What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-07 · 156 added, 233 removed, 298 unchanged (57% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Prepaids and other assets

Current assets of discontinued operations

TOTAL CURRENT ASSETS

Property, plant, and equipment, net

Property and equipment, net

Other noncurrent assets

Intangible assets, net

Deferred tax assets

Noncurrent assets of discontinued operations

Deferred tax assets, net

LIABILITIES AND EQUITY

4 unchanged sentences

Litigation contingency

Other liabilities

Current liabilities of discontinued operations

Other current liabilities

TOTAL CURRENT LIABILITIES

Long-term payable

TOTAL LIABILITIES

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

192,559,288 issued and 153,551,386 outstanding at September 30, 2024;

197,536,271 issued and 156,169,130 outstanding at March 31, 2025;

195,028,207 issued and 154,133,385 outstanding at December 31, 2024

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Accumulated deficit

Accumulated other comprehensive (loss) income

Total eXp World Holdings, Inc.

stockholders' equity

Equity attributable to noncontrolling interest

Accumulated other comprehensive (loss)

TOTAL LIABILITIES AND EQUITY

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EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses

8 unchanged sentences

Other (income) expense, net

Equity in losses of unconsolidated affiliates

Equity in (income) losses of unconsolidated affiliates

Total other (income) expense, net

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Net (loss) income from continuing operations

Net loss from discontinued operations

Net (loss) income from discontinued operations

Net (loss) income

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Foreign currency translation gain (loss), net of tax

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

Comprehensive (loss)

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

EXP WORLD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Common stock:

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Shares issued for stock options exercised

Agent growth incentive stock compensation

Agent equity stock compensation

Agent growth incentive stock-based compensation

Agent equity stock-based compensation

Stock option compensation

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Net (loss) income

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

Dividends declared and paid ( $ 0.05 per share of common stock)

Balance, end of period

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

Net income (loss)

Net (loss) income

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

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Amortization expense - intangible assets

Loss on disposition of business

Allowance for credit losses on receivables/bad debt on receivables

Equity in loss of unconsolidated affiliates

Agent growth incentive stock compensation expense

Equity in (income) loss of unconsolidated affiliates

Agent growth incentive stock-based compensation expense

Stock option compensation

Agent equity stock compensation expense

Agent equity stock-based compensation expense

Deferred income taxes, net

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Accrued expenses

Long term payable

Litigation contingency

2 unchanged sentences

INVESTING ACTIVITIES

Purchases of property, plant, and equipment

Purchase of business

Proceeds from sale of business

Purchases of property and equipment

Investments in unconsolidated affiliates

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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

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

Property and equipment purchases in accounts payable

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

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eXp World Holdings, Inc.

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

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

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

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

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

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

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

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GAAP for complete financial statements.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024 (“2023 Annual Report”).

These interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 20, 2025 (the “2024 Annual Report”).

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

Operating results for the three and nine 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.

Further, the technology is being replaced with Virbela Frame ® technology that will be primarily utilized internally within the Company.

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

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

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

For more information See Note 3 – Discontinued Operations .

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

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 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.

Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The Company is operated and managed as three reportable segments, which are North American Realty, International Realty and Other Affiliated Services.

Our business segments bring together related eXp technologies and services to support the success and development of agents, entrepreneurs and businesses and provide them remote business solutions.

In the first quarter of 2025, the Company’s Chief Operating Decision Maker (“CODM”) began managing the FrameVR.io® business as part of the North American Realty segment.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Intercompany transactions and balances are eliminated upon consolidation.

Variable interest entities and noncontrolling interests

A company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) and must consolidate the entity if the company has both:

Variable interest entities (“VIEs”) and noncontrolling interests

A company is deemed to be the primary beneficiary of a VIE and must consolidate the entity if the company has both:

(i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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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.

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

Use of Estimates

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

Reclassifications

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

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

Restricted cash

5 unchanged sentences

Restricted cash

Balance, September 30, 2023

Balance, March 31, 2024

Balance, December 31, 2024

Balance, September 30, 2024

DISCONTINUED OPERATIONS

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

September 30, 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

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses

Cost of revenue

General and administrative expenses

Technology and development expenses

Sales and marketing expenses

Total operating expenses

Operating (loss)

Other income, net

Total other income, net

(Loss) before income tax expense

Income tax benefit (expense)

Net loss from discontinued operations

Balance, March 31, 2025

EXPECTED CREDIT LOSSES

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

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

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

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

Receivables from real estate property settlements totaled $ 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:

September 30, 2024

As of March 31, 2025 and December 31, 2024, receivables from real estate property settlements totaled $ 97,775 and $ 82,300 , respectively, of which the Company recognized expected credit losses of $ 24 and $ 34 , respectively.

As of March 31, 2025 and December 31, 2024, agent non-commission based fees receivable and short-term advances totaled $ 8,461 and $ 6,980 , of which the Company recognized expected credit losses of $ 2,170 and $ 1,555 , respectively.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

March 31, 2025

December 31, 2024

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accumulated depreciation

Depreciable property, net

Discontinued operations

Depreciable property and equipment, net

Assets under development

Property, plant, and equipment, net

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.

Property and equipment, net

For the three months ended March 31, 2025 and 2024, depreciation expense was $ 1,945 and $ 2,059 , respectively.

GOODWILL AND INTANGIBLE ASSETS

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 September 30, 2024,

the Company recorded cumulative translation adjustment of ( $ 266 ) related to Canadian goodwill.

Goodwill was $ 17,263 as of March 31, 2025 and $ 17,226 as of December 31, 2024.

As of March 31, 2025, the Company recorded cumulative translation adjustment of $ 37 related to Canadian goodwill.

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

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

For the 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

Intangible assets, net consisted of the following:

March 31, 2025

Existing technology

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

Amortization expense for definite-lived intangible assets for the three months ended September 30, 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.

Amortization expense for definite-lived intangible assets for the three months ended March 31, 2025 and 2024 was $ 616 and $ 340 , respectively.

STOCKHOLDERS’ EQUITY

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Common stock:

Balance, beginning of quarter

Balance, beginning of period

Shares issued for stock options exercised

Agent growth incentive stock compensation

Agent equity stock compensation

Balance, end of quarter

Agent growth incentive stock-based compensation

Agent equity stock-based compensation

Balance, end of period

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.

Agent Equity Program

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 purpose of the equity plans 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 (“AEP”)

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 shares of common stock AEP.

If agents and brokers elect to receive portions of their commissions in shares of 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

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”).

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

During the three months ended March 31, 2025 and 2024, the Company issued 2,004,995 and 2,189,922 shares of common stock, respectively, to agents and brokers with a value of $ 20,756 and $ 25,868 , respectively, inclusive of discount.

Agent Growth Incentive Program (“AGIP”)

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 AGIP encourages greater performance and awards agents with shares of 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.

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

For the three months ended September 30, 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

Announced in October 2023, the Thrive program provides a stock incentive to the individual teams of leaders 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.

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

Stock grant liability balance at December 31, 2022

For the three months ended March 31, 2025 and 2024 the Company’s stock-based compensation expense attributable to the Agent Growth Incentive Program was $ 8,119 and $ 8,827 , respectively, of which the total amount of stock-based compensation attributable to liability classified awards was $ 622 and $ 650 , respectively.

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

Balance, December 31, 2023

Stock grant liability increase year to date

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Stock grants reclassified from liability to equity year to date

Balance, September 30, 2024

Balance, March 31, 2025

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

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 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.

During the three months ended March 31, 2025 and 2024, the Company granted 72,845 and 353,656 stock options, respectively, to employees with an estimated grant date fair value of $ 5.66 and $ 6.93 per share, respectively.

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

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 (“RSUs”)

The Company grants 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 quarters ended March 31, 2025 and 2024, the Company granted 47,652 and 0 RSUs, respectively, with weighted average grant date fair values of $ 10.67 and n/a.

As of March 31, 2025 and 2024, the total unrecognized stock-based compensation associated with these RSUs was $ 480 and n/a, which are expected to be recognized over a weighted average period of approximately 3.05 and 0 years, respectively.

Stock Repurchase Plan

In December 2018, the Company’s board of directors (the “Board”) approved a stock repurchase program authorizing the Company to purchase up to $ 25.0 million of its common stock, which was later amended in November 2019 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 May 2022, the Board approved an increase to the total amount of its buyback program from $ 400.0 million to $ 500.0 million.

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

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

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

The repurchase program does not require the Company to acquire a specific number of shares.

The cost of the shares that are repurchased is funded from cash and cash equivalents on hand.

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

In December 2020, the Board approved another amendment to the Stock Repurchase Program, 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 Stock Repurchase Program from $ 400.0 million to $ 500.0 million.

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

Purchases under the Stock Repurchase Program may be made in the open market or through a 10b5-1 plan and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The timing and number of shares repurchased under the Stock Repurchase Program depends upon market conditions.

The Stock Repurchase Program does not require the Company to acquire a specific number of shares.

The cost of the shares that are repurchased under the Stock Repurchase Program is funded from cash and cash equivalents on hand.

10b5-1 Repurchase Plan

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

In June 2023, the Board approved increasing the stock repurchase program to $ 1.0 billion.

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.

In connection with the Stock Repurchase Program, 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.

(“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.

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

(“Stephens”), a financial services firm that acts as an agent authorized to purchase shares on behalf of the Company, entered into that certain Issuer Repurchase Plan (as amended, the “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 March 12, 2025, the Board approved, and the Company entered into a Tenth Amendment to the Issuer Repurchase Plan which provides for the repurchase of up to (i) $ 2.0 million during the calendar month of March 2025, (ii) $ 7.5 million during each of the calendar months commencing April 1, 2025 through and including May 31, 2025, (iii) $ 10.0 million during the calendar month of June 2025, (iv) $ 15.0 million during each of the calendar months commencing July 1, 2025 through and including October 31, 2025, and (v) $ 10.0 million during each of the calendar months commencing November 1, 2025 through and including December 31, 2025.

For accounting purposes, shares of common stock repurchased under the Stock Repurchase Program are recorded based upon the applicable trade date.

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

These shares are considered issued but not outstanding.

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

Three Months Ended September 30,

Nine Months Ended September 30,

The following table shows the share changes in treasury stock for the periods presented (not in thousands):

Three Months Ended March 31,

Treasury stock:

Balance, beginning of quarter

Balance, beginning of period

Repurchases of common stock

Forfeiture to treasury stock for acquisition

Balance, end of quarter

Balance, end of period

SEGMENT INFORMATION

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

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

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

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

Adjusted Segment EBITDA is defined by us as a segment’s operating profit (loss) from continuing operations plus depreciation and amortization, litigation contingency and stock-based compensation expenses.

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

Adjusted Segment EBITDA is defined by us as a segment’s operating income (loss) from continuing operations plus depreciation and amortization, litigation contingency and stock-based compensation expenses.

See “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report for a discussion of why management believes Adjusted Segment EBITDA, a non-U.S.

GAAP measure, is useful.

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

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.

Going forward, the remaining operations of Virbela will not meet the operating or reporting segment criteria, therefore, any operating results related to Virbela technology will be included in the

Other Affiliated Services segment.

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

The Company’s three reportable segments are as follows:

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● Other Affiliated Services:

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

includes our SUCCESS ® Magazine, and other ancillary ventures.

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

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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 (loss) from continuing operations and Goodwill (in thousands).

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

North American Realty

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Consolidated revenues

Commissions and other agent-related costs

Three Months Ended March 31,

North American Realty

International Realty

Other Affiliated Services

Commissions reconciliation:

Segment eliminations

Consolidated commissions and other agent-related costs

Adjusted EBITDA

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

North American Realty

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Consolidated Adjusted EBITDA

Operating Profit Reconciliation:

(Loss) income before income tax expense reconciliation:

Depreciation and amortization expense

Litigation contingency

Stock compensation expense

Stock-based compensation expense

Stock option expense

Consolidated operating (loss) profit

September 30, 2024

Other (income) expense, net

Consolidated (loss) income before income tax expense

March 31, 2025

December 31, 2024

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net (loss) income from continuing operations

Net loss from discontinued operations

Net (loss) income from discontinued operations

Weighted average shares - basic

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Earnings per share:

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

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

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

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

For three months ended 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.

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

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

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

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

For three months ended March 31, 2025 and 2024 total outstanding shares of common stock excluded 3,424,959 and 3,212,244 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 $ 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.

Regulatory developments from the U.S.

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

Our provision for income tax expense (benefit) amounted to $ 1,671 and ($ 3,305 ) for the three months ended March 31, 2025 and 2024, which represent effective tax rates of ( 17.9 %) and 18.0 % , respectively.

The effective tax rate differs from our statutory rates in both periods primarily due to foreign and domestic mix of earnings, and stock-based compensation.

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

and international tax reform legislation could affect the Company's effective tax rate.

The Company continues to monitor the OECD’s Base Erosion and Profit Shifting (BEPS) framework—including the legislative adoption of Pillar Two and other tax reform legislation by jurisdiction—to evaluate the potential impact on future periods.

The Company does not expect the adoption of Pillar Two rules to have a significant impact on its consolidated financial statements in fiscal year 2025.

FAIR VALUE MEASUREMENT

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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:

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

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.

As of March 31, 2025 and December 31, 2024, the fair value of the Company’s money market funds was $ 33,800 and $ 38,344 , respectively.

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

The Company did not have any Level 2 or Level 3 financial assets or liabilities in the period presented.

The Company did not have any Level 2 financial assets or liabilities in the period presented.

In the first quarter of 2025, the Company acquired $ 11,000 of Level 3 assets, at fair value.

COMMITMENTS AND CONTINGENCIES

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, stockholder derivative actions and non-compliance with contractual or other legal obligations.

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 (“TCPA”) 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

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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 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.

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 al., Case No.

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 U.S.

brokerage defendants (the “Hooper Action”).

The Settlement resolves 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 U.S.

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 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 30 business days after preliminary court approval of the Settlement and the final 50 % (or $ 17,000 ) will be deposited on or before the one-year anniversary of the 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.

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.

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.

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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.

The Company continues to vigorously defend against the claims in the 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;

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.

For the Canadian antitrust litigation, we have not recorded any accruals as of March 31, 2025.

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 from current expectations.

Derivative Litigation

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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.

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

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

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

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

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

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.

On May 5, 2025 , the Company’s Board declared a dividend of $ 0.05 per share which is expected to be payable on June 4, 2025 , to stockholders of record as of the close of business on May 19, 2025 .

The ex-dividend date is expected to be on or around May 16, 2025.

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