Segment Information

3 Months Ended

Mar. 31, 2023

Segment Information

Segment Information

12. 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 2022 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,
	2023		2022
Continuing franchise fees	$	29,547	$	31,120
Annual dues		8,618		8,920
Broker fees		10,892		15,085
Franchise sales and other revenue		11,573		9,612
Total Real Estate		60,630		64,737
Continuing franchise fees		2,529		2,379
Franchise sales and other revenue		659		649
Total Mortgage		3,188		3,028
Marketing Funds fees		21,342		22,851
Other		241		388
Total revenue	$	85,401	$	91,004

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

	Three Months Ended
	March 31,
	2023		2022
Adjusted EBITDA: Real Estate	$	22,692	$	30,116
Adjusted EBITDA: Mortgage		(2,597)		(2,173)
Adjusted EBITDA: Other		(175)		(26)
Adjusted EBITDA: Consolidated		19,920		27,917
Impairment charge - leased assets (a)		—		(3,735)
Equity-based compensation expense		(4,451)		(5,637)
Acquisition-related expense (b)		(37)		(1,257)
Fair value adjustments to contingent consideration (c)		4		(285)
Restructuring charges		(39)		—
Other		(410)		(236)
Interest income		1,004		19
Interest expense		(8,245)		(3,651)
Depreciation and amortization		(8,033)		(8,985)
Income (loss) before provision for income taxes	$	(287)	$	4,150

(a) Represents the impairment recognized on a portion of the Company’s corporate headquarters office building in the prior year. 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 acquisition activities and integration of acquired companies.

(c) Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 8, Fair Value Measurements for additional information.