UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934	
For the quarterly period ended March 31, 2021.
OR
☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934	
For the transition period from              to             
Commission file number: 001-36101

RE/MAX Holdings, Inc.
(Exact name of registrant as specified in its charter)

			
			
Delaware		80-0937145	
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification Number)	
			
5075 South Syracuse Street
Denver, Colorado		80237	
(Address of principal executive offices)		(Zip Code)	

(303) 770-5531
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(b) of the Act:			
Title of each class	Trading Symbol	Name of each exchange on which registered	
Class A Common Stock, $0.0001 par value per share	RMAX	New York Stock Exchange	
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No ☐    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Emerging growth company	☐	
Non-accelerated filer	☐‌	Smaller reporting company	☐			
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☒
On April 30, 2021, there were 18,890,602 outstanding shares of the registrant’s Class A common stock (including unvested restricted stock), $0.0001 par value per share, and 1 outstanding share of Class B common stock, $0.0001 par value per share.

Table of Contents
TABLE OF CONTENTS

 	 	 	Page No.	
 	 	PART I. – FINANCIAL INFORMATION		
				
Item 1.	 	Financial Statements	3	
				
 	 	Condensed Consolidated Balance Sheets	3	
				
 	 	Condensed Consolidated Statements of Income	4	
				
		Condensed Consolidated Statements of Comprehensive Income	5	
				
 	 	Condensed Consolidated Statements of Stockholders’ Equity	6	
				
 	 	Condensed Consolidated Statements of Cash Flows	7	
				
 	 	Notes to Unaudited Condensed Consolidated Financial Statements	8	
				
Item 2.	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20	
				
Item 3.	 	Quantitative and Qualitative Disclosures About Market Risks	28	
				
Item 4.	 	Controls and Procedures	29	
				
 	 	PART II. – OTHER INFORMATION		
				
Item 1.	 	Legal Proceedings	29	
				
Item 1A.	 	Risk Factors	30	
				
Item 2.	 	Unregistered Sales of Equity Securities and Use of Proceeds	30	
				
Item 3.	 	Defaults Upon Senior Securities	30	
				
Item 4.	 	Mine Safety Disclosures	30	
				
Item 5.	 	Other Information	30	
				
Item 6.	 	Exhibits	31	
				
		SIGNATURES	32	

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PART I. – FINANCIAL INFORMATION
Item 1. Financial Statements
RE/MAX HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)

							
		March 31, 		December 31, 	
		2021		2020	
Assets							
Current assets:							
Cash and cash equivalents		$	102,632		$	101,355	
Restricted cash			21,500			19,872	
Accounts and notes receivable, current portion, less allowances of $11,705 and $11,724, respectively			29,544			29,985	
Income taxes receivable			2,158			1,222	
Other current assets			14,715			13,938	
Total current assets			170,549			166,372	
Property and equipment, net of accumulated depreciation of $15,292 and $14,731, respectively			9,184			7,872	
Operating lease right of use assets			37,816			38,878	
Franchise agreements, net			68,337			72,196	
Other intangible assets, net			28,284			29,969	
Goodwill			176,008			175,835	
Deferred tax assets, net			49,162			48,855	
Income taxes receivable, net of current portion			1,980			1,980	
Other assets, net of current portion			17,068			15,435	
Total assets		$	558,388		$	557,392	
Liabilities and stockholders' equity							
Current liabilities:							
Accounts payable		$	5,782		$	2,108	
Accrued liabilities			67,208			68,571	
Income taxes payable			9,884			9,579	
Deferred revenue			24,689			25,282	
Current portion of debt			2,356			2,428	
Current portion of payable pursuant to tax receivable agreements			3,590			3,590	
Operating lease liabilities			5,826			5,687	
Total current liabilities			119,335			117,245	
Debt, net of current portion			220,676			221,137	
Payable pursuant to tax receivable agreements, net of current portion			29,974			29,974	
Deferred tax liabilities, net			496			490	
Deferred revenue, net of current portion			19,601			19,864	
Operating lease liabilities, net of current portion			48,794			50,279	
Other liabilities, net of current portion			5,411			5,722	
Total liabilities			444,287			444,711	
Commitments and contingencies							
Stockholders' equity:							
Class A common stock, par value $.0001 per share, 180,000,000 shares authorized; 18,719,248 and 18,390,691 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively			2			2	
Class B common stock, par value $.0001 per share, 1,000 shares authorized; 1 share issued and outstanding as of March 31, 2021 and December 31, 2020, respectively			—			—	
Additional paid-in capital			498,810			491,422	
Retained earnings			21,433			25,139	
Accumulated other comprehensive income, net of tax			653			612	
Total stockholders' equity attributable to RE/MAX Holdings, Inc.			520,898			517,175	
Non-controlling interest			(406,797)			(404,494)	
Total stockholders' equity			114,101			112,681	
Total liabilities and stockholders' equity		$	558,388		$	557,392	

See accompanying notes to unaudited condensed consolidated financial statements.

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RE/MAX HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except share and per share amounts)
(Unaudited)

							
		Three Months Ended March 31, 	
		2021		2020	
Revenue:							
Continuing franchise fees		$	25,374		$	24,143	
Annual dues			8,672			8,921	
Broker fees			11,953			9,444	
Marketing Funds fees			18,145			17,522	
Franchise sales and other revenue			8,151			10,242	
Total revenue			72,295			70,272	
Operating expenses:							
Selling, operating and administrative expenses			43,676			34,677	
Marketing Funds expenses			18,145			17,522	
Depreciation and amortization			6,937			6,310	
Total operating expenses			68,758			58,509	
Operating income			3,537			11,763	
Other expenses, net:							
Interest expense			(2,098)			(2,682)	
Interest income			163			269	
Foreign currency transaction gains (losses)			(20)			(270)	
Total other expenses, net			(1,955)			(2,683)	
Income before provision for income taxes			1,582			9,080	
Provision for income taxes			58			(3,790)	
Net income		$	1,640		$	5,290	
Less: net income attributable to non-controlling interest			548			2,659	
Net income attributable to RE/MAX Holdings, Inc.		$	1,092		$	2,631	
							
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock							
Basic		$	0.06		$	0.15	
Diluted		$	0.06		$	0.15	
Weighted average shares of Class A common stock outstanding							
Basic			18,496,532			17,974,264	
Diluted			18,866,727			18,033,631	
Cash dividends declared per share of Class A common stock		$	0.23		$	0.22	

See accompanying notes to unaudited condensed consolidated financial statements.

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RE/MAX HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)

							
		Three Months Ended March 31, 	
		2021		2020	
Net income		$	1,640		$	5,290	
Change in cumulative translation adjustment			79			(230)	
Other comprehensive income (loss), net of tax			79			(230)	
Comprehensive income			1,719			5,060	
Less: comprehensive income attributable to non-controlling interest			586			2,465	
Comprehensive income attributable to RE/MAX Holdings, Inc., net of tax		$	1,133		$	2,595	

See accompanying notes to unaudited condensed consolidated financial statements.

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RE/MAX HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)

																										
																		Accumulated other							
		Class A		Class B		Additional					comprehensive		Non-		Total	
		common stock		common stock		paid-in		Retained		income (loss),		controlling		stockholders'	
		Shares	    	Amount	    	Shares	    	Amount	    	capital	    	earnings	    	net of tax	    	interest	    	equity	
Balances, January 1, 2021		18,390,691		$	2		1		$	—		$	491,422		$	25,139		$	612		$	(404,494)		$	112,681	
Net income		—			—		—			—			—			1,092			—			548			1,640	
Distributions to non-controlling unitholders		—			—		—			—			—			—			—			(2,889)			(2,889)	
Equity-based compensation expense and dividend equivalents		459,330			—		—			—			12,679			(472)			—			—			12,207	
Dividends to Class A common stockholders		—			—		—			—			—			(4,326)			—			—			(4,326)	
Change in accumulated other comprehensive income		—			—		—			—			—			—			41			38			79	
Payroll taxes related to net settled restricted stock units		(130,773)			—		—			—			(5,291)			—			—			—			(5,291)	
Balances, March 31, 2021		18,719,248		$	2		1		$	—		$	498,810		$	21,433		$	653		$	(406,797)		$	114,101	

																										
																		Accumulated other							
		Class A		Class B		Additional					comprehensive		Non-		Total	
		common stock		common stock		paid-in		Retained		income (loss),		controlling		stockholders'	
		Shares	    	Amount	    	Shares	    	Amount	    	capital	    	earnings	    	net of tax	    	interest	    	equity	
Balances, January 1, 2020		17,838,233		$	2		1		$	—		$	466,945		$	30,525		$	414		$	(399,510)		$	98,376	
Net income		—			—		—			—			—			2,631			—			2,659			5,290	
Distributions to non-controlling unitholders		—			—		—			—			—			—			—			(2,777)			(2,777)	
Equity-based compensation expense and dividend equivalents		368,375			—		—			—			5,962			(289)			—			—			5,673	
Dividends to Class A common stockholders		—			—		—			—			—			(3,986)			—			—			(3,986)	
Change in accumulated other comprehensive income		—			—		—			—			—			—			(36)			(194)			(230)	
Payroll taxes related to net settled restricted stock units		(82,645)			—		—			—			(2,268)			—			—			—			(2,268)	
Balances, March 31, 2020		18,123,963		$	2		1		$	—		$	470,639		$	28,881		$	378		$	(399,822)		$	100,078	

See accompanying notes to unaudited condensed consolidated financial statements.
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RE/MAX HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

		Three Months Ended March 31, 	
		2021		2020	
Cash flows from operating activities:							
Net income		$	1,640		$	5,290	
Adjustments to reconcile net income to net cash provided by operating activities:							
Depreciation and amortization			6,937			6,310	
Bad debt expense			287			3,435	
Equity-based compensation expense			12,054			2,186	
Deferred income tax expense			(320)			2,241	
Fair value adjustments to contingent consideration			(280)			(505)	
Non-cash lease expense (benefit)			(284)			—	
Other, net			87			(504)	
Changes in operating assets and liabilities			711			(4,804)	
Net cash provided by operating activities			20,832			13,649	
Cash flows from investing activities:							
Purchases of property, equipment and capitalization of software			(4,381)			(1,965)	
Net cash used in investing activities			(4,381)			(1,965)	
Cash flows from financing activities:							
Payments on debt			(660)			(660)	
Distributions paid to non-controlling unitholders			(2,889)			(2,777)	
Dividends and dividend equivalents paid to Class A common stockholders			(4,798)			(4,275)	
Payments related to tax withholding for share-based compensation			(5,291)			(2,268)	
Net cash used in financing activities			(13,638)			(9,980)	
Effect of exchange rate changes on cash			92			(205)	
Net increase in cash, cash equivalents and restricted cash			2,905			1,499	
Cash, cash equivalents and restricted cash, beginning of period			121,227			103,601	
Cash, cash equivalents and restricted cash, end of period		$	124,132		$	105,100	
Supplemental disclosures of cash flow information:							
Cash paid for interest		$	1,970		$	2,556	
Net cash paid for income taxes		$	926		$	1,079	

See accompanying notes to unaudited condensed consolidated financial statements.

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1. Business and Organization
RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC (“RMCO”), are referred to hereinafter as the “Company.”
The Company is a franchisor in the real estate industry, franchising real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages within the United States (“U.S.”) under the Motto Mortgage brand (“Motto”). RE/MAX, founded in 1973, has nearly 140,000 agents operating in over 8,000 offices and a presence in more than 110 countries and territories. Motto, founded in 2016, is the first nationally franchised mortgage brokerage in the U.S. RE/MAX and Motto are 100% franchised—the Company does not own any of the brokerages that operate under these brands.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Condensed Consolidated Balance Sheet at December 31, 2020, which was derived from the audited consolidated financial statements at that date, and the unaudited interim condensed consolidated financial statements and notes thereto have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements are presented on a consolidated basis and include the accounts of Holdings and its consolidated subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal and recurring adjustments necessary to present fairly the Company’s financial position as of March 31, 2021 and the results of its operations and comprehensive income, cash flows and changes in its stockholders’ equity for the three months ended March 31, 2021 and 2020. Interim results may not be indicative of full-year performance.
These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report on Form 10-K”). Please refer to that document for a fuller discussion of all significant accounting policies.
Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Segment Reporting
The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”.
Revenue Recognition
The Company generates most of its revenue from contracts with customers. The Company’s major streams of revenue are:

	●	Continuing franchise fees, which are fixed contractual fees paid monthly by regional franchise owners and franchisees based on the number of RE/MAX agents and the number of Motto offices.	

	●	Annual dues, which are fees charged directly to RE/MAX agents.	

	●	Broker fees, which are fees on real estate commissions when a RE/MAX agent assists a consumer to buy or sell a home.	
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	●	Marketing Funds fees, which are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices.	

	●	Franchise sales and other revenue, which consist of fees from initial sales of RE/MAX and Motto franchises, renewals of RE/MAX franchises and master franchise fees, as well as technology and data services subscription revenue, loan processing revenue, preferred marketing arrangements, approved supplier programs and event-based revenue from training and other programs.	

Annual Dues
The activity in the Company’s deferred revenue for annual dues consists of the following (in thousands):
													
		Balance at
beginning of period		New billings		Revenue recognized (a)		Balance at end
of period	
Three Months Ended March 31, 2021		$	14,539		$	10,277		$	(8,672)		$	16,144	

(a)	Revenue recognized related to the beginning balance was $6.3 million for the three months ended March 31, 2021.	
Franchise Sales
The activity in the Company’s franchise sales deferred revenue accounts consists of the following (in thousands):
													
		Balance at
beginning of period		New billings		Revenue recognized (a)		Balance at end
of period	
Three Months Ended March 31, 2021		$	25,069		$	2,005		$	(2,349)		$	24,725	
(a)	Revenue recognized related to the beginning balance was $2.3 million for the three months ended March 31, 2021.	
Commissions Related to Franchise Sales
Commissions paid on franchise sales are recognized as an asset and amortized over the contract life of the franchise agreement. The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands):

		Balance at
beginning of period		Expense
recognized		Additions to contract
cost for new activity		Balance at end
of period	
Three Months Ended March 31, 2021		$	3,690		$	(421)		$	320		$	3,589	

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Disaggregated Revenue
In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, and by geographical area (in thousands):

	Three Months Ended March 31, 	
	2021		2020	
U.S. Company-Owned Regions	$	32,546		$	30,578	
U.S. Independent Regions		3,288			2,996	
Canada Company-Owned Regions		3,554			3,081	
Canada Independent Regions		2,205			2,039	
Global		2,641			2,548	
Fee revenue (a)		44,234			41,242	
Franchise sales and other revenue (b)		6,920			8,663	
Total Real Estate		51,154			49,905	
U.S.		16,182			15,651	
Canada		1,737			1,655	
Global		226			216	
Total Marketing Funds		18,145			17,522	
Mortgage (c)		2,323			1,458	
Other (c)		673			1,387	
Total	$	72,295		$	70,272	

(a)	Fee revenue includes Continuing franchise fees, Annual dues and Broker fees.	
(b)	Franchise sales and other revenue is derived primarily within the U.S.	
(c)	Revenue from Mortgage and Other are derived exclusively within the U.S.	
Transaction Price Allocated to the Remaining Performance Obligations
The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands):

		Remainder of 2021		2022		2023		2024		2025		2026		Thereafter		Total	
Annual dues		$	15,373		$	771		$	—		$	—		$	—		$	—		$	—		$	16,144	
Franchise sales			5,244			5,898			4,533			3,300			2,023			1,049			2,678			24,725	
Total		$	20,617		$	6,669		$	4,533		$	3,300		$	2,023		$	1,049		$	2,678		$	40,869	

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Cash, Cash Equivalents and Restricted Cash
All cash held by the Marketing Funds is contractually restricted. The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands):

		March 31, 2021		December 31, 2020	
Cash and cash equivalents		$	102,632		$	101,355	
Restricted cash			21,500			19,872	
Total cash, cash equivalents and restricted cash		$	124,132		$	121,227	

Services Provided to the Marketing Funds by Real Estate
Real Estate charges the Marketing Funds for various services it performs. These services primarily comprise (a) building and maintaining agent marketing technology, including customer relationship management tools, the www.remax.com website, agent, office and team websites, and mobile apps, (b) dedicated employees focused on marketing campaigns, and (c) various administrative services including customer support of technology, accounting and legal. Because these costs are ultimately paid by the Marketing Funds, they do not impact the net income of Holdings as the Marketing Funds have no reported net income.
Costs charged from Real Estate to the Marketing Funds are as follows (in thousands):

		Three Months Ended March 31, 	
		2021		2020	
Technology - operating		$	3,600		$	2,971	
Technology - capital			180			644	
Marketing staff and administrative services			1,118			1,228	
Total		$	4,898		$	4,843	

Leases
The Company leases corporate offices, a distribution center, billboards and certain equipment. As all franchisees are independently owned and operated, there are no leases recognized for any offices used by the Company’s franchisees. All the Company’s material leases are classified as operating leases.
The Company acts as the lessor for sublease agreements on its corporate headquarters, consisting solely of operating leases.
The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from any of its short-term leases. All leases with a term of 12 months or less at commencement, for which the Company is not reasonably certain to exercise available renewal options that would extend the lease term past 12 months, will be recognized on a straight-line basis over the lease term.‌
Recently Adopted Accounting Pronouncements
None.
New Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which contains temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The new guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020. The relief is temporary and only available until December 31, 2022, when the reference rate replacement activity is expected to have completed. The Company believes the amendments of ASU 2020-04 will not have a significant impact on the Company’s consolidated financial statements
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and related disclosures as the Company does not currently engage in interest rate hedging of its LIBOR based debt, nor does it believe it has any material contracts tied to LIBOR other than its Senior Secured Credit Agreement, as discussed in Note 8, Debt. An amendment to the Senior Secured Credit agreement will likely be required, but the Company does not expect any material adverse consequences from this transition.
3. Non-controlling Interest
Holdings is the sole managing member of RMCO and operates and controls all the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:

		March 31, 2021		December 31, 2020		
		Shares		Ownership %		Shares		Ownership %		
Non-controlling interest ownership of common units in RMCO		12,559,600		40.2	%	12,559,600		40.6	%	
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO)		18,719,248		59.8	%	18,390,691		59.4	%	
Total common units in RMCO		31,278,848		100.0	%	30,950,291		100.0	%	

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

	Three Months Ended March 31, 	
	2021		2020		
	RE/MAX
Holdings,
Inc.	    	Non-controlling
interest	    	Total	    	RE/MAX
Holdings,
Inc.	    	Non-controlling
interest	    	Total		
Weighted average ownership percentage of RMCO(a)		59.6	%		40.4	%		100	%		58.9	%		41.1	%		100.0	%	
Income before provision for income taxes(a)	$	942		$	640		$	1,582		$	5,552		$	3,528		$	9,080		
Provision for income taxes(b)(c)		150			(92)			58			(2,921)			(869)			(3,790)		
Net income	$	1,092		$	548		$	1,640		$	2,631		$	2,659		$	5,290		

(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 certain relatively insignificant items recorded at RE/MAX Holdings.	
(b)	The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the flow-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions.	
(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 and its subsidiaries. Otherwise, because RMCO is a flow-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):

	Three Months Ended March 31, 	
	2021		2020	
Tax and other distributions	$	—		$	14	
Dividend distributions		2,889			2,763	
Total distributions to non-controlling unitholders	$	2,889		$	2,777	

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

		Three Months Ended March 31, 	
		2021		2020	
Numerator							
Net income attributable to RE/MAX Holdings, Inc.		$	1,092		$	2,631	
Denominator for basic net income per share of Class A common stock							
Weighted average shares of Class A common stock outstanding			18,496,532			17,974,264	
Denominator for diluted net income per share of Class A common stock							
Weighted average shares of Class A common stock outstanding			18,496,532			17,974,264	
Add dilutive effect of the following:							
Restricted stock			370,195			59,367	
Weighted average shares of Class A common stock outstanding, diluted			18,866,727			18,033,631	
Earnings per share of Class A common stock							
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, basic		$	0.06		$	0.15	
Net income attributable to RE/MAX Holdings, Inc. per share of Class A common stock, diluted		$	0.06		$	0.15	

Outstanding Class B common stock does not share in the earnings of Holdings and is therefore not a participating security. Accordingly, basic and diluted net income per share of Class B common stock has not been presented.
Dividends
Dividends declared and paid during each quarter ended per share on all outstanding shares of Class A common stock were as follows (in thousands, except per share information):

		Three Months Ended March 31, 	
		2021		2020	
Quarter end declared	    	Date paid	    	Per share	    	Amount paid to Class A
stockholders	    	Amount paid to Non-controlling
unitholders	    	Date paid	    	Per share	    	Amount paid to Class A
stockholders	    	Amount paid to Non-controlling
unitholders	
March 31		March 17, 2021		$	0.23		$	4,326		$	2,889		March 18, 2020		$	0.22		$	3,986		$	2,763	

On May 5, 2021, the Company’s Board of Directors declared a quarterly dividend of $0.23 per share on all outstanding shares of Class A common stock, which is payable on June 2, 2021 to stockholders of record at the close of business on May 19, 2021.
5. Acquisitions
Gadberry & wemlo
On September 10, 2020, the Company acquired The Gadberry Group, LLC (“Gadberry”) for $4.6 million in cash, net of cash acquired, and $5.5 million in Class A common stock, plus approximately $9.9 million of equity-based compensation, which will be accounted for as compensation expense in the future over two to three years (see Note 11, Equity-Based Compensation for additional information). In addition, the Company recorded a contingent consideration liability in connection with the purchase of Gadberry, which had an acquisition date fair value of $0.9 million, measured at the present value of the probability weighted consideration expected to be transferred. Gadberry is a location intelligence data company whose products have been instrumental in the success of the Company’s consumer website, www.remax.com. Founded in 2000, Gadberry specializes in building products that help clients solve geospatial challenges through location data. Gadberry plans to expand its non-RE/MAX clients while maintaining and enhancing its contributions to the RE/MAX technology offering.
On August 25, 2020, the Company acquired Wemlo, Inc. (“wemlo”) for $6.1 million in cash, net of cash acquired, and $3.3 million in Class A common stock, plus approximately $6.7 million of equity-based compensation, which will be accounted for as compensation expense in the future over three years (see Note 11, Equity-Based Compensation for additional
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information). Wemlo is a fintech company that has developed its cloud service for mortgage brokers, combining third-party loan processing services with an all-in-one digital platform.
The total purchase price for both of the aforementioned acquisitions was allocated to the assets and liabilities acquired based on their preliminary estimated fair values. The Company recorded $14.4 million in goodwill, virtually all of which is deductible for tax purposes, and $6.3 million in other intangibles as a result of these acquisitions.
6. Intangible Assets and Goodwill
The following table provides the components of the Company’s intangible assets (in thousands, except weighted average amortization period in years):

		Weighted	    			    			    			    			    			    			
		Average		As of March 31, 2021		As of December 31, 2020	
		Amortization		Initial		Accumulated		Net		Initial		Accumulated		Net	
		Period		Cost		Amortization		Balance		Cost		Amortization		Balance	
Franchise agreements		12.6		$	180,867		$	(112,530)		$	68,337		$	180,867		$	(108,671)		$	72,196	
Other intangible assets:																					
Software (a)		4.5		$	45,876		$	(21,519)		$	24,357		$	44,389		$	(18,926)		$	25,463	
Trademarks		8.3			2,325			(1,341)			984			2,325			(1,274)			1,051	
Non-compete agreements		5.1			3,920			(3,110)			810			3,920			(2,814)			1,106	
Training materials		5.0			2,400			(1,240)			1,160			2,400			(1,120)			1,280	
Other		5.3			1,670			(697)			973			1,670			(601)			1,069	
Total other intangible assets		4.7		$	56,191		$	(27,907)		$	28,284		$	54,704		$	(24,735)		$	29,969	

(a)	As of March 31, 2021 and December 31, 2020, capitalized software development costs of $1.6 million and $1.4 million, respectively, were related to technology projects not yet complete and ready for their intended use and thus were not subject to amortization.	
Amortization expense was $6.4 million and $5.9 million for the three months ended March 31, 2021 and 2020, respectively.
The estimated future amortization expense related to intangible assets includes the estimated amortization expense associated with the Company’s intangible assets assumed with the Company’s acquisitions (in thousands):

As of March 31, 2021:			
Remainder of 2021	$	19,238	
2022		23,444	
2023		17,512	
2024		14,513	
2025		10,467	
Thereafter		11,447	
	$	96,621	

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

	Real Estate		Mortgage		Total	
Balance, January 1, 2021		157,202			18,633			175,835	
Purchase price adjustments		133			—			133	
Effect of changes in foreign currency exchange rates		40			—			40	
Balance, March 31, 2021	$	157,375		$	18,633		$	176,008	

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7. Accrued Liabilities
Accrued liabilities consist of the following (in thousands):

		March 31, 2021		December 31, 2020	
Marketing Funds (a)		$	50,675		$	48,452	
Accrued payroll and related employee costs			7,101			10,692	
Accrued taxes			2,019			2,491	
Accrued professional fees			2,545			1,806	
Other			4,868			5,130	
		$	67,208		$	68,571	

(a)	Consists primarily of liabilities recognized to reflect the contractual restriction that all funds collected in the Marketing Funds must be spent for designated purposes. See Note 2, Summary of Significant Accounting Policies for additional information.	

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

		March 31, 2021		December 31, 2020	
Senior Secured Credit Facility		$	224,425		$	225,013	
Other long-term financing			6			78	
Less unamortized debt issuance costs			(809)			(882)	
Less unamortized debt discount costs			(590)			(644)	
Less current portion			(2,356)			(2,428)	
		$	220,676		$	221,137	

Maturities of debt are as follows (in thousands):

As of March 31, 2021				
Remainder of 2021		$	1,768	
2022			2,350	
2023			220,313	
		$	224,431	

Senior Secured Credit Facility
The Senior Secured Credit Facility consists of a $235.0 million term loan facility which matures on December 15, 2023 and a $10.0 million revolving loan facility which must be repaid on December 15, 2021. As of March 31, 2021, the Company had no revolving loans outstanding under its Senior Secured Credit Facility and the interest rate on the term loan facility was 3.5%.
 
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9. Fair Value Measurements
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which is described in detail in the 2020 Annual Report on Form 10-K.
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands):

		As of March 31, 2021		As of December 31, 2020	
		Fair Value	    	Level 1	    	Level 2	    	Level 3		Fair Value	    	Level 1	    	Level 2	    	Level 3	
Liabilities																									
Motto contingent consideration		$	4,700		$	—		$	—		$	4,700		$	4,750		$	—		$	—		$	4,750	
Gadberry contingent consideration			1,360			—			—			1,360			1,590			—			—			1,590	
Contingent consideration (a)		$	6,060		$	—		$	—		$	6,060		$	6,340		$	—		$	—		$	6,340	

(a)	Recorded as a component of “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets.	

The Company is required to pay additional purchase consideration totaling 8% of gross receipts collected by Motto each year (the “Revenue Share Year”) through September 30, 2026, with no limitation as to the maximum payout. The annual payment is required to be made within 120 days of the end of each Revenue Share Year. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay. Increases or decreases in the fair value of the contingent purchase consideration can result from changes in discount rates as well as the timing and amount of forecasted revenues. The forecasted revenue growth assumption that is most sensitive is the assumed franchise sales count for which the forecast assumes between 70 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 $0.2 million. A 1% change to the discount rate applied to the forecast changes the liability by approximately $0.1 million. As of March 31, 2021, contingent consideration also includes an amount recognized in connection with the acquisition of Gadberry (see Note 6, Acquisitions, for more information on this acquisition).The Company measures these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Condensed Consolidated Statements of Income.
The table below presents a reconciliation of the contingent consideration (in thousands):

		Total	
Balance at January 1, 2021		$	6,340	
Fair value adjustments			(280)	
Cash payments			—	
Balance at March 31, 2021		$	6,060	

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

		March 31, 2021		December 31, 2020	
		Carrying
Amount	    	Fair Value
Level 2	    	Carrying
Amount	    	Fair Value
Level 2	
Senior Secured Credit Facility		$	223,026		$	223,303		$	223,487		$	223,887	

10. Income Taxes
The “Provision for income taxes” in the accompanying Condensed Consolidated Statements of Income is based on an estimate of the Company’s annualized effective income tax rate.
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11. Equity-Based Compensation
Employee equity-based compensation expense under the RE/MAX Holdings, Inc. 2013 Omnibus Incentive Plan (the “Incentive Plan”), net of the amount capitalized in internally developed software, is as follows (in thousands):

		Three Months Ended March 31, 	
		2021		2020	
Expense from time-based awards (a)(b)		$	9,821		$	2,137	
Expense from performance-based awards (a)(c)			796			81	
Expense from bonus to be settled in shares (d)			1,437			—	
Equity-based compensation capitalized			—			(32)	
Equity-based compensation expense		$	12,054		$	2,186	

	(a)	Includes awards granted to booj, First, wemlo and Gadberry employees and former owners at the time of acquisition.	
	(b)	During the three months ended March 31, 2021, the Company recognized $5.5 million of expense as a result of the acceleration of significant grants that were issued to two employees of an acquired company who departed during the period.	
	(c)	Expense recognized for performance-based awards is re-assessed each quarter based on expectations of achievement against the performance conditions.	
	(d)	A portion of the annual corporate bonus earned is to be settled in shares. These amounts are recognized as “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets and are not included in “Additional paid-in capital” until the shares are issued.	
Time-based Restricted Stock
The following table summarizes equity-based compensation activity related to time-based restricted stock units and restricted stock awards:

		Shares		Weighted average
grant date fair
value per share	
Balance, January 1, 2021		1,018,008		$	36.74	
Granted		240,101		$	41.72	
Shares vested (including tax withholding) (a)		(410,418)		$	38.42	
Forfeited		(13,347)		$	37.88	
Balance, March 31, 2021		834,344		$	37.33	

	(a)	Pursuant to the terms of the Incentive Plan, shares withheld by the Company for the payment of the employee's tax withholding related to shares vesting are added back to the pool of shares available for future awards.	
As of March 31, 2021, there was $24.9 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.9 years.
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Performance-based Restricted Stock
As discussed in more detail in the Company’s Annual Report on Form 10-K, the Company has historically issued performance-based restricted stock awards (PSUs) that contained revenue performance targets and relative total shareholder return (rTSR) targets, both measured over a 3-year performance period. In 2021, the Company changed the structure of its PSUs by issuing awards with only a revenue target and eliminated the rTSR component. Additionally, the revenue target will be measured over three distinct 1-year performance periods, with the target determined near the beginning of each performance period. As a result, the target for 2021 has been determined but will be determined subsequently for 2022 and 2023. These awards cliff-vest at the end of a 3-year period, although the amount of shares that may be earned is fixed after each 1-year performance period ends and performance against target for that period is measured. As with prior revenue performance awards, the Company’s expense will be adjusted based on the estimated achievement of revenue versus each target. Because the performance targets for the 1-year periods in 2022 and 2023 have not yet been determined, they do not yet have a grant date under GAAP and are therefore excluded from the table below.
The following table summarizes equity-based compensation activity related to performance-based restricted stock units:

		Shares		Weighted average
grant date fair
value per share	
Balance, January 1, 2021		281,735		$	32.34	
Granted (a)		55,229		$	41.72	
Forfeited		(2,573)		$	28.29	
Balance, March 31, 2021		334,391		$	33.92	

(a)	Represents the total participant target award.	
As of March 31, 2021, there was $5.8 million of total unrecognized expense. This compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.9 years.
12. Commitments and Contingencies
A number of putative class action complaints are pending against the National Association of Realtors (“NAR”), Realogy Holdings Corp., HomeServices of America, Inc., RE/MAX, LLC and Keller Williams Realty, Inc. The first was filed on March 6, 2019, by plaintiff Christopher Moehrl in the United States District Court for the Northern District of Illinois. The second was filed in the same court on April 15, 2019, by plaintiff Sawbill Strategic, Inc. These two actions have now been consolidated (the “Moehrl Action”). Similar actions have been filed in federal courts: a) by Joshua Sitzer and other plaintiffs in the Western District of Missouri (the “Sitzer Action”); b) by Mark Rubenstein and Jeffery Nolan in the District of Connecticut (the “Rubenstein Action”); c) by plaintiffs Gary Bauman, Mary Jane Bauman, and Jennifer Nosalek in the District of Massachusetts (the “Bauman Action”); d) by plaintiff Judah Leeder in the Northern District of Illinois (the “Leeder Action”) and e) by plaintiff Alfio Conti in the Northern District of California (the “Conti Action”). The complaints make substantially similar allegations and seek substantially similar relief. For convenience, all of these lawsuits are collectively referred to as the “Moehrl-related suits.” In the Moehrl Action, the plaintiffs allege that a NAR rule requires brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property, resulting in inflated costs to sellers in violation of federal antitrust law. They further allege that certain defendants use their agreements with franchisees to require adherence to the NAR rule in violation of federal antitrust law. Amended complaints added allegations regarding buyer steering and non-disclosure of buyer-broker compensation to the buyer. While similar to the Moehrl Action, various other lawsuits: allege violations of the Missouri Merchandising Practices Act (the Sitzer Action); include a multiple listing service (MLS) defendant (the Bauman Action); allege state antitrust violations (the Sitzer Action, Bauman Action, and Conti Action); allege harm to home buyers rather than sellers (the Rubenstein Action, Leeder Action, and Conti Action); allege unjust enrichment (the Leeder Action and Conti Action) or unfair competition (the Conti Action); and/or allege violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) rather than antitrust law (the Rubenstein Action). Among other requested relief, plaintiffs seek damages against the defendants and injunctive relief. The Company intends to vigorously defend against all claims. The Company may become involved in additional litigation or other legal proceedings concerning the same or similar claims. We are unable to predict whether resolution of these matters would have a material effect on our financial position or results of operations.
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13. Segment Information

The Company operates under the following four operating segments: Real Estate, Mortgage, Marketing Funds and booj. Due to quantitative insignificance, the booj operating segment does not meet the criteria of a reportable segment and is included in “Other”. Mortgage does not meet the quantitative significance test; however, management has chosen to report results for the segment as it believes it will be a key driver of future success for Holdings. Management evaluates the operating results of its segments based upon revenue and adjusted earnings before interest, the provision for income taxes, depreciation and amortization and other non-cash and non-recurring cash charges or other items (“Adjusted EBITDA”). The Company’s presentation of Adjusted EBITDA may not be comparable to similar measures used by other companies. Except for the adjustments identified below in arriving at Adjusted EBITDA, the accounting policies of the reportable segments are the same as those described in the Company’s 2020 Annual Report on Form 10-K.

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

		Three Months Ended March 31, 	
		2021		2020	
Continuing franchise fees		$	23,609		$	22,877	
Annual dues			8,672			8,921	
Broker fees			11,953			9,444	
Franchise sales and other revenue			6,920			8,663	
Total Real Estate			51,154			49,905	
Continuing franchise fees			1,765			1,266	
Franchise sales and other revenue			558			192	
Total Mortgage			2,323			1,458	
Marketing Funds fees			18,145			17,522	
Other			673			1,387	
Total revenue		$	72,295		$	70,272	
							
The following table presents a reconciliation of Adjusted EBITDA by segment to income before provision for income taxes (in thousands):

		Three Months Ended March 31, 	
		2021		2020	
Adjusted EBITDA: Real Estate		$	24,420		$	20,731	
Adjusted EBITDA: Mortgage			(1,150)			(578)	
Adjusted EBITDA: Other			(110)			(614)	
Adjusted EBITDA: Consolidated			23,160			19,539	
Gain (loss) on sale or disposition of assets, net			11			11	
Equity-based compensation expense			(12,054)			(2,186)	
Acquisition-related expense (a)			(943)			(566)	
Gain on reduction in tax receivable agreement liability			—			500	
Fair value adjustments to contingent consideration (b)			280			505	
Interest income			163			269	
Interest expense			(2,098)			(2,682)	
Depreciation and amortization			(6,937)			(6,310)	
Income before provision for income taxes		$	1,582		$	9,080	
							
(a)	Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.	
(b)	Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 9, Fair Value Measurements for additional information.	

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Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements (“financial statements”) and accompanying notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and accompanying notes included in our most recent Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report on Form 10-K”).
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” “anticipate,” “may,” “will,” “would” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. Forward-looking statements include statements related to: agent count; franchise sales; the impact of the global coronavirus (“COVID-19”) pandemic on our results of operations, financial condition, liquidity and business, including agent count, revenues, expenses, operations, goodwill, income taxes and allowance for doubtful accounts; support that we offered to our franchisees, its effectiveness, and the implication of this support (or future support) to our revenue; our business model, revenue streams, cost structure, balance sheet, and financial flexibility; management of expenses and capital expenditures in response to the impacts of the COVID-19 pandemic, including the amounts and timing of anticipated reductions; revenue; operating expenses; financial outlook; our plans regarding dividends; non-GAAP financial measures; housing and mortgage market condition and trends; economic and demographic trends; competition; the anticipated benefits our technology initiatives; our anticipated sources and uses of liquidity including for potential acquisitions; future litigation expenses relating to the Moehrl-related suits; our strategic and operating plans and business models including our plans to re-invest in our business; and the expected impact of acquisitions and when we expect acquisitions to become accretive to earnings.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily accurately indicate the times at which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materiality from those expressed in or suggested by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our 2020 Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not intend, and we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
The results of operations discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are those of RE/MAX Holdings, Inc. (“Holdings”) and its consolidated subsidiaries, including RMCO, LLC and its consolidated subsidiaries (“RMCO”), collectively, the “Company,” “we,” “our” or “us.”
Business Overview
We are one of the world’s leading franchisors in the real estate industry. We franchise real estate brokerages globally under the RE/MAX brand (“RE/MAX”) and mortgage brokerages in the U.S. under the Motto Mortgage brand (“Motto”). We also sell ancillary products and services, primarily technology, to our franchise networks and, in certain instances, we sell those offerings outside our franchise networks. We organize our business based on the services we provide in Real Estate, Mortgage and our collective franchise marketing operations, known as the Marketing Funds. RE/MAX and Motto are 100% franchised—we do not own any of the brokerages that operate under these brands. We focus on enabling our networks’ success by providing powerful technology, quality education and training, and valuable marketing to build the strength of the RE/MAX and Motto brands. We support our franchisees in growing their brokerages, although, they fund the cost of developing their brokerages. As a result, we maintain a low fixed-cost structure which, combined with our recurring fee-based models, enables us to capitalize on the economic benefits of the franchising model, yielding high margins and significant cash flow.
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Financial and Operational Highlights – Three Months Ended March 31, 2021
(Compared to the three months ended March 31, 2020, unless otherwise noted)

	●	Total agent count grew by 6.4% to 140,214 agents.	
	●	U.S. and Canada combined agent count increased 0.7% to 84,771 agents.	
	●	Total open Motto Mortgage offices increased 27.1% to 150 offices.	
	●	Revenue of $72.3 million, an increase of 2.9% from the prior year.	
	●	Net income attributable to RE/MAX Holdings, Inc. of $1.1 million.	
	●	Adjusted EBITDA grew 18.5% to $23.2 million compared to $19.5 million in the prior year.	
	●	Adjusted EBITDA margin grew to 32.0% from 27.8% in the prior year.	
	●	Cash flow from operations of $20.8 million, an increase of 52.6% compared to the prior year.	
A robust housing market and record Motto Mortgage growth helped drive our performance during the three months ended March 31, 2021. During this period, RE/MAX agent count growth experienced its largest year-over-year increase in over a decade, adding more than 8,000 new agents, led by healthy agent growth in Canada and double-digit agent growth globally. Motto continued its record pace of franchise sales, selling the most franchises in its history for the trailing twelve-month period ended March 31, 2021. Motto now has 150 open offices in nearly 40 states.
We continue to increase and enhance our value proposition for both of our franchise networks. For example, at the recent RE/MAX agent conference, the Company introduced an opportunity for virtually all U.S. RE/MAX affiliates to access health benefits through a marketing relationship with a third party. The Company also introduced new tools, technology, and educational resources for the exclusive benefit of the RE/MAX network.
Within our mortgage business, we continue to ramp up our wemlo acquisition, offering affordable, dependable loan processing services to more of our Motto franchises each week. The housing market is experiencing above-average activity, so competition for talent within the industry is intense. Our ability to hire as many quality loan processors as quickly as we would like is our primary challenge alongside onboarding Motto franchisees.
Selected Operating and Financial Highlights
The following tables summarize several key performance indicators and our results of operations.
										
		As of March 31, 		
		2021		2020		#		%		
Total agent count growth		6.4	%	5.0	%					
										
Agent Count:										
U.S.		62,261		62,668		(407)		(0.6)	%	
Canada		22,510		21,523		987		4.6	%	
Subtotal		84,771		84,191		580		0.7	%	
Outside U.S. and Canada		55,443		47,625		7,818		16.4	%	
Total		140,214		131,816		8,398		6.4	%	
										
Motto open offices (2)		150		118		32		27.1	%	
										
		Three Months Ended March 31, 		
		2021		2020		#		%		
RE/MAX franchise sales (1)		166		188		(22)		(11.7)	%	
Motto franchise sales (2)		9		8		1		12.5	%	

(1)	Includes franchise sales in the U.S., Canada and global regions.	
(2)	Excludes virtual offices and branchises.	

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	Three Months Ended March 31, 		
	2021		2020		
Total revenue	$	72,295		$	70,272		
Total selling, operating and administrative expenses	$	43,676		$	34,677		
Operating income	$	3,537		$	11,763		
Net income	$	1,640		$	5,290		
Net income attributable to RE/MAX Holdings, Inc.	$	1,092		$	2,631		
Adjusted EBITDA (1)	$	23,160		$	19,539		
Adjusted EBITDA margin (1)		32.0	%  		27.8	%  	

(1)	See “—Non-GAAP Financial Measures” for further discussion of Adjusted EBITDA and Adjusted EBITDA margin and a reconciliation of the differences between Adjusted EBITDA and net income, which is the most comparable U.S. generally accepted accounting principles (“U.S. GAAP”) measure for operating performance. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue.	
Results of Operations
Comparison of the Three Months Ended March 31, 2021 and 2020
Revenue
A summary of the components of our revenue is as follows (in thousands except percentages):

		Three Months Ended		Change		
		March 31, 		Favorable/(Unfavorable)		
		2021		2020		$		%		
Revenue:													
Continuing franchise fees		$	25,374		$	24,143		$	1,231		5.1	%	
Annual dues			8,672			8,921			(249)		(2.8)	%	
Broker fees			11,953			9,444			2,509		26.6	%	
Marketing Funds fees			18,145			17,522			623		3.6	%	
Franchise sales and other revenue			8,151			10,242			(2,091)		(20.4)	%	
Total revenue		$	72,295		$	70,272		$	2,023		2.9	%	

Consolidated revenue increased primarily due to an increase in Broker fees, incremental revenue from acquisitions, and growth of Motto, partially offset by lower event-based revenue and continued attrition of booj’s legacy customer base.‌
Continuing Franchise Fees
Revenue from Continuing franchise fees increased primarily due to fewer agent recruiting initiatives, which included a waiver of Continuing franchise fees, in the current year as compared to prior year and Motto expansion, partially offset by declines in agent count in Company-Owned Regions. Beginning April 1, 2021, there will be an average price increase of 3.8% in continuing franchise fees in the majority of our U.S. Company-Owned regions.
Broker Fees
Revenue from Broker fees increased primarily due to higher total transactions per agent and rising home prices.
Marketing Funds fees
Revenue from the Marketing Funds fees increased primarily due to fewer agent recruiting initiatives, which included a waiver of Marketing Funds fees, in the current year as compared to prior year, offset by declines in agent count in Company-Owned Regions.
Franchise Sales and Other Revenue
Franchise sales and other revenue decreased primarily due to lower event-based revenue due to our annual agent conference having limited in-person attendance due to COVID-19 restrictions and continued attrition of booj’s legacy customer base, partially offset by incremental revenue from acquisitions. The attrition of the booj legacy customer base negatively impacted the three months ended March 31, 2021 by $0.3 million and is expected to negatively impact the full year 2021 by approximately $2.0 million to $2.5 million, as compared to the same period in the prior year.
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Operating Expenses
A summary of the components of our operating expenses is as follows (in thousands, except percentages):

		Three Months Ended		Change		
		March 31, 		Favorable/(Unfavorable)		
		2021		2020		$		%		
Operating expenses:													
Selling, operating and administrative expenses		$	43,676		$	34,677		$	(8,999)		(26.0)	%	
Marketing Funds expenses			18,145			17,522			(623)		(3.6)	%	
Depreciation and amortization			6,937			6,310			(627)		(9.9)	%	
Total operating expenses		$	68,758		$	58,509		$	(10,249)		(17.5)	%	
Percent of revenue			95.1	%		83.3	%						
Selling, operating and administrative expenses consists of personnel costs, professional fee expenses, lease costs and other expenses. Other expenses within Selling, operating and administrative expenses include certain marketing and production costs that are not paid by the Marketing Funds, including travel and entertainment costs, and costs associated with our annual conventions in the U.S. and other events and technology services.

		Three Months Ended		Change		
		March 31, 		Favorable/(Unfavorable)		
		2021		2020		$		%		
Selling, operating and administrative expenses:													
Personnel		$	28,333		$	16,260		$	(12,073)		(74.2)	%	
Professional fees			4,254			3,128			(1,126)		(36.0)	%	
Lease costs			2,083			2,238			155		6.9	%	
Other			9,006			13,051			4,045		31.0	%	
Total selling, operating and administrative expenses		$	43,676		$	34,677		$	(8,999)		(26.0)	%	
Percent of revenue			60.4	%		49.3	%						

Total Selling, operating and administrative expenses increased as follows:

	●	Personnel costs increased primarily due to higher equity-based compensation expense, primarily from recent acquisitions and including $5.5 million driven by the acceleration of certain awards, see Note 11, Equity-Based Compensation). Higher bonus expense due to the elimination of the corporate bonus in the prior year and increased headcount largely from acquisitions also contributed to the increase.	
	●	Professional fees increased primarily due to an increase in acquisition related expenses and legal fees related to the Moehrl-related suits (See section titled “Legal Proceedings,” set forth in Part II, Item 1 of this Quarterly Report on Form 10-Q). We expect to incur an additional $2.8 million to $3.3 million in legal expenses during the remainder of this year because of this ongoing litigation.	
	●	Other selling, operating and administrative expenses decreased primarily due to lower travel and events expenses, including lower expenses for our annual agent conference largely offsetting the reductions in revenue noted above, and lower bad debt expense driven by improved collections of past-due receivables.	
Marketing Funds Expenses
We recognize an equal and offsetting amount of expenses to revenue such that there is no impact to our overall profitability.
Depreciation and Amortization
Depreciation and amortization expense increased primarily due to placing internally developed software into service and new amortization related to our acquisitions.
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Other Expenses, Net
A summary of the components of our Other expenses, net is as follows (in thousands, except percentages):  

		Three Months Ended		Change		
		March 31, 		Favorable/(Unfavorable)		
		2021		2020		$		%		
Other expenses, net:													
Interest expense		$	(2,098)		$	(2,682)		$	584		21.8	%	
Interest income			163			269			(106)		(39.4)	%	
Foreign currency transaction gains (losses)			(20)			(270)			250		92.6	%	
Total other expenses, net		$	(1,955)		$	(2,683)		$	728		27.1	%	
Percent of revenue			2.7	%		3.8	%						

Other expenses, net decreased primarily due to a decrease in interest expense as a result of decreasing interest rates on
our Senior Secured Credit Facility (as defined in Note 8, Debt), partially offset by lower interest earnings on our cash balances from lower interest rates.‌
Provision for Income Taxes
Our effective income tax rate decreased to (3.7)% from 41.7% for the three months ended March 31, 2021 and 2020, respectively, primarily driven by nonrecurring taxes arising from (a) the conversion of First from a C Corporation to a flow-through entity in 2020 and (b) various adjustments in 2021 that have a disproportionate impact on the tax rate due to having a low pre-tax net income. Our effective income tax rate depends on many factors, including a rate benefit attributable to the fact that the portion of RMCO’s earnings attributable to the non-controlling interests are not subject to corporate-level taxes because RMCO is classified as a partnership for U.S. federal income tax purposes and therefore is treated as a “flow-through entity,” as well as annual changes in state and foreign income tax rates. See Note 3, Non-controlling Interest to the accompanying unaudited condensed consolidated financial statements for further details on the allocation of income taxes between Holdings and the non-controlling interest and see Note 10, Income Taxes for additional information.
Adjusted EBITDA
See “—Non-GAAP Financial Measures” for our definition of Adjusted EBITDA and for further discussion of our presentation of Adjusted EBITDA as well as a reconciliation of Adjusted EBITDA to net income, which is the most comparable GAAP measure for operating performance.
Adjusted EBITDA was $23.2 million for the three months ended March 31, 2021, an increase of $3.6 million from the comparable prior year period. Adjusted EBITDA increased primarily due to increased Broker fees revenue and lower bad debt expense from improved collections, partially offset by higher bonus expense due to the elimination of the corporate bonus in the prior year and higher legal fees.
Non-GAAP Financial Measures
The Securities and Exchange Commission (“SEC”) has adopted rules to regulate the use in filings with the SEC and in public disclosures of financial measures that are not in accordance with U.S. GAAP, such as Adjusted EBITDA and the ratios related thereto. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.
We define Adjusted EBITDA as EBITDA (consolidated net income before depreciation and amortization, interest expense, interest income and the provision for income taxes, each of which is presented in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q), adjusted for the impact of the following items that are either non-cash or that we do not consider representative of our ongoing operating performance: gain or loss on sale or disposition of assets, impairment charges, equity-based compensation expense, acquisition-related expense, gain or losses from changes in the tax receivable agreement liability, expense or income related to changes in the estimated fair value measurement of contingent consideration and other non-recurring items.
As Adjusted EBITDA omits certain non-cash items and other non-recurring cash charges or other items, we believe that it is less susceptible to variances that affect our operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. We present Adjusted EBITDA, and the related Adjusted EBITDA
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margin, because we believe they are useful as supplemental measures in evaluating the performance of our operating businesses and provides greater transparency into our results of operations. Our management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of our business.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider these measures either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Some of these limitations are:

	●	these measures do not reflect changes in, or cash requirements for, our working capital needs;	
	●	these measures do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt;	
	●	these measures do not reflect our income tax expense or the cash requirements to pay our taxes;	
	●	these measures do not reflect the cash requirements to pay dividends to stockholders of our Class A common stock and tax and other cash distributions to our non-controlling unitholders;	
	●	these measures do not reflect the cash requirements pursuant to the Tax Receivable Agreements (“TRAs”);	
	●	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and these measures do not reflect any cash requirements for such replacements;	
	●	although equity-based compensation is a non-cash charge, the issuance of equity-based awards may have a dilutive impact on earnings per share; and	
	●	other companies may calculate these measures differently, so similarly named measures may not be comparable.	
A reconciliation of Adjusted EBITDA to net income is set forth in the following table (in thousands):

		Three Months Ended March 31, 	
		2021		2020	
Net income		$	1,640		$	5,290	
Depreciation and amortization			6,937			6,310	
Interest expense			2,098			2,682	
Interest income			(163)			(269)	
Provision for income taxes			(58)			3,790	
EBITDA			10,454			17,803	
(Gain) loss on sale or disposition of assets			(11)			(11)	
Equity-based compensation expense			12,054			2,186	
Acquisition-related expense (1)			943			566	
Gain on reduction in tax receivable agreement liability			—			(500)	
Fair value adjustments to contingent consideration (2)			(280)			(505)	
Adjusted EBITDA		$	23,160		$	19,539	

(1)	Acquisition-related expense includes personnel, legal, accounting, advisory and consulting fees incurred in connection with acquisition activities and integration of acquired companies.	
(2)	Fair value adjustments to contingent consideration include amounts recognized for changes in the estimated fair value of the contingent consideration liabilities. See Note 9, Fair Value Measurements to the accompanying unaudited condensed consolidated financial statements for additional information.	
Liquidity and Capital Resources
Overview of Factors Affecting Our Liquidity
Our liquidity position is affected by the growth of our agent base and conditions in the real estate market. In this regard, our short-term liquidity position from time to time has been, and will continue to be, affected by a number of factors including agents in the RE/MAX network, particularly in Company-Owned Regions. Our cash flows are primarily related to the timing of:
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	(i)	cash receipt of revenues;	
	(ii)	payment of selling, operating and administrative expenses;	
	(iii)	investments in technology and Motto;	
	(iv)	cash consideration for acquisitions and acquisition-related expenses;	
	(v)	principal payments and related interest payments on our Senior Secured Credit Facility;	
	(vi)	dividend payments to stockholders of our Class A common stock;	
	(vii)	distributions and other payments to non-controlling unitholders pursuant to the terms of RMCO’s limited liability company operating agreement (“the RMCO, LLC Agreement”);	
	(viii)	corporate tax payments paid by the Company; and	
	(ix)	payments to the TRA parties pursuant to the TRAs.	
We have satisfied these needs primarily through our existing cash balances, cash generated by our operations and funds available under our Senior Secured Credit Facility. We may also utilize our Senior Secured Credit Facility, and we may pursue other sources of capital that may include other forms of external financing, such as additional financing in the public capital markets, in order to increase our cash position and preserve financial flexibility as needs arise.
Financing Resources
RMCO and RE/MAX, LLC, a wholly owned subsidiary of RMCO, have a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lenders party thereto (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility provided to RE/MAX, LLC consists of $235.0 million in term loans and a $10.0 million revolving facility. Borrowings under the term loans and revolving loans accrue interest, at London Interbank Offered Rate (“LIBOR”), provided LIBOR shall be no less than 0.75% plus an applicable margin of 2.75%. LIBOR was originally set to cease being provided as a reference rate at the end of 2021, with alternate rates in the U.S. being developed such as the Secured Overnight Financing Rate (“SOFR”). Such cessation would likely require amendments to our Senior Secured Credit Facility. However, in late 2020, the timeline for the cessation of term-based LIBOR (upon which our outstanding borrowings are based) was extended until June 2023. The Company continues to evaluate when it might modify its Senior Secured Credit Facility to allow for a new reference rate.

As of March 31, 2021, we had $223.0 million of term loans outstanding, net of an unamortized discount and issuance costs, and no revolving loans outstanding under our Senior Secured Credit Facility. As of March 31, 2021, the interest rate on the term loan facility was 3.5%. See our 2020 Annual Report on Form 10-K for more information.
Sources and Uses of Cash
As of March 31, 2021 and December 31, 2020, we had $102.6 million and $101.4 million, respectively, of cash and cash equivalents, of which approximately $5.2 million and $4.2 million, respectively, were denominated in foreign currencies.
The following table summarizes our cash flows from operating, investing, and financing activities (in thousands):

		Three Months Ended March 31, 	
		2021		2020	
Cash provided by (used in):							
Operating activities		$	20,832		$	13,649	
Investing activities			(4,381)			(1,965)	
Financing activities			(13,638)			(9,980)	
Effect of exchange rate changes on cash			92			(205)	
Net change in cash, cash equivalents and restricted cash		$	2,905		$	1,499	

 Operating Activities
Cash provided by operating activities increased primarily as a result of:

	●	an increase in Adjusted EBITDA of $3.6 million;	
	●	payment of certain employee related accruals in the prior year of $1.3 million; and	
	●	timing differences on various operating assets and liabilities.	
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Investing Activities
During the three months ended March 31, 2021 the change in cash (used in) provided by investing activities was primarily the result of work completed on our corporate headquarters refresh and higher capitalizable investments in technology as compared to the prior year.
Financing Activities
During the three months ended March 31, 2021 cash used in financing activities increased primarily due to an increase in payments related to tax withholding for vested share-based compensation, and an increase in dividends per Class A share and non-controlling unit to $0.23 per share/unit during the first quarter of 2021 as compared to $0.22 per share/unit for the first quarter of 2020.
Capital Allocation Priorities
Liquidity
Our objective is to maintain a strong liquidity position. We have existing cash balances, cash flows from operating activities, access to our revolving facility and incremental facilities under our Senior Secured Credit Facility available to support the needs of our business. Should additional liquidity needs arise, our filed shelf registration would permit access to public capital markets if such financing would be available.
Acquisitions
As part of our growth strategy, we may pursue reacquisitions of Independent Regions in the U.S. and Canada as well as additional acquisitions or investments in complementary businesses, services and technologies that would provide access to new markets, revenue streams, or otherwise complement our existing operations. We may fund any such growth with various sources of capital including existing cash balances and cash flow from operations, as well as proceeds from debt financings including under existing credit facilities or new arrangements raised in the public capital markets.
Capital Expenditures
The total aggregate amount for purchases of property and equipment and capitalization of developed software was $4.4 million and $2.0 million during the three months ended March 31, 2021 and 2020, respectively. These amounts primarily relate to spend on our corporate headquarters refresh and investments in technology. In order to expand our technology, we plan to continue to re-invest in our business in order to improve operational efficiencies and enhance the tools and services provided to the affiliates in our networks. Total capital expenditures for 2021 are expected to be between $12 million and $15 million as we continue with the corporate headquarters refresh and higher capitalizable investments. See Financial and Operational Highlights above for additional information.
Dividends
Our Board of Directors declared and we paid quarterly cash dividends of $0.23 per share on all outstanding shares of Class A common stock during the first quarter of 2021. On May 5, 2021, our Board of Directors declared a quarterly cash dividend of $0.23 per share on all outstanding shares of Class A common stock, which is payable on June 2, 2021 to stockholders of record at the close of business on May 19, 2021. The declaration of additional future dividends, and, if declared, the amount of any such future dividend, will be subject to our actual future earnings and capital requirements and will be at the discretion of our Board of Directors.
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Distributions and Other Payments to Non-controlling Unitholders by RMCO
Distributions and other payments pursuant to the RMCO, LLC Agreement and TRAs were comprised of the following (in thousands):

		Three Months Ended	
		March 31, 	
		2021		2020	
Distributions and other payments pursuant to the RMCO, LLC Agreement:							
Pro rata distributions to RIHI as a result of distributions to RE/MAX Holdings in order to satisfy its estimated tax liabilities		$	—		$	14	
Dividend distributions			2,889			2,763	
Total distributions to RIHI			2,889			2,777	
Payments pursuant to the TRAs			—			—	
Total distributions to RIHI and TRA payments		$	2,889		$	2,777	
Commitments and Contingencies
See Note 12, Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements for additional information.
Off Balance Sheet Arrangements
We have no material off balance sheet arrangements as of March 31, 2021.
Critical Accounting Judgments and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures in the financial statements and accompanying notes. Actual results could differ from those estimates. Our Critical Accounting Judgments and Estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Judgments and Estimates” in our 2020 Annual Report on Form 10-K for which there were no material changes, included:

	●	Motto and First Goodwill	
	●	Purchase Accounting for Acquisitions	
	●	Deferred Tax Assets and TRA Liability	
	●	General Litigation Matters	
New Accounting Pronouncements
There have been no new accounting pronouncements not yet effective that we believe have a significant impact, or potential significant impact, to our consolidated financial statements. See Note 2, Summary of Significant Accounting Policies to the accompanying unaudited condensed consolidated financial statements for additional information.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
We have operations both within the U.S. and globally and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and credit risks, as well as risks relating to changes in the general economic conditions in the countries where we conduct business. We do not currently use derivative instruments to mitigate the impact of our market risk exposures nor do we use derivatives for trading or speculative purposes.
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Credit Risk
We are exposed to credit risk related to receivables from franchisees. We perform quarterly reviews of credit exposure above an established threshold for each franchisee and are in regular communication with those franchisees about their balance. For significant delinquencies, we will terminate the franchise. While the onset of COVID-19 in early 2020 created concerns around possible increases in delinquencies, the strong rebound of the housing market coupled with significant temporary financial support initiatives we offered resulted in collection rates roughly equivalent to prior years. Bad debt expense is less than 1% of revenue for the three months ended March 31, 2021.
Interest Rate Risk
We are subject to interest rate risk in connection with borrowings under our Senior Secured Credit Facility which bear interest at variable rates. At March 31, 2021, $224.4 million in term loans were outstanding under our Senior Secured Credit Facility. We currently do not engage in any interest rate hedging activity, but given our variable rate borrowings, we monitor interest rates and if appropriate, may engage in hedging activity prospectively. The interest rate on our Senior Secured Credit Facility is currently based on LIBOR, subject to a floor of 0.75%, plus an applicable margin of 2.75%. As of March 31, 2021, the interest rate was 3.5%. If LIBOR rises such that our rate is above the floor, then each hypothetical 0.25% increase would result in additional annual interest expense of $0.6 million. To mitigate a portion of this risk, we invest our cash balances in short-term investments that earn interest at variable rates.
Currency Risk
We have a network of global franchisees in over 110 countries and territories. Fluctuations in exchange rates of the U.S. dollar against foreign currencies can result, and have resulted, in fluctuations in (a) revenue and operating income due to a portion of our revenue being denominated in foreign currencies and (b) foreign exchange transaction gains and losses due primarily to cash and accounts receivable balances denominated in foreign currencies, with the Canadian dollar representing the most significant exposure. We currently do not engage in any foreign exchange hedging activity of our revenues but may do so in the future; however, we actively convert cash balances into U.S. dollars to mitigate currency risk on cash positions. During the three months ended March 31, 2021, a hypothetical 5% strengthening/weakening in the value of the U.S. dollar compared to the Canadian dollar would have resulted in a decrease/increase to operating income of approximately $0.3 million.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that as of March 31, 2021 our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are involved in litigation, claims and other proceedings relating to the conduct of our business, and the disclosures set forth in Note 12, Commitments and Contingencies relating to certain legal matters is incorporated
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herein by reference. Such litigation and other proceedings may include, but are not limited to, actions relating to intellectual property, commercial arrangements, franchising arrangements, brokerage disputes, vicarious liability based upon conduct of individuals or entities outside of our control including franchisees and independent agents, and employment law claims. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant time and resources from management. Although we do not believe any currently pending litigation will have a material adverse effect on our business, financial condition or operations, there are inherent uncertainties in litigation and other claims and regulatory proceedings and such pending matters could result in unexpected expenses and liabilities and might materially adversely affect our business, financial condition or operations, including our reputation.
Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, please see “Risk Factors” in our 2020 Annual Report on Form 10-K. There have been no material changes to the risk factors as disclosed in our 2020 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.

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Item 6. Exhibits

Exhibit No.	  	Exhibit Description	  	Form	  	File
Number	  	Date of
First Filing	  	Exhibit
Number	  	Filed
Herewith	
													
3.1		Amended and Restated Certificate of Incorporation		10-Q		001-36101		11/14/2013		3.1			
													
3.2		Bylaws of RE/MAX Holdings, Inc.		8-K		001-36101		2/22/2018		3.1			
													
4.1		Form of RE/MAX Holdings, Inc.’s Class A common stock certificate.		S-1		333-190699		9/27/2013		4.1			
													
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.										X	
													
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.										X	
													
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002										X	
													
101.INS		XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.										X	
													
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31

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	 		RE/MAX Holdings, Inc.
(Registrant)	
						
Date:		May 6, 2021	By:		/s/ Adam M. Contos	
					Adam M. Contos	
					Director and Chief Executive Officer	
					(Principal Executive Officer)	
						
Date:		May 6, 2021	By:		/s/ Karri R. Callahan	
					Karri R. Callahan
Chief Financial Officer
(Principal Financial Officer)	
						
Date:		May 6, 2021	By:		/s/ Brett A. Ritchie	
					Brett A. Ritchie
Chief Accounting Officer
(Principal Accounting Officer)	

32

Exhibit 31.1
Certification
I, Adam M. Contos, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of RE/MAX Holdings, Inc.;	

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;	

	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;	

	4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:	

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;	

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and	

	d.	Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

	5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):	

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

			
Date: May 6, 2021		/s/ Adam M. Contos	
		Adam M. Contos	
		Director and Chief Executive Officer	
		(Principal Executive Officer)	

Exhibit 31.2
Certification
I, Karri R. Callahan certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of RE/MAX Holdings, Inc.;	

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;	

	3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;	

	4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:	

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;	

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and	

	d.	Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

	5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):	

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

			
Date: May 6, 2021		/s/ Karri R. Callahan	
		Karri R. Callahan	
		Chief Financial Officer	
		(Principal Financial Officer)	

Exhibit 32.1
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of RE/MAX Holdings, Inc., a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:
The Quarterly Report on Form 10-Q for the period ended March 31, 2021 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of March 31, 2021 and December 31, 2020, and for the three months ended March 31, 2021 and 2020.

			
Date: May 6, 2021		/s/ Adam M. Contos	
		Adam M. Contos	
		Director and Chief Executive Officer	
		(Principal Executive Officer)	
			
Date: May 6, 2021		/s/ Karri R. Callahan	
		Karri R. Callahan	
		Chief Financial Officer	
		(Principal Financial Officer)	

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.