What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 287 added, 271 removed, 589 unchanged (49% of the section changed)

25 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Commissions and Other Agent-Related Costs – Revenue share expenses – Refer to Note 2 to the financial statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Commissions and Other Agent-Related Costs – Sustainable Revenue Share Plan expenses – Refer to Note 2 to the financial statements

Critical Audit Matter Description

2 unchanged sentences

An FLQA agent is an agent or broker that an agent or broker has personally attracted to the Company who has met specific sales transaction volume requirements.

These additional commissions are earned on a multitiered basis by FLQA agents and brokers for real estate transactions within their downstream brokerage network.

For the year ended December 31, 2023, the Company incurred $4.0 billion of commissions and other agent-related costs, which includes commissions paid to agents and brokers under the revenue sharing plan.

These additional commissions are earned on a multitiered basis by FLQA agents and brokers for real estate transactions within their downstream brokerage network and are included within commissions and other agent-related costs.

We identified the revenue sharing plan as a critical audit matter because the plan has a complex multi-tiered compensation structure involving highly automated system calculations to determine the commissions paid to agents and brokers.

This required an increased extent of audit effort to audit and evaluate the accuracy of commissions paid under the revenue share plan.

required an increased extent of audit effort to audit and evaluate the accuracy of commissions paid under the revenue share plan.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures performed related to the testing of the accuracy of expenses under the revenue sharing plan included the following, among others:

● We tested the effectiveness of controls over the revenue share expenses, including management’s controls over the calculation of commissions under the revenue sharing plan.

● We tested the effectiveness of controls over the revenue share expenses, including management's controls over the calculation of commission under the revenue sharing plan.

● With the assistance of our IT specialists, we:

3 unchanged sentences

● For the samples selected:

o We tested the mathematical accuracy of the recorded commissions by recalculating the revenue sharing allocation in accordance with the independent contractor agreements and traced the underlying transactions to third party documents including settlement statements, purchase agreements and bank statements.

o We tested the accuracy of the FLQA count for agents and brokers by reading independent contractor agreements and obtained evidence of agents and brokers reaching the required sales transaction volume, including settlement statements.

Commitments and Contingencies — Refer to Note 13 to the financial statements.

Critical Audit Matter Description

The Company is among several defendants in numerous 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, as well as a case brought in Canada (“antitrust litigation”).

The Company reviews loss contingencies to determine the likelihood of loss and to assess whether a reasonable estimate of the loss or range of loss can be made.

The Company recognizes expenses for legal claims when a loss is considered probable and reasonably estimable.

If it is reasonably possible that a loss may have been incurred and the effect on the financial statements could be material, the Company discloses an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the financial statements.

The Company has determined that it is reasonably possible that a loss associated with the antitrust litigation has occurred;

however, the loss or range of loss is not reasonably estimable and no provision for loss was recorded as of December 31, 2023.

We identified the antitrust litigation as a critical audit matter because of the challenges in auditing management's judgments applied in determining the likelihood of loss related to the resolution of such litigation, as well as the judgment in determining whether potential loss associated with the antitrust litigation is reasonably estimable.

Specifically, auditing management's determination of whether any contingent loss arising from the antitrust litigation is probable, reasonably possible, or remote, and the related disclosures, is subjective and requires significant judgment due to the uncertainties involved, together with the novelty and complexity of the issues.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures performed related to antitrust litigation and claims included the following, among others:

● We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s evaluation of the antitrust litigation, including controls related to the Company's assessment of the accounting and related disclosures based on the most recent facts and circumstances.

● We inquired of the Company's internal and external legal counsel, as well as executives and other members of management, to understand the basis for the Company's accounting conclusions related to the antitrust litigation.

● We requested and received written responses from internal and external legal counsel.

● We evaluated management's analysis of antitrust litigation.

● We examined Board of Directors meeting minutes, including relevant sub-committee meeting minutes, and compared to written responses received from internal and external counsel.

● We made inquiries of management and the audit committee to evaluate and corroborate our understanding obtained through inquiries of internal and external legal counsel.

We also performed public domain searches for evidence contrary to management's analysis.

● We compared the Company's assessment of this matter to relevant history of similar legal contingencies that have been settled or otherwise resolved to evaluate the consistency of the Company's assessment of antitrust litigation.

● We consulted with our accounting experts to assist in our evaluation of the case facts and the Company's related accounting treatment for the antitrust litigation.

● We obtained written representations from executives of the Company.

● We obtained and reviewed the class action complaints, relevant court rulings, and terms related to other settlements of similar or related antitrust litigation.

● We evaluated the Company's financial statement disclosure for consistency with the audit evidence obtained on the antitrust litigation matter.

● We evaluated events subsequent to December 31, 2023, that might impact our evaluation of the antitrust litigation, including any related accrual or disclosure.

o We tested the mathematical accuracy of the recorded commission by recalculating the revenue share allocation in accordance with the independent contractor agreements and traced the underlying transactions to third party documents.

● We tested the accuracy of the FLQA count for agents and brokers by reading independent contractor agreements and obtaining evidence of agents and brokers reaching the required sales transaction volume.

/s/ Deloitte & Touche LLP

5 unchanged sentences

(In thousands, except share amounts)

December 31, 2023

December 31, 2022

Year Ended December 31,

CURRENT ASSETS

3 unchanged sentences

Prepaids and other assets

Current assets of discontinued operations

TOTAL CURRENT ASSETS

Property, plant, and equipment, net

Operating lease right-of-use assets

Other noncurrent assets

1 unchanged sentence

Deferred tax assets

Noncurrent assets of discontinued operations

LIABILITIES AND EQUITY

3 unchanged sentences

Accrued expenses

Current portion of lease obligation - operating lease

Litigation contingency

Accrued expenses and other liabilities

Current liabilities of discontinued operations

TOTAL CURRENT LIABILITIES

Long-term payable

Long-term lease obligation - operating lease, net of current portion

TOTAL LIABILITIES

5 unchanged sentences

40,894,822 and 28,937,671 shares held, respectively

Accumulated earnings

Accumulated other comprehensive income

Accumulated deficit

Accumulated other comprehensive (loss) income

Total eXp World Holdings, Inc.

10 unchanged sentences

General and administrative expenses

Technology and development expenses

Sales and marketing expenses

Impairment expense

Litigation contingency

Total operating expenses

4 unchanged sentences

Total other (income) expense, net

Income (loss) before income tax expense

(Loss) income before income tax expense

Income tax (benefit) expense

Net (loss) income

Net (loss) income from continuing operations

Net (loss) income from discontinued operations

Net (loss) income attributable to noncontrolling interest

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

(Loss) earnings per share

Earnings (loss) per share

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

3 unchanged sentences

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

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation gain (loss), net of tax

21 unchanged sentences

Balance, end of period

Accumulated earnings:

Accumulated (deficit) earnings:

Balance, beginning of period

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

Dividends declared and paid ( $ 0.05 , $ 0.045 and $ 0.04 per share of common stock beginning with Q3 2023, Q3 2022 and Q4 2021, respectively)

Dividends declared and paid

Balance, end of period

5 unchanged sentences

Balance, beginning of period

Stock compensation

Transactions with noncontrolling interests

6 unchanged sentences

OPERATING ACTIVITIES

Net (loss) income

Reconciliation of net income to net cash provided by operating activities:

Net income (loss)

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

Depreciation expense

Amortization expense - intangible assets

Amortization expense - long-term payable

Impairment expense

13 unchanged sentences

Long term payable

Litigation contingency

Other operating activities

1 unchanged sentence

INVESTING ACTIVITIES

Purchases of property, plant, equipment

Proceeds from sale of business

Purchases of property, plant, and equipment

Acquisition of business, net of cash acquired

Proceeds from sale of business

Investments in unconsolidated affiliates

16 unchanged sentences

Issuance of treasury stock, for acquisition

Lease liabilities arising from obtaining right-of-use assets

Contingent consideration for disposition of business

9 unchanged sentences

eXp owns and operates a diversified portfolio of service-based businesses whose operations benefit substantially from utilizing our enabling technology platform.

Specifically, we operate a cloud-based real estate brokerage (in North America and other international locations), a Virbela business and related affiliated services that support the development and success of agents, entrepreneurs and businesses by leveraging innovative technologies and integrated services.

Our North American and international real estate brokerage is now one of the largest and fastest-growing real estate brokerage companies, operating throughout the United States, most of the Canadian provinces, 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.

Specifically, we operate a cloud-based real estate brokerage in North America and other international locations, and related affiliated services that support the development and success of agents, entrepreneurs and businesses by leveraging innovative technologies and integrated services.

Our North American and international real estate brokerage is now one of the largest real estate brokerage companies, operating throughout the United States, all of the Canadian provinces, 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.

The accompanying consolidated financial statements have been prepared in accordance with U.S.

2 unchanged sentences

The Company’s fiscal year end is December 31.

We report operating results through four reportable segments:

North American Realty, International Realty, Virbela and Other Affiliated Services, as further discussed in Note 10 – Segment Information to the consolidated financial statements included elsewhere in this Annual Report.

In the first quarter of 2024, the Company determined that there was 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 AI solutions, we experienced a decline in demand for our application-based platform, Virbela, the technology is being replaced with Virbela FrameVR.io technology that will be primarily utilized internally within the Company.

As a result of this change, the Company determined that Virbela qualified for reporting as discontinued operations.

In accordance with ASC 205 – Presentation of Financial Statements , any remaining assets and liabilities of Virbela will be presented within discontinued operations in the Company’s consolidated balance sheet and Virbela’s results of operations have been included in discontinued operations in the Company’s consolidated statements of comprehensive (loss) income.

During the fourth quarter of 2024, the Company completed the disposition of Virbela, the balance sheet was transferred to the purchaser of Virbela, and a loss of $ 266 was recognized.

Prior to 2024, Virbela represented an operating and reporting segment under ASC 280.

Beginning in the first quarter of 2024, the remaining operations of Virbela will not meet the operating or reporting segment criteria, therefore, any operating results related to FrameVR.io technologies will be included in the Other Affiliated Services segment.

Prior year financial statements and segment information have been reclassified to reflect Virbela as discontinued operations.

The Company evaluated the impact of discontinued operations on the consolidated statements of cash flows and determined that the changes were not material.

Accordingly, the prior-period cash flow statements have not been restated.

The cash flows of discontinued operations are included within the respective categories of operating, investing, and financing activities in the consolidated statements of cash flows.

The cash balances as of December 31, 2023 and December 31, 2022 include the cash held by the discontinued operations.

We report operating results through three reportable segments:

North American Realty, International Realty and Other Affiliated Services, as further discussed in Note 11 – Segment Information to the consolidated financial statements included elsewhere in this Annual Report.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

The accompanying consolidated financial statements include the accounts of eXp World Holdings, Inc., its wholly-owned subsidiaries and 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 or 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 or 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.

8 unchanged sentences

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

The Company has several joint venture investments.

As of December 31, 2023, the operations of these joint ventures are not material to the Company’s financial position or results of operations.

Use of estimates

3 unchanged sentences

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

The actual results experienced by the Company

may differ materially and adversely from the Company’s estimates.

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

To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

1 unchanged sentence

When necessary, the Company will reclassify certain amounts in prior period financial statements to conform to the current period’s presentation.

In 2023, the Company reclassified certain amounts in the reconciliation of the provision for income taxes and deferred tax assets in Note 12 – Income Taxes .

These reclassifications had no effect on the provision for tax or deferred tax assets that were previously reported.

No other reclassifications occurred during the current period.

The Company has reclassified Virbela operations as discontinued operations, and prior year financial statements and segment information have been reclassified to conform with current year presentation.

To more clearly present technology and development expenses, the Company elected to present all technology and development expenses as a separate line item on the consolidated statements of comprehensive (loss) income.

In 2023 and 2022, the Company presented technology and development expenses within general and administrative expenses and sales and marketing expenses.

These amounts have been reclassified, in conformity with the current year’s presentation of technology and development expenses on the consolidated statements of comprehensive (loss) income.

These reclassifications had no effect on the reported results of operations.

Cash and cash equivalents

9 unchanged sentences

Restricted cash

Total cash, cash equivalents, and restricted cash, ending balance

Cash in discontinued operations

Total cash, cash equivalents, and restricted cash

Fair value measurements

17 unchanged sentences

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

In 2023, the Company has decreased its allowances for expected credit losses, for real estate transactions, due to a decrease of the aging receivable balances, as a result of improvement in accounts receivable management.

As of December 31, 2023 and 2022, receivables from real estate property settlements totaled $ 81,004 and $ 79,135 , respectively, of which the Company recognized expected credit losses of $- and $ 3,127 as of December 31, 2023 and 2022, respectively.

As of December 31, 2024 and 2023, receivables from real estate property settlements totaled $ 82,300 and $ 81,004 , respectively, of which the Company recognized expected credit losses of $ 34 as of December 31, 2024 and no credit losses as of December 31, 2023.

As of December 31, 2024 and 2023 agent non-commission based fees receivable and short-term advances totaled $ 6,980 and $ 7,268 , respectively of which the Company recognized expected credit losses of $ 1,555 and $ 2,204 , respectively.

4 unchanged sentences

Average monthly rates are used to translate revenues and expenses.

Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the consolidated statements of operations in other (income) expense, net.

Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the consolidated statements of comprehensive (loss) income, in other (income) expense, net.

The Company does not employ a hedging strategy to manage the impact of foreign currency fluctuations.

8 unchanged sentences

Leases are agreements, or terms within agreements, that convey the right to control the use of and receive substantially all of the economic benefit from an identified asset for a period of time in exchange for consideration.

The Company currently only possesses office space leases .

Right-of-use assets

The Company recognizes right-of-use (“ROU”) assets at the commencement date of the lease.

ROU assets are measured at cost, less accumulated depreciation and impairment losses and are adjusted concurrently with the remeasurement of corresponding lease liabilities resulting from a change in future lease payments or a change in the assessment of whether any purchase, extension, or termination options will be exercised.

The cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received, if any.

Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the ROU assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

Lease liabilities

At the commencement date of a lease, the Company recognizes a lease liability measured at the present value of the lease payments to be made over the lease term.

Variable lease payments are recognized as expenses in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the implicit interest rate in the lease is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced by the lease payments made.

In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, or a change in the assessment to purchase the underlying asset.

The Company currently only possesses leases for short-term office space and other low-value assets .

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to leases that have a lease term of 12 months or less from the commencement date and which do not contain a purchase option.

The Company does not capitalize leases with a present value of below its minimum capitalization threshold as it would not materially affect the Company’s financial position or results of operations.

Lease payments on short-term leases and low-value leases are recognized as expenses on a straight-line basis over the lease term.

Goodwill represents the excess of the consideration paid over the estimated fair value of assets acquired and liabilities assumed in a business combination.

The Company evaluates goodwill for impairment on an annual basis in the fiscal fourth quarter or on an interim basis if an event occurs or circumstances change that would more likely than not indicate that the fair value of the reporting unit is less than its carrying amount.

Generally, this evaluation begins with a qualitative assessment to determine if the fair value of the reporting unit is more likely than not less than its carrying value.

The test for impairment requires management to make judgments relating to future cash flows, growth rates and economic and market conditions.

In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is more likely than not an impairment loss has occurred.

The Company recognized goodwill impairment of $ 8,248 for the year ended December 31, 2023 related to Virbela.

The Company did no t recognize any impairment of goodwill for the years ended December 31, 2022 and 2021.

Intangible assets

The Company’s intangible assets are finite lived and consist primarily of trade name, technology and customer relationships.

Each intangible asset is amortized on a straight-line basis over its useful life, ranging from 3 to 10 years .

The Company evaluates its intangible assets for recoverability and potential impairment, or as events or changes in circumstances indicate the carrying value may be impaired.

The Company recognized impairment related to the trade name and customer relationships of $ 955 for the year ended December 31, 2023, related to Virbela.

The Company did no t recognize any impairment of intangible assets for the years ended December 31, 2022 and 2021.

Software development costs

6 unchanged sentences

If current expectations of future growth rates are not met or market factors outside of the Company’s control change significantly, then goodwill or intangible assets may become impaired.

Additionally, as goodwill and intangible assets associated with recently acquired businesses are recorded on the balance sheet at their estimated acquisition date fair values, those amounts are more susceptible to impairment risk if business operating results or macroeconomic conditions deteriorate.

Acquisition-related costs, such as due diligence, legal and accounting fees, are expensed as incurred and not considered in determining the fair value of the acquired assets.

5 unchanged sentences

Stock-based compensation

Our stock-based compensation is comprised of employee equity incentives, agent growth incentive programs, agent equity program and stock option awards.

Stock-based compensation is more fully disclosed in Note 9 – Stockholders’ Equity to the consolidated financial statements included elsewhere in this Annual Report.

Our stock-based compensation is comprised of employee equity incentives, agent growth incentive programs, agent equity program, stock option awards and restricted stock units.

Stock-based compensation is more fully disclosed in Note 10 – Stockholders’ Equity .

The Company accounts for stock-based compensation granted to employees and non-employees using a fair value method.

3 unchanged sentences

Revenue recognition

The Company generates substantially all of its revenue from North American Realty and International Realty segments and generates a de minimis portion of its revenues from software subscription (Virbela segment) and professional services.

The Company does not have contracts with customers that provide variable consideration.

7 unchanged sentences

The Company estimates and accrues revenue to which it is entitled to for closed transactions but has yet to receive all the necessary closing documents.

The accrual for estimated revenue was immaterial for the years ended December 31, 2023 and 2022.

Revenue is derived from assisting homebuyers and sellers in listing, marketing, selling and finding residential real estate.

8 unchanged sentences

Disaggregated revenue

The Company primarily operates as a real estate brokerage firm and discloses disaggregated revenue from services to customers across its four reportable segments to provide additional insight into the future recognition of revenue and cash flows.

The Company primarily operates as a real estate brokerage firm and discloses disaggregated revenue from services to customers across its three reportable segments to provide additional insight into the future recognition of revenue and cash flows.

The vast majority of the Company’s revenue is derived from providing real estate brokerage services, to purchasers and sellers of homes in the U.S., Canada and internationally.

See Note 10 – Segment Information to the consolidated financial statements included elsewhere in this Annual Report for details regarding segment and geographic information.

See Note 11 – Segment Information for details regarding segment and geographic information.

Management provides disaggregation of revenue from its services to customers to provide additional insight into the future recognition of revenue and cash flows.

Sustainable Revenue Share Plan expenses

The Company’s costs incurred under the Revenue Share Plan are included as commissions and other agent-related costs in the consolidated statements of comprehensive income.

The Company has a revenue sharing plan where its agents and brokers can receive additional commission income from real estate transactions consummated by agents and brokers they have attracted to the Company.

Agents and brokers are eligible for revenue share based on the number of FLQA agents they have attracted to the Company.

An FLQA agent is an agent or broker that an agent has personally attracted to the Company who has met specific real estate transaction volume requirements.

These additional commissions are earned on a multitiered basis by FLQA agents and brokers for real estate transactions within their downstream brokerage network.

The supplementary income distributed to the sponsor under the Revenue Share Plan is exclusively derived from the Company's portion of the transaction commission.

The Company’s costs incurred under the Revenue Share Plan are included as commissions and other agent-related costs in the consolidated statements of comprehensive (loss) income.

Advertising and marketing costs

Advertising and marketing costs are generally expensed in the period incurred.

Advertising and marketing expenses are included in the sales and marketing expense line item on the accompanying consolidated statements of comprehensive income.

Advertising and marketing expenses are included in the sales and marketing expense line item on the accompanying consolidated statements of comprehensive (loss) income.

For the years ended December 31, 2024, 2023 and 2022, the Company incurred advertising and marketing expenses of $ 11,908 , $ 12,056 and $ 15,172 , respectively.

17 unchanged sentences

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting standards that have been issued that might have a material impact on its financial position and results of operations.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 – Segment Reporting (Topic 280) (“ASU 2023-07”).

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses.

The amendments in this update require, among other things, that a public company disclose on an annual and interim basis significant segment expense, as well as other segment expenses, that are regularly provided to the CODM.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, early adoption is permitted.

The Company is currently evaluating the effect the amendments in ASU 2023-07 will have on its segment disclosures.

In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740) (“ASU 2023-09”).

ASU 2023-09 improves reporting for income taxes, primarily by requiring disclosure of specific categories in the tax rate reconciliation and providing additional annual information for reconciling items that meet a quantitative threshold.

The amendments in ASU 2023-09 also require additional annual information regarding income taxes paid, as well as other additional disclosures.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, early adoption is permitted.

The Company is currently evaluating the effect the amendments in ASU 2023-09 will have on its tax disclosures.

The Company did not complete any acquisitions during the year ended December 31, 2023.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosure (Subtopic 220-40).

ASU 2024-03 requires disclosure in the notes to the financial statements, specified information about certain costs and expenses.

The amendment requires that at each interim and annual reporting period an entity:

1) Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion, and amortization recognized as part of oil-and-gas producing activities.

2) Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.

3) Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

This amendment is effective for all public business entities for annual periods beginning after December 31, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the effect ASU 2024-03 will have on its disclosures.

The Company did not complete any material acquisitions during the years ended December 31, 2024 and 2023.

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

2 unchanged sentences

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

DISCONTINUED OPERATIONS

In accordance with ASC 205-20 , the results of the Virbela business are presented as discontinued operations in the 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.

In the fourth quarter of 2024, the Company completed the disposition of Virbela.

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

ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS

December 31, 2024

December 31, 2023

CURRENT ASSETS

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $ 189 and $ 99 , respectively

Prepaids and other assets

TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS

Property, plant, and equipment, net

Intangible assets, net

Deferred tax assets

TOTAL ASSETS OF DISCONTINUED OPERATIONS

CURRENT LIABILITIES

Accounts payable

Accrued expenses

TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS

TOTAL LIABILITIES OF DISCONTINUED OPERATIONS

INCOME STATEMENT OF DISCONTINUED OPERATIONS

Year Ended December 31,

Operating expenses

Cost of revenue

General and administrative expenses

Technology and development expenses

Sales and marketing expenses

Impairment expense

Total operating expenses

Operating (loss)

Other income, net

Total other income, net

(Loss) before income tax expense

Income tax benefit (expense)

Net (loss) income from discontinued operations

FAIR VALUE MEASUREMENT

10 unchanged sentences

Prepaid insurance

Rent deposits

Other assets (includes inventory)

18 unchanged sentences

Total goodwill

During the fourth quarter of 2023, as part of the Company’s annual goodwill impairment assessment, the Company determined that the goodwill associated with Virbela, the Company’s technology segment was impaired.

During the impairment evaluation, the Company determined that the projection for future cash flows associated with Virbela had declined significantly resulting from the post-COVID 19 work environment of return to the office and hybrid work initiatives globally, as well as the increase in the demand for artificial intelligence solutions.

The Company determined the estimated fair value of Virbela using the market approach, which measures value based on what other purchasers in the market have paid for assets or business interests that can be considered reasonably similar to Virbela.

Based on that approach, the estimated fair value was significantly lower than the book value of Virbela and the goodwill associated with Virbela was impaired.

The Company recognized an impairment charge of $ 8,248 for the year ended December 31, 2023.

During 2023, the Company disposed of its Showcase Web Sites LLC business, which resulted in a reduction of goodwill of $ 2,310 , this business was included in the North American Realty segment.

Goodwill was recorded in connection with the acquisition of Zoocasa in July 2022 and represents fair value as of the acquisition date.

The acquisition was accounted for using the acquisition method of accounting.

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

The excess of the purchase price over the aggregate fair values of the identifiable assets was recorded as goodwill.

During the fourth quarter of 2024, as part of the Company’s annual goodwill impairment assessment, the Company determined that the goodwill associated with SUCCESS was impaired, as a result of the changing market conditions surrounding print media.

During the fourth quarter of 2023, as part of the Company’s annual goodwill impairment assessment, the Company determined that the goodwill associated with Virbela (included in discontinued operations), was impaired.

The Company recognized goodwill impairment charges of $ 2,386 and $ 8,248 for the years ended December 31, 2024 and 2023, respectively.

The Company has a risk of future impairment to the extent that individual reporting unit performance does not meet projections.

2 unchanged sentences

December 31, 2024

Existing technology

Non-competition agreements

Customer relationships

Licensing agreement

Intellectual property

Total intangible assets

December 31, 2023

7 unchanged sentences

As part of the Company’s annual assessment, the Company also reviews the useful lives of its amortizable intangible assets and determines if there should be any change to the amortization period.

For the amortizable assets related to the Virbela segment, the Company determined that the trade name and the customer relationships that were recognized as part of the acquisition, should be fully amortized as of December 31, 2023.

This assessment was made based on the future negative operating cash flows and the decline in the estimated fair value of Virbela.

As a result, the Company recognized an impairment loss related the net book value of the trade name of $ 585 and customer relationships $ 370 .

As of December 31, 2023, expected amortization related to definite-lived intangible assets will be:

Expected amortization

2028 and thereafter

In 2024, for amortizable intangible assets related to SUCCESS, the Company determined that customer relationships and content (included in Intellectual Property) should have been fully amortized as of December 31, 2024.

This assessment was based on the decline in the estimated fair value for each of those assets.

As a result, the Company recognized an impairment loss related to the net book value of the customer lists of $ 549 and content of $ 1,995 .

In 2023, for the amortizable assets related to the Virbela segment, the Company determined that the trade name and the customer relationships that were recognized as part of the acquisition, should be fully amortized as of December 31, 2023.

As a result, the Company recognized an impairment loss (included in discontinued operations) related the net book value of the trade name of $ 585 and customer relationships $ 370 .

ACCRUED EXPENSES

12 unchanged sentences

Common stock:

Balance, beginning of year

Balance, beginning of period

Shares issued for stock options exercised

1 unchanged sentence

Agent equity stock compensation

Balance, end of year

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

Balance, end of period

The Company’s stockholder approved equity programs described below are administered under the 2024 Equity Incentive Plan, beginning in September 2024.

Prior to that time, the equity programs were administered under the 2015 Equity Incentive Plan which has since terminated.

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.

Agent Equity Program

The Company provides agents and brokers the opportunity to elect to receive 5 % of commissions earned from each completed residential real estate transaction in the form of common stock (the “Agent Equity Program” or “AEP”) at a 10 % discount recognized by the Company.

The Company declared and paid dividends of $ 0.05 quarterly in 2024, $ 0.045 in each of the first and second quarters of 2023, $ 0.05 in each of the third and fourth quarters of 2023, $ 0.040 in each of the first and second quarters of 2022 and $ 0.045 in each of the third and fourth quarters of 2022.

Dividends are declared at the discretion of the Board of Directors and are based on various factors, including the Company’s financial condition, results of operations, capital requirements, and market conditions.

The total cash dividends paid during each of these years were funded from available cash and were recorded as reductions to retained earnings.

Agent Equity Program (“AEP”)

The Company provides agents and brokers the opportunity to elect to receive 5 % of commissions earned from each completed residential real estate transaction in the form of common stock of the Company at a discount recognized by the Company.

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.

For the years ended December 31, 2023, 2022 and 2021, the Company issued 8,897,804 , 11,462,940 and 3,645,386 shares of common stock, respectively, to agents and brokers for $ 135,226 , $ 164,104 and $ 144,437 , respectively, net of discount.

Agent Growth Incentive Program

The Company administers an equity incentive program whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks (the “Agent Growth Incentive Program” or “AGIP”).

For the years ended December 31, 2024, 2023 and 2022, the Company issued 9,253,300 , 8,897,804 and 11,462,940 shares of common stock, respectively, to agents and brokers for $ 111,278 , $ 135,226 and $ 164,104 , respectively, net of discount, attributable to the AEP.

Agent Growth Incentive Program (“AGIP”)

The Company administers AGIP whereby agents and brokers become eligible to receive awards of the Company’s common stock through agent attraction and performance benchmarks.

The incentive program encourages greater performance and awards agents with common stock based on achievement of performance milestones.

Awards typically vest after performance benchmarks are reached and three years of subsequent service is provided to the Company.

Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of performance metrics.

Share-based performance awards are based on a fixed-dollar amount of shares performance metrics are achieved.

As such, the awards are classified as liabilities until the number of share awards becomes fixed once the performance metric is achieved.

1 unchanged sentence

The total amount of stock compensation attributable to liability classified awards was $ 2,251 , $ 3,832 and $ 2,056 for the years ended December 31, 2024, 2023 and 2022, respectively.

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

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

Stock grant liability balance at December 31, 2022

12 unchanged sentences

( 2,219,881 )

( 1,245,862 )

Balance, December 31, 2023

3 unchanged sentences

Balance, December 31, 2024

Agent Thrive Program

Announced in October 2023, the Thrive program provides a stock incentive to the individual team leaders of teams of culturally aligned teams that join the Company as part of the program.

After affiliating with the Company, the team leader becomes eligible to receive an award of the Company’s common stock through team performance benchmarks.

Awards typically vest after production benchmarks are reached and three years of subsequent service is provided to the Company.

Share-based performance awards are based on a fixed-dollar amount of shares based on the achievement of production metrics.

As such, the awards are classified as liabilities until the number of share awards becomes fixed once the production metric is achieved.

Stock Option Awards

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

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

The fair value of the options issued was calculated using a Black-Scholes-Merton option-pricing model with the following assumptions:

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

The fair value of the options issued is calculated using a Black-Scholes-Merton option-pricing model with the following assumptions:

Expected term

18 unchanged sentences

Balance at December 31, 2023

( 1,198,706 )

Balance at December 31, 2024

8 unchanged sentences

As of December 31, 2024, unrecognized compensation cost associated with the Company’s outstanding stock options was $ 14,259 , which is expected to be recognized over a weighted-average period of approximately 1.18 years.

In addition to the core programs described above, the Company may grant other equity-based or ad hoc awards as needed to attract and retain employees, agents, or team leaders.

These awards are generally granted with time-based or performance-based vesting conditions, and the terms are determined based on the specific objectives of the grant.

To date, participation and grants of this variety have been limited .

Restricted Stock Units

Beginning in 2024, the Company granted restricted stock units (“RSUs”) to officers and certain employees and may grant them to directors and consultants in the future.

Each RSU represents the right to receive one share of the Company’s common stock upon vesting, subject to time-based and/or performance-based restrictions.

RSUs typically vest over a three -year period with equal and periodically graded vesting or cliff vesting, as applicable.

RSUs do not have an exercise price, and no payment is required by the grantee to receive the shares upon vesting.

The fair value of the RSUs granted is determined based on the closing market price of the Company's common stock on the grant date.

The total fair value of RSUs is recognized as stock-based compensation expense over the vesting period, with adjustments for estimated forfeitures.

For the year ended December 31, 2024, the Company granted 115,574 RSU’s with a weighted average grant date fair value of $ 13.00 .

As of December 31, 2024, the total unrecognized stock-based compensation expense associated with RSUs was $ 1,222 which is expected to be recognized over a weighted-average period of approximately 2.27 years.

Stock Repurchase Program

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

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

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.

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

11 unchanged sentences

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

On December 27, 2022, the Board approved and the Company entered into, a form of third amendment to the Issuer Repurchase Plan, to decrease the monthly repurchases from $ 13.3 million of its common stock per month to $ 10.0

million, in connection with ongoing contractions in the real estate market.

On May 10, 2023, the Board approved and, on May 11, 2023, the Company entered into, a form of fourth amendment to the Issuer Repurchase Plan, to increase the monthly repurchase amounts during 2023 due to actual and projected changes in the Company’s cash and cash equivalents;

3 unchanged sentences

On November 17, 2023, the Board approved, and the Company entered into, a form of sixth amendment to the Issuer Repurchase Plan to reduce the monthly repurchase from (i) $ 12.0 million to $ 8.0 million during November 2023, (ii) from $ 12.0 million to $ 6.0 million during any calendar month commencing December 1, 2023 through and including June 30, 2024.

On March 5, 2024, the Board approved, and, on March 6, 2024, the Company entered into, a form of seventh amendment to the Issuer Repurchase Plan to increase the monthly repurchase from (i) $ 6.0 million to $ 20.0 million during any calendar month commencing March 1, 2024 through and including April 30, 2024, and (ii) from $ 6.0 million to $ 15.0 million during any calendar month commencing May 1, 2024 through and including December 31, 2024.

On June 19, 2024, the Board approved, and the Company entered into, a form of eighth amendment to the Issuer Repurchase Plan to decrease the monthly repurchase from (i) $ 15.0 million to $ 11.7 million during any calendar month commencing July 1, 2024 through and including September 30, 2024, and (ii) from $ 15.0 million to $ 8.3 million during any calendar month commencing October 1, 2024 through and including December 31, 2024.

On December 5, 2024, the Board approved, and the Company entered into, a form of ninth amendment to the Issuer Repurchase Plan to establish the monthly repurchase maximum as (i) $ 1.5 million during the calendar months commencing January 1, 2025 and ending February 28, 2025, (ii) $ 2.0 million during the calendar month commencing March 1, 2025 and ending March 31, 2025, (iii) $ 10.0 million during the calendar months commencing April 1, 2025 and ending June 30, 2025, (iv) $ 15.0 million during the calendar months commencing July 1, 2025 and ending October 31, 2025, and (v) $ 10.0 million during the calendar months commencing November 1, 2025 and ending December 31, 2025.

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

4 unchanged sentences

Treasury stock:

Balance, beginning of year

Balance, beginning of period

Repurchases of common stock

1 unchanged sentence

Issuance of treasury stock for acquisition

Balance, end of year

Balance, end of period

SEGMENT INFORMATION

Segment information aligns with how the Chief Operating Decision Maker (“CODM”), Glenn Sanford, Chief Executive Officer of eXp World Holdings, Inc.

and eXp Realty, LLC, a wholly owned subsidiary of the Company (“eXp Realty”) manages the business and allocates resources as four operating segments.

Segment information aligns with how the Chief Operating Decision Maker (“CODM”), Glenn Sanford, Chief Executive Officer of eXp World Holdings, Inc., manages the business and allocates resources as three operating segments.

The Company determines an operating segment if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has discrete financial information and is (iii) regularly reviewed by the CODM.

Once operating segments are identified, the Company performs a quantitative analysis of the current and historic revenues and profitability for each operating segment, together with a qualitative assessment to determine if operating segments have similar operating characteristics.

We have four operating segments and four reportable segments.

We have three operating segments and three reportable segments.

The CODM uses revenues and Adjusted Segment EBITDA as key metrics to evaluate the operating and financial performance of a segment, identify trends affecting the segments, develop projections and make strategic business decisions.

Adjusted Segment EBITDA for the reportable segments is defined as operating profit (loss) plus depreciation and amortization and stock-based compensation expenses.

The Company’s four reportable segments as follows:

The CODM also regularly reviews commissions and other agent-related costs to assess segment performance.

Commissions and other agent-related costs include sales commissions, revenue share and stock-based compensation paid to our agents.

Adjusted Segment EBITDA for the reportable segments is defined as net income before depreciation and amortization, interest expense, income taxes, and other items that are not core to the operating activities of the Company.

The Company’s three reportable segments as follows:

● North American Realty:

2 unchanged sentences

includes real estate brokerage operations in all other international locations.

includes the enterprise application-based Virbela platform and web-based Frame platform and the support services offered by eXp World Technologies.

● Other Affiliated Services:

includes our SUCCESS ® Magazine and other smaller ventures.

includes our SUCCESS ® Magazine, FrameVR.io, and other ancillary ventures.

Historically, the Company has reported results for four reportable segments.

In the first quarter of 2024, the Company determined that the Virbela segment qualified for reporting as discontinued operations.

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

Prior years segment information has been reclassified to remove Virbela from the segment disclosure, in accordance with discontinued operations treatment.

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

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

All segments follow the same basis of presentation and accounting policies as those described in Footnote 2 – Summary of Significant Accounting Policies .

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

7 unchanged sentences

Consolidated revenues

Commissions and other agent-related costs

Year Ended December 31,

North American Realty

International Realty

Other Affiliated Services

Commissions reconciliation:

Segment eliminations

Consolidated commissions and other agent-related costs

Adjusted EBITDA

5 unchanged sentences

Consolidated Adjusted EBITDA

Operating (Loss) Profit Reconciliation:

(Loss) income before income tax expense reconciliation:

Depreciation and amortization expense

Impairment expense

Litigation contingency

Stock compensation expense

Stock option expense

Consolidated operating (loss) profit

Other (income) expense, net

Consolidated (loss) income before income tax expense

December 31, 2024

3 unchanged sentences

Other Affiliated Services

Segment total

Corporate and other

Consolidated total

Segment and consolidated total

Geographical information

2 unchanged sentences

were 17 % and 14 % as of December 31, 2024 and 2023, respectively.

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

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

EARNINGS PER SHARE

Basic earnings per share is computed based on net income attributable to eXp stockholders divided by the basic weighted-average shares outstanding during the period.

Basic earnings per share is computed based on the Company’s net income divided by the basic weighted-average shares outstanding during the period.

Dilutive earnings per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period.

2 unchanged sentences

Year Ended December 31,

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

Net (loss) income from continuing operations

Net (loss) income from discontinued operations

Weighted average shares - basic

2 unchanged sentences

Earnings per share:

(Loss) earnings per share attributable to common stock- basic

(Loss) earnings per share attributable to common stock- diluted

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 the years ended December 31, 2024, 2023 and 2022, total outstanding shares of common stock excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 3,698,061 , 820,376 and 1,000,421 , respectively.

The following table provides the components of income before provision for income taxes by domestic and foreign subsidiaries:

The following table provides the components of income (loss) before provision for income taxes from continuing operations by domestic and foreign subsidiaries:

Year Ended December 31,

The components of the provision for (benefit from) income tax expense are as follows:

The components of the income tax (benefit) expense from continuing operations are as follows:

Year Ended December 31,

1 unchanged sentence

Total deferred income tax benefit

Total provision (benefit) for income taxes

The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

Total income tax (benefit) expense from continuing operations

The reconciliation of the provision for income tax (benefit) expense from continuing operations at the United States federal statutory rate compared to the Company's income tax (benefit) expense as reported is as follows:

Year Ended December 31,

3 unchanged sentences

Unrecognized tax benefit

Share-based compensation

Stock-based compensation

162m compensation limitation

2 unchanged sentences

Prior year true up items

The Company has made certain prior year reclassifications to research and development credit, unrecognized tax benefit, share-based compensation and other categories to ensure consistency with current year presentation.

These reclassifications had no effect on total effective tax rate.

Deferred tax assets and liabilities consist of the following for the periods presented:

The company has restated prior year amounts to remove amounts from discontinued operations.

Deferred tax assets and liabilities from continuing operations consist of the following for the periods presented:

December 31, 2024

2 unchanged sentences

Net operating loss carryforward

Accruals and Reserves

Goodwill and Intangibles

Research and experimental costs

Stock-based compensation

Accruals and reserves

Research and development credit

Share-based compensation

Goodwill and intangible assets

Total gross deferred tax assets

Valuation allowance

Deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Property and equipment

Intangibles/Goodwill

Right of use lease asset

Property, plant and equipment

Total gross deferred tax liabilities

Net deferred tax assets

Certain prior year deferred asset amounts have been reclassified for consistency with the current year presentation.

In prior year the Company reported nominal deferred tax asset balances for partnership basis difference, lease liability and legal settlement accruals, these balances were reported as part of accruals and reserves in 2023.

Further, in prior year research and experimental costs were reported combined with intangible assets, these costs were stated separately in 2023.

These reclassifications had no effect on gross and net deferred tax assets.

The Company accounts for deferred taxes under ASC Topic 740 – Income Taxes (“ASC 740”), which requires a reduction of the carrying amount of deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized.

1 unchanged sentence

This assessment considers matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

The evaluation of the recoverability of the deferred tax assets requires that the Company weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

As of December 31, 2023, based on its assessment of the realizability of its net deferred tax assets, we reached the conclusion that our US federal, US State and foreign net deferred tax assets more-likely-than-not will be fully realized and therefore no valuation allowance was recorded.

As of December 31, 2024, based on its assessment of the realizability of its net deferred tax assets, we reached the conclusion that our US federal, and foreign net deferred tax assets more-likely-than-not will be fully realized, however certain US State deferred tax assets will likely not be fully realized.

A valuation allowance of $ 0.2 million was recorded in the current year to reflect the portion of net deferred tax assets that are likely to not be fully realized.

As of December 31, 2024, the Company had federal, state and foreign net operating losses of approximately $ 92.2 million, $ 66.3 million and $ 12.7 million, respectively.

The full amount of $ 125.8 million of federal net operating loss can be carried forward

indefinitely and can offset 80% of future taxable income.

Certain state and foreign net operating losses will carry forward for limited number of years and, if not utilized, will begin to expire in 2024.

As of December 31, 2023, the Company conducted an IRC Section 382 analysis with respect to its net operating loss carryforward and determined there was an immaterial limitation.

The full amount of $ 92.2 million of federal net operating loss can be carried forward indefinitely and can offset 80% of future taxable income.

Certain state net operating losses will carry forward for a limited number of years and, if not utilized, may begin to expire in 2024.

Certain foreign net operating losses will carry forward for a limited number of years and, if not utilized, will begin to expire in 2028.

The Company conducted an IRC Section 382 analysis with respect to its net operating loss carryforward and determined there was an immaterial limitation.

Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested and accordingly, no provision for applicable income taxes has been provided thereon.

1 unchanged sentence

As of December 31, 2024 the undistributed earnings of the Company's foreign subsidiaries could result in withholding taxes of approximately $ 1.2 million, if repatriated.

As of December 31, 2023, the Company had federal and California Research and Development credits of approximately $ 5.8 million and $ 0.9 million, respectively.

Federal credit can be carried forward 20 years and will begin to expire in 2039.

California credit can be carried forward indefinitely.

As of December 31, 2024, the Company had federal and California Research and Development credit carryforwards of approximately $ 7.0 million and $ 0.6 million, respectively.

The federal credit can be carried forward 20 years and will begin to expire in 2039.

The California credit can be carried forward indefinitely.

The Company maintains liabilities for uncertain tax positions.

6 unchanged sentences

Unrecognized tax benefits - end of year

The unrecognized tax benefits relate to Federal and California research and development credits in 2023, 2022, and 2021.

As of December 31, 2023, the total amount of unrecognized tax benefits that would affect the Company effective tax rate, if recognized, is $ 1,904 .

The unrecognized tax benefits relate to federal and California research and development credits generated from 2019 through 2024.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate, if recognized, is $ 2,573 and $ 1,904 at December 31, 2024 and 2023, respectively.

The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense.

As of December 31, 2023, the Company accrued interest or penalties related to uncertain tax positions in the amount of $ 0 .

The company does not expect of the uncertain tax position to reverse during the next 12 month.

During 2022 the Company completed its federal examination for 2019 with no change to the original filing.

There are no federal or state tax examinations in progress nor has it had any state tax examinations since its inception.

As of December 31, 2024 and 2023, the Company did not accrue interest or penalties related to uncertain tax positions.

The Company does not expect any of the uncertain tax positions to reverse during the next 12 months.

There are no federal or state tax examinations in progress.

Because the Company has net operating loss carryforwards, there are open statutes of limitations in which federal taxing authorities may examine the Company's tax returns for all years from December 31, 2012 through the current period.

US State taxing authorities may examine the Company's tax return for all years from December 31, 2014 through the current period and foreign tax authorities may examine the Company’s tax return for all years from December 31, 2019 through the current period.

US State taxing authorities may examine the Company's tax returns for all years from December 31, 2014 through the current period and foreign tax authorities may examine the Company’s tax returns for all years from December 31, 2019 through the current period.

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

1 unchanged sentence

or international tax reform legislation could result in an impact to the Company's effective tax rate.

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 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 I and II by countries, and all other tax regulatory changes, to evaluate the potential impact on future periods.

The adoption of Pillar Two rules did not have a significant impact on the Company's consolidated financial statements in 2024.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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 or financial condition.

Such litigation may include, but is not limited to, actions or claims relating to sensitive data, including proprietary business information and intellectual property and that of clients and personally identifiable information of employees and contractors, cyber-attacks, data breaches and non-compliance with contractual or other legal obligations.

Such litigation may include, but is not limited to, actions or claims relating to sensitive data,

including proprietary business information and intellectual property and that of clients and personally identifiable information of employees and contractors, cyber-attacks, data breaches and non-compliance with contractual or other legal obligations.

Litigation and other legal matters are inherently unpredictable and subject to substantial uncertainties and adverse resolutions could occur.

2 unchanged sentences

However, substantial unanticipated judgments, penalties, sanctions, and fines do occur.

adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid.

For the cases described below, management is currently unable to reasonably estimate the possible loss or range of possible loss because, among other reasons, (i) the proceedings are in preliminary stages, (ii) specific damage amounts have not been sought, (iii) damages sought are, in our opinion, unsupported and/or exaggerated, (iv) there is uncertainty as to the outcome of pending appeals or motions in these and similar lawsuits affecting the industry, (v) there are significant factual issues to be resolved;

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

For the matters described below, we have not recorded any accruals as of December 31, 2023.

However, the Company has determined that a material loss is reasonably possible in the near term, and facts could emerge through the course of the lawsuits that lead the Company to determine that a loss is estimable, resulting in an accrued liability that could be material.

Since October 31, 2023, the Company and/or its subsidiaries have been named as defendants in numerous putative class action complaints brought in various U.S.

district courts and the Federal Court of Canada relating to antitrust matters, which lawsuits are described below.

The following lawsuits, brought by putative classes of residential property sellers, allege that defendants participated in a system that resulted in sellers of residential property purportedly paying inflated buyer broker commissions in violation of federal and state antitrust laws, as applicable:

National Association of Realtors et.

al., Case No.

4:23-cv-00788-FJG (filed in the United States District Court for the Western District of Missouri, Western Division);

1925 Hooper LLC, et al.

The National Association of Realtors et.

al., Case No.

1:23-cv-05392- SEG (United States District Court for the Northern District of Georgia, Atlanta Division);

The National Association of Realtors, et al.

3:23-cv-06352 (United States District Court for the Northern District of California, San Francisco Division);

As a result, the Company could from time to time incur judgments, enter into settlements, or revise its expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid.

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, 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 (collectively, the “antitrust litigation”).

On December 9, 2024, the Company and certain of its subsidiaries entered into a Settlement Agreement (the “Settlement”) with plaintiffs in the U.S.

antitrust lawsuit 1925 Hooper LLC, et al.

The National Association of Realtors et.

4:23-cv-00945 (United States District Court for the Western District of Missouri, Western Division);

Gael Fierro et al.

The National Association of Realtors, et al.

2:24-cv-00449 (United States District Court for the Central District of California);

Willsim Latham, LLC, et al.

MetroList Services, Inc., et al.

2:24-at-00067 (United States District Court for the Eastern District of California, Sacramento Division);

Kevin McFall v.

Canadian Real Estate Association, et al.

T-119-24-ID 1 (Federal Court of Canada);

and Nathaniel Whaley et al.

The National Association of Realtors, et al.

2:24-cv-00105 (United States District Court for the District of Nevada).

The following lawsuit, brought by a putative class of residential property buyers, alleges that defendants participated in a system that resulted in buyers of residential property purportedly paying inflated home prices as a result of sellers purportedly paying inflated buyer broker commissions in violation of federal and Illinois antitrust laws:

Compass, Inc., et.

al., Case No.

1:23-cv-15618 (United States District Court for the Northern District of Illinois, Eastern Division).

The plaintiffs in these lawsuits 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 or buyers, as applicable, in those states or provinces, as applicable, as well as attorneys’ fees and costs of suit.

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

Each antitrust lawsuit 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.

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

1:23-cv-05392- SEG (United States District Court for the Northern District of Georgia, Atlanta Division), which was filed on November 22, 2023 against the Company and other US brokerage defendants (the “Hooper Action”).

The Settlement resolve all claims set forth in the Hooper Action, and similar claims on a nationwide basis against the Company (collectively, the “Claims”) and releases the Company, its subsidiaries and affiliates, and their independent contractor real estate agents in the United States from the 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 a $ 34.0 million litigation contingency accrual recorded for the year ended December 31, 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, 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 Canadian antitrust lawsuit Kevin McFall v.

Canadian Real Estate Association, et al., Case No.

T-119-24-ID 1 (Federal Court of Canada), filed on January 18, 2024.

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;

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 December 31, 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;

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

Capital Maintenance Agreements

An indirect subsidiary and unconsolidated joint venture of the Company, SUCCESS Lending, is a party to Mortgage Warehouse Agreements and related ancillary agreements (the “Credit Agreements”) with JPMorgan Chase Bank and Texas Capital Bank, which each provide SUCCESS Lending with a revolving warehouse credit line of up to $ 25 million.

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

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

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

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

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

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

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

4 unchanged sentences

The Company matches a portion of contributions made by participating employees.

years ended December 31, 2023, 2022 and 2021, the Company's costs for contributions to this plan were $ 4,763 , $ 4,720 , and $ 3,196 , respectively.

For the years ended December 31, 2024, 2023 and 2022, the Company's costs for contributions to this plan were $ 4,569 , $ 4,763 , and $ 4,720 , respectively.

SUBSEQUENT EVENTS

Quarterly Cash Dividend

On February 14, 2024 , our Board of Directors approved a cash dividend of $ 0.05 per common share to be paid on March 29, 2024 to stockholders of record on March 8, 2024 .The ex-dividend date is expected to be on or around March 7, 2024.

On February 14, 2025 , our Board of Directors approved a cash dividend of $ 0.05 per common share expected to be paid on March 19, 2025 to stockholders of record on March 4, 2025 .The ex-dividend date is expected to be on or around March 3, 2025.

The dividend will be paid in cash.

Antitrust Litigation

The Company and certain of its subsidiaries were named in additional antitrust litigation after December 31, 2023;

specifically, the Fierro Litigation, the McFall Litigation, the Latham Litigation, the Whaley Litigation, and the Boykin Litigation.

The Boykin litigation was filed on February 16, 2024 as a putative class action complaint under the caption Boykin v.

The National Association of Realtors, et al.

2:24-cv-00340) in the United States District Court for the District of Nevada, naming as defendants the National Association of Realtors, certain regional Realtor associations, certain regional multiple listing services, certain real estate brokerages, and certain real estate brokerage owners, including eXp World Holdings, Inc.

The Boykin Litigation complaint alleges that defendants conspired to restrain trade by causing certain home sellers to pay buyer broker fees and inflated commissions on the sale of homes all in violation of federal antitrust laws and Nevada unfair trade practices laws.

The putative class representative seeks to represent a class of persons who paid a commission to a buyer’s broker in connection with the sale of a home from February 16, 2020, through the present.

Plaintiff, on behalf of herself and the putative class, seeks a permanent injunction enjoining the defendants from engaging in the alleged unlawful acts described in the Boykin Litigation complaint.

Plaintiff, on behalf of herself and the putative class, also seeks an award of declaratory relief, damages in an amount to be determined at trial, statutory interest and penalties, and attorneys’ fees, expenses and costs of suit.

See Note 13 – Commitments and Contingencies to the consolidated financial statements included elsewhere in this Annual Report for additional information about such litigation and other proceedings.

Agent Equity Program

Beginning March 1, 2024, agents and brokers may receive 5 % of commissions earned from each completed residential real estate transaction in the form of common stock at a 5 % discount recognized by the Company (which was previously 10 % discount on all AEP purchases before March 1, 2024).

Under the AEP, agents and brokers that have elected to receive portions of their commissions in common stock are entitled to receive the equivalent number of shares of common stock, based on the fixed monetary value of the commission payable.

Segment change

Subsequent to December 31, 2024, the Company’s CODM began managing the FrameVR.io business as part of the North American Realty segment.

As a result, in the first quarter of 2025, the Company reclassified FrameVR.io from the Other Affiliated Services segment to the North American Realty segment to align with this change in management approach.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data