Marcus & Millichap, Inc. (the “Company”, “Marcus &
Millichap”, or “MMI”) (NYSE: MMI), a leading national real estate
services firm specializing in commercial real estate investment
sales, financing, research and advisory services, reported its
second quarter results today.
Second Quarter 2024 Highlights Compared to Second Quarter
2023
- Total revenue of $158.4 million, compared to $162.9 million
- Brokerage commissions of $135.4 million, compared to $140.3
million
- Private Client Market brokerage revenue of $84.8 million,
compared to $96.2 million
- Middle Market and Larger Transaction Market brokerage revenue
of $45.3 million, compared to $39.4 million
- Financing fees of $18.3 million, compared to $17.9 million
- Net loss of $5.5 million, or $0.14 per common share, diluted,
compared to net loss of $8.7 million, or $0.23 per common share,
diluted
- Adjusted EBITDA of $1.4 million, compared to $(1.1)
million1
Six Months 2024 Highlights Compared to Six Months
2023
- Total revenue of $287.5 million, compared to $317.7 million
- Brokerage commissions of $244.9 million, compared to $275.4
million
- Private Client Market brokerage revenue of $158.0 million,
compared to $186.7 million
- Middle Market and Larger Transaction Market brokerage revenue
of $76.8 million, compared to $78.9 million
- Financing fees of $32.7 million, compared to $33.8 million
- Net loss of $15.5 million, or $0.40 per common share, diluted,
compared to net loss of $14.6 million, or $0.37 per common share,
diluted
- Adjusted EBITDA of $(8.6) million, compared to $(8.5)
million1
“We are encouraged by the progress in the second quarter, with
sequential improvement in our results compared to the first
quarter. Our brokerage transaction volume increased 27%, reflecting
more realistic pricing, opportunistic capital gradually re-entering
the market and internal initiatives to increase business. The
pull-back in the 10-year treasury yield and conviction of the
upcoming interest rate easing cycle is also encouraging,” stated
Hessam Nadji, Marcus & Millichap’s president and chief
executive officer.
Mr. Nadji continued, “The market still faces uncertainty related
to the prospects of a soft landing and the Fed’s balancing act.
However, we believe lower interest rates and pent-up buyer demand
with record capital still on the sideline bode well for healthier
sales and financing volumes ahead. Our strong capital position and
unwavering commitment to innovation, productivity and talent
acquisition and retention continue to guide us. Our focus on
investing in proprietary technology and strategic initiatives
ensures that Marcus & Millichap remains on the offense as we
emerge from this cycle.”
_________________________ 1 Please refer to the reconciliation
of GAAP measures to non-GAAP measures at the end of this release
for more information.
Second Quarter 2024 Results Compared to Second Quarter
2023
Total revenue for the second quarter 2024 was $158.4 million, a
decrease of 2.8% compared to $162.9 million for the same period in
the prior year.
For real estate brokerage commissions, revenue was $135.4
million, a decrease of 3.5% compared to the same period in the
prior year. The decline was primarily attributed to a 4.9% decrease
in total sales volume, reflecting the ongoing market disruption
driven by high interest rates and constrained lending. The decrease
was partially offset by a three basis point increase in the average
commission rate earned compared to the second quarter 2023. Private
Client Market revenue decreased by 11.9%, while the combined Middle
Market and Larger Transaction Market revenue increased by
14.8%.
For financing fees, revenue was $18.3 million, an increase of
2.2% compared to the same period in the prior year. The increase
was primarily attributed to an 11.0% increase in total financing
volume, partially offset by a 14 basis point decrease in the
average fee rate compared to second quarter of 2023.
Total operating expenses for the second quarter 2024 were $166.4
million, compared to $173.5 million for the same period in the
prior year. The change was primarily due to reductions of 3.0% in
cost of services and 5.7% in selling, general and administrative
expenses. Cost of services as a percentage of total revenue
decreased by 20 basis points to 61.9% compared to the same period
during the prior year.
Selling, general and administrative expenses for the second
quarter 2024 were $65.0 million, compared to $68.9 million for the
same period in the prior year. The change was primarily due to a
reduction in marketing support and corporate bonus attributable to
the lower revenue.
Net loss for the second quarter 2024 was $5.5 million, or $0.14
per common share, diluted, compared to a net loss of $8.7 million,
or $0.23 per common share, diluted, for the same period in the
prior year. Adjusted EBITDA for the second quarter 2024 was $1.4
million, compared to $(1.1) million for the same period in the
prior year, primarily as a result of the decrease in operating
loss.
Six Months 2024 Results Compared to Six Months 2023
Total revenues for the six months ended June 30, 2024 were
$287.5 million, compared to $317.7 million for the same period in
the prior year, a decrease of $30.2 million, or 9.5%. Total
operating expenses for the six months ended June 30, 2024 decreased
by 8.4% to $315.6 million compared to $344.4 million for the same
period in the prior year. Cost of services as a percent of total
revenues decreased to 60.9%, down 100 basis points compared to the
first six months of 2023. The Company’s net loss for the six months
ended June 30, 2024 was $15.5 million, or $0.40 per common share,
diluted, compared to $14.6 million, or $0.37 per common share,
diluted, for the same period in the prior year. Adjusted EBITDA for
the six months ended June 30, 2024 decreased to $(8.6) million,
from $(8.5) million for the same period in the prior year. As of
June 30, 2024, the Company had 1,726 investment sales and financing
professionals, compared to 1,865 at the end of the same period last
year.
Capital Allocation
On August 1, 2024, the Board of Directors declared a semi-annual
regular dividend of $0.25 per share, or approximately $10.2
million, with a payment date of October 4, 2024, to stockholders of
record at the close of business on September 16, 2024.
During the six months ended June 30, 2024, the Company
repurchased 16,900 shares of common stock at an average price of
$32.77 per share for a total price of $0.6 million. Since August
2022, the Company has repurchased and retired 2,141,422 shares of
common stock at an average price of $32.24 per share for a total
price of $69.0 million.
After accounting for shares repurchased through August 2, 2024,
Marcus & Millichap has approximately $71.0 million available to
repurchase shares under its program. No time limit has been
established for the completion of the program, and the repurchases
are expected to be executed from time-to-time, subject to general
business and market conditions and other investment opportunities,
through open market purchases or privately negotiated transactions,
including through Rule 10b5-1 plans.
Business Outlook
The market is still working through the ongoing price discovery,
wider than normal bid/ask spreads, and a prolonged downturn in
transaction volume due to the Federal Reserve’s decision to delay
interest rate reductions. While these conditions are likely to
persist through much of 2024, price adjustments, distressed
situations and maturing loans could drive additional transactions
in the quarters ahead. Over the long term, real estate demand is
expected to return sales and financing volumes to higher than
current levels given the record capital on the sideline and key
advantages of real estate investments. Accordingly, the Company
believes it remains well-positioned to achieve long-term
growth.
The Company benefits from its experienced management team,
infrastructure investments, industry-leading market research and
proprietary technology. The size and fragmentation of the Private
Client Market continues to offer long-term growth opportunities
through consolidation. This highly fragmented market segment
consistently accounts for over 80% of all U.S. commercial property
transactions and over 60% of the commission pool. The top 10
brokerage firms led by MMI had an estimated 22% share of this
segment by transaction count in 2023.
Key factors that may influence the Company’s business during
2024 include:
- Volatility in transactional activity and investor sentiment
driven by:
- The elevated cost of debt capital
- Interest rate uncertainty and the heightened bid-ask spread
between buyers and sellers
- Risks of a potential recession and its unfavorable impact to
commercial real estate space demand
- Possible impact to market sentiment related to the presidential
election, potential tax and other policy changes which may
influence transaction velocity and/or future fluctuations in sales
and financing activity
- Increase in operating expenses driven by labor costs,
insurance, taxes and cost of materials
- Volatility in each of the Company’s markets
- Increase in costs related to in-person events, client meetings,
and conferences
- Global geopolitical uncertainty, which may cause investors to
refrain from transacting
- The potential for acquisition activity and subsequent
integration
Webcast and Call Information
Marcus & Millichap will host a live webcast today to discuss
the financial results at 7:30 a.m. Pacific Time/10:30 a.m. Eastern
Time. The webcast will be accessible through the Investor Relations
section of Marcus & Millichap's website at
ir.marcusmillichap.com and will be archived upon completion of the
call. The Company encourages the use of the webcast due to
potential extended wait times to access the conference call via
dial-in.
For those unable to access the webcast, callers from the United
States and Canada should dial 1-877-407-9208 ten minutes prior to
the scheduled call time. International callers should dial
1-201-493-6784.
Replay Information
For those unable to participate during the live broadcast, a
telephonic replay of the call will also be available from 1:30 p.m.
Eastern Time on Wednesday, August 7, 2024 through 11:59 p.m.
Eastern Time on Wednesday, August 21, 2024 by dialing
1-844-512-2921 in the United States and Canada or 1-412-317-6671
internationally and entering passcode 13746778.
About Marcus & Millichap, Inc.
Marcus & Millichap, Inc. is a leading national real estate
services firm specializing in commercial real estate investment
sales, financing services, research and advisory services. As of
June 30, 2024, the Company had 1,726 investment sales and financing
professionals in more than 80 offices who provide investment
brokerage and financing services to sellers and buyers of
commercial real estate. The Company also offers market research,
consulting and advisory services to its clients. Marcus &
Millichap closed 3,364 transactions during the six months ended
June 30, 2024, with a sales volume of $19.2 billion. For additional
information, please visit www.MarcusMillichap.com.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements, including our
expectations regarding the long-term outlook of the commercial real
estate transaction market, and our positioning within it, our
belief relating to the Company’s long-term growth, our assessment
of the key factors influencing the Company’s business outlook for
2024 and the execution of our capital return program, including a
semi-annual dividend and stock repurchase program. We have based
these forward-looking statements largely on our current
expectations and projections about future events and financial
trends affecting the financial condition of our business.
Forward-looking statements should not be read as a guarantee of
future performance or results and will not necessarily be accurate
indications of the times at, or by, 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.
Important factors that could cause such differences include, but
are not limited to:
- general uncertainty in the capital markets, a worsening of
economic conditions, and the rate and pace of economic recovery
following an economic downturn;
- changes in our business operations;
- market trends in the commercial real estate market or the
general economy, including the impact of inflation and increased
interest rates;
- our ability to attract and retain qualified senior executives,
managers, and investment sales and financing professionals;
- the impact of forgivable loans and related expense resulting
from the recruitment and retention of agents;
- the effects of increased competition on our business;
- our ability to successfully enter new markets or increase our
market share;
- our ability to successfully expand our services and businesses
and to manage any such expansions;
- our ability to retain existing clients and develop new
clients;
- our ability to keep pace with changes in technology;
- any business interruption or technology failure, including
cybersecurity risks and ransomware attacks, and any related impact
on our reputation;
- changes in interest rates, availability of capital, tax laws,
employment laws, or other government regulation affecting our
business, in each case as may be impacted by the 2024 presidential
election;
- our ability to successfully identify, negotiate, execute, and
integrate accretive acquisitions; and
- other risk factors included under “Risk Factors” in our most
recent Annual Report on Form 10-K.
In addition, in this release, the words “believe,” “may,”
“will,” “estimate,” “continue,” “anticipate,” “intend,” “goal,”
“expect,” “predict,” “potential,” “should,” and similar
expressions, as they relate to our Company, our business and our
management, are intended to identify forward-looking statements. In
light of these risks and uncertainties, the forward-looking events
and circumstances discussed in this release may not occur and
actual results could differ materially from those anticipated or
implied in the forward-looking statements.
Forward-looking statements speak only as of the date of this
release. You should not put undue reliance on any forward-looking
statements. We assume no obligation to update forward-looking
statements to reflect actual results, changes in assumptions or
changes in other factors affecting forward-looking information,
except to the extent required by applicable laws. If we update one
or more forward-looking statements, no inference should be drawn
that we will make additional updates with respect to those or other
forward-looking statements. We have not filed our Quarterly Report
on Form 10-Q (“Form 10-Q”) for the quarter ended June 30, 2024. As
a result, all financial results described in this release should be
considered preliminary, and are subject to change to reflect any
necessary adjustments or changes in accounting estimates, that are
identified prior to the time we file our Form 10-Q.
MARCUS & MILLICHAP,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue:
Real estate brokerage commissions
$
135,423
$
140,330
$
244,898
$
275,376
Financing fees
18,294
17,896
32,721
33,764
Other revenue
4,650
4,640
9,852
8,518
Total revenue
158,367
162,866
287,471
317,658
Operating expenses:
Cost of services
98,081
101,163
174,949
196,590
Selling, general and administrative
65,003
68,910
133,919
141,129
Depreciation and amortization
3,329
3,468
6,751
6,675
Total operating expenses
166,413
173,541
315,619
344,394
Operating loss
(8,046
)
(10,675
)
(28,148
)
(26,736
)
Other income, net
4,812
4,890
10,380
9,700
Interest expense
(204
)
(216
)
(403
)
(431
)
Loss before provision (benefit) for income
taxes
(3,438
)
(6,001
)
(18,171
)
(17,467
)
Provision (benefit) for income taxes
2,100
2,728
(2,646
)
(2,905
)
Net loss
$
(5,538
)
$
(8,729
)
$
(15,525
)
$
(14,562
)
Net loss per share:
Basic
$
(0.14
)
$
(0.23
)
$
(0.40
)
$
(0.37
)
Diluted
$
(0.14
)
$
(0.23
)
$
(0.40
)
$
(0.37
)
Weighted average common shares
outstanding:
Basic
38,675
38,538
38,561
38,867
Diluted
38,675
38,538
38,561
38,867
MARCUS & MILLICHAP, INC. KEY
OPERATING METRICS SUMMARY (Unaudited)
Total sales volume was approximately $9.5 billion for the three
months ended June 30, 2024, encompassing 1,800 transactions
consisting of $7.2 billion for real estate brokerage (1,272
transactions), $1.8 billion for financing (272 transactions) and
$0.5 billion in other transactions, including consulting and
advisory services (256 transactions). Total sales volume was
approximately $19.2 billion for the six months ended June 30, 2024,
encompassing 3,364 transactions consisting of $12.8 billion for
real estate brokerage (2,374 transactions), $3.5 billion for
financing (506 transactions) and $2.9 billion in other
transactions, including consulting and advisory services (484
transactions). As of June 30, 2024, the Company had 1,625
investment sales professionals and 101 financing professionals. Key
metrics for real estate brokerage and financing activities
(excluding other transactions) are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
Real Estate Brokerage
2024
2023
2024
2023
Average Number of Investment Sales
Professionals
1,620
1,757
1,629
1,769
Average Number of Transactions per
Investment Sales Professional
0.79
0.81
1.46
1.53
Average Commission per Transaction
$
106,465
$
98,686
$
103,159
$
101,954
Average Commission Rate
1.89
%
1.86
%
1.91
%
1.88
%
Average Transaction Size (in
thousands)
$
5,636
$
5,303
$
5,404
$
5,433
Total Number of Transactions
1,272
1,422
2,374
2,701
Total Sales Volume (in millions)
$
7,169
$
7,542
$
12,830
$
14,674
Three Months Ended
June 30,
Six Months Ended
June 30,
Financing (1)
2024
2023
2024
2023
Average Number of Financing
Professionals
100
95
100
94
Average Number of Transactions per
Financing Professional
2.72
2.99
5.06
5.99
Average Fee per Transaction
$
51,184
$
52,166
$
49,331
$
49,382
Average Fee Rate
0.76
%
0.90
%
0.72
%
0.82
%
Average Transaction Size (in
thousands)
$
6,705
$
5,786
$
6,885
$
5,986
Total Number of Transactions
272
284
506
563
Total Financing Volume (in millions)
$
1,824
$
1,643
$
3,484
$
3,370
(1)
Operating metrics exclude certain
financing fees not directly associated to transactions.
The following table sets forth the number of transactions, sales
volume and revenue by commercial real estate market segment for
real estate brokerage:
Three Months Ended June 30,
2024
2023
Change
Real Estate Brokerage
Number
Volume
Revenue
Number
Volume
Revenue
Number
Volume
Revenue
(in millions)
(in thousands)
(in millions)
(in thousands)
(in millions)
(in thousands)
<$1 million
207
$
116
$
5,352
209
$
120
$
4,665
(2
)
$
(4
)
$
687
Private Client Market ($1 – <$10
million)
922
2,899
84,816
1,070
3,571
96,238
(148
)
(672
)
(11,422
)
Middle Market ($10 – <$20 million)
79
1,082
19,135
77
1,021
17,425
2
61
1,710
Larger Transaction Market (≥$20
million)
64
3,072
26,120
66
2,830
22,002
(2
)
$
242
$
4,118
1,272
$
7,169
$
135,423
1,422
$
7,542
$
140,330
(150
)
$
(373
)
$
(4,907
)
Six Months Ended June 30,
2024
2023
Change
Real Estate Brokerage
Number
Volume
Revenue
Number
Volume
Revenue
Number
Volume
Revenue
(in millions)
(in thousands)
(in millions)
(in thousands)
(in millions)
(in thousands)
<$1 million
393
$
219
$
10,116
392
$
236
$
9,703
1
$
(17
)
$
413
Private Client Market ($1 – <$10
million)
1,730
5,489
157,979
2,040
6,825
186,741
(310
)
(1,336
)
(28,762
)
Middle Market ($10 – <$20 million)
138
1,884
34,228
143
1,921
34,793
(5
)
(37
)
(565
)
Larger Transaction Market (≥$20
million)
113
5,238
42,575
126
5,692
44,139
(13
)
$
(454
)
$
(1,564
)
2,374
$
12,830
$
244,898
2,701
$
14,674
$
275,376
(327
)
$
(1,844
)
$
(30,478
)
MARCUS & MILLICHAP,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except for
shares and par value)
June 30, 2024
(unaudited)
December 31,
2023
Assets
Current assets:
Cash, cash equivalents, and restricted
cash
$
161,993
$
170,753
Commissions receivable
15,731
16,171
Prepaid expenses
7,843
8,813
Income tax receivable
9,724
9,299
Marketable debt securities,
available-for-sale (amortized cost of $120,308 and $169,018
at June 30, 2024 and December 31, 2023,
respectively, and $0 allowance for credit
losses)
119,807
168,881
Advances and loans, net
11,125
3,574
Other assets, current
17,795
16,203
Total current assets
344,018
393,694
Property and equipment, net
27,366
27,450
Operating lease right-of-use assets,
net
89,256
90,058
Marketable debt securities,
available-for-sale (amortized cost of $55,493 and $69,538 at
June 30, 2024 and December 31, 2023,
respectively, and $0 allowance for credit losses)
53,700
67,459
Assets held in rabbi trust
11,686
10,838
Deferred tax assets, net
49,595
46,930
Goodwill and other intangible assets,
net
48,970
51,183
Advances and loans, net
185,612
175,827
Other assets, non-current
15,226
14,972
Total assets
$
825,429
$
878,411
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses
$
10,036
$
8,126
Deferred compensation and commissions
46,644
55,769
Operating lease liabilities
17,858
18,336
Accrued bonuses and other employee related
expenses
10,760
19,119
Other liabilities, current
7,791
3,919
Total current liabilities
93,089
105,269
Deferred compensation and commissions
28,188
47,771
Operating lease liabilities
70,590
69,407
Other liabilities, non-current
6,892
10,690
Total liabilities
198,759
233,137
Commitments and contingencies
—
—
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares – 25,000,000; issued and
outstanding shares – none at June 30, 2024 and
December 31, 2023, respectively
—
—
Common stock, $0.0001 par value:
Authorized shares – 150,000,000; issued
and outstanding shares – 38,729,323 and
38,412,484 at June 30, 2024 and December
31, 2023, respectively
4
4
Additional paid-in capital
161,895
153,740
Retained earnings
466,132
492,298
Accumulated other comprehensive loss
(1,361
)
(768
)
Total stockholders’ equity
626,670
645,274
Total liabilities and stockholders’
equity
$
825,429
$
878,411
MARCUS & MILLICHAP, INC. OTHER
INFORMATION (Unaudited)
Adjusted EBITDA Reconciliation
Adjusted EBITDA, which the Company defines as net loss before
(i) interest income and other, including net realized gains
(losses) on marketable debt securities, available-for-sale and
cash, cash equivalents, and restricted cash, (ii) interest expense,
(iii) provision (benefit) for income taxes, (iv) depreciation and
amortization, and (v) stock-based compensation. The Company uses
Adjusted EBITDA in its business operations to evaluate the
performance of its business, develop budgets and measure its
performance against those budgets, among other things. The Company
also believes that analysts and investors use Adjusted EBITDA as a
supplemental measure to evaluate its overall operating performance.
However, Adjusted EBITDA has material limitations as a supplemental
metric and should not be considered in isolation or as a substitute
for analysis of the Company’s results as reported under U.S.
generally accepted accounting principles (“U.S. GAAP”). The Company
finds Adjusted EBITDA to be a useful management metric to assist in
evaluating performance, because Adjusted EBITDA eliminates items
related to capital structure, taxes and non-cash items. Considering
the foregoing limitations, the Company does not rely solely on
Adjusted EBITDA as a performance measure and also considers its
U.S. GAAP results. Adjusted EBITDA is not a measurement of the
Company’s financial performance under U.S. GAAP and should not be
considered as an alternative to net loss, operating income or any
other measures calculated in accordance with U.S. GAAP. Because
Adjusted EBITDA is not calculated in the same manner by all
companies, it may not be comparable to other similarly titled
measures used by other companies.
A reconciliation of the most directly comparable U.S. GAAP
financial measure, net loss, to Adjusted EBITDA is as follows (in
thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Net loss
$
(5,538
)
$
(8,729
)
$
(15,525
)
$
(14,562
)
Adjustments:
Interest income and other(1)
(4,543
)
(4,090
)
(9,308
)
(8,480
)
Interest expense
204
216
403
431
Provision (benefit) for income taxes
2,100
2,728
(2,646
)
(2,905
)
Depreciation and amortization
3,329
3,468
6,751
6,675
Stock-based compensation
5,889
5,351
11,684
10,362
Adjusted EBITDA
$
1,441
$
(1,056
)
$
(8,641
)
$
(8,479
)
(1)
Other includes net realized
losses on marketable debt securities, available-for-sale.
Glossary of Terms
- Private Client Market: transactions with values from $1 million
to up to but less than $10 million
- Middle Market: transactions with values from $10 million to up
to but less than $20 million
- Larger Transaction Market: transactions with values of $20
million and above
- Acquisitions: acquisition of businesses accounted for as a
business combination in accordance with generally accepted
accounting standards
Certain Adjusted Metrics
Real Estate Brokerage
Following are actual and as adjusted metrics excluding any large
transactions in our real estate brokerage business in excess of
$300 million:
Three Months Ended
June 30, 2024
Six Months Ended
June 30, 2024
(actual)
(as adjusted)
(actual)
(as adjusted)
Total Sales Volume Decrease
(4.9)%
(4.9)%
(12.6)%
(12.6)%
Average Commission Rate
Increase
1.6%
1.6%
1.6%
1.6%
Average Transaction Size Increase
(Decrease)
6.3%
6.3%
(0.5)%
(0.5)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807492120/en/
Investor Relations: Investor Relations
InvestorRelations@marcusmillichap.com
Marcus and Millichap (NYSE:MMI)
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Marcus and Millichap (NYSE:MMI)
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부터 10월(10) 2023 으로 10월(10) 2024
