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

Quarterly report pursuant to Section 13 or 15(d)

Selected Balance Sheet Data (Tables)

Selected Balance Sheet Data (Tables)

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Other assets consisted of the following (in thousands):


	Current				Non-Current
	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Mortgage servicing rights (“MSRs”), net of amortization	$	—	$	—	$	2,203	$	2,209
Due from independent contractors, net ^{(1) (2)}		2,335		3,831		35,421		27,157
Security deposits		—		—		1,212		1,196
Employee notes receivable ⁽³⁾		151		156		263		370
Customer trust accounts and other		3,545		2,381		849		846

	$	6,031	$	6,368	$	39,948	$	31,778

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

⁽²⁾

Includes allowance for doubtful accounts related to current receivables of $407 and $514 as of March 31, 2019 and December 31, 2018, respectively. The Company recorded a recovery for bad debt expense of $(104) and $(106) and wrote-off $3 and $51 of these receivables for the three months ended March 31, 2019 and 2018, respectively. Any cash receipts on notes are applied first to unpaid principal balance prior to any income being recognized.

⁽³⁾	Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $60 and $131 for the three months ended March 31, 2019 and 2018, respectively. See Note 9 – “Related-Party Transactions” for additional information.

Summary of Net Change in Carrying Value of MSRs

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


	March 31, 2019			December 31, 2018
Beginning balance	$	2,209		$	—
Additions from acquisition		—			2,121
Additions		129			391
Amortization		(135	)		(303	)

Ending balance	$	2,203		$	2,209

Components of Deferred Compensation and Commissions

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


	Current				Non-Current
	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Stock appreciation rights (“SARs”) liability ⁽¹⁾	$	1,969	$	1,810	$	17,630	$	19,299
Commissions payable to investment sales and financing professionals		22,504		44,812		11,883		23,983
Deferred compensation liability ⁽¹⁾		1,450		1,288		7,393		6,605

	$	25,923	$	47,910	$	36,906	$	49,887

⁽¹⁾

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

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

The net change in the carrying value of the assets held in the rabbi trust and the net change in the carrying value of the deferred compensation liability, each exclusive of additional contributions, distributions and trust expenses, consisted of the following (in thousands):


	Three Months Ended March 31,
	2019		2018
Increase in the carrying value of the assets held in the rabbi trust ⁽¹⁾	$	703	$	14

Increase in the net carrying value of the deferred compensation obligation ⁽²⁾	$	685	$	—

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

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

Summary of Deferred Rent and Other Liabilities

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


	Non-Current
	March 31, 2019		December 31, 2018
Deferred rent and other ⁽¹⁾	$	—	$	5,445
Contingent consideration ⁽²⁾		2,097		2,054

	$	2,097	$	7,499

⁽¹⁾	The Company does not have deferred rent as of March 31, 2019 due to adoption of the new lease standard on January 1, 2019.

⁽²⁾	The current portions of contingent consideration in the amounts of $826 and $821 as of March 31, 2019 and December 31, 2018, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets.