Marcus & Millichap (MMI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue increased 4% year-over-year to $168.5 million, marking the first annual growth since the market disruption two years ago, with brokerage commissions up 1.5% and financing fees up 19.3%.

• Net loss for Q3 2024 narrowed to $5.4 million ($0.14 per share), improved from $9.2 million ($0.24 per share) in Q3 2023; adjusted EBITDA reached break-even.

• For the nine months ended September 30, 2024, revenue declined 4.9% to $456.0 million, with a net loss of $20.9 million, an improvement over the prior year.

• Management notes early signs of market stabilization, increased investor activity, and institutional capital returning, supported by internal initiatives and capital returning to the market.

• Strategic investments in talent, technology, and business development continue, despite near-term EPS pressure.

Financial highlights

• Q3 2024 brokerage revenue was $142.0 million (+1.5% YoY), with total sales volume of $8.5 billion across 1,331 transactions; financing revenue grew 19.3% to $20.6 million, with 318 transactions totaling $2.1 billion.

• Other revenue (leasing, consulting, advisory) rose 20% to $6 million.

• Operating expenses for Q3 were $180.0 million, up 1.4% year-over-year; SG&A was $70.7 million (+2.2% YoY), mainly due to higher personnel costs.

• Cost of services as a percentage of revenue decreased to 62.2% in Q3 2024, down 240 basis points year-over-year.

• Cash, cash equivalents, and marketable securities totaled $338.3 million as of September 30, 2024.

Outlook and guidance

• Management expects sequential revenue growth in Q4, with cost of services as a percentage of revenue to increase sequentially.

• SG&A expected to remain consistent with Q3 and improve over Q4 last year.

• Full-year tax rate projected at 13%-16%.

• Modest economic growth and potential further Fed rate cuts are expected to support investor sentiment and transaction activity.

• Recovery to long-term average transaction volumes is expected to be gradual, possibly extending beyond 2025.