited regulations” to ensure “outdated, unnecessary, or unduly burdensome regulations” are addressed and modernized.

As a result, the regulatory framework of RESPA applicable to our business may be subject to change.

In addition, federal fair housing laws generally make it illegal to discriminate against protected

classes of individuals in housing or brokerage services.

Other laws and regulations applicable to our business include (i) the Federal Truth in Lending Act of 1969;

(ii) the Federal Equal Credit Opportunity;

(iii) the Federal Fair Credit Reporting Act;

(iv) the Fair Housing Act;

(v) the Home Mortgage Disclosure Act;

(vi) the Gramm-Leach-Bliley Act;

(vii) the Consumer Financial Protection Act;

(viii) the Fair and Accurate Credit Transactions Act;

(ix) the Telephone Consumer Protection Act;

and (x) state and federal laws pertaining to the privacy rights of consumers, which affects how we collect and use customer information, including solicitation of new clients.

Real Estate Regulation – U.S.

State and Local Level

Real estate and brokerage licensing laws and requirements vary from state to state.

In general, all individuals and entities lawfully conducting businesses as real estate brokers, agents or sales associates must be licensed in the state in which they carry on business and must at all times be in compliance.

Certain jurisdictions may require a person licensed as a real estate agent, broker, sales associate or salesperson, to be affiliated with a brokerage in order to engage in licensed real estate brokerage activities or allow the agent, broker, sales associate or salesperson to work for the public, another agent or broker, sales associate or salesperson conducting business on behalf of the brokerage, sponsoring agent, broker, sales associate or salesperson.

Engaging in the real estate brokerage business requires obtaining a real estate brokerage license.

In order to obtain this license, jurisdictions require that a member or manager be licensed individually as a real estate broker in that jurisdiction.

This member or manager is responsible for supervising the licensees and the entity’s real estate brokerage activities within the state.

Real estate licensees, whether they are brokers, salespersons, individuals, agents or entities, must follow the state’s real estate licensing laws and regulations.

These laws and regulations generally specify minimum duties and obligations of these licensees to their clients and the public, as well as standards for the conduct of business, including contract and disclosure requirements, record keeping requirements, requirements for local offices, escrow trust fund management, agency representation, advertising regulations and fair housing requirements.

In each of the states where we have operations, we assign appropriate personnel to manage and comply with applicable laws and regulations.

Most states have local regulations (city or county government) that govern the conduct of the real estate brokerage business.

Local regulations generally require additional disclosures by the parties to a real estate transaction or their agents or brokers, or the receipt of reports or certifications, often from the local governmental authority, prior to the closing or settlement of a real estate transaction as well as prescribed review and approval periods for documentation and broker conditions for review and approval.

Third-Party Rules

federal, international, state, provincial and local governmental regulations, the real estate industry is subject to rules established by private real estate groups and/or trade organizations, including, among others, state and local Associations of REALTORS® (“AOR”), the National Association of Realtors® (“NAR”), and local Multiple Listing Services (“MLSs”).

“REALTOR” and “REALTORS” are registered trademarks of the National Association of REALTORS®.

Each third-party organization generally has prescribed policies, bylaws, codes of ethics or conduct, and fees and rules governing the actions of members in dealings with other members, clients and the public, as well as how the third-party organization’s brand and services may or may not be deployed or displayed.

We assign appropriate personnel to manage and comply with third party organization policies and bylaws.

Environmental Regulation

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Due to this, we are not materially impacted by any environmental regulation.

Other Regulation

Our technology and affiliate services businesses operate in multiple geographies and industries which subject them to various governmental and non-governmental rules and regulations, including without limitation, franchising, fair trade, health and data privacy rules.

As we expand into new businesses and markets, we assign and/or engage appropriate personnel to manage and comply with such requirements.

Environmental, Social and Governance Initiatives

As a company dedicated to disrupting the traditional industry model, eXp understands the importance of ingraining environmental, social and governance (ESG) best practices across the organization.

In 2022, we conducted an ESG materiality assessment with the assistance of an external consultant, GlobeScan, to identify the material ESG topics that have the greatest impact on the Company’s success.

Our approach included extensive desk research to identify the range of potential environmental, social, governance and economic issues that eXp might face.

To refine and prioritize the issues, a series of 16 in-depth interviews were conducted with key internal and external stakeholders to understand their expectations and perceptions of eXp’s business and environmental and social impacts.

These interviews included a range of constituents such as eXp executives, agents, industry associations, investors, customers, academics and sustainability experts.

Additionally, we conducted a data-driven analysis of issue areas through a structured online questionnaire.

The company-wide survey was delivered in January 2023 to our leadership team, employees and agents.

The objective of the survey was to assess and prioritize issues influencing eXp's business success.

The results of the materiality assessment were provided to the Company’s Board and management to identify our key focus areas and to develop a strategy to address the material ESG topics identified in the assessment.

Impact on society

Agent / employee diversity, inclusion / equity

Anti-corruption / anti-bribery

Business ethics / integrity / transparency

Community engagement/impact

Data privacy / cyber security

Energy use / greenhouse gas emissions

ESG governance / education

Executive compensation

Market presence / expansion

Non-discrimination of clients / communities

Physical/psychological safety

Cloud technology to lower environmental impact

Remote working culture

Responsible marketing/content practices

Responsible tax behavior

Product / service accessibility / social inclusion

Talent attraction / retention

Training/coaching / development

Waste / electronic waste

Resilience to climate / other global impacts

Responsible supply chain / service providers

Impact on business

During 2022, the Company had various social initiatives, including the following:

● Community Involvement :

Our employees, agents and brokers are our best embodiment of the Company’s commitment to community as a core value.

Many of our employees, agents and brokers are involved in their own communities to support the betterment of lives.

The Company also sponsors many community initiatives which are well attended by our employees, agents and brokers.

The first week of October of each year is designated “I Heart eXp” week and employees, agents and brokers across the U.S.

mobilize to take part in community charity initiatives.

Beginning in May 2021, the Company entered into a joint initiative with New Story, an international nonprofit that pioneers solutions to end global homelessness, to build 100 homes in the Morelos region of Mexico after it suffered damages from a 7.1 magnitude earthquake.

Many employees and agents donated directly to New Story as part of this effort and donations were matched by our founder and CEO Glenn Sanford up to $300,000.

Additionally, in 2021, eXp’s affiliated nonprofit, eXtend-a-Hand, was granted 501(c)(3) status by the Internal Revenue Service.

eXtend-a-Hand’s mission is to provide financial assistance to independent agents of the Company who suffer catastrophic events, including, without limitation, natural disasters, illness and accidents and in the case of dependents or designated beneficiaries, the death of their independent agent family member.

The Company is devoted to agent well-being and continued to expand the reach of eXtend-a-Hand during 2022.

● Diversity and Inclusiveness :

We are committed to creating an equitable, diverse and inclusive culture for our employees, agents and brokers.

Our Employee Experience team operates under the human resources department and supports this mission with diversity, equity and inclusion practices to support employee engagement and global collaboration.

In 2019, we formed the ONE eXp initiative, which is an internal group available to our agents, brokers and employees to discuss, promote and propose business actions that encourage diversity, equity, belonging and inclusion.

ONE eXp is also an important vehicle by which we connect diverse agents and brokers with clients identifying as and/or seeking out diverse representation in their home purchase or selling journey.

Since its inception, ONE eXp has formed many dedicated subgroup networks, including networks for agents, brokers and employee promoting and/or identifying as Latino, South Asian, Asian, Middle Eastern, Black, LGBTQIA+, Women, senior, young professional and/or person with disabilities and new groups are being added regularly.

Human Capital

Our employees and independent real estate agents and brokers represent the human capital investments imperative to our operations.

We ended fiscal year 2021 with 1,669 full-time employees.

Our employees, including our brokers and our independent contractor real estate agents, represent the human capital investments imperative to our operations.

As of December 31, 2022, the Company had approximately 2,016 full-time equivalent employees and 86,203 real estate agents.

Our employees are not members of any labor union and we have never experienced business interruptions due to labor disputes.

We also utilize part-time and temporary employees and consultants when necessary;

A key component to our operational capabilities is our independent real estate agent and broker network, which consisted of 71,137 agents as of December 31, 2021.

in many of our foreign markets we rely on the use of indirect employment structures where personnel providing certain services to the foreign entities are employed by a contractor of the Company and are not employed by the Company.

Our operations are overseen directly by management.

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We have successfully expanded our current management to retain skilled employees with experience relevant to our business and intend to continue with this initiative.

management’s relationships with agents, brokers, technology providers, and customers will provide the foundation through which we expect to grow our business in the future.

Our management’s relationships with agents, brokers, technology providers and customers will provide the foundation through which we expect to grow our business in the future.

We believe the skill set of our management team will be a primary asset in the development of our brands and trademarks.

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At eXp, these core values are manifested throughout everything we do and support the Company’s overall vision and shape our culture.

We believe that our ongoing success is attributable in large part to our eXp staff who work across the U.S.

We believe that our ongoing success is attributable in large part to our eXp employees who work across the U.S.

and internationally in the cloud environment to support our agent-centric business model and core values.

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eXp has been named one of the Best Places to Work on Glassdoor for each of the years 2019 through 2022.

In 2021, we were named as one of the Top 100 Companies to Watch for Remote Jobs by FlexJobs.

Diversity and Inclusiveness :

We are committed to creating an equitable, diverse and inclusive culture for our employees, agents and brokers.

In 2019, we formed the One eXp initiative which is an internal group available to our agents, brokers, and staff to discuss, promote and propose business actions that encourage diversity, equity, belonging, and inclusion.

One eXp is also an important vehicle by which we connect diverse agents and brokers with clients identifying as and/or seeking out diverse representation in their home purchase or selling journey.

Since its inception, One eXp has formed many dedicated subgroup networks, including networks for agents, brokers and staff promoting and/or identifying as Latino, South Asian, Asian, Middle Eastern, LGBTQIA+, Women, senior, young professional, and/or person with disabilities, and new groups are being added regularly.

In 2021 and 2022, we were named as one of the Top 100 Companies to Watch for Remote Jobs by FlexJobs.

Health & Safety:

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During 2022, our human resources department expanded on our existing health and safety benefit offerings to support the health and safety of our employees in their remote work environments.

Community Involvement :

Our staff, agents and brokers are our best embodiment of the Company’s commitment to community as a core value.

Many of our staff, agents and brokers are involved in their own communities to support the betterment of lives.

The Company also sponsors many community initiatives which are well attended by our staff, agents and brokers.

The first week of October of each year is designated “I Heart eXp” week and staff, agents and brokers across the U.S.

mobilize to take part in community charity initiatives.

During September 2021, the Company also announced a joint initiative with New Story, a nonprofit that pioneers solutions to end global homelessness, to build 100 homes in the Morelos region of Mexico after it suffered damages from a 7.1 magnitude earthquake.

Many staff and agents donated directly to New Story as part of this effort, which donations were matched by our founder and CEO Glenn Sanford up to $300,000.

Additionally, in 2021, eXp’s wholly owned nonprofit, eXtend-a-Hand, was granted 501(c)(3) status by the Internal Revenue Service.

eXtend-a-Hand’s mission is to provide financial assistance to independent agents of the Company who suffer catastrophic events, including, without limitation, natural disasters, illness, and accidents, and in the case of dependents or designated beneficiaries, the death of their independent agent family member.

The Company is devoted to agent well-being and looks forward to expanding the reach of eXtend-a-Hand into 2022.

Independent Agent and Broker Support :

We provide entrepreneurial business opportunities and a competitive compensation structure to our independent agents and brokers.

We provide entrepreneurial business opportunities and a competitive compensation structure to our agents and brokers.

Additionally, our agents and brokers have a unique choice to attain a greater vested interest in eXp through the acceptance of equity awards in eXp stock as part of their compensation packages.

These programs and our agent support platforms — including training, back-office support and communications — allow agents and brokers to successfully operate their own businesses that are aligned with our strategies and goals, creating synergies across our distribution network.

We believe it is critical to our success that agent voices are heard at every level of the Company, including management, which mission is supported by our Agent Advisory Council.

We believe it is critical to our success that agent voices are heard at every level of the Company, including management, whose mission is supported by our Agent Advisory Council.

Refer to our Agent Advisory Council section of our website at https://expworldholdings.com/agent-advisory-council/ for information on agent participation in the management of eXp.

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Available Information

Our Company files annual, quarterly, and current reports, proxy statements and other documents with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), are filed with the U.S.

Securities and Exchange Commission (the “SEC”).

Such reports and information for the previous twelve-months are available free of charge through our website at www.expworldholdings.com/investors/sec-filings/.

Additionally, the SEC maintains an internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

The public can obtain any documents that we file with the SEC at www.sec.gov .

Our Company maintains a website at www.expworldholdings.com .

Our filings with the SEC, including without limitation, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, for the previous twelve-months are available through a link maintained on our website under the heading “Investors —SEC Filings.”

Our Company also uses the following channels as a means of disclosing information about the Company on a broad, non-exclusionary basis, including information about our brokerage, upcoming investor and industry conferences, our planned financial and other announcements and other matters and for complying with our disclosure obligations under Regulation FD:

eXp website ( www.expworldholdings.com )

eXp Realty Twitter Account ( https://twitter.com/eXpRealty )

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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-K

Item 1. Business