Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 27, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36101 | |
Entity Registrant Name | RE/MAX Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0937145 | |
Entity Address Line One | 5075 South Syracuse Street | |
Entity Address City or Town | Denver | |
Entity Address State or Province | CO | |
Entity Address Postal Zip Code | 80237 | |
City Area Code | 303 | |
Local Phone Number | 770-5531 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value per share | |
Trading Symbol | RMAX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001581091 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 18,237,327 | |
Common Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 89,820 | $ 108,663 |
Restricted cash | 30,993 | 29,465 |
Accounts and notes receivable, current portion, net of allowances | 33,892 | 32,518 |
Income taxes receivable | 2,020 | 2,138 |
Other current assets | 15,828 | 20,178 |
Total current assets | 172,553 | 192,962 |
Property and equipment, net of accumulated depreciation | 8,419 | 9,793 |
Operating lease right of use assets | 24,229 | 25,825 |
Franchise agreements, net | 105,653 | 120,174 |
Other intangible assets, net | 20,506 | 25,763 |
Goodwill | 258,814 | 258,626 |
Deferred tax assets, net | 51,441 | |
Income taxes receivable, net of current portion | 754 | 754 |
Other assets, net of current portion | 6,943 | 9,896 |
Total assets | 597,871 | 695,234 |
Current liabilities: | ||
Accounts payable | 8,252 | 6,165 |
Accrued liabilities | 104,421 | 70,751 |
Income taxes payable | 483 | 1,658 |
Deferred revenue | 24,107 | 27,784 |
Current portion of debt | 4,600 | 4,600 |
Current portion of payable pursuant to tax receivable agreements | 1,642 | 1,642 |
Operating lease liabilities | 7,747 | 7,068 |
Total current liabilities | 151,252 | 119,668 |
Debt, net of current portion | 440,913 | 443,720 |
Payable pursuant to tax receivable agreements, net of current portion | 24,917 | |
Deferred tax liabilities, net | 12,386 | 13,113 |
Deferred revenue, net of current portion | 18,041 | 18,287 |
Operating lease liabilities, net of current portion | 33,472 | 37,989 |
Other liabilities, net of current portion | 5,082 | 5,838 |
Total liabilities | 661,146 | 663,532 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Additional paid-in capital | 546,184 | 535,566 |
Accumulated deficit | (129,248) | (53,999) |
Accumulated other comprehensive income (deficit), net of tax | (129) | (395) |
Total stockholders' equity attributable to RE/MAX Holdings, Inc. | 416,809 | 481,174 |
Non-controlling interest | (480,084) | (449,472) |
Total stockholders' equity (deficit) | (63,275) | 31,702 |
Total liabilities and stockholders' equity (deficit) | 597,871 | 695,234 |
Common Class A | ||
Stockholders' equity (deficit): | ||
Common stock | 2 | 2 |
Common Class B | ||
Stockholders' equity (deficit): | ||
Common stock |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Common Class A | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 18,213,497 | 17,874,238 |
Common stock, shares outstanding | 18,213,497 | 17,874,238 |
Common Class B | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1 | 1 |
Common stock, shares outstanding | 1 | 1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue: | ||||
Total revenue | $ 81,223 | $ 88,943 | $ 249,071 | $ 272,119 |
Operating expenses: | ||||
Selling, operating and administrative expenses | 43,090 | 49,702 | 132,417 | 138,314 |
Marketing Funds expenses | 20,853 | 22,736 | 63,272 | 68,496 |
Depreciation and amortization | 8,195 | 8,757 | 24,236 | 26,855 |
Settlement and impairment charges | 55,000 | 2,513 | 55,000 | 8,708 |
Gain on reduction in tax receivable agreement liability | (24,917) | (24,917) | ||
Total operating expenses | 102,221 | 83,708 | 250,008 | 242,373 |
Operating income (loss) | (20,998) | 5,235 | (937) | 29,746 |
Other expenses, net: | ||||
Interest expense | (9,292) | (5,729) | (26,377) | (13,412) |
Interest income | 1,173 | 497 | 3,318 | 675 |
Foreign currency transaction gains (losses) | 125 | (360) | 383 | (340) |
Total other expenses, net | (7,994) | (5,592) | (22,676) | (13,077) |
Income (loss) before provision for income taxes | (28,992) | (357) | (23,613) | 16,669 |
Provision for income taxes | (53,680) | (553) | (56,494) | (4,359) |
Net income (loss) | (82,672) | (910) | (80,107) | 12,310 |
Less: net income (loss) attributable to non-controlling interest | (23,218) | (1,050) | (21,992) | 4,890 |
Net income (loss) attributable to RE/MAX Holdings, Inc. | $ (59,454) | $ 140 | $ (58,115) | $ 7,420 |
Common Class A | ||||
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock | ||||
Basic | $ (3.28) | $ 0.01 | $ (3.22) | $ 0.39 |
Diluted | $ (3.28) | $ 0.01 | $ (3.22) | $ 0.39 |
Weighted average shares of Class A common stock outstanding | ||||
Basic | 18,150,557 | 18,646,306 | 18,064,009 | 18,859,376 |
Diluted | 18,150,557 | 18,876,863 | 18,064,009 | 19,080,605 |
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 |
Continuing franchise fees | ||||
Revenue: | ||||
Total revenue | $ 31,834 | $ 33,310 | $ 96,011 | $ 100,937 |
Annual dues | ||||
Revenue: | ||||
Total revenue | 8,456 | 8,911 | 25,661 | 26,847 |
Broker fees | ||||
Revenue: | ||||
Total revenue | 14,255 | 16,596 | 39,468 | 50,998 |
Marketing Funds fees | ||||
Revenue: | ||||
Total revenue | 20,853 | 22,736 | 63,272 | 68,496 |
Franchise sales and other revenue | ||||
Revenue: | ||||
Total revenue | $ 5,825 | $ 7,390 | $ 24,659 | $ 24,841 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net income (loss) | $ (82,672) | $ (910) | $ (80,107) | $ 12,310 |
Change in cumulative translation adjustment | (1,015) | (2,238) | 313 | (2,823) |
Other comprehensive income (loss), net of tax | (1,015) | (2,238) | 313 | (2,823) |
Comprehensive income (loss) | (83,687) | (3,148) | (79,794) | 9,487 |
Less: Comprehensive income (loss) attributable to non-controlling interest | (23,601) | (2,102) | (21,945) | 3,594 |
Comprehensive income (loss) attributable to RE/MAX Holdings, Inc., net of tax | $ (60,086) | $ (1,046) | $ (57,849) | $ 5,893 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Common Class A Common Stock | Common Class A | Common Class B Common Stock | Common Class B | Additional paid-in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive income (loss), net of tax | Non-controlling interest | Total |
Beginning balance, Value at Dec. 31, 2021 | $ 2 | $ 515,443 | $ (7,821) | $ 650 | $ (439,207) | $ 69,067 | |||
Beginning balance, Shares at Dec. 31, 2021 | 18,806,194 | 1 | |||||||
Net income (loss) | 1,451 | 1,494 | 2,945 | ||||||
Distributions to non-controlling unitholders | (2,894) | (2,894) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 12,215 | (685) | 11,530 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 587,283 | ||||||||
Dividends to Class A common stockholders | (4,439) | (4,439) | |||||||
Repurchase and retirement of common shares, Value | (1,314) | (1,314) | |||||||
Repurchase and retirement of common shares, Shares | (45,885) | ||||||||
Change in accumulated other comprehensive income (loss) | 242 | 240 | 482 | ||||||
Shares withheld for taxes on share-based compensation, Value | (5,586) | (5,586) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (175,048) | ||||||||
Ending balance, Value at Mar. 31, 2022 | $ 2 | 522,072 | (12,808) | 892 | (440,367) | 69,791 | |||
Ending balance, Shares at Mar. 31, 2022 | 19,172,544 | 1 | |||||||
Beginning balance, Value at Dec. 31, 2021 | $ 2 | 515,443 | (7,821) | 650 | (439,207) | 69,067 | |||
Beginning balance, Shares at Dec. 31, 2021 | 18,806,194 | 1 | |||||||
Net income (loss) | 12,310 | ||||||||
Change in accumulated other comprehensive income (loss) | (2,823) | ||||||||
Ending balance, Value at Sep. 30, 2022 | $ 2 | 532,264 | (38,165) | (877) | (446,536) | 46,688 | |||
Ending balance, Shares at Sep. 30, 2022 | 18,390,142 | 1 | |||||||
Beginning balance, Value at Mar. 31, 2022 | $ 2 | 522,072 | (12,808) | 892 | (440,367) | 69,791 | |||
Beginning balance, Shares at Mar. 31, 2022 | 19,172,544 | 1 | |||||||
Net income (loss) | 5,829 | 4,446 | 10,275 | ||||||
Distributions to non-controlling unitholders | (4,529) | (4,529) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 4,123 | (7) | 4,116 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 39,002 | ||||||||
Dividends to Class A common stockholders | (4,420) | (4,420) | |||||||
Repurchase and retirement of common shares, Value | (10,552) | (10,552) | |||||||
Repurchase and retirement of common shares, Shares | (441,311) | ||||||||
Change in accumulated other comprehensive income (loss) | (583) | (484) | (1,067) | ||||||
Shares withheld for taxes on share-based compensation, Value | (73) | (73) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (16,400) | ||||||||
Ending balance, Value at Jun. 30, 2022 | $ 2 | 526,122 | (21,958) | 309 | (440,934) | 63,541 | |||
Ending balance, Shares at Jun. 30, 2022 | 18,753,835 | 1 | |||||||
Net income (loss) | 140 | (1,050) | (910) | ||||||
Distributions to non-controlling unitholders | (3,500) | (3,500) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 6,839 | (96) | 6,743 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 172,522 | ||||||||
Dividends to Class A common stockholders | (4,322) | (4,322) | |||||||
Repurchase and retirement of common shares, Value | (11,929) | (11,929) | |||||||
Repurchase and retirement of common shares, Shares | (507,980) | ||||||||
Change in accumulated other comprehensive income (loss) | (1,186) | (1,052) | (2,238) | ||||||
Shares withheld for taxes on share-based compensation, Value | (697) | (697) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (28,235) | ||||||||
Ending balance, Value at Sep. 30, 2022 | $ 2 | 532,264 | (38,165) | (877) | (446,536) | 46,688 | |||
Ending balance, Shares at Sep. 30, 2022 | 18,390,142 | 1 | |||||||
Beginning balance, Value at Dec. 31, 2022 | $ 2 | 535,566 | (53,999) | (395) | (449,472) | 31,702 | |||
Beginning balance, Shares at Dec. 31, 2022 | 17,874,238 | 17,874,238 | 1 | 1 | |||||
Net income (loss) | (671) | (8) | (679) | ||||||
Distributions to non-controlling unitholders | (2,889) | (2,889) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 6,635 | (660) | 5,975 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 593,463 | ||||||||
Dividends to Class A common stockholders | (4,164) | (4,164) | |||||||
Repurchase and retirement of common shares, Value | (3,408) | (3,408) | |||||||
Repurchase and retirement of common shares, Shares | (160,405) | ||||||||
Change in accumulated other comprehensive income (loss) | 82 | 17 | 99 | ||||||
Shares withheld for taxes on share-based compensation, Value | (3,458) | (3,458) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (185,349) | ||||||||
Other, Value | (235) | (235) | |||||||
Ending balance, Value at Mar. 31, 2023 | $ 2 | 538,743 | (63,137) | (313) | (452,352) | 22,943 | |||
Ending balance, Shares at Mar. 31, 2023 | 18,121,947 | 1 | |||||||
Beginning balance, Value at Dec. 31, 2022 | $ 2 | 535,566 | (53,999) | (395) | (449,472) | 31,702 | |||
Beginning balance, Shares at Dec. 31, 2022 | 17,874,238 | 17,874,238 | 1 | 1 | |||||
Net income (loss) | (80,107) | ||||||||
Repurchase and retirement of common shares, Value | $ (3,400) | ||||||||
Repurchase and retirement of common shares, Shares | (160,405) | ||||||||
Change in accumulated other comprehensive income (loss) | 313 | ||||||||
Ending balance, Value at Sep. 30, 2023 | $ 2 | 546,184 | (129,248) | (129) | (480,084) | (63,275) | |||
Ending balance, Shares at Sep. 30, 2023 | 18,213,497 | 18,213,497 | 1 | 1 | |||||
Beginning balance, Value at Mar. 31, 2023 | $ 2 | 538,743 | (63,137) | (313) | (452,352) | 22,943 | |||
Beginning balance, Shares at Mar. 31, 2023 | 18,121,947 | 1 | |||||||
Net income (loss) | 2,010 | 1,234 | 3,244 | ||||||
Distributions to non-controlling unitholders | (2,889) | (2,889) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 3,688 | (3) | 3,685 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 5,682 | ||||||||
Dividends to Class A common stockholders | (4,168) | (4,168) | |||||||
Change in accumulated other comprehensive income (loss) | 816 | 413 | 1,229 | ||||||
Shares withheld for taxes on share-based compensation, Value | (19) | (19) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (1,013) | ||||||||
Ending balance, Value at Jun. 30, 2023 | $ 2 | 542,412 | (65,298) | 503 | (453,594) | 24,025 | |||
Ending balance, Shares at Jun. 30, 2023 | 18,126,616 | 1 | |||||||
Net income (loss) | (59,454) | (23,218) | (82,672) | ||||||
Distributions to non-controlling unitholders | (2,889) | (2,889) | |||||||
Equity-based compensation expense and dividend equivalents, Value | 4,309 | (327) | 3,982 | ||||||
Equity-based compensation expense and dividend equivalents, Shares | 121,311 | ||||||||
Dividends to Class A common stockholders | (4,170) | (4,170) | |||||||
Change in accumulated other comprehensive income (loss) | (632) | (383) | (1,015) | ||||||
Shares withheld for taxes on share-based compensation, Value | (537) | (537) | |||||||
Shares withheld for taxes on share-based compensation, Shares | (34,430) | ||||||||
Other, Value | 1 | 1 | |||||||
Ending balance, Value at Sep. 30, 2023 | $ 2 | $ 546,184 | $ (129,248) | $ (129) | $ (480,084) | $ (63,275) | |||
Ending balance, Shares at Sep. 30, 2023 | 18,213,497 | 18,213,497 | 1 | 1 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (80,107) | $ 12,310 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 24,236 | 26,855 |
Equity-based compensation expense | 14,050 | 18,006 |
Bad debt expense | 4,903 | 1,256 |
Deferred income tax expense (benefit) | 51,799 | (41) |
Fair value adjustments to contingent consideration | (379) | 1,303 |
Settlement charge | 55,000 | |
Impairment charge - leased assets | 6,248 | |
Loss on sale or disposition of assets, net | 386 | 1,314 |
Non-cash lease benefit | (2,242) | (1,539) |
Non-cash loss on lease termination | 1,175 | |
Non-cash debt charges | 644 | 644 |
Gain on reduction in tax receivable agreement liability | (24,917) | |
Other, net | (73) | 70 |
Changes in operating assets and liabilities | (23,675) | (6,215) |
Net cash provided by operating activities | 19,625 | 61,386 |
Cash flows from investing activities: | ||
Purchases of property, equipment and capitalization of software | (4,249) | (7,950) |
Other | 679 | (1,915) |
Net cash used in investing activities | (3,570) | (9,865) |
Cash flows from financing activities: | ||
Payments on debt | (3,450) | (3,450) |
Distributions paid to non-controlling unitholders | (8,667) | (10,923) |
Dividends and dividend equivalents paid to Class A common stockholders | (13,492) | (13,969) |
Payments related to tax withholding for share-based compensation | (4,014) | (6,356) |
Common shares repurchased | (3,408) | (23,795) |
Payment of contingent consideration | (360) | (120) |
Net cash used in financing activities | (33,391) | (58,613) |
Effect of exchange rate changes on cash | 21 | (2,009) |
Net decrease in cash, cash equivalents and restricted cash | (17,315) | (9,101) |
Cash, cash equivalents and restricted cash, beginning of period | 138,128 | 158,399 |
Cash, cash equivalents and restricted cash, end of period | $ 120,813 | $ 149,298 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2023 | |
Business and Organization | |
Business and Organization | 1. Business and Organization RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC (“RMCO”), are referred to hereinafter as the “Company.” The Company is one of the world’s leading franchisors in the real estate industry, franchising real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages within the United States (“U.S.”) under the Motto Mortgage brand (“Motto”). The Company also sells ancillary products and services, including loan processing services, to its Motto network through the wemlo brand. The Company focuses on enabling its networks’ success by providing powerful technology, quality education, and valuable marketing to build the strength of the RE/MAX and Motto brands. RE/MAX and Motto are 100% franchised—the Company does not own any of the brokerages that operate under these brands. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying Condensed Consolidated Balance Sheet at December 31, 2022, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and include the accounts of Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2023 and the results of its operations and comprehensive income (loss), cash flows and changes in its stockholders’ equity (deficit) for the three and nine months ended September 30, 2023 and 2022. Interim results may not be indicative of full-year performance. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Segment Reporting The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Due to quantitative insignificance, the “Other” operating segment is comprised of operations which do not meet the criteria of a reportable segment. Revenue Recognition The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are: ● Continuing franchise fees, which are fixed contractual fees paid monthly by RE/MAX or Motto franchisees or Independent Region sub-franchisors based on the number of RE/MAX agents or Motto open offices. ● Annual dues, which are fees charged directly to RE/MAX agents. ● Broker fees, which are fees on real estate commissions when a RE/MAX agent assists a consumer with buying or selling a home. ● Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents or Motto open offices. ● Franchise sales and other revenue, which consists of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises and RE/MAX master franchise fees, as well as data services subscription revenue, preferred marketing arrangements, technology products and subscription revenue, events-related revenue from education and other programs and mortgage loan processing revenue. Deferred Revenue and Commissions Related to Franchise Sales Deferred revenue is primarily driven by Franchise sales and Annual dues, as discussed above, and is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets. Other deferred revenue is primarily related to events-related revenue. The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) September 30, 2023 Franchise sales $ 25,281 $ 6,517 $ (6,715) $ 25,083 Annual dues 14,164 25,320 (25,661) 13,823 Other 6,626 14,675 (18,059) 3,242 $ 46,071 $ 46,512 $ (50,435) $ 42,148 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $6.2 million and $13.0 million, respectively, for the nine months ended September 30, 2023. Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized September 30, 2023 Capitalized contract costs for commissions $ 3,974 $ 2,129 $ (1,848) $ 4,255 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 6,491 $ 7,332 $ — $ — $ — $ — $ — $ 13,823 Franchise sales 1,826 6,714 5,536 4,204 2,786 1,384 2,633 25,083 Total $ 8,317 $ 14,046 $ 5,536 $ 4,204 $ 2,786 $ 1,384 $ 2,633 $ 38,906 Disaggregated Revenue In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 U.S. Company-Owned Regions $ 35,504 $ 39,975 $ 105,440 $ 121,862 U.S. Independent Regions 1,668 1,819 4,896 5,397 Canada Company-Owned Regions 10,607 10,764 30,946 32,673 Canada Independent Regions 721 723 2,168 2,141 Global 3,251 2,908 9,653 9,193 Fee revenue (a) 51,751 56,189 153,103 171,266 Franchise sales and other revenue (b) 4,812 6,466 21,649 21,902 Total Real Estate 56,563 62,655 174,752 193,168 U.S. 15,638 17,186 48,043 52,386 Canada 4,956 5,201 14,440 15,202 Global 259 349 789 908 Total Marketing Funds 20,853 22,736 63,272 68,496 Mortgage (c) 3,640 3,194 10,444 9,337 Other (c) 167 358 603 1,118 Total $ 81,223 $ 88,943 $ 249,071 $ 272,119 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. Cash, Cash Equivalents and Restricted Cash The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): September 30, 2023 December 31, 2022 Cash and cash equivalents $ 89,820 $ 108,663 Restricted cash: Marketing Funds (a) 17,243 29,465 Settlement Fund (b) 13,750 — Total cash, cash equivalents and restricted cash $ 120,813 $ 138,128 (a) All cash held by the Marketing Funds is contractually restricted, pursuant to the applicable franchise agreements. (b) Represents the net amounts held in the Settlement Fund as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information. Services Provided to the Marketing Funds by Real Estate Real Estate charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) building and maintaining the remax.com and remax.ca websites and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology; accounting and legal. In 2022 and prior, the additional services provided were (d) agent marketing technology; including customer relationship management and competitive market analysis tools and (e) agent, office and team websites. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income (loss) of Holdings as the Marketing Funds have no reported net income. The Company started to transition to the kvCORE platform for agent marketing technology and agent, office, and team websites in the second half of 2022. The payment for these aforementioned services have since been paid for directly by the Marketing Funds, which reduces the charges Real Estate had historically charged the Marketing Funds when these services were provided by the Company (See Restructuring Charges Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Technology − operating $ 1,169 $ 3,526 $ 3,507 $ 11,269 Technology − capital (a) — (277) (203) 884 Marketing staff and administrative services 1,441 1,493 4,416 4,174 Total $ 2,610 $ 4,742 $ 7,720 $ 16,327 (a) During the first quarter of 2023 and the third quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million and $0.3 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds. Accounts and Notes Receivable As of September 30, 2023, and December 31, 2022, the Company had allowances against accounts and notes receivable of $11.4 million and $9.1 million, respectively. Property and Equipment As of September 30, 2023, and December 31, 2022, the Company had accumulated depreciation of $12.9 million and $10.9 million, respectively. Leases The Company leases corporate offices, a distribution center, billboards and certain equipment. As all franchisees are independently owned and operated, there are no leases recognized for any offices used by the Company’s franchisees. All the Company’s material leases are classified as operating leases. The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases. During the first and third quarters of 2022, the Company subleased portions of its corporate headquarters. As a result, the Company performed impairment tests on the portions subleased. Based on a comparison of undiscounted cash flows to the right of use (“ROU”) asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company’s corporate headquarters and the sublease rates received. This resulted in impairment charges of $3.7 million for the first quarter of 2022 and $2.5 million for the third quarter of 2022, which reflect the excess of the ROU asset carrying value over its fair value. During the second quarter of 2022, the Company terminated its booj office lease, which is owned by an entity controlled by former employees of the Company. As a result, the Company wrote off an ROU asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease. The Company also recognized a loss on termination of $2.5 million, which included a lease termination payment of $1.3 million. Restructuring and Reduction in Force Charges During the third quarter of 2023, the Company announced a reduction in force and reorganization (the “Reorganization”) intended to streamline the Company’s operations and yield cost savings over the long term. The Reorganization reduced the Company’s overall workforce by approximately 7% and was substantially complete by September 30, 2023. As a result of the Reorganization, the Company incurred a pre-tax cash charge for one-time termination benefits of severance and related costs of $4.3 million and accelerated equity compensation expense of $0.5 million. See Note 6, Accrued Liabilities During the third quarter of 2022, the Company began incurring expenses related to a restructuring in its business and technology offerings with the phased rollout of the kvCORE platform, replacing the functionality previously provided by the booj platform. A significant amount of these costs are termination benefits related to workforce reductions including severance and related expenses that were incurred in the second half of 2022. See Note 6, Accrued Liabilities Severance and Retirement Plan On May 24, 2023, the Compensation Committee of the Board of Directors approved a Severance and Retirement Plan (the “Plan”). The Plan replaces the Severance Pay Benefit Plan adopted by the Company on December 4, 2018. The Plan provides benefits to eligible employees and executive officers of RE/MAX, LLC and its subsidiaries, in the event of (i) involuntary termination of their employment due to position elimination, reduction in force, or other circumstances that the employer determines should result in payment of benefits, or (ii) voluntary termination of employment due to retirement for employees who meet the retirement eligibility criteria in the Plan, subject in both cases to certain restrictions set forth in the Plan. In the case of involuntary termination, these benefits include salary continuation, a health benefits stipend, outplacement services and a possible pro-rated bonus. In the case of retirement, these benefits include modification of vesting of restricted stock awards (for employees who are eligible for restricted stock awards) and a possible pro-rated bonus. Foreign Currency Derivatives The Company is exposed to foreign currency transaction gains and losses related to certain foreign currency denominated asset and liability positions, with the Canadian dollar representing the most significant exposure primarily from an intercompany loan from a U.S. subsidiary to a Canadian subsidiary. The Company uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to a few months, to minimize its exposures related to foreign currency exchange rate fluctuations. None of these contracts are designated as accounting hedges as the underlying currency positions are revalued through “Foreign currency transaction gains (losses)” along with the related derivative contracts. The Company has a short-term $74.0 million Canadian dollar forward contract that matures in the fourth quarter of 2023 that net settles in U.S. dollars based on the prevailing spot rates at maturity. Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets (commissions related to franchise sales) and contract liabilities (deferred revenue) acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The impact to future acquisitions could be material depending on the significance of future acquisitions. There would be no impact to cash flows. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which contains temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The Company adopted this standard effective July 1, 2023, on a prospective basis, with an executed amendment of its Senior Secured Credit Facility Agreement. The Company’s benchmark rate was transitioned from LIBOR to Adjusted Term SOFR. The amendments of ASU 2020-04 did not have a significant impact on the Company’s consolidated financial statements and related disclosures. New Accounting Pronouncements Not Yet Adopted None. |
Non-controlling Interest
Non-controlling Interest | 9 Months Ended |
Sep. 30, 2023 | |
Non-controlling Interest. | |
Non-controlling Interest | 3. Non-controlling Interest Holdings is the sole managing member of RMCO and operates and controls all the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows: September 30, 2023 December 31, 2022 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 40.8 % 12,559,600 41.3 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 18,213,497 59.2 % 17,874,238 58.7 % Total common units in RMCO 30,773,097 100.0 % 30,433,838 100.0 % The weighted average ownership (“WAO”) percentages for the applicable reporting periods are used to calculate the “Net income (loss) attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income (loss) before provision for income taxes” to “Net income (loss) attributable to RE/MAX Holdings, Inc.” and “Net Income (loss) attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income (Loss) for the periods indicated is detailed as follows (in thousands, except percentages): Three Months Ended September 30, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 59.1 % 40.9 % 100.0 % 59.8 % 40.2 % 100.0 % Income (loss) before provision for income taxes (a) $ (6,866) $ (22,126) $ (28,992) $ (219) $ (138) $ (357) (Provision) / benefit for income taxes (b) (52,588) (1,092) (53,680) 359 (912) (553) Net income (loss) $ (59,454) $ (23,218) $ (82,672) $ 140 $ (1,050) $ (910) Nine Months Ended September 30, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 59.0 % 41.0 % 100.0 % 60.0 % 40.0 % 100.0 % Income (loss) before provision for income taxes (a) $ (3,694) $ (19,919) $ (23,613) $ 10,016 $ 6,653 $ 16,669 (Provision) / benefit for income taxes (b) (54,421) (2,073) (56,494) (2,596) (1,763) (4,359) Net income (loss) $ (58,115) $ (21,992) $ (80,107) $ 7,420 $ 4,890 $ 12,310 (a) The WAO percentage of RMCO differs from the allocation of income (loss) before provision for income taxes between Holdings and the non-controlling interest due to certain items recorded at Holdings. (b) The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the flow-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, including taxes in certain foreign jurisdictions. Distributions and Other Payments to Non-controlling Unitholders Under the terms of RMCO’s limited liability company operating agreement, RMCO makes cash distributions to non-controlling unitholders on a pro-rata basis. The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands): Nine Months Ended September 30, 2023 2022 Tax distributions $ — $ 2,256 Dividend distributions 8,667 8,667 Total distributions to non-controlling unitholders $ 8,667 $ 10,923 |
Earnings (Loss) Per Share, Divi
Earnings (Loss) Per Share, Dividends and Repurchases | 9 Months Ended |
Sep. 30, 2023 | |
Earnings (Loss) Per Share, Dividends and Repurchases | |
Earnings (Loss) Per Share, Dividends and Repurchases | 4. Earnings (Loss) Per Share, Dividends and Repurchases Earnings (Loss) Per Share The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings (loss) per share (“EPS”) calculations (in thousands, except shares and per share information): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Numerator Net income (loss) attributable to RE/MAX Holdings, Inc. $ (59,454) $ 140 $ (58,115) $ 7,420 Denominator for basic net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 18,150,557 18,646,306 18,064,009 18,859,376 Denominator for diluted net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 18,150,557 18,646,306 18,064,009 18,859,376 Add dilutive effect of the following: Restricted stock (a) — 230,557 — 221,229 Weighted average shares of Class A common stock outstanding, diluted 18,150,557 18,876,863 18,064,009 19,080,605 Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock Basic $ (3.28) $ 0.01 $ (3.22) $ 0.39 Diluted $ (3.28) $ 0.01 $ (3.22) $ 0.39 Outstanding Class B common stock does not share in the earnings of Holdings and is therefore not a participating security. Accordingly, basic and diluted net income (loss) per share of Class B common stock has not been presented. Dividends Dividends declared and paid during each quarter ended per share on all outstanding shares of Class A common stock were as follows (in thousands, except per share information): Nine Months Ended September 30, 2023 2022 Quarter end declared Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) March 31 March 22, 2023 $ 0.23 $ 4,164 $ 2,889 March 16, 2022 $ 0.23 $ 4,439 $ 2,889 June 30 May 31, 2023 0.23 4,168 2,889 May 25, 2022 0.23 4,420 2,889 September 30 August 29, 2023 0.23 4,169 2,889 August 30, 2022 0.23 4,322 2,889 $ 0.69 $ 12,501 $ 8,667 $ 0.69 $ 13,181 $ 8,667 Subsequent to September 30, 2023, the Company’s Board of Directors decided to suspend the Company’s quarterly dividend. In light of the recent litigation settlement and ongoing challenging housing and mortgage market conditions, the Company’s Board of Directors believes this action to preserve the Company’s capital is prudent. Share Repurchases and Retirement In January 2022, the Company’s Board of Directors authorized a common stock repurchase program of up to $100 million. During the nine months ended September 30, 2023, 160,405 shares of the Company’s Class A common stock were repurchased and retired for $3.4 million excluding commissions, at a weighted average cost of $21.24. As of September 30, 2023, $62.5 million remained available under the share repurchase program. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets and Goodwill | |
Intangible Assets and Goodwill | 5. Intangible Assets and Goodwill The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years): Weighted Average As of September 30, 2023 As of December 31, 2022 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.3 $ 224,574 $ (118,921) $ 105,653 $ 224,397 $ (104,223) $ 120,174 Other intangible assets: Software (a) 4.2 $ 51,580 $ (37,365) $ 14,215 $ 48,658 $ (32,198) $ 16,460 Trademarks 9.2 1,724 (1,377) 347 1,713 (1,272) 441 Non-compete agreements 4.3 12,969 (7,318) 5,651 12,953 (4,878) 8,075 Training materials — 2,400 (2,400) — 2,400 (2,080) 320 Other 7.0 870 (577) 293 870 (403) 467 Total other intangible assets 4.4 $ 69,543 $ (49,037) $ 20,506 $ 66,594 $ (40,831) $ 25,763 (a) As of September 30, 2023 and December 31, 2022, capitalized software development costs of $1.5 million and $4.6 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization. Amortization expense was $7.6 million and $8.3 million for the three months ended September 30, 2023 and 2022, respectively, and was $22.4 million and $25.1 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands): Remainder of 2023 $ 7,417 2024 25,917 2025 22,185 2026 15,535 2027 8,889 Thereafter 46,216 $ 126,159 The following table presents changes to goodwill by reportable segment (in thousands): Real Estate Mortgage Total Balance, January 1, 2023 $ 239,993 $ 18,633 $ 258,626 Effect of changes in foreign currency exchange rates 188 — 188 Balance, September 30, 2023 $ 240,181 $ 18,633 $ 258,814 As of September 30, 2023, there were no events or circumstances that would indicate impairment may have occurred at either reporting unit level. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities. | |
Accrued Liabilities | 6. Accrued Liabilities Accrued liabilities consist of the following (in thousands): September 30, 2023 December 31, 2022 Marketing Funds (a) $ 27,613 $ 47,670 Accrued payroll and related employee costs 13,844 14,419 Accrued taxes 1,609 2,025 Accrued professional fees 1,451 1,331 Settlement payable (b) 55,000 — Other 4,904 5,306 $ 104,421 $ 70,751 (a) Consists primarily of liabilities recognized to reflect the contractual restriction that all funds collected in the Marketing Funds must be spent for designated purposes. See Note 2, Summary of Significant Accounting Policies for additional information. (b) Represents the net settlement payable as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information. The following table presents a roll forward of the severance and related costs liability as related to the Reorganization and the strategic shift and restructure of its business, which is in “Accrued payroll and related employee costs” in the table above (in thousands): Balance, January 1, 2023 $ 3,631 Severance and other related expenses 4,246 Cash payments (3,674) Balance, September 30, 2023 (a) $ 4,203 (a) Includes $3.9 million relating to the Reorganization that occurred in the third quarter of 2023. The remaining liability balance is related to the strategic shift and restructure of its business that occurred in the third quarter of 2022 . |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Debt | 7. Debt Debt, net of current portion, consists of the following (in thousands): September 30, 2023 December 31, 2022 Senior Secured Credit Facility $ 449,650 $ 453,101 Less unamortized debt issuance costs (3,056) (3,532) Less unamortized debt discount costs (1,081) (1,249) Less current portion (4,600) (4,600) $ 440,913 $ 443,720 As of September 30, 2023, maturities of debt are as follows (in thousands): Remainder of 2023 $ 1,150 2024 4,600 2025 4,600 2026 4,600 2027 4,600 Thereafter 430,100 $ 449,650 Senior Secured Credit Facility On July 21, 2021, the Company amended and restated its Senior Secured Credit Facility to refinance its existing facility. The revised facility provides for a seven-year $460.0 million term loan facility which matures on July 21, 2028, and a $50.0 million revolving loan facility which must be repaid on July 21, 2026. The Senior Secured Credit Facility requires the Company to repay term loans at $1.2 million per quarter. The Company is also required to repay the term loans and reduce revolving commitments with (i) 100% of proceeds of any incurrence of additional debt not permitted by the Senior Secured Credit Facility, (ii) 100% of proceeds of asset sales and 100% of amounts recovered under insurance policies, subject to certain exceptions and a reinvestment right and (iii) 50% of Excess Cash Flow (or “ECF” as defined in the Senior Secured Credit Facility) at the end of the applicable fiscal year if RE/MAX, LLC’s Total Leverage Ratio (or “TLR” as defined in the Senior Secured Credit Facility) is in excess of 4.25:1. If the TLR as of the last day of such fiscal year is equal to or less than 4.25:1 but above 3.75:1, the repayment percentage is 25% of ECF and if the TLR as of the last day of such fiscal year is less than 3.75:1, no repayment from ECF is required. In addition, the Company is limited in the amount of restricted payments it can make as defined in the Senior Secured Credit Facility. These restricted payments include declaration or payment of dividends, repurchase of shares, or other distributions. In general, the Company can make unlimited restricted payments, so long as the TLR is below 3.50:1 (both before and after giving effect to such payments). As of September 30, 2023, our TLR was 7.00:1. Borrowings under the term loans and revolving loans accrue interest, at the Company’s option on (a) LIBOR, provided LIBOR shall be no less than 0.50% plus an applicable margin of 2.50% and, provided further that such rate shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “LIBOR Rate”) or (b) the greatest of (i) the prime rate as quoted by the Wall Street Journal, (ii) the NYFRB Rate (as defined in the Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Eurodollar Rate plus 1.00%, (such greatest rate, the “ABR”) plus, in each case, an applicable margin of 1.50%. The Senior Secured Credit Facility includes a provision for transition from LIBOR to the alternative reference rate of Adjusted Term SOFR on or before June 2023 (the LIBOR Rate cessation date). The Company transitioned from LIBOR to Adjusted Term SOFR during the third quarter of 2023 and borrowings under the term loans and revolving loans accrue interest based on Adjusted Term SOFR, beginning on July 31, 2023, subject to the same floor of 0.50%, plus the same applicable margin of 2.50%. As of September 30, 2023, the interest rate on the term loan facility was 7.9%. If amounts are drawn under the revolving line of credit, the Senior Secured Credit Facility requires the TLR to not exceed 4.50:1. As a result, as long as the Company’s TLR remains above 4.50:1, access to the revolving line of credit will be precluded. The Company expects that the earliest the TLR will fall below 4.50:1 is during the third quarter of 2024. A commitment fee of 0.5% per annum (subject to reductions) accrues on the amount of unutilized revolving line of credit regardless of the TLR. As of the date of this report, no amounts were drawn on the revolving line of credit. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 8. Fair Value Measurements Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which is described in detail in the 2022 Annual Report on Form 10-K. A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands): As of September 30, 2023 As of December 31, 2022 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Motto contingent consideration $ 3,200 $ — $ — $ 3,200 $ 3,710 $ — $ — $ 3,710 Gadberry Group contingent consideration 588 — — 588 817 — — 817 Contingent consideration (a) $ 3,788 $ — $ — $ 3,788 $ 4,527 $ — $ — $ 4,527 (a) Recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets. The Company is required to pay additional purchase consideration totaling 8% of gross receipts collected by Motto each year (the “Revenue Share Year”) through September 30, 2026, with no limitation as to the maximum payout. The annual payment is required to be made within 120 days of the end of each Revenue Share Year. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay. Increases or decreases in the fair value of the contingent purchase consideration can result from changes in discount rates as well as the timing and amount of forecasted revenues. The forecasted revenue growth assumption that is most sensitive is the assumed franchise sales count for which the forecast assumes between 60-140 franchises sold annually. This assumption is based on historical sales and an assumption of growth over time. A 10% change in the number of franchise sales would not have a material impact. A 1% change to the discount rate applied to the forecast changes the liability by approximately $0.1 million. As of September 30, 2023, contingent consideration also includes an amount recognized in connection with the acquisition of the Gadberry Group. The Company measures these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income (Loss). The table below presents a reconciliation of the contingent consideration (in thousands): Total Balance at January 1, 2023 $ 4,527 Fair value adjustments (379) Cash payments (360) Balance at September 30, 2023 $ 3,788 The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands): September 30, 2023 December 31, 2022 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 445,513 $ 436,161 $ 448,320 $ 414,587 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 9. Income Taxes Commitments and Contingencies Valuation Allowance During the third quarter of 2023, the Company evaluated the need for a valuation allowance against its deferred tax assets and determined that in accordance with ASC 740 Income Taxes (“ASC 740”), the objective negative evidence of a three-year cumulative pre-tax net loss, primarily due to the settlement of the Nationwide Claims, prevented the use of the Company’s subjective positive evidence of expected future profitability in evaluating the realizability of its net deferred tax assets. As a result, during the third quarter of 2023, the Company recorded a $59.2 million valuation allowance against its U.S. net deferred tax assets. Tax Receivable Agreements (“TRAs”) As of September 30, 2023 and December 31, 2022, the Company’s total liability under the TRAs was $1.6 million and $26.6 million, respectively, which includes both short-term and long-term components. In relation to the deferred tax asset valuation allowance described above, the Company also remeasured the liability under the TRAs as of September 30, 2023 and recorded a $24.9 million gain on reduction in TRA liability, during the third quarter of 2023. Uncertain Tax Positions Uncertain tax position liabilities represent the aggregate tax effect of differences between the tax return positions and the amounts otherwise recognized in the consolidated financial statements and are recognized in “Income taxes payable” in the Condensed Consolidated Balance Sheets. Interest and penalties are accrued on the uncertain tax positions and included in the “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income (Loss). While the Company believes the liabilities recognized for uncertain tax positions are adequate to cover reasonably expected tax risks, there can be no assurance that an issue raised by a tax authority will be resolved at a cost that does not exceed the liability recognized. A reconciliation of the beginning and ending uncertain tax position amounts, excluding interest and penalties is as follows: As of September 30, 2023 2022 Balance, January 1 $ 1,014 $ 1,587 Decrease related to prior year tax positions (756) — Increase related to tax positions from acquired companies — 309 Balance, September 30 $ 258 $ 1,896 A portion of the Company’s uncertain tax positions have a reasonable possibility of being settled within the next 12 months. |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Equity-Based Compensation | |
Equity-Based Compensation | 10. Equity-Based Compensation Equity-based compensation expense under the Holdings 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”) as well as the new Holdings 2023 Omnibus Incentive Plan (the “2023 Incentive Plan” and, together with the 2013 Incentive Plan, the “Incentive Plans”), is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Expense from time-based awards (a) $ 3,269 $ 5,725 $ 8,616 $ 13,417 Expense from performance-based awards (a)(b) 1,040 1,130 2,601 1,408 Expense from bonus to be settled in shares (c) 582 979 2,833 3,181 Equity-based compensation expense $ 4,891 $ 7,834 $ 14,050 $ 18,006 (a) During the third quarter of 2022, the Company recognized $1.7 million of expense upon the acceleration of certain grants issued in connection with the restructuring of its business. In addition, during the third quarter of 2022, the Company recognized $1.4 million of incremental expense upon acceleration of certain grants that were issued to two employees and former owners of an acquired company who departed during the third quarter of 2022. (b) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. During the first quarter of 2022, the Company had a significant amount of forfeitures related to performance-based awards issued to the Company’s former CEO which, subsequent to his departure, did not vest. (c) A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued. Time-based Restricted Stock The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards: Shares Weighted average grant date fair value per share Balance, January 1, 2023 611,102 $ 32.23 Granted 689,526 $ 18.44 Shares vested (including tax withholding) (a) (412,476) $ 30.72 Forfeited (65,160) $ 22.47 Balance, September 30, 2023 822,992 $ 22.21 (a) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. As of September 30, 2023, there was $11.0 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.6 years. Performance-based Restricted Stock The following table summarizes equity-based compensation activity related to performance-based restricted stock units: Shares Weighted average grant date fair value per share Balance, January 1, 2023 143,199 $ 33.47 Granted (a) 234,621 $ 20.04 Shares vested (including tax withholding) (b) (22,304) $ 16.81 Forfeited (31,825) $ 26.72 Balance, September 30, 2023 323,691 $ 25.55 (a) Represents the total participant target award. (b) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. As of September 30, 2023, there was $3.2 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.6 years. The 2013 Incentive Plan was replaced by the 2023 Incentive Plan, which was approved by the Board of Directors and approved by the Company's stockholders at the annual meeting of stockholders. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies A number of putative class action complaints were filed against the National Association of Realtors (“NAR”), Anywhere Real Estate, Inc. (formerly Realogy Holdings Corp.), HomeServices of America, Inc. (“HSA”), RE/MAX, LLC and Keller Williams Realty, Inc (“Keller Williams”). The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the United States District Court for the Northern District of Illinois (the “Moehrl Action”). Similar actions have been filed in various federal courts. The complaints make substantially similar allegations and seek substantially similar relief. For convenience, all of these lawsuits are collectively referred to as the “Moehrl-related antitrust litigations.” In the Moehrl Action, the plaintiffs allege that a NAR rule that requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property, results in increased costs to sellers and is in violation of federal antitrust law. They further allege that certain defendants use their agreements with franchisees to require adherence to the NAR rule in violation of federal antitrust law. Amended complaints added allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. While similar to the Moehrl Action, the Moehrl-related antitrust litigations also allege: state antitrust violations; unjust enrichment; state consumer protection statute violations; harm to home buyers rather than sellers; violations of the Missouri Merchandising Practices Act; and claims against a multiple listing service (MLS) defendant rather than NAR. In the Moehrl Action, plaintiffs sought certification of two classes of home sellers: (1) a class seeking an award of alleged damages incurred by home sellers who paid a commission between March 6, 2015 and December 31, 2020, to a brokerage affiliated with a corporate defendant in connection with the sale of residential real estate listed on any of the 20 covered MLSs in various parts of the country; and (2) a class of current or future owners of residential real estate, who are presently listing or will in the future list a home for sale on any of the 20 covered MLSs, seeking to prohibit defendants from maintaining and enforcing the NAR rules at issue in the complaint. On March 29, 2023, the court in the Moehrl Action granted plaintiffs’ motion for class certification as to both classes. On April 12, 2023, RE/MAX, LLC petitioned the United States Court of Appeals for the Seventh Circuit for permission to appeal the Court’s class certification decision. On May 24, 2023, the Seventh Circuit denied the petition. On August 2, 2023 during a status conference, the Moehrl court indicated that rulings on summary judgment motions, which have not been filed yet, would likely not occur prior to May of 2024, and a trial date has not been set. In one of the Moehrl-related antitrust litigations, filed by plaintiffs Scott and Rhonda Burnett and others in the Western District of Missouri (the “Burnett Action”), the court on April 22, 2022 granted plaintiffs’ motion for class certification and a trial was set for October 2023. On September 15, 2023, RE/MAX, LLC entered into a Settlement Term Sheet (the “Settlement”) with plaintiffs in the Burnett Action and Moehrl Action. The proposed Settlement would resolve all claims set forth in the Burnett Action and Moehrl Action, as well as all similar claims on a nationwide basis against RE/MAX, LLC (collectively, the “Nationwide Claims”) and would release RE/MAX, LLC and the Company, their subsidiaries and affiliates, and RE/MAX sub-franchisors, franchisees and their sales associates in the United States from the Nationwide Claims. By the terms of the Settlement, RE/MAX, LLC agreed to make certain changes to its business practices and to pay a total settlement amount of $55.0 million (the “Settlement Amount”) into a qualified settlement escrow fund (the “Settlement Fund”). The Settlement Amount is expected to be deposited into the Settlement Fund in installments, of which 25% of the settlement (or $13.8 million) was deposited into the Settlement Fund during the third quarter of 2023. An additional 25% is expected to be deposited into the Settlement Fund within ten business days after preliminary court approval of the Settlement and the final 50% being deposited within ten business days of final court approval of the Settlement. The Company has used – and intends to use – available cash to pay the Settlement Amount. The Company recorded the Settlement Amount to “Settlement and impairment charges” within the Condensed Consolidated Statements of Income (Loss) with a corresponding liability recorded to “Accrued liabilities” within the Consolidated Condensed Balance Sheets. In addition, the first installment the Company paid into the Settlement Fund is included in “Restricted cash” within the Consolidated Condensed Balance Sheets. The Settlement remains subject to preliminary and final court approval and will become effective following any appeals process, if applicable. The Settlement and any actions taken to carry out the Settlement are not an admission or concession of liability, or of the validity of any claim, defense, or point of fact or law on the part of any party. RE/MAX, LLC continues to deny the material allegations of the complaints in the Burnett Action and the Moehrl Action. RE/MAX, LLC entered into the Settlement after considering the risks and costs of continuing the litigation. On September 19, 2023, the Burnett court stayed deadlines as to RE/MAX, LLC and ordered plaintiffs to file a Motion for Preliminary Approval of the Settlement on or before October 18, 2023. On October 5, 2023, RE/MAX, LLC entered into a definitive settlement agreement (the “Settlement Agreement”) containing substantially the same material terms and conditions as provided in the Settlement. Also on October 5, 2023, plaintiffs filed a Motion for Preliminary Approval of the Settlement Agreement. On October 31, 2023, after a two-week trial, the jury in the Burnett Action found a conspiracy existed and awarded approximately $1.8 billion against the three remaining defendants NAR, Keller Williams and HSA. The Company expects the award to be trebled and the court to order injunctive relief against the three defendants that did not settle in advance of trial. In one of the other Moehrl-related antitrust litigations, filed by Jennifer Nosalek and others in the District of Massachusetts (the “Nosalek Action”), on June 30, 2023, plaintiffs filed a motion requesting preliminary approval of a settlement with MLS Property Information Network, Inc. (“MLS PIN”). The court entered an order on September 7, 2023, granting preliminary approval of the settlement and setting an approval hearing on January 4, 2024. If approved by the court, the settlement agreement requires MLS PIN to pay $3.0 million, to eliminate the requirement that a seller must offer compensation to a buyer-broker and to amend various rules pertaining to seller notices and negotiation of buyer-broker compensation. On September 28, 2023, the Department of Justice filed a statement of interest seeking to extend the deadlines for the proposed settlement agreement. On October 3, 2023, the court moved the final settlement approval hearing to March 7, 2024. No other defendants are part of the MLS PIN settlement. Plaintiffs in the Nosalek Action agreed that the substantive terms of the Settlement Agreement should include the proposed MLS PIN class members. On October 24, 2023, plaintiffs filed a joint notice of pending settlement and a motion to stay the Nosalek case as to RE/MAX, LLC and RE/MAX Integrated Regions, LLC, which was granted on October 31, 2023. On April 9, 2021, a putative class action claim (the “Sunderland Action”) was filed in the Federal Court of Canada against the Toronto Regional Real Estate Board (“TRREB”), The Canadian Real Estate Association (“CREA”), RE/MAX Ontario-Atlantic Canada Inc. (“RE/MAX OA”), which was acquired by the Company in July 2021, Century 21 Canada Limited Partnership, Royal Lepage Real Estate Services Ltd., and many other real estate companies, collectively the “Defendants”, by the putative representative plaintiff, Mark Sunderland (the “Plaintiff”). The Plaintiff alleges that the Defendants conspired, agreed or arranged with each other and acted in furtherance of their conspiracy to fix, maintain, increase, control, raise, or stabilize the rate of real estate buyers’ brokerages’ and salespersons’ commissions in respect of the purchase and sale of properties listed on TRREB’s multiple listing service system (the “Toronto MLS”) in violation of the Canadian Competition Act. On February 24, 2022, Plaintiff filed a Fresh as Amended Statement of Claim. With respect RE/MAX OA, the amended claim alleges franchisor defendants aided and abetted their respective franchisee brokerages and their salespeople in violation of the section 45(1) of the Competition Act. Among other requested relief, the Plaintiff seeks damages against the defendants and injunctive relief. On September 25, 2023, the Court dismissed the claims against RE/MAX OA, and on October 25, 2023, the Plaintiff appealed the decision. The Company intends to vigorously defend against all remaining claims, including against any appeals. If the Settlement is not approved, the Company may become involved in additional litigation or other legal proceedings concerning the same or similar claims. As a result, the Company is unable to reasonably estimate the financial impact of the litigation beyond what has been accrued for pursuant to the terms of the Settlement Agreement and the Company cannot predict, beyond the Settlement Amount, whether resolution of these matters would have a material effect on its financial position or results of operations. The Moehrl-related antitrust litigations and Sunderland Action consist of: Christopher Moehrl et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc. RE/MAX, LLC., and Keller Williams Realty, Inc., Scott and Rhonda Burnett et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, RE/MAX, LLC, and Keller Williams Realty, Inc., Jennifer Nosalek et al. v. MLS Property Information Network, Inc., Anywhere Real Estate Inc. (f/k/a Realogy Holdings Corp.), Century 21 Real Estate LLC, Coldwell Banker Real Estate LLC, Sotheby’s International Realty Affiliates LLC, Better Homes and Gardens Real Estate LLC, ERA Franchise System LLC, HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, RE/MAX, LLC, Polzler & Schneider Holdings Corp., Integra Enterprises Corp., RE/MAX of New England, Inc., RE/MAX Integrated Regions, LLC, and Keller Williams Realty, Inc., Mya Batton et al. v. The National Association of Realtors, Realogy Holdings Corp., HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, The Long & Foster Companies, Inc., RE/MAX, LLC, and Keller Williams Realty, Inc., Mark Sunderland v. Toronto Regional Real Estate Board (TRREB), The Canadian Real Estate Association (CREA), RE/MAX Ontario-Atlantic Canada Inc. o/a RE/MAX INTEGRA, Century 21 Canada Limited Partnership, Residential Income Fund, L.P., Royal Lepage Real Estate Services Ltd., Homelife Realty Services Inc., Right At Home Realty Inc., Forest Hill Real Estate Inc., Harvey Kalles Real Estate Ltd., Max Wright Real Estate Corporation, Chestnut Park Real Estate Limited, Sutton Group Realty Services Ltd. and IPRO Realty Ltd., |
Segment Information
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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Balance Sheet at December 31, 2022, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and include the accounts of Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2023 and the results of its operations and comprehensive income (loss), cash flows and changes in its stockholders’ equity (deficit) for the three and nine months ended September 30, 2023 and 2022. Interim results may not be indicative of full-year performance. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies. |
Use of Estimates | Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Segment Reporting | Segment Reporting The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and Other. Due to quantitative insignificance, the “Other” operating segment is comprised of operations which do not meet the criteria of a reportable segment. |
Revenue Recognition | Revenue Recognition The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are: ● Continuing franchise fees, which are fixed contractual fees paid monthly by RE/MAX or Motto franchisees or Independent Region sub-franchisors based on the number of RE/MAX agents or Motto open offices. ● Annual dues, which are fees charged directly to RE/MAX agents. ● Broker fees, which are fees on real estate commissions when a RE/MAX agent assists a consumer with buying or selling a home. ● Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents or Motto open offices. ● Franchise sales and other revenue, which consists of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises and RE/MAX master franchise fees, as well as data services subscription revenue, preferred marketing arrangements, technology products and subscription revenue, events-related revenue from education and other programs and mortgage loan processing revenue. Deferred Revenue and Commissions Related to Franchise Sales Deferred revenue is primarily driven by Franchise sales and Annual dues, as discussed above, and is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets. Other deferred revenue is primarily related to events-related revenue. The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) September 30, 2023 Franchise sales $ 25,281 $ 6,517 $ (6,715) $ 25,083 Annual dues 14,164 25,320 (25,661) 13,823 Other 6,626 14,675 (18,059) 3,242 $ 46,071 $ 46,512 $ (50,435) $ 42,148 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $6.2 million and $13.0 million, respectively, for the nine months ended September 30, 2023. Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized September 30, 2023 Capitalized contract costs for commissions $ 3,974 $ 2,129 $ (1,848) $ 4,255 Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 6,491 $ 7,332 $ — $ — $ — $ — $ — $ 13,823 Franchise sales 1,826 6,714 5,536 4,204 2,786 1,384 2,633 25,083 Total $ 8,317 $ 14,046 $ 5,536 $ 4,204 $ 2,786 $ 1,384 $ 2,633 $ 38,906 Disaggregated Revenue In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 U.S. Company-Owned Regions $ 35,504 $ 39,975 $ 105,440 $ 121,862 U.S. Independent Regions 1,668 1,819 4,896 5,397 Canada Company-Owned Regions 10,607 10,764 30,946 32,673 Canada Independent Regions 721 723 2,168 2,141 Global 3,251 2,908 9,653 9,193 Fee revenue (a) 51,751 56,189 153,103 171,266 Franchise sales and other revenue (b) 4,812 6,466 21,649 21,902 Total Real Estate 56,563 62,655 174,752 193,168 U.S. 15,638 17,186 48,043 52,386 Canada 4,956 5,201 14,440 15,202 Global 259 349 789 908 Total Marketing Funds 20,853 22,736 63,272 68,496 Mortgage (c) 3,640 3,194 10,444 9,337 Other (c) 167 358 603 1,118 Total $ 81,223 $ 88,943 $ 249,071 $ 272,119 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): September 30, 2023 December 31, 2022 Cash and cash equivalents $ 89,820 $ 108,663 Restricted cash: Marketing Funds (a) 17,243 29,465 Settlement Fund (b) 13,750 — Total cash, cash equivalents and restricted cash $ 120,813 $ 138,128 (a) All cash held by the Marketing Funds is contractually restricted, pursuant to the applicable franchise agreements. (b) Represents the net amounts held in the Settlement Fund as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information. |
Services Provided to the Marketing Funds by Real Estate | Services Provided to the Marketing Funds by Real Estate Real Estate charges the Marketing Funds for various services it performs. These services are primarily comprised of (a) building and maintaining the remax.com and remax.ca websites and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology; accounting and legal. In 2022 and prior, the additional services provided were (d) agent marketing technology; including customer relationship management and competitive market analysis tools and (e) agent, office and team websites. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income (loss) of Holdings as the Marketing Funds have no reported net income. The Company started to transition to the kvCORE platform for agent marketing technology and agent, office, and team websites in the second half of 2022. The payment for these aforementioned services have since been paid for directly by the Marketing Funds, which reduces the charges Real Estate had historically charged the Marketing Funds when these services were provided by the Company (See Restructuring Charges Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Technology − operating $ 1,169 $ 3,526 $ 3,507 $ 11,269 Technology − capital (a) — (277) (203) 884 Marketing staff and administrative services 1,441 1,493 4,416 4,174 Total $ 2,610 $ 4,742 $ 7,720 $ 16,327 (a) During the first quarter of 2023 and the third quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million and $0.3 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds. |
Accounts and Notes Receivable | Accounts and Notes Receivable As of September 30, 2023, and December 31, 2022, the Company had allowances against accounts and notes receivable of $11.4 million and $9.1 million, respectively. |
Property and Equipment | Property and Equipment As of September 30, 2023, and December 31, 2022, the Company had accumulated depreciation of $12.9 million and $10.9 million, respectively. |
Leases | Leases The Company leases corporate offices, a distribution center, billboards and certain equipment. As all franchisees are independently owned and operated, there are no leases recognized for any offices used by the Company’s franchisees. All the Company’s material leases are classified as operating leases. The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases. During the first and third quarters of 2022, the Company subleased portions of its corporate headquarters. As a result, the Company performed impairment tests on the portions subleased. Based on a comparison of undiscounted cash flows to the right of use (“ROU”) asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company’s corporate headquarters and the sublease rates received. This resulted in impairment charges of $3.7 million for the first quarter of 2022 and $2.5 million for the third quarter of 2022, which reflect the excess of the ROU asset carrying value over its fair value. During the second quarter of 2022, the Company terminated its booj office lease, which is owned by an entity controlled by former employees of the Company. As a result, the Company wrote off an ROU asset of $2.7 million and derecognized $1.5 million of lease liability associated with the terminated lease. The Company also recognized a loss on termination of $2.5 million, which included a lease termination payment of $1.3 million. |
Restructuring and Reduction in Force Charges | Restructuring and Reduction in Force Charges During the third quarter of 2023, the Company announced a reduction in force and reorganization (the “Reorganization”) intended to streamline the Company’s operations and yield cost savings over the long term. The Reorganization reduced the Company’s overall workforce by approximately 7% and was substantially complete by September 30, 2023. As a result of the Reorganization, the Company incurred a pre-tax cash charge for one-time termination benefits of severance and related costs of $4.3 million and accelerated equity compensation expense of $0.5 million. See Note 6, Accrued Liabilities During the third quarter of 2022, the Company began incurring expenses related to a restructuring in its business and technology offerings with the phased rollout of the kvCORE platform, replacing the functionality previously provided by the booj platform. A significant amount of these costs are termination benefits related to workforce reductions including severance and related expenses that were incurred in the second half of 2022. See Note 6, Accrued Liabilities |
Severance and Retirement Plan | Severance and Retirement Plan On May 24, 2023, the Compensation Committee of the Board of Directors approved a Severance and Retirement Plan (the “Plan”). The Plan replaces the Severance Pay Benefit Plan adopted by the Company on December 4, 2018. The Plan provides benefits to eligible employees and executive officers of RE/MAX, LLC and its subsidiaries, in the event of (i) involuntary termination of their employment due to position elimination, reduction in force, or other circumstances that the employer determines should result in payment of benefits, or (ii) voluntary termination of employment due to retirement for employees who meet the retirement eligibility criteria in the Plan, subject in both cases to certain restrictions set forth in the Plan. In the case of involuntary termination, these benefits include salary continuation, a health benefits stipend, outplacement services and a possible pro-rated bonus. In the case of retirement, these benefits include modification of vesting of restricted stock awards (for employees who are eligible for restricted stock awards) and a possible pro-rated bonus. |
Foreign Currency Derivatives | Foreign Currency Derivatives The Company is exposed to foreign currency transaction gains and losses related to certain foreign currency denominated asset and liability positions, with the Canadian dollar representing the most significant exposure primarily from an intercompany loan from a U.S. subsidiary to a Canadian subsidiary. The Company uses short duration foreign currency forward contracts, generally with maturities ranging from a few days to a few months, to minimize its exposures related to foreign currency exchange rate fluctuations. None of these contracts are designated as accounting hedges as the underlying currency positions are revalued through “Foreign currency transaction gains (losses)” along with the related derivative contracts. The Company has a short-term $74.0 million Canadian dollar forward contract that matures in the fourth quarter of 2023 that net settles in U.S. dollars based on the prevailing spot rates at maturity. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets (commissions related to franchise sales) and contract liabilities (deferred revenue) acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The impact to future acquisitions could be material depending on the significance of future acquisitions. There would be no impact to cash flows. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which contains temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The Company adopted this standard effective July 1, 2023, on a prospective basis, with an executed amendment of its Senior Secured Credit Facility Agreement. The Company’s benchmark rate was transitioned from LIBOR to Adjusted Term SOFR. The amendments of ASU 2020-04 did not have a significant impact on the Company’s consolidated financial statements and related disclosures. |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted None. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of deferred revenue for franchise sales and annual dues | The activity consists of the following (in thousands): Balance at Revenue Balance at January 1, 2023 New billings recognized (a) September 30, 2023 Franchise sales $ 25,281 $ 6,517 $ (6,715) $ 25,083 Annual dues 14,164 25,320 (25,661) 13,823 Other 6,626 14,675 (18,059) 3,242 $ 46,071 $ 46,512 $ (50,435) $ 42,148 (a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $6.2 million and $13.0 million, respectively, for the nine months ended September 30, 2023. |
Schedule of commissions related to franchise sales | The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands): Additions to Balance at contract cost Expense Balance at January 1, 2023 for new activity recognized September 30, 2023 Capitalized contract costs for commissions $ 3,974 $ 2,129 $ (1,848) $ 4,255 |
Schedule of transaction price allocated to the remaining performance obligations | The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands): Remainder of 2023 2024 2025 2026 2027 2028 Thereafter Total Annual dues $ 6,491 $ 7,332 $ — $ — $ — $ — $ — $ 13,823 Franchise sales 1,826 6,714 5,536 4,204 2,786 1,384 2,633 25,083 Total $ 8,317 $ 14,046 $ 5,536 $ 4,204 $ 2,786 $ 1,384 $ 2,633 $ 38,906 |
Schedule of disaggregated revenue | In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 U.S. Company-Owned Regions $ 35,504 $ 39,975 $ 105,440 $ 121,862 U.S. Independent Regions 1,668 1,819 4,896 5,397 Canada Company-Owned Regions 10,607 10,764 30,946 32,673 Canada Independent Regions 721 723 2,168 2,141 Global 3,251 2,908 9,653 9,193 Fee revenue (a) 51,751 56,189 153,103 171,266 Franchise sales and other revenue (b) 4,812 6,466 21,649 21,902 Total Real Estate 56,563 62,655 174,752 193,168 U.S. 15,638 17,186 48,043 52,386 Canada 4,956 5,201 14,440 15,202 Global 259 349 789 908 Total Marketing Funds 20,853 22,736 63,272 68,496 Mortgage (c) 3,640 3,194 10,444 9,337 Other (c) 167 358 603 1,118 Total $ 81,223 $ 88,943 $ 249,071 $ 272,119 (a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees. (b) Franchise sales and other revenue is derived primarily within the U.S. (c) Revenue from Mortgage and Other are derived exclusively within the U.S. |
Schedule of reconciliation of cash, both unrestricted and restricted | The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands): September 30, 2023 December 31, 2022 Cash and cash equivalents $ 89,820 $ 108,663 Restricted cash: Marketing Funds (a) 17,243 29,465 Settlement Fund (b) 13,750 — Total cash, cash equivalents and restricted cash $ 120,813 $ 138,128 (a) All cash held by the Marketing Funds is contractually restricted, pursuant to the applicable franchise agreements. (b) Represents the net amounts held in the Settlement Fund as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information. |
Schedule of cost charges to intersegment | Costs charged from Real Estate to the Marketing Funds are as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Technology − operating $ 1,169 $ 3,526 $ 3,507 $ 11,269 Technology − capital (a) — (277) (203) 884 Marketing staff and administrative services 1,441 1,493 4,416 4,174 Total $ 2,610 $ 4,742 $ 7,720 $ 16,327 (a) During the first quarter of 2023 and the third quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million and $0.3 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds. |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Non-controlling Interest. | |
Summary of Ownership of the Common Units | The ownership of the common units in RMCO is summarized as follows: September 30, 2023 December 31, 2022 Shares Ownership % Shares Ownership % Non-controlling interest ownership of common units in RMCO 12,559,600 40.8 % 12,559,600 41.3 % Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 18,213,497 59.2 % 17,874,238 58.7 % Total common units in RMCO 30,773,097 100.0 % 30,433,838 100.0 % |
Reconciliation from Income Before Provision for Income Taxes to Net Income | A reconciliation of “Income (loss) before provision for income taxes” to “Net income (loss) attributable to RE/MAX Holdings, Inc.” and “Net Income (loss) attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income (Loss) for the periods indicated is detailed as follows (in thousands, except percentages): Three Months Ended September 30, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 59.1 % 40.9 % 100.0 % 59.8 % 40.2 % 100.0 % Income (loss) before provision for income taxes (a) $ (6,866) $ (22,126) $ (28,992) $ (219) $ (138) $ (357) (Provision) / benefit for income taxes (b) (52,588) (1,092) (53,680) 359 (912) (553) Net income (loss) $ (59,454) $ (23,218) $ (82,672) $ 140 $ (1,050) $ (910) Nine Months Ended September 30, 2023 2022 RE/MAX Holdings, Inc. Non-controlling interest Total RE/MAX Holdings, Inc. Non-controlling interest Total Weighted average ownership percentage of RMCO (a) 59.0 % 41.0 % 100.0 % 60.0 % 40.0 % 100.0 % Income (loss) before provision for income taxes (a) $ (3,694) $ (19,919) $ (23,613) $ 10,016 $ 6,653 $ 16,669 (Provision) / benefit for income taxes (b) (54,421) (2,073) (56,494) (2,596) (1,763) (4,359) Net income (loss) $ (58,115) $ (21,992) $ (80,107) $ 7,420 $ 4,890 $ 12,310 (a) The WAO percentage of RMCO differs from the allocation of income (loss) before provision for income taxes between Holdings and the non-controlling interest due to certain items recorded at Holdings. (b) The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the flow-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, including taxes in certain foreign jurisdictions. |
Distributions Paid or Payable | Under the terms of RMCO’s limited liability company operating agreement, RMCO makes cash distributions to non-controlling unitholders on a pro-rata basis. The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands): Nine Months Ended September 30, 2023 2022 Tax distributions $ — $ 2,256 Dividend distributions 8,667 8,667 Total distributions to non-controlling unitholders $ 8,667 $ 10,923 |
Earnings (Loss) Per Share, Di_2
Earnings (Loss) Per Share, Dividends and Repurchases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings (Loss) Per Share, Dividends and Repurchases | |
Reconciliation of Numerator and Denominator used in Basic and Diluted EPS Calculations | The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings (loss) per share (“EPS”) calculations (in thousands, except shares and per share information): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Numerator Net income (loss) attributable to RE/MAX Holdings, Inc. $ (59,454) $ 140 $ (58,115) $ 7,420 Denominator for basic net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 18,150,557 18,646,306 18,064,009 18,859,376 Denominator for diluted net income (loss) per share of Class A common stock Weighted average shares of Class A common stock outstanding 18,150,557 18,646,306 18,064,009 18,859,376 Add dilutive effect of the following: Restricted stock (a) — 230,557 — 221,229 Weighted average shares of Class A common stock outstanding, diluted 18,150,557 18,876,863 18,064,009 19,080,605 Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock Basic $ (3.28) $ 0.01 $ (3.22) $ 0.39 Diluted $ (3.28) $ 0.01 $ (3.22) $ 0.39 |
Schedule of Dividends Declared and Paid Quarterly per Share | Dividends declared and paid during each quarter ended per share on all outstanding shares of Class A common stock were as follows (in thousands, except per share information): Nine Months Ended September 30, 2023 2022 Quarter end declared Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) Date paid Per share Class A stockholders ($) Non-controlling unitholders ($) March 31 March 22, 2023 $ 0.23 $ 4,164 $ 2,889 March 16, 2022 $ 0.23 $ 4,439 $ 2,889 June 30 May 31, 2023 0.23 4,168 2,889 May 25, 2022 0.23 4,420 2,889 September 30 August 29, 2023 0.23 4,169 2,889 August 30, 2022 0.23 4,322 2,889 $ 0.69 $ 12,501 $ 8,667 $ 0.69 $ 13,181 $ 8,667 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets and Goodwill | |
Schedule of components of intangible assets | The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years): Weighted Average As of September 30, 2023 As of December 31, 2022 Amortization Initial Accumulated Net Initial Accumulated Net Period Cost Amortization Balance Cost Amortization Balance Franchise agreements 12.3 $ 224,574 $ (118,921) $ 105,653 $ 224,397 $ (104,223) $ 120,174 Other intangible assets: Software (a) 4.2 $ 51,580 $ (37,365) $ 14,215 $ 48,658 $ (32,198) $ 16,460 Trademarks 9.2 1,724 (1,377) 347 1,713 (1,272) 441 Non-compete agreements 4.3 12,969 (7,318) 5,651 12,953 (4,878) 8,075 Training materials — 2,400 (2,400) — 2,400 (2,080) 320 Other 7.0 870 (577) 293 870 (403) 467 Total other intangible assets 4.4 $ 69,543 $ (49,037) $ 20,506 $ 66,594 $ (40,831) $ 25,763 (a) As of September 30, 2023 and December 31, 2022, capitalized software development costs of $1.5 million and $4.6 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization. |
Schedule of estimated future amortization of intangible assets, other than goodwill | As of September 30, 2023, the estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands): Remainder of 2023 $ 7,417 2024 25,917 2025 22,185 2026 15,535 2027 8,889 Thereafter 46,216 $ 126,159 |
Schedule of changes to goodwill | The following table presents changes to goodwill by reportable segment (in thousands): Real Estate Mortgage Total Balance, January 1, 2023 $ 239,993 $ 18,633 $ 258,626 Effect of changes in foreign currency exchange rates 188 — 188 Balance, September 30, 2023 $ 240,181 $ 18,633 $ 258,814 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities. | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): September 30, 2023 December 31, 2022 Marketing Funds (a) $ 27,613 $ 47,670 Accrued payroll and related employee costs 13,844 14,419 Accrued taxes 1,609 2,025 Accrued professional fees 1,451 1,331 Settlement payable (b) 55,000 — Other 4,904 5,306 $ 104,421 $ 70,751 (a) Consists primarily of liabilities recognized to reflect the contractual restriction that all funds collected in the Marketing Funds must be spent for designated purposes. See Note 2, Summary of Significant Accounting Policies for additional information. (b) Represents the net settlement payable as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information. |
Schedule of restructure by type of cost | The following table presents a roll forward of the severance and related costs liability as related to the Reorganization and the strategic shift and restructure of its business, which is in “Accrued payroll and related employee costs” in the table above (in thousands): Balance, January 1, 2023 $ 3,631 Severance and other related expenses 4,246 Cash payments (3,674) Balance, September 30, 2023 (a) $ 4,203 (a) Includes $3.9 million relating to the Reorganization that occurred in the third quarter of 2023. The remaining liability balance is related to the strategic shift and restructure of its business that occurred in the third quarter of 2022 . |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt | |
Schedule of debt | Debt, net of current portion, consists of the following (in thousands): September 30, 2023 December 31, 2022 Senior Secured Credit Facility $ 449,650 $ 453,101 Less unamortized debt issuance costs (3,056) (3,532) Less unamortized debt discount costs (1,081) (1,249) Less current portion (4,600) (4,600) $ 440,913 $ 443,720 |
Schedule of Maturities of Debt | As of September 30, 2023, maturities of debt are as follows (in thousands): Remainder of 2023 $ 1,150 2024 4,600 2025 4,600 2026 4,600 2027 4,600 Thereafter 430,100 $ 449,650 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Liabilities measured at fair value on a recurring basis | A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands): As of September 30, 2023 As of December 31, 2022 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Motto contingent consideration $ 3,200 $ — $ — $ 3,200 $ 3,710 $ — $ — $ 3,710 Gadberry Group contingent consideration 588 — — 588 817 — — 817 Contingent consideration (a) $ 3,788 $ — $ — $ 3,788 $ 4,527 $ — $ — $ 4,527 (a) Recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets. |
Reconciliation of the contingent consideration | The table below presents a reconciliation of the contingent consideration (in thousands): Total Balance at January 1, 2023 $ 4,527 Fair value adjustments (379) Cash payments (360) Balance at September 30, 2023 $ 3,788 |
Summary of carrying value and fair value of senior secured credit facility | The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands): September 30, 2023 December 31, 2022 Carrying Amount Fair Value Level 2 Carrying Amount Fair Value Level 2 Senior Secured Credit Facility $ 445,513 $ 436,161 $ 448,320 $ 414,587 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Schedule of unrecognized tax benefits | As of September 30, 2023 2022 Balance, January 1 $ 1,014 $ 1,587 Decrease related to prior year tax positions (756) — Increase related to tax positions from acquired companies — 309 Balance, September 30 $ 258 $ 1,896 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Schedule of Employee Stock-Based Compensation Expense | Equity-based compensation expense under the Holdings 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”) as well as the new Holdings 2023 Omnibus Incentive Plan (the “2023 Incentive Plan” and, together with the 2013 Incentive Plan, the “Incentive Plans”), is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Expense from time-based awards (a) $ 3,269 $ 5,725 $ 8,616 $ 13,417 Expense from performance-based awards (a)(b) 1,040 1,130 2,601 1,408 Expense from bonus to be settled in shares (c) 582 979 2,833 3,181 Equity-based compensation expense $ 4,891 $ 7,834 $ 14,050 $ 18,006 (a) During the third quarter of 2022, the Company recognized $1.7 million of expense upon the acceleration of certain grants issued in connection with the restructuring of its business. In addition, during the third quarter of 2022, the Company recognized $1.4 million of incremental expense upon acceleration of certain grants that were issued to two employees and former owners of an acquired company who departed during the third quarter of 2022. (b) Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. During the first quarter of 2022, the Company had a significant amount of forfeitures related to performance-based awards issued to the Company’s former CEO which, subsequent to his departure, did not vest. (c) A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued. |
Time-based awards | |
Schedule of Restricted Stock Units | The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards: Shares Weighted average grant date fair value per share Balance, January 1, 2023 611,102 $ 32.23 Granted 689,526 $ 18.44 Shares vested (including tax withholding) (a) (412,476) $ 30.72 Forfeited (65,160) $ 22.47 Balance, September 30, 2023 822,992 $ 22.21 (a) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. |
Performance-based awards | |
Schedule of Restricted Stock Units | The following table summarizes equity-based compensation activity related to performance-based restricted stock units: Shares Weighted average grant date fair value per share Balance, January 1, 2023 143,199 $ 33.47 Granted (a) 234,621 $ 20.04 Shares vested (including tax withholding) (b) (22,304) $ 16.81 Forfeited (31,825) $ 26.72 Balance, September 30, 2023 323,691 $ 25.55 (a) Represents the total participant target award. (b) Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Information | |
Schedule of Revenue from External Customers By Segment | 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 |
Schedule of Revenue and Adjusted EBITDA of the Company's Reportable Segment | 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. |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended |
Sep. 30, 2023 | |
REMAX | Motto | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |
Percentage of company consisting of franchises | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Reporting (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Summary of Significant Accounting Policies | |
Number of operating segments | 4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Deferred Revenue (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | $ 46,071 |
New billings | 46,512 |
Revenue recognized | (50,435) |
Balance at the end of period | 42,148 |
Franchise sales | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 25,281 |
New billings | 6,517 |
Revenue recognized | (6,715) |
Balance at the end of period | 25,083 |
Revenue recognized related to the beginning balance | 6,200 |
Annual dues | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 14,164 |
New billings | 25,320 |
Revenue recognized | (25,661) |
Balance at the end of period | 13,823 |
Revenue recognized related to the beginning balance | 13,000 |
Other | |
Disaggregation of Revenue [Line Items] | |
Balance at beginning of period | 6,626 |
New billings | 14,675 |
Revenue recognized | (18,059) |
Balance at the end of period | $ 3,242 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Commissions Related to Franchise Sales (Details) - Capitalized contract costs for commissions $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Capitalized Contract Cost [Line Items] | |
Balance at beginning of period | $ 3,974 |
Additions to contract cost for new activity | 2,129 |
Expense recognized | (1,848) |
Balance at end of period | $ 4,255 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Transaction Price (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 38,906 |
Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 13,823 |
Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | 25,083 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 8,317 |
Performance period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 6,491 |
Performance period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 1,826 |
Performance period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 14,046 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 7,332 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 6,714 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 5,536 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 5,536 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,204 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 4,204 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,786 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,786 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 1,384 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 1,384 |
Performance period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Annual Dues And Franchise Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,633 |
Performance period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Annual dues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2029-01-01 | Franchise sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation revenue | $ 2,633 |
Performance period |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregated revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 81,223 | $ 88,943 | $ 249,071 | $ 272,119 |
Franchise sales and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 5,825 | 7,390 | 24,659 | 24,841 |
Real Estate | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 56,563 | 62,655 | 174,752 | 193,168 |
Real Estate | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 51,751 | 56,189 | 153,103 | 171,266 |
Real Estate | Franchise sales and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,812 | 6,466 | 21,649 | 21,902 |
Marketing Funds | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 20,853 | 22,736 | 63,272 | 68,496 |
Mortgage | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,640 | 3,194 | 10,444 | 9,337 |
Mortgage | Franchise sales and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 846 | 566 | 2,407 | 1,821 |
Other. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 167 | 358 | 603 | 1,118 |
U.S. | Company -Owned Regions | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 35,504 | 39,975 | 105,440 | 121,862 |
U.S. | Independent Regions | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,668 | 1,819 | 4,896 | 5,397 |
U.S. | Marketing Funds | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 15,638 | 17,186 | 48,043 | 52,386 |
Canada | Company -Owned Regions | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 10,607 | 10,764 | 30,946 | 32,673 |
Canada | Independent Regions | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 721 | 723 | 2,168 | 2,141 |
Canada | Marketing Funds | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,956 | 5,201 | 14,440 | 15,202 |
Global | Global. | Fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,251 | 2,908 | 9,653 | 9,193 |
Global | Marketing Funds | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 259 | $ 349 | $ 789 | $ 908 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents and Restricted Cash | ||||
Cash and cash equivalents | $ 89,820 | $ 108,663 | ||
Restricted cash | 30,993 | 29,465 | ||
Total cash, cash equivalents and restricted cash | 120,813 | 138,128 | $ 149,298 | $ 158,399 |
Marketing Funds | ||||
Cash, Cash Equivalents and Restricted Cash | ||||
Restricted cash | 17,243 | $ 29,465 | ||
Settlement Fund | ||||
Cash, Cash Equivalents and Restricted Cash | ||||
Restricted cash | $ 13,750 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Services Provided to Marketing Funds by REMAX Franchising (Details) - Marketing funds - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Costs charged | $ 2,610 | $ 4,742 | $ 7,720 | $ 16,327 | |
Work in progress assets | |||||
Costs charged | 300 | $ 200 | |||
Technology - operating | |||||
Costs charged | 1,169 | 3,526 | 3,507 | 11,269 | |
Technology - capital | |||||
Costs charged | (277) | (203) | 884 | ||
Marketing staff and administrative services | |||||
Costs charged | $ 1,441 | $ 1,493 | $ 4,416 | $ 4,174 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Accounts and Notes Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Accounts and notes receivable, allowance | $ 11.4 | $ 9.1 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Property and equipment, accumulated depreciation | $ 12.9 | $ 10.9 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Leases (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 lease | |
Leases | |||||
Number of franchisees' leases recognized by the Company | lease | 0 | ||||
ROU Assets written off | $ 2,700 | ||||
Operating lease liability derecognized | 1,500 | ||||
Loss on termination recognized | (2,500) | $ (2,460) | |||
Cash paid for lease termination | $ 1,300 | ||||
Impairment charge - leased assets | $ 2,513 | $ 3,700 | $ 6,248 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Restructuring and Reduction in Force Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Summary of Significant Accounting Policies | ||
Restructuring and related cost percent | 7% | |
Severance and related costs | $ 4,300 | $ 4,246 |
Accelerated equity compensation expense | $ 500 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Foreign Currency Derivatives (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Foreign Currency Exchange | |
Derivative [Line Items] | |
Notional amount | $ 74 |
Non-controlling Interest - Owne
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares | Sep. 30, 2023 | Dec. 31, 2022 |
Shares | ||
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 18,213,497 | 17,874,238 |
Total number of common stock units in RMCO | 30,773,097 | 30,433,838 |
Ownership Percentage | ||
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) | 59.20% | 58.70% |
Total percentage of common stock units | 100% | 100% |
RIHI | ||
Shares | ||
Non-controlling interest ownership of common units in RMCO | 12,559,600 | 12,559,600 |
Ownership Percentage | ||
Non-controlling interest ownership of common units in RMCO | 40.80% | 41.30% |
Non-controlling Interest - Net
Non-controlling Interest - Net income reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Minority Interest [Line Items] | |||||||||
Income (loss) before provision for income taxes attributable to RE/MAX Holdings, Inc. | $ (6,866) | $ (219) | $ (3,694) | $ 10,016 | |||||
Income (loss) before provision for income taxes: Non-controlling interest | (22,126) | (138) | (19,919) | 6,653 | |||||
Income (loss) before provision for income taxes | (28,992) | (357) | (23,613) | 16,669 | |||||
(Provision)/benefit for income taxes attributable to RE/MAX Holdings, Inc. | (52,588) | 359 | (54,421) | (2,596) | |||||
(Provision)/benefit for income taxes: Non-controlling interest | (1,092) | (912) | (2,073) | (1,763) | |||||
(Provision)/benefit for income taxes | (53,680) | (553) | (56,494) | (4,359) | |||||
Net income (loss) attributable to RE/MAX Holdings, Inc. | (59,454) | 140 | (58,115) | 7,420 | |||||
Net income (loss): Non-controlling interest | (23,218) | (1,050) | (21,992) | 4,890 | |||||
Net income (loss) | $ (82,672) | $ 3,244 | $ (679) | $ (910) | $ 10,275 | $ 2,945 | $ (80,107) | $ 12,310 | |
RMCO, LLC | |||||||||
Minority Interest [Line Items] | |||||||||
Weighted average ownership percentage | 100% | 100% | 100% | ||||||
RMCO, LLC | Weighted Average | |||||||||
Minority Interest [Line Items] | |||||||||
Weighted average ownership percentage attributable to RE/MAX Holdings, Inc. | 59.10% | 59.80% | 59% | 60% | |||||
Weighted average ownership percentage | 100% | 100% | 100% | 100% | |||||
RIHI | RMCO, LLC | Weighted Average | |||||||||
Minority Interest [Line Items] | |||||||||
Weighted average ownership percentage: Non-controlling interest | 40.90% | 40.20% | 41% | 40% |
Non-controlling Interest - Dist
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 8,667 | $ 10,923 |
Tax distributions | ||
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | 2,256 | |
Dividend distributions | ||
Dividends Payable [Line Items] | ||
Distributions paid or payable to or on behalf of non-controlling unitholders | $ 8,667 | $ 8,667 |
Earnings (Loss) Per Share, Di_3
Earnings (Loss) Per Share, Dividends and Repurchases - Reconciliation of the numerator and denominator used in basic and diluted EPS calculations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator | ||||
Net income (loss) attributable to RE/MAX Holdings, Inc. | $ (59,454) | $ 140 | $ (58,115) | $ 7,420 |
Common Class A | ||||
Denominator for basic net income (loss) per share of Class A common stock | ||||
Weighted average shares of Class A common stock outstanding | 18,150,557 | 18,646,306 | 18,064,009 | 18,859,376 |
Denominator for diluted net income (loss) per share of Class A common stock | ||||
Weighted average shares of Class A common stock outstanding | 18,150,557 | 18,646,306 | 18,064,009 | 18,859,376 |
Add dilutive effect of the following: | ||||
Weighted average shares of Class A common stock outstanding, diluted | 18,150,557 | 18,876,863 | 18,064,009 | 19,080,605 |
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock | ||||
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic | $ (3.28) | $ 0.01 | $ (3.22) | $ 0.39 |
Net income (loss) attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted | $ (3.28) | $ 0.01 | $ (3.22) | $ 0.39 |
Restricted stock and restricted stock units | ||||
Add dilutive effect of the following: | ||||
Restricted stock and restricted stock units | 230,557 | 221,229 |
Earnings (Loss) Per Share, Di_4
Earnings (Loss) Per Share, Dividends and Repurchases - Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Dividends Payable [Line Items] | ||||||||
Dividends to Class A common stockholders | $ 4,170 | $ 4,168 | $ 4,164 | $ 4,322 | $ 4,420 | $ 4,439 | ||
Common Class A | ||||||||
Dividends Payable [Line Items] | ||||||||
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 | ||||
Quarterly dividend | Common Class A | ||||||||
Dividends Payable [Line Items] | ||||||||
Cash dividends declared per share of Class A common stock | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.23 | $ 0.69 | $ 0.69 |
Dividends to Class A common stockholders | $ 4,169 | $ 4,168 | $ 4,164 | $ 4,322 | $ 4,420 | $ 4,439 | $ 12,501 | $ 13,181 |
Dividend to Non-controlling unitholders | $ 2,889 | $ 2,889 | $ 2,889 | $ 2,889 | $ 2,889 | $ 2,889 | $ 8,667 | $ 8,667 |
Earnings (Loss) Per Share, Di_5
Earnings (Loss) Per Share, Dividends and Repurchases - Share Repurchases and Retirement (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Jan. 31, 2022 | |
Share Repurchases And Retirement [Line Items] | ||||||
Shares repurchased and retired, Value | $ 3,408 | $ 11,929 | $ 10,552 | $ 1,314 | ||
Common Class A | ||||||
Share Repurchases And Retirement [Line Items] | ||||||
Authorized amount | $ 100,000 | |||||
Shares repurchased and retired, Shares | 160,405 | |||||
Shares repurchased and retired, Value | $ 3,400 | |||||
Shares repurchased, average cost | $ 21.24 | |||||
Share repurchase authorization, Value | $ 62,500 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Finite Lived Intangible Assets [Line Items] | |||||
Net Balance | $ 105,653 | $ 105,653 | $ 120,174 | ||
Amortization expense | 7,600 | $ 8,300 | 22,400 | $ 25,100 | |
Franchise agreements | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 224,574 | 224,574 | 224,397 | ||
Accumulated Amortization | (118,921) | (118,921) | (104,223) | ||
Net Balance | $ 105,653 | $ 105,653 | 120,174 | ||
Franchise agreements | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 12 years 3 months 18 days | 12 years 3 months 18 days | |||
Other Intangible Assets | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | $ 69,543 | $ 69,543 | 66,594 | ||
Accumulated Amortization | (49,037) | (49,037) | (40,831) | ||
Net Balance | $ 20,506 | $ 20,506 | 25,763 | ||
Other Intangible Assets | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 4 years 4 months 24 days | 4 years 4 months 24 days | |||
Software | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | $ 51,580 | $ 51,580 | 48,658 | ||
Accumulated Amortization | (37,365) | (37,365) | (32,198) | ||
Net Balance | $ 14,215 | $ 14,215 | 16,460 | ||
Software | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 4 years 2 months 12 days | 4 years 2 months 12 days | |||
Software Development | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Capitalized software development costs | $ 1,500 | $ 1,500 | 4,600 | ||
Trademarks | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | 1,724 | 1,724 | 1,713 | ||
Accumulated Amortization | (1,377) | (1,377) | (1,272) | ||
Net Balance | $ 347 | $ 347 | 441 | ||
Trademarks | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 9 years 2 months 12 days | 9 years 2 months 12 days | |||
Non-compete agreements | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | $ 12,969 | $ 12,969 | 12,953 | ||
Accumulated Amortization | (7,318) | (7,318) | (4,878) | ||
Net Balance | $ 5,651 | $ 5,651 | 8,075 | ||
Non-compete agreements | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 4 years 3 months 18 days | 4 years 3 months 18 days | |||
Training materials | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | $ 2,400 | $ 2,400 | 2,400 | ||
Accumulated Amortization | $ (2,400) | $ (2,400) | (2,080) | ||
Net Balance | 320 | ||||
Training materials | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 0 years | 0 years | |||
Other.. | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Initial Cost | $ 870 | $ 870 | 870 | ||
Accumulated Amortization | (577) | (577) | (403) | ||
Net Balance | $ 293 | $ 293 | $ 467 | ||
Other.. | Weighted Average | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Useful life of intangible assets | 7 years | 7 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
Remainder of 2023 | $ 7,417 |
2024 | 25,917 |
2025 | 22,185 |
2026 | 15,535 |
2027 | 8,889 |
Thereafter | 46,216 |
Estimated future amortization expense | $ 126,159 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Changes to goodwill | |
Beginning Balance | $ 258,626 |
Effect of changes in foreign currency exchange rates | 188 |
Ending Balance | 258,814 |
Real Estate | |
Changes to goodwill | |
Beginning Balance | 239,993 |
Effect of changes in foreign currency exchange rates | 188 |
Ending Balance | 240,181 |
Mortgage | |
Changes to goodwill | |
Beginning Balance | 18,633 |
Ending Balance | $ 18,633 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued Liabilities. | ||
Marketing Funds | $ 27,613 | $ 47,670 |
Accrued payroll and related employee costs | 13,844 | 14,419 |
Accrued taxes | 1,609 | 2,025 |
Accrued professional fees | 1,451 | 1,331 |
Settlement payable | 55,000 | |
Other | 4,904 | 5,306 |
Accrued liabilities | $ 104,421 | $ 70,751 |
Accrued Liabilities - Rollforwa
Accrued Liabilities - Rollforward related to restructure (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Beginning balance | $ 3,631 | |
Severance and other related expenses | $ 4,300 | 4,246 |
Cash payments | (3,674) | |
Ending balance | 4,203 | 4,203 |
Reorganization | ||
Restructuring Cost and Reserve [Line Items] | ||
Ending balance | $ 3,900 | $ 3,900 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt | ||
Debt instrument carrying value | $ 449,650 | $ 453,101 |
Less unamortized debt issuance costs | (3,056) | (3,532) |
Less unamortized debt discount costs | (1,081) | (1,249) |
Less current portion | (4,600) | (4,600) |
Debt, net of current portion | $ 440,913 | $ 443,720 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt | ||
Remainder of 2023 | $ 1,150 | |
2024 | 4,600 | |
2025 | 4,600 | |
2026 | 4,600 | |
2027 | 4,600 | |
Thereafter | 430,100 | |
Long term debt | $ 449,650 | $ 453,101 |
Debt - Additional Information (
Debt - Additional Information (Details) $ in Millions | 9 Months Ended | |
Jul. 21, 2021 USD ($) | Sep. 30, 2023 USD ($) item | |
London Interbank Offered Rate (LIBOR) | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
SOFR | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Excess cash flow payment | $ 0 | |
Excess cash flow repayment (as a percent) | 50% | |
Leverage ratio under debt covenant | 7 | |
Percentage of proceeds of additional debt incurred not permitted by credit facility required to repay term loans | 100% | |
Percentage of proceeds of assets sales required to repay term loans and reduce revolving commitments | 100% | |
Percentage of amounts recovered under insurance policies required to repay term loans and reduce revolving commitments | 100% | |
Percentage of excess cash flow repayments | 25% | |
Senior Secured Credit Facility Refinancing | Equal To or Less Than 4.25 | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.25 | |
Senior Secured Credit Facility Refinancing | Less Than 3.75 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 3.75 | |
Senior Secured Credit Facility Refinancing | Below 3.50 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 3.50 | |
Senior Secured Credit Facility Refinancing | Above 3.50 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 3.50 | |
Amount of restricted payments limit | $ 50 | |
Percentage of restricted payments limit | 50% | |
Number of calendar quarters | item | 4 | |
Restricted cash payment | $ 24.6 | |
Senior Secured Credit Facility Refinancing | Above 4.50 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.50 | |
Senior Secured Credit Facility Refinancing | Not Exceeding 4.50 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.50 | |
Senior Secured Credit Facility Refinancing | Excess of 4.25 Percent | ||
Debt Instrument [Line Items] | ||
Leverage ratio under debt covenant | 4.25 | |
Senior Secured Credit Facility Refinancing | Federal Reserve Bank of New York | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Senior Secured Credit Facility Refinancing | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% | |
Senior Secured Credit Facility Refinancing | SOFR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% | |
Term loan | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Credit facility, borrowing capacity | $ 460 | |
Mandatory principal payments | $ 1.2 | |
Loan term | 7 years | |
Debt instrument, interest rate | 7.90% | |
Frequency of payments | quarter | |
Revolving loan facility | ||
Debt Instrument [Line Items] | ||
Amounts drawn on line of credit | $ 0 | |
Revolving loan facility | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Credit facility, borrowing capacity | $ 50 | |
Revolving loan facility commitment fee on average daily amount of unused portion | 0.50% | |
ABR loans | Senior Secured Credit Facility Refinancing | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
ABR loans | Senior Secured Credit Facility Refinancing | Eurodollar | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1% |
Fair Value Measurements - Compa
Fair Value Measurements - Company's liabilities measured at fair value on a recurring basis (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Percentage of gross revenues to be paid yearly | 8% | |
Change in franchise sales - percentage | 10% | |
Annual payment period | 120 days | |
Change in discount rate | 1% | |
Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | $ 3,788 | $ 4,527 |
Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 3,788 | 4,527 |
Motto | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 3,200 | 3,710 |
Motto | Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 3,200 | 3,710 |
Gadberry | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 588 | 817 |
Gadberry | Level 3 | Measured on a recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | 588 | $ 817 |
One Percent Change To Discount Rate [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
New billings | $ 100 | |
Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assumed number of franchises sold annually | item | 60 | |
Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assumed number of franchises sold annually | item | 140 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of the contingent consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair value adjustments | $ (280) | $ (692) | $ (379) | $ 1,303 |
Cash payments | (360) | $ (120) | ||
Measured on a recurring basis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Balance at Beginning | 4,527 | |||
Balance at Ending | 3,788 | 3,788 | ||
Level 3 | Measured on a recurring basis | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Balance at Beginning | 4,527 | |||
Fair value adjustments | (379) | |||
Cash payments | (360) | |||
Balance at Ending | $ 3,788 | $ 3,788 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - Senior Secured Credit Facility Refinancing - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Carrying amounts | ||
Debt Instrument [Line Items] | ||
Long term debt, carrying amount | $ 445,513 | $ 448,320 |
Level 2 | Estimated fair value | ||
Debt Instrument [Line Items] | ||
Long term debt, fair value | $ 436,161 | $ 414,587 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 15, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Valuation allowance on net deferred tax assets | $ 59,200 | $ 59,200 | ||
Increase (decrease) of deferred tax valuation allowance | 59,200 | |||
Settlement amount | 55,000 | 55,000 | ||
Amounts payable under tax receivable agreements | 1,600 | 1,600 | $ 26,600 | |
Gain on reduction in tax receivable agreement liability | $ 24,917 | 24,917 | ||
Settled Litigation | Nationwide Claims | ||||
Settlement amount | $ 55,000 | $ 55,000 |
Income Taxes - Uncertain tax po
Income Taxes - Uncertain tax position amounts (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance, beginning | $ 1,014 | $ 1,587 |
Decrease related to prior year tax positions | (756) | |
Increase related to tax positions from acquired companies | 309 | |
Balance, ending | $ 258 | $ 1,896 |
Equity-Based Compensation - 201
Equity-Based Compensation - 2013 Omnibus Incentive Plan (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) employee | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Employee stock-based compensation expense | ||||
Equity-based compensation expense | $ 4,891 | $ 7,834 | $ 14,050 | $ 18,006 |
Accelerated expense | 500 | |||
Time-based awards | ||||
Employee stock-based compensation expense | ||||
Equity-based compensation expense | 3,269 | 5,725 | 8,616 | 13,417 |
Accelerated expense | 1,700 | |||
Time-based awards | Employees and former owner | ||||
Employee stock-based compensation expense | ||||
Accelerated expense | $ 1,400 | |||
Number of employees departed | employee | 2 | |||
Performance-based awards | ||||
Employee stock-based compensation expense | ||||
Equity-based compensation expense | 1,040 | $ 1,130 | 2,601 | 1,408 |
Bonus settled in shares | ||||
Employee stock-based compensation expense | ||||
Equity-based compensation expense | $ 582 | $ 979 | $ 2,833 | $ 3,181 |
Equity-Based Compensation - Tim
Equity-Based Compensation - Time-Based Restricted Stock (Details) - Time-based awards $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Restricted Stock Units | |
Nonvested at beginning of period | shares | 611,102 |
Granted | shares | 689,526 |
Shares vested (including tax withholding) | shares | (412,476) |
Forfeited | shares | (65,160) |
Nonvested at end of period | shares | 822,992 |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 32.23 |
Granted, Weighted average grant date fair value per share | $ / shares | 18.44 |
Shares vested (including tax withholding) , Weighted average grant date fair value per share | $ / shares | 30.72 |
Forfeited, Weighted average grant date fair value per share | $ / shares | 22.47 |
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 22.21 |
Unrecognized compensation cost | $ | $ 11 |
Period for recognition of RSU compensation expense | 1 year 7 months 6 days |
Equity-Based Compensation - Per
Equity-Based Compensation - Performance-based Restricted Stock (Details) - Performance-based awards $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Restricted Stock Units | |
Nonvested at beginning of period | shares | 143,199 |
Granted | shares | 234,621 |
Shares vested (including tax withholding) | shares | (22,304) |
Forfeited | shares | (31,825) |
Nonvested at end of period | shares | 323,691 |
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares | $ 33.47 |
Granted, Weighted average grant date fair value per share | $ / shares | 20.04 |
Shares vested (including tax withholding) , Weighted average grant date fair value per share | $ / shares | 16.81 |
Forfeited, Weighted average grant date fair value per share | $ / shares | 26.72 |
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares | $ 25.55 |
Unrecognized compensation cost | $ | $ 3.2 |
Period for recognition of RSU compensation expense | 1 year 7 months 6 days |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 15, 2023 USD ($) D | Sep. 07, 2023 USD ($) | Oct. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Apr. 22, 2023 item class | |
Commitments and Contingencies | ||||||
Settlement amount | $ 55,000 | $ 55,000 | ||||
Moehrl Related Antitrust Litigations | ||||||
Commitments and Contingencies | ||||||
Number of classes of home sellers | class | 2 | |||||
Number of covered multiple listing service | item | 20 | |||||
Moehrl Related Antitrust Litigations | Pending Litigation | ||||||
Commitments and Contingencies | ||||||
Settlement amount | $ 3,000 | |||||
Moehrl Related Antitrust Litigations | Settled Litigation | ||||||
Commitments and Contingencies | ||||||
Litigation settlement amount awarded to other party | $ 1,800,000 | |||||
Nationwide Claims | Settled Litigation | ||||||
Commitments and Contingencies | ||||||
Settlement amount | $ 55,000 | $ 55,000 | ||||
Nationwide Claims | Settled Litigation | Instalment one | ||||||
Commitments and Contingencies | ||||||
The percentage of amount deposited in the settlement fund | 25% | |||||
The amount deposited in the settlement fund | $ 13,800 | |||||
Nationwide Claims | Settled Litigation | Instalment two | ||||||
Commitments and Contingencies | ||||||
The percentage of amount deposited in the settlement fund | 25% | |||||
Number of business days after preliminary court approval of settlement | D | 10 | |||||
Nationwide Claims | Settled Litigation | Instalment three | ||||||
Commitments and Contingencies | ||||||
The percentage of amount deposited in the settlement fund | 50% | |||||
Number of business days of final court approval of settlement | D | 10 |
Segment Information (Details)
Segment Information (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Information | |
Number of operating segments | 4 |
Segment Information - Revenue (
Segment Information - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information | ||||
Total revenue | $ 81,223 | $ 88,943 | $ 249,071 | $ 272,119 |
Real Estate | ||||
Segment Reporting Information | ||||
Total revenue | 56,563 | 62,655 | 174,752 | 193,168 |
Mortgage | ||||
Segment Reporting Information | ||||
Total revenue | 3,640 | 3,194 | 10,444 | 9,337 |
Marketing Funds fees | ||||
Segment Reporting Information | ||||
Total revenue | 20,853 | 22,736 | 63,272 | 68,496 |
Other. | ||||
Segment Reporting Information | ||||
Total revenue | 167 | 358 | 603 | 1,118 |
Continuing franchise fees | ||||
Segment Reporting Information | ||||
Total revenue | 31,834 | 33,310 | 96,011 | 100,937 |
Continuing franchise fees | Real Estate | ||||
Segment Reporting Information | ||||
Total revenue | 29,040 | 30,682 | 87,974 | 93,421 |
Continuing franchise fees | Mortgage | ||||
Segment Reporting Information | ||||
Total revenue | 2,794 | 2,628 | 8,037 | 7,516 |
Annual dues | ||||
Segment Reporting Information | ||||
Total revenue | 8,456 | 8,911 | 25,661 | 26,847 |
Annual dues | Real Estate | ||||
Segment Reporting Information | ||||
Total revenue | 8,456 | 8,911 | 25,661 | 26,847 |
Broker fees | ||||
Segment Reporting Information | ||||
Total revenue | 14,255 | 16,596 | 39,468 | 50,998 |
Broker fees | Real Estate | ||||
Segment Reporting Information | ||||
Total revenue | 14,255 | 16,596 | 39,468 | 50,998 |
Franchise sales and other revenue | ||||
Segment Reporting Information | ||||
Total revenue | 5,825 | 7,390 | 24,659 | 24,841 |
Franchise sales and other revenue | Real Estate | ||||
Segment Reporting Information | ||||
Total revenue | 4,812 | 6,466 | 21,649 | 21,902 |
Franchise sales and other revenue | Mortgage | ||||
Segment Reporting Information | ||||
Total revenue | $ 846 | $ 566 | $ 2,407 | $ 1,821 |
Segment Information - Reconcili
Segment Information - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||||||
Adjusted EBITDA | $ 26,748 | $ 31,483 | $ 73,312 | $ 95,094 | ||
Settlement charge | (55,000) | (55,000) | ||||
Impairment charge - leased assets | (2,513) | $ (3,700) | (6,248) | |||
Loss on lease termination | $ (2,500) | (2,460) | ||||
Equity-based compensation expense | (4,891) | (7,834) | (14,050) | (18,006) | ||
Acquisition-related expense | (59) | (412) | (160) | (1,997) | ||
Fair value adjustments to contingent consideration | 280 | 692 | 379 | (1,303) | ||
Restructuring charges | (4,278) | (8,092) | (4,245) | (8,092) | ||
Gain on reduction in tax receivable agreement liability | 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 | ||
Real Estate | ||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||||||
Adjusted EBITDA | 28,400 | 32,894 | 79,813 | 99,904 | ||
Mortgage | ||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||||||
Adjusted EBITDA | (1,486) | (1,270) | (5,540) | (4,607) | ||
Other. | ||||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated | ||||||
Adjusted EBITDA | $ (166) | $ (141) | $ (961) | $ (203) |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (59,454) | $ 140 | $ (58,115) | $ 7,420 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Modified | false |
Rule 10b5-1 Arrangement Modified | false |