What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-07-31 · 133 added, 105 removed, 398 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

June 30, 2024

September 30, 2024

December 31, 2023

23 unchanged sentences

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

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

192,559,288 issued and 153,551,386 outstanding at September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses

5 unchanged sentences

Total operating expenses

Operating income

Operating (loss) income

Other (income) expense

2 unchanged sentences

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)

(Loss) income before income tax expense

Income tax (benefit) expense

Net (loss) income from continuing operations

Net loss from discontinued operations

Net (loss) income

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)

Basic, net (loss) income from continuing operations

Basic, net (loss) income from discontinued operations

Basic, net (loss) income

Diluted, net (loss) income from continuing operations

Diluted, net (loss) income from discontinued operations

Diluted, net (loss) income

Weighted average shares outstanding

Comprehensive income (loss):

Net income (loss)

Comprehensive (loss) income:

Net (loss) income

Other comprehensive income (loss):

Foreign currency translation gain (loss), net of tax

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

Comprehensive (loss) income 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Common stock:

14 unchanged sentences

Balance, beginning of period

Net income (loss)

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

Net (loss) income

Dividends declared and paid ( $ 0.05 per share of common stock in each of Q3 2024 and Q3 2023)

Balance, end of period

11 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

3 unchanged sentences

Amortization expense - intangible assets

Loss on disposition of business

Allowance for credit losses on receivables/bad debt on receivables

15 unchanged sentences

INVESTING ACTIVITIES

Purchases of property, plant, equipment

Purchases of property, plant, and equipment

Purchase of business

Proceeds from sale of business

Investments in unconsolidated affiliates

15 unchanged sentences

Termination of lease obligation - operating lease

Contingent consideration for disposition of business

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

Property, plant and equipment purchases in accounts payable

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

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

(Amounts in thousands, except share amounts and per share data or noted otherwise)

(Amounts in thousands, except share amounts and per share data or as noted otherwise)

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

9 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 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 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 ® .

Operating results for the three and nine months ended September 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 had been a significant change to the Virbela business model.

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 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.

6 unchanged sentences

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.

therefore, any operating results related to 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.

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Joint ventures are accounted for using the equity method and are recognized initially at cost.

Joint ventures are typically included in the Other Affiliated Services unless the joint venture specifically supports one of the reportable segments.

Joint ventures are typically included in the Other Affiliated Services segment unless the joint venture specifically supports one of the reportable segments.

The Company has several joint venture investments.

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Restricted cash

Balance, June 30, 2023

Balance, September 30, 2023

Balance, December 31, 2023

Balance, June 30, 2024

Balance, September 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 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).

In accordance with ASC 205-20 Discontinued operations , the results of the Virbela business are presented as discontinued operations in the condensed consolidated statements of comprehensive loss 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 condensed consolidated balance sheets.

The following tables present the information for Virbela’s operations for the three and nine months ended September 30, 2024 and 2023, and the balance sheet information as of September 30, 2024 and December 31, 2023.

ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

June 30, 2024

September 30, 2024

December 31, 2023

14 unchanged sentences

INCOME STATEMENT OF DISCONTINUED OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses

9 unchanged sentences

Income tax benefit (expense)

Net income (loss) from discontinued operations

Net loss from discontinued operations

EXPECTED CREDIT LOSSES

6 unchanged sentences

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

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.

Receivables from real estate property settlements totaled $ 99,988 and $ 81,004 of which the Company recognized expected credit losses of $ 30 and $- , respectively as of September 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, agent non-commission based fees receivable and short-term advances totaled $ 6,791 and $ 7,268 , of which the Company recognized expected credit losses of $ 1,304 and $ 2,204 , respectively.

PLANT, PROPERTY AND EQUIPMENT, NET

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

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

Property, plant, and equipment, net

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.

For the three months ended September 30, 2024 and 2023, depreciation expense was $ 1,937 and $ 2,136 , respectively.

For the nine months ended September 30, 2024 and 2023 depreciation expense was $ 5,887 and $ 6,299 , respectively.

GOODWILL AND INTANGIBLE ASSETS

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

Goodwill was $ 19,866 as of September 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.

As of September 30, 2024,

the Company recorded cumulative translation adjustment of ( $ 266 ) 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 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

For the nine months ended September 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 September 30, 2024 and December 31, 2023:

September 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 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.

Amortization expense for definite-lived intangible assets for the three months ended September 30, 2024 and 2023 was $ 442 and $ 654 , respectively.

Amortization expense for definite-lived intangible assets for the nine months ended September 30, 2024 and 2023 was $ 1,855 and $ 1,849 , respectively.

STOCKHOLDERS’ EQUITY

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 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, as amended.

The Company’s equity programs described below were administered under the stockholder approved 2015 Equity Incentive Plan, as amended, for issuances prior to September 1, 2024, and under the stockholder approved 2024 Equity Incentive Plan for issuances on or after September 1, 2024.

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.

1 unchanged sentence

The Company provides agents and brokers the opportunity to elect to receive 5 % of commissions earned from each completed real estate transaction in the form of common stock (the “Agent Equity Program” or “AEP”).

If agents and brokers

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 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.

If agents and brokers 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 recognized 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 September 30, 2024 and 2023, the Company issued 2,208,226 and 1,985,169 shares of common stock, respectively, to agents and brokers with a value of $ 29,541 and $ 38,897 , respectively, inclusive of discount.

During the nine months ended September 30, 2024 and 2023, the Company issued 7,290,796 and 6,649,976 shares of common stock, respectively, to agents and brokers with a value of $ 85,997 and $ 104,548 , 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 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.

For the three months ended September 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 9,910 and $ 11,764 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 891 and $ 1,458 , respectively.

For the nine months ended September 30, 2024 and 2023 the Company’s stock compensation expense attributable to the Agent Growth Incentive Program was $ 28,067 and $ 29,912 , respectively, of which the total amount of stock compensation attributable to liability classified awards was $ 2,179 and $ 2,796 , respectively.

Agent Thrive Program

11 unchanged sentences

Stock grants reclassified from liability to equity year to date

Balance, June 30, 2024

Balance, September 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 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.

During the three months ended September 30, 2024 and 2023, the Company granted 62,735 and 445,380 stock options, respectively, to employees with an estimated grant date fair value of $ 6.21 and $ 10.71 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.

During the nine months ended September 30, 2024 and 2023 the Company granted 738,473 and 1,973,943 stock options, respectively, to employees with an estimated

grant date fair value of $ 6.57 and $ 8.87 per share, respectively.

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

12 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., 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.

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

(“Stephens”), 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 shares of 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.

3 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Treasury stock:

1 unchanged sentence

Repurchases of common stock

Forfeiture to treasury stock for acquisition

Balance, end of quarter

23 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

North American Realty

5 unchanged sentences

Adjusted EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

North American Realty

8 unchanged sentences

Stock option expense

Consolidated operating profit

June 30, 2024

Consolidated operating (loss) profit

September 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 June 30,

Six Months Ended June 30,

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income from continuing operations

Net loss from discontinued operations

Weighted average shares - basic

6 unchanged sentences

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.

For three months ended September 30, 2024 and 2023 total outstanding shares of common stock excluded 4,153,812 and 192,684 shares, respectively, from the computation of diluted earnings per share because their effect would have been anti-dilutive.

For nine months ended September 30, 2024 and 2023 total outstanding shares of common stock excluded 3,309,505 and 679,425 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 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.

Our provision for income tax expense from continuing operations amounted to $ 3.5 million and $ 3.0 million for the nine months ended September 30, 2024 and 2023, which represent effective tax rates of negative ( 69.6 % ) and positive 15.9 % respectively.

The effective tax rate differs from our statutory rates in both periods primarily due to the impact of the stock-based compensation, research and development 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 condensed financial statements during fiscal year 2024.

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

FAIR VALUE MEASUREMENT

3 unchanged sentences

The fair value hierarchy prioritizes the quality and reliability of the information used to determine fair values.

Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Categorization within

the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The fair value hierarchy is defined into the following three categories:

4 unchanged sentences

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

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.

As of September 30, 2024 and December 31, 2023, the fair value of the Company’s money market funds was $ 42,967 and $ 46,268 , respectively.

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

2 unchanged sentences

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

Such litigation includes, but is not limited to, actions or claims relating to cyber-attacks, data breaches, the Real Estate Settlement Procedures Act (“RESPA”), the Telephone Consumer Protection Act of 1991 and state consumer protection laws, antitrust and anticompetition, worker classification, timely filing required SEC filings and non-compliance with contractual or other legal obligations.

The Company and its affiliated brokerage entities are among several defendants in eight U.S.

Such litigation includes, but is not limited to, actions or claims relating to cyber-attacks, data breaches, the Real Estate Settlement Procedures Act (“RESPA”), the Telephone Consumer Protection Act of 1991 and state consumer protection laws, antitrust and anticompetition, worker classification, timely filing required SEC filings, stockholder derivative actions and non-compliance with contractual or other legal obligations.

Antitrust Litigation

The Company and its affiliated brokerage entities were among several defendants in eight U.S.

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 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.

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.

The Company continues to vigorously defend against these claims.

However, due to the complexities inherent in such litigation, including the uncertainty of legal processes and potential developments in the cases, the ultimate liability may differ from the current provision.

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

federal and state antitrust laws and federal Canadian antitrust laws, as applicable, and one U.S.

On October 1, 2024, the Company entered into a Settlement Term Sheet (the “Settlement”) with plaintiffs in the U.S.

antitrust litigation filed by plaintiffs 1925 Hooper LLC and others in the Northern District of Georgia (the “Hooper Action”).

The Company expects that the proposed Settlement would resolve all U.S.

claims set forth in the Hooper Action, as well as all similar claims on a nationwide basis against the Company (collectively, the “Nationwide Claims”) and would release the Company, its subsidiaries and affiliates, and their independent contractor real estate agents in the United States from the Nationwide Claims.

By the terms of the Settlement, the Company agreed to make certain changes to its business practices and to pay a total settlement amount of $ 34,000 (the “Settlement Amount”) into a qualified settlement escrow fund (the “Settlement Fund”).

The Settlement Amount is expected to be deposited into the Settlement Fund in installments, of which 50 % of the settlement (or $ 17,000 ) will be deposited into the Settlement Fund within thirty business days after preliminary court approval of the Settlement and the final 50 % (for $ 17,000 ) being deposited on or before the one-year anniversary of initial settlement payment.

The Company intends to use available cash to pay the Settlement Amount.

Management has determined that a $ 34.0 million loss is probable and have included an $ 18.0 million additional litigation contingency accrual recorded in the third quarter of 2024.

While management has determined that loss in excess of the accrual is reasonably possible, it is currently unable to reasonably estimate the possible additional loss or range of possible additional loss because, among other reasons, (i) the settlement is subject to court approval and appeals processes, (ii) further developments in the legal proceedings, including but not limited to motions, or rulings, could impact the Company's exposure, and/or (iii) potential changes in law or precedent could affect the final determination of liability.

The Settlement remains subject to preliminary and final court approval and will become effective following any appeals process, if applicable.

The Settlement and any actions taken to carry out the Settlement are not an admission or concession of liability, or of the validity of any claim, defense, or point of fact or law on the part of any party.

The Company continues to deny the material allegations of the complaints in the antitrust litigation.

The Company entered into the Settlement after considering the risks and costs of continuing the litigation.

The Company continues to vigorously defend against the claims in the Canadian antitrust litigation.

Management is currently unable to reasonably estimate the possible loss or range of possible loss for the Canadian antitrust litigation because, among other reasons, (i) the proceeding is in preliminary stages, (ii) specific damage amounts have not been sought, (iii) damages sought are, in our opinion, unsupported and/or exaggerated, (iv) there are significant factual issues to be resolved;

and/or (v) there are novel legal issues or unsettled legal theories presented.

For the Canadian antitrust litigation, we have not recorded any accruals as of September 30, 2024.While the Company does not expect such litigation to have a material adverse effect on our business, results of operations, cash flows or financial condition, due to the complexities inherent in such litigation, including the uncertainty of legal processes and potential developments in the cases, the ultimate liability may differ.

Derivative Litigation

Certain current and former directors and officers of the Company were named as defendants, and the Company was named as a nominal defendant, in a derivative lawsuit in the Court of Chancery of the State of Delaware, first filed on September 25, 2024, entitled Los Angeles City Employees’ Retirement System, on behalf of eXp World Holdings, Inc.

Glenn Sanford, et.

2024-0998-KSJM).

The lawsuit alleges that certain current and former directors and officers breached fiduciary duties related to the Company’s response to reports of alleged sexual misconduct involving independent contractor real estate agents affiliated with the Company’s subsidiaries and that certain defendants had improper compensation arrangements allowing them to profit from the Company’s revenue share program in connection therewith.

The complaint seeks a court declaration of fiduciary duty breaches, disgorgement of profits, damages with interest, injunctive relief for improved oversight of sexual misconduct allegations, and reimbursement of plaintiffs' costs, including expert and attorney fees.

Although the Company does not anticipate that the outcome of such litigation will have a material adverse effect on its business, results of operations, cash flows, or financial condition, the inherent complexities and uncertainties of legal proceedings may result in a liability that differs from current expectations.

Management is currently unable to reasonably estimate the possible loss or range of possible loss for this matter because, among other reasons, (i) the proceeding is in preliminary stages, (ii) specific damage amounts have not been sought, (iii) there are significant factual issues to be resolved;

and/or (iv) there are novel legal issues or unsettled legal theories presented.

Capital Maintenance Agreements

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 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.

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”).

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

SUBSEQUENT EVENTS

Quarterly Cash Dividend

On November 4, 2024 , the Company’s Board of Directors declared a dividend of $ 0.05 per share which is expected to be payable on December 2, 2024 , to stockholders of record as of the close of business on November 18, 2024 .

The ex-dividend date is expected to be on or around November 15, 2024.

The dividend will be paid in cash.

Antitrust Litigation

On October 1, 2024, the Company entered into the Settlement in the Hooper Action to resolve the Nationwide Claims, as discussed further in Note 12 – Commitments and Contingencies to these unaudited consolidated financial statements.

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