PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements, detailing financial position, performance, and cash flows Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | | :----- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $869,800 | $792,209 | $(77,591) | | Total Liabilities | $238,982 | $184,434 | $(54,548) | | Total Stockholders' Equity | $630,818 | $607,775 | $(23,043) | | Cash, Cash Equivalents, and Restricted Cash | $153,445 | $85,954 | $(67,491) | | Marketable Debt Securities (Current) | $189,667 | $136,461 | $(53,206) | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change (%) | | :---------------------------------- | :------------------ | :------------------ | :------------- | | Total Revenue | $172,276 | $158,367 | 8.8% | | Real Estate Brokerage Commissions | $141,417 | $135,423 | 4.4% | | Financing Fees | $26,259 | $18,294 | 43.5% | | Operating Loss | $(9,045) | $(8,046) | 12.4% | | Net Loss | $(11,035) | $(5,538) | 99.3% | | Basic EPS | $(0.28) | $(0.14) | 100.0% | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change (%) | | :-------------------------------- | :------------------ | :------------------ | :------------- | | Total Revenue | $317,314 | $287,471 | 10.4% | | Real Estate Brokerage Commissions | $265,039 | $244,898 | 8.2% | | Financing Fees | $44,389 | $32,721 | 35.7% | | Operating Loss | $(26,756) | $(28,148) | (4.9)% | | Net Loss | $(15,457) | $(15,525) | (0.4)% | | Basic EPS | $(0.40) | $(0.40) | 0.0% | Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (Three Months Ended June 30) | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Net Loss | $(11,035) | $(5,538) | | Total Other Comprehensive Income (Loss) | $1,405 | $(85) | | Comprehensive Loss | $(9,630) | $(5,623) | Condensed Consolidated Statements of Comprehensive Loss (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net Loss | $(15,457) | $(15,525) | | Total Other Comprehensive Income (Loss) | $1,758 | $(593) | | Comprehensive Loss | $(13,699) | $(16,118) | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (Six Months Ended June 30, 2025) | Metric (Six Months Ended June 30, 2025) | Amount (in thousands) | | :-------------------------------------- | :-------------------- | | Balance at December 31, 2024 | $630,818 | | Net and Comprehensive (Loss) Income | $(13,699) | | Dividends | $(10,230) | | Stock-Based Compensation | $12,402 | | Repurchases of Common Stock | $(7,398) | | Balance as of June 30, 2025 | $607,775 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | YoY Change (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | :------------------------ | | Net Cash Used in Operating Activities | $(31,821) | $(50,170) | $18,349 | | Net Cash (Used in) Provided by Investing Activities | $(10,076) | $58,777 | $(68,853) | | Net Cash Used in Financing Activities | $(25,858) | $(17,229) | $(8,629) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(67,491) | $(8,760) | $(58,731) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $85,954 | $161,993 | $(76,039) | Notes to Condensed Consolidated Financial Statements - Marcus & Millichap specializes in commercial real estate investment sales, financing, research, and advisory services, operating over 80 offices in the US and Canada24 - The company's Canadian operations represented 3.7% and 4.1% of total revenue for the three and six months ended June 30, 2025, respectively, a decrease from 6.5% and 5.6% in the prior year34 - Revenue from real estate brokerage commissions and financing fees is recognized at the close of escrow or loan closing, respectively, when performance obligations are complete3738 - The company has a strategic alliance with MTRCC, where it may indemnify a portion of MTRCC's loan guarantee obligation to Fannie Mae, with a maximum aggregate guarantee of $371.1 million as of June 30, 20253242133 - The company changed its income tax calculation method from the annual effective tax rate (AETR) to the discrete method for the second quarter of 2025 due to significant variability in the AETR from nominal changes to projected pre-tax earnings120 Selected Financial Statement Details | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--------------------------- | :------------------------------- | | Goodwill and other intangible assets, net | $42,713 | $43,521 | | Allowance for credit losses (advances and loans) | $1,600 | $1,200 | | Current Deferred compensation and commissions | $37,428 | $67,197 | | Non-current Deferred compensation and commissions | $26,318 | $33,257 | | Maximum aggregate loan guarantee obligation | $371,100 | N/A | - The Board of Directors declared a semi-annual regular dividend of $0.25 per share on July 31, 2025, payable on October 6, 2025104135 - The company repurchased 242,821 shares of common stock for $7.4 million during the six months ended June 30, 2025, with $63.6 million remaining authorized under the repurchase program20108 - The Credit Facility with Wells Fargo Bank was extended to June 1, 2026, providing a $10 million line of credit, with $1.1 million utilized for standby letters of credit as of June 30, 2025130131 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operational results, analyzing key factors including economic conditions and capital resources Forward-Looking Statements - Forward-looking statements are based on current expectations and projections, subject to risks like general capital market uncertainty, economic conditions, interest rate changes, and the ability to attract and retain professionals137141 Overview - The company is a top commercial real estate investment broker in the U.S., with 1,640 investment sales and financing professionals142 Key Operational Metrics (Three Months Ended June 30, 2025) | Metric (Three Months Ended June 30, 2025) | Value | | :---------------------------------------- | :---- | | Total Transactions Closed | 2,070 | | Total Sales Volume | ~$12.3 billion | | Revenue from Real Estate Brokerage Commissions | 82% | | Revenue from Financing Fees | 15% | | Revenue from Other Services | 3% | | Private Client Market Contribution to Brokerage Commissions | 66% | Factors Affecting Our Business - Key economic indicators show positive momentum with 597,000 new jobs added in the first half of 2025, but unemployment remains stable at 4.1%149 - Commercial real estate fundamentals are robust, with positive space absorption across most property types, and oversupply risks diminishing due to elevated capital costs and rising tariffs152154 - Apartment vacancy rates trended lower to 4.4% in Q2 2025, with 790,000 units absorbed in the trailing 12 months, the strongest in over 30 years157 - Interest rate volatility and policy uncertainty have led to increased lender caution, with the 10-year treasury benchmark remaining near 4.5%160 - Commercial real estate transaction activity increased by 12% year-over-year in Q2 2025, led by office and retail property sales164 - New tax act provisions, including bonus depreciation and increased state and local tax (SALT) allowances, are expected to bolster commercial real estate investment activity162166 Key Financial Measures and Indicators - Revenue is primarily from real estate investment sales, with commissions recognized at escrow close and financing fees at loan closing167170171 - Cost of services primarily consists of variable commissions paid to investment sales and financing professionals, which can vary based on individual contracts and experience175 - Selling, general and administrative expenses include personnel costs, business development, marketing, and stock-based compensation176 - The company changed its interim income tax calculation method from the annual effective tax rate (AETR) to the discrete method in Q2 2025 due to AETR variability180181 Results of Operations Comparison of Three Months Ended June 30, 2025 and 2024 Results of Operations (Three Months Ended June 30) | Metric | 3 Months Ended Jun 30, 2025 (in thousands) | 3 Months Ended Jun 30, 2024 (in thousands) | Dollar Change (in thousands) | Percentage Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------- | :---------------- | | Real estate brokerage commissions | $141,417 | $135,423 | $5,994 | 4.4% | | Financing fees | $26,259 | $18,294 | $7,965 | 43.5% | | Total revenue | $172,276 | $158,367 | $13,909 | 8.8% | | Cost of services | $106,618 | $98,081 | $8,537 | 8.7% | | Selling, general and administrative | $71,550 | $65,003 | $6,547 | 10.1% | | Operating loss | $(9,045) | $(8,046) | $(999) | 12.4% | | Provision for income taxes | $7,288 | $2,100 | $5,188 | 247.0% | | Net loss | $(11,035) | $(5,538) | $(5,497) | 99.3% | - The average commission rate for real estate brokerage decreased by 13 basis points due to an increase in average transaction size, as larger transactions typically have smaller commission rates187 - Selling, general, and administrative expense increased by $6.6 million, or 10.1%, primarily due to higher compensation-related costs, increased investment in business development and marketing, and changes in deferred contingent consideration valuation192 Comparison of Six Months Ended June 30, 2025 and 2024 Results of Operations (Six Months Ended June 30) | Metric | 6 Months Ended Jun 30, 2025 (in thousands) | 6 Months Ended Jun 30, 2024 (in thousands) | Dollar Change (in thousands) | Percentage Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------- | :---------------- | | Real estate brokerage commissions | $265,039 | $244,898 | $20,141 | 8.2% | | Financing fees | $44,389 | $32,721 | $11,668 | 35.7% | | Total revenue | $317,314 | $287,471 | $29,843 | 10.4% | | Cost of services | $194,966 | $174,949 | $20,017 | 11.4% | | Selling, general and administrative | $143,102 | $133,919 | $9,183 | 6.9% | | Operating loss | $(26,756) | $(28,148) | $1,392 | (4.9)% | | Benefit for income taxes | $(2,209) | $(2,646) | $437 | (16.5)% | | Net loss | $(15,457) | $(15,525) | $68 | (0.4)% | - Cost of services as a percentage of total revenue increased by 50 basis points to 61.4%, primarily due to senior professionals earning higher additional commissions203 - Other revenue decreased by 20.0% to $7.9 million, mainly due to a reduction in leasing fees201 Non-GAAP Financial Measure - Adjusted EBITDA is defined as net loss before interest income and other, interest expense, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation209 Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric | 3 Months Ended Jun 30, 2025 (in thousands) | 3 Months Ended Jun 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | | Net loss | $(11,035) | $(5,538) | | Adjusted EBITDA | $1,456 | $1,441 | Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric | 6 Months Ended Jun 30, 2025 (in thousands) | 6 Months Ended Jun 30, 2024 (in thousands) | | :----- | :--------------------------------------- | :--------------------------------------- | | Net loss | $(15,457) | $(15,525) | | Adjusted EBITDA | $(7,286) | $(8,641) | Liquidity and Capital Resources - Primary liquidity sources are cash, cash equivalents, restricted cash, operating cash flows, marketable debt securities, and a $10 million credit facility211 Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | | Net cash flows used in operating activities | $(31,821) | $(50,170) | | Net cash flows (used in) provided by investing activities | $(10,076) | $58,777 | | Net cash flows used in financing activities | $(25,858) | $(17,229) | | Net decrease in cash, cash equivalents, and restricted cash | $(67,491) | $(8,760) | | Cash, cash equivalents, and restricted cash at end of period | $85,954 | $161,993 | - Cash flows used in operating activities decreased by $18.3 million, primarily due to a reduction in advances and loans213 - Investing activities shifted from providing $58.8 million in 2024 to using $10.1 million in 2025, mainly due to a $69.8 million increase in net purchases of securities214 - Financing activities used $8.6 million more cash, driven by a $6.8 million increase in stock repurchases and $1.1 million in principal payments for deferred/contingent consideration215 - The company has a maximum aggregate loan guarantee obligation of $371.1 million related to its strategic alliance with MTRCC, supported by $0.8 million in restricted cash218219 - Inflation, which rose to 2.7% as of March 2025, and the Federal Reserve's restrained interest rate outlook, coupled with potential inflationary trade policies, could impact future economic conditions222223 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details market risk exposure, primarily interest rate risk on marketable debt securities and minor foreign currency risk - The company holds $246.7 million in marketable debt securities, available-for-sale, with a weighted average credit rating of AA-225 Sensitivity of Marketable Debt Securities to Interest Rate Changes | Change in Interest Rates | Approximate Change in Fair Value of Investments (in thousands) | | :----------------------- | :----------------------------------------------------------- | | 2% Decrease | $6,229 | | 1% Decrease | $3,115 | | 1% Increase | $(3,116) | | 2% Increase | $(6,233) | Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal control - Management concluded that disclosure controls and procedures were effective as of June 30, 2025228 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025229 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings, with no material adverse effect expected on financial results - The company is involved in ordinary course legal proceedings, but management does not expect a material adverse effect on financial results231 Item 1A. Risk Factors No material changes to risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K232 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 230,283 shares for $7.4 million, with $63.6 million remaining authorized for repurchases Common Stock Repurchases (Three Months Ended June 30, 2025) | Period (Three Months Ended June 30, 2025) | Total Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining (in thousands) | | :---------------------------------------- | :--------------------- | :--------------------------- | :------------------------------------------------ | | April 1, 2025 - April 30, 2025 | 161,165 | $31.04 | $65,523 | | May 1, 2025 - May 31, 2025 | 57,288 | $28.45 | $63,894 | | June 1, 2025 - June 30, 2025 | 11,830 | $28.80 | $63,553 | | Total | 230,283 | N/A | $63,553 | - As of June 30, 2025, $63.6 million remained authorized for repurchases under the common stock repurchase program108233 Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported by the company during the period - No defaults upon senior securities were reported234 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company235 Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - No Rule 10b5-1 trading plans were adopted or terminated by directors or officers during the quarter236 Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including credit agreement amendments and CEO/CFO certifications - Key exhibits include the Third Amendment to the Second Amended and Restated Credit Agreement and CEO/CFO certifications237 SIGNATURES The report was signed on August 7, 2025, by President and CEO Hessam Nadji and CFO Steven F. DeGennaro - The report was signed by the President and CEO, Hessam Nadji, and CFO, Steven F. DeGennaro, on August 7, 2025243
Marcus & Millichap(MMI) - 2025 Q2 - Quarterly Report