Slide 1: Third Quarter 2021 Earnings Conference Call
THIRD QUARTER 2021 EARNINGS CONFERENCE CALL NOVEMBER 5, 2021 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements in this presentation are “forward-looking statements” within the meaning of the federal securities laws, including our business outlook for 2021 and beyond, the potential continuing impact of the COVID-19 pandemic, and expectations for changes (or fluctu
Slide 3: Conference Call Participants
CONFERENCE CALL PARTICIPANTS HESSAM NADJI President, Chief Executive Officer and Director STEVE DEGENNARO Chief Financial Officer 3 3
Slide 4: MMI Financial Highlights
Marcus ¢ Millichap MMI FINANCIAL HIGHLIGHTS
Slide 5: 2021 Third Quarter Highlights
Financial Highlights YoY vs. ’19 Revenue $332.4 million 109.6% 67.7% Net Income $33.9 million nm (1) 75.8% 2021 THIRD Adjusted EBITDA $51.0 million nm (1) 83.0% QUARTER HIGHLIGHTS Operational Highlights YoY vs. ’19 Sales Volume $20.8 billion 129.1% 72.4% Transaction Closings 3,325 55.4% 36.6% Number
Slide 6: Year-to-Date 2021 Highlights
Financial Highlights YoY vs. ’19 Revenue $801.3 million 71.7% 40.9% YEAR-TO-DATE Net Income $80.5 million nm (1) 43.2% Adjusted EBITDA $124.8 million nm (1) 50.3% 2021 HIGHLIGHTS Operational Highlights YoY vs. ‘19 Sales Volume $50.2 billion 80.7% 44.0% Transaction Closings 8,942 49.6% 29.2% Number o
Slide 7: 2021 Third Quarter Brokerage Highlights
2021 THIRD Sales Volume $16.5 billion YoY 136.0% vs. ‘19 72.5% QUARTER Transaction Closings 2,456 60.8% 40.1% BROKERAGE Number of Investment Sales Professionals as of September 30, 2021 1,897 (1.2)% 2.8% HIGHLIGHTS Real Estate Brokerage Commissions $299.8 million 112.8% 66.3% Revenue Revenue by Tran
Slide 8: Year-to-Date 2021 Brokerage Highlights
YoY vs. ‘19 YEAR-TO-DATE 2021 Sales Volume $38.9 billion 86.6% 50.3% BROKERAGE Transaction Closings Number of Investment Sales 6,374 51.2% 27.7% HIGHLIGHTS Professionals as of September 30, 2021 1,897 (1.2)% 2.8% Real Estate Brokerage Commissions $715.5 million 72.0% 39.2% Revenue Revenue by Transac
Slide 9: 2021 Third Quarter Financing Highlights
2021 THIRD Sales Volume $3.3 billion YoY 95.2% vs. ‘19 94.3% QUARTER Transaction Closings 600 35.7% 22.2% FINANCING Number of Financing Professionals as of September 30, 2021 85 7.6% (14.1)% HIGHLIGHTS Financing Fees Revenue $29.4 million 88.2% 83.5% Transactions by Transactions by Property Type Reg
Slide 10: Year-to-Date 2021 Financing Highlights
YoY vs. ’19 YEAR-TO-DATE 2021 Sales Volume $7.8 billion 69.8% 55.8% FINANCING Transaction Closings 1,778 36.7% 30.5% HIGHLIGHTS Number of Financing Professionals as of September 30, 2021 85 7.6% (14.1)% Financing Fees Revenue $75.4 million 72.8% 58.9% Transactions by Transactions by Property Type No
Slide 11: Market Highlights
Marcus ¢ Millichap MARKET HIGHLIGHTS
Slide 12: 2021 Job Creation Sets Record; Pace of Gains Slowing
2021 JOB CREATION SETS RECORD; PACE OF GAINS SLOWING Economic Foundation Leading Up to the Pandemic Was Historically Strong. Jobs Recovery Making Gains; Stimulus, Vaccinations and Economic Reopening Positive Forces Supporting Revival. 2021 forecast to add 6.4 million jobs* -22.4 Million 155.0 +17.4
Slide 13: Unprecedented Government Support, Consumption and Savings Bode Well for Future Economic Growth
UNPRECEDENTED GOVERNMENT SUPPORT, CONSUMPTION AND SAVINGS BODE WELL FOR FUTURE ECONOMIC GROWTH Government Stimulus Share of GDP Core Retail Sales Savings Deposits 40% $470 $18.0 30% $430 $16.5 Core Retail Sales (Billions) Deposits (Trillions) Percent of GDP 20% $390 $15.0 10% $350 $13.5 0% $310 $12.
Slide 14: Labor Shortage Beginning to Weigh on Hiring Pace; Inflationary Pressure May Induce Fed Tapering
LABOR SHORTAGE BEGINNING TO WEIGH ON HIRING PACE; INFLATIONARY PRESSURE MAY INDUCE FEDERAL RESERVE TAPERING Job Openings vs. Unemployed Inflation vs. Treasury Rates Job Openings Unemployed Core PCE 10-Year Treasury 24 4% Job Openings/Unemployed (Millions) 18 3% Rate 12 2% 6 1% 0 0% * Through Septemb
Slide 15: Private Investors Dominate U.S. Commercial Real Estate Acquisitions
PRIVATE INVESTORS DOMINATE U.S. COMMERCIAL REAL ESTATE ACQUISITIONS 100% 4% 4% 4% 4% 4% 5% 5% 5% 5% 5% 5% 8% 8% 9% 9% 8% 12% 12% 10% 14% 20% 17% 18% 25% 75% 28% 25% 28% 24% 27% 27% 24% Percent of Dollar Volume 32% 27% 26% 29% User/Other 9% 9% 31% 11% 16% 9% 14% REIT/Listed 50% 18% Institutional 10%
Slide 16: Private Investors Dominate U.S. Commercial Real Estate Acquisitions
PRIVATE INVESTORS DOMINATE U.S. Employment Growth vs. Unemployment Rate COMMERCIAL REAL ESTATE Employment Growth Unemployment Rate ACQUISITIONS 12.0 8% Employment Growth (Mil.) Unemployment Rate • Labor shortage beginning to slow pace of job 6.0 6% creation, but record 5.1 million jobs added 0.0 4%
Slide 17: As Economy Recovers, Gap Between Property Types Should Narrow
AS ECONOMY RECOVERS, GAP BETWEEN PROPERTY TYPES Occupancy Trends SHOULD NARROW 100% • Property fundamentals entered economic Occupancy (%) 95% shutdown in very strong position. Crisis impact varied by property type. 90% • Necessity-based retail, single-tenant retail, 85% industrial, apartments and s
Slide 18: Overall CRE Sales Accelerated to Modestly Exceed Pre-COVID Levels in 3Q 2021
OVERALL CRE SALES ACCELERATED Annual U.S. Commercial Real Estate Sales Trends(1) TO MODESTLY EXCEED PRE-COVID LEVELS IN 3Q 2021. 40 Total Transactions (000s) 30 • Transactions hit all-time quarterly record in 3Q 2021, showing increase of 5% over 20 3Q 2019. Larger deals pushed dollar 10 volume highe
Slide 19: Commercial Real Estate Yields and Inflation Resistance Compelling
COMMERCIAL REAL ESTATE Cap Rate/10-Year Treasury Spreads YIELDS AND INFLATION 12% CRE Cap Rate 10-Year Treasury Rate RESISTANCE COMPELLING Cap Rate Long-Term Avg. 440 bps 9% 430 bps • CRE market benefiting from low interest 480 bps Average Rate 480 bps rates and ample liquidity. 210 bps 580 bps 6% •
Slide 20: MMI Market Position
Marcus ¢ Millichap MMI MARKET POSITION
Slide 21: Private Client Market Segment
• Market segment consists of sales $1 million to <$10 million. • Largest and most active market segment, accounting for PRIVATE CLIENT MARKET 80%+ of transactions. • Primarily driven by high-net worth individuals, SEGMENT partnerships and smaller private fund managers. • Influenced by personal drive
Slide 22: MMI Financial Details
Marcus ¢ Millichap MMI FINANCIAL DETAILS
Slide 23: Total Revenues
TOTAL REVENUES ($ in millions) Q3 ’19, Q3 ‘20 & Q3 ‘21 Year-to-Date ’19, ‘20 & ‘21 $360 $900 $332.4 $801.3 $320 $800 $280 $700 $240 $600 $568.5 $198.2 $200 $500 $466.7 $158.6 $160 $400 $120 $300 $80 $200 $40 $100 $0 $0 Q3 '19 Q3 '20 Q3 '21 YTD '19 YTD '20 YTD '21 23
Slide 24: Brokerage Operating Metrics
BROKERAGE OPERATING METRICS Q3 2019, Q3 2020 & Q3 2021 Total Sales Volume Total Number of Transactions ($ in billions) $20.0 2,800 2,456 $16.5 2,400 $15.0 2,000 1,753 1,527 $9.6 1,600 $10.0 $7.0 1,200 $5.0 800 400 $0.0 0 Q3 '19 Q3 '20 Q3 '21 Q3 '19 Q3 '20 Q3 '21 Average Number of Investment Sales Pr
Slide 25: Brokerage Revenue by Market Segment
BROKERAGE REVENUE BY MARKET SEGMENT Q3 2019, Q3 2020 & Q3 2021 <$1 million Private Client Market ($1 - <$10 million) ($ thousands) ($ thousands) $8,000 $7,182 $7,419 $200,000 $183,033 $6,290 $6,000 $150,000 $121,228 $97,856 $4,000 $100,000 $2,000 $50,000 $0 $0 Q3 '19 Q3 '20 Q3 '21 Q3 '19 Q3 '20 Q3 '
Slide 26: Brokerage Operating Metrics
BROKERAGE OPERATING METRICS Year-to-Date 2019, 2020 & 2021 Total Sales Volume Total Number of Transactions ($ in billions) $50.0 8,000 $38.9 6,374 $40.0 6,000 4,992 $30.0 $25.9 4,217 $20.9 4,000 $20.0 $10.0 2,000 $0.0 0 YTD '19 YTD '20 YTD '21 YTD '19 YTD '20 YTD '21 Average Number of Investment Sal
Slide 27: Brokerage Revenue by Market Segment
BROKERAGE REVENUE BY MARKET SEGMENT Year-to-Date 2019, 2020 & 2021 <$1 million Private Client Market ($1 - <$10 million) ($ thousands) ($ thousands) $25,000 $500,000 $446,592 $19,607 $21,175 $20,000 $400,000 $345,812 $16,550 $15,000 $300,000 $282,937 $10,000 $200,000 $5,000 $100,000 $0 $0 YTD '19 YT
Slide 28: Operating Expenses
OPERATING EXPENSES ($ in millions) Q3 ’19, Q3 ‘20 & Q3 ‘21 Year-To-Date ’19, ‘20 & ‘21 $350 $800 $693.8 $300 $286.7 $700 $600 $693.8 $250 $286.7 $499.2 $500 $200 $443.1 $174.1 $506.9 $219.2 $400 $443.1 $152.0 63.3% of Rev $150 65.9% of Rev $152.0 $343.7 $124.1 $300 $287.2 62.6% of Rev 60.5% of Rev 6
Slide 29: Net Income and Adjusted EBITDA Performance
NET INCOME AND ADJUSTED EBITDA PERFORMANCE Q3 2019, Q3 2020 & Q3 2021 Net Income Adjusted EBITDA ($ in millions) ($ in millions) $40 $60 $35 $33.9 $51.0 $50 $30 $40 $25 $19.3 $20 $30 $27.9 $15 $20 $10 $12.2 $6.0 $10 $5 $0 $0 Q3 '19 Q3 '20 Q3 '21 Q3 '19 Q3 '20 Q3 '21 29
Slide 30: Net Income and Adjusted EBITDA Performance
NET INCOME AND ADJUSTED EBITDA PERFORMANCE YTD 2019, 2020 & 2021 Net Income Adjusted EBITDA ($ in millions) ($ in millions) $90 $140 $80.5 $124.8 $80 $120 $70 $100 $60 $56.2 $83.0 $50 $80 $40 $60 $30 $40 $38.8 $19.2 $20 $20 $10 $0 $0 YTD '19 YTD '20 YTD '21 YTD '19 YTD '20 YTD '21 30
Slide 31: Cash Flow Provided By (Used In) Operating Activities
CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES QTD Cash Flow Provided By YTD Cash Flow Provided By (Used In) Operating Activities (1) Operating Activities (1) ($ in millions) ($ in millions) $99.6 $70.0 $66.1 $100 $90 $60.0 $80 $70 $50.0 $60 $50 $40.0 $40 $30 $30.0 $20 $23.6 $10 $20.0 $18.3 $0
Slide 32: Strong Liquid Capital Position
STRONG LIQUID CAPITAL POSITION Cash and Cash Equivalents and Marketable Debt Securities, Available-For-Sale ($ in millions) $600 $550 $528.4(2) $500 $449.2 $450 $400 $247.4(1) $350 $206.0 (1) $300 $250 $200 $150 $281.0 $243.2 $100 $50 $0 12/31/2020 9/30/2021 12/31/2020 Cash and Cash Equivalents Mark
Slide 33: Appendix
APPENDIX 33
Slide 34: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020 Net Income $33,924 $6,040 $80,468 $19,216 Adjusted EBITDA, which the Company defines as net income before (i) Adjustments: interest income and other, including net realized gains (losses
Slide 35: National Platform Focused on Real Estate Investment Brokerage
NATIONAL PLATFORM FOCUSED ON REAL ESTATE INVESTMENT BROKERAGE • 50-year old platform dedicated to perfecting real estate investment brokerage • Designed to maximize real estate value, facilitate investment options by geography and property type and create liquidity for investors MARKET LEADER IN THE
Slide 36: Illustrative MMI Earnings Model
ILLUSTRATIVE MMI EARNINGS MODEL Transaction Commission Investment Agents Productivity Value Rate Sales Revenue Investment Financing & Cost of SG&A(1) EBITDA(2) Sales Revenue Other Revenue Services (1) Includes stock-based compensation 36 (2) EBITDA is not a measurement of our financial performance u