Marcus & Millichap, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Marcus & Millichap reported a 13.9% decrease in brokerage commissions for 2023, offset by growth in financing and other revenues.</b>

AI Summary

Marcus & Millichap, Inc. (MMI) filed a Annual Report (10-K) with the SEC on February 27, 2024. Total revenue for the fiscal year ended December 31, 2023, was $873.9 million. Real estate brokerage commissions decreased by 13.9% to $790.1 million in 2023 compared to $917.6 million in 2022. Financing fees increased by 15.9% to $63.1 million in 2023 compared to $54.4 million in 2022. Other revenues saw a significant increase of 76.5% to $20.7 million in 2023 compared to $11.7 million in 2022. The company reported total assets of $1.05 billion as of December 31, 2023.

Why It Matters

For investors and stakeholders tracking Marcus & Millichap, Inc., this filing contains several important signals. The decline in brokerage commissions, the company's primary revenue source, indicates a challenging market environment for real estate transactions in 2023. Growth in financing and other revenues suggests diversification efforts or a stronger performance in ancillary services, potentially mitigating the impact of the core business slowdown.

Risk Assessment

Risk Level: medium — Marcus & Millichap, Inc. shows moderate risk based on this filing. The company's reliance on real estate brokerage commissions, which saw a significant decline in 2023, presents a substantial risk to its financial performance.

Analyst Insight

Investors should monitor the company's ability to sustain growth in its financing and other revenue segments to offset potential continued weakness in brokerage commissions.

Revenue Breakdown

Key Numbers

• 873.9 million — Total Revenue (Fiscal year ended December 31, 2023.)
• 790.1 million — Real Estate Brokerage Commissions (Fiscal year ended December 31, 2023.)
• 63.1 million — Financing Fees (Fiscal year ended December 31, 2023.)
• 20.7 million — Other Revenues (Fiscal year ended December 31, 2023.)
• 1.05 billion — Total Assets (As of December 31, 2023.)
• -13.9% — Change in Brokerage Commissions (2023 vs 2022.)
• 15.9% — Growth in Financing Fees (2023 vs 2022.)
• 76.5% — Growth in Other Revenues (2023 vs 2022.)

Key Players & Entities

• Marcus & Millichap, Inc. (company) — Filer of the 10-K report.
• 2023-12-31 (date) — Fiscal year end for the reported period.
• 2024-02-27 (date) — Filing date of the 10-K report.
• 873.9 million (dollar_amount) — Total revenue for the fiscal year ended December 31, 2023.
• 790.1 million (dollar_amount) — Real estate brokerage commissions for 2023.
• 917.6 million (dollar_amount) — Real estate brokerage commissions for 2022.
• 63.1 million (dollar_amount) — Financing fees for 2023.
• 54.4 million (dollar_amount) — Financing fees for 2022.

FAQ

Key Financial Figures

• $0.0001 — ich registered Common Stock, par value $0.0001 per share MMI New York Stock Exchange
• $31.51 — are of common stock on June 30, 2023 of $31.51 as reported on the New York Stock Excha
• $1 million — d industrial buildings, with a value of $1 million or more. 3 Table of Contents SPEC
• $10 million — brokerage company in the $1 million to $10 million private client market. This is the larg
• $43.6 billion — ith total sales volume of approximately $43.6 billion. We service clients by underwriting, m
• $20 million — from $10 million to up to but less than $20 million; and Larger transaction market: proper
• $30.8 billion — h a total sales volume of approximately $30.8 billion. For more than 15 years, we have closed
• $1 — (77) $ (3,915) Private Client Market ($1 – <$10 million) 4,097 13,616 372,979 6
• $10 — 753) (10,858) (309,040) Middle Market ($10 – <$20 million) 303 4,117 73,007 735 9
• $6.7 b — total financing volume of approximately $6.7 billion, resulting in $66.9 million in fi
• $66.9 million — pproximately $6.7 billion, resulting in $66.9 million in financing fees, which accounted for

Filing Documents

• mmi-20231231.htm (10-K) — 2155KB
• mmi-12312023xexx211listofs.htm (EX-21.1) — 10KB
• mmi-12312023xexx231consent.htm (EX-23.1) — 4KB
• mmi-12312023xexx311certifi.htm (EX-31.1) — 10KB
• mmi-12312023xexx312certifi.htm (EX-31.2) — 10KB
• mmi-12312023xexx321certifi.htm (EX-32.1) — 6KB
• a97restatedcompensationr.htm (EX-97) — 20KB
• a97restatedcompensationr001.jpg (GRAPHIC) — 246KB
• a97restatedcompensationr002.jpg (GRAPHIC) — 226KB
• a97restatedcompensationr003.jpg (GRAPHIC) — 117KB
• a97restatedcompensationr004.jpg (GRAPHIC) — 264KB
• a97restatedcompensationr005.jpg (GRAPHIC) — 346KB
• a97restatedcompensationr006.jpg (GRAPHIC) — 68KB
• mmi-20231231_g1.jpg (GRAPHIC) — 1703KB
• mmi-20231231_g2.jpg (GRAPHIC) — 119KB
• mmi-20231231_g3.jpg (GRAPHIC) — 77KB
• 0001578732-24-000009.txt (&nbsp;) — 17792KB
• mmi-20231231.xsd (EX-101.SCH) — 78KB
• mmi-20231231_cal.xml (EX-101.CAL) — 129KB
• mmi-20231231_def.xml (EX-101.DEF) — 315KB
• mmi-20231231_lab.xml (EX-101.LAB) — 974KB
• mmi-20231231_pre.xml (EX-101.PRE) — 638KB
• mmi-20231231_htm.xml (XML) — 1806KB

Business

Business 5 Item 1A.

Risk Factors

Risk Factors 19 Item 1B. Unresolved Staff Comments 31 Item 1C. C ybersecurity 31 Item 2.

Properties

Properties 33 Item 3.

Legal Proceedings

Legal Proceedings 33 Item 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. [RESERVED] 36 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 36 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 49 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 50 Item 9. Changes in and Disagreements w ith Accountants on Accounting and Financial Disclosure 50 Item 9A.

Controls and Procedures

Controls and Procedures 50 Item 9B. Other Information 51 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 51 PART III Item 10. Directors, Executive Officers and Corporate Governance 52 Item 11.

Executive Compensation

Executive Compensation 53 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 53 Item 13. Certain Relationships and Related Transactions, and Director Independence 54 Item 14. Principal Accounting Fees and Services 54 PART IV Item 15. Exhibits, Financial Statement Schedules 55 Item 16. Form 10-K Summary 57

SIGNATURES

SIGNATURES 58 2 Table of Contents MARKET, INDUSTRY AND OTHER DATA Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning the commercial real estate industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on (i) information gathered from various sources, (ii) certain assumptions that we have made, and (iii) our knowledge of the commercial real estate market. While we believe that the market position, market opportunity and market size information that is included in this Annual Report on Form 10-K is generally reliable, such information is inherently imprecise. Unless indicated otherwise, the industry data included herein is generally based on information available through the nine months ended September 30, 2023 since full year 2023 information may not yet have been published. We use market data from CoStar Group, Inc. and Real Capital Analytics that consists of list side information of sales transactions of multifamily, retail, office, and industrial buildings, with a value of $1 million or more. 3 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements, including the Company's business outlook for 2024, market consensus on interest rate decreases in 2024 and for the 2024 economic forecast, our expectations of 2024 commercial real estate sales activity in the wake of reduced interest rates, the execution of our capital return program, including a semi-annual dividend and stock repurchase program, and expectations for market share growth. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily

Business

Item 1. Business Company Overview Marcus & Millichap, Inc. ("MMI") is a leading national real estate services firm specializing in commercial real estate investment sales, financing services, research, and advisory services. We are the leading national investment brokerage company in the $1 million to $10 million private client market. This is the largest and most active market and consistently comprises more than 80% of total U.S. commercial property transactions greater than $1 million in the marketplace. As of December 31, 2023, we had 1,783 investment sales and financing professionals that are primarily exclusive commission-based independent contractors who provide real estate investment brokerage and financing services to sellers and buyers of commercial real estate in over 80 offices in the United States and Canada. In 2023, we closed 7,546 sales, financing, and other transactions with total sales volume of approximately $43.6 billion. We service clients by underwriting, marketing, selling, and financing commercial real estate properties in a manner that maximizes value for sellers, provides buyers with the largest and most diverse inventory of commercial properties, and secures the most competitive financing from lenders for borrowers. Our business model is based on several key attributes: for more than 50 years, we have provided investment brokerage and financing services through proprietary inventory and marketing systems, policies and a culture of information sharing, and in-depth investment brokerage training. Our sales force executes these services under the supervision of a dedicated sales management team focused on client service and growing the firm; market leading share and brand within the $1 million to $10 million private client market, which consistently represents more than 80% of total U.S. commercial property transactions greater than $1 million in the marketplace; investment sales and financing professionals providing exclusive client re

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