Segment Information

3 Months Ended

Mar. 31, 2025

Segment Information

Segment Information

12. Segment Information

The Company operates under the following three reportable segments: Real Estate, Mortgage, and Marketing Funds. 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. The Company presents all other business activities and operating segments that do not meet the quantitative significance tests for reportable segments under Other. The Company’s chief operating decision maker (“CODM”) evaluates operating results of its segments based upon forecast or budget operating results against actual operating results, including revenue, operating expenses 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 2024 Annual Report on Form 10-K.

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

	Three Months Ended
	March 31,
	2025		2024
Continuing franchise fees	$	26,826	$	28,365
Annual dues		7,789		8,225
Broker fees		11,431		10,716
Franchise sales and other revenue		6,430		7,142
Total Real Estate revenue		52,476		54,448
Continuing franchise fees		2,525		2,720
Franchise sales and other revenue		602		913
Total Mortgage revenue		3,127		3,633
Marketing Funds fees		18,864		20,206
Total reportable segments revenue	$	74,467	$	78,287

The following table presents Selling, operating and administrative expenses by segment and includes a reconciliation of reportable segment expenses in Adjusted EBITDA (in thousands):

	Three Months Ended
	March 31,
	2025		2024
Personnel	$	21,569	$	21,692
Professional fees		2,380		2,736
Lease costs		1,523		1,773
Events, travel and related costs		6,801		8,052
Other segment items (a)		5,415		5,521
Total Real Estate selling, operating and administrative expenses		37,688		39,774
Adjustments to arrive at segment expense in Adjusted EBITDA (b)		(6,172)		(5,529)
Total Real Estate expense in Adjusted EBITDA	$	31,516	$	34,245
Personnel	$	3,509	$	4,126
Professional fees		195		175
Lease costs		117		125
Events, travel and related costs		454		607
Other segment items (a)		1,050		849
Total Mortgage selling, operating and administrative expenses		5,325		5,882
Adjustments to arrive at segment expense in Adjusted EBITDA (b)		(540)		(1,088)
Total Mortgage expense in Adjusted EBITDA	$	4,785	$	4,794
Marketing Funds fees (c)	$	18,864	$	20,206
Other (d)	$	15	$	49

(a) Other Segment items for each reportable segment include:

Real Estate – other technology expenses, bank fees, corporate administration expenses, commissions, insurance, property and other taxes, bad debt expense, and other miscellaneous expenses.

Mortgage – other technology expenses, commissions, bad debt expense, and other miscellaneous expenses.

(b) The adjustment reconciles segment Selling, operating and administrative expenses to total segment expense included in the measure of segment Adjusted EBITDA. These adjustments contain certain non-cash items and other non-recurring cash charges or other items.

(c) Marketing Funds fees are comprised of the Company’s marketing campaigns designed to build and maintain brand awareness and the development and operation of agent marketing technology. The Marketing Funds segment operates at no profit. See Note 2, Summary of Significant Accounting Policies, for additional information.

(d) As of March 31, 2025 Other is not considered a reportable segment and is included in total Selling, operating and administrative expenses. See Note 2, Summary of Significant Accounting Policies, for additional information.

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,
	2025		2024
Adjusted EBITDA: Real Estate	$	20,960	$	20,203
Adjusted EBITDA: Mortgage		(1,658)		(1,161)
Adjusted EBITDA: Total reportable segments (a)		19,302		19,042
Adjusted EBITDA: Other (a)		(15)		(49)
Settlement and impairment charges (b)		(619)		—
Equity-based compensation expense		(6,346)		(5,923)
Fair value adjustments to contingent consideration (c)		(116)		(34)
Other adjustments (d)		33		(1,032)
Interest income		908		1,001
Interest expense		(7,924)		(9,256)
Depreciation and amortization		(6,589)		(7,852)
Income (loss) before provision for income taxes	$	(1,366)	$	(4,103)

(a) The Marketing Funds segment operates at no profit. In addition, as of March 31, 2025, Other is not considered a reportable segment. See Note 2, Summary of Significant Accounting Policies, for additional information.

(b) Represents the settlement of an immaterial legal matter and an impairment recognized on an office lease in Canada in the first quarter of 2025. See Note 2, Summary of Significant Accounting Policies, for additional information on the Company’s leases.

(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.

(d) Other is primarily made up of employee retention-related expenses from the Company's CEO transition in the prior year and expenses related to the prior period organizational restructuring.

The following table presents total assets of the Company’s segments (in thousands):

	March 31, 2025		December 31, 2024
Real Estate	$	491,416	$	508,081
Marketing Funds		33,159		29,069
Mortgage		46,811		44,433
Other (a)		5		11
Total assets	$	571,391	$	581,594

(a) As of March 31, 2025, Other is not considered a reportable segment.