What changed in this filing

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Item 1. Business

2024-02-22 compared with 2023-02-28 · 134 added, 114 removed, 89 unchanged (74% of the section changed)

eXp World Holdings, Inc.

(“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 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.

(“eXp,” or, collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”) owns and oversees a diversified portfolio of service-oriented businesses.

These businesses significantly benefit from the integration of our advanced enabling technology platform.

Our strategic focus is on expanding our real estate brokerage operations.

To achieve this, we emphasize enhancing the value proposition for our agents, investing in the development of immersive, cloud-based technological solutions, and offering affiliate and media services that bolster these efforts.

The following are developments in our business since the beginning of the fiscal year ended December 31, 2023:

● During 2023, the Company announced various new agent incentive programs to enhance the agent experience and to attract culturally aligned agents, teams of agents and independent brokerages to the Company.

New incentive programs include Boost, Accelerate, and Thrive, which offer unique financial incentives.

● In 2023, the Company launched various new ancillary programs and services to support the development and success of its agents, brokers and customers, including the continued global expansion of eXp Luxury™, Military Rewards Program, Listing Kits, Bundle Select™, eXp Exclusives™, My Link My Lead™, and affiliate relationships like HomeHunter™.

● Additional talent joined the Company in 2023, including the appointment of Peggie Pelosi to our Board of Directors in January 2023 and the appointment of Fred Reichheld to our Board of Directors in September 2023.

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.

The Company is operated and managed as four reportable segments which 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.

North American Realty and International Realty

Both the North American Realty segment and the International Realty segment 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.

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.

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 have attracted to eXp.

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.

Our International Realty segment includes our foreign operations in the United Kingdom (the “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, Poland, and Dubai.

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

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.

Among other technologies we use to operate our business, our proprietary Virbela ® and Frame™ platforms offer metaverse solutions, including 3D, fully immersive, cloud offices.

These cloud offices include virtual conference rooms, training centers and individual offices in which our management, employees, agents and brokers all work on a daily basis and, in separate custom settings, in which our customers operate as well, collaborating, socializing and transacting business across geographic regions.

While most Company and customer operations have taken place on the Virbela platform since 2016, many operations have begun to shift to the Frame platform as its development has matured, including its unique capability to operate fully on the web without the requirement for a separate client application.

As our customers evolve post-COVID, including a return-to-work-offices, and in light of ongoing internal and external demand for web-accessible platforms and artificial intelligence solutions, we have experienced a decline in demand for our application-based platform, Virbela, and a rising interest our web-accessible platform, Frame.

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.

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

This segment also includes SUCCESS ® Space, a new kind of coworking solution offering highly flexible, on-demand rental work spaces for individual and group use, access to professional development coaching, media production services, virtual-world communications technology and full-service cafes.

Markets and Customers

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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 North American Realty segment represented 98.6% of total consolidated revenues in 2023.

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, Germany, the Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai.

Our International Realty segment represented 1.3% of total consolidated revenues in 2023.

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.

We continue to innovate the Virbela portfolio, expanding the product offering to include and enhance our Frame platform.

We have experienced a decline, among internal staff and agent users as well as among external unaffiliated customers, in demand for our application-based platform, Virbela, and an increased demand for our web-accessible platform, Frame.

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.

Therefore, variability in the commissions earned in the real estate industry exists based on general economic and market factors, as well as price and volume of homes sold.

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 complementary services provided during the close process.

We compete primarily on the basis of our service, culture, collaboration, and utilization of cloud-based systems and technologies that reduce costs, while providing relevant and substantial professional development and opportunities for our agents and brokers 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 varies based on geographical location and specific customer-agent negotiations, among other factors.

Therefore, variability in the commissions earned in the real estate industry exists based on general economic and market factors, as well as the price and volume of homes sold.

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 closing 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.

We also believe our compensation and incentive programs to attract and retain highly productive agents is one of the most compelling in the industry.

We also believe our compensation and incentive programs to attract and retain highly productive agents are one of the most compelling in the industry.

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

Software Development

Our Company continues to increase our investment in the development of our own cloud-based transaction processing platforms and further expand our products and service offerings.

We continue to create process efficiencies and provide our agents and brokers with mobile applications designed to facilitate transactions in an efficient and consumer friendly way.

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 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.

Our Company continues to increase our investment in the development of our own cloud-based transaction processing platforms and further expand our technological products and service offerings.

We continue to create process efficiencies and provide our agents and brokers with technologies designed to facilitate transactions in an efficient and consumer-friendly way.

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

Our cloud-based real estate brokerage is highly dependent on the proprietary technology that we employ and the intellectual property that we create.

“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, among others.

“eXp Realty” is one of our registered trademarks in the United States, among other registered and nonregistered trademarks.

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).

including, for example, https://exprealty.com and https://exprealty.ca.

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” registered trademark and https://success.com.

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.

We have also engaged various third parties to extend enterprise licenses for critical transaction management, client relationship management 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.

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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.

By contrast, our Virbela and Other Affiliated Services segments experience generally consistent revenue during the year, with some increased adoption around the Company’s spring and fall events.

Government Regulation

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 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.

With respect to these independent contractors, like most brokerage firms, we are subject to the Internal Revenue Service regulations, foreign regulations and applicable state and provincial law guidelines regarding independent contractor classification.

See Note 13 – Commitments and Contingencies to the consolidated financial statements included elsewhere within this Annual Report for additional information on the Company’s legal proceedings.

For additional information with respect to related risks facing our business, see Item “1A.

– Risk Factors” included elsewhere within this Annual Report.

Legal and Regulatory Environment

All of our businesses, as well as our joint ventures (such as mortgage origination, title underwriting, and ancillary agent support services), operate in highly regulated industries and are subject to changes in government policy, variations in the interpretation and enforcement of laws by regulatory bodies and other government entities, and modifications to existing laws, regulatory frameworks, and guidelines.

Residential Real Estate

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

Further, lawsuits, investigations, disputes and regulatory proceedings against us or other professionals or businesses in the residential real estate industry and tangential industries may impact the Company and its affiliated real estate professionals when the outcomes of those cases address practices common to the broader industry, business community, or the Company and may result in litigation or investigations for the Company.

We are a participant in multiple listing services (“MLSs”) through our subsidiary entities, employees, and affiliated real estate professionals.

Many of our affiliated real estate professionals are members of the National Association of Realtors (“NAR”) and state Realtor associations.

The regulations, rules and policies of these organizations are subject to change, which changes can be influenced by regulatory developments, litigation, and other actions.

From time to time, certain industry practices come under federal or state scrutiny or are the subject of litigation.

The industry is currently experiencing increased scrutiny by private parties, regulators and other government offices, both on a federal and state level, particularly in the areas of antitrust and competition, Real Estate Settlement Procedures Act (“RESPA”) compliance (and similar state statutes), Telephone Consumer Protection Act compliance (“TCPA”) (and similar state statutes) and worker classification.

RESPA, along with various state and international real estate laws, governs the payments and referrals associated with residential sales and settlement services, such as mortgages, title insurance, and home insurance.

These laws may impose limitations on arrangements involving our real estate brokerage, affiliated real estate professionals, lead generation efforts, and the businesses of our joint ventures, in addition to mandating timely disclosure about such relationships.

While RESPA and similar statutes allow

for certain payments, fee splits, and affiliated business arrangements, compliance can be challenging due to varying interpretations by courts and regulators.

Violations can result in significant penalties, including fines and legal fees, particularly where RESPA and similar statutes have been invoked by plaintiffs in private litigation for various purposes.

Additionally, we're bound by state laws that restrict inducements and gifts to consumers, affecting our lead-generation efforts.

Our business is subject to various antitrust and competition laws, including the Sherman Antitrust Act, the Federal Trade Commission Act, the Clayton Act, and other related federal, state, and provincial laws in the jurisdictions in which we operate.

These laws prevent anti-competitive behaviors such as price-fixing and other conduct that unreasonably restrains trade and competition.

In 2021, the Department of Justice (“DOJ”) withdrew its consent to a November 2020 proposed settlement with NAR concerning alleged anti-competitive practices in real estate.

While the DOJ dismissed its lawsuit against NAR in July 2021, it indicated a broader investigation into NAR's activities.

In November 2021, NAR modified its rules to implement most of the changes the DOJ settlement sought.

In January 2023, a court set aside the DOJ's new investigative demand related to NAR.

The indirect and direct effects, if any, of this action upon the real estate industry are not yet clear.

While anti-competition enforcement has intensified across industries, there is a unique focus on the real estate industry in the United States and Canada.

For example, the White House issued an Executive Order in July 2021 identifying real estate brokerages and listings as an area of focus.

In 2018, a joint workshop by the DOJ and FTC addressed potential competition issues in the residential real estate sector which could be the subject of future enforcement actions.

As disclosed in Note 13 – Commitments and Contingencies to the consolidated financial statements included elsewhere within this Annual Report, we are a defendant in certain antitrust class action complaints which allege violations of federal antitrust law in the United States and Canada.

These lawsuits, together with similar lawsuits against other businesses in our industry, have prompted discussion of regulatory changes to rules established by local or state real estate boards or MLSs.

The resolution of the antitrust litigation and/or other regulatory changes may require changes to our or our brokers’ business models, including changes in agent and broker compensation.

This could reduce the fees we receive from our affiliated real estate professionals, which, in turn, could adversely affect our financial condition and results of operations.

Internationally, our operations are also subject to laws against improper payments, including the U.S.

Foreign Corrupt Practices Act and similar global regulations.

Worker Classification

Except for certain employees who have an active real estate license or in jurisdictions with unique local laws, our 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.

With respect to these independent contractors, we are subject to the Internal Revenue Service regulations, foreign regulations and applicable state and provincial law guidelines regarding independent contractor classification.

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

We continue to monitor these matters as well as related federal and state developments.

Cybersecurity and Data Privacy Regulations

Our business necessitates collecting and handling sensitive personal data, and we are governed by various domestic and international privacy and cybersecurity laws.

For example, in the U.S., we are required to comply with the Gramm-Leach-Bliley Act, which governs the disclosure and safeguarding of consumer financial information, as well as state statutes governing privacy and cybersecurity matters like the California Consumer Privacy Act (“CCPA”).

California further strengthened privacy regulations with the California Privacy Rights Act (“CPRA”) in 2020, effective January 1, 2023, introducing more stringent requirements and creating a dedicated enforcement agency.

Other states have enacted or are considering their own privacy laws.

Internationally, the European Union's General Data Protection Regulation (“GDPR”) grants extensive privacy rights and enforces strict penalties for non-compliance.

With the E.U.-U.S.

Privacy Shield being invalidated in 2020, businesses have turned to alternative mechanisms like standard contractual clauses for data transfer.

Additionally, global data privacy regulations continue to evolve.

For additional information with respect to related risks facing our business, see Item 1A - Risk Factors in this Annual Report, in particular under the caption “Cybersecurity incidents could disrupt our business operations, result in the loss of critical and confidential information, adversely impact our reputation and harm our business.”

The TCPA limits specific telemarketing actions, such as autodialing and using artificial voice messages, and has established a national Do-Not-Call registry.

The TCPA has a broad definition of autodialing and mandates written consent for some communications to mobile phones.

Some states have, or might introduce, their own versions of the TCPA.

We are susceptible to class action claims suggesting we're responsible for contacts made by our real estate professionals.

Environmental Regulation

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

However, sustainable investing and environmental, social, and governance practices continue to be the focus of increased regulatory scrutiny across jurisdictions.

In the U.S., the SEC has proposed climate disclosure rules to require public issuers to include enhanced disclosure regarding corporate climate-related information in their periodic reports and registration statements.

Such information would include climate-related risks that are reasonably likely to have a material impact on an issuer’s business or results of operations, as well as certain climate-related financial statement metrics.

In addition, we expect state laws and regulations regarding these topics to continue to evolve and impose new and additional requirements.

For example, in October 2023, California enacted a new climate accountability package pursuant to its new Climate Corporate Data Accountability Act that will require annual disclosure of certain greenhouse gas emissions and new Climate-Related Financial Risk Act that will require biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations and rulemaking that may impact final scope and compliance timing.

Globally, the International Sustainability Standards Board and applicable sustainability disclosure standards impact how national regulators and governance bodies approach these and related topics.

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.

We operate in multiple geographies and industries which subject us 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.

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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.

We are committed to running a sustainable business for our agents, their clients, and the greater good of our planet by bringing people together beyond boundaries with advanced collaboration technologies.

Our approach leverages the power of community and cloud-based solutions to drive positive impact for people and the environment.

In 2022, we conducted a robust 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, which was delivered in January 2023 to our leadership team, employees and agents.

In 2023, the Company’s Board of Directors created a Sustainability Committee of the Board tasked with overseeing and developing, alongside management, strategies related to the material ESG topics identified in the assessment.

We have chosen to focus our efforts on three key pillars that we have termed our “Core Values”:

empowering people development, building inclusive and equitable communities and advancing climate-positive solutions.

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 :

During 2023, the Company had various social initiatives in support of these Core Values, including the following:

● Empowering People Development:

We are helping people achieve their fullest potential by fostering personal and professional growth through our tools, technology and collaboration.

We have continued throughout 2023 to provide tools for productivity and health and wellbeing, for our employees, access to wellness platforms such as Calm, Vitality and Noom, and, for our real estate agents and brokers, providing toolkits for scaling business and entrepreneurship.

● Building Inclusive and Equitable Communities:

We drive fairness, inclusivity and belonging by supporting diverse groups of clients, agents, brokers and employees, and encouraging them to create a positive impact in their communities through philanthropic initiatives.

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

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, including the promotion of ONE eXp, 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.

In 2023 we established the Realtor Safety Taskforce whose mission is ensuring the utmost safety of our agents while they are representing eXp, including at eXp-sponsored events and meetings, and we provide safe and inclusive workspaces within our virtual world.

We also created the Women’s Impact Network to further the success, health and wellbeing of our female agents and employees while providing an outlet for diverse and inclusive voices.

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.

We contribute to building equitable communities through the sponsorship of 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.

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.

have continued expanding initiatives driven by our 501(c)(3) affiliated nonprofit, eXtend-a-Hand, whose 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.

● Advancing Climate-Positive Solutions:

We are paving a responsible path to a better planet through our cloud-based model and will continue to promote, scale, and innovate solutions for a low-carbon economy and more resilient communities.

We have reduced our GHGs and environmental impact including server energy, waste and agent travel, while also providing ESG training to all agents and employees and offering products for sustainability.

We established an incentive plan for electric vehicles for agents and provided education on sustainable homes and energy efficiency.

We are committed to furthering these goals through targets that will be regularly evaluated to ensure our continued success in meeting the pillars of our core values strategy.

Human Capital

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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.

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.

Our management’s relationships with agents, brokers, technology providers and customers will provide the foundation with 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.

Talent and Culture :

Our business is driven by nine core values of community, sustainability, integrity, service, collaboration, innovation, transparency, agility and fun.

Our business is driven by nine core values of community, sustainability, integrity, service, collaboration, innovation, transparency, agile and fun.

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

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and internationally.

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.

During 2023, the Company offered self-defense training to real estate agents and brokers attending our annual fall convention and our human resources department expanded existing offerings to support the health and safety of our employees in their remote work environments.

The Realtor Safety Taskforce has been established to continue fostering an environment of safety and ensure that all company related activities, events and meetings are planned and executed with safety at the forefront.

Independent Agent and Broker Support :

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.

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 offerings.

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, whose 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 and our Board of Directors, which includes a rotating agent director seat.

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.

Information contained on our website is not incorporated by reference into this report.

As the Company grows, management continually researches new directives and implementation efforts for the long-term success of the Company.

Information contained on our website is not incorporated by reference into this Annual Report.

Available Information

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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/.

Such reports and information for the previous 12 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.

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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 )

eXp World Holdings Twitter Account ( https://twitter.com/eXpWorldIR )

eXp investors website ( www.expworldholdings.com/investors/ )

eXp Realty X Account ( https://x.com/eXpRealty )

eXp World Holdings X Account ( https://x.com/eXpWorldIR )

eXp Realty LinkedIn page ( https://www.linkedin.com/company/exp-realty/ )

eXp World Holdings LinkedIn page ( https://www.linkedin.com/company/expworldholdings/ )

eXp Realty Facebook Page ( https://www.facebook.com/eXpRealty )

5 unchanged sentences

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