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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________________________
FORM 10-Q
__________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________to___________
Commission File Number: 001-36155
__________________________
MARCUS & MILLICHAP, INC.
(Exact name of registrant as specified in its Charter)
__________________________
Delaware35-2478370
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
23975 Park Sorrento, Suite 400
Calabasas, California
91302
(Address of Principal Executive Offices)(Zip Code)
(818) 212-2250
(Registrant’s telephone number, including area code)
__________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per share
MMI
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Number of shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding as of November 5, 2024 was 38,823,704 shares.


Table of Contents
MARCUS & MILLICHAP, INC.
TABLE OF CONTENTS
Page
5
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Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for shares and par value)
September 30, 2024
(unaudited)
December 31,
2023
Assets
Current assets:
Cash, cash equivalents, and restricted cash$172,717 $170,753 
Commissions receivable19,195 16,171 
Prepaid expenses7,698 8,813 
Income tax receivable9,743 9,299 
Marketable debt securities, available-for-sale (amortized cost of $126,130 and $169,018 at September 30, 2024 and December 31, 2023, respectively, and $0 allowance for credit losses)
126,083 168,881 
Advances and loans, net10,142 3,574 
Other assets, current10,967 16,203 
Total current assets356,545 393,694 
Property and equipment, net26,752 27,450 
Operating lease right-of-use assets, net84,621 90,058 
Marketable debt securities, available-for-sale (amortized cost of $50,725 and $69,538 at September 30, 2024 and December 31, 2023, respectively, and $0 allowance for credit losses)
50,208 67,459 
Assets held in rabbi trust12,181 10,838 
Deferred tax assets, net50,127 46,930 
Goodwill and other intangible assets, net46,822 51,183 
Advances and loans, net180,885 175,827 
Other assets, non-current25,573 14,972 
Total assets$833,714 $878,411 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses$12,618 $8,126 
Deferred compensation and commissions48,419 55,769 
Operating lease liabilities18,152 18,336 
Accrued bonuses and other employee related expenses16,988 19,119 
Other liabilities, current17,046 3,919 
Total current liabilities113,223 105,269 
Deferred compensation and commissions28,581 47,771 
Operating lease liabilities66,686 69,407 
Other liabilities, non-current7,496 10,690 
Total liabilities215,986 233,137 
Commitments and contingencies  
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares – 25,000,000; issued and outstanding shares – none at September 30, 2024 and December 31, 2023, respectively
  
Common stock, $0.0001 par value:
Authorized shares – 150,000,000; issued and outstanding shares – 38,823,704 and 38,412,484 at September 30, 2024 and December 31, 2023, respectively
4 4 
Additional paid-in capital166,999 153,740 
Retained earnings450,590 492,298 
Accumulated other comprehensive income (loss)135 (768)
Total stockholders’ equity617,728 645,274 
Total liabilities and stockholders’ equity$833,714 $878,411 
See accompanying notes to condensed consolidated financial statements.
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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Revenue:
Real estate brokerage commissions$141,970 $139,817 $386,868 $415,193 
Financing fees20,582 17,257 53,303 51,021 
Other revenue5,959 4,952 15,811 13,470 
Total revenue168,511 162,026 455,982 479,684 
Operating expenses:
Cost of services104,754 104,628 279,703 301,218 
Selling, general and administrative70,672 69,192 204,591 210,321 
Depreciation and amortization4,550 3,637 11,301 10,312 
Total operating expenses179,976 177,457 495,595 521,851 
Operating loss(11,465)(15,431)(39,613)(42,167)
Other income, net5,321 4,422 15,701 14,122 
Interest expense(208)(241)(611)(672)
Loss before benefit for income taxes(6,352)(11,250)(24,523)(28,717)
Benefit for income taxes(967)(2,010)(3,613)(4,915)
Net loss$(5,385)$(9,240)$(20,910)$(23,802)
Net loss per share:
Basic$(0.14)$(0.24)$(0.54)$(0.61)
Diluted$(0.14)$(0.24)$(0.54)$(0.61)
Weighted average common shares outstanding:
Basic38,76238,49238,62938,740
Diluted38,76238,49238,62938,740
See accompanying notes to condensed consolidated financial statements.





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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Net loss$(5,385)$(9,240)$(20,910)$(23,802)
Other comprehensive income (loss):
Marketable debt securities, available-for-sale:
Change in net unrealized gains and losses1,303 89 1,241 690 
Reclassification adjustment for net gains and losses included in other income, net   16 
Net change, net of tax of $434 and $418 for the three and nine months ended September 30, 2024, and $30 and $228 for the three and nine months ended 2023, respectively
1,303 89 1,241 706 
Foreign currency translation gain (loss), net of tax of $0 for each of the three and nine months ended September 30, 2024 and 2023, respectively
193 (405)(338)(5)
Total other comprehensive income (loss)1,496 (316)903 701 
Comprehensive loss$(3,889)$(9,556)$(20,007)$(23,101)
See accompanying notes to condensed consolidated financial statements.
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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except for shares)
(Unaudited)
Three Months Ended September 30, 2024
Preferred StockCommon StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Total
SharesAmountSharesAmount
Balance at June 30, 2024 $ 38,729,323 $4 $161,895 $466,132 $(1,361)$626,670 
Net and comprehensive (loss) income— — — — — (5,385)1,496 (3,889)
Dividends— — — — — (10,157)— (10,157)
Stock-based award activity       
Stock-based compensation— — — — 6,071 — — 6,071 
Shares issued pursuant to employee stock purchase plan— — — — — — —  
Issuance of common stock for vesting of restricted stock units— — 120,202 — — — — — 
Shares withheld related to net share settlement of stock-based awards— — (25,821)— (967)— — (967)
Issuance of common stock for stock settled deferred consideration— — — — — — —  
Balance as of September 30, 2024 $ 38,823,704 $4 $166,999 $450,590 $135 $617,728 
Three Months Ended September 30, 2023
Preferred StockCommon StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
SharesAmountSharesAmount
Balance at June 30, 2023 $ 38,460,595$4 $140,142 $526,373 $(2,600)$663,919 
Net and comprehensive loss— — — — — (9,240)(316)(9,556)
Dividends— — — — — (10,088)— (10,088)
Stock-based award activity
Stock-based compensation— — — — 5,446 — — 5,446 
Issuance of common stock for vesting of restricted stock units— — 95,672 — — — — — 
Shares withheld related to net share settlement of stock-based awards— — (10,208)— (368)— — (368)
Balance as of September 30, 2023 $ 38,546,059$4 $145,220 $507,045 $(2,916)$649,353 
See accompanying notes to condensed consolidated financial statements.
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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except for shares)
(Unaudited)
Nine Months Ended September 30, 2024
Preferred StockCommon StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Total
SharesAmountSharesAmount
Balance at December 31, 2023 $ 38,412,484 $4 $153,740 $492,298 $(768)$645,274 
Net and comprehensive (loss) income— — — — — (20,910)903 (20,007)
Dividends— — — — (20,244)— (20,244)
Stock-based award activity
Stock-based compensation— — — — 17,755 — — 17,755 
Shares issued pursuant to employee stock purchase plan— — 16,348 — 424 — — 424 
Issuance of common stock for vesting of restricted stock units— — 535,569 — — — — — 
Issuance of common stock for unvested restricted stock awards— — 16,121 — — — — — 
Shares withheld related to net share settlement of stock-based awards— — (165,863)— (5,753)— — (5,753)
Issuance of common stock for stock settled deferred consideration— — 25,945 — 833 — — 833 
Repurchases of common stock— — (16,900)— — (554)— (554)
Balance as of September 30, 2024 $ 38,823,704 $4 $166,999 $450,590 $135 $617,728 
Nine Months Ended September 30, 2023
Preferred StockCommon StockAdditional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Total
SharesAmountSharesAmount
Balance at December 31, 2022 $ 39,255,838$4 $131,541 $585,581 $(3,617)$713,509 
Net and comprehensive (loss) income— — — — — (23,802)701 (23,101)
Dividends— — — — — (20,372)— (20,372)
Stock-based award activity
Stock-based compensation— — — — 15,808 — — 15,808 
Shares issued pursuant to employee stock purchase plan— — 15,297 — 392 — — 392 
Issuance of common stock for vesting of restricted stock units— — 433,468 — — — — — 
Issuance of common stock for unvested restricted stock awards— — 17,339 — — — — — 
Shares withheld related to net share settlement of stock-based awards— — (135,527)— (4,354)— — (4,354)
Issuance of common stock for stock settled deferred consideration— — 58,205 — 1,833 — — 1,833 
Repurchases of common stock— — (1,098,561)— — (34,362)— (34,362)
Balance as of September 30, 2023 $ 38,546,059$4 $145,220 $507,045 $(2,916)$649,353 
See accompanying notes to condensed consolidated financial statements.
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MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20242023
Cash flows from operating activities
Net loss$(20,910)$(23,802)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization11,301 10,312 
Non-cash lease expense16,855 18,824 
Credit loss expense379 660 
Stock-based compensation17,755 15,808 
Deferred taxes, net(3,613)(4,915)
Unrealized foreign exchange losses3 13 
Net realized losses on marketable debt securities, available-for-sale 23 
Other non-cash items(9)(546)
Changes in operating assets and liabilities:
Commissions receivable(3,210)(6,335)
Prepaid expenses1,115 2,955 
Advances and loans(12,102)(9,339)
Other assets(5,444)(5,371)
Accounts payable and accrued expenses4,449 (1,872)
Income tax receivable(445)(722)
Accrued bonuses and other employee related expenses(2,104)(22,970)
Deferred compensation and commissions(25,777)(47,135)
Operating lease liabilities(14,220)(13,445)
Other liabilities1,036 743 
Net cash used in operating activities(34,941)(87,114)
Cash flows from investing activities
Purchases of marketable debt securities, available-for-sale(108,203)(175,985)
Proceeds from sales and maturities of marketable debt securities, available-for-sale169,849 312,493 
Issuances of employee notes receivable (120)
Payments received on employee notes receivable5 34 
Purchase of property and equipment(6,344)(7,689)
Net cash provided by investing activities55,307 128,733 
Cash flows from financing activities
Taxes paid related to net share settlement of stock-based awards(5,753)(4,354)
Proceeds from issuance of shares pursuant to employee stock purchase plan424 392 
Dividends paid(10,487)(10,439)
Principal payments on stock appreciation rights liability(1,976)(1,945)
Principal payments on deferred and contingent consideration (2,044)
Cash paid for stock repurchases(554)(34,928)
Net cash used in financing activities(18,346)(53,318)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash(56) 
Net increase (decrease) in cash, cash equivalents, and restricted cash1,964 (11,699)
Cash, cash equivalents, and restricted cash at beginning of period170,753 235,873 
Cash, cash equivalents, and restricted cash at end of period$172,717 $224,174 
Supplemental cash flow disclosures:  
Interest paid during the period$569 $423 
Income taxes paid, net$444 $722 
Supplemental disclosures of non-cash investing and financing activities:  
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable$25 $16 
Unpaid purchases of property and equipment$313 $259 
Right-of-use assets obtained in exchange for operating lease liabilities$11,374 $27,669 
Issuance of stock for the settlement of deferred consideration$833 $1,833 
Dividend payable$10,586 $10,555 
See accompanying notes to condensed consolidated financial statements.
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Description of Business, Basis of Presentation and Recent Accounting Pronouncements
Description of Business
Marcus & Millichap, Inc. (the “Company,” “Marcus & Millichap,” or “MMI”), a Delaware corporation, is a real estate services firm specializing in commercial real estate investment sales, financing services, research and advisory services. As of September 30, 2024, MMI operates over 80 offices in the United States and Canada through its wholly-owned subsidiaries, including the operations of Marcus & Millichap Capital Corporation.
Reorganization and Initial Public Offering
MMI was formed in June 2013 in preparation for Marcus & Millichap Company (“MMC”) to spin-off its majority-owned subsidiary, Marcus & Millichap Real Estate Investment Services, Inc. (“MMREIS”). Prior to the initial public offering (“IPO”) of MMI, all of the preferred and common stockholders of MMREIS (including MMC and employees of MMREIS) contributed all of their outstanding shares to MMI, in exchange for new MMI common stock. As a result, MMREIS became a wholly-owned subsidiary of MMI. Thereafter, MMC distributed 80.0% of the shares of MMI common stock to MMC’s shareholders and exchanged the remaining portion of its shares of MMI common stock for cancellation of indebtedness of MMC. MMI completed its IPO on November 5, 2013.
Basis of Presentation
The financial information presented in the accompanying unaudited condensed consolidated financial statements, has been prepared in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements and notes include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated financial position, results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto, including the Company’s accounting policies for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed on February 27, 2024 with the SEC. The results of the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, for other interim periods or for future years.
Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, investments in strategic alliance partners (included under other assets, current and non-current), security deposits (included under other assets, non-current), and commissions receivable, net. Cash, cash equivalents, and restricted cash are placed with high-credit quality financial institutions and invested in high-credit quality money market funds and commercial paper. Concentrations and ratings of investments in marketable debt securities, available-for-sale are limited by the approved investment policy.
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
To reduce its credit risk, the Company monitors the credit standing of the financial institutions and money market funds that represent amounts recorded as cash, cash equivalents, and restricted cash. The Company historically has not experienced any significant losses related to cash, cash equivalents, and restricted cash.
In September 2021, the Company entered into a Strategic Alliance (“Strategic Alliance”) with M&T Realty Capital Corporation (“MTRCC”) pursuant to which the Company has agreed to provide loan opportunities that may be funded through MTRCC’s Delegated Underwriting and Servicing Agreement (“DUS Agreement”) with the Federal National Mortgage Association (“Fannie Mae”) that requires MTRCC to guarantee a portion of each loan funded. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC through the DUS Agreement. The Company manages and limits the concentration of risk related to the guarantees assumed by monitoring the underlying property type, geographic location, credit of the borrowers, underlying debt service coverage, and loan to value ratios.
The Company derives its revenue from a broad range of real estate investors, owners, and users in the United States and Canada, none of which individually represents a significant concentration of credit risk. The Company maintains allowances, as needed, for estimated credit losses based on management’s assessment of the likelihood of collection. For the three and nine months ended September 30, 2024 and 2023, no transaction represented 10% or more of total revenue. Further, while one or more transactions may represent 10% or more of commissions receivable at any reporting date, amounts due for brokerage and financing transactions are typically collected within 10 days of settlement and, therefore, do not expose the Company to significant credit risk.
During the three and nine months ended September 30, 2024, the Company’s Canadian operations represented 3.8% and 4.9% of total revenue, respectively. During the three and nine months ended September 30, 2023, the Company's Canadian operations represented 5.4% and 4.0% of total revenue, respectively.
During the three and nine months ended September 30, 2024 and 2023, no office represented 10% or more of total revenue.
Revenue Recognition
The Company generates real estate brokerage commissions by acting as a broker for real estate owners or investors seeking to buy or sell interests in commercial properties and generates financing fees from securing financing on purchase transactions, from refinancing its clients’ existing mortgage debt and other ancillary fees associated with financing activities, including, but not limited to, debt and equity advisory services, loan sales, due diligence services, loan guarantee fees, loan performance fees and other consulting services.
Real Estate Brokerage Commissions
Contracts for representing buyers and sellers of real estate are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which happens at the close of escrow. At that time, the Company's performance is complete.
Financing Fees
Contracts for representing potential borrowers are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with an exception for guarantee obligations, do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the loan closes.
Loan Performance Fees - For loans originated through the Strategic Alliance with MTRCC, the Company receives variable consideration in the form of loan performance fees based on a portion of the servicing fees expected to be received under the servicing contract for servicing the loan. As the Company is not obligated to perform any servicing functions and has no further obligations related to the transaction giving rise to the loan performance fees, the estimated value of the loan performance fees to be received is recorded at the time the loan closes and are collected over the estimated term of the
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
related loan. Any changes in the estimate of loan performance fees to be received are recorded in revenue in the period the estimate changes.
Guarantee Obligations - For certain loans originated through the Strategic Alliance with MTRCC, the Company may agree, at its option, to indemnify MTRCC for a portion of MTRCC’s obligations for loans sold to Fannie Mae. For these loans, the Company allocates a portion of the transaction price and records a loan guarantee obligation based on its fair value. Revenue for this stand-ready obligation is recorded on a straight-line basis over the term of the estimated guarantee period and is recorded in financing fees in the condensed consolidated statements of operations. The guarantee obligation is capped at 16.7% of any unpaid principal balance in excess of the value of the collateral securing such loan. For these loans, the Company is required to pledge cash in a restricted bank account in support of the guarantee obligation. The Company records an allowance for estimated losses related to the loans subject to the guarantee considering the risk characteristics of the loan, the loan's risk rating, historical loss experience, potential adverse situations affecting individual loans and other forecasted information as appropriate.
Other Revenue
Other revenue includes fees generated from leasing, consulting and advisory services, as well as referral fees from other real estate brokers, and such fees are recognized when services are provided, or upon closing of the transaction or when the Company has no further performance obligations.
Recent Accounting Pronouncements
Pending Adoption
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 was issued in response to the SEC’s final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated, and to align the requirements in the FASB Accounting Standards Codification (“Codification”) with the SEC’s disclosure requirements. The effective date for each amendment in ASU 2023-06 will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K by June 30, 2027, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company does not expect the adoption of ASU 2023-06 to have a material impact on its consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to require the disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly provided to the chief operating decision maker (the “CODM”), and (iii) included in each reported measure of a segment’s profit or loss. Public entities will be required to provide this disclosure quarterly. In addition, this ASU requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources. Compliance with these and certain other disclosure requirements will be required for the Company's Annual Report on Form 10-K for the year 2024, and for subsequent quarterly and annual reports. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to require disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income taxes paid. The new requirements should be applied on a prospective basis with an option to apply them retrospectively. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements (“ASU 2024-02”), which removes references to various FASB Concepts Statements in the guidance to simplify the Codification and draw a distinction between authoritative and nonauthoritative literature. ASU
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2024-02 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024, with early adoption permitted. The Company does not expect the adoption of ASU 2024-02 to have a material impact on its consolidated financial statements and related disclosures.
2.    Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
2024
December 31,
2023
Computer software and hardware equipment$55,538 $49,851 
Furniture, fixtures and equipment26,511 26,097 
Less: accumulated depreciation and amortization(55,297)(48,498)
$26,752 $27,450 
Depreciation expense for property and equipment was $2.4 million for both the three months ended September 30, 2024 and 2023 and $7.1 million and $6.7 million for the nine months ended September 30, 2024 and 2023, respectively.
3.    Investments in Marketable Debt Securities, Available-for-Sale
Amortized cost, allowance for credit losses, gross unrealized gains (losses) in accumulated other comprehensive income (loss) and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):
September 30, 2024
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Short-term investments:
U.S. treasuries$16,894 $ $ $(86)$16,808 
Corporate debt109,236  123 (84)109,275 
$126,130 $ $123 $(170)$126,083 
Long-term investments:
U.S. treasuries$834 $ $ $(26)$808 
U.S. government sponsored entities1,016  34 (49)1,001 
Corporate debt36,792  405 (784)36,413 
Asset-backed securities (“ABS”) and other12,083  179 (276)11,986 
$50,725 $ $618 $(1,135)$50,208 
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2023
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Short-term investments:
U.S. treasuries$91,951 $ $60 $(171)$91,840 
Corporate debt77,067  14 (40)77,041 
$169,018 $ $74 $(211)$168,881 
Long-term investments:    
U.S. treasuries$10,097 $ $ $(245)$9,852 
U.S. government sponsored entities1,069  29 (58)1,040 
Corporate debt45,990  244 (1,669)44,565 
ABS and other12,382  72 (452)12,002 
$69,538 $ $345 $(2,424)$67,459 
The Company’s investments in marketable debt securities, available-for-sale, that have been in a continuous unrealized loss position, for which an allowance for credit losses has not been recorded, by type of security consisted of the following (in thousands):
September 30, 2024
Less than 12 months 12 months or greater Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value(1)
Gross
Unrealized
Losses
U.S. treasuries$ $ $17,536 $(112)$17,536 $(112)
U.S. government sponsored entities  466 (49)466 (49)
Corporate debt744 (1)26,670 (867)27,414 (868)
ABS and other798 (2)4,618 (274)5,416 (276)
$1,542 $(3)$49,290 $(1,302)$50,832 $(1,305)

December 31, 2023
Less than 12 months 12 months or greater Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value(1)
Gross
Unrealized
Losses
U.S. treasuries$9,982 $(1)$20,610 $(415)$30,592 $(416)
U.S. government sponsored entities  488 (58)488 (58)
Corporate debt45,251 (59)30,423 (1,650)75,674 (1,709)
ABS and other1,701 (15)5,988 (437)7,689 (452)
$56,934 $(75)$57,509 $(2,560)$114,443 $(2,635)
(1)The fair value excludes accrued interest receivable.
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Gross realized gains and losses from the sales of the Company’s marketable debt securities, available-for-sale, consisted of the following (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Gross realized gains (1)
$ $ $ $ 
Gross realized losses (1)
$ $ $ $(23)
(1)Recorded in other income, net in the condensed consolidated statements of operations. The cost basis of securities sold were determined based on the specific identification method.
The Company invests its excess cash in a diversified portfolio of fixed and variable rate debt securities to meet current and future cash flow needs. All investments are made in accordance with the Company’s approved investment policy. As of September 30, 2024, the portfolio had a weighted average credit rating of A+ and a weighted term to contractual maturity of 2.2 years. As of September 30, 2024, the Company had 138 securities in the portfolio representing an unrealized aggregate loss of $1.3 million, or 1% of amortized cost, and a weighted average credit rating of A+.
As of September 30, 2024, the Company performed an impairment analysis and determined an allowance for credit losses was not required. The Company determined that it did not have an intent to sell and it was not more likely than not that the Company would be required to sell any security based on its current liquidity position, or to maintain compliance with its investment policy, specifically as it relates to minimum credit ratings. The Company evaluated the securities with an unrealized loss considering severity of loss, credit ratings, specific credit events during the period since acquisition, overall likelihood of default, market sector, potential impact from the current economic environment, including interest rates, geopolitical unrest and a review of an issuer’s and securities’ liquidity and financial strength, as needed. The Company concluded that it would receive all scheduled interest and principal payments. The Company, therefore, determined qualitatively that the unrealized loss was related to changes in interest rates and other market factors and therefore no allowance for credit losses was required.
Amortized cost and fair value of marketable debt securities, available-for-sale, by contractual maturity consisted of the following (in thousands, except weighted average data):
September 30, 2024December 31, 2023
Amortized
 Cost
Fair ValueAmortized
 Cost
Fair Value
Due in one year or less$126,130 $126,083 $169,018 $168,881 
Due after one year through five years31,002 30,900 48,241 47,200 
Due after five years through ten years9,852 9,603 12,950 12,279 
Due after ten years9,871 9,705 8,347 7,980 
$176,855 $176,291 $238,556 $236,340 
Weighted average contractual maturity2.2 years1.9 years
Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.
4.    Acquisitions, Goodwill and Other Intangible Assets
Goodwill is recorded as part of the Company’s acquisitions and primarily arose from the acquired assembled workforce and brokerage and financing sales platforms. The Company expects all of the goodwill to be tax deductible, with the tax-deductible amount of goodwill related to the contingent and deferred consideration to be determined once the cash
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
payments are made to settle any contingent and deferred consideration. The goodwill resulting from acquisitions is allocated to the Company’s one reporting unit.
Goodwill and intangible assets, net consisted of the following (in thousands):
September 30, 2024December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Goodwill and intangible assets:      
Goodwill$37,932 $— $37,932 $38,046 $— $38,046 
Intangible assets (1)
25,106 (16,216)8,890 31,022 (17,885)13,137 
$63,038 $(16,216)$46,822 $69,068 $(17,885)$51,183 
(1)Total weighted remaining average amortization period was 3.5 years and 3.8 years as of September 30, 2024 and December 31, 2023, respectively. Intangible assets principally include non-compete agreements and customer relationships.
For the three and nine months ended September 30, 2024, the Company recorded amortization expense for intangible assets of $2.2 million and $4.2 million, respectively, including accelerated amortization of certain intangible assets resulting from changes in estimates. For the three and nine months ended September 30, 2023, the Company recorded amortization expense for intangible assets of $1.3 million and $3.6 million, respectively.
The changes in the carrying amount of goodwill consisted of the following (in thousands):
Nine Months Ended September 30, 2024
Beginning balance$38,046 
Additions from acquisitions  
Impact of foreign currency translation(114)
Ending balance$37,932 
Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):
September 30, 2024
Remainder of 2024$763 
20252,905 
20262,156 
20271,856 
20281,210 
Thereafter 
$8,890 
The Company evaluates goodwill for impairment annually in the fourth quarter. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing, which indicate that it is more likely than not an impairment loss has occurred. The Company evaluates its intangible assets that have finite useful lives whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable.
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of September 30, 2024, the Company considered the impact of economic conditions and evaluated its goodwill and intangible assets for impairment testing. The Company estimated the recoverability of the intangible assets by comparing the carrying amount of each asset to the future undiscounted cash flows that the Company expects the asset to generate. The sum of the undiscounted expected future cash flows was greater than the carrying amount of the intangible assets. The Company concluded that as of September 30, 2024, there was no impairment of its intangible assets or goodwill.
5.    Selected Balance Sheet Data
Allowances on Advances and Loans
Allowance for credit losses for advances and loans as of September 30, 2024 and December 31, 2023 was $1.0 million and $0.7 million, respectively.
Other Assets
Other assets consisted of the following (in thousands):
CurrentNon-Current
September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Security deposits$ $ $1,324 $1,491 
Employee notes receivable26 37 6 26 
Securities, held-to-maturity(1)
 9,500 9,500  
Loan performance fee receivable2,496 1,725 10,094 7,885 
Investments in convertible notes(2)
1,273  4,425 5,081 
Other(3)
7,172 4,941 224 489 
$10,967 $16,203 $25,573 $14,972 
(1)In connection with the Strategic Alliance with MTRCC, the Company held a $9.5 million Mandatorily Redeemable Fixed-Rate Cumulative Preferred Stock investment in MTRCC classified as held-to-maturity, which was scheduled to be redeemed on September 1, 2024. In anticipation of the redemptions, the Company purchased, and net settled, $9.5 million of Mandatorily Redeemable Fixed-Rate Cumulative Preferred Stock of MTRCC on August 26, 2024. The new securities are classified as held-to-maturity, are expected to mature on August 26, 2027 and accrue interest based on the one-year treasury rate.
(2)The Company purchased convertible notes with principal balances aggregating $5.0 million during the fourth quarter 2023 in connection with strategic alliances with companies in the real estate sector. The convertible notes accrue interest at rates between 6% and 10%, are convertible into equity for premiums and mature in a weighted average of    0.97 years subject to extension at the option of the holders. The Company has elected to account for its investments in convertible notes under the fair value option; see Note 7 – "Fair Value Measurements" for additional information.
(3)Other primarily includes customer trust accounts and prepaid lease costs.
Deferred Compensation and Commissions
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Deferred compensation and commissions consisted of the following (in thousands):
CurrentNon-Current
September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Stock appreciation rights (“SARs”) liability (1)
$2,603 $2,480 $9,348 $11,418 
Commissions payable to investment sales and financing professionals43,473 52,689 11,132 28,198 
Deferred compensation liability (1)
1,988 201 8,101 8,155 
Other355 399   
$48,419 $55,769 $28,581 $47,771 
(1)The SARs and deferred compensation liabilities become subject to payout at the time the participant is no longer considered a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to participants within the next twelve months have been classified as current. .

SARs Liability
Prior to the IPO, certain employees of the Company were granted SARs under a stock-based compensation program assumed by MMC. In connection with the IPO, the SARs agreements were revised, the MMC liability of $20.0 million for the SARs was frozen as of March 31, 2013 and was transferred to MMI through a capital distribution. The SARs liability will be settled with each participant in ten annual installments in January of each year upon retirement or termination from service, or in full upon consummation of a change in control of the Company.
Under the revised agreements, MMI is required to accrue interest on the outstanding balance beginning on January 1, 2014, at a rate based on the 10-year treasury note, plus 2%. The rate resets annually. The rates at January 1, 2024 and 2023 were 5.95% and 5.79%, respectively. MMI recorded interest expense related to this liability of $170,000 and $190,000 for the three months ended September 30, 2024 and 2023, respectively, and $510,000 and $570,000 for the nine months ended September 30, 2024 and 2023, respectively.
Estimated payouts within the next twelve months for participants that have separated from service have been classified as current. During the nine months ended September 30, 2024 and 2023, the Company made total payments of $2.5 million and $2.3 million, respectively, consisting of principal and accumulated interest.
Commissions Payable
Certain investment sales and financing professionals can earn additional commissions after meeting certain annual revenue thresholds. These commissions are recognized as cost of services in the period in which they are earned as they relate to specific transactions closed. The Company may defer payment of certain commissions, at its election, for up to three years. Commissions that are not expected to be paid within twelve months are classified as long-term.
Deferred Compensation Liability
A select group of management is eligible to participate in the Marcus & Millichap Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a non-qualified deferred compensation plan that is intended to comply with Section 409A of the Internal Revenue Code and permits participants to defer compensation up to the limits set forth in the Deferred Compensation Plan. Amounts are paid out generally when the participant is no longer a service provider; however, an in-service payout election is available to participants. Participants may elect to receive payouts as a lump sum or quarterly over a two to fifteen-year period. The Company elected to fund the Deferred Compensation Plan through Company-owned variable life insurance policies. The Deferred Compensation Plan is managed by a third-party institutional fund manager, and the deferred compensation and investment earnings are held as a Company asset in a rabbi trust, which is recorded in assets held in rabbi trust in the accompanying condensed consolidated balance sheets. The assets in the trust are restricted unless the Company becomes insolvent, in which case the trust assets are subject to the claims of the Company’s creditors. The Company may also, in its sole and absolute discretion, elect to withdraw at any time a portion of the trust assets by an amount by which the fair market value of the trust assets exceeds
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
110% of the aggregate deferred compensation liability represented by the participants’ accounts. Estimated payouts within the next twelve months for participants that have separated from service or elected an in-service payout have been classified as current. During the nine months ended September 30, 2024 and 2023, the Company made total payments to participants of $172,000 and $240,000 respectively.
The assets held in the rabbi trust are carried at the cash surrender value of the variable life insurance policies, which represents its fair value. The net change in the carrying value of the assets held in the rabbi trust and the net change in the carrying value of the deferred compensation liability, each exclusive of additional contributions, distributions and trust expenses, consisted of the following (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Increase (decrease) in the carrying value of the assets held in the rabbi trust (1)
$549 $(237)$1,518 $693 
(Increase) decrease in the net carrying value of the deferred compensation obligation (2)
$(649)$262 $(1,385)$(623)
(1)Recorded in other income, net in the condensed consolidated statements of operations.
(2)Recorded in selling, general and administrative expense in the condensed consolidated statements of operations.
Other Liabilities
Other liabilities consisted of the following (in thousands):
CurrentNon-Current
September 30,
2024
December 31,
2023
September 30,
2024
December 31,
2023
Deferred consideration$407 $1,178 $ $393 
Contingent consideration4,487 819 631 4,663 
Dividends payable10,657 802 1,584 1,680 
Loan guarantee obligation1,060 725 4,150 3,194 
Other435 395 1,131 760 
$17,046 $3,919 $7,496 $10,690 
6.    Related-Party Transactions
Shared and Transition Services
Certain services are provided to the Company under a Transition Services Agreement (“TSA”) between MMC and the Company. The TSA is intended to provide certain services until the Company acquires these services separately. In addition, the Company charges MMC for certain shared licensing arrangements. Under the TSA, the Company received net charge-backs during the three months ended September 30, 2024 and 2023 of $18,000 and $24,000, respectively, and during the nine months ended September 30, 2024 and 2023 of $45,000 and $68,000, respectively These amounts are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations.
Brokerage and Financing Services with the Subsidiaries of MMC
MMC has wholly or majority owned subsidiaries that buy and sell commercial real estate properties. The Company performs certain brokerage and financing services related to transactions of the subsidiaries of MMC. For both the three months ended September 30, 2024 and 2023, the Company did not earn real estate brokerage commissions and financing fees from transactions with subsidiaries of MMC related to these services and did not incur cost of services related to these services. For the nine months ended September 30, 2024 and 2023, the Company earned real estate brokerage commissions
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
and financing fees of $1,020,000 and $441,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $610,000 and $264,000, respectively, related to this revenue.
Operating Lease with MMC
The Company has an operating lease with MMC for a single-story office building located in Palo Alto, California, which expires in May 2032. The related operating lease cost was $291,000 for both the three months ended September 30, 2024 and 2023, and $872,000 and $883,000 for the nine months ended September 30, 2024 and 2023, respectively. Operating lease cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. The related operating lease right-of-use asset, net and operating lease liability as of September 30, 2024 was $7,175,000 and $7,832,000, respectively and as of December 31, 2023 was $7,800,000 and $8,300,000, respectively.
Amounts due to (from) MMC
As of September 30, 2024 and December 31, 2023, the Company recorded a net receivable of $3,800 and net payable of $10,000 with MMC, respectively. These amounts are included in other assets, current and accounts payable and accrued expenses, respectively, in the accompanying condensed consolidated balance sheets.
Other
The Company makes advances to non-executive employees from time-to-time. At September 30, 2024 and December 31, 2023, the aggregate principal amount for employee notes receivable was $32,000 and $63,000, respectively, which is included in other assets in the accompanying condensed consolidated balance sheets. See Note 5 – “Selected Balance Sheet Data”.
As of September 30, 2024, George M. Marcus, the Company’s founder and Chairman, beneficially owned approximately 39% of the Company’s issued and outstanding common stock, including shares owned by Phoenix Investments Holdings, LLC and the Marcus Family Foundation II.
7.    Fair Value Measurements
U.S. GAAP defines the fair value of a financial instrument as the amount that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date. The Company is responsible for the determination of fair value and the supporting methodologies and assumptions. The Company uses various pricing sources and third parties to provide and validate the values utilized.
The degree of judgment used in measuring the fair value of financial instruments is generally inversely correlated with the level of observable valuation inputs. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment.
Assets recorded at fair value are measured and classified in accordance with a fair value hierarchy consisting of the three “levels” based on the observability of inputs available in the marketplace used to measure the fair values as discussed below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
Level 3: Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
Recurring Fair Value Measurements
The Company values its investments including commercial paper and floating net asset value money market funds recorded in cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, assets held in the rabbi trust, deferred compensation liability, contingent and deferred consideration and investments in convertible notes at fair value on a recurring basis.
Fair values for investments included in cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale were determined for each individual security in the investment portfolio and all securities are Level 1 or 2 measurements as appropriate.
Fair values for assets held in the rabbi trust and related deferred compensation liability were determined based on the cash surrender value of the Company-owned variable life insurance policies and underlying investments in the trust, and are Level 2 and Level 1 measurements, respectively.
Contingent consideration in connection with acquisitions, is carried at fair value and determined on a contract-by-contract basis, calculated using unobservable inputs based on a probability of achieving EBITDA and other performance requirements, and is a Level 3 measurement. Deferred consideration in connection with acquisitions is carried at fair value and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time, and is a Level 2 measurement.
We have elected to account for our investments in convertible notes, included in other assets, under the fair value option, with changes in fair value recognized in other income, net in the condensed consolidated statements of operations. We estimate the fair value of each convertible note at each balance sheet date using a scenario-based framework that incorporates various scenarios weighted based on the expected likelihood of occurrence. Within each scenario, a discounted cash flow approach was utilized, taking the expected settlement for the event, and discounting it based on the expected timing and a discount rate. Each of the assumptions in the model were considered significant assumptions. We noted that a change in the expected probability, expected payoff, timing, or discount rate, would result in a change to the fair value ascribed to the convertible notes. As these are significant inputs not observable in the market, the valuation is classified as a Level 3 measurement.
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MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):
September 30, 2024December 31, 2023
Fair ValueLevel 1Level 2Level 3Fair ValueLevel 1Level 2Level 3
Assets:
Assets held in rabbi trust$12,181 $ $12,181 $ $10,838 $ $10,838 $ 
Convertible notes$5,698 $ $ $5,698 $5,081 $ $ $5,081 
Cash equivalents (1):
       
Commercial paper$68,459 $ $68,459 $