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M&

Marcus & Millichap, Inc. (MMI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue rose 15.1% year over year to $193.9M, with diluted EPS of $0.01 including an $0.08 per-share litigation accrual; adjusted EBITDA improved to $6.9M from breakeven, marking the fifth consecutive YoY revenue growth quarter .
  • Strength was driven by Private Client brokerage (revenue +16.9% YoY) and financing fees (+27.7% YoY), while larger transactions (≥$20M) declined due to tough comps from outsized 2024 growth .
  • Cost of services ticked up to 62.4% of revenue (+20bps YoY) and SG&A included a $4M legal reserve; management highlighted improved pipeline, lender engagement and near-record exclusive inventory .
  • Versus S&P Global consensus, MMI slightly beat Q3 revenue ($193.9M vs $193.8M*) and EPS ($0.01 vs $0.005*), with low estimate depth (two estimates for the quarter*)—a modest upside catalyst as sequential improvement is expected into Q4 .
  • Capital return remained ongoing: the Board declared a semi-annual $0.25 dividend payable Oct 6, and share repurchases YTD totaled ~$8M; cash/securities were $382M with no debt, supporting balanced capital allocation .

What Went Well and What Went Wrong

  • What Went Well

    • Private Client segment strength: revenue +16.9% YoY to $102.3M; mix shift lifted average commission rate by 28bps YoY to 1.94% as activity broadened across apartments and single-tenant retail .
    • Financing momentum: fees +27.7% YoY to $26.3M; financing volume +34.4% YoY with 406 transactions; lender engagement improved, with banks and credit unions expanding lending and regional banks returning .
    • Adjusted EBITDA recovery: $6.9M vs roughly breakeven last year (and +$4M would be ex-legal reserve), reflecting operating leverage as volume and mix improved .
    • CEO quote: “Our fifth consecutive quarter of year-over-year revenue growth was driven by expanded client outreach, leading research content and gradually improving bid/ask spreads” .

  • What Went Wrong

    • Larger transactions (≥$20M) revenue fell YoY to $26.3M (from $29.9M) on very difficult comps after outsized growth in late 2024; number of ultra-large ($70M+) deals dropped from 21 to 7 YoY .
    • Cost pressure: cost of services rose to 62.4% of revenue (+20bps YoY), and SG&A included a $4M litigation accrual (EPS impact ~$0.08), partially offsetting improved operating results .
    • Macros still uneven: management cited lingering bid-ask spreads, tight lending underwriting, and a 10-year yield less responsive to recent Fed cuts; closing timelines remain longer-than-normal .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$168.5 $172.3 $193.9
Diluted EPS ($USD)$(0.14) $(0.28) $0.01
Net Income ($USD Millions)$(5.4) $(11.0) $0.24
Operating Loss ($USD Millions)$(11.5) $(9.0) $(2.4)
Cost of Services ($USD Millions)$104.8 $106.6 $121.0
Cost of Services (% of Revenue)~62.2% 61.9% 62.4%
SG&A ($USD Millions)$70.7 $71.6 $72.5
Adjusted EBITDA ($USD Millions)$(0.02) $1.46 $6.89

Segment revenue breakdown (brokerage and financing):

Segment Revenue ($USD Millions)Q3 2024Q3 2025
Brokerage Commissions$142.0 $162.2
- Private Client ($1–<$10M)$87.5 $102.3
- Middle Market ($10–<$20M)$19.4 $26.1
- Larger Transaction (≥$20M)$29.9 $26.3
<$1M$5.2 $7.4
Financing Fees$20.6 $26.3
Other Revenue$6.0 $5.4
Total Revenue$168.5 $193.9

Key operating metrics:

KPIQ3 2024Q2 2025Q3 2025
Total Transactions (Count)1,331 brokerage / 318 financing 1,375 brokerage / 409 financing 1,586 brokerage / 406 financing
Brokerage Volume ($USD Billions)$8.53 $8.02 $8.36
Financing Volume ($USD Billions)$2.13 $3.39 $2.87
Avg Commission Rate (Brokerage)1.66% 1.76% 1.94%
Avg Fee Rate (Financing)0.75% 0.64% 0.71%
Avg Brokerage Transaction Size ($000s)$6,407 $5,830 $5,270

Estimates vs. actual (S&P Global):

MetricConsensus Q3 2025Actual Q3 2025
Revenue ($USD Millions)$193.8*$193.9
Diluted EPS ($USD)$0.005*$0.01
# of Estimates (Revenue / EPS)2* / 2*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2 call)Current Guidance (as of Q3 call)Change
RevenueQ4 2025Not guided numerically; normal seasonality expected Sequential revenue growth consistent with normal year-end seasonality Maintained (qualitative)
Cost of Services (% Rev)Q3 2025 vs Q2 2025“Sequentially higher than Q2” —Realized as 62.4% in Q3
Cost of Services (% Rev)Q4 2025 vs Q3 2025—“Sequentially higher than Q3” Raised (seasonal pattern)
SG&A ($)Q3 2025 vs Q2 2025“Relatively flat vs Q2” Q3 included $4M legal reserve Above prior due to reserve
SG&A ($)Q4 2025—“Increase modestly on a dollar basis” (ex-legal normalization) Raised modestly
Tax Expense ($)Q3 2025$0.5–$1.0M Actual recorded $1.2M Slightly above guide
Tax Expense ($)Q4 2025—$4–$6M New explicit range
DividendH2 2025Semi-annual $0.25 declared Aug 1 Paid Oct 6; future dividends subject to Board approval Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2)Current Period (Q3)Trend
Private Client strengthQ1: Private Client +6%; Q2: +10% revenue with rising engagement Q3: +16.9% revenue; commission rate +28bps; activity improved across apartments and net lease Improving
Larger transactions (≥$20M)Q1: Robust mix shift to larger deals; IPA expansion Q3: YoY decline on tough comps; ultra-large deals ($70M+) down; strategy intact Mixed/soft vs comps
Financing platform momentumQ1: Financing +26%; 337 deals with 172 lenders Q3: Fees +27.7%; 406 deals; banks/credit unions expanding; regional banks back Improving
AI/technology initiativesQ2: Modernizing production support, adoption of AI Q3: Productivity focus via technology and AI; DealGround AI platform launched in Sept Building
Macro: rates/tariffsQ1–Q2: Tariff uncertainty; bid-ask spread narrowing; Fed cuts likely Q3: 10-year less responsive to Fed cut; cautious optimism and improving alignment Incremental progress
Auction businessQ2: 273 transactions over 12 months (27% of auctions) Q3: 191 sales YTD; gaining traction, multi-fee model Scaling
Litigation—$4M reserve; EPS impact $0.08; plan to appeal One-off headwind

Management Commentary

  • CEO strategic message: “We are encouraged by our strong pipeline, improved hiring and the company’s near record exclusive inventory levels… We remain focused on productivity growth through technology and AI investments, strategic acquisitions and growing the MMI brand” .
  • Market position: “MMI’s private client business showed particular strength… banks and credit unions continued to expand lending… expansion into larger transactions remains on track despite tough year-over-year comparisons” .
  • Financing integration: “Closed over 1,100 financing transactions with nearly 350 separate lenders… integrating our sales and financing teams, offering combined services to our private and institutional clients” .
  • Operating leverage: “We are kind of at that inflection point where you really see an acceleration of profitability… this is the inflection point” (CFO) .

Q&A Highlights

  • Larger deal dynamics: Tough comps from 2024’s outsized ultra-large deals; current $20–$50M pipeline steady; IPA leadership additions to deepen institutional coverage .
  • Client motivation and pricing: Greater realism on pricing, lender spreads narrowing, fewer listings aging or falling out; alignment improving but not fully normalized .
  • Profitability threshold: Investments in talent, tech, and central services to drive leverage; current revenue scale near inflection point even adjusting for legal reserve .
  • Lender activity: Banks/credit unions and regional banks have returned; quotes more actionable; ~50% of funding from banks and credit unions; faster loan execution .
  • Litigation context: Disputed disclosure claim went to trial; verdict viewed as error; strong grounds for appeal; assessed reserve amount accordingly (CFO) .

Estimates Context

  • Q3 2025 results vs consensus: Revenue $193.9M vs $193.8M*; EPS $0.01 vs $0.005*—both slightly above expectations with two estimates for the quarter*. Values marked with * retrieved from S&P Global .
  • Forward estimates: Q4 2025 consensus revenue ~$239.1M* and EPS ~$0.25*, FY 2025 revenue ~$750.3M* and EPS ~$(0.14)*; management expects sequential improvement in Q4 but notes tough comps vs exceptional Q4 2024 .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix shift toward Private Client and financing is driving commission rate and transaction count gains, underpinning adjusted EBITDA recovery despite a one-off legal reserve .
  • Larger transactions remain strategically important, with recent softer YoY comparisons driven by extraordinary 2024 levels rather than structural weakness—positioning intact via IPA hires and robust inventory .
  • Lender engagement has materially improved, particularly among regional banks and credit unions; financing volumes and deal execution velocity should continue to support revenue into Q4 .
  • Seasonal pattern suggests cost of services and SG&A will be sequentially higher in Q4, with tax expense guided to $4–$6M—investors should model near-term margin pressure alongside volume gains .
  • Balance sheet strength (no debt; $382M cash/securities) enables continued capital return and selective M&A/recruiting—supporting medium-term market share gains as activity normalizes .
  • AI/technology and centralized production support initiatives aim to boost productivity and operating leverage as market alignment improves; DealGround launch underscores sector-wide AI adoption .
  • Near-term trading lens: modest beat on revenue/EPS vs low-depth consensus*, improving sequential setup into Q4, and signs of pipeline strength could support sentiment, while legal reserve and margin seasonality temper upside .

Values marked with * retrieved from S&P Global.