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

Quarterly report pursuant to Section 13 or 15(d)

Investments in Marketable Debt Securities, Available-for-Sale

Investments in Marketable Debt Securities, Available-for-Sale

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments in Marketable Debt Securities, Available-for-Sale

Amortized cost, allowance for credit losses, gross unrealized gains (losses) in accumulated other comprehensive (loss) income and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):


	June 30, 2023
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	65,984	$	—	$	—	$	(489)	$	65,495
Corporate debt	99,487		—		1		(127)		99,361

	$	165,471	$	—	$	1	$	(616)	$	164,856
Long-term investments:
U.S. treasuries	$	18,115	$	—	$	—	$	(706)	$	17,409
U.S. government sponsored entities	574		—		—		(64)		510
Corporate debt	44,923		—		6		(2,679)		42,250
Asset-backed securities (“ABS”) and other	11,146		—		—		(604)		10,542
	$	74,758	$	—	$	6	$	(4,053)	$	70,711


	December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	135,688	$	—	$	14	$	(1,153)	$	134,549
Corporate debt	118,135		—		1		(95)		118,041
ABS and other	859		—		—		(15)		$	844
	$	254,682	$	—	$	15	$	(1,263)	$	253,434
Long-term investments:
U.S. treasuries	$	21,434	$	—	$	—	$	(719)	$	20,715
U.S. government sponsored entities	602		—		—		(66)		536
Corporate debt	44,214		—		21		(2,877)		41,358
ABS and other	6,569		—		—		(583)		5,986
	$	72,819	$	—	$	21	$	(4,245)	$	68,595

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):


	June 30, 2023
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	42,767	$	(139)	$	39,930	$	(1,056)	$	82,697	$	(1,195)
U.S. government sponsored entities	—		—		509		(64)		509		(64)
Corporate debt	107,067		(564)		25,047		(2,242)		132,114		(2,806)
ABS and other	4,623		(83)		5,887		(521)		10,510		(604)
	$	154,457	$	(786)	$	71,373	$	(3,883)	$	225,830	$	(4,669)


	December 31, 2022
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	73,055	$	(1,232)	$	66,144	$	(640)	$	139,199	$	(1,872)
U.S. government sponsored entities	447		(46)		87		(20)		534		(66)
Corporate debt	130,816		(1,909)		10,681		(1,063)		141,497		(2,972)
ABS and other	4,710		(314)		2,091		(284)		6,801		(598)
	$	209,028	$	(3,501)	$	79,003	$	(2,007)	$	288,031	$	(5,508)

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Gross realized gains (1)	$	—	$	1	$	—	$	114
Gross realized losses (1)	$	(23)	$	(17)	$	(23)	$	(17)


(1)			Recorded in other income (expense), 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 June 30, 2023, the portfolio had a weighted average credit rating of AA and a weighted term to contractual maturity of 1.7 years, with 226 securities in the portfolio representing an unrealized aggregate loss of $4.7 million, or 2% of amortized cost, and a weighted average credit rating of AA.

As of June 30, 2023, 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):


	June 30, 2023				December 31, 2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	165,471	$	164,856	$	254,683	$	253,434
Due after one year through five years	55,898		53,492		56,507		54,169
Due after five years through ten years	14,560		13,210		13,435		11,850
Due after ten years	4,300		4,009		2,876		2,576
	$	240,229	$	235,567	$	327,501	$	322,029
Weighted average contractual maturity			1.7 years				1.1 years

Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.