RE/MAX : Investor Presentation

RE/MAX Holdings, Inc.

Investor Presentation

August 2020

Forward-Looking Statements

This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking 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; revenue; operating expenses; dividends; shareholder return; non-GAAP financial measures; housing and mortgage market conditions; the Company's strategic and operating plans and business models; First becoming accretive and the timing thereof; the impact of the COVID-19 pandemic. 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 materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include the global COVID-19 pandemic, which poses significant and widespread risks to the Company's business, including the Company's agents, loan originators, franchisees and employees, as well as home buyers and sellers. The duration and magnitude of the impact from the COVID-19 pandemic depends on future developments that cannot be predicted at this time. The Company has already experienced significant disruption to its business as a result of the COVID-19 pandemic and such disruptions may continue for a significant amount of time. Notwithstanding any mitigation actions the Company has initiated and expects to continue as the crisis is ongoing, sustained material revenue declines relating to this crisis could impact the Company's financial condition, results of operations, stock price and ability to access the capital markets. Other important risks and uncertainties include, without limitation, (1) changes in the real estate market or interest rates and availability of financing, (2) changes in business and economic activity in general, (3) the Company's ability to attract and retain quality franchisees, (4) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (5) changes in laws and regulations, (6) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (7) the Company's ability to implement its technology initiatives, and (8) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances.

2

Why Invest in RE/MAX Holdings, Inc. Today?

Organic Growth, Catalysts and Return of Capital

Shareholder Return Driven By

Organic Growth

• Stable recurring revenue
• High margins & strong free cash flow

Driven by1:

1. Agent growth
2. Motto Mortgage
3. Franchise sales
4. Rising average home prices

	Catalysts			Return of Capital
▪ Independent region		▪	Committed to returning
	acquisitions			capital through dividend
▪	Reinvest in the business			payments over time
		▪
▪	Other acquisitions within		Dividend metrics:
			▪ ~35% of FCF in 20192
	or related to our core
	competencies of			▪ $0.22 quarterly
	franchising and real			dividend
	estate

FCF Fuels Catalysts and Return of Capital to Create Shareholder Value

1Other potential organic growth opportunities include increases in agent productivity, monetizing our technology offerings and expanding our approved supplier relationships.

2Free Cash Flow ("FCF") = Operating Cash Flow - Capital Expenditures - Changes in restricted cash of the Marketing Funds; $26M 2019 quarterly dividend distributions / $74M 2019 FCF = 35%; see Appendix for reconciliation of non-GAAP measures

3

By Helping Others Achieve Their Goals, We Achieve Ours

1Source: Franchise Grade*, based on an analysis of over 2,800 franchise systems during the 36-month period ended December 31, 2018 2As measured by residential transaction sides

3Source: Based on 2019 transaction sides cited in two surveys of the largest participating U.S. brokerages. The 2020 REAL Trends 500 includes data for 1,711 brokerages with at least 500
transaction sides each. The RISMedia 2020 Power Broker Top 1,000 includes data for 1,000 brokerages with the highest sales volume
4According to MMR Strategy Group study of unaided awareness	4

Experienced Management Team, Industry-leading Brands,

Entrepreneurial Affiliates, Skilled Headquarters Team

*Transaction sides per agent calculated by RE/MAX based on 2020 REAL Trends 500 data, citing 2019 transaction sides for the 1,711 largest participating U.S. brokerages. RE/MAX average: 15.6. Competitors: 7.0.

** Source: Entrepreneur Franchise - Based on an analysis of data, including costs and fees, support, size and growth, brand strength, and financial strength and stability, from franchise disclosure and related
documents dated August 2018 to July 2019 of 1,105 participating franchise systems
*** Source: Entrepreneur Franchise - Based on the net number of franchise units added in the U.S. and Canada between August 2019 to July 2019 according to Entrepreneur magazine's review of unit lists and	5
Franchise Disclosure Documents of 1,105 participating franchises across all industries

The Real Estate Franchisor

Hallmarks of a Successful

Franchise Business

Successful Franchisors

Key Success Factors of Franchisors

▪

▪

▪

▪

Unique product or service offering

Brand name and market share

Training and productivity tools

Group purchasing power

7

RE/MAX Holdings, Inc. is a

Premium Franchisor

Nobody in the world sells more real estate than RE/MAX1

100% franchised business, delivering the full economic benefits of the model2

Dual-brand franchisor, focused on our core businesses

Among the best-in-class franchisor operating margins

1As measured by residential transaction sides

2Excluding booj and First

8

9

10

The Mortgage Brokerage Franchisor

12

Motto Mortgage Fact Sheet

• 100% franchised mortgage brokerage business
• Nota lender and does notunderwrite loans
• Offers convenience to home buyers by bringing real estate agents and licensed loan originators together under one roof
• Motto Mortgage loan originators access a variety of quality loan options from multiple leading wholesalers
• Core operational team is scaling as Motto grows
• Franchises can be purchased by select qualified candidates both within and outside of RE/MAX network

13

Motto Mortgage Timeline

Attend	Franchisee Ramps to Paying
Training
$4,500 Monthly Royal Fee
	Franchise
	Opens
	License
	Obtained
Franchise Sold

Estimated 12 to 14 months

Illustrative of an expected sequence and timing of events for a new Motto Mortgage franchisee. Actual sequence and timing of events may vary.

14

Motto Mortgage Continues to Expand

Year-over-Year Revenue Growth of Almost 80%, Losses Narrowing as Motto Scales

1

1Adjusted EBITDA is a non-GAAP measure. See the Appendix for definitions and reconciliations of non-GAAP measures.

1515

Agent Count Growth

Total Agent Count Growth: 2012 - 2019

Total Network Agent Count

41,881 agents added to network from 2012-2019

6,609 agents added in 2019

Approximately two-thirds of our agents are in the U.S. and Canada

17

Unmatched Global Footprint

RE/MAX Global Footprint

As of June 30, 2020

RE/MAX Regional or Franchise Presence

Agents by Geography

As of June 30, 2020

Outside the U.S.

and Canada

48,933 Agents

U.S.

61,677 Agents

Canada

21,295 Agents

The RE/MAX brand spans over 110 countries and territories

18

Growing Our Global Network

Year-over-Year Agent Count Growth of 3.8%

Agent Count Change Year-over-Year

June 30, 2019

June 30, 2020

+3.8% YoY

(+4,885 agents)

-1.4% YoY

(-1,161 agents)

+14.1% YoY

(+6,046 agents)

19

Agent Count Change in the U.S. and Canada

Agent Count Change Year-over-Year

June 30, 2020 over June 30, 2019

-1.6%	-0.6%
(-1,023 Agents)	(-138 Agents)

Agents in the U.S.

Agents in Canada

20

Business Model

Unique and Effective Agent-Centric RE/MAX Model

Traditional Brokerage		The RE/MAX Model

❑ Owned & operated by brokerage	◼ 100% franchised2
❑ 30-40% of commission goes to broker1	◼ Recommended 95% agent commission
❑ Commission rate typically determined by	◼ Ability for agent to set commission rates with
brokerage, not agent	sellers in many cases
❑ Lack of autonomy within brokerage	◼ Entrepreneurially driven agents
❑ Marketing dictated by brokerage	◼ Multiple support channels: brand, marketing &
	training

Revenue Driven by Commission	Revenue Driven by Agent Count

1In some cases, with a cap

2Excluding booj and First

22

Differentiated Agent-Centric Approach

Attracts Entrepreneurial Agents and Franchisees

Our Agents and Franchisees are in Business FOR Themselves, But NOT by Themselves

Affiliation with #1 Brand

Attractive Agent & Franchise Economics

Lead Referral System

Training Programs

Entrepreneurial Culture

• #1 name in real estate1
• RE/MAX agents average double the sales of other agents in the 2020 REAL Trends 500 survey of large brokerages2
• Recommended 95% / 5% splitwith broker vs. 70% / 30% or 60% / 40% at traditional brokerages
• Sell more, earn more
• Relatively low initial franchisee fee
• We believe we generate more free leadsthan any other brand
• Global agent network facilitates agent-to-agent referrals
• #1 real estate franchisor website3; global websites attract buyers and sellers
• RE/MAX University; 24/7 on demand and certification training courses
• Founded by industry "mavericks"
• Agent-centricmodel
• Freedom to set commission rates, self-promote, etc.

1MMR Strategy Group study of unaided awareness.

2Transaction sides per agent calculated by RE/MAX based on 2020 REAL Trends 500 data, citing 2019 transaction sides for the 1,711 largest participating U.S. brokerages. RE/MAX average: 15.6. Competitors: 7.0.

3According to Hitwise data, Jan.-Dec. 2019.	23

Revenue Model

Company-owned Regions in U.S. & Canada

Revenue Streams from Agent to

Franchisee to RE/MAX1

RE/MAX

Continuing	Broker Fee
Franchise	1% of
Fee	Commissions
		Annual
		Dues
		$410 /
		Agent
Franchises / Brokerages	Per Year

Fixed	Recommended
Monthly
5% of
Management
Commissions
Fee

2019 Annual Revenue per Agent to RE/MAX

(U.S. & Canada)2

~$2,600 / Agent

Average

~$1,450 / Agent	~$750 / Agent	~$400 / Agent
Average	Average

Agents	Continuing	Broker Fee	Annual Dues
	Franchise Fees

1Illustrative of the majority of Company-owned Regions in the U.S.

2Annual dues are currently a flat fee of US$410/CA$410 per agent annually for our U.S. and Canadian agents. The average per agent for the year ended December 31, 2019 in Company-owned Regions reflects the impact of foreign currency movements related to revenue received from Canadian agents. The ratio of Canadian agents to U.S. agents in Independent Regions has increased as a result of U.S. Independent Region acquisitions.

24

Revenue Model

Independent Regions in U.S. & Canada

Revenue Streams from Agent to

Franchisee to Independent Region to RE/MAX 1

	RE/MAX
15%-30% of		Implied Gross
	70%-85%
Continuing
	Upside
Franchise Fee
Broke Fee		Through
Initial Franchise Fee
		Independent
Independent Regions	Region
		Acquisitions
Continuing	Broker Fee
Franchise	1% of Commissions	Annual Dues
Fee		$410 / Agent

	Per Year
Franchises / Brokerages
Fixed	Recommended
Monthly
5% of Commissions
Management

Fee

Agents

2019 Annual Revenue per Agent to RE/MAX

(U.S. & Canada)2

~$750/ Agent

Average

~$300 / Agent	~$100 / Agent	~$350 / Agent
Average	Average

Continuing	Broker Fee	Annual Dues
Franchise Fees

1Illustrative of Independent Regions in the U.S.

2Annual dues are currently a flat fee of US$410/CA$410 per agent annually for our U.S. and Canadian agents. The average per agent for the year ended December 31, 2019 in Independent Regions reflects the impact of foreign currency movements related to revenue received from Canadian agents. The ratio of Canadian agents to U.S. agents in Independent Regions has increased as a result of U.S. Independent Region acquisitions.

25

Reacquiring Independent Regions

Annual Revenue Per Agent Increases ~$1,850

66% of Agents in the U.S. & Canada are in Company-

owned Regions1

Company-owned Regions

Independent Regions

1Agent counts and average revenue to RE/MAX, LLC per agent is for the year ended December 31, 2019

U.S./Canada Overview1

• Company-ownedRegions
• • 19 regions
  • 55,605 agents
• Independent Regions
• • 9 regions
  • 29,083 agents
• Average Annual Revenue per Agent
• • Company-ownedregions:

~$2,600

• Independent regions: ~$750

26

Franchise Sales Drive Agent Growth

Global Franchise Sales Consistently Strong

✓ Target underpenetrated geographies in the U.S. and Canada where RE/MAX share is below network average

✓ Selling to entrepreneurial brokers who will grow the business

✓ Over 1,000 global franchise sales in 2017, 2018 and 2019

27

Acquisition of First

Continued Execution of the RE/MAX Technology Strategy

A four-year old, North Carolina-based technology startup

Leverages data science, machine learnings and human interactions

Works to help real estate professionals better leverage the value of their personal network

*Current First clients not affiliated with RE/MAX may remain on through their current contract's expiration, or until the end of 2020.

29

Smarter Agents, Smarter Technology

booj Platform, Consumer-Facing App & remax.com

Customized agent, office and

App	team websites introduced

Remax.com website refreshed

and enhanced

New consumer real estate

search app launched

Websites

31

Financials

Franchise Sales Drive Agent Growth

Revenue1

Adjusted EBITDA2

Adjusted Net Income3

($M)

As of December 31

($M)

As of December 31

($M)

As of December 31

Relatively High Adjusted	53%	49%	37%
EBITDA Margins3

1Revenue was impacted by the acquisition of the Marketing Funds on January 1, 2019. Revenue excluding the Marketing Funds in 2019 decreased 1.2% from 2018 to $210 million 2Adjusted EBITDA and Adjusted Net Income are Non-GAAP measures. See Appendix for definitions and reconciliations of Non-GAAP measures.

3Adjusted EBITDA margins were impacted by the acquisition of the Marketing Funds on January 1, 2019. The Marketing Funds have no impact to Adjusted EBITDA as revenue from the Marketing Funds is offset by an equal amount of expenses; however, there is an impact to Adjusted EBITDA margin due to higher revenue from the Marketing Funds.

33

Quarterly Financial Performance

Generating High Margins

	Revenue
($M)	As of three months ended June 30	($M)
80	$72		60
$71	$70
70	$68

50

60

$52

Adjusted EBITDA1

As of three months ended June 30

Adjusted Net Income1

($M)	As of three months ended June 30

60

50

50

40

$30

40

40

30

$28

$22

30

30

20

$20 $19

$20 $19

20

10

10

20

10

$14

$12 $12

0		0

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Relatively High Adjusted EBITDA

Margins2

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

42%

39%

33%

28%

36%

0

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

1Adjusted EBITDA and Adjusted Net Income are Non-GAAP measures. See Appendix for definitions and reconciliations of Non-GAAP measures.

2Adjusted EBITDA margins for the three months ended June 30, 2019, the three months ended September 30, 2019, the three months ended December 31 2019, the three months ended March 31, 2020 and the three months ended June 30, 2020 were impacted by the acquisition of the Marketing Funds on January 1, 2019. The Marketing Funds have no impact to Adjusted EBITDA as revenue from the Marketing Funds are offset by an equal amount of expenses; however, there is an impact to Adjusted EBITDA margin due to higher revenue from the Marketing Funds. Excluding the impact of the Marketing Funds, Adjusted EBTDA margin was 56%, 53%, 44%, 37% and 47% for the three months ended June 30,2019, the three months ended September 30, 2019, the three months ended December 31, 2019, the three months ended March 31, 2020 and the three months ended June 30, 2020 respectively.

34

Revenue by Stream and Geographic Area

Growing Recurring Revenue Base

2019 Revenue Streams1

Franchise Sales & Other

Revenue

2019 Revenue by Geographic Area

Outside the U.S.

and Canada

Canada

Broker Fees

Continuing

Franchise Fees

Annual Dues

Recurring fees and dues (i.e. Continuing

Franchise Fees and Annual Dues) accounted for

64% of revenue in 2019

1Excludes revenue from Marketing Funds

United

States

~95% of 2019 revenue

was generated in the U.S.

and Canada

35

Low Leverage to Support Strategy

Maturities of Debt1

Balance Sheet

$25,000

$20,000

$15,000

$10,000

$5,000

$2.4 $2.4

$1.3

$-

• Credit facility of $235.0 million plus $10.0 million revolving credit facility
• Covenant light deal
• Variable Rate: LIBOR + 275bps with 0.75% floor
• $224.6 million in outstanding debt1 and no revolving loans outstanding
• Cash balance of $84.5 million on June 30, 2020
• Total Debt / Adjusted EBITDA2 of 2.5x3
• Net Debt / Adjusted EBITDA2 of 1.6x4

2020

2021

2022

2023

Thereafter

1Net of unamortized debt discount and debt issuance costs

2Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP numbers and exclude all adjustments attributable to the non-controlling interest. See the Appendix for definitions and reconciliations of
non-GAAP measures.
3Based on twelve months ended June 30, 2020, Adjusted EBITDA of $18.9M and total debt of $224.6M, net of unamortized debt discount and debt issuance costs
4Based on twelve months ended June 30, 2020, Adjusted EBITDA of $18.9M and net debt of $140.1M, net of unamortized debt discount, debt issuance costs and unrestricted cash balance at June 30,	36
2020

Cash Flow Generation Fuels Capital Allocation Strategy

Strong Annual Adjusted EBITDA1 Conversion to Free Cash Flow

Full Year 2019

$'s in Millions

Capital Allocation Priorities

			▪ Acquire Independent Regions
			▪ Reinvest in the business to drive future
				organic growth
			▪ Other strategic acquisitions &
				partnerships
2	3	4	▪	Return of capital

As % of

Adj. EBITDA1

71%

66%

64%

1 Adjusted EBITDA and Free Cash Flow are non-GAAP measures and exclude all adjustments attributable to the non-controlling interest. See the Appendix for definitions and reconciliations of non-GAAP measures.
2Free Cash Flow = Operating Cash Flow - Capital Expenditures
3Free Cash Flow after Distributions to RIHI = Free Cash Flow - Tax and other discretionary non-dividend distributions paid to RIHI to enable RIHI to satisfy its income tax obligations
4Unencumbered Cash Generated = Free Cash Flow after Distributions to RIHI - Quarterly debt principal payments - Annual excess cash flow payment on debt, see Appendix for reconciliation of Non-GAAP measures	37

RE/MAX Holdings, Inc.

RMAX: Recurring Revenue, High Margins & Strong Free Cash Flow

1Source: MMR Strategy Group Study of unaided brand awareness

2Source: Franchise Grade*, based on an analysis of over 2,800 franchise systems during the 36-month period ended December 31, 2018

38

Appendix

Industry Forecasts

Monthly Existing Home Sales1 (Thousands)

Annual Existing Home Sales2,3 (Millions)

Home Price Appreciation2,3 (YoY)

Housing Starts - Single Family3,4 (Thousands)

1Source: NAR (National Association of Realtors) - Existing Home Sales, numbers presented are not seasonally adjusted; May 2014 through June 2020

2Source: NAR (National Association of Realtors) - U.S. Economic Outlook, August 2020

3Source: Fannie Mae - Economic and Strategic Research - Housing Forecast, July 2020

4Source: NAHB (National Association of Home Builders) - Housing and Interest Rate Forecast July 2020

40

Mortgage Finance Forecasts

Purchase Originations Expected to Grow Slightly, Rates to Remain Low

Loan Originations1 ($'s in billions)

Mortgage & Interest Rates1

1Source: Mortgage Bankers Association - MBA Mortgage Finance Forecast July 2020

41

RE/MAX Holdings, Inc.

Agent Count

							As of
	June 30,		March 31,		December 31,		September 30,	June 30,		March 31,		December 31,		September 30,
	2020	2020	2019	2019			2019	2019	2018	2018
Agent Count:
U.S.
Company-ow ned Regions	47,886	48,840	49,267	48,576			48,748	48,904	49,318	50,342
Independent Regions	13,791	13,828	13,854	13,972			13,952	13,760	13,804	13,948
U.S. Total	61,677	62,668	63,121	62,548			62,700	62,664	63,122	64,290
Canada
Company-ow ned Regions	6,102	6,217	6,338	6,402			6,510	6,549	6,702	6,858
Independent Regions	15,193		15,306		15,229		15,117			14,923		14,818		14,625		14,550
Canada Total	21,295		21,523		21,567		21,519			21,433		21,367		21,327		21,408
U.S. and Canada Total	82,972	84,191	84,688	84,067			84,133	84,031	84,449	85,698
Outside U.S. and Canada
Independent Regions	48,933		47,625		46,201		44,191			42,887		41,501		39,831		38,207
Outside U.S. and Canada Total	48,933		47,625		46,201		44,191			42,887		41,501		39,831		38,207
Total	131,905		131,816		130,889		128,258			127,020		125,532		124,280		123,905
Net change in agent count compared to the prior period	89	927	2,631	1,238			1,488	1,252	375	823

42

RE/MAX Holdings, Inc.

Adjusted EBITDA Reconciliation to Net Income

(Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)

(Amounts in 000s)
Net income	$
Depreciation and amortization
Interest expense
Interest income
Provision for income taxes
EBITDA
(Gain) loss on sale or disposition of assets
Equity-based compensation expense
Acquisition-related expense (1)
Gain on reduction in tax receivable agreement liability
Fair value adjustments to contingent consideration (2)
Adjusted EBITDA (3)	$
Adjusted EBITDA Margin (3)
Footnote:

Three Months Ended
June 30,
2020			2019
5,924	$	16,133	$
6,412			5,541
2,187			3,154
(34)			(342)
706			3,186
15,195			27,672
(11)			(16)
2,747			1,796
328			15
500			-
150			415
18,909	$	29,882	$
36.2	%		41.9	%

Six Months Ended
June 30,
2020			2019
11,214	$	24,390
12,722			11,099
4,869			6,309
(303)			(662)
4,496			5,094
32,998			46,230
(22)			363
4,933			5,847
894			87
-			-
(355)			345
38,448	$	52,872
31.4	%		37.1	%

Year Ended

December 31,

2019

$ 46,856 22,323 12,229 (1,446) 10,909

90,871

342

10,934

1,127

-

241

$ 103,515

36.7

1. Acquisition-relatedexpense includes legal, accounting, advisory and consulting fees incurred in connection with the acquisition 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 liability.
3. Non-GAAPmeasure. See the end of this press release for definitions of non-GAAP measures.

43

RE/MAX Holdings, Inc.

Adjusted Net Income & Adjusted Earnings per Share

(Reflects RE/MAX Holdings with 100% ownership of RMCO, LLC)

					Three Months Ended			Six Months Ended
					June 30,				June 30,
(Amounts in 000s)					2020			2019			2020			2019
Net income				$	5,924		$	16,133		$	11,214		$	24,390
Amortization of acquired intangible assets				4,849			4,466			9,698			8,931
Provision for income taxes					706			3,186			4,496			5,094
Add-backs:
(Gain) loss on sale or disposition of assets				(11)			(16)			(22)			363
Equity-based compensation expense				2,747			1,796			4,933			5,847
Acquisition-related expense	(1)				328			15			894			87
Gain on reduction in tax receivable agreement liability			500			-			-			-
Fair value adjustments to contingent consideration	(2)			150			415			(355)			345
Adjusted pre-tax net income					15,193			25,995			30,858			45,057
Less: Provision for income taxes at 24% (3)				(3,646)			(6,239)			(7,406)			(10,814)
Adjusted net income (4)			$	11,547	$	19,756	$	23,452	$	34,243
Total basic pro forma shares outstanding				30,683,563			30,367,921			30,608,714			30,351,542
Total diluted pro forma shares outstanding				30,706,486			30,393,558			30,649,859			30,385,480
Adjusted net income basic earnings per share (4)		$	0.38		$	0.65		$	0.77		$	1.13
Adjusted net income diluted earnings per share (4		$	0.38	$	0.65		$	0.77	$	1.13

Footnote:

1. Acquisition-relatedexpense includes legal, accounting, advisory and consulting fees incurred in connection w ith the acquisition 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 liability.
3. 24% is the combined federal and state statutory rate and is an estimate of our long-term tax rate assuming the full exchange of all outstanding non- controlling interests for Class A common stock. It excludes the impacts of (a) our partnership structure, (b) unusual, non-recurring tax matters, such as the conversion of First to an LLC, and (c) low er income for 2020 due to the pandemic, w hich is causing distorted impacts to differences betw een tax and GAAP accounting, and causing certain foreign taxes to be nondeductible in 2020 w hen they otherw ise have been and w e expect w ill be again in the future.

(4) Non-GAAP measure. See the end of this press release for definitions of non-GAAP measures.

44

RE/MAX Holdings, Inc.

Free Cash Flow & Unencumbered Cash Generation

		Six months ended
		June 30,
	2020				2019
Cash flow from operations	$	16,323	$	32,983
Less: Purchases of property, equipment and capitalization of software		(3,102)			(7,378)
Decreases in restricted cash of the Marketing Funds (1)		5,848			4,868
Free cash flow (2)		19,069			30,473
Free cash flow		19,069			30,473
Less: Tax/Other non-dividend distributions to RIHI		(40)			(2,031)
Free cash flow after tax/non-dividend distributions to RIHI (2)
	19,029			28,442
Free cash flow after tax/non-dividend distributions to RIHI		19,029			28,442
Less: Debt principal payments		(1,322)			(1,311)
Unencumbered cash generated (2)
$	17,707	$	27,131
Summary
Cash flow from operations	$	16,323	$	32,983
Free cash flow (2)	$	19,069	$	30,473
Free cash flow after tax/non-dividend distributions to RIHI (2)	$	19,029	$	28,442
Unencumbered cash generated (2)	$	17,707	$	27,131
Adjusted EBITDA	$	38,448	$	52,872
Free cash flow as % of Adjusted EBITDA (2)		49.6%			57.6%
Free cash flow less distributions to RIHI as % of Adjusted EBITDA (2)		49.5%			53.8%
Unencumbered cash generated as % of Adjusted EBITDA (2)		46.1%			51.3%

Footnote:

1. This line reflects any subsequent changes in the restricted cash balance (which under GAAP reflects as either (a) an increase or decrease in cash flow from operations or (b) an incremental amount of purchases of property and equipment and capitalization of developed software) so as

to remove the impact of changes in restricted cash in determining free cash flow.

1. Non-GAAPmeasure. See the end of this presentation for definitions of non-GAAP measures.

	Year Ended
	December 31,
	2019
$	78,975
	(13,226)
	7,895
	73,644
	73,644
	(4,880)
	68,764
	68,764
	(2,622)
$	66,142
$	78,975
$	73,644
$	68,764
$	66,142
$	103,515
	71.1%
	66.4%
	63.9%

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Non-GAAP Financial Measures

The 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, Adjusted net income, Adjusted basic and diluted earnings per share (Adjusted EPS) and free cash flow. These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP.

The Company defines 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 the unaudited consolidated financial statements included earlier in this presentation), adjusted for the impact of the following items that are either non-cash or that the Company does not consider representative of its ongoing operating performance: loss or gain on sale or disposition of assets and sublease, equity-based compensation expense, acquisition-related expense, Special Committee investigation and remediation expense, gain on reduction in tax receivable agreement liability, expense or income related to changes in the estimated fair value measurement of contingent consideration, and other non-recurring items.

Because Adjusted EBITDA and Adjusted EBITDA margin omit certain non-cash items and other non-recurring cash charges or other items, the Company believes that each measure is less susceptible to variances that affect its operating performance resulting from depreciation, amortization and other non-cash and non-recurring cash charges or other items. The Company presents Adjusted EBITDA and the related Adjusted EBITDA margin because the Company believes they are useful as supplemental measures in evaluating the performance of its operating businesses and provides greater transparency into the Company's results of operations. The Company's management uses Adjusted EBITDA and Adjusted EBITDA margin as factors in evaluating the performance of the business.

Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analyzing the Company's results as reported under U.S. GAAP. Some of these limitations are:

• these measures do not reflect changes in, or cash requirements for, the Company's working capital needs;
• these measures do not reflect the Company's interest expense, or the cash requirements necessary to service interest or principal payments on its debt;
• these measures do not reflect the Company's income tax expense or the cash requirements to pay its taxes;
• these measures do not reflect the cash requirements to pay dividends to stockholders of the Company's Class A common stock and tax and other cash distributions to its non-controlling unitholders;
• these measures do not reflect the cash requirements pursuant to the tax receivable agreements;
• 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.

46

Non-GAAP Financial Measures (continued)

Adjusted net income is calculated as Net income attributable to RE/MAX Holdings, assuming the full exchange of all outstanding non-controlling interests for shares of Class A common stock as of the beginning of the period (and the related increase to the provision for income taxes after such exchange), plus primarily non-cash items and other items that management does not consider to be useful in assessing the Company's operating performance (e.g., amortization of acquired intangible assets, gain on sale or disposition of assets and sub-lease,acquisition-related expense and equity-based compensation expense).

Adjusted basic and diluted earnings per share (Adjusted EPS) are calculated as Adjusted net income (as defined above) divided by pro forma (assuming the full exchange of all outstanding non-controlling interests) basic and diluted weighted average shares, as applicable.

When used in conjunction with GAAP financial measures, Adjusted net income and Adjusted EPS are supplemental measures of operating performance that management believes are useful measures to evaluate the Company's performance relative to the performance of its competitors as well as performance period over period. By assuming the full exchange of all outstanding non-controlling interests, management believes these measures:

• facilitate comparisons with other companies that do not have a low effective tax rate driven by a non-controlling interest on a pass-through entity;
• facilitate period over period comparisons because they eliminate the effect of changes in Net income attributable to RE/MAX Holdings, Inc. driven by increases in its ownership of RMCO, LLC, which are unrelated to the Company's operating performance; and
• eliminate primarily non-cash and other items that management does not consider to be useful in assessing the Company's operating performance.

Free cash flow is calculated as cash flows from operations less capital expenditures and any changes in restricted cash of the Marketing Funds, all as reported under GAAP, and quantifies how much cash a company has to pursue opportunities that enhance shareholder value. The restricted cash of the Marketing Funds is limited in use for the benefit of franchisees and any impact to free cash flow is removed. The Company believes free cash flow is useful to investors as a supplemental measure as it calculates the cash flow available for working capital needs, re-investment opportunities, potential independent region and strategic acquisitions, dividend payments or other strategic uses of cash.

Free cash flow after tax and non-dividend distributions to RIHI is calculated as free cash flow less tax and other non-dividend distributions paid to RIHI (the non-controlling interest holder) to enable RIHI to satisfy its income tax obligations. Similar payments would be made by the Company directly to federal and state taxing authorities as a component of the Company's consolidated provision for income taxes if a full exchange of non-controlling interests occurred in the future. As a result and given the significance of the Company's ongoing tax and non-dividend distribution obligations to its non-controlling interest, free cash flow after tax and non-dividend distributions, when used in conjunction with GAAP financial measures, provides a meaningful view of cash flow available to the Company to pursue opportunities that enhance shareholder value.

Unencumbered cash generated is calculated as free cash flow after tax and non-dividend distributions to RIHI less quarterly debt principal payments less annual excess cash flow payment on debt, as applicable. Given the significance of the Company's excess cash flow payment on debt, when applicable, unencumbered cash generated, when used in conjunction with GAAP financial measures, provides a meaningful view of the cash flow available to the Company to pursue opportunities that enhance shareholder value after considering its debt service obligations.

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