Segment Information

3 Months Ended

Mar. 31, 2021

Segment Information

Segment Information

13. Segment Information

The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”. Mortgage does not meet the quantitative significance test; however, management has chosen to report results for the segment as it believes it will be a key driver of future success for Holdings. 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 the Company’s 2020 Annual Report on Form 10-K.

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The following table presents revenue from external customers by segment (in thousands):

	Three Months Ended March 31,
	2021		2020
Continuing franchise fees	$	23,609	$	22,877
Annual dues		8,672		8,921
Broker fees		11,953		9,444
Franchise sales and other revenue		6,920		8,663
Total Real Estate		51,154		49,905
Continuing franchise fees		1,765		1,266
Franchise sales and other revenue		558		192
Total Mortgage		2,323		1,458
Marketing Funds fees		18,145		17,522
Other		673		1,387
Total revenue	$	72,295	$	70,272

The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes (in thousands):

	Three Months Ended March 31,
	2021		2020
Adjusted EBITDA: Real Estate	$	24,420	$	20,731
Adjusted EBITDA: Mortgage		(1,150)		(578)
Adjusted EBITDA: Other		(110)		(614)
Adjusted EBITDA: Consolidated		23,160		19,539
Gain (loss) on sale or disposition of assets, net		11		11
Equity-based compensation expense		(12,054)		(2,186)
Acquisition-related expense (a)		(943)		(566)
Gain on reduction in tax receivable agreement liability		—		500
Fair value adjustments to contingent consideration (b)		280		505
Interest income		163		269
Interest expense		(2,098)		(2,682)
Depreciation and amortization		(6,937)		(6,310)
Income before provision for income taxes	$	1,582	$	9,080

(a) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.

(b) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 9, Fair Value Measurements for additional information.