What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-05-01 · 126 added, 105 removed, 377 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

March 31, 2024

June 30, 2024

December 31, 2023

7 unchanged sentences

Property, plant, and equipment, net

Operating lease right-of-use assets

Other noncurrent assets

8 unchanged sentences

Litigation contingency

Current portion of lease obligation - operating lease

Other liabilities

Current liabilities of discontinued operations

3 unchanged sentences

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

186,361,476 issued and 154,846,563 outstanding at March 31, 2024;

189,947,235 issued and 153,733,373 outstanding at June 30, 2024;

183,606,708 issued and 154,669,037 outstanding at December 31, 2023

12 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

5 unchanged sentences

Total operating expenses

Operating (loss) income

Operating income

Other (income) expense

1 unchanged sentence

Equity in losses of unconsolidated affiliates

Total (income) expense, net

Income (loss) before income tax expense

Income tax benefit

Net (loss) income from continuing operations

Net loss from discontinued operations

Net (loss) income

(Loss) earnings per share

Basic, net (loss) income from continuing operations

Basic, net loss from discontinued operations

Basic, net (loss) income

Diluted, net (loss) income from continuing operations

Diluted, net loss from discontinued operations

Diluted, net (loss) income

Total other (income) expense, net

Income before income tax expense

Income tax expense

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Net income (loss)

Earnings (loss) per share

Basic, net income (loss) from continuing operations

Basic, net income (loss) from discontinued operations

Basic, net income (loss)

Diluted, net income (loss) from continuing operations

Diluted, net income (loss) from discontinued operations

Diluted, net income (loss)

Weighted average shares outstanding

Comprehensive (loss) income:

Net (loss) income

Other comprehensive (loss) income:

Comprehensive income (loss):

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation gain (loss), net of tax

Comprehensive (loss) income attributable to eXp World Holdings, Inc.

Comprehensive income (loss) attributable to eXp World Holdings, Inc.

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

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Common stock:

14 unchanged sentences

Balance, beginning of period

Net (loss) income

Net income (loss)

Dividends declared and paid ( $ 0.05 and $ 0.045 per share of common stock in Q2 2024 and Q2 2023, respectively)

12 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

Net (loss) income

Net income (loss)

Reconciliation of net income (loss) to net cash provided by operating activities:

19 unchanged sentences

Purchases of property, plant, equipment

Purchase of business

Investments in unconsolidated affiliates

13 unchanged sentences

Cash paid for income taxes

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Termination of lease obligation - operating lease

Property, plant and equipment increase due to transfer of right-of-use lease asset

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

6 unchanged sentences

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.

5 unchanged sentences

In our opinion, the accompanying interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

In the first quarter of 2024, the Company determined that there has been a significant change to the Virbela business model.

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 in our web-accessible platform, Frame ® .

As our customers evolve post-COVID, including 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 in our web-accessible platform, Virbela Frame ® .

Accordingly, the Company has begun the process of winding down the Virbela business, which includes closing out current contracts, and reducing its external customers and internal employee support.

1 unchanged sentence

The Company expects the process to wind down the Virbela business to be completed by the fourth quarter of 2024.

As a result of this change, the Company has determined that Virbela qualifies for reporting as discontinued operations and will be reported as discontinued operations in the Company’s quarterly report on Form 10-Q for the period ended March 31, 2024 (the “Form 10-Q”).

In accordance with Accounting Standards Codification (“ASC”) 205 – Presentation of Financial Statements, we will present the assets and liabilities of Virbela within discontinued operations in the Company’s condensed consolidated balance sheet and Virbela’s results of operations will be included in discontinued operations in the Company’s condensed consolidated statements of comprehensive income (loss).

As a result of this change, the Company determined that winding down of the Virbela business qualifies for reporting as discontinued operations in the Company’s condensed consolidated balance sheet and the Company’s condensed consolidated statements of comprehensive income (loss).

Prior period financial statement information has been reclassified to reflect Virbela as discontinued operations.

For more information See Note 3 – Discontinued Operations .

In prior years, Virbela represented an operating and reporting segment under ASC 280.

Going forward, the remaining operations of Virbela will not meet the operating or reporting segment criteria, therefore, any operating results related to Virbela and Frame ® technologies will be included in the Other Affiliated Services segment.

Prior year segment and financial statement information has been reclassified to reflect Virbela as discontinued operations .

As a result of the Company’s decision to wind down the Virbela business in the first quarter of 2024, the Company determined that the remaining operations of Virbela do not meet the operating or reporting segment criteria;

therefore, any operating results related to Virbela and Virbela Frame® technologies are included in the Other Affiliated Services segment beginning in the first quarter of 2024.

All prior period segment disclosure information has been reclassified to conform to the current reporting structure in this Form 10-Q.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

The accompanying interim unaudited 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.

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

Entities in which the Company has less than a 20% investment and where the Company does not exercise significant influence are accounted for under the cost method.

10 unchanged sentences

The operations of these joint ventures are not material to the Company’s financial position or results of operations.

Use of Estimate s

Use of Estimates

The preparation of financial statements in conformity with U.S.

14 unchanged sentences

Restricted cash

Balance, March 31, 2023

Balance, June 30, 2023

Balance, December 31, 2023

Balance, March 31, 2024

Balance, June 30, 2024

DISCONTINUED OPERATIONS

In accordance with ASC 205-20, the results of the Virbela business are presented as discontinued operations in the condensed consolidated statements of comprehensive income and, as such, have been excluded from continuing operations.

Further, the Company reclassified the assets and liabilities of the Virbela segment as assets and liabilities of discontinued operations in the consolidated balance sheets.

The following tables present the information for Virbela’s operations for the three months ended March 31, 2024 and 2023, and the balance sheet information as of March 31, 2024 and December 31, 2023 (in thousands).

Further, the Company reclassified the assets and liabilities of the Virbela segment as assets and liabilities of discontinued operations in the condensed balance sheets.

The following tables present the information for Virbela’s operations for the three and six months ended June 30, 2024 and 2023, and the balance sheet information as of June 30, 2024 and December 31, 2023 (in thousands).

ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Prepaids and other assets

TOTAL CURRENT ASSETS

TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS

Property, plant, and equipment, net

1 unchanged sentence

Deferred tax assets

TOTAL ASSETS OF DISCONTINUED OPERATIONS

CURRENT LIABILITIES

1 unchanged sentence

Accrued expenses

TOTAL CURRENT LIABILITIES

TOTAL LIABILITIES

TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS

TOTAL LIABILITIES OF DISCONTINUED OPERATIONS

INCOME STATEMENT OF DISCONTINUED OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

Commissions and other agent-related costs

Cost of revenue

General and administrative expenses

6 unchanged sentences

(Loss) before income tax expense

Income tax benefit

Net loss from discontinued operations

Income tax benefit (expense)

Net income (loss) from discontinued operations

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.

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

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

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

Receivables from real estate property settlements totaled $ 100,529 and $ 81,004 of which the Company recognized expected credit losses of $ 2 and $- , respectively as of March 31, 2024 and December 31, 2023.

As of March 31, 2024 and December 31, 2023 agent non-commission based fees receivable and short-term advances totaled $ 7,487 and $ 7,268 , of which the Company recognized expected credit losses of $ 2,363 and $ 2,204 , respectively.

Receivables from real estate property settlements totaled $ 128,814 and $ 81,004 of which the Company recognized expected credit losses of $ 88 and $- , respectively as of June 30, 2024 and December 31, 2023.

As of June 30, 2024 and December 31, 2023, agent non-commission based fees receivable and short-term advances totaled $ 7,092 and $ 7,268 , of which the Company recognized expected credit losses of $ 1,439 and $ 2,204 , respectively.

PLANT, PROPERTY AND EQUIPMENT, NET

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

March 31, 2024

June 30, 2024

December 31, 2023

7 unchanged sentences

Property, plant, and equipment, net

For the three months ended March 31, 2024 and 2023 depreciation expense was $ 2,059 and $ 2,067 , respectively.

For the three months ended June 30, 2024 and 2023, depreciation expense was $ 1,891 and $ 2,096 , respectively.

For the six months ended June 30, 2024 and 2023 depreciation expense was $ 3,950 and $ 4,163 , respectively.

GOODWILL AND INTANGIBLE ASSETS

Goodwill was $ 16,682 as of March 31, 2024 and $ 16,982 as of December 31, 2023.

As of March 31, 2024, the Company recorded cumulative translation adjustment of ($ 300 ) related to Canadian goodwill.

Goodwill was $ 19,673 as of June 30, 2024 and $ 16,982 as of December 31, 2023.

During the second quarter of 2024, the Company acquired a small real estate business, resulting in recording goodwill of $ 3,150 .

As of June 30, 2024, the Company recorded cumulative translation adjustment of ( $ 459 ) related to Canadian goodwill.

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

For the three months ended March 31, 2024, no events occurred that indicated it was more likely than not that goodwill was impaired.

The following tables present definite-lived intangible assets as of March 31, 2024 and December 31, 2023, in thousands:

March 31, 2024

For the six months ended June 30, 2024, no events occurred that indicated it was more likely than not that goodwill was impaired.

The following tables present definite-lived intangible assets as of June 30, 2024 and December 31, 2023, in thousands:

June 30, 2024

Existing technology

12 unchanged sentences

Definite-lived intangible assets are amortized using the straight-line method over an asset’s estimated useful life.

Amortization expense for definite-lived intangible assets for the three months ended March 31, 2024 and 2023 was $ 340 and $ 512 , respectively.

Amortization expense for definite-lived intangible assets for the three months ended June 30, 2024 and 2023 was $ 1,073 and $ 683 , respectively.

Amortization expense for definite-lived intangible assets for the six months ended June 30, 2024 ended and 2023 was $ 1,413 and $ 1,195 , respectively.

STOCKHOLDERS’ EQUITY

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Common stock:

4 unchanged sentences

Balance, end of quarter

The Company’s equity programs described below are administered under the stockholder approved 2015 Equity Incentive Plan.

The Company’s equity programs described below are administered under the stockholder approved 2015 Equity Incentive Plan, as amended.

The purpose of the equity plan is to retain the services of valued employees, directors, officers, agents, and consultants and to incentivize such persons to make contributions to the Company and motivate excellent performance.

3 unchanged sentences

elect to receive portions of their commissions in common stock, they are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable.

The Company recognizes a 10 % discount on these issuances for the period beginning January 1, 2024 through February 29, 2024, and a 5 % discount on these issuances beginning as of March 1, 2024, as an additional cost of sales charge during the periods presented.

During the three months ended March 31, 2024 and 2023, the Company issued 2,189,922 and 2,106,369 shares of common stock, respectively, to agents and brokers with a value of $ 25,868 and $ 26,775 , respectively, inclusive of discount.

The Company recognizes a 10 % discount on these issuances prior to February 29, 2024, and a 5 % discount on these issuances beginning as of March 1, 2024, as an additional cost of sales charge during the periods presented.

During the three months ended June 30, 2024 and 2023, the Company issued 2,892,648 and 2,558,438 shares of common stock, respectively, to agents and brokers with a value of $ 30,588 and $ 38,876 , respectively, inclusive of discount.

During the six months ended June 30, 2024 and 2023, the Company issued 5,082,570 and 4,664,807 shares of common stock, respectively, to agents and brokers with a value of $ 56,456 and $ 65,652 , 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 March 31, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 8,827 and $ 9,660 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 650 and $ 993 , respectively.

For the three months ended June 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 9,329 and $ 8,488 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 638 and $ 345 , respectively.

For the six months ended June 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 18,157 and $ 18,148 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 1,288 and $ 1,338 , respectively.

Agent Thrive Program

11 unchanged sentences

Stock grants reclassified from liability to equity year to date

Balance, March 31, 2024

Balance, June 30, 2024

Stock Option Awards

1 unchanged sentence

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

During the three months ended March 31, 2024 and 2023 the Company granted 353,656 and 88,553 stock options, respectively, to employees with an estimated grant date fair value of $ 6.93 and $ 8.18 per share, respectively.

During the three months ended June 30, 2024 and 2023, the Company granted 322,082 and 1,440,010 stock options, respectively, to employees with an estimated grant date fair value of $ 6.35 and $ 8.35 per share, respectively.

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

During the six months ended June 30, 2024 and 2023 the Company granted 675,738 and 1,528,563 stock options, respectively, to employees with an estimated grant date fair

value of $ 6.63 and $ 8.34 per share, respectively.

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

Stock Repurchase Plan

1 unchanged sentence

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.

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

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

In June 2023, the Board approved an increase to the total amount of its buyback program from $ 500.0 million to $ 1.0 billion.

7 unchanged sentences

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 common stock of the Company, which is amended from time to time to adjust the monthly repurchase amount.

Most recently, on March 6, 2024, the Board approved, and the Company entered into a seventh amendment to the Issuer Repurchase Plan to increase the monthly repurchase to (i) $ 20.0 million during the calendar months commencing March 1, 2024 through and including April 30, 2024, and (ii) $ 15.0 million during the calendar months commencing May 1, 2024 through and including December 31, 2024.

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

On January 10, 2022, the Company and Stephens Inc., a financial services firm that acts as an agent authorized to purchase shares on behalf of the Company, entered into a form of Issuer Repurchase Plan (“Issuer Repurchase Plan”) which authorized Stephens to repurchase common stock of the Company, which is amended from time to time to adjust the monthly repurchase amount.

Most recently, on June 19, 2024, the Board approved, and the Company entered into an eighth amendment to the Issuer Repurchase Plan which provides for the repurchase of up to (i) $ 15.0 million during the calendar month commencing June 1, 2024 through and including June 30, 2024, (ii) $ 11.7 million during the calendar months commencing July 1, 2024 through and including September 30, 2024, and (iii) $ 8.3 million during the calendar months commencing October 1, 2024 through and including December 31, 2024.

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

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

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Treasury stock:

20 unchanged sentences

● Other Affiliated Services:

includes our SUCCESS ® Magazine, Frame ® technology, and other smaller ventures.

includes our SUCCESS ® Magazine, Virbela Frame ® technology, 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.

3 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

North American Realty

5 unchanged sentences

Adjusted EBITDA

Three Months Ended March 31,

Adjusted EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

North American Realty

3 unchanged sentences

Consolidated Adjusted EBITDA

Operating (Loss) Profit Reconciliation:

Operating Profit Reconciliation:

Depreciation and amortization expense

2 unchanged sentences

Stock option expense

Consolidated operating (loss) profit

March 31, 2024

Consolidated operating profit

June 30, 2024

December 31, 2023

9 unchanged sentences

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

Three Months Ended March 31,

Net (loss) income from continuing operations

Net loss from discontinued operations

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Weighted average shares - basic

2 unchanged sentences

Earnings per share:

Net (loss) income from continuing operations per share - basic

Net (loss) income from discontinued operations per share - basic

Net (loss) income from continuing operations per share - diluted

Net (loss) income from discontinued operations per share - diluted

For three months ended March 31, 2024 and 2023 total outstanding shares of common stock excluded 3,212,244 and 635,343 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Net income (loss) from continuing operations per share - basic

Net income (loss) from discontinued operations per share - basic

Net income (loss) from continuing operations per share - diluted

Net income (loss) from discontinued operations per share - diluted

For three months ended June 30, 2024 and 2023 total outstanding shares of common stock excluded 447,005 and 656,776 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For six months ended June 30, 2024 and 2023 total outstanding shares of common stock excluded 3,037,309 and 588,940 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 income tax expense (benefit) amounted to ($ 3.4 ) million and ($ 2.6 ) million for the three months ended March 31, 2024 and 2023, which represent effective tax rates of positive 18 % and 238 % , respectively.

The provision for income tax benefit was primarily attributable to income(loss) from continuing and discontinuing operations, deductible stock-based compensation shortfalls and research and development credit.

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.

Our provision for income tax expense from continuing operations amounted to $ 4.8 million and $ 1.2 million for the six months ended June 30, 2024 and 2023, which represent effective tax rates of positive 174.3 % and 8.1 % respectively.

The provision for income tax expense was primarily attributable to deductible stock-based compensation shortfalls, research and development credit and non-deductible executive compensation.

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

The Company is subject to a wide variety of tax laws and regulations across the jurisdictions where it operates.

2 unchanged sentences

The Company continues to monitor the Base Erosion and Profit Shifting (BEPS) Integrated Framework provided by the Organization for Economic Co-operation and Development (OECD) including the legislative adoption of Pillar II by countries, and all other tax regulatory changes, to evaluate the potential impact on future periods.

The Company does not expect adoption of Pillar Two rules to have a significant impact on its consolidated financial statements during fiscal year 2024.

The Company does not expect adoption of Pillar Two rules to have a significant impact on its condensed financial statements during fiscal year 2024.

FAIR VALUE MEASUREMENT

10 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, the fair value of the Company’s money market funds was $ 46,665 and $ 46,268 , respectively.

As of June 30, 2024 and December 31, 2023, the fair value of the Company’s money market funds was $ 42,455 and $ 46,268 , respectively.

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

5 unchanged sentences

and one Canadian putative class action lawsuits alleging that the Company participated in a system that resulted in sellers of residential property paying inflated buyer broker commissions in violation of U.S.

federal and state antitrust laws and federal Canadian antitrust laws, as applicable, as discussed further in our 2023 Annual Report and Note 13 – Subsequent Events to these unaudited consolidated financial statements (“antitrust litigation”).

As of March 31, 2024, the Company has determined that it is probable that a loss associated with the antitrust litigation has occurred and that the lower boundary of potential loss is reasonably estimable.

Based on an analysis of settlements negotiated by co-defendants companies in similar legal matters and ongoing developments in the antitrust litigation, the Company has recorded a provision for loss of $16.0 million which represents the lower boundary of a reasonably possible range of loss.

federal and state antitrust laws and federal Canadian antitrust laws, as applicable, as discussed further in our 2023 Annual Report and below, and one U.S.

putative class action lawsuit alleging that the Company participated in a system that resulted in buyers of residential property paying inflated home prices as a result of sellers paying inflated buyer broker commissions in violation of federal and Illinois antitrust laws, as discussed further below and in our 2023 Annual Report (collectively, the “antitrust litigation”).

As of June 30, 2024, the Company has determined that it is probable that a loss associated with the antitrust litigation has occurred and that the lower boundary of potential loss is reasonably estimable.

Based on an analysis of settlements negotiated by co-defendants companies in similar legal matters and ongoing developments in the antitrust litigation, the Company has recorded a provision for loss of $ 16.0 million in the first quarter of 2024, which represents the lower boundary of a reasonably possible range of loss.

The high-end range of loss cannot be reasonably estimated at this time due to the dynamic nature of the lawsuit and the contingent nature of possible outcomes.

We have determined that it is at least reasonably possible that the loss estimate provision could change in the near term and that such change could be material.

This contingent uncertainty highlights the provisional nature of the current loss estimate.

Additionally, we cannot provide any assurances that results of such litigation will not have a material adverse effect on our business, results of operations, cash flows or financial condition.

2 unchanged sentences

The Company will reassess this estimate as additional information becomes available or as circumstances change.

On May 22, 2024, Texas Capital Bank (“TCB”) entered into a Change in Terms Agreement (the “Change Agreement”) with SUCCESS Lending, LLC (“SUCCESS Lending”), an indirect subsidiary and unconsolidated joint venture of the Company, to modify certain terms of that certain Mortgage Warehouse Agreement entered into by and between TCB and SUCCESS Lending in April 2022.

The Change Agreement reduces the size of the warehouse credit line provided by TCB to SUCCESS Lending under the Mortgage Warehouse Agreement from $ 25 million to $ 10 million.

SUBSEQUENT EVENTS

Quarterly Cash Dividend

On April 24, 2024 , the Company’s Board of Directors declared a dividend of $ 0.05 per share which is expected to be payable on May 27, 2024 , to stockholders of record as of the close of business on May 13, 2024 .

The ex-dividend date is expected to be on or around May 10, 2024.

On July 26, 2024 , the Company’s Board of Directors declared a dividend of $ 0.05 per share which is expected to be payable on August 30, 2024 , to stockholders of record as of the close of business on August 14, 2024 .

The ex-dividend date is expected to be on or around August 13, 2024.

The dividend will be paid in cash.

Antitrust Litigation

On April 11, 2024, the Company was named in Shauntell Burton et al.

Bluefield Realty Group, LLC, et al., Case No.

7:24-cv-01800-JDA (filed in the United States District Court for the District of South Carolina) (the “Burton Litigation”), brought by a putative class of residential property sellers, alleging that defendants participated in a system that resulted in sellers of residential property purportedly paying inflated buyer broker commissions in violation of federal antitrust law.

As with the other antitrust litigation, the plaintiffs seek a permanent injunction enjoining the defendants from requiring home sellers to pay buyer-broker commissions or from otherwise restricting competition among brokers, an award of declaratory relief and damages or restitution on behalf of certain home sellers as well as attorneys’ fees and costs of suit.

Plaintiffs allege joint and several liability and seek treble or other multiple damages.

The Burton Litigation is in the pleadings phase and the Company intends to vigorously defend against all claims.

The Company may become involved in additional litigation or other legal proceedings concerning the same or similar claims.

On July 22, 2024, Flagstar Bank FSB (“Flagstar”) assigned that certain Mortgage Warehouse Agreement entered into in March 2022 (the “SUCCESS Credit Agreement”) with SUCCESS Lending to JPMorgan Chase Bank, National Association (“JPMorgan”).

The SUCCESS Credit Agreement provided SUCCESS Lending with a revolving warehouse credit line of up to $ 25 million.

In connection with the assignment of the SUCCESS Credit Agreement to JPMorgan, Flagstar also assigned to JPMorgan the related Capital Maintenance Agreement (the “Capital Maintenance Agreement”), pursuant to which the Company agreed to provide certain funds necessary to ensure that SUCCESS Lending is at all times in compliance with its financial covenants under the SUCCESS Credit Agreement.

The material terms of the Capital Maintenance Agreement remain unchanged and the Company’s capital commitment liability under the Capital Maintenance Agreement is limited to $ 2,000,000 .

In the event SUCCESS Lending fails to comply with its financial covenants, the Company may have to contribute additional capital up to the limit.

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