| 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 | | Six Months Ended | | | June 30, | | June 30, | | | 2025 | | 2024 | | 2025 | | 2024 | Continuing franchise fees | | $ | 26,484 | | $ | 27,643 | | $ | 53,310 | | $ | 56,008 | Annual dues | | | 7,693 | | | 8,151 | | | 15,482 | | | 16,376 | Broker fees | | | 13,454 | | | 14,528 | | | 24,885 | | | 25,244 | Franchise sales and other revenue | | | 3,205 | | | 4,427 | | | 9,635 | | | 11,569 | Total Real Estate revenue | | | 50,836 | | | 54,749 | | | 103,312 | | | 109,197 | Continuing franchise fees | | | 2,508 | | | 2,697 | | | 5,033 | | | 5,417 | Franchise sales and other revenue | | | 1,133 | | | 980 | | | 1,735 | | | 1,893 | Total Mortgage revenue | | | 3,641 | | | 3,677 | | | 6,768 | | | 7,310 | Marketing Funds fees | | | 18,273 | | | 20,027 | | | 37,137 | | | 40,233 | Total reportable segments revenue | | $ | 72,750 | | $ | 78,453 | | $ | 147,217 | | $ | 156,740 |
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 | | Six Months Ended | | | June 30, | | June 30, | | | 2025 | | 2024 | | 2025 | | 2024 | Personnel | | $ | 18,243 | | $ | 18,813 | | $ | 39,812 | | $ | 40,505 | Professional fees | | | 3,152 | | | 2,424 | | | 5,532 | | | 5,160 | Lease costs | | | 1,581 | | | 1,510 | | | 3,104 | | | 3,283 | Events, travel and related costs | | | 1,133 | | | 1,958 | | | 7,934 | | | 10,010 | Other segment items (a) | | | 4,340 | | | 4,222 | | | 9,755 | | | 9,743 | Total Real Estate selling, operating and administrative expenses | | | 28,449 | | | 28,927 | | | 66,137 | | | 68,701 | Adjustments to arrive at segment expense in Adjusted EBITDA (b) | | | (5,414) | | | (3,949) | | | (11,586) | | | (9,478) | Total Real Estate expense in Adjusted EBITDA | | $ | 23,035 | | $ | 24,978 | | $ | 54,551 | | $ | 59,223 | | | | | | | | | | | | | | Personnel | | $ | 3,219 | | $ | 3,384 | | $ | 6,728 | | $ | 7,510 | Professional fees | | | 245 | | | 338 | | | 440 | | | 513 | Lease costs | | | 109 | | | 98 | | | 226 | | | 223 | Events, travel and related costs | | | 1,155 | | | 1,167 | | | 1,609 | | | 1,774 | Other segment items (a) | | | 696 | | | 923 | | | 1,746 | | | 1,772 | Total Mortgage selling, operating and administrative expenses | | | 5,424 | | | 5,910 | | | 10,749 | | | 11,792 | Adjustments to arrive at segment expense in Adjusted EBITDA (b) | | | (263) | | | (552) | | | (803) | | | (1,640) | Total Mortgage expense in Adjusted EBITDA | | $ | 5,161 | | $ | 5,358 | | $ | 9,946 | | $ | 10,152 | | | | | | | | | | | | | | Marketing Funds fees (c) | | $ | 18,273 | | $ | 20,027 | | $ | 37,137 | | $ | 40,233 | Other (d) | | $ | 15 | | $ | 14 | | $ | 30 | | $ | 63 |
| (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 June 30, 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 | | Six Months Ended | | | June 30, | | June 30, | | | 2025 | | 2024 | | 2025 | | 2024 | Adjusted EBITDA: Real Estate | | $ | 27,801 | | $ | 29,771 | | $ | 48,761 | | $ | 49,974 | Adjusted EBITDA: Mortgage | | | (1,520) | | | (1,681) | | | (3,178) | | | (2,842) | Adjusted EBITDA: Total reportable segments (a) | | | 26,281 | | | 28,090 | | | 45,583 | | | 47,132 | Adjusted EBITDA: Other (a) | | | (15) | | | (14) | | | (30) | | | (63) | Settlement and impairment charges (b) | | | 57 | | | — | | | (562) | | | — | Equity-based compensation expense | | | (2,968) | | | (3,902) | | | (9,314) | | | (9,825) | Fair value adjustments to contingent consideration (c) | | | 100 | | | (103) | | | (16) | | | (137) | Restructuring charges (d) | | | (2,840) | | | 9 | | | (2,737) | | | 41 | Other adjustments (e) | | | (12) | | | (775) | | | (82) | | | (1,839) | Interest income | | | 841 | | | 949 | | | 1,749 | | | 1,950 | Interest expense | | | (7,982) | | | (9,191) | | | (15,906) | | | (18,447) | Depreciation and amortization | | | (6,601) | | | (7,400) | | | (13,190) | | | (15,252) | Income (loss) before provision for income taxes | | $ | 6,861 | | $ | 7,663 | | $ | 5,495 | | $ | 3,560 |
| (a) | The Marketing Funds segment operates at no profit. In addition, as of June 30, 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) | During the second quarter of 2025, the Company restructured its support services intended to further enhance the overall customer experience. See Note 2, Summary of Significant Accounting Policies, for additional information. |
| (e) | Other adjustments are primarily made up of employee retention-related expenses from the Company's CEO transition in the prior year. |
The following table presents total assets of the Company’s segments (in thousands): | | | | | | | June 30, 2025 | | December 31, 2024 | Real Estate | $ | 503,842 | | $ | 508,081 | Marketing Funds | | 25,197 | | | 29,069 | Mortgage | | 45,758 | | | 44,433 | Other (a) | | — | | | 11 | Total assets | $ | 574,797 | | $ | 581,594 |
| (a) | As of June 30, 2025, Other is not considered a reportable segment. |
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