Segment Information

3 Months Ended

Mar. 31, 2024

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 2023 Annual Report on Form 10-K.

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

	Three Months Ended
	March 31,
	2024		2023
Continuing franchise fees	$	28,365	$	29,547
Annual dues		8,225		8,618
Broker fees		10,716		10,892
Franchise sales and other revenue		7,142		11,573
Total Real Estate		54,448		60,630
Continuing franchise fees		2,720		2,529
Franchise sales and other revenue		913		659
Total Mortgage		3,633		3,188
Marketing Funds fees		20,206		21,342
Other		—		241
Total revenue	$	78,287	$	85,401

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,
	2024		2023
Adjusted EBITDA: Real Estate	$	20,203	$	22,692
Adjusted EBITDA: Mortgage		(1,161)		(2,597)
Adjusted EBITDA: Other		(49)		(175)
Adjusted EBITDA: Consolidated		18,993		19,920
Equity-based compensation expense		(5,923)		(4,451)
Acquisition-related expense (a)		—		(37)
Fair value adjustments to contingent consideration (b)		(34)		4
Restructuring charges (c)		32		(39)
Other (d)		(1,064)		(410)
Interest income		1,001		1,004
Interest expense		(9,256)		(8,245)
Depreciation and amortization		(7,852)		(8,033)
Income (loss) before provision for income taxes	$	(4,103)	$	(287)

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

(b) 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.

(c) 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. See Note 2, Summary of Significant Accounting Policies for additional information.

(d) Other is primarily made up of employee retention related expenses from the Company's CEO transition.