Segment Information

9 Months Ended

Sep. 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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Continuing franchise fees	$	29,040	$	30,682	$	87,974	$	93,421
Annual dues		8,456		8,911		25,661		26,847
Broker fees		14,255		16,596		39,468		50,998
Franchise sales and other revenue		4,812		6,466		21,649		21,902
Total Real Estate		56,563		62,655		174,752		193,168
Continuing franchise fees		2,794		2,628		8,037		7,516
Franchise sales and other revenue		846		566		2,407		1,821
Total Mortgage		3,640		3,194		10,444		9,337
Marketing Funds fees		20,853		22,736		63,272		68,496
Other		167		358		603		1,118
Total revenue	$	81,223	$	88,943	$	249,071	$	272,119

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Adjusted EBITDA: Real Estate	$	28,400	$	32,894	$	79,813	$	99,904
Adjusted EBITDA: Mortgage		(1,486)		(1,270)		(5,540)		(4,607)
Adjusted EBITDA: Other		(166)		(141)		(961)		(203)
Adjusted EBITDA: Consolidated		26,748		31,483		73,312		95,094
Settlement charge (a)		(55,000)		—		(55,000)		—
Impairment charge - leased assets (b)		—		(2,513)		—		(6,248)
Loss on lease termination (c)		—		—		—		(2,460)
Equity-based compensation expense		(4,891)		(7,834)		(14,050)		(18,006)
Acquisition-related expense (d)		(59)		(412)		(160)		(1,997)
Fair value adjustments to contingent consideration (e)		280		692		379		(1,303)
Restructuring charges (f)		(4,278)		(8,092)		(4,245)		(8,092)
Gain on reduction in tax receivable agreement liability (g)		24,917		—		24,917		—
Other		(395)		308		(1,471)		(727)
Interest income		1,173		497		3,318		675
Interest expense		(9,292)		(5,729)		(26,377)		(13,412)
Depreciation and amortization		(8,195)		(8,757)		(24,236)		(26,855)
Income (loss) before provision for income taxes	$	(28,992)	$	(357)	$	(23,613)	$	16,669

(a) Represents the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information.

(b) 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.

(c) 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.

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

(e) 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.

(f) During the third quarter of 2023, the Company announced a reduction in force and reorganization intended to streamline the Company’s operations and yield cost savings over the long term and during the third quarter of 2022, the Company incurred expenses related to a restructuring associated with a shift in its technology offerings strategy. See Note 2, Summary of Significant Accounting Policies for additional information.

(g) Gain on reduction in tax receivable agreement liability is a result of a valuation allowance on deferred tax assets recorded during the third quarter of 2023. See Note 9, Income Taxes for additional information.