Marcus & Millichap(MMI) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for Q2 2024 was $158.4 million, a decrease of$4.5 million or 2.8% compared to Q2 2023 revenue of $162.9 million[160]. - Revenue from real estate brokerage commissions decreased to$135.4 million, down $4.9 million or 3.5$140.3 million in Q2 2023, attributed to a 4.9% decrease in total sales volume[161]. - For the six months ended June 30, 2024, total revenue was $287.5 million, a decrease of$30.2 million or 9.5% compared to $317.7 million for the same period in 2023[170]. - Revenue from real estate brokerage commissions for the six months ended June 30, 2024 decreased to$244.9 million, down $30.5 million or 11.1$275.4 million in the same period in 2023[171]. - Net loss for Q2 2024 was $5.5 million, an improvement of$3.2 million or 36.6% compared to a net loss of $8.7 million in Q2 2023[160]. - Adjusted EBITDA for Q2 2024 was$1.4 million, a significant increase of $2.5 million compared to an adjusted EBITDA loss of$1.1 million in Q2 2023, reflecting a 236.5% improvement[160]. - Adjusted EBITDA for the six months ended June 30, 2024, was $(8,641) thousand, compared to$(8,479) thousand for the same period in 2023[180]. Transaction Activity - As of June 30, 2024, the company closed 1,800 investment sales and financing transactions with a total sales volume of approximately $9.5 billion for the quarter[118]. - The company closed 3,364 transactions with a total sales volume of approximately$19.2 billion for the six months ended June 30, 2024[118]. - In Q2 2024, the company closed over 1,800 transactions with a total sales volume of approximately $9.5 billion, compared to 1,900 transactions and$9.7 billion in Q2 2023, indicating a decline in transaction activity[155]. - The average transaction size for real estate brokerage increased to $5.636 million in Q2 2024 from$5.303 million in Q2 2023, showing a growth of 6.3%[156]. Revenue Sources - Approximately 86% of the company's revenue for the three months ended June 30, 2024, was generated from real estate brokerage commissions, totaling $135.4 million[119]. - The private client market (properties priced from$1 million to less than $10 million) contributed approximately 63$1-$10 million market, which contributed approximately 65$18.3 million, up $0.4 million or 2.2$17.9 million in Q2 2023, driven by an 11.0% increase in total financing volume[161]. Operating Expenses - Total operating expenses for Q2 2024 were $166.4 million, a decrease of$7.1 million or 4.1% from $173.5 million in Q2 2023[163]. - Cost of services decreased to$98.1 million, down $3.1 million or 3.0$101.2 million in Q2 2023, primarily due to lower commission expenses[164]. - Selling, general, and administrative expenses decreased to $65.0 million, down$3.9 million or 5.7% from $68.9 million in Q2 2023, due to reduced marketing support[165]. Market Conditions - The commercial real estate market is experiencing a slowdown due to sustained higher interest rates and tighter lender underwriting, leading to a reduced volume of available debt capital[133]. - The expectation gap between buyers and sellers remains challenging, with lending and investor activity below pre-pandemic historical norms[131]. - The industrial vacancy rate increased in Q2 2024 due to elevated construction exceeding space demand, while retail vacancy rates remained near record lows[130]. - The company is facing challenges in the office property segment, with increased uncertainty and potential for additional foreclosures[138]. Cash Flow and Financial Position - Total cash, cash equivalents, and restricted cash decreased by$8.8 million to $162.0 million at June 30, 2024, compared to$170.8 million at December 31, 2023[182]. - Cash flows used in operating activities were $50.2 million for the six months ended June 30, 2024, compared to$94.8 million for the same period in 2023, a decrease of $44.6 million[183]. - Cash flows provided by investing activities were$58.8 million for the six months ended June 30, 2024, compared to $82.4 million for the same period in 2023, a decrease of$23.6 million[185]. - Cash flows used in financing activities were $17.2 million for the six months ended June 30, 2024, compared to$52.4 million for the same period in 2023, a decrease of $35.1 million[186]. Interest Rate and Investment Risks - The company does not face material interest rate risk with respect to other assets and liabilities[195]. - The functional currency of the Canadian operations is the Canadian dollar, exposing the company to foreign currency exchange rate risk[195]. - Historically, foreign exchange rate risk has not been material for the company[195]. - A 2$3.84 million[197]. - A 1% decrease in interest rates would result in an approximate increase in the fair value of investments by $1.92 million[197]. - A 1$1.919 million[197]. - A 2% increase in interest rates would result in a decrease in the fair value of investments by $3.837 million[197]. Construction and Development - The completion of approximately 480,000 new multifamily units is anticipated in 2024, setting a new construction high[129].