Marcus & Millichap, Inc. · NYSE:MMI
Marcus & Millichap — Q4 2024 Earnings Presentation
38 slides from Marcus & Millichap's earnings presentation, Feb 14, 2025
Slide 1: Fourth Quarter 2024 Earnings Conference Call
2024 Earnings Conference Call February 14, 2025 Fourth Quarter 2024
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation includes forward-looking statements, including our expectations regarding the long-term outlook of the commercial real estate transaction market, and our positioning within it, our belief relating to the Company’s long- term growth, our assessment of the
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
Slide 5: 2024 Fourth Quarter Highlights
2024 FOURTH QUARTER HIGHLIGHTS Financial Highlights YoY Revenue $240.1 million 44.4 % Net Income $8.5 million 183.5 % Adjusted EBITDA $18.0 million 500.4 % Operational Highlights YoY Sales Volume $18.4 billion 53.6 % Transaction Closings 2,485 27.6 % Number of Investment Sales and Financing 1,712 (4
Slide 6: Full-Year 2024 Highlights
FULL-YEAR 2024 HIGHLIGHTS Financial Highlights YoY Revenue $696.1 million 7.8 % Net Loss $(12.4) million 63.7 % Adjusted EBITDA $9.4 million 147.7 % Operational Highlights YoY Sales Volume $49.6 billion 13.7 % Transaction Closings 7,836 3.8 % Number of Investment Sales and Financing 1,712 (4.0)% Pro
Slide 7: 2024 Fourth Quarter Brokerage Highlights
2024 FOURTH QUARTER BROKERAGE HIGHLIGHTS YoY Sales Volume $12.3 billion 40.8% Transaction Closings 1,742 23.3% Number of Investment Sales Professionals as 1,610 (4.4)% of December 31, 2024 Real Estate Brokerage Commissions Revenue $202.8 million 40.3% Revenue by Transactions by Transactions by Trans
Slide 8: Full-Year 2024 Brokerage Highlights
FULL-YEAR 2024 BROKERAGE HIGHLIGHTS YoY Sales Volume $33.6 billion 9.1% Transaction Closings 5,447 (0.5)% Number of Investment Sales Professionals as 1,610 (4.4)% of December 31, 2024 Real Estate Brokerage Commissions Revenue $589.7 million 5.3% Revenue by Transactions by Transactions by Transaction
Slide 9: 2024 Fourth Quarter Financing Highlights
2024 FOURTH QUARTER FINANCING HIGHLIGHTS YoY Sales Volume $3.5 billion 139.4% Transaction Closings 425 79.3% Number of Financing Professionals as of 102 3.0% December 31, 2024 Financing Fees Revenue $31.2 million 96.6% Transactions by Transactions by Property Type Region Northeast / Other, 19% Mid-A
Slide 10: Full-Year 2024 Financing Highlights
FULL-YEAR 2024 FINANCING HIGHLIGHTS YoY Sales Volume $9.1 billion 35.2% Transaction Closings 1,249 16.1% Number of Financing Professionals as of 102 3.0% December 31, 2024 Financing Fees Revenue $84.5 million 26.3% Transactions by Transactions by Property Type Region Other, 18% Northeast / Multifami
Slide 11: Market Highlights
Market Highlights
Slide 12: Job Gains Slowing in Alignment with Fed's Strategy
JOB GAINS SLOWING IN ALIGNMENT WITH FED’S STRATEGY; UNEMPLOYMENT RATE REMAINS STABLE Annual Employment Growth Unemployment Rate 10 7% 2023: 2.6M 2024: 2.0M 2025*: 1.2M 5 6% Employment Growth (Millions) Unemployment Rate 0 5% -5 4% -10 3% 23 22 21 ** 24 18 17 16 15 14 13 12 20 1 10 * 20 4 20 3 22 20
Slide 13: Fed Taking Cautious Approach in 2025
FED TAKING CAUTIOUS APPROACH IN 2025 AS THEY AWAIT POLICY CLARITY; 10-YEAR TREASURY REMAINS ELEVATED 10-Year Treasury vs. Fed Funds Rate Inflation Adjusted Fed Balance Sheet 10-Year Treasury Fed Funds Rate Notes & Bonds MBS 6.0% TIPS/TIPS Inflation Compensation/Agencies/Bills Fed Holdings (Trillions
Slide 14: Inflation Has Trended Lower, Paving Way for Gradual Fed Easing
INFLATION HAS TRENDED LOWER, PAVING THE WAY FOR GRADUAL FED EASING; SOME FEDERAL POLICIES POSE INFLATION RISK Inflation vs. 10-Year Treasury CPI Inflation 10-Year Treasury Core PCE 10.0% 7.5% Rate 5.0% 2.5% 0.0% 23 22 21 20 19 18 17 16 24 20 20 20 20 20 20 20 20 20 14 Sources: BLS, Federal Reserve,
Slide 15: Private Investors Dominate U.S. Commercial Real Estate
PRIVATE PRIVATEINVESTORS DOMINATE INVESTORS DOMINATE U.S. U.S. COMMERCIAL COMMERCIAL REAL REAL ESTATE; ESTATE; INSTITUTIONAL INVESTORSRE-ENTERING INSTITUTIONAL INVESTORS MORE HESITANT IN CURRENT WINDOW THE MARKET 100% 5% 4% 4% 4% 4% 4% 5% 3% 3% 6% 7% 8% 10% 7% 90% 9% 9% 6% 13% 12% 10% 9% 17% 80% 18%
Slide 16: Employment Remains Positive; Space Demand Varies by Property Type
EMPLOYMENT REMAINS POSITIVE; SPACE DEMAND VARIES BY PROPERTY TYPE Employment Growth vs. Unemployment Rate • Labor shortage still restraining Employment Growth Unemployment Rate employment growth; 4.5 million jobs Employment Growth (Mil.) 12.0 8% added in 2022, 3.0 million in 2023, and Unemployment R
Slide 17: Property Fundamentals Generally Sound; Variations Widening
PROPERTY FUNDAMENTALS GENERALLY SOUND BY HISTORICAL STANDARDS; Occupancy Trends HOWEVER, VARIATIONS WIDENING 100% • Multifamily and industrial aggressively delivering 95% record new completions as the economy slows. Occupancy (%) Risk of over-supply limited to select local markets 90% with heavy con
Slide 18: Maturing CRE Loan Volumes Concerning but Unlikely Disruptive
MATURING CRE LOAN VOLUMES CONCERNING BUT UNLIKELY TO BECOME DISRUPTIVE AS LENDERS Commercial Real Estate Loan Maturities* CONTINUE WORKOUTS; RISKS VARY 1,000 WIDELY BY PROPERTY TYPE Other Dollar Volume (Billions) 750 • With the exception of office properties, rent Healthcare growth and appreciation
Slide 19: Lender Caution and Wide Bid/Ask Spread Weigh on CRE Sales
LENDER CAUTION AND TIGHTENED UNDERWRITING, WIDENED BID/ASK SPREAD STILL WEIGH ON CRE SALES/ Annual U.S. Commercial Real Estate Sales Trends(1) FINANCING 60 Total Transactions (000s) • Transaction count in 2024 estimated to have 45 dipped 3% year-over-year; dollar volume increased by 9% year-over-yea
Slide 20: CRE Yield Spreads Challenged; Pricing Recalibrating
COMMERCIAL REAL ESTATE YIELD SPREADS CHALLENGED; PRICING Cap Rate/10-Year Treasury Spreads RECALIBRATING TO HIGHER CRE Cap Rate 10-Year Treasury Rate INTEREST RATES 12% • Rapid rise of interest rates, tightened lender 10% underwriting, and slowing economic growth ahead fueled uncertainty in valuatio
Slide 21: MMI Market Position
MMI Market Position
Slide 22: MMI Well-Aligned with the CRE Market
MMI WELL-ALIGNED WITH THE CRE MARKET Private Client Segment Boasts Largest Transaction and Commission Pool Opportunity • Private client market typically consists of sales $1 million to • Influenced by personal drivers that result in buying/selling/ <$10 million. refinancing properties, as well as ma
Slide 23: MMI Financial Details
MMI Financial Details
Slide 24: Total Revenue
TOTAL REVENUE ($ IN MILLIONS) Full-Year ‘23 vs ‘24 Q4'23 vs Q4'24 300 900 250 $240.1 44.4 % 750 7.8% $696.1 200 $645.9 $166.2 600 150 450 100 300 50 150 0 0 Q4'23 Q4'24 '23 '24 24
Slide 25: Brokerage Operating Metrics Q4 2023 vs Q4 2024
BROKERAGE OPERATING METRICS Q4 2023 vs Q4 2024 Total Sales Volume Total Number of Transactions ($ in billions) 20 2,000 23.3% 1,742 15 1,413 40.8% $12.3 10 $8.7 1,000 5 0 Q4'23 Q4'24 0 Q4'23 Q4'24 Average Number of Investment Sales Professionals Average Commission Per Transaction ($ in thousands) 2,
Slide 26: Brokerage Operating Metrics Full-Year 2023 vs 2024
BROKERAGE OPERATING METRICS FULL-YEAR 2023 vs 2024 Total Sales Volume Total Number of Transactions ($ in billions) 60 10,000 50 8,000 40 9.1% $33.6 (0.5)% $30.8 5,475 5,447 6,000 30 20 4,000 10 2,000 0 0 '23 '24 '23 '24 Average Number of Investment Sales Professionals Average Commission Per Transact
Slide 27: Brokerage Revenue by Market Segment Q4
BROKERAGE REVENUE BY MARKET SEGMENT Q4 2023 vs Q4 2024 <$1 million Private Client Market ($1 - <$10 million) ($ in thousands) ($ in thousands) 7,500 200,000 1.0% $5,735 6,000 $5,680 150,000 27.0% $120,364 4,500 $94,772 100,000 3,000 50,000 1,500 0 0 Q4'23 Q4'24 Q4'23 Q4'24 Middle Market ($10 - <$20
Slide 28: Brokerage Revenue by Market Segment Full-Year
BROKERAGE REVENUE BY MARKET SEGMENT FULL-YEAR 2023 vs 2024 <$1 million Private Client Market ($1 - <$10 million) ($ in thousands) ($ in thousands) 30,000 500,000 25,000 0.7% $372,979 (1.9)% $365,837 $20,894 $21,034 400,000 20,000 300,000 15,000 200,000 10,000 100,000 5,000 0 0 '23 '24 '23 '24 Middle
Slide 29: Operating Expense
OPERATING EXPENSE ($ IN MILLIONS) Q4'23 vs Q4'24 FY ‘23 vs FY ‘24 250 800 $233.4 $729.0 $705.2 200 $183.4 600 $151.8 63.2% of Rev 62.9% of Rev $406.6 $431.5 62.0% of Rev 150 $105.4 63.4% of Rev 400 100 44.1% of Rev $285.0 $280.9 40.3% of Rev 44.9% of Rev $74.7 $76.3 31.8% of Rev 200 50 2.0% of Rev $
Slide 30: Net Income and Adjusted EBITDA Performance Q4
NET INCOME AND ADJUSTED EBITDA PERFORMANCE Q4 2023 vs Q4 2024 Net Income Adjusted EBITDA ($ in millions) ($ in millions) $10.0 $20.0 $8.5 $18.0 $15.0 $5.0 183.5% $10.0 $— 500.4% $5.0 $(5.0) $— $(10.0) $(10.2) $(5.0) $(4.5) $(15.0) $(10.0) Q4'23 Q4'24 Q4'23 Q4'24 30
Slide 31: Net Income and Adjusted EBITDA Performance Full-Year
NET INCOME AND ADJUSTED EBITDA PERFORMANCE FULL-YEAR 2023 vs 2024 Net Loss Adjusted EBITDA ($ in millions) ($ in millions) $20.0 $20.0 $10.0 $9.4 $10.0 $— 147.7% $— $(10.0) 63.7% $(12.4) $(10.0) $(20.0) $(20.0) $(30.0) $(19.6) $(34.0) $(40.0) $(30.0) '23 '24 '23 '24 31
Slide 32: Cash Flows Provided By (Used In) Operating Activities
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES Q4 Cash Flows Provided By Annual Cash Flows Provided By (Used In) Operating Activities Operating Activities (1) ($ in millions) ($ in millions) $60.0 $56.6 $50.0 $50.0 $25.0 $21.7 285.5% 130.0% $40.0 $— $30.0 $(25.0) $20.0 $(50.0) $14.7 $10.0 $(7
Slide 33: Liquidity Position
LIQUIDITY POSITION Cash and Cash Equivalents and Marketable Debt Securities, Available-For-Sale ($ in millions) 500 $407.1 (3.2)% $394.2 400 300 $236.3 $240.8 200 100 $170.8 $153.4 0 12/31/2023 12/31/2024 Cash and Cash Equivalents Marketable Debt Securities, Available-For-Sale Liquidity position as
Slide 34: Appendix
Appendix
Slide 35: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION Adjusted EBITDA as net income (loss) before (i) interest income Three Months Ended Twelve Months Ended and other, including net realized gains (losses) on marketable debt December 31, December 31, securities, available-for-sale and cash, cash equivalents, and restricte
Slide 36: Company Overview
NATIONAL PLATFORM FOCUSED ON REAL ESTATE INVESTMENT BROKERAGE • Over 50 years of experience 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 LEADE
Slide 37: Illustrative MMI Earnings Model
ILLUSTRATIVE MMI EARNINGS MODEL Investment Productivity Transaction Commission Sales Agents 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
Slide 38: Fourth Quarter 2024
Marcus ¢ Millichap Fourth Quarter 2024