What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-11-02 · 105 added, 134 removed, 276 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30, 2022

March 31, 2023

December 31, 2022

21 unchanged sentences

Common Stock, $ 0.00001 par value 900,000,000 shares authorized;

168,562,464 issued and 152,702,078 outstanding in 2022;

155,516,284 issued and 148,764,592 outstanding in 2021

174,532,043 issued and 153,442,421 outstanding at March 31, 2023;

171,656,030 issued and 152,839,239 outstanding at December 31, 2022

Additional paid-in capital

2 unchanged sentences

Accumulated earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total eXp World Holdings, Inc.

6 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses

3 unchanged sentences

Total operating expenses

Operating income

Operating (loss) income

Other (income) expense

Other (income) expense, net

Equity in (income) losses of unconsolidated affiliates

Equity in losses of unconsolidated affiliates

Total other (income) expense, net

Income (loss) before income tax expense

(Loss) income before income tax expense

Income tax benefit

13 unchanged sentences

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Common stock:

5 unchanged sentences

Repurchases of common stock

Issuance of treasury stock, for acquisition

Balance, end of period

22 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

19 unchanged sentences

INVESTING ACTIVITIES

Purchases of property, plant and equipment

Acquisition of businesses, net of cash acquired

Purchases of property, plant, equipment & intangible assets

Investments in unconsolidated affiliates

13 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Termination of lease liabilities

Issuance of treasury stock, for acquisition

Lease liabilities arising from obtaining right-of-use assets

Property, plant and equipment purchases in accounts payable

5 unchanged sentences

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, Germany, The Dominican Republic, Greece, New Zealand, Chile, and Poland.

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

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

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

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

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Effective in December 2022, the Company revised the presentation of segment information to reflect changes in the way the Company manages and evaluates the business.

As such, we now report operating results through four reportable segments:

North American Realty, International Realty, Virbela and Other Affiliated Services, as further discussed in Note 11 – Segment Information .

Accordingly, certain amounts in the prior years’ consolidated financial statements have been revised to conform to the current year presentation.

See additional information in Note 11 –Segment Information .

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries, and including those entities in which we have a variable interest of which we are the primary beneficiary.

The accompanying condensed consolidated financial statements include the accounts of eXp and its consolidated subsidiaries, including those entities in which we have a variable interest of which we are the primary beneficiary.

If the Company has a variable interest in an entity but it is not the primary beneficiary of the entity or exercises control over the operations and has less than 50% ownership, it will use the equity method or the cost method of accounting for investments.

12 unchanged sentences

The Company regularly evaluates estimates and assumptions related to allowance for credit losses, legal contingencies, income taxes, revenue recognition, stock-based compensation, goodwill, and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on current facts,

historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

11 unchanged sentences

Balance, December 31, 2021

Balance, September 30, 2021

Balance, March 31, 2022

Balance, December 31, 2022

Balance, September 30, 2022

Recently Adopted Accounting Principles and Change in Accounting Principle

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 – Income Taxes (Topic 740) (“ASU 2019-12”).

ASU 2019-12 removes certain exceptions for investments, intraperiod allocations and interim calculations and adds guidance to reduce complexity in accounting for income taxes.

ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020;

early adoption is permitted.

The adoption of ASU 2019-12 had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2021, the FASB issued ASU 2021-08 – Business Combinations (Topic 805) (“ASU 2021-08”).

ASU 2021-08 addresses diversity and inconsistencies related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination.

The amendments in this update require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The Company has reviewed the amendments of ASU 2021-08 and will apply the guidance upon its effective date should the Company have future business combinations.

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

(“Zoocasa”) in a stock purchase transaction.

The total consideration paid was $ 17,458 including net cash of $ 9,668 (net of cash acquired of $ 2,772 ), stock issued from treasury of $ 4,800 and the anticipated working capital adjustment.

The Zoocasa acquisition has been accounted for using the acquisition method of accounting.

Under the acquisition method of accounting, the Company allocated the total purchase price to the tangible and identifiable intangible assets acquired, and assumed liabilities based on their estimated fair values as of the acquisition date, as determined by management.

The purchase price included goodwill of $ 14,459 and identified intangible assets of $ 1,281 .

The excess of the purchase price over the aggregate fair values of the identifiable assets was recorded as goodwill, which is not deductible for tax purposes.

Goodwill generated from the acquisition includes an assembled workforce.

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

The Company is in the process of completing the purchase price allocation and the final analysis of working capital adjustments which will be completed within one year from the date of acquisition.

Balance, March 31, 2023

EXPECTED CREDIT LOSSES

4 unchanged sentences

The three categories include agent non-commission based fees, agent short-term advances, and commissions receivable for real estate property settlements.

As of the first quarter of 2022, the Company provided an allowance for potential credit losses of real estate transactions.

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

Receivables from real estate property settlements totaled $ 110,239 and $ 128,499 of which the Company recognized expected credit losses of $ 823 and nil , respectively as of September 30, 2022 and December 31, 2021.

As of September 30, 2022 and December 31, 2021 agent non-commission based fees receivable and short-term advances totaled $ 12,369 and $ 7,188 , of which the Company recognized expected credit losses of $ 1,963 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 nine months ended September 30, 2022 and the year ended December 31, 2021.

As of the first quarter of 2022, the Company provided an allowance for potential credit losses of real estate transactions.

Receivables from real estate property settlements totaled $ 94,724 and $ 79,135 of which the Company recognized expected credit losses of $ 758 and $ 3,127 , respectively as of March 31, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022 agent non-commission based fees receivable and short-term advances totaled $ 7,360 and $ 12,141 , of which the Company recognized expected credit losses of $ 1,466 and $ 887 , respectively.

PLANT, PROPERTY AND EQUIPMENT, NET

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

September 30, 2022

March 31, 2023

December 31, 2022

6 unchanged sentences

Property, plant, and equipment, net

For the three months ended September 30, 2022 and 2021, depreciation expense was $ 2,129 and $ 1,376 , respectively.

For the nine months ended September 30, 2022 and 2021, depreciation expense was $ 5,699 and $ 3,572 , respectively.

For the three months ended March 31, 2023 and 2022 depreciation expense was $ 2,067 and $ 1,616 , respectively.

GOODWILL AND INTANGIBLE ASSETS

Goodwill was $ 26,514 as of September 30, 2022 and $ 12,945 as of December 31, 2021.

In the third quarter of 2022, the Company recorded cumulative translation adjustment of ($ 890 ) related to the Canadian goodwill in the Zoocasa transaction.

Goodwill was $ 27,261 as of March 31, 2023 and $ 27,212 as of December 31, 2022.

In the first quarter of 2023, the Company recorded cumulative translation adjustment of $ 73 related to Canadian goodwill.

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 and nine months ended September 30, 2022, no events occurred that indicated it was more likely than not that goodwill was impaired.

During the third quarter of 2022 the Company received Goodwill in an acquisition.

For information regarding the Company’s recent acquisitions, see Note 3 – Acquisitions .

For the three months ended March 31, 2023, no events occurred that indicated it was more likely than not that goodwill was impaired.

Definite-lived intangible assets were as follows:

September 30, 2022

March 31, 2023

December 31, 2022

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 September 30, 2022 and 2021 was $ 638 and $ 318 , respectively.

Amortization expense for definite-lived intangible assets for the nine months ended September 30, 2022 and 2021 was $ 1,455 and $ 939 , respectively.

Amortization expense for definite-lived intangible assets for the three months ended March 31, 2023 and 2022 was $ 512 and $ 342 , respectively.

The Company has no indefinite-lived assets.

1 unchanged sentence

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

Three Months Ended September 30,

Nine Months Ended September 30,

(Shares of Common Stock)

Three Months Ended March 31,

Common stock:

Balance, beginning of quarter

Balance, beginning of year

Shares issued for stock options exercised

9 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 September 30, 2022 and 2021, the Company issued 3,410,310 and 1,075,500 shares of common stock, respectively, to agents and brokers with a value of $ 44,395 and $ 41,838 , respectively, inclusive of discount.

During the nine months ended September 30, 2022 and 2021, the Company issued 8,903,217 and 2,574,766 shares of common stock, respectively, to agents and brokers with a value of $ 131,230 and $ 101,691 , respectively, inclusive of discount.

During the three months ended March 31, 2023 and 2022, the Company issued 2,106,369 and 1,550,455 shares of common stock, respectively, to agents and brokers with a value of $ 26,775 and $ 38,500 , respectively, inclusive of discount.

Agent Growth Incentive Program

4 unchanged sentences

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 September 30, 2022, the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 5,800 , of which the total amount of stock compensation expense attributable to liability classified awards was ($ 985 ).

For the nine months ended September 30, 2022, the Company’s stock compensation expense attributable to the Agent Growth Incentive

Program was $ 22,828 of which the total amount of stock compensation expense attributable to liability classified awards was $ 3,466 .

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.

For the three months ended March 31, 2023 and 2022 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 9,660 and $ 7,798 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 993 and $ 1,906 , respectively.

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

2 unchanged sentences

Stock grants reclassified from liability to equity year to date

Balance, September 30, 2022

Balance, December 31, 2022

Stock grant liability increase year to date

Stock grants reclassified from liability to equity year to date

Balance, March 31, 2023

Stock Option Awards

During the three months ended September 30, 2022, and 2021, the Company granted 394,657 and 176,263 stock options, respectively, to employees with an estimated grant date fair value of $ 8.50 and $ 23.26 per share, respectively.

During the nine months ended September 30, 2022 and 2021, the Company granted 1,167,042 and 370,594 stock options, respectively, to employees with an estimated grant date fair value of $ 11.21 and $ 24.05 per share, respectively.

Stock options are granted to directors, officers, certain employees and consultants with an exercise price equal to the fair market value of common stock on the grant date and the stock options expire 10 years from the date of grant.

These options have time-based restrictions with equal and periodically graded vesting over a three-year period.

During the three months ended March 31, 2023, and 2022, the Company granted 88,553 and 484,378 stock options, respectively, to employees with an estimated grant date fair value of $ 8.18 and $ 26.04 per share, respectively.

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

Stock Repurchase Plan

In December 2018, the Company’s board of directors (the “Board”) approved a stock repurchase program authorizing the Company to purchase up to $ 25.0 million of its common stock, which was later amended in November 2019 and again in June 2020 increasing the authorized repurchase amount to $ 75.0 million.

In December 2018, the Company’s board of directors (the “Board”) approved a stock repurchase program authorizing the Company to purchase up to $ 25.0 million of its common stock, which was later amended in November 2019 increasing the authorized repurchase amount to $ 75.0 million.

In December 2020, the Board approved another amendment to the repurchase plan, increasing the total amount authorized to be purchased from $ 75.0 million to $ 400.0 million.

Purchases under the repurchase program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

In May 2022, the Board approved an increase to the total amount of its buyback program from $ 400.0 million to $ 500.0 million.

Purchases under the repurchase program may be made in the open market or through

a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Exchange Act, as amended.

The timing and number of shares repurchased depends upon market conditions.

1 unchanged sentence

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., (the “Issuer Repurchase Plan”) to increase monthly repurchases from $ 10 million of its common stock per month up to $ 20 million which amendment was signed May 6, 2022.

10b5-1 Repurchase Plan

The Company maintains an internal stock repurchase program with program changes subject to Board consent.

From time to time, the Company adopts written trading plans pursuant to Rule 10b5-1 of the Exchange Act to conduct repurchases on the open market.

On January 10, 2022, the Company and Stephens Inc.

entered into a form of Issuer Repurchase Plan (“Issuer Repurchase Plan”) which authorized Stephens to repurchase up to $ 10.0 million of its common stock per month.

On May 3, 2022, the Board approved a form of first amendment to the Issuer Repurchase Plan to increase monthly repurchases from $ 10.0 million of its common stock per month up to $ 20.0 million, which amendment was signed May 6, 2022.

On September 27, 2022, the Board approved and the Company entered into, a form of second amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $ 20.0 million of its common stock per month to $ 13.3 million, in anticipation of volume decreases in connection with the contraction in the real estate market.

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

On December 27, 2022, the Board approved and the Company entered into, a form of third amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $ 13.3 million of its common stock per month to $ 10.0 million, in connection with ongoing contractions in the real estate market.

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

Such repurchased shares are held in treasury and are presented using the cost method.

These shares are not retired and are considered issued but not outstanding.

During the third quarter of 2022 the Company issued treasury shares in an acquisition.

For information regarding the Company’s recent acquisitions, see Note 3 – Acquisitions .

These shares are considered issued but not outstanding.

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

Three Months Ended September 30,

Nine Months Ended September 30,

(Shares of Treasury Stock)

Three Months Ended March 31,

Treasury stock:

Balance, beginning of quarter

Balance, beginning of year

Repurchases of common stock

Issuance of treasury stock for acquisition

Balance, end of quarter

4 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income attributable to common stock

5 unchanged sentences

Earnings per share attributable to common stock- diluted

For the three months ended September 30, 2022 and 2021 total outstanding shares of common stock excluded 1,315,861 and 132,704 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For nine months ended September 30, 2022 and 2021 total outstanding shares of common stock excluded 845,162 and 75,680 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For three months ended March 31, 2023 and 2022 total outstanding shares of common stock excluded 635,343 and 392,483 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 ($ 8.12 ) million and ($ 33.26 ) million for the nine months ended September 30, 2022 and 2021, respectively, which represent an effective tax rates of negative 56.2 % and 102.5 %, respectively.

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

Our provision for (benefit from) income taxes amounted to ($ 2.59 ) million and ($ 5.15 ) million for the three months ended March 31, 2023 and 2022, which represent effective tax rates of positive 237.56 % and negative 137.97 % , respectively.

The decrease in income tax benefit was primarily attributable to lower deductible stock-based compensation windfalls.

The effective tax rate differs from our statutory rates in both periods primarily due to the impact of the stock-based compensation and R&D tax credit.

FAIR VALUE MEASUREMENT

10 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the fair value of the Company’s money market funds was $ 43,679 and $ 43,386 , respectively.

As of March 31, 2023 and December 31, 2022, the fair value of the Company’s money market funds was $ 44,539 and $ 44,062 , respectively.

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

3 unchanged sentences

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.

Pursuant to the proposed settlement agreement terms, the Company will grant certain monetary and non-monetary settlements.

The Company decided to set aside provisions at the amount of $ 10.0 million to cover current estimated settlement fees and costs.

The settlement agreement terms remain subject to judicial review and approval.

There are no matters pending or, to the Company’s knowledge, threatened that are expected to have a material adverse impact on the business, reputation, results of operations, or financial condition.

There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial stockholder is an adverse party or has a material interest adverse to the Company’s interest.

In March and April 2022, an indirect subsidiary and unconsolidated joint venture of the Company, SUCCESS Lending, entered into Mortgage Warehouse Agreements and related ancillary agreements (the “Credit Agreements”) with Flagstar Bank FSB and Texas Capital Bank, which each provide SUCCESS Lending with a revolving warehouse credit line of up to $ 25 million.

It is customary for mortgage businesses like SUCCESS Lending to obtain warehouse credit lines in order to enable them to close and fund residential mortgage loans for subsequent sale to investors.

SUCCESS Lending will use the borrowing capacity under the Credit Agreements exclusively for such purposes and borrowings will generally be repaid with the proceeds received from the sale of mortgage loans.

In connection with the Credit Agreements, the Company has entered into Capital Maintenance Agreements with each of Flagstar Bank FSB and Texas Capital Bank whereby the Company agrees to provide certain funds necessary to ensure that SUCCESS Lending is at all times in compliance with its financial covenants under the Credit Agreements.

The Company’s capital commitment liability under the Capital Maintenance Agreement with Flagstar Bank FSB is limited to $ 2.0 million.

The Company’s capital commitment liability under the Capital Maintenance Agreement with Texas Capital Bank is limited to $ 1.25 million.

The Credit Agreements represent off-balance sheet arrangements for the Company.

SEGMENT INFORMATION

Historically, management has not made operating decisions and assessed performance based on geographic locations.

Rather, the chief operating decision-maker makes operating decisions and assesses performance based on the products and services of the identified operating segments.

While management does consider real estate and brokerage services, the acquired technology and affiliated services provided to be identified operating segments, the profits and losses and assets of the technology and affiliated services business units are not material.

Operating Segments

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

The real estate brokerage business represents 99.1 % and 99.2 % of the total revenue of the Company for the nine months ended September 30, 2022 and 2021, respectively.

The real estate brokerage business represents 96.9 % and 99.0 % of the total assets of the Company as of September 30, 2022 and December 31, 2021, respectively.

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

Additionally, the Company offers professional services for implementation and consulting services.

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 September 30, 2022 and 2021, respectively.

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

Geographical Information

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

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, New Zealand, Chile, and Poland.

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

For the nine months ended September 30, 2022 and 2021, approximately 9 % and 8 % respectively, of the Company’s total revenue was generated outside of the U.S.

Assets held outside of the U.S.

were 5 % and 8 % as of September 30, 2022 and December 31, 2021

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

The reportable segments presented below represent the Company’s segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources.

In identifying its reportable segments, the Company also considers the nature of services provided by its segments.

Management evaluates the operating results of each of its reportable segments based upon revenue and Adjusted EBITDA.

Adjusted Segment EBITDA is defined by us as operating profit plus depreciation and amortization and stock-based compensation expenses.

The Company’s presentation of Adjusted Segment EBITDA may not be comparable to similar measures used by other companies.

The Company’s four reportable segments as follows:

● North American Realty:

includes real estate brokerage operations in the United States and Canada, as well as lead-generation and other real estate support services provided in North America.

● International Realty:

includes real estate brokerage operations in all other international locations.

includes Virbela enterprise metaverse technology and the support services offered by eXp World Technologies.

● Other Affiliated Services:

includes our SUCCESS ® Magazine and other smaller ventures.

The Company also reports corporate expenses, as further detailed below, as “Corporate and other” which include expenses incurred in connection with business development support provided to the agents as well as resources, including administrative, brokerage operations and legal functions.

All segments follow the same basis of presentation and accounting policies as those described throughout the Notes to the Audited Consolidated Financial Statements included herein.

The following table provides information about the Company’s reportable segments and a reconciliation of the total segment Revenues to consolidated Revenues and Adjusted Segment EBITDA to the consolidated operating (loss) profit (in thousands).

Financial information for the comparable prior periods presented have been revised to conform with the current year presentation .

Three Months Ended March 31,

North American Realty

International Realty

Other Affiliated Services

Revenues reconciliation:

Segment eliminations

Consolidated revenues

Adjusted EBITDA

Three Months Ended March 31,

North American Realty

International Realty

Other Affiliated Services

Corporate expenses and other

Consolidated Adjusted EBITDA

Operating Profit Reconciliation:

Depreciation and amortization expense

Stock compensation expense

Stock option expense

Consolidated operating (loss) profit

The Company does not use segment assets to allocate resources or to assess performance of the segments and therefore, total segment assets have not been disclosed.

SUBSEQUENT EVENTS

Quarterly Cash Dividend

On October 27, 2022 , the Company’s Board of Directors declared a dividend of $ 0.045 per share which is expected to be payable on November 28, 2022 , to stockholders of record as of the close of business on November 14, 2022 .

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

On April 27, 2023 , the Company’s Board of Directors declared a dividend of $ 0.045 per share which is expected to be payable on May 31, 2023 , to stockholders of record as of the close of business on May 12, 2023 .

The ex-dividend date is expected to be May 30, 2023.

The dividend will be paid in cash.

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