18. Segment Information

The Company operates under the following three segments: RE/MAX Franchising, Motto Franchising and booj. Due to quantitative insignificance, the Motto Franchising and booj operating segments do not meet the criteria of a reportable segment, and RE/MAX Franchising is the only reportable segment. The RE/MAX Franchising reportable segment comprises the operations of the Company’s owned and independent global franchising operations under the RE/MAX brand name and corporate-wide shared services expenses. Other comprises Motto Franchising and booj and does not include any charges related to shared services. Management evaluates the operating results of its segments based upon revenue and adjusted earnings before interest, the provision for income taxes, depreciation and amortization and other non-cash and non-recurring cash charges or other items (“Adjusted EBITDA”). The Company’s presentation of Adjusted EBITDA may not be comparable to similar measures used by other companies. Except for the adjustments identified below in arriving at Adjusted EBITDA, the accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies.

The following table presents revenue from external customers by segment for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	Year Ended December 31,
			2017		2016
	2018		As adjusted*		As adjusted*
Continuing franchise fees	$	98,828	$	93,232	$	81,194
Annual dues		35,894		33,767		32,653
Broker fees		46,871		43,801		37,209
Franchise sales and other revenue		22,911		22,357		24,470
Brokerage revenue		—		—		112
Total RE/MAX Franchising	$	204,504	$	193,157	$	175,638
Other		8,122		557		4
Total revenue	$	212,626	$	193,714	$	175,642

*See Note 3, Revenue for more information.

The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	Year Ended December 31,
			2017		2016
	2018		As adjusted*		As adjusted*
Adjusted EBITDA: RE/MAX Franchising	$	108,669	$	105,184	$	94,717
Adjusted EBITDA: Other		(4,353)		(3,039)		(928)
Adjusted EBITDA: Consolidated		104,316		102,145		93,789
Gain (loss) on sale or disposition of assets and sublease, net (a)		139		(4,260)		171
Loss on early extinguishment of debt		—		—		(2,893)
Equity-based compensation expense		(9,176)		(2,900)		(2,330)
Public offering related expenses		—		—		(193)
Acquisition-related expense (b)		(1,634)		(5,889)		(1,899)
Gain on reduction in TRA liability (c)		6,145		32,736		—
Special Committee investigation and remediation expense (d)		(2,862)		(2,634)		—
Fair value adjustments to contingent consideration (e)		1,289		(180)		(100)
Interest income		676		352		160
Interest expense		(12,051)		(9,996)		(8,596)
Depreciation and amortization		(20,678)		(20,512)		(16,094)
Income before provision for income taxes	$	66,164	$	88,862	$	62,015

*See Note 3, Revenue for more information.

(a)

Represents gain (loss) on the sale or disposition of assets as well as the gains (losses) on the sublease of a portion of our corporate headquarters office building.

(b)

Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies that are included in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.

(c)

Gain on reduction in tax receivable agreement liability is a result of the Tax Cuts and Jobs Act enacted in December 2017 and further clarified in 2018. See Note 12, Income Taxes for additional information.

(d)

Special Committee investigation and remediation expense relates to costs incurred in relation to the previously disclosed investigation by the special committee of independent directors of actions of certain members of our senior management and the implementation of the remediation plan.

(e)

Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 11, Fair Value Measurements for additional information.

The following table presents total assets as of December 31, 2018 and 2017 of the Company’s reportable segments (in thousands):


	As of December 31,
			2017
	2018		As adjusted*
Total RE/MAX Franchising	$	405,584	$	392,797
Other		21,256		20,038
Total	$	426,840	$	412,835

*See Note 3, Revenue for more information.

The following table presents long-lived assets, net of accumulated depreciation disaggregated by geographical area as of December 31, 2018 and 2017 (in thousands):


	As of December 31,
			2017
	2018		As adjusted*
U.S.	$	4,342	$	2,842
Global		48		63
Total	$	4,390	$	2,905

*See Note 3, Revenue for more information.