8-K
eXp World Holdings, Inc. (AGNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 2023
EXP WORLD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| | | | | |
|---|---|---|---|---|
| Delaware | **** | 001-38493 | **** | 98-0681092 |
| (State or other jurisdiction | | (Commission | | (IRS Employer |
| of incorporation) | | File Number) | | Identification No.) |
| | | |
|---|---|---|
| 2219 Rimland Drive, Suite 301 , Bellingham , WA | | 98226 |
| (Address of principal executive offices) | | (Zip Code) |
| ( 360 ) 685-4206 | ||
| (Registrant’s telephone number, including area code) | ||
| Not applicable | ||
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to section 12(b) of the Act:
| | | | |
|---|---|---|---|
| Title of Each Class | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, 0.00001 par value per share | EXPI | **** | The Nasdaq Stock Market |
All values are in US Dollars.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02.Results of Operations and Financial Condition.
On May 2, 2023, eXp World Holdings, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as expressly set forth by specific reference in such filing.
Exhibit 99.1 contains certain non-GAAP financial information. The reconciliation of such non-GAAP financial information to GAAP financial measures is included in Exhibit 99.1. Further, Exhibit 99.1 contains statements intended as “forward-looking statements,” all of which are subject to the cautionary statements about forward-looking statements set forth therein.
Item 7.01 Regulation FD Disclosure.
In the press release issued on May 2, 2023, and attached hereto as Exhibit 99.1, the Company also announced that it would conduct a virtual fireside chat today, Tuesday, May 2, 2023, at 2:00 p.m. (Pacific Time) to discuss its financial results for the three months ended March 31, 2023.
On April 27, 2023, the Company’s Board of Directors declared a cash dividend of $0.045 per share of the Company’s outstanding common stock. The dividend is expected to be paid on May 31, 2023 to the stockholders of record on May 12, 2023.
The information in this Item 7.01 shall not be deemed “filed” for purposes of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Exchange Act or the Securities Act, except as expressly set forth by specific reference in such filing.
The information in this report and Exhibit 99.1 hereto may contain “forward-looking statements” within the meaning of the Securities Act and the Exchange Act. There can be no assurance that future dividends will be declared. The declaration of future dividends is subject to approval of the Board of Directors after its review of the Company’s financial performance and cash needs. Declaration of future dividends is also subject to various risks and uncertainties.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated May 2, 2023 |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| eXp World Holdings, Inc. | |
|---|---|
| (Registrant) | |
| Date: May 2, 2023 | /s/ James Bramble |
| James Bramble | |
| General Counsel |
Exhibit 99.1
eXp World Holdings Reports Q1 2023 Results
Positive Net Income of $1.5 Million
Agent Count Grew 12% Year Over Year to More Than 87,000 Agents in 24 Global Markets
International Achieves Record Revenue, Increasing 52% Year Over Year
Generated $39 Million of Operating Cash Flow^(1)^
Company Declares Cash Dividend for Q2 2023 of $0.045 per Share of Common Stock
BELLINGHAM, Wash. — May 2, 2023 — eXp World Holdings, Inc. (Nasdaq: EXPI), (or the “Company”), the holding company for eXp Realty^®^, Virbela and SUCCESS^®^ Enterprises, today announced financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Consolidated Financial Highlights as Compared to the Same Year-Ago Quarter:
| ● | Revenue decreased 16% to $850.6 million. |
|---|---|
| ● | Gross profit decreased 12% to $73.1 million. |
| --- | --- |
| ● | Net income of $1.5 million. Earnings per diluted share of $0.01 compared to earnings per diluted share of $0.06 in the year ago quarter. |
| --- | --- |
| ● | Adjusted EBITDA (a non-GAAP financial measure) of $13.3 million. |
| --- | --- |
| ● | As of March 31, 2023, cash and cash equivalents totaled $122.8 million, compared to $130.1 million as of March 31, 2022. The company repurchased approximately $29.9 million of common stock during the first quarter of 2023. |
| --- | --- |
| ● | The Company paid a cash dividend for the first quarter of 2022 of $0.045 per share of common stock on March 31, 2023. On April 27, 2023, the Company’s Board of Directors declared a cash dividend of $0.045 per share of common stock for the second quarter of 2023, expected to be paid on May 31, 2023 to stockholders of record on May 12, 2023. |
| --- | --- |
Management Commentary
“In 2009, we successfully launched the cloud-based, agent-centric brokerage model, which is now the model for many newer brokerage firms across the industry. As we iterate on the agent value proposition, our focus is to modernize our infrastructure for the next generation of real estate agents,” said Glenn Sanford, Founder, Chairman and CEO of eXp World Holdings. “Our cloud-based model and solid financial foundation enable us to continue investing in synergistic products and
technologies that lay the groundwork for the future, while delivering an enhanced agent experience today.
“We continue to grow our agent-centric culture by amplifying our agents’ voices across the organization through our Agent Advisory Councils, masterminds and our strong usage of the Net Promoter System (NPS), which captures ongoing agent and employee feedback. We’re excited to meet in person at our 9th Annual Shareholder Summit in Orlando from May 17-20, where eXp Realty agents and SUCCESS^®^ coaches will be the main speakers for the event."
"During the first quarter, the financial benefits of our variable cost model were apparent as we generated positive net income and over $39 million of operating cash flow^(1)^ despite the global residential real estate market downturn," said Jeff Whiteside, CFO and Chief Collaboration Officer of eXp World Holdings. "Our International Realty segment had a record revenue quarter with 52% year-over-year growth, and we remain focused on driving durable, profitable growth across the eXp World Holdings portfolio."
First Quarter 2023 Operational Highlights as Compared to the Same Year-Ago Period:
| ● | Announced partnership with Realty.com, a listings platform that connects qualified sellers and buyers directly with real estate agents, including exclusive enhanced services and pricing. |
|---|---|
| ● | Appointed Peggie Pelosi to the Company’s Board of Directors, effective Jan. 26, 2023. |
| --- | --- |
| ● | Announced Amy Somerville as Chief Executive Officer, SUCCESS Enterprises. |
| --- | --- |
| ● | Agents and brokers on the eXp Realty platform increased 12% to 87,327 as of March 31, 2023. |
| --- | --- |
| ● | Real estate transactions closed decreased 10% to 102,305. |
| --- | --- |
| ● | Real estate transaction volume decreased 20% to $33.2 billion. |
| --- | --- |
| ● | eXp Realty ended the first quarter of 2023 with a global Net Promoter Score of 70, a measure of agent satisfaction, as part of the Company’s intense focus on improving the agent experience. |
| --- | --- |
(1) Operating cash flow presented is net cash provided by operating activities excluding change in customer deposits.
First Quarter 2023 Results – Virtual Fireside Chat
The Company will hold a virtual fireside chat and investor Q&A with eXp World Holdings Founder and CEO Glenn Sanford and CFO Jeff Whiteside on Tuesday, May 2, 2023 at 2 p.m. PT / 5 p.m. ET.
The investor Q&A is open to investors, current shareholders and anyone interested in learning more about eXp World Holdings and its companies. Submit questions in advance for inclusion to investors@eXpWorldHoldings.com.
Date: Tuesday, May 2, 2023
Time: 2 p.m. PT / 5 p.m. ET
Location: EXPI Campus. Join at https://expworldholdings.com/contact/download/
Livestream: expworldholdings.com/events
****
About eXp World Holdings, Inc.
eXp World Holdings, Inc. (Nasdaq: EXPI) is the holding company for eXp Realty^®^, Virbela and SUCCESS^®^ Enterprises. eXp Realty is the fastest-growing real estate company in the world with more than 87,000 agents in the United States, Canada, the United Kingdom, Australia, South Africa, India, Mexico, Portugal, France, Puerto Rico, Brazil, Italy, Hong Kong, Colombia, Spain, Israel, Panama, Germany, Dominican Republic, Greece, New Zealand, Chile, Poland and Dubai and continues to scale internationally. As a publicly traded company, eXp World Holdings provides real estate professionals the unique opportunity to earn equity awards for production goals and contributions to overall company growth. eXp World Holdings and its businesses offer a full suite of brokerage and real estate tech solutions, including its innovative residential and commercial brokerage model, professional services, collaborative tools and personal development. The cloud-based brokerage is powered by Virbela, an immersive 3D platform that is deeply social and collaborative, enabling agents to be more connected and productive. SUCCESS^®^ Enterprises, anchored by SUCCESS^®^ magazine and its related media properties, was established in 1897 and is a leading personal and professional development brand and publication.
For more information, visit https://expworldholdings.com.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, this press release includes references to Adjusted EBITDA, which is a non-U.S. GAAP financial measure and may be different than similarly titled measures used by other companies. It is presented to enhance investors’ overall understanding of the company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.
The company’s Adjusted EBITDA provides useful information about financial performance, enhances the overall understanding of past performance and future prospects, and allows for greater transparency with respect to a key metric used by management for financial and operational decision-making. Adjusted EBITDA helps identify underlying trends in the business that otherwise could be masked by the effect of the expenses that are excluded in Adjusted EBITDA. In particular, the company believes the exclusion of stock and stock option expenses provides a useful supplemental measure in evaluating the performance of operations and provides better transparency into results of operations.
The company defines the non-U.S. GAAP financial measure of Adjusted EBITDA to mean net income (loss), excluding other income (expense), income tax benefit (expense), depreciation, amortization, impairment charges, stock-based compensation expense, and stock option expense. Adjusted EBITDA may assist investors in seeing financial performance through the eyes of management, and may provide an additional tool for investors to use in comparing core financial performance over multiple periods with other companies in the industry.
Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to Net Income (Loss), the closest comparable U.S. GAAP measure. Some of these limitations are that:
| ● | Adjusted EBITDA excludes stock-based compensation expense and stock option expense, which have been, and will continue to be for the foreseeable future, significant recurring expenses in the business and an important part of the compensation strategy; and |
|---|---|
| ● | Adjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of fixed assets, amortization of acquired intangible assets, and impairment charges related to these long-lived assets, and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. |
| --- | --- |
Safe Harbor Statement
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. These statements include, but are not limited to, statements about the continued growth of our agent and broker base; expansion of our residential real estate brokerage business into foreign markets; and revenue growth and financial performance. Such forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to revise or update them. Such statements are not guarantees of future performance. Important factors that may cause actual results to differ materially and adversely from those expressed in forward-looking statements include changes in business or other market conditions; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the company’s Securities and Exchange Commission filings, including but not limited to the most recently filed Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
Media Relations Contact:
eXp World Holdings, Inc.
mediarelations@expworldholdings.com
****
Investor Relations Contact:
Denise Garcia
investors@expworldholdings.com
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share amounts and per share data)
| | | | | | |
|---|---|---|---|---|---|
| | | Three Months Ended March 31, | |||
| | | 2023 | | 2022 | |
| Revenues | | $ 850,616 | | $ 1,010,731 | |
| Operating expenses | | | | | |
| Commissions and other agent-related costs | | 777,559 | | 927,267 | |
| General and administrative expenses | | 71,767 | | 75,322 | |
| Sales and marketing expenses | | 2,963 | | 3,700 | |
| Total operating expenses | | 852,289 | | 1,006,289 | |
| Operating (loss) income | | (1,673) | | 4,442 | |
| Other (income) expense | | | | | |
| Other (income) expense, net | | (880) | | 410 | |
| Equity in losses of unconsolidated affiliates | | 342 | | 317 | |
| Total other (income) expense, net | | (538) | | 727 | |
| (Loss) income before income tax expense | | (1,135) | | 3,715 | |
| Income tax benefit | | (2,588) | | (5,149) | |
| Net income | | 1,453 | | 8,864 | |
| Net income attributable to noncontrolling interest | | - | | 18 | |
| Net income attributable to eXp World Holdings, Inc. | | $ 1,453 | | $ 8,882 | |
| Earnings per share | | | | | |
| Basic | | 0.01 | | 0.06 | |
| Diluted | | 0.01 | | 0.06 | |
| Weighted average shares outstanding | | | | | |
| Basic | | 152,546,766 | | 149,226,166 | |
| Diluted | | 155,668,712 | | 156,842,721 | |
The following tables reflects Revenues and Adjusted Segment EBITDA by reportable segments:
| | | | | | |
|---|---|---|---|---|---|
| | | | | | |
| SEGMENT REVENUES | |||||
| (In thousands) | |||||
| | |||||
| | | Three Months Ended March 31, | |||
| Revenues | 2023 | 2022 | | ||
| North American Realty | | $ 837,114 | | $ 1,001,880 | |
| International Realty | | 10,758 | | 7,094 | |
| Virbela | | 2,163 | | 1,813 | |
| Other Affiliated Services | | 1,677 | | 838 | |
| Revenues reconciliation: | | | | | |
| Segment eliminations | | (1,096) | | (894) | |
| Consolidated revenues | | $ 850,616 | | $ 1,010,731 | |
| | | | | | |
| | | | | | |
|---|---|---|---|---|---|
| | | | | | |
| ADJUSTED SEGMENT EBITDA | |||||
| (In thousands) | |||||
| | |||||
| | | Three Months Ended March 31, | |||
| | 2023 | 2022 | | ||
| North American Realty | | $ 21,203 | | $ 28,770 | |
| International Realty | | (3,676) | | (1,956) | |
| Virbela | | (1,296) | | (2,771) | |
| Other Affiliated Services | | (681) | | (829) | |
| Corporate expenses and other | | (2,223) | | (5,505) | |
| Consolidated Adjusted EBITDA | | $ 13,327 | | $ 17,709 | |
| | | | | | |
| | | | | | |
|---|---|---|---|---|---|
| CONSOLIDATED US-GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION | |||||
| (In thousands) | |||||
| | |||||
| | | Three Months Ended March 31, | |||
| | 2023 | 2022 | | ||
| Net income | | $ 1,453 | | $ 8,864 | |
| Other (income) expense, net | | (538) | | 727 | |
| Income tax benefit | | (2,588) | | (5,149) | |
| Depreciation and amortization | | 2,579 | | 1,958 | |
| Stock compensation expense ^(1)^ | | 9,660 | | 7,798 | |
| Stock option expense | | 2,761 | | 3,511 | |
| Adjusted EBITDA | | $ 13,327 | | $ 17,709 | |
| | | | | | |
| ^(1)^This includes agent growth incentive stock compensation expense and stock compensation expense related to business acquisitions. |
EXP WORLD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
| | | | | |
|---|---|---|---|---|
| | | March 31, 2023 | | December 31, 2022 |
| | | | | |
| ASSETS | | | | |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | | $ 122,769 | | $ 121,594 |
| Restricted cash | | 55,365 | | 37,789 |
| Accounts receivable, net of allowance for credit losses of $2,224 and $4,014, respectively | | 99,860 | | 87,262 |
| Prepaids and other assets | | 12,253 | | 8,468 |
| TOTAL CURRENT ASSETS | | 290,247 | | 255,113 |
| Property, plant, and equipment, net | | 14,075 | | 18,151 |
| Operating lease right-of-use assets | | 2,075 | | 2,127 |
| Other noncurrent assets | | 1,711 | | 1,703 |
| Intangible assets, net | | 11,565 | | 8,700 |
| Deferred tax assets | | 68,399 | | 68,676 |
| Goodwill | | 27,261 | | 27,212 |
| TOTAL ASSETS | | $ 415,333 | | $ 381,682 |
| LIABILITIES AND EQUITY | | | | |
| CURRENT LIABILITIES | | | | |
| Accounts payable | | $ 9,080 | | $ 10,391 |
| Customer deposits | | 55,171 | | 37,789 |
| Accrued expenses | | 97,137 | | 78,944 |
| Current portion of lease obligation - operating lease | | 159 | | 175 |
| TOTAL CURRENT LIABILITIES | | 161,547 | | 127,299 |
| Long-term payable | | 5 | | 4,697 |
| Long-term lease obligation - operating lease, net of current portion | | 694 | | 694 |
| TOTAL LIABILITIES | | 162,246 | | 132,690 |
| EQUITY | | | | |
| Common Stock, $0.00001 par value 900,000,000 shares authorized; 174,532,043 issued and 153,442,421 outstanding at March 31, 2023; 171,656,030 issued and 152,839,239 outstanding at December 31, 2022 | | 2 | | 2 |
| Additional paid-in capital | | 650,383 | | 611,872 |
| Treasury stock, at cost: 21,089,622 and 18,816,791 shares held, respectively | | (414,926) | | (385,010) |
| Accumulated earnings | | 15,580 | | 20,723 |
| Accumulated other comprehensive income | | 879 | | 236 |
| Total eXp World Holdings, Inc. stockholders' equity | | 251,918 | | 247,823 |
| Equity attributable to noncontrolling interest | | 1,169 | | 1,169 |
| TOTAL EQUITY | | 253,087 | | 248,992 |
| TOTAL LIABILITIES AND EQUITY | | $ 415,333 | | $ 381,682 |
| | | | | |
|---|---|---|---|---|
| | | | | |
| EXP WORLD HOLDINGS, INC. | ||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (In thousands) | ||||
| | ||||
| | | Three Months Ended March 31, | ||
| | | 2023 | | 2022 |
| OPERATING ACTIVITIES | | | | |
| Net income | | $ 1,453 | | $ 8,864 |
| Reconciliation of net income to net cash provided by operating activities: | | | | |
| Depreciation expense | | 2,067 | | 1,616 |
| Amortization expense - intangible assets | | 512 | | 342 |
| Loss on dissolution of consolidated affiliates | | - | | 361 |
| Allowance for credit losses on receivables/bad debt on receivables | | (1,790) | | 219 |
| Equity in loss of unconsolidated affiliates | | 342 | | 317 |
| Agent growth incentive stock compensation expense | | 9,660 | | 7,798 |
| Stock option compensation | | 2,761 | | 3,511 |
| Agent equity stock compensation expense | | 26,775 | | 38,500 |
| Deferred income taxes, net | | 277 | | (5,901) |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable | | (10,808) | | (9,846) |
| Prepaids and other assets | | (3,722) | | 496 |
| Customer deposits | | 17,382 | | 49,266 |
| Accounts payable | | (1,310) | | 74 |
| Accrued expenses | | 17,200 | | 15,854 |
| Long term payable | | (4,692) | | - |
| Other operating activities | | 37 | | 36 |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | | 56,144 | | 111,507 |
| INVESTING ACTIVITIES | | | | |
| Purchases of property, plant, equipment & intangible assets | | (1,432) | | (4,684) |
| Investments in unconsolidated affiliates | | (350) | | - |
| NET CASH USED IN INVESTING ACTIVITIES | | (1,782) | | (4,684) |
| FINANCING ACTIVITIES | | | | |
| Repurchase of common stock | | (29,916) | | (29,956) |
| Proceeds from exercise of options | | 307 | | 498 |
| Transactions with noncontrolling interests | | - | | (426) |
| Dividends declared and paid | | (6,596) | | (5,859) |
| NET CASH USED IN FINANCING ACTIVITIES | | (36,205) | | (35,743) |
| Effect of changes in exchange rates on cash, cash equivalents and restricted cash | | 594 | | 41 |
| Net change in cash, cash equivalents and restricted cash | | 18,751 | | 71,121 |
| Cash, cash equivalents and restricted cash, beginning balance | | 159,383 | | 175,910 |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE | | $ 178,134 | | $ 247,031 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | | | | |
| Cash paid for income taxes | | $ 1,089 | | $ 483 |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | |
| Property, plant and equipment purchases in accounts payable | | - | | 246 |