Segment Information

6 Months Ended

Jun. 30, 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.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Continuing franchise fees	$	29,387	$	31,619	$	58,934	$	62,739
Annual dues		8,587		9,016		17,205		17,936
Broker fees		14,321		19,317		25,213		34,402
Franchise sales and other revenue		5,264		5,824		16,837		15,436
Total Real Estate		57,559		65,776		118,189		130,513
Continuing franchise fees		2,714		2,509		5,243		4,888
Franchise sales and other revenue		902		606		1,561		1,255
Total Mortgage		3,616		3,115		6,804		6,143
Marketing Funds fees		21,077		22,909		42,419		45,760
Other		195		372		436		760
Total revenue	$	82,447	$	92,172	$	167,848	$	183,176

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Adjusted EBITDA: Real Estate	$	28,721	$	36,331	$	51,413	$	67,010
Adjusted EBITDA: Mortgage		(1,457)		(1,164)		(4,054)		(3,337)
Adjusted EBITDA: Other		(620)		(36)		(795)		(62)
Adjusted EBITDA: Consolidated		26,644		35,131		46,564		63,611
Impairment charge - leased assets (a)		—		—		—		(3,735)
Loss on lease termination (b)		—		(2,460)		—		(2,460)
Equity-based compensation expense		(4,708)		(4,535)		(9,159)		(10,172)
Acquisition-related expense (c)		(64)		(328)		(101)		(1,585)
Fair value adjustments to contingent consideration (d)		95		(1,710)		99		(1,995)
Restructuring charges		72		—		33		—
Other		(666)		(236)		(1,076)		(1,035)
Interest income		1,141		159		2,145		178
Interest expense		(8,840)		(4,032)		(17,085)		(7,683)
Depreciation and amortization		(8,008)		(9,113)		(16,041)		(18,098)
Income (loss) before provision for income taxes	$	5,666	$	12,876	$	5,379	$	17,026

(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) During the second quarter of 2022, a 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 acquisition activities and integration of acquired companies.

(d) 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.