Marcus & Millichap, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Selected Balance Sheet Data (Tables)

Selected Balance Sheet Data (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other assets consisted of the following (in thousands):


	Current				Non-Current
	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
MSRs, net of amortization	$	—	$	—	$	2,039	$	2,209
Due from independent contractors, net (1) (2)		2,381		3,831		48,911		27,157
Security deposits		—		—		1,313		1,196
Employee notes receivable (3)		150		156		373		370
Customer trust accounts and other		9,821		2,381		796		846

	$	12,352	$	6,368	$	53,432	$	31,778

(1)	Represents amounts advanced, notes receivable and other receivables due from the Company’s investment sales and financing professionals. The notes receivable along with interest are typically collected from future commissions and are generally due in one to five years.

(2)

Includes allowance for doubtful accounts related to current receivables of $404 and $514 as of September 30, 2019 and December 31, 2018, respectively. The Company recorded a provision for bad debt expense of $88 and $81 and

wrote-off

$82 and $17 of these receivables for the three months ended September 30, 2019 and 2018, respectively. The Company recorded a provision for bad debt expense of $75 and $52 and

wrote-off

$185 and $72 of these receivables for the nine months ended September 30, 2019 and 2018, respectively. Any cash receipts on notes are applied first to unpaid principal balance prior to any income being recognized.

(3)	Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $60 and $192 for the nine months ended September 30, 2019 and 2018, respectively. See Note 9 – “Related-Party Transactions” for additional information.

Summary of Net Change in Carrying Value of MSRs

The net change in the carrying value of MSRs consisted of the following (in thousands):


	September 30, 2019			December 31, 2018
Beginning balance	$	2,209		$	—
Additions from acquisition		—			2,121
Additions		243			391
Amortization		(413	)		(303	)

Ending balance	$	2,039		$	2,209

Components of Deferred Compensation and Commissions

Deferred compensation and commissions consisted of the following (in thousands):


	Current				Non-Current
	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Stock appreciation rights (“SARs”) liability (1)	$	1,895	$	1,810	$	18,082	$	19,299
Commissions payable to investment sales and financing professionals		29,118		44,812		16,858		23,983
Deferred compensation liability (1)		1,437		1,288		6,755		6,605

	$	32,450	$	47,910	$	41,695	$	49,887

(1)

The SARs and deferred compensation liability become subject to payout as a result of a participant no longer being considered as a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to the participants within the next twelve months have been classified as current.

Summary of Net Change in Carrying Value of Assets Held in Rabbi Trust and Deferred Compensation Liability

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,
	2019		2018		2019		2018
Increase in the carrying value of the assets held in the rabbi trust (1)	$	31	$	266	$	959	$	456

Increase in the net carrying value of the deferred compensation obligation (2)	$	31	$	267	$	943	$	455

(1)	Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income.

(2)	Recorded in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income.

Summary of Deferred Rent and Other Liabilities

Deferred rent and other liabilities consisted of the following (in thousands):


	Non-Current
	September 30, 2019		December 31, 2018
Deferred rent (1)	$	—	$	5,445
Contingent consideration and other (2)		2,001		2,054

	$	2,001	$	7,499

(1)	The Company does not have deferred rent in 2019 due to adoption of the new lease standard on January 1, 2019.

(2)	The current portions of contingent consideration in the amounts of $853 and $821 as of September 30, 2019 and December 31, 2018, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets.