10-K: eXp World Holdings Faces Profit Decline Amid Legal Costs

eXp World Holdings reported a 7% increase in net loss and a 56% drop in adjusted EBITDA for 2025, despite revenue growth and international expansion.

Summary

• Net loss for the year ended December 31, 2025, increased to $22.714 million, up from $21.267 million in 2024.
• Consolidated adjusted EBITDA decreased by 56% to $33.172 million in 2025, down from $75.483 million in 2024.
• Revenues increased by 4% to $4.772 billion in 2025, primarily driven by higher home sale prices in the U.S. and increased transactions in Canada and international markets.
• Gross profit decreased by 3% to $333.578 million in 2025, reflecting increased agent capping and lower agent fees.
• Operating income (loss) worsened by 13% to a loss of $21.466 million, due to increased legal expenses and accruals, and higher employee-related and technology costs.
• Real estate sales transactions increased by 1% to 440,163, and sales volume grew by 5% to $194.038 billion.
• Agent count remained relatively flat at 83,060, a slight increase from 82,980 in 2024.
• The company paid the first $17.0 million installment of a $34.0 million antitrust lawsuit settlement in Q2 2025, with the remaining $17.0 million due by Q2 2026.
• Cash and cash equivalents stood at $124.2 million as of December 31, 2025, with net working capital increasing by 28% to $105.167 million.
• Cash provided by operating activities decreased by 38% to $118.611 million, impacted by lower agent equity program participation and the antitrust settlement payment.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with caution due to significant declines in profitability metrics (EBITDA, net income) and substantial ongoing legal liabilities, despite positive revenue growth and strategic expansions.

Positives

• Revenue increased by 4% to $4.772 billion, driven by higher U.S. home sale prices and increased international transactions.
• Real estate sales volume grew by 5% to $194.038 billion, indicating continued market activity through the platform.
• International Realty revenue surged by 67%, reflecting increased productivity in existing markets and successful expansion into new countries.
• The company expanded into five new international markets in 2025: Peru, Ecuador, Türkiye, Japan, Romania, and the Netherlands.
• New specialized divisions were launched, including the Land and Ranch Division and the Sports and Entertainment Division, to support agents in niche markets.
• Technology investments continued with the launch of 'CRM of Choice' and 'LYVVE™', a global property search platform, enhancing agent tools and consumer experience.
• Net working capital improved by 28% to $105.167 million, indicating a stronger short-term liquidity position.
• The company maintains a strong cash position with $124.2 million in cash and cash equivalents.

Negatives

• Net loss from continuing operations increased by 35% to $22.714 million in 2025.
• Consolidated adjusted EBITDA decreased significantly by 56% to $33.172 million.
• Gross profit declined by 3% due to increased agent capping and lower agent fees.
• Operating income (loss) worsened by 13%, primarily due to increased legal expenses and accruals, and higher employee-related and technology costs.
• Real estate per transaction cost increased by 11.6% to $624, indicating rising operational expenses per transaction.
• Cash provided by operating activities decreased by 38% to $118.611 million, partly due to the antitrust litigation payment.
• Agent Net Promoter Score (aNPS) slightly decreased from 76 to 75, suggesting a minor dip in agent satisfaction.
• Other real estate transactions (leases, rentals, referrals) decreased, driven by changes in the rental market and a shift towards sales.
• The company faces significant legal liabilities, including a $34.0 million antitrust settlement and ongoing Canadian antitrust and derivative litigation, with uncertain outcomes.

Risks

• Business results are materially influenced by the strength of the U.S. residential real estate sector and overall economic conditions, including high interest rates, inflation, and consumer confidence.
• Monetary policies of the U.S. federal government and its agencies, particularly those impacting mortgage interest rates and buyer affordability, may have a material adverse impact.
• Fluctuations in housing inventory levels, whether limited supply or excessive supply, can negatively impact the business.
• Material decreases in the average brokerage commission rate, due to regulation, litigation (e.g., NAR settlement), or competitive models, could materially adversely affect financial results.
• The introduction and integration of emerging technologies, including artificial intelligence, presents various operational, compliance, and reputational risks.
• Operating results are subject to seasonality and vary significantly among quarters, making meaningful comparisons difficult.
• Climate-related physical impacts, regulatory changes, and disclosure obligations could increase costs, reduce transaction activity, and expose the company to liability or reputational harm.
• Inability to attract, retain, and incentivize qualified real estate professionals due to intense competition, industry/regulatory changes, or volatility in stock value.
• Loss of current executive officers or other key management could significantly harm the business.
• Security breaches, interruptions, delays, and failures in systems and operations could substantially harm the business and reputation.
• Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact reputation.
• The company may be unable to utilize a portion of its net operating loss or research tax credit carryforwards, which may adversely affect profitability.
• Changes in tax laws and regulations, including those related to homeownership incentives, may have a material adverse effect.
• Inability to effectively and efficiently manage growth in its business.
• Failure to successfully complete or integrate acquisitions or joint ventures.
• International operations are subject to risks not generally experienced by U.S. operations, such as foreign currency fluctuations, local laws, and political instability.
• Failure to accurately predict demand or growth of new products and services could have an adverse effect.
• The real estate market may be severely impacted by industry changes as a result of certain class action lawsuits, settlements, or government investigations.
• Negligence or willful misconduct of independent real estate professionals could materially and adversely affect the company's reputation and subject it to liability.
• Failure to grow in local markets or identify and pursue new business opportunities could harm long-term prospects and profitability.
• Changes to the business model may cause a disproportionate increase in expenses or reduce profit margins.
• Growth depends in part on the success of strategic relationships with third parties, including MLS access.
• Failure to maintain compliance with federal, state, county, and foreign governmental authorities' laws and regulations, or private associations and governing boards, could result in significant financial harm and loss of reputation.
• The revenue sharing plan, similar to network marketing, is subject to intense government scrutiny and regulation, and changes in law might adversely affect the business.
• The company may suffer significant financial harm if it does not comply with classification and compensation practices for independent contractors.
• The company may be blocked from or limited in providing its agent compensation plans in certain jurisdictions.
• Failure to protect the privacy and personal information of customers, agents, or employees may lead to legal claims, government action, and reputational damage.
• Entering into new business arrangements, joint ventures, or business lines may expose the company to additional regulatory and compliance risks.
• Significant ownership by Glenn Sanford and Penny L Sanford TTEE Gratitude 2022 Trust (25.7% and 16.5% respectively) can significantly influence actions that may be adverse to the interests of other stockholders.
• Stockholders may experience dilution in the future due to the company's ability to issue additional shares of common stock and its equity incentive plans.
• The price of the company's common stock is subject to volatility.
• Delaware law and the company's organizational documents may impede or discourage a takeover.

Future Outlook

The company believes it is positioned for growth with a strong agent base, an efficient cloud-based operating model, and low fixed costs, allowing it to adapt quickly to market changes. It expects to continue investing in technology, education, and affiliated services to support agent growth and adapt to an evolving real estate marketplace. The Board intends to continue paying quarterly dividends. Future capital requirements may necessitate additional equity or debt financing to support growth plans.

Management Comments

• The Company's strategic focus is the continued expansion of its real estate brokerage operations by delivering a differentiated value proposition to agents—centered on industry-leading economics, ownership opportunities, and access to tools and services that support long-term professional growth.
• Through disciplined investment in technology, education, and affiliated services, the Company seeks to provide a scalable platform where real estate professionals can grow their businesses and adapt to an evolving real estate marketplace.
• A core element of the Company's value proposition is its commitment to cooperation, transparency, and consumer-centric practices, which the Company views as essential to a healthy, open real estate marketplace and a key differentiator in attracting and retaining professional agents.
• Despite these challenges [market conditions], we believe the Company is positioned for growth with a strong base of agents, an efficient cloud-based operating model, and low fixed costs. This structure allows us to adapt quickly to market changes while supporting long-term productivity and retention.

Industry Context

StockSavvy.ai notes that eXp World Holdings operated in a challenging real estate market in 2025, characterized by flat U.S. home sales and modest price increases, largely influenced by high interest rates and affordability constraints. The broader industry is undergoing significant transformation due to the NAR settlement and ongoing antitrust scrutiny, which are reshaping agent compensation models and increasing compliance burdens. The company's strategic focus on international expansion and technology investments, particularly in AI, aligns with industry trends seeking efficiency and new growth avenues amidst these shifts.

Comparison to Industry Standards

• The company's cloud-based brokerage model is presented as a differentiator, allowing for rapid market entry and lower costs compared to traditional brick-and-mortar brokerages.
• The company's compensation and incentive programs, including revenue share and equity opportunities, are highlighted as highly compelling within the industry, aiming to attract and retain productive agents.
• The NAR settlement, which requires changes to cooperative compensation and buyer agreements, is a significant industry-wide event impacting all brokerages, including eXp, by potentially altering agent compensation structures and client engagement practices.
• The ongoing antitrust litigation, including the Hooper Action settlement and the Canadian lawsuit, reflects a broader legal challenge to business practices in the residential real estate sector, affecting major brokerages and potentially leading to further industry-wide adjustments.
• The mention of Compass, Inc.'s lawsuit against Zillow Group, Inc. for anti-competitive conduct, with allegations against other industry participants including eXp, underscores the heightened scrutiny on competitive practices across the real estate technology and brokerage landscape.

Management Changes

Corporate Governance

Legal Proceedings

• The company is a defendant in eight U.S. and one Canadian putative class action lawsuits alleging participation in a system that resulted in inflated buyer broker commissions in violation of antitrust laws.
• A $34.0 million settlement was reached in the U.S. antitrust lawsuit (Hooper Action), receiving preliminary court approval on May 23, 2025, with the first $17.0 million installment paid in Q2 2025. The company denies liability.
• The company is vigorously defending against the Canadian putative class action antitrust lawsuit (Kevin McFall v. Canadian Real Estate Association, et al.), with no accruals recorded as of December 31, 2025, and an inability to reasonably estimate possible loss.
• Certain current and former directors and officers are named as defendants in a derivative lawsuit (Los Angeles City Employees Retirement System, on behalf of eXp World Holdings, Inc. v. Glenn Sanford, et al.) alleging fiduciary duty breaches related to alleged sexual misconduct and improper compensation arrangements. The company is unable to reasonably estimate possible loss.
• The company is subject to various other legal proceedings and claims arising in the ordinary course of business, with outcomes inherently uncertain.

Stakeholder Impact

• Shareholders: Face increased net losses and reduced adjusted EBITDA, impacting investment returns. Potential for dilution from equity incentive plans. Benefit from continued quarterly dividends and share repurchase program. Significant ownership by Glenn Sanford and Penny L Sanford TTEE Gratitude 2022 Trust may influence corporate decisions.
• Agents/Brokers: Experience flat agent count, suggesting challenges in attraction/retention. Benefit from new specialized divisions, technology tools (CRM of Choice, LYVVE™), and the Co-Sponsor Program. Are directly impacted by industry-wide changes in compensation models due to antitrust settlements and regulatory scrutiny, potentially increasing compliance burdens and altering earning potential. Subject to strict policies and procedures, including those on independent contractor classification and revenue share manipulation.
• Customers: May benefit from enhanced technology platforms like LYVVE™ for property search and improved agent tools. Are subject to new disclosure requirements and potential changes in how buyer-broker compensation is handled, which could affect affordability and transaction processes.
• Employees: Affected by increased employee-related expenses and severance costs. Benefit from competitive compensation programs, including equity award opportunities. Management changes in key technology and brokerage roles aim to strengthen operational leadership.
• Creditors: The company has no bank debt but has capital maintenance agreements for SUCCESS Lending's revolving warehouse credit lines, limiting its liability to $2.0 million with JPMorgan Chase Bank and $1.25 million with Texas Capital Bank.

Next Steps

• Payment of the remaining $17.0 million antitrust settlement installment on or before the one-year anniversary of the initial payment (expected by Q2 2026).
• Continued vigorous defense against the Canadian putative class action antitrust lawsuit.
• Continued defense against the derivative lawsuit.
• Continued investment in technology platform and agent-facing tools.
• Continued expansion into new international markets.
• Board intends to continue paying quarterly dividends.
• May seek additional funding through equity or debt financing to support future growth plans.

Key Dates

Recommendation

The company's financial performance in 2025, marked by increased net losses and a significant drop in adjusted EBITDA, is concerning. While strategic initiatives like international expansion and technology investments show potential, the flat agent count and substantial ongoing legal liabilities, including a $34.0 million antitrust settlement and other unresolved lawsuits, create considerable uncertainty. A 'Hold' recommendation is appropriate as the company navigates these significant headwinds, balancing growth potential against immediate financial and regulatory challenges.

Keywords

Real Estate Brokerage, Cloud-based Real Estate, Agent Attraction, Revenue Share Plan, Antitrust Litigation, SEC Filing, 10-K, Financial Performance, Real Estate Market, Agent Compensation, Technology Platform, International Expansion, Cybersecurity, Corporate Governance, EXPI