10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

__________________________

FORM 10-Q

__________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________to___________

Commission File Number: 001-36155

__________________________

MARCUS & MILLICHAP, INC.

(Exact name of registrant as specified in its Charter)

__________________________

Delaware	35-2478370
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
23975 Park Sorrento, Suite 400 Calabasas, California	91302
(Address of Principal Executive Offices)	(Zip Code)

(818) 212-2250

(Registrant’s telephone number, including area code)

__________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	MMI	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding as of August 1, 2023 was 38,460,595 shares.

MARCUS & MILLICHAP, INC.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	4
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	5
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Mine Safety Disclosures	42
Item 5. Other Information	43
Item 6. Exhibits	44
SIGNATURES

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for shares and par value)

	June 30, 2023 (unaudited)		December 31, 2022
Assets
Current assets:
Cash, cash equivalents, and restricted cash	$	171,220	$	235,873
Commissions receivable	9,954		8,453
Prepaid expenses	8,872		9,411
Income tax receivable	17,491		8,682
Marketable debt securities, available-for-sale (amortized cost of $165,471 and $254,682 at June 30, 2023 and December 31, 2022, respectively, and $0 allowance for credit losses)	164,856		253,434
Advances and loans, net	3,497		4,005
Other assets, current	5,850		7,282
Total current assets	381,740		527,140
Property and equipment, net	28,462		27,644
Operating lease right-of-use assets, net	102,741		87,945
Marketable debt securities, available-for-sale (amortized cost of $74,758 and $72,819 at June 30, 2023 and December 31, 2022, respectively, and $0 allowance for credit losses)	70,711		68,595
Assets held in rabbi trust	10,365		9,553
Deferred tax assets, net	35,933		41,321
Goodwill and other intangible assets, net	53,525		55,696
Advances and loans, net	181,944		169,955
Other assets, non-current	18,092		15,859
Total assets	$	883,513	$	1,003,708
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	11,893	$	11,450
Deferred compensation and commissions	43,351		75,321
Operating lease liabilities	17,838		16,984
Accrued bonuses and other employee related expenses	11,088		38,327
Other liabilities, current	4,899		9,933
Total current liabilities	89,069		152,015
Deferred compensation and commissions	41,299		64,461
Operating lease liabilities	78,707		65,109
Other liabilities, non-current	10,519		8,614
Total liabilities	219,594		290,199
Commitments and contingencies	—		—
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares – 25,000,000; issued and outstanding shares – none at June 30, 2023 and December 31, 2022, respectively	—		—
Common stock, $0.0001 par value:
Authorized shares – 150,000,000; issued and outstanding shares – 38,460,595 and 39,255,838 at June 30, 2023 and December 31, 2022, respectively	4		4
Additional paid-in capital	140,142		131,541
Retained earnings	526,373		585,581
Accumulated other comprehensive loss	(2,600)		(3,617)
Total stockholders’ equity	663,919		713,509
Total liabilities and stockholders’ equity	$	883,513	$	1,003,708

See accompanying notes to condensed consolidated financial statements.

3

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Real estate brokerage commissions	$	140,330	$	354,685	$	275,376	$	641,594
Financing fees	17,896		36,811		33,764		63,264
Other revenue	4,640		4,461		8,518		10,563
Total revenue	162,866		395,957		317,658		715,421
Operating expenses:
Cost of services	101,163		256,042		196,590		452,810
Selling, general and administrative	68,910		79,841		141,129		154,376
Depreciation and amortization	3,468		3,332		6,675		7,243
Total operating expenses	173,541		339,215		344,394		614,429
Operating (loss) income	(10,675)		56,742		(26,736)		100,992
Other income (expense), net	4,890		(461)		9,700		(11)
Interest expense	(216)		(158)		(431)		(318)
(Loss) income before provision (benefit) for income taxes	(6,001)		56,123		(17,467)		100,663
Provision (benefit) for income taxes	2,728		13,955		(2,905)		25,712
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
(Loss) earnings per share:
Basic	$	(0.23)	$	1.05	$	(0.37)	$	1.87
Diluted	$	(0.23)	$	1.04	$	(0.37)	$	1.85
Weighted average common shares outstanding:
Basic	38,538		40,048		38,867		40,018
Diluted	38,538		40,342		38,867		40,390

See accompanying notes to condensed consolidated financial statements.

4

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
Other comprehensive (loss) income:
Marketable debt securities, available-for-sale:
Change in net unrealized gains and losses	(516)		(1,558)		600		(3,915)
Less: reclassification adjustment for net losses (gains) included in other income (expense), net	17		7		17		(77)
Net change, net of tax of $(168) and $198 for the three and six months ended June 30, 2023, and $(528) and $(1,366) for the three and six months ended June 30, 2022, respectively	(499)		(1,551)		617		(3,992)
Foreign currency translation gain, net of tax of $0 for each of the three and six months ended June 30, 2023 and 2022, respectively	346		179		400		120
Total other comprehensive (loss) income	(153)		(1,372)		1,017		(3,872)
Comprehensive (loss) income	$	(8,882)	$	40,796	$	(13,545)	$	71,079

See accompanying notes to condensed consolidated financial statements.

5

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except for shares)

(Unaudited)

	Three Months Ended June 30, 2023
	Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount		Shares	Amount
Balance at March 31, 2023	—	$	—	38,876,354	$	4	$	132,905	$	551,696	$	(2,447)	$	682,158
Net and comprehensive (loss) income	—	—		—	—		—		(8,729)		(153)		(8,882)
Stock-based award activity
Stock-based compensation	—	—		—	—		5,351		—		—		5,351
Shares issued pursuant to employee stock purchase plan	—	—		15,297	—		392		—		—		392
Issuance of common stock for vesting of restricted stock units	—	—		43,923	—		—		—		—		—
Issuance of common stock for unvested restricted stock awards	—	—		17,339	—		—		—		—		—
Shares withheld related to net share settlement of stock-based awards	—	—		(11,885)	—		(339)		—		—		(339)
Issuance of common stock for stock settled deferred consideration	—	—		58,205	—		1,833		—		—		1,833
Repurchases of common stock	—	—		(538,638)	—		—		(16,594)		—		(16,594)
Balance as of June 30, 2023	—	$	—	38,460,595	$	4	$	140,142	$	526,373	$	(2,600)	$	663,919

	Three Months Ended June 30, 2022
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount		Shares	Amount
Balance at March 31, 2022	—	$	—	39,795,399	$	4	$	122,782	$	554,193	$	(1,590)	$	675,389
Net and comprehensive income (loss)	—	—		—	—		—		42,168		(1,372)		40,796
Stock-based award activity
Stock-based compensation	—	—		—	—		4,275		—		—		4,275
Shares issued pursuant to employee stock purchase plan				11,089			414		—		—		414
Issuance of common stock for settlement of deferred stock units				166,449	—		—		—		—		—
Issuance of common stock for vesting of restricted stock units	—	—		44,971	—		—		—		—		—
Issuance of common stock for unvested restricted stock awards				11,494									—
Shares withheld related to net share settlement of stock-based awards	—	—		(93,783)	—		(5,121)		—		—		(5,121)
Issuance of common stock for stock settled deferred consideration				28,673			1,417						1,417
Balance as of June 30, 2022	—	$	—	39,964,292	$	4	$	123,767	$	596,361	$	(2,962)	$	717,170

See accompanying notes to condensed consolidated financial statements.

6

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except for shares)

(Unaudited)

	Six Months Ended June 30, 2023
	Preferred Stock					Common Stock						Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Total
	Shares		Amount			Shares		Amount
Balance at December 31, 2022	—		$	—		39,255,838		$	4			$	131,541			$	585,581			$	(3,617)			$	713,509
Net and comprehensive (loss) income	—		—			—		—				—				(14,562)				1,017				(13,545)
Dividends	—		—			—						—				(10,284)				—				(10,284)
Stock-based award activity
Stock-based compensation	—		—			—		—				10,362				—				—				10,362
Shares issued pursuant to employee stock purchase plan	—		—			15,297		—				392				—				—				392
Issuance of common stock for vesting of restricted stock units	—		—			337,796		—				—				—				—				—
Issuance of common stock for unvested restricted stock awards	—		—			17,339		—				—				—				—				—
Shares withheld related to net share settlement of stock-based awards	—		—			(125,319)		—				(3,986)				—				—				(3,986)
Issuance of common stock for stock settled deferred consideration	—		—			58,205		—				1,833				—				—				1,833
Repurchases of common stock	—		—			(1,098,561)		—				—				(34,362)				—				(34,362)
Balance as of June 30, 2023	—	$0	$	—	0	38,460,595	0	$	4	$	—	$	140,142	$	—	$	526,373	$	—	$	(2,600)	$	—	$	663,919

	Six Months Ended June 30, 2022
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2021	—	$	—	39,692,373	$	4	$	121,844	$	573,546	$	910	$	696,304
Net and comprehensive income (loss)	—	—		—	—		—		74,951		(3,872)		71,079
Dividends	—	—		—	—		—		(52,136)		—		(52,136)
Stock-based award activity													—
Stock-based compensation	—	—		—	—		8,131		—		—		8,131
Shares issued pursuant to employee stock purchase plan	—	—		11,089	—		414		—		—		414
Issuance of common stock for settlement of deferred stock units	—	—		166,449	—		—		—		—		—
Issuance of common stock for vesting of restricted stock units	—	—		212,234	—		—		—		—		—
Issuance of common stock for unvested restricted stock awards	—	—		11,494	—		—		—		—		—
Shares withheld related to net share settlement of stock-based awards	—	—		(158,020)	—		(8,039)		—		—		(8,039)
Issuance of common stock for stock settled deferred consideration	—	—		28,673	—		1,417		—		—		1,417
Balance as of June 30, 2022	—	$	—	39,964,292	$	4	$	123,767	$	596,361	$	(2,962)	$	717,170

See accompanying notes to condensed consolidated financial statements.

7

MARCUS & MILLICHAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net (loss) income	$	(14,562)	$	74,951
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	6,675		7,243
Non-cash lease expense	12,928		11,944
Credit loss expense (recovery)	634		(28)
Stock-based compensation	10,362		8,131
Deferred taxes, net	5,188		(130)
Unrealized foreign exchange losses (gains)	(56)		403
Net realized losses (gains) on marketable debt securities, available-for-sale	23		(96)
Other non-cash items	(560)		(22)
Changes in operating assets and liabilities:
Commissions receivable	(1,396)		2,922
Prepaid expenses	540		3,177
Advances and loans	(12,043)		(48,539)
Other assets	(4,981)		(2,818)
Accounts payable and accrued expenses	672		(2,684)
Income tax receivable and payable	(8,808)		(15,005)
Accrued bonuses and other employee related expenses	(27,244)		(19,260)
Deferred compensation and commissions	(54,154)		(61,047)
Operating lease liabilities	(8,852)		(9,759)
Other liabilities	859		(1,223)
Net cash used in operating activities	(94,775)		(51,840)
Cash flows from investing activities
Acquisition of businesses, net of cash received	—		(12,500)
Purchases of marketable debt securities, available-for-sale	(142,867)		(174,259)
Proceeds from sales and maturities of marketable debt securities, available-for-sale	230,795		135,206
Issuances of employee notes receivable	(119)		(71)
Payments received on employee notes receivable	33		71
Purchase of property and equipment	(5,469)		(5,022)
Net cash provided by (used in) investing activities	82,373		(56,575)
Cash flows from financing activities
Taxes paid related to net share settlement of stock-based awards	(3,986)		(8,039)
Proceeds from issuance of shares pursuant to employee stock purchase plan	392		414
Dividends paid	(10,327)		(50,082)
Principal payments on stock appreciation rights liability	(1,945)		(1,761)
Principal payments on deferred and contingent consideration	(1,578)		(2,431)
Cash paid for stock repurchases	(34,928)		—
Net cash used in financing activities	(52,372)		(61,899)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash	121		(175)
Net decrease in cash, cash equivalents, and restricted cash	(64,653)		(170,489)
Cash, cash equivalents, and restricted cash at beginning of period	235,873		382,140
Cash, cash equivalents, and restricted cash at end of period	$	171,220	$	211,651
Supplemental cash flow disclosures:
Interest paid during the period	$	408	$	514
Income taxes paid, net	$	714	$	40,046
Supplemental disclosures of non-cash investing and financing activities:
Unpaid purchases of property and equipment	$	382	$	1,196
Right-of-use assets obtained in exchange for operating lease liabilities	$	27,593	$	15,169
Issuance of stock for the settlement of deferred consideration	$	1,833	$	1,417

See accompanying notes to condensed consolidated financial statements.

8

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Description of Business and Basis of Presentation

Description of Business

Marcus & Millichap, Inc. (the “Company,” “Marcus & Millichap,” or “MMI”), a Delaware corporation, is a brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of June 30, 2023, MMI operates 80 offices in the United States and Canada through its wholly-owned subsidiaries, including the operations of Marcus & Millichap Capital Corporation.

Reorganization and Initial Public Offering

MMI was formed in June 2013 in preparation for Marcus & Millichap Company (“MMC”) to spin-off its majority-owned subsidiary, Marcus & Millichap Real Estate Investment Services, Inc. (“MMREIS”). Prior to the initial public offering (“IPO”) of MMI, all of the preferred and common stockholders of MMREIS (including MMC and employees of MMREIS) contributed all of their outstanding shares to MMI, in exchange for new MMI common stock. As a result, MMREIS became a wholly-owned subsidiary of MMI. Thereafter, MMC distributed 80.0% of the shares of MMI common stock to MMC’s shareholders and exchanged the remaining portion of its shares of MMI common stock for cancellation of indebtedness of MMC. MMI completed its IPO on November 5, 2013.

Basis of Presentation

The financial information presented in the accompanying unaudited condensed consolidated financial statements, has been prepared in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements and notes include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated financial position, results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto, including the Company’s accounting policies for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed on February 28, 2023 with the SEC. The results of the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for other interim periods or for future years.

Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, security deposits (included under other assets, non-current) and commissions receivable, net. Cash, cash equivalents, and restricted cash are placed with high-credit quality financial institutions and invested in high-credit quality money market funds and commercial paper. Concentrations and ratings of marketable debt securities, available-for-sale are limited by the approved investment policy.

9

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

To reduce its credit risk, the Company monitors the credit standing of the financial institutions money market funds that represent amounts recorded as cash, cash equivalents, and restricted cash. The Company historically has not experienced any significant losses related to cash, cash equivalents, and restricted cash.

In September 2021, the Company entered into a Strategic Alliance (“Strategic Alliance”) with M&T Realty Capital Corporation (“MTRCC”) pursuant to which the Company has agreed to provide loan opportunities that may be funded through MTRCC’s Delegated Underwriting and Servicing Agreement (“DUS Agreement”) with the Federal National Mortgage Association (“Fannie Mae”) that requires MTRCC to guarantee a portion of each loan funded. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC through the DUS Agreement. The Company manages and limits the concentration of risk related to the guarantees assumed by monitoring the underlying property type, geographic location, credit of the borrowers, underlying debt service coverage, and loan to value ratios.

The Company derives its revenue from a broad range of real estate investors, owners, and users in the United States and Canada, none of which individually represents a significant concentration of credit risk. The Company maintains allowances, as needed, for estimated credit losses based on management’s assessment of the likelihood of collection. For the three and six months ended June 30, 2023 and 2022, no transaction represented 10% or more of total revenue. Further, while one or more transactions may represent 10% or more of commissions receivable at any reporting date, amounts due are typically collected within 10 days of settlement and, therefore, do not expose the Company to significant credit risk.

During the three and six months ended June 30, 2023, the Company’s Canadian operations represented 3.5% and 3.2% of total revenue, respectively. During both the three and six months ended June 30, 2022, the Company’s Canadian operations represented 2.2% of total revenue.

During each of the three and six months ended June 30, 2023 and 2022, no office represented 10% or more of total revenue.

Revenue Recognition

The Company generates real estate brokerage commissions by acting as a broker for real estate owners or investors seeking to buy or sell interests in commercial properties and generates financing fees from securing financing on purchase transactions, from refinancing its clients’ existing mortgage debt and other ancillary fees associated with financing activities, including, but not limited to, debt and equity advisory services, loan sales, due diligence services, guarantee fees, and loan performance fees.

Real Estate Brokerage Commissions

Contracts for representing buyers and sellers of real estate are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the close of escrow. At that time, the Company's performance is complete, and revenue is recorded.

Financing Fees

Contracts for representing potential borrowers are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with an exception for guarantee obligations, do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the loan closes.

Loan Performance Fees - For loans originated through the Strategic Alliance with MTRCC, the Company receives variable consideration in the form of loan performance fees based on a portion of the servicing fees expected to be received under the servicing contract for servicing the loan. As the Company is not obligated to perform any servicing functions and has no further obligations related to the transaction giving rise to the loan performance fees, the estimated value of the loan performance fees to be received is recorded at the time the loan closes and are collected over the estimated term of the related loan. Any changes in the estimate of loan performance fees to be received are recorded in revenue in the period the estimate changes.

10

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Guarantee Obligations - For certain loans originated through the Strategic Alliance with MTRCC, the Company may agree, at its option, to indemnify MTRCC for a portion of MTRCC’s obligations for loans sold to Fannie Mae. For these loans, the Company allocates a portion of the transaction price and records a loan guarantee obligation based on its fair value. Revenue for this stand-ready obligation is recorded on a straight-line basis over the term of the estimated guarantee period and is recorded in financing fees in the condensed consolidated statements of operations. The guarantee obligation is capped at 16.7% of any unpaid principal balance in excess of the collateral securing such loan. For these loans, the Company is required to pledge cash in a restricted bank account in support of the guarantee obligation. The Company records an allowance for estimated losses related to the loans subject to the guarantee considering the risk characteristics of the loan, the loan's risk rating, historical loss experience, potential adverse situations affecting individual loans and other forecasted information as appropriate.

Mortgage Servicing - The Company recognized mortgage servicing revenue upon the acquisition of a servicing contract. The Company recorded servicing fees when earned, provided the loans were current and the debt service payments were made by the borrowers. As of September 30, 2022, the Company no longer owns any mortgage servicing rights.

Other Revenue

Other revenue includes fees generated from consulting and advisory services and fees are recognized when services are provided, or upon closing of the transaction.

2.    Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Computer software and hardware equipment	$	46,995	$	42,617
Furniture, fixtures and equipment	26,964		26,453
Less: accumulated depreciation and amortization	(45,497)		(41,426)
	$	28,462	$	27,644

Depreciation expense for property and equipment was $2.3 million and $1.8 million for the three months ended June 30, 2023 and 2022, respectively, and $4.3 million and $3.7 million for the six months ended June 30, 2023 and 2022 , respectively.

11

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3.    Investments in Marketable Debt Securities, Available-for-Sale

Amortized cost, allowance for credit losses, gross unrealized gains (losses) in accumulated other comprehensive (loss) income and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):

	June 30, 2023
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	65,984	$	—	$	—	$	(489)	$	65,495
Corporate debt	99,487		—		1		(127)		99,361
	$	165,471	$	—	$	1	$	(616)	$	164,856
Long-term investments:
U.S. treasuries	$	18,115	$	—	$	—	$	(706)	$	17,409
U.S. government sponsored entities	574		—		—		(64)		510
Corporate debt	44,923		—		6		(2,679)		42,250
Asset-backed securities (“ABS”) and other	11,146		—		—		(604)		10,542
	$	74,758	$	—	$	6	$	(4,053)	$	70,711

	December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	135,688	$	—	$	14	$	(1,153)	$	134,549
Corporate debt	118,135		—		1		(95)		118,041
ABS and other	859		—		—		(15)		$	844
	$	254,682	$	—	$	15	$	(1,263)	$	253,434
Long-term investments:
U.S. treasuries	$	21,434	$	—	$	—	$	(719)	$	20,715
U.S. government sponsored entities	602		—		—		(66)		536
Corporate debt	44,214		—		21		(2,877)		41,358
ABS and other	6,569		—		—		(583)		5,986
	$	72,819	$	—	$	21	$	(4,245)	$	68,595

12

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company’s investments in marketable debt securities, available-for-sale, that have been in a continuous unrealized loss position, for which an allowance for credit losses has not been recorded, by type of security consisted of the following (in thousands):

	June 30, 2023
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	42,767	$	(139)	$	39,930	$	(1,056)	$	82,697	$	(1,195)
U.S. government sponsored entities	—		—		509		(64)		509		(64)
Corporate debt	107,067		(564)		25,047		(2,242)		132,114		(2,806)
ABS and other	4,623		(83)		5,887		(521)		10,510		(604)
	$	154,457	$	(786)	$	71,373	$	(3,883)	$	225,830	$	(4,669)

	December 31, 2022
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	73,055	$	(1,232)	$	66,144	$	(640)	$	139,199	$	(1,872)
U.S. government sponsored entities	447		(46)		87		(20)		534		(66)
Corporate debt	130,816		(1,909)		10,681		(1,063)		141,497		(2,972)
ABS and other	4,710		(314)		2,091		(284)		6,801		(598)
	$	209,028	$	(3,501)	$	79,003	$	(2,007)	$	288,031	$	(5,508)

Gross realized gains and losses from the sales of the Company’s marketable debt securities, available-for-sale, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Gross realized gains (1)	$	—	$	1	$	—	$	114
Gross realized losses (1)	$	(23)	$	(17)	$	(23)	$	(17)

(1) Recorded in other income (expense), net in the condensed consolidated statements of operations. The cost basis of securities sold were determined based on the specific identification method.

The Company invests its excess cash in a diversified portfolio of fixed and variable rate debt securities to meet current and future cash flow needs. All investments are made in accordance with the Company’s approved investment policy. As of June 30, 2023, the portfolio had a weighted average credit rating of AA and a weighted term to contractual maturity of 1.7 years, with 226 securities in the portfolio representing an unrealized aggregate loss of $4.7 million, or 2% of amortized cost, and a weighted average credit rating of AA.

As of June 30, 2023, the Company performed an impairment analysis and determined an allowance for credit losses was not required. The Company determined that it did not have an intent to sell and it was not more likely than not that the Company would be required to sell any security based on its current liquidity position, or to maintain compliance with its investment policy, specifically as it relates to minimum credit ratings. The Company evaluated the securities with an unrealized loss considering severity of loss, credit ratings, specific credit events during the period since acquisition, overall likelihood of default, market sector, potential impact from the current economic environment, including interest rates, geopolitical unrest and a review of an issuer’s and securities’ liquidity and financial strength, as needed. The Company concluded that it would receive all scheduled interest and principal payments. The Company, therefore, determined

13

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

qualitatively that the unrealized loss was related to changes in interest rates and other market factors and therefore no allowance for credit losses was required.

Amortized cost and fair value of marketable debt securities, available-for-sale, by contractual maturity consisted of the following (in thousands, except weighted average data):

	June 30, 2023				December 31, 2022
	Amortized  Cost		Fair Value		Amortized  Cost		Fair Value
Due in one year or less	$	165,471	$	164,856	$	254,683	$	253,434
Due after one year through five years	55,898		53,492		56,507		54,169
Due after five years through ten years	14,560		13,210		13,435		11,850
Due after ten years	4,300		4,009		2,876		2,576
	$	240,229	$	235,567	$	327,501	$	322,029
Weighted average contractual maturity			1.7 years				1.1 years

Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.

4.    Acquisitions, Goodwill and Other Intangible Assets

Goodwill is recorded as part of the Company’s acquisitions and primarily arose from the acquired assembled workforce and brokerage and financing sales platforms. The Company expects all of the goodwill to be tax deductible, with the tax-deductible amount of goodwill related to the contingent and deferred consideration to be determined once the cash payments are made to settle any contingent and deferred consideration. The goodwill resulting from acquisitions is allocated to the Company’s one reporting unit.

Goodwill and intangible assets, net consisted of the following (in thousands):

	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill and intangible assets:
Goodwill	$	38,047	$	—	$	38,047	$	37,914	$	—	$	37,914
Intangible assets (1)	32,420		(16,942)		15,478		32,287		(14,505)		17,782
	$	70,467	$	(16,942)	$	53,525	$	70,201	$	(14,505)	$	55,696

(1) Total weighted average amortization period was 4.2 years and 4.5 years as of June 30, 2023 and December 31, 2022, respectively. Intangible assets principally include non-competes and customer relationships.

The Company recorded amortization expense for intangible assets of $1.1 million for both the three months ended June 30, 2023 and 2022 and $2.3 million for both the six months ended June 30, 2023 and 2022.

14

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The changes in the carrying amount of goodwill consisted of the following (in thousands):

	Six Months Ended June 30, 2023
Beginning balance	$	37,914
Additions from acquisitions	—
Impact of foreign currency translation	133
Ending balance	$	38,047

Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):

	June 30, 2023
Remainder of 2023	$	2,275
2024	4,101
2025	3,880
2026	2,156
2027	1,855
Thereafter	1,211
	$	15,478

The Company evaluates goodwill for impairment annually in the fourth quarter. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing, which indicate that it is more likely than not an impairment loss has occurred. The Company evaluates its intangible assets that have finite useful lives whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable.

As of June 30, 2023, the Company considered the impact of economic conditions and evaluated its goodwill and intangible assets for impairment testing. The Company estimated the recoverability of the intangible assets by comparing the carrying amount of each asset to the future undiscounted cash flows that the Company expects the asset to generate. The sum of the undiscounted expected future cash flows was greater than the carrying amount of the intangible assets. The Company concluded that as of June 30, 2023, there was no impairment of its intangible assets or goodwill.

5.    Selected Balance Sheet Data

Allowances on Advances and Loans

Allowance for credit losses for advances and loans as of June 30, 2023 and December 31, 2022 was $578,000 and $791,000, respectively.

15

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Assets

Other assets consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Security deposits	$	—	$	—	$	1,500	$	1,625
Employee notes receivable	52		6		38		—
Securities, held-to-maturity(1)	—		—		9,500		9,500
Loan performance fee receivable	1,261		766		6,565		4,261
Other(2)	4,537		6,510		489		473
	$	5,850	$	7,282	$	18,092	$	15,859

(1)Securities, held-to-maturity, are expected to mature on September 1, 2024 and accrue interest based on the 1-year treasury rate.

(2)Other primarily includes customer trust accounts and prepaid lease costs.

Deferred Compensation and Commissions

Deferred compensation and commissions consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Stock appreciation rights (“SARs”) liability (1)	$	2,480	$	2,323	$	11,037	$	13,137
Commissions payable to investment sales and financing professionals	40,196		72,247		22,647		45,156
Deferred compensation liability (1)	471		493		7,615		6,168
Other	204		258		—		—
	$	43,351	$	75,321	$	41,299	$	64,461

(1) The SARs and deferred compensation liabilities become subject to payout at the time the participant is no longer considered a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to participants within the next twelve months have been classified as current.

SARs Liability

Prior to the IPO, certain employees of the Company were granted SARs under a stock-based compensation program assumed by MMC. In connection with the IPO, the SARs agreements were revised, the MMC liability of $20.0 million for the SARs was frozen as of March 31, 2013 and was transferred to MMI through a capital distribution. The SARs liability will be settled with each participant in ten annual installments in January of each year upon retirement or termination from service, or in full upon consummation of a change in control of the Company.

Under the revised agreements, MMI is required to accrue interest on the outstanding balance beginning on January 1, 2014, at a rate based on the 10-year treasury note, plus 2%. The rate resets annually. The rates at January 1, 2023 and 2022 were 5.79% and 3.63%, respectively. MMI recorded interest expense related to this liability of $190,000 and $136,000 for the three months ended June 30, 2023 and 2022, respectively, and $380,000 and $271,000 for the six months ended June 30, 2023 and 2022, respectively.

Estimated payouts within the next twelve months for participants that have separated from service have been classified as current. During the six months ended June 30, 2023 and 2022, the Company made total payments of $2.3 million and $2.2 million, respectively, consisting of principal and accumulated interest.

16

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Commissions Payable

Certain investment sales and financing professionals can earn additional commissions after meeting certain annual revenue thresholds. These commissions are recognized as cost of services in the period in which they are earned as they relate to specific transactions closed. The Company may defer payment of certain commissions, at its election, for up to three years. Commissions that are not expected to be paid within twelve months are classified as long-term.

Deferred Compensation Liability

A select group of management is eligible to participate in the Marcus & Millichap Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a non-qualified deferred compensation plan that is intended to comply with Section 409A of the Internal Revenue Code and permits participants to defer compensation up to the limits set forth in the Deferred Compensation Plan. Amounts are paid out generally when the participant is no longer a service provider; however, an in-service payout election is available to participants. Participants may elect to receive payouts as a lump sum or quarterly over a two to fifteen-year period. The Company elected to fund the Deferred Compensation Plan through Company-owned variable life insurance policies. The Deferred Compensation Plan is managed by a third-party institutional fund manager, and the deferred compensation and investment earnings are held as a Company asset in a rabbi trust, which is recorded in assets held in rabbi trust in the accompanying condensed consolidated balance sheets. The assets in the trust are restricted unless the Company becomes insolvent, in which case the trust assets are subject to the claims of the Company’s creditors. The Company may also, in its sole and absolute discretion, elect to withdraw at any time a portion of the trust assets by an amount by which the fair market value of the trust assets exceeds 110% of the aggregate deferred compensation liability represented by the participants’ accounts. Estimated payouts within the next twelve months for participants that have separated from service or elected an in-service payout have been classified as current. During the six months ended June 30, 2023 and 2022, the Company made total payments to participants of $163,000 and $625,000 respectively.

The assets held in the rabbi trust are carried at the cash surrender value of the variable life insurance policies, which represents its fair value. The net change in the carrying value of the assets held in the rabbi trust and the net change in the carrying value of the deferred compensation liability, each exclusive of additional contributions, distributions and trust expenses, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Increase (decrease) in the carrying value of the assets held in the rabbi trust (1)	$	472	$	(1,259)	$	930	$	(1,784)
(Increase) decrease in the net carrying value of the deferred compensation obligation (2)	$	(452)	$	1,259	$	(885)	$	1,791

(1)Recorded in other income (expense), net in the condensed consolidated statements of operations.

(2)Recorded in selling, general and administrative expense in the condensed consolidated statements of operations.

17

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Liabilities

Other liabilities consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Deferred consideration	$	1,294	$	3,633	$	724	$	1,486
Contingent consideration	1,513		1,726		5,005		5,341
Dividends payable	645		612		1,528		1,603
Stock repurchase payable	—		565		—		—
Loan guarantee obligation	537		2,040		2,696		—
Other	910		1,357		566		184
	$	4,899	$	9,933	$	10,519	$	8,614

6.    Related-Party Transactions

Shared and Transition Services

Certain services are provided to the Company under a Transition Services Agreement (“TSA”) between MMC and the Company. The TSA is intended to provide certain services until the Company acquires these services separately. Under the TSA, the Company earned net charge-backs during the three months ended June 30, 2023 and 2022 of $19,000 and $7,000, respectively, and during the six months ended June 30, 2023 and 2022 of $44,000 and $18,000, respectively. These amounts are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations.

Brokerage and Financing Services with the Subsidiaries of MMC

MMC has wholly or majority owned subsidiaries that buy and sell commercial real estate properties. The Company performs certain brokerage and financing services related to transactions of the subsidiaries of MMC. For the three months ended June 30, 2023 and 2022, the Company earned real estate brokerage commissions and financing fees of $0 and $912,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $0 and $547,000, respectively, related to this revenue. For the six months ended June 30, 2023 and 2022, the Company earned real estate brokerage commissions and financing fees of $441,000 and $2,510,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $264,000 and $1,501,000, respectively, related to this revenue.

Operating Lease with MMC

The Company extended its operating lease with MMC for a single-story office building located in Palo Alto, California, which expires in May 2032. The related operating lease cost was $295,000 and $320,000 for the three months ended June 30, 2023 and 2022, respectively, and $592,000 and $653,000 for the six months ended June 30, 2023 and 2022, respectively. Operating lease cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. The related operating lease right-of-use asset, net and operating lease liability as of June 30, 2023 was $8,115,000 and $8,442,000, respectively and as of December 31, 2022 was $9,041,000 and $9,262,000, respectively.

Amounts due to (from) MMC

As of June 30, 2023 and December 31, 2022, the Company recorded a receivable of $3,000 and a payable of $79,000 with MMC, respectively. These amounts are included in other assets, current and accounts payable and accrued expenses, respectively, in the accompanying condensed consolidated balance sheets.

18

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other

The Company makes advances to non-executive employees from time-to-time. At June 30, 2023 and December 31, 2022, the aggregate principal amount for employee notes receivable was $90,000 and $6,000, respectively, which is included in other assets in the accompanying condensed consolidated balance sheets. See Note 5 - "Selected Balance Sheet Data".

As of June 30, 2023, George M. Marcus, the Company’s founder and Chairman, beneficially owned approximately 39% of the Company’s issued and outstanding common stock, including shares owned by Phoenix Investments Holdings, LLC and the Marcus Family Foundation II.

7.    Fair Value Measurements

U.S. GAAP defines the fair value of a financial instrument as the amount that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date. The Company is responsible for the determination of fair value and the supporting methodologies and assumptions. The Company uses various pricing sources and third parties to provide and validate the values utilized.

The degree of judgment used in measuring the fair value of financial instruments is generally inversely correlated with the level of observable valuation inputs. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment.

Assets recorded at fair value are measured and classified in accordance with a fair value hierarchy consisting of the three “levels” based on the observability of inputs available in the marketplace used to measure the fair values as discussed below:

•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

•Level 3: Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Recurring Fair Value Measurements

The Company values its investments including commercial paper and floating net asset value money market funds recorded in cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, assets held in the rabbi trust, deferred compensation liability and contingent and deferred consideration at fair value on a recurring basis.

Fair values for investments included in cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale were determined for each individual security in the investment portfolio and all securities are Level 1 or 2 measurements as appropriate.

Fair values for assets held in the rabbi trust and related deferred compensation liability were determined based on the cash surrender value of the Company-owned variable life insurance policies and underlying investments in the trust, and are Level 2 and Level 1 measurements, respectively.

Contingent consideration in connection with acquisitions, is carried at fair value and determined on a contract-by-contract basis, calculated using unobservable inputs based on a probability of achieving EBITDA and other performance requirements, and is a Level 3 measurement. Deferred consideration in connection with acquisitions is carried at fair value

19

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time, and is a Level 2 measurement.

Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):

	June 30, 2023								December 31, 2022
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets:
Assets held in rabbi trust	$	10,365	$	—	$	10,365	$	—	$	9,553	$	—	$	9,553	$	—
Cash equivalents (1):
Commercial paper	$	50,191	$	—	$	50,191	$	—	$	41,324	$	—	$	41,324	$	—
Money market funds	81,411		81,411		—		—		139,025		139,025		—		—
	$	131,602	$	81,411	$	50,191	$	—	$	180,349	$	139,025	$	41,324	$	—
Marketable debt securities, available-for-sale:
Short-term investments:
U.S. treasuries	$	65,495	$	65,495	$	—	$	—	$	134,549	$	134,549	$	—	$	—
Corporate debt	99,361		—		99,361		—		118,041		—		118,041		—
ABS and other	—		—		—		—		844		—		844		—
	$	164,856	$	65,495	$	99,361	$	—	$	253,434	$	134,549	$	118,885	$	—
Long-term investments:
U.S. treasuries	$	17,409	$	17,409	$	—	$	—	$	20,715	$	20,715	$	—	$	—
U.S. government sponsored entities	510		—		510		—		536		—		536		—
Corporate debt	42,250		—		42,250		—		41,358		—		41,358		—
ABS and other	10,542		—		10,542		—		5,986		—		5,986		—
	$	70,711	$	17,409	$	53,302	$	—	$	68,595	$	20,715	$	47,880	$	—
Liabilities:
Contingent consideration	$	6,518	$	—	$	—	$	6,518	$	7,067	$	—	$	—	$	7,067
Deferred consideration	$	2,018	$	—	$	2,018	$	—	$	5,119	$	—	$	5,119	$	—
Deferred compensation liability	$	8,086	$	8,086	$	—	$	—	$	6,661	$	6,661	$	—	$	—

(1) Included in cash, cash equivalents, and restricted cash on the accompanying condensed consolidated balance sheets.

There were no transfers in or out of Level 3 during the six months ended June 30, 2023 and 2022.

During the six months ended June 30, 2023, the Company considered current and future interest rates and the probability of achieving EBITDA and other performance targets in its determination of fair value for the contingent consideration. The Company is uncertain as to the extent of the volatility in the unobservable inputs in the foreseeable future. Deferred consideration in connection with acquisitions is carried at fair value and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time.

As of June 30, 2023 and December 31, 2022, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $17.3 million and $21.3 million, respectively. Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these payments will be made over the next one to four-year period. Changes in fair value are included in selling, general and administrative expense in the condensed consolidated statements of operations.

20

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):

	Six Months Ended June 30,
	2023		2022
Beginning balance	$	7,067	$	9,312
Contingent consideration in connection with acquisitions	—		—
Change in fair value of contingent consideration(1)	511		(493)
Payments of contingent consideration	(1,060)		(1,040)
Ending balance	$	6,518	$	7,779

(1) Includes immaterial impact of foreign currency translation.

Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):

	Fair Value at June 30, 2023		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	6,518	Discounted cash flow	Expected life of cash flows	0.1-4.3 years	(2.2 years)
				Discount rate	6.2%-7.3%	(6.8%)
				Probability of achievement	0.0%-100.0%	(94.8%)
	Fair Value at December 31, 2022		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	7,067	Discounted cash flow	Expected life of cash flows	0.4-4.8 years	(2.7 years)
				Discount rate	6.0%-7.0%	(6.5)%
				Probability of achievement	0.0%-100.0%	(95.4)%

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

Nonrecurring Fair Value Measurements

In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of intangibles, goodwill and other assets for indications of impairment at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.

8.    Stockholders’ Equity

Common Stock

As of June 30, 2023 and December 31, 2022, there were 38,460,595 and 39,255,838 shares of common stock, $0.0001 par value, issued and outstanding, which included unvested restricted stock awards (“RSAs”) issued to non-employee directors, respectively. See Note 11 – “(Loss) Earnings per Share” for additional information.

On August 1, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, payable on October 6, 2023, to stockholders of record at the close of business on September 15, 2023.

21

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of June 30, 2023, $2.2 million of dividend equivalents related to unvested stock awards are recorded in other liabilities in the condensed consolidated balance sheets. See Note 5 – “Selected Balance Sheet Data.”

Preferred Stock

The Company has 25,000,000 authorized shares of preferred stock with a par value $0.0001 per share. At June 30, 2023 and December 31, 2022, there were no preferred shares issued or outstanding.

Accumulated Other Comprehensive (Loss) Income

Amounts reclassified from accumulated other comprehensive (loss) income are included as a component of other income (expense), net or selling, general and administrative expense, as applicable, in the condensed consolidated statements of operations. The reclassifications were determined on a specific identification basis.

The Company has not provided for U.S. taxes on unremitted earnings of its foreign subsidiary as it is operating at a loss and has no earnings and profits to remit. As a result, deferred taxes were not provided related to the cumulative foreign currency translation adjustments.

Repurchases of Common Stock

On August 2, 2022, the Company's Board of Directors authorized a common stock repurchase program of up to $70 million. On May 2, 2023, the Company's Board of Directors approved an additional $70 million to repurchase common stock under its stock repurchase program. During the six months ended June 30, 2023, the Company repurchased and retired 1,098,561 shares of common stock for $34.4 million, at an average cost of $31.28 per share. As of June 30, 2023, $76.0 million remained authorized for repurchases under the stock repurchase program.

9.    Stock-Based Compensation Plans

2013 Omnibus Equity Incentive Plan

The Company’s Board of Directors adopted the 2013 Omnibus Equity Incentive Plan (the “2013 Plan”), which became effective upon the Company’s IPO. In February 2017, the Board of Directors amended and restated the 2013 Plan, which was approved by the Company’s stockholders in May 2017. Grants are made from time to time by the compensation committee of the Company’s Board of Directors at its discretion, subject to certain restrictions as to the number and value of shares that may be granted to any individual. In addition, non-employee directors receive annual grants under a director compensation policy. The compensation committee of the Company’s Board of Directors has the option to grant dividend equivalents to unvested grants. Any dividend equivalents granted to unvested awards are paid to the participant at the time the related grants vest. As of June 30, 2023, there were 3,401,886 shares available for future grants under the 2013 Plan.

On August 1, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, with a payment date of October 6, 2023, to stockholders of record at the close of business on September 15, 2023. The Compensation Committee granted dividend equivalents to all unvested grants as of the record date.

As of June 30, 2023, $2.2 million of dividend equivalents remains to be paid upon vesting of stock awards.

Awards Granted and Settled

Under the 2013 Plan, the Company has issued RSAs to non-employee directors and restricted stock units (“RSUs”) to employees and independent contractors. RSAs vest over a one-year period from the date of grant, subject to service requirements. RSUs generally vest in equal annual installments over a five-year period from the date of grant or earlier as approved by the compensation committee of the Company’s Board of Directors. Dividend equivalents granted for unvested stock awards are paid at the time the stock awards vest. Any unvested awards and dividend equivalents are canceled upon termination as a service provider. As of June 30, 2023, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.

22

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the six months ended June 30, 2023, 349,290 shares of RSUs and RSAs vested, with 125,319 shares of common stock withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the vesting date. The shares withheld for taxes were returned to the share reserve and are available for future issuance in accordance with provisions of the 2013 Plan. Unvested RSUs will be settled through the issuance of new shares of common stock.

Outstanding Awards

Activity under the 2013 Plan consisted of the following (dollars in thousands, except weighted average per share data):

	Shares	Weighted- Average Grant Date Fair Value Per Share
Nonvested shares at December 31, 2022⁽¹⁾	1,741,461	$	42.14
Granted	556,260	34.09
Vested	(349,290)	42.10
Forfeited/canceled	(10,347)	40.90
Nonvested shares at June 30, 2023⁽¹⁾	1,938,084	$	39.85

(1) Nonvested RSUs will be settled through the issuance of new shares of common stock.

As of June 30, 2023, the Company had unrecognized stock-based compensation relating to RSUs and RSAs of approximately $68.2 million, which is expected to be recognized over a weighted-average period of 3.69 years.

Employee Stock Purchase Plan

In 2013, the Company adopted the 2013 Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to qualify under Section 423 of the Internal Revenue Code and provides for consecutive, non-overlapping six-month offering periods. The offering periods generally start on the first trading day on or after May 15 and November 15 of each year. Qualifying employees may purchase shares of the Company stock at a 10% discount based on the lower of the market price at the beginning or end of the offering period, subject to IRS limitations. The Company determined that the ESPP was a compensatory plan and is required to expense the fair value of the awards over each six-month offering period.

The ESPP initially had 366,667 shares of common stock reserved, and 121,615 shares of common stock remain available for issuance as of June 30, 2023. The ESPP provides for annual increases in the number of shares available for issuance under the ESPP, equal to the lesser of (i) 366,667 shares, (ii) 1% of the outstanding shares on such date, or (iii) an amount determined by the compensation committee of the Board of Directors. Pursuant to the provisions of the ESPP, the Board of Directors has determined to not provide for any annual increases to date. As of June 30, 2023, total unrecognized compensation cost related to the ESPP was $65,000 and is expected to be recognized over a weighted average period of 0.38 years.

SARs and DSUs

Prior to the IPO, certain employees were granted SARs. As of March 31, 2013, the outstanding SARs were frozen at the liability amount, and will be paid out to each participant in installments upon retirement or departure under the terms of the revised SARs agreements. To replace beneficial ownership in the SARs, the difference between the book value liability and the fair value of the awards was granted to plan participants in the form of deferred stock units (“DSUs”), which were fully vested upon receipt and will be settled in actual stock at a rate of 20% per year if the participant remains employed by the Company during that period (otherwise all unsettled shares of stock upon termination from service will be settled five years from the termination date, unless otherwise agreed to by the Company). In the event of death or termination of service after reaching the age of 67, 100% of the DSUs will be settled. As of December 31, 2022, all DSUs were settled.

23

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Summary of Stock-Based Compensation

Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of operations and consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
ESPP	$	28	$	29	$	83	$	85
RSUs and RSAs	5,323		4,246		10,279		8,046
	$	5,351	$	4,275	$	10,362	$	8,131

10.    Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2023 was (45.5)% and 16.6%, respectively, compared to 24.9% and 25.5% for the three and six months ended June 30, 2022, respectively. The Company provides for the effects of income taxes in interim financial statements based on the Company’s estimate of its annual effective tax rate for the full year, which is based on forecasted income by jurisdiction where the Company operates, adjusted for any tax effects of items that relate discretely to the period, if any.

The provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (dollars in thousands):

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
Income tax (benefit) expense at the federal statutory rate	$	(1,260)	21.0	%	$	11,786	21.0	%	$	(3,668)	21.0	%	$	21,139	21.0	%
State income tax expense (benefit), net of federal benefit	315		(5.3)	%	2,389		4.3	%	(424)		2.4	%	4,422		4.4	%
(Windfall) shortfall tax benefits, net related to stock-based compensation	119		(2.0)	%	(1,758)		(3.1)	%	773		(4.4)	%	(2,064)		(2.1)	%
Change in valuation allowance	17		(0.3)	%	23		0.0	%	244		(1.4)	%	(81)		(0.1)	%
Permanent and other items (1)	3,537		(58.9)	%	1,515		2.7	%	170		(1.0)	%	2,296		2.3	%
	$	2,728	(45.5)	%	$	13,955	24.9	%	$	(2,905)	16.6	%	$	25,712	25.5	%

(1) Permanent items relate principally to compensation charges, qualified transportation fringe benefits, meals and entertainment, and other items principally related to the effect of providing taxes in the interim financial statements based on the estimated full year effective tax rate.

24

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

11.    (Loss) Earnings per Share

Basic and diluted (loss) earnings per share for the three and six months ended June 30, 2023 and 2022, respectively consisted of the following (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator (Basic and Diluted):
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
Change in value for stock settled consideration(3)	13		(24)		37		(38)
Adjusted net (loss) income	$	(8,716)	$	42,144	$	(14,525)	$	74,913
Denominator:
Basic
Weighted average common shares issued and outstanding	38,553		39,936		38,880		39,829
Deduct: Unvested RSAs (1)	(15)		(12)		(13)		(13)
Add: Fully vested DSUs (2)	—		124		—		202
Weighted average common shares outstanding	38,538		40,048		38,867		40,018
Basic (loss) earnings per common share	$	(0.23)	$	1.05	$	(0.37)	$	1.87
Diluted
Weighted average common shares outstanding from above	38,538		40,048		38,867		40,018
Add: Dilutive effect of RSUs, RSAs & ESPP(5)	—		213		—		291
Add: Contingently issuable shares(3)(5)	—		81		—		81
Weighted average common shares outstanding	38,538		40,342		38,867		40,390
Diluted (loss) earnings per common share	$	(0.23)	$	1.04	$	(0.37)	$	1.85
Antidilutive shares excluded from diluted earnings per common share(4)	1,887		843		1,781		843

(1)RSAs were issued and outstanding to the non-employee directors and have a one-year vesting term subject to service requirements. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(2)Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(3)Relates to contingently issuable stock settled consideration.

(4)Primarily pertaining to RSU grants to the Company’s employees and independent contractors.

(5)Shares related to the Company's RSUs, RSAs, ESPP, and contingently issuable shares were excluded from the weighted average common shares outstanding for the three and six months ended June 30, 2023 because inclusion of such shares would be antidilutive in a period of loss.

12.    Commitments and Contingencies

Credit Agreement

On June 18, 2014, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”). On May 31, 2022, the Company executed an amended and restated Credit Agreement (the “First Amended and Restated Credit Agreement”) to extend the maturity date of the Credit Agreement on substantially the same terms and conditions as the original credit facility. The First Amended and Restated Credit Agreement provided for a $60.0 million principal amount senior secured revolving credit facility that was guaranteed by all of the Company’s domestic subsidiaries (the “Credit Facility”), which was scheduled to mature on August 1, 2022. On July 28, 2022, the Company entered into the Second Amended and Restated Credit Agreement, which provides for a three-year extension of its Credit Facility with Wells Fargo Bank, National Association on principally the same terms and conditions as the extension signed in May 2022. The new agreement matures on June 1, 2025.

25

MARCUS & MILLICHAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Company may borrow, repay and reborrow amounts under the Credit Facility until its maturity date, at which time all amounts outstanding under the Credit Facility must be repaid in full. Borrowings under the Credit Agreement are available for general corporate purposes and working capital. The Credit Facility includes a $10.0 million sublimit for the issuance of standby letters of credit of which $533,000 was utilized at June 30, 2023. Borrowings under the Credit Facility will bear interest at the Daily Simple SOFR rate plus a spread of between 1.00% to 1.25% depending on the Company’s total funded debt to EBITDA as defined in the Credit Agreement. In connection with the amendments of the Credit Agreement, the Company paid bank fees and other expenses, which are being amortized over the remaining term of the Credit Agreement. The Company pays a commitment fee of up to 0.1% per annum, payable quarterly, based on the amount of unutilized commitments under the Credit Facility. The amortization and commitment fee is included in the interest expense in the accompanying condensed consolidated statements of operations and was $26,000 and $22,000 for the three months ended June 30, 2023 and 2022, respectively, and $51,000 and $47,000 during the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, there were no amounts outstanding under the Credit Agreement.

The Credit Facility contains customary covenants, including financial and other covenant reporting requirements and events of default. Financial covenants require the Company, on a combined basis with its guarantors, to maintain (i) an EBITDAR Coverage Ratio (as defined in the Credit Agreement) of not less than 1.25:1.0 as of each quarter end, determined on a rolling four-quarter basis, and (ii) total funded debt to EBITDA not greater than 2.0:1.0 as of each quarter end, determined on a rolling four-quarter basis, and also limits investments in foreign entities and certain other loans. The Credit Facility is secured by substantially all assets of the Company, including pledges of 100% of the stock or other equity interest of each subsidiary except for the capital stock of a controlled foreign corporation (as defined in the Internal Revenue Code), in which case no such pledge is required. As of June 30, 2023, the Company was in compliance with all financial and non-financial covenants and has not experienced any limitation in its operations as a result of the covenants. Our ability to borrow under our Credit Facility is limited by our ability to comply with its covenants or obtain necessary waivers.

Strategic Alliance

The Company, in connection with the Strategic Alliance with MTRCC, has agreed to provide loan opportunities that may be funded through MTRCC’s DUS agreement with Fannie Mae. MTRCC's agreement with Fannie Mae requires MTRCC to guarantee a portion of each funded loan. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC. As of June 30, 2023, the Company has agreed to a maximum aggregate guarantee obligation of $114.7 million relating to loans with an unpaid balance of $688.1 million. The Company would be liable for its maximum aggregate guarantee obligation only if all of the loans for which it is providing a guarantee to MTRCC were to default and all of the collateral underlying these loans were determined to be without value at the time of settlement. As of June 30, 2023 and December 31, 2022, the Company has recorded an allowance for loss-sharing obligations of $656,000 and $275,000, respectively, and pledged $102,000 and $16,000, respectively, in a restricted bank account in support of the guarantee obligation.

Other

In connection with certain agreements with investment sales and financing professionals, the Company may agree to advance amounts to such professionals upon reaching certain time and performance goals. Such commitments as of June 30, 2023 aggregated $10.0 million.

13.    Subsequent Events

On August 1, 2023, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, payable on October 6, 2023, to stockholders of record at the close of business on September 15, 2023.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context requires otherwise, the words “Marcus & Millichap,” “MMI,” “we,” the “Company,” “us” and “our” refer to Marcus & Millichap, Inc., and its consolidated subsidiaries.

Forward-Looking Statements

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to further interest rate changes, rising inflation, and geopolitical unrest. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Form 10-Q and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023, including the “Risk Factors” section and the consolidated financial statements and notes included therein.

Overview

We are a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. We have been the top commercial real estate investment broker in the United States based on the number of investment transactions for more than 16 years. As of June 30, 2023, we had 1,865 investment sales and financing professionals that are primarily exclusive independent contractors operating in 80 offices, who provide real estate brokerage and financing services to sellers and buyers of commercial real estate assets. During the three and six months ended June 30, 2023, we closed 1,946 and 3,753 investment sales, financing and other transactions with total sales volume of approximately $9.7 billion and $20.2 billion, respectively. During the year ended December 31, 2022, we closed 12,272 investment sales, financing and other transactions with total sales volume of approximately $86.3 billion.

We generate revenue by collecting real estate brokerage commissions upon the sale, and fees upon the financing, of commercial properties, and by providing equity advisory services, loan sales, loan guarantees and consulting and advisory services. Real estate brokerage commissions are typically based upon the value of the property and financing fees are typically based upon the size of the loan. During the three months ended June 30, 2023, approximately 86% of our revenue was generated from real estate brokerage commissions, 11% from financing fees and 3% from other real estate related services.

We divide commercial real estate into four major market segments, characterized by price:

• Properties priced less than $1 million;

• Private client market: properties priced from $1 million to up to but less than $10 million;

• Middle market: properties priced from $10 million to up to but less than $20 million; and

• Larger transaction market: properties priced from $20 million and above.

We are the industry leader in serving private clients in the $1-$10 million private client market segment, which contributed approximately 69% and 59% of our real estate brokerage commissions during the three months ended June 30, 2023 and 2022, respectively, and approximately 68% and 58% of our real estate brokerage commissions during the six months ended June 30, 2023 and 2022, respectively. The following tables set forth the number of transactions, sales volume and revenue by commercial real estate market segment for real estate brokerage:

27

	Three Months Ended June 30,
	2023					2022					Change
Real Estate Brokerage	Number	Volume		Revenue		Number	Volume		Revenue		Number	Volume		Revenue
		(in millions)		(in thousands)			(in millions)		(in thousands)			(in millions)		(in thousands)
<$1 million	209	$	120	$	4,665	279	$	168	$	6,672	(70)	$	(48)	$	(2,007)
Private Client Market ($1 – <$10 million)	1,070	3,571		96,238		2,021	7,348		209,868		(951)	(3,777)		(113,630)
Middle Market ($10 – <$20 million)	77	1,021		17,425		209	2,819		56,456		(132)	(1,798)		(39,031)
Larger Transaction Market (≥$20 million)	66	2,830		22,002		176	9,533		81,689		(110)	(6,703)		(59,687)
	1,422	$	7,542	$	140,330	2,685	$	19,868	$	354,685	(1,263)	$	(12,326)	$	(214,355)

	Six Months Ended June 30,
	2023					2022					Change
Real Estate Brokerage	Number	Volume		Revenue		Number	Volume		Revenue		Number	Volume		Revenue
		(in millions)		(in thousands)			(in millions)		(in thousands)			(in millions)		(in thousands)
<$1 million	392	$	236	$	9,703	485	$	296	$	12,459	(93)	$	(60)	$	(2,756)
Private Client Market ($1 – <$10 million)	2,040	6,825		186,741		3,627	13,044		370,899		(1,587)	(6,219)		(184,158)
Middle Market ($10 – <$20 million)	143	1,921		34,793		393	5,322		103,216		(250)	(3,401)		(68,423)
Larger Transaction Market (≥$20 million)	126	5,692		44,139		317	18,411		155,020		(191)	(12,719)		(110,881)
	2,701	$	14,674	$	275,376	4,822	$	37,073	$	641,594	(2,121)	$	(22,399)	$	(366,218)

Factors Affecting Our Business

Our business and our operating results, financial condition and liquidity are significantly affected by the number and size of commercial real estate investment sales and financing transactions that we close in any period. The number and size of these transactions are affected by our ability to recruit and retain investment sales and financing professionals, identify and contract properties for sale, and identify those that need financing and refinancing. We principally monitor the commercial real estate market through four factors, which generally drive our business. The factors are the economy, commercial real estate supply and demand, capital markets, and investor sentiment and investment activity.

The Economy

Our business is dependent on economic conditions within the markets in which we operate. Changes in the economy on a global, national, regional or local basis can have a positive or negative impact on our business. Economic indicators and projections related to job growth, unemployment, interest rates, retail spending and consumer confidence trends can have a positive or negative impact on our business. Overall market conditions, including global trade, interest rate changes, inflation, and job creation, can affect investor sentiment and, ultimately, the demand for our services from investors in real estate.

Economic uncertainty continues to weigh on the investor perspective. Although numerous key economic indicators such as job creation, the unemployment rate and GDP growth remain positive and most economists are now predicting a soft landing, recession risk remains a concern among investors. Inflation has eased, with the headline Consumer Price Index (CPI) falling to 3.0% and the forward looking Producer Price Index (PPI) falling to just 0.1%, but many measurements including the core Personal Consumption Expenditures Index (core PCE), which is monitored most closely by the Federal Reserve, still remain well above their target of 2.0%. Following the Federal Reserve's 25 basis points increase in July 2023, we believe the combination of slowing job creation, reduced wage pressure, easing inflation, tighter credit markets and more modest economic growth has the potential to curtail further Federal Reserve rate increases.

Various economic indicators continue to send mixed signals about the near-term economic outlook. The two best-known indicators of an ensuing recession remain in contradiction. The treasury rate yield curve inverted early in the fourth quarter last year, and short-term treasury rates remain higher than longer-term rates, signaling a possible downturn ahead.

28

However, the 3.6% unemployment rate has moved little, remaining near its 54-year low as of July 2023, indicating continued labor market strength. Other measures are mixed as well. The Institute for Supply Management (ISM) manufacturing index continues to point to contraction, while the ISM services index points to growth. Meanwhile, job creation, inflation-adjusted retail sales and other metrics have begun to flatten, suggesting the economic growth trajectory may be shifting into neutral. The inconsistency among indicators continues to confound economic forecasts for 2023, but the broad consensus is leaning toward a soft landing and a period of slow growth in late 2023, early 2024. The rising perception that the U.S. economy could avoid a recession has convinced an increasing number of commercial real estate investors to cautiously reengage the investment market, but the sector has yet to attain the critical mass needed to fully revive investment activity.

Commercial Real Estate Supply and Demand

Our business is dependent on the willingness of investors to invest in or sell commercial real estate, which is affected by many factors beyond our control. These factors include the supply of commercial real estate, coupled with user demand for these properties, and the performance of real estate assets, when compared with other investment alternatives, such as stocks and bonds.

Space demand for most commercial property types remained positive in the second quarter of 2023. Apartment absorption was reinvigorated by strengthening consumer sentiment and reduced fears of a recession, but the number of net new apartment leases fell short of the robust construction deliveries in the quarter, resulting in a 10 basis points rise of vacancy rates on a national level. Nonetheless, rent growth resumed in the second quarter, taking the national average effective rent to a record high. Retail space demand was also positive in the second quarter, slightly outpacing construction. As a result, retail vacancy rates remained flat for a third consecutive quarter at 4.6%, matching the record low set in 2018. Industrial space demand remained positive in the second quarter, but tapered relative to the first quarter in response to reduced retailer inventories and downshifted international trade. The robust pace of industrial space construction, on track to deliver a record 400 million square feet in 2023, resulted in an up-tick in industrial vacancy rates to 4.3%, up from the record low 3.6% rate achieved in the second quarter last year. Nonetheless, industrial rent growth remains elevated, achieving a 14.3% gain on a year-over-year basis.

Contrary to the positive momentum achieved by the other property types, office space demand has yet to stabilize. Hybrid and work-from-home business practices remain in place for most companies, but questions surrounding the long-term viability of these models remain. Some companies have reinvigorated their efforts to bring workers back to the office full time, while others appear content with more flexible practices. Thus far, no clear consensus has emerged, and long-term office space demand remains in question. The national average office vacancy rate continued to rise in the second quarter, reaching a 23 year record high of 17%. Suburban office space has outperformed the urban core while class B/C office space has a lower vacancy rate than class A office space. The broad-based uncertainty surrounding office space demand has been further complicated by dramatically tightened lending on office building assets, which has further restrained the limited office investor activity.

Although fundamentals for most property types remain positive, both lending and investor activity remain below the pre-pandemic norm. The expectation gap between buyers and sellers remains wide, though it is beginning to show preliminary signs of stabilization. Space demand will likely be strongly influenced in the second half of 2023 by Federal Reserve rate movements, consumer and business sentiment, and the prospects of a soft landing.

Capital Markets

Credit and liquidity issues in the financial markets have a direct impact on the flow of capital to the commercial real estate market. Real estate purchases are often financed with debt, and as a result, credit and liquidity impact transaction activity and prices. Movements of interest rates in one direction, whether increasing or decreasing, could adversely or positively affect the operations and income potential of commercial real estate properties, as well as lender and equity underwriting for real estate investments. These changes directly influence investor demand for commercial real estate investments. Furthermore, the use of debt or loan-to-value ratios can shift along with lender confidence and underwriting standards. At times of heightened uncertainty or liquidity issues, loan-to-values decline, requiring buyers to provide more equity and take more risk to close deals.

The capital markets remain at the heart of the commercial real estate transaction slowdown. The combination of sharply higher interest rates with tighter lender underwriting, reduced loan-to-value standards and a broad-based reduction in the volume of available debt capital have restrained market liquidity and forced investors to recalibrate their underwriting. This exacerbated the buyer/seller expectation gap and restrained trading in the first half of 2023.

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The rapid withdrawal of savings from Silicon Valley Bank in March and then First Republic Bank in May forced the shutdown of both banks, causing other banks to shore up their reserves. To mitigate their risk exposure to runs on the bank by depositors, banks have increased their reserves by 10% to $3.3 trillion. They accomplished this by reducing their lending, including their lending on commercial real estate properties, and increasing their emphasis on deposits.

Following the Federal Reserve’s 25 basis points rate increase in July 2023, Chairman Powell indicated that future rate decisions will be data-driven. While this is not a clear signal that the Federal Reserve will stop increasing rates, Wall Street has assigned a 61% likelihood that the overnight rate at the end of the year will be in the current range of 5.25% - 5.5%. The 10-year treasury rate has recently been range-bound in the upper 3% to low 4% range, with each periodic fluctuation requiring repricing and causing transaction delays. Although many lenders continue to maintain lending rate floors that have sustained a widened lender spread and higher interest rates for borrowers, if the Federal Reserve signals rate stability at its September meeting, lenders may begin to tighten their spreads thereby reducing rates, if only nominally. While debt capital remains available for most property types, the underwriting remains stringent, with tightened loan-to-value percentages that have forced investors to underwrite acquisitions with higher cap rates. An increasing number of property owners have begun to seek updated property valuations and more owners have begun to test the sales market, suggesting that activity may begin to revive, despite fewer property owners bringing assets to the market in the first half of the year.

The Federal Reserve’s rate decision in September could significantly impact the market. Should the Federal Reserve signal at least a temporary end to their rate increases, lenders may begin to rein in their spreads, thereby reducing mortgage rates. Investors may begin to underwrite assets more aggressively, potentially narrowing the buyer/seller expectation gap. However, if the Federal Reserve continues to signal an intention to raise rates further, many lenders and investors may sustain their more conservative practices. In addition, concerns regarding commercial property loan performance and potential defaults have increased, particularly for office properties. Although overall systemic risk appears limited given healthy property fundamentals in most property types, these concerns add to a conservative stance among lenders in general. We believe record capital on the sidelines, eventual clarity on the factors outlined above and an end to the tightening cycle should result in a recovery in transaction volumes. The timing of such a recovery is difficult to predict.

Investor Sentiment and Investment Activity

We facilitate investors buying, selling, and financing properties in order to generate commissions. Investors’ desires and need to engage in real estate transactions are dependent on many factors that are beyond our control. The economy, supply and demand for properly positioned properties, available credit and market events impact investor sentiment and, therefore, transaction velocity. In addition, our private clients, who make up the largest source of revenue, are often motivated to buy, sell and/or refinance properties due to personal circumstances, such as death, divorce, partnership breakups and estate planning.

Commercial real estate sales activity remained constrained through the first half of 2023 as tightened lender underwriting, significantly higher interest rates, recession risk and broad-based market uncertainty weighed on investor decisions. We believe a significant volume of investment capital remains on the sidelines waiting for economic, interest rate, financial market and commercial real estate pricing clarity. Price adjustments are necessary to recalibrate values to higher interest rates, but how long that recalibration process takes will substantially depend on the Federal Reserve rate policies. Once investors re-engage in the market, it will likely take time to navigate the price discovery process and for sales activity to revive.

Office properties, particularly those in the urban core, face the greatest uncertainty and the greatest challenges in acquiring debt financing. Apartment financing, underpinned by Fannie Mae and Freddie Mac, has generally been the most attainable, with typically lower interest rates than other property types. However, the rapid interest rate spike relative to the sector's very low cap rates and the large apartment development pipeline together with the three quarters of weakened apartment demand in 2022 has weighted on apartment sales. Defensive assets — such as single-tenant net lease properties backed by high-credit tenants — and medical office assets continue to receive buyer interest, but sales of these types of properties have also fallen as the flow of 1031 exchange capital coming from other property types has diminished. Ultimately, the market velocity will be dictated by a combination of the economic outlook, Federal Reserve action, interest rates and the narrowing of the buyer/seller expectation gap. If the Federal Reserve signals an end to their rate increases and the economy avoids a significant recession, we believe commercial real estate sales activity should begin to move toward its historical norm in the latter part of 2023.

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Key Financial Measures and Indicators

Revenue

Our revenue is primarily generated from our real estate investment sales business. In addition to real estate brokerage commissions, we generate revenue from financing fees and from other revenue, which are primarily comprised of consulting and advisory fees.

Because our business is transaction oriented, we rely on investment sales and financing professionals to continually develop leads, identify properties to sell and finance, market those properties and close the sale timely to generate a consistent flow of revenue. While our sales volume is impacted by seasonality factors, the timing of closings is also dependent on many market and personal factors unique to a particular client or transaction, particularly clients transacting in the $1-$10 million private client market segment. These factors can cause transactions to be accelerated or delayed beyond our control. Further, commission rates earned are generally inversely related to the value of the property sold. As a result of our expansion into the middle and larger transaction market segments, we have seen our overall commission rates fluctuate from period-to-period as a result of changes in the relative mix of the number and volume of investment sales transactions closed in the middle and larger transaction market segments as compared to the $1-$10 million private client market segment. These factors may result in period-to-period variations in our revenue that differ from historical patterns.

A small percentage of our transactions include retainer fees and/or breakage fees. Retainer fees are credited against a success-based fee paid upon the closing of a transaction or a breakage fee. Transactions that are terminated before completion will sometimes generate breakage fees, which are usually calculated as a set amount or a percentage of the fee we would have received had the transaction closed.

Real Estate Brokerage Commissions

We earn real estate brokerage commissions by acting as a broker for commercial real estate owners seeking to sell or investors seeking to buy properties. Revenue from real estate brokerage commissions is recognized at the close of escrow.

Financing Fees

We earn financing fees by securing financing on purchase transactions or by securing refinancing of our clients’ existing mortgage debt. We recognize financing fee revenue at the time the loan closes, and we have no remaining significant obligations in connection with the transaction.

To a lesser extent, we also earn fees on loan performance, equity advisory services, loan sales, loan guarantees and ancillary services associated with financing activities. We recognize guarantee fees over the term of the guarantee and other fees when we have no further obligations, generally upon the closing of a transaction. During the six months ended June 30, 2022, we generated mortgage servicing fees through the provision of collection, remittance, recordkeeping, reporting and other related mortgage servicing functions, activities and services. We recognized mortgage servicing revenue upon the acquisition of a servicing obligation.

Other Revenue

Other revenue includes fees generated from consulting, advisory and other real estate services performed by our investment sales professionals. Revenue from these services is recognized as they are performed and completed.

Operating Expenses

Our operating expenses consist of cost of services, selling, general and administrative expenses and depreciation and amortization. The significant components of our expenses are further described below.

Cost of Services

The majority of our cost of services expense is variable commissions paid to our investment sales professionals and compensation-related costs related to our financing activities. Commission expenses are directly attributable to providing services to our clients for investment sales and financing services. Most of our investment sales and financing professionals are independent contractors and are paid commissions; however, because there are some who are initially paid a salary and certain of our financing professionals are employees, costs of services also include employee-related compensation, employer taxes and benefits for those employees. The commission rates we pay to our investment sales and financing

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professionals vary based on individual contracts negotiated and are generally higher for the more experienced professionals. Some of our most senior investment sales and financing professionals can also earn additional commissions after meeting certain annual financial thresholds. These additional commissions are recognized as cost of services in the period in which they are earned. Payment of a portion of these additional commissions are generally deferred for a period of one to three years, at our election, and paid at the beginning of the second, third or fourth calendar year. Cost of services also includes referral fees paid to other real estate brokers where we are the principal service provider. Cost of services, therefore, can vary based on the commission structure of the independent contractors that closed transactions in any particular period.

Selling, General and Administrative Expenses

The largest expense component within selling, general and administrative expenses is personnel expenses for our management team and sales and support staff. In addition, these costs include facilities costs (excluding depreciation and amortization), staff related expenses, sales, marketing, legal, telecommunication, network, data sources, transaction costs related to acquisitions, costs to acquire and retain talent, changes in fair value for contingent and deferred consideration and other administrative expenses. Also included in selling, general and administrative are expenses for stock-based compensation to non-employee directors, employees and independent contractors (i.e. investment sales and financing professionals) under the Amended and Restated 2013 Omnibus Equity Incentive Plan (“2013 Plan”) and the 2013 Employee Stock Purchase Plan (“ESPP”).

Depreciation and Amortization Expense

Depreciation expense consists of depreciation recorded on our computer software and hardware and furniture, fixture and equipment. Depreciation is provided over estimated useful lives ranging from three to seven years for assets. Amortization expense consists of (i) amortization recorded for the 2022 period on our mortgage servicing rights (“MSRs”) using the interest method over the period that servicing income is expected to be received and (ii) amortization recorded on intangible assets amortized on a straight-line basis using a useful life between one and seven years.

Other Income (Expense), Net

Other income (expense), net primarily consists of interest income, net gains or losses on our deferred compensation plan assets, realized gains and losses on our marketable debt securities, available-for-sale, foreign currency gains and losses and other non-operating income and expenses.

Interest Expense

Interest expense primarily consists of interest expense associated with the stock appreciation rights (“SARs”) liability, and our Credit Agreement.

Provision (Benefit) for Income Taxes

We are subject to U.S. and Canadian federal taxes and individual state and local taxes based on the income generated in the jurisdictions in which we operate. Our effective tax rate fluctuates as a result of (i) changes in our annual effective tax rate applied to current pre-tax income (loss), (ii) the change in the mix of our activities in the jurisdictions in which we operate due to differing tax rates in those jurisdictions and (iii) the impact of permanent items, including compensation charges, qualified transportation fringe benefits, uncertain tax positions, meals and entertainment and tax-exempt deferred compensation plan assets. Our provision (benefit) for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our 2013 Plan and ESPP.

We record deferred taxes, net based on the tax rate expected to be in effect at the time those items are expected to be recognized for tax purposes.

Results of Operations

Following is a discussion of our results of operations for the three and six months ended June 30, 2023 and 2022. The tables included in the period comparisons below provide summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results.

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Key Operating Metrics

We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We also believe these metrics are relevant to investors’ and others’ assessment of our financial condition and results of operations. During the three months ended June 30, 2023 and 2022, we closed more than 1,900 and 3,600 investment sales, financing and other transactions, respectively, with total sales volume of approximately $9.7 billion and $26.4 billion, respectively. During the six months ended June 30, 2023 and 2022, we closed more than 3,700 and 6,500 investment sales, financing and other transactions, respectively, with total sales volume of approximately $20.2 billion and $47.4 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
Real Estate Brokerage	2023			2022			2023			2022
Average Number of Investment Sales Professionals	1,757			1,822			1,769			1,839
Average Number of Transactions per Investment Sales Professional	0.81			1.47			1.53			2.62
Average Commission per Transaction	$	98,686		$	132,099		$	101,954		$	133,056
Average Commission Rate	1.86		%	1.79		%	1.88		%	1.73		%
Average Transaction Size (in thousands)	$	5,303		$	7,399		$	5,433		$	7,688
Total Number of Transactions	1,422			2,685			2,701			4,822
Total Sales Volume (in millions)	$	7,542		$	19,868		$	14,674		$	37,073

	Three Months Ended June 30,						Six Months Ended June 30,
Financing (1)	2023			2022			2023			2022
Average Number of Financing Professionals	95			87			94			86
Average Number of Transactions per Financing Professional	2.99			8.01			5.99			14.15
Average Fee per Transaction	$	52,166		$	44,985		$	49,382		$	44,198
Average Fee Rate	0.90		%	0.70		%	0.82		%	0.75		%
Average Transaction Size (in thousands)	$	5,786		$	6,453		$	5,986		$	5,882
Total Number of Transactions	284			697			563			1,217
Total Financing Volume (in millions)	$	1,643		$	4,498		$	3,370		$	7,158

(1)Operating metrics exclude certain financing fees not directly associated to transactions.

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Comparison of Three Months Ended June 30, 2023 and 2022

Below are key operating results for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 (dollars in thousands):

	Three Months Ended June 30, 2023		Percentage of Revenue		Three Months Ended June 30, 2022		Percentage of Revenue		Change
									Dollar				Percentage
Revenue:
Real estate brokerage commissions	$	140,330	86.2	%	$	354,685	89.6	%	$	(214,355)	-60.4	%	(60.4)	%
Financing fees	17,896		11.0		36,811		9.3		(18,915)		-51.4	%	(51.4)	%
Other revenue	4,640		2.8		4,461		1.1		179		4.0	%	4.0	%
Total revenue	162,866		100		395,957		100		(233,091)		-58.9	%	(58.9)	%
Operating expenses:
Cost of services	101,163		62.1		256,042		64.7		(154,879)		-60.5	%	(60.5)	%
Selling, general and administrative	68,910		42.3		79,841		20.2		(10,931)		-13.7	%	(13.7)	%
Depreciation and amortization	3,468		2.1		3,332		0.8		136		4.1	%	4.1	%
Total operating expenses	173,541		106.5		339,215		85.7		(165,674)		-48.8	%	(48.8)	%
Operating (loss) income	(10,675)		(6.5)		56,742		14.3		(67,417)		-118.8	%	(118.8)	%
Other income (expense), net	4,890		3.0		(461)		(0.1)		5,351		-1160.7	%	(1)
Interest expense	(216)		(0.1)		(158)		0.0		(58)		36.7	%	36.7	%
(Loss) income before provision for income taxes	(6,001)		(3.7)		56,123		14.2		(62,124)		-110.7	%	(110.7)	%
Provision for income taxes	2,728		1.7	%	13,955		3.5		(11,227)		-80.5	%	(80.5)	%
Net (loss) income	$	(8,729)	(5.4)	%	$	42,168	10.6	%	$	(50,897)	-120.7	%	(120.7)	%
Adjusted EBITDA (2)	$	(1,056)	(0.6)	%	$	62,909	15.9	%	$	(63,965)	-101.7	%	(101.7)	%

(1)Percentage not meaningful.

(2)Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-GAAP Financial Measure.”     

Revenue

Our total revenue was $162.9 million for the three months ended June 30, 2023 compared to $396.0 million for the same period in 2022, a decrease of $233.1 million, or 58.9%. Total revenue decreased as a result of decreases in real estate brokerage commissions and financing fees, as described below. See "Factors Affecting Our Business" section for additional market information.

Real estate brokerage commissions. Revenue from real estate brokerage commissions decreased to $140.3 million for the three months ended June 30, 2023 from $354.7 million for the same period in 2022, a decrease of $214.4 million, or 60.4%. The number of transactions decreased by 47.0% and the average commission per transaction decreased 25.3%, which drove a decrease of revenue of 54.1% in the Private Client Market and a decrease of 71.5% in the combined Middle Market and Larger Transaction Market. The average commission rate increased by seven basis points in the second quarter of 2023 compared to the same quarter in 2022 as a result of a shift in the proportion of transactions to the Private Client Market from the Middle Market and Larger Transaction Market as Private Client Market transactions typically earn higher commission rates.

Financing fees. Revenue from financing fees decreased to $17.9 million for the three months ended June 30, 2023 from $36.8 million for the same period in 2022, a decrease of $18.9 million, or 51.4%, resulting primarily from a 59.3% decrease in the number of financing transactions, partially offset by a 16.0% increase in the average fee per transaction. The average fee rate increased by 20 basis points primarily due to a decrease in the average transaction size of 10.3% as a result of a decrease in the percentage of larger size financing transactions, which typically earn lower commission rates.

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Other revenue. Other revenue increased to $4.6 million for the three months ended June 30, 2023 from $4.5 million for the same period in 2022, an increase of $0.2 million, or 4.0%. The increase was primarily driven by increases in consulting and advisory services during the three months ended June 30, 2023, compared to the same period in 2022.

Total Operating Expenses

Our total operating expenses were $173.5 million for the three months ended June 30, 2023 compared to $339.2 million for the same period in 2022, a decrease of $165.7 million, or 48.8%. Cost of services decreased by $154.9 million and selling, general, and administrative expenses decreased by $10.9 million, as described below. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities.

Cost of services. Cost of services decreased to $101.2 million for the three months ended June 30, 2023 from $256.0 million for the same period in 2022, a decrease of $154.9 million, or 60.5%. The decrease was primarily due to decreased commission expenses driven by the related decreased revenue noted above. Cost of services as a percentage of total revenue decreased by 260 basis points to 62.1% compared to the same period in 2022.

Selling, general, and administrative expense. Selling, general and administrative expense for the second quarter of 2023 decreased to $68.9 million, from $79.8 million compared to the same period in the prior year, a decrease of $10.9 million or 13.7%. The change was primarily due to a reduction in compensation related costs, specifically performance-based bonuses for the second quarter of 2023, partially offset by an increase in business development, marketing, and other support costs related to the long-term retention of our sales and financing professionals.

Depreciation and amortization expense. Depreciation and amortization expense increased by an immaterial amount for the three months ended June 30, 2023 compared to the same period in the prior year.

Other Income (Expense), Net

Other income (expense), net increased to income of $4.9 million for the three months ended June 30, 2023 from an expense of $0.5 million for the same period in 2022. The increase of $5.4 million was primarily driven by an increase of $3.2 million in income from investments and a favorable change of $1.7 million in the value of our deferred compensation plan assets that are held in a rabbi trust.

Interest Expense

Interest expense increased by an immaterial amount for the three months ended June 30, 2023 compared to the same period in 2022, and primarily relates to interest expense on the Company’s SARs liability.

Provision for Income Taxes

The provision for income taxes was $2.7 million for the three months ended June 30, 2023, compared to $14.0 million for the same period in 2022. The effective income tax rate for the three months ended June 30, 2023, was (45.5)% compared to 24.9% for the same period in 2022. The tax provision for the three months ended June 30, 2023 is affected by non-deductible permanent items and changes in estimates to reflect income taxes through June 30, 2023 at the estimated annual effective tax rate. This resulted in recording a tax provision versus a tax benefit despite the loss before income taxes for the three months ended June 30, 2023.

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Comparison of Six Months Ended June 30, 2023 and 2022

Below are key operating results for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 (dollars in thousands):

	Six Months Ended June 30, 2023		Percentage of Revenue		Six Months Ended June 30, 2022		Percentage of Revenue		Change
									Dollar				Percentage
Revenue:
Real estate brokerage commissions	$	275,376	86.7	%	$	641,594	89.7	%	$	(366,218)	-57.1	%	(57.1)	%
Financing fees	33,764		10.6		63,264		8.8		(29,500)		-46.6	%	(46.6)	%
Other revenue	8,518		2.7		10,563		1.5		(2,045)		-19.4	%	(19.4)	%
Total revenue	317,658		100		715,421		100		(397,763)		-55.6	%	(55.6)	%
Operating expenses:
Cost of services	196,590		61.9		452,810		63.3		(256,220)		-56.6	%	(56.6)	%
Selling, general and administrative	141,129		44.4		154,376		21.6		(13,247)		-8.6	%	(8.6)	%
Depreciation and amortization	6,675		2.1		7,243		1.0		(568)		-7.8	%	(7.8)	%
Total operating expenses	344,394		108.4		614,429		85.9		(270,035)		-43.9	%	(43.9)	%
Operating (loss) income	(26,736)		(8.4)		100,992		14.1		(127,728)		-126.5	%	(126.5)	%
Other income (expense), net	9,700		3.0		(11)		0.0		9,711		-88281.8	%	(1)
Interest expense	(431)		(0.1)		(318)		0.0		(113)		35.5	%	35.5	%
(Loss) income before (benefit) provision for income taxes	(17,467)		(5.5)		100,663		14.1		(118,130)		-117.4	%	(117.4)	%
(Benefit) provision for income taxes	(2,905)		(0.9)		25,712		3.6		(28,617)		-111.3	%	(111.3)	%
Net (loss) income	$	(14,562)	(4.6)	%	$	74,951	10.5	%	$	(89,513)	-119.4	%	(119.4)	%
Adjusted EBITDA (2)	$	(8,479)	(2.7)	%	$	114,761	16.0	%	$	(123,240)	-107.4	%	(107.4)	%

(1)Percentage not meaningful.

(2)Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net income, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, see “Non-GAAP Financial Measure.”

Revenue

Our total revenue was $317.7 million for the six months ended June 30, 2023 compared to $715.4 million for the same period in 2022, a decrease of $397.8 million, or 55.6%. Total revenue decreased as a result of decreases in real estate brokerage commissions, financing fees and other revenue, as described below. See "Factors Affecting Our Business" section for additional market information.

Real estate brokerage commissions. Revenue from real estate brokerage commissions decreased to $275.4 million for the six months ended June 30, 2023 from $641.6 million for the same period in 2022, a decrease of $366.2 million, or 57.1%. The number of transactions decreased by 44.0% and the average commission per transaction decreased 23.4%, which drove a decrease of revenue of 49.7% in the Private Client Market and a decrease of 69.4% in the combined Middle Market and Larger Transaction Market. The average commission rate increased by 15 basis points in the second quarter of 2023 compared to the same quarter in 2022, as a result of a shift in the proportion of transactions to the Private Client Market from the Middle Market and Larger Transaction Market as Private Client Market transactions typically earn higher commission rates.

Financing fees. Revenue from financing fees decreased to $33.8 million for the six months ended June 30, 2023 from $63.3 million for the same period in 2022, a decrease of $29.5 million, or 46.6%, resulting primarily from a 53.7% decrease in the number of financing transactions, partially offset by an 11.7% increase in the average fee per transaction. The average fee rate increased by seven basis points due to an increase in the number of smaller size financing transactions, which typically earn higher commission rates.

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Other revenue. Other revenue decreased to $8.5 million for the six months ended June 30, 2023 from $10.6 million for the same period in 2022, a decrease of $2.0 million, or 19.4%. The decrease was primarily driven by decreases in consulting and advisory services during the six months ended June 30, 2023, compared to the same period in 2022.

Total Operating Expenses

Our total operating expenses were $344.4 million for the six months ended June 30, 2023 compared to $614.4 million for the same period in 2022, a decrease of $270.0 million, or 43.9%. Cost of services decreased by $256.2 million and selling, general, and administrative expenses decreased by $13.2 million, as described below. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities.

Cost of services. Cost of services decreased to $196.6 million for the six months ended June 30, 2023 from $452.8 million for the same period in 2022, a decrease of $256.2 million, or 56.6%. The decrease was primarily due to decreased commission expenses driven by the related decreased revenue noted above. Cost of services as a percentage of total revenue decreased by 140 basis points to 61.9% compared to the same period in 2022.

Selling, general, and administrative expense. Selling, general and administrative expense for the six months ended June 30, 2023 decreased to $141.1 million, from $154.4 million compared to the same period in the prior year, a decrease of $13.2 million or 8.6%. The change was primarily due to a reduction in compensation-related costs, specifically performance-based bonuses for the first half of 2023, partially offset by an increase in business development, marketing, other support and expensing of capital related to the long-term retention of our sales and financing professionals.

Depreciation and amortization expense. Depreciation and amortization expense decreased by an immaterial amount for the six months ended June 30, 2023 compared to the same period in the prior year.

Other Income (Expense), Net

Other income (expense), net increased to $9.7 million for the six months ended June 30, 2023 from $0.0 million for the same period in 2022. The increase of $9.7 million was primarily driven by an increase of $6.7 million in income from investments and a favorable change of $2.7 million in the value of our deferred compensation plan assets that are held in a rabbi trust.

Interest Expense

Interest expense increased by an immaterial amount for the three months ended June 30, 2023 compared to the same period in 2022, and primarily relates to interest expense on the Company’s SARs liability.

(Benefit) Provision for Income Taxes

The benefit for income taxes was $2.9 million for the six months ended June 30, 2023, compared to a provision for income taxes of $25.7 million for the same period in 2022. The effective income tax rate for the six months ended June 30, 2023 was 16.6% compared to 25.5% for the same period in 2022. The effective income tax rate decreased primarily due to relationship of permanent nondeductible items to projected pre-tax income for the full year.

Non-GAAP Financial Measure

In this quarterly report on Form 10-Q, we include a non-GAAP financial measure, adjusted earnings before interest income/expense, taxes, depreciation and amortization, stock-based compensation and other non-cash items, or Adjusted EBITDA. We define Adjusted EBITDA as net (loss) income before (i) interest income and other, including net realized gains (losses) on marketable debt securities, available-for-sale and cash, cash equivalents, and restricted cash, (ii) interest expense, (iii) provision (benefit) for income taxes, (iv) depreciation and amortization, and (v) stock-based compensation. We use Adjusted EBITDA in our business operations to evaluate the performance of our business, develop budgets and measure our performance against those budgets, among other things. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate our overall operating performance. However, Adjusted EBITDA has material limitations as a supplemental metric and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. We find Adjusted EBITDA to be a useful management metric to assist in evaluating performance, because Adjusted EBITDA eliminates items related to capital structure, taxes and non-cash items.

37

In light of the foregoing limitations, we do not rely solely on Adjusted EBITDA as a performance measure and also consider our U.S. GAAP results. Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, operating income or any other measures calculated in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. A reconciliation of the most directly comparable U.S. GAAP financial measure, net income, to Adjusted EBITDA is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
Adjustments:
Interest income and other (1)	(4,090)		(979)		(8,480)		(1,594)
Interest expense	216		158		431		318
Provision (benefit) for income taxes	2,728		13,955		(2,905)		25,712
Depreciation and amortization	3,468		3,332		6,675		7,243
Stock-based compensation	5,351		4,275		10,362		8,131
Adjusted EBITDA	$	(1,056)	$	62,909	$	(8,479)	$	114,761

(1)Other includes net realized gains (losses) on marketable debt securities available-for-sale.

Liquidity and Capital Resources

Our primary sources of liquidity are cash, cash equivalents, and restricted cash, cash flows from operations, marketable debt securities, available-for-sale and, if necessary, borrowings under our Credit Agreement. In order to enhance yield to us, we have invested a portion of our cash in money market funds and fixed and variable income debt securities, in accordance with our investment policy approved by the Board of Directors. Certain of our investments in money market funds may not maintain a stable net asset value and may impose fees on redemptions and/or gating fees. To date, the Company has not experienced any restrictions or gating fees on its ability to redeem funds from money market funds. Although we have historically funded our operations through operating cash flows, there can be no assurance that we can continue to meet our cash requirements entirely through our operations, cash, cash equivalents, and restricted cash, proceeds from the sale of marketable debt securities, available-for-sale or availability under our Credit Agreement.

Cash Flows

Our total cash, cash equivalents, and restricted cash balance decreased by $64.7 million to $171.2 million at June 30, 2023, compared to $235.9 million at December 31, 2022. The following table sets forth our summary cash flows for the six months ended June 30, 2023 and 2022 (in thousands):

	Six Months Ended June 30,
	2023		2022
Net cash flows used in operating activities	$	(94,775)	$	(51,840)
Net cash flows provided by (used in) investing activities	82,373		(56,575)
Net cash flows used in financing activities	(52,372)		(61,899)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash	121		(175)
Net decrease in cash, cash equivalents, and restricted cash	(64,653)		(170,489)
Cash, cash equivalents, and restricted cash at beginning of period	235,873		382,140
Cash, cash equivalents, and restricted cash at end of period	$	171,220	$	211,651

Operating Activities

Cash flows used in operating activities were $94.8 million for the six months ended June 30, 2023 compared to $51.8 million for the same period in 2022. The $42.9 million increase in cash flows used in operating activities for the six months

38

ended June 30, 2023 compared to the same period in 2022 was primarily due to decreased operating income as discussed above. The cash flows from operating activities are also affected by the timing of certain cash receipts and payments.

Investing Activities

Cash flows provided by investing activities were $82.4 million for the six months ended June 30, 2023 compared to cash flows used in investing activities of $56.6 million for the same period in 2022. The $138.9 million increase in cash provided by investing activities for the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to a net increase of $127.0 million in net proceeds from sales and maturities of securities in 2023 compared to the same period in 2022, as well as the 2022 acquisition of a business for $12.5 million, with no corresponding outflow in the current period.

Financing Activities

Cash flows used in financing activities were $52.4 million for the six months ended June 30, 2023 compared to $61.9 million for the same period in 2022. The decrease of $9.5 million in cash flows used in financing activities for the six months ended June 30, 2023 compared to the same period in 2022 was primarily due to a decrease of $4.1 million in taxes paid related to net share settlement of stock-based awards, along with a decrease of $39.8 million in dividends paid, partially offset by $34.9 million in stock repurchases in 2023, which did not occur in the 2022 period.

Liquidity

We believe that our existing balances of cash, cash equivalents, and restricted cash, cash flows expected to be generated from our operations, and proceeds from the sale of marketable debt securities, available-for-sale will be sufficient to satisfy our operating requirements for at least the next 12 months. If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could prevent us from funding acquisitions or otherwise financing our growth or operations. As of June 30, 2023, cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale, aggregated $406.8 million, and we had $59.5 million of borrowing capacity under our Credit Agreement (defined below).

Credit Agreement

We have a Credit Agreement with Wells Fargo Bank, National Association for a $60.0 million principal amount senior secured revolving credit facility that is guaranteed by all of our domestic subsidiaries and matures on June 1, 2025 (the “Credit Agreement”). The Company is monitoring covenant compliance on a regular basis to ensure continued compliance with the Credit Agreement. Our ability to borrow under our Credit Agreement is limited by our ability to comply with its covenants or obtain necessary waivers. See Note 12 – “Commitments and Contingencies” of our Notes to Condensed Consolidated Financial Statements for additional information on the Credit Agreement.

Off Balance Sheet Arrangements

The Company, in connection with the Strategic Alliance with M&T Realty Capital Corporation (“MTRCC”), has agreed to provide loan opportunities that may be funded through MTRCC’s agreement with Fannie Mae which requires MTRCC to guarantee a portion of each funded loan. On a loan-by-loan basis, the Company, at its option, can assume a portion of MTRCC’s guarantee obligation to Fannie Mae of loan opportunities presented to and closed by MTRCC. As of June 30, 2023, the Company has agreed to a maximum aggregate guarantee obligation of $114.7 million relating to loans with an unpaid balance of $688.1 million. The maximum guarantee obligation is not representative of the actual loss we would incur. The Company would be liable for this amount only if all of the loans for which it is providing a guarantee to MTRCC were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The Company records a loan-loss obligation and is required to provide cash collateral to MTRCC for this obligation.

Material Cash Requirements

There have been no material changes in our commitments under contractual obligations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022 through the date the condensed consolidated financial

39

statements were issued, other than for the semi-annual regular dividend of $0.25 per share on outstanding common stock declared by our Board of Directors on August 1, 2023, payable on October 6, 2023.

Inflation

Our commissions and other variable costs related to revenue are primarily affected by real estate market supply and demand, which may be affected by uncertain or changing economic and market conditions, including inflation/deflation arising in connection with and in response to various macroeconomic factors and impact of rising interest rates on the broader economy.

The annual inflation rate in the U.S. increased to 9.1% in June 2022, the highest annual inflation rate since November 1981, but has since decreased to 3.0% in June 2023. In response to elevated inflation levels, the Federal Reserve has increased the federal funds rate by 525 basis points through July 26, 2023. In the wake of several bank failures and continued concerns in the banking system, the Federal Reserve has sustained their tapered rate increases, fueling speculation that they may soon pause their upward pressure on the overnight rate. As a byproduct of the rapid increases in interest rates since March 2022, lenders have tightened their underwriting standards and raised rates substantively, adversely impacting commercial real estate transactions. Although inflation is still elevated and well above the Federal Reserve’s target rate, it appears to be on a downward trend. Services and wage inflation, however have yet to deliver a measurable downturn. Both of these types of inflation affect commercial real estate operators, increasing their operating costs. Sustained elevated interest rates and inflation would be expected to have a negative impact on client demand for commercial real estate.

Critical Accounting Policies; Use of Estimates

We prepare our financial statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective and our actual results may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. There were no significant changes in our critical accounting policies, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We maintain a portfolio of investments in a variety of fixed and variable debt rate securities, including U.S. Treasuries, U.S. government sponsored entities, corporate debt, asset-backed securities and others. As of June 30, 2023, the fair value of investments in marketable debt securities, available-for-sale was $235.6 million. The primary objective of our investment activity is to maintain the safety of principal and to provide for future liquidity requirements while maximizing yields without significantly increasing risk. While some investments may be securities of companies in foreign countries, all investments are denominated and payable in U.S. Dollars. We do not enter into investments for trading or speculative purposes. While our intent is not to sell these investment securities prior to their stated maturities, we may choose to sell any of the securities for strategic reasons including, but not limited to, anticipated capital requirements, anticipation of credit deterioration, duration management and because a security no longer meets the criteria of our investment policy. We do not use derivatives or similar instruments to manage our interest rate risk. We seek to invest in high quality investments. The weighted average rating (exclusive of cash, cash equivalents, and restricted cash) was AA as of June 30, 2023. Maturities are maintained consistent with our short-, medium- and long-term liquidity objectives.

Currently, our portfolio of investments predominantly consists of fixed interest rate debt securities; however, a portion of our investment portfolio may consist of variable interest rate debt securities. Our investments in fixed interest rate debt securities are subject to various market risks. Changes in prevailing interest rates may adversely or positively impact their fair market value should interest rates generally rise or fall. Accordingly, we also may have interest rate risk with variable interest rate debt securities as the income produced may decrease if interest rates fall. Contraction in market liquidity may adversely affect the value of portions of our portfolio and affect our ability to sell securities in the time frames required and at acceptable prices. Uncertainty in future market conditions may raise market participant’s expectations of returns, thus impacting the value of securities in our portfolio as well. The following table sets forth the

40

impact on the fair value of our investments as of June 30, 2023 from changes in interest rates based on the weighted average duration of the debt securities in our portfolio (in thousands):

Change in Interest Rates	Approximate Change in Fair Value of Investments Increase (Decrease)
2% Decrease …..................	$	4,424
1% Decrease …..................	$	2,212
1% Increase …..................	$	(2,211)
2% Increase …..................	$	(4,422)

Due to the nature of our business and the manner in which we conduct our operations, we believe we do not face any material interest rate risk with respect to other assets and liabilities, equity price risk or other market risks. The functional currency of our Canadian operations is the Canadian dollar. We are exposed to foreign currency exchange rate risk for the settlement of transactions of the Canadian operations as well as unrealized translation adjustments. Historically foreign exchange rate risk has not been material.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), including maintenance of (i) records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, and (ii) policies and procedures that provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, (b) our receipts and expenditures are being made only in accordance with authorizations of management and our Board of Directors, and (c) we will prevent or timely detect unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Our management, with the supervision and participation of our chief executive officer (“CEO”) and chief financial officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this Form 10-Q, based on the criteria established under the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on such evaluation, our management has concluded that as of June 30, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any significant impact to our internal controls over financial reporting despite the fact that a number of our employees and independent contractors are still working remotely. The design of our processes and controls allow for remote execution with accessibility to secure data. Given the current environment, we are continually monitoring and assessing the design and operating effectiveness on our internal controls.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in claims and legal actions arising in the ordinary course of our business, some of which involve claims for damages that are substantial in amount. Most of these litigation matters are covered by our insurance policies, which contain deductibles, exclusions, claim limits and aggregate policy limits. Such litigation and other proceedings may include, but are not limited to, actions relating to commercial relationships, standard brokerage disputes like the alleged failure to disclose physical or environmental defects or property expenses or contracts, the alleged inadequate disclosure of matters relating to the transaction like the relationships among the parties to the transaction, potential claims or losses pertaining to the asset, vicarious liability based upon conduct of individuals or entities outside of our control, general fraud claims, conflicts of interest claims, employment law claims, including claims challenging the classification of our sales professionals as independent contractors, claims alleging violations of state consumer fraud statutes and intellectual property. While the ultimate liability for these legal proceedings cannot be determined, we review the need for an accrual for loss contingencies quarterly and record an accrual for litigation related losses where the likelihood of loss is both probable and estimable. We do not believe, based on information currently available to us, that the final outcome of these proceedings will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes from the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

Share repurchase activity during the three months ended June 30, 2023 was as follows:

Periods	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
April 1, 2023 - April 30, 2023	401,462	$	31.56	401,462	$	9,944,539
May 1, 2023 - May 31, 2023	115,076	$	28.15	115,076	$	76,704,946
June 1, 2023 - June 30, 2023	22,100	$	31.02	22,100	$	76,019,514
Total	538,638			538,638	$	76,019,514

(1)Excludes shares withheld for employee taxes upon vesting of stock-based awards. Stock repurchases under our program may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.

(2)On May 2, 2023, the Company's Board of Directors approved an additional $70 million to repurchase common stock under its stock repurchase program, resulting in approximately $76 million available to repurchase shares under its program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

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Item 5. Other Information

Rule 10b5-1 Trading Plans

The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our officers and directors for the three months ended June 30, 2023, which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), was as follows:

Name	Title	Action	Date Adopted	Expiration Date	Aggregate # of Securities to be Purchased/Sold
Gregory A. LaBerge	Senior Vice President, Chief Administrative Officer	Adoption	May 22, 2023	Earlier of May 19, 2024 or when all shares are sold under the plan.	8,201

None of our officers or directors adopted or terminated a “non-Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K.

43

Item 6. Exhibits

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________

*    Filed herewith.

**    Furnished, not filed.

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Marcus & Millichap, Inc.
Date:	August 4, 2023	By:	/s/ Hessam Nadji
			Hessam Nadji President and Chief Executive Officer (Principal Executive Officer)
Date:	August 4, 2023	By:	/s/ Steven F. DeGennaro
			Steven F. DeGennaro Chief Financial Officer (Principal Financial Officer)

45

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer of Marcus & Millichap, Inc. pursuant to

Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Hessam Nadji, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2023	/s/ Hessam Nadji
	Hessam Nadji President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer of Marcus & Millichap, Inc. pursuant to

Rule 13a-14(a) under the Exchange Act,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven F. DeGennaro, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2023	/s/ Steven F. DeGennaro
	Steven F. DeGennaro Chief Financial Officer

EX-32.1

Exhibit 32.1

Certifications of Chief Executive Officer and Chief Financial Officer of Marcus & Millichap, Inc. Pursuant to

Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Marcus & Millichap, Inc. on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Hessam Nadji, President and Chief Executive Officer of the Company, and Steven F. DeGennaro, Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 4, 2023	/s/ Hessam Nadji
		Hessam Nadji President and Chief Executive Officer (Principal Executive Officer)
Date:	August 4, 2023	/s/ Steven F. DeGennaro
		Steven F. DeGennaro Chief Financial Officer (Principal Financial Officer)

XML

Cover Page - $ / shares	6 Months Ended
	Jun. 30, 2023	Aug. 01, 2023	Dec. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-36155
Entity Registrant Name	MARCUS & MILLICHAP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	35-2478370
Entity Address, Address Line One	23975 Park Sorrento, Suite 400
Entity Address, City or Town	Calabasas
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91302
City Area Code	818
Local Phone Number	212-2250
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	MMI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Preferred stock, par value (in dollars per share)	$ 0.0001		$ 0.0001
Entity Common Stock, Shares Outstanding		38,460,595
Entity Central Index Key	0001578732
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash, cash equivalents, and restricted cash	$ 171,220	$ 235,873
Commissions receivable	9,954	8,453
Prepaid expenses	8,872	9,411
Income tax receivable	17,491	8,682
Marketable debt securities, available-for-sale (amortized cost of $165,471 and $254,682 at June 30, 2023 and December 31, 2022, respectively, and $0 allowance for credit losses)	164,856	253,434
Advances and loans, net	3,497	4,005
Other assets, current	5,850	7,282
Total current assets	381,740	527,140
Property and equipment, net	28,462	27,644
Operating lease right-of-use assets, net	102,741	87,945
Marketable debt securities, available-for-sale (amortized cost of $74,758 and $72,819 at June 30, 2023 and December 31, 2022, respectively, and $0 allowance for credit losses)	70,711	68,595
Assets held in rabbi trust	10,365	9,553
Deferred tax assets, net	35,933	41,321
Goodwill and other intangible assets, net	53,525	55,696
Advances and loans, net	181,944	169,955
Other assets, non-current	18,092	15,859
Total assets	883,513	1,003,708
Current liabilities:
Accounts payable and accrued expenses	11,893	11,450
Deferred compensation and commissions	43,351	75,321
Operating lease liabilities	17,838	16,984
Accrued bonuses and other employee related expenses	11,088	38,327
Other liabilities, current	4,899	9,933
Total current liabilities	89,069	152,015
Deferred compensation and commissions	41,299	64,461
Operating lease liabilities	78,707	65,109
Other liabilities, non-current	10,519	8,614
Total liabilities	219,594	290,199
Commitments and contingencies	0	0
Stockholders' equity:
Preferred stock	0	0
Common stock	4	4
Additional paid-in capital	140,142	131,541
Retained earnings	526,373	585,581
Accumulated other comprehensive loss	(2,600)	(3,617)
Total stockholders’ equity	663,919	713,509
Total liabilities and stockholders’ equity	$ 883,513	$ 1,003,708

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Amortized cost, current	$ 165,471	$ 254,682
Allowance for credit losses, current	0	0
Amortized cost, noncurrent	74,758	72,819
Allowance for credit losses, noncurrent	$ 0	$ 0
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	150,000,000	150,000,000
Common stock, shares issued (in shares)	38,460,595	39,255,838
Common stock, shares outstanding (in shares)	38,460,595	39,255,838

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue:
Total revenue	$ 162,866	$ 395,957	$ 317,658	$ 715,421
Operating expenses:
Cost of services	101,163	256,042	196,590	452,810
Selling, general and administrative	68,910	79,841	141,129	154,376
Depreciation and amortization	3,468	3,332	6,675	7,243
Total operating expenses	173,541	339,215	344,394	614,429
Operating (loss) income	(10,675)	56,742	(26,736)	100,992
Other income (expense), net	4,890	(461)	9,700	(11)
Interest expense	(216)	(158)	(431)	(318)
(Loss) income before provision (benefit) for income taxes	(6,001)	56,123	(17,467)	100,663
Provision (benefit) for income taxes	2,728	13,955	(2,905)	25,712
Net (loss) income	$ (8,729)	$ 42,168	$ (14,562)	$ 74,951
(Loss) earnings per share:
Basic (in dollars per share)	$ (0.23)	$ 1.05	$ (0.37)	$ 1.87
Diluted (in dollars per share)	$ (0.23)	$ 1.04	$ (0.37)	$ 1.85
Weighted average common shares outstanding:
Basic (in shares)	38,538,000	40,048,000	38,867,000	40,018,000
Diluted (in shares)	38,538,000	40,342,000	38,867,000	40,390,000
Real estate brokerage commissions
Revenue:
Total revenue	$ 140,330	$ 354,685	$ 275,376	$ 641,594
Financing fees
Revenue:
Total revenue	17,896	36,811	33,764	63,264
Other revenue
Revenue:
Total revenue	$ 4,640	$ 4,461	$ 8,518	$ 10,563

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CONDENSED CONSOLIDATED STATEMETNS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (8,729)	$ 42,168	$ (14,562)	$ 74,951
Marketable debt securities, available-for-sale:
Change in net unrealized gains and losses	(516)	(1,558)	600	(3,915)
Less: reclassification adjustment for net losses (gains) included in other income (expense), net	17	7	17	(77)
Net change, net of tax of $(168) and $198 for the three and six months ended June 30, 2023, and $(528) and $(1,366) for the three and six months ended June 30, 2022, respectively	(499)	(1,551)	617	(3,992)
Foreign currency translation gain, net of tax of $0 for each of the three and six months ended June 30, 2023 and 2022, respectively	346	179	400	120
Total other comprehensive (loss) income	(153)	(1,372)	1,017	(3,872)
Comprehensive (loss) income	$ (8,882)	$ 40,796	$ (13,545)	$ 71,079

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CONDENSED CONSOLIDATED STATEMETNS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Marketable debt securities, available-for-sale, net change, tax	$ (168)	$ (528)	$ 198	$ (1,366)
Foreign currency translation loss, tax	$ 0	$ 0	$ 0	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning Balance (in shares) at Dec. 31, 2021		0	39,692,373
Beginning Balance at Dec. 31, 2021	$ 696,304,000	$ 0	$ 4,000	$ 121,844,000	$ 573,546,000	$ 910,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net and comprehensive (loss) income	71,079,000				74,951,000	(3,872,000)
Dividends	(52,136,000)				(52,136,000)
Stock-based compensation	8,131,000			8,131,000
Shares issued pursuant to employee stock purchase plan (in shares)			11,089
Shares issued pursuant to employee stock purchase plan	414,000			414,000
Issuance of common stock for settlement of deferred stock units (in shares)			166,449
Issuance of common stock for vesting of restricted stock units (in shares)			212,234
Issuance of common stock for unvested restricted stock awards (in shares)			11,494
Shares withheld related to net share settlement of stock-based awards (in shares)			(158,020)
Shares withheld related to net share settlement of stock-based awards	(8,039,000)			(8,039,000)
Issuance of common stock for stock settled deferred consideration (in shares)			28,673
Issuance of stock for the settlement of deferred consideration	1,417,000			1,417,000
Ending Balance (in shares) at Jun. 30, 2022		0	39,964,292
Ending Balance at Jun. 30, 2022	717,170,000	$ 0	$ 4,000	123,767,000	596,361,000	(2,962,000)
Beginning Balance (in shares) at Mar. 31, 2022		0	39,795,399
Beginning Balance at Mar. 31, 2022	675,389,000	$ 0	$ 4,000	122,782,000	554,193,000	(1,590,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net and comprehensive (loss) income	40,796,000				42,168,000	(1,372,000)
Stock-based compensation	4,275,000			4,275,000
Shares issued pursuant to employee stock purchase plan (in shares)			11,089
Shares issued pursuant to employee stock purchase plan	414,000			414,000
Issuance of common stock for settlement of deferred stock units (in shares)			166,449
Issuance of common stock for vesting of restricted stock units (in shares)			44,971
Issuance of common stock for unvested restricted stock awards (in shares)			11,494
Shares withheld related to net share settlement of stock-based awards (in shares)			(93,783)
Shares withheld related to net share settlement of stock-based awards	(5,121,000)			(5,121,000)
Issuance of common stock for stock settled deferred consideration (in shares)			28,673
Issuance of stock for the settlement of deferred consideration	1,417,000			1,417,000
Ending Balance (in shares) at Jun. 30, 2022		0	39,964,292
Ending Balance at Jun. 30, 2022	717,170,000	$ 0	$ 4,000	123,767,000	596,361,000	(2,962,000)
Beginning Balance (in shares) at Dec. 31, 2022		0	39,255,838
Beginning Balance at Dec. 31, 2022	713,509,000	$ 0	$ 4,000	131,541,000	585,581,000	(3,617,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net and comprehensive (loss) income	(13,545,000)				(14,562,000)	1,017,000
Dividends	(10,284,000)				(10,284,000)
Stock-based compensation	10,362,000			10,362,000
Shares issued pursuant to employee stock purchase plan (in shares)			15,297
Shares issued pursuant to employee stock purchase plan	392,000			392,000
Issuance of common stock for vesting of restricted stock units (in shares)			337,796
Issuance of common stock for unvested restricted stock awards (in shares)			17,339
Shares withheld related to net share settlement of stock-based awards (in shares)			(125,319)
Shares withheld related to net share settlement of stock-based awards	(3,986,000)			(3,986,000)
Issuance of common stock for stock settled deferred consideration (in shares)			58,205
Issuance of stock for the settlement of deferred consideration	1,833,000			1,833,000
Repurchases of common stock (in shares)			(1,098,561)
Repurchases of common stock	(34,362,000)				(34,362,000)
Ending Balance (in shares) at Jun. 30, 2023		0	38,460,595
Ending Balance at Jun. 30, 2023	663,919,000	$ 0	$ 4,000	140,142,000	526,373,000	(2,600,000)
Beginning Balance (in shares) at Mar. 31, 2023		0	38,876,354
Beginning Balance at Mar. 31, 2023	682,158,000	$ 0	$ 4,000	132,905,000	551,696,000	(2,447,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net and comprehensive (loss) income	(8,882,000)				(8,729,000)	(153,000)
Stock-based compensation	5,351,000			5,351,000
Shares issued pursuant to employee stock purchase plan (in shares)			15,297
Shares issued pursuant to employee stock purchase plan	392,000			392,000
Issuance of common stock for vesting of restricted stock units (in shares)			43,923
Issuance of common stock for unvested restricted stock awards (in shares)			17,339
Shares withheld related to net share settlement of stock-based awards (in shares)			(11,885)
Shares withheld related to net share settlement of stock-based awards	(339,000)			(339,000)
Issuance of common stock for stock settled deferred consideration (in shares)			58,205
Issuance of stock for the settlement of deferred consideration	1,833,000			1,833,000
Repurchases of common stock (in shares)			(538,638)
Repurchases of common stock	(16,594,000)				(16,594,000)
Ending Balance (in shares) at Jun. 30, 2023		0	38,460,595
Ending Balance at Jun. 30, 2023	$ 663,919,000	$ 0	$ 4,000	$ 140,142,000	$ 526,373,000	$ (2,600,000)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net (loss) income	$ (14,562,000)	$ 74,951,000
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	6,675,000	7,243,000
Non-cash lease expense	12,928,000	11,944,000
Credit loss expense (recovery)	634,000	(28,000)
Stock-based compensation	10,362,000	8,131,000
Deferred taxes, net	5,188,000	(130,000)
Unrealized foreign exchange losses (gains)	(56,000)	403,000
Net realized losses (gains) on marketable debt securities, available-for-sale	23,000	(96,000)
Other non-cash items	(560,000)	(22,000)
Changes in operating assets and liabilities:
Commissions receivable	(1,396,000)	2,922,000
Prepaid expenses	540,000	3,177,000
Advances and loans	(12,043,000)	(48,539,000)
Other assets	(4,981,000)	(2,818,000)
Accounts payable and accrued expenses	672,000	(2,684,000)
Income tax receivable and payable	(8,808,000)	(15,005,000)
Accrued bonuses and other employee related expenses	(27,244,000)	(19,260,000)
Deferred compensation and commissions	(54,154,000)	(61,047,000)
Operating lease liabilities	(8,852,000)	(9,759,000)
Other liabilities	859,000	(1,223,000)
Net cash used in operating activities	(94,775,000)	(51,840,000)
Cash flows from investing activities
Acquisition of businesses, net of cash received	0	(12,500,000)
Purchases of marketable debt securities, available-for-sale	(142,867,000)	(174,259,000)
Proceeds from sales and maturities of marketable debt securities, available-for-sale	230,795,000	135,206,000
Issuances of employee notes receivable	(119,000)	(71,000)
Payments received on employee notes receivable	33,000	71,000
Purchase of property and equipment	(5,469,000)	(5,022,000)
Net cash provided by (used in) investing activities	82,373,000	(56,575,000)
Cash flows from financing activities
Taxes paid related to net share settlement of stock-based awards	(3,986,000)	(8,039,000)
Proceeds from issuance of shares pursuant to employee stock purchase plan	392,000	414,000
Dividends paid	(10,327,000)	(50,082,000)
Principal payments on stock appreciation rights liability	(1,945,000)	(1,761,000)
Principal payments on deferred and contingent consideration	(1,578,000)	(2,431,000)
Cash paid for stock repurchases	(34,928,000)	0
Net cash used in financing activities	(52,372,000)	(61,899,000)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash	121,000	(175,000)
Net decrease in cash, cash equivalents, and restricted cash	(64,653,000)	(170,489,000)
Cash, cash equivalents, and restricted cash at beginning of period	235,873,000	382,140,000
Cash, cash equivalents, and restricted cash at end of period	171,220,000	211,651,000
Supplemental cash flow disclosures:
Interest paid during the period	408,000	514,000
Income taxes paid, net	714,000	40,046,000
Supplemental disclosures of non-cash investing and financing activities:
Unpaid purchases of property and equipment	382,000	1,196,000
Right-of-use assets obtained in exchange for operating lease liabilities	27,593,000	15,169,000
Issuance of stock for the settlement of deferred consideration	$ 1,833,000	$ 1,417,000

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Description of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

Description of Business

Marcus & Millichap, Inc. (the “Company,” “Marcus & Millichap,” or “MMI”), a Delaware corporation, is a brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of June 30, 2023, MMI operates 80 offices in the United States and Canada through its wholly-owned subsidiaries, including the operations of Marcus & Millichap Capital Corporation.

Reorganization and Initial Public Offering

MMI was formed in June 2013 in preparation for Marcus & Millichap Company (“MMC”) to spin-off its majority-owned subsidiary, Marcus & Millichap Real Estate Investment Services, Inc. (“MMREIS”). Prior to the initial public offering (“IPO”) of MMI, all of the preferred and common stockholders of MMREIS (including MMC and employees of MMREIS) contributed all of their outstanding shares to MMI, in exchange for new MMI common stock. As a result, MMREIS became a wholly-owned subsidiary of MMI. Thereafter, MMC distributed 80.0% of the shares of MMI common stock to MMC’s shareholders and exchanged the remaining portion of its shares of MMI common stock for cancellation of indebtedness of MMC. MMI completed its IPO on November 5, 2013.

Basis of Presentation

The financial information presented in the accompanying unaudited condensed consolidated financial statements, has been prepared in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements and notes include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated financial position, results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto, including the Company’s accounting policies for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed on February 28, 2023 with the SEC. The results of the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for other interim periods or for future years.

Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, security deposits (included under other assets, non-current) and commissions receivable, net. Cash, cash equivalents, and restricted cash are placed with high-credit quality financial institutions and invested in high-credit quality money market funds and commercial paper. Concentrations and ratings of marketable debt securities, available-for-sale are limited by the approved investment policy.

To reduce its credit risk, the Company monitors the credit standing of the financial institutions money market funds that represent amounts recorded as cash, cash equivalents, and restricted cash. The Company historically has not experienced any significant losses related to cash, cash equivalents, and restricted cash.

In September 2021, the Company entered into a Strategic Alliance (“Strategic Alliance”) with M&T Realty Capital Corporation (“MTRCC”) pursuant to which the Company has agreed to provide loan opportunities that may be funded through MTRCC’s Delegated Underwriting and Servicing Agreement (“DUS Agreement”) with the Federal National Mortgage Association (“Fannie Mae”) that requires MTRCC to guarantee a portion of each loan funded. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC through the DUS Agreement. The Company manages and limits the concentration of risk related to the guarantees assumed by monitoring the underlying property type, geographic location, credit of the borrowers, underlying debt service coverage, and loan to value ratios.

The Company derives its revenue from a broad range of real estate investors, owners, and users in the United States and Canada, none of which individually represents a significant concentration of credit risk. The Company maintains allowances, as needed, for estimated credit losses based on management’s assessment of the likelihood of collection. For the three and six months ended June 30, 2023 and 2022, no transaction represented 10% or more of total revenue. Further, while one or more transactions may represent 10% or more of commissions receivable at any reporting date, amounts due are typically collected within 10 days of settlement and, therefore, do not expose the Company to significant credit risk.

During the three and six months ended June 30, 2023, the Company’s Canadian operations represented 3.5% and 3.2% of total revenue, respectively. During both the three and six months ended June 30, 2022, the Company’s Canadian operations represented 2.2% of total revenue.

During each of the three and six months ended June 30, 2023 and 2022, no office represented 10% or more of total revenue.

Revenue Recognition

The Company generates real estate brokerage commissions by acting as a broker for real estate owners or investors seeking to buy or sell interests in commercial properties and generates financing fees from securing financing on purchase transactions, from refinancing its clients’ existing mortgage debt and other ancillary fees associated with financing activities, including, but not limited to, debt and equity advisory services, loan sales, due diligence services, guarantee fees, and loan performance fees.

Real Estate Brokerage Commissions

Contracts for representing buyers and sellers of real estate are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the close of escrow. At that time, the Company's performance is complete, and revenue is recorded.

Financing Fees

Contracts for representing potential borrowers are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with an exception for guarantee obligations, do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the loan closes.

Loan Performance Fees - For loans originated through the Strategic Alliance with MTRCC, the Company receives variable consideration in the form of loan performance fees based on a portion of the servicing fees expected to be received under the servicing contract for servicing the loan. As the Company is not obligated to perform any servicing functions and has no further obligations related to the transaction giving rise to the loan performance fees, the estimated value of the loan performance fees to be received is recorded at the time the loan closes and are collected over the estimated term of the related loan. Any changes in the estimate of loan performance fees to be received are recorded in revenue in the period the estimate changes.

Guarantee Obligations - For certain loans originated through the Strategic Alliance with MTRCC, the Company may agree, at its option, to indemnify MTRCC for a portion of MTRCC’s obligations for loans sold to Fannie Mae. For these loans, the Company allocates a portion of the transaction price and records a loan guarantee obligation based on its fair value. Revenue for this stand-ready obligation is recorded on a straight-line basis over the term of the estimated guarantee period and is recorded in financing fees in the condensed consolidated statements of operations. The guarantee obligation is capped at 16.7% of any unpaid principal balance in excess of the collateral securing such loan. For these loans, the Company is required to pledge cash in a restricted bank account in support of the guarantee obligation. The Company records an allowance for estimated losses related to the loans subject to the guarantee considering the risk characteristics of the loan, the loan's risk rating, historical loss experience, potential adverse situations affecting individual loans and other forecasted information as appropriate.

Mortgage Servicing - The Company recognized mortgage servicing revenue upon the acquisition of a servicing contract. The Company recorded servicing fees when earned, provided the loans were current and the debt service payments were made by the borrowers. As of September 30, 2022, the Company no longer owns any mortgage servicing rights.

Other Revenue

Other revenue includes fees generated from consulting and advisory services and fees are recognized when services are provided, or upon closing of the transaction.

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Computer software and hardware equipment	$	46,995	$	42,617
Furniture, fixtures and equipment	26,964		26,453
Less: accumulated depreciation and amortization	(45,497)		(41,426)
	$	28,462	$	27,644

Depreciation expense for property and equipment was $2.3 million and $1.8 million for the three months ended June 30, 2023 and 2022, respectively, and $4.3 million and $3.7 million for the six months ended June 30, 2023 and 2022 , respectively

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Investments in Marketable Debt Securities, Available-for-Sale

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments in Marketable Debt Securities, Available-for-Sale

Investments in Marketable Debt Securities, Available-for-Sale

Amortized cost, allowance for credit losses, gross unrealized gains (losses) in accumulated other comprehensive (loss) income and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):

	June 30, 2023
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	65,984	$	—	$	—	$	(489)	$	65,495
Corporate debt	99,487		—		1		(127)		99,361
	$	165,471	$	—	$	1	$	(616)	$	164,856
Long-term investments:
U.S. treasuries	$	18,115	$	—	$	—	$	(706)	$	17,409
U.S. government sponsored entities	574		—		—		(64)		510
Corporate debt	44,923		—		6		(2,679)		42,250
Asset-backed securities (“ABS”) and other	11,146		—		—		(604)		10,542
	$	74,758	$	—	$	6	$	(4,053)	$	70,711

	December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	135,688	$	—	$	14	$	(1,153)	$	134,549
Corporate debt	118,135		—		1		(95)		118,041
ABS and other	859		—		—		(15)		$	844
	$	254,682	$	—	$	15	$	(1,263)	$	253,434
Long-term investments:
U.S. treasuries	$	21,434	$	—	$	—	$	(719)	$	20,715
U.S. government sponsored entities	602		—		—		(66)		536
Corporate debt	44,214		—		21		(2,877)		41,358
ABS and other	6,569		—		—		(583)		5,986
	$	72,819	$	—	$	21	$	(4,245)	$	68,595

The Company’s investments in marketable debt securities, available-for-sale, that have been in a continuous unrealized loss position, for which an allowance for credit losses has not been recorded, by type of security consisted of the following (in thousands):

	June 30, 2023
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	42,767	$	(139)	$	39,930	$	(1,056)	$	82,697	$	(1,195)
U.S. government sponsored entities	—		—		509		(64)		509		(64)
Corporate debt	107,067		(564)		25,047		(2,242)		132,114		(2,806)
ABS and other	4,623		(83)		5,887		(521)		10,510		(604)
	$	154,457	$	(786)	$	71,373	$	(3,883)	$	225,830	$	(4,669)

	December 31, 2022
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	73,055	$	(1,232)	$	66,144	$	(640)	$	139,199	$	(1,872)
U.S. government sponsored entities	447		(46)		87		(20)		534		(66)
Corporate debt	130,816		(1,909)		10,681		(1,063)		141,497		(2,972)
ABS and other	4,710		(314)		2,091		(284)		6,801		(598)
	$	209,028	$	(3,501)	$	79,003	$	(2,007)	$	288,031	$	(5,508)

Gross realized gains and losses from the sales of the Company’s marketable debt securities, available-for-sale, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Gross realized gains (1)	$	—	$	1	$	—	$	114
Gross realized losses (1)	$	(23)	$	(17)	$	(23)	$	(17)

(1) Recorded in other income (expense), net in the condensed consolidated statements of operations. The cost basis of securities sold were determined based on the specific identification method.

The Company invests its excess cash in a diversified portfolio of fixed and variable rate debt securities to meet current and future cash flow needs. All investments are made in accordance with the Company’s approved investment policy. As of June 30, 2023, the portfolio had a weighted average credit rating of AA and a weighted term to contractual maturity of 1.7 years, with 226 securities in the portfolio representing an unrealized aggregate loss of $4.7 million, or 2% of amortized cost, and a weighted average credit rating of AA.

As of June 30, 2023, the Company performed an impairment analysis and determined an allowance for credit losses was not required. The Company determined that it did not have an intent to sell and it was not more likely than not that the Company would be required to sell any security based on its current liquidity position, or to maintain compliance with its investment policy, specifically as it relates to minimum credit ratings. The Company evaluated the securities with an unrealized loss considering severity of loss, credit ratings, specific credit events during the period since acquisition, overall likelihood of default, market sector, potential impact from the current economic environment, including interest rates, geopolitical unrest and a review of an issuer’s and securities’ liquidity and financial strength, as needed. The Company concluded that it would receive all scheduled interest and principal payments. The Company, therefore, determined

qualitatively that the unrealized loss was related to changes in interest rates and other market factors and therefore no allowance for credit losses was required.

Amortized cost and fair value of marketable debt securities, available-for-sale, by contractual maturity consisted of the following (in thousands, except weighted average data):

	June 30, 2023				December 31, 2022
	Amortized  Cost		Fair Value		Amortized  Cost		Fair Value
Due in one year or less	$	165,471	$	164,856	$	254,683	$	253,434
Due after one year through five years	55,898		53,492		56,507		54,169
Due after five years through ten years	14,560		13,210		13,435		11,850
Due after ten years	4,300		4,009		2,876		2,576
	$	240,229	$	235,567	$	327,501	$	322,029
Weighted average contractual maturity			1.7 years				1.1 years

Actual maturities may differ from contractual maturities because certain issuers have the right to prepay certain obligations with or without prepayment penalties.

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Acquisitions, Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions, Goodwill and Other Intangible Assets

Acquisitions, Goodwill and Other Intangible Assets

Goodwill is recorded as part of the Company’s acquisitions and primarily arose from the acquired assembled workforce and brokerage and financing sales platforms. The Company expects all of the goodwill to be tax deductible, with the tax-deductible amount of goodwill related to the contingent and deferred consideration to be determined once the cash payments are made to settle any contingent and deferred consideration. The goodwill resulting from acquisitions is allocated to the Company’s one reporting unit.

Goodwill and intangible assets, net consisted of the following (in thousands):

	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill and intangible assets:
Goodwill	$	38,047	$	—	$	38,047	$	37,914	$	—	$	37,914
Intangible assets (1)	32,420		(16,942)		15,478		32,287		(14,505)		17,782
	$	70,467	$	(16,942)	$	53,525	$	70,201	$	(14,505)	$	55,696

(1) Total weighted average amortization period was 4.2 years and 4.5 years as of June 30, 2023 and December 31, 2022, respectively. Intangible assets principally include non-competes and customer relationships.

The Company recorded amortization expense for intangible assets of $1.1 million for both the three months ended June 30, 2023 and 2022 and $2.3 million for both the six months ended June 30, 2023 and 2022.

The changes in the carrying amount of goodwill consisted of the following (in thousands):

	Six Months Ended June 30, 2023
Beginning balance	$	37,914
Additions from acquisitions	—
Impact of foreign currency translation	133
Ending balance	$	38,047

Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):

	June 30, 2023
Remainder of 2023	$	2,275
2024	4,101
2025	3,880
2026	2,156
2027	1,855
Thereafter	1,211
	$	15,478

The Company evaluates goodwill for impairment annually in the fourth quarter. In addition to the annual impairment evaluation, the Company evaluates at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing, which indicate that it is more likely than not an impairment loss has occurred. The Company evaluates its intangible assets that have finite useful lives whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable.

As of June 30, 2023, the Company considered the impact of economic conditions and evaluated its goodwill and intangible assets for impairment testing. The Company estimated the recoverability of the intangible assets by comparing the carrying amount of each asset to the future undiscounted cash flows that the Company expects the asset to generate. The sum of the undiscounted expected future cash flows was greater than the carrying amount of the intangible assets. The Company concluded that as of June 30, 2023, there was no impairment of its intangible assets or goodwill.

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Selected Balance Sheet Data

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Selected Balance Sheet Data

Selected Balance Sheet Data

Allowances on Advances and Loans

Allowance for credit losses for advances and loans as of June 30, 2023 and December 31, 2022 was $578,000 and $791,000, respectively.

Other Assets

Other assets consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Security deposits	$	—	$	—	$	1,500	$	1,625
Employee notes receivable	52		6		38		—
Securities, held-to-maturity(1)	—		—		9,500		9,500
Loan performance fee receivable	1,261		766		6,565		4,261
Other(2)	4,537		6,510		489		473
	$	5,850	$	7,282	$	18,092	$	15,859

(1)Securities, held-to-maturity, are expected to mature on September 1, 2024 and accrue interest based on the 1-year treasury rate.

(2)Other primarily includes customer trust accounts and prepaid lease costs.

Deferred Compensation and Commissions

Deferred compensation and commissions consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Stock appreciation rights (“SARs”) liability (1)	$	2,480	$	2,323	$	11,037	$	13,137
Commissions payable to investment sales and financing professionals	40,196		72,247		22,647		45,156
Deferred compensation liability (1)	471		493		7,615		6,168
Other	204		258		—		—
	$	43,351	$	75,321	$	41,299	$	64,461

(1) The SARs and deferred compensation liabilities become subject to payout at the time the participant is no longer considered a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to participants within the next twelve months have been classified as current.

SARs Liability

Prior to the IPO, certain employees of the Company were granted SARs under a stock-based compensation program assumed by MMC. In connection with the IPO, the SARs agreements were revised, the MMC liability of $20.0 million for the SARs was frozen as of March 31, 2013 and was transferred to MMI through a capital distribution. The SARs liability will be settled with each participant in ten annual installments in January of each year upon retirement or termination from service, or in full upon consummation of a change in control of the Company.

Under the revised agreements, MMI is required to accrue interest on the outstanding balance beginning on January 1, 2014, at a rate based on the 10-year treasury note, plus 2%. The rate resets annually. The rates at January 1, 2023 and 2022 were 5.79% and 3.63%, respectively. MMI recorded interest expense related to this liability of $190,000 and $136,000 for the three months ended June 30, 2023 and 2022, respectively, and $380,000 and $271,000 for the six months ended June 30, 2023 and 2022, respectively.

Estimated payouts within the next twelve months for participants that have separated from service have been classified as current. During the six months ended June 30, 2023 and 2022, the Company made total payments of $2.3 million and $2.2 million, respectively, consisting of principal and accumulated interest.

Commissions Payable

Certain investment sales and financing professionals can earn additional commissions after meeting certain annual revenue thresholds. These commissions are recognized as cost of services in the period in which they are earned as they relate to specific transactions closed. The Company may defer payment of certain commissions, at its election, for up to three years. Commissions that are not expected to be paid within twelve months are classified as long-term.

Deferred Compensation Liability

A select group of management is eligible to participate in the Marcus & Millichap Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a non-qualified deferred compensation plan that is intended to comply with Section 409A of the Internal Revenue Code and permits participants to defer compensation up to the limits set forth in the Deferred Compensation Plan. Amounts are paid out generally when the participant is no longer a service provider; however, an in-service payout election is available to participants. Participants may elect to receive payouts as a lump sum or quarterly over a two to fifteen-year period. The Company elected to fund the Deferred Compensation Plan through Company-owned variable life insurance policies. The Deferred Compensation Plan is managed by a third-party institutional fund manager, and the deferred compensation and investment earnings are held as a Company asset in a rabbi trust, which is recorded in assets held in rabbi trust in the accompanying condensed consolidated balance sheets. The assets in the trust are restricted unless the Company becomes insolvent, in which case the trust assets are subject to the claims of the Company’s creditors. The Company may also, in its sole and absolute discretion, elect to withdraw at any time a portion of the trust assets by an amount by which the fair market value of the trust assets exceeds 110% of the aggregate deferred compensation liability represented by the participants’ accounts. Estimated payouts within the next twelve months for participants that have separated from service or elected an in-service payout have been classified as current. During the six months ended June 30, 2023 and 2022, the Company made total payments to participants of $163,000 and $625,000 respectively.

The assets held in the rabbi trust are carried at the cash surrender value of the variable life insurance policies, which represents its fair value. The net change in the carrying value of the assets held in the rabbi trust and the net change in the carrying value of the deferred compensation liability, each exclusive of additional contributions, distributions and trust expenses, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Increase (decrease) in the carrying value of the assets held in the rabbi trust (1)	$	472	$	(1,259)	$	930	$	(1,784)
(Increase) decrease in the net carrying value of the deferred compensation obligation (2)	$	(452)	$	1,259	$	(885)	$	1,791

(1)Recorded in other income (expense), net in the condensed consolidated statements of operations.

(2)Recorded in selling, general and administrative expense in the condensed consolidated statements of operations.

Other Liabilities

Other liabilities consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Deferred consideration	$	1,294	$	3,633	$	724	$	1,486
Contingent consideration	1,513		1,726		5,005		5,341
Dividends payable	645		612		1,528		1,603
Stock repurchase payable	—		565		—		—
Loan guarantee obligation	537		2,040		2,696		—
Other	910		1,357		566		184
	$	4,899	$	9,933	$	10,519	$	8,614

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Related-Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

Shared and Transition Services

Certain services are provided to the Company under a Transition Services Agreement (“TSA”) between MMC and the Company. The TSA is intended to provide certain services until the Company acquires these services separately. Under the TSA, the Company earned net charge-backs during the three months ended June 30, 2023 and 2022 of $19,000 and $7,000, respectively, and during the six months ended June 30, 2023 and 2022 of $44,000 and $18,000, respectively. These amounts are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations.

Brokerage and Financing Services with the Subsidiaries of MMC

MMC has wholly or majority owned subsidiaries that buy and sell commercial real estate properties. The Company performs certain brokerage and financing services related to transactions of the subsidiaries of MMC. For the three months ended June 30, 2023 and 2022, the Company earned real estate brokerage commissions and financing fees of $0 and $912,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $0 and $547,000, respectively, related to this revenue. For the six months ended June 30, 2023 and 2022, the Company earned real estate brokerage commissions and financing fees of $441,000 and $2,510,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $264,000 and $1,501,000, respectively, related to this revenue.

Operating Lease with MMC

The Company extended its operating lease with MMC for a single-story office building located in Palo Alto, California, which expires in May 2032. The related operating lease cost was $295,000 and $320,000 for the three months ended June 30, 2023 and 2022, respectively, and $592,000 and $653,000 for the six months ended June 30, 2023 and 2022, respectively. Operating lease cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. The related operating lease right-of-use asset, net and operating lease liability as of June 30, 2023 was $8,115,000 and $8,442,000, respectively and as of December 31, 2022 was $9,041,000 and $9,262,000, respectively.

Amounts due to (from) MMC

As of June 30, 2023 and December 31, 2022, the Company recorded a receivable of $3,000 and a payable of $79,000 with MMC, respectively. These amounts are included in other assets, current and accounts payable and accrued expenses, respectively, in the accompanying condensed consolidated balance sheets.

Other

The Company makes advances to non-executive employees from time-to-time. At June 30, 2023 and December 31, 2022, the aggregate principal amount for employee notes receivable was $90,000 and $6,000, respectively, which is included in other assets in the accompanying condensed consolidated balance sheets. See Note 5 - "Selected Balance Sheet Data".

As of June 30, 2023, George M. Marcus, the Company’s founder and Chairman, beneficially owned approximately 39% of the Company’s issued and outstanding common stock, including shares owned by Phoenix Investments Holdings, LLC and the Marcus Family Foundation II.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

U.S. GAAP defines the fair value of a financial instrument as the amount that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date. The Company is responsible for the determination of fair value and the supporting methodologies and assumptions. The Company uses various pricing sources and third parties to provide and validate the values utilized.

The degree of judgment used in measuring the fair value of financial instruments is generally inversely correlated with the level of observable valuation inputs. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment.

Assets recorded at fair value are measured and classified in accordance with a fair value hierarchy consisting of the three “levels” based on the observability of inputs available in the marketplace used to measure the fair values as discussed below:

•Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

•Level 3: Unobservable inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Management estimates include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Recurring Fair Value Measurements

The Company values its investments including commercial paper and floating net asset value money market funds recorded in cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, assets held in the rabbi trust, deferred compensation liability and contingent and deferred consideration at fair value on a recurring basis.

Fair values for investments included in cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale were determined for each individual security in the investment portfolio and all securities are Level 1 or 2 measurements as appropriate.

Fair values for assets held in the rabbi trust and related deferred compensation liability were determined based on the cash surrender value of the Company-owned variable life insurance policies and underlying investments in the trust, and are Level 2 and Level 1 measurements, respectively.

Contingent consideration in connection with acquisitions, is carried at fair value and determined on a contract-by-contract basis, calculated using unobservable inputs based on a probability of achieving EBITDA and other performance requirements, and is a Level 3 measurement. Deferred consideration in connection with acquisitions is carried at fair value

and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time, and is a Level 2 measurement.

Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):

	June 30, 2023								December 31, 2022
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets:
Assets held in rabbi trust	$	10,365	$	—	$	10,365	$	—	$	9,553	$	—	$	9,553	$	—
Cash equivalents (1):
Commercial paper	$	50,191	$	—	$	50,191	$	—	$	41,324	$	—	$	41,324	$	—
Money market funds	81,411		81,411		—		—		139,025		139,025		—		—
	$	131,602	$	81,411	$	50,191	$	—	$	180,349	$	139,025	$	41,324	$	—
Marketable debt securities, available-for-sale:
Short-term investments:
U.S. treasuries	$	65,495	$	65,495	$	—	$	—	$	134,549	$	134,549	$	—	$	—
Corporate debt	99,361		—		99,361		—		118,041		—		118,041		—
ABS and other	—		—		—		—		844		—		844		—
	$	164,856	$	65,495	$	99,361	$	—	$	253,434	$	134,549	$	118,885	$	—
Long-term investments:
U.S. treasuries	$	17,409	$	17,409	$	—	$	—	$	20,715	$	20,715	$	—	$	—
U.S. government sponsored entities	510		—		510		—		536		—		536		—
Corporate debt	42,250		—		42,250		—		41,358		—		41,358		—
ABS and other	10,542		—		10,542		—		5,986		—		5,986		—
	$	70,711	$	17,409	$	53,302	$	—	$	68,595	$	20,715	$	47,880	$	—
Liabilities:
Contingent consideration	$	6,518	$	—	$	—	$	6,518	$	7,067	$	—	$	—	$	7,067
Deferred consideration	$	2,018	$	—	$	2,018	$	—	$	5,119	$	—	$	5,119	$	—
Deferred compensation liability	$	8,086	$	8,086	$	—	$	—	$	6,661	$	6,661	$	—	$	—

(1) Included in cash, cash equivalents, and restricted cash on the accompanying condensed consolidated balance sheets.

There were no transfers in or out of Level 3 during the six months ended June 30, 2023 and 2022.

During the six months ended June 30, 2023, the Company considered current and future interest rates and the probability of achieving EBITDA and other performance targets in its determination of fair value for the contingent consideration. The Company is uncertain as to the extent of the volatility in the unobservable inputs in the foreseeable future. Deferred consideration in connection with acquisitions is carried at fair value and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time.

As of June 30, 2023 and December 31, 2022, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $17.3 million and $21.3 million, respectively. Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these payments will be made over the next one to four-year period. Changes in fair value are included in selling, general and administrative expense in the condensed consolidated statements of operations.

A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):

	Six Months Ended June 30,
	2023		2022
Beginning balance	$	7,067	$	9,312
Contingent consideration in connection with acquisitions	—		—
Change in fair value of contingent consideration(1)	511		(493)
Payments of contingent consideration	(1,060)		(1,040)
Ending balance	$	6,518	$	7,779

(1) Includes immaterial impact of foreign currency translation.

Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):

	Fair Value at June 30, 2023		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	6,518	Discounted cash flow	Expected life of cash flows	0.1-4.3 years	(2.2 years)
				Discount rate	6.2%-7.3%	(6.8%)
				Probability of achievement	0.0%-100.0%	(94.8%)
	Fair Value at December 31, 2022		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	7,067	Discounted cash flow	Expected life of cash flows	0.4-4.8 years	(2.7 years)
				Discount rate	6.0%-7.0%	(6.5)%
				Probability of achievement	0.0%-100.0%	(95.4)%

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

Nonrecurring Fair Value Measurements

In accordance with U.S. GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews the carrying value of intangibles, goodwill and other assets for indications of impairment at least annually. When indications of potential impairment are identified, the Company may be required to determine the fair value of those assets and record an adjustment for the carrying amount in excess of the fair value determined. Any fair value determination would be based on valuation approaches, which are appropriate under the circumstances and utilize Level 2 and Level 3 measurements as required.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Common Stock

As of June 30, 2023 and December 31, 2022, there were 38,460,595 and 39,255,838 shares of common stock, $0.0001 par value, issued and outstanding, which included unvested restricted stock awards (“RSAs”) issued to non-employee directors, respectively. See Note 11 – “(Loss) Earnings per Share” for additional information.

On August 1, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, payable on October 6, 2023, to stockholders of record at the close of business on September 15, 2023.

As of June 30, 2023, $2.2 million of dividend equivalents related to unvested stock awards are recorded in other liabilities in the condensed consolidated balance sheets. See Note 5 – “Selected Balance Sheet Data.”

Preferred Stock

The Company has 25,000,000 authorized shares of preferred stock with a par value $0.0001 per share. At June 30, 2023 and December 31, 2022, there were no preferred shares issued or outstanding.

Accumulated Other Comprehensive (Loss) Income

Amounts reclassified from accumulated other comprehensive (loss) income are included as a component of other income (expense), net or selling, general and administrative expense, as applicable, in the condensed consolidated statements of operations. The reclassifications were determined on a specific identification basis.

The Company has not provided for U.S. taxes on unremitted earnings of its foreign subsidiary as it is operating at a loss and has no earnings and profits to remit. As a result, deferred taxes were not provided related to the cumulative foreign currency translation adjustments.

Repurchases of Common Stock

On August 2, 2022, the Company's Board of Directors authorized a common stock repurchase program of up to $70 million. On May 2, 2023, the Company's Board of Directors approved an additional $70 million to repurchase common stock under its stock repurchase program. During the six months ended June 30, 2023, the Company repurchased and retired 1,098,561 shares of common stock for $34.4 million, at an average cost of $31.28 per share. As of June 30, 2023, $76.0 million remained authorized for repurchases under the stock repurchase program.

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Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation Plans

Stock-Based Compensation Plans

2013 Omnibus Equity Incentive Plan

The Company’s Board of Directors adopted the 2013 Omnibus Equity Incentive Plan (the “2013 Plan”), which became effective upon the Company’s IPO. In February 2017, the Board of Directors amended and restated the 2013 Plan, which was approved by the Company’s stockholders in May 2017. Grants are made from time to time by the compensation committee of the Company’s Board of Directors at its discretion, subject to certain restrictions as to the number and value of shares that may be granted to any individual. In addition, non-employee directors receive annual grants under a director compensation policy. The compensation committee of the Company’s Board of Directors has the option to grant dividend equivalents to unvested grants. Any dividend equivalents granted to unvested awards are paid to the participant at the time the related grants vest. As of June 30, 2023, there were 3,401,886 shares available for future grants under the 2013 Plan.

On August 1, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, with a payment date of October 6, 2023, to stockholders of record at the close of business on September 15, 2023. The Compensation Committee granted dividend equivalents to all unvested grants as of the record date.

As of June 30, 2023, $2.2 million of dividend equivalents remains to be paid upon vesting of stock awards.

Awards Granted and Settled

Under the 2013 Plan, the Company has issued RSAs to non-employee directors and restricted stock units (“RSUs”) to employees and independent contractors. RSAs vest over a one-year period from the date of grant, subject to service requirements. RSUs generally vest in equal annual installments over a five-year period from the date of grant or earlier as approved by the compensation committee of the Company’s Board of Directors. Dividend equivalents granted for unvested stock awards are paid at the time the stock awards vest. Any unvested awards and dividend equivalents are canceled upon termination as a service provider. As of June 30, 2023, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan.

During the six months ended June 30, 2023, 349,290 shares of RSUs and RSAs vested, with 125,319 shares of common stock withheld to pay applicable required employee statutory withholding taxes based on the market value of the shares on the vesting date. The shares withheld for taxes were returned to the share reserve and are available for future issuance in accordance with provisions of the 2013 Plan. Unvested RSUs will be settled through the issuance of new shares of common stock.

Outstanding Awards

Activity under the 2013 Plan consisted of the following (dollars in thousands, except weighted average per share data):

	Shares	Weighted- Average Grant Date Fair Value Per Share
Nonvested shares at December 31, 2022⁽¹⁾	1,741,461	$	42.14
Granted	556,260	34.09
Vested	(349,290)	42.10
Forfeited/canceled	(10,347)	40.90
Nonvested shares at June 30, 2023⁽¹⁾	1,938,084	$	39.85

(1) Nonvested RSUs will be settled through the issuance of new shares of common stock.

As of June 30, 2023, the Company had unrecognized stock-based compensation relating to RSUs and RSAs of approximately $68.2 million, which is expected to be recognized over a weighted-average period of 3.69 years.

Employee Stock Purchase Plan

In 2013, the Company adopted the 2013 Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to qualify under Section 423 of the Internal Revenue Code and provides for consecutive, non-overlapping six-month offering periods. The offering periods generally start on the first trading day on or after May 15 and November 15 of each year. Qualifying employees may purchase shares of the Company stock at a 10% discount based on the lower of the market price at the beginning or end of the offering period, subject to IRS limitations. The Company determined that the ESPP was a compensatory plan and is required to expense the fair value of the awards over each six-month offering period.

The ESPP initially had 366,667 shares of common stock reserved, and 121,615 shares of common stock remain available for issuance as of June 30, 2023. The ESPP provides for annual increases in the number of shares available for issuance under the ESPP, equal to the lesser of (i) 366,667 shares, (ii) 1% of the outstanding shares on such date, or (iii) an amount determined by the compensation committee of the Board of Directors. Pursuant to the provisions of the ESPP, the Board of Directors has determined to not provide for any annual increases to date. As of June 30, 2023, total unrecognized compensation cost related to the ESPP was $65,000 and is expected to be recognized over a weighted average period of 0.38 years.

SARs and DSUs

Prior to the IPO, certain employees were granted SARs. As of March 31, 2013, the outstanding SARs were frozen at the liability amount, and will be paid out to each participant in installments upon retirement or departure under the terms of the revised SARs agreements. To replace beneficial ownership in the SARs, the difference between the book value liability and the fair value of the awards was granted to plan participants in the form of deferred stock units (“DSUs”), which were fully vested upon receipt and will be settled in actual stock at a rate of 20% per year if the participant remains employed by the Company during that period (otherwise all unsettled shares of stock upon termination from service will be settled five years from the termination date, unless otherwise agreed to by the Company). In the event of death or termination of service after reaching the age of 67, 100% of the DSUs will be settled. As of December 31, 2022, all DSUs were settled.

Summary of Stock-Based Compensation

Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of operations and consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
ESPP	$	28	$	29	$	83	$	85
RSUs and RSAs	5,323		4,246		10,279		8,046
	$	5,351	$	4,275	$	10,362	$	8,131

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2023 was (45.5)% and 16.6%, respectively, compared to 24.9% and 25.5% for the three and six months ended June 30, 2022, respectively. The Company provides for the effects of income taxes in interim financial statements based on the Company’s estimate of its annual effective tax rate for the full year, which is based on forecasted income by jurisdiction where the Company operates, adjusted for any tax effects of items that relate discretely to the period, if any.

The provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (dollars in thousands):

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
Income tax (benefit) expense at the federal statutory rate	$	(1,260)	21.0	%	$	11,786	21.0	%	$	(3,668)	21.0	%	$	21,139	21.0	%
State income tax expense (benefit), net of federal benefit	315		(5.3)	%	2,389		4.3	%	(424)		2.4	%	4,422		4.4	%
(Windfall) shortfall tax benefits, net related to stock-based compensation	119		(2.0)	%	(1,758)		(3.1)	%	773		(4.4)	%	(2,064)		(2.1)	%
Change in valuation allowance	17		(0.3)	%	23		0.0	%	244		(1.4)	%	(81)		(0.1)	%
Permanent and other items (1)	3,537		(58.9)	%	1,515		2.7	%	170		(1.0)	%	2,296		2.3	%
	$	2,728	(45.5)	%	$	13,955	24.9	%	$	(2,905)	16.6	%	$	25,712	25.5	%

(1) Permanent items relate principally to compensation charges, qualified transportation fringe benefits, meals and entertainment, and other items principally related to the effect of providing taxes in the interim financial statements based on the estimated full year effective tax rate.

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(Loss) Earnings per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

(Loss) Earnings per Share

(Loss) Earnings per Share

Basic and diluted (loss) earnings per share for the three and six months ended June 30, 2023 and 2022, respectively consisted of the following (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator (Basic and Diluted):
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
Change in value for stock settled consideration(3)	13		(24)		37		(38)
Adjusted net (loss) income	$	(8,716)	$	42,144	$	(14,525)	$	74,913
Denominator:
Basic
Weighted average common shares issued and outstanding	38,553		39,936		38,880		39,829
Deduct: Unvested RSAs (1)	(15)		(12)		(13)		(13)
Add: Fully vested DSUs (2)	—		124		—		202
Weighted average common shares outstanding	38,538		40,048		38,867		40,018
Basic (loss) earnings per common share	$	(0.23)	$	1.05	$	(0.37)	$	1.87
Diluted
Weighted average common shares outstanding from above	38,538		40,048		38,867		40,018
Add: Dilutive effect of RSUs, RSAs & ESPP(5)	—		213		—		291
Add: Contingently issuable shares(3)(5)	—		81		—		81
Weighted average common shares outstanding	38,538		40,342		38,867		40,390
Diluted (loss) earnings per common share	$	(0.23)	$	1.04	$	(0.37)	$	1.85
Antidilutive shares excluded from diluted earnings per common share(4)	1,887		843		1,781		843

(1)RSAs were issued and outstanding to the non-employee directors and have a one-year vesting term subject to service requirements. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(2)Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(3)Relates to contingently issuable stock settled consideration.

(4)Primarily pertaining to RSU grants to the Company’s employees and independent contractors.

(5)Shares related to the Company's RSUs, RSAs, ESPP, and contingently issuable shares were excluded from the weighted average common shares outstanding for the three and six months ended June 30, 2023 because inclusion of such shares would be antidilutive in a period of loss.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Credit Agreement

On June 18, 2014, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”). On May 31, 2022, the Company executed an amended and restated Credit Agreement (the “First Amended and Restated Credit Agreement”) to extend the maturity date of the Credit Agreement on substantially the same terms and conditions as the original credit facility. The First Amended and Restated Credit Agreement provided for a $60.0 million principal amount senior secured revolving credit facility that was guaranteed by all of the Company’s domestic subsidiaries (the “Credit Facility”), which was scheduled to mature on August 1, 2022. On July 28, 2022, the Company entered into the Second Amended and Restated Credit Agreement, which provides for a three-year extension of its Credit Facility with Wells Fargo Bank, National Association on principally the same terms and conditions as the extension signed in May 2022. The new agreement matures on June 1, 2025.

The Company may borrow, repay and reborrow amounts under the Credit Facility until its maturity date, at which time all amounts outstanding under the Credit Facility must be repaid in full. Borrowings under the Credit Agreement are available for general corporate purposes and working capital. The Credit Facility includes a $10.0 million sublimit for the issuance of standby letters of credit of which $533,000 was utilized at June 30, 2023. Borrowings under the Credit Facility will bear interest at the Daily Simple SOFR rate plus a spread of between 1.00% to 1.25% depending on the Company’s total funded debt to EBITDA as defined in the Credit Agreement. In connection with the amendments of the Credit Agreement, the Company paid bank fees and other expenses, which are being amortized over the remaining term of the Credit Agreement. The Company pays a commitment fee of up to 0.1% per annum, payable quarterly, based on the amount of unutilized commitments under the Credit Facility. The amortization and commitment fee is included in the interest expense in the accompanying condensed consolidated statements of operations and was $26,000 and $22,000 for the three months ended June 30, 2023 and 2022, respectively, and $51,000 and $47,000 during the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, there were no amounts outstanding under the Credit Agreement.

The Credit Facility contains customary covenants, including financial and other covenant reporting requirements and events of default. Financial covenants require the Company, on a combined basis with its guarantors, to maintain (i) an EBITDAR Coverage Ratio (as defined in the Credit Agreement) of not less than 1.25:1.0 as of each quarter end, determined on a rolling four-quarter basis, and (ii) total funded debt to EBITDA not greater than 2.0:1.0 as of each quarter end, determined on a rolling four-quarter basis, and also limits investments in foreign entities and certain other loans. The Credit Facility is secured by substantially all assets of the Company, including pledges of 100% of the stock or other equity interest of each subsidiary except for the capital stock of a controlled foreign corporation (as defined in the Internal Revenue Code), in which case no such pledge is required. As of June 30, 2023, the Company was in compliance with all financial and non-financial covenants and has not experienced any limitation in its operations as a result of the covenants. Our ability to borrow under our Credit Facility is limited by our ability to comply with its covenants or obtain necessary waivers.

Strategic Alliance

The Company, in connection with the Strategic Alliance with MTRCC, has agreed to provide loan opportunities that may be funded through MTRCC’s DUS agreement with Fannie Mae. MTRCC's agreement with Fannie Mae requires MTRCC to guarantee a portion of each funded loan. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC. As of June 30, 2023, the Company has agreed to a maximum aggregate guarantee obligation of $114.7 million relating to loans with an unpaid balance of $688.1 million. The Company would be liable for its maximum aggregate guarantee obligation only if all of the loans for which it is providing a guarantee to MTRCC were to default and all of the collateral underlying these loans were determined to be without value at the time of settlement. As of June 30, 2023 and December 31, 2022, the Company has recorded an allowance for loss-sharing obligations of $656,000 and $275,000, respectively, and pledged $102,000 and $16,000, respectively, in a restricted bank account in support of the guarantee obligation.

Other

In connection with certain agreements with investment sales and financing professionals, the Company may agree to advance amounts to such professionals upon reaching certain time and performance goals. Such commitments as of June 30, 2023 aggregated $10.0 million.

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Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn August 1, 2023, 2023, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, payable on October 6, 2023, to stockholders of record at the close of business on September 15, 2023.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net (loss) income	$ (8,729)	$ 42,168	$ (14,562)	$ 74,951

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Insider Trading Arrangements

3 Months Ended

6 Months Ended

Jun. 30, 2023

shares

Jun. 30, 2023

shares

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our officers and directors for the three months ended June 30, 2023, which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 Plan”), was as follows:

Name	Title	Action	Date Adopted	Expiration Date	Aggregate # of Securities to be Purchased/Sold
Gregory A. LaBerge	Senior Vice President, Chief Administrative Officer	Adoption	May 22, 2023	Earlier of May 19, 2024 or when all shares are sold under the plan.	8,201

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Gregory A. LaBerge [Member]

Trading Arrangements, by Individual

Name

Gregory A. LaBerge

Title

Senior Vice President, Chief Administrative Officer

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

May 22, 2023

Arrangement Duration

363 days

Aggregate Available

8,201

8,201

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Description of Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Description of Business

Description of Business

Marcus & Millichap, Inc. (the “Company,” “Marcus & Millichap,” or “MMI”), a Delaware corporation, is a brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services. As of June 30, 2023, MMI operates 80 offices in the United States and Canada through its wholly-owned subsidiaries, including the operations of Marcus & Millichap Capital Corporation.

Basis of Presentation

Basis of Presentation The financial information presented in the accompanying unaudited condensed consolidated financial statements, has been prepared in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements and notes include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the condensed consolidated financial position, results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto, including the Company’s accounting policies for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed on February 28, 2023 with the SEC. The results of the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for other interim periods or for future years.

Consolidation

Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

Revenue Recognition

The Company generates real estate brokerage commissions by acting as a broker for real estate owners or investors seeking to buy or sell interests in commercial properties and generates financing fees from securing financing on purchase transactions, from refinancing its clients’ existing mortgage debt and other ancillary fees associated with financing activities, including, but not limited to, debt and equity advisory services, loan sales, due diligence services, guarantee fees, and loan performance fees.

Real Estate Brokerage Commissions

Contracts for representing buyers and sellers of real estate are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the close of escrow. At that time, the Company's performance is complete, and revenue is recorded.

Financing Fees

Contracts for representing potential borrowers are usually negotiated on a transaction-by-transaction basis. The consideration associated with the successful outcome remains constrained until the completion of a transaction which occurs at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with an exception for guarantee obligations, do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the loan closes.

Loan Performance Fees - For loans originated through the Strategic Alliance with MTRCC, the Company receives variable consideration in the form of loan performance fees based on a portion of the servicing fees expected to be received under the servicing contract for servicing the loan. As the Company is not obligated to perform any servicing functions and has no further obligations related to the transaction giving rise to the loan performance fees, the estimated value of the loan performance fees to be received is recorded at the time the loan closes and are collected over the estimated term of the related loan. Any changes in the estimate of loan performance fees to be received are recorded in revenue in the period the estimate changes.

Guarantee Obligations - For certain loans originated through the Strategic Alliance with MTRCC, the Company may agree, at its option, to indemnify MTRCC for a portion of MTRCC’s obligations for loans sold to Fannie Mae. For these loans, the Company allocates a portion of the transaction price and records a loan guarantee obligation based on its fair value. Revenue for this stand-ready obligation is recorded on a straight-line basis over the term of the estimated guarantee period and is recorded in financing fees in the condensed consolidated statements of operations. The guarantee obligation is capped at 16.7% of any unpaid principal balance in excess of the collateral securing such loan. For these loans, the Company is required to pledge cash in a restricted bank account in support of the guarantee obligation. The Company records an allowance for estimated losses related to the loans subject to the guarantee considering the risk characteristics of the loan, the loan's risk rating, historical loss experience, potential adverse situations affecting individual loans and other forecasted information as appropriate.

Mortgage Servicing - The Company recognized mortgage servicing revenue upon the acquisition of a servicing contract. The Company recorded servicing fees when earned, provided the loans were current and the debt service payments were made by the borrowers. As of September 30, 2022, the Company no longer owns any mortgage servicing rights.

Other Revenue

Other revenue includes fees generated from consulting and advisory services and fees are recognized when services are provided, or upon closing of the transaction.

Use of Estimates

Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, and restricted cash, investments in marketable debt securities, available-for-sale, security deposits (included under other assets, non-current) and commissions receivable, net. Cash, cash equivalents, and restricted cash are placed with high-credit quality financial institutions and invested in high-credit quality money market funds and commercial paper. Concentrations and ratings of marketable debt securities, available-for-sale are limited by the approved investment policy.

To reduce its credit risk, the Company monitors the credit standing of the financial institutions money market funds that represent amounts recorded as cash, cash equivalents, and restricted cash. The Company historically has not experienced any significant losses related to cash, cash equivalents, and restricted cash.

In September 2021, the Company entered into a Strategic Alliance (“Strategic Alliance”) with M&T Realty Capital Corporation (“MTRCC”) pursuant to which the Company has agreed to provide loan opportunities that may be funded through MTRCC’s Delegated Underwriting and Servicing Agreement (“DUS Agreement”) with the Federal National Mortgage Association (“Fannie Mae”) that requires MTRCC to guarantee a portion of each loan funded. On a loan-by-loan basis, the Company, at its option, can indemnify a portion of MTRCC’s guarantee obligation of loan opportunities presented to and closed by MTRCC through the DUS Agreement. The Company manages and limits the concentration of risk related to the guarantees assumed by monitoring the underlying property type, geographic location, credit of the borrowers, underlying debt service coverage, and loan to value ratios.

The Company derives its revenue from a broad range of real estate investors, owners, and users in the United States and Canada, none of which individually represents a significant concentration of credit risk. The Company maintains allowances, as needed, for estimated credit losses based on management’s assessment of the likelihood of collection. For the three and six months ended June 30, 2023 and 2022, no transaction represented 10% or more of total revenue. Further, while one or more transactions may represent 10% or more of commissions receivable at any reporting date, amounts due are typically collected within 10 days of settlement and, therefore, do not expose the Company to significant credit risk.

During the three and six months ended June 30, 2023, the Company’s Canadian operations represented 3.5% and 3.2% of total revenue, respectively. During both the three and six months ended June 30, 2022, the Company’s Canadian operations represented 2.2% of total revenue.

During each of the three and six months ended June 30, 2023 and 2022, no office represented 10% or more of total revenue.

Reorganization and Initial Public Offering

Reorganization and Initial Public Offering MMI was formed in June 2013 in preparation for Marcus & Millichap Company (“MMC”) to spin-off its majority-owned subsidiary, Marcus & Millichap Real Estate Investment Services, Inc. (“MMREIS”). Prior to the initial public offering (“IPO”) of MMI, all of the preferred and common stockholders of MMREIS (including MMC and employees of MMREIS) contributed all of their outstanding shares to MMI, in exchange for new MMI common stock. As a result, MMREIS became a wholly-owned subsidiary of MMI. Thereafter, MMC distributed 80.0% of the shares of MMI common stock to MMC’s shareholders and exchanged the remaining portion of its shares of MMI common stock for cancellation of indebtedness of MMC. MMI completed its IPO on November 5, 2013

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Computer software and hardware equipment	$	46,995	$	42,617
Furniture, fixtures and equipment	26,964		26,453
Less: accumulated depreciation and amortization	(45,497)		(41,426)
	$	28,462	$	27,644

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Investments in Marketable Debt Securities, Available-for-Sale (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Allowance for Credit Losses, Gross Unrealized Gains/Losses in Accumulated Other Comprehensive Income/Loss and Fair Value of Marketable Securities, Available-for-Sale, by Type of Security

Amortized cost, allowance for credit losses, gross unrealized gains (losses) in accumulated other comprehensive (loss) income and fair value of marketable debt securities, available-for-sale, by type of security consisted of the following (in thousands):

	June 30, 2023
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	65,984	$	—	$	—	$	(489)	$	65,495
Corporate debt	99,487		—		1		(127)		99,361
	$	165,471	$	—	$	1	$	(616)	$	164,856
Long-term investments:
U.S. treasuries	$	18,115	$	—	$	—	$	(706)	$	17,409
U.S. government sponsored entities	574		—		—		(64)		510
Corporate debt	44,923		—		6		(2,679)		42,250
Asset-backed securities (“ABS”) and other	11,146		—		—		(604)		10,542
	$	74,758	$	—	$	6	$	(4,053)	$	70,711

	December 31, 2022
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term investments:
U.S. treasuries	$	135,688	$	—	$	14	$	(1,153)	$	134,549
Corporate debt	118,135		—		1		(95)		118,041
ABS and other	859		—		—		(15)		$	844
	$	254,682	$	—	$	15	$	(1,263)	$	253,434
Long-term investments:
U.S. treasuries	$	21,434	$	—	$	—	$	(719)	$	20,715
U.S. government sponsored entities	602		—		—		(66)		536
Corporate debt	44,214		—		21		(2,877)		41,358
ABS and other	6,569		—		—		(583)		5,986
	$	72,819	$	—	$	21	$	(4,245)	$	68,595

Available-for-sale Marketable Debt Securities in a Continuous Unrealized Loss Position

The Company’s investments in marketable debt securities, available-for-sale, that have been in a continuous unrealized loss position, for which an allowance for credit losses has not been recorded, by type of security consisted of the following (in thousands):

	June 30, 2023
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	42,767	$	(139)	$	39,930	$	(1,056)	$	82,697	$	(1,195)
U.S. government sponsored entities	—		—		509		(64)		509		(64)
Corporate debt	107,067		(564)		25,047		(2,242)		132,114		(2,806)
ABS and other	4,623		(83)		5,887		(521)		10,510		(604)
	$	154,457	$	(786)	$	71,373	$	(3,883)	$	225,830	$	(4,669)

	December 31, 2022
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. treasuries	$	73,055	$	(1,232)	$	66,144	$	(640)	$	139,199	$	(1,872)
U.S. government sponsored entities	447		(46)		87		(20)		534		(66)
Corporate debt	130,816		(1,909)		10,681		(1,063)		141,497		(2,972)
ABS and other	4,710		(314)		2,091		(284)		6,801		(598)
	$	209,028	$	(3,501)	$	79,003	$	(2,007)	$	288,031	$	(5,508)

Gross Realized Gains and Losses from Sale of Available for Sale Marketable Debt Securities

Gross realized gains and losses from the sales of the Company’s marketable debt securities, available-for-sale, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Gross realized gains (1)	$	—	$	1	$	—	$	114
Gross realized losses (1)	$	(23)	$	(17)	$	(23)	$	(17)

(1) Recorded in other income (expense), net in the condensed consolidated statements of operations. The cost basis of securities sold were determined based on the specific identification method.

Amortized Cost and Fair Value of Marketable Debt Securities, Available-for-Sale, by Contractual Maturity

Amortized cost and fair value of marketable debt securities, available-for-sale, by contractual maturity consisted of the following (in thousands, except weighted average data):

	June 30, 2023				December 31, 2022
	Amortized  Cost		Fair Value		Amortized  Cost		Fair Value
Due in one year or less	$	165,471	$	164,856	$	254,683	$	253,434
Due after one year through five years	55,898		53,492		56,507		54,169
Due after five years through ten years	14,560		13,210		13,435		11,850
Due after ten years	4,300		4,009		2,876		2,576
	$	240,229	$	235,567	$	327,501	$	322,029
Weighted average contractual maturity			1.7 years				1.1 years

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Acquisitions, Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Summary of Goodwill and Intangible Assets, Net

Goodwill and intangible assets, net consisted of the following (in thousands):

	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Goodwill and intangible assets:
Goodwill	$	38,047	$	—	$	38,047	$	37,914	$	—	$	37,914
Intangible assets (1)	32,420		(16,942)		15,478		32,287		(14,505)		17,782
	$	70,467	$	(16,942)	$	53,525	$	70,201	$	(14,505)	$	55,696

(1) Total weighted average amortization period was 4.2 years and 4.5 years as of June 30, 2023 and December 31, 2022, respectively. Intangible assets principally include non-competes and customer relationships.

Summary of Changes in Carrying Carrying Amount of Goodwill

The changes in the carrying amount of goodwill consisted of the following (in thousands):

	Six Months Ended June 30, 2023
Beginning balance	$	37,914
Additions from acquisitions	—
Impact of foreign currency translation	133
Ending balance	$	38,047

Schedule of Estimated Amortization Expense for Intangible Assets

Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):

	June 30, 2023
Remainder of 2023	$	2,275
2024	4,101
2025	3,880
2026	2,156
2027	1,855
Thereafter	1,211
	$	15,478

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Selected Balance Sheet Data (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Security deposits	$	—	$	—	$	1,500	$	1,625
Employee notes receivable	52		6		38		—
Securities, held-to-maturity(1)	—		—		9,500		9,500
Loan performance fee receivable	1,261		766		6,565		4,261
Other(2)	4,537		6,510		489		473
	$	5,850	$	7,282	$	18,092	$	15,859

(1)Securities, held-to-maturity, are expected to mature on September 1, 2024 and accrue interest based on the 1-year treasury rate.

(2)Other primarily includes customer trust accounts and prepaid lease costs.

Schedule of Deferred Compensation and Commissions

Deferred compensation and commissions consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Stock appreciation rights (“SARs”) liability (1)	$	2,480	$	2,323	$	11,037	$	13,137
Commissions payable to investment sales and financing professionals	40,196		72,247		22,647		45,156
Deferred compensation liability (1)	471		493		7,615		6,168
Other	204		258		—		—
	$	43,351	$	75,321	$	41,299	$	64,461

(1) The SARs and deferred compensation liabilities become subject to payout at the time the participant is no longer considered a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to participants within the next twelve months have been classified as current.

Summary of Net Change in Carrying Value of Assets Held in Rabbi Trust and Deferred Compensation Liability

The net change in the carrying value of the assets held in the rabbi trust and the net change in the carrying value of the deferred compensation liability, each exclusive of additional contributions, distributions and trust expenses, consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Increase (decrease) in the carrying value of the assets held in the rabbi trust (1)	$	472	$	(1,259)	$	930	$	(1,784)
(Increase) decrease in the net carrying value of the deferred compensation obligation (2)	$	(452)	$	1,259	$	(885)	$	1,791

(1)Recorded in other income (expense), net in the condensed consolidated statements of operations.

(2)Recorded in selling, general and administrative expense in the condensed consolidated statements of operations.

Summary of Other Liabilities

Other liabilities consisted of the following (in thousands):

	Current				Non-Current
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Deferred consideration	$	1,294	$	3,633	$	724	$	1,486
Contingent consideration	1,513		1,726		5,005		5,341
Dividends payable	645		612		1,528		1,603
Stock repurchase payable	—		565		—		—
Loan guarantee obligation	537		2,040		2,696		—
Other	910		1,357		566		184
	$	4,899	$	9,933	$	10,519	$	8,614

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and liabilities at Fair Value on Recurring Basis

Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):

	June 30, 2023								December 31, 2022
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets:
Assets held in rabbi trust	$	10,365	$	—	$	10,365	$	—	$	9,553	$	—	$	9,553	$	—
Cash equivalents (1):
Commercial paper	$	50,191	$	—	$	50,191	$	—	$	41,324	$	—	$	41,324	$	—
Money market funds	81,411		81,411		—		—		139,025		139,025		—		—
	$	131,602	$	81,411	$	50,191	$	—	$	180,349	$	139,025	$	41,324	$	—
Marketable debt securities, available-for-sale:
Short-term investments:
U.S. treasuries	$	65,495	$	65,495	$	—	$	—	$	134,549	$	134,549	$	—	$	—
Corporate debt	99,361		—		99,361		—		118,041		—		118,041		—
ABS and other	—		—		—		—		844		—		844		—
	$	164,856	$	65,495	$	99,361	$	—	$	253,434	$	134,549	$	118,885	$	—
Long-term investments:
U.S. treasuries	$	17,409	$	17,409	$	—	$	—	$	20,715	$	20,715	$	—	$	—
U.S. government sponsored entities	510		—		510		—		536		—		536		—
Corporate debt	42,250		—		42,250		—		41,358		—		41,358		—
ABS and other	10,542		—		10,542		—		5,986		—		5,986		—
	$	70,711	$	17,409	$	53,302	$	—	$	68,595	$	20,715	$	47,880	$	—
Liabilities:
Contingent consideration	$	6,518	$	—	$	—	$	6,518	$	7,067	$	—	$	—	$	7,067
Deferred consideration	$	2,018	$	—	$	2,018	$	—	$	5,119	$	—	$	5,119	$	—
Deferred compensation liability	$	8,086	$	8,086	$	—	$	—	$	6,661	$	6,661	$	—	$	—

(1) Included in cash, cash equivalents, and restricted cash on the accompanying condensed consolidated balance sheets.

Schedule of Reconciliation of Contingent Consideration Measured at Fair Value on Recurring Basis

A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):

	Six Months Ended June 30,
	2023		2022
Beginning balance	$	7,067	$	9,312
Contingent consideration in connection with acquisitions	—		—
Change in fair value of contingent consideration(1)	511		(493)
Payments of contingent consideration	(1,060)		(1,040)
Ending balance	$	6,518	$	7,779

(1) Includes immaterial impact of foreign currency translation.

Fair Value Liabilities Measured On Recurring Basis Valuation Techniques

Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):

	Fair Value at June 30, 2023		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	6,518	Discounted cash flow	Expected life of cash flows	0.1-4.3 years	(2.2 years)
				Discount rate	6.2%-7.3%	(6.8%)
				Probability of achievement	0.0%-100.0%	(94.8%)
	Fair Value at December 31, 2022		Valuation Technique	Unobservable inputs	Range (Weighted Average)(1)
Contingent consideration	$	7,067	Discounted cash flow	Expected life of cash flows	0.4-4.8 years	(2.7 years)
				Discount rate	6.0%-7.0%	(6.5)%
				Probability of achievement	0.0%-100.0%	(95.4)%

(1) Unobservable inputs were weighted by the relative fair value of the instruments.

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Stock-Based Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Outstanding Awards Under 2013 Omnibus Equity Incentive Plan

Activity under the 2013 Plan consisted of the following (dollars in thousands, except weighted average per share data):

	Shares	Weighted- Average Grant Date Fair Value Per Share
Nonvested shares at December 31, 2022⁽¹⁾	1,741,461	$	42.14
Granted	556,260	34.09
Vested	(349,290)	42.10
Forfeited/canceled	(10,347)	40.90
Nonvested shares at June 30, 2023⁽¹⁾	1,938,084	$	39.85

(1) Nonvested RSUs will be settled through the issuance of new shares of common stock.

Stock-Based Compensation Expense

Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of operations and consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
ESPP	$	28	$	29	$	83	$	85
RSUs and RSAs	5,323		4,246		10,279		8,046
	$	5,351	$	4,275	$	10,362	$	8,131

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Components of Provision for Income Taxes and Income before Provision for Income Taxes

The provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (dollars in thousands):

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
Income tax (benefit) expense at the federal statutory rate	$	(1,260)	21.0	%	$	11,786	21.0	%	$	(3,668)	21.0	%	$	21,139	21.0	%
State income tax expense (benefit), net of federal benefit	315		(5.3)	%	2,389		4.3	%	(424)		2.4	%	4,422		4.4	%
(Windfall) shortfall tax benefits, net related to stock-based compensation	119		(2.0)	%	(1,758)		(3.1)	%	773		(4.4)	%	(2,064)		(2.1)	%
Change in valuation allowance	17		(0.3)	%	23		0.0	%	244		(1.4)	%	(81)		(0.1)	%
Permanent and other items (1)	3,537		(58.9)	%	1,515		2.7	%	170		(1.0)	%	2,296		2.3	%
	$	2,728	(45.5)	%	$	13,955	24.9	%	$	(2,905)	16.6	%	$	25,712	25.5	%

(1) Permanent items relate principally to compensation charges, qualified transportation fringe benefits, meals and entertainment, and other items principally related to the effect of providing taxes in the interim financial statements based on the estimated full year effective tax rate.

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(Loss) Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share, Including Antidilutive Securities Excluded from Computation of Earnings Per Share

Basic and diluted (loss) earnings per share for the three and six months ended June 30, 2023 and 2022, respectively consisted of the following (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator (Basic and Diluted):
Net (loss) income	$	(8,729)	$	42,168	$	(14,562)	$	74,951
Change in value for stock settled consideration(3)	13		(24)		37		(38)
Adjusted net (loss) income	$	(8,716)	$	42,144	$	(14,525)	$	74,913
Denominator:
Basic
Weighted average common shares issued and outstanding	38,553		39,936		38,880		39,829
Deduct: Unvested RSAs (1)	(15)		(12)		(13)		(13)
Add: Fully vested DSUs (2)	—		124		—		202
Weighted average common shares outstanding	38,538		40,048		38,867		40,018
Basic (loss) earnings per common share	$	(0.23)	$	1.05	$	(0.37)	$	1.87
Diluted
Weighted average common shares outstanding from above	38,538		40,048		38,867		40,018
Add: Dilutive effect of RSUs, RSAs & ESPP(5)	—		213		—		291
Add: Contingently issuable shares(3)(5)	—		81		—		81
Weighted average common shares outstanding	38,538		40,342		38,867		40,390
Diluted (loss) earnings per common share	$	(0.23)	$	1.04	$	(0.37)	$	1.85
Antidilutive shares excluded from diluted earnings per common share(4)	1,887		843		1,781		843

(1)RSAs were issued and outstanding to the non-employee directors and have a one-year vesting term subject to service requirements. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(2)Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 9 – “Stock-Based Compensation Plans” for additional information.

(3)Relates to contingently issuable stock settled consideration.

(4)Primarily pertaining to RSU grants to the Company’s employees and independent contractors.

(5)Shares related to the Company's RSUs, RSAs, ESPP, and contingently issuable shares were excluded from the weighted average common shares outstanding for the three and six months ended June 30, 2023 because inclusion of such shares would be antidilutive in a period of loss.

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Description of Business and Basis of Presentation - Narrative (Detail) - office	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Class of Stock [Line Items]
Number of offices			80
Percentage of common stock distributed			80.00%
Commission's receivable settled period			10 days
Guarantee obligations			16.70%
Total Revenues | Geographic Concentration Risk | Canada | Customer
Class of Stock [Line Items]
Concentration risk percentage	3.50%	2.20%	3.20%	2.20%

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Property and Equipment, Net - Schedule of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation and amortization	$ (45,497)	$ (41,426)
Property and equipment, net	28,462	27,644
Computer software and hardware equipment
Property, Plant and Equipment [Line Items]
Property and equipment	46,995	42,617
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property and equipment	$ 26,964	$ 26,453

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Property and Equipment, Net - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 2.3	$ 1.8	$ 4.3	$ 3.7

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Investments in Marketable Debt Securities, Available-for-Sale - Schedule of Amortized Cost and Fair Value of Marketable Securities, Available-for-Sale, by Type of Security (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost	$ 240,229	$ 327,501
Fair Value	235,567	322,029
Short-term investments:
Marketable Securities [Line Items]
Amortized Cost	165,471	254,682
Allowance for Credit Losses	0	0
Gross Unrealized Gains	1	15
Gross Unrealized Losses	(616)	(1,263)
Fair Value	164,856	253,434
Long-term investments:
Marketable Securities [Line Items]
Amortized Cost	74,758	72,819
Allowance for Credit Losses	0	0
Gross Unrealized Gains	6	21
Gross Unrealized Losses	(4,053)	(4,245)
Fair Value	70,711	68,595
U.S. treasuries | Short-term investments:
Marketable Securities [Line Items]
Amortized Cost	65,984	135,688
Allowance for Credit Losses	0	0
Gross Unrealized Gains	0	14
Gross Unrealized Losses	(489)	(1,153)
Fair Value	65,495	134,549
U.S. treasuries | Long-term investments:
Marketable Securities [Line Items]
Amortized Cost	18,115	21,434
Allowance for Credit Losses	0	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(706)	(719)
Fair Value	17,409	20,715
U.S. government sponsored entities | Long-term investments:
Marketable Securities [Line Items]
Amortized Cost	574	602
Allowance for Credit Losses	0	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(64)	(66)
Fair Value	510	536
Corporate debt | Short-term investments:
Marketable Securities [Line Items]
Amortized Cost	99,487	118,135
Allowance for Credit Losses	0	0
Gross Unrealized Gains	1	1
Gross Unrealized Losses	(127)	(95)
Fair Value	99,361	118,041
Corporate debt | Long-term investments:
Marketable Securities [Line Items]
Amortized Cost	44,923	44,214
Allowance for Credit Losses	0	0
Gross Unrealized Gains	6	21
Gross Unrealized Losses	(2,679)	(2,877)
Fair Value	42,250	41,358
Asset-backed securities (“ABS”) and other | Short-term investments:
Marketable Securities [Line Items]
Amortized Cost		859
Allowance for Credit Losses		0
Gross Unrealized Gains		0
Gross Unrealized Losses		(15)
Fair Value		844
Asset-backed securities (“ABS”) and other | Long-term investments:
Marketable Securities [Line Items]
Amortized Cost	11,146	6,569
Allowance for Credit Losses	0	0
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(604)	(583)
Fair Value	$ 10,542	$ 5,986

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Investments in Marketable Debt Securities, Available-for-Sale - Amortized Cost and Fair Value of Investments in Available for Sale Securities Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Available for sale securities continuous unrealized loss position for less than 12 months, fair value	$ 154,457	$ 209,028
Available for sale securities continuous unrealized loss position for less than 12 months, gross unrealized loss	(786)	(3,501)
Available for sale securities continuous unrealized loss position for 12 months or longer, fair value	71,373	79,003
Available for sale securities continuous unrealized loss position for 12 months or longer, gross unrealized loss	(3,883)	(2,007)
Available for sale securities continuous unrealized loss position, fair value	225,830	288,031
Available for sale securities continuous unrealized loss position, gross unrealized loss	(4,669)	(5,508)
U.S. treasuries
Marketable Securities [Line Items]
Available for sale securities continuous unrealized loss position for less than 12 months, fair value	42,767	73,055
Available for sale securities continuous unrealized loss position for less than 12 months, gross unrealized loss	(139)	(1,232)
Available for sale securities continuous unrealized loss position for 12 months or longer, fair value	39,930	66,144
Available for sale securities continuous unrealized loss position for 12 months or longer, gross unrealized loss	(1,056)	(640)
Available for sale securities continuous unrealized loss position, fair value	82,697	139,199
Available for sale securities continuous unrealized loss position, gross unrealized loss	(1,195)	(1,872)
U.S. government sponsored entities
Marketable Securities [Line Items]
Available for sale securities continuous unrealized loss position for less than 12 months, fair value	0	447
Available for sale securities continuous unrealized loss position for less than 12 months, gross unrealized loss	0	(46)
Available for sale securities continuous unrealized loss position for 12 months or longer, fair value	509	87
Available for sale securities continuous unrealized loss position for 12 months or longer, gross unrealized loss	(64)	(20)
Available for sale securities continuous unrealized loss position, fair value	509	534
Available for sale securities continuous unrealized loss position, gross unrealized loss	(64)	(66)
Corporate debt
Marketable Securities [Line Items]
Available for sale securities continuous unrealized loss position for less than 12 months, fair value	107,067	130,816
Available for sale securities continuous unrealized loss position for less than 12 months, gross unrealized loss	(564)	(1,909)
Available for sale securities continuous unrealized loss position for 12 months or longer, fair value	25,047	10,681
Available for sale securities continuous unrealized loss position for 12 months or longer, gross unrealized loss	(2,242)	(1,063)
Available for sale securities continuous unrealized loss position, fair value	132,114	141,497
Available for sale securities continuous unrealized loss position, gross unrealized loss	(2,806)	(2,972)
Asset-backed securities (“ABS”) and other
Marketable Securities [Line Items]
Available for sale securities continuous unrealized loss position for less than 12 months, fair value	4,623	4,710
Available for sale securities continuous unrealized loss position for less than 12 months, gross unrealized loss	(83)	(314)
Available for sale securities continuous unrealized loss position for 12 months or longer, fair value	5,887	2,091
Available for sale securities continuous unrealized loss position for 12 months or longer, gross unrealized loss	(521)	(284)
Available for sale securities continuous unrealized loss position, fair value	10,510	6,801
Available for sale securities continuous unrealized loss position, gross unrealized loss	$ (604)	$ (598)

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Investments in Marketable Debt Securities, Available-for-Sale - Gross Realized Gains and Losses from Sale of Available for Sale Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 0	$ 1	$ 0	$ 114
Gross realized losses	$ (23)	$ (17)	$ (23)	$ (17)

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Investments in Marketable Debt Securities, Available-for-Sale - Narrative (Detail) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($) security	Dec. 31, 2022
Marketable Securities [Line Items]
Weighted average contractual maturity	1 year 8 months 12 days	1 year 1 month 6 days
Fitch, AA Rating | Moody's, Aaa Rating | Standard & Poor's, AA Rating
Marketable Securities [Line Items]
Weighted average contractual maturity	1 year 8 months 12 days
Fitch, AA+ Rating | Moody's, Aa3 Rating | Standard & Poor's, AA+ Rating | Weighted Average Credit AA Plus Rating
Marketable Securities [Line Items]
Available-for-sale, securities number of unrealized loss positions | security	226
Available-for-sale, securities in unrealized loss positions, accumulated loss | $	$ 4.7
Percentage of amortized cost	2.00%

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Investments in Marketable Debt Securities, Available-for-Sale - Schedule of Amortized Cost and Fair Value of Marketable Securities, Available-for-Sale, by Contractual Maturity (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Amortized Cost
Due in one year or less	$ 165,471	$ 254,683
Due after one year through five years	55,898	56,507
Due after five years through ten years	14,560	13,435
Due after ten years	4,300	2,876
Amortized Cost	240,229	327,501
Fair Value
Due in one year or less	164,856	253,434
Due after one year through five years	53,492	54,169
Due after five years through ten years	13,210	11,850
Due after ten years	4,009	2,576
Fair Value	$ 235,567	$ 322,029
Weighted average contractual maturity	1 year 8 months 12 days	1 year 1 month 6 days

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Acquisitions, Goodwill and Other Intangible Assets - Narrative (Detail) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) reportingUnit	Jun. 30, 2022 USD ($)
Business Combination and Asset Acquisition [Abstract]
Number of reporting units | reportingUnit			1
Amortization expense | $	$ 1.1	$ 1.1	$ 2.3	$ 2.3

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Acquisitions, Goodwill and Other Intangible Assets - Summary of Goodwill and Intangible Assets (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Goodwill, gross carrying amount	$ 38,047	$ 37,914
Intangible assets, gross carrying amount	32,420	32,287
Goodwill and intangible assets, gross carrying amount, total	70,467	70,201
Intangible assets, accumulated amortization	(16,942)	(14,505)
Goodwill, net book value	38,047	37,914
Intangible assets, net book value	15,478	17,782
Goodwill and intangible assets, net book value	$ 53,525	$ 55,696
Weighted average amortization intangible assets	4 years 2 months 12 days	4 years 6 months

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Acquisitions, Goodwill and Other Intangible Assets - Summary of Net Change in Carrying Value of Goodwill (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 37,914
Additions from acquisitions	0
Impact of foreign currency translation	133
Ending balance	$ 38,047

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Acquisitions, Goodwill and Other Intangible Assets - Schedule of Estimated Amortization Expense for Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Remainder of 2023	$ 2,275
2024	4,101
2025	3,880
2026	2,156
2027	1,855
Thereafter	1,211
Total	$ 15,478	$ 17,782

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Selected Balance Sheet Data - Narrative (Detail) - USD ($) $ in Thousands				3 Months Ended		6 Months Ended
	Jan. 01, 2022	Jan. 01, 2021	Jan. 01, 2014	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Mar. 31, 2013
Schedule Of Accrued Expenses [Line Items]
Advances and loans and commissions receivable allowance for credit loss				$ 578		$ 578		$ 791
SARs frozen liability amount				11,037		$ 11,037		$ 13,137
Treasury note term						1 year
Interest expense				216	$ 158	$ 431	$ 318
Commissions Payable
Schedule Of Accrued Expenses [Line Items]
Maximum payment deferral period for certain commissions payable						3 years
SARs
Schedule Of Accrued Expenses [Line Items]
SARs frozen liability amount									$ 20,000
Treasury note term			10 years
Base spread on SARs liability variable rate			2.00%
SARs liability interest accrual rates	3.63%	5.79%
Interest expense				$ 190	$ 136	$ 380	271
Payments for SARs Liability						$ 2,200	2,300
Deferred Compensation Liability
Schedule Of Accrued Expenses [Line Items]
Fair value of deferred compensation plan assets						110.00%
Payments made during the period						$ 163	$ 625
Deferred Compensation Liability | Minimum
Schedule Of Accrued Expenses [Line Items]
Payout period						2 years
Deferred Compensation Liability | Maximum
Schedule Of Accrued Expenses [Line Items]
Payout period						15 years

XML

Selected Balance Sheet Data - Schedule of Other Assets (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Other Assets [Line Items]
Other assets, current	$ 5,850	$ 7,282
Other assets, non-current	$ 18,092	15,859
Treasury note term	1 year
Security deposits
Other Assets [Line Items]
Other assets, current	$ 0	0
Other assets, non-current	1,500	1,625
Employee notes receivable
Other Assets [Line Items]
Other assets, current	52	6
Other assets, non-current	38	0
Securities, held-to-maturity
Other Assets [Line Items]
Other assets, current	0	0
Other assets, non-current	9,500	9,500
Loan performance fee receivable
Other Assets [Line Items]
Other assets, current	1,261	766
Other assets, non-current	6,565	4,261
Other
Other Assets [Line Items]
Other assets, current	4,537	6,510
Other assets, non-current	$ 489	$ 473

XML

Selected Balance Sheet Data - Components of Deferred Compensation and Commissions (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current
Stock appreciation rights ("SARs") liability	$ 2,480	$ 2,323
Commissions payable to investment sales and financing professionals	40,196	72,247
Deferred compensation liability	471	493
Other	204	258
Deferred compensation and commissions	43,351	75,321
Non-Current
Stock appreciation rights ("SARs") liability	11,037	13,137
Commissions payable to investment sales and financing professionals	22,647	45,156
Deferred compensation liability	7,615	6,168
Other	0	0
Deferred compensation and commissions	$ 41,299	$ 64,461

XML

Selected Balance Sheet Data - Summary of Net Change in Carrying Value of Assets Held in Rabbi Trust and Deferred Compensation Liability (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Increase (decrease) in the carrying value of the assets held in the rabbi trust	$ 472	$ (1,259)	$ 930	$ (1,784)
(Increase) decrease in the net carrying value of the deferred compensation obligation	$ (452)	$ 1,259	$ (885)	$ 1,791

XML

Selected Balance Sheet Data - Schedule of Other Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current
Deferred consideration	$ 1,294	$ 3,633
Contingent consideration	1,513	1,726
Dividends payable	645	612
Stock repurchase payable	0	565
Loan guarantee obligation	537	2,040
Other	910	1,357
Other liabilities	4,899	9,933
Non-Current
Deferred consideration	724	1,486
Contingent consideration	5,005	5,341
Dividends payable	1,528	1,603
Stock repurchase payable	0	0
Loan guarantee obligation	2,696	0
Other	566	184
Other liabilities	$ 10,519	$ 8,614

XML

Related-Party Transactions - Narrative (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Total revenue	$ 162,866,000	$ 395,957,000	$ 317,658,000	$ 715,421,000
Cost of services	101,163,000	256,042,000	196,590,000	452,810,000
Operating lease right-of-use assets, net	102,741,000		102,741,000		$ 87,945,000
Other assets, current	5,850,000		5,850,000		7,282,000
Accounts payable and accrued expenses	11,893,000		11,893,000		11,450,000
Related Party
Related Party Transaction [Line Items]
Other assets, current	90,000		90,000		6,000
MMC
Related Party Transaction [Line Items]
Operating lease cost	295,000	320,000	592,000	653,000
Operating lease right-of-use assets, net	8,115,000		8,115,000		9,041,000
Operating lease liability	8,442,000		8,442,000		9,262,000
MMC | Related Party
Related Party Transaction [Line Items]
Total revenue	0	912,000	441,000	2,510,000
Other assets, current	3,000		3,000
Accounts payable and accrued expenses					$ 79,000
MMC | Transition Services Agreement
Related Party Transaction [Line Items]
Selling, general and administrative expense	(19,000)	(7,000)	(44,000)	(18,000)
MMC | Brokerage And Financing Services | Related Party
Related Party Transaction [Line Items]
Cost of services	$ 0	$ 547,000	$ 264,000	$ 1,501,000
Chairman And Founder
Related Party Transaction [Line Items]
Beneficial ownership percentage			39.00%

XML

Fair Value Measurements - Schedule of Assets and Liabilities at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Assets
Assets held in rabbi trust	$ 10,365	$ 9,553
Marketable debt securities, available-for-sale	235,567	322,029
Liabilities:
Contingent consideration	6,518		$ 7,779
Deferred consideration	2,018	5,119
Deferred compensation liability	8,086	6,661
Short-term investments:
Assets
Marketable debt securities, available-for-sale	164,856	253,434
Long-term investments:
Assets
Marketable debt securities, available-for-sale	70,711	68,595
U.S. treasuries | Short-term investments:
Assets
Marketable debt securities, available-for-sale	65,495	134,549
U.S. treasuries | Long-term investments:
Assets
Marketable debt securities, available-for-sale	17,409	20,715
U.S. government sponsored entities | Long-term investments:
Assets
Marketable debt securities, available-for-sale	510	536
Corporate debt | Short-term investments:
Assets
Marketable debt securities, available-for-sale	99,361	118,041
Corporate debt | Long-term investments:
Assets
Marketable debt securities, available-for-sale	42,250	41,358
ABS and other | Short-term investments:
Assets
Marketable debt securities, available-for-sale		844
ABS and other | Long-term investments:
Assets
Marketable debt securities, available-for-sale	10,542	5,986
Recurring
Assets
Cash equivalents	131,602	180,349
Recurring | Short-term investments:
Assets
Marketable debt securities, available-for-sale	164,856	253,434
Recurring | Long-term investments:
Assets
Marketable debt securities, available-for-sale	70,711	68,595
Recurring | Commercial paper
Assets
Cash equivalents	50,191	41,324
Recurring | Money market funds
Assets
Cash equivalents	81,411	139,025
Recurring | Assets held in rabbi trust
Assets
Assets held in rabbi trust	10,365	9,553
Recurring | U.S. treasuries | Short-term investments:
Assets
Marketable debt securities, available-for-sale	65,495	134,549
Recurring | U.S. treasuries | Long-term investments:
Assets
Marketable debt securities, available-for-sale	17,409	20,715
Recurring | U.S. government sponsored entities | Long-term investments:
Assets
Marketable debt securities, available-for-sale	510	536
Recurring | Corporate debt | Short-term investments:
Assets
Marketable debt securities, available-for-sale	99,361	118,041
Recurring | Corporate debt | Long-term investments:
Assets
Marketable debt securities, available-for-sale	42,250	41,358
Recurring | ABS and other | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	844
Recurring | ABS and other | Long-term investments:
Assets
Marketable debt securities, available-for-sale	10,542	5,986
Level 1 | Recurring
Assets
Cash equivalents	81,411	139,025
Liabilities:
Deferred consideration	0	0
Deferred compensation liability	8,086	6,661
Level 1 | Recurring | Short-term investments:
Assets
Marketable debt securities, available-for-sale	65,495	134,549
Level 1 | Recurring | Long-term investments:
Assets
Marketable debt securities, available-for-sale	17,409	20,715
Level 1 | Recurring | Commercial paper
Assets
Cash equivalents	0	0
Level 1 | Recurring | Money market funds
Assets
Cash equivalents	81,411	139,025
Level 1 | Recurring | Assets held in rabbi trust
Assets
Assets held in rabbi trust	0	0
Level 1 | Recurring | U.S. treasuries | Short-term investments:
Assets
Marketable debt securities, available-for-sale	65,495	134,549
Level 1 | Recurring | U.S. treasuries | Long-term investments:
Assets
Marketable debt securities, available-for-sale	17,409	20,715
Level 1 | Recurring | U.S. government sponsored entities | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 1 | Recurring | Corporate debt | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 1 | Recurring | Corporate debt | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 1 | Recurring | ABS and other | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 1 | Recurring | ABS and other | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 2 | Recurring
Assets
Cash equivalents	50,191	41,324
Liabilities:
Deferred consideration	2,018	5,119
Deferred compensation liability	0	0
Level 2 | Recurring | Short-term investments:
Assets
Marketable debt securities, available-for-sale	99,361	118,885
Level 2 | Recurring | Long-term investments:
Assets
Marketable debt securities, available-for-sale	53,302	47,880
Level 2 | Recurring | Commercial paper
Assets
Cash equivalents	50,191	41,324
Level 2 | Recurring | Money market funds
Assets
Cash equivalents	0	0
Level 2 | Recurring | Assets held in rabbi trust
Assets
Assets held in rabbi trust	10,365	9,553
Level 2 | Recurring | U.S. treasuries | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 2 | Recurring | U.S. treasuries | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 2 | Recurring | U.S. government sponsored entities | Long-term investments:
Assets
Marketable debt securities, available-for-sale	510	536
Level 2 | Recurring | Corporate debt | Short-term investments:
Assets
Marketable debt securities, available-for-sale	99,361	118,041
Level 2 | Recurring | Corporate debt | Long-term investments:
Assets
Marketable debt securities, available-for-sale	42,250	41,358
Level 2 | Recurring | ABS and other | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	844
Level 2 | Recurring | ABS and other | Long-term investments:
Assets
Marketable debt securities, available-for-sale	10,542	5,986
Level 3 | Recurring
Assets
Cash equivalents	0	0
Liabilities:
Deferred consideration	0	0
Deferred compensation liability	0	0
Level 3 | Recurring | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | Commercial paper
Assets
Cash equivalents	0	0
Level 3 | Recurring | Money market funds
Assets
Cash equivalents	0	0
Level 3 | Recurring | Assets held in rabbi trust
Assets
Assets held in rabbi trust	0	0
Level 3 | Recurring | U.S. treasuries | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | U.S. treasuries | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | U.S. government sponsored entities | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | Corporate debt | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | Corporate debt | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | ABS and other | Short-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Level 3 | Recurring | ABS and other | Long-term investments:
Assets
Marketable debt securities, available-for-sale	0	0
Contingent consideration
Liabilities:
Contingent consideration	6,518	7,067		$ 9,312
Contingent consideration | Level 1 | Recurring
Liabilities:
Contingent consideration	0	0
Contingent consideration | Level 2 | Recurring
Liabilities:
Contingent consideration	0	0
Contingent consideration | Level 3
Liabilities:
Contingent consideration	$ 6,518	$ 7,067

XML

Fair Value Measurements - Narrative (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, assets, level 3 transfers, amount	$ 0	$ 0
Contingent and deferred consideration, maximum undiscounted payment	$ 17,300,000		$ 21,300,000
Recurring | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Earn-out period for contingent and deferred consideration	1 year
Recurring | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Earn-out period for contingent and deferred consideration	4 years

XML

Fair Value Measurements - Schedule of Reconciliation of Contingent Consideration Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Ending balance	$ 6,518	$ 7,779
Contingent consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	7,067	9,312
Contingent consideration in connection with acquisitions	0	0
Change in fair value of contingent consideration	511	(493)
Payments of contingent consideration	(1,060)	$ (1,040)
Ending balance	$ 6,518

XML

Fair Value Measurements - Schedule of Fair Value Liabilities Measured On Recurring Basis Valuation Techniques (Detail) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 6,518		$ 7,779
Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	6,518	$ 7,067		$ 9,312
Level 3 | Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	6,518	7,067
Level 3 | Recurring | Contingent consideration | Discounted cash flow
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 6,518	$ 7,067
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Expected life of cash flows | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.1	0.4
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Expected life of cash flows | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	4.3	4.8
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Expected life of cash flows | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	2.2	2.7
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Discount rate | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.062	0.060
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Discount rate | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.073	0.070
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Discount rate | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.068	(0.065)
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Probability of achievement | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.000	0.000
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Probability of achievement | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	1.000	1.000
Level 3 | Recurring | Contingent consideration | Discounted cash flow | Probability of achievement | Weighted Average
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.948	(0.954)

XML

Stockholders' Equity - Narrative (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2023	May 02, 2023	Apr. 06, 2023	Dec. 31, 2022	Aug. 02, 2022
Common stock, shares issued (in shares)	38,460,595			39,255,838
Common stock, shares outstanding (in shares)	38,460,595			39,255,838
Common stock share, par value (in dollars per share)	$ 0.0001			$ 0.0001
Preferred stock, shares authorized (in shares)	25,000,000			25,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001			$ 0.0001
Preferred stock, shares issued (in shares)	0			0
Preferred stock, shares outstanding (in shares)	0			0
Undistributed earnings of foreign subsidiary	$ 0
Stock repurchase program, authorized amount		$ 70,000			$ 70,000
Stock repurchased and retired (in shares)	1,098,561
Stock repurchased and retired	$ 34,400
Average cost (in dollars per share)	$ 31.28
Stock repurchase program, remaining authorized repurchase amount	$ 76,000
Unvested Restricted Stock
Dividends payable			$ 2,200
Unvested Restricted Stock | 2013 Omnibus Equity Incentive Plan
Dividends payable	$ 2,200

XML

Stock-Based Compensation Plans - 2013 Omnibus Equity Incentive Plan (Detail) - USD ($) $ in Millions	Jun. 30, 2023	Apr. 06, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares available for grant (in shares)	3,401,886
Unvested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends payable		$ 2.2
2013 Omnibus Equity Incentive Plan | Unvested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividends payable	$ 2.2

XML

Stock-Based Compensation Plans - Awards Granted and Settled (Details)	6 Months Ended
	Jun. 30, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested shares (in shares)	349,290
2013 Omnibus Equity Incentive Plan | Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding under compensation plan (in shares)	0
Number of shares issued under compensation plan (in shares)	0
Restricted Stock Awards | 2013 Omnibus Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Restricted Stock Units | 2013 Omnibus Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years
Vested shares (in shares)	349,290
Number of common stock shares withheld to pay employee statutory withholding taxes (in shares)	125,319
Performance Shares | 2013 Omnibus Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding under compensation plan (in shares)	0
Number of shares issued under compensation plan (in shares)	0
Performance Units | 2013 Omnibus Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding under compensation plan (in shares)	0
Number of shares issued under compensation plan (in shares)	0
SARs | 2013 Omnibus Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding under compensation plan (in shares)	0
Number of shares issued under compensation plan (in shares)	0

XML

Stock-Based Compensation Plans - Outstanding Awards Under 2013 Omnibus Equity Incentive Plan (Detail) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Shares
Nonvested shares at beginning (in shares) | shares	1,741,461
Granted (in shares) | shares	556,260
Vested (in shares) | shares	(349,290)
Forfeited/canceled (in shares) | shares	(10,347)
Nonvested shares at ending (in shares) | shares	1,938,084
Weighted- Average Grant Date Fair Value Per Share
Nonvested at beginning (in dollars per share) | $ / shares	$ 42.14
Granted (in dollars per share) | $ / shares	34.09
Vested (in dollars per share) | $ / shares	42.10
Forfeited/canceled (in dollars per share) | $ / shares	40.90
Nonvested at ending (in dollars per share) | $ / shares	$ 39.85
Unrecognized stock-based compensation expense | $	$ 68.2
Unrecognized Compensation Expense Is Expected To Be Recognized Over A Weighted Average Period (Years)	3 years 8 months 8 days

XML

Stock-Based Compensation Plans - Employee Stock Purchase Plan (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares available for issuance (in shares)	3,401,886
Unrecognized stock-based compensation expense | $	$ 68,200
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Length of purchase intervals	6 months
ESPP discount rate	10.00%
Initial Common stock reserved (in shares)	366,667
Common stock shares available for issuance (in shares)	121,615
Unrecognized stock-based compensation expense | $	$ 65
Cost not yet recognized, period for recognition	4 months 17 days
Employee Stock Purchase Plan - Annual Available for Issuance Share Increase
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock available for future issuance authorized annual share increase	366,667
Common stock available for future issuance authorized annual percentage increase	1.00%

XML

Stock-Based Compensation Plans - SARs and DSUs (Detail)	6 Months Ended
	Jun. 30, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested shares (in shares)	349,290
Deferred stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
DSU settlement to common stock percentage	20.00%
DSU settlement into actual stock issued term	5 years
Employee termination age	67 years
Percentage of shares of deferred stock units settled in the event of death or termination after reaching age 67	100.00%

XML

Stock-Based Compensation Plans - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense	$ 5,351	$ 4,275	$ 10,362	$ 8,131
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense	28	29	83	85
RSUs and RSAs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated share-based compensation expense	$ 5,323	$ 4,246	$ 10,279	$ 8,046

XML

Income Taxes - Narrative (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	(45.50%)	24.90%	16.60%	25.50%

XML

Income Taxes - Components of Provision for Income Taxes and Income before Provision for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Amount
Income tax (benefit) expense at the federal statutory rate	$ (1,260)	$ 11,786	$ (3,668)	$ 21,139
State income tax expense (benefit), net of federal benefit	315	2,389	(424)	4,422
(Windfall) shortfall tax benefits, net related to stock-based compensation	119	(1,758)	773	(2,064)
Change in valuation allowance	17	23	244	(81)
Permanent and other items	3,537	1,515	170	2,296
Provision for income taxes	$ 2,728	$ 13,955	$ (2,905)	$ 25,712
Rate
Income tax (benefit) expense at the federal statutory rate	21.00%	21.00%	21.00%	21.00%
State income tax expense (benefit), net of federal benefit	(5.30%)	4.30%	2.40%	4.40%
(Windfall) shortfall tax benefits, net related to stock-based compensation	(2.00%)	(3.10%)	(4.40%)	(2.10%)
Change in valuation allowance	(0.30%)	0.00%	(1.40%)	(0.10%)
Permanent and other items	(58.90%)	2.70%	(1.00%)	2.30%
Provision for income taxes	(45.50%)	24.90%	16.60%	25.50%

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(Loss) Earnings per Share - Computation of Basic and Diluted Earnings Per Share, Including Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator (Basic and Diluted):
Net (loss) income	$ (8,729)	$ 42,168	$ (14,562)	$ 74,951
Change in value for stock settled consideration	13	(24)	37	(38)
Adjusted net (loss) income	$ (8,716)	$ 42,144	$ (14,525)	$ 74,913
Denominator:
Weighted average common shares issued and outstanding (in shares)	38,553,000	39,936,000	38,880,000	39,829,000
Deduct: Unvested RSAs (in shares)	(15,000)	(12,000)	(13,000)	(13,000)
Add: Fully vested DSUs (in shares)	0	124,000	0	202,000
Weighted average common shares outstanding (in shares)	38,538,000	40,048,000	38,867,000	40,018,000
Basic (loss) earnings per common share (in dollars per share)	$ (0.23)	$ 1.05	$ (0.37)	$ 1.87
Weighted average common shares outstanding from above (in shares)	38,538,000	40,048,000	38,867,000	40,018,000
Add: Dilutive effect of RSUs, RSAs & ESPP (in shares)	0	213,000	0	291,000
Add: Contingently issuable shares (in shares)	0	81,000	0	81,000
Weighted average common shares outstanding (in shares)	38,538,000	40,342,000	38,867,000	40,390,000
Diluted (in dollars per share)	$ (0.23)	$ 1.04	$ (0.37)	$ 1.85
Antidilutive shares excluded from diluted earnings per common share (in shares)	1,887,000	843,000	1,781,000	843,000
Restricted Stock Awards | 2013 Omnibus Equity Incentive Plan
Denominator:
Vesting period			1 year

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Commitments and Contingencies - Narrative (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jul. 28, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Line of Credit Facility [Line Items]
Interest expense		$ 216	$ 158	$ 431	$ 318
Guarantee obligations, maximum exposure		114,700		114,700
Maximum unpaid loan amount for which guarantee obligations granted		688,100		688,100
Allowance for loss sharing obligations		656		656		$ 275
Other commitment amount		10,000		10,000
Guarantor Obligations, Amount Pledged		102		102		$ 16
Revolving Credit Facility | Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Senior secured revolving credit facility maximum borrowing capacity		60,000		60,000
Debt instrument, term	3 years
Standby letters of credit borrowing capacity		10,000		10,000
Standby letters of credit, utilized amount		533		$ 533
Credit agreement, unused capacity, commitment fee percentage				0.10%
Interest expense		26	$ 22	$ 51	$ 47
Credit agreement, amount outstanding		$ 0		$ 0
Minimum EBITDAR coverage ratio				1.25
Maximum Total Funded Debt to EBITDA ratio				2.0
Credit agreement, pledge percentage				100.00%
Minimum | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Line of Credit Facility Bearing interest rate				1.00%
Maximum | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Line of Credit Facility Bearing interest rate				1.25%

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Subsequent Events - Narrative (Detail)	Aug. 01, 2023 $ / shares
Subsequent Event | Semi Annual Regular Dividend
Subsequent Event [Line Items]
Dividends payable amount per share (in dollars per share)	$ 0.25