Segment Information

6 Months Ended

Jun. 30, 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.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Continuing franchise fees	$	31,619	$	25,039	$	62,739	$	48,648
Annual dues		9,016		8,869		17,936		17,541
Broker fees		19,317		17,453		34,402		29,406
Franchise sales and other revenue		5,824		4,930		15,436		11,850
Total Real Estate		65,776		56,291		130,513		107,445
Continuing franchise fees		2,509		1,916		4,888		3,681
Franchise sales and other revenue		606		494		1,255		1,052
Total Mortgage		3,115		2,410		6,143		4,733
Marketing Funds fees		22,909		18,042		45,760		36,187
Other		372		503		760		1,176
Total revenue	$	92,172	$	77,246	$	183,176	$	149,541

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Adjusted EBITDA: Real Estate	$	36,331	$	31,503	$	67,010	$	55,782
Adjusted EBITDA: Mortgage		(1,164)		(733)		(3,337)		(1,883)
Adjusted EBITDA: Other		(36)		(72)		(62)		(182)
Adjusted EBITDA: Consolidated		35,131		30,698		63,611		53,717
Impairment charge - leased assets (a)		—		—		(3,735)		—
Loss on lease termination (b)		(2,460)		—		(2,460)		—
Equity-based compensation expense		(4,535)		(6,253)		(10,172)		(18,307)
Acquisition-related expense (c)		(328)		(3,928)		(1,585)		(4,871)
Fair value adjustments to contingent consideration (d)		(1,710)		(290)		(1,995)		(10)
Other		(236)		(202)		(1,035)		(50)
Interest income		159		19		178		182
Interest expense		(4,032)		(2,124)		(7,683)		(4,222)
Depreciation and amortization		(9,113)		(6,846)		(18,098)		(13,654)
Income (loss) before provision for income taxes	$	12,876	$	11,074	$	17,026	$	12,785

(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) During the second quarter of 2022, the loss was recognized in connection with the termination of the booj office lease. See Note 2, Summary of Significant Accounting Policies for additional information.

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

(d) 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.