GlobeNewswire Inc | Aug 5, 2020 09:45AM EDT

August 05, 2020

Achieves Most Profitable Quarter in Companys HistoryRevenue Up 33% Year-over-year to $354 Million

BELLINGHAM, Wash., Aug. 05, 2020 (GLOBE NEWSWIRE) -- eXp World Holdings, Inc. (Nasdaq: EXPI), the parent company for eXp Realty and VirBELA, today announced financial results for the second quarter ended June 30, 2020.

eXp World Holdings reported its most profitable quarter in its history with net income of $8.3 million in the second quarter, which represents continued progress toward the companys goal of achieving positive earnings for a fiscal year. In addition, quarterly revenue grew 33% year over year to $354 million driven by eXp Realtys continued strength in agent count and transactions during an unprecedented time for the real estate industry and the global economy.

Even in these uncertain times, eXp Realty continued to deliver on its value proposition to agents, brokers and consumers and report record financial results. We achieved the most profitable quarter in the companys more than 10-year history with a positive net income for the third quarter in a row, said eXp World Holdings CEO, Chairman and Founder Glenn Sanford.

Due to the performance of our agents and the power of our cloud-based brokerage model, eXp Realty achieved exceptional results with strong growth in all areas, despite initial impacts on the housing market from business restrictions related to COVID-19. eXp Realty always has pursued the minimum footprint required to operate and was able to more easily reduce expenses due to the pandemic, something that traditional brick-and-mortar brokerages and franchises were unable to realize. During the quarter, agents continued to join us at the highest rate in the industry due to our overall value proposition and the ability to support them in the current environment, ending the quarter with more than 31,000 agents.

VirBELA expanded quickly during the quarter to keep up with demand as companies look to the future and how they will operate given all the uncertainties around physical office set-ups or how to hold events. We are engaged with hundreds of new and prospective clients, and VirBELA is positioned to substantially benefit from the global shift to remote work and events.

Second-quarter 2020 Financial Results Summary

-- Revenue increased 33% in the second quarter of 2020 to $354 million, compared to $267 million in the second quarter of 2019. -- Gross profit grew 55% to $34.4 million in the second quarter of 2020, compared to $22.1 million in the second quarter of 2019. Gross profit is calculated as revenues less commission and other agent-related costs. -- Net income was $8.3 million, or $0.11 per diluted share in the second quarter of 2020, compared to a net loss of $2.2 million, or $(0.04) per diluted share, in the second quarter of 2019. -- Adjusted EBITDA (a non-GAAP financial measure) was $13.6 million in the second quarter of 2020, compared to $3.8 million in the second quarter of 2019. -- Cash flow from operations increased 57% to $28.5 million in the second quarter of 2020, compared to $18.1 million in the second quarter of 2019.

Second-quarter 2020 Operating and Business Highlights

-- The number of agents and brokers on the eXp Realty platform increased 54% to 31,091 at the end of the second quarter of 2020, compared to 20,162 a year ago. -- Residential transaction sides closed for the second quarter of 2020 increased approximately 22% to 43,653, compared to 35,836 during the second quarter of 2019. -- Residential transaction volume closed for the second quarter of 2020 increased approximately 26% to $13.0 billion, compared to $10.3 billion during the second quarter of 2019. -- By focusing on the agent experience, eXp Realty earned a 70 agent Net Promoter Score, which measures agent satisfaction, for the second quarter in a row.

As we look toward the second half of 2020, we anticipate the presence and influence of COVID-19 to linger, but eXp World Holdings businesses are uniquely positioned to adapt and thrive, said eXp World Holdings CFO and Chief Collaboration Officer Jeff Whiteside. Combine agent excellence that delivers increased sales volume and attracts top-producing agents with the advantages of our cloud-based brokerage model and it is a cycle of success. We expect that the eXp Realty business and our agents will continue to adjust to ongoing economic conditions in the housing market. We also plan to formally announce our expansion into new international markets as well as a strategic initiative in commercial real estate. At VirBELA, we see significant growth opportunities ahead as remote work, distance learning and virtual events become the norm during this time of physical distancing.

Second-half 2020 Business Outlook

-- Revenue is expected to continue to grow year over year in the third and fourth quarters of 2020 due to anticipated growth in home transaction sides and commission revenue in eXp Realty. -- eXp Realty expects to continue to add agents at levels above what competing national brokerages experience. The cloud-based remote model is very appealing to agents and independent brokerages, especially during this challenging time. -- The acquisition of Showcase IDX was completed in July 2020, bringing a technology company focused on agent website and consumer real estate portal technology to eXp World Holdings. The company will continue to operate Showcase IDX and offer its services to clients. With this acquisition, eXp will be able to strategically focus on creating consumer home-search technology. -- eXp Realtys strategic focus on international growth will intensify, with plans to launch operations in five new countries in the second half of 2020. The company anticipates that international markets will become a material contributor to growth in the next twelve months. -- eXp intends to aggressively expand presence in commercial real estate by attracting a significant number of commercial real estate brokers to join the company in the next twelve months as a result of a strategic initiative. This initiative is anticipated to lead to commercial real estate becoming a strong contributor to growth of the company. -- Affiliated services businesses in mortgage, title and iBuying are anticipated to become complementary contributors to growth in the coming year. -- Accelerated growth opportunities for VirBELA are anticipated to continue. VirBELA has experienced a substantial increase in use and adoption due to its effectiveness in supporting remote working, remote learning and virtual events during this time of physical distancing. Recent adoption by the events industry is driving new use and increased awareness.

eXp World Holdings Investor Q&AAn investor Q&A will be held Thursday, Aug. 6 at 8 a.m. PT / 11 a.m. ET in the VirBELA Open Campus in the Auditorium. A livestream also will be available at expworldholdings.com/events. The investor Q&A is open to investors, current shareholders and anyone interested in learning more about eXp World Holdings and its companies.

Use of Non-GAAP Financial MeasuresTo 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 companys 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 companys 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 expense, depreciation and amortization; 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 and amortization of acquired intangible assets and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future.

Safe Harbor StatementThe statements contained herein may include statements of future expectations and other forward-looking statements that are based on managements 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. Such forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to revise or update them. These statements include, but are not limited to, statements about the companys expansion, revenue growth, operating results, financial performance and net income changes. 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 companys Securities and Exchange Commission filings, including but not limited to the most recently filed Annual Report on Form 10-K.

About eXp World HoldingseXp World Holdings, Inc. (Nasdaq: EXPI) owns eXp Realty, Showcase IDX and VirBELA.

eXp Realty, The Real Estate Cloud Brokerage, is the fastest-growing, global residential real estate company with more than 32,000 agents in the United States, Canada, the United Kingdom and Australia. As a subsidiary of a publicly traded company, eXp Realty uniquely offers real estate professionals within its ranks opportunities to earn eXp World Holdings stock for production and contributions to overall company growth.

Showcase IDX is the leading real estate search technology company that helps agents market and grow their businesses and online presence. Showcase IDXs services include property search for online and mobile platforms, lead generation, state-of-the-art mapping, and CRM tools and integration.

VirBELA is an immersive technology platform for business, events and education. Its modern, cloud-based environment provides a virtual experience for workers, attendees, students and more to communicate, collaborate, meet and socialize. For more information, visit the companys website at virbela.com.

For more information, please visit the companys website at www.expworldholdings.com.

Connect with eXp World Holdings and its companies: https://expworldholdings.com/social

Reported Consolidated Results

EXP WORLD HOLDINGS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands) June 30, 2020 December 31, 2019 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 63,551 $ 40,087 Restricted cash 17,405 6,987 Accounts receivable, net of allowance forcredit losses of $1,260 and allowance for bad 52,543 28,196 debt of $137, respectivelyPrepaids and other assets 3,302 3,549 TOTAL CURRENT ASSETS 136,801 78,819 Property, plant, and equipment, net 6,080 5,428 Operating lease right-of-use assets 902 1,264 Other noncurrent assets 7 16 Intangible assets, net 2,837 2,677 Goodwill 8,248 8,248 TOTAL ASSETS $ 154,875 $ 96,452 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $ 1,642 $ 2,593 Customer deposits 17,405 6,987 Accrued expenses 53,839 31,034 Current portion of long-term payable 970 916 Current portion of lease obligation - 727 435 operating leaseTOTAL CURRENT LIABILITIES 74,583 41,965 Long-term payable, net of current portion 1,585 1,530 Long-term lease obligation - operating lease, 175 829 net of current portionTOTAL LIABILITIES 76,343 44,324 EQUITY Common Stock, $0.00001 par value 220,000shares authorized; 70,579 issued and 68,532 1 1 outstanding in 2020; 66,199 issued and 65,274outstanding in 2019Additional paid-in capital 160,643 130,682 Treasury stock, at cost: 2,047 and 925 shares (20,610 ) (8,623 )held, respectivelyAccumulated deficit (61,853 ) (70,293 )Accumulated other comprehensive income 147 200 Total eXp World Holdings, Inc. stockholders' 78,328 51,967 equityEquity attributable to noncontrolling 204 161 interestTOTAL EQUITY 78,532 52,128 TOTAL LIABILITIES AND EQUITY $ 154,875 $ 96,452

EXP WORLD HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(In thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Revenues $ 353,525 $ 266,705 $ 624,946 $ 423,739 Operating expensesCommissionsand other 319,164 244,587 562,570 387,129 agent-relatedcostsGeneral andadministrative 25,155 23,204 52,015 42,905 expensesSales andmarketing 887 1,071 1,831 1,960 expensesTotaloperating 345,206 268,862 616,416 431,994 expenses Operating 8,319 (2,157 ) 8,530 (8,255 )income (loss)Other expense (income)Other expense 11 (10 ) 49 25 (income), netEquity inlosses of 12 - 34 - unconsolidatedaffiliatesTotal otherexpense 23 (10 ) 83 25 (income), netIncome (loss)before income 8,296 (2,147 ) 8,447 (8,280 )tax expenseIncome tax 61 48 70 212 expenseNet income 8,235 (2,195 ) 8,377 (8,492 )(loss)Net lossattributableto 40 - 63 - noncontrollinginterestNet income(loss)attributable $ 8,275 $ (2,195 ) $ 8,440 $ (8,492 )to eXp WorldHoldings, Inc. Earnings(loss) per shareBasic $ 0.12 $ (0.04 ) $ 0.13 $ (0.14 )Diluted $ 0.11 $ (0.04 ) $ 0.12 $ (0.14 )Weightedaverage shares outstandingBasic 67,756 61,526 66,751 61,138 Diluted 72,661 61,526 72,050 61,138

US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION(In thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income $ 8,235 $ (2,195 ) $ 8,377 $ (8,492 )(loss)Other expense 23 (10 ) 83 25 (income), netIncome tax 61 48 70 212 expenseDepreciation &amortization 856 534 1,781 974 expense ^(1)Stockcompensation 3,246 3,587 6,765 7,257 expenseStock option 1,227 1,831 2,300 3,046 expenseAdjusted EBITDA $ 13,648 $ 3,795 $ 19,376 $ 3,022 ^(1) Note, stock payable amortization is included in other (expense)/income assuch is not included in this amortization expense

Media Relations Contact:Cynthia NowakVice president, marketing and communications, eXp World Holdings360.419.5285 ext. 116cynthia.nowak@exprealty.net

Investor Relations Contact:Raymond RJ JonesExecutive Vice President, finance and growth, eXp World Holdings360.761.4393investors@expworldholdings.com