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MARCUS & MILLICHAP, INC. REPORTS RESULTS FOR
FOURTH QUARTER AND FULL YEAR 2022

Record Annual Revenue of $1.3 Billion
Diluted Earnings Per Share of $0.20 for the Fourth Quarter and $2.59 for the Full Year

CALABASAS, Calif., February 17, 2023 -- (BUSINESS WIRE) -- Marcus & Millichap, Inc. (the “Company”, “Marcus & Millichap”, “MMI”) (NYSE: MMI), a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, today reported financial results for the fourth quarter and the year ended December 31, 2022.

Fourth Quarter 2022 Highlights Compared to Fourth Quarter 2021
Total revenue was $262.4 million, compared to $495.1 million
Net income was $7.9 million, or $0.20 per common share, diluted, compared to $62.0 million, or $1.53 per common share, diluted
Adjusted EBITDA was $14.1 million compared to $88.2 million
Brokerage commissions were $235.8 million, compared to $455.5 million
oPrivate Client brokerage revenue was $145.6 million, compared to $247.4 million
oMiddle Market and Larger Transaction brokerage revenue was $85.1 million, compared to $198.6 million
Financing fees were $21.6 million, compared to $34.2 million

Full Year 2022 Highlights Compared to Full Year 2021
Total revenue was $1,301.7 million, compared to $1,296.4 million
Net income was $104.2 million, or $2.59 per common share, diluted, compared to $142.5 million, or $3.55 per common share, diluted
Adjusted EBITDA was $165.5 million compared to $213.0 million
Brokerage commissions were $1,170.3 million, compared to $1,171.0 million
oPrivate Client brokerage revenue was $682.0 million, compared to $694.0 million
oMiddle Market and Larger Transaction brokerage revenue was $463.5 million, compared to $446.3 million
Financing fees were $113.0 million, compared to $109.7 million


“Despite a challenging fourth quarter spurred by the Fed-induced market disruption, MMI delivered record revenue in 2022 and the second-best earnings in our 52-year history,” stated Hessam Nadji, Marcus & Millichap’s President and CEO. “Last year’s Federal Reserve actions to fight runaway inflation resulted in the most aggressive financial tightening in 40 years, disrupting valuations and reducing fourth quarter market sales by 57%, according to data from Real Capital Analytics. Our fourth quarter financial results were directly impacted by the market disruption and costs related to investments in long-term growth initiatives. However, the relative strength of the Marcus & Millichap platform was on display as we outperformed the market with nearly 2,700 closings in the quarter.”

Mr. Nadji continued, “Notwithstanding ongoing near-term market headwinds, we expect clarity to emerge as the Fed nears the end of its tightening cycle and real estate investors recalibrate expectations on valuations. This will take time to emerge broadly and lift trading volumes, but there is no shortage of capital or buyer demand for appropriately priced assets. Our strategy to stay focused on the long term, continue investing in technology, market-leading talent and accretive acquisitions is unwavering. As we have proven through many cycles, our client-driven, value-added services are particularly sought after during times of disruption and foster robust recovery as cycles turn. We continue to invest in our business, which we believe will further enhance our market position and enable us to create even more long-term value for our shareholders.”

Capital Allocation

During the twelve months ended December 31, 2022, the Company declared two semi-annual regular dividends and one special dividend totaling $62.6 million, and repurchased 864,271 shares of common stock for $29.6 million.

On February 9, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, or approximately $10.4 million, payable on April 6, 2023, to stockholders of record at the close of business on March 14, 2023.

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Fourth Quarter 2022 Results Compared to Fourth Quarter 2021

Total revenue for the fourth quarter of 2022 was $262.4 million, compared to $495.1 million for the same period during the prior year, decreasing by 47.0%. Real estate brokerage commissions decreased to $235.8 million, compared to $455.5 million from the same period in the prior year primarily driven by lower transaction volume resulting from a slowdown in market activity arising from increasing interest rates and an uncertain economic outlook.

Total operating expenses for the fourth quarter of 2022 were $256.6 million, a decrease of 37.9% compared to $413.2 million for the same period in the prior year. The change was primarily driven by a 45.8% decrease in cost of services and a 5.7% decrease in selling, general and administrative expense. Cost of services as a percent of total revenue increased by 160 basis points to 68.9% compared to the same period during the prior year, primarily due to more tenured agents achieving a larger share of revenue throughout the year.

Selling, general and administrative expense for the fourth quarter of 2022 decreased by $4.4 million to $72.6 million, compared to the same period in the prior year. The change was primarily due to a decrease in management performance compensation.

Net income for the fourth quarter of 2022 was $7.9 million, or $0.20 per common share, diluted, compared to $62.0 million, or $1.53 per common share, diluted, for the same period in the prior year. Adjusted EBITDA for the fourth quarter of 2022 was $14.1 million, compared to $88.2 million for the same period in the prior year.
Full Year 2022 Results Compared to Full Year 2021
Total revenue for 2022 reached $1,302 million, compared to $1,296 million for 2021, an increase of $5.3 million, or 0.4%. Total operating expenses for 2022 were $1,164 million, compared to $1,107 million for 2021, which represents an increase of 5.2%. Cost of services as a percent of total revenue increased to 65.4% for 2022, up 60 basis points compared to 2021, primarily due to a larger share of revenue generated by more tenured agents. Net income for 2022 was $104.2 million, or $2.59 per common share, diluted, compared with $142.5 million, or $3.55 per common share, diluted, for 2021. Adjusted EBITDA for 2022 decreased to $165.5 million, from $213.0 million for 2021. As of December 31, 2022, the Company had 1,904 investment sales and financing professionals, a net reduction of 90 over the prior year.

Business Outlook
The economy and commercial real estate transaction market will likely remain choppy for the first half of 2023 as interest rate fluctuations and lender caution impair the price discovery process and the buyer/seller expectation gap remains wide. However, 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 segment continues to offer long-term growth opportunities through consolidation. This highly fragmented market segment consistently accounts for over 80% of all commercial property sales transactions and over 60% of the commission pool. The top 10 brokerage firms led by MMI have an estimated 21% share of this segment by transaction count.

Key factors that may influence the Company’s business during 2023 include:
Volatility in market sales and investor sentiment driven by:
oThe elevated cost of debt capital
oInterest rate fluctuations and the heightened bid-ask spread between buyers and sellers
oRisks of an impending recession and the resulting reduction of CRE space demand that results from uncertainty
oPossible impact to investor sentiment related to potential tax and other policy changes which may contribute to transaction acceleration and/or future fluctuations in sales and financing activity
oRising operating costs driven by wages, insurance, taxes and construction materials
Volatility in each of the Company’s market segments
Increase in costs related to in-person events, client meetings, and conferences as the economy opens further
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 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 use of the webcast due to potential extended wait times to access the conference call via dial-in.

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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 Friday, February 17, 2023 through 11:59 p.m. Eastern Time on Friday, March 3, 2023 by dialing 1-844-512-2921 in the United States and Canada or 1-412-317-6671 internationally and entering passcode 13735052.

About Marcus & Millichap, Inc.
Marcus & Millichap, Inc. is a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of December 31, 2022, the Company had 1,904 investment sales and financing professionals in 81 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 our clients. Marcus & Millichap closed 12,272 transactions in 2022, with a sales volume of approximately $86.3 billion. For additional information, please visit www.MarcusMillichap.com.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements, including the Company’s business outlook for 2023, the anticipation of further interest rate increases and inflation, the execution of our capital return program, and expectations for market share growth. 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 rising inflation and higher interest rates;
our ability to attract and retain qualified senior executives, managers and investment sales and financing professionals;
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 cyber 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;
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 and Quarterly Report on Form 10-Q.

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 Form 10-K for the year ended December 31, 2022. As a result, all financial results described in this earnings 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-K.

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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended
December 31,
Year Ended
December 31,
2022202120222021
Revenue:
Real estate brokerage commissions$235,827 $455,511 $1,170,310 $1,170,969 
Financing fees21,615 34,242 112,978 109,690 
Other revenue5,007 5,381 18,422 15,781 
Total revenue262,449 495,134 1,301,710 1,296,440 
Operating expenses:
Cost of services180,724 333,327 850,894 840,209 
Selling, general and administrative72,629 77,007 300,009 255,154 
Depreciation and amortization3,239 2,915 13,406 11,721 
Total operating expenses256,592 413,249 1,164,309 1,107,084 
Operating income5,857 81,885 137,401 189,356 
Other income, net4,368 1,790 5,336 4,527 
Interest expense(161)(144)(708)(580)
Income before provision for income taxes10,064 83,531 142,029 193,303 
Provision for income taxes2,153 21,529 37,804 50,833 
Net income$7,911 $62,002 $104,225 $142,470 
Earnings per share:
Basic$0.20 $1.55 $2.61 $3.57 
Diluted$0.20 $1.53 $2.59 $3.55 
Weighted average common shares outstanding:
Basic39,46139,97739,89339,888
Diluted39,67840,41940,18640,187
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MARCUS & MILLICHAP, INC.
KEY OPERATING METRICS SUMMARY
(Unaudited)

Total sales volume was $16.4 billion for the three months ended December 31, 2022, encompassing 2,698 transactions consisting of $13.1 billion for real estate brokerage (2,043 transactions), $2.4 billion for financing (408 transactions) and $0.9 billion in other transactions, including consulting and advisory services (247 transactions). Total sales volume was $86.3 billion for the year ended December 31, 2022, encompassing 12,272 transactions consisting of $68.1 billion for real estate brokerage (9,111 transactions), $12.8 billion for financing (2,143 transactions) and $5.4 billion in other transactions, including consulting and advisory services (1,018 transactions). As of December 31, 2022, the Company had 1818 investment sales professionals and 86 financing professionals. Key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:
Three Months Ended
December 31,
Years Ended
December 31,
Real Estate Brokerage:2022202120222021
Average Number of Investment Sales Professionals1,799 1,899 1,817 1,925 
Average Number of Transactions per Investment Sales Professional1.14 1.73 5.01 5.01 
Average Commission per Transaction$115,431 $138,960 $128,450 $121,319 
Average Commission Rate1.80 %1.59 %1.72 %1.73 %
Average Transaction Size (in thousands)$6,407 $8,718 $7,473 $6,994 
Total Number of Transactions2,043 3,278 9,111 9,652 
Total Sales Volume (in millions)$13,090 $28,576 $68,088 $67,507 
Three Months Ended
December 31,
Years Ended
December 31,
Financing (1):
2022202120222021
Average Number of Financing Professionals86 83 86 85 
Average Number of Transactions per Financing Professional4.74 8.39 24.92 29.11 
Average Fee per Transaction$45,325 $42,639 $44,546 $37,959 
Average Fee Rate0.78 %0.78 %0.74 %0.81 %
Average Transaction Size (in thousands)$5,823 $5,458 $5,984 $4,691 
Total Number of Transactions408 696 2,143 2,474 
Total Financing Volume (in millions)$2,376 $3,799 $12,823 $11,605 


(1) Operating metrics exclude certain financing fees not directly associated to transactions.

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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 December 31,
20222021Change
Real Estate Brokerage NumberVolumeRevenueNumberVolumeRevenueNumberVolumeRevenue
(in millions)(in thousands)(in millions)(in thousands)(in millions)(in thousands)
<$1 million208$111 $5,098 296$200 $9,506 (88)$(89)$(4,408)
Private Client Market
($1 – <$10 million)
1,5655,546 145,586 2,4398,700 247,404 (874)(3,154)(101,818)
Middle Market
($10 – <$20 million)
1542,131 38,476 2733,733 72,531 (119)(1,602)(34,055)
Larger Transaction Market (≥$20 million)1165,302 46,667 27015,943 126,070 (154)(10,641)(79,403)
2,043$13,090 $235,827 3,278$28,576 $455,511 (1,235)$(15,486)$(219,684)

Year Ended December 31,
20222021Change
Real Estate Brokerage NumberVolumeRevenueNumberVolumeRevenueNumberVolumeRevenue
(in millions)(in thousands)(in millions)(in thousands)(in millions)(in thousands)
<$1 million936$560 $24,809 1,087$732 $30,681 (151)$(172)$(5,872)
Private Client Market
($1 – <$10 million)
6,85024,474 682,019 7,30024,339 693,996 (450)135 (11,977)
Middle Market
($10 – <$20 million)
7359,980 188,593 6438,874 170,230 921,106 18,363 
Larger Transaction Market (≥$20 million)59033,074 274,889 62233,562 276,062 (32)(488)(1,173)
9,111$68,088 $1,170,310 9,652$67,507 $1,170,969 (541)$581 $(659)



















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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for shares and par value)
December 31,
20222021
Assets
Current assets:
Cash, cash equivalents, and restricted cash of $15,800$235,873 $382,140 
Commissions receivable8,453 17,230 
Prepaid expenses9,411 13,220 
Income tax receivable8,682 — 
Marketable debt securities, available-for-sale (includes amortized cost of $254,683 and $183,915 at December 31, 2022 and 2021, respectively, and $0 allowance for credit losses)253,434 183,868 
Advances and loans, net4,005 6,403 
Other assets, current7,282 5,270 
Total current assets527,140 608,131 
Property and equipment, net27,644 23,192 
Operating lease right-of-use assets, net87,945 81,528 
Marketable debt securities, available-for-sale (includes amortized cost of $72,818 and $111,858 at December 31, 2022 and 2021, respectively, and $0 allowance for credit losses)68,595 112,610 
Assets held in rabbi trust9,553 11,508 
Deferred tax assets, net41,321 33,736 
Goodwill and other intangible assets, net55,696 48,105 
Advances and loans, net169,955 113,242 
Other assets, non-current15,859 13,146 
Total assets$1,003,708 $1,045,198 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses$11,450 $15,487 
Deferred compensation and commissions75,321 114,685 
Income tax payable— 17,853 
Operating lease liabilities16,984 18,973 
Accrued bonuses and other employee related expenses38,327 49,848 
Other liabilities, current9,933 8,784 
Total current liabilities152,015 225,630 
Deferred compensation and commissions64,461 53,536 
Operating lease liabilities65,109 58,334 
Other liabilities, non-current8,614 11,394 
Total liabilities290,199 348,894 
Commitments and contingencies— — 
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares – 25,000,000; issued and outstanding shares – none at December 31, 2022 and 2021, respectively— — 
Common stock, $0.0001 par value:
Authorized shares – 150,000,000; issued and outstanding shares – 39,255,838 and 39,692,373 at December 31, 2022 and 2021, respectively
Additional paid-in capital131,541 121,844 
Retained earnings585,581 573,546 
Accumulated other comprehensive income(3,617)910 
Total stockholders’ equity713,509 696,304 
Total liabilities and stockholders’ equity$1,003,708 $1,045,198 
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MARCUS & MILLICHAP, INC.
OTHER INFORMATION
(Unaudited)

Adjusted EBITDA Reconciliation
Adjusted EBITDA, which the Company defines as net income before (i) interest income and other, including net realized gains (losses) on marketable debt securities, available-for-sale and cash and cash equivalents, (ii) interest expense, (iii) provision for income taxes, (iv) depreciation and amortization, (v) stock-based compensation, and (vi) non-cash mortgage servicing rights (“MSRs”) activity. 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. In light of 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 income, 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 income, to Adjusted EBITDA is as follows (in thousands):

Three Months Ended
December 31,
Year Ended
December 31,
2022202120222021
Net income$7,911 $62,002 $104,225 $142,470 
Adjustments:
Interest income and other (1)
(3,992)(1,026)(7,951)(2,496)
Interest expense161 144 708 580 
Provision for income taxes2,153 21,529 37,804 50,833 
Depreciation and amortization3,239 2,915 13,406 11,721 
Stock-based compensation4,637 2,708 17,312 10,361 
Non-cash MSR activity (2)
— (60)— (467)
Adjusted EBITDA$14,109 $88,212 $165,504 $213,002 

(1)Other includes net realized gains (losses) on marketable debt securities available-for-sale.
(2)Non-cash MSR activity includes the assumption of servicing obligations.


Glossary of Terms
Private Client Market segment: transactions with values from $1 million to up to but less than $10 million
Middle Market segment: transactions with values from $10 million to up to but less than $20 million
Larger Transaction Market segment: transactions with values of $20 million and above
Acquisitions: acquisitions of teams and/or acquisitions as business combinations under accounting standards

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Certain Adjusted Metrics
Real Estate Brokerage
During the twelve months ended December 31, 2022, we closed a large portfolio of transactions in our real estate brokerage business in excess of $300 million. Following are actual and as adjusted metrics excluding these transactions:

Three Months Ended
December 31, 2022
Year Ended
December 31, 2022
(actual)
(as adjusted)
(actual)
(as adjusted)
Total Sales Volume Increase (decrease)(54.2)%(50.4)%0.9%(1.0)%
Average Commission Rate Increase (decrease)13.2%5.9%