RE/MAX HOLDINGS, INC., 10-K filed on 2/22/2019
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2018
Jan. 31, 2019
Jun. 30, 2018
Entity Registrant Name RE/MAX Holdings, Inc.    
Entity Central Index Key 0001581091    
Document Period End Date Dec. 31, 2018    
Current Fiscal Year End Date --12-31    
Document Type 10-K    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Filer Category Large Accelerated Filer    
Entity Shell Company false    
Entity Public Float     $ 927.1
Entity Small Business false    
Entity Emerging Growth Company false    
Common Class A      
Entity Common Stock, Shares Outstanding   17,754,416  
Common Class B      
Entity Common Stock, Shares Outstanding   1  
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Current assets:    
Cash and cash equivalents $ 59,974 $ 50,807
Accounts and notes receivable, current portion, less allowances of $7,980 and $7,223, respectively 21,185 20,284
Income taxes receivable 533 963
Other current assets 5,855 7,974
Total current assets 87,547 80,028
Property and equipment, net of accumulated depreciation of $13,280 and 12,326, respectively 4,390 2,905
Franchise agreements, net 103,157 119,349
Other intangible assets, net 22,965 8,476
Goodwill 150,684 135,213
Deferred tax assets, net 53,698 62,841
Other assets, net of current portion 4,399 4,023
Total assets 426,840 412,835
Current liabilities:    
Accounts payable 1,890 517
Accrued liabilities 13,143 15,390
Income taxes payable 208 97
Deferred revenue 25,489 25,268
Current portion of debt 2,622 2,350
Current portion of payable pursuant to tax receivable agreements 3,567 6,252
Total current liabilities 46,919 49,874
Debt, net of current portion 225,165 226,636
Payable pursuant to tax receivable agreements, net of current portion 37,220 46,923
Deferred tax liabilities, net 400 151
Deferred revenue, net of current portion 20,224 20,228
Other liabilities, net of current portion 17,637 19,897
Total liabilities 347,565 363,709
Commitments and contingencies (note 15)
Stockholders' equity:    
Additional paid-in capital 460,101 451,199
Retained earnings 21,138 8,400
Accumulated other comprehensive income, net of tax 328 459
Total stockholders' equity attributable to RE/MAX Holdings, Inc. 481,569 460,060
Non-controlling interest (402,294) (410,934)
Total stockholders' equity 79,275 49,126
Total liabilities and stockholders' equity 426,840 412,835
Common Class A    
Stockholders' equity:    
Common stock 2 2
Common Class B    
Stockholders' equity:    
Common stock
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Accounts Receivable, allowance $ 7,980 $ 7,223
Property and equipment, accumulated depreciation $ 13,280 $ 12,326
Common Class A | Common Stock    
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 180,000,000 180,000,000
Common stock, shares issued 17,754,416 17,696,991
Common stock, shares outstanding 17,754,416 17,696,991
Common Class B | Common Stock    
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
v3.10.0.1
Consolidated Statements of Income - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue:      
Total revenue $ 212,626 $ 193,714 $ 175,642
Operating expenses:      
Selling, operating and administrative expenses 120,179 106,946 88,037
Depreciation and amortization 20,678 20,512 16,094
Loss on sale or disposition of assets, net 63 660 178
Gain on reduction in tax receivable agreement liability (note 4) (6,145) (32,736)  
Total operating expenses 134,775 95,382 104,309
Operating income 77,851 98,332 71,333
Other expenses, net:      
Interest expense (12,051) (9,996) (8,596)
Interest income 676 352 160
Foreign currency transaction (losses) gains (312) 174 (86)
Loss on early extinguishment of debt     (796)
Total other expenses, net (11,687) (9,470) (9,318)
Income before provision for income taxes 66,164 88,862 62,015
Provision for income taxes (15,799) (57,047) (15,167)
Net income 50,365 31,815 46,848
Less: net income attributable to non-controlling interest (note 4) 23,321 21,577 24,627
Net income attributable to RE/MAX Holdings, Inc. $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock      
Basic $ 1.52 $ 0.58 $ 1.26
Diluted $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding      
Basic 17,737,649 17,688,533 17,628,741
Diluted 17,767,499 17,731,800 17,677,768
Cash dividends declared per share of Class A common stock $ 0.80 $ 0.72 $ 0.60
Common Class A      
Other expenses, net:      
Net income attributable to RE/MAX Holdings, Inc. $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock      
Basic $ 1.52 $ 0.58 $ 1.26
Diluted $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding      
Basic 17,737,649 17,688,533 17,628,741
Diluted 17,767,499 17,731,800 17,677,768
Cash dividends declared per share of Class A common stock $ 0.80 $ 0.72 $ 0.60
Continuing franchise fees      
Revenue:      
Total revenue $ 101,104 $ 93,694 $ 81,197
Annual dues      
Revenue:      
Total revenue 35,894 33,767 32,653
Broker fees      
Revenue:      
Total revenue 46,871 43,801 37,209
Franchise sales and other revenue      
Revenue:      
Total revenue $ 28,757 $ 22,452 24,471
Brokerage revenue      
Revenue:      
Total revenue     $ 112
v3.10.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Comprehensive Income                      
Net income $ 11,066 $ 15,541 $ 14,591 $ 9,167 $ (403) $ 7,290 $ 15,539 $ 9,388 $ 50,365 $ 31,815 $ 46,848
Change in cumulative translation adjustment                 (253) 1,037 146
Other comprehensive (loss) income, net of tax                 (253) 1,037 146
Comprehensive income                 50,112 32,852 46,994
Less: comprehensive income attributable to non-controlling interest                 23,199 22,108 24,715
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax                 $ 26,913 $ 10,744 $ 22,279
v3.10.0.1
Consolidated Statement of Stockholders' Equity - USD ($)
$ in Thousands
Previously Reported [Member]
Common Stock
Common Class A
Previously Reported [Member]
Common Stock
Common Class B
Previously Reported [Member]
Additional paid-in capital
Previously Reported [Member]
Retained earnings
Previously Reported [Member]
Accumulated other comprehensive income (loss), net of tax
Previously Reported [Member]
Non-controlling interest
Previously Reported [Member]
Restatement Adjustment [Member]
Common Stock
Common Class A
Restatement Adjustment [Member]
Common Stock
Common Class B
Restatement Adjustment [Member]
Additional paid-in capital
Restatement Adjustment [Member]
Retained earnings
Restatement Adjustment [Member]
Accumulated other comprehensive income (loss), net of tax
Restatement Adjustment [Member]
Non-controlling interest
Restatement Adjustment [Member]
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
Total
Cumulative effect adjustment from change in accounting principle                     $ (4,875)   $ (11,596) $ (16,471)              
Adjusted balance                             $ 2   $ 446,209 $ (644) $ (105) $ (422,519) $ 22,943
Beginning balance, Value at Dec. 31, 2015 $ 2   $ 446,209 $ 4,231 $ (105) $ (410,923) $ 39,414                            
Beginning balance, Shares at Dec. 31, 2015 17,584,351 1                         17,584,351 1          
Net income                                   22,221   24,627 46,848
Distributions paid to non-controlling unitholders                                       (17,927) (17,927)
Equity-based compensation expense and related dividend equivalents, value                                 2,330       2,330
Dividends paid to Class A common stockholders                                   (10,578)     (10,578)
Change in accumulated other comprehensive (loss) income                                     58 88 146
Payroll taxes related to net settled restricted stock units                                 (516)       (516)
Payroll taxes related to net settled restricted stock units (in shares)                             (13,639)            
Issuance of Class A common stock, equity-based compensation plans, value                                 101       101
Issuance of Class A common stock, equity-based compensation plans, shares                             81,836            
Other                                 466       466
Ending balance, Value at Dec. 31, 2016               $ 2   $ 448,713 10,955 $ (47) (415,782) 43,841              
Ending balance, Shares at Dec. 31, 2016               17,652,548 1                        
Cumulative effect adjustment from change in accounting principle                                 123 (44)   (51) 28
Net income                                   10,238   21,577 31,815
Distributions paid to non-controlling unitholders                                       (17,260) (17,260)
Equity-based compensation expense and related dividend equivalents, value                                 2,900 (53)     2,847
Equity-based compensation expense and related dividend equivalents, shares                             58,426            
Dividends paid to Class A common stockholders                                   (12,740)     (12,740)
Change in accumulated other comprehensive (loss) income                                     506 531 1,037
Payroll taxes related to net settled restricted stock units                                 (816)       (816)
Payroll taxes related to net settled restricted stock units (in shares)                             (13,983)            
Other                                 402       402
Ending balance, Value at Dec. 31, 2017               $ 2   $ 451,199 $ 8,400 $ 459 $ (410,934) $ 49,126             49,126
Ending balance, Shares at Dec. 31, 2017               17,696,991 1           17,696,991 1          
Net income                                   27,044   23,321 50,365
Distributions paid to non-controlling unitholders                                       (14,559) (14,559)
Equity-based compensation expense and related dividend equivalents, value                                 9,314 (113)     9,201
Equity-based compensation expense and related dividend equivalents, shares                             73,462            
Dividends paid to Class A common stockholders                                   (14,193)     (14,193)
Change in accumulated other comprehensive (loss) income                                     (131) (122) (253)
Payroll taxes related to net settled restricted stock units                                 (895)       (895)
Payroll taxes related to net settled restricted stock units (in shares)                             (16,037)            
Other                                 483       483
Ending balance, Value at Dec. 31, 2018                             $ 2   $ 460,101 $ 21,138 $ 328 $ (402,294) $ 79,275
Ending balance, Shares at Dec. 31, 2018                             17,754,416 1          
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:      
Net income $ 50,365 $ 31,815 $ 46,848
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 20,678 20,512 16,094
Bad debt expense 2,257 1,109 1,195
(Gain) loss on sale or disposition of assets and sublease, net (139) 4,260 (171)
Loss on early extinguishment of debt     796
Equity-based compensation expense 9,176 2,900 2,330
Deferred income tax expense 9,552 47,965 3,367
Fair value adjustments to contingent consideration (1,289) 180 100
Payments pursuant to tax receivable agreements (6,305) (13,371) (1,344)
Non-cash change in tax receivable agreement liability (6,145) (32,736)  
Other 1,082 1,145 1,029
Changes in operating assets and liabilities:      
Accounts and notes receivable, current portion (3,241) (2,825) (3,841)
Advances from/to affiliates 581 (106) 71
Other current and noncurrent assets 2,170 (2,724) 186
Other current and noncurrent liabilities (3,497) 2,815 (1,956)
Income taxes receivable/payable 560 (1,133) (71)
Deferred revenue and deposits, current portion 259 3,482 (254)
Net cash provided by operating activities 76,064 63,288 64,379
Cash flows from investing activities:      
Purchases of property, equipment and software and capitalization of trademark costs (7,787) (2,198) (4,502)
Acquisitions, net of cash acquired of $362, $0 and $131, respectively (25,888) (35,720) (112,934)
Dispositions     200
Other investing activity, net     (96)
Net cash (used in) provided by investing activities (33,675) (37,918) (117,332)
Cash flows from financing activities:      
Proceeds from issuance of debt     233,825
Payments on debt (3,171) (2,366) (203,298)
Capitalized debt amendment costs     (1,379)
Distributions paid to non-controlling unitholders (14,559) (17,260) (17,927)
Dividends and dividend equivalents paid to Class A common stockholders (14,306) (12,793) (10,578)
Proceeds from exercise of stock options     101
Payment of payroll taxes related to net settled restricted stock units (895) (816) (516)
Payment of contingent consideration (221)    
Net cash (used in) provided by financing activities (33,152) (33,235) 228
Effect of exchange rate changes on cash (70) 1,063 122
Net increase (decrease) in cash and cash equivalents 9,167 (6,802) (52,603)
Cash and cash equivalents, beginning of year 50,807 57,609 110,212
Cash and cash equivalents, end of period 59,974 50,807 57,609
Supplemental disclosures of cash flow information:      
Cash paid for interest 11,525 9,972 7,797
Net cash paid for income taxes 5,769 10,078 11,912
Schedule of non-cash investing and financing activities:      
Note receivable received as consideration for sale of brokerage operations assets     150
Increase in accounts payable for capitalization of trademark costs and purchases of property, equipment and software $ 1,080 $ 295 150
Contingent consideration issued in a business acquisition     $ 6,300
v3.10.0.1
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Consolidated Statements of Cash Flows      
Cash acquired $ 362 $ 0 $ 131
v3.10.0.1
Business and Organization
 12 Months Ended
Dec. 31, 2018
Business and Organization  
Business and Organization

1. Business and Organization

RE/MAX Holdings, Inc. (“RE/MAX Holdings”) completed an initial public offering (the “IPO”) of its shares of Class A common stock on October 7, 2013. RE/MAX Holdings’ only business is to act as the sole manager of RMCO, LLC (“RMCO”). As of December 31, 2018, RE/MAX Holdings owns 58.57% of the common membership units in RMCO, while RIHI, Inc. (“RIHI”) owns the remaining 41.43% of common membership units in RMCO. RE/MAX Holdings and its consolidated subsidiaries, including 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. RE/MAX, founded in 1973, has over 120,000 agents operating in over 8,000 offices and a presence in more than 110 countries and territories. Motto Mortgage (“Motto”), founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. During the first quarter of 2018, the Company acquired all membership interests in booj, LLC, formerly known as Active Website, LLC, (“booj”), a real estate technology company. The Company sold certain operating assets and liabilities of its owned brokerage offices during the first quarter of 2016 to existing RE/MAX franchisees. Since then, RE/MAX is 100% franchised, and no longer operates any real estate brokerage offices and therefore, no longer recognizes brokerage revenue.

The Company’s revenue is derived from:

·

Continuing franchise fees which consist of 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 from RE/MAX agents;

·

Broker fees, which consist of a small percentage of fees received by agents on real estate commissions when an agent sells a home; and

·

Franchise sales and other 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, event-based revenue from training and other programs and revenue from booj’s legacy customers.

See Note 2, Summary of Significant Accounting Policies for information on the Company’s revenue recognition policies.

RE/MAX Holdings Capital Structure

RE/MAX Holdings has two classes of common stock, Class A common stock and Class B common stock, which are described as follows:

Class A common stock

Holders of shares of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Additionally, holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Company’s Board of Directors, subject to any statutory or contractual restrictions on the payment of dividends.

Holders of shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights.

Class B common stock

RIHI is the sole holder of Class B common stock and is controlled by David Liniger, the Company’s Chairman and Co-Founder, and Gail Liniger, the Company’s Vice Chair and Co-Founder. On October 7, 2018, pursuant to the terms of the Company’s Certificate of Incorporation, RIHI lost its previous effective control of a majority of the voting power of RE/MAX Holdings common stock. RIHI owns all RE/MAX Holdings’ Class B common stock which, prior to October 7, 2018, entitled RIHI to a number of votes on matters presented to RE/MAX Holdings stockholders equal to two times the number of RMCO common units that RIHI held. Effective October 7, 2018, the voting power of Class B common stock was reduced to equal the number of RMCO common units held, and therefore RIHI lost the controlling vote of RE/MAX Holdings. As a result of this change in the voting rights of the Class B common stock, RIHI no longer controls a majority of the voting power of RE/MAX Holdings’ common stock, and RE/MAX Holdings is no longer considered a “controlled company” under the corporate governance standards of the New York Stock Exchange (the “NYSE”). See Item 1. Business above for further information.

Holders of shares of Class B common stock do not have preemptive, subscription, redemption or conversion rights.

Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters presented to the Company’s stockholders for their vote or approval, except as otherwise required by applicable law.

v3.10.0.1
Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2018
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements (“financial statements”) and notes thereto included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements include the accounts of RE/MAX Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of December 31, 2018 and 2017, the results of its operations and comprehensive income, changes in its stockholders’ equity and its cash flows for the years ended December 31, 2018, 2017 and 2016.

During 2018, the Company completed the acquisition of booj, and during 2017 and 2016, the Company completed the acquisitions of various independent regions. Their results of operations, cash flows and financial positions are included in the financial statements from their respective dates of acquisition. See Note 6, Acquisitions for additional information.

Reclassifications

Other than the change in accounting principle discussed in Note 3, Revenue, there have been no reclassifications to the financial statements during the current year.  

Use of Estimates

The preparation of the accompanying 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

RE/MAX Holdings consolidates RMCO and records a non-controlling interest in the accompanying Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, respectively.

Revenue Recognition

The Company generates all its revenue from contracts with customers. The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of RE/MAX and Motto trademarks; distinctive sales and promotional materials; access to technology; standardized supplies and other materials used in RE/MAX and Motto offices; and recommended procedures for operation of RE/MAX and Motto offices. The Company concluded that these benefits are highly related and all a part of one performance obligation, a license of symbolic intellectual property that is billed through a variety of fees including franchise sales, continuing franchise fees, broker fees, and annual dues, described below. The Company has other performance obligations associated with contracts with customers in other revenue for training, marketing and events, and legacy booj customers. The method used to measure progress is over the passage of time for most streams of revenue. The following is a description of principal activities from which the Company generates its revenue. 

Continuing Franchise Fees

Revenue from continuing franchise fees consists of fixed contractual fees paid monthly by 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. This revenue is recognized in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents and number of Motto offices.

Annual Dues

Annual dues revenue consists of fixed contractual fees paid annually based on the number of RE/MAX agents. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents.

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 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

Year Ended December 31, 2018

 

$

15,297

 

$

36,474

 

$

(35,894)

 

$

15,877

(a)

Revenue recognized related to the beginning balance was $14.0 million for the year ended December 31, 2018.

(b)

 

Broker Fees

Revenue from broker fees represents fees received from the Company’s RE/MAX franchised regions or franchise offices that are based on a percentage of RE/MAX agents’ gross commission income on home sale transactions. Revenue from broker fees is recognized as a sales-based royalty and recognized in the month when a home sale transaction occurs. Motto franchisees do not pay any fees based on the number or dollar value of loans brokered.

Franchise Sales

Franchise sales is comprised of revenue from the sale or renewal of franchises. An initial fee is charged upon a franchise sale. Those initial fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. 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

Year Ended December 31, 2018

 

$

27,943

 

$

8,732

 

$

(9,115)

 

$

27,560

(a)

Revenue recognized related to the beginning balance was $7.4 million for the year ended December 31, 2018.

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 Consolidated Balance Sheets) consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Expense recognized

 

Additions to contract cost for new activity

 

Balance at end of period

Year Ended December 31, 2018

 

$

3,532

 

$

(1,229)

 

$

1,445

 

$

3,748

Other Revenue

Other revenue is primarily revenue from preferred marketing arrangements and event-based revenue from training and other programs. Revenue from preferred marketing arrangements involves both flat fees paid in advance as well as revenue sharing, both of which are generally recognized over the period of the arrangement and are recorded net as the Company does not control the good or service provided. Event-based revenue is recognized when the event occurs and until then is included in “Deferred revenue”. Other revenue also includes revenue from booj’s operations for its external customers as booj continues to provide technology products and services, such as websites, mobile apps, reporting and site tools, to its existing customers at the date of acquisition.

Selling, Operating and Administrative Expenses

Selling, operating and administrative expenses primarily consist of personnel costs, including salaries, benefits, payroll taxes and other compensation expenses, professional fees, rent and related facility operations expense, as well as expenses for marketing, and expanding and supporting the Company’s franchise. 

Cash and Cash Equivalents

Cash and cash equivalents include bank deposits and other highly liquid investments purchased with an original purchase maturity of three months or less. 

Fair Value of Financial Instruments

The carrying amounts of financial instruments, net of any allowances, including cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature.  

Accounts and Notes Receivable

Accounts receivable arising from monthly billings do not bear interest. The Company provides limited financing of certain franchise sales through the issuance of notes receivable that either bear interest at a rate of prime plus 2% or at a stated amount, which is fixed at the inception of the note with the associated interest recorded in “Interest income” in the accompanying Consolidated Statements of Income. Amounts collected on notes receivable are included in “Net cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows.

The Company records allowances against its accounts and notes receivable balances for estimated probable losses. Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The allowance for doubtful accounts and notes is based on historical experience, general economic conditions, and the attributes of specific accounts.

The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Additions/charges to cost and expense for allowances for doubtful accounts

 

Deductions/write-offs

 

Balance at end of period

Year Ended December 31, 2018

 

$

7,223

 

$

2,257

 

$

(1,500)

 

$

7,980

Year Ended December 31, 2017, as adjusted*

    

 

6,458

 

 

1,109

 

 

(344)

 

 

7,223

Year Ended December 31, 2016, as adjusted*

 

 

5,406

 

 

1,195

 

 

(143)

 

 

6,458

*See Note 3, Revenue for more information.

Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation

Accumulated other comprehensive income (loss) includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with stockholders and is comprised of foreign currency translation adjustments.

As of December 31, 2018,  the Company, directly and through its franchisees, conducted operations in over 110 countries and territories, including the U.S. and Canada. The functional currency for the Company’s domestic operations is the U.S. dollar and for its Canadian subsidiary is the Canadian Dollar.

Assets and liabilities of the Canadian subsidiary are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of income and cash flows are translated at the average exchange rates in effect during the applicable period. Exchange rate fluctuations on translating consolidated foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded as a component of “Accumulated other comprehensive income,” and periodic changes are included in comprehensive income. When the Company sells a part or all of its investment in a foreign entity resulting in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, it releases any related cumulative translation adjustment into net income.

Foreign currency denominated monetary assets and liabilities and transactions occurring in currencies other than the Company’s or the Company’s consolidated foreign subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the accompanying Consolidated Balance Sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the accompanying Consolidated Statements of Income as “Foreign currency transaction (losses) gains.” 

Property and Equipment

Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter.

Franchise Agreements and Other Intangible Assets

The Company’s franchise agreements result from franchise rights acquired from Independent Region acquisitions and are initially recorded at fair value. The Company amortizes the franchise agreements over their estimated useful life on a straight-line basis.

The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation-operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of three to five years. Purchased software licenses are amortized over their estimated useful lives.

In addition, the Company owns the principal trademarks, service marks and trade names that it uses in conjunction with operating its business. These intangible assets increase when the Company pays to file trademark applications in the U.S. and certain other jurisdictions globally. The Company’s trademarks are amortized on a straight-line basis over their estimated useful lives.

The Company reviews its franchise agreements and other intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated from such asset. If not recoverable, the excess of the carrying amount of an asset over its estimated discounted cash flows would be charged to operations as an impairment loss. For each of the years ended December 31, 2018,  2017 and 2016, there were no material impairments indicated for such assets.

Goodwill

Goodwill is an asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. The Company assesses goodwill for impairment at least annually or whenever an event occurs, or circumstances change that would indicate impairment may have occurred at the reporting unit level. Reporting units are driven by the level at which segment management reviews operating results. The Company previously performed its required impairment testing annually on August 31. In 2018, the Company elected to change the date of its required annual impairment testing to October 1. This change in method of applying an accounting principal resulted in the Company performing two annual impairment tests in 2018, on August 31 and October 1. The Company elected to implement this change to better align with its budget and planning process.

The Company’s impairment assessment begins with a qualitative assessment to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount. The initial qualitative assessment includes comparing the overall financial performance of the reporting units against the planned results as well as other factors which might indicate that the reporting unit’s value has declined since the last assessment date. If it is determined in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the standard two-step quantitative impairment test is performed. The first step of the quantitative impairment test consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. If the first step of the quantitative impairment test indicates that the estimated fair value of a reporting unit is less than its carrying value, then impairment potentially exists, and the second step of the quantitative impairment test is performed to measure the amount of goodwill impairment. Goodwill impairment exists when the estimated implied fair value of a reporting unit’s goodwill is less than its carrying value. 

The Company did not record any goodwill impairments during the years ended December 31, 2018,  2017 and 2016.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. Further, the Company records its income taxes receivable and payable based upon its estimated income tax liability.

RMCO complies with the requirements of the Internal Revenue Code that are applicable to limited liability companies that have elected to be treated as partnerships, which allow for the complete pass-through of taxable income or losses to RMCO’s unitholders, who are individually responsible for any federal tax consequences. Provision for Income Taxes includes the federal income tax obligation related to RE/MAX Holdings’ allocated portion of RMCO’s income. RMCO is subject to certain state and local taxes, and its global subsidiaries are subject to tax in certain jurisdictions.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 

Equity-Based Compensation

The Company recognizes compensation expense associated with equity-based compensation as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All equity-based compensation is required to be measured at fair value on the grant date, is expensed over the requisite service, generally over a three-year period, and forfeitures are accounted for as they occur. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 13, Equity-Based Compensation for additional discussion regarding details of the Company’s equity-based compensation plans.

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 became effective prospectively for the Company on January 1, 2018. The Company concluded that the acquisition of booj meets the definition of a business. See Note 6, Acquisitions for additional information. The Company has also concluded that it expects future Independent Region acquisitions to be accounted for as an acquisition of a business.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies classification for certain cash receipts and cash payments on the Consolidated Statement of Cash Flows. ASU 2016-15 became effective for the Company on January 1, 2018 and required a retrospective transition method for each period presented. Under the new guidance, the contingent consideration payments related to the purchase of Full House Mortgage Connection, Inc. (“Full House”), a franchisor of mortgage brokerages that created concepts used to develop Motto, are classified as financing outflows up to the $6.3 million acquisition date fair value and any cash payments paid in excess of the acquisition date fair value are classified as operating outflows. See Note 6, Acquisitions for additional information. The adoption of this standard had no other material impact on its financial statements and related disclosures. 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), with several subsequent amendments, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP when it became effective for the Company on January 1, 2018. See Note 3, Revenue for more information.

New Accounting Pronouncements Not Yet Adopted

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 for costs after adoption. ASU 2018-15 is effective for the Company beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. The Company plans to adopt this ASU prospectively to all new implementation costs incurred after adoption. Given this implementation approach, the adoption of the standard on January 1, 2020 will have no immediate impact.

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 is effective for the Company beginning January 1, 2020; early adoption is permitted. Certain changes are applied retrospectively to each period presented and others are to be applied either in the period of adoption or prospectively. The Company believes the amendments of ASU 2018-13 will not have a significant impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for the Company beginning January 1, 2019. The standard is to be applied either in the period of adoption or retrospectively to each period effected by the Tax Cuts and Jobs Act. The Company believes the amendments of ASU 2018-02 will not have a significant impact on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed. The Company has not yet adopted ASU 2017-04.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the assets and liabilities that arise from all leases on the consolidated balance sheets. ASU 2016-02 is required to be adopted by the Company on January 1, 2019. The Company plans to elect the transition package of three practical expedients permitted within the standard, which among other things, allows the carryforward of historical lease classifications. The Company will not retrospectively recast prior periods presented and will instead adjust assets and liabilities on January 1, 2019. The Company has determined that the adoption of this standard will increase both “Total assets” and “Total liabilities” on the Consolidated Balance Sheets by approximately $54.0 million, primarily related to building leases. The Company does not expect any material change to the Consolidated Statements of Income in 2019. 

v3.10.0.1
Impacts of Adopting New Revenue Recognition
 12 Months Ended
Dec. 31, 2018
Impacts of Adopting New Revenue Recognition  
Impacts of Adopting New Revenue Recognition

3. Impacts of Adopting New Revenue Recognition

Changes in Revenue Recognition Policies

The Company adopted the new revenue standard (Topic 606) on January 1, 2018. The Company applied the new revenue standard retrospectively and has recast the 2017 and 2016 financial statements as though the new revenue standard had been applied in all periods presented. The adoption of the new guidance changed the timing of recognition of franchise sales and franchise renewal revenue and related commissions paid on franchise sales and renewals, as discussed below. 

Franchise sales is comprised of revenue from the sale or renewal of franchises. The Company previously recognized revenue at the time of sale. Under the new revenue standard, the franchise sale initial fees are considered to be a part of the license of symbolic intellectual property, which is now recognized over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. Correspondingly, the commissions related to franchise sales are recorded as an asset (the current portion in “Other current assets” and long-term portion in “Other assets, net of current portion”) and are recognized over the contractual term of the franchise agreement in “Selling, operating and administrative expenses”. Previously, such commissions were expensed as incurred.

The following tables summarize the impacts of the new revenue standard adoption on the Company’s financial statements (in thousands, except per share information):

Consolidated Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

As of December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Accounts and notes receivable, current portion, net

 

$

21,304

 

$

(1,020)

 

$

20,284

Income taxes receivable

 

 

870

 

 

93

 

 

963

Other current assets

 

 

6,924

 

 

1,050

 

 

7,974

Deferred tax assets, net

 

 

59,151

 

 

3,690

 

 

62,841

Other assets, net of current portion

 

 

1,563

 

 

2,460

 

 

4,023

Income taxes payable

 

 

133

 

 

(36)

 

 

97

Deferred revenue

 

 

18,918

 

 

6,350

 

 

25,268

Deferred revenue, net of current

 

 

 —

 

 

20,228

 

 

20,228

Retained earnings

 

 

16,027

 

 

(7,627)

 

 

8,400

Accumulated other comprehensive income, net of tax

 

 

515

 

 

(56)

 

 

459

Non-controlling interest

 

 

398,348

 

 

12,586

 

 

410,934

Consolidated Statement of Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

24,667

 

$

(2,215)

 

$

22,452

Selling, operating and administrative expenses

 

 

107,268

 

 

(322)

 

 

106,946

Provision for income taxes (a)

 

 

55,576

 

 

1,471

 

 

57,047

Net income (a)

 

 

35,179

 

 

(3,364)

 

 

31,815

Net income attributable to non-controlling interest

 

 

22,364

 

 

(787)

 

 

21,577

Net income attributable to RE/MAX Holdings, Inc.

 

 

12,815

 

 

(2,577)

 

 

10,238

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

 

 

 

 

 

 

 

 

 

Basic

 

 

0.72

 

 

(0.14)

 

 

0.58

Diluted

 

 

0.72

 

 

(0.14)

 

 

0.58

(a)

Includes an adjustment in 2017 to the deferred tax asset arising from deferred revenue under Topic 606 due to the drop in the U.S. tax rates from 35% to 21% under the Tax Cuts and Jobs Act.

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

25,131

 

$

(660)

 

$

24,471

Selling, operating and administrative expenses

 

 

88,213

 

 

(176)

 

 

88,037

Provision for income taxes

 

 

15,273

 

 

(106)

 

 

15,167

Net income

 

 

47,226

 

 

(378)

 

 

46,848

Net income attributable to non-controlling interest

 

 

24,830

 

 

(203)

 

 

24,627

Net income attributable to RE/MAX Holdings, Inc.

 

 

22,396

 

 

(175)

 

 

22,221

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

 

 

 

 

 

 

 

 

 

Basic

 

 

1.27

 

 

(0.01)

 

 

1.26

Diluted

 

 

1.27

 

 

(0.01)

 

 

1.26

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Change in cumulative translation adjustment

 

 

1,074

 

 

(37)

 

 

1,037

Comprehensive income

 

 

36,253

 

 

(3,401)

 

 

32,852

Comprehensive income attributable to non-controlling interest

 

 

22,895

 

 

(787)

 

 

22,108

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

13,358

 

 

(2,614)

 

 

10,744

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Change in cumulative translation adjustment

 

 

165

 

 

(19)

 

 

146

Comprehensive income

 

 

47,391

 

 

(397)

 

 

46,994

Comprehensive income attributable to non-controlling interest

 

 

24,918

 

 

(203)

 

 

24,715

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

22,473

 

 

(194)

 

 

22,279

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Deferred income tax expense

 

 

46,494

 

 

1,471

 

 

47,965

Accounts and notes receivable, current portion

 

 

(2,924)

 

 

99

 

 

(2,825)

Other current and noncurrent assets

 

 

(2,414)

 

 

(310)

 

 

(2,724)

Other current and noncurrent liabilities

 

 

1,583

 

 

1,232

 

 

2,815

Deferred revenue and deposits, current portion

 

 

2,610

 

 

872

 

 

3,482

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Deferred income tax expense

 

 

3,473

 

 

(106)

 

 

3,367

Other current and noncurrent assets

 

 

362

 

 

(176)

 

 

186

Other current and noncurrent liabilities

 

 

(2,616)

 

 

660

 

 

(1,956)

Disaggregated Revenue

In the following table, segment revenue is disaggregated by geographical area for the years ended December 31, 2018, 2017 and 2016 (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

U.S.

 

$

170,496

 

$

160,537

 

$

145,488

Canada

 

 

23,771

 

 

23,189

 

 

22,071

Global

 

 

10,237

 

 

9,431

 

 

8,079

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642

*See above within Note 3, Revenue for more information.

In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S. and Canada for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

Company-owned Regions

 

$

133,925

 

$

125,092

 

$

103,756

Independent Regions

 

 

46,289

 

 

44,799

 

 

47,498

Global and Other

 

 

24,290

 

 

23,266

 

 

24,384

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642

*See above within Note 3, Revenue for more information.

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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2019

    

2020

    

2021

    

2022

    

2023

    

Thereafter

    

Total

Annual dues

 

$

15,877

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

15,877

Franchise sales

 

 

7,415

 

 

6,116

 

 

4,706

 

 

3,171

 

 

1,652

 

 

4,500

 

 

27,560

Total

 

$

23,292

 

$

6,116

 

$

4,706

 

$

3,171

 

$

1,652

 

$

4,500

 

$

43,437

Using the transition requirements of the new standard, the Company has elected not to disclose the amount of the transaction price allocated to the remaining performance obligations or when the Company expects to recognize that amount as revenue for the years ended December 31, 2017 and 2016.

v3.10.0.1
Non-controlling Interest
 12 Months Ended
Dec. 31, 2018
Noncontrolling Interest  
Non-controlling Interest

4. Non-controlling Interest

RE/MAX 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:

d

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

2018

 

 

2017

 

 

    

Shares

    

Ownership %

    

 

Shares

    

Ownership %

 

Non-controlling interest ownership of common units in RMCO

 

12,559,600

 

41.43

%

 

12,559,600

 

41.51

%

RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO)

 

17,754,416

 

58.57

%

 

17,696,991

 

58.49

%

Total common units in RMCO

 

30,314,016

 

100.00

%

 

30,256,591

 

100.00

%

The weighted average ownership percentages for the applicable reporting periods are used to calculate the net income attributable to RE/MAX Holdings. 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 Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

 

2017

 

 

2016

 

 

2018

 

 

As adjusted*

 

 

As adjusted*

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

Weighted average ownership percentage of RMCO (a)

 

58.55

%

 

41.45

%

 

100.00

%

 

 

58.48

%

 

41.52

%

 

100.00

%

 

 
58.40

%

 

41.60

%

 

100.00

%

Income before provision for income taxes

$

41,238

 

$

24,926

 

$

66,164

 

 

$

65,493

 

$

23,369

 

$

88,862

 

 

$

36,165

 

$

25,850

 

$

62,015

 

Provision for income taxes (b)(c)

 

(14,194)

 

 

(1,605)

 

 

(15,799)

 

 

 

(55,255)

 

 

(1,792)

 

 

(57,047)

 

 

 

(13,944)

 

 

(1,223)

 

 

(15,167)

 

Net income

$

27,044

 

$

23,321

 

$

50,365

 

 

$

10,238

 

$

21,577

 

$

31,815

 

 

$

22,221

 

$

24,627

 

$

46,848

 

*See Note 3, Revenue for more information.

(a)

The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between RE/MAX Holdings and the non-controlling interest due to (a) certain relatively insignificant expenses and (b) the significant gain on reduction in TRA liability in 2018 and 2017 attributable only to RE/MAX Holdings. See Note 12, Income Taxes for additional information.

(b)

The provision for income taxes attributable to RE/MAX 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 RE/MAX Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. In 2018 and 2017, the provision for income taxes attributable to RE/MAX Holdings also includes a significant decrease in the value of deferred tax assets. See Note 12, 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. 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):

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31, 

 

 

2018

 

2017

Tax and other distributions

 

$

4,511

 

$

8,217

Dividend distributions

 

 

10,048

 

 

9,043

Total distributions to non-controlling unitholders

 

$

14,559

 

$

17,260

On February 20, 2019, the Company declared a distribution to non-controlling unitholders of $2.6 million, which is payable on March 20, 2019.

RE/MAX Holdings Ownership of RMCO and Tax Receivable Agreements

RE/MAX Holdings has twice acquired significant portions of the ownership in RMCO; first in October 2013 at the time of IPO when RE/MAX Holdings acquired its initial 11.5 million common units of RMCO and, second, in November and December 2015 when it acquired 5.2 million additional common units. RE/MAX Holdings sold Class A common stock, which it exchanged for these common units of RMCO. RIHI then sold the Class A common stock to the market.

When RE/MAX Holdings acquired common units in RMCO, it received a step-up in tax basis on the underlying assets held by RMCO. The step-up is principally equivalent to the difference between (1) the fair value of the underlying assets on the date of acquisition of the common units and (2) their tax basis in RMCO, multiplied by the percentage of units acquired. The majority of the step-up in basis relates to intangibles assets, primarily franchise agreements and goodwill, and the step-up is often substantial. These assets are amortizable under IRS rules and result in deductions on the Company’s tax return for many years and consequently, RE/MAX Holdings receives a future tax benefit. These future benefits are reflected within deferred tax assets of approximately $53.7 million on the Company’s consolidated balance sheets as of December 31, 2018. 

If RE/MAX Holdings acquires additional common units of RMCO from RIHI, the percentage of RE/MAX Holdings’ ownership of RMCO will increase, and additional deferred tax assets will be created as additional tax basis step-ups occur.

In connection with the initial sale of RMCO common units in October 2013, RE/MAX Holdings entered into Tax Receivable Agreements (“TRAs”) which require that RE/MAX Holdings make annual payments to the TRA holders equivalent to 85% of any tax benefits realized on each year’s tax return from the additional tax deductions arising from the step-up in tax basis. The TRA holders as of December 31, 2018 are RIHI and Parallaxes Rain Co-Investment, LLC (“Parallaxes”). TRA liabilities were established for the future cash obligations expected to be paid under the TRAs and are not discounted. As of December 31, 2018, this liability was $40.8 million and was recorded within “Current portion of payable pursuant to tax receivable agreements” and “Payable pursuant to tax receivable agreement” in the Consolidated Balance Sheets. Similar to the deferred tax assets, the TRA liabilities would increase if RE/MAX Holdings acquires additional common units of RMCO from RIHI.

Both deferred tax assets and TRA liability were substantially reduced by the Tax Cuts and Jobs Act enacted in December 2017. The reduction in the corporate tax rate from 35% to 21% resulted in comparable reductions in both the deferred tax asset amounts and the TRA liabilities. The deferred tax assets and TRA liabilities were further reduced in 2018 as a result of the foreign tax provisions contained in the Tax Cuts and Jobs Act. See Note 12, Income Taxes for further information on the impact of the Tax Cuts and Jobs Act.

v3.10.0.1
Earnings Per Share and Dividends
 12 Months Ended
Dec. 31, 2018
Earnings Per Share and Dividends  
Earnings Per Share and Dividends

5. Earnings Per Share and Dividends

Earnings Per Share

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The treasury stock method is used to determine the dilutive effect of time-based restricted stock units. The dilutive effect of performance-based restricted stock units are measured using the guidance for contingently issuable shares.

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):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Numerator

 

 

   

 

 

 

 

 

 

Net income attributable to RE/MAX Holdings, Inc.

 

$

27,044

 

$

10,238

 

$

22,221

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

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

17,737,649

 

 

17,688,533

 

 

17,628,741

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

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

17,737,649

 

 

17,688,533

 

 

17,628,741

Add dilutive effect of the following:

 

 

 

 

 

 

 

 

 

Stock options

 

 

 —

 

 

 —

 

 

5,059

Restricted stock units

 

 

29,850

 

 

43,267

 

 

43,968

Weighted average shares of Class A common stock outstanding, diluted

 

 

17,767,499

 

 

17,731,800

 

 

17,677,768

Earnings per share of Class A common stock

 

 

 

 

 

 

 

 

 

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

 

$

1.52

 

$

0.58

 

$

1.26

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

 

$

1.52

 

$

0.58

 

$

1.26

*See Note 3, Revenue for more information.

Outstanding Class B common stock does not share in the earnings of RE/MAX 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 quarterly per share on all outstanding shares of Class A common stock were as follows (in thousands, except share and per share information):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2018

 

2017

 

2016

 

 

Date paid

 

Per share

 

Date paid

 

Per share

 

Date paid

 

Per share

Dividend declared during quarter ended:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31

 

March 21, 2018

 

$
0.20

 

 

March 22, 2017

 

$
0.18

 

March 23, 2016

 

$
0.15

June 30

 

May 30, 2018

 

 
0.20

 

 

May 31, 2017

 

 
0.18

 

June 2, 2016

 

 
0.15

September 30

 

August 29, 2018

 

 
0.20

 

 

August 30, 2017

 

 
0.18

 

August 31, 2016

 

 
0.15

December 31

 

November 28, 2018

 

 
0.20

 

 

November 29, 2017

 

 
0.18

 

December 1, 2016

 

 
0.15

 

 

 

 

$
0.80

 

 

 

 

$

0.72

 

 

 

$
0.60

On February 20, 2019, the Company’s Board of Directors declared a quarterly dividend of $0.21 per share on all outstanding shares of Class A common stock, which is payable on March 20, 2019 to stockholders of record at the close of business on March 6, 2019.

v3.10.0.1
Acquisitions
 12 Months Ended
Dec. 31, 2018
Acquisitions  
Acquisitions

6. Acquisitions

Booj, LLC

On February 26, 2018, RE/MAX, LLC acquired all membership interests in booj using $26.3 million in cash generated from operations, plus up to approximately $10.0 million in equity-based compensation to be earned over time, which will be accounted for as compensation expense in the future (see Note 13, Equity-Based Compensation for additional information). RE/MAX, LLC acquired booj to deliver core technology solutions designed for and with RE/MAX affiliates.

The following table summarizes the Company’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed (in thousands):

 

 

 

 

 

 

booj

Cash

 

$

362

Other current assets

 

 

367

Property and equipment

 

 

625

Software

 

 

7,400

Trademarks

 

 

500

Non-compete agreement

 

 

1,200

Customer relationships

 

 

800

Other intangible assets

 

 

1,589

Other assets, net of current portion

 

 

336

Total assets acquired, excluding goodwill

 

 

13,179

Current portion of debt

 

 

(606)

Other current liabilities

 

 

(557)

Debt, net of current portion

 

 

(805)

Total liabilities assumed

 

 

(1,968)

Goodwill

 

 

15,039

Total purchase price

 

$

26,250

Acquisition-related costs

 

$

846

Revenue since acquisition date

 

$

5,586

The Company finalized its accounting for the acquisition of booj during the year ended December 31, 2018. Booj 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. The largest intangible assets acquired were valued using an income approach which utilizes Level 3 inputs and are being amortized over a weighted-average useful life using the straight-line method. The excess of the total purchase price over the fair value of the identifiable assets acquired was recorded as goodwill. The goodwill is attributable to expected synergies and projected long-term revenue growth for the RE/MAX network. All of the goodwill recognized is tax deductible.

Independent Region Acquisitions

RE/MAX, LLC has acquired certain key assets of several Independent Regions, including the franchise agreements issued by the Company permitting the sale of RE/MAX franchises in the corresponding regions as well as the franchise agreements between those Independent Regions and the franchisees. RE/MAX, LLC acquired these assets in order to expand its owned and operated regional franchising operations. Details of these acquisitions are outlined in the tables below. 

The Company funded RE/MAX of Georgia, Inc., RE/MAX of Kentucky/Tennessee, Inc., and RE/MAX of Southern Ohio, Inc. (collectively “RE/MAX Regional Services”) by refinancing its 2013 Senior Secured Credit Facility (See Note 10, Debt) and using cash from operations. The Company used cash generated from operations to fund all other Independent Region acquisitions.

 

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX of Northern Illinois, Inc.

 

RE/MAX Regional Services

 

RE/MAX of New Jersey, Inc.

 

RE/MAX of Alaska, Inc.

 

RE/MAX of New York, Inc.

Acquisition date

 

November 15, 2017

 

December 15, 2016

 

December 1, 2016

 

April 1, 2016

 

February 22, 2016

Cash consideration (in thousands)

 

$                   35,720

 

$                   50,400

 

$                 45,000

 

$                 1,500

 

$                   8,500

Status of accounting for the business combination

 

Final as of December 31,

2018 (a)

 

Final as of December 31,

2017

 

Final as of December 31, 2017

 

Final as of December 31, 2016

 

Final as of December 31, 2016

(a)

In finalizing the accounting for this acquisition, adjustments were made during the year ended December 31, 2018 to the Consolidated Balance Sheet to decrease “Franchise agreements, net” by $0.7 million with a corresponding increase to “Goodwill”.

 

The franchise agreements acquired were valued using an income approach which utilizes Level 3 inputs and are being amortized over a weighted-average useful life using the straight-line method.

Full House Mortgage Connection, Inc.

Motto Franchising, LLC (“Motto Franchising”), a wholly-owned subsidiary of RE/MAX, LLC, was formed and developed to franchise mortgage brokerages. On September 12, 2016, Motto Franchising acquired certain assets of Full House Mortgage Connection, Inc. (“Full House”), a franchisor of mortgage brokerages that created concepts used to develop Motto, for initial cash consideration of $8.0 million. Motto Franchising, as a franchisor, grants each franchisee a license to use the Motto Mortgage brand, trademark, promotional and operating materials and concepts. The Company used cash generated from operations to initially fund the acquisition. Additional cash consideration may be required based on future revenues generated. The contingent purchase consideration and its subsequent valuation is more fully described in Note 11, Fair Value Measurements.

The following table summarizes the estimated consideration transferred at the acquisition (in thousands):

 

 

 

 

Cash consideration

 

$

8,000

Contingent purchase consideration (note 11)

 

 

6,300

Total purchase price

 

$

14,300

The following table summarizes the allocation of the purchase price to the fair value of assets acquired for the acquisitions occurring in 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX of Northern Illinois

 

RE/MAX Regional Services

 

RE/MAX of New Jersey

 

Full House

 

RE/MAX of Alaska

 

RE/MAX of New York

 

Total

Cash and cash equivalents

 

$

 -

 

$

 -

 

$

335

 

$

 -

 

$

 -

 

$

131

 

$

466

Franchise agreements

 

 

22,800

 

 

30,700

 

 

29,700

 

 

 -

 

 

529

 

 

5,000

 

 

88,729

Non-compete agreement

 

 

 -

 

 

 -

 

 

 -

 

 

2,500

 

 

 -

 

 

 -

 

 

2,500

Other assets

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

340

 

 

340

Goodwill

 

 

12,920

 

 

19,700

 

 

15,300

 

 

11,800

 

 

971

 

 

3,029

 

 

63,720

Other liabilities

 

 

 -

 

 

 -

 

 

(335)

 

 

 -

 

 

 -

 

 

 -

 

 

(335)

Total purchase price

 

$

35,720

 

$

50,400

 

$

45,000

 

$

14,300

 

$

1,500

 

$

8,500

 

$

155,420

Each of these constitute a business and were accounted for using the fair value acquisition method. The total purchase price for all acquisitions was allocated to the assets acquired based on their estimated fair values. The largest intangible assets acquired were valued using an income approach which utilizes Level 3 inputs and are being amortized over a weighted-average useful life using the straight-line method. The excess of the total purchase price over the estimated fair value of the identifiable assets acquired was recorded as goodwill. The goodwill recognized for all acquisitions is attributable to expected synergies and projected long-term revenue growth. All of the goodwill recognized is tax deductible.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the acquisition of booj had occurred on January 1, 2017, the acquisition of RE/MAX of Northern Illinois had occurred on January 1, 2016 and the acquisitions of RE/MAX Regional Services, RE/MAX of New Jersey, RE/MAX of Alaska and RE/MAX of New York had occurred on January 1, 2015. The historical financial information has been adjusted to give effect to events that are (1) directly attributed to the acquisitions, (2) factually supportable and (3) expected to have a continuing impact on the combined results, including additional amortization expense associated with the valuation of the acquired franchise agreements. This unaudited pro forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually occurred on that date, nor of the results that may be obtained in the future.

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

2018

 

2017

 

2016

 

 

(in thousands, except per share amounts)

Total revenue

 

$

213,892

 

$

205,059

 

$

192,734

Net income attributable to RE/MAX Holdings, Inc. (a)

 

$

26,352

 

$

7,628

 

$

24,929

Basic earnings per common share

 

$

1.49

 

$

0.43

 

$

1.41

Diluted earnings per common share

 

$

1.48

 

$

0.43

 

$

1.41

 

v3.10.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2018
Property and Equipment  
Property and Equipment

7. Property and Equipment

Property and equipment consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

Depreciable Life

    

2018

    

2017

Leasehold improvements

    

Shorter of estimated useful life or life of lease

 

$

3,278

 

$

3,227

Office furniture, fixtures and equipment

 

2 - 10 years

 

 

14,392

 

 

12,004

Total property and equipment

 

 

 

 

17,670

 

 

15,231

Less accumulated depreciation

 

 

 

 

(13,280)

 

 

(12,326)

Total property and equipment, net

 

 

 

$

4,390

 

$

2,905

Depreciation expense was $1.2 million,  $0.9 million and $0.9 million for the years ended December 31, 2018,  2017 and 2016, respectively.

v3.10.0.1
Intangible Assets and Goodwill
 12 Months Ended
Dec. 31, 2018
Intangible Assets and Goodwill  
Intangible Assets and Goodwill

8. 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 December 31, 2018

 

As of December 31, 2017

 

 

Amortization

 

Initial

 

Accumulated

 

Net

 

Initial

 

Accumulated

 

Net

 

 

Period

 

Cost

 

Amortization

 

Balance

 

Cost

 

Amortization

 

Balance

Franchise agreements

 

12.5

 

$

180,867

 

$

(77,710)

 

$

103,157

 

$

181,567

 

$

(62,218)

 

$

119,349

Other intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software (a)

 

4.4

 

$

20,579

 

$

(5,802)

 

$

14,777

 

$

13,762

 

$

(8,111)

 

$

5,651

Trademarks

 

9.3

 

 

1,857

 

 

(839)

 

 

1,018

 

 

1,539

 

 

(902)

 

 

637

Non-compete

 

7.7

 

 

3,700

 

 

(896)

 

 

2,804

 

 

2,500

 

 

(312)

 

 

2,188

Training materials

 

5.0

 

 

2,350

 

 

(157)

 

 

2,193

 

 

 —

 

 

 —

 

 

 —

Other (b)

 

11.9

 

 

2,389

 

 

(216)

 

 

2,173

 

 

 —

 

 

 —

 

 

 —

Total other intangible assets

 

5.8

 

$

30,875

 

$

(7,910)

 

$

22,965

 

$

17,801

 

$

(9,325)

 

$

8,476

(a)

As of December 31, 2018, and December 31, 2017, capitalized software development costs of $4.5 million and $0.6 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization.

(b)

“Other” consists of customer relationships and a favorable market lease, both obtained in connection with the acquisition of booj. The favorable market lease is amortized as additional rent expense through “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income over the remaining term of the lease.

Amortization expense was $19.5 million,  $19.6 million and $15.2 million for the years ended December 31, 2018,  2017 and 2016, respectively.

As of December 31, 2018, the estimated future amortization expense for the next five years related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the acquisition of booj and is as follows (in thousands):

 

 

 

 

Year ending December 31:

    

 

 

2019

 

$

20,524

2020

    

 

20,591

2021

 

 

19,820

2022

 

 

16,967

2023

 

 

13,799

 

 

$

91,701

The following table presents changes to goodwill for the period from January 1, 2017 to December 31, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX Franchising

 

Other

 

Total

Balance, January 1, 2017

 

$

114,833

 

$

11,800

 

$

126,633

Goodwill recognized related to acquisitions

 

 

12,220

 

 

 —

 

 

12,220

Adjustments to acquisition accounting during the measurement period

 

 

(3,865)

 

 

 —

 

 

(3,865)

Effect of changes in foreign currency exchange rates

 

 

225

 

 

 —

 

 

225

Balance, December 31, 2017

    

 

123,413

 

 

11,800

 

 

135,213

Goodwill recognized related to current year acquisitions (a)

 

 

15,039

 

 

 —

 

 

15,039

Adjustments to acquisition accounting during the measurement period

 

 

700

 

 

 —

 

 

700

Effect of changes in foreign currency exchange rates

 

 

(268)

 

 

 —

 

 

(268)

Balance, December 31, 2018

 

$

138,884

 

$

11,800

 

$

150,684

(a)

The purpose of the booj acquisition is to develop and deliver core technology solutions designed for and with RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from this acquisition to RE/MAX Franchising. See Note 6, Acquisitions for additional information.
v3.10.0.1
Accrued Liabilities
 12 Months Ended
Dec. 31, 2018
Accrued Liabilities.  
Accrued Liabilities

9. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

 

 

 

 

 

 

 

 

    

As of December 31,

 

 

2018

 

2017

Accrued payroll and related employee costs

 

$

6,517

 

$

3,874

Accrued taxes

 

 

1,480

 

 

1,635

Accrued professional fees

 

 

2,010

 

 

2,339

Other (a)

 

 

3,136

 

 

7,542

 

 

$

13,143

 

$

15,390

(a)

Other accrued liabilities as of December 31, 2017 include a $4.5 million payable in connection with the February 13, 2018 settlement, and subsequent payment, resulting from the litigation matter concerning the Company’s 2013 acquisition of the net assets of Tails, Inc. (“Tails”), as discussed in Note 15, Commitments and Contingencies.
v3.10.0.1
Debt
 12 Months Ended
Dec. 31, 2018
Debt  
Debt

10. Debt

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

 

 

 

 

 

 

 

 

 

    

As of December 31,

 

 

2018

 

2017

2016 Senior Secured Credit Facility

    

$

229,713

 

$

232,063

Other long-term financing (a)

 

 

635

 

 

 —

Less unamortized debt issuance costs

 

 

(1,481)

 

 

(1,780)

Less unamortized debt discount costs

 

 

(1,080)

 

 

(1,297)

Less current portion (a)

 

 

(2,622)

 

 

(2,350)

 

 

$

225,165

 

$

226,636

(a)

Includes financing assumed with the acquisition of booj. As of December 31, 2018, the carrying value of this financing approximates the fair value.

Maturities of debt are as follows (in thousands):

 

 

 

Year Ending December 31:

 

 

2019

$

2,622

2020

 

2,712

2021

 

2,350

2022

 

2,350

2023

 

220,314

 

$

230,348

Senior Secured Credit Facility

On July 31, 2013, the Company entered into a new credit agreement with several lenders and administered by a bank, referred to herein as the “2013 Senior Secured Credit Facility.” The 2013 Senior Secured Credit Facility consisted of a $230.0 million term loan facility and a $10.0 million revolving loan facility.

On December 15, 2016, the 2013 Senior Secured Credit Facility was amended and restated, referred to herein as the “2016 Senior Secured Credit Facility.” The 2016 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 which must be repaid on December 15, 2021. The proceeds provided by the term loan were used to refinance and repay existing indebtedness and fund the acquisition of RE/MAX Regional Services. In connection with the 2016 Senior Secured Credit Facility, the Company incurred costs of $3.5 million during the year ended December 31, 2016, of which $1.4 million was recorded in “Debt, net of current portion” in the accompanying Consolidated Balance Sheets and is being amortized to interest expense over the term of the 2016 Senior Secured Credit Facility and the remaining $2.1 million was expensed as incurred.

Borrowings under the term loans and revolving loans accrue interest, at our option on (a) LIBOR provided LIBOR shall be no less than 0.75% plus an applicable margin of 2.75% and, provided further, that LIBOR shall be adjusted for reserve requirements for eurocurrency liabilities, if any (the “Eurodollar Rate”) or (b) the greatest of (i) JPMorgan Chase Bank N.A.’s prime rate, (ii) the NYFRB Rate (as defined in the 2016 Senior Secured Credit Facility) plus 0.50% and (iii) the one-month Eurodollar Rate plus 1%, (such greatest rate, the “ABR”) plus, in each case, the applicable margin. The applicable margin for ABR loans is 1.75%.

The 2013 Senior Secured Credit Facility required RE/MAX, LLC to repay term loans with 50% of excess cash flow at the end of the applicable year if its total leverage ratio as defined therein was in excess of 2.50:1.00, with such percentage decreasing as RE/MAX, LLC’s leverage ratio decreased. Under the 2013 Senior Secured Credit Facility, the Company was required to make principal payments out of excess cash flow, as well as from the proceeds of certain asset sales, proceeds from the issuance of indebtedness and from insurance recoveries. The Company made an excess cash flow prepayment of $12.7 million during the year ended December 31, 2016.

The 2016 Senior Secured Credit Facility requires RE/MAX, LLC to repay term loans and reduce revolving commitments with (i) 100.0% of proceeds of any incurrence of additional debt not permitted by the 2016 Senior Secured Credit Facility, (ii) 100.0% of proceeds of asset sales and 100.0% of amounts recovered under insurance policies, subject to certain exceptions and a reinvestment right and (iii) 50.0% of excess cash flow at the end of the applicable fiscal year if RE/MAX, LLC’s total leverage ratio as defined in the 2016 Senior Secured Credit Facility is in excess of 3.25:1.00, with such percentage decreasing to zero as RE/MAX, LLC’s leverage ratio decreases below 2.75 to 1.0. The Company’s total leverage ratio was less than 2.75 to 1.0 as of December 31, 2018, and as a result, the Company does not expect to make an excess cash flow principal prepayment within the next 12-month period. The Company may make optional prepayments on the term loan facility at any time without penalty; however, no such optional prepayments were made during the year ended December 31, 2018.

Whenever amounts are drawn under the revolving line of credit, the 2016 Senior Secured Credit Facility requires compliance with a leverage ratio and an interest coverage ratio. A commitment fee of 0.5% per annum accrues on the amount of unutilized revolving line of credit. As of December 31, 2018, no amounts were drawn on the revolving line of credit. The Company received certain limited waivers and extensions related to its obligation to deliver timely financial information for the year ended December 31, 2017.

v3.10.0.1
Fair Value Measurements
 12 Months Ended
Dec. 31, 2018
Fair Value Measurements  
Fair Value Measurements

11. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

·

Level 1: Quoted prices for identical instruments in active markets.

·

Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. The fair value of the Company’s debt reflects a Level 2 measurement and was estimated based on quoted prices for the Company’s debt instruments in an inactive market.

·

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Level 3 liabilities that are measured at fair value on a recurring basis consist of the Company’s contingent consideration related to the acquisition of Full House.

A summary of the Company’s liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017 is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2018

 

As of December 31, 2017

 

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

5,070

 

$

 -

 

$

 -

 

$

5,070

 

$

6,580

 

$

 -

 

$

 -

 

$

6,580

The Company is required to pay additional purchase consideration totaling eight percent of gross receipts collected by Motto each year (the “Revenue Share Year”) beginning after September 30, 2017 and continuing through September 30, 2026, with no limitation as to the maximum payout. The annual payment to the former owner of Full House is required to be made within 120 days of the end of each Revenue Share Year. Each Revenue Share Year ends September 30. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay Full House with respect to the acquired business. 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 related to assumed franchise sales count for which the forecast assumes between 50 and 80 franchises sold annually. This assumption is based on historical sales and an assumption of growth over time. 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 changes the liability by approximately $0.3 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 Consolidated Statements of Income. 

The table below presents a reconciliation of the contingent consideration from January 1, 2017 to December 31, 2018 (in thousands): 

 

 

 

 

Balance at January 1, 2017

 

$

6,400

Fair value adjustments

 

 

180

Balance at December 31, 2017

 

 

6,580

Fair value adjustments (a)

 

 

(1,289)

Cash payments (b)

 

 

(221)

Balance at December 31, 2018

 

$

5,070

(a)

Fair value adjustments relate to realignment of future franchise sales assumptions to more closely reflect historical sales trends from inception to date.

(b)

Cash payments include payments for Revenue Share Year 1 and Revenue Share Year 2 due to timing of payments.

The Company assesses categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels I,  II and III during the year ended December 31, 2018.

The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility as of December 31, 2018 and 2017 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

2018

 

2017

 

    

Carrying Amount

    

Fair Value     Level 2

    

Carrying Amount

    

Fair Value     Level 2

Senior Secured Credit Facility

    

$

227,152

 

$

221,673

 

$

228,986

 

$

232,933

 

v3.10.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2018
Income Taxes  
Income Taxes

12. Income Taxes

“Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

 

2017

    

2016

 

 

2018

 

As Adjusted*

 

As Adjusted*

Domestic

    

$

52,798

 

$

77,346

 

$

50,145

Foreign

 

 

13,366

 

 

11,516

 

 

11,870

Total

 

$

66,164

 

$

88,862

 

$

62,015

*See Note 3, Revenue for more information.

Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

 

2017

    

2016

 

 

2018

 

As Adjusted*

 

As Adjusted*

Current

 

 

 

 

 

 

 

 

 

Federal

 

$

1,730

 

$

3,568

 

$

8,002

Foreign

 

 

3,818

 

 

4,345

 

 

2,855

State and local

 

 

699

 

 

1,169

 

 

943

Total current expense

 

 

6,247

 

 

9,082

 

 

11,800

Deferred expense

 

 

 

 

 

 

 

 

 

Federal

 

 

8,829

 

 

47,073

 

 

2,992

Foreign

 

 

12

 

 

323

 

 

137

State and local

 

 

711

 

 

569

 

 

238

Total deferred expense

 

 

9,552

 

 

47,965

 

 

3,367

Provision for income taxes

 

$

15,799

 

$

57,047

 

$

15,167

*See Note 3, Revenue for more information.

The provision for income taxes attributable to RE/MAX Holdings includes all U.S. federal and state income taxes on RE/MAX Holdings’ proportionate share of RMCO’s net income. The provision for income taxes attributable to entities other than RE/MAX Holdings represents taxes imposed directly on RMCO and its subsidiaries, primarily foreign taxes that are allocated to the non-controlling interest.

A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

    

 

 

 

2017

    

2016

 

 

 

2018

 

As Adjusted*

 

As Adjusted*

U.S. statutory tax rate

 

 

21.0

%

 

35.0

%

 

35.0

%

Increase due to state and local taxes, net of federal benefit

 

 

3.1

 

 

2.6

 

 

2.6

 

Non-creditable foreign taxes

 

 

1.2

 

 

 -

 

 

 -

 

Foreign derived intangible income deduction

 

 

(1.3)

 

 

 -

 

 

 -

 

Income attributable to non-controlling interests

 

 

(7.3)

 

 

(12.5)

 

 

(14.1)

 

Other

 

 

(0.8)

 

 

(0.8)

 

 

1.0

 

Subtotal

 

 
15.9

 

 
24.3

 

 
24.5

 

Impact of TRA adjustment on NCI (a)

 

 

0.7

 

 

4.5

 

 

 -

 

Effect of permanent difference - TRA adjustment (b)

 

 

(2.2)

 

 

(13.6)

 

 

 -

 

Tax Reform Rate Change (c)

 

 

 -

 

 

49.0

 

 

 -

 

Valuation allowance recognized on tax basis step-ups

 

 

9.5

 

 

 -

 

 

 

 

 

 

 
23.9

%

 
64.2

%

 
24.5

%

*See Note 3, Revenue for more information.

(a)

Reflects additional impact of non-controlling interest adjustment being on a larger base of income that includes the gain on reduction in TRA liability.

(b)

Reflects the impact of gain on TRA liability reduction, which is not taxable.

(c)

Reflects reduction in deferred tax assets and resulting increase in deferred tax expense due to U.S. Federal rate declining from 35% to 21%.

In December 2017, the Tax Cut and Jobs Act (the “TCJA”) was enacted, which included a significant reduction in the U.S. corporate income tax rate from 35% to 21% along with several changes to taxation of foreign derived income. In 2017, the Company recorded a $42.8 million charge to “Provision for income taxes” in the accompanying Consolidated Statements of Income for the reduction in the value of its deferred tax assets related to this tax rate change (reflected in the rate reconciliation table above as a 49.0% adjustment in 2017). Correspondingly, the TRA liabilities were reduced because of the rate change, resulting in a benefit to operating income of $32.7 million. The net effect of these two adjustments was a reduction to 2017 net income of $10.1 million. When the aforementioned adjustments were recorded in 2017, the Company was still evaluating several aspects of the TCJA, most notably around foreign derived income.

In 2018, the Company completed its evaluation of the impacts to its foreign derived income, particularly the tax credits received for foreign taxes and deductions allowed under the newly created foreign-derived intangible income deduction. The SEC staff issued Staff Accounting Bulletin 118, which provided all companies through December of 2018 to finalize provisional estimates of the impacts of the TCJA.

Starting with tax year 2018, the Company has foreign tax credit limitation due to the U.S. federal tax rate being lower than many foreign jurisdictions, particularly Canada. Certain of the tax basis step-ups, described in Note 4, Non-controlling interest, are related to intangible assets from the Company’s Western Canada operations. The deductions expected to be taken from these tax basis step-ups are no longer expected to be realized by the Company due to now being subject to a foreign tax credit limitation. As a result, the Company recognized a $6.3 million valuation allowance against the related deferred tax assets and an increase in “Provision for income taxes” in the accompanying Consolidated Statements of Income (reflected in the rate reconciliation table above as a 9.5% adjustment in 2018). The loss in value of the step-up, along with other less significant changes, also reduced the value of the TRA liabilities, resulting in a $6.1 benefit to operating income. The net impact of these items was insignificant to net income. In addition, the Company is now limited on the amount of foreign tax credit that can be claimed in its U.S. return.

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 foreign derived income. Such final regulations are expected in 2019.

Income taxes receivable, net were $0.3 million and $0.9 million at December 31, 2018 and 2017, respectively.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the accompanying Consolidated Balance Sheets.

These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

 

 

2017

 

 

2018

 

As Adjusted*

Long-term deferred tax assets

 

 

 

 

 

 

Goodwill, other intangibles and other assets

 

$

48,427

 

$

52,385

Imputed interest deduction pursuant to tax receivable agreements

 

 

2,719

 

 

3,052

Rent liabilities

 

 

1,845

 

 

1,878

Compensation and benefits

 

 

2,131

 

 

526

Allowance for doubtful accounts

 

 

944

 

 

834

Motto contingent liability

 

 

748

 

 

929

Deferred revenue

 

 

3,939

 

 

3,914

Foreign tax credit carryforward

 

 

1,259

 

 

 —

Other

 

 

1,281

 

 

663

Total long-term deferred tax assets

 

 

63,293

 

 

64,181

Valuation allowance (a)

 

 

(7,051)

 

 

 —

Total long-term deferred tax assets, net of valuation allowance

 

 

56,242

 

 

64,181

Long-term deferred tax liabilities

 

 

 

 

 

 

Property and equipment and other long-lived assets

 

 

(2,944)

 

 

(1,491)

Total long-term deferred tax liabilities

 

 

(2,944)

 

 

(1,491)

Net long-term deferred tax assets

 

 

53,298

 

 

62,690

Total deferred tax assets and liabilities

 

$

53,298

 

$

62,690

*See Note 3, Revenue for more information.

(a)

Includes a valuation allowance on deferred tax assets for goodwill and intangibles in the Company’s Western Canada operations, as well as foreign tax credit carryforwards.

As of December 31, 2018, the Company generated $1.3 million in unutilized foreign tax credits. These credits may be carried back one year and carried forward for 10 years until utilized. This amount is included in the valuation allowance as of December 31, 2018.

Net deferred tax assets are recorded related to differences between the financial reporting basis and the tax basis of RE/MAX Holdings’ proportionate share of the net assets of RMCO. Based on the Company’s historical taxable income and its expected future earnings, management evaluates the uncertainty associated with booking tax benefits and determines whether the deferred tax assets are more likely than not to be realized, including evaluation of deferred tax liabilities and the expectation of future taxable income. If not expected to be realized, a valuation allowance is recognized to offset the deferred tax asset.

The Company does not believe it has any significant uncertain tax positions. Accordingly, the Company did not record any material adjustments or recognize interest expense for uncertain tax positions for the years ended December 31, 2018, 2017 and 2016. In the future, if uncertain tax positions arise, interest and penalties will be accrued and included in the “Provision for income taxes” in the accompanying Consolidated Statements of Income.

The Company and its subsidiaries file, or will file, income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. RE/MAX Holdings will file its 2018 income tax returns by October 15, 2019. RMCO is not subject to domestic federal income taxes as it is a flow-through entity; however, RMCO is still required to file an annual U.S. Return of Partnership Income. With respect to state and local jurisdictions and countries outside of the U.S., the Company and its subsidiaries are typically subject to examination for three to four years after the income tax returns have been filed. As such, income tax returns filed since 2014 are subject to examination.

v3.10.0.1
Equity-Based Compensation
 12 Months Ended
Dec. 31, 2018
Equity-Based Compensation  
Equity-Based Compensation

13. Equity-Based Compensation

The RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “2013 Incentive Plan”) includes restricted stock units (“RSUs”) which may have time-based or performance-based vesting criteria. The Company recognizes equity-based compensation expense in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The Company recognizes corporate income tax benefits relating to the vesting of restricted stock units in “Provision for income taxes” in the accompanying Consolidated Statements of Income.

Employee stock-based compensation expense under the Company’s 2013 Incentive Plan, net of the amount capitalized in internally developed software, is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

2018

 

2017

 

2016

Expense from Time-based RSUs

$

5,110

 

$

2,523

 

$

2,330

Expense from Performance-based RSUs

 

4,066

 

 

377

 

 

 -

Equity-based compensation expense

 

9,176

 

 

2,900

 

 

2,330

Tax benefit from equity-based compensation

 

(1,297)

 

 

(637)

 

 

(511)

Excess tax benefit from equity-based compensation

 

(145)

 

 

(324)

 

 

(261)

Net compensation cost

$

7,734

 

$

1,939

 

$

1,558

Time-based Restricted Stock Units

Time-based RSUs are valued using the Company’s closing stock price on the date of grant. Grants awarded to the Company’s Board of Directors generally vest over a one-year period. Grants awarded to the Company’s employees, other than booj employees and former owners in connection with the acquisition, generally vest equally in annual installments over a three-year period. Grants awarded to booj employees and former owners in connection with the acquisition vest in three installments over a four-year period. Compensation expense is recognized on a straight-line basis over the vesting period.

The following table summarizes equity-based compensation activity related to time-based RSUs for the year ended December 31, 2018:  

 

 

 

 

 

 

 

    

Time-based restricted stock units

    

 

Weighted average grant date fair value per share

Balance, January 1, 2018

 

105,862

 

$

41.67

Granted

 

271,941

 

$

53.04

Shares vested (including tax withholding)(a)

 

(70,650)

 

$

41.50

Forfeited

 

(8,543)

 

$

44.82

Balance, December 31, 2018

 

298,610

 

$

51.97

 

 

 

 

 

 

(a)

Pursuant to the terms of the 2013 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.

The following table summarizes information about our RSU grants during the years ended December 31, 2018, 2017 and 2016:

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

Weighted average grant date fair value per RSU granted

 

$

53.04

 

$

55.45

 

$

33.24

At December 31, 2018, there was $11.1 million of total unrecognized time-based 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 2.65 years for time-based restricted stock units.

Performance-based Restricted Stock Units

Performance-based RSUs granted to employees, other than booj employees and former owners in connection with the acquisition, are stock-based awards in which the number of shares ultimately received depends on the Company’s achievement of a specified revenue target as well as the Company’s total shareholder return (“TSR”) relative to a peer company index over a three-year performance period. If threshold vesting conditions are not met, no shares will vest.  If threshold vesting conditions are met, the number of shares that could be issued range from 0% to 150% of the participant’s target award. Performance-based RSUs are valued on the date of grant using a Monte Carlo simulation for the TSR element of the award. The Company’s expense will be adjusted based on the estimated achievement of revenue versus target. Earned performance-based RSUs cliff-vest at the end of the three-year performance period. Compensation expense is recognized on a straight-line basis over the vesting period based on the Company’s estimated performance, with cumulative to-date adjustments made when revenue performance expectations change.

Performance-based RSUs granted to booj employees and former owners in connection with the acquisition are stock-based awards in which the number of shares ultimately received depends on the achievement of certain technology milestones set forth in the related purchase agreement. The number of shares that could be issued range from 0% to 100% of the participant’s target award. The awards were valued using the Company’s closing stock price on the date of grant. The Company’s expense will be adjusted based on the estimated achievement of the milestones. Earned performance-based RSUs vest May 31, 2019 and November 1, 2019 to the extent the corresponding milestones are achieved and provided the participant is still an employee of the Company at the time of vesting. Compensation expense is recognized on a straight-line basis over the vesting period based on the Company’s estimated performance. 

The following table summarizes equity-based compensation activity related to performance-based RSUs for year ended December 31, 2018:

 

 

 

 

 

 

 

    

Performance-based restricted stock units

    

 

Weighted average grant date fair value per share

Balance, January 1, 2018

 

31,831

 

$

57.88

Granted (a)

 

156,694

 

$

55.38

Shares vested

 

(2,811)

 

$

56.59

Forfeited

 

(6,099)

 

$

57.06

Balance, December 31, 2018

 

179,615

 

$

55.75

(a)

Represents the total participant target award.

At December 31, 2018, there was $4.9 million of total unrecognized performance-based 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 1.22 years for performance-based RSUs.

After giving effect to all outstanding awards (assuming maximum achievement of performance goals for performance-based awards), there were 2,285,200 additional shares available for the Company to grant under the 2013 Incentive Plan as of December 31, 2018.

v3.10.0.1
Leadership Changes and the New Service Model
 12 Months Ended
Dec. 31, 2018
Leadership Changes and the New Service Model  
Leadership Changes and the New Service Model

14. Leadership Changes and the New Service Model

On February 9, 2018, the Company announced the retirement of the Company’s President. The Company entered into a Separation Agreement with the President, and pursuant to the terms of this agreement, the Company incurred a total cost of $1.8 million which was recorded to “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income during the year ended December 31, 2018, which will be paid over a 39-month period.

 

In addition, the Company announced a new service model in early 2019 designed to deliver more value to franchisees, as well as support franchisee growth and professional development (the “New Service Model”). In connection with the New Service Model, the Company will incur a total of approximately $2.1 million in expenses related to severance and outplacement services provided to certain former employees of the Company, of which $1.4 million in expense was recognized during the year ended December 31, 2018. These expenses are included in “Selling, general and administrative expenses” in the accompanying Consolidated Statements of Income. All of the above costs were attributable to the RE/MAX Franchising reportable segment.

v3.10.0.1
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2018
Commitments and Contingencies  
Commitments and Contingencies

15. Commitments and Contingencies

Commitments

The Company leases offices and equipment under noncancelable leases, subject to certain provisions for renewal options and escalation clauses.  Future minimum payments (including those allocated to an affiliate) under these leases and commitments, net of payments under sublease agreements, are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Rent Payments

 

Sublease Receipts

 

Total Cash Outflows

Year ending December 31:

 

 

 

 

 

 

 

 

 

2019

    

$

9,402

 

$

(1,087)

 

$

8,315

2020

 

 

9,601

 

 

(873)

 

 

8,728

2021

 

 

9,341

 

 

(775)

 

 

8,566

2022

 

 

9,011

 

 

(804)

 

 

8,207

2023

 

 

9,169

 

 

(827)

 

 

8,342

Thereafter

 

 

43,556

 

 

(1,382)

 

 

42,174

 

 

$

90,080

 

$

(5,748)

 

$

84,332

Minimum rent payments under noncancelable operating leases are recognized on a straight-line basis over the terms of the leases. Rent expense, excluding amounts related to gain or loss on sublease, was $7.7 million,  $7.8 million and $7.5 million for the years ended December 31, 2018,  2017 and 2016, respectively, net of amounts recorded under sublease agreements of $1.3 million,  $1.0 million and $1.1 million for the years ended December 31, 2018,  2017 and 2016, respectively.

The Company leases its corporate headquarters office building (the “Master Lease”) under a lease expiring April 2028. The Company may, at its option, extend the Master Lease for two renewal periods of 10 years. Under the terms of the Master Lease, the Company pays an annual base rent, which escalates 3% each year. The Company pays for operating expenses in connection with the ownership, maintenance, operation, upkeep and repair of the leased space. The Company may assign or sublet an interest in the Master Lease only with the approval of the landlord.

There were no new subleases during the year ended December 31, 2018; however, the following subleases resulted in a gain (loss) on sublease during the year ended December 31, 2017:

 

 

 

 

 

 

Execution Date

 

End Date

 

2017 Gain (Loss) on Sublease
(In millions)

May 2017

 

April 2028

 

$

(0.2)

August 2017

 

January 2025

 

 

(3.7)

September 2017 (a)

 

August 2024

 

 

0.3

 

 

 

 

$

(3.6)

(a)

During the year ended December 31, 2013 the Company entered into a sublease agreement with a tenant and recognized a loss related to the subleased office space of $1.2 million. In September 2017 the Company amended this sublease agreement and the existing liability was reduced, resulting in a net gain of $0.3 million during the year ended December 31, 2017.

As of December 31, 2018, and 2017, the liability related to the aforementioned sublease agreements was approximately $2.4 million and $3.9 million, respectively, and is included in “Other liabilities, net of current portion” in the accompanying Consolidated Balance Sheets.

Additionally, the Company acquired an office lease in connection with the acquisition of booj. Future lease payments related to the booj office lease are approximately $0.2 million per year for the next five years with payments thereafter totaling approximately $2.0 million.

Contingencies 

In connection with the Purchase of Full House, as described in Note 6, Acquisitions the Company entered into an arrangement to pay additional purchase consideration based on Motto’s future gross revenues, excluding certain fees, for each year beginning October 1, 2017 through September 30, 2026. As of December 31, 2018, this liability was estimated to be $5.1 million.

In connection with the sale of the assets and liabilities related to the Company’s previously owned brokerages, the Company entered into three Assignment and Assumption of Leases Agreements (the “Assignment Agreements”) pursuant to which the Company assigned its obligations under and rights, title and interest in 21 leases to the respective purchasers. For certain leases, the Company remains secondarily liable for future lease payments through July 2021 under the respective lease agreements and accordingly, as of December 31, 2018, the Company has outstanding lease guarantees of $2.0 million. This amount represents the maximum potential amount of future payments under the respective lease guarantees.

In addition, the Company maintains a self-insurance program for health benefits. As of December 31, 2018, and 2017, the Company recorded a liability of $0.3 million and $0.4 million, respectively, related to this program.

Litigation

The Company is subject to litigation claims arising in the ordinary course of business. The Company believes that it has adequately accrued for legal matters in accordance with the requirements of GAAP. The Company records litigation accruals for legal matters which are both probable and estimable and for related legal costs as incurred. The Company does not reduce these liabilities for potential insurance or third-party recoveries.

On October 7, 2013, RE/MAX Holdings acquired the net assets, excluding cash, of Tails for consideration paid of $20.2 million. Following earlier litigation that was dismissed, several shareholders of Tails filed a complaint entitled Robert B. Fisher, Carla L. Fisher, Bradley G. Rhodes and James D. Schwartz v. Gail Liniger, Dave Liniger, Bruce Benham, RE/MAX Holdings, Inc. and Tails Holdco, Inc. in Denver District Court ("Tails II"). On February 13, 2018, the parties signed a formal Settlement Agreement and Mutual General Release resulting in the Company recording a charge of $2.6 million in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income during the year ended December 31, 2017. In February 2018, the Company received $1.9 million from its insurance carriers as reimbursement of attorneys’ fees and a portion of the settlement and paid $4.5 million to satisfy the terms of the Settlement Agreement. As a result of the settlement, the litigation was dismissed with prejudice on March 1, 2018. 

Management of the Company believes no other such litigation matters involving a reasonably possible chance of loss will, individually or in the aggregate, result in a material adverse effect on the Company's financial condition, results of operations and cash flows.

v3.10.0.1
Defined-Contribution Savings Plan
 12 Months Ended
Dec. 31, 2018
Defined-Contribution Savings Plan.  
Defined-Contribution Savings Plan

16. Defined-Contribution Savings Plan

The Company sponsors an employee retirement plan (the “401(k) Plan”) that provides certain eligible employees of the Company an opportunity to accumulate funds for retirement. The Company provides matching contributions on a discretionary basis. During the years ended December 31, 2018,  2017 and 2016, the Company recognized expense of  $1.8 million,  $1.5 million and $1.4 million, respectively, for matching contributions to the 401(k) Plan.

v3.10.0.1
Related-Party Transactions
 12 Months Ended
Dec. 31, 2018
Related Party Transactions  
Related-Party Transactions

17. Related-Party Transactions

The majority stockholders of RIHI, specifically the Company’s current Chairman and Co-Founder and the Company’s Vice Chair and Co-Founder have made and continue to make a golf course they own available to the Company for business purposes. The Company used the golf course and related facilities for business purposes at minimal charge during the years ended December 31, 2018, 2017 and 2016. Additionally, the Company recorded expense of $0.5 million for the value of the benefits provided to Company personnel for the complimentary use of the golf course during each year ended December 31, 2018, 2017 and 2016, with an offsetting increase in additional paid in capital. 

The Company provides services, such as accounting, legal, marketing, technology, human resources and public relations services, to certain affiliated entities (primarily the Company’s affiliated advertising funds), and it allows these companies to share its leased office space. During the years ended December 31, 2018, 2017 and 2016, the total amount allocated for services rendered and rent for office space provided on behalf of affiliated entities were $3.8 million, $3.4 million and $2.0 million, respectively. Amounts are generally paid within 30 days and no amounts were outstanding at December 31, 2018 and 2017. See Note 19, Subsequent Event for additional information on the acquisition of the advertising funds.

Related party advertising funds had current outstanding amounts due from the Company of $0.5 million and $0.1 million as of December 31, 2018 and 2017, respectively. Such amounts are included in “Accounts payable” in the accompanying Consolidated Balance Sheets.

v3.10.0.1
Segment Information
 12 Months Ended
Dec. 31, 2018
Segment Information  
Segment Information

18. Segment Information

The Company operates under the following three segments: RE/MAX Franchising, Motto Franchising and booj. Due to quantitative insignificance, the Motto Franchising and booj operating segments do not meet the criteria of a reportable segment, and RE/MAX Franchising is the only reportable segment. The RE/MAX Franchising reportable segment comprises the operations of the Company’s owned and independent global franchising operations under the RE/MAX brand name and corporate-wide shared services expenses. Other comprises Motto Franchising and booj and does not include any charges related to shared services. 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 Note 2, Summary of Significant Accounting Policies.  

The following table presents revenue from external customers by segment for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Continuing franchise fees

 

$

98,828

 

$

93,232

 

$

81,194

Annual dues

 

 

35,894

 

 

33,767

 

 

32,653

Broker fees

 

 

46,871

 

 

43,801

 

 

37,209

Franchise sales and other revenue

 

 

22,911

 

 

22,357

 

 

24,470

Brokerage revenue

 

 

 —

 

 

 —

 

 

112

Total RE/MAX Franchising

 

$

204,504

 

$

193,157

 

$

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total revenue

 

$

212,626

 

$

193,714

 

$

175,642

*See Note 3, Revenue for more information.

The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Adjusted EBITDA: RE/MAX Franchising

 

$

108,669

 

$

105,184

 

$

94,717

Adjusted EBITDA: Other

 

 

(4,353)

 

 

(3,039)

 

 

(928)

Adjusted EBITDA: Consolidated

 

 

104,316

 

 

102,145

 

 

93,789

Gain (loss) on sale or disposition of assets and sublease, net (a)

 

 

139

 

 

(4,260)

 

 

171

Loss on early extinguishment of debt

 

 

 —

 

 

 —

 

 

(2,893)

Equity-based compensation expense

 

 

(9,176)

 

 

(2,900)

 

 

(2,330)

Public offering related expenses

 

 

 —

 

 

 —

 

 

(193)

Acquisition-related expense (b)

 

 

(1,634)

 

 

(5,889)

 

 

(1,899)

Gain on reduction in TRA liability (c)

 

 

6,145

 

 

32,736

 

 

 —

Special Committee investigation and remediation expense (d)

 

 

(2,862)

 

 

(2,634)

 

 

 —

Fair value adjustments to contingent consideration (e)

 

 

1,289

 

 

(180)

 

 

(100)

Interest income

 

 

676

 

 

352

 

 

160

Interest expense

 

 

(12,051)

 

 

(9,996)

 

 

(8,596)

Depreciation and amortization

 

 

(20,678)

 

 

(20,512)

 

 

(16,094)

Income before provision for income taxes

 

$

66,164

 

$

88,862

 

$

62,015

*See Note 3, Revenue for more information.

(a)

Represents gain (loss) on the sale or disposition of assets as well as the gains (losses) on the sublease of a portion of our corporate headquarters office building.

(b)

Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies that are included in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.

(c)

Gain on reduction in tax receivable agreement liability is a result of the Tax Cuts and Jobs Act enacted in December 2017 and further clarified in 2018. See Note 12, Income Taxes for additional information.

(d)

Special Committee investigation and remediation expense relates to costs incurred in relation to the previously disclosed investigation by the special committee of independent directors of actions of certain members of our senior management and the implementation of the remediation plan. 

(e)

Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 11, Fair Value Measurements for additional information.

 

The following table presents total assets as of December 31, 2018 and 2017 of the Company’s reportable segments (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

    

2017

 

 

2018

 

As adjusted*

Total RE/MAX Franchising

 

$

405,584

 

$

392,797

Other

 

 

21,256

 

 

20,038

Total

 

$

426,840

 

$

412,835

*See Note 3, Revenue for more information.

The following table presents long-lived assets, net of accumulated depreciation disaggregated by geographical area as of December 31, 2018 and 2017 (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

    

2017

 

 

2018

 

As adjusted*

U.S.

 

$

4,342

 

$

2,842

Global

 

 

48

 

 

63

Total

 

$

4,390

 

$

2,905

*See Note 3, Revenue for more information.

 

v3.10.0.1
Subsequent Events
 12 Months Ended
Dec. 31, 2018
Subsequent Events  
Subsequent Events

19. Subsequent Events

 

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 in a transaction that closed on January 1, 2019. All of these entities, except for the Western Canada region, were then merged into a new entity called RE/MAX Marketing Fund (with the Western Canada fund, collectively, the “Marketing Funds”). As in the past, the funds collected are contractually obligated to be used to support both regional and pan-regional marketing campaigns to build brand awareness and to support the Company’s agent and broker marketing technology. The Company does not plan for the use of the funds to change because of this acquisition and consolidation. The acquisitions of the Marketing Funds are part of the Company’s succession plan, and ownership of the Marketing Funds by the franchisor is a common structure. Fees incurred with the acquisition of the Marketing Funds were not material for the year ended December 31, 2018.

 

Beginning January 1, 2019, all assets and liabilities of the Marketing Funds will be reflected in the consolidated financial statements of the Company. The Company will also begin recognizing revenue from the amounts collected, which substantially increases its revenues. However, because the use of these funds is contractually encumbered for the benefit of franchisees, the Company expects to have an equal and offsetting amount of expenses such that there is no material impact to overall profitability of the Company as a result of this acquisition. The Company also plans to disclose the Marketing Funds as a separate reportable segment in 2019.

 

The following table reflects the preliminary assets and liabilities of the acquired entities as of December 31, 2018 (in thousands):

 

 

 

 

 

 

Marketing Funds

 

 

(Unaudited)

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

 

$

 -

 

v3.10.0.1
Quarterly Financial Information
 12 Months Ended
Dec. 31, 2018
Quarterly Financial Information (unaudited)  
Quarterly Financial Information (unaudited)

20. Quarterly Financial Information (unaudited)

Summarized quarterly results for the years ended December 31, 2018 and 2017 were as follows (in thousands, except shares and per share amounts):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

    

March 31, 2018

    

June 30, 2018

    

September 30, 2018

    

December 31, 2018

Total revenue

 

$

52,642

 

$

54,277

 

$

54,866

 

$

50,841

Total operating expenses

 

 

38,925

 

 

33,363

 

 

33,059

 

 

29,428

Operating income

 

 

13,717

 

 

20,914

 

 

21,807

 

 

21,413

Total other expenses, net

    

 

(2,688)

 

 

(3,176)

 

 

(2,846)

 

 

(2,977)

Income before provision for income taxes

 

 

11,029

 

 

17,738

 

 

18,961

 

 

18,436

Provision for income taxes

 

 

(1,862)

 

 

(3,147)

 

 

(3,420)

 

 

(7,370)

Net income

 

 

9,167

 

 

14,591

 

 

15,541

 

 

11,066

Less: net income attributable to non-controlling interest

 

 

4,184

 

 

6,943

 

 

7,402

 

 

4,792

Net income attributable to RE/MAX Holdings, Inc.

 

$

4,983

 

$

7,648

 

$

8,139

 

$

6,274

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

0.43

 

$

0.46

 

$

0.35

Diluted

 

$

0.28

 

$

0.43

 

$

0.46

 

$

0.35

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,709,095

 

 
17,746,042

 

 

17,746,184

 

 

17,748,745

Diluted

 

 

17,762,133

 

 
17,769,641

 

 

17,771,212

 

 

17,771,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

    

March 31, 2017

    

June 30, 2017

    

September 30, 2017

    

December 31, 2017 (a)

 

 

As adjusted*

    

As adjusted*

    

As adjusted*

    

As adjusted*

Total revenue

 

$

47,406

 

$

48,727

 

$

49,071

 

$

48,510

Total operating expenses

 

 

32,637

 

 

26,055

 

 

36,580

 

 

110

Operating income

 

 

14,769

 

 

22,672

 

 

12,491

 

 

48,400

Total other expenses, net

 

 

(2,351)

 

 

(2,398)

 

 

(2,180)

 

 

(2,541)

Income before provision for income taxes

 

 

12,418

 

 

20,274

 

 

10,311

 

 

45,859

Provision for income taxes

 

 

(3,030)

 

 

(4,735)

 

 

(3,021)

 

 

(46,262)

Net income (loss)

 

 

9,388

 

 

15,539

 

 

7,290

 

 

(403)

Less: net income attributable to non-controlling interest

 

 

4,848

 

 

8,081

 

 

3,573

 

 

5,074

Net income (loss) attributable to RE/MAX Holdings, Inc.

 

$

4,540

 

$

7,458

 

$

3,717

 

$

(5,477)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.26

 

$

0.42

 

$

0.21

 

$

(0.31)

Diluted

 

$

0.26

 

$

0.42

 

$

0.21

 

$

(0.31)

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,662,842

 

 
17,696,842

 

 

17,696,991

 

 

17,696,991

Diluted

 

 

17,716,013

 

 

17,723,802

 

 

17,737,786

 

 

17,747,744

*See Note 3, Revenue for more information.

(a)The quarterly results for the quarter ended December 31, 2017 were impacted by the Tax Cuts and Jobs Act enacted in December 2017. The reduction in the corporate tax rate from 35% to 21% resulted in comparable reductions in both the deferred tax asset amounts and the TRA liabilities. See Note 11, Income Taxes for further information on the impact of the Tax Cuts and Jobs Act.

v3.10.0.1
Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2018
Summary of Significant Accounting Policies  
Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements (“financial statements”) and notes thereto included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The accompanying financial statements include the accounts of RE/MAX Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of December 31, 2018 and 2017, the results of its operations and comprehensive income, changes in its stockholders’ equity and its cash flows for the years ended December 31, 2018, 2017 and 2016.

During 2018, the Company completed the acquisition of booj, and during 2017 and 2016, the Company completed the acquisitions of various independent regions. Their results of operations, cash flows and financial positions are included in the financial statements from their respective dates of acquisition. See Note 6, Acquisitions for additional information.

Reclassifications

Reclassifications

Other than the change in accounting principle discussed in Note 3, Revenue, there have been no reclassifications to the financial statements during the current year.

Use of Estimates

Use of Estimates

The preparation of the accompanying 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

Principles of Consolidation

RE/MAX Holdings consolidates RMCO and records a non-controlling interest in the accompanying Consolidated Balance Sheets and records net income attributable to the non-controlling interest and comprehensive income attributable to the non-controlling interest in the accompanying Consolidated Statements of Income and Consolidated Statements of Comprehensive Income, respectively.

Revenue Recognition

Revenue Recognition

The Company generates all its revenue from contracts with customers. The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of RE/MAX and Motto trademarks; distinctive sales and promotional materials; access to technology; standardized supplies and other materials used in RE/MAX and Motto offices; and recommended procedures for operation of RE/MAX and Motto offices. The Company concluded that these benefits are highly related and all a part of one performance obligation, a license of symbolic intellectual property that is billed through a variety of fees including franchise sales, continuing franchise fees, broker fees, and annual dues, described below. The Company has other performance obligations associated with contracts with customers in other revenue for training, marketing and events, and legacy booj customers. The method used to measure progress is over the passage of time for most streams of revenue. The following is a description of principal activities from which the Company generates its revenue. 

Continuing Franchise Fees

Revenue from continuing franchise fees consists of fixed contractual fees paid monthly by 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. This revenue is recognized in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents and number of Motto offices.

Annual Dues

Annual dues revenue consists of fixed contractual fees paid annually based on the number of RE/MAX agents. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents.

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 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

Year Ended December 31, 2018

 

$

15,297

 

$

36,474

 

$

(35,894)

 

$

15,877

(a)

Revenue recognized related to the beginning balance was $14.0 million for the year ended December 31, 2018.

(b)

 

Broker Fees

Revenue from broker fees represents fees received from the Company’s RE/MAX franchised regions or franchise offices that are based on a percentage of RE/MAX agents’ gross commission income on home sale transactions. Revenue from broker fees is recognized as a sales-based royalty and recognized in the month when a home sale transaction occurs. Motto franchisees do not pay any fees based on the number or dollar value of loans brokered.

Franchise Sales

Franchise sales is comprised of revenue from the sale or renewal of franchises. An initial fee is charged upon a franchise sale. Those initial fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. 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

Year Ended December 31, 2018

 

$

27,943

 

$

8,732

 

$

(9,115)

 

$

27,560

(a)

Revenue recognized related to the beginning balance was $7.4 million for the year ended December 31, 2018.

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 Consolidated Balance Sheets) consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Expense recognized

 

Additions to contract cost for new activity

 

Balance at end of period

Year Ended December 31, 2018

 

$

3,532

 

$

(1,229)

 

$

1,445

 

$

3,748

Other Revenue

Other revenue is primarily revenue from preferred marketing arrangements and event-based revenue from training and other programs. Revenue from preferred marketing arrangements involves both flat fees paid in advance as well as revenue sharing, both of which are generally recognized over the period of the arrangement and are recorded net as the Company does not control the good or service provided. Event-based revenue is recognized when the event occurs and until then is included in “Deferred revenue”. Other revenue also includes revenue from booj’s operations for its external customers as booj continues to provide technology products and services, such as websites, mobile apps, reporting and site tools, to its existing customers at the date of acquisition.

Selling, Operating and Administrative Expenses

Selling, Operating and Administrative Expenses

Selling, operating and administrative expenses primarily consist of personnel costs, including salaries, benefits, payroll taxes and other compensation expenses, professional fees, rent and related facility operations expense, as well as expenses for marketing, and expanding and supporting the Company’s franchise.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include bank deposits and other highly liquid investments purchased with an original purchase maturity of three months or less.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of financial instruments, net of any allowances, including cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value due to their short-term nature.

Accounts and Notes Receivable

Accounts and Notes Receivable

Accounts receivable arising from monthly billings do not bear interest. The Company provides limited financing of certain franchise sales through the issuance of notes receivable that either bear interest at a rate of prime plus 2% or at a stated amount, which is fixed at the inception of the note with the associated interest recorded in “Interest income” in the accompanying Consolidated Statements of Income. Amounts collected on notes receivable are included in “Net cash provided by operating activities” in the accompanying Consolidated Statements of Cash Flows.

The Company records allowances against its accounts and notes receivable balances for estimated probable losses. Increases and decreases in the allowance for doubtful accounts are established based upon changes in the credit quality of receivables and are included as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. The allowance for doubtful accounts and notes is based on historical experience, general economic conditions, and the attributes of specific accounts.

The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Additions/charges to cost and expense for allowances for doubtful accounts

 

Deductions/write-offs

 

Balance at end of period

Year Ended December 31, 2018

 

$

7,223

 

$

2,257

 

$

(1,500)

 

$

7,980

Year Ended December 31, 2017, as adjusted*

    

 

6,458

 

 

1,109

 

 

(344)

 

 

7,223

Year Ended December 31, 2016, as adjusted*

 

 

5,406

 

 

1,195

 

 

(143)

 

 

6,458

*See Note 3, Revenue for more information.

Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation

Accumulated Other Comprehensive Income (Loss) and Foreign Currency Translation

Accumulated other comprehensive income (loss) includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with stockholders and is comprised of foreign currency translation adjustments.

As of December 31, 2018,  the Company, directly and through its franchisees, conducted operations in over 110 countries and territories, including the U.S. and Canada. The functional currency for the Company’s domestic operations is the U.S. dollar and for its Canadian subsidiary is the Canadian Dollar.

Assets and liabilities of the Canadian subsidiary are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of income and cash flows are translated at the average exchange rates in effect during the applicable period. Exchange rate fluctuations on translating consolidated foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded as a component of “Accumulated other comprehensive income,” and periodic changes are included in comprehensive income. When the Company sells a part or all of its investment in a foreign entity resulting in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, it releases any related cumulative translation adjustment into net income.

Foreign currency denominated monetary assets and liabilities and transactions occurring in currencies other than the Company’s or the Company’s consolidated foreign subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the accompanying Consolidated Balance Sheets related to these non-functional currency transactions result in transaction gains and losses that are reflected in the accompanying Consolidated Statements of Income as “Foreign currency transaction (losses) gains.” 

Property and Equipment

Property and Equipment

Property and equipment, including leasehold improvements, are initially recorded at cost. Depreciation is provided for on a straight-line method over the estimated useful lives of each asset class and commences when the property is placed in service. Amortization of leasehold improvements is provided for on a straight-line method over the estimated benefit period of the related assets or the lease term, if shorter.

Franchise Agreements and Other Intangible Assets

Franchise Agreements and Other Intangible Assets

The Company’s franchise agreements result from franchise rights acquired from Independent Region acquisitions and are initially recorded at fair value. The Company amortizes the franchise agreements over their estimated useful life on a straight-line basis.

The Company also purchases and develops software for internal use. Software development costs and upgrade and enhancement costs incurred during the application development stage that result in additional functionality are capitalized. Costs incurred during the preliminary project and post-implementation-operation stages are expensed as incurred. Capitalized software costs are generally amortized over a term of three to five years. Purchased software licenses are amortized over their estimated useful lives.

In addition, the Company owns the principal trademarks, service marks and trade names that it uses in conjunction with operating its business. These intangible assets increase when the Company pays to file trademark applications in the U.S. and certain other jurisdictions globally. The Company’s trademarks are amortized on a straight-line basis over their estimated useful lives.

The Company reviews its franchise agreements and other intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is assessed by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated from such asset. If not recoverable, the excess of the carrying amount of an asset over its estimated discounted cash flows would be charged to operations as an impairment loss. For each of the years ended December 31, 2018,  2017 and 2016, there were no material impairments indicated for such assets.

Goodwill

Goodwill

Goodwill is an asset representing the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized. The Company assesses goodwill for impairment at least annually or whenever an event occurs, or circumstances change that would indicate impairment may have occurred at the reporting unit level. Reporting units are driven by the level at which segment management reviews operating results. The Company previously performed its required impairment testing annually on August 31. In 2018, the Company elected to change the date of its required annual impairment testing to October 1. This change in method of applying an accounting principal resulted in the Company performing two annual impairment tests in 2018, on August 31 and October 1. The Company elected to implement this change to better align with its budget and planning process.

The Company’s impairment assessment begins with a qualitative assessment to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount. The initial qualitative assessment includes comparing the overall financial performance of the reporting units against the planned results as well as other factors which might indicate that the reporting unit’s value has declined since the last assessment date. If it is determined in the qualitative assessment that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the standard two-step quantitative impairment test is performed. The first step of the quantitative impairment test consists of comparing the estimated fair value of each reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, then it is not considered impaired and no further analysis is required. If the first step of the quantitative impairment test indicates that the estimated fair value of a reporting unit is less than its carrying value, then impairment potentially exists, and the second step of the quantitative impairment test is performed to measure the amount of goodwill impairment. Goodwill impairment exists when the estimated implied fair value of a reporting unit’s goodwill is less than its carrying value. 

The Company did not record any goodwill impairments during the years ended December 31, 2018,  2017 and 2016.

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. Further, the Company records its income taxes receivable and payable based upon its estimated income tax liability.

RMCO complies with the requirements of the Internal Revenue Code that are applicable to limited liability companies that have elected to be treated as partnerships, which allow for the complete pass-through of taxable income or losses to RMCO’s unitholders, who are individually responsible for any federal tax consequences. Provision for Income Taxes includes the federal income tax obligation related to RE/MAX Holdings’ allocated portion of RMCO’s income. RMCO is subject to certain state and local taxes, and its global subsidiaries are subject to tax in certain jurisdictions.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Equity Based Compensation

Equity-Based Compensation

The Company recognizes compensation expense associated with equity-based compensation as a component of “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income. All equity-based compensation is required to be measured at fair value on the grant date, is expensed over the requisite service, generally over a three-year period, and forfeitures are accounted for as they occur. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 13, Equity-Based Compensation for additional discussion regarding details of the Company’s equity-based compensation plans.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 became effective prospectively for the Company on January 1, 2018. The Company concluded that the acquisition of booj meets the definition of a business. See Note 6, Acquisitions for additional information. The Company has also concluded that it expects future Independent Region acquisitions to be accounted for as an acquisition of a business.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies classification for certain cash receipts and cash payments on the Consolidated Statement of Cash Flows. ASU 2016-15 became effective for the Company on January 1, 2018 and required a retrospective transition method for each period presented. Under the new guidance, the contingent consideration payments related to the purchase of Full House Mortgage Connection, Inc. (“Full House”), a franchisor of mortgage brokerages that created concepts used to develop Motto, are classified as financing outflows up to the $6.3 million acquisition date fair value and any cash payments paid in excess of the acquisition date fair value are classified as operating outflows. See Note 6, Acquisitions for additional information. The adoption of this standard had no other material impact on its financial statements and related disclosures. 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), with several subsequent amendments, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP when it became effective for the Company on January 1, 2018. See Note 3, Revenue for more information.

New Accounting Pronouncements Not Yet Adopted

New Accounting Pronouncements Not Yet Adopted

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 for costs after adoption. ASU 2018-15 is effective for the Company beginning January 1, 2020 and provides for the alternative to adopt the ASU (a) prospectively only for new costs incurred after the adoption date or (b) by adjusting existing costs to comply with this standard, including the requirement to present the amortization of costs outside “Depreciation and amortization”. The Company plans to adopt this ASU prospectively to all new implementation costs incurred after adoption. Given this implementation approach, the adoption of the standard on January 1, 2020 will have no immediate impact.

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 is effective for the Company beginning January 1, 2020; early adoption is permitted. Certain changes are applied retrospectively to each period presented and others are to be applied either in the period of adoption or prospectively. The Company believes the amendments of ASU 2018-13 will not have a significant impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220), which adjusts the classification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for the Company beginning January 1, 2019. The standard is to be applied either in the period of adoption or retrospectively to each period effected by the Tax Cuts and Jobs Act. The Company believes the amendments of ASU 2018-02 will not have a significant impact on the Company’s financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests beginning January 1, 2020 for the Company and is required to be adopted using a prospective approach. Early adoption is allowed. The Company has not yet adopted ASU 2017-04.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the assets and liabilities that arise from all leases on the consolidated balance sheets. ASU 2016-02 is required to be adopted by the Company on January 1, 2019. The Company plans to elect the transition package of three practical expedients permitted within the standard, which among other things, allows the carryforward of historical lease classifications. The Company will not retrospectively recast prior periods presented and will instead adjust assets and liabilities on January 1, 2019. The Company has determined that the adoption of this standard will increase both “Total assets” and “Total liabilities” on the Consolidated Balance Sheets by approximately $54.0 million, primarily related to building leases. The Company does not expect any material change to the Consolidated Statements of Income in 2019.

v3.10.0.1
Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2018
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 Consolidated Balance Sheets) consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Expense recognized

 

Additions to contract cost for new activity

 

Balance at end of period

Year Ended December 31, 2018

 

$

3,532

 

$

(1,229)

 

$

1,445

 

$

3,748

 

Schedule of Allowances Against Accounts and Notes Receivable

The activity in the Company’s allowances against accounts and notes receivable consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

Additions/charges to cost and expense for allowances for doubtful accounts

 

Deductions/write-offs

 

Balance at end of period

Year Ended December 31, 2018

 

$

7,223

 

$

2,257

 

$

(1,500)

 

$

7,980

Year Ended December 31, 2017, as adjusted*

    

 

6,458

 

 

1,109

 

 

(344)

 

 

7,223

Year Ended December 31, 2016, as adjusted*

 

 

5,406

 

 

1,195

 

 

(143)

 

 

6,458

*See Note 3, Revenue for more information.

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 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

Year Ended December 31, 2018

 

$

15,297

 

$

36,474

 

$

(35,894)

 

$

15,877

(a)

Revenue recognized related to the beginning balance was $14.0 million for the year ended December 31, 2018.

(b)

 
Franchise sales revenue  
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

Year Ended December 31, 2018

 

$

27,943

 

$

8,732

 

$

(9,115)

 

$

27,560

(a)

Revenue recognized related to the beginning balance was $7.4 million for the year ended December 31, 2018.
v3.10.0.1
Impacts of Adopting New Revenue Recognition (Tables)
 12 Months Ended
Dec. 31, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]  
Schedule of disaggregated revenue

In the following table, segment revenue is disaggregated by geographical area for the years ended December 31, 2018, 2017 and 2016 (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

U.S.

 

$

170,496

 

$

160,537

 

$

145,488

Canada

 

 

23,771

 

 

23,189

 

 

22,071

Global

 

 

10,237

 

 

9,431

 

 

8,079

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642

*See above within Note 3, Revenue for more information.

In the following table, segment revenue is disaggregated by Company-owned or Independent Regions in the U.S. and Canada for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

2017

 

2016

 

 

2018

    

As adjusted*

 

As adjusted*

Company-owned Regions

 

$

133,925

 

$

125,092

 

$

103,756

Independent Regions

 

 

46,289

 

 

44,799

 

 

47,498

Global and Other

 

 

24,290

 

 

23,266

 

 

24,384

Total RE/MAX Franchising

 

 

204,504

 

 

193,157

 

 

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total

 

$

212,626

 

$

193,714

 

$

175,642

*See above within Note 3, Revenue for more information.

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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2019

    

2020

    

2021

    

2022

    

2023

    

Thereafter

    

Total

Annual dues

 

$

15,877

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

15,877

Franchise sales

 

 

7,415

 

 

6,116

 

 

4,706

 

 

3,171

 

 

1,652

 

 

4,500

 

 

27,560

Total

 

$

23,292

 

$

6,116

 

$

4,706

 

$

3,171

 

$

1,652

 

$

4,500

 

$

43,437

 

Annual dues  
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]  
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 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

Year Ended December 31, 2018

 

$

15,297

 

$

36,474

 

$

(35,894)

 

$

15,877

(a)

Revenue recognized related to the beginning balance was $14.0 million for the year ended December 31, 2018.

(b)

 
Franchise sales revenue  
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]  
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

Year Ended December 31, 2018

 

$

27,943

 

$

8,732

 

$

(9,115)

 

$

27,560

(a)

Revenue recognized related to the beginning balance was $7.4 million for the year ended December 31, 2018.
ASU 2014-09  
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]  
Schedule of Cumulative impact on financial statements

The following tables summarize the impacts of the new revenue standard adoption on the Company’s financial statements (in thousands, except per share information):

Consolidated Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

As of December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Accounts and notes receivable, current portion, net

 

$

21,304

 

$

(1,020)

 

$

20,284

Income taxes receivable

 

 

870

 

 

93

 

 

963

Other current assets

 

 

6,924

 

 

1,050

 

 

7,974

Deferred tax assets, net

 

 

59,151

 

 

3,690

 

 

62,841

Other assets, net of current portion

 

 

1,563

 

 

2,460

 

 

4,023

Income taxes payable

 

 

133

 

 

(36)

 

 

97

Deferred revenue

 

 

18,918

 

 

6,350

 

 

25,268

Deferred revenue, net of current

 

 

 —

 

 

20,228

 

 

20,228

Retained earnings

 

 

16,027

 

 

(7,627)

 

 

8,400

Accumulated other comprehensive income, net of tax

 

 

515

 

 

(56)

 

 

459

Non-controlling interest

 

 

398,348

 

 

12,586

 

 

410,934

Consolidated Statement of Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

24,667

 

$

(2,215)

 

$

22,452

Selling, operating and administrative expenses

 

 

107,268

 

 

(322)

 

 

106,946

Provision for income taxes (a)

 

 

55,576

 

 

1,471

 

 

57,047

Net income (a)

 

 

35,179

 

 

(3,364)

 

 

31,815

Net income attributable to non-controlling interest

 

 

22,364

 

 

(787)

 

 

21,577

Net income attributable to RE/MAX Holdings, Inc.

 

 

12,815

 

 

(2,577)

 

 

10,238

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

 

 

 

 

 

 

 

 

 

Basic

 

 

0.72

 

 

(0.14)

 

 

0.58

Diluted

 

 

0.72

 

 

(0.14)

 

 

0.58

(a)

Includes an adjustment in 2017 to the deferred tax asset arising from deferred revenue under Topic 606 due to the drop in the U.S. tax rates from 35% to 21% under the Tax Cuts and Jobs Act.

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Franchise sales and other revenue

 

$

25,131

 

$

(660)

 

$

24,471

Selling, operating and administrative expenses

 

 

88,213

 

 

(176)

 

 

88,037

Provision for income taxes

 

 

15,273

 

 

(106)

 

 

15,167

Net income

 

 

47,226

 

 

(378)

 

 

46,848

Net income attributable to non-controlling interest

 

 

24,830

 

 

(203)

 

 

24,627

Net income attributable to RE/MAX Holdings, Inc.

 

 

22,396

 

 

(175)

 

 

22,221

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

 

 

 

 

 

 

 

 

 

Basic

 

 

1.27

 

 

(0.01)

 

 

1.26

Diluted

 

 

1.27

 

 

(0.01)

 

 

1.26

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Change in cumulative translation adjustment

 

 

1,074

 

 

(37)

 

 

1,037

Comprehensive income

 

 

36,253

 

 

(3,401)

 

 

32,852

Comprehensive income attributable to non-controlling interest

 

 

22,895

 

 

(787)

 

 

22,108

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

13,358

 

 

(2,614)

 

 

10,744

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Change in cumulative translation adjustment

 

 

165

 

 

(19)

 

 

146

Comprehensive income

 

 

47,391

 

 

(397)

 

 

46,994

Comprehensive income attributable to non-controlling interest

 

 

24,918

 

 

(203)

 

 

24,715

Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax

 

 

22,473

 

 

(194)

 

 

22,279

Consolidated Statement of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2017

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

35,179

 

$

(3,364)

 

$

31,815

Deferred income tax expense

 

 

46,494

 

 

1,471

 

 

47,965

Accounts and notes receivable, current portion

 

 

(2,924)

 

 

99

 

 

(2,825)

Other current and noncurrent assets

 

 

(2,414)

 

 

(310)

 

 

(2,724)

Other current and noncurrent liabilities

 

 

1,583

 

 

1,232

 

 

2,815

Deferred revenue and deposits, current portion

 

 

2,610

 

 

872

 

 

3,482

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of Changes in Accounting Policies

 

 

Year Ended December 31, 2016

 

    

As previously
reported

    

Adjustments

    

As adjusted

Net income

 

$

47,226

 

$

(378)

 

$

46,848

Deferred income tax expense

 

 

3,473

 

 

(106)

 

 

3,367

Other current and noncurrent assets

 

 

362

 

 

(176)

 

 

186

Other current and noncurrent liabilities

 

 

(2,616)

 

 

660

 

 

(1,956)

 

v3.10.0.1
Non-controlling Interest (Tables)
 12 Months Ended
Dec. 31, 2018
Noncontrolling Interest  
Summary of Ownership of the Common Units

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

2018

 

 

2017

 

 

    

Shares

    

Ownership %

    

 

Shares

    

Ownership %

 

Non-controlling interest ownership of common units in RMCO

 

12,559,600

 

41.43

%

 

12,559,600

 

41.51

%

RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO)

 

17,754,416

 

58.57

%

 

17,696,991

 

58.49

%

Total common units in RMCO

 

30,314,016

 

100.00

%

 

30,256,591

 

100.00

%

 

Reconciliation from Income Before Provision for Income Taxes to Net Income

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 Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

 

 

 

2017

 

 

2016

 

 

2018

 

 

As adjusted*

 

 

As adjusted*

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

 

RE/MAX Holdings, Inc.

 

Non-controlling interest

 

Total

 

Weighted average ownership percentage of RMCO (a)

 

58.55

%

 

41.45

%

 

100.00

%

 

 

58.48

%

 

41.52

%

 

100.00

%

 

 
58.40

%

 

41.60

%

 

100.00

%

Income before provision for income taxes

$

41,238

 

$

24,926

 

$

66,164

 

 

$

65,493

 

$

23,369

 

$

88,862

 

 

$

36,165

 

$

25,850

 

$

62,015

 

Provision for income taxes (b)(c)

 

(14,194)

 

 

(1,605)

 

 

(15,799)

 

 

 

(55,255)

 

 

(1,792)

 

 

(57,047)

 

 

 

(13,944)

 

 

(1,223)

 

 

(15,167)

 

Net income

$

27,044

 

$

23,321

 

$

50,365

 

 

$

10,238

 

$

21,577

 

$

31,815

 

 

$

22,221

 

$

24,627

 

$

46,848

 

*See Note 3, Revenue for more information.

(a)

The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between RE/MAX Holdings and the non-controlling interest due to (a) certain relatively insignificant expenses and (b) the significant gain on reduction in TRA liability in 2018 and 2017 attributable only to RE/MAX Holdings. See Note 12, Income Taxes for additional information.

(b)

The provision for income taxes attributable to RE/MAX 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 RE/MAX Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. In 2018 and 2017, the provision for income taxes attributable to RE/MAX Holdings also includes a significant decrease in the value of deferred tax assets. See Note 12, 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. 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

The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31, 

 

 

2018

 

2017

Tax and other distributions

 

$

4,511

 

$

8,217

Dividend distributions

 

 

10,048

 

 

9,043

Total distributions to non-controlling unitholders

 

$

14,559

 

$

17,260

 

v3.10.0.1
Earnings Per Share and Dividends (Tables)
 12 Months Ended
Dec. 31, 2018
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):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Numerator

 

 

   

 

 

 

 

 

 

Net income attributable to RE/MAX Holdings, Inc.

 

$

27,044

 

$

10,238

 

$

22,221

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

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

17,737,649

 

 

17,688,533

 

 

17,628,741

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

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

17,737,649

 

 

17,688,533

 

 

17,628,741

Add dilutive effect of the following:

 

 

 

 

 

 

 

 

 

Stock options

 

 

 —

 

 

 —

 

 

5,059

Restricted stock units

 

 

29,850

 

 

43,267

 

 

43,968

Weighted average shares of Class A common stock outstanding, diluted

 

 

17,767,499

 

 

17,731,800

 

 

17,677,768

Earnings per share of Class A common stock

 

 

 

 

 

 

 

 

 

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

 

$

1.52

 

$

0.58

 

$

1.26

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

 

$

1.52

 

$

0.58

 

$

1.26

*See Note 3, Revenue for more information.

Schedule of Dividends Declared and Paid Quarterly per Share

Dividends declared and paid quarterly per share on all outstanding shares of Class A common stock were as follows (in thousands, except share and per share information):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2018

 

2017

 

2016

 

 

Date paid

 

Per share

 

Date paid

 

Per share

 

Date paid

 

Per share

Dividend declared during quarter ended:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31

 

March 21, 2018

 

$
0.20

 

 

March 22, 2017

 

$
0.18

 

March 23, 2016

 

$
0.15

June 30

 

May 30, 2018

 

 
0.20

 

 

May 31, 2017

 

 
0.18

 

June 2, 2016

 

 
0.15

September 30

 

August 29, 2018

 

 
0.20

 

 

August 30, 2017

 

 
0.18

 

August 31, 2016

 

 
0.15

December 31

 

November 28, 2018

 

 
0.20

 

 

November 29, 2017

 

 
0.18

 

December 1, 2016

 

 
0.15

 

 

 

 

$
0.80

 

 

 

 

$

0.72

 

 

 

$
0.60

 

v3.10.0.1
Acquisitions (Tables)
 12 Months Ended
Dec. 31, 2018
Acquisitions  
Schedule of details of acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX of Northern Illinois, Inc.

 

RE/MAX Regional Services

 

RE/MAX of New Jersey, Inc.

 

RE/MAX of Alaska, Inc.

 

RE/MAX of New York, Inc.

Acquisition date

 

November 15, 2017

 

December 15, 2016

 

December 1, 2016

 

April 1, 2016

 

February 22, 2016

Cash consideration (in thousands)

 

$                   35,720

 

$                   50,400

 

$                 45,000

 

$                 1,500

 

$                   8,500

Status of accounting for the business combination

 

Final as of December 31,

2018 (a)

 

Final as of December 31,

2017

 

Final as of December 31, 2017

 

Final as of December 31, 2016

 

Final as of December 31, 2016

(a)

In finalizing the accounting for this acquisition, adjustments were made during the year ended December 31, 2018 to the Consolidated Balance Sheet to decrease “Franchise agreements, net” by $0.7 million with a corresponding increase to “Goodwill”.
Schedule of Final Fair Value Of Assets at Acquisition Date

The following table summarizes the allocation of the purchase price to the fair value of assets acquired for the acquisitions occurring in 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX of Northern Illinois

 

RE/MAX Regional Services

 

RE/MAX of New Jersey

 

Full House

 

RE/MAX of Alaska

 

RE/MAX of New York

 

Total

Cash and cash equivalents

 

$

 -

 

$

 -

 

$

335

 

$

 -

 

$

 -

 

$

131

 

$

466

Franchise agreements

 

 

22,800

 

 

30,700

 

 

29,700

 

 

 -

 

 

529

 

 

5,000

 

 

88,729

Non-compete agreement

 

 

 -

 

 

 -

 

 

 -

 

 

2,500

 

 

 -

 

 

 -

 

 

2,500

Other assets

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

340

 

 

340

Goodwill

 

 

12,920

 

 

19,700

 

 

15,300

 

 

11,800

 

 

971

 

 

3,029

 

 

63,720

Other liabilities

 

 

 -

 

 

 -

 

 

(335)

 

 

 -

 

 

 -

 

 

 -

 

 

(335)

Total purchase price

 

$

35,720

 

$

50,400

 

$

45,000

 

$

14,300

 

$

1,500

 

$

8,500

 

$

155,420

 

Summary of Unaudited Pro Forma Information

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

 

2018

 

2017

 

2016

 

 

(in thousands, except per share amounts)

Total revenue

 

$

213,892

 

$

205,059

 

$

192,734

Net income attributable to RE/MAX Holdings, Inc. (a)

 

$

26,352

 

$

7,628

 

$

24,929

Basic earnings per common share

 

$

1.49

 

$

0.43

 

$

1.41

Diluted earnings per common share

 

$

1.48

 

$

0.43

 

$

1.41

 

Booj Llc  
Acquisitions  
Schedule of Final 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):

 

 

 

 

 

 

booj

Cash

 

$

362

Other current assets

 

 

367

Property and equipment

 

 

625

Software

 

 

7,400

Trademarks

 

 

500

Non-compete agreement

 

 

1,200

Customer relationships

 

 

800

Other intangible assets

 

 

1,589

Other assets, net of current portion

 

 

336

Total assets acquired, excluding goodwill

 

 

13,179

Current portion of debt

 

 

(606)

Other current liabilities

 

 

(557)

Debt, net of current portion

 

 

(805)

Total liabilities assumed

 

 

(1,968)

Goodwill

 

 

15,039

Total purchase price

 

$

26,250

Acquisition-related costs

 

$

846

Revenue since acquisition date

 

$

5,586

 

Full House Mortgage Connection, Inc.  
Acquisitions  
Consideration Transferred

The following table summarizes the estimated consideration transferred at the acquisition (in thousands):

 

 

 

 

Cash consideration

 

$

8,000

Contingent purchase consideration (note 11)

 

 

6,300

Total purchase price

 

$

14,300

 

v3.10.0.1
Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2018
Property and Equipment  
Property and Equipment

Property and equipment consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

Depreciable Life

    

2018

    

2017

Leasehold improvements

    

Shorter of estimated useful life or life of lease

 

$

3,278

 

$

3,227

Office furniture, fixtures and equipment

 

2 - 10 years

 

 

14,392

 

 

12,004

Total property and equipment

 

 

 

 

17,670

 

 

15,231

Less accumulated depreciation

 

 

 

 

(13,280)

 

 

(12,326)

Total property and equipment, net

 

 

 

$

4,390

 

$

2,905

 

v3.10.0.1
Intangible Assets and Goodwill (Tables)
 12 Months Ended
Dec. 31, 2018
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 December 31, 2018

 

As of December 31, 2017

 

 

Amortization

 

Initial

 

Accumulated

 

Net

 

Initial

 

Accumulated

 

Net

 

 

Period

 

Cost

 

Amortization

 

Balance

 

Cost

 

Amortization

 

Balance

Franchise agreements

 

12.5

 

$

180,867

 

$

(77,710)

 

$

103,157

 

$

181,567

 

$

(62,218)

 

$

119,349

Other intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software (a)

 

4.4

 

$

20,579

 

$

(5,802)

 

$

14,777

 

$

13,762

 

$

(8,111)

 

$

5,651

Trademarks

 

9.3

 

 

1,857

 

 

(839)

 

 

1,018

 

 

1,539

 

 

(902)

 

 

637

Non-compete

 

7.7

 

 

3,700

 

 

(896)

 

 

2,804

 

 

2,500

 

 

(312)

 

 

2,188

Training materials

 

5.0

 

 

2,350

 

 

(157)

 

 

2,193

 

 

 —

 

 

 —

 

 

 —

Other (b)

 

11.9

 

 

2,389

 

 

(216)

 

 

2,173

 

 

 —

 

 

 —

 

 

 —

Total other intangible assets

 

5.8

 

$

30,875

 

$

(7,910)

 

$

22,965

 

$

17,801

 

$

(9,325)

 

$

8,476

(a)

As of December 31, 2018, and December 31, 2017, capitalized software development costs of $4.5 million and $0.6 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization.

(b)

“Other” consists of customer relationships and a favorable market lease, both obtained in connection with the acquisition of booj. The favorable market lease is amortized as additional rent expense through “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income over the remaining term of the lease.
Schedule of estimated future amortization of intangible assets, other than goodwill

As of December 31, 2018, the estimated future amortization expense for the next five years related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the acquisition of booj and is as follows (in thousands):

 

 

 

 

Year ending December 31:

    

 

 

2019

 

$

20,524

2020

    

 

20,591

2021

 

 

19,820

2022

 

 

16,967

2023

 

 

13,799

 

 

$

91,701

 

Schedule of changes to goodwill

The following table presents changes to goodwill for the period from January 1, 2017 to December 31, 2018 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX Franchising

 

Other

 

Total

Balance, January 1, 2017

 

$

114,833

 

$

11,800

 

$

126,633

Goodwill recognized related to acquisitions

 

 

12,220

 

 

 —

 

 

12,220

Adjustments to acquisition accounting during the measurement period

 

 

(3,865)

 

 

 —

 

 

(3,865)

Effect of changes in foreign currency exchange rates

 

 

225

 

 

 —

 

 

225

Balance, December 31, 2017

    

 

123,413

 

 

11,800

 

 

135,213

Goodwill recognized related to current year acquisitions (a)

 

 

15,039

 

 

 —

 

 

15,039

Adjustments to acquisition accounting during the measurement period

 

 

700

 

 

 —

 

 

700

Effect of changes in foreign currency exchange rates

 

 

(268)

 

 

 —

 

 

(268)

Balance, December 31, 2018

 

$

138,884

 

$

11,800

 

$

150,684

The purpose of the booj acquisition is to develop and deliver core technology solutions designed for and with RE/MAX franchisees and agents. As such, the Company allocated the goodwill arising from this acquisition to RE/MAX Franchising. See Note 6, Acquisitions for additional information.

v3.10.0.1
Accrued Liabilities (Tables)
 12 Months Ended
Dec. 31, 2018
Accrued Liabilities.  
Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

 

 

 

 

 

 

 

 

    

As of December 31,

 

 

2018

 

2017

Accrued payroll and related employee costs

 

$

6,517

 

$

3,874

Accrued taxes

 

 

1,480

 

 

1,635

Accrued professional fees

 

 

2,010

 

 

2,339

Other (a)

 

 

3,136

 

 

7,542

 

 

$

13,143

 

$

15,390

Other accrued liabilities as of December 31, 2017 include a $4.5 million payable in connection with the February 13, 2018 settlement, and subsequent payment, resulting from the litigation matter concerning the Company’s 2013 acquisition of the net assets of Tails, Inc. (“Tails”), as discussed in Note 15, Commitments and Contingencies.

v3.10.0.1
Debt (Tables)
 12 Months Ended
Dec. 31, 2018
Debt  
Schedule of debt

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

 

 

 

 

 

 

 

 

 

    

As of December 31,

 

 

2018

 

2017

2016 Senior Secured Credit Facility

    

$

229,713

 

$

232,063

Other long-term financing (a)

 

 

635

 

 

 —

Less unamortized debt issuance costs

 

 

(1,481)

 

 

(1,780)

Less unamortized debt discount costs

 

 

(1,080)

 

 

(1,297)

Less current portion (a)

 

 

(2,622)

 

 

(2,350)

 

 

$

225,165

 

$

226,636

(a)

Includes financing assumed with the acquisition of booj. As of December 31, 2018, the carrying value of this financing approximates the fair value.
Schedule of Maturities of Debt

Maturities of debt are as follows (in thousands):

 

 

 

Year Ending December 31:

 

 

2019

$

2,622

2020

 

2,712

2021

 

2,350

2022

 

2,350

2023

 

220,314

 

$

230,348

 

v3.10.0.1
Fair Value Measurements (Tables)
 12 Months Ended
Dec. 31, 2018
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 as of December 31, 2018 and 2017 is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2018

 

As of December 31, 2017

 

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

 

Fair Value

 

Level 1

 

Level 2

 

Level 3

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration

 

$

5,070

 

$

 -

 

$

 -

 

$

5,070

 

$

6,580

 

$

 -

 

$

 -

 

$

6,580

 

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 the contingent consideration from January 1, 2017 to December 31, 2018 (in thousands): 

 

 

 

 

Balance at January 1, 2017

 

$

6,400

Fair value adjustments

 

 

180

Balance at December 31, 2017

 

 

6,580

Fair value adjustments (a)

 

 

(1,289)

Cash payments (b)

 

 

(221)

Balance at December 31, 2018

 

$

5,070

(a)

Fair value adjustments relate to realignment of future franchise sales assumptions to more closely reflect historical sales trends from inception to date.

(b)

Cash payments include payments for Revenue Share Year 1 and Revenue Share Year 2 due to timing of payments.

Summary of carrying value and fair value of senior secured credit facility

The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility as of December 31, 2018 and 2017 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

2018

 

2017

 

    

Carrying Amount

    

Fair Value     Level 2

    

Carrying Amount

    

Fair Value     Level 2

Senior Secured Credit Facility

    

$

227,152

 

$

221,673

 

$

228,986

 

$

232,933

 

v3.10.0.1
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2018
Income Taxes  
Schedule of Income Before Provision for Income Taxes

 

“Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

 

2017

    

2016

 

 

2018

 

As Adjusted*

 

As Adjusted*

Domestic

    

$

52,798

 

$

77,346

 

$

50,145

Foreign

 

 

13,366

 

 

11,516

 

 

11,870

Total

 

$

66,164

 

$

88,862

 

$

62,015

*See Note 3, Revenue for more information.

Schedule of Components of Provision for Income Taxes

Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

 

2017

    

2016

 

 

2018

 

As Adjusted*

 

As Adjusted*

Current

 

 

 

 

 

 

 

 

 

Federal

 

$

1,730

 

$

3,568

 

$

8,002

Foreign

 

 

3,818

 

 

4,345

 

 

2,855

State and local

 

 

699

 

 

1,169

 

 

943

Total current expense

 

 

6,247

 

 

9,082

 

 

11,800

Deferred expense

 

 

 

 

 

 

 

 

 

Federal

 

 

8,829

 

 

47,073

 

 

2,992

Foreign

 

 

12

 

 

323

 

 

137

State and local

 

 

711

 

 

569

 

 

238

Total deferred expense

 

 

9,552

 

 

47,965

 

 

3,367

Provision for income taxes

 

$

15,799

 

$

57,047

 

$

15,167

*See Note 3, Revenue for more information.

Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

    

 

 

 

2017

    

2016

 

 

 

2018

 

As Adjusted*

 

As Adjusted*

U.S. statutory tax rate

 

 

21.0

%

 

35.0

%

 

35.0

%

Increase due to state and local taxes, net of federal benefit

 

 

3.1

 

 

2.6

 

 

2.6

 

Non-creditable foreign taxes

 

 

1.2

 

 

 -

 

 

 -

 

Foreign derived intangible income deduction

 

 

(1.3)

 

 

 -

 

 

 -

 

Income attributable to non-controlling interests

 

 

(7.3)

 

 

(12.5)

 

 

(14.1)

 

Other

 

 

(0.8)

 

 

(0.8)

 

 

1.0

 

Subtotal

 

 
15.9

 

 
24.3

 

 
24.5

 

Impact of TRA adjustment on NCI (a)

 

 

0.7

 

 

4.5

 

 

 -

 

Effect of permanent difference - TRA adjustment (b)

 

 

(2.2)

 

 

(13.6)

 

 

 -

 

Tax Reform Rate Change (c)

 

 

 -

 

 

49.0

 

 

 -

 

Valuation allowance recognized on tax basis step-ups

 

 

9.5

 

 

 -

 

 

 

 

 

 

 
23.9

%

 
64.2

%

 
24.5

%

*See Note 3, Revenue for more information.

(a)

Reflects additional impact of non-controlling interest adjustment being on a larger base of income that includes the gain on reduction in TRA liability.

(b)

Reflects the impact of gain on TRA liability reduction, which is not taxable.

(c)

Reflects reduction in deferred tax assets and resulting increase in deferred tax expense due to U.S. Federal rate declining from 35% to 21%.
Summary of Deferred Tax Assets and Liabilities

Details of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31, 

 

    

 

 

2017

 

 

2018

 

As Adjusted*

Long-term deferred tax assets

 

 

 

 

 

 

Goodwill, other intangibles and other assets

 

$

48,427

 

$

52,385

Imputed interest deduction pursuant to tax receivable agreements

 

 

2,719

 

 

3,052

Rent liabilities

 

 

1,845

 

 

1,878

Compensation and benefits

 

 

2,131

 

 

526

Allowance for doubtful accounts

 

 

944

 

 

834

Motto contingent liability

 

 

748

 

 

929

Deferred revenue

 

 

3,939

 

 

3,914

Foreign tax credit carryforward

 

 

1,259

 

 

 —

Other

 

 

1,281

 

 

663

Total long-term deferred tax assets

 

 

63,293

 

 

64,181

Valuation allowance (a)

 

 

(7,051)

 

 

 —

Total long-term deferred tax assets, net of valuation allowance

 

 

56,242

 

 

64,181

Long-term deferred tax liabilities

 

 

 

 

 

 

Property and equipment and other long-lived assets

 

 

(2,944)

 

 

(1,491)

Total long-term deferred tax liabilities

 

 

(2,944)

 

 

(1,491)

Net long-term deferred tax assets

 

 

53,298

 

 

62,690

Total deferred tax assets and liabilities

 

$

53,298

 

$

62,690

*See Note 3, Revenue for more information.

(a)

Includes a valuation allowance on deferred tax assets for goodwill and intangibles in the Company’s Western Canada operations, as well as foreign tax credit carryforwards.
v3.10.0.1
Equity-Based Compensation (Tables)
 12 Months Ended
Dec. 31, 2018
Employee Stock-Based Compensation Expense

Employee stock-based compensation expense under the Company’s 2013 Incentive Plan, net of the amount capitalized in internally developed software, is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 

 

2018

 

2017

 

2016

Expense from Time-based RSUs

$

5,110

 

$

2,523

 

$

2,330

Expense from Performance-based RSUs

 

4,066

 

 

377

 

 

 -

Equity-based compensation expense

 

9,176

 

 

2,900

 

 

2,330

Tax benefit from equity-based compensation

 

(1,297)

 

 

(637)

 

 

(511)

Excess tax benefit from equity-based compensation

 

(145)

 

 

(324)

 

 

(261)

Net compensation cost

$

7,734

 

$

1,939

 

$

1,558

 

Time-based Restricted Stock Units  
Restricted Stock Units

The following table summarizes equity-based compensation activity related to time-based RSUs for the year ended December 31, 2018:  

 

 

 

 

 

 

 

    

Time-based restricted stock units

    

 

Weighted average grant date fair value per share

Balance, January 1, 2018

 

105,862

 

$

41.67

Granted

 

271,941

 

$

53.04

Shares vested (including tax withholding)(a)

 

(70,650)

 

$

41.50

Forfeited

 

(8,543)

 

$

44.82

Balance, December 31, 2018

 

298,610

 

$

51.97

 

 

 

 

 

 

(a)

Pursuant to the terms of the 2013 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.

The following table summarizes information about our RSU grants during the years ended December 31, 2018, 2017 and 2016:

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

Weighted average grant date fair value per RSU granted

 

$

53.04

 

$

55.45

 

$

33.24

 

Performance-based Restricted Stock Units  
Restricted Stock Units

 

 

 

 

 

 

 

 

    

Performance-based restricted stock units

    

 

Weighted average grant date fair value per share

Balance, January 1, 2018

 

31,831

 

$

57.88

Granted (a)

 

156,694

 

$

55.38

Shares vested

 

(2,811)

 

$

56.59

Forfeited

 

(6,099)

 

$

57.06

Balance, December 31, 2018

 

179,615

 

$

55.75

(a)

Represents the total participant target award.
v3.10.0.1
Commitments and Contingencies (Tables)
 12 Months Ended
Dec. 31, 2018
Commitments and Contingencies  
Operating Leases Future Minimum Payments

Future minimum payments (including those allocated to an affiliate) under these leases and commitments, net of payments under sublease agreements, are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Rent Payments

 

Sublease Receipts

 

Total Cash Outflows

Year ending December 31:

 

 

 

 

 

 

 

 

 

2019

    

$

9,402

 

$

(1,087)

 

$

8,315

2020

 

 

9,601

 

 

(873)

 

 

8,728

2021

 

 

9,341

 

 

(775)

 

 

8,566

2022

 

 

9,011

 

 

(804)

 

 

8,207

2023

 

 

9,169

 

 

(827)

 

 

8,342

Thereafter

 

 

43,556

 

 

(1,382)

 

 

42,174

 

 

$

90,080

 

$

(5,748)

 

$

84,332

 

Schedule of gain (loss) on sublease

 

 

 

 

 

 

Execution Date

 

End Date

 

2017 Gain (Loss) on Sublease
(In millions)

May 2017

 

April 2028

 

$

(0.2)

August 2017

 

January 2025

 

 

(3.7)

September 2017 (a)

 

August 2024

 

 

0.3

 

 

 

 

$

(3.6)

(a)

During the year ended December 31, 2013 the Company entered into a sublease agreement with a tenant and recognized a loss related to the subleased office space of $1.2 million. In September 2017 the Company amended this sublease agreement and the existing liability was reduced, resulting in a net gain of $0.3 million during the year ended December 31, 2017.
v3.10.0.1
Segment Information (Tables)
 12 Months Ended
Dec. 31, 2018
Segment Information  
Schedule of Revenue of the Company's Reportable Segment

The following table presents revenue from external customers by segment for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Continuing franchise fees

 

$

98,828

 

$

93,232

 

$

81,194

Annual dues

 

 

35,894

 

 

33,767

 

 

32,653

Broker fees

 

 

46,871

 

 

43,801

 

 

37,209

Franchise sales and other revenue

 

 

22,911

 

 

22,357

 

 

24,470

Brokerage revenue

 

 

 —

 

 

 —

 

 

112

Total RE/MAX Franchising

 

$

204,504

 

$

193,157

 

$

175,638

Other

 

 

8,122

 

 

557

 

 

 4

Total revenue

 

$

212,626

 

$

193,714

 

$

175,642

*See Note 3, Revenue for more information.

Reconciliation of Adjusted EBITDA for its Reportable Segment to Consolidated Balances

The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes for the years ended December 31, 2018, 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

    

 

    

2017

    

2016

 

 

2018

 

As adjusted*

 

As adjusted*

Adjusted EBITDA: RE/MAX Franchising

 

$

108,669

 

$

105,184

 

$

94,717

Adjusted EBITDA: Other

 

 

(4,353)

 

 

(3,039)

 

 

(928)

Adjusted EBITDA: Consolidated

 

 

104,316

 

 

102,145

 

 

93,789

Gain (loss) on sale or disposition of assets and sublease, net (a)

 

 

139

 

 

(4,260)

 

 

171

Loss on early extinguishment of debt

 

 

 —

 

 

 —

 

 

(2,893)

Equity-based compensation expense

 

 

(9,176)

 

 

(2,900)

 

 

(2,330)

Public offering related expenses

 

 

 —

 

 

 —

 

 

(193)

Acquisition-related expense (b)

 

 

(1,634)

 

 

(5,889)

 

 

(1,899)

Gain on reduction in TRA liability (c)

 

 

6,145

 

 

32,736

 

 

 —

Special Committee investigation and remediation expense (d)

 

 

(2,862)

 

 

(2,634)

 

 

 —

Fair value adjustments to contingent consideration (e)

 

 

1,289

 

 

(180)

 

 

(100)

Interest income

 

 

676

 

 

352

 

 

160

Interest expense

 

 

(12,051)

 

 

(9,996)

 

 

(8,596)

Depreciation and amortization

 

 

(20,678)

 

 

(20,512)

 

 

(16,094)

Income before provision for income taxes

 

$

66,164

 

$

88,862

 

$

62,015

*See Note 3, Revenue for more information.

(a)

Represents gain (loss) on the sale or disposition of assets as well as the gains (losses) on the sublease of a portion of our corporate headquarters office building.

(b)

Acquisition-related expense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition and integration of acquired companies that are included in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.

(c)

Gain on reduction in tax receivable agreement liability is a result of the Tax Cuts and Jobs Act enacted in December 2017 and further clarified in 2018. See Note 12, Income Taxes for additional information.

(d)

Special Committee investigation and remediation expense relates to costs incurred in relation to the previously disclosed investigation by the special committee of independent directors of actions of certain members of our senior management and the implementation of the remediation plan. 

(e)

Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liability. See Note 11, Fair Value Measurements for additional information.
Summary of Total Assets by Segment

The following table presents total assets as of December 31, 2018 and 2017 of the Company’s reportable segments (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

    

2017

 

 

2018

 

As adjusted*

Total RE/MAX Franchising

 

$

405,584

 

$

392,797

Other

 

 

21,256

 

 

20,038

Total

 

$

426,840

 

$

412,835
Summary of Long-lived Assets, Net of accumulated depreciation by Geographic Areas

The following table presents long-lived assets, net of accumulated depreciation disaggregated by geographical area as of December 31, 2018 and 2017 (in thousands):

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

    

2017

 

 

2018

 

As adjusted*

U.S.

 

$

4,342

 

$

2,842

Global

 

 

48

 

 

63

Total

 

$

4,390

 

$

2,905

*See Note 3, Revenue for more information.

v3.10.0.1
Subsequent Events (Tables)
 12 Months Ended
Dec. 31, 2018
Subsequent Event [Line Items]  
Schedule of Estimated Fair Value Of Assets at Acquisition Date

The following table summarizes the allocation of the purchase price to the fair value of assets acquired for the acquisitions occurring in 2017 and 2016 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RE/MAX of Northern Illinois

 

RE/MAX Regional Services

 

RE/MAX of New Jersey

 

Full House

 

RE/MAX of Alaska

 

RE/MAX of New York

 

Total

Cash and cash equivalents

 

$

 -

 

$

 -

 

$

335

 

$

 -

 

$

 -

 

$

131

 

$

466

Franchise agreements

 

 

22,800

 

 

30,700

 

 

29,700

 

 

 -

 

 

529

 

 

5,000

 

 

88,729

Non-compete agreement

 

 

 -

 

 

 -

 

 

 -

 

 

2,500

 

 

 -

 

 

 -

 

 

2,500

Other assets

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

340

 

 

340

Goodwill

 

 

12,920

 

 

19,700

 

 

15,300

 

 

11,800

 

 

971

 

 

3,029

 

 

63,720

Other liabilities

 

 

 -

 

 

 -

 

 

(335)

 

 

 -

 

 

 -

 

 

 -

 

 

(335)

Total purchase price

 

$

35,720

 

$

50,400

 

$

45,000

 

$

14,300

 

$

1,500

 

$

8,500

 

$

155,420

 

RE/MAX Marketing Fund  
Subsequent Event [Line Items]  
Schedule of Estimated Fair Value Of Assets at Acquisition Date

 

 

 

 

 

 

Marketing Funds

 

 

(Unaudited)

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

 

$

 -

 

v3.10.0.1
Quarterly Financial Information (Tables)
 12 Months Ended
Dec. 31, 2018
Quarterly Financial Information (unaudited)  
Schedule of Quarterly Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

    

March 31, 2018

    

June 30, 2018

    

September 30, 2018

    

December 31, 2018

Total revenue

 

$

52,642

 

$

54,277

 

$

54,866

 

$

50,841

Total operating expenses

 

 

38,925

 

 

33,363

 

 

33,059

 

 

29,428

Operating income

 

 

13,717

 

 

20,914

 

 

21,807

 

 

21,413

Total other expenses, net

    

 

(2,688)

 

 

(3,176)

 

 

(2,846)

 

 

(2,977)

Income before provision for income taxes

 

 

11,029

 

 

17,738

 

 

18,961

 

 

18,436

Provision for income taxes

 

 

(1,862)

 

 

(3,147)

 

 

(3,420)

 

 

(7,370)

Net income

 

 

9,167

 

 

14,591

 

 

15,541

 

 

11,066

Less: net income attributable to non-controlling interest

 

 

4,184

 

 

6,943

 

 

7,402

 

 

4,792

Net income attributable to RE/MAX Holdings, Inc.

 

$

4,983

 

$

7,648

 

$

8,139

 

$

6,274

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.28

 

$

0.43

 

$

0.46

 

$

0.35

Diluted

 

$

0.28

 

$

0.43

 

$

0.46

 

$

0.35

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,709,095

 

 
17,746,042

 

 

17,746,184

 

 

17,748,745

Diluted

 

 

17,762,133

 

 
17,769,641

 

 

17,771,212

 

 

17,771,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended

 

    

March 31, 2017

    

June 30, 2017

    

September 30, 2017

    

December 31, 2017 (a)

 

 

As adjusted*

    

As adjusted*

    

As adjusted*

    

As adjusted*

Total revenue

 

$

47,406

 

$

48,727

 

$

49,071

 

$

48,510

Total operating expenses

 

 

32,637

 

 

26,055

 

 

36,580

 

 

110

Operating income

 

 

14,769

 

 

22,672

 

 

12,491

 

 

48,400

Total other expenses, net

 

 

(2,351)

 

 

(2,398)

 

 

(2,180)

 

 

(2,541)

Income before provision for income taxes

 

 

12,418

 

 

20,274

 

 

10,311

 

 

45,859

Provision for income taxes

 

 

(3,030)

 

 

(4,735)

 

 

(3,021)

 

 

(46,262)

Net income (loss)

 

 

9,388

 

 

15,539

 

 

7,290

 

 

(403)

Less: net income attributable to non-controlling interest

 

 

4,848

 

 

8,081

 

 

3,573

 

 

5,074

Net income (loss) attributable to RE/MAX Holdings, Inc.

 

$

4,540

 

$

7,458

 

$

3,717

 

$

(5,477)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.26

 

$

0.42

 

$

0.21

 

$

(0.31)

Diluted

 

$

0.26

 

$

0.42

 

$

0.21

 

$

(0.31)

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

17,662,842

 

 
17,696,842

 

 

17,696,991

 

 

17,696,991

Diluted

 

 

17,716,013

 

 

17,723,802

 

 

17,737,786

 

 

17,747,744

*See Note 3, Revenue for more information.

(a)The quarterly results for the quarter ended December 31, 2017 were impacted by the Tax Cuts and Jobs Act enacted in December 2017. The reduction in the corporate tax rate from 35% to 21% resulted in comparable reductions in both the deferred tax asset amounts and the TRA liabilities. See Note 11, Income Taxes for further information on the impact of the Tax Cuts and Jobs Act.

v3.10.0.1
Business and Organization (Details)
 12 Months Ended
Dec. 31, 2018
country
Vote
Office
class
item
Dec. 31, 2017
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Number of classes of common stock | class 2  
RMCO, LLC    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Parent economic interest in RMCO (as a percent) 58.57% 58.49%
Non-controlling unitholders ownership of common units in RMCO as a percentage 41.43% 41.51%
RIHI | RMCO, LLC    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Non-controlling unitholders ownership of common units in RMCO as a percentage 41.43%  
Common Class A    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Number of votes per share held | Vote 1  
Common Class B | RIHI    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Ratio of votes in parent company to number of L L C common units held 2  
Minimum    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Number of agents | item 120,000  
Number of offices | Office 8,000  
Number of countries in which entity operates | country 110  
REMAX [Member]    
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]    
Percentage of Company consisting of franchises 100.00%  
v3.10.0.1
Summary of Significant Accounting Policies - Additional Information (Details)
 3 Months Ended 12 Months Ended
Dec. 31, 2018
USD ($)
Sep. 30, 2018
USD ($)
Jun. 30, 2018
USD ($)
Mar. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Sep. 30, 2017
USD ($)
Jun. 30, 2017
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2018
USD ($)
country
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Jan. 01, 2019
USD ($)
Significant Accounting Policies [Line Items]                        
Total revenue $ 50,841,000 $ 54,866,000 $ 54,277,000 $ 52,642,000 $ 48,510,000 $ 49,071,000 $ 48,727,000 $ 47,406,000 $ 212,626,000 $ 193,714,000 $ 175,642,000  
Impairment of franchise agreements and other intangible assets subject to amortization                 0 0 0  
Impairment of goodwill                 $ 0 0 0  
Equity-based compensation vesting period                 3 years      
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification                 $ 6,300,000      
Minimum                        
Significant Accounting Policies [Line Items]                        
Number of countries and territories operations conducted | country                 110      
Software | Minimum                        
Significant Accounting Policies [Line Items]                        
Useful life of intangible assets                 3 years      
Software | Maximum                        
Significant Accounting Policies [Line Items]                        
Useful life of intangible assets                 5 years      
Accounts Receivable | Prime plus                        
Significant Accounting Policies [Line Items]                        
Accounts and notes receivable interest rate percentage 2.00%               2.00%      
Continuing franchise fees                        
Significant Accounting Policies [Line Items]                        
Total revenue                 $ 101,104,000 93,694,000 81,197,000  
Annual dues                        
Significant Accounting Policies [Line Items]                        
Total revenue                 35,894,000 33,767,000 32,653,000  
Broker fees                        
Significant Accounting Policies [Line Items]                        
Total revenue                 46,871,000 43,801,000 37,209,000  
Franchise sales and other revenue                        
Significant Accounting Policies [Line Items]                        
Total revenue                 $ 28,757,000 $ 22,452,000 24,471,000  
Brokerage revenue                        
Significant Accounting Policies [Line Items]                        
Total revenue                     $ 112,000  
Forecast | ASU 2016-02                        
Significant Accounting Policies [Line Items]                        
Operating Lease, Right-of-Use Asset                       $ 54,000,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]                       Assets
Operating Lease, Liability                       $ 54,000,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]                       Liabilities
v3.10.0.1
Summary of Significant Accounting Policies - Schedule of Deferred Revenue (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Deferred Revenue Arrangement [Line Items]      
New billings $ (259) $ (3,482) $ 254
RE/MAX franchise agreements      
Deferred Revenue Arrangement [Line Items]      
Period of franchise agreement 5 years    
Motto franchise agreements      
Deferred Revenue Arrangement [Line Items]      
Period of franchise agreement 7 years    
Annual dues      
Deferred Revenue Arrangement [Line Items]      
Deferred revenue recognition period 12 months    
Balance at beginning of period $ 15,297    
New billings 36,474    
Revenue recognized (35,894)    
Balance at the end of period 15,877 15,297  
Revenue recognized 14,000    
Franchise sales revenue      
Deferred Revenue Arrangement [Line Items]      
Balance at beginning of period 27,943    
New billings 8,732    
Revenue recognized (9,115)    
Balance at the end of period 27,560 $ 27,943  
Revenue recognized $ 7,400    
Franchise sales revenue | RE/MAX franchise agreements      
Deferred Revenue Arrangement [Line Items]      
Period of franchise agreement 5 years    
Franchise sales revenue | Motto franchise agreements      
Deferred Revenue Arrangement [Line Items]      
Period of franchise agreement 7 years    
v3.10.0.1
Summary of Significant Accounting Policies - Commissions Related to Franchise Sales (Details) - Commissions Related to Franchise Sales
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Capitalized Contract Cost [Line Items]  
Balance at beginning of period $ 3,532
Expense recognized (1,229)
Additions to contract cost for new activity 1,445
Balance at end of period $ 3,748
v3.10.0.1
Summary of Significant Accounting Policies - Schedule of Allowances Against Accounts and Notes Receivable (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Receivables [Abstract]      
Balance at beginning of period $ 7,223 $ 6,458 $ 5,406
Additions and charges to cost and expense for allowances for doubtful accounts 2,257 1,109 1,195
Deductions/ write-offs (1,500) (344) (143)
Balance at end of period $ 7,980 $ 7,223 $ 6,458
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Condensed Consolidated Balance Sheet (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Accounts and notes receivable, current portion, net $ 21,185 $ 20,284
Income taxes receivable 533 963
Other current assets 5,855 7,974
Deferred tax assets, net   62,841
Other assets, net of current portion 4,399 4,023
Income taxes payable 208 97
Deferred revenue 25,489 25,268
Deferred revenue, net of current 20,224 20,228
Retained earnings 21,138 8,400
Accumulated other comprehensive income, net of tax 328 459
Non-controlling interest $ 402,294 410,934
RE/MAX franchise agreements    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Period of franchise agreement 5 years  
Motto franchise agreements    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Period of franchise agreement 7 years  
As previously reported | ASU 2014-09    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Accounts and notes receivable, current portion, net   21,304
Income taxes receivable   870
Other current assets   6,924
Deferred tax assets, net   59,151
Other assets, net of current portion   1,563
Income taxes payable   133
Deferred revenue   18,918
Retained earnings   16,027
Accumulated other comprehensive income, net of tax   515
Non-controlling interest   398,348
Adjustments | ASU 2014-09    
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]    
Accounts and notes receivable, current portion, net   (1,020)
Income taxes receivable   93
Other current assets   1,050
Deferred tax assets, net   3,690
Other assets, net of current portion   2,460
Income taxes payable   (36)
Deferred revenue   6,350
Deferred revenue, net of current   20,228
Retained earnings   (7,627)
Accumulated other comprehensive income, net of tax   (56)
Non-controlling interest   $ 12,586
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Condensed Consolidated Statement of Income (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Total revenue $ 50,841 $ 54,866 $ 54,277 $ 52,642 $ 48,510 $ 49,071 $ 48,727 $ 47,406 $ 212,626 $ 193,714 $ 175,642
Selling, operating and administrative expenses                 120,179 106,946 88,037
Provision for income taxes 7,370 3,420 3,147 1,862 46,262 3,021 4,735 3,030 15,799 57,047 15,167
Net income 11,066 15,541 14,591 9,167 (403) 7,290 15,539 9,388 50,365 31,815 46,848
Net income: Non-controlling interest 4,792 7,402 6,943 4,184 5,074 3,573 8,081 4,848 23,321 21,577 24,627
Net income attributable to RE/MAX Holdings, Inc. $ 6,274 $ 8,139 $ 7,648 $ 4,983 $ (5,477) $ 3,717 $ 7,458 $ 4,540 $ 27,044 $ 10,238 $ 22,221
U.S. statutory tax rate                 21.00% 35.00% 35.00%
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock                      
Basic $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
Diluted $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
ASU 2014-09                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
U.S. statutory tax rate                 21.00% 35.00%  
As previously reported | ASU 2014-09                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Selling, operating and administrative expenses                   $ 107,268 $ 88,213
Provision for income taxes                   55,576 15,273
Net income                   35,179 47,226
Net income: Non-controlling interest                   22,364 24,830
Net income attributable to RE/MAX Holdings, Inc.                   $ 12,815 $ 22,396
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock                      
Basic                   $ 0.72 $ 1.27
Diluted                   $ 0.72 $ 1.27
Adjustments | ASU 2014-09                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Selling, operating and administrative expenses                   $ (322) $ (176)
Provision for income taxes                   1,471 (106)
Net income                   (3,364) (378)
Net income: Non-controlling interest                   (787) (203)
Net income attributable to RE/MAX Holdings, Inc.                   $ (2,577) $ (175)
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock                      
Basic                   $ (0.14) $ (0.01)
Diluted                   $ (0.14) $ (0.01)
Franchise sales and other revenue                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Total revenue                 $ 28,757 $ 22,452 $ 24,471
Franchise sales and other revenue | As previously reported | ASU 2014-09                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Total revenue                   24,667 25,131
Franchise sales and other revenue | Adjustments | ASU 2014-09                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Total revenue                   (2,215) (660)
Annual dues                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Total revenue                 $ 35,894 $ 33,767 $ 32,653
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Condensed Consolidated Statement of Comprehensive Income (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income $ 11,066 $ 15,541 $ 14,591 $ 9,167 $ (403) $ 7,290 $ 15,539 $ 9,388 $ 50,365 $ 31,815 $ 46,848
Change in cumulative translation adjustment                 (253) 1,037 146
Comprehensive income                 50,112 32,852 46,994
Comprehensive income attributable to non-controlling interest                 23,199 22,108 24,715
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax                 $ 26,913 10,744 22,279
ASU 2014-09 | As previously reported                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income                   35,179 47,226
Change in cumulative translation adjustment                   1,074 165
Comprehensive income                   36,253 47,391
Comprehensive income attributable to non-controlling interest                   22,895 24,918
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax                   13,358 22,473
ASU 2014-09 | Adjustments                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income                   (3,364) (378)
Change in cumulative translation adjustment                   (37) (19)
Comprehensive income                   (3,401) (397)
Comprehensive income attributable to non-controlling interest                   (787) (203)
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax                   $ (2,614) $ (194)
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Condensed Consolidated Statement of Cash Flows (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income $ 11,066 $ 15,541 $ 14,591 $ 9,167 $ (403) $ 7,290 $ 15,539 $ 9,388 $ 50,365 $ 31,815 $ 46,848
Deferred income tax expense                 9,552 47,965 3,367
Accounts and notes receivable, current portion                 (3,241) (2,825) (3,841)
Other current and noncurrent assets                 2,170 (2,724) 186
Other current and noncurrent liabilities                 (3,497) 2,815 (1,956)
Deferred revenue and deposits, current portion                 $ 259 3,482 (254)
ASU 2014-09 | As previously reported                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income                   35,179 47,226
Deferred income tax expense                   46,494 3,473
Accounts and notes receivable, current portion                   (2,924)  
Other current and noncurrent assets                   (2,414) 362
Other current and noncurrent liabilities                   1,583 (2,616)
Deferred revenue and deposits, current portion                   2,610  
ASU 2014-09 | Adjustments                      
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]                      
Net income                   (3,364) (378)
Deferred income tax expense                   1,471 (106)
Accounts and notes receivable, current portion                   99  
Other current and noncurrent assets                   (310) (176)
Other current and noncurrent liabilities                   1,232 $ 660
Deferred revenue and deposits, current portion                   $ 872  
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Disaggregated revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Disaggregation of Revenue [Line Items]                      
Total revenue $ 50,841 $ 54,866 $ 54,277 $ 52,642 $ 48,510 $ 49,071 $ 48,727 $ 47,406 $ 212,626 $ 193,714 $ 175,642
Owned Regions                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 133,925 125,092 103,756
Independent Regions                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 46,289 44,799 47,498
Global and Other                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 24,290 23,266 24,384
RE/MAX Franchising                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 204,504 193,157 175,638
Other                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 8,122 557 4
U.S.                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 170,496 160,537 145,488
Canada                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 23,771 23,189 22,071
Global                      
Disaggregation of Revenue [Line Items]                      
Total revenue                 $ 10,237 $ 9,431 $ 8,079
v3.10.0.1
Impacts of Adopting New Revenue Recognition - Transaction Price (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 43,437
Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue 15,877
Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue 27,560
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 23,292
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 15,877
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 7,415
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Annual Dues And Franchise Sales  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 6,116
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Annual dues  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 6,116
Performance period 1 year
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 $ 4,706
Performance period 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]  
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 4,706
Performance period 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 $ 3,171
Performance period 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]  
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 3,171
Performance period 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 $ 1,652
Performance period 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]  
Performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 1,652
Performance period 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 $ 4,500
Performance period
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]  
Performance period
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | Franchise sales revenue  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation revenue $ 4,500
Performance period
v3.10.0.1
Non-controlling Interest - Ownership of common units in RMCO (Details) - RMCO, LLC - shares
Dec. 31, 2018
Dec. 31, 2017
Shares [Abstract]    
Non-controlling unitholders ownership of common units in RMCO 12,559,600 12,559,600
RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO 17,754,416 17,696,991
Total number of common stock units in RMCO 30,314,016 30,256,591
Ownership Percentage [Abstract]    
Non-controlling unitholders ownership of common units in RMCO as a percentage 41.43% 41.51%
RE/MAX Holdings, Inc. outstanding Class A common stock (equal to RE/MAX Holdings, Inc. common units in RMCO 58.57% 58.49%
Total percentage of common stock units 100.00% 100.00%
v3.10.0.1
Non-controlling Interest - Net income reconciliation (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Minority Interest [Line Items]                      
Weighted average ownership percentage of controlling interest                 58.55% 58.48% 58.40%
Weighted average ownership percentage of noncontrolling interest                 41.45% 41.52% 41.60%
Total (as a percentage)                 100.00% 100.00% 100.00%
Income before provision for income taxes attributable to RE/MAX Holdings, Inc.                 $ 41,238 $ 65,493 $ 36,165
Provision for income taxes attributable to RE/MAX Holdings, Inc.                 (14,194) (55,255) (13,944)
Net income attributable to RE/MAX Holdings, Inc. $ 6,274 $ 8,139 $ 7,648 $ 4,983 $ (5,477) $ 3,717 $ 7,458 $ 4,540 27,044 10,238 22,221
Income before provision for income taxes: Non-controlling interest                 24,926 23,369 25,850
Provision for income taxes: Non-controlling interest                 (1,605) (1,792) (1,223)
Net income: Non-controlling interest 4,792 7,402 6,943 4,184 5,074 3,573 8,081 4,848 23,321 21,577 24,627
Income before provision for income taxes 18,436 18,961 17,738 11,029 45,859 10,311 20,274 12,418 66,164 88,862 62,015
Provision for income taxes (7,370) (3,420) (3,147) (1,862) (46,262) (3,021) (4,735) (3,030) (15,799) (57,047) (15,167)
Net income $ 11,066 $ 15,541 $ 14,591 $ 9,167 $ (403) $ 7,290 $ 15,539 $ 9,388 50,365 31,815 46,848
Non-controlling interest                      
Minority Interest [Line Items]                      
Net income                 $ 23,321 $ 21,577 $ 24,627
v3.10.0.1
Non-controlling Interest - Distributions Paid or Payable (Details) - USD ($)
$ in Thousands
 12 Months Ended
Feb. 20, 2019
Dec. 31, 2018
Dec. 31, 2017
Dividends Payable [Line Items]      
Distributions paid or payable to or on behalf of non-controlling unitholders   $ 14,559 $ 17,260
Tax and other distributions      
Dividends Payable [Line Items]      
Distributions paid or payable to or on behalf of non-controlling unitholders   4,511 8,217
Dividend distributions      
Dividends Payable [Line Items]      
Distributions paid or payable to or on behalf of non-controlling unitholders   $ 10,048 $ 9,043
Subsequent Event | Quarterly distribution      
Dividends Payable [Line Items]      
Distributions declared to non-controlling unitholders $ 2,600    
v3.10.0.1
Non-controlling Interest - Narrative (Details) - USD ($)
$ in Thousands, shares in Millions
 1 Months Ended 2 Months Ended 12 Months Ended
Oct. 31, 2013
Dec. 31, 2015
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Significant Accounting Policies [Line Items]          
Deferred tax assets, net     $ 53,698 $ 62,841  
Corporate tax rate     21.00% 35.00% 35.00%
RIHI          
Significant Accounting Policies [Line Items]          
Common stock issued at initial public offering 11.5 5.2      
TRA holders          
Significant Accounting Policies [Line Items]          
Tax benefit realized     85.00%    
RMCO, LLC | RIHI          
Significant Accounting Policies [Line Items]          
TRA liability     $ 40,800    
v3.10.0.1
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 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Numerator                      
Net income attributable to RE/MAX Holdings, Inc. $ 6,274 $ 8,139 $ 7,648 $ 4,983 $ (5,477) $ 3,717 $ 7,458 $ 4,540 $ 27,044 $ 10,238 $ 22,221
Denominator for basic net income per share of common stock                      
Weighted average shares of Class A common stock outstanding 17,748,745 17,746,184 17,746,042 17,709,095 17,696,991 17,696,991 17,696,842 17,662,842 17,737,649 17,688,533 17,628,741
Denominator for diluted net income per share of common stock                      
Weighted average shares of Class A common stock outstanding 17,748,745 17,746,184 17,746,042 17,709,095 17,696,991 17,696,991 17,696,842 17,662,842 17,737,649 17,688,533 17,628,741
Weighted average shares of Class A common stock outstanding, diluted 17,771,180 17,771,212 17,769,641 17,762,133 17,747,744 17,737,786 17,723,802 17,716,013 17,767,499 17,731,800 17,677,768
Earnings per share of Class A common stock                      
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
Common Class A                      
Numerator                      
Net income attributable to RE/MAX Holdings, Inc.                 $ 27,044 $ 10,238 $ 22,221
Denominator for basic net income per share of common stock                      
Weighted average shares of Class A common stock outstanding                 17,737,649 17,688,533 17,628,741
Denominator for diluted net income per share of common stock                      
Weighted average shares of Class A common stock outstanding                 17,737,649 17,688,533 17,628,741
Weighted average shares of Class A common stock outstanding, diluted                 17,767,499 17,731,800 17,677,768
Earnings per share of Class A common stock                      
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic                 $ 1.52 $ 0.58 $ 1.26
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted                 $ 1.52 $ 0.58 $ 1.26
Employee Stock Option | Common Class A                      
Add dilutive effect of the following:                      
Dilutive effect                     5,059
Restricted Stock Units (RSUs) | Common Class A                      
Add dilutive effect of the following:                      
Dilutive effect                 29,850 43,267 43,968
v3.10.0.1
Earnings Per Share and Dividends - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 12 Months Ended
Feb. 20, 2019
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2016
Mar. 31, 2016
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Dividends Payable [Line Items]                                
Cash dividends declared per share of Class A common stock                           $ 0.80 $ 0.72 $ 0.60
Dividends declared and paid                           $ 14,193 $ 12,740 $ 10,578
Common Class A                                
Dividends Payable [Line Items]                                
Cash dividends declared per share of Class A common stock                           $ 0.80 $ 0.72 $ 0.60
Quarterly dividend | Common Class A                                
Dividends Payable [Line Items]                                
Cash dividends declared per share of Class A common stock $ 0.21 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.15 $ 0.15 $ 0.15 $ 0.15      
v3.10.0.1
Acquisitions (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Feb. 26, 2018
Nov. 15, 2017
Dec. 15, 2016
Dec. 01, 2016
Sep. 12, 2016
Apr. 01, 2016
Feb. 22, 2016
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Business Acquisition [Line Items]                    
Issuance of Class A common stock, equity-based compensation plans, value                   $ 101
Purchase Price Allocation                    
Goodwill               $ 150,684 $ 135,213 126,633
Acquisition- related expense               1,634 5,889 1,899
Increase to goodwill               700 (3,865)  
Pro Forma Information                    
Total revenue               213,892 205,059 192,734
Net income attributable to RE/MAX Holdings, Inc.               $ 26,352 $ 7,628 $ 24,929
Basic earnings per common share               $ 1.49 $ 0.43 $ 1.41
Diluted earnings per common share               $ 1.48 $ 0.43 $ 1.41
Booj Llc                    
Business Acquisition [Line Items]                    
Cash consideration $ 26,300                  
Issuance of Class A common stock, equity-based compensation plans, value 10,000                  
Purchase Price Allocation                    
Cash and cash equivalents 362                  
Other current assets 367                  
Property and equipment 625                  
Software 7,400                  
Trademarks 500                  
Non-compete agreement 1,200                  
Customer relationships 800                  
Franchise agreements 1,589                  
Other assets, net of current portion 336                  
Total assets acquired, excluding goodwill 13,179                  
Current portion of debt (606)                  
Other current liabilities (557)                  
Debt, net of current portion (805)                  
Total liabilities assumed (1,968)                  
Goodwill 15,039                  
Total purchase price 26,250                  
Acquisition- related expense 846                  
Revenue since acquisition date $ 5,586                  
Remax Of Northern Illinois Inc                    
Business Acquisition [Line Items]                    
Cash consideration   $ 35,720                
Purchase Price Allocation                    
Franchise agreements   22,800                
Goodwill   12,920                
Total purchase price   $ 35,720                
Decrease to franchise agreements               $ (700)    
Increase to goodwill               $ 700    
RE/MAX Regional Services                    
Business Acquisition [Line Items]                    
Cash consideration     $ 50,400              
Purchase Price Allocation                    
Franchise agreements     30,700              
Goodwill     19,700              
Total purchase price     $ 50,400              
RE/MAX of New Jersey                    
Business Acquisition [Line Items]                    
Cash consideration       $ 45,000            
Purchase Price Allocation                    
Cash and cash equivalents       335            
Franchise agreements       29,700            
Goodwill       15,300            
Other liabilities       (335)            
Total purchase price       $ 45,000            
RE/MAX of Alaska, Inc.                    
Business Acquisition [Line Items]                    
Cash consideration           $ 1,500        
Purchase Price Allocation                    
Franchise agreements           529        
Goodwill           971        
Total purchase price           $ 1,500        
Re/Max of New York, Inc.                    
Business Acquisition [Line Items]                    
Cash consideration             $ 8,500      
Purchase Price Allocation                    
Cash and cash equivalents             131      
Franchise agreements             5,000      
Other assets, net of current portion             340      
Goodwill             3,029      
Total purchase price             $ 8,500      
Full House Mortgage Connection, Inc.                    
Business Acquisition [Line Items]                    
Cash consideration         $ 8,000          
Purchase Price Allocation                    
Non-compete agreement         2,500          
Goodwill         11,800          
Total purchase price         14,300          
Contingent consideration liability         $ 6,300          
RE Max Of Northern Illinois RE Max Regional Services RE Max Of New Jersey Full House RE Max Of Alaska RE Max Of New York [Member]                    
Purchase Price Allocation                    
Cash and cash equivalents                 $ 466  
Franchise agreements                 88,729  
Non-compete agreement                 2,500  
Other assets, net of current portion                 340  
Goodwill                 63,720  
Other liabilities                 (335)  
Total purchase price                 $ 155,420  
v3.10.0.1
Property and Equipment - Property and Equipment (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Property Plant And Equipment [Line Items]      
Property and equipment, gross $ 17,670 $ 15,231  
Less accumulated depreciation (13,280) (12,326)  
Property and equipment, net 4,390 2,905  
Depreciation expense $ 1,200 900 $ 900
Leasehold Improvements      
Property Plant And Equipment [Line Items]      
Depreciable life Shorter of estimated useful life or life of lease    
Property and equipment, gross $ 3,278 3,227  
Office furniture, fixtures and equipment      
Property Plant And Equipment [Line Items]      
Property and equipment, gross $ 14,392 $ 12,004  
Office furniture, fixtures and equipment | Minimum      
Property Plant And Equipment [Line Items]      
Depreciable life 2 years    
Office furniture, fixtures and equipment | Maximum      
Property Plant And Equipment [Line Items]      
Depreciable life 10 years    
v3.10.0.1
Intangible Assets and Goodwill - Components of Company's Intangible Assets (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]      
Net Balance $ 103,157 $ 119,349  
Amortization expense 19,500 19,600 $ 15,200
Franchise agreements      
Finite Lived Intangible Assets [Line Items]      
Initial Cost 180,867 181,567  
Accumulated Amortization (77,710) (62,218)  
Net Balance $ 103,157 119,349  
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 $ 30,875 17,801  
Accumulated Amortization (7,910) (9,325)  
Net Balance $ 22,965 8,476  
Other intangible assets | Weighted Average      
Finite Lived Intangible Assets [Line Items]      
Useful life of intangible assets 5 years 9 months 18 days    
Software      
Finite Lived Intangible Assets [Line Items]      
Capitalized software development costs $ 4,500 600  
Trademarks      
Finite Lived Intangible Assets [Line Items]      
Initial Cost 1,857 1,539  
Accumulated Amortization (839) (902)  
Net Balance $ 1,018 637  
Trademarks | Weighted Average      
Finite Lived Intangible Assets [Line Items]      
Useful life of intangible assets 9 years 3 months 18 days    
Software Development      
Finite Lived Intangible Assets [Line Items]      
Initial Cost $ 20,579 13,762  
Accumulated Amortization (5,802) (8,111)  
Net Balance $ 14,777 5,651  
Software Development | Weighted Average      
Finite Lived Intangible Assets [Line Items]      
Useful life of intangible assets 4 years 4 months 24 days    
Non-compete agreements      
Finite Lived Intangible Assets [Line Items]      
Initial Cost $ 3,700 2,500  
Accumulated Amortization (896) (312)  
Net Balance $ 2,804 $ 2,188  
Non-compete agreements | Weighted Average      
Finite Lived Intangible Assets [Line Items]      
Useful life of intangible assets 7 years 8 months 12 days    
Training materials      
Finite Lived Intangible Assets [Line Items]      
Initial Cost $ 2,350    
Accumulated Amortization (157)    
Net Balance $ 2,193    
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 $ 2,389    
Accumulated Amortization (216)    
Net Balance $ 2,173    
Other | Weighted Average      
Finite Lived Intangible Assets [Line Items]      
Useful life of intangible assets 11 years 10 months 24 days    
v3.10.0.1
Intangible Assets and Goodwill - Estimated Future Amortization of Intangible Assets, Other Than Goodwill (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]  
2019 $ 20,524
2020 20,591
2021 19,820
2022 16,967
2023 13,799
Estimated future amortization expense over next five years $ 91,701
v3.10.0.1
Intangible Assets and Goodwill - Schedule of Changes in Goodwill (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Changes to goodwill    
Beginning Balance $ 135,213 $ 126,633
Goodwill recognized related to acquisitions 15,039 12,220
Adjustments to acquisition accounting during the measurement period 700 (3,865)
Effect of changes in foreign currency exchange rates (268) 225
Ending Balance 150,684 135,213
RE/MAX Franchising    
Changes to goodwill    
Beginning Balance 123,413 114,833
Goodwill recognized related to acquisitions 15,039 12,220
Adjustments to acquisition accounting during the measurement period 700 (3,865)
Effect of changes in foreign currency exchange rates (268) 225
Ending Balance 138,884 123,413
Other    
Changes to goodwill    
Beginning Balance 11,800 11,800
Ending Balance $ 11,800 $ 11,800
v3.10.0.1
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Accrued Liabilities [Line Items]    
Accrued payroll and related employee costs $ 6,517 $ 3,874
Accrued taxes 1,480 1,635
Accrued professional fees 2,010 2,339
Other 3,136 7,542
Accrued liabilities $ 13,143 15,390
Tails Inc.    
Accrued Liabilities [Line Items]    
Other   $ 4,500
v3.10.0.1
Debt - Schedule of Debt (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]    
Long term debt $ 230,348  
Less unamortized debt issuance costs (1,481) $ (1,780)
Less unamortized debt discount costs (1,080) (1,297)
Less current portion (2,622) (2,350)
Debt, net of current portion 225,165 226,636
Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Long term debt 229,713 $ 232,063
Other Long Term Financing    
Debt Instrument [Line Items]    
Long term debt $ 635  
v3.10.0.1
Debt - Schedule of Maturities of Debt (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Debt  
Long term debt $ 230,348
2019 2,622
2020 2,712
2021 2,350
2022 2,350
2023 $ 220,314
v3.10.0.1
Debt - Additional Information (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2018
USD ($)
Dec. 31, 2016
USD ($)
Dec. 15, 2016
USD ($)
Jul. 31, 2013
USD ($)
Debt Instrument [Line Items]        
Excess cash flow payment   $ 12.7    
London Interbank Offered Rate (LIBOR)        
Debt Instrument [Line Items]        
Basis spread on variable rate 2.75%      
London Interbank Offered Rate (LIBOR) | Minimum        
Debt Instrument [Line Items]        
Basis spread on variable rate 0.75%      
2013 Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Excess cash flow repayment (as a percent)   50.00%    
Leverage ratio under debt covenant   2.50    
Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Debt issuance costs incurred   $ 3.5    
Debt Instrument, expense incurred   2.1    
Excess cash flow repayment (as a percent) 50.00%      
Leverage ratio under debt covenant 3.25      
Percentage of proceeds of additional debt incurred not permitted by credit facility required to repay term loans 100.00%      
Percentage of proceeds of assets sales required to repay term loans and reduce revolving commitments 100.00%      
Percentage of amounts recovered under insurance policies required to repay term loans and reduce revolving commitments 100.00%      
First periodic payment from current period 12 months      
Additional mandatory prepayment if total leverage ratio is not achieved $ 0.0      
Additional mandatory commitment reduction if total leverage ratio is not achieved $ 0.0      
Senior Secured Credit Facility | Minimum        
Debt Instrument [Line Items]        
Leverage ratio under debt covenant 2.75      
Senior Secured Credit Facility | Federal Reserve Bank of New York        
Debt Instrument [Line Items]        
Basis spread on variable rate 0.50%      
Senior Secured Credit Facility | Base Rate        
Debt Instrument [Line Items]        
Basis spread on variable rate 1.75%      
Debt Net Of Current Portion | Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Debt issuance costs incurred   $ 1.4    
Term loan | 2013 Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Credit facility, borrowing capacity       $ 230.0
Term loan | Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Notes Payable to Bank     $ 235.0  
Revolving loan facility        
Debt Instrument [Line Items]        
Revolving loan facility commitment fee on average daily amount of unused portion 0.50%      
Amounts drawn on line of credit $ 0.0      
Revolving loan facility | 2013 Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Credit facility, borrowing capacity       $ 10.0
Revolving loan facility | Senior Secured Credit Facility        
Debt Instrument [Line Items]        
Credit facility, borrowing capacity     $ 10.0  
ABR loans | Senior Secured Credit Facility | Eurodollar        
Debt Instrument [Line Items]        
Basis spread on variable rate 1.00%      
v3.10.0.1
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
item
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Sep. 12, 2016
USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Annual payment period 120 days      
Deferred revenue and deposits, current portion $ 259 $ 3,482 $ (254)  
Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Contingent consideration liability       $ 6,300
Percentage of gross revenues to be paid yearly 8.00%      
Full House Mortgage Connection, Inc. | Measured on a recurring basis | Contingent consideration        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Contingent consideration liability $ 5,070 6,580 $ 6,400  
Full House Mortgage Connection, Inc. | Level 3 | Measured on a recurring basis | Contingent consideration        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Contingent consideration liability 5,070 $ 6,580    
Ten Percent Reduction In Franchise Sales [Member] | Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Deferred revenue and deposits, current portion (300)      
One Percent Increase To Discount Rate [Member] | Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Deferred revenue and deposits, current portion (300)      
One Percent Decrease To Discount Rate [Member] | Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Deferred revenue and deposits, current portion $ 300      
Minimum | Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Assumed number of franchises sold annually | item 50      
Maximum | Full House Mortgage Connection, Inc.        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Assumed number of franchises sold annually | item 80      
v3.10.0.1
Fair Value Measurements - Reconciliation of Assets and Liabilities Measured Using Significant Unobservable Inputs (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Fair value adjustment $ (1,289) $ 180 $ 100
Cash payments (221)    
Full House Mortgage Connection, Inc. | Measured on a recurring basis | Contingent consideration      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Balance at Beginning 6,580 6,400  
Fair value adjustment 1,289 (180)  
Cash payments (221)    
Balance at Ending 5,070 6,580 $ 6,400
Full House Mortgage Connection, Inc. | Measured on a recurring basis | Contingent consideration | Level 3      
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]      
Balance at Beginning 6,580    
Balance at Ending $ 5,070 $ 6,580  
v3.10.0.1
Fair Value Measurements - Schedule of Senior Secured Credit Facility (Details) - USD ($)
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]    
Transfer of asset fair value Level 1 to 2 $ 0  
Transfer of liability fair value Level 1 to 2 0  
Transfer of asset fair value Level 2 to 1 0  
Transfer of liability fair value Level 2 to 1 0  
Transfers of assets or liabilities between the fair value measurement levels 3 0  
Carrying amounts | Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Long term debt, carrying amount 227,152,000 $ 228,986,000
Level 2 | Estimated fair value | Senior Secured Credit Facility    
Debt Instrument [Line Items]    
Long term debt, fair value $ 221,673,000 $ 232,933,000
v3.10.0.1
Income Taxes - Schedule of Income Before Provision for Income Taxes (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Taxes                      
Domestic                 $ 52,798 $ 77,346 $ 50,145
Foreign                 13,366 11,516 11,870
Income before provision for income taxes $ 18,436 $ 18,961 $ 17,738 $ 11,029 $ 45,859 $ 10,311 $ 20,274 $ 12,418 $ 66,164 $ 88,862 $ 62,015
v3.10.0.1
Income Taxes - Schedule of Components of Provision for Income Taxes (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Current                      
Federal                 $ 1,730 $ 3,568 $ 8,002
Foreign                 3,818 4,345 2,855
State and local                 699 1,169 943
Total current expense                 6,247 9,082 11,800
Deferred expense                      
Federal                 8,829 47,073 2,992
Foreign                 12 323 137
State and local                 711 569 238
Total deferred expense                 9,552 47,965 3,367
Provision for income taxes $ 7,370 $ 3,420 $ 3,147 $ 1,862 $ 46,262 $ 3,021 $ 4,735 $ 3,030 $ 15,799 $ 57,047 $ 15,167
v3.10.0.1
Income Taxes - Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Income Taxes      
U.S. statutory tax rate 21.00% 35.00% 35.00%
Increase due to state and local taxes, net of federal benefit 3.10% 2.60% 2.60%
Non-creditable foreign taxes 1.20%    
Foreign derived intangible income deduction (1.30%)    
Income attributable to non-controlling interests (7.30%) (12.50%) (14.10%)
Other (0.80%) (0.80%) 1.00%
Subtotal 15.90% 24.30% 24.50%
Impact of TRA adjustment on NCI 0.70% 4.50%  
Effect of permanent difference - TRA adjustment (2.20%) (13.60%)  
Tax Reform Rate Change   49.00%  
Valuation allowance recognized on basis step-ups 9.50%    
Effective tax rate 23.90% 64.20% 24.50%
Income tax expense (benefit)   $ 42,800  
Benefit as a result of reduction in TRA Liability $ 6,145 32,736  
Net effect on net income   (10,100)  
Valuation allowance against related deferred tax assets 6,300    
Value of TRA liability 6,100    
Income taxes receivable $ 300 $ 900  
v3.10.0.1
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Long-term deferred tax assets    
Goodwill, other intangibles and other assets and liabilities $ 48,427 $ 52,385
Imputed interest deduction pursuant to tax receivable agreements 2,719 3,052
Rent liabilities 1,845 1,878
Compensation and benefits 2,131 526
Allowance for doubtful accounts 944 834
Motto contingent liability 748 929
Deferred revenue 3,939 3,914
Foreign tax credit carryforward 1,259  
Other 1,281 663
Total long term deferred tax assets 63,293 64,181
Valuation allowance (7,051)  
Total long-term deferred tax assets, net of valuation allowance 56,242 64,181
Long-term deferred tax liabilities    
Property and equipment and other long-lived assets (2,944) (1,491)
Total long-term deferred tax liabilities (2,944) (1,491)
Net long-term deferred tax assets 53,298 62,690
Total deferred tax assets and liabilities $ 53,298 $ 62,690
v3.10.0.1
Income Taxes - Additional Information (Details)
$ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
Minority Interest [Line Items]  
Foreign tax credit carryforward $ 1,259
Carried back period (in years) 1 year
Carried forward period (in years) 10 years
Minimum  
Minority Interest [Line Items]  
Income tax examination, period 3 years
Maximum  
Minority Interest [Line Items]  
Income tax examination, period 4 years
v3.10.0.1
Equity-Based Compensation (Details)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 31, 2018
USD ($)
installment
$ / shares
shares
Dec. 31, 2017
USD ($)
$ / shares
shares
Dec. 31, 2016
USD ($)
$ / shares
Employee stock-based compensation expense      
Equity-based compensation expense | $ $ 9,176 $ 2,900 $ 2,330
Restricted Stock Units      
Vesting Period 3 years    
Proceeds from exercise of stock options | $     101
2013 Stock Incentive Plan      
Employee stock-based compensation expense      
Equity-based compensation expense | $ $ 9,176 2,900 2,330
Tax benefit from share-based compensation | $ (1,297) (637) (511)
Excess tax benefit from share-based compensation | $ (145) (324) (261)
Net compensation cost | $ $ 7,734 $ 1,939 $ 1,558
Time-based Restricted Stock Units      
Restricted Stock Units      
Nonvested at beginning of period 105,862    
Granted 271,941    
Shares vested (70,650)    
Forfeited (8,543)    
Nonvested at end of period 298,610 105,862  
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares $ 41.67    
Granted, Weighted average grant date fair value per share | $ / shares 53.04 $ 55.45 $ 33.24
Shares vested, Weighted average grant date fair value per share | $ / shares 41.50    
Forfeited, Weighted average grant date fair value per share | $ / shares 44.82    
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares $ 51.97 $ 41.67  
Unrecognized compensation cost | $ $ 11,100    
Period for recognition of RSU compensation expense 2 years 7 months 24 days    
Time-based Restricted Stock Units | 2013 Stock Incentive Plan      
Employee stock-based compensation expense      
Equity-based compensation expense | $ $ 5,110 $ 2,523 $ 2,330
Time-based Restricted Stock Units | Directors      
Restricted Stock Units      
Vesting Period 1 year    
Time-based Restricted Stock Units | Employees      
Restricted Stock Units      
Vesting Period 3 years    
Performance-based Restricted Stock Units      
Restricted Stock Units      
Nonvested at beginning of period 31,831    
Granted 156,694    
Shares vested (2,811)    
Forfeited (6,099)    
Nonvested at end of period 179,615 31,831  
Nonvested at beginning of period, Weighted average grant date fair value per share | $ / shares $ 57.88    
Granted, Weighted average grant date fair value per share | $ / shares 55.38    
Shares vested, Weighted average grant date fair value per share | $ / shares 56.59    
Forfeited, Weighted average grant date fair value per share | $ / shares 57.06    
Nonvested at end of period, Weighted average grant date fair value per share | $ / shares $ 55.75 $ 57.88  
Period of performance measurement 3 years    
Unrecognized compensation cost | $ $ 4,900    
Period for recognition of RSU compensation expense 1 year 2 months 19 days    
Performance-based Restricted Stock Units | Minimum      
Restricted Stock Units      
Shares issued upon participants target award 0.00%    
Performance-based Restricted Stock Units | Maximum      
Restricted Stock Units      
Shares issued upon participants target award 150.00%    
Performance-based Restricted Stock Units | 2013 Stock Incentive Plan      
Employee stock-based compensation expense      
Equity-based compensation expense | $ $ 4,066 $ 377  
Restricted Stock Units (RSUs)      
Restricted Stock Units      
Additional shares available to grant under plan (in shares) 2,285,200    
Booj Llc | Time-based Restricted Stock Units      
Restricted Stock Units      
Vesting Period 4 years    
Number of installments in a vesting period | installment 3    
Booj Llc | Performance-based Restricted Stock Units | Minimum      
Restricted Stock Units      
Shares issued upon participants target award 0.00%    
Booj Llc | Performance-based Restricted Stock Units | Maximum      
Restricted Stock Units      
Shares issued upon participants target award 100.00%    
v3.10.0.1
Leadership Changes and the New Service Model (Details) - USD ($)
$ in Thousands
 11 Months Ended 12 Months Ended
Dec. 31, 2018
Dec. 31, 2018
President    
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]    
The period for payment of restructuring costs.   39 months
RE/MAX Franchising | President | Separation And Transition Agreement | Selling, General and Administrative Expenses    
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]    
Severance and other related expenses $ 1,800  
RE/MAX Franchising | Restructuring Plan | Former Employees | Selling, General and Administrative Expenses    
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]    
Severance and other related expenses   $ 1,400
Pro Forma [Member] | RE/MAX Franchising | Restructuring Plan | Former Employees | Selling, General and Administrative Expenses    
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]    
Severance and other related expenses   $ 2,100
v3.10.0.1
Commitments and Contingencies - Operating Leases Future Minimum Payments (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Rent Payments Abstract  
2019 $ 9,402
2020 9,601
2021 9,341
2022 9,011
2023 9,169
Thereafter 43,556
Total Rent Payments 90,080
Sublease Receipts  
2019 (1,087)
2020 (873)
2021 (775)
2022 (804)
2023 (827)
Thereafter (1,382)
Total Sublease receipts (5,748)
Total Cash Outflows  
2019 8,315
2020 8,728
2021 8,566
2022 8,207
2023 8,342
Thereafter 42,174
Total Cash Outflows $ 84,332
v3.10.0.1
Commitments and Contingencies - Contingencies (Details)
$ in Thousands
 1 Months Ended 12 Months Ended
Sep. 12, 2016
USD ($)
Oct. 07, 2013
USD ($)
Apr. 30, 2010
item
Dec. 31, 2018
USD ($)
lease
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2013
USD ($)
Loss Contingencies [Line Items]              
Rent expense, excluding amounts related to gain or loss on sublease       $ 7,700 $ 7,800 $ 7,500  
Operating sublease income       $ 1,300 1,000 $ 1,100  
Loss recorded related to subleased office space             $ 1,200
Gain recognized on amendment of sublease agreement         300    
Number of leases assigned to purchasers | lease       21      
Self insurance program liability       $ 300 400    
Assignment and Assumption of Lease Agreements              
Loss Contingencies [Line Items]              
Outstanding lease guarantees       2,000      
Master Lease              
Loss Contingencies [Line Items]              
Number of renewal periods | item     2        
Renewal of lease period     10 years        
Annual rent escalation in initial lease period and in first renewal period     3.00%        
Gain (Loss) on Sublease         (3,600)    
Master Lease | May 2017              
Loss Contingencies [Line Items]              
Gain (Loss) on Sublease         (200)    
Master Lease | August 2017              
Loss Contingencies [Line Items]              
Gain (Loss) on Sublease         (3,700)    
Master Lease | September 2017              
Loss Contingencies [Line Items]              
Gain (Loss) on Sublease         300    
Tails Inc.              
Loss Contingencies [Line Items]              
Cash consideration   $ 20,200          
Full House Mortgage Connection, Inc.              
Loss Contingencies [Line Items]              
Cash consideration $ 8,000            
Accrued liabilities | Full House Mortgage Connection, Inc.              
Loss Contingencies [Line Items]              
Short-term portion of liability       5,100      
Other liabilities              
Loss Contingencies [Line Items]              
Long-term portion of liability       $ 2,400 $ 3,900    
v3.10.0.1
Commitments and Contingencies - Commitments (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Future lease payments  
2019 $ 9,402
2020 9,601
2021 9,341
2022 9,011
2023 9,169
Thereafter 43,556
Total Rent Payments 90,080
Booj Llc  
Future lease payments  
2019 200
2020 200
2021 200
2022 200
2023 200
Thereafter $ 2,000
v3.10.0.1
Commitments and Contingencies - Litigation (Details) - USD ($)
$ in Millions
 1 Months Ended
Feb. 13, 2018
Oct. 07, 2013
Feb. 28, 2018
Loss Contingencies [Line Items]      
Payment of legal settlement     $ 4.5
Amount of reimbursement of attorneys fees and portion of settlement.     $ 1.9
Tails Inc.      
Loss Contingencies [Line Items]      
Cash consideration   $ 20.2  
Selling, General and Administrative Expenses      
Loss Contingencies [Line Items]      
Charges on settlement $ 2.6    
v3.10.0.1
Defined-Contribution Savings Plan (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Defined-Contribution Savings Plan      
Matching contribution Expenses $ 1.8 $ 1.5 $ 1.4
v3.10.0.1
Related-Party Transactions (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Related party balances and activity      
Expenses recorded for benefits provided by related party $ 0.5 $ 0.5 $ 0.5
Accounts payable to affiliates 0.5 0.1  
Services rendered and rent for office space provided      
Related party balances and activity      
Amounts allocated for services rendered and rent for office space $ 3.8 3.4 $ 2.0
Affiliated Entity | Services rendered and rent for office space provided      
Related party balances and activity      
General payment period 30 days    
Accounts receivable from affiliates $ 0.0 $ 0.0  
v3.10.0.1
Segment Information (Details)
Dec. 31, 2018
segment
Segment Information  
Number of Operating Segments 3
v3.10.0.1
Segment Information - Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Segment Reporting Information                      
Total revenue $ 50,841 $ 54,866 $ 54,277 $ 52,642 $ 48,510 $ 49,071 $ 48,727 $ 47,406 $ 212,626 $ 193,714 $ 175,642
RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                 204,504 193,157 175,638
Other                      
Segment Reporting Information                      
Total revenue                 8,122 557 4
Continuing franchise fees                      
Segment Reporting Information                      
Total revenue                 101,104 93,694 81,197
Continuing franchise fees | RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                 98,828 93,232 81,194
Annual dues                      
Segment Reporting Information                      
Total revenue                 35,894 33,767 32,653
Annual dues | RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                 35,894 33,767 32,653
Broker fees                      
Segment Reporting Information                      
Total revenue                 46,871 43,801 37,209
Broker fees | RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                 46,871 43,801 37,209
Franchise sales and other revenue                      
Segment Reporting Information                      
Total revenue                 28,757 22,452 24,471
Franchise sales and other revenue | RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                 $ 22,911 $ 22,357 24,470
Brokerage revenue                      
Segment Reporting Information                      
Total revenue                     112
Brokerage revenue | RE/MAX Franchising                      
Segment Reporting Information                      
Total revenue                     $ 112
v3.10.0.1
Segment Information - Reconciliation (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated                      
Adjusted EBITDA                 $ 104,316 $ 102,145 $ 93,789
Gain (loss) on sale or disposition of assets and sublease, net                 139 (4,260) 171
Loss on early extinguishment of debt                     (2,893)
Equity-based compensation expense                 (9,176) (2,900) (2,330)
Public offering related expenses                     193
Acquisition-related expense                 (1,634) (5,889) (1,899)
Gain on reduction in TRA liability                 6,145 32,736  
Special Committee investigation and remediation expense                 (2,862) (2,634)  
Fair value adjustments to contingent consideration                 1,289 (180) (100)
Interest income                 676 352 160
Interest expense                 (12,051) (9,996) (8,596)
Depreciation and amortization                 (20,678) (20,512) (16,094)
Income before provision for income taxes $ 18,436 $ 18,961 $ 17,738 $ 11,029 $ 45,859 $ 10,311 $ 20,274 $ 12,418 66,164 88,862 62,015
RE/MAX Franchising                      
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated                      
Adjusted EBITDA                 108,669 105,184 94,717
Other                      
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated                      
Adjusted EBITDA                 $ (4,353) $ (3,039) $ (928)
v3.10.0.1
Segment Information - Summary of Total Assets (Detail) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Segment Total Assets [Line Items]    
Total assets $ 426,840 $ 412,835
RE/MAX Franchising    
Segment Total Assets [Line Items]    
Total assets 405,584 392,797
Other    
Segment Total Assets [Line Items]    
Total assets $ 21,256 $ 20,038
v3.10.0.1
Segment Information - Summary of Long-Lived Assets by Geographical Area (Detail) - USD ($)
$ in Thousands
Dec. 31, 2018
Dec. 31, 2017
Segment Reporting, Asset Reconciling Item [Line Items]    
Long-lived assets, net of accumulated depreciation $ 4,390 $ 2,905
U.S.    
Segment Reporting, Asset Reconciling Item [Line Items]    
Long-lived assets, net of accumulated depreciation 4,342 2,842
Global    
Segment Reporting, Asset Reconciling Item [Line Items]    
Long-lived assets, net of accumulated depreciation $ 48 $ 63
v3.10.0.1
Subsequent Events (Details) - Subsequent Event - RE/MAX Marketing Fund
$ in Thousands
Jan. 01, 2019
USD ($)
Purchase Price Allocation  
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
v3.10.0.1
Quarterly Financial Information - Schedule of Quarterly Financial Information (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 12 Months Ended
Dec. 31, 2018
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Sep. 30, 2017
Jun. 30, 2017
Mar. 31, 2017
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Quarterly Financial Information [Line Items]                      
Total revenue $ 50,841 $ 54,866 $ 54,277 $ 52,642 $ 48,510 $ 49,071 $ 48,727 $ 47,406 $ 212,626 $ 193,714 $ 175,642
Total operating expenses 29,428 33,059 33,363 38,925 110 36,580 26,055 32,637 134,775 95,382 104,309
Operating income 21,413 21,807 20,914 13,717 48,400 12,491 22,672 14,769 77,851 98,332 71,333
Total other expenses, net (2,977) (2,846) (3,176) (2,688) (2,541) (2,180) (2,398) (2,351) (11,687) (9,470) (9,318)
Income before provision for income taxes 18,436 18,961 17,738 11,029 45,859 10,311 20,274 12,418 66,164 88,862 62,015
Provision for income taxes (7,370) (3,420) (3,147) (1,862) (46,262) (3,021) (4,735) (3,030) (15,799) (57,047) (15,167)
Net income 11,066 15,541 14,591 9,167 (403) 7,290 15,539 9,388 50,365 31,815 46,848
Less: net income attributable to non-controlling interest (note 4) 4,792 7,402 6,943 4,184 5,074 3,573 8,081 4,848 23,321 21,577 24,627
Net income attributable to RE/MAX Holdings, Inc. $ 6,274 $ 8,139 $ 7,648 $ 4,983 $ (5,477) $ 3,717 $ 7,458 $ 4,540 $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock                      
Basic $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
Diluted $ 0.35 $ 0.46 $ 0.43 $ 0.28 $ (0.31) $ 0.21 $ 0.42 $ 0.26 $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding                      
Basic 17,748,745 17,746,184 17,746,042 17,709,095 17,696,991 17,696,991 17,696,842 17,662,842 17,737,649 17,688,533 17,628,741
Diluted 17,771,180 17,771,212 17,769,641 17,762,133 17,747,744 17,737,786 17,723,802 17,716,013 17,767,499 17,731,800 17,677,768
U.S. statutory tax rate                 21.00% 35.00% 35.00%
Common Class A                      
Quarterly Financial Information [Line Items]                      
Net income attributable to RE/MAX Holdings, Inc.                 $ 27,044 $ 10,238 $ 22,221
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock                      
Basic                 $ 1.52 $ 0.58 $ 1.26
Diluted                 $ 1.52 $ 0.58 $ 1.26
Weighted average shares of Class A common stock outstanding                      
Basic                 17,737,649 17,688,533 17,628,741
Diluted                 17,767,499 17,731,800 17,677,768