Slide 1: Third Quarter 2017 Earnings Conference Call
Third Quarter 2017 Earnings Conference Call November 7, 2017 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 2017 and beyond and expectations for market share growth. Statements about our beliefs and expectations and statem
Slide 3: Conference Call Participants
Conference Call Participants Hessam Nadji President, Chief Executive Officer & Director Marty Louie Chief Financial Officer 3
Slide 4: MMI Financial Highlights
MMI Financial Highlights 4
Slide 5: 2017 Third Quarter Highlights
2017 Third Quarter Highlights Financial Highlights YOY Revenues $183.3 million 1.5% Net Income $15.5 million 2.2% Adjusted EBITDA $28.5 million 1.4% Operational Highlights YOY Sales Volume(1) $10.1 billion (9.0)% Transaction Closings 2,278 (4.7)% Investment Sales & Financing Professionals 1,757 5.1%
Slide 6: Year-to-Date Highlights
Year-to-Date Highlights Financial Highlights YOY Revenues $516.9 million (2.2)% Net Income $43.0 million (9.3)% Adjusted EBITDA $79.6 million (8.5)% Operational Highlights YOY Sales Volume $29.9 billion (4.6)% Transaction Closings 6,536 (2.2)% Investment Sales & Financing Professionals 1,757 5.1% as
Slide 7: 2017 Third Quarter Brokerage Highlights
2017 Third Quarter Brokerage Highlights YOY Sales Volume $8.0 billion 5.2% Transaction Closings 1,697 4.0% Investment Sales Professionals as of September 30, 2017 1,665 6.1% Real Estate Brokerage Commissions Revenue $169.4 million 2.2% Revenue by Transactions by Property Transactions by Region Trans
Slide 8: Year-to-Date Brokerage Highlights
Year-to-Date Brokerage Highlights YOY Sales Volume(1) $21.8 billion (8.1)% Transaction Closings 4,810 0.1% Investment Sales Professionals as of September 30, 2017 1,665 6.1% Real Estate Brokerage Commissions Revenue $472.1 million (3.6)% Revenue by Transactions by Property Transactions by Region Tra
Slide 9: 2017 Third Quarter Financing Highlights
2017 Third Quarter Financing Highlights YOY Sales Volume $1.3 billion 2.3% Transaction Closings 409 (6.0)% Financing Professionals as of September 30, 2017 92 (8.9)% Financing Fees Revenue $11.4 million 0.4% Transactions by Property Type Transactions by Region 15% 16% 7% 11% 47% 48% 31% 25% Western
Slide 10: Year-to-Date Financing Highlights
Year-to-Date Financing Highlights YOY Sales Volume $3.9 billion 5.0% Transaction Closings 1,208 (0.2)% Financing Professionals as of September 30, 2017 92 (8.9)% Financing Fees Revenue $34.1 million 10.9% Transactions by Property Type Transactions by Region 13% 16% 6% 8% 49% 54% 32% 22% Western Midw
Slide 11: Market Highlights
Market Highlights 11
Slide 12: U.S. Employment Gains Driving Real Estate Demand
U.S. Employment Gains Driving Real Estate Demand • U.S. employment has expanded well above prior peak • 2017 forecast to add 2.1 million jobs** 0.9 -8.7 Million Quarterly Job Growth (Millions) 0.0 +8.3 Million +17.0 Million* -0.9 -1.8 -2.7 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 * 17 20 2
Slide 13: Labor Market at Full Employment; Absorption Trends Vary by Sector
Labor Market at Full Employment; Absorption Trends Vary by Sector Employment Growth vs. Unemployment Rate Employment Growth Unemployment Rate 3.2 8% Employment Growth (Mil.) Unemployment Rate • Employment growth totaled nearly 2.4 7% 1.9 million jobs in the past 12 months 1.6 6% • Total employment s
Slide 14: Property Fundamentals Remain Healthy; Construction Trends Vary
Property Fundamentals Remain Healthy; Construction Trends Vary • Fundamentals showing healthy performance across all property types • Multifamily properties led the recovery, followed by Industrial – new supply in both sectors has increased as a result • Select markets showing signs of high-end apar
Slide 15: Investment Sales Market Still Active Despite Recent Slowdown
Investment Sales Market Still Active Despite Recent Slowdown U.S. Commercial Real Estate - Total Transactions (1) 60 Total Transactions (000s) 45 • Post-election interest rate volatility, uncertainty 30 regarding tax reform and economic initiatives, tempering transactions in the short-term 15 • Thro
Slide 16: Commercial Real Estate Yields Compelling
Commercial Real Estate Yields Compelling CRE Cap Rate Average Cap Rate/Yield 12% 8% 10-Year Treasury Rate Cap Rate Long-Term Avg. Average Yield (Cap Rate) 6% 440 bps 9% 430 bps 480 bps Average Rate 480 bps 210 bps 6% 4% 580 bps 410 bps 3% 2% 10-Yr Treasury Long-Term Avg. 0% 0% y t P r T ap Bo . R Ca
Slide 17: Commercial Real Estate Cap Rate Trends
Commercial Real Estate Cap Rate Trends Cap Rates by Market Type (1) Cap Rates by Class (2) Primary Class A Secondary Class B/C 10% 9% Tertiary 9% 8% Average Cap Rate 8% Average Cap Rate 7% 22% 8% 64% 85% 7% 14% 7% 6% 6% 4% 5% 9% 5% 5% 12% * * 20 4 20 5 20 6 20 7 20 8 20 9 20 0 20 1 20 2 20 3 20 4 20
Slide 18: MMI Market Position
MMI Market Position 18
Slide 19: Private Client Market Segment – Largest Sales and Commission Pool Opportunity
Private Client Market Segment – Largest Sales and Commission Pool Opportunity • Market segment consists of sales $1 million - $10 million; is the largest and most active, accounting for 80%+ of transactions • Primarily driven by high-net worth individuals, partnerships and smaller private fund manag
Slide 20: MMI – Private Client Market Leader with Growth Opportunity
MMI – Private Client Market Leader with Growth Opportunity Top 10 U.S. Brokerage Firms by Market Share Private Client Market Segment ($1M - $10M) (Private Client Market Segment $1M - $10M) (1) Transactions as Percentage of Total Transactions (2) Marcus & Millichap 8.7% 100% CB Richard Ellis 4.3% ~2.
Slide 21: Market Share Growth Opportunity by Property Type
Market Share Growth Opportunity by Property Type MMI YTD 3Q 2017 Transactions by Property Type (1) Property Type Transactions Volume ($Billion) Multifamily 2,357 $15.0 Retail 2,651 $8.5 • Leveraging platform, relationships, brand to grow in various sectors Office 484 $2.0 • Growth opportunity remain
Slide 22: MMI Financial Detail
MMI Financial Detail 22
Slide 23: Q3 2017 Total Revenues Increased By 1.5% From Prior Year
Q3 2017 Total Revenues Increased By 1.5% From Prior Year Revenues ($ in millions) $200 $180.6 $183.3 $160 $120 $80 $40 $0 Q3 '16 Q3 '17 23
Slide 24: Year-to-Date Total Revenues Decreased By 2.2% From Prior Year
Year-to-Date Total Revenues Decreased By 2.2% From Prior Year Revenues ($ in millions) $600 $528.3 $516.9 $500 $400 $300 $200 $100 $0 YTD '16 YTD '17 24
Slide 25: Q3 2017 Brokerage Operating Metrics
Q3 2017 Brokerage Operating Metrics Total Sales Volume Total Number Of Sales Transactions ($ in billions) $10.0 2,000 1,631 1,697 $7.6 $8.0 1,750 $8.0 1,500 $6.0 1,250 1,000 $4.0 750 500 $2.0 250 $0.0 0 Q3 '16 Q3 '17 Q3 '16 Q3 '17 Average Investment Sales Professionals Average Commission Per Transac
Slide 26: Q3 2017 Brokerage Revenue by Market Segment
Q3 2017 Brokerage Revenue by Market Segment <$1 million Private Client Market ($1 - $10 million) ($ thousands) ($ thousands) $7,921 $8,000 $7,032 $140,000 $113,438 $115,959 $7,000 $120,000 $6,000 $100,000 $5,000 $80,000 $4,000 $60,000 $3,000 $40,000 $2,000 $1,000 $20,000 $0 $0 Q3 '16 Q3 '17 Q3 '16 Q
Slide 27: Year-to-Date Brokerage Operating Metrics
Year-to-Date Brokerage Operating Metrics Total Sales Volume Total Number Of Sales Transactions ($ in billions) $25.0 $23.7 6,000 $21.8 4,810 4,805 $20.0 5,000 4,000 $15.0 3,000 $10.0 2,000 $5.0 1,000 $0.0 0 YTD '16 YTD '17 YTD '16 YTD '17 Average Sales Professionals Average Commission Per Transactio
Slide 28: Year-to-Date Brokerage Revenue by Market Segment
Year-to-Date Brokerage Revenue by Market Segment <$1 million Private Client Market ($1 - $10 million) ($ thousands) ($ thousands) $350,000 $330,485 $328,177 $25,000 $22,446 -0.7% $20,110 $300,000 $20,000 $250,000 $15,000 $200,000 $10,000 $150,000 $100,000 $5,000 $50,000 $0 $0 YTD '16 YTD '17 YTD '16
Slide 29: Q3 2017 Operating Expenses
Q3 2017 Operating Expenses Operating Expenses ($ in millions) $180 $160 $155.7 $158.7 $140 $120 63.0% of Rev 62.6% of Rev $100 $113.9 $114.8 $80 $60 $40 22.6% of Rev 23.2% of Rev $20 $40.7 $42.5 0.6% of Rev 0.7% of Rev $0 $1.1 $1.4 Q3 '16 Q3 '17 Depreciation SG&A COS 29
Slide 30: Year-to-Date Operating Expenses
Year-to-Date Operating Expenses Operating Expenses ($ in millions) $480 $449.7 $448.2 $440 $400 $360 $320 61.2% of Rev 60.9% of Rev $280 $323.1 $314.8 $240 $200 $160 $120 $80 $123.4 23.3% of Rev $129.4 25.0% of Rev $40 $0 $3.2 0.6% of Rev $4.0 0.8% of Rev YTD '16 YTD '17 Depreciation SG&A COS 30
Slide 31: Q3 2017 Net Income and Adjusted EBITDA Performance
Q3 2017 Net Income and Adjusted EBITDA Performance Net Income Adjusted EBITDA ($ in millions) ($ in millions) $18 $32 $15.5 $28.1 $28.5 $16 $15.1 $28 $14 $24 $12 $20 $10 $16 $8 $6 $12 $4 $8 $2 $4 $0 $0 Q3 '16 Q3 '17 Q3 '16 Q3 '17 31
Slide 32: Year-to-Date Net Income and Adjusted EBITDA Performance
Year-to-Date Net Income and Adjusted EBITDA Performance Net Income Adjusted EBITDA ($ in millions) ($ in millions) $50 $47.5 $100 $43.0 $87.0 $45 $90 $79.6 $40 $80 $35 $70 $30 $60 $25 $50 $20 $40 $15 $30 $10 $20 $5 $10 $0 $0 YTD '16 YTD '17 YTD '16 YTD '17 32
Slide 33: Cash Flow Provided by Operating Activities
Cash Flow Provided by Operating Activities QTD Cash Flow Provided by YTD Cash Flow Provided by Operating Activities Operating Activities ($ in millions) ($ in millions) $30 $29.3 $45 $41.5 $40 $28 $35 $30 $25.3 $25 $26 $24.9 $20 $15 $24 $10 $5 $22 $0 Q3 '16 Q3 '17 YTD '16 YTD '17 (1) Net cash provid
Slide 34: Strong Liquid Capital Position
Strong Liquid Capital Position Strong Liquid Capital Cash Position on Hand and Core-Cash Investments ($ in millions) $300 $274.0 $275 $261.0 $250 $225 $73.6 (1) $91.3(1) $200 $175 $150 $125 $100 $182.7 $187.4 $75 $50 $25 $0 12/31/2016 9/30/2017 Cash and Cash Equivalents Core-Cash Investments (1) Rel
Slide 35: Appendix
35 Marcus g Millichap
Slide 36: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA, which the Company defines as net income before (i) interest income and other, including net realized gains (losses) on marketable securities, available-for-sale and cash and cash equivalents, (ii) interest expense, (iii) provision for income taxes, (iv
Slide 37: Company Overview
Company Overview National Platform Focused on • 46-year old platform dedicated to perfecting real estate investment brokerage Investment • Designed to facilitate the movement of capital providing liquidity to clients Brokerage Market Leader in the • Only national brokerage firm focused on the Privat
Slide 38: Illustrative MMI Earnings Model
Illustrative MMI Earnings Model Investment Sales Agents Revenue MMCC & Other Productivity Revenue Transaction Value Cost of Services Commission Rate SG&A (1) Investment Sales EBITDA (2) Revenue (1) Includes stock-based compensation (2) EBITDA is not a measurement of our financial performance under U