Segment Information

3 Months Ended

Mar. 31, 2022

Segment Information

Segment Information

13. Segment Information

The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and 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 2021 Annual Report on Form 10-K.

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

	Three Months Ended
	March 31,
	2022		2021
Continuing franchise fees	$	31,120	$	23,609
Annual dues		8,920		8,672
Broker fees		15,085		11,953
Franchise sales and other revenue		9,612		6,920
Total Real Estate		64,737		51,154
Continuing franchise fees		2,379		1,765
Franchise sales and other revenue		649		558
Total Mortgage		3,028		2,323
Marketing Funds fees		22,851		18,145
Other		388		673
Total revenue	$	91,004	$	72,295

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,
	2022		2021
Adjusted EBITDA: Real Estate	$	30,116	$	24,420
Adjusted EBITDA: Mortgage		(2,173)		(1,150)
Adjusted EBITDA: Other		(26)		(110)
Adjusted EBITDA: Consolidated		27,917		23,160
Impairment charge - leased assets (a)		(3,735)		—
Equity-based compensation expense		(5,637)		(12,054)
Acquisition-related expense (b)		(1,257)		(943)
Fair value adjustments to contingent consideration (c)		(285)		280
Other		(236)		11
Interest income		19		163
Interest expense		(3,651)		(2,098)
Depreciation and amortization		(8,985)		(6,808)
Income (loss) before provision for income taxes	$	4,150	$	1,711

(a) Represents the impairment recognized on a portion of the Company’s corporate headquarters office building. See Note 2, Summary of Significant Accounting Policies for additional information.

(b) Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with the evaluation, due diligence, execution and integration of acquisitions.

(c) 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.