2013-11-05P2YfalseQ30001578732--12-31P1YReclassification from other assets current.Nonvested RSUs will be settled through the issuance of new shares of common stock.The total unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 3.53 years.Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value. 0001578732 2020-01-01 2020-09-30 0001578732 2021-01-01 2021-09-30 0001578732 2020-07-01 2020-09-30 0001578732 2021-07-01 2021-09-30 0001578732 2021-09-30 0001578732 2020-12-31 0001578732 2020-01-01 2020-12-31 0001578732 2021-11-02 0001578732 2021-06-30 0001578732 2020-06-30 0001578732 2019-12-31 0001578732 2020-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2021-09-30 0001578732 us-gaap:ShortTermInvestmentsMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember 2021-09-30 0001578732 mmi:LongTermInvestmentsMember us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001578732 mmi:LongTermInvestmentsMember 2021-09-30 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:InvestmentsHeldInRabbiTrustMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember 2021-09-30 0001578732 mmi:AccountsPayableAndOtherLiabilitiesCurrentMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperMember 2021-09-30 0001578732 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001578732 us-gaap:AssetBackedSecuritiesMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember 2021-09-30 0001578732 us-gaap:ComputerEquipmentMember 2021-09-30 0001578732 us-gaap:FurnitureAndFixturesMember 2021-09-30 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2021-09-30 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member mmi:LongTermInvestmentsMember 2021-09-30 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:PerformanceUnitsMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-09-30 0001578732 us-gaap:PerformanceSharesMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-09-30 0001578732 mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember us-gaap:StockOptionMember 2021-09-30 0001578732 mmi:ContingentConsiderationMember 2021-09-30 0001578732 mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember 2021-09-30 0001578732 us-gaap:HeldtomaturitySecuritiesMember 2021-09-30 0001578732 mmi:CustomerTrustAccountsAndOtherMember 2021-09-30 0001578732 mmi:EmployeeNotesReceivableMember 2021-09-30 0001578732 mmi:SecurityDepositMember 2021-09-30 0001578732 mmi:MortgageServicingRightsNetOfAmortizationMember 2021-09-30 0001578732 mmi:EmployeeStockPurchasePlanMember 2021-09-30 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:IndependentContractorsMember 2021-09-30 0001578732 mmi:CreditAgreementMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputPrepaymentRateMember srt:MinimumMember mmi:MortgageServicingRightsMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member mmi:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputPrepaymentRateMember srt:MaximumMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember srt:WeightedAverageMember us-gaap:MeasurementInputPrepaymentRateMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDefaultRateMember srt:MinimumMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDefaultRateMember srt:MaximumMember mmi:MortgageServicingRightsMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member mmi:MortgageServicingRightsMember srt:WeightedAverageMember us-gaap:MeasurementInputDefaultRateMember us-gaap:FairValueMeasurementsNonrecurringMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputLossSeverityMember srt:MinimumMember 2021-09-30 0001578732 us-gaap:FairValueInputsLevel3Member mmi:MortgageServicingRightsMember us-gaap:FairValueMeasurementsNonrecurringMember srt:MaximumMember us-gaap:MeasurementInputLossSeverityMember 2021-09-30 0001578732 srt:WeightedAverageMember us-gaap:MeasurementInputLossSeverityMember mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2021-09-30 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:WeightedAverageMember 2021-09-30 0001578732 us-gaap:MeasurementInputConstantPrepaymentRateMember 2021-09-30 0001578732 srt:FitchAAPlusRatingMember srt:StandardPoorsAAPlusRatingMember mmi:WeightedAverageCreditAaPlusRatingMember srt:MoodysAa3RatingMember 2021-09-30 0001578732 us-gaap:MeasurementInputExpectedTermMember srt:MinimumMember mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001578732 us-gaap:MeasurementInputExpectedTermMember srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:MeasurementInputExpectedTermMember 2021-09-30 0001578732 srt:MinimumMember us-gaap:MeasurementInputDiscountRateMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 srt:MaximumMember us-gaap:MeasurementInputDiscountRateMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 srt:WeightedAverageMember us-gaap:MeasurementInputDiscountRateMember mmi:ContingentConsiderationMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001578732 mmi:ProbabilityOfAchievementMember srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 srt:MaximumMember mmi:ProbabilityOfAchievementMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 srt:WeightedAverageMember mmi:ProbabilityOfAchievementMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2021-09-30 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember 2020-12-31 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember 2020-12-31 0001578732 us-gaap:ShortTermInvestmentsMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember 2020-12-31 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember 2020-12-31 0001578732 mmi:LongTermInvestmentsMember us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001578732 mmi:LongTermInvestmentsMember 2020-12-31 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember mmi:InvestmentsHeldInRabbiTrustMember 2020-12-31 0001578732 mmi:InvestmentsHeldInRabbiTrustMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember 2020-12-31 0001578732 mmi:AccountsPayableAndOtherLiabilitiesCurrentMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001578732 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:MoneyMarketFundsMember 2020-12-31 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:MoneyMarketFundsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperMember 2020-12-31 0001578732 us-gaap:CommercialPaperMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2020-12-31 0001578732 us-gaap:CommercialPaperMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001578732 us-gaap:ComputerEquipmentMember 2020-12-31 0001578732 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member mmi:LongTermInvestmentsMember 2020-12-31 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:ShortTermInvestmentsMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember mmi:LongTermInvestmentsMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member mmi:LongTermInvestmentsMember us-gaap:USTreasurySecuritiesMember 2020-12-31 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member mmi:LongTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member mmi:LongTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member mmi:LongTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:ShortTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:ShortTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:CorporateDebtSecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:ShortTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:ShortTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:ShortTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ShortTermInvestmentsMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:ShortTermInvestmentsMember us-gaap:USTreasurySecuritiesMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:ShortTermInvestmentsMember us-gaap:USTreasurySecuritiesMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:USTreasurySecuritiesMember us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member mmi:LongTermInvestmentsMember us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member mmi:LongTermInvestmentsMember us-gaap:AssetBackedSecuritiesMember 2020-12-31 0001578732 us-gaap:AssetBackedSecuritiesMember mmi:LongTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member mmi:LongTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001578732 mmi:ContingentConsiderationMember 2020-12-31 0001578732 mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member mmi:ContingentConsiderationMember 2020-12-31 0001578732 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member mmi:ContingentConsiderationMember 2020-12-31 0001578732 mmi:MarcusAndMillichapCompanyMember 2020-12-31 0001578732 us-gaap:HeldtomaturitySecuritiesMember 2020-12-31 0001578732 mmi:CustomerTrustAccountsAndOtherMember 2020-12-31 0001578732 mmi:EmployeeNotesReceivableMember 2020-12-31 0001578732 mmi:SecurityDepositMember 2020-12-31 0001578732 mmi:MortgageServicingRightsNetOfAmortizationMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputPrepaymentRateMember srt:MinimumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember srt:MaximumMember us-gaap:MeasurementInputPrepaymentRateMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputPrepaymentRateMember srt:WeightedAverageMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDefaultRateMember srt:MinimumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDefaultRateMember srt:MaximumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDefaultRateMember srt:WeightedAverageMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputLossSeverityMember srt:MinimumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputLossSeverityMember srt:MaximumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputLossSeverityMember srt:WeightedAverageMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:MinimumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2020-12-31 0001578732 mmi:MortgageServicingRightsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember srt:WeightedAverageMember 2020-12-31 0001578732 us-gaap:MeasurementInputConstantPrepaymentRateMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:MeasurementInputExpectedTermMember srt:MinimumMember 2020-12-31 0001578732 srt:MaximumMember us-gaap:MeasurementInputExpectedTermMember mmi:ContingentConsiderationMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001578732 srt:WeightedAverageMember us-gaap:MeasurementInputExpectedTermMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2020-12-31 0001578732 srt:MinimumMember us-gaap:MeasurementInputDiscountRateMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:MeasurementInputDiscountRateMember srt:MaximumMember 2020-12-31 0001578732 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember us-gaap:MeasurementInputDiscountRateMember 2020-12-31 0001578732 srt:MinimumMember mmi:ProbabilityOfAchievementMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember mmi:ProbabilityOfAchievementMember srt:MaximumMember 2020-12-31 0001578732 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember mmi:ContingentConsiderationMember mmi:ProbabilityOfAchievementMember srt:WeightedAverageMember 2020-12-31 0001578732 us-gaap:SalesRevenueNetMember us-gaap:GeographicConcentrationRiskMember 2021-07-01 2021-09-30 0001578732 mmi:TransitionServicesAgreementMember mmi:MarcusAndMillichapCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-07-01 2021-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember 2021-07-01 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:IndependentContractorsSubsequentToAdoptionOfNewStandardMember 2021-07-01 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2021-07-01 2021-09-30 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2021-07-01 2021-09-30 0001578732 mmi:EmployeeStockPurchasePlanMember 2021-07-01 2021-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001578732 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2021-07-01 2021-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001578732 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001578732 us-gaap:PreferredStockMember 2021-07-01 2021-09-30 0001578732 mmi:OtherRevenuesMember 2021-07-01 2021-09-30 0001578732 mmi:FinancingFeesMember 2021-07-01 2021-09-30 0001578732 mmi:RealEstateBrokerageCommissionsMember 2021-07-01 2021-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember 2021-07-01 2021-09-30 0001578732 mmi:CreditAgreementMember 2021-07-01 2021-09-30 0001578732 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-07-01 2021-09-30 0001578732 us-gaap:CustomerConcentrationRiskMember mmi:CommissionReceivableMember 2021-07-01 2021-09-30 0001578732 mmi:TransactionRiskMember 2021-07-01 2021-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember srt:MaximumMember country:CA 2021-07-01 2021-09-30 0001578732 us-gaap:SalesRevenueNetMember us-gaap:GeographicConcentrationRiskMember 2020-07-01 2020-09-30 0001578732 mmi:TransitionServicesAgreementMember mmi:MarcusAndMillichapCompanyMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-07-01 2020-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember 2020-07-01 2020-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:IndependentContractorsSubsequentToAdoptionOfNewStandardMember 2020-07-01 2020-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2020-07-01 2020-09-30 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2020-07-01 2020-09-30 0001578732 mmi:EmployeeStockPurchasePlanMember 2020-07-01 2020-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001578732 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2020-07-01 2020-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001578732 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001578732 us-gaap:PreferredStockMember 2020-07-01 2020-09-30 0001578732 mmi:OtherRevenuesMember 2020-07-01 2020-09-30 0001578732 mmi:FinancingFeesMember 2020-07-01 2020-09-30 0001578732 mmi:RealEstateBrokerageCommissionsMember 2020-07-01 2020-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember 2020-07-01 2020-09-30 0001578732 mmi:CreditAgreementMember 2020-07-01 2020-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember srt:MaximumMember country:CA 2020-07-01 2020-09-30 0001578732 mmi:TransactionRiskMember 2020-07-01 2020-09-30 0001578732 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2020-07-01 2020-09-30 0001578732 mmi:CommissionReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2020-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember mmi:TransitionServicesAgreementMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-01-01 2021-09-30 0001578732 mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember us-gaap:RestrictedStockMember 2021-01-01 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 mmi:EmployeeStockPurchasePlanMember 2021-01-01 2021-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember 2021-01-01 2021-09-30 0001578732 us-gaap:StockOptionMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 us-gaap:PerformanceSharesMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 mmi:PerformanceUnitsMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 mmi:ContingentConsiderationMember 2021-01-01 2021-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember 2021-01-01 2021-09-30 0001578732 mmi:IpoMmiMember 2021-01-01 2021-09-30 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2021-01-01 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2021-01-01 2021-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:IndependentContractorsSubsequentToAdoptionOfNewStandardMember 2021-01-01 2021-09-30 0001578732 mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember mmi:DeferredStockUnitsMemberMember 2021-01-01 2021-09-30 0001578732 mmi:IndependentContractorsMember us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-09-30 0001578732 mmi:RestrictedStockUnitsAndDeferredStockUnitsMember mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember 2021-01-01 2021-09-30 0001578732 mmi:CreditAgreementMember 2021-01-01 2021-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-09-30 0001578732 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2021-01-01 2021-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-09-30 0001578732 us-gaap:CommonStockMember 2021-01-01 2021-09-30 0001578732 us-gaap:PreferredStockMember 2021-01-01 2021-09-30 0001578732 mmi:OtherRevenuesMember 2021-01-01 2021-09-30 0001578732 mmi:FinancingFeesMember 2021-01-01 2021-09-30 0001578732 mmi:RealEstateBrokerageCommissionsMember 2021-01-01 2021-09-30 0001578732 mmi:ChairmanAndFounderMember 2021-01-01 2021-09-30 0001578732 mmi:EmployeeStockPurchasePlanAnnualAvailableForIssuanceShareIncreaseMember 2021-01-01 2021-09-30 0001578732 us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-09-30 0001578732 mmi:FederalFundsRateMember 2021-01-01 2021-09-30 0001578732 us-gaap:LondonInterbankOfferedRateLIBORMember srt:MinimumMember 2021-01-01 2021-09-30 0001578732 srt:MaximumMember us-gaap:LondonInterbankOfferedRateLIBORMember 2021-01-01 2021-09-30 0001578732 mmi:CommissionsPayableMember 2021-01-01 2021-09-30 0001578732 mmi:DeferredCompensationLiabilityMember 2021-01-01 2021-09-30 0001578732 us-gaap:FairValueMeasurementsRecurringMember srt:MaximumMember 2021-01-01 2021-09-30 0001578732 us-gaap:FairValueMeasurementsRecurringMember srt:MinimumMember 2021-01-01 2021-09-30 0001578732 srt:FitchAARatingMember srt:MoodysAaaRatingMember srt:StandardPoorsAARatingMember 2021-01-01 2021-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember srt:MaximumMember country:CA 2021-01-01 2021-09-30 0001578732 mmi:TransactionRiskMember 2021-01-01 2021-09-30 0001578732 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-09-30 0001578732 mmi:CommissionReceivableMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember 2020-01-01 2020-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember mmi:TransitionServicesAgreementMember us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-01-01 2020-09-30 0001578732 mmi:MarcusAndMillichapCompanyMember 2020-01-01 2020-09-30 0001578732 mmi:ContingentConsiderationMember 2020-01-01 2020-09-30 0001578732 mmi:EmployeeStockPurchasePlanMember 2020-01-01 2020-09-30 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2020-01-01 2020-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2020-01-01 2020-09-30 0001578732 us-gaap:RestrictedStockUnitsRSUMember mmi:IndependentContractorsSubsequentToAdoptionOfNewStandardMember 2020-01-01 2020-09-30 0001578732 us-gaap:PreferredStockMember 2020-01-01 2020-09-30 0001578732 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2020-01-01 2020-09-30 0001578732 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0001578732 mmi:OtherRevenuesMember 2020-01-01 2020-09-30 0001578732 mmi:FinancingFeesMember 2020-01-01 2020-09-30 0001578732 mmi:RealEstateBrokerageCommissionsMember 2020-01-01 2020-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember 2020-01-01 2020-09-30 0001578732 mmi:CreditAgreementMember 2020-01-01 2020-09-30 0001578732 mmi:DeferredCompensationLiabilityMember 2020-01-01 2020-09-30 0001578732 us-gaap:GeographicConcentrationRiskMember us-gaap:SalesRevenueNetMember srt:MaximumMember country:CA 2020-01-01 2020-09-30 0001578732 mmi:TransactionRiskMember 2020-01-01 2020-09-30 0001578732 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2020-01-01 2020-09-30 0001578732 mmi:CommissionReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-09-30 0001578732 us-gaap:StockAppreciationRightsSARSMember 2013-03-31 0001578732 us-gaap:StockAppreciationRightsSARSMember 2014-01-01 2014-01-01 0001578732 us-gaap:StockAppreciationRightsSARSMember 2020-01-01 2020-01-01 0001578732 us-gaap:StockAppreciationRightsSARSMember 2021-01-01 2021-01-01 0001578732 mmi:DeferredStockUnitsMember 2013-11-05 2013-11-05 0001578732 mmi:TwoThousandAndThirteenOmnibusEquityAwardPlanMember mmi:DeferredStockUnitsMember 2013-11-05 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001578732 us-gaap:RetainedEarningsMember 2021-06-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2021-06-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001578732 us-gaap:CommonStockMember 2021-06-30 0001578732 us-gaap:PreferredStockMember 2021-06-30 0001578732 us-gaap:CommonStockMember 2021-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2021-09-30 0001578732 us-gaap:RetainedEarningsMember 2021-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001578732 us-gaap:PreferredStockMember 2021-09-30 0001578732 us-gaap:PreferredStockMember 2020-06-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2020-06-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001578732 us-gaap:CommonStockMember 2020-06-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001578732 us-gaap:RetainedEarningsMember 2020-06-30 0001578732 us-gaap:CommonStockMember 2020-09-30 0001578732 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001578732 us-gaap:ReceivablesFromStockholderMember 2020-09-30 0001578732 us-gaap:RetainedEarningsMember 2020-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001578732 us-gaap:PreferredStockMember 2020-09-30 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001578732 us-gaap:RetainedEarningsMember 2020-12-31 0001578732 us-gaap:ReceivablesFromStockholderMember 2020-12-31 0001578732 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001578732 us-gaap:CommonStockMember 2020-12-31 0001578732 us-gaap:PreferredStockMember 2020-12-31 0001578732 us-gaap:RestrictedStockMember mmi:NonEmployeeDirectorMember 2020-12-31 0001578732 us-gaap:RestrictedStockUnitsRSUMember us-gaap:EmployeeStockMember 2020-12-31 0001578732 mmi:IndependentContractorsMember us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0001578732 us-gaap:AdditionalPaidInCapitalMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 us-gaap:ReceivablesFromStockholderMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 us-gaap:PreferredStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:ReceivablesFromStockholderMember 2019-12-31 0001578732 us-gaap:CommonStockMember 2019-12-31 0001578732 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001578732 us-gaap:RetainedEarningsMember 2019-12-31 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001578732 us-gaap:PreferredStockMember 2019-12-31 0001578732 us-gaap:PreferredStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 us-gaap:CommonStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:AdditionalPaidInCapitalMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:ReceivablesFromStockholderMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:RetainedEarningsMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:AccumulatedOtherComprehensiveIncomeMember srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMember 2019-12-31 0001578732 us-gaap:CommonStockMember srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember 2019-12-31 0001578732 mmi:ContingentConsiderationMember 2019-12-31 0001578732 mmi:ContingentConsiderationMember 2020-09-30 0001578732 us-gaap:AccountingStandardsUpdate201613Member 2019-12-31 iso4217:USD utr:Year xbrli:shares xbrli:pure utr:Month utr:Day mmi:Office iso4217:USD xbrli:shares mmi:Segment utr:Y
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, 2021
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)
 
 
 
Delaware
 
35-2478370
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
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 class
 
Trading 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 time 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 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.  ☐
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 2, 2021 was 39,667,728 shares.
 
 
 

Table of Contents
MARCUS & MILLICHAP, INC.
TABLE OF CONTENTS
 
 
  
Page
 
  
     
   
  
     
  
 
3
 
  
 
4
 
  
 
5
 
  
 
7
 
  
 
8
 
   
  
 
26
 
  
 
39
 
  
 
40
 
   
  
     
   
  
 
41
 
  
 
41
 
  
 
42
 
  
 
42
 
  
 
42
 
  
 
42
 
  
 
43
 
   
  
 
44
 
 
2

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, 2021
(Unaudited)
 
  
December 31,
2020
 
Assets
                 
Current assets:
                 
Cash and cash equivalents
   $ 281,007      $ 243,152  
Commissions receivable, net
     15,377        10,391  
Prepaid expenses
     9,232        10,153  
Marketable debt securities,
available-for-sale
(includes amortized cost of $116,852 and $158,148 at September 30, 2021 and December 31, 2020, respectively, and $0 allowance for credit losses)
     116,902        158,258  
Advances and loans, net
     3,017        2,413  
Other assets
     4,436        4,711  
    
 
 
    
 
 
 
Total current assets
     429,971        429,078  
Property and equipment, net
     22,890        23,436  
Operating lease
right-of-use
assets, net
     85,250        84,024  
Marketable debt securities,
available-for-sale
(includes amortized cost of $128,788 and $45,181 at September 30, 2021 and December 31, 2020, respectively, and $0 allowance for credit losses)
     130,502        47,773  
Assets held in rabbi trust
     11,056        10,295  
Deferred tax assets, net
     24,410        21,374  
Goodwill and other intangible assets, net
     48,974        52,053  
Advances and loans, net
     108,709        106,913  
Other assets
     13,318        4,176  
    
 
 
    
 
 
 
Total assets
   $ 875,080      $ 779,122  
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and stockholders’ equity
                 
Current liabilities:
                 
Accounts payable and other liabilities
   $ 20,025      $ 18,288  
Deferred compensation and commissions
     53,068        58,106  
Income tax payable
     5,658        3,726  
Operating lease liabilities
     19,745        19,190  
Accrued bonuses and other employee related expenses
     32,066        21,007  
    
 
 
    
 
 
 
Total current liabilities
     130,562        120,317  
Deferred compensation and commissions
     38,638        38,745  
Operating lease liabilities
     60,970        59,408  
Other liabilities
     12,641        13,816  
    
 
 
    
 
 
 
Total liabilities
     242,811        232,286  
 
 
 
 
 
 
 
 
 
Commitments and contingencies
                   
 
 
 
 
 
 
 
 
 
Stockholders’ equity:
                 
Preferred stock, $0.0001 par value:
                 
Authorized shares – 25,000,000; issued and outstanding shares – none at September 30, 2021 and December 31, 2020, respectively
                   
Common stock, $0.0001 par value:
                 
Authorized shares – 150,000,000; issued and outstanding shares – 39,666,785 and 39,401,976 at September 30, 2021 and December 31, 2020, respectively
     4        4  
Additional
paid-in
capital
     118,974        113,182  
Retained earnings
     511,544        431,076  
Accumulated other comprehensive income
     1,747        2,574  
    
 
 
    
 
 
 
Total stockholders’ equity
     632,269        546,836  
    
 
 
    
 
 
 
Total liabilities and stockholders’ equity
   $ 875,080      $ 779,122  
    
 
 
    
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
3

Table of Contents
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(Unaudited)
 
 
  
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
 
  
2021
 
 
2020
 
 
2021
 
 
2020
 
Revenues:
  
 
 
 
Real estate brokerage commissions
   $ 299,759     $ 140,844     $
 
715,458     $
 
416,044  
Financing fees
     29,391       15,620       75,448       43,674  
Other revenues
     3,233       2,111       10,400       6,974  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total revenues
     332,383       158,575       801,306       466,692  
    
 
 
   
 
 
   
 
 
   
 
 
 
Operating expenses:
                                
Cost of services
     219,194       99,707       506,882       287,207  
Selling, general and administrative
     64,673       49,722       178,147       148,101  
Depreciation and amortization
     2,850       2,606       8,806       7,822  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     286,717       152,035       693,835       443,130  
    
 
 
   
 
 
   
 
 
   
 
 
 
Operating income
     45,666       6,540       107,471       23,562  
Other income (expense), net
     323       1,615       2,737       4,224  
Interest expense
     (144     (199     (436     (695
    
 
 
   
 
 
   
 
 
   
 
 
 
Income before provision for income taxes
     45,845       7,956       109,772       27,091  
Provision for income taxes
     11,921       1,916       29,304       7,875  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income
     33,924       6,040       80,468       19,216  
    
 
 
   
 
 
   
 
 
   
 
 
 
         
Other comprehensive (loss) income:
                                
Marketable debt securities,
available-for-sale:
                                
Change in net unrealized gains
     (240     (30     (715     687  
Less: reclassification adjustment for net losses included in other income (expense), net
     23       8       26       32  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net change, net of tax of $(75), $(7), $(239) and $246 for the three and nine months ended September 30, 2021 and 2020, respectively
     (217     (22     (689     719  
Foreign currency translation gain (loss), net of tax of $0 for each of the three and nine months ended September 30, 2021
and 2020, respectively
 
     192       (214     (138     254  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other comprehensive (loss) income
     (25     (236     (827     973  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive income
   $ 33,899     $ 5,804     $ 79,641     $ 20,189  
    
 
 
   
 
 
   
 
 
   
 
 
 
         
Earnings per share:
                                
Basic
   $ 0.85     $ 0.15     $ 2.02     $ 0.49  
Diluted
   $ 0.84     $ 0.15     $ 2.00     $ 0.48  
Weighted average common shares outstanding:
                                
Basic
     39,940       39,681       39,859       39,617  
Diluted
     40,241       39,727       40,148       39,676  
See accompanying notes to condensed consolidated financial statements.
 
4

Table of Contents
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except for shares)
(Unaudited)
 
 
  
Three Months Ended September 30, 2021
 
 
  
Preferred Stock
 
  
Common Stock
 
  
Additional
Paid-In

Capital
 
 
Stock Notes
Receivable
From
Employees
 
  
Retained
Earnings
 
  
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Total
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
Balance at June 30, 2021
             $           39,578,360     $ 4      $
 
117,457     $         $ 477,620      $ 1,772     $ 596,853  
Net and comprehensive income
(loss)
     —                    —                                      33,924        (25     33,899  
Stock-based award activity
                                                                             
Stock-based compensation
                                            2,703                                    2,703  
Issuance of common stock for settlement of deferred stock units
                         60,373                                                           
Issuance of common stock for vesting of restricted stock units
                         58,411                                                           
Shares withheld related to net share settlement of stock-based awards
                         (30,359               (1,186                                  (1,186
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of September 30, 2021
             $           39,666,785     $ 4      $ 118,974     $         $ 511,544      $ 1,747     $ 632,269  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
 
  
Three Months Ended September 30, 2020
 
 
  
Preferred Stock
 
  
Common Stock
 
  
Additional
Paid-In

Capital
 
 
Stock Notes
Receivable
From
Employees
 
  
Retained
Earnings
 
  
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Total
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
Balance at June 30, 2020
             $            39,328,017     $ 4      $
 
108,308     $          $ 401,414      $ 3,187     $ 512,913  
Net and comprehensive income
 
(loss)
     —                    —                                      6,040        (236     5,804  
Stock-based award activity
                                                                             
Stock-based compensation
                                            2,383                                    2,383  
Issuance of common stock for vesting of restricted stock units
                         50,912                                                           
Shares withheld related to net share settlement of stock-based awards
                         (2,452               (66                                  (66
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of September 30, 2020
             $           39,376,477     $ 4      $ 110,625     $         $ 407,454      $ 2,951     $ 521,034  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
5

Table of Contents
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except for shares)
(Unaudited)
 
 
  
Nine Months Ended September 30, 2021
 
 
  
Preferred Stock
 
  
Common Stock
 
  
Additional
Paid-In

Capital
 
 
Stock Notes
Receivable
From
Employees
 
  
Retained
Earnings
 
  
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Total
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
Balance at December 31, 2020
             $           39,401,976     $ 4      $
 
113,182     $         $ 431,076      $ 2,574     $ 546,836  
Net and comprehensive income (loss)
     —                    —                                      80,468        (827     79,641  
Stock-based award activity
                                                                             
Stock-based compensation
                                            7,653                                    7,653  
Shares issued pursuant to employee stock purchase
plan
                         11,635                 369                                    369  
Issuance of common stock for settlement of deferred stock units
                         60,373                                                           
Issuance of common stock for vesting of restricted stock units
                         241,726                                                           
Issuance of common stock for unvested restricted stock awards
                         12,492                                                           
Issuance of common stock for stock settled deferred consideration
                         27,481                 1,000                                    1,000  
Shares withheld related to net share settlement of stock-based awards
                         (88,898               (3,230                                  (3,230
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of September 30, 2021
             $           39,666,785     $ 4      $ 118,974     $         $ 511,544      $ 1,747     $ 632,269  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
 
  
Nine Months Ended September 30, 2020
 
 
  
Preferred Stock
 
  
Common Stock
 
  
Additional
Paid-In

Capital
 
 
Stock Notes
Receivable
From
Employees
 
 
Retained
Earnings
 
 
Accumulated
Other
Comprehensive
Income
 
  
Total
 
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
Balance at December 31, 2019
             $            39,153,195     $ 4      $
 
104,658     $
(4
)
  $ 388,271     $ 1,978      $ 494,907  
Cumulative effect of a change in accounting principle, net of tax
                                                              (33               (33
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
Balance at January 1, 2020, as adjusted
                         39,153,195       4        104,658       (4     388,238       1,978        494,874  
Net and comprehensive income
     —                    —                                     19,216       973        20,189  
Stock-based award activity
                                                                            
Stock-based compensation
                                            7,551                                   7,551  
Shares issued pursuant to employee stock purchase plan
                         15,923                 371                                   371  
Issuance of common stock for vesting of restricted stock units
                         248,391                                                          
Issuance of common stock for unvested restricted stock awards
                         19,516                                                          
Shares withheld related to net share settlement of stock-based awards
                         (60,548               (1,955                                 (1,955
Reduction of stock notes receivable from employees
     —                    —                            4                          4  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
Balance as of September 30, 2020
             $           39,376,477     $ 4      $ 110,625     $         $ 407,454     $ 2,951      $ 521,034  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
   
 
 
   
 
 
    
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
6

Table of Contents
MARCUS & MILLICHAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
     Nine Months Ended
September 30,
 
     2021     2020  
Cash flows from operating activities
                
Net income
   $ 80,468     $ 19,216  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                
Depreciation and amortization
     8,806       7,822  
Amortization of
right-of-use
assets
     17,773       16,883  
Credit loss recovery
     25       55  
Stock-based compensation
     7,653       7,551  
Deferred taxes, net
     (2,847     6,050  
Unrealized foreign exchange (gains) losses
     (298     276  
Net realized gains on marketable debt securities,
available-for-sale
     (78     (180
Other
non-cash
items
     361       930  
Changes in operating assets and liabilities:
                
Commissions receivable
     (5,297     (1,928
Prepaid expenses
     925       1,988  
Advances and loans
     (2,434     (36,905
Other assets
     (1,076     (1,087
Accounts payable and other liabilities
     4,020       (1,373
Income tax receivable/payable
     1,932       (5,024
Accrued bonuses and other employee related expenses
     11,223       (12,145
Deferred compensation and commissions
     (4,499     (17,593
Operating lease liabilities
     (15,889     (13,504
Other liabilities
     (1,175     702  
    
 
 
   
 
 
 
Net cash provided by (used in) operating activities
     99,593       (28,266
    
 
 
   
 
 
 
Cash flows from investing activities
                
Acquisition of businesses, net of cash received
     229       (11,821
Purchases of marketable debt securities,
available-for-sale
     (291,063     (179,221
Proceeds from sales and maturities of marketable debt securities,
available-for-sale
     248,540       175,226  
Purchases of securities,
held-to-maturity
     (9,500         
Issuances of employee notes receivable
     (40     (243
Payments received on employee notes receivable
     290       90  
Purchase of property and equipment
     (4,238     (5,412
    
 
 
   
 
 
 
Net cash used in investing activities
     (55,782     (21,381
    
 
 
   
 
 
 
Cash flows from financing activities
                
Taxes paid related to net share settlement of stock-based awards
     (3,230     (1,955
Proceeds from issuance of shares pursuant to employee stock purchase plan
     369       371  
Principal payments on notes payable to former stockholders
              (6,564
Principal payments on stock appreciation rights liability
     (1,481     (1,251
Principal payments on contingent and deferred consideration
     (1,739     (420
    
 
 
   
 
 
 
Net cash used in financing activities
     (6,081     (9,819
    
 
 
   
 
 
 
Effect of currency exchange rate changes on cash and cash equivalents
     125       (92
    
 
 
   
 
 
 
Net increase (decrease) in cash and cash equivalents
     37,855       (59,558
Cash and cash equivalents at beginning of period
     243,152       232,670  
    
 
 
   
 
 
 
Cash and cash equivalents at end of period
   $ 281,007     $ 173,112  
    
 
 
   
 
 
 
     
Supplemental disclosures of cash flow information
                
Interest paid during the period
   $ 734     $ 1,208  
    
 
 
   
 
 
 
Income taxes paid, net
   $ 30,168     $ 6,849  
    
 
 
   
 
 
 
See accompanying notes to condensed consolidated financial statements.
 
7

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
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 brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of September 30, 2021, MMI operates 82 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 off
e
ring (“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 in November 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, 2020 included in the Company’s Annual Report on Form
10-K
filed on March 1, 2021 with the SEC. The results of the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, for other interim periods or for future years.
Considerations Related to the
COVID-19
Pandemic
T
he Company may continue to experience operational and financial impacts due to the ongoing
COVID-19
pandemic. Actual results may differ from the Company’s current estimates and historical trends due to the uncertainty around the economic impact and spread of
COVID-19,
as well as the impact of vaccine mandates on our workforce.
See Note 5 – “Acquisitions, Goodwill and Other Intangible Assets” and Note 8 – “Fair Value Measurements” for further discussions on the potential impacts of
COVID-19.
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 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 and the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenues 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 and cash equivalents, investments in marketable debt securities,
available-for-sale,
security deposits (included under other assets,
non-current)
and commissions receivable, net. Cash and cash equivalents are placed with high-credit quality financial institutions and invested in high-credit quality money market funds and commercial paper. Concentrations and ratings of marketable debt securities,
available-for-sale
are limited by the approved investment policy.
 
8

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
To reduce its credit risk, the Company monitors the credit standing of the financial institutions money market funds that represent amounts recorded as cash and cash equivalents. The Company historically has not experienced any significant losses related to cash and cash equivalents.
The Company derives its revenues 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, 2021 and 2020, no transaction represented 10% or more of total revenues. Further, while one or more transactions may represent 10% or more of commissions receivable at any reporting date, amounts due are typically collected within 10 days of settlement and, therefore, do not expose the Company to significant credit risk.
During each of the three and nine months ended September 30, 2021, the Company’s Canadian operations represented 2.2% of total revenues, respectively. During the three and nine months ended September 30, 2020, the Company’s Canadian operations represented 1.50% and 1.9% of total revenues, respectively.
During each of the three and nine months ended September 30, 2021 and 2020, no office represented 10% or more of total revenues.
Recent Accounting Pronouncements
Pending Adoption
In March 2020, the FASB issued Accounting Standards Update (“ASU”)
No. 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
(“ASU
2020-04”).
ASU
2020-04
provides temporary optional exceptions to the guidance in U.S. GAAP on contract modifications to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). ASU
2020-04
is effective for all entities upon issuance and may be applied prospectively to contract modifications through December 31, 2022. The guidance applies to the Company’s Credit Agreement (see Note 13 – “Commitments and Contingencies”), which references LIBOR, and will generally allow it to account for and present a modification as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. As of September 30, 2021, the Company has not drawn funds from the credit facility. The Company continues to evaluate the impact of this new standard but does not expect ASU
2020-04
to have a material effect on its condensed consolidated financial statements.
 
2.
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
     September 30,
2021
     December 31,
2020
 
Computer software and hardware equipment
   $ 32,766      $ 30,955  
Furniture, fixtures and equipment
     23,946        23,418  
Less: accumulated depreciation and amortization
     (33,822      (30,937
    
 
 
    
 
 
 
     $ 22,890      $ 23,436  
    
 
 
    
 
 
 
During the nine months ended September 30, 2021 and 2020, the Company
wrote-off
approximately $2.5 million and $968,000, respectively, of fully depreciated computer software and hardware equipment and furniture, fixtures and equipment.
As of September 30, 2021 and 2020, property and equipment additions incurred but not yet paid included in accounts payable and other liabilities were $786,000 and $430,000, respectively.
 
3.
Operating Leases
The Company has operating leases for all of its facilities and autos. As of September 30, 2021 and December 31, 2020, operating lease
right-of-use
(“ROU”) assets were $143.3
 million and $126.9
 million, respectively, and the related accumulated amortization was $58.0
 million and $42.9
 million,
respectively.
 
9

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The operating lease cost, included in selling, general and administrative expense in the condensed consolidated statement of net and comprehensive income, consisted of the following (in thousands):
 
 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Operating lease cost:
  
  
  
  
Lease cost
(1)
   $
 
6,549      $
 
6,355      $
 
19,650      $
 
18,959  
Variable lease cost
(2)
     1,355        1,485        3,996        4,096  
Sublease income
     (206      (50      (258      (216
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 7,698      $ 7,790      $ 23,388      $ 22,839  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Includes short-term lease cost and ROU asset amortization.
(2)
Primarily relates to common area maintenance, property taxes, insurance, utilities and parking.
Maturities of lease liabilities by year consisted of the following (in thousands):
 
 
  
September 30,
2021
 
Remainder of 2021
   $ 5,958  
2022
     20,560  
2023
     17,256  
2024
     14,769  
2025
     12,462  
Thereafter
     15,603  
    
 
 
 
Total future minimum lease payments
     86,608  
Less imputed interest
     (5,893
    
 
 
 
Present value of operating lease liabilities
   $ 80,715  
    
 
 
 
Supplemental cash flow information and noncash activity related to the operating leases consisted of the following (in thousands):
 
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
Operating cash flow information:
  
  
Cash paid for amounts included in the measurement of operating lease liabilities
   $
 
17,697      $
 
15,566  
Noncash activity:
                 
ROU assets obtained in exchange for operating lease liabilities
   $ 18,003      $ 7,771  
Tenant improvements owned by lessor related to ROU assets
(1)
   $ 1,005      $ 949  
 
(1)
Reclassification from other assets current.
Other information related to the operating leases consisted of the following:
 
 
  
September 30, 2021
 
 
December 31, 2020
 
Weighted average remaining operating lease term
     4.71 years       4.70 years  
Weighted average discount rate
     2.9     3.1
 
10

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
4.
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, 2021
 
 
  
Amortized
Cost
 
  
Allowance
for Credit
Losses
 
  
Gross
Unrealized
Gains
 
  
Gross
Unrealized
Losses
 
 
Fair
Value
 
Short-term investments:
  
  
  
  
 
U.S. treasuries
   $ 19,984      $         $ 7      $        $ 19,991  
Corporate debt
     96,868                  43                 96,911  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
     $ 116,852      $         $ 50      $        $ 116,902  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Long-term investments:
                                           
U.S. treasuries
   $ 86,893      $         $ 190      $ (26   $ 87,057  
U.S. government sponsored entities
     797                  27        (2     822  
Corporate debt
     33,845                  1,422        (33     35,234  
Asset-backed securities (“ABS”) and other
     7,253                  141        (5     7,389  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
     $
 
128,788      $         $ 1,780      $ (66   $ 130,502  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
 
  
December 31, 2020
 
 
  
Amortized
Cost
 
  
Allowance
for Credit
Losses
 
  
Gross
Unrealized
Gains
 
  
Gross
Unrealized
Losses
 
 
Fair
Value
 
Short-term investments:
  
  
  
  
 
U.S. treasuries
   $
 
75,887      $         $ 88      $ (5 )   $ 75,970  
U.S. government sponsored entities
     32,439                  8                 32,447  
Corporate debt
     49,822                  20        (1 )     49,841  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
     $ 158,148      $         $ 116      $ (6 )   $ 158,258  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Long-term investments:
                                           
U.S. treasuries
   $ 3,375      $         $ 266      $        $ 3,641  
U.S. government sponsored entities
     1,114                  38                 1,152  
Corporate debt
     34,183                  2,137        (33 )     36,287  
ABS and other
     6,509                  195        (11 )     6,693  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
     $ 45,181      $         $ 2,636      $ (44 )   $ 47,773  
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
The Company’s investments in marketable debt s
e
curities,
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, 2021  
     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
   $
 
44,428      $ (26   $         $        $ 44,428      $ (26
U.S. government sponsored entities
     123        (2                        123        (2
Corporate debt
     12,501        (33                        12,501        (33
ABS and other
     1,129        (4     221        (1     1,350        (5
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
 
     $ 58,181      $ (65   $ 221      $ (1   $ 58,402      $ (66
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
 
 
11

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
  
December 31, 2020
 
 
  
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
   $ 41,702      $ (5   $         $        $ 41,702      $ (5
Corporate debt
     29,810        (34                        29,810        (34
ABS and other
     546        (6     157        (5     703        (11
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
 
     $ 72,058      $ (45   $ 157      $ (5   $ 72,215      $ (50
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
    
 
 
 
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,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Gross realized gains
(1)
   $ 68      $ 97      $ 78      $ 229  
    
 
 
    
 
 
    
 
 
    
 
 
 
Gross realized losses
(1)
   $         $ (34    $         $ (49
    
 
 
    
 
 
    
 
 
    
 
 
 

(1)
Recorded in other income (expense), net in the condensed consolidated statements of net and comprehensive income. 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, 2021, the portfolio had an average credit rating of AA and weighted term to contractual maturity of 1.9 years, with 37 securities in the portfolio with an unrealized loss aggregating $66,000, or 0.1% of amortized cost, and a weighted average credit rating of AA+.
As of September 30, 2021, 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 ma
i
ntain 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 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, 2021
 
  
December 31, 2020
 
 
  
Amortized
Cost
 
  
Fair Value
 
  
Amortized
Cost
 
  
Fair Value
 
Due in one year or less
   $ 116,852      $ 116,902      $ 158,148      $ 158,258  
Due after one year through five years
     112,288        113,167        30,604        32,041  
Due after five years through ten years
     11,618        12,334        10,022        11,044  
Due after ten years
     4,882        5,001        4,555        4,688  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 245,640      $ 247,404      $ 203,329      $ 206,031  
    
 
 
    
 
 
    
 
 
    
 
 
 
Weighted average contractual maturity
              1.9 years                 1.6 years  
Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.
 
12

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
5.
Acquisitions, Goodwill and Other Intangible Assets
During the nine months ended September 30, 2021, the Company recognized measurement period adjustments, including additional cash expected to be received in excess of the provisional amounts that were recognized at the acquisition date for businesses acquired during 2020. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have affected the measurement of the amounts recognized as of the acquisition date. The impact to amortization expense not previously recognized related to these changes in estimates was not material.
The goodwill recorded as part of the acquisitions 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 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, 2021
 
  
December 31, 2020
 
 
  
Gross
Carrying
Amount
 
  
Accumulated
Amortization
 
 
Net Book
Value
 
  
Gross
Carrying
Amount
 
  
Accumulated
Amortization
 
 
Net Book
Value
 
Goodwill and intangible assets:
  
  
 
  
  
 
Goodwill
   $ 34,071      $ —       $ 34,071      $ 33,375      $ —       $ 33,375  
Intangible assets
(1)
     23,974        (9,071     14,903        24,745        (6,067     18,678  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
     $ 58,045      $ (9,071   $ 48,974      $ 58,120      $ (6,067   $ 52,053  
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
(1)
Total weighted average amortization period was 5.53 years and 5.57 years as of September 30, 2021 and December 31, 2020, respectively.
The changes in the carrying amount of goodwill consisted of the following (in thousands):
 
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
Beginning balance
   $ 33,375      $ 15,072  
Additions from acquisitions
(1)
     696        9,247  
Impairment losses
                   
    
 
 
    
 
 
 
Ending balance
   $ 34,071      $ 24,319  
    
 
 
    
 
 
 
 
(1)
 
The 2021 addition represents a measurement period adjustment.
Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):
 
 
  
September 30, 2021
 
Remainder of 2021
   $ 869  
2022
     3,474  
2023
     3,407  
2024
     2,891  
2025
     2,671  
Thereafter
     1,591  
    
 
 
 
     $ 14,903  
    
 
 
 
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.
 
13

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
As of September 30, 2021, the Company considered the impact of
COVID-19
pandemic 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 conclud
e
d that as of September 30, 2021, there was no impairment of its goodwill and intangible assets.
 
6.
Selected Balance Sheet Data
Advances and Loans, Net and Commissions Receivable, Net
Allowance for credit losses for advances and loans and commissions receivable consisted of the following (in thousands):
 
 
  
Advances and
Loans
 
  
Commissions
Receivable
 
 
Total
 
Beginning balance as of January 1, 2021
   $ 563      $ 94     $
 
657  
Credit loss (recovery)
     116        (91     25  
Write-offs
     (60               (60
    
 
 
    
 
 
   
 
 
 
Ending balance as of September 30, 2021
   $ 619      $ 3     $ 622  
    
 
 
    
 
 
   
 
 
 
       
     Advances and
Loans
     Commissions
Receivable
    Total  
Beginning balance as of January 1, 2020
   $ 512      $ 32
(1)
 
  $ 544  
Credit loss expense
     13        42       55  
Write-offs
     (50               (50
    
 
 
    
 
 
   
 
 
 
Ending balance as of September 30, 2020
   $ 475      $ 74     $ 549  
    
 
 
    
 
 
   
 
 
 
(1)
Includes cumulative-effect adjustment related to the adoption of ASU
No. 2016-13,
Financial Instruments - Credit Losses
.
Other Assets
Other assets consisted of the following (in thousands):
 
 
  
Current
 
  
Non-Current
 
 
  
September 30,
2021
 
  
December 31,
2020
 
  
September 30,
2021
 
  
December 31,
2020
 
Mortgage servicing rights (“MSRs”), net of amortization
   $         $         $ 1,919      $ 1,897  
Security deposits
                         1,445        1,461  
Employee notes receivable
(1)
     66        185                  246  
Securities,
held-to-maturity
                         9,500            
Customer trust accounts and other
     4,370        4,526        454        572  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 4,436      $ 4,711      $ 13,318      $ 4,176  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $10 and $0 for the nine months ended September 30, 2021 and 2020, respectively. See Note 7 – “Related-Party Transactions” for additional information.
 
14

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
MSRs
The net change in the carrying value of MSRs consisted of the following (in thousands):
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
Beginning balance
   $ 1,897      $ 2,002  
Additions
     421        425  
Amortization
     (399      (404
    
 
 
    
 
 
 
Ending balance
   $ 1,919      $ 2,023  
    
 
 
    
 
 
 
The portfolio of loans serviced by the Company aggregated $1.7 billion and $1.6 billion for the periods ended September 30, 2021 and December 31, 2020, respectively. See Note 8 – “Fair Value Measurements” for additional information on MSRs.
In connection with MSR activities, the Company holds funds in escrow for the benefit of the lenders. These funds, which totaled $3.1 million and $3.2 million as of September 30, 2021 and December 31, 2020, respectively, and the offsetting obligations are not presented in the Company’s condensed consolidated financial statements as they do not represent assets and liabilities of the Company.
Deferred Compensation and Commissions
Deferred compensation and commissions consisted of the following (in thousands):
 
     Current     
Non-Current
 
     September 30,
2021
     December 31,
2020
     September 30,
2021
     December 31,
2020
 
Stock appreciation rights (“SARs”) liability
(1)
   $ 2,241      $ 2,162      $ 14,796      $ 16,671  
Commissions payable to investment sales and financing professionals
     49,175        54,082        17,012        15,306  
Deferred compensation liability
(1)
     1,132        1,519        6,830        6,768  
Other
     520        343                      
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 53,068      $ 58,106      $ 38,638      $ 38,745  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
The SARs and deferred compensation liability become subject to payout as a result of a participant no longer being considered 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.
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, 2021 and 2020 were 2.930% and 3.920%, respectively. MMI recorded interest expense related to this liability of $122,000 and $178,000 for the three months ended September 30, 2021 and 2020, respectively, and $366,000 and $533,000 for the nine months ended September 30, 2021 and 2020, 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, 2021 and 2020, the Company made total payments of $2.2 million and $2.1 million, consisting of principal and accumulated interest, respectively.
 
15

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Commissions Payable
Certain investment sales professionals have the ability to 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 has the ability to defer payment of certain commissions, at its election, for up to three years. Commissions payable 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 r
a
bbi 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 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 in service payout have been classified as current. During each of the nine months ended September 30, 2021 and 2020, the Company made total payments to participants of $1.2 million, 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,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
(Decrease) increase in the carrying value of the assets held in the rabbi trust
(1)
   $ (59    $ 434      $ 932      $ 170  
    
 
 
    
 
 
    
 
 
    
 
 
 
(Decrease) increase in the net carrying value of the deferred compensation obligation 
(2)
   $ (43    $ 388      $ 720      $ 88  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(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.
Other Liabilities
Other liabilities consisted of the following (in thousands):
 
 
  
Non-Current
 
 
  
September 30,
2021
 
  
December 31,
2020
 
Deferred consideration
(1) (2)
   $ 5,809      $ 8,582  
Contingent consideration
(1) (2)
     5,812        4,219  
Other
     1,020        1,015  
    
 
 
    
 
 
 
     $ 12,641      $ 13,816  
    
 
 
    
 
 
 
 
(1)
The current portions of deferred consideration in the amounts of $5,418 and $6,666 as of September 30, 2021 and December 31, 2020, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets. The current portions of contingent consideration in the amounts of $2,286 and $1,353 as of September 30, 2021 and December 31, 2020, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets.
(2)
Includes a measurement period adjustment and a reduction in deferred consideration settled in stock made during the nine months ended September 30, 2021, which represents a noncash investing activity. See Note 5 – “Acquisitions, Goodwill and Other Intangible Assets” for additional information.
 
16

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
7.
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. Under the TSA, the Company incurred net costs (charge-back) during the three months ended September 30, 2021 and 2020 of $(11,000) and $10,000, respectively, and during the nine months ended September 30, 2021 and 2020 of $4,000 and $52,000, respectively. These amounts are included in selling, general and administrative expense in the accompanying condensed consolidated statements of net and comprehensive income.
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 the three months ended September 30, 2021 and 2020, the Company earned real estate brokerage commissions and financing fees of $603,000 and $225,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $363,000 and $130,000, respectively, related to these revenues. For the nine months ended September 30, 2021 and 2020, the Company earned real estate brokerage commissions and financing fees of $1.4 million and $1.9 million, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $840,000 and $1.1 million, respectively, related to these revenues.
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 on May 31, 2022. The related operating lease cost was $333,000 for each of the three months ended September 30, 2021 and 2020, respectively, and $998,000 for each of the nine months ended September 30, 2021 and 2020, respectively. Operating lease cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of net and comprehensive income. See Note 3 – “Operating Leases” for additional information.
Accounts Payable and Other Liabilities with MMC
As of September 30, 2021 and December 31, 2020, accounts payable and other liabilities with MMC totaling $86,000 and $89,000, respectively, remain unpaid and are included in accounts payable and other liabilities in the accompanying condensed
consolidated balance sheets.
O
ther
T
he Company makes advances to
non-executive
employees from
time-to-time.
At September 30, 2021 and December 31, 2020, the aggregate principal amount for employee notes receivable was
$66,000
 
and $431,000, respectively, which is included in other assets (current and
non-current)
in the accompanying condensed consolidated balance sheets. See Note 6
– “Selected Balance Sheet Data” for additional information.
As of September 30, 2021, George M. Marcus, the Company’s founder and Chairman, beneficially owned approximately 38% of the Company’s issued and outstanding common stock, including shares owned by Phoenix Investments Holdings, LLC and the Marcus Family Foundation II.
 
8.
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:
 
17

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
   
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 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 NAV money market funds recorded in cash and cash equivalents, investments in marketable debt securities,
available-for-sale,
assets held in the rabbi trust, deferred compensation liability and contingent and deferred consideration at fair value on a recurring basis.
Fair values for investments included in cash and cash equivalents and marketable debt securities,
available-for-sale
were determined for each individual security in the investment portfolio and all these 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 L
e
vel 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.
 
18

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):
 
 
  
September 30, 2021
 
  
December 31, 2020
 
 
  
Fair Value
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Fair Value
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
Assets:
  
  
  
  
  
  
  
  
Assets held in rabbi trust
   $ 11,056      $         $ 11,056      $         $ 10,295      $         $ 10,295      $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Cash equivalents
(1)
:
                                                                       
Commercial paper
   $         $         $         $         $ 9,399      $         $ 9,399      $     
Money market funds
     223,678        223,678                            158,271        158,271                      
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 223,678      $ 223,678      $         $         $ 167,670      $ 158,271      $ 9,399      $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Marketable debt securities,
available-for-sale:
                                                                       
Short-term investments:
                                                                       
U.S. treasuries
   $ 19,991      $ 19,991      $         $         $ 75,970      $ 75,970      $         $     
U.S. government sponsored entities
                                             32,447                  32,447            
Corporate debt
     96,911                  96,911                  49,841                  49,841            
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 116,902      $ 19,991      $ 96,911      $         $ 158,258      $ 75,970      $ 82,288      $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Long-term investments:
                                                                       
U.S. treasuries
   $ 87,057      $ 87,057      $         $         $ 3,641      $ 3,641      $         $     
U.S. government sponsored entities
     822                  822                  1,152                  1,152            
Corporate debt
     35,234                  35,234                  36,287                  36,287            
ABS and other
     7,389                  7,389                  6,693                  6,693            
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 130,502      $ 87,057      $ 43,445      $         $ 47,773      $ 3,641      $ 44,132      $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
                                                                       
Contingent consideration
   $ 8,098      $         $         $ 8,098      $ 5,572      $         $         $ 5,572  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Deferred consideration
   $ 11,227      $         $ 11,227      $         $ 15,248      $         $ 15,248      $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Deferred compensation liability
   $ 7,962      $ 7,962      $         $         $ 8,287      $ 8,287      $         $     
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.
There were no transfers in or out of Level 3 during the nine months ended September 30, 2021 and 2020.
D
uring the nine months ended September 30, 2021, the Company considered current and future interest rates on the probability of achieving EBITDA and other performance targets in its determination of fair value for the contingent consideration. The Company is uncertain as to the extent of the volatility in the unobservable inputs in the foreseeable future. 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.
As of September 30, 2021 and December 31, 2020, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $30.3 million and $33.2 million, respectively. Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these payments will be made over the next one to
six-year
period. Changes in fair value are included in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income.
 
19

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):
 
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
Beginning balance
   $
 
5,572      $
 
3,387  
Contingent consideration in connection with acquisitions
(1)
     (100      1,800  
Change in fair value of contingent consideration
     3,246        134  
Payments of contingent consideration
     (620      (638
    
 
 
    
 
 
 
Ending balance
   $ 8,098      $ 4,683  
    
 
 
    
 
 
 
 
(1)
Contingent consideration in connection with acquisitions represents a noncash investing activity. Nine months ended September 30, 2021 relates to a measurement period adjustment. See Note 5 – “Acquisitions, Goodwill and Other Intangible Assets” for additional information.
Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):
 
     Fair Value at
September 30, 2021
     Valuation Technique      Unobservable inputs      Range
(Weighted Average)
(1)
 
Contingent consideration
   $ 8,098        Discounted cash flow        Expected life of cash flows       
1.7-6.1 years (3.7 years)
 
                         Discount rate       
1.8%-3.6%       (2.8%)
 
                         Probability of achievement       
26.9%-100.0%     (94.9%)
 
         
     Fair Value at
December 31, 2020
     Valuation Technique      Unobservable inputs      Range
(Weighted Average)
(1)
 
Contingent consideration
   $ 5,572        Discounted cash flow        Expected life of cash flows       
2.4-6.8
years (4.4 years)
 
                         Discount rate       
2.6%-4.3%       (3.4%)
 
                         Probability of achievement       
50.0%-100.0%     (86.1%)
 
 
(1)
Unobservable inputs were weighted by the relative fair value of the instruments.
Nonrecurring Fair Value Measurements
In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of MSRs, intangibles, goodwill and other assets for indications of impairment at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.
MSRs are recorded at fair value upon acquisition of a servicing contract. The Company has elected the amortization method for the subsequent measurement of MSRs. MSRs are carried at the lower of amortized cost or fair value. MSRs are a Level 3 measurement. The Company’s MSRs do not trade in an active, open market with readily observable prices. The estimated fair value of the Company’s MSRs were developed using a discounted cash flow model that calculates the present value of estimated future net servicing income. The model considers contractual provisions and assumptions of market participants including specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions used to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. Management uses assumptions in the determination of fair value for MSRs after considering default, severity, prepayment and discount rates related to the specific types and underlying collateral of the various serviced loans, interest rates, refinance rates, and current government and private sector responses on the economic impact of the
COVID-19
pandemic. MSRs are carried at the lower of amortized cost or fair value. The fair value of the MSRs approximated the carrying value at September 30, 2021 and December 31, 2020 after consideration of the revisions to the various assumptions. See Note 6 – “Selected Balance Sheet Data – Other Assets – MSRs” for additional information.
 
20

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial assets measured at fair value on a nonrecurring basis consisted of the following (dollars in thousands):
 
 
  
Fair Value at
September 30, 2021
 
  
Valuation Technique
 
  
Unobservable inputs
 
  
Range
(Weighted Average)
 (1)
 
MSRs
   $ 2,351        Discounted cash flow        Constant prepayment rates       
0.0%-20.0% (10.0%)
 
                         Constant default rate       
0.3%-4.7
%   (
1.2%)
 
                         Loss severity       
26.2%-31.4%
(28.0%)
 
                         Discount rate       
10.0%-10.0%
(10.0%)
 
         
     Fair Value at
December 31, 2020
     Valuation Technique      Unobservable inputs      Range
(Weighted Average)
(1)
 
MSRs
   $ 2,135        Discounted cash flow        Constant prepayment rates       
0.0%-20.0%
(10.0%)
 
                         Constant default rate       
0.3%-4.1
%   (
1.1%)
 
                         Loss severity       
26.2%-31.4% (28.0%)
 
                         Discount rate       
10.0%-10.0%
(10.0%)
 
 
(1)
Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value.
 
9.
Stockholders’ Equity
Common Stock
As of September 30, 2021 and December 31, 2020, there were 39,666,785 and 39,401,976 shares of common stock, $0.0001 par value, issued and outstanding, which include unvested restricted stock awards (“RSAs”) issued to
non-employee
directors, respectively. See Note 12 – “Earnings per Share” for additional information.
Preferred Stock
The Company has 25,000,000 authorized shares of preferred stock with a par value $0.0001 per share. At September 30, 2021 and December 31, 2020, there were no preferred shares issued or outstanding.
Accumulated Other Comprehensive Income/Loss
Amounts reclassified from accumulated other comprehensive income/loss include marketable debt securities, available for sale are included as a component of other income (expense), net or selling, general and administrative expense, as applicable, in the condensed consolidated statements of net and comprehensive income. The reclassifications were determined on a specific identification basis.
The Company has not p
r
ovided for U.S. taxes on unremitted earnings of its foreign subsidiary as it is operating at a loss and has no earnings and profits to remit. As a result, deferred taxes were not provided related to the cumulative foreign currency translation adjustments.
 
 
10.
Stock-Based Compensation Plans
2
013 Omnibus Equity Incentive Plan
The Company’s board of directors adopted the 2013 Omnibus Equity Incentive Plan (the “2013 Plan”), which became effective upon the Company’s IPO. In February 2017, the board of directors amended and restated the 2013 Plan, which was approved by the Company’s stockholders in May 2017. Grants are made from time to time by the compensation committee of the Company’s board of directors at its discretion, subject to certain restrictions as to the number and value of shares that may be granted to any individual. In addition,
non-employee
directors receive annual grants under a director compensation policy. As of September 30, 2021, there were 4,672,675 shares available for future grants under the 2013 Plan.
 
21

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Awards Granted and Settled
Under the 2013 Plan, the Company has issued RSAs to
non-employee
directors and restricted stock units (“RSUs”) to employees and independent contractors. RSAs vest over a
one-year
period from the date of grant, subject to service requirements. RSUs generally vest in equal annual installments over a five-year period from the date of grant or earlier as approved by the compensation committee of the Company’s board of directors. Any unvested awards are canceled upon termination as a service provider. As of September 30, 2021, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.
During the nine months ended September 30, 2021, 241,726 shares of RSUs vested and 60,373 shar
e
s of deferred stock units (“DSUs”) were settled and 88,898 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the vesting date. The shares withheld for taxes were returned to the share reserve and are available for future issuance in accordance with provisions of the 2013 Plan.
Outstanding Awards
Activity under the 2013 Plan consisted of the following (dollars in thousands, except weighted average per share data):
 
 
  
RSA Grants to
Non-employee

Directors
 
 
RSU Grants to
Employees
 
 
RSU Grants to
Independent
Contractors
 
 
Total
 
 
Weighted-
Average Grant
Date Fair Value
Per Share
 
Nonvested shares at December 31, 2020
(1)
     16,728       637,650       264,001       918,379     $  33.73  
Granted
     12,492       269,474       81,566       363,532     $ 38.74  
Vested
     (16,728     (163,758     (77,968     (258,454   $ 31.93  
Transferred
              (9,057     9,057              $ 34.49  
Forfeited/canceled
              (25,470     (6,345     (31,815   $ 33.06  
    
 
 
   
 
 
   
 
 
   
 
 
         
Nonvested shares at September 30, 2021
(1)
     12,492       708,839       270,311       991,642     $ 35.52  
    
 
 
   
 
 
   
 
 
   
 
 
         
Unrecognized stock-based compensation expense as of September 30, 2021
(2)
   $ 265     $ 22,090     $ 8,499     $ 30,854          
    
 
 
   
 
 
   
 
 
   
 
 
         
Weighted average remaining vesting period (years) as of September 30, 2021
     0.59       3.60       3.44       3.53          
    
 
 
   
 
 
   
 
 
   
 
 
         
 
(1)
Nonvested RSUs will be settled through the issuance of new shares of common stock.
(2)
The total unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 3.53 years.
Employee Stock Purchase Plan
In 2013, the Company adopted the 2013 Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to qualify under Section 423 of the Internal Revenue Code and provides for consecutive,
non-overlapping
6-month
offering periods. The offering periods generally start on the first trading day on or after May 15 and November 15 of each year. Qualifying employees may purchase shares of the Company stock at a 10% discount based on the lower of the market price at the beginning or end of the offering period, subject to IRS limitations. The Company determined that the ESPP was a compensatory plan and is required to expense the fair value of the awards over each
6-month
offering period.
The ESPP initially had 366,667 shares of common stock reserved, and 165,242 shares of common stock remain available for issuance as of September 30, 2021. The ESPP provides for annual increases in the number of shares available for issuance under the ESPP, equal to the least of (i) 366,667 shares, (ii) 1% of the outstanding shares on such date, or (iii) an amount determined by the compensation committee of the board of directors. Pursuant to the provisions of the ESPP, the board of directors has determined to not provide for any annual increases to date. At September 30, 2021, total unrecognized compensation cost related to the ESPP was $16,000 and is expected to be recognized over a weighted average period of 0.13 years.
 
22

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
SARs and DSUs
Prior to the IPO, certain employees were granted SARs. As of March 31, 2013, the outstanding SARs were frozen at the liability amount, and will be paid out to each participant in installments upon retirement or departure under the terms of the revised SARs agreements. To replace beneficial ownership in the SARs, the difference between the book value liability and the fair value of the awards was granted to plan participants in the form of DSUs, which were fully vested upon receipt and will be settled in actual stock at a rate of 20% per year if the participant remains employed by the Company during that period (otherwise all unsettled shares of stock upon termination from service will be settled five years from the termination date, unless otherwise agreed to by the Company). In the event of death or termination of service after reaching the age of 67, 100% of the DSUs will be settled. As of September 30, 2021, 281,193 shares of fully vested DSUs remained to be settled in 2022.
Summary of Stock-Based Compensation
Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income and consisted of the following (in thousands):
 
 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
ESPP
   $ 33      $ 62      $ 107      $ 145  
RSAs –
non-employee
directors
     114        120        338        493  
RSUs – employees
     1,731        1,413        4,932        4,583  
RSUs – independent contractors
     825        788        2,276        2,330  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $
 
 2,703      $
 
 2,383      $
 
 7,653      $
 
 7,551  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
11.
Income Taxes
The Company’s effective tax rate for the three and nine months ended September 30, 2021 was 26.0% and 26.7%, respectively, compared to 24.1% and 29.1%, respectively, for the three and nine months ended September 30, 2020. The Company provides for the effects of income taxes in interim financial statements based on the Company’s estimate of its annual effective tax rate for the full year, which is based on forecasted income by jurisdiction where the Company operates, adjusted for any tax effects of items that relate discretely to the period, if any.
The provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (dollars in thousands):
 
 
  
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 
 
  
2021
 
 
2020
 
 
2021
 
 
2020
 
 
  
Amount
 
 
Rate
 
 
Amount
 
 
Rate
 
 
Amount
 
 
Rate
 
 
Amount
 
 
Rate
 
Income tax expense at the federal statutory rate
   $ 9,627    
 
 
21.0   $  1,671      
 
21.0   $  23,052       21.0   $  5,689    
 
 
21.0
State income tax expense, net of federal benefit
     2,111       4.6     453       5.7     5,157       4.7     1,403       5.2
(Windfall) shortfall tax benefits, net related to stock-based compensation
     (443     (1.0 )%      130       1.6     (522     (0.5 )%      203       0.7
Change in valuation allowance
     55       0.1     134       1.7     243       0.2     594       2.2
Permanent and other items
(1)
     571       1.3     (472     (5.9 )%      1,374       1.3     (14         
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
     $
 
 11,921       26.0   $
 
1,916       24.1   $
 
29,304       26.7   $
 
7,875       29.1
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
 
Permanent items relate principally to compensation charges, qualified transportation fringe benefits and meals and entertainment.
23

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
12.
Earnings per Share
Basic and diluted
 earnings per share for the three and nine months ended September 30, 2021 and 2020, respectively consisted of the following (in thousands, except per share data):
 
 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Numerator (Basic and Diluted):
  
     
  
     
  
     
  
     
Net income
   $  33,924      $ 6,040      $  80,468      $  19,216  
Change in value for stock settled consideration
     (2                8            
    
 
 
    
 
 
    
 
 
    
 
 
 
Adjusted net income
   $ 33,922      $ 6,040      $ 80,476      $ 19,216  
    
 
 
    
 
 
    
 
 
    
 
 
 
         
Denominator:
                                   
Basic
                                   
Weighted average common shares issued and outstanding
     39,634        39,357        39,539        39,293  
Deduct: Unvested RSAs
(1)
     (13      (18      (14      (18
Add: Fully vested DSUs
(2)
     319        342        334        342  
    
 
 
    
 
 
    
 
 
    
 
 
 
Weighted average common shares outstanding
     39,940        39,681        39,859        39,617  
    
 
 
    
 
 
    
 
 
    
 
 
 
         
Basic earnings per common share
   $ 0.85      $ 0.15      $ 2.02      $ 0.49  
    
 
 
    
 
 
    
 
 
    
 
 
 
         
Diluted
                                   
Weighted average common shares outstanding from above
     39,940        39,681        39,859        39,617  
Add: Dilutive effect of RSUs, RSAs & ESPP
     188        46        176        59  
Add: Contingently issuable shares
(3)
     113                  113            
    
 
 
    
 
 
    
 
 
    
 
 
 
Weighted average common shares outstanding
     40,241        39,727        40,148        39,676  
    
 
 
    
 
 
    
 
 
    
 
 
 
         
Diluted earnings per common share
   $ 0.84      $ 0.15      $ 2.00      $ 0.48  
    
 
 
    
 
 
    
 
 
    
 
 
 
         
Antidilutive shares excluded from diluted earnings per common share
(4)
     112        696        363        719  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(1)
RSAs were issued and outstanding to the
non-employee
directors and have a
one-year
vesting term subject to service requirements. See Note 10 – “Stock-Based Compensation Plans” for additional information.
(2)
Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 10 – “Stock-Based Compensation Plans” for additional information.
(3)
Relates to contingently issuable stock settled consideration.
(4)
Primarily pertaining to RSU grants to the Company’s employees and independent contractors.
 
13.
Commitments and Contingencies
Credit Agreement
On June 18, 2014, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association (the “Bank”), as amended and restated on May 28, 2019, and further, amended on November 27, 2019 and on February 9, 2021 (the “Credit Agreement”). The Credit Agreement provides for a $60.0 million principal amount senior secured revolving credit facility that is guaranteed by all of the Company’s domestic subsidiaries (the “Credit Facility”) and matures on
June 1, 2022
. The Company may borrow, repay and reborrow amounts under the Credit Facility until its maturity date, at which time all amounts outstanding under the Credit Facility must be repaid in full. Upon the expiration of the use of the LIBOR as a benchmark, the benchmark will be replaced with the SOFR plus a spread adjustment.
 
24

Table of Contents
MARCUS & MILLICHAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
Borrowings under the Credit Agreement are available for general corporate purposes and working capital. The Credit Facility includes a $10.0 million sublimit for the issuance of standby letters of credit of which $533,000 was utilized at September 30, 2021. Borrowings under the Credit Facility will bear interest, at the Company’s option, at either (i) a fluctuating rate per annum 2.00% below the Base Rate (defined as the highest of (a) the Bank’s prime rate,
(b) one-month
LIBOR plus 1.50%, and (c) the federal funds rate plus 1.50%), or (ii) at a fixed rate per annum determined by Bank to be between 0.875% to 1.125% above LIBOR.
In connection with the amendments of the Credit Agreement, the Company paid bank fees and other expenses, which are being amortized over the remaining term of the Credit Agreement. The Company pays a commitment fee of up to 0.1% per annum, payable quarterly, based on the amount of unutilized commitments under the Credit Facility. The amortization and commitment fee is included in interest expense in the accompanying condensed cons
o
lidated statements of net and comprehensive income and was $21,000 and $22,000 for the three months ended September 30, 2021 and 2020, respectively, and $65,000 for each of the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, there were no amounts outstanding under the Credit Agreement.
The Credit Facility contains customary covenants, including financial and other covenant reporting requirements and events of default. Financial covenants require the Company, on a combined basis with its guarantors, to maintain (i) an EBITDAR Coverage Ratio (as defined in the Credit Agreement) of not less than 1.25:1.0 as of each quarter end, determined on a rolling four-quarter basis, and (ii) total funded debt to EBITDA not greater than 1.5:1.0 as of each quarter end, determined on a rolling four-quarter basis, and also limits investments in foreign entities and certain other loans. The Credit Facility is secured by substantially all assets of the Company, including pledges of 100% of the stock or other equity interest of each subsidiary except for the capital stock of a controlled foreign corporation (as defined in the Internal Revenue Code), in which case no such pledge is required. As of September 30, 2021, the Company was in compliance with all financial and
non-financial
covenants and has not experienced any limitation in its operations as a result of the covenants.
Other
In connection with certain agreements with investment sales and financing professionals, the Company may agree to advance amounts to certain such professionals upon reaching certain time and performance goals. Such commitments as of September 30, 2021 aggregated $15.9 
million.
 
25

Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context requires otherwise, the words “Marcus & Millichap,” “MMI,” “we,” the “Company,” “us” and “our” refer to Marcus & Millichap, Inc., and its consolidated subsidiaries.
Forward-Looking Statements
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to any continuing impact of the
COVID-19
pandemic. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Form
10-Q
and in conjunction with our Annual Report on Form
10-K
for the year ended December 31, 2020 filed with the SEC on March 1, 2021, including the “Risk Factors” section and the consolidated financial statements and notes included therein.
Overview
We are a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. We have been the top commercial real estate investment broker in the United States based on the number of investment transactions for more than 15 years. As of September 30, 2021, we had 1,982 investment sales and financing professionals that are primarily exclusive independent contractors operating in 82 offices, who provide real estate brokerage and financing services to sellers and buyers of commercial real estate assets. During the three and nine months ended September 30, 2021, we closed 3,325 and 8,942 investment sales, financing and other transactions with total sales volume of approximately $20.8 billion and $50.2 billion, respectively. During the year ended December 31, 2020, we closed 8,954 investment sales, financing and other transactions with total sales volume of approximately $43.4 billion.
We generate revenues by collecting real estate brokerage commissions upon the sale, and fees upon the financing, of commercial properties, and by providing equity advisory services, loan sales and consulting and advisory services. Real estate brokerage commissions are typically based upon the value of the property and financing fees are typically based upon the size of the loan. During the three months ended September 30, 2021, approximately 90% of our revenues were generated from real estate brokerage commissions, 9% from financing fees and 1% from other real estate related services. During the nine months ended September 30, 2021, approximately 89% of our revenues were generated from real estate brokerage commissions, 10% from financing fees and 1% from other real estate related services. During the year ended December 31, 2020, approximately 88% of our revenues were generated from real estate brokerage commissions, 10% from financing fees and 2% from other real estate related services.
We divide commercial real estate into four major market segments, characterized by price:
 
   
Properties priced less than $1 million;
 
   
Private client market:
properties priced from $1 million to up to but less than $10 million;
 
   
Middle market:
properties priced from $10 million to up to but less than $20 million; and
 
   
Larger transaction market:
properties priced from $20 million and above.
Our strength is in serving private clients in the
$1-$10 million
private client market segment, which contributed approximately 61% and 69% of our real estate brokerage commissions during the three months ended September 30, 2021 and 2020, respectively, and approximately 62% and 68% of our real estate brokerage commissions during the nine months ended September 30, 2021 and 2020, respectively. The following table sets forth the number of transactions, sales volume and revenues by commercial real estate market segment for real estate brokerage:
 
     Three Months Ended September 30,         
     2021      2020      Change  
Real Estate Brokerage
   Number      Volume      Revenues      Number      Volume      Revenues      Number      Volume      Revenues  
            (in millions)      (in thousands)             (in millions)      (in thousands)             (in millions)      (in thousands)  
<$1 million
     267      $ 183      $ 7,419        241      $ 156      $ 6,290        26      $ 27      $ 1,129  
Private client market ($1 - <$10 million)
     1,894        6,296        183,033        1,168        3,592        97,856        726        2,704        85,177  
Middle market ($10 - <$20 million)
     136        1,940        35,353        70        945        17,643        66        995        17,710  
Larger transaction market (
³
$20 million)
     159        8,088        73,954        48        2,302        19,055        111        5,786        54,899  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
     2,456      $  16,507      $  299,759        1,527      $  6,995      $  140,844        929      $  9,512      $  158,915  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
 
 
26

Table of Contents
    Nine Months Ended September 30,        
    2021     2020     Change  
Real Estate Brokerage
  Number     Volume     Revenues     Number     Volume     Revenues     Number     Volume     Revenues  
          (in millions)     (in thousands)           (in millions)     (in thousands)           (in millions)     (in thousands)  
<$1 million
    791     $ 532     $ 21,175       649     $ 410     $ 16,550       142     $ 122     $ 4,625  
Private client market ($1 - <$10 million)
    4,861       15,639       446,592       3,203       10,207       282,937       1,658       5,432       163,655  
Middle market ($10 - <$20 million)
    370       5,141       97,699       204       2,785       51,902       166       2,356       45,797  
Larger transaction market (
³
$20 million)
    352       17,619       149,992       161       7,459       64,655       191       10,160       85,337  
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
    6,374     $  38,931     $  715,458       4,217     $  20,861     $  416,044       2,157     $  18,070     $  299,414  
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
COVID-19
We are closely monitoring the continuing impact of the
COVID-19
pandemic on all aspects of our business and in the regions we operate. We continue to follow the local guidelines in cities where our offices are located, and all of our offices have
re-opened.
Our business was impacted by the
COVID-19
pandemic during most of 2020, with the total number of transactions and total revenues declining 7.9% and 11.1%, respectively, in the year ended December 31, 2020 compared to the same period in 2019. During the nine months ended September 30, 2021, total revenues and total number of transactions increased 71.7% and 49.6%, respectively, compared to the same period in 2020 and 40.9% and 29.2%, respectively, compared to the same period in 2019. While our total revenues were significantly above prior years’ levels, some uncertainty exists in our ability to sustain the growth rates experienced during the three and nine months ended September 30, 2021.
Due to the continuing uncertainty around the
COVID-19
pandemic, we are unable to predict its potential impact on our financial condition, results of operations and cash flows. These uncertainties include the scope, severity and duration of the pandemic; variants in the virus, vaccination rates and the effects thereof; expectation gaps among buyers and sellers on pricing and property operation, vulnerability to economic weakness and/or slow recovery; the direct and indirect economic effects of the actions taken by state and local governments to continue to contain the pandemic or mitigate its impact; and the impact of these and other factors on our employees, independent contractors, clients and potential clients.
Cybersecurity
In August 2021, we were subject to a cybersecurity attack on our information technology systems. We immediately engaged cybersecurity experts to secure and restore all essential systems and were able to do so with no material disruption to our business. At this time, there is no evidence of any material risk or misuse relating to personal information.
We continue to work with our external cybersecurity experts to assess and enhance the security of our systems and personal information. We maintained cyber insurance, which has covered the majority of costs related to this incident.
Factors Affecting Our Business
Our business and our operating results, financial condition and liquidity are significantly affected by the number and size of commercial real estate investment sales and financing transactions that we close in any period. The number and size of these transactions are affected by our ability to recruit and retain investment sales and financing professionals, identify and contract properties for sale and identify those that need financing and refinancing. We principally monitor the commercial real estate market through four factors, which generally drive our business. The factors are the economy, commercial real estate supply and demand, capital markets and investor sentiment and investment activity.
The Economy
Our business is dependent on economic conditions within the markets in which we operate. Changes in the economy on a global, national, regional or local basis can have a positive or a negative impact on our business. Economic indicators and projections related to job growth, unemployment, interest rates, retail spending and confidence trends can have a positive or a negative impact on our business. Overall market conditions, including global trade, interest rate changes and job creation, can affect investor sentiment and, ultimately, the demand for our services from investors in real estate.
 
27

Table of Contents
The U.S. economy maintained strong growth through the third quarter as consumer spending and corporate investment fueled gains. Job creation has been robust, with the economy adding 5.1 million jobs through the first three quarters of 2021. However, only 78% of the 22.4 million jobs lost during the pandemic have been recovered thus far, and the economy faces a labor shortage that has begun to restrain job additions. As of August 2021, according to the Bureau of Labor Statistics, there were 10.4 million job openings in the U.S., but just 8.4 million people were looking for work. The labor shortage has generated increased wage pressure across all industries, fueling increased inflation. Increased pricing pressure has been further aggravated by supply chain bottlenecks that have resulted in manufacturing component and consumer product shortages. Combined, these and other inflationary pressures could spur a response from the Federal Reserve that places upward pressure on interest rates. Although heightened inflation risk exists, we believe that commercial real estate tends to be a comparatively strong inflation hedge relative to many other investment classes. This combination, along with elevated liquidity, supported strong investor activity in the third quarter of 2021. Additional headwinds could still emerge, however, as the U.S. Congress negotiates tax policy revisions that could affect commercial real estate investments.    
Commercial Real Estate Supply and Demand
Our business is dependent on the willingness of investors to invest in or sell commercial real estate, which is affected by many factors beyond our control. These factors include the supply of commercial real estate coupled with user demand for these properties and the performance of real estate assets when compared with other investment alternatives, such as stocks and bonds.
Space demand for virtually all commercial property types accelerated in the third quarter. Apartment demand reached a record level, while self-storage and industrial properties delivered strong gains. Office, retail, hotel and seniors housing properties delivered more modest gains, but we believe the momentum is pointing toward broad-based commercial real estate demand growth. By the same token, materials shortages and elevated construction costs have restrained construction levels for all property types except apartments and industrial space, the two property types that could see record space deliveries in 2021. The mitigated supply risk for most property types is a positive factor supporting the commercial real estate outlook. Demand drivers continue to favor suburban areas and metros across the southeast and southwest that are benefiting from elevated
in-migration.
Although major urban gateway markets like New York and San Francisco were disproportionately impacted by the health crisis, they generated positive commercial real estate space demand in the third quarter, supporting a potential future recovery in these areas as well. The positive momentum of commercial real estate fundamentals has attracted increased capital to the sector, creating an active bid climate for many marketed assets, especially those in markets demonstrating particularly favorable growth metrics. The rising demand for assets has supported increased transaction flow and has placed upward pressure on prices at a macro level.
Capital Markets
Credit and liquidity issues in the financial markets have a direct impact on the flow of capital to the commercial real estate market. Real estate purchases are often financed with debt and, as a result, credit and liquidity impact transaction activity and prices. Changes in interest rates, as well as steady and protracted movements of interest rates in one direction, whether increases or decreases, could adversely or positively affect the operations and income potential of commercial real estate properties, as well as lender and equity underwriting for real estate investments. These changes generally influence the demand of investors for commercial real estate investments.
Both equity and debt capital remains very liquid, with financing broadly available for most property types in most markets. Banks continue to be the leading source of financing, but commercial mortgage-backed security (CMBS) financing has become increasingly available. CMBS financing was virtually
non-existent
at the outset of the pandemic, but by the second quarter of 2021 CMBS comprised 18% of the lender composition pool, exceeding traditional levels. The broad array of financing sources and the competition to place capital, together with low underlying treasury rates, has helped keep lending rates low through the first three quarters of the year. However, the Federal Reserve has begun to signal that they will taper their quantitative easing programs very soon. As the Federal Reserve reduces their $120 billion monthly investments into treasuries and mortgage-backed securities, we believe risk-free interests rates such as the
10-year
treasury may experience upward pressure. This in turn could cause commercial real estate lending rates to rise. Nonetheless, interest rates remain well-below the historical norm, keeping the cost of debt capital below the first-year return rate on most acquisitions. Barring a major capital markets disruption, we believe the pool of capital seeking placement in commercial real estate should sustain strong transaction activity through 2021 and into 2022.
Investor Sentiment and Investment Activity
We rely on investors to buy and sell properties in order to generate commissions. Investors’ desires to engage in real estate transactions are dependent on many factors that are beyond our control. The economy, supply and demand for properly positioned properties, available credit and market events impact investor sentiment and, therefore, transaction velocity. In addition, our private clients are often motivated to buy, sell and/or refinance properties due to personal circumstances such as death, divorce, partnership breakups and estate planning.
 
28

Table of Contents
Third quarter commercial real estate transaction activity was notably strong, well above the pandemic restrained third quarter of 2020 and even surpassing the third quarter of 2019 for most property types. Positive market and economic factors including rising commercial real estate space demand, strong liquidity, low interest rates, expectations of a robust economic momentum and positive demographics aligned to spur investor optimism. The demand for several types of commercial real estate, particularly in growth markets was robust. Buyers often compete to place capital, driving record pricing for some property types in select markets. Although property types
hard-hit
by the pandemic are still going through price discovery, momentum remains strong. Office property sales face the greatest uncertainty due to questions about corporate strategies for returning to the offices. Office pricing has recently become more stable, but we believe another
COVID-19
surge could potentially disrupt the return to office timetable again, creating a new round of pricing instability. Another area of investor uncertainty centers on potential tax reform, but recent communications from the House of Representatives suggests that changes to very important commercial real estate focused tax policies such as the 1031 tax deferred exchange and the
step-up
basis are improbable at this time. This has bolstered investor confidence, but until the final version of any tax policy changes are officially adopted, commercial real estate investors could remain wary. Despite these areas of uncertainty, we believe the overall enthusiasm for commercial real estate investment as demonstrated by increasing transaction activity remains positive.
Seasonality
Our real estate brokerage commissions and financing fees have tended to be seasonal and, combined with other factors, can affect an investor’s ability to compare our financial condition and results of operations on a
quarter-by-quarter
basis. Historically, this seasonality has generally caused our revenue, operating income, net income and cash flows from operating activities to be lower in the first half of the year and higher in the second half of the year, particularly in the fourth quarter. The concentration of earnings and cash flows in the last six months of the year, particularly in the fourth quarter, is due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. This historical trend can be disrupted both positively and negatively by major economic events, political events, natural disasters or pandemics such as the
COVID-19
pandemic, which may impact, among other things, investor sentiment for a particular property type or location, volatility in financial markets, current and future projections of interest rates, attractiveness of other asset classes, market liquidity and the extent of limitations or availability of capital allocations for larger property buyers, among others. Private client investors may accelerate or delay transactions due to personal or business-related reasons unrelated to economic events. In addition, our operating margins are typically lower during the second half of each year due to our commission structure for some of our senior investment sales and financing professionals. These senior investment sales and financing professionals are on a graduated commission schedule that resets annually, pursuant to which higher commissions are paid for higher sales volumes. Our historical pattern of seasonality may or may not continue to the same degree experienced in prior years.
Operating Segments
We follow the guidance for segment reporting, which requires reporting information on operating segments in interim and annual financial statements. Substantially all of our operations involve the delivery of commercial real estate services to our customers including real estate investment sales, financing and consulting and advisory services. Management makes operating decisions, assesses performance and allocates resources based on an ongoing review of these integrated operations, which constitute only one operating segment for financial reporting purposes.
Key Financial Measures and Indicators
Revenues
Our revenues are primarily generated from our real estate investment sales business. In addition to real estate brokerage commissions, we generate revenues from financing fees and from other revenues, which are primarily comprised of consulting and advisory fees.
Because our business is transaction oriented, we rely on investment sales and financing professionals to continually develop leads, identify properties to sell and finance, market those properties and close the sale timely to generate a consistent flow of revenue. While our sales volume is impacted by seasonality factors, the timing of closings is also dependent on many market and personal factors unique to a particular client or transaction, particularly clients transacting in the
$1-$10 million
private client market segment. These factors can cause transactions to be accelerated or delayed beyond our control. Further, commission rates earned are generally inversely related to the value of the property sold. As a result of our expansion into the middle and larger transaction market segments, we have seen our overall commission rates fluctuate from
period-to-period
as a result of changes in the relative mix of the number and volume of investment sales transactions closed in the middle and larger transaction market segments as compared to the
$1-$10 million
private client market segment. These factors may result in
period-to-period
variations in our revenues that differ from historical patterns.
 
29

Table of Contents
A small percentage of our transactions include retainer fees and/or breakage fees. Retainer fees are credited against a success-based fee paid upon the closing of a transaction or a breakage fee. Transactions that are terminated before completion will sometimes generate breakage fees, which are usually calculated as a set amount or a percentage of the fee we would have received had the transaction closed.
Real Estate Brokerage Commissions
We earn real estate brokerage commissions by acting as a broker for commercial real estate owners seeking to sell or investors seeking to buy properties. Revenues from real estate brokerage commissions are typically recognized at the close of escrow.
Financing Fees
We earn financing fees by securing financing on purchase transactions or by securing refinancing of our clients’ existing mortgage debt. We recognize financing fee revenues at the time the loan closes, and we have no remaining significant obligations for performance in connection with the transaction.
To a lesser extent, we also earn mortgage servicing revenue, mortgage servicing fees, equity advisory services, loan sales and ancillary fees associated with financing activities. We recognize mortgage servicing revenues upon the acquisition of a servicing obligation. We generate mortgage servicing fees through the provision of collection, remittance, recordkeeping, reporting and other related mortgage servicing functions, activities and services.
Other Revenues
Other revenues include fees generated from consulting, advisory and other real estate services performed by our investment sales professionals, as well as referral fees from other real estate brokers. Revenues from these services are recognized as they are performed and completed.
Operating Expenses
Our operating expenses consist of cost of services, selling, general and administrative expenses and depreciation and amortization. The significant components of our expenses are further described below.
Cost of Services
The majority of our cost of services expense is variable commissions paid to our investment sales professionals and compensation-related costs related to our financing activities. Commission expenses are directly attributable to providing services to our clients for investment sales and financing services. Most of our investment sales and financing professionals are independent contractors and are paid commissions; however, because there are some who are initially paid a salary and certain of our financing professionals are employees, costs of services also include employee-related compensation, employer taxes and benefits for those employees. The commission rates we pay to our investment sales and financing professionals vary based on individual contracts negotiated and are generally higher for the more experienced professionals. Some of our most senior investment sales and financing professionals also have the ability to earn additional commissions after meeting certain annual financial thresholds. These additional commissions are recognized as cost of services in the period in which they are earned. Payment of a portion of these additional commissions are generally deferred for a period of one or three years, at our election, and paid at the beginning of the second or fourth calendar year. Cost of services also includes referral fees paid to other real estate brokers where we are the principal service provider. Cost of services, therefore, can vary based on the commission structure of the independent contractors that closed transactions in any particular period.
Selling, General and Administrative Expenses
The largest expense component within selling, general and administrative expenses is personnel expenses for our management team and sales and support staff. In addition, these costs include facilities costs (excluding depreciation and amortization), staff related expenses, sales, marketing, legal, telecommunication, network, data sources, transaction costs related to acquisitions, changes in fair value for contingent and deferred consideration and other administrative expenses. Also included in selling, general and administrative are expenses for stock-based compensation to
non-employee
directors, employees and independent contractors (i.e. investment sales and financing professionals) under the Amended and Restated 2013 Omnibus Equity Incentive Plan (“2013 Plan”) and the 2013 Employee Stock Purchase Plan (“ESPP”).
 
30

Table of Contents
Depreciation and Amortization Expense
Depreciation expense consists of depreciation recorded on our computer software and hardware and furniture, fixture and equipment. Depreciation is provided over estimated useful lives ranging from three to seven years for assets. Amortization expense consists of (i) amortization recorded on our mortgage servicing rights (“MSRs”) using the interest method over the period that servicing income is expected to be received and (ii) amortization recorded on intangible assets amortized on a straight-line basis using a useful life between one and seven years.
Other Income (Expense), Net
Other income (expense), net primarily consists of interest income, net gains or losses on our deferred compensation plan assets, realized gains and losses on our marketable debt securities,
available-for-sale,
foreign currency gains and losses and other
non-operating
income and expenses.
Interest Expense
Interest expense primarily consists of interest expense associated with the stock appreciation rights (“SARs”) liability, notes payable to former stockholders (through the second quarter of 2020 when fully repaid) and our credit agreement.
Provision for Income Taxes
We are subject to U.S. and Canadian federal taxes and individual state and local taxes based on the income generated in the jurisdictions in which we operate. Our effective tax rate fluctuates as a result of the change in the mix of our activities in the jurisdictions we operate due to differing tax rates in those jurisdictions and the impact of permanent items, including compensation charges, qualified transportation fringe benefits, uncertain tax positions, meals and entertainment and
tax-exempt
deferred compensation plan assets. Our provision for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our 2013 Plan and ESPP.
We record deferred taxes, net based on the tax rate expected to be in effect at the time those items are expected to be recognized for tax purposes.
 
31

Table of Contents
Results of Operations
Following is a discussion of our results of operations for the three and nine months ended September 30, 2021 and 2020. The tables included in the period comparisons below provide summaries of our results of operations. The
period-to-period
comparisons of financial results are not necessarily indicative of future results.
Key Operating Metrics
We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We also believe these metrics are relevant to investors’ and others’ assessment of our financial condition and results of operations. During the three months ended September 30, 2021 and 2020, we closed more than 3,300 and 2,100 investment sales, financing and other transactions, respectively, with total sales volume of approximately $20.8 billion and $9.1 billion, respectively. During the nine months ended September 30, 2021 and 2020, we closed more than 8,900 and 5,900 investment sales, financing and other transactions, respectively, with total sales volume of approximately $50.2 billion and $27.8 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:
 
     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
Real Estate Brokerage
   2021     2020     2021     2020  
Average Number of Investment Sales Professionals
     1,909       1,917       1,934       1,911  
Average Number of Transactions per Investment Sales Professional
     1.29       0.80       3.30       2.21  
Average Commission per Transaction
   $  122,052     $  92,236     $  112,246     $  98,659  
Average Commission Rate
     1.82     2.01     1.84     1.99
Average Transaction Size (in thousands)
   $ 6,721     $ 4,581     $ 6,108     $ 4,947  
Total Number of Transactions
     2,456       1,527       6,374       4,217  
Total Sales Volume (in millions)
   $ 16,507     $ 6,995     $ 38,931     $ 20,861  
 
                                                       
    
Three Months Ended

September 30,
   
Nine Months Ended

September 30,
 
Financing
(1)
  
2021
   
2020
   
2021
   
2020
 
Average Number of Financing Professionals
  
 
86
 
 
 
82
 
 
 
86
 
 
 
86
 
Average Number of Transactions per Financing Professional
  
 
6.98
 
 
 
5.39
 
 
 
20.67
 
 
 
15.13
 
Average Fee per Transaction
  
$
 42,319
 
 
$
 33,531
 
 
$
 36,126
 
 
$
 31,607
 
Average Fee Rate
  
 
0.77
 
 
0.88
 
 
0.82
 
 
0.89
Average Transaction Size (in thousands)
  
$
5,503
 
 
$
3,828
 
 
$
4,390
 
 
$
3,533
 
Total Number of Transactions
  
 
600
 
 
 
442
 
 
 
1,778
 
 
 
1,301
 
Total Financing Volume (in millions)
  
$
3,302
 
 
$
1,692
 
 
$
7,806
 
 
$
4,597
 
 
(1)
Operating metrics exclude certain financing fees not directly associated to transactions.
 
32

Table of Contents
Comparison of Three Months Ended September 30, 2021 and 2020
Below are key operating results for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 (dollars in thousands):
 
     Three Months
Ended
September 30, 2021
    Percentage
of
Revenue
    Three Months
Ended
September 30, 2020
    Percentage
of
Revenue
    Change  
    Dollar     Percentage  
Revenues:
            
Real estate brokerage commissions
   $  299,759       90.2   $  140,844       88.8   $ 158,915       112.8
Financing fees
     29,391       8.8       15,620       9.9       13,771       88.2
Other revenues
     3,233       1.0       2,111       1.3       1,122       53.2
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Total revenues
     332,383       100.0       158,575       100.0       173,808       109.6
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Operating expenses:
            
Cost of services
     219,194       65.9       99,707       62.9       119,487       119.8
Selling, general and administrative
     64,673       19.5       49,722       31.4       14,951       30.1
Depreciation and amortization
     2,850       0.9       2,606       1.6       244       9.4
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Total operating expenses
     286,717       86.3       152,035       95.9       134,682       88.6
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Operating income
     45,666       13.7       6,540       4.1       39,126      
nm
 
(2)
 
Other income (expense), net
     323       0.1       1,615       1.0       (1,292     (80.0 )% 
Interest expense
     (144     0.0       (199     (0.1     55       (27.6 )% 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Income before provision for income taxes
     45,845       13.8       7,956       5.0       37,889      
nm
 
(2)
 
Provision for income taxes
     11,921       3.6       1,916       1.2       10,005      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Net income
   $ 33,924       10.2   $ 6,040       3.8   $ 27,884      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Adjusted EBITDA
(1)
   $ 50,985       15.3   $ 12,229       7.7   $ 38,756      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
(1)
Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see
“Non-GAAP
Financial Measure.”
(2)
Not meaningful
Revenues
Our total revenues were $332.4 million for the three months ended September 30, 2021 compared to $158.6 million for the same period in 2020, an increase of $173.8 million, or 109.6%. Total revenues increased as a result of increases in real estate brokerage commissions, financing fees and other revenues, as described below.
Real estate brokerage commissions.
Revenues from real estate brokerage commissions increased to $299.8 million for the three months ended September 30, 2021 from $140.8 million for the same period in 2020, an increase of $158.9 million, or 112.8%. The increase was primarily driven by a 136.0% increase in overall sales volume generated by a 60.8% increase in the number of investment sales transactions and a 46.7% increase in average transaction size, partially offset by a 19 basis points reduction in average commission rates due to a larger proportion of transactions closed from the Larger Transaction Market segment.
Financing fees.
Revenues from financing fees increased to $29.4 million for the three months ended September 30, 2021 from $15.6 million for the same period in 2020, an increase of $13.8 million, or 88.2%, in part spurred by growth from our recent acquisitions and other ancillary financing fees. The increase was driven by a 95.2% increase in financing volume, partially offset by an 11 basis points decrease in average commission rates due in part to fees from certain larger loan transactions. Financing volume was impacted by a 35.7% increase in the number of financing transactions and a 43.8% increase in average transaction size.
Other revenues.
Other revenues increased to $3.2 million for the three months ended September 30, 2021 from $2.1 million for the same period in 2020, an increase of $1.1 million, or 53.2%. The increase was primarily driven by increases in consulting and advisory services during the three months ended September 30, 2021, compared to the same period in 2020.
Total Operating Expenses
Our total operating expenses were $286.7 million for the three months ended September 30, 2021 compared to $152.0 million for the same period in 2020, an increase of $134.7 million, or 88.6%. The increase was due to increases in cost of services, which are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities, selling, general and administrative costs and depreciation and amortization expense, as described below.
 
33

Table of Contents
Cost of services.
Cost of services increased to $219.2 million for the three months ended September 30, 2021 from $99.7 million for the same period in 2020, an increase of $119.5 million, or 119.8%. The increase was primarily due to increased commission expenses driven by the related increased revenues noted above. Cost of services as a percent of total revenues increased to 65.9% compared to 62.9% for the same period in 2020 primarily due to our senior investment sales and financing professionals who earn additional commissions after meeting certain annual financial thresholds, reaching their thresholds earlier than anticipated.
Selling, general and administrative expense.
Selling, general and administrative expense for the three months ended September 30, 2021 increased $15.0 million, or 30.1%, to $64.7 million from $49.7 million for the same period in 2020. The change was primarily due to increases in (i) compensation related costs, primarily driven by increases in management performance compensation due to a significant year-over-year growth in operating results; (ii) business development, marketing and other support related to the long-term retention of our sales and financing professionals; (iii) facilities expenses due to expansion of existing offices; and (iv) legal costs.
Depreciation and amortization expense.
Depreciation and amortization expense increased to $2.9 million for the three months ended September 30, 2021 from $2.6 million for the same period in 2020, an increase of $0.2 million, or 9.4%.
Other Income (Expense), Net
Other income (expense), net decreased to $0.3 million for the three months ended September 30, 2021 from $1.6 million for the same period in 2020. The decrease was primarily driven by (i) an unfavorable change in the value of our deferred compensation plan assets that are held in a rabbi trust; (ii) a reduction in interest income on our investments in marketable debt securities,
available-for-sale
due to an overall decrease in interest rates; and (iii) a foreign currency loss related to our Canadian operations.
Interest Expense
Interest expense decreased to $0.1 million for the three months ended September 30, 2021 from $0.2 million for the same period in 2020. The decrease for the three months ended September 30, 2021 was primarily due to a decrease in interest expense on SARs liability.
Provision for Income Taxes
The provision for income taxes was $11.9 million for the three months ended September 30, 2021 compared to $1.9 million in the same period in 2020, an increase of $10.0 million. The effective income tax rate for the three months ended September 30, 2021 was 26.0% compared to 24.1% for the same period in 2020. The effective income tax rate increased primarily due the change in the relationship of permanent nondeductible items to income before provision for income taxes, partially offset by an increase in windfall tax benefits, net related to the settlement of stock-based awards and a decrease in Canadian losses, which are subject to a full valuation allowance.
 
34

Table of Contents
Comparison of Nine Months Ended September 30, 2021 and 2020
Below are key operating results for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 (dollars in thousands):
 
     Nine Months
Ended
September 30, 2021
    Percentage
of
    Nine Months
Ended
    Percentage
of
    Change  
    Revenue     September 30, 2020     Revenue     Dollar     Percentage  
Revenues:
            
Real estate brokerage commissions
   $  715,458       89.3   $  416,044       89.1   $  299,414       72.0
Financing fees
     75,448       9.4       43,674       9.4       31,774       72.8
Other revenues
     10,400       1.3       6,974       1.5       3,426       49.1
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Total revenues
     801,306       100.0       466,692       100.0       334,614       71.7
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Operating expenses:
            
Cost of services
     506,882       63.3       287,207       61.5       219,675       76.5
Selling, general and administrative
     178,147       22.2       148,101       31.7       30,046       20.3
Depreciation and amortization
     8,806       1.1       7,822       1.8       984       12.6
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Total operating expenses
     693,835       86.6       443,130       95.0       250,705       56.6
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Operating income
     107,471       13.4       23,562       5.0       83,909      
nm
 
(2)
 
Other income (expense), net
     2,737       0.3       4,224       0.9       (1,487     (35.2 )% 
Interest expense
     (436     (0.1     (695     (0.1     259       (37.3 )% 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Income before provision for income taxes
     109,772       13.6       27,091       5.8       82,681      
nm
 
(2)
 
Provision for income taxes
     29,304       3.7       7,875       1.7       21,429      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Net income
   $ 80,468       9.9   $ 19,216       4.1   $ 61,252      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
Adjusted EBITDA
(1)
   $ 124,790       15.6   $ 38,757       8.3   $ 86,033      
nm
 
(2)
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
(1)
Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see
“Non-GAAP
Financial Measure.”
(2)
Not meaningful
Revenues
Our total revenues were $801.3 million for the nine months ended September 30, 2021 compared to $466.7 million for the same period in 2020, an increase of $334.6 million, or 71.7%. Total revenues increased as a result of increases in real estate brokerage commissions, financing fees and other revenues, as described below.
Real estate brokerage commissions.
Revenues from real estate brokerage commissions increased to $715.5 million for the nine months ended September 30, 2021, from $416.0 million for the same period in 2020, an increase of $299.4 million, or 72.0%. The increase was primarily driven by an 86.6% increase in sales volume generated by a 51.2% increase in the number of investment sales transactions and a 23.5% increase in the average transaction size. These increases were partially offset by a 15 basis points reduction in average commission rates due to a larger proportion of transactions closed from the Larger Transaction Market segment.
Financing fees.
Revenues from financing fees increased to $75.4 million for the nine months ended September 30, 2021 from $43.7 million for the same period in 2020, an increase of $31.8 million, or 72.8%, in part spurred by growth from our recent acquisitions and other ancillary financing fees. The increase was driven by a 69.8% increase in financing volume, partially offset by a 7 basis points reduction in average commission rates due in part to fees from certain larger loan transactions. Financing volume was impacted by a 24.3% increase in average transaction size and a 36.7% increase in the number of financing transactions.
Other revenues.
Other revenues increased to $10.4 million for the nine months ended September 30, 2021 from $7.0 million for the same period in 2020, an increase of $3.4 million, or 49.1%. The increase was primarily driven by an increase in consulting and advisory services during the nine months ended September 30, 2021, compared to the same period in 2020.
Total Operating Expenses
Our total operating expenses were $693.8 million for the nine months ended September 30, 2021 compared to $443.1 million for the same period in 2020, an increase of $250.7 million, or 56.6%. The increase was due to increases in cost of services, which are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities, selling, general and administrative costs and depreciation and amortization expense, as described below.
 
35

Table of Contents
Cost of services.
Cost of services increased to $506.9 million for the nine months ended September 30, 2021 from $287.2 million for the same period in 2020, an increase of $219.7 million, or 76.5%. The increase was primarily due to increased commission expenses driven by the related increased revenues noted above. Cost of services as a percent of total revenues increased to 63.3% compared to 61.5% for the same period in 2020 primarily due to our senior investment sales and financing professionals who earn additional commissions after meeting certain annual financial thresholds, reaching their thresholds earlier than prior years and a higher proportion of transactions closed by our more senior investment sales and financing professionals. 
Selling, general and administrative expense.
Selling, general and administrative expense for the nine months ended September 30, 2021 increased $30.0 million, or 20.3%, to $178.1 million from $148.1 million for the same period in 2020. The increase was primarily due to increases in (i) compensation related costs, primarily driven by increases in management performance compensation due to a significant year-over-year increase in operating results; (ii) business development, marketing and other support related to the long-term retention of our sales and financing professionals; (iii) facilities expenses due to expansion of existing offices; and (iv) net change in value of contingent and deferred consideration in connection with our acquisition activities. These increases were partially offset by decreases in (i) sales operations support and promotional marketing expenses primarily due to the cancellation of the Company’s annual sales recognition event typically held during the first quarter of 2021 due to ongoing concerns about the pandemic; and (ii) legal costs.
Depreciation and amortization expense.
Depreciation and amortization expense increased to $8.8 million for the nine months ended September 30, 2021 from $7.8 million for the same period in 2020, an increase of $1.0 million, or 12.6%. The increase was primarily driven by capital expenditures due to our growth.
Other Income (Expense), Net
Other income (expense), net decreased to $2.7 million for the nine months ended September 30, 2021 from $4.2 million for the same period in 2020. The decrease was primarily driven by a reduction in interest income on our investments in marketable debt securities,
available-for-sale
due to an overall decrease in interest rates. This decrease was partially offset by (i) a favorable change in the value of our deferred compensation plan assets that are held in a rabbi trust; and (ii) a foreign currency gain related to our Canadian operations.
Interest Expense
Interest expense decreased to $0.4 million for the nine months ended September 30, 2021 from $0.7 million for the same period in 2020. The decrease for the nine months ended September 30, 2021 was primarily due to a decrease in interest expense on SARs liability and no interest expense related to notes payable to former stockholders, which were fully repaid during the second quarter of 2020.
Provision for Income Taxes
The provision for income taxes was $29.3 million for the nine months ended September 30, 2021 compared to $7.9 million in the same period in 2020, an increase of $21.4 million, or 272.1%. The effective income tax rate for the nine months ended September 30, 2021 was 26.7% compared to 29.1% for the same period in 2020. The effective income tax rate decreased primarily due to an increase in windfall tax benefits, net related to the settlement of stock-based awards and a decrease in Canadian losses which are subject to a full valuation allowance, partially offset by a net increase in permanent and other items.
 
36

Table of Contents
Non-GAAP
Financial Measure
In this quarterly report on Form
10-Q,
we include a
non-GAAP
financial measure, adjusted earnings before interest income/expense, taxes, depreciation and amortization, stock-based compensation and other
non-cash
items, or Adjusted EBITDA. We define Adjusted EBITDA 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
MSR activity. We use Adjusted EBITDA in our business operations to evaluate the performance of our business, develop budgets and measure our performance against those budgets, among other things. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate our 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 our results as reported under U.S. GAAP. We find 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, we do not rely solely on Adjusted EBITDA as a performance measure and also consider our U.S. GAAP results. Adjusted EBITDA is not a measurement of our 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
September 30,
     Nine Months Ended
September 30,
 
     2021      2020      2021      2020  
Net income
   $  33,924      $ 6,040      $ 80,468      $  19,216  
Adjustments:
                                   
Interest income and other
(1)
     (503      (889      (1,470      (4,090
Interest expense
     144        199        436        695  
Provision for income taxes
     11,921        1,916        29,304        7,875  
Depreciation and amortization
     2,850        2,606        8,806        7,822  
Stock-based compensation
     2,703        2,383        7,653        7,551  
Non-cash
MSR activity
(2)
     (54      (26      (407      (312
    
 
 
    
 
 
    
 
 
    
 
 
 
Adjusted EBITDA
(3)
   $ 50,985      $  12,229      $  124,790      $ 38,757  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
(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.
(3)
The increase in Adjusted EBITDA for the three and nine months ended September 30, 2021, compared to the same period in 2020 is primarily due to an increase in total revenues and a lower proportion of operating expenses compared to total revenues.
Liquidity and Capital Resources
Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, marketable debt securities,
available-for-sale
and, if necessary, borrowings under our credit agreement. In order to enhance yield to us, we have invested a portion of our cash in money market funds and fixed and variable income debt securities, in accordance with our investment policy approved by the board of directors. Certain of our investments in money market funds may not maintain a stable net asset value and may impose fees on redemptions and/or gating fees. To date, the Company has not experienced any restrictions or gating fees on its ability to redeem funds from money market funds. Although we have historically funded our operations through operating cash flows, there can be no assurance that we can continue to meet our cash requirements entirely through our operations, cash and cash equivalents, proceeds from the sale of marketable debt securities,
available-for-sale
or availability under our credit agreement.
 
37

Table of Contents
Cash Flows
Our total cash and cash equivalents balance increased by $37.9 million to $281.0 million at September 30, 2021, compared to $243.2 million at December 31, 2020. The following table sets forth our summary cash flows for the nine months ended September 30, 2021 and 2020 (in thousands):
 
     Nine Months Ended
September 30,
 
     2021      2020  
Net cash provided by (used in) operating activities
   $ 99,593      $  (28,266
Net cash used in investing activities
     (55,782      (21,381
Net cash used in financing activities
     (6,081      (9,819
    
 
 
    
 
 
 
Effect of currency exchange rate changes on cash and cash equivalents
     125        (92
    
 
 
    
 
 
 
Net increase (decrease) in cash and cash equivalents
     37,855        (59,558
Cash and cash equivalents at beginning of period
     243,152        232,670  
    
 
 
    
 
 
 
Cash and cash equivalents at end of period
   $  281,007      $  173,112  
    
 
 
    
 
 
 
Operating Activities
Cash flows provided by operating activities were $99.6 million for the nine months ended September 30, 2021 compared to cash flows used in operating activities of $28.3 million for the same period in 2020. Net cash provided by operating activities is driven by our net income adjusted for
non-cash
items and changes in operating assets and liabilities. The $127.9 million improvement in operating cash flows for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to higher total revenues and a lower proportion of operating expenses compared to total revenues, differences in timing of certain payments and receipts, a reduction in advances to our investment sales and financing professionals and lower bonus payments paid during the first quarter of 2021 compared to the same period in 2020 due to the significant decline in operating results for the year ended December 31, 2020. The improvement in operating cash flows was partially offset by a reduction in the deferral of certain discretionary commissions.
Investing Activities
Cash flows used in investing activities were $55.8 million for the nine months ended September 30, 2021 compared to $21.4 million for the same period in 2020. The $34.4 million increased usage in investing activities for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to a $38.5 million increase in net purchases of marketable debt securities and a $9.5 million purchase of
held-to-maturity
securities, with no such comparable outflow for the same period in 2020. The increased usage in investing cash flows was partially offset by a $12.1 million reduction in cash used in acquisitions of businesses, net of cash received during the nine months ended September 30, 2021 compared to the same period in 2020.
Financing Activities
Cash flows used in financing activities were $6.1 million for the nine months ended September 30, 2021 compared to $9.8 million for the same period in 2020. The $3.7 million reduction in cash flows used in financing activities for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily impacted by principal payments on notes payable to former stockholders, which were fully repaid during the second quarter of 2020, partially offset by increases in principal payments on contingent and deferred consideration in connection with acquisitions and taxes paid related to net share settlement of stock-based awards.
Liquidity
We believe that our existing balances of cash and cash equivalents, cash flows expected to be generated from our operations, proceeds from the sale of marketable debt securities,
available-for-sale
and borrowings available under the Credit Agreement (defined below) will be sufficient to satisfy our operating requirements for at least the next 12 months. If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could prevent us from funding acquisitions or otherwise financing our growth or operations. As of September 30, 2021, cash and cash equivalents and marketable debt securities,
available-for-sale,
aggregated $528.4 million, and we had $59.5 million of borrowing capacity under our credit agreement.
 
38

Table of Contents
Credit Agreement
We have a Credit Agreement with Wells Fargo Bank, National Association for a $60.0 million principal amount senior secured revolving credit facility that is guaranteed by all of our domestic subsidiaries and matures on June 1, 2022 (the “Credit Agreement”). See Note 13 – “Commitments and Contingencies” of our Notes to Condensed Consolidated Financial Statements for additional information on the Credit Agreement.
Contractual Obligations and Commitments
There have been no material changes in our commitments under contractual obligations, as disclosed in our Annual Report on Form
10-K
for the year ended December 31, 2020 through the date the condensed consolidated financial statements were issued.
Off Balance Sheet Arrangements
We do not have any
off-balance
sheet arrangements.
Inflation
Our revenues and other variable costs related to revenue are primarily affected by real estate market supply and demand, which may be affected by uncertain or changing economic and market conditions, including inflation/deflation arising in connection with and in response to the
COVID-19
pandemic. The actual economic impact from inflation/deflation to our business remains unknown at this time.
Critical Accounting Policies; Use of Estimates
We prepare our financial statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective and our actual results may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. There were no significant changes in our critical accounting policies, as disclosed in our Annual Report on Form
10-K
for the year ended December 31, 2020.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, see Note 1 – “Description of Business, Basis of Presentation and Recent Accounting Pronouncements” of our Notes to Condensed Consolidated Financial Statements. Although we do not believe any of the other accounting pronouncements listed in that note will have a significant impact on our business, we are still in the process of determining the impact of the new pronouncements may have on our condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We maintain a portfolio of investments in a variety of fixed and variable debt rate securities, including U.S. Treasuries, U.S. government sponsored entities, corporate debt, asset-backed securities and other. As of September 30, 2021, the fair value of investments in marketable debt securities,
available-for-sale
was $247.4 million. The primary objective of our investment activity is to maintain the safety of principal, and to provide for future liquidity requirements while maximizing yields without significantly increasing risk. While some investments may be securities of companies in foreign countries, all investments are denominated and payable in U.S. Dollars. We do not enter into investments for trading or speculative purposes. While our intent is not to sell these investment securities prior to their stated maturities, we may choose to sell any of the securities for strategic reasons including, but not limited to, anticipated capital requirements, anticipation of credit deterioration, duration management and because a security no longer meets the criteria of our investment policy. We do not use derivatives or similar instruments to manage our interest rate risk. We seek to invest in high quality investments. The weighted average rating (exclusive of cash and cash equivalents) was AA as of September 30, 2021. Maturities are maintained consistent with our short-, medium- and long-term liquidity objectives.
 
39

Table of Contents
Currently, our portfolio of investments predominantly consists of fixed interest rate debt securities; however, a portion of our investment portfolio may consist of variable interest rate debt securities. Our investments in fixed interest rate debt securities are subject to various market risks. Changes in prevailing interest rates may adversely or positively impact their fair market value should interest rates generally rise or fall. Accordingly, we also may have interest rate risk with variable interest rate debt securities as the income produced may decrease if interest rates fall. Contraction in market liquidity may adversely affect the value of portions of our portfolio and affect our ability to sell securities in the time frames required and at acceptable prices. Uncertainty in future market conditions may raise market participant’s expectations of returns, thus impacting the value of securities in our portfolio as well. The following table sets forth the impact on the fair value of our investments as of September 30, 2021 from changes in interest rates based on the weighted average duration of the debt securities in our portfolio (in thousands):
 
Change in Interest Rates
   Approximate Change in
Fair Value of Investments
Increase (Decrease)
 
2% Decrease
   $  2,604  
1% Decrease
   $ 1,788  
1% Increase
   $  (3,299
2% Increase
   $  (6,597
Due to the nature of our business and the manner in which we conduct our operations, we believe we do not face any material interest rate risk with respect to other assets and liabilities, equity price risk or other market risks. The functional currency of our Canadian operations is the Canadian dollar. We are exposed to foreign currency exchange rate risk for the settlement of transactions of the Canadian operations as well as unrealized translation adjustments. To date, realized foreign currency exchange rate gains and losses have not been material.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f),
including maintenance of (i) records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, and (ii) policies and procedures that provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, (b) our receipts and expenditures are being made only in accordance with authorizations of management and our board of directors and (c) we will prevent or timely detect unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
Our management, with the supervision and participation of our chief executive officer (“CEO”) and chief financial officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-
15(e) and
15d-
15(e) under the Exchange Act, as of the end of the period covered by this Form
10-Q,
based on the criteria established under the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on such evaluation, our management has concluded that as of September 30, 2021, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules
13a-15(f)
and
15d-15(f)
under the Exchange Act) during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any significant impact to our internal controls over financial reporting despite the fact that a significant number of our employees and independent contractors are still working remotely due to
the COVID-19 pandemic.
The design of our processes and controls allow for remote execution with accessibility to secure data. We are continually monitoring and assessing
the COVID-19 situation
to minimize the impact, if any, on the design and operating effectiveness on our internal controls.
 
40

Table of Contents
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in claims and legal actions arising in the ordinary course of our business, some of which involve claims for damages that are substantial in amount. Most of these litigation matters are covered by our insurance policies, which contain deductibles, exclusions, claim limits and aggregate policy limits. Such litigation and other proceedings may include, but are not limited to, actions relating to commercial relationships, standard brokerage disputes like the alleged failure to disclose physical or environmental defects or property expenses or contracts, the alleged inadequate disclosure of matters relating to the transaction like the relationships among the parties to the transaction, potential claims or losses pertaining to the asset, vicarious liability based upon conduct of individuals or entities outside of our control, general fraud claims, conflicts of interest claims, employment law claims, including claims challenging the classification of our sales professionals as independent contractors, claims alleging violations of state consumer fraud statutes and intellectual property. While the ultimate liability for these legal proceedings cannot be determined, we review the need for an accrual for loss contingencies quarterly and record an accrual for litigation related losses where the likelihood of loss is both probable and estimable. We do not believe, based on information currently available to us, that the final outcome of these proceedings will have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Item 1A. Risk Factors
There have been no material changes from the risk factors described in our Annual Report on
Form 10-K for
the year ended December 31, 2020, other than the updated risk factors below relating to the Technology and Cybersecurity.
Technology and Cybersecurity Risks
If we do not respond to technological innovations or changes or upgrade our technology systems, our growth prospects and results of operations could be adversely affected.
To remain competitive, we must continue to enhance and improve the functionality, features and security of our technology infrastructure. Infrastructure upgrades may require significant capital investment outside of the normal course of business. In the future, we will likely need to improve and upgrade our technology, database systems and network infrastructure in order to allow our business to grow in both size and scope. Without such improvements, our operations might suffer from unanticipated system disruptions, slow performance or unreliable service levels, any of which could negatively affect our ability to provide rapid customer service. We may face significant delays in introducing new services, investment sales professional tools and enhancements. Moreover, if we do not keep pace with the rapid innovations and changes taking place in information technology in our industry, we could be at a competitive disadvantage. If competitors introduce new products and services using new technologies, our proprietary technology and systems may become less competitive, and our business may be harmed. In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance that our business will improve.
Interruption, data security breaches, or failure of our information technology, communications systems or data services could hurt our ability to effectively provide our services, which could damage our reputation and harm our operating results.
Our business requires the continued operation of information technology and communication systems and network infrastructure. Our ability to conduct our national business may be adversely impacted by disruptions or breaches to these systems or infrastructure. Our information technology and communications systems are vulnerable to damage or disruption from fire, power loss, telecommunications failure, system malfunctions, computer viruses, third-party misconduct or penetration and criminal acts, natural disasters such as hurricanes, earthquakes, wildfires and floods, acts of war or terrorism, or other events which are beyond our control. For example, in August 2021, we were subject to a cybersecurity attack on our information technology systems. We immediately engaged cybersecurity experts to secure and restore all essential systems and were able to do so with no material disruption to our business.
In addition, the operation and maintenance of these systems and networks is, in some cases, dependent on third-party technologies, systems and service providers for which there is no certainty of uninterrupted availability. Any of these events could cause system interruption, delays, and loss of critical data or intellectual property (such as our client lists and information, business methods and research) and may also disrupt our ability to provide services to or interact with our clients, and we may not be able to successfully implement contingency plans that depend on communication or travel. We have business continuity plans and backup systems to reduce the potentially adverse effect of such events, but our business continuity planning may not be sufficient and cannot account for all eventualities. A catastrophic event that results in the destruction or disruption of any of our data centers or our critical business or information technology systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be adversely affected. Our business relies significantly on the use of commercial real estate data. We produce much of this data internally, but a significant portion is purchased from third-party providers for which there is no certainty of uninterrupted availability. A disruption of our ability to provide data to our professionals and/or clients could damage our reputation, and our operating results could be adversely affected.
 
41

Table of Contents
Failure to maintain the security of our information and technology networks, including personally identifiable and client information could adversely affect us.
Security breaches and other disruptions could compromise our information and expose us to liability, which could cause our business and reputation to suffer. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and intellectual property and that of our clients and personally identifiable information of our employees and contractors, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure have been subject to, and may in the future be vulnerable to, various cyber-attacks, such as hacking, spoofing and phishing attacks and ransomware attacks, or our systems may be breached due to employee error, malfeasance or other disruptions. A significant actual or potential theft, loss, fraudulent use or misuse of client, employee or other personally identifiable data, whether by third parties or as a result of employee malfeasance or
otherwise, non-compliance with
our contractual or other legal obligations regarding such data or a violation of our privacy and security policies with respect to such data could result in significant costs, fines, litigation or regulatory actions against us. Such an event could additionally disrupt our operations and the services we provide to clients, damage our reputation, and cause a loss of confidence in our services, which could adversely affect our business, revenues and competitive position. Additionally, we increasingly rely on third-party data storage providers, including cloud storage solution providers, resulting in less direct control over our data. Such third parties may also be vulnerable to security breaches and compromised security systems, which could adversely affect our reputation.
We rely on the collection and use of personally identifiable information from clients to conduct our business. We disclose our information collection and dissemination practices in a published privacy statement on our websites, which we may modify from time to time. We may be subject to legal claims, government action, including under the Racketeer Influenced and Corrupt Organizations Act, and damage to our reputation if we act or are perceived to be acting inconsistently with the terms of our privacy statement, client expectations or the law. In the event we or the vendors with which we contract to provide services on behalf of our clients were to suffer a breach of personally identifiable information, our customers could terminate their business with us. Further, we may be subject to claims to the extent individual employees or investment sales and financing professionals breach or fail to adhere to company policies and practices and such actions jeopardize any personally identifiable information. In addition, concern among potential buyers or sellers about our privacy practices could keep them from using our services or require us to incur significant expense to alter our business practices or educate them about how we use personally identifiable information. We maintain cyber security insurance, but there can be no assurance that it will be adequate to cover past or future incidents.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
 
42

Table of Contents
Item 6. Exhibits
 
Exhibit No.   
Description
31.1*    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*    The following financial statements from the Company’s Quarterly Report on Form
10-Q
for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Net and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104*    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
*
Filed herewith.
**
Furnished, not filed.
 
43

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
     
Marcus
 & Millichap, Inc
.
Date:  
November 5, 2021
    By:  
/s/ Hessam Nadji
       
Hessam Nadji
President and Chief Executive Officer
(Principal Executive Officer)
Date:  
November 5, 2021
    By:  
/s/ Steven F. DeGennaro
       
Steven F. DeGennaro
Chief Financial Officer
(Principal Financial Officer)
 
44