RE/MAX HOLDINGS, INC., 10-Q filed on 8/6/2020
Quarterly Report
v3.20.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2020  
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, $0.0001 par value per share  
Trading Symbol RMAX  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001581091  
Amendment Flag false  
Common Class A    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   18,123,963
Common Class B    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   1
v3.20.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 84,545 $ 83,001
Restricted cash 14,752 20,600
Accounts and notes receivable, current portion, less allowances of $15,112 and $12,538, respectively 29,732 28,644
Income taxes receivable 639 896
Other current assets 9,773 9,638
Total current assets 139,441 142,779
Property and equipment, net of accumulated depreciation of $15,914 and $14,940, respectively 5,124 5,444
Operating lease right of use assets 48,787 51,129
Franchise agreements, net 79,933 87,670
Other intangible assets, net 27,628 32,315
Goodwill 161,814 159,038
Deferred tax assets, net 50,169 52,595
Income taxes receivable, net of current portion 1,690 1,690
Other assets, net of current portion 13,126 9,692
Total assets 527,712 542,352
Current liabilities:    
Accounts payable 4,225 2,983
Accrued liabilities 44,442 60,163
Income taxes payable 8,210 6,854
Deferred revenue 25,362 25,663
Current portion of debt 2,566 2,648
Current portion of payable pursuant to tax receivable agreements 6,478 3,583
Operating lease liabilities 5,381 5,102
Total current liabilities 96,664 106,996
Debt, net of current portion 222,051 223,033
Payable pursuant to tax receivable agreements, net of current portion 30,745 33,640
Deferred tax liabilities, net 351 293
Deferred revenue, net of current portion 17,905 18,763
Operating lease liabilities, net of current portion 53,197 55,959
Other liabilities, net of current portion 4,642 5,292
Total liabilities 425,555 443,976
Commitments and contingencies (note 12)
Stockholders' equity:    
Additional paid-in capital 473,451 466,945
Retained earnings 28,385 30,525
Accumulated other comprehensive income, net of tax 440 414
Total stockholders' equity attributable to RE/MAX Holdings, Inc. 502,278 497,886
Non-controlling interest (400,121) (399,510)
Total stockholders' equity 102,157 98,376
Total liabilities and stockholders' equity 527,712 542,352
Common Class A    
Stockholders' equity:    
Common stock 2 2
Common Class B    
Stockholders' equity:    
Common stock $ 0 $ 0
v3.20.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Accounts and notes receivable, allowance $ 15,112 $ 12,538
Property and equipment, accumulated depreciation $ 15,914 $ 14,940
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 18,123,963 17,838,233
Common stock, shares outstanding 18,123,963 17,838,233
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
v3.20.2
Condensed Consolidated Statements of Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue:        
Total revenue $ 52,207 $ 71,381 $ 122,479 $ 142,559
Operating expenses:        
Selling, operating and administrative expenses 25,348 25,710 60,025 59,613
Marketing Funds expenses 11,765 18,060 29,287 36,832
Depreciation and amortization 6,412 5,541 12,722 11,099
Total operating expenses 43,525 49,311 102,034 107,544
Operating income 8,682 22,070 20,445 35,015
Other expenses, net:        
Interest expense (2,187) (3,154) (4,869) (6,309)
Interest income 34 342 303 662
Foreign currency transaction gains (losses) 101 61 (169) 116
Total other expenses, net (2,052) (2,751) (4,735) (5,531)
Income before provision for income taxes 6,630 19,319 15,710 29,484
Provision for income taxes (706) (3,186) (4,496) (5,094)
Net income 5,924 16,133 11,214 24,390
Less: net income attributable to non-controlling interest (note 3) 2,435 7,563 5,094 11,411
Net income attributable to RE/MAX Holdings, Inc. $ 3,489 $ 8,570 $ 6,120 $ 12,979
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock        
Basic $ 0.19 $ 0.48 $ 0.34 $ 0.73
Diluted $ 0.19 $ 0.48 $ 0.34 $ 0.73
RMCO, LLC        
Other expenses, net:        
Net income $ 5,924 $ 16,133 $ 11,214 $ 24,390
Less: net income attributable to non-controlling interest (note 3) 2,435 7,563 5,094 11,411
Net income attributable to RE/MAX Holdings, Inc. $ 3,489 $ 8,570 $ 6,120 $ 12,979
Common Class A        
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock        
Basic $ 0.19 $ 0.48 $ 0.34 $ 0.73
Diluted $ 0.19 $ 0.48 $ 0.34 $ 0.73
Weighted average shares of Class A common stock outstanding        
Basic 18,123,963 17,808,321 18,049,114 17,791,942
Diluted 18,146,886 17,833,958 18,090,259 17,825,880
Cash dividends declared per share of Class A common stock $ 0.22 $ 0.21 $ 0.44 $ 0.42
Continuing franchise fees        
Revenue:        
Total revenue $ 16,738 $ 24,894 $ 40,881 $ 49,850
Annual dues        
Revenue:        
Total revenue 8,745 8,819 17,666 17,673
Broker fees        
Revenue:        
Total revenue 10,426 13,459 19,870 22,047
Marketing Funds fees        
Revenue:        
Total revenue 11,765 18,060 29,287 36,832
Franchise sales and other revenue        
Revenue:        
Total revenue $ 4,533 $ 6,149 $ 14,775 $ 16,157
v3.20.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Condensed Consolidated Statements of Comprehensive Income        
Net income $ 5,924 $ 16,133 $ 11,214 $ 24,390
Change in cumulative translation adjustment 117 65 (113) 134
Other comprehensive income (loss), net of tax 117 65 (113) 134
Comprehensive income 6,041 16,198 11,101 24,524
Less: comprehensive income attributable to non-controlling interest 2,490 7,595 4,955 11,476
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax $ 3,551 $ 8,603 $ 6,146 $ 13,048
v3.20.2
Condensed Consolidated Statements of Stockholders' Equity - USD ($)
Common Stock
Common Class A
Common Stock
Common Class B
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of tax
Non-controlling interest
Common Class A
Common Class B
Total
Beginning balance, Value at Dec. 31, 2018 $ 2,000 $ 0 $ 460,101,000 $ 21,138,000 $ 328,000 $ (402,294,000)     $ 79,275,000
Beginning balance, Shares at Dec. 31, 2018 17,754,416 1              
Net income $ 0 $ 0 0 4,409,000 0 3,848,000     8,257,000
Distributions to non-controlling unitholders 0 0 0 0 0 (2,693,000)     (2,693,000)
Equity-based compensation expense and related dividend equivalents, value $ 0 $ 0 3,213,000 (42,000) 0 0     3,171,000
Equity-based compensation expense and related dividend equivalents, shares 70,797 0              
Dividends to Class A common stockholders $ 0 $ 0 0 (3,740,000) 0 0     (3,740,000)
Change in accumulated other comprehensive income 0 0 0 0 36,000 33,000     69,000
Payroll taxes related to net settled restricted stock units, value $ 0 $ 0 (713,000) 0 0 0     (713,000)
Payroll taxes related to net settled restricted stock units, shares (17,265) 0              
Ending balance, Value at Mar. 31, 2019 $ 2,000 $ 0 462,601,000 21,765,000 364,000 (401,106,000)     83,626,000
Ending balance, Shares at Mar. 31, 2019 17,807,948 1              
Beginning balance, Value at Dec. 31, 2018 $ 2,000 $ 0 460,101,000 21,138,000 328,000 (402,294,000)     79,275,000
Beginning balance, Shares at Dec. 31, 2018 17,754,416 1              
Net income                 24,390,000
Change in accumulated other comprehensive income                 134,000
Ending balance, Value at Jun. 30, 2019 $ 2,000 $ 0 463,055,000 26,595,000 397,000 (398,124,000)     91,925,000
Ending balance, Shares at Jun. 30, 2019 17,809,119 1              
Beginning balance, Value at Mar. 31, 2019 $ 2,000 $ 0 462,601,000 21,765,000 364,000 (401,106,000)     83,626,000
Beginning balance, Shares at Mar. 31, 2019 17,807,948 1              
Net income $ 0 $ 0 0 8,570,000 0 7,563,000     16,133,000
Distributions to non-controlling unitholders 0 0 0 0 0 (4,613,000)     (4,613,000)
Equity-based compensation expense and related dividend equivalents, value $ 0 0 182,000 (1,000) 0 0     181,000
Equity-based compensation expense and related dividend equivalents, shares 1,740                
Dividends to Class A common stockholders $ 0 0 0 (3,739,000) 0 0     (3,739,000)
Change in accumulated other comprehensive income 0 0 0 0 33,000 32,000     65,000
Payroll taxes related to net settled restricted stock units, value $ 0 0 (18,000) 0 0 0     (18,000)
Payroll taxes related to net settled restricted stock units, shares (569)                
Other $ 0 0 290,000 0 0 0     290,000
Ending balance, Value at Jun. 30, 2019 $ 2,000 $ 0 463,055,000 26,595,000 397,000 (398,124,000)     91,925,000
Ending balance, Shares at Jun. 30, 2019 17,809,119 1              
Beginning balance, Value at Dec. 31, 2019 $ 2,000 $ 0 466,945,000 30,525,000 414,000 (399,510,000)     98,376,000
Beginning balance, Shares at Dec. 31, 2019 17,838,233 1         17,838,233 1  
Net income $ 0 $ 0 0 2,631,000 0 2,659,000     5,290,000
Distributions to non-controlling unitholders 0 0 0 0 0 (2,777,000)     (2,777,000)
Equity-based compensation expense and related dividend equivalents, value $ 0 $ 0 5,962,000 (289,000) 0 0     5,673,000
Equity-based compensation expense and related dividend equivalents, shares 368,375 0              
Dividends to Class A common stockholders $ 0 $ 0 0 (3,986,000) 0 0     (3,986,000)
Change in accumulated other comprehensive income 0 0 0 0 (36,000) (194,000)     (230,000)
Payroll taxes related to net settled restricted stock units, value $ 0 $ 0 (2,268,000) 0 0 0     (2,268,000)
Payroll taxes related to net settled restricted stock units, shares (82,645) 0              
Ending balance, Value at Mar. 31, 2020 $ 2,000 $ 0 470,639,000 28,881,000 378,000 (399,822,000)     100,078,000
Ending balance, Shares at Mar. 31, 2020 18,123,963 1              
Beginning balance, Value at Dec. 31, 2019 $ 2,000 $ 0 466,945,000 30,525,000 414,000 (399,510,000)     98,376,000
Beginning balance, Shares at Dec. 31, 2019 17,838,233 1         17,838,233 1  
Net income                 11,214,000
Change in accumulated other comprehensive income                 (113,000)
Ending balance, Value at Jun. 30, 2020 $ 2,000 $ 0 473,451,000 28,385,000 440,000 (400,121,000)     102,157,000
Ending balance, Shares at Jun. 30, 2020 18,123,963 1         18,123,963 1  
Beginning balance, Value at Mar. 31, 2020 $ 2,000 $ 0 470,639,000 28,881,000 378,000 (399,822,000)     100,078,000
Beginning balance, Shares at Mar. 31, 2020 18,123,963 1              
Net income $ 0 $ 0 0 3,489,000 0 2,435,000     5,924,000
Distributions to non-controlling unitholders 0 0 0 0 0 (2,789,000)     (2,789,000)
Equity-based compensation expense and related dividend equivalents, value 0 0 2,812,000 0 0 0     2,812,000
Dividends to Class A common stockholders 0 0 0 (3,987,000) 0 0     (3,987,000)
Change in accumulated other comprehensive income 0 0 0 0 62,000 55,000     117,000
Other 0 0 0 2,000 0 0     2,000
Ending balance, Value at Jun. 30, 2020 $ 2,000 $ 0 $ 473,451,000 $ 28,385,000 $ 440,000 $ (400,121,000)     $ 102,157,000
Ending balance, Shares at Jun. 30, 2020 18,123,963 1         18,123,963 1  
v3.20.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash flows from operating activities:    
Net income $ 11,214 $ 24,390
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 12,722 11,099
Bad debt expense 3,860 2,560
Equity-based compensation expense 4,933 5,847
Deferred income tax expense 1,099 2,521
Fair value adjustments to contingent consideration (355) 345
Other, net 229 1,048
Changes in operating assets and liabilities (17,379) (14,827)
Net cash provided by operating activities 16,323 32,983
Cash flows from investing activities:    
Purchases of property, equipment and capitalization of software (3,102) (7,378)
Restricted cash acquired with the Marketing Funds acquisition 0 28,495
Other 0 (1,200)
Net cash (used in) provided by investing activities (3,102) 19,917
Cash flows from financing activities:    
Payments on debt (1,322) (1,311)
Distributions paid to non-controlling unitholders (5,566) (7,306)
Dividends and dividend equivalents paid to Class A common stockholders (8,262) (7,522)
Payments related to tax withholding for share-based compensation (2,268) (731)
Net cash used in financing activities (17,418) (16,870)
Effect of exchange rate changes on cash (107) 109
Net (decrease) increase in cash, cash equivalents and restricted cash (4,304) 36,139
Cash, cash equivalents and restricted cash, beginning of year 103,601 59,974
Cash, cash equivalents and restricted cash, end of period 99,297 96,113
Supplemental disclosures of cash flow information:    
Cash paid for interest 4,608 5,948
Net cash paid for income taxes 1,682 3,885
Payments pursuant to tax receivable agreements $ 0 $ 2,854
v3.20.2
Business and Organization
6 Months Ended
Jun. 30, 2020
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 a franchisor 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”). RE/MAX, founded in 1973, has over 130,000 agents operating in over 8,000 offices and a presence in more than 110 countries and territories. Motto, founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. RE/MAX and Motto are 100% franchised and do not operate any real estate or mortgage brokerage offices.

v3.20.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Consolidated Balance Sheet at December 31, 2019, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements 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 June 30, 2020 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three and six months ended June 30, 2020 and 2019. 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, 2019 (“2019 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.

Revenue Recognition

The Company generates the substantial majority 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 regional franchise owners and franchisees based on the number of RE/MAX agents in the respective franchised region or office and the number of Motto offices.
Annual dues, which are fees charged directly to RE/MAX agents.
Broker fees, which are fees paid on real estate commissions when a RE/MAX agent assists a consumer to buy or sell a home.
Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices.
Franchise sales and other franchise revenue, which consist of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises, master franchise fees, preferred marketing arrangements, approved supplier programs and event-based revenue from training and other programs.

Annual Dues

The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets, and consists of the following in aggregate (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

15,982

$

18,072

$

(17,666)

$

16,388

(a)

Revenue recognized related to the beginning balance was $4.5 million and $11.2 million for the three and six months ended June 30, 2020, respectively.

Franchise Sales

The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

25,884

$

3,758

$

(4,909)

$

24,733

(a)

Revenue recognized related to the beginning balance was $2.0 million and $4.6 million for the three and six months ended June 30, 2020, respectively.

Commissions Related to Franchise Sales

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):

Balance at

Expense

Additions to contract

Balance at end

    

beginning of period

    

recognized

    

cost for new activity

    

of period

Six Months Ended June 30, 2020

$

3,578

$

(711)

$

740

$

3,607

Disaggregated Revenue

In the following table, segment revenue is disaggregated by geographical area (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

U.S.

$

31,420

$

41,689

$

72,529

$

83,424

Canada

4,625

5,893

9,935

11,242

Global

2,326

2,803

5,812

5,543

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

U.S.

10,596

16,381

26,247

33,053

Canada

1,015

1,500

2,670

3,385

Global

154

179

370

394

Total Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising (a)

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

(a)Revenue from the Motto Franchising segment is derived exclusively within the U.S.

In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions in the U.S., Canada and Global (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Company-Owned Regions

$

29,365

$

39,823

$

64,406

$

75,730

Independent Regions

7,780

8,671

16,565

16,772

Global and Other

1,226

1,891

7,305

7,707

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

Certain items in the table above have been reclassified in the three and six months ended June 30, 2019 to conform with the current year presentation.

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):

    

Remaining 6 months of
2020

    

2021

    

2022

    

2023

    

2024

    

2025

    

Thereafter

    

Total

Annual dues

$

12,258

$

4,130

$

$

$

$

$

$

16,388

Franchise sales

3,631

6,274

4,894

3,464

2,178

1,109

3,183

24,733

Total

$

15,889

$

10,404

$

4,894

$

3,464

$

2,178

$

1,109

$

3,183

$

41,121

Cash, Cash Equivalents and Restricted Cash

All cash held by the Marketing Funds is contractually 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):

June 30,

December 31,

    

2020

2019

Cash and cash equivalents

$

84,545

$

83,001

Restricted cash

14,752

20,600

Total cash, cash equivalents and restricted cash

$

99,297

$

103,601

Services Provided to the Marketing Funds by RE/MAX Franchising

RE/MAX Franchising charges the Marketing Funds for various services it performs. These services primarily comprise (a) building and maintaining agent marketing technology, including customer relationship management tools, the remax.com website, agent, office and team websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology, accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income of Holdings as the Marketing Funds have no reported net income.

Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Technology development - operating

$

3,722

$

1,199

$

6,693

$

2,164

Technology development - capital

116

1,529

760

2,464

Marketing staff and administrative services

983

1,024

2,211

2,049

Total

$

4,821

$

3,752

$

9,664

$

6,677

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 of the Company’s material leases are classified as operating leases.

The Company acts as the lessor for four sublease agreements on its corporate headquarters, consisting solely of operating leases.

The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from any of its short-term leases. All leases with a term of 12 months or less at commencement, for which the Company is not reasonably certain to exercise available renewal options that would extend the lease term past 12 months, will be recognized on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Income. The Company adopted this standard effective January 1, 2020 prospectively to all new implementation costs incurred after adoption. The amendments of ASU 2018-15 did not have a significant impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which eliminates certain disclosure requirements for fair value measurements and requires new or modified disclosures. ASU 2018-13 became

effective for the Company on January 1, 2020. This new guidance was applied on a prospective basis. The amendments of ASU 2018-13 did not have a significant impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires earlier recognition of credit losses on loans, held-to-maturity securities, and certain other financial assets. ASU 2016-13 replaces the current incurred loss model with a model requiring entities to estimate expected credit losses over the life of the financial instrument based on both historical information as well as reasonable and supportable forecasts. The FASB requires entities to use a modified retrospective transition approach, in which an adjustment is made to beginning retained earnings for the cumulative effect of adopting the standard. ASU 2016-13 became effective for the Company on January 1, 2020. The standard had an immaterial effect on the Company’s credit losses at transition and no adjustment to retained earnings was required. All periods presented for comparative purposes prior to the adoption date of this standard were not adjusted.

New Accounting Pronouncements Not Yet Adopted

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 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 new guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. The relief is temporary and only available until December 31, 2022, when the reference rate replacement activity is expected to have completed. The Company believes the amendments of ASU 2020-04 will not have a significant impact on the Company’s consolidated financial statements and related disclosures as the Company does not currently engage in interest rate hedging of its LIBOR based debt, nor does it believe it has any material contracts tied to LIBOR other than its debt agreement.

v3.20.2
Non-controlling Interest
6 Months Ended
Jun. 30, 2020
Noncontrolling Interest  
Non-controlling Interest

3. Non-controlling Interest

Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:

June 30, 2020

December 31, 2019

    

Shares

    

Ownership %

    

Shares

    

Ownership %

 

Non-controlling interest ownership of common units in RMCO

12,559,600

40.9

%  

12,559,600

41.3

%

Holdings outstanding Class A common stock (equal to Holdings common units in RMCO)

18,123,963

59.1

%  

17,838,233

58.7

%

Total common units in RMCO

30,683,563

100.0

%  

30,397,833

100.0

%

The weighted average ownership percentages for the applicable reporting periods are used to calculate the “Net income attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):

Three Months Ended June 30, 

2020

2019

    

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

%  

100.00

%  

58.6

%  

41.4

%  

100.0

%

Income before provision for income taxes(a)

$

3,895

$

2,735

$

6,630

$

11,328

$

7,991

$

19,319

Provision for income taxes(b)(c)

(406)

(300)

(706)

(2,758)

(428)

(3,186)

Net income

$

3,489

$

2,435

$

5,924

$

8,570

$

7,563

$

16,133

Six Months Ended June 30, 

2020

2019

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

%

58.6

%

41.4

%

100.0

%

Income before provision for income taxes(a)

$

9,447

$

6,263

$

15,710

$

17,286

$

12,198

$

29,484

Provision for income taxes(b)(c)

(3,327)

(1,169)

(4,496)

(4,307)

(787)

(5,094)

Net income

$

6,120

$

5,094

$

11,214

$

12,979

$

11,411

$

24,390

(a)The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between Holdings and the non-controlling interest due to (i) certain relatively insignificant expenses and (ii) a gain on reduction in the tax receivable agreement liability attributable only to Holdings was recorded for the three months ended March 31, 2020 and subsequently removed for the three months ended June 30, 2020.
(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 pass-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. For the six months ended June 30, 2020, the provision for income taxes attributable to Holdings also includes a decrease in the value of deferred tax assets. See Note 10, Income Taxes for additional information.
(c)The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Otherwise, because RMCO is a pass-through entity, there is no U.S. federal and state income tax provision recorded on the non-controlling interest.

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):

Six Months Ended

June 30, 

    

2020

    

2019

Tax and other distributions

$

40

$

2,031

Dividend distributions

5,526

5,275

Total distributions to non-controlling unitholders

$

5,566

$

7,306

v3.20.2
Earnings Per Share and Dividends
6 Months Ended
Jun. 30, 2020
Earnings Per Share and Dividends  
Earnings Per Share and Dividends

4. Earnings Per Share and Dividends

Earnings Per Share

The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except shares and per share information):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Numerator

Net income attributable to RE/MAX Holdings, Inc.

$

3,489

$

8,570

$

6,120

$

12,979

Denominator for basic net income per share of Class A common stock

Weighted average shares of Class A common stock outstanding

18,123,963

17,808,321

18,049,114

17,791,942

Denominator for diluted net income per share of Class A common stock

Weighted average shares of Class A common stock outstanding

18,123,963

17,808,321

18,049,114

17,791,942

Add dilutive effect of the following:

Restricted stock units

22,923

25,637

41,145

33,938

Weighted average shares of Class A common stock outstanding, diluted

18,146,886

17,833,958

18,090,259

17,825,880

Earnings per share of Class A common stock

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic

$

0.19

$

0.48

$

0.34

$

0.73

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted

$

0.19

$

0.48

$

0.34

$

0.73

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 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):

Six Months Ended June 30, 

2020

2019

Quarter end declared

    

Date paid

    

Per share

    

Amount paid
to Class A
stockholders

    

Amount paid
to non-controlling
unitholders

    

Date paid

    

Per share

    

Amount paid
to Class A
stockholders

    

Amount paid
to non-controlling
unitholders

March 31

March 18, 2020

$

0.22

$

3,986

$

2,763

March 20, 2019

$

0.21

$

3,740

$

2,638

June 30

June 2, 2020

0.22

3,987

2,763

May 29, 2019

0.21

3,739

2,637

$

0.44

$

7,973

$

5,526

$

0.42

$

7,479

$

5,275

On August 5, 2020, the Company’s Board of Directors declared a quarterly dividend of $0.22 per share on all outstanding shares of Class A common stock, which is payable on September 2, 2020 to stockholders of record at the close of business on August 19, 2020.

v3.20.2
Acquisitions
6 Months Ended
Jun. 30, 2020
Acquisitions  
Acquisitions

5. Acquisitions

First

On December 16, 2019, the Company acquired First Leads, Inc. (“First”) for $15 million in cash generated from operations. First provides a mobile app that leverages data science, machine learning and human interaction to help real estate professionals better leverage the value of their personal network and was acquired to complement the Company’s technology offerings and booj Platform.

Marketing Funds

On January 1, 2019, the Company acquired all of the regional and pan-regional advertising fund entities previously owned by its founder and Chairman of the Board of Directors, David Liniger, for a nominal amount. As in the past, the Marketing Funds are contractually obligated to use the funds collected to support both regional and pan-regional marketing campaigns designed to build and maintain brand awareness and to support the Company’s agent marketing

technology. The acquisitions of the Marketing Funds were part of the Company’s succession plan, and ownership of the Marketing Funds by the franchisor is a common structure. Expenses incurred with the acquisition of the Marketing Funds were not material.

The total assets equal the total liabilities of the Marketing Funds and beginning January 1, 2019, are reflected in the condensed consolidated financial statements of the Company. The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands):

Restricted cash

$

28,495

Other current assets

8,472

Property and equipment

788

Other assets, net of current portion

126

Total assets acquired

37,881

Other current liabilities

37,881

Total liabilities assumed

37,881

Total acquisition price

$

-

The Company finalized its accounting for the acquisition of the Marketing Funds during the three months ended June 30, 2019. The Marketing Funds constitutes a business and was accounted for using the fair value acquisition method. The total purchase price was allocated to the assets acquired based on their estimated fair values.

v3.20.2
Intangible Assets and Goodwill
6 Months Ended
Jun. 30, 2020
Intangible Assets and Goodwill  
Intangible Assets and Goodwill

6. 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 June 30, 2020

As of December 31, 2019

Amortization

Initial

Accumulated

Net

Initial

Accumulated

Net

Period

Cost

Amortization

Balance

Cost

Amortization

Balance

Franchise agreements

12.5

$

180,867

$

(100,934)

$

79,933

$

180,867

$

(93,197)

$

87,670

Other intangible assets:

Software (a)

4.3

$

36,946

$

(13,628)

$

23,318

$

36,680

$

(9,653)

$

27,027

Trademarks

9.0

2,021

(1,148)

873

1,904

(1,037)

867

Non-compete agreements

4.5

3,700

(2,168)

1,532

3,700

(1,546)

2,154

Training materials

5.0

2,400

(880)

1,520

2,400

(640)

1,760

Other

3.8

810

(425)

385

800

(293)

507

Total other intangible assets

4.6

$

45,877

$

(18,249)

$

27,628

$

45,484

$

(13,169)

$

32,315

(a)As of June 30, 2020 and December 31, 2019, capitalized software development costs of $0.8 million and $10.5 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 for the three months ended June 30, 2020 and 2019 was $6.0 million and $5.1 million, respectively. Amortization expense for the six months ended June 30, 2020 and 2019 was $11.8 million and $10.3 million, respectively.

The estimated future amortization expense for the next five years related to intangible assets is as follows (in thousands):

As of June 30, 2020:

Remainder of 2020

$

17,556

2021

26,133

2022

19,516

2023

15,371

2024

12,916

$

91,492

The following table presents changes to goodwill (in thousands), by segment:

    

RE/MAX
Franchising

    

Motto Franchising

    

Total

Balance, January 1, 2020

$

147,238

$

11,800

$

159,038

Goodwill recognized from acquisitions(a)

2,927

2,927

Effect of changes in foreign currency exchange rates

(151)

(151)

Balance, June 30, 2020

$

150,014

$

11,800

$

161,814

(a)The purpose of the First acquisition is to deliver technology solutions to RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from this acquisition to RE/MAX Franchising. The change in goodwill relates to updates to the initial purchase price allocation.

v3.20.2
Accrued Liabilities
6 Months Ended
Jun. 30, 2020
Accrued Liabilities.  
Accrued Liabilities

7. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

June 30, 

December 31, 

2020

2019

Marketing Funds (a)

$

36,837

$

39,672

Accrued payroll and related employee costs

2,384

11,900

Accrued taxes

1,317

2,451

Accrued professional fees

1,712

2,047

Other

2,192

4,093

$

44,442

$

60,163

(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.

v3.20.2
Debt
6 Months Ended
Jun. 30, 2020
Debt  
Debt

8. Debt

Debt, net of current portion, consists of the following (in thousands):

June 30, 

    

December 31, 

2020

2019

Senior Secured Credit Facility

$

226,188

$

227,363

Other long-term financing(a)

216

362

Less unamortized debt issuance costs

(1,034)

(1,182)

Less unamortized debt discount costs

(753)

(862)

Less current portion(a)

(2,566)

(2,648)

$

222,051

$

223,033

(a)Includes financing assumed with the acquisition of booj. As of June 30, 2020, the carrying value of this financing approximates the fair value.

Maturities of debt are as follows (in thousands):

Six Months Ended June 30, 2020

    

Remainder of 2020

$

1,326

2021

2,414

2022

2,350

2023

220,314

$

226,404

Senior Secured Credit Facility

In July 2013, the Company entered into a credit agreement with several lenders and administered by a bank, referred to herein as the “2013 Senior Secured Credit Facility.” In December 2016, the 2013 Senior Secured Credit Facility was amended and restated, referred to herein as the “Senior Secured Credit Facility.” The Senior Secured Credit Facility consists of a $235.0 million term loan facility which matures on December 15, 2023 and a $10.0 million revolving loan facility for which any loans outstanding must be repaid on December 15, 2021. As of June 30, 2020, the Company had no revolving loans outstanding under its Senior Secured Credit Facility. As of June 30, 2020, the interest rate on the term loan facility was 3.50%.

v3.20.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2020
Fair Value Measurements  
Fair Value Measurements

9. Fair Value Measurements

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 2019 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 June 30, 2020

As of December 31, 2019

    

Fair Value

    

Level 1

    

Level 2

    

Level 3

Fair Value

    

Level 1

    

Level 2

    

Level 3

Liabilities

Contingent consideration

$

4,650

$

$

$

4,650

$

5,005

$

$

$

5,005

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 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 50-80 franchises sold annually, with a weighted average of approximately 70. The model also assumes a discount rate of approximately 15%. A 10% reduction in the number of franchise sales would decrease the liability by $0.3 million. A 1% change to the

discount rate applied to the forecast would change the liability by approximately $0.1 million. The Company measures this liability 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 and recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets.

The table below presents a reconciliation of this liability (in thousands):

Balance at January 1, 2020

$

5,005

Fair value adjustments

(355)

Balance at June 30, 2020

$

4,650


The following table summarizes the carrying value and fair value of the Senior Secured Credit Facility (in thousands):

June 30, 2020

December 31, 2019

    

Carrying
Amount

    

Fair Value
Level 2

    

Carrying
Amount

    

Fair Value
Level 2

Senior Secured Credit Facility

$

224,401

$

218,271

$

225,319

$

227,363

v3.20.2
Income Taxes
6 Months Ended
Jun. 30, 2020
Income Taxes  
Income Taxes

10. Income Taxes

The “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income is based on an estimate of the Company’s annualized effective income tax rate.

For the quarterly period ended March 31, 2020, the Company determined that it was unable to reliably estimate its annual effective tax rate to apply to its income for the quarter, as described in ASC 740 as a result of the uncertainty surrounding the COVID-19 pandemic. Therefore, the Company elected to record its tax provision for the three months ended March 31, 2020 using its actual effective tax rate. During the current period, the Company determined it is able to reliably estimate its annual effective tax rate to apply to its income, therefore, the Company elected to record its tax provision for the three and six months ended June 30, 2020 using its annualized effective income tax rate.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted which includes several significant business tax provisions. The Company recognized the effect of this change in tax law during the first quarter which was not significant. The CARES Act provides a five-year carryback of net operating losses generated in tax years beginning after December 31, 2017 and before January 1, 2020. Based upon this change in law, any 2020 tax loss, if realized, will be able to be carried back five years.

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted which includes significant changes to the U.S. Corporate tax system. The Company will continue to evaluate tax planning opportunities as well as monitor any changes that might be contained in the final regulations related to the TCJA.

v3.20.2
Equity-Based Compensation
6 Months Ended
Jun. 30, 2020
Equity-Based Compensation  
Equity-Based Compensation

11. Equity-Based Compensation

Employee equity-based compensation expense, net of the amount capitalized in internally developed software, is as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2020

    

2019

    

2020

    

2019

Expense from time-based awards (a)

$

2,358

$

1,872

$

4,495

$

3,963

Expense from performance-based awards (a)(b)

389

(872)

470

250

Expense from bonus to be settled in shares (c)

920

1,818

Equity-based compensation capitalized (a)

(124)

(32)

(184)

Equity-based compensation expense

$

2,747

$

1,796

$

4,933

$

5,847

(a)Includes expense recognized and costs capitalized in connection with the awards granted to booj employees and former owners at the time of acquisition.
(b)Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. The Company granted certain performance awards to booj employees that vested in 2019 and therefore have no comparable amounts in 2020.
(c)In 2019, the Company revised its annual bonus plan so that a portion of the bonus for most employees would be settled in shares if the Company met certain performance metrics. The Company eliminated the 2020 corporate bonus as part of cost savings measures in connection with the COVID-19 pandemic.

Time-based Restricted Stock Units

The following table summarizes equity-based compensation activity related to time-based restricted stock units (“RSUs”):

    

RSUs

    

Weighted average
grant date fair
value per share

Balance, January 1, 2020

455,452

$

46.15

Granted

296,000

$

29.16

Shares vested (including tax withholding) (a)

(163,028)

$

45.58

Forfeited

(9,076)

$

41.09

Balance, June 30, 2020

579,348

$

37.71

(a)Pursuant to the terms of the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards.

At June 30, 2020, there was $16.3 million of total unrecognized RSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.0 years for time-based restricted stock units.

Performance-based Restricted Stock Units

The following table summarizes equity-based compensation activity related to performance-based restricted stock units (“PSUs”):

    

PSUs

    

Weighted average
grant date fair
value per share

Balance, January 1, 2020

139,964

$

45.31

Granted

203,765

$

28.29

Shares vested (including tax withholding) (a)

(6,331)

$

38.49

Forfeited

(4,841)

$

45.93

Balance, June 30, 2020

332,557

$

35.00

(a)Represents the total participant target award.

At June 30, 2020, there was $3.3 million of total unrecognized PSU expense, all of which is related to unvested awards. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.3 years for PSUs.

v3.20.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies  
Commitments and Contingencies

12. Commitments and Contingencies

In March and April of 2019, three putative class action complaints were filed against National Association of Realtors (“NAR”), Realogy Holdings Corp., HomeServices of America, Inc, RE/MAX Holdings, and Keller Williams Realty, Inc. The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the Northern District of Illinois. The second was filed on April 15, 2019, by plaintiff Sawbill Strategies, Inc., also in the Northern District of Illinois. These two

actions have now been consolidated. A third action was filed by plaintiffs Joshua Sitzer and four other individual plaintiffs in the Western District of Missouri. The complaints (collectively “Moehrl/Sitzer suits”) make substantially similar allegations and seek substantially similar relief. The plaintiffs allege that a NAR rule requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property, resulting in inflated costs to sellers 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 add allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. Additionally, plaintiffs in the action filed by Sitzer et al allege violations of the Missouri Merchandising Practices Act. By agreement, RE/MAX, LLC was substituted for RE/MAX Holdings as defendant in the actions. Among other requested relief, plaintiffs seek damages against the defendants and an injunction enjoining defendants from requiring sellers to pay the buyer broker. The Company intends to vigorously defend against all of these claims. The Company may become involved in litigation or other legal proceedings concerning the same or similar allegations to those made in the Moehrl/Sitzer suits.

v3.20.2
Segment Information
6 Months Ended
Jun. 30, 2020
Segment Information  
Segment Information

13. Segment Information

The Company operates under the following four operating segments: RE/MAX Franchising, Motto Franchising, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”. Motto Franchising 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 2019 Annual Report on Form 10-K.


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

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Continuing franchise fees (a)

$

15,795

$

23,978

$

38,672

$

48,095

Annual dues

8,745

8,819

17,666

17,673

Broker fees (a)

10,426

13,459

19,870

22,047

Franchise sales and other revenue

3,405

4,129

12,068

12,394

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

Continuing franchise fees

943

916

2,209

1,755

Franchise sales and other revenue

127

114

319

234

Total Motto Franchising

1,070

1,030

2,528

1,989

Marketing Funds fees (a)

11,765

18,060

29,287

36,832

Other

1,001

1,906

2,388

3,529

Total revenue

$

52,207

$

71,381

$

122,479

$

142,559

(a)Continuing franchise fees and Marketing Funds fees declined primarily due to the temporary COVID-19 related financial support programs offered to franchisees. Broker fees declined primarily due to reductions in home sale transactions due to the COVID-19 pandemic.

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

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Adjusted EBITDA: RE/MAX Franchising

$

19,318

$

30,021

$

40,049

$

54,165

Adjusted EBITDA: Motto Franchising

(741)

(719)

(1,319)

(1,460)

Adjusted EBITDA: Other

332

580

(282)

167

Adjusted EBITDA: Consolidated

18,909

29,882

38,448

52,872

Gain (loss) on sale or disposition of assets

11

16

22

(363)

Equity-based compensation expense

(2,747)

(1,796)

(4,933)

(5,847)

Acquisition-related expense (a)

(328)

(15)

(894)

(87)

Gain on reduction in tax receivable agreement liability

(500)

Fair value adjustments to contingent consideration (b)

(150)

(415)

355

(345)

Interest income

34

342

303

662

Interest expense

(2,187)

(3,154)

(4,869)

(6,309)

Depreciation and amortization

(6,412)

(5,541)

(12,722)

(11,099)

Income before provision for income taxes

$

6,630

$

19,319

$

15,710

$

29,484

(a)Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies.
(b)Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 9, Fair Value Measurements for additional information.
v3.20.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2020
Summary of Significant Accounting Policies  
Basis of Presentation

Basis of Presentation

The accompanying Consolidated Balance Sheet at December 31, 2019, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements 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 June 30, 2020 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three and six months ended June 30, 2020 and 2019. 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, 2019 (“2019 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.

Revenue Recognition

Revenue Recognition

The Company generates the substantial majority 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 regional franchise owners and franchisees based on the number of RE/MAX agents in the respective franchised region or office and the number of Motto offices.
Annual dues, which are fees charged directly to RE/MAX agents.
Broker fees, which are fees paid on real estate commissions when a RE/MAX agent assists a consumer to buy or sell a home.
Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices.
Franchise sales and other franchise revenue, which consist of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises, master franchise fees, preferred marketing arrangements, approved supplier programs and event-based revenue from training and other programs.

Annual Dues

The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets, and consists of the following in aggregate (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

15,982

$

18,072

$

(17,666)

$

16,388

(a)

Revenue recognized related to the beginning balance was $4.5 million and $11.2 million for the three and six months ended June 30, 2020, respectively.

Franchise Sales

The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

25,884

$

3,758

$

(4,909)

$

24,733

(a)

Revenue recognized related to the beginning balance was $2.0 million and $4.6 million for the three and six months ended June 30, 2020, respectively.

Commissions Related to Franchise Sales

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):

Balance at

Expense

Additions to contract

Balance at end

    

beginning of period

    

recognized

    

cost for new activity

    

of period

Six Months Ended June 30, 2020

$

3,578

$

(711)

$

740

$

3,607

Disaggregated Revenue

In the following table, segment revenue is disaggregated by geographical area (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

U.S.

$

31,420

$

41,689

$

72,529

$

83,424

Canada

4,625

5,893

9,935

11,242

Global

2,326

2,803

5,812

5,543

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

U.S.

10,596

16,381

26,247

33,053

Canada

1,015

1,500

2,670

3,385

Global

154

179

370

394

Total Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising (a)

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

(a)Revenue from the Motto Franchising segment is derived exclusively within the U.S.

In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions in the U.S., Canada and Global (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Company-Owned Regions

$

29,365

$

39,823

$

64,406

$

75,730

Independent Regions

7,780

8,671

16,565

16,772

Global and Other

1,226

1,891

7,305

7,707

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

Certain items in the table above have been reclassified in the three and six months ended June 30, 2019 to conform with the current year presentation.

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):

    

Remaining 6 months of
2020

    

2021

    

2022

    

2023

    

2024

    

2025

    

Thereafter

    

Total

Annual dues

$

12,258

$

4,130

$

$

$

$

$

$

16,388

Franchise sales

3,631

6,274

4,894

3,464

2,178

1,109

3,183

24,733

Total

$

15,889

$

10,404

$

4,894

$

3,464

$

2,178

$

1,109

$

3,183

$

41,121

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

All cash held by the Marketing Funds is contractually 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):

June 30,

December 31,

    

2020

2019

Cash and cash equivalents

$

84,545

$

83,001

Restricted cash

14,752

20,600

Total cash, cash equivalents and restricted cash

$

99,297

$

103,601

Services Provided to the Marketing Funds By RE/MAX Franchising

Services Provided to the Marketing Funds by RE/MAX Franchising

RE/MAX Franchising charges the Marketing Funds for various services it performs. These services primarily comprise (a) building and maintaining agent marketing technology, including customer relationship management tools, the remax.com website, agent, office and team websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology, accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income of Holdings as the Marketing Funds have no reported net income.

Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Technology development - operating

$

3,722

$

1,199

$

6,693

$

2,164

Technology development - capital

116

1,529

760

2,464

Marketing staff and administrative services

983

1,024

2,211

2,049

Total

$

4,821

$

3,752

$

9,664

$

6,677

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 of the Company’s material leases are classified as operating leases.

The Company acts as the lessor for four sublease agreements on its corporate headquarters, consisting solely of operating leases.

The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from any of its short-term leases. All leases with a term of 12 months or less at commencement, for which the Company is not reasonably certain to exercise available renewal options that would extend the lease term past 12 months, will be recognized on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which clarifies that implementation costs incurred by customers in cloud computing arrangements are deferred if they would be capitalized by customers in the software licensing arrangements under the internal-use software guidance. ASU 2018-15 also clarifies that any capitalized costs should not be recorded to “Depreciation and amortization” in the Consolidated Statements of Income. The Company adopted this standard effective January 1, 2020 prospectively to all new implementation costs incurred after adoption. The amendments of ASU 2018-15 did not have a significant impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which eliminates certain disclosure requirements for fair value measurements and requires new or modified disclosures. ASU 2018-13 became

effective for the Company on January 1, 2020. This new guidance was applied on a prospective basis. The amendments of ASU 2018-13 did not have a significant impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires earlier recognition of credit losses on loans, held-to-maturity securities, and certain other financial assets. ASU 2016-13 replaces the current incurred loss model with a model requiring entities to estimate expected credit losses over the life of the financial instrument based on both historical information as well as reasonable and supportable forecasts. The FASB requires entities to use a modified retrospective transition approach, in which an adjustment is made to beginning retained earnings for the cumulative effect of adopting the standard. ASU 2016-13 became effective for the Company on January 1, 2020. The standard had an immaterial effect on the Company’s credit losses at transition and no adjustment to retained earnings was required. All periods presented for comparative purposes prior to the adoption date of this standard were not adjusted.

New Accounting Pronouncements Not Yet Adopted

New Accounting Pronouncements Not Yet Adopted

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 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 new guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. The relief is temporary and only available until December 31, 2022, when the reference rate replacement activity is expected to have completed. The Company believes the amendments of ASU 2020-04 will not have a significant impact on the Company’s consolidated financial statements and related disclosures as the Company does not currently engage in interest rate hedging of its LIBOR based debt, nor does it believe it has any material contracts tied to LIBOR other than its debt agreement.

v3.20.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2020
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):

Balance at

Expense

Additions to contract

Balance at end

    

beginning of period

    

recognized

    

cost for new activity

    

of period

Six Months Ended June 30, 2020

$

3,578

$

(711)

$

740

$

3,607

Schedule of disaggregated revenue

In the following table, segment revenue is disaggregated by geographical area (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

U.S.

$

31,420

$

41,689

$

72,529

$

83,424

Canada

4,625

5,893

9,935

11,242

Global

2,326

2,803

5,812

5,543

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

U.S.

10,596

16,381

26,247

33,053

Canada

1,015

1,500

2,670

3,385

Global

154

179

370

394

Total Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising (a)

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

(a)Revenue from the Motto Franchising segment is derived exclusively within the U.S.

In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions in the U.S., Canada and Global (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Company-Owned Regions

$

29,365

$

39,823

$

64,406

$

75,730

Independent Regions

7,780

8,671

16,565

16,772

Global and Other

1,226

1,891

7,305

7,707

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

Marketing Funds

11,765

18,060

29,287

36,832

Motto Franchising

1,070

1,030

2,528

1,989

Other

1,001

1,906

2,388

3,529

Total

$

52,207

$

71,381

$

122,479

$

142,559

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):

    

Remaining 6 months of
2020

    

2021

    

2022

    

2023

    

2024

    

2025

    

Thereafter

    

Total

Annual dues

$

12,258

$

4,130

$

$

$

$

$

$

16,388

Franchise sales

3,631

6,274

4,894

3,464

2,178

1,109

3,183

24,733

Total

$

15,889

$

10,404

$

4,894

$

3,464

$

2,178

$

1,109

$

3,183

$

41,121

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):

June 30,

December 31,

    

2020

2019

Cash and cash equivalents

$

84,545

$

83,001

Restricted cash

14,752

20,600

Total cash, cash equivalents and restricted cash

$

99,297

$

103,601

Schedule of cost charges to intersegment

Costs charged from RE/MAX Franchising to the Marketing Funds are as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Technology development - operating

$

3,722

$

1,199

$

6,693

$

2,164

Technology development - capital

116

1,529

760

2,464

Marketing staff and administrative services

983

1,024

2,211

2,049

Total

$

4,821

$

3,752

$

9,664

$

6,677

Annual dues  
Schedule of contract liability

The activity in the Company’s deferred revenue for annual dues is included in “Deferred revenue” and “Deferred revenue, net of current portion” on the Condensed Consolidated Balance Sheets, and consists of the following in aggregate (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

15,982

$

18,072

$

(17,666)

$

16,388

(a)

Revenue recognized related to the beginning balance was $4.5 million and $11.2 million for the three and six months ended June 30, 2020, respectively.

Franchise sales  
Schedule of contract liability

The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands):

    

Balance at
beginning of period

    

New billings

    

Revenue recognized(a)

    

Balance at end
of period

Six Months Ended June 30, 2020

$

25,884

$

3,758

$

(4,909)

$

24,733

(a)

Revenue recognized related to the beginning balance was $2.0 million and $4.6 million for the three and six months ended June 30, 2020, respectively.

v3.20.2
Non-controlling Interest (Tables)
6 Months Ended
Jun. 30, 2020
Noncontrolling Interest  
Summary of Ownership of the Common Units

June 30, 2020

December 31, 2019

    

Shares

    

Ownership %

    

Shares

    

Ownership %

 

Non-controlling interest ownership of common units in RMCO

12,559,600

40.9

%  

12,559,600

41.3

%

Holdings outstanding Class A common stock (equal to Holdings common units in RMCO)

18,123,963

59.1

%  

17,838,233

58.7

%

Total common units in RMCO

30,683,563

100.0

%  

30,397,833

100.0

%

Reconciliation from Income Before Provision for Income Taxes to Net Income

The weighted average ownership percentages for the applicable reporting periods are used to calculate the “Net income attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):

Three Months Ended June 30, 

2020

2019

    

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

%  

100.00

%  

58.6

%  

41.4

%  

100.0

%

Income before provision for income taxes(a)

$

3,895

$

2,735

$

6,630

$

11,328

$

7,991

$

19,319

Provision for income taxes(b)(c)

(406)

(300)

(706)

(2,758)

(428)

(3,186)

Net income

$

3,489

$

2,435

$

5,924

$

8,570

$

7,563

$

16,133

Six Months Ended June 30, 

2020

2019

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

%

58.6

%

41.4

%

100.0

%

Income before provision for income taxes(a)

$

9,447

$

6,263

$

15,710

$

17,286

$

12,198

$

29,484

Provision for income taxes(b)(c)

(3,327)

(1,169)

(4,496)

(4,307)

(787)

(5,094)

Net income

$

6,120

$

5,094

$

11,214

$

12,979

$

11,411

$

24,390

(a)The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between Holdings and the non-controlling interest due to (i) certain relatively insignificant expenses and (ii) a gain on reduction in the tax receivable agreement liability attributable only to Holdings was recorded for the three months ended March 31, 2020 and subsequently removed for the three months ended June 30, 2020.
(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 pass-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. For the six months ended June 30, 2020, the provision for income taxes attributable to Holdings also includes a decrease in the value of deferred tax assets. See Note 10, Income Taxes for additional information.
(c)The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Otherwise, because RMCO is a pass-through entity, there is no U.S. federal and state income tax provision recorded on the non-controlling interest.
Distributions Paid or Payable

Six Months Ended

June 30, 

    

2020

    

2019

Tax and other distributions

$

40

$

2,031

Dividend distributions

5,526

5,275

Total distributions to non-controlling unitholders

$

5,566

$

7,306

v3.20.2
Earnings Per Share and Dividends (Tables)
6 Months Ended
Jun. 30, 2020
Earnings Per Share and Dividends  
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 EPS calculations (in thousands, except shares and per share information):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Numerator

Net income attributable to RE/MAX Holdings, Inc.

$

3,489

$

8,570

$

6,120

$

12,979

Denominator for basic net income per share of Class A common stock

Weighted average shares of Class A common stock outstanding

18,123,963

17,808,321

18,049,114

17,791,942

Denominator for diluted net income per share of Class A common stock

Weighted average shares of Class A common stock outstanding

18,123,963

17,808,321

18,049,114

17,791,942

Add dilutive effect of the following:

Restricted stock units

22,923

25,637

41,145

33,938

Weighted average shares of Class A common stock outstanding, diluted

18,146,886

17,833,958

18,090,259

17,825,880

Earnings per share of Class A common stock

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic

$

0.19

$

0.48

$

0.34

$

0.73

Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted

$

0.19

$

0.48

$

0.34

$

0.73

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):

Six Months Ended June 30, 

2020

2019

Quarter end declared

    

Date paid

    

Per share

    

Amount paid
to Class A
stockholders

    

Amount paid
to non-controlling
unitholders

    

Date paid

    

Per share

    

Amount paid
to Class A
stockholders

    

Amount paid
to non-controlling
unitholders

March 31

March 18, 2020

$

0.22

$

3,986

$

2,763

March 20, 2019

$

0.21

$

3,740

$

2,638

June 30

June 2, 2020

0.22

3,987

2,763

May 29, 2019

0.21

3,739

2,637

$

0.44

$

7,973

$

5,526

$

0.42

$

7,479

$

5,275

v3.20.2
Acquisitions (Tables)
6 Months Ended
Jun. 30, 2020
Marketing funds  
Acquisitions  
Schedule of Fair Value Of Assets at Acquisition Date The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands):

Restricted cash

$

28,495

Other current assets

8,472

Property and equipment

788

Other assets, net of current portion

126

Total assets acquired

37,881

Other current liabilities

37,881

Total liabilities assumed

37,881

Total acquisition price

$

-

v3.20.2
Intangible Assets and Goodwill (Tables)
6 Months Ended
Jun. 30, 2020
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 June 30, 2020

As of December 31, 2019

Amortization

Initial

Accumulated

Net

Initial

Accumulated

Net

Period

Cost

Amortization

Balance

Cost

Amortization

Balance

Franchise agreements

12.5

$

180,867

$

(100,934)

$

79,933

$

180,867

$

(93,197)

$

87,670

Other intangible assets:

Software (a)

4.3

$

36,946

$

(13,628)

$

23,318

$

36,680

$

(9,653)

$

27,027

Trademarks

9.0

2,021

(1,148)

873

1,904

(1,037)

867

Non-compete agreements

4.5

3,700

(2,168)

1,532

3,700

(1,546)

2,154

Training materials

5.0

2,400

(880)

1,520

2,400

(640)

1,760

Other

3.8

810

(425)

385

800

(293)

507

Total other intangible assets

4.6

$

45,877

$

(18,249)

$

27,628

$

45,484

$

(13,169)

$

32,315

(a)As of June 30, 2020 and December 31, 2019, capitalized software development costs of $0.8 million and $10.5 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

The estimated future amortization expense for the next five years related to intangible assets is as follows (in thousands):

As of June 30, 2020:

Remainder of 2020

$

17,556

2021

26,133

2022

19,516

2023

15,371

2024

12,916

$

91,492

Schedule of changes to goodwill

The following table presents changes to goodwill (in thousands), by segment:

    

RE/MAX
Franchising

    

Motto Franchising

    

Total

Balance, January 1, 2020

$

147,238

$

11,800

$

159,038

Goodwill recognized from acquisitions(a)

2,927

2,927

Effect of changes in foreign currency exchange rates

(151)

(151)

Balance, June 30, 2020

$

150,014

$

11,800

$

161,814

(a)The purpose of the First acquisition is to deliver technology solutions to RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from this acquisition to RE/MAX Franchising. The change in goodwill relates to updates to the initial purchase price allocation.
v3.20.2
Accrued Liabilities (Tables)
6 Months Ended
Jun. 30, 2020
Accrued Liabilities.  
Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

June 30, 

December 31, 

2020

2019

Marketing Funds (a)

$

36,837

$

39,672

Accrued payroll and related employee costs

2,384

11,900

Accrued taxes

1,317

2,451

Accrued professional fees

1,712

2,047

Other

2,192

4,093

$

44,442

$

60,163

(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.
v3.20.2
Debt (Tables)
6 Months Ended
Jun. 30, 2020
Debt  
Schedule of debt

Debt, net of current portion, consists of the following (in thousands):

June 30, 

    

December 31, 

2020

2019

Senior Secured Credit Facility

$

226,188

$

227,363

Other long-term financing(a)

216

362

Less unamortized debt issuance costs

(1,034)

(1,182)

Less unamortized debt discount costs

(753)

(862)

Less current portion(a)

(2,566)

(2,648)

$

222,051

$

223,033

(a)Includes financing assumed with the acquisition of booj. As of June 30, 2020, the carrying value of this financing approximates the fair value.
Schedule of Maturities of Debt

Maturities of debt are as follows (in thousands):

Six Months Ended June 30, 2020

    

Remainder of 2020

$

1,326

2021

2,414

2022

2,350

2023

220,314

$

226,404

v3.20.2
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2020
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 June 30, 2020

As of December 31, 2019

    

Fair Value

    

Level 1

    

Level 2

    

Level 3

Fair Value

    

Level 1

    

Level 2

    

Level 3

Liabilities

Contingent consideration

$

4,650

$

$

$

4,650

$

5,005

$

$

$

5,005

Reconciliation of all liabilities of Company measured at fair value on a recurring basis using significant unobservable inputs

The table below presents a reconciliation of this liability (in thousands):

Balance at January 1, 2020

$

5,005

Fair value adjustments

(355)

Balance at June 30, 2020

$

4,650

Summary of carrying value and fair value of senior secured credit facility The following table summarizes the carrying value and fair value of the Senior Secured Credit Facility (in thousands):

June 30, 2020

December 31, 2019

    

Carrying
Amount

    

Fair Value
Level 2

    

Carrying
Amount

    

Fair Value
Level 2

Senior Secured Credit Facility

$

224,401

$

218,271

$

225,319

$

227,363

v3.20.2
Equity-Based Compensation (Tables)
6 Months Ended
Jun. 30, 2020
Employee Stock-Based Compensation Expense

Employee equity-based compensation expense, net of the amount capitalized in internally developed software, is as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2020

    

2019

    

2020

    

2019

Expense from time-based awards (a)

$

2,358

$

1,872

$

4,495

$

3,963

Expense from performance-based awards (a)(b)

389

(872)

470

250

Expense from bonus to be settled in shares (c)

920

1,818

Equity-based compensation capitalized (a)

(124)

(32)

(184)

Equity-based compensation expense

$

2,747

$

1,796

$

4,933

$

5,847

(a)Includes expense recognized and costs capitalized in connection with the awards granted to booj employees and former owners at the time of acquisition.
(b)Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions. The Company granted certain performance awards to booj employees that vested in 2019 and therefore have no comparable amounts in 2020.
(c)In 2019, the Company revised its annual bonus plan so that a portion of the bonus for most employees would be settled in shares if the Company met certain performance metrics. The Company eliminated the 2020 corporate bonus as part of cost savings measures in connection with the COVID-19 pandemic.
Time-based awards  
Restricted Stock Units

    

RSUs

    

Weighted average
grant date fair
value per share

Balance, January 1, 2020

455,452

$

46.15

Granted

296,000

$

29.16

Shares vested (including tax withholding) (a)

(163,028)

$

45.58

Forfeited

(9,076)

$

41.09

Balance, June 30, 2020

579,348

$

37.71

(a)Pursuant to the terms of the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan, RSUs withheld by the Company for the payment of the employee's tax withholding related to an RSU vesting are added back to the pool of shares available for future awards.
Performance-based awards  
Restricted Stock Units

    

PSUs

    

Weighted average
grant date fair
value per share

Balance, January 1, 2020

139,964

$

45.31

Granted

203,765

$

28.29

Shares vested (including tax withholding) (a)

(6,331)

$

38.49

Forfeited

(4,841)

$

45.93

Balance, June 30, 2020

332,557

$

35.00

(a)Represents the total participant target award.
v3.20.2
Segment Information (Tables)
6 Months Ended
Jun. 30, 2020
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 June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Continuing franchise fees (a)

$

15,795

$

23,978

$

38,672

$

48,095

Annual dues

8,745

8,819

17,666

17,673

Broker fees (a)

10,426

13,459

19,870

22,047

Franchise sales and other revenue

3,405

4,129

12,068

12,394

Total RE/MAX Franchising

38,371

50,385

88,276

100,209

Continuing franchise fees

943

916

2,209

1,755

Franchise sales and other revenue

127

114

319

234

Total Motto Franchising

1,070

1,030

2,528

1,989

Marketing Funds fees (a)

11,765

18,060

29,287

36,832

Other

1,001

1,906

2,388

3,529

Total revenue

$

52,207

$

71,381

$

122,479

$

142,559

(a)Continuing franchise fees and Marketing Funds fees declined primarily due to the temporary COVID-19 related financial support programs offered to franchisees. Broker fees declined primarily due to reductions in home sale transactions due to the COVID-19 pandemic.
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 before provision for income taxes (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Adjusted EBITDA: RE/MAX Franchising

$

19,318

$

30,021

$

40,049

$

54,165

Adjusted EBITDA: Motto Franchising

(741)

(719)

(1,319)

(1,460)

Adjusted EBITDA: Other

332

580

(282)

167

Adjusted EBITDA: Consolidated

18,909

29,882

38,448

52,872

Gain (loss) on sale or disposition of assets

11

16

22

(363)

Equity-based compensation expense

(2,747)

(1,796)

(4,933)

(5,847)

Acquisition-related expense (a)

(328)

(15)

(894)

(87)

Gain on reduction in tax receivable agreement liability

(500)

Fair value adjustments to contingent consideration (b)

(150)

(415)

355

(345)

Interest income

34

342

303

662

Interest expense

(2,187)

(3,154)

(4,869)

(6,309)

Depreciation and amortization

(6,412)

(5,541)

(12,722)

(11,099)

Income before provision for income taxes

$

6,630

$

19,319

$

15,710

$

29,484

(a)Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies.
(b)Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 9, Fair Value Measurements for additional information.
v3.20.2
Business and Organization (Details)
6 Months Ended
Jun. 30, 2020
country
Office
item
Minimum  
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]  
Number of agents | item 130,000
Number of offices | Office 8,000
Number of countries in which entity operates | country 110
REMAX  
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]  
Percentage of Company consisting of franchises 100.00%
v3.20.2
Summary of Significant Accounting Policies - Schedule of Deferred Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2020
Annual dues    
Disaggregation of Revenue [Line Items]    
Balance at beginning of period   $ 15,982
New billings   18,072
Revenue recognized   (17,666)
Balance at the end of period $ 16,388 16,388
Revenue recognized 4,500 11,200
Franchise sales    
Disaggregation of Revenue [Line Items]    
Balance at beginning of period   25,884
New billings   3,758
Revenue recognized   (4,909)
Balance at the end of period 24,733 24,733
Revenue recognized $ 2,000 $ 4,600
v3.20.2
Summary of Significant Accounting Policies - Commissions Related to Franchise Sales (Details) - Commissions Related to Franchise Sales
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Capitalized Contract Cost [Line Items]  
Balance at beginning of period $ 3,578
Expense recognized (711)
Additions to contract cost for new activity 740
Balance at end of period $ 3,607
v3.20.2
Summary of Significant Accounting Policies - Disaggregated revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Disaggregation of Revenue [Line Items]        
Total revenue $ 52,207 $ 71,381 $ 122,479 $ 142,559
Company -owned Regions        
Disaggregation of Revenue [Line Items]        
Total revenue 29,365 39,823 64,406 75,730
Independent Regions        
Disaggregation of Revenue [Line Items]        
Total revenue 7,780 8,671 16,565 16,772
Global and Other        
Disaggregation of Revenue [Line Items]        
Total revenue 1,226 1,891 7,305 7,707
RE/MAX Franchising        
Disaggregation of Revenue [Line Items]        
Total revenue 38,371 50,385 88,276 100,209
Total Marketing Funds        
Disaggregation of Revenue [Line Items]        
Total revenue 11,765 18,060 29,287 36,832
Motto Franchising        
Disaggregation of Revenue [Line Items]        
Total revenue 1,070 1,030 2,528 1,989
Other        
Disaggregation of Revenue [Line Items]        
Total revenue 1,001 1,906 2,388 3,529
U.S. | RE/MAX Franchising        
Disaggregation of Revenue [Line Items]        
Total revenue 31,420 41,689 72,529 83,424
U.S. | Total Marketing Funds        
Disaggregation of Revenue [Line Items]        
Total revenue 10,596 16,381 26,247 33,053
Canada | RE/MAX Franchising        
Disaggregation of Revenue [Line Items]        
Total revenue 4,625 5,893 9,935 11,242
Canada | Total Marketing Funds        
Disaggregation of Revenue [Line Items]        
Total revenue 1,015 1,500 2,670 3,385
Global | RE/MAX Franchising        
Disaggregation of Revenue [Line Items]        
Total revenue 2,326 2,803 5,812 5,543
Global | Total Marketing Funds        
Disaggregation of Revenue [Line Items]        
Total revenue $ 154 $ 179 $ 370 $ 394
v3.20.2
Summary of Significant Accounting Policies - Transaction Price (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 41,121
Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue 16,388
Franchise sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue 24,733
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 15,889
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 12,258
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | Franchise sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 3,631
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 10,404
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 4,130
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Franchise sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 6,274
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 4,894
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Franchise sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 4,894
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 3,464
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Franchise sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 3,464
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 1 year
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 $ 2,178
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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 $ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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 $ 2,178
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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 $ 1,109
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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]  
Remaining performance obligation revenue $ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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 $ 1,109
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 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 $ 3,183
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1
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]  
Remaining performance obligation revenue $ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1
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 $ 3,183
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1
v3.20.2
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Jun. 30, 2019
Dec. 31, 2018
Cash, Cash Equivalents and Restricted Cash        
Cash and cash equivalents $ 84,545 $ 83,001    
Total cash, cash equivalents and restricted cash 99,297 103,601 $ 96,113 $ 59,974
Marketing funds        
Cash, Cash Equivalents and Restricted Cash        
Cash and cash equivalents 84,545 83,001    
Restricted Cash 14,752 20,600    
Total cash, cash equivalents and restricted cash $ 99,297 $ 103,601    
v3.20.2
Summary of Significant Accounting Policies - Services Provided to Marketing Funds by RE/MAX Franchising (Details) - Marketing funds - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Cost charges $ 4,821 $ 3,752 $ 9,664 $ 6,677
Technology development - operating        
Cost charges 3,722 1,199 6,693 2,164
Technology development - capital        
Cost charges 116 1,529 760 2,464
Marketing staff and administrative services        
Cost charges $ 983 $ 1,024 $ 2,211 $ 2,049
v3.20.2
Summary of Significant Accounting Policies - Leases (Details)
6 Months Ended
Jun. 30, 2020
lease
Leases  
Number of franchisees' leases recognized by the Company 0
Number of sublease agreements 4
v3.20.2
Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Restatement Adjustment | ASU 2016-13  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Cumulative effect adjustment from change in accounting principle $ 0
v3.20.2
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares
Jun. 30, 2020
Dec. 31, 2019
Shares    
Non-controlling interest ownership of common units in RMCO 12,559,600 12,559,600
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 18,123,963 17,838,233
Total number of common stock units in RMCO 30,683,563 30,397,833
Ownership Percentage    
Non-controlling interest ownership of common units in RMCO as a percentage 40.90% 41.30%
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO) 59.10% 58.70%
Total percentage of common stock units 100.00% 100.00%
v3.20.2
Non-controlling Interest - Net income reconciliation (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Minority Interest [Line Items]            
Weighted average ownership percentage of controlling interest 59.10%   58.60%   59.00% 58.60%
Weighted average ownership percentage of noncontrolling interest 40.90%   41.40%   41.00% 41.40%
Total (as a percentage) 100.00%   100.00%   100.00% 100.00%
Income before provision for income taxes attributable to RE/MAX Holdings, Inc. $ 3,895   $ 11,328   $ 9,447 $ 17,286
Income before provision for income taxes: Non-controlling interest 2,735   7,991   6,263 12,198
Income before provision for income taxes 6,630   19,319   15,710 29,484
Provision for income taxes attributable to RE/MAX Holdings, Inc. (406)   (2,758)   (3,327) (4,307)
Provision for income taxes: Non-controlling interest (300)   (428)   (1,169) (787)
Provision for income taxes (706)   (3,186)   (4,496) (5,094)
Net income attributable to RE/MAX Holdings, Inc. 3,489   8,570   6,120 12,979
Net income: Non-controlling interest 2,435   7,563   5,094 11,411
Net income 5,924 $ 5,290 16,133 $ 8,257 11,214 24,390
RMCO, LLC            
Minority Interest [Line Items]            
Net income attributable to RE/MAX Holdings, Inc. 3,489   8,570   6,120 12,979
Net income: Non-controlling interest 2,435   7,563   5,094 11,411
Net income $ 5,924   $ 16,133   $ 11,214 $ 24,390
v3.20.2
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Tax and other distributions    
Dividends Payable [Line Items]    
Distributions paid or payable to or on behalf of non-controlling unitholders $ 40 $ 2,031
Dividend distributions    
Dividends Payable [Line Items]    
Distributions paid or payable to or on behalf of non-controlling unitholders 5,526 5,275
Quarterly distribution    
Dividends Payable [Line Items]    
Distributions paid or payable to or on behalf of non-controlling unitholders $ 5,566 $ 7,306
v3.20.2
Earnings Per Share and Dividends - Reconciliation of the numerator and denominator used in basic and diluted EPS calculations (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Numerator        
Net income attributable to RE/MAX Holdings, Inc. $ 3,489 $ 8,570 $ 6,120 $ 12,979
Earnings per share of Class A common stock        
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 0.19 $ 0.48 $ 0.34 $ 0.73
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 0.19 $ 0.48 $ 0.34 $ 0.73
RMCO, LLC        
Numerator        
Net income attributable to RE/MAX Holdings, Inc. $ 3,489 $ 8,570 $ 6,120 $ 12,979
Common Class A        
Denominator for basic net income per share of Class A common stock        
Weighted average shares of Class A common stock outstanding 18,123,963 17,808,321 18,049,114 17,791,942
Denominator for diluted net income per share of Class A common stock        
Weighted average shares of Class A common stock outstanding 18,123,963 17,808,321 18,049,114 17,791,942
Add dilutive effect of the following:        
Weighted average shares of Class A common stock outstanding, diluted 18,146,886 17,833,958 18,090,259 17,825,880
Earnings per share of Class A common stock        
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 0.19 $ 0.48 $ 0.34 $ 0.73
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 0.19 $ 0.48 $ 0.34 $ 0.73
Employee Stock Option | Common Class A        
Denominator for basic net income per share of Class A common stock        
Weighted average shares of Class A common stock outstanding 18,123,963 17,808,321 18,049,114 17,791,942
Denominator for diluted net income per share of Class A common stock        
Weighted average shares of Class A common stock outstanding 18,123,963 17,808,321 18,049,114 17,791,942
Restricted Stock Units (RSUs)        
Add dilutive effect of the following:        
Restricted stock units 22,923 25,637 41,145 33,938
Restricted Stock Units (RSUs) | Common Class A        
Add dilutive effect of the following:        
Weighted average shares of Class A common stock outstanding, diluted 18,146,886 17,833,958 18,090,259 17,825,880
v3.20.2
Earnings Per Share and Dividends - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Aug. 05, 2020
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2020
Jun. 30, 2019
Dividends Payable [Line Items]              
Dividends to Class A common stockholders   $ 3,987 $ 3,986 $ 3,739 $ 3,740    
Common Class A              
Dividends Payable [Line Items]              
Cash dividends declared per share of Class A common stock   $ 0.22   $ 0.21   $ 0.44 $ 0.42
Quarterly dividend              
Dividends Payable [Line Items]              
Distributions declared to non-controlling unitholders   $ 2,763 $ 2,763 $ 2,637 $ 2,638 $ 5,526 $ 5,275
Quarterly dividend | Common Class A              
Dividends Payable [Line Items]              
Cash dividends declared per share of Class A common stock   $ 0.22 $ 0.22 $ 0.21 $ 0.21 $ 0.44 $ 0.42
Dividends to Class A common stockholders   $ 3,987 $ 3,986 $ 3,739 $ 3,740 $ 7,973 $ 7,479
Quarterly dividend | Common Class A | Subsequent Event              
Dividends Payable [Line Items]              
Cash dividends declared per share of Class A common stock $ 0.22            
v3.20.2
Acquisitions (Details) - USD ($)
$ in Thousands
Dec. 16, 2019
Jun. 30, 2020
Dec. 31, 2019
Jan. 01, 2019
Purchase Price Allocation        
Goodwill   $ 161,814 $ 159,038  
First Leads        
Business Acquisition [Line Items]        
Cash consideration $ 15,000      
Marketing funds        
Purchase Price Allocation        
Restricted cash       $ 28,495
Other current assets       8,472
Property and equipment       788
Other assets, net of current portion       126
Total assets acquired       37,881
Other current liabilities       37,881
Total liabilities assumed       $ 37,881
v3.20.2
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Finite Lived Intangible Assets [Line Items]          
Net Balance $ 79,933   $ 79,933   $ 87,670
Amortization expense 6,000 $ 5,100 11,800 $ 10,300  
Franchise agreements          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 180,867   180,867   180,867
Accumulated Amortization (100,934)   (100,934)   (93,197)
Net Balance 79,933   $ 79,933   87,670
Franchise agreements | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     12 years 6 months    
Other intangible assets          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 45,877   $ 45,877   45,484
Accumulated Amortization (18,249)   (18,249)   (13,169)
Net Balance 27,628   $ 27,628   32,315
Other intangible assets | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     4 years 7 months 6 days    
Software          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 36,946   $ 36,946   36,680
Accumulated Amortization (13,628)   (13,628)   (9,653)
Net Balance 23,318   $ 23,318   27,027
Software | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     4 years 3 months 18 days    
Trademarks          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 2,021   $ 2,021   1,904
Accumulated Amortization (1,148)   (1,148)   (1,037)
Net Balance 873   $ 873   867
Trademarks | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     9 years    
Software Development          
Finite Lived Intangible Assets [Line Items]          
Capitalized software development costs 800   $ 800   10,500
Non-compete agreements          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 3,700   3,700   3,700
Accumulated Amortization (2,168)   (2,168)   (1,546)
Net Balance 1,532   $ 1,532   2,154
Non-compete agreements | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     4 years 6 months    
Training materials          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 2,400   $ 2,400   2,400
Accumulated Amortization (880)   (880)   (640)
Net Balance 1,520   $ 1,520   1,760
Training materials | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     5 years    
Other          
Finite Lived Intangible Assets [Line Items]          
Initial Cost 810   $ 810   800
Accumulated Amortization (425)   (425)   (293)
Net Balance $ 385   $ 385   $ 507
Other | Weighted Average          
Finite Lived Intangible Assets [Line Items]          
Useful life of intangible assets     3 years 9 months 18 days    
v3.20.2
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]  
Remainder of 2020 $ 17,556
2021 26,133
2022 19,516
2023 15,371
2024 12,916
Estimated future amortization expense over next five years $ 91,492
v3.20.2
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Changes to goodwill  
Beginning Balance $ 159,038
Goodwill recognized from acquisitions 2,927
Effect of changes in foreign currency exchange rates (151)
Ending Balance 161,814
RE/MAX Franchising  
Changes to goodwill  
Beginning Balance 147,238
Goodwill recognized from acquisitions 2,927
Effect of changes in foreign currency exchange rates (151)
Ending Balance 150,014
Motto Franchising  
Changes to goodwill  
Beginning Balance 11,800
Goodwill recognized from acquisitions 0
Effect of changes in foreign currency exchange rates 0
Ending Balance $ 11,800
v3.20.2
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Accrued Liabilities.    
Marketing Funds $ 36,837 $ 39,672
Accrued payroll and related employee costs 2,384 11,900
Accrued taxes 1,317 2,451
Accrued professional fees 1,712 2,047
Other 2,192 4,093
Accrued liabilities $ 44,442 $ 60,163
v3.20.2
Debt - Schedule of Debt (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]    
Senior Secured Credit Facility $ 226,404  
Less current portion (2,566) $ (2,648)
Debt, net of current portion 222,051 223,033
Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Senior Secured Credit Facility 226,188 227,363
Other long-term financing 216 362
Less unamortized debt issuance costs (1,034) (1,182)
Less unamortized debt discount costs (753) (862)
Less current portion (2,566) (2,648)
Debt, net of current portion $ 222,051 $ 223,033
v3.20.2
Debt - Schedule of Maturities of Debt (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Debt  
Remainder of 2020 $ 1,326
2021 2,414
2022 2,350
2023 220,314
Long term debt $ 226,404
v3.20.2
Debt - Additional Information (Details) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2016
Debt Instrument [Line Items]    
Debt instrument, interest rate 3.50%  
Term loan | Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Notes Payable to Bank   $ 235.0
Revolving loan facility    
Debt Instrument [Line Items]    
Amounts drawn on line of credit $ 0.0  
Revolving loan facility | Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Credit facility, borrowing capacity   $ 10.0
v3.20.2
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
item
Dec. 31, 2019
USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Contingent consideration liability $ 4,650 $ 5,005
Percentage of gross revenues to be paid yearly 8.00%  
Franchise Sale Reduction, Percentage 10  
Change in discount rate 1.00%  
Business Combination, Contingent Consideration, Liability, Measurement Input [Extensible List] us-gapp:MeasurementInputDiscountRateMember  
Business Combination, Contingent Consideration, Liability, Measurement Input 15  
Measured on a recurring basis    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Contingent consideration liability $ 4,650 5,005
Level 1 | Measured on a recurring basis    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Contingent consideration liability 0 0
Level 2 | Measured on a recurring basis    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Contingent consideration liability 0 0
Level 3 | Measured on a recurring basis    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Contingent consideration liability 4,650 $ 5,005
Ten Percent Reduction In Franchise Sales [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred revenue, current and noncurrent 300  
One Percent Change To Discount Rate [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred revenue, current and noncurrent $ 100  
Minimum    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assumed number of franchises sold annually | item 50  
Maximum    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assumed number of franchises sold annually | item 80  
Weighted Average    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assumed number of franchises sold annually | item 70  
v3.20.2
Fair Value Measurements - Reconciliation of Assets and Liabilities Measured Using Significant Unobservable Inputs (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Balance at Beginning     $ 5,005  
Fair value adjustment $ 150 $ 415 (355) $ 345
Balance at Ending 4,650   4,650  
Measured on a recurring basis        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Balance at Beginning     5,005  
Balance at Ending 4,650   4,650  
Level 3 | Measured on a recurring basis        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Balance at Beginning     5,005  
Balance at Ending $ 4,650   $ 4,650  
v3.20.2
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - Senior Secured Credit Facility - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Carrying amounts    
Debt Instrument [Line Items]    
Long term debt, carrying amount $ 224,401 $ 225,319
Level 2 | Estimated fair value    
Debt Instrument [Line Items]    
Long term debt, fair value $ 218,271 $ 227,363
v3.20.2
Equity-Based Compensation (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Employee stock-based compensation expense        
Equity-based compensation capitalized (a) $ 0 $ (124) $ (32) $ (184)
Equity-based compensation expense 2,747 1,796 4,933 5,847
Time-based awards        
Employee stock-based compensation expense        
Equity-based compensation expense $ 2,358 1,872 $ 4,495 3,963
Restricted Stock Units        
Nonvested at beginning of period     455,452  
Granted     296,000  
Shares vested     (163,028)  
Forfeited     (9,076)  
Nonvested at end of period 579,348   579,348  
Nonvested at beginning of period, Weighted average grant date fair value per share     $ 46.15  
Granted, Weighted average grant date fair value per share     29.16  
Shares vested, Weighted average grant date fair value per share     45.58  
Forfeited, Weighted average grant date fair value per share     41.09  
Nonvested at end of period, Weighted average grant date fair value per share $ 37.71   $ 37.71  
Unrecognized compensation cost $ 16,300   $ 16,300  
Period for recognition of RSU compensation expense     2 years  
Performance-based awards        
Employee stock-based compensation expense        
Equity-based compensation expense $ 389 (872) $ 470 250
Restricted Stock Units        
Nonvested at beginning of period     139,964  
Granted     203,765  
Shares vested     (6,331)  
Forfeited     (4,841)  
Nonvested at end of period 332,557   332,557  
Nonvested at beginning of period, Weighted average grant date fair value per share     $ 45.31  
Granted, Weighted average grant date fair value per share     28.29  
Shares vested, Weighted average grant date fair value per share     38.49  
Forfeited, Weighted average grant date fair value per share     45.93  
Nonvested at end of period, Weighted average grant date fair value per share $ 35.00   $ 35.00  
Unrecognized compensation cost $ 3,300   $ 3,300  
Period for recognition of RSU compensation expense     2 years 3 months 18 days  
Bonus settled in shares        
Employee stock-based compensation expense        
Equity-based compensation expense $ 0 $ 920 $ 0 $ 1,818
v3.20.2
Segment Information (Details)
6 Months Ended
Jun. 30, 2020
segment
Segment Information  
Number of Operating Segments 4
v3.20.2
Segment Information - Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting Information        
Total revenue $ 52,207 $ 71,381 $ 122,479 $ 142,559
RE/MAX Franchising        
Segment Reporting Information        
Total revenue 38,371 50,385 88,276 100,209
Motto Franchising        
Segment Reporting Information        
Total revenue 1,070 1,030 2,528 1,989
Marketing Funds fees        
Segment Reporting Information        
Total revenue 11,765 18,060 29,287 36,832
Other        
Segment Reporting Information        
Total revenue 1,001 1,906 2,388 3,529
Continuing franchise fees        
Segment Reporting Information        
Total revenue 16,738 24,894 40,881 49,850
Continuing franchise fees | RE/MAX Franchising        
Segment Reporting Information        
Total revenue 15,795 23,978 38,672 48,095
Continuing franchise fees | Motto Franchising        
Segment Reporting Information        
Total revenue 943 916 2,209 1,755
Annual dues        
Segment Reporting Information        
Total revenue 8,745 8,819 17,666 17,673
Annual dues | RE/MAX Franchising        
Segment Reporting Information        
Total revenue 8,745 8,819 17,666 17,673
Broker fees        
Segment Reporting Information        
Total revenue 10,426 13,459 19,870 22,047
Broker fees | RE/MAX Franchising        
Segment Reporting Information        
Total revenue 10,426 13,459 19,870 22,047
Franchise sales and other revenue        
Segment Reporting Information        
Total revenue 4,533 6,149 14,775 16,157
Franchise sales and other revenue | RE/MAX Franchising        
Segment Reporting Information        
Total revenue 3,405 4,129 12,068 12,394
Franchise sales and other revenue | Motto Franchising        
Segment Reporting Information        
Total revenue $ 127 $ 114 $ 319 $ 234
v3.20.2
Segment Information - Reconciliation (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated        
Adjusted EBITDA $ 18,909 $ 29,882 $ 38,448 $ 52,872
Gain (loss) on sale or disposition of assets 11 16 22 (363)
Equity-based compensation expense (2,747) (1,796) (4,933) (5,847)
Acquisition-related expense (328) (15) (894) (87)
Gain on reduction in tax receivable agreement liability (500) 0 0 0
Fair value adjustments to contingent consideration (150) (415) 355 (345)
Interest income 34 342 303 662
Interest expense (2,187) (3,154) (4,869) (6,309)
Depreciation and amortization (6,412) (5,541) (12,722) (11,099)
Income before provision for income taxes 6,630 19,319 15,710 29,484
RE/MAX Franchising        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated        
Adjusted EBITDA 19,318 30,021 40,049 54,165
Motto Franchising        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated        
Adjusted EBITDA (741) (719) (1,319) (1,460)
Other        
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated        
Adjusted EBITDA $ 332 $ 580 $ (282) $ 167