Slide 1: Third Quarter 2022 Earnings Conference Call
THIRD QUARTER 2022 EARNINGS CONFERENCE CALL - NOVEMBER 4, 2022 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 2022, the potential continuing impact of the COVID-19 pandemic, and expectations for changes (or fluctuations) in
Slide 3: Conference Call Participants
CONFERENCE CALL PARTICIPANTS HESSAM NADJI President, Chief Executive Officer and Director STEVE DEGENNARO Chief Financial Officer 3
Slide 4: MMI Financial Highlights
MMI FINANCIAL HIGHLIGHTS Marcus ¢ Millichap
Slide 5: 2022 Third Quarter Highlights
Financial Highlights YoY Revenue $323.8 million (2.6)% Net Income $21.4 million (37.0)% 2022 THIRD Adjusted EBITDA $36.6 million (28.1)% QUARTER HIGHLIGHTS Operational Highlights YoY Sales Volume $22.6 billion 8.7% Transaction Closings 3,034 (8.8)% Number of Investment Sales and Financing 1,880 (5.1
Slide 6: Year-to-Date 2022 Highlights
Financial Highlights YoY Revenue $1,039.3 million 29.7% Net Income $96.3 million 19.7% Year-to-Date Adjusted EBITDA $151.4 million 21.3% 2022 HIGHLIGHTS Operational Highlights YoY Sales Volume $69.9 billion 39.4% Transaction Closings 9,574 7.1% Number of Investment Sales and Financing 1,880 (5.1)% P
Slide 7: 2022 Third Quarter Brokerage Highlights
2022 THIRD Sales Volume $17.9 billion YoY 8.6% QUARTER Transaction Closings 2,246 (8.6)% BROKERAGE Number of Investment Sales Professionals as 1,794 (5.4)% HIGHLIGHTS of September 30, 2022 Real Estate Brokerage Commissions Revenue $292.9 million (2.3)% Revenue by Transactions by Transactions by Tran
Slide 8: Year-to-Date 2022 Brokerage Highlights
YoY Sales Volume $55.0 billion 41.3% YEAR-TO-DATE Transaction Closings 7,068 10.9% 2022 BROKERAGE Number of Investment Sales Professionals as 1,794 (5.4)% HIGHLIGHTS of September 30, 2022 Real Estate Brokerage Commissions Revenue $934.5 million 30.6% Revenue by Transactions by Transactions by Transa
Slide 9: 2022 Third Quarter Financing Highlights
YoY 2022 THIRD Sales Volume $3.3 billion (0.4)% QUARTER Transaction Closings 518 (13.7)% FINANCING Number of Financing Professionals as of 86 1.2% HIGHLIGHTS September 30, 2022 Financing Fees Revenue $28.1 million (4.4)% Transactions by Transactions by Property Type Region Other, 12% Northeast / Mid
Slide 10: Year-to-Date Financing Highlights
YoY YEAR-TO-DATE Sales Volume $10.4 billion 33.8% 2022 Transaction Closings 1,735 (2.4)% FINANCING Number of Financing Professionals as of 86 1.2% HIGHLIGHTS September 30, 2022 Financing Fees Revenue $91.4 million 21.1% Transactions by Transactions by Property Type Region Other, 12% Northeast / Mid-
Slide 11: Market Highlights
MARKET HIGHLIGHTS Marcus ¢ Millichap 1
Slide 12: Unprecedented Government Stimulus Bolsters Consumption
UNPRECEDENTED GOVERNMENT STIMULUS BOLSTERS CONSUMPTION AND PENT-UP DEMAND, FUELED RECOVERY AND INFLATION Government Stimulus Share of GDP Core Retail Sales Savings Deposits $550 $20.0 40% 32% $500 $18.0 Core Retail Sales (Billions) Deposits (Trillions) $450 Percent of GDP 24% $16.0 16% $400 $14.0 8%
Slide 13: Job Growth Continues With Employment Surpassing Pre-Pandemic Levels
JOB GROWTH CONTINUES WITH EMPLOYMENT SURPASSING PRE- PANDEMIC LEVELS 2022 forecast to add 4.5 million jobs* -22.0 Million +22.5Million 155.0 150.0 145.0 Total Employment (Millions) 140.0 135.0 130.0 125.0 120.0 115.0 22-Feb 22-Sep 20-Jul 21-Feb 21-Sep 22-Apr 20-Feb 20-Sep 21-Apr 21-Nov 22-Jun 20-Apr
Slide 14: Labor Shortage Weighs on Hiring; Inflation Pressure Driving Aggressive Fed Action
LABOR SHORTAGE WEIGHS ON HIRING; INFLATION PRESSURE DRIVING AGGRESSIVE FED ACTION Job Openings vs. Unemployed Inflation vs. Treasury Rates Job Openings Unemployed Core PCE 10-Year Treasury 24 6.0% Job Openings/Unemployed (Millions) 18 4.5% Rate 12 3.0% 6 1.5% 0 0.0% 19 21 16 18 20 * 17 05 07 09 11 1
Slide 15: Sept. 2021: Fed Took No Action Calling Inflation Transitory
SEPT. 2021: FED TOOK NO ACTION CALLING INFLATION “TRANSITORY” SEPT. 2022: AGGRESSIVE ACTION DESPITE LEADING INDICATORS TURNING Inflation Rate Steel Price Single-Family Home Sales CPI Core PCE 10.0% $2,000 7 Annual Home Sales (Millions, SAAR) 7.5% $1,600 6 Y-O-Y Percent Change Price per Ton 5.0% $1,2
Slide 16: Interest Rates Still Low on a Long-Term Historical Basis
INTEREST RATES STILL LOW ON A LONG-TERM HISTORICAL BASIS Fed Funds Rate 10-Year Treasury Long-Term Avg Long-Term Avg 20% 15% Rate 10% 5% Long-Term Avg: 5.7% Long-Term Avg: 4.7% 0% 12 60 86 94 20 68 2 76 10 84 58 66 92 18 0 74 8 56 82 16 64 90 98 72 6 80 14 62 88 * 96 70 4 78 22 ‘0 ‘0 ‘0 ‘0 ‘0 * Thro
Slide 17: Rising Interest Rates, Recession Fears Challenging Rent Growth
RISING INTEREST RATES, RECESSION FEARS CHALLENGING RENT GROWTH 10-Year Treasury Rent Growth: 2018 to 3Q 2022 40% 4.8% 30% 3.6% Rent Growth Rate 2.4% 20% 1.2% 10% 0.0% —% Industrial Apartment Self- Retail Office 20 18 21 19 * 22 Storage * Through October 19, 2022 Preliminary estimate for 3Q 2022 rent
Slide 18: Private Investors Dominate U.S. Commercial Real Estate
PRIVATE INVESTORS DOMINATE U.S. COMMERCIAL REAL ESTATE; INSTITUTIONAL INVESTORS MORE HESITANT IN CURRENT WINDOW 100% 3% 5% 6% 5% 5% 4% 4% 5% 4% 4% 5% 3% 8% 7% 9% 9% 9% 9% 12% 12% 10% 14% 17% 20% 18% 25% 27% 75% 25% 27% 28% 28% 24% 27% 25% 32% 27% Percent of Dollar Volume 26% 5% 29% User/Other 9% 9%
Slide 19: Employment Remains Sound; Space Demand Remains Stable
Employment Growth vs. Unemployment Rate EMPLOYMENT REMAINS SOUND; SPACE DEMAND REMAINS STABLE AS Employment Growth Unemployment Rate RECESSION RISKS RISE 12.0 8.0% Employment Growth (Mil.) Unemployment Rate • Labor shortage still restraining job creation but 6.0 6.0% record 6.7 million jobs added in
Slide 20: Sound Property Fundamentals Bode Well; Some Cracks Emerging
SOUND PROPERTY FUNDAMENTALS BODE WELL; HOWEVER, SOME CRACKS Occupancy Trends EMERGING 100% • Multifamily and industrial aggressively 95% Occupancy (%) delivering record new completions as the 90% economy slows. 85% • Supply chain disruptions still posing some challenges; companies have bolstered 80%
Slide 21: CRE Market Responding to Higher Interest Rates
CRE MARKET RESPONDING TO HIGHER INTEREST RATES; GOING FORWARD, FED MESSAGING WILL Annual U.S. Commercial Real Estate Sales Trends(1) REMAIN A KEY FACTOR 60 • Transaction counts YTD 3Q 2022 estimated to Total Transactions (000s) have dipped, falling 9% year-over-year. In 3Q, 45 estimates point to a 2
Slide 22: Commercial Real Estate Yield Spreads Challenged
COMMERCIAL REAL ESTATE Cap Rate/10-Year Treasury Spreads YIELD SPREADS CHALLENGED; CRE Cap Rate 10 Year Treasury Rate HOWEVER, INFLATION HEDGE 12% Cap Rate Long-Term Avg. PROFILE COMPELLING 10% 440 bps 430 bps 480 bps 8% Average Rate • Rapid rise of interest rates, tightened lender 480 bps 210 bps 5
Slide 23: MMI Market Position
MMI MARKET POSITION Marcus ¢ Millichap 3,
Slide 24: Private Client Market Segment
• Market segment consists of sales $1 million to <$10 million. PRIVATE CLIENT • Largest and most active market segment, accounting for 80%+ of MARKET SEGMENT transactions. • Primarily driven by high-net worth individuals, partnerships and smaller private fund managers. Largest Transaction and Commis
Slide 25: MMI Financial Details
MMI FINANCIAL DETAILS Marcus ¢ Millichap 5
Slide 26: Total Revenue
TOTAL REVENUE ($ IN MILLIONS) Q3 ‘21 vs Q3 ‘22 Year-to-Date ‘21 vs ‘22 $400 $1,200 $1,039.3 $350 $332.4 $1,050 $323.8 (2.6)% $300 $900 $801.3 29.7% $250 $750 $200 $600 $150 $450 $100 $300 $50 $150 $0 $0 Q3'21 Q3'22 YTD '21 YTD '22 26
Slide 27: Brokerage Operating Metrics Q3
BROKERAGE OPERATING METRICS Q3 2021 vs Q3 2022 Total Sales Volume Total Number of Transactions ($ in billions) $25 3,000 $20 $17.9 2,456 $16.5 2,246 $15 2,000 8.6% (8.6)% $10 1,000 $5 $0 Q3'21 Q3'22 0 Q3'21 Q3'22 Average Number of Investment Sales Professionals Average Commission Per Transaction ($
Slide 28: Brokerage Operating Metrics Year-to-Date
BROKERAGE OPERATING METRICS YEAR-TO-DATE 2021 VS 2022 Total Sales Volume Total Number of Transactions ($ in billions) $60 $55.0 8,000 7,068 $50 6,374 $38.9 $40 6,000 41.3% 10.9% $30 4,000 $20 2,000 $10 $0 0 YTD '21 YTD '22 YTD '21 YTD '22 Average Number of Investment Sales Professionals Average Comm
Slide 29: Brokerage Revenue by Market Segment Q3
BROKERAGE REVENUE BY MARKET SEGMENT Q3 2021 vs Q3 2022 Private Client Market ($1 - <$10 million) <$1 million ($ in thousands) ($ in thousands) $10,000 $250,000 $7,419 $7,252 $200,000 $183,033 $7,500 $165,534 (2.3)% $150,000 (9.6)% $5,000 $100,000 $2,500 $50,000 $0 $0 Q3'21 Q3'22 Q3'21 Q3'22 Larger T
Slide 30: Brokerage Revenue by Market Segment Year-to-Date
BROKERAGE REVENUE BY MARKET SEGMENT YEAR-TO-DATE 2021 VS 2022 Private Client Market ($1 - <$10 million) <$1 million ($ in thousands) ($ in thousands) $25,000 $600,000 $21,175 $536,433 $19,711 $20,000 $500,000 $446,592 (6.9)% $400,000 $15,000 20.1% $300,000 $10,000 $200,000 $5,000 $100,000 $0 $0 YTD
Slide 31: Operating Expense
OPERATING EXPENSE ($ IN MILLIONS) Q3 2021 vs Q3 2022 Year-to-Date 2021 vs 2022 $350 $1,000 $907.7 $300 $293.3 $286.7 $800 $250 $693.8 $600 64.5% of Rev $200 $670.2 67.1% of Rev $217.4 65.9% of Rev $219.2 63.3% of Rev $150 $506.9 $400 $100 22.5% of Rev $200 $227.4 21.9% of Rev 19.5% of Rev $73.0 22.2
Slide 32: Net Income and Adjusted EBITDA Performance Q3
NET INCOME AND ADJUSTED EBITDA PERFORMANCE Q3 2021 vs Q3 2022 Net Income Adjusted EBITDA ($ in millions) ($ in millions) $40.0 $60.0 $35.0 $33.9 $51.0 $50.0 $30.0 $40.0 $25.0 $36.6 (37.0)% $21.4 (28.1)% $20.0 $30.0 $15.0 $20.0 $10.0 $10.0 $5.0 $0.0 $0.0 Q3'21 Q3'22 Q3'21 Q3'22 32
Slide 33: Net Income and Adjusted EBITDA Performance YTD
NET INCOME AND ADJUSTED EBITDA PERFORMANCE YEAR-TO-DATE 2021 VS 2022 Net Income Adjusted EBITDA ($ in millions) ($ in millions) $151.4 $100.0 $96.3 $150.0 $124.8 $80.5 $80.0 $120.0 21.3% 19.7% $60.0 $90.0 $40.0 $60.0 $20.0 $30.0 $0.0 $0.0 YTD '21 YTD '22 YTD '21 YTD '22 33
Slide 34: Cash Flow Provided By (Used In) Operating Activities
CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES QTD Cash Flow Provided By YTD Cash Flow Provided By (Used In) Operating Activities Operating Activities (1) ($ in millions) ($ in millions) $80.0 $125.0 $66.1 $99.6 $100.0 $60.0 $75.0 nm(2) (39.4)% $40.1 $40.0 $50.0 $25.0 $20.0 $0.0 $(11.8) $0.0 $
Slide 35: Liquidity Position
LIQUIDITY POSITION Cash and Cash Equivalents and Marketable Debt Securities, Available-For-Sale ($ in millions) $800 $700 $678.6 $600 $572.0 $296.5 (15.7)% $500 $301.1 $400 $300 $200 $382.1 $270.9 $100 $0 12/31/2021 9/30/2022 Cash and Cash Equivalents Marketable Debt Securities, Available-For-Sale L
Slide 36: Appendix
APPENDIX Marcus Millichap 36
Slide 37: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA Three Months Ended September 30, Nine Months Ended September 30, RECONCILIATION 2022 2021 2022 2021 Adjusted EBITDA, which the Company defines as net income before (i) interest income and other, including net realized gains (losses) on Net income $21,362 $33,924 $96,313 $80,468 marke
Slide 38: Company Overview
NATIONAL PLATFORM FOCUSED ON REAL ESTATE INVESTMENT BROKERAGE • 51-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 39: Illustrative MMI Earnings Model
ILLUSTRATIVE MMI EARNINGS MODEL Investment Transaction Commission Agents Productivity Sales Value Rate Revenue Investment Financing & Cost of Sales Other SG&A(1) EBITDA(2) Services Revenue Revenue 1. Includes stock-based compensation 2. EBITDA is not a measurement of our financial performance under