QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
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24 |
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35 |
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36 |
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37 |
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37 |
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37 |
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37 |
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37 |
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37 |
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37 |
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March 31, 2021 (Unaudited) |
December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | |
$ | |
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Commissions receivable, net |
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Prepaid expenses |
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Marketable debt securities, available-for-sale |
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Advances and loans, net |
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Other assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Marketable debt securities, available-for-sale |
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Assets held in rabbi trust |
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Deferred tax assets, net |
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Goodwill and other intangible assets, net |
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Advances and loans, net |
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Other assets |
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Total assets |
$ | $ | ||||||
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable and other liabilities |
$ | $ | ||||||
Deferred compensation and commissions |
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Income tax payable |
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Operating lease liabilities |
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Accrued bonuses and other employee related expenses |
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Total current liabilities |
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Deferred compensation and commissions |
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Operating lease liabilities |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock, $ |
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Authorized shares – |
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Common stock, $ |
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Authorized shares – |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three Months Ended March 31, |
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2021 | 2020 | |||||||
Revenues: |
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Real estate brokerage commissions |
$ |
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$ |
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Financing fees |
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Other revenues |
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Total revenues |
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Operating expenses: |
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Cost of services |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Operating income |
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Other income (expense), net |
( |
) | ||||||
Interest expense |
( |
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) | ||||
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Income before provision for income taxes |
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Provision for income taxes |
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Net income |
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Other comprehensive (loss) income: |
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Marketable debt securities, available-for-sale: |
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Change in net unrealized – (losses) gains |
( |
) | ( |
) | ||||
Less: reclassification adjustment for net losses included in other income (expense), net |
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Net change, net of tax of $( |
( |
) | ( |
) | ||||
Foreign currency translation (loss) gain, net of tax of $ |
( |
) | ||||||
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Total other comprehensive (loss) income |
( |
) | ||||||
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Comprehensive income |
$ | $ | ||||||
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Earnings per share: |
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Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
Weighted average common shares outstanding: |
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Basic |
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Diluted |
Three Months Ended March 31, 2021 |
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Preferred Stock |
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Common Stock |
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Additional |
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Stock Notes Receivable |
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Accumulated Other |
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Shares |
Amount |
Shares |
Amount |
Paid-In Capital |
From Employees |
Retained Earnings |
Comprehensive Income (Loss) |
Total |
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Balance at December 31, 2020 |
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$ | $ | $ | $ | $ | $ | |
$ | |||||||||||||||||||||||||||
Net and comprehensive income (loss) |
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— | — | ( |
) | |||||||||||||||||||||||||||||||
Stock-based award activity |
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Stock-based compensation |
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Issuance of common stock for vesting of restricted stock units |
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Shares withheld related to net share settlement of stock-based awards |
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( |
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Balance as of March 31, 2021 |
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$ |
$ |
$ |
$ |
$ |
$ |
$ |
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Three Months Ended March 31, 2020 |
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Preferred Stock |
Common Stock |
Additional |
Stock Notes Receivable |
Accumulated Other |
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Shares |
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Amount |
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Shares |
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Amount |
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Paid-In Capital |
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From Employees |
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Retained Earnings |
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Comprehensive Income |
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Total |
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Balance at December 31, 2019 |
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$ | $ | $ | $ | ( |
) |
$ | $ | $ | ||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax |
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( |
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Balance at January 1, 2020, as adjusted |
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( |
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Net and comprehensive income |
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— | — | |||||||||||||||||||||||||||||||||
Stock-based award activity |
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Stock-based compensation |
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Issuance of common stock for vesting of restricted stock units |
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Shares withheld related to net share settlement of stock-based awards |
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( |
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Balance as of March 31, 2020 |
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$ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||
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Three Months Ended March 31, |
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2021 | 2020 | |||||||
Cash flows from operating activities |
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Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
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Amortization of right-of-use |
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Credit loss recovery |
( |
) | ( |
) | ||||
Stock-based compensation |
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Deferred taxes, net |
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Unrealized foreign exchange (gains) losses |
( |
) | ||||||
Net realized gains on marketable debt securities, available-for-sale |
( |
) | ( |
) | ||||
Other non-cash items |
( |
) | ||||||
Changes in operating assets and liabilities: |
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Commissions receivable |
||||||||
Prepaid expenses |
||||||||
Advances and loans |
( |
) | ( |
) | ||||
Other assets |
( |
) | ( |
) | ||||
Accounts payable and other liabilities |
( |
) | ||||||
Income tax payable |
||||||||
Accrued bonuses and other employee related expenses |
( |
) | ( |
) | ||||
Deferred compensation and commissions |
( |
) | ( |
) | ||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Other liabilities |
( |
) | ( |
) | ||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
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Cash flows from investing activities |
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Acquisition of businesses, net of cash received |
( |
) | ||||||
Purchases of marketable debt securities, available-for-sale |
( |
) | ( |
) | ||||
Proceeds from sales and maturities of marketable debt securities, available-for-sale |
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Issuances of employee notes receivable |
( |
) | ( |
) | ||||
Payments received on employee notes receivable |
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Purchase of property and equipment |
( |
) | ( |
) | ||||
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Net cash provided by investing activities |
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Cash flows from financing activities |
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Taxes paid related to net share settlement of stock-based awards |
( |
) | ( |
) | ||||
Principal payments on stock appreciation rights liability |
( |
) | ( |
) | ||||
Principal payments on deferred consideration |
( |
) | ||||||
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Net cash used in financing activities |
( |
) | ( |
) | ||||
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Effect of currency exchange rate changes on cash and cash equivalents |
( |
) | ||||||
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Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ | $ | ||||||
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Supplemental disclosures of cash flow information |
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Interest paid during the period |
$ | $ | ||||||
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Income taxes paid, net |
$ | $ | ||||||
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1. |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements |
2. |
Property and Equipment, Net |
March 31, 2021 |
December 31, 2020 |
|||||||
Computer software and hardware equipment |
$ | $ | ||||||
Furniture, fixtures and equipment |
||||||||
Less: accumulated depreciation and amortization |
( |
) | ( |
) | ||||
$ | $ | |||||||
3. |
Operating Leases |
Three Months Ended March 31, |
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2021 | 2020 | |||||||
Operating lease cost: |
||||||||
Lease cost (1) |
$ | $ | ||||||
Variable lease cost (2) |
||||||||
Sublease income |
( |
) | ( |
) | ||||
$ |
$ |
|||||||
(1) |
Includes short-term lease cost and ROU asset amortization. |
(2) |
Primarily relates to common area maintenance, property taxes, insurance, utilities and parking. |
March 31, 2021 | ||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total future minimum lease payments |
||||
Less imputed interest |
( |
) | ||
Present value of operating lease liabilities |
$ | |||
Three Months Ended March 31, |
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2021 | 2020 | |||||||
Operating cash flow information: |
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Cash paid for amounts included in the measurement of operating lease liabilities |
$ | $ | ||||||
Noncash activity: |
||||||||
ROU assets obtained in exchange for operating lease liabilities |
$ | $ | ||||||
Tenant improvements owned by lessor related to ROU assets (1) |
$ | $ |
(1) |
Reclassification from other assets current. |
March 31, 2021 | December 31, 2020 | |||||||
Weighted average remaining operating lease term |
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Weighted average discount rate |
% | % |
4. |
Investments in Marketable Debt Securities |
March 31, 2021 | ||||||||||||||||||||
Amortized Cost |
Allowance for Credit Losses |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
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Short-term investments: |
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U.S. treasuries |
$ | $ | $ | $ | $ | |||||||||||||||
U.S. government sponsored entities |
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Corporate debt |
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$ | $ | $ | $ | $ | ||||||||||||||||
Long-term investments: |
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U.S. treasuries |
$ | $ | $ | $ | $ | |||||||||||||||
U.S. government sponsored entities |
( |
) | ||||||||||||||||||
Corporate debt |
( |
) | ||||||||||||||||||
Asset-backed securities (“ABS”) and other |
( |
) | ||||||||||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
December 31, 2020 | ||||||||||||||||||||
Amortized Cost |
Allowance for Credit Losses |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
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Short-term investments: |
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U.S. treasuries |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||
U.S. government sponsored entities |
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Corporate debt |
( |
) | ||||||||||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
Long-term investments: |
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U.S. treasuries |
$ | $ | $ | $ | $ | |||||||||||||||
U.S. government sponsored entities |
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Corporate debt |
( |
) | ||||||||||||||||||
ABS and other |
( |
) | ||||||||||||||||||
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||
Less than 12 months | 12 months or |
Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
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U.S. government sponsored entities |
$ | $ | ( |
) | $ | $ | $ | $ | ( |
) | ||||||||||||||
Corporate debt |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
ABS and other |
( |
) | ( |
) | ||||||||||||||||||||
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
December 31, 2020 | ||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
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U.S. treasuries |
$ | $ | ( |
) | $ | $ | $ | $ | ( |
) | ||||||||||||||
Corporate debt |
( |
) | ( |
) | ||||||||||||||||||||
ABS and other |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
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$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||
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Three Months Ended March 31, |
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2021 | 2020 | |||||||
Gross realized gains (1) |
$ | $ | ||||||
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Gross realized losses (1) |
$ | $ | ||||||
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(1) |
Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income. The cost basis of securities sold were determined based on the specific identification method. |
March 31, 2021 | December 31, 2020 | |||||||||||||||
Amortized Cost |
Fair Value | Amortized Cost |
Fair Value | |||||||||||||
Due in one year or less |
$ | $ | $ | $ | ||||||||||||
Due after one year through five years |
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Due after five years through ten years |
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Due after ten years |
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$ | $ | $ | $ | |||||||||||||
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Weighted average contractual maturity |
5. |
Acquisitions, Goodwill and Other Intangible Assets |
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
Gross Carrying Amount |
Accumulated Amortization |
Net Book Value |
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Goodwill and intangible assets: |
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Goodwill |
$ | $ | — | $ | $ | $ | — | $ | ||||||||||||||||
Intangible assets (1) |
( |
) | ( |
) | ||||||||||||||||||||
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$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | |||||||||||||||
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(1) |
Total weighted average amortization period was |
Three Months Ended March 31, |
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2021 | 2020 | |||||||
Beginning balance |
$ | $ | ||||||
Additions from acquisitions (1) |
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Impairment losses |
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|||||
Ending balance |
$ | $ | ||||||
|
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|
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(1) |
The 2021 addition represents a measurement period adjustment. |
March 31, 2021 |
||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
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|
|||
$ | ||||
|
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6. |
Selected Balance Sheet Data |
Advances and Loans |
Commissions Receivable |
Total | ||||||||||
Beginning balance as of January 1, 2021 |
$ | $ | $ | |||||||||
Credit loss recovery |
( |
) | ( |
) | ( |
) | ||||||
Write-offs |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Ending balance as of March 31, 2021 |
$ | $ | $ | |||||||||
|
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|
|
|
|
Advances and Loans |
Commissions Receivable |
Total | ||||||||||
Beginning balance as of January 1, 2020 |
$ | $ | (1) |
$ | ||||||||
Credit loss recovery |
( |
) | ( |
) | ||||||||
Write-offs |
( |
) | ( |
) | ||||||||
|
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|
|||||||
Ending balance as of March 31, 2020 |
$ | $ | $ | |||||||||
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(1) |
Includes cumulative-effect adjustment related to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses. |
Current | Non-Current |
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March 31, 2021 |
December 31, 2020 |
March 31, 2021 |
December 31, 2020 |
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Mortgage servicing rights (“MSRs”), net of amortization |
$ | $ | $ | $ | ||||||||||||
Security deposits |
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Employee notes receivable (1) |
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Customer trust accounts and other |
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$ | $ | $ | $ | |||||||||||||
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(1) |
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $ |
Three Months Ended March 31, |
||||||||
2021 | 2020 | |||||||
Beginning balance |
$ | $ |
||||||
Additions |