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

3 Months Ended

Mar. 31, 2024

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 and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):


	March 31, 2024
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	78,335	$	—	$	—	$	(330)	$	78,005
Corporate debt	120,512		—		—		(203)		120,309

	$	198,847	$	—	$	—	$	(533)	$	198,314
Long-term investments:
U.S. treasuries	$	843	$	—	$	—	$	(52)	$	791
U.S. government sponsored entities	1,052		—		13		(66)		999
Corporate debt	45,145		—		141		(1,629)		43,657
Asset-backed securities (“ABS”) and other	12,262		—		73		(382)		11,953
	$	59,302	$	—	$	227	$	(2,129)	$	57,400


	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 debt	77,067		—		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 entities	1,069		—		29		(58)		1,040
Corporate debt	45,990		—		244		(1,669)		44,565
ABS and other	12,382		—		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):


	March 31, 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	$	61,178	$	(12)	$	17,208	$	(370)	$	78,386	$	(382)
U.S. government sponsored entities	—		—		469		(66)		469		(66)
Corporate debt	120,550		(188)		31,652		(1,644)		152,202		(1,832)
ABS and other	2,082		(12)		5,575		(370)		7,657		(382)
	$	183,810	$	(212)	$	54,904	$	(2,450)	$	238,714	$	(2,662)


	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 debt	45,251		(59)		30,423		(1,650)		75,674		(1,709)
ABS and other	1,701		(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.

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 March 31,
	2024		2023
Gross realized gains (1)	$	—	$	—
Gross realized losses (1)	$	—	$	—


(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 March 31, 2024, the portfolio had a weighted average credit rating of AA- and a weighted term to contractual maturity of 1.8 years, with 211 securities in the portfolio representing an unrealized aggregate loss of $2.7 million, or 1% of amortized cost, and a weighted average credit rating of AA-.

As of March 31, 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):


	March 31, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	198,847	$	198,314	$	169,018	$	168,881
Due after one year through five years	38,336		37,491		48,241		47,200
Due after five years through ten years	11,709		10,997		12,950		12,279
Due after ten years	9,257		8,912		8,347		7,980
	$	258,149	$	255,714	$	238,556	$	236,340
Weighted average contractual maturity			1.8 years				1.9 years

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