Marcus & Millichap(US:MMI)2025-11-07 22:06Financial Performance - Total revenue for the three months ended September 30, 2025 was $193.9 million, an increase of $25.4 million or 15.1% compared to $168.5 million in the same period in 2024[192]. - Total revenue for the nine months ended September 30, 2025 was $511.2 million, an increase of $55.2 million or 12.1% compared to $456.0 million in the same period in 2024[204]. - Revenue from real estate brokerage commissions increased to $162.2 million, up $20.2 million or 14.2%, driven by a 19.2% increase in total transactions[193]. - Revenue from real estate brokerage commissions for the nine months ended September 30, 2025 was $427.2 million, an increase of $40.3 million or 10.4%[205]. - Financing fees revenue rose to $26.3 million, an increase of $5.7 million or 27.7%, primarily due to a 34.4% increase in total financing volume[194]. - Net income for the three months ended September 30, 2025 was $240, compared to a net loss of $5.4 million in the same period in 2024, representing a turnaround of $5.6 million[192]. - Adjusted EBITDA for the three months ended September 30, 2025 was $6.9 million, compared to a loss of $21, indicating a significant improvement[192]. - Adjusted EBITDA for the nine months ended September 30, 2025, was a loss of $397,000, compared to a loss of $8.7 million in 2024[216]. Transaction Activity - As of September 30, 2025, the company closed 2,289 investment sales and financing transactions with a total sales volume of approximately $12.2 billion for the three months, and 6,065 transactions with a total sales volume of approximately $33.9 billion for the nine months[154]. - In Q3 2025, commercial real estate transaction activity increased by 8% year-over-year, with office and multi-tenant retail property sales leading the gains[172]. - Total sales volume for Q3 2025 reached approximately $12.2 billion, compared to $12.0 billion in Q3 2024[190]. - The average number of transactions per investment sales professional increased to 1.02 in Q3 2025 from 0.84 in Q3 2024[190]. Market Conditions - The overall vacancy rate in the commercial real estate market increased by 20 basis points to 4.6%, with unit absorption thinning to just 57,000 units in the third quarter of 2025[166]. - Apartment starts have fallen by 76% from their peak in 2022, indicating a significant slowdown in new supply in the market[165]. - The company anticipates that receding new supply risks should aid commercial real estate performance in the coming quarters[165]. - The company anticipates that increased stability and lower interest rates could bolster investment activity in the coming quarters[172]. Operating Expenses - Total operating expenses for the three months ended September 30, 2025 were $196.3 million, an increase of $16.3 million or 9.1% compared to $180.0 million in the same period in 2024[196]. - Selling, general, and administrative expenses increased to $215.6 million for the nine months ended September 30, 2025, up from $204.6 million in 2024, representing a 5.4% increase[210]. - Cost of services for the nine months ended September 30, 2025 increased to $316.0 million, up $36.3 million or 13.0% compared to $279.7 million in the same period in 2024[209]. - Depreciation and amortization expense decreased to $8.7 million for the nine months ended September 30, 2025, down from $11.3 million in 2024, a decrease of 22.6%[211]. Cash Flow and Investments - Total cash, cash equivalents, and restricted cash decreased by $36.0 million to $117.4 million at September 30, 2025, from $153.4 million at December 31, 2024[218]. - Cash flows provided by operating activities were $20.4 million for the nine months ended September 30, 2025, compared to cash flows used of $34.9 million in 2024, a $55.3 million increase[219]. - Cash flows used in investing activities were $29.2 million for the nine months ended September 30, 2025, compared to cash flows provided of $55.3 million in 2024, an increase of $84.5 million in cash used[220]. - Cash flows used in financing activities were $27.4 million for the nine months ended September 30, 2025, compared to $18.3 million in 2024, a $9.1 million increase[221]. Interest Rate and Market Risks - The Federal Reserve lowered the overnight rate by 25 basis points in September and October, bringing the rate to the 3.75% - 4.0% range, the lowest since November 2022[161]. - A 2% decrease in interest rates could increase the fair value of investments by approximately $6,653,000, while a 2% increase could decrease it by approximately $7,064,000[233]. - The company does not face material interest rate risk concerning other assets and liabilities, equity price risk, or other market risks[233]. - The functional currency for Canadian operations is the Canadian dollar, exposing the company to foreign currency exchange rate risk[233]. - Historically, foreign exchange rate risk has not been material for the company[233].