QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | |||||
5 | |||||
September 30, 2022 (unaudited) | December 31, 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Commissions receivable | |||||||||||
Prepaid expenses | |||||||||||
Income tax receivable | |||||||||||
Marketable debt securities, available-for-sale (includes amortized cost of $ | |||||||||||
Advances and loans, net | |||||||||||
Other assets, current | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets, net | |||||||||||
Marketable debt securities, available-for-sale (includes amortized cost of $ | |||||||||||
Assets held in rabbi trust | |||||||||||
Deferred tax assets, net | |||||||||||
Goodwill and other intangible assets, net | |||||||||||
Advances and loans, net | |||||||||||
Other assets, non-current | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Deferred compensation and commissions | |||||||||||
Income tax payable | |||||||||||
Operating lease liabilities | |||||||||||
Accrued bonuses and other employee related expenses | |||||||||||
Other liabilities, current | |||||||||||
Total current liabilities | |||||||||||
Deferred compensation and commissions | |||||||||||
Operating lease liabilities | |||||||||||
Other liabilities, non-current | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Authorized shares – | |||||||||||
Common stock, $ | |||||||||||
Authorized shares – | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Real estate brokerage commissions | $ | $ | $ | $ | |||||||||||||||||||
Financing fees | |||||||||||||||||||||||
Other revenues | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of services | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Income before provision for income taxes | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive loss: | |||||||||||||||||||||||
Marketable debt securities, available-for-sale: | |||||||||||||||||||||||
Change in net unrealized (losses) gains | ( | ( | ( | ( | |||||||||||||||||||
Less: reclassification adjustment for net losses (gains) included in other income, net | ( | ||||||||||||||||||||||
Net change, net of tax of $( | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency translation gain (loss), net of tax of $ | ( | ||||||||||||||||||||||
Total other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net and comprehensive income (loss) | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Dividend | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based award activity | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | $ |
Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Net and comprehensive income (loss) | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Stock-based award activity | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of deferred stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 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 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Net and comprehensive income (loss) | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Dividends | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Stock-based award activity | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued pursuant to employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of deferred stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for unvested restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock for stock settled deferred consideration | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2022 | $ | $ | $ | $ | $ | ( | $ |
Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Net and comprehensive income (loss) | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Stock-based award activity | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Shares issued pursuant to employee stock purchase plan | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for settlement of deferred stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for vesting of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for unvested restricted stock awards | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement of stock-based awards | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock for stock settled deferred consideration | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2021 | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Noncash lease expense | |||||||||||
Credit loss recovery | |||||||||||
Stock-based compensation | |||||||||||
Deferred taxes, net | ( | ( | |||||||||
Unrealized foreign exchange losses (gains) | ( | ||||||||||
Net realized gains on marketable debt securities, available-for-sale | ( | ( | |||||||||
Other non-cash items | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Commissions receivable | ( | ||||||||||
Prepaid expenses | |||||||||||
Advances and loans | ( | ( | |||||||||
Other assets | ( | ( | |||||||||
Accounts payable and accrued expenses | ( | ||||||||||
Income tax receivable/payable | ( | ||||||||||
Accrued bonuses and other employee related expenses | ( | ||||||||||
Deferred compensation and commissions | ( | ( | |||||||||
Operating lease liabilities | ( | ( | |||||||||
Other liabilities | ( | ( | |||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
Cash flows from investing activities | |||||||||||
Acquisition of businesses, net of cash received | ( | ||||||||||
Purchases of marketable debt securities, available-for-sale | ( | ( | |||||||||
Proceeds from sales and maturities of marketable debt securities, available-for-sale | |||||||||||
Purchases of securities, held-to-maturity | ( | ||||||||||
Issuances of employee notes receivable | ( | ( | |||||||||
Payments received on employee notes receivable | |||||||||||
Purchase of property and equipment | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Taxes paid related to net share settlement of stock-based awards | ( | ( | |||||||||
Proceeds from issuance of shares pursuant to employee stock purchase plan | |||||||||||
Dividends paid | ( | ||||||||||
Principal payments on stock appreciation rights liability | ( | ( | |||||||||
Principal payments on deferred and contingent consideration | ( | ( | |||||||||
Cash paid for stock repurchases | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of currency exchange rate changes on cash and cash equivalents | ( | ||||||||||
Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental cash flow disclosures: | |||||||||||
Interest paid during the period | $ | $ | |||||||||
Income taxes paid, net | $ | $ | |||||||||
Supplemental disclosures of noncash investing and financing activities: | |||||||||||
Unpaid purchases of property and equipment | $ | $ | |||||||||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | |||||||||
Issuance of stock for the settlement of deferred consideration | $ | $ | |||||||||
Measurement period adjustment of acquisition related contingent consideration | $ | $ | ( |
September 30, 2022 | December 31, 2021 | ||||||||||
Computer software and hardware equipment | $ | $ | |||||||||
Furniture, fixtures and equipment | |||||||||||
Less: accumulated depreciation and amortization | ( | ( | |||||||||
$ | $ |
September 30, 2022 | |||||||||||||||||||||||||||||
Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||||||||
Asset-backed securities (“ABS”) and other | ( | ||||||||||||||||||||||||||||
$ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
U.S. government sponsored entities | ( | ||||||||||||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||||||||
ABS and other | ( | ||||||||||||||||||||||||||||
$ | $ | $ | $ | ( | $ |
December 31, 2021 | |||||||||||||||||||||||||||||
Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||||||||
$ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||
U.S. government sponsored entities | ( | ||||||||||||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||||||||
ABS and other | ( | ||||||||||||||||||||||||||||
$ | $ | $ | $ | ( | $ |
September 30, 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 | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
U.S. government sponsored entities | ( | ( | ( | ||||||||||||||||||||||||||||||||
Corporate debt | ( | ( | ( | ||||||||||||||||||||||||||||||||
ABS and other | ( | ( | ( | ||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | ( | $ | $ | ( |
December 31, 2021 | |||||||||||||||||||||||||||||||||||
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 | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
U.S. government sponsored entities | ( | ( | |||||||||||||||||||||||||||||||||
Corporate debt | ( | ( | ( | ||||||||||||||||||||||||||||||||
ABS and other | ( | ( | |||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | ( | $ | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Gross realized gains (1) | $ | $ | $ | $ | |||||||||||||||||||
Gross realized losses (1) | $ | ( | $ | $ | ( | $ |
(1) | Recorded in other income, net in the condensed consolidated statements of net income. The cost basis of securities sold were determined based on the specific identification method. |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||||||||||
Due after one year through five years | |||||||||||||||||||||||
Due after five years through ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Weighted average contractual maturity |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||||||
Goodwill and intangible assets: | |||||||||||||||||||||||||||||||||||
Goodwill | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||
Intangible assets (1) | ( | ( | |||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | ( | $ |
(1) | Total weighted average amortization period was |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
Additions from acquisitions (1) | |||||||||||
Impairment losses | |||||||||||
Ending balance | $ | $ |
(1) | The 2021 addition represents a measurement period adjustment for an acquisition made in 2020. |
September 30, 2022 | |||||
Remainder of 2022 | $ | ||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
$ |
Current | Non-Current | ||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||
Mortgage servicing rights (“MSRs”), net of amortization | $ | $ | $ | $ | |||||||||||||||||||
Security deposits | |||||||||||||||||||||||
Employee notes receivable | |||||||||||||||||||||||
Securities, held-to-maturity(1) | |||||||||||||||||||||||
Loan performance fee receivable | |||||||||||||||||||||||
Prepaid lease costs and other | |||||||||||||||||||||||
$ | $ | $ | $ |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
Additions | |||||||||||
Amortization | ( | ( | |||||||||
Reclassification to assets held for sale | ( | ||||||||||
Loss on sale | ( | ||||||||||
Ending balance | $ | $ |
Current | Non-Current | ||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||
Stock appreciation rights (“SARs”) liability (1) | $ | $ | $ | $ | |||||||||||||||||||
Commissions payable to investment sales and financing professionals | |||||||||||||||||||||||
Deferred compensation liability (1) | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
(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. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(Decrease) increase in the carrying value of the assets held in the rabbi trust (1) | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
Decrease (increase) in the net carrying value of the deferred compensation obligation (2) | $ | $ | $ | $ | ( |
Current | Non-Current | ||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | ||||||||||||||||||||
Deferred consideration | $ | $ | $ | $ | |||||||||||||||||||
Contingent consideration | |||||||||||||||||||||||
Dividends payable | |||||||||||||||||||||||
Stock repurchase payable | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Assets held in rabbi trust | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Cash equivalents (1): | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial paper | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Money market funds | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Marketable debt securities, available-for-sale: | |||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||||||||||||||
ABS and other | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Long-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
U.S. government sponsored entities | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||||||||||||||
ABS and other | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Contingent consideration | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Deferred consideration | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Deferred compensation liability | $ | $ | $ | $ | $ | $ | $ | $ |
(1) | Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets. |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Beginning balance | $ | $ | |||||||||
Contingent consideration in connection with acquisitions | ( | ||||||||||
Change in fair value of contingent consideration | ( | ||||||||||
Payments of contingent consideration | ( | ( | |||||||||
Ending balance | $ | $ |
Fair Value at September 30, 2022 | Valuation Technique | Unobservable inputs | Range (Weighted Average)(1) | ||||||||||||||||||||
Contingent consideration | $ | Discounted cash flow | Expected life of cash flows | ||||||||||||||||||||
Discount rate | |||||||||||||||||||||||
Probability of achievement | |||||||||||||||||||||||
Fair Value at December 31, 2021 | Valuation Technique | Unobservable inputs | Range (Weighted Average)(1) | ||||||||||||||||||||
Contingent consideration | $ | Discounted cash flow | Expected life of cash flows | ||||||||||||||||||||
Discount rate | |||||||||||||||||||||||
Probability of achievement |
(1) | Unobservable inputs were weighted by the relative fair value of the instruments. |
Shares | Weighted- Average Grant Date Fair Value Per Share | ||||||||||
Nonvested shares at December 31, 2021⁽¹⁾ | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited/canceled | ( | ||||||||||
Nonvested shares at September 30, 2022⁽¹⁾ | $ | ||||||||||
Unrecognized stock-based compensation expense as of September 30, 2022 | $ | ||||||||||
Unrecognized compensation expense is expected to be recognized over a weighted-average period (years) of approximately | |||||||||||
Weighted average remaining vesting period (years) as of September 30, 2022 |
(1) | Nonvested RSUs will be settled through the issuance of new shares of common stock. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
ESPP | $ | $ | $ | $ | |||||||||||||||||||
RSUs and RSAs | |||||||||||||||||||||||
$ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | Amount | Rate | ||||||||||||||||||||||||||||||||||||||||
Income tax expense at the federal statutory rate | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||
State income tax expense, net of federal benefit | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||
(Windfall) shortfall tax benefits, net related to stock-based compensation | ( | ( | % | ( | ( | % | ( | ( | % | ( | ( | % | |||||||||||||||||||||||||||||||||||
Change in valuation allowance | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||
Permanent and other items (1) | % | % | % | % | |||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % |
(1) | Permanent items relate principally to compensation charges, qualified transportation fringe benefits and meals and entertainment. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Numerator (Basic and Diluted): | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Change in value for stock settled consideration | ( | ( | ( | ||||||||||||||||||||
Adjusted net income | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Weighted average common shares issued and outstanding | |||||||||||||||||||||||
Deduct: Unvested RSAs (1) | ( | ( | ( | ( | |||||||||||||||||||
Add: Fully vested DSUs (2) | |||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
Diluted | |||||||||||||||||||||||
Weighted average common shares outstanding from above | |||||||||||||||||||||||
Add: Dilutive effect of RSUs, RSAs & ESPP | |||||||||||||||||||||||
Add: Contingently issuable shares(3) | |||||||||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
Antidilutive shares excluded from diluted earnings per common share(4) |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Brokerage | Number | Volume | Revenues | Number | Volume | Revenues | Number | Volume | Revenues | ||||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in thousands) | (in millions) | (in thousands) | (in millions) | (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
<$1 million | 243 | $ | 154 | $ | 7,252 | 267 | $ | 183 | $ | 7,419 | (24) | $ | (29) | $ | (167) | ||||||||||||||||||||||||||||||||||||||
Private Client Market ($1 – <$10 million) | 1,658 | 5,885 | 165,534 | 1,894 | 6,296 | 183,033 | (236) | (411) | (17,499) | ||||||||||||||||||||||||||||||||||||||||||||
Middle Market ($10 – <$20 million) | 188 | 2,527 | 46,901 | 136 | 1,940 | 35,353 | 52 | 587 | 11,548 | ||||||||||||||||||||||||||||||||||||||||||||
Larger Transaction Market (≥$20 million) | 157 | 9,360 | 73,202 | 159 | 8,088 | 73,954 | (2) | 1,272 | (752) | ||||||||||||||||||||||||||||||||||||||||||||
2,246 | $ | 17,926 | $ | 292,889 | 2,456 | $ | 16,507 | $ | 299,759 | (210) | $ | 1,419 | $ | (6,870) |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Brokerage | Number | Volume | Revenues | Number | Volume | Revenues | Number | Volume | Revenues | ||||||||||||||||||||||||||||||||||||||||||||
(in millions) | (in thousands) | (in millions) | (in thousands) | (in millions) | (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
<$1 million | 728 | $ | 450 | $ | 19,711 | 791 | $ | 532 | $ | 21,175 | (63) | $ | (82) | $ | (1,464) | ||||||||||||||||||||||||||||||||||||||
Private Client Market ($1 – <$10 million) | 5,285 | 18,929 | 536,433 | 4,861 | 15,639 | 446,592 | 424 | 3,290 | 89,841 | ||||||||||||||||||||||||||||||||||||||||||||
Middle Market ($10 – <$20 million) | 581 | 7,849 | 150,117 | 370 | 5,141 | 97,699 | 211 | 2,708 | 52,418 | ||||||||||||||||||||||||||||||||||||||||||||
Larger Transaction Market (≥$20 million) | 474 | 27,771 | 228,222 | 352 | 17,619 | 149,992 | 122 | 10,152 | 78,230 | ||||||||||||||||||||||||||||||||||||||||||||
7,068 | $ | 54,999 | $ | 934,483 | 6,374 | $ | 38,931 | $ | 715,458 | 694 | $ | 16,068 | $ | 219,025 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Real Estate Brokerage | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Average Number of Investment Sales Professionals | 1,792 | 1,909 | 1,823 | 1,934 | |||||||||||||||||||
Average Number of Transactions per Investment Sales Professional | 1.25 | 1.29 | 3.88 | 3.30 | |||||||||||||||||||
Average Commission per Transaction | $ | 130,405 | $ | 122,052 | $ | 132,213 | $ | 112,246 | |||||||||||||||
Average Commission Rate | 1.63 | % | 1.82 | % | 1.70 | % | 1.84 | % | |||||||||||||||
Average Transaction Size (in thousands) | $ | 7,981 | $ | 6,721 | $ | 7,781 | $ | 6,108 | |||||||||||||||
Total Number of Transactions | 2,246 | 2,456 | 7,068 | 6,374 | |||||||||||||||||||
Total Sales Volume (in millions) | $ | 17,926 | $ | 16,507 | $ | 54,999 | $ | 38,931 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Financing (1) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Average Number of Financing Professionals | 87 | 86 | 86 | 86 | |||||||||||||||||||
Average Number of Transactions per Financing Professional | 5.95 | 6.98 | 20.17 | 20.67 | |||||||||||||||||||
Average Fee per Transaction | $ | 44,751 | $ | 42,319 | $ | 44,363 | $ | 36,126 | |||||||||||||||
Average Fee Rate | 0.70 | % | 0.77 | % | 0.74 | % | 0.82 | % | |||||||||||||||
Average Transaction Size (in thousands) | $ | 6,350 | $ | 5,503 | $ | 6,021 | $ | 4,390 | |||||||||||||||
Total Number of Transactions | 518 | 600 | 1,735 | 1,778 | |||||||||||||||||||
Total Financing Volume (in millions) | $ | 3,289 | $ | 3,302 | $ | 10,447 | $ | 7,806 |
Three Months Ended September 30, 2022 | Percentage of Revenue | Three Months Ended September 30, 2021 | Percentage of Revenue | Change | |||||||||||||||||||||||||||||||
Dollar | Percentage | ||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
Real estate brokerage commissions | $ | 292,889 | 90.4 | % | $ | 299,759 | 90.2 | % | $ | (6,870) | -2.3 | % | (2.3) | % | |||||||||||||||||||||
Financing fees | 28,099 | 8.7 | 29,391 | 8.8 | (1,292) | -4.4 | % | (4.4) | % | ||||||||||||||||||||||||||
Other revenues | 2,852 | 0.9 | 3,233 | 1.0 | (381) | -11.8 | % | (11.8) | % | ||||||||||||||||||||||||||
Total revenues | 323,840 | 100 | 332,383 | 100 | (8,543) | -2.6 | % | (2.6) | % | ||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Cost of services | 217,360 | 67.1 | 219,194 | 65.9 | (1,834) | -0.8 | % | (0.8) | % | ||||||||||||||||||||||||||
Selling, general and administrative | 73,004 | 22.6 | 64,673 | 19.5 | 8,331 | 12.9 | % | 12.9 | % | ||||||||||||||||||||||||||
Depreciation and amortization | 2,924 | 0.9 | 2,850 | 0.9 | 74 | 2.6 | % | 2.6 | % | ||||||||||||||||||||||||||
Total operating expenses | 293,288 | 90.6 | 286,717 | 86.3 | 6,571 | 2.3 | % | 2.3 | % | ||||||||||||||||||||||||||
Operating income | 30,552 | 9.4 | 45,666 | 13.7 | (15,114) | -33.1 | % | (33.1) | % | ||||||||||||||||||||||||||
Other income, net | 978 | 0.3 | 323 | 0.1 | 655 | 202.8 | % | 202.8 | % | ||||||||||||||||||||||||||
Interest expense | (229) | 0.0 | (144) | 0.0 | (85) | 59.0 | % | 59.0 | % | ||||||||||||||||||||||||||
Income before provision for income taxes | 31,301 | 9.7 | 45,845 | 13.8 | (14,544) | -31.7 | % | (31.7) | % | ||||||||||||||||||||||||||
Provision for income taxes | 9,939 | 3.1 | 11,921 | 3.6 | (1,982) | -16.6 | % | (16.6) | % | ||||||||||||||||||||||||||
Net income | $ | 21,362 | 6.6 | % | $ | 33,924 | 10.2 | % | $ | (12,562) | -37.0 | % | (37.0) | % | |||||||||||||||||||||
Adjusted EBITDA (1) | $ | 36,633 | 11.3 | % | $ | 50,985 | 15.3 | % | $ | (14,352) | -28.1 | % | (28.1) | % |
Nine Months Ended September 30, 2022 | Percentage of Revenue | Nine Months Ended September 30, 2021 | Percentage of Revenue | Change | |||||||||||||||||||||||||||||||
Dollar | Percentage | ||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
Real estate brokerage commissions | $ | 934,483 | 89.9 | % | $ | 715,458 | 89.3 | % | $ | 219,025 | 30.6 | % | |||||||||||||||||||||||
Financing fees | 91,363 | 8.8 | 75,448 | 9.4 | 15,915 | 21.1 | % | ||||||||||||||||||||||||||||
Other revenues | 13,415 | 1.3 | 10,400 | 1.3 | 3,015 | 29.0 | % | ||||||||||||||||||||||||||||
Total revenues | 1,039,261 | 100.0 | 801,306 | 100.0 | 237,955 | 29.7 | % | ||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Cost of services | 670,170 | 64.5 | 506,882 | 63.3 | 163,288 | 32.2 | % | ||||||||||||||||||||||||||||
Selling, general and administrative | 227,380 | 21.9 | 178,147 | 22.2 | 49,233 | 27.6 | % | ||||||||||||||||||||||||||||
Depreciation and amortization | 10,167 | 0.9 | 8,806 | 1.1 | 1,361 | 15.5 | % | ||||||||||||||||||||||||||||
Total operating expenses | 907,717 | 87.3 | 693,835 | 86.6 | 213,882 | 30.8 | % | ||||||||||||||||||||||||||||
Operating income | 131,544 | 12.7 | 107,471 | 13.4 | 24,073 | 22.4 | % | ||||||||||||||||||||||||||||
Other income, net | 967 | 0.1 | 2,737 | 0.3 | (1,770) | (64.7) | % | ||||||||||||||||||||||||||||
Interest expense | (547) | (0.1) | (436) | (0.1) | (111) | 25.5 | % | ||||||||||||||||||||||||||||
Income before provision for income taxes | 131,964 | 12.7 | 109,772 | 13.6 | 22,192 | 20.2 | % | ||||||||||||||||||||||||||||
Provision for income taxes | 35,651 | 3.4 | 29,304 | 3.7 | 6,347 | 21.7 | % | ||||||||||||||||||||||||||||
Net income | $ | 96,313 | 9.3 | % | $ | 80,468 | 9.9 | % | $ | 15,845 | 19.7 | % | |||||||||||||||||||||||
Adjusted EBITDA | $ | 151,394 | 14.6 | % | $ | 124,790 | 15.6 | % | $ | 26,604 | 21.3 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
Net income | $ | 21,362 | $ | 33,924 | $ | 96,313 | $ | 80,468 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Interest income and other (1) | (2,365) | (503) | (3,959) | (1,470) | |||||||||||||||||||
Interest expense | 229 | 144 | 547 | 436 | |||||||||||||||||||
Provision for income taxes | 9,939 | 11,921 | 35,651 | 29,304 | |||||||||||||||||||
Depreciation and amortization | 2,924 | 2,850 | 10,167 | 8,806 | |||||||||||||||||||
Stock-based compensation | 4,544 | 2,703 | 12,675 | 7,653 | |||||||||||||||||||
Non-cash MSR activity (2) | — | (54) | — | (407) | |||||||||||||||||||
Adjusted EBITDA | $ | 36,633 | $ | 50,985 | $ | 151,394 | $ | 124,790 |
Nine Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Net cash flows (used in) provided by operating activities | $ | (11,775) | $ | 99,593 | |||||||
Net cash flows used in investing activities | (31,291) | (55,782) | |||||||||
Net cash flows used in financing activities | (67,774) | (6,081) | |||||||||
Effect of currency exchange rate changes on cash and cash equivalents | (436) | 125 | |||||||||
Net (decrease) increase in cash and cash equivalents | (111,276) | 37,855 | |||||||||
Cash and cash equivalents at beginning of period | 382,140 | 243,152 | |||||||||
Cash and cash equivalents at end of period | $ | 270,864 | $ | 281,007 |
Change in Interest Rates | Approximate Change in Fair Value of Investments Increase (Decrease) | |||||||
2% Decrease ….................. | $ | 5,576 | ||||||
1% Decrease ….................. | $ | 2,788 | ||||||
1% Increase ….................. | $ | (2,787) | ||||||
2% Increase ….................. | $ | (5,572) |
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 | ||||||||||||||||||||||
July 1, 2022 - July 31, 2022 | — | $ | — | — | $ | — | ||||||||||||||||||||
August 1, 2022 - August 31, 2022 | — | $ | — | — | $ | — | ||||||||||||||||||||
September 1, 2022 - September 30, 2022 | 226,795 | $ | 33.41 | 226,795 | $ | 62,422,637 | ||||||||||||||||||||
Total | 226,795 | 226,795 | $ | 62,422,637 | ||||||||||||||||||||||
Exhibit No. | Description | |||||||
10.1+ | Second Amended and Restated Credit Agreement dated July 28, 2022, by and between Marcus & Millichap, Inc. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the registrant’s quarterly report on Form 10-Q (No. 001-36155) for the quarter ended June 30, 2022, filed on August 5, 2022). | |||||||
10.2+ | ||||||||
10.3+ | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
101* | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Net Income, (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) |
Marcus & Millichap, Inc. | ||||||||||||||
Date: | November 4, 2022 | By: | /s/ Hessam Nadji | |||||||||||
Hessam Nadji President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
Date: | November 4, 2022 | By: | /s/ Steven F. DeGennaro | |||||||||||
Steven F. DeGennaro Chief Financial Officer (Principal Financial Officer) |
Date: November 4, 2022 | /s/ Hessam Nadji | ||||
Hessam Nadji President and Chief Executive Officer |
Date: November 4, 2022 | /s/ Steven F. DeGennaro | ||||
Steven F. DeGennaro Chief Financial Officer |
Date: | November 4, 2022 | /s/ Hessam Nadji | ||||||||||||
Hessam Nadji President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
Date: | November 4, 2022 | /s/ Steven F. DeGennaro | ||||||||||||
Steven F. DeGennaro Chief Financial Officer (Principal Financial Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Amortized cost, current | $ 213,042 | $ 183,915 |
Allowance for credit losses, current | 0 | 0 |
Amortized cost, noncurrent | 94,727 | 111,858 |
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) | 39,797,423 | 39,692,373 |
Common stock, shares outstanding (in shares) | 39,797,423 | 39,692,373 |
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Revenues: | ||||
Total revenues | $ 323,840 | $ 332,383 | $ 1,039,261 | $ 801,306 |
Operating expenses: | ||||
Cost of services | 217,360 | 219,194 | 670,170 | 506,882 |
Selling, general and administrative | 73,004 | 64,673 | 227,380 | 178,147 |
Depreciation and amortization | 2,924 | 2,850 | 10,167 | 8,806 |
Total operating expenses | 293,288 | 286,717 | 907,717 | 693,835 |
Operating income | 30,552 | 45,666 | 131,544 | 107,471 |
Other income, net | 978 | 323 | 967 | 2,737 |
Interest expense | (229) | (144) | (547) | (436) |
Income before provision for income taxes | 31,301 | 45,845 | 131,964 | 109,772 |
Provision for income taxes | 9,939 | 11,921 | 35,651 | 29,304 |
Net income | $ 21,362 | $ 33,924 | $ 96,313 | $ 80,468 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.53 | $ 0.85 | $ 2.40 | $ 2.02 |
Diluted (in dollars per share) | $ 0.53 | $ 0.84 | $ 2.39 | $ 2.00 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 40,086 | 39,940 | 40,038 | 39,859 |
Diluted (in shares) | 40,302 | 40,241 | 40,358 | 40,148 |
Real estate brokerage commissions | ||||
Revenues: | ||||
Total revenues | $ 292,889 | $ 299,759 | $ 934,483 | $ 715,458 |
Financing fees | ||||
Revenues: | ||||
Total revenues | 28,099 | 29,391 | 91,363 | 75,448 |
Other revenues | ||||
Revenues: | ||||
Total revenues | $ 2,852 | $ 3,233 | $ 13,415 | $ 10,400 |
CONDENSED CONSOLIDATED STATEMETNS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 21,362 | $ 33,924 | $ 96,313 | $ 80,468 |
Marketable debt securities, available-for-sale: | ||||
Change in net unrealized (losses) gains | (1,541) | (240) | (5,456) | (715) |
Less: reclassification adjustment for net losses (gains) included in other income, net | 7 | 23 | (70) | 26 |
Net change, net of tax of $(522) and $(1,888) for the three and nine months ended September 30, 2022, and $(75) and $(239) for the three and nine months ended September 30, 2021, respectively | (1,534) | (217) | (5,526) | (689) |
Foreign currency translation gain (loss), net of tax of $0 for each of the three and nine months ended September 30, 2022 and 2021, respectively | 569 | 192 | 689 | (138) |
Total other comprehensive loss | (965) | (25) | (4,837) | (827) |
Comprehensive income | $ 20,397 | $ 33,899 | $ 91,476 | $ 79,641 |
CONDENSED CONSOLIDATED STATEMETNS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
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Statement of Comprehensive Income [Abstract] | ||||
Marketable debt securities, available-for-sale, net change, tax | $ (522) | $ (75) | $ (1,888) | $ (239) |
Foreign currency translation loss, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements |
9 Months Ended |
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Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements | Description of Business, Basis of Presentation and Recent Accounting Pronouncements 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 September 30, 2022, MMI operates 82 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 in November 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, 2021 included in the Company’s Annual Report on Form 10-K filed on March 1, 2022 with the SEC. The results of the three months and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, for other interim periods or for future years. The Company reclassified certain items previously included within accounts payable and other liabilities to other liabilities, current in the December 31, 2021 condensed consolidated balance sheet to conform with current period presentation. 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 and the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenues 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 and cash equivalents, investments in marketable debt securities, available-for-sale, security deposits and commissions receivable, net. Cash and cash equivalents 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 and cash equivalents. The Company historically has not experienced any significant losses related to cash and cash equivalents. 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”) and which 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 though 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 revenues 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 nine months ended September 30, 2022 and 2021, no transaction represented 10% or more of total revenues. 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 nine months ended September 30, 2022, the Company’s Canadian operations represented 1.5% and 2.0% of total revenues. During both the three and nine months ended September 30, 2021, the Company’s Canadian operations represented approximately 2.2% of total revenues. During each of the three and nine months ended September 30, 2022 and 2021, no office represented 10% or more of total revenues. 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, mortgage servicing, debt and equity advisory services, loan sales, due diligence services, guarantee fees, loan performance fees and other consulting. The Company’s contracts, except as noted below, do not contain multiple-element arrangements, variable consideration, financing components, significant noncash consideration, licenses, long-term contracts with customers or other items affecting the transaction price. 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, in almost all cases, is at the close of escrow. At that time, the Company recognizes revenue related to the transaction. The Company’s fee agreements do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the transaction closes. 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, in almost all cases, is at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with certain exceptions, 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 net income. The guarantee obligation is capped at 16.7% of the unpaid principal balance in excess of the collateral securing such loan. For these loans, the Company also records an allowance for loss-sharing obligations based on the unpaid balance of the loan for its portion of the obligation guaranteed to MTRCC. Mortgage Servicing - The Company recognizes mortgage servicing revenues upon the acquisition of a servicing contract. The Company records servicing fees when earned provided the loans are current and the debt service payments are made by the borrowers. Other Revenues Other revenues include fees generated from consulting and advisory services, as well as referral fees from other real estate brokers, and are recognized when services are provided, or upon closing of the transaction. Recent Accounting Pronouncements Pending Adoption In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 is effective for all entities upon issuance and may be applied prospectively to contract modifications through December 31, 2022. The Company's Amended and Restated Credit Agreement (see Note 12 – “Commitments and Contingencies”) no longer references LIBOR. As the Company had not drawn on its Credit Agreement, we determined that the adoption of ASU 2020-04 did not have an impact on the condensed consolidated financial statements.
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Property and Equipment, Net |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands):
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Investments in Marketable Debt Securities, Available-for-Sale |
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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):
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):
Gross realized gains and losses from the sales of the Company’s marketable debt securities, available-for-sale, consisted of the following (in thousands):
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 September 30, 2022, the portfolio had an average credit rating of AA and a weighted term to contractual maturity of 1.3 years, with 223 securities in the portfolio representing an unrealized aggregate loss of $6.7 million or 2% of amortized cost, and a weighted average credit rating of AA+. As of September 30, 2022, 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):
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Acquisitions, Goodwill and Other Intangible Assets |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions, Goodwill and Other Intangible Assets | Acquisitions, Goodwill and Other Intangible Assets During the nine months ended September 30, 2022, the Company expanded its network of financing professionals and provided further diversification to its financing services. The Company completed an acquisition of a business that was accounted for as a business combination, and the results have been included in the condensed consolidated financial statements beginning on the acquisition date. Terms of the acquisition principally included cash paid at closing. The goodwill recorded as part of the Company’s acquisitions 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):
The Company recorded amortization expense for intangible assets of $1.2 million and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $3.5 million and $3.0 million for the nine months ended September 30, 2022 and 2021, respectively. The changes in the carrying amount of goodwill consisted of the following (in thousands):
Estimated amortization expense for intangible assets by year for the next five years and thereafter consisted of the following (in thousands):
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 September 30, 2022, 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 September 30, 2022, there was no impairment of its intangible assets or goodwill.
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Selected Balance Sheet Data |
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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 September 30, 2022 and December 31, 2021 was $836,000 and $789,000, respectively. Other Assets Other assets consisted of the following (in thousands):
(1)Securities, held-to-maturity, are expected to mature on September 1, 2024 and accrue interest based on the 1-year treasury rate. MSRs The net change in the carrying value of MSRs consisted of the following (in thousands):
In the six months ended June 30, 2022, the Company received cancellation notices on certain servicing contracts. Amortization of those contracts was adjusted to reflect the cancellations. In June 2022, the Company determined to discontinue its servicing activities and signed an agreement to sell the remaining servicing rights. The Company recorded a loss on the sale of the remaining rights in the second quarter of 2022 and had reclassified the remaining carrying value of the MSRs to assets held for sale. The loss on sale was recorded within selling, general and administrative expenses within the condensed consolidated statements of net income. The sale closed in the third quarter of 2022. The portfolio of loans serviced by the Company aggregated $1.7 billion for the period ended December 31, 2021. Deferred Compensation and Commissions Deferred compensation and commissions consisted of the following (in thousands):
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, 2022 and 2021 were 3.63% and 2.93%, respectively. MMI recorded interest expense related to this liability of $135,000 and $122,000 for the three months ended September 30, 2022 and 2021, respectively, and $406,000 and $366,000 for the nine months ended September 30, 2022 and 2021, respectively. Estimated payouts within the next twelve months for participants that have separated from service have been classified as current. During each of the nine months ended September 30, 2022 and 2021, the Company made total payments of $2.2 million, 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 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 nine months ended September 30, 2022 and 2021, the Company made total payments to participants of $807,000 and $1,200,000 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):
(1)Recorded in other income, net in the condensed consolidated statements of net income. (2)Recorded in selling, general and administrative expense in the condensed consolidated statements of net income. Other Liabilities Other liabilities consisted of the following (in thousands):
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Related-Party Transactions |
9 Months Ended |
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Sep. 30, 2022 | |
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 incurred net costs (charge-back) during the three months ended September 30, 2022 and 2021 of $(17,000) and $(11,000), respectively, and during the nine months ended September 30, 2022 and 2021 of $(35,000) and $4,000, respectively. These amounts are included in selling, general and administrative expense in the accompanying condensed consolidated statements of net income. 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 September 30, 2022 and 2021, the Company earned real estate brokerage commissions and financing fees of $650,000 and $603,000, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $388,000 and $363,000, respectively, related to these revenues. For the nine months ended September 30, 2022 and 2021, the Company earned real estate brokerage commissions and financing fees of $3.2 million and $1.4 million, respectively, from transactions with subsidiaries of MMC related to these services. The Company incurred cost of services of $1.9 million and $840,000, respectively, related to these revenues. Operating Lease with MMC The Company extended its operating lease with MMC for a single-story office building located in Palo Alto, California, which now expires in May 2032. The related operating lease cost was $296,000 and $333,000 for the three months ended September 30, 2022 and 2021, respectively, and $967,000 and $998,000 for the nine months ended September 30, 2022 and 2021, respectively. Operating lease cost is included in selling, general and administrative expense in the accompanying condensed consolidated statements of net income. Accounts Payable and Accrued Expenses with MMC As of September 30, 2022 and December 31, 2021, the Company owed MMC $90,000 and $93,000, respectively. These amounts are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. Other The Company makes advances to non-executive employees from time-to-time. At September 30, 2022 and December 31, 2021, the aggregate principal amount for employee notes receivable was $1,000 and $40,000, respectively, which is included in other assets, current in the accompanying condensed consolidated balance sheets. See Note 5 – “Selected Balance Sheet Data” for additional information. As of September 30, 2022, George M. Marcus, the Company’s founder and Chairman, beneficially owned approximately 38% 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 |
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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 and cash equivalents, 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 and cash equivalents and marketable debt securities, available-for-sale were determined for each individual security in the investment portfolio and all these 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):
There were no transfers in or out of Level 3 during the nine months ended September 30, 2022 and 2021. During the nine months ended September 30, 2022, 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 September 30, 2022 and December 31, 2021, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $23.8 million and $28.6 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 to five-year period. Changes in fair value are included in selling, general and administrative expense in the condensed consolidated statements of net income. A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):
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):
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 MSRs, 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. MSRs are recorded at fair value upon acquisition of a servicing contract. The Company has elected the amortization method for the subsequent measurement of MSRs. MSRs are carried at the lower of amortized cost or fair value. MSRs are a Level 3 measurement. The Company’s MSRs do not trade in an active, open market with readily observable prices. The estimated fair value of the Company’s MSRs were developed using a discounted cash flow model that calculates the present value of estimated future net servicing income. The model considers contractual provisions and assumptions of market participants including specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions used to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. Management uses assumptions in the determination of fair value for MSRs after considering default, severity, prepayment and discount rates related to the specific types and underlying collateral of the various serviced loans, interest rates, refinance rates, and current government and private sector responses on the economic impact of the COVID-19 pandemic. In June 2022, the Company determined to discontinue its servicing activities and signed an agreement to sell the remaining servicing rights. The sale closed in the third quarter of 2022. See Note 5 – “Selected Balance Sheet Data” for additional information.
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Stockholders' Equity |
9 Months Ended |
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Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock As of September 30, 2022 and December 31, 2021, there were 39,797,423 and 39,692,373 shares of common stock, $0.0001 par value, issued and outstanding, which include unvested restricted stock awards (“RSAs”) issued to non-employee directors, respectively. See Note 11 – “Earnings per Share” for additional information. On February 16, 2022, the Board of Directors declared a semi-annual regular dividend of $0.25 per share and a special dividend of $1.00 per share, payable on April 4, 2022, to stockholders of record at the close of business on March 8, 2022. On August 2, 2022, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, payable on October 6, 2022, to stockholders of record at the close of business on September 15, 2022. As a result, the Company paid $50.2 million in dividends to outstanding shareholders during the nine months ended September 30, 2022. As of September 30, 2022, the dividend payable was $12.4 million, of which $10.0 million was paid on October 6, 2022, and $2.4 million remains to be paid upon vesting of stock awards. This payable of $12.4 million is recorded in other liabilities, current and other liabilities, non-current 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 September 30, 2022 and December 31, 2021, 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, net or selling, general and administrative expense, as applicable, in the condensed consolidated statements of net income. 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. During the nine months ended September 30, 2022, the Company repurchased and retired 226,795 shares of common stock for $7.6 million, at an average cost of $33.41 per share, of which $1.9 million was for shares repurchased but not settled. As of September 30, 2022, $62.4 million remained available under the stock repurchase program.
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Stock-Based Compensation Plans |
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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 September 30, 2022, there were 3,801,591 shares available for future grants under the 2013 Plan. On August 2, 2022, the Board of Directors declared a semi-annual regular dividend of $0.25 per share payable on October 6, 2022, to stockholders of record at the close of business on September 15, 2022. The Compensation Committee granted dividend equivalents to all unvested grants as of the record date. As of September 30, 2022, $2.4 million remains to be paid upon vesting of stock awards, including $0.5 million related to the semi-annual regular dividend declared on August 2, 2022. 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 September 30, 2022, there were no issued or outstanding options, SARs, performance units or performance share awards under the 2013 Plan. During the nine months ended September 30, 2022, 288,954 RSUs vested and 82,876 shares of common stock were 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):
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 6-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 6-month offering period. The ESPP initially had 366,667 shares of common stock reserved, and 145,636 shares of common stock remain available for issuance as of September 30, 2022. The ESPP provides for annual increases in the number of shares available for issuance under the ESPP, equal to the least 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. At September 30, 2022, total unrecognized compensation cost related to the ESPP was $32,000 and is expected to be recognized over a weighted average period of 0.13 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. During the nine months ended September 30, 2022, 166,449 DSUs were settled, and 78,615 shares of common stock were withheld to pay applicable required employee statutory withholding taxes based on the market value of the DSUs on the settlement date. As of September 30, 2022, 114,744 shares of fully vested DSUs remained to be settled in 2022. Summary of Stock-Based Compensation Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of net income and consisted of the following (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company’s effective tax rate for the three and nine months ended September 30, 2022 was 31.7% and 27.0%, respectively, compared to 26.0% and 26.7% respectively, for the three and nine months ended September 30, 2021. 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):
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Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share Basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021, respectively consisted of the following (in thousands, except per share data):
(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.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2022 | |
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 September 30, 2022. 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 interest expense in the accompanying condensed consolidated statements of net income and was $94,000 and $21,000 for the three months ended September 30, 2022 and 2021, respectively and $141,000 and $65,000, respectively, during the nine months ended September 30, 2022 and 2021. As of September 30, 2022, 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 September 30, 2022, 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. 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 agreement with Fannie Mae and which 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 September 30, 2022, the Company has agreed to a maximum aggregate guarantee obligation of $54.1 million relating to loans with an unpaid balance of $324.9 million. The maximum guarantee obligation is not representative of the actual loss the Company 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. 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 September 30, 2022 aggregated $19.3 million.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn August 2, 2022, the Board of Directors declared a semi-annual regular dividend of $0.25 per share, or $10.5 million, payable on October 6, 2022 to stockholders of record at the close of business on September 15, 2022, of which $10.0 million was paid on October 6, 2022. Between September 30, 2022 and October 31, 2022, the Company repurchased an additional 431,700 shares of common stock for $14.9 million under the stock repurchase program. |
Description of Business, Basis of Presentation and Recent Accounting Pronouncements (Policies) |
9 Months Ended |
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Sep. 30, 2022 | |
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 September 30, 2022, MMI operates 82 offices in the United States and Canada through its wholly-owned subsidiaries, including the operations of Marcus & Millichap Capital Corporation.
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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, 2021 included in the Company’s Annual Report on Form 10-K filed on March 1, 2022 with the SEC. The results of the three months and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022, for other interim periods or for future years. The Company reclassified certain items previously included within accounts payable and other liabilities to other liabilities, current in the December 31, 2021 condensed consolidated balance sheet to conform with current period presentation.
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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, mortgage servicing, debt and equity advisory services, loan sales, due diligence services, guarantee fees, loan performance fees and other consulting. The Company’s contracts, except as noted below, do not contain multiple-element arrangements, variable consideration, financing components, significant noncash consideration, licenses, long-term contracts with customers or other items affecting the transaction price. 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, in almost all cases, is at the close of escrow. At that time, the Company recognizes revenue related to the transaction. The Company’s fee agreements do not include terms or conditions that require the Company to perform any service or fulfill any obligation once the transaction closes. 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, in almost all cases, is at the time the loan closes. At that time, the Company recognizes revenue related to the transaction. The Company’s fee arrangements, with certain exceptions, 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 net income. The guarantee obligation is capped at 16.7% of the unpaid principal balance in excess of the collateral securing such loan. For these loans, the Company also records an allowance for loss-sharing obligations based on the unpaid balance of the loan for its portion of the obligation guaranteed to MTRCC. Mortgage Servicing - The Company recognizes mortgage servicing revenues upon the acquisition of a servicing contract. The Company records servicing fees when earned provided the loans are current and the debt service payments are made by the borrowers. Other Revenues Other revenues include fees generated from consulting and advisory services, as well as referral fees from other real estate brokers, and are recognized when services are provided, or upon closing of the transaction.
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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 and the related disclosures at the date of the condensed consolidated financial statements and the reported amounts of revenues 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 and cash equivalents, investments in marketable debt securities, available-for-sale, security deposits and commissions receivable, net. Cash and cash equivalents 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 and cash equivalents. The Company historically has not experienced any significant losses related to cash and cash equivalents. 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”) and which 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 though 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 revenues 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 nine months ended September 30, 2022 and 2021, no transaction represented 10% or more of total revenues. 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 nine months ended September 30, 2022, the Company’s Canadian operations represented 1.5% and 2.0% of total revenues. During both the three and nine months ended September 30, 2021, the Company’s Canadian operations represented approximately 2.2% of total revenues. During each of the three and nine months ended September 30, 2022 and 2021, no office represented 10% or more of total revenues.
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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 in November 2013 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Pending Adoption In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 is effective for all entities upon issuance and may be applied prospectively to contract modifications through December 31, 2022. The Company's Amended and Restated Credit Agreement (see Note 12 – “Commitments and Contingencies”) no longer references LIBOR. As the Company had not drawn on its Credit Agreement, we determined that the adoption of ASU 2020-04 did not have an impact on the condensed consolidated financial statements.
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Property and Equipment, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands):
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Investments in Marketable Debt Securities, Available-for-Sale (Tables) |
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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):
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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):
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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):
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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):
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Acquisitions, Goodwill and Other Intangible Assets (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Goodwill and Intangible Assets, Net | Goodwill and intangible assets, net consisted of the following (in thousands):
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Summary of Changes in Carrying Carrying Amount of Goodwill | The changes in the carrying amount of goodwill consisted of the following (in thousands):
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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):
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Selected Balance Sheet Data (Tables) |
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets consisted of the following (in thousands):
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Summary of Net Change in Carrying Value of MSRs | The net change in the carrying value of MSRs consisted of the following (in thousands):
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Schedule of Deferred Compensation and Commissions | Deferred compensation and commissions consisted of the following (in thousands):
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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):
(1)Recorded in other income, net in the condensed consolidated statements of net income. (2)Recorded in selling, general and administrative expense in the condensed consolidated statements of net income.
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Summary of Other Liabilities | Other liabilities consisted of the following (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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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):
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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):
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Stock-Based Compensation Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Stock-Based Compensation Expense | Components of stock-based compensation are included in selling, general and administrative expense in the condensed consolidated statements of net income and consisted of the following (in thousands):
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 earnings per share for the three and nine months ended September 30, 2022 and 2021, respectively consisted of the following (in thousands, except per share data):
(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.
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Description of Business, Basis of Presentation and Recent Accounting Pronouncements - Narrative (Detail) - office |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Class of Stock [Line Items] | ||||
Number of offices | 82 | |||
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 | 1.50% | 2.20% | 2.00% | 2.20% |
Property and Equipment, Net - Schedule of Property and Equipment, Net (Detail) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation and amortization | $ (40,032) | $ (35,138) |
Property and equipment, net | 26,823 | 23,192 |
Computer software and hardware equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 40,725 | 33,819 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 26,130 | $ 24,511 |
Property and Equipment, Net - Narrative (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1.7 | $ 1.8 | $ 5.4 | $ 5.4 |
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 | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Gross realized gains | $ 0 | $ 68 | $ 114 | $ 78 |
Gross realized losses | $ (10) | $ 0 | $ (27) | $ 0 |
Investments in Marketable Debt Securities, Available-for-Sale - Narrative (Detail) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022
USD ($)
security
|
Dec. 31, 2021 |
|
Schedule of Available-for-sale Securities [Line Items] | ||
Weighted average contractual maturity | 1 year 3 months 18 days | 1 year 6 months |
Fitch, AA Rating | Moody's, Aaa Rating | Standard & Poor's, AA Rating | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Weighted average contractual maturity | 1 year 3 months 18 days | |
Fitch, AA+ Rating | Moody's, Aa3 Rating | Standard & Poor's, AA+ Rating | Weighted Average Credit AA Plus Rating | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-sale, securities number of unrealized loss positions | security | 223 | |
Available-for-sale, securities in unrealized loss positions, accumulated loss | $ | $ 6.7 | |
Percentage of amortized cost | 2.00% |
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 |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Amortized Cost | ||
Due in one year or less | $ 213,042 | $ 183,915 |
Due after one year through five years | 78,268 | 96,035 |
Due after five years through ten years | 13,554 | 11,129 |
Due after ten years | 2,905 | 4,694 |
Amortized Cost | 307,769 | 295,773 |
Fair Value | ||
Due in one year or less | 211,759 | 183,868 |
Due after one year through five years | 74,918 | 96,257 |
Due after five years through ten years | 11,808 | 11,601 |
Due after ten years | 2,603 | 4,752 |
Fair Value | $ 301,088 | $ 296,478 |
Weighted average contractual maturity | 1 year 3 months 18 days | 1 year 6 months |
Acquisitions, Goodwill and Other Intangible Assets - Narrative (Detail) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2022
USD ($)
reportingUnit
|
Sep. 30, 2021
USD ($)
|
|
Business Combination and Asset Acquisition [Abstract] | ||||
Number of reporting units | reportingUnit | 1 | |||
Amortization expense | $ | $ 1.2 | $ 0.9 | $ 3.5 | $ 3.0 |
Acquisitions, Goodwill and Other Intangible Assets - Summary of Goodwill and Intangible Assets (Detail) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
Business Combination and Asset Acquisition [Abstract] | ||||
Goodwill, gross carrying amount | $ 38,101 | $ 34,071 | ||
Intangible assets, gross carrying amount | 32,444 | 23,974 | ||
Goodwill and intangible assets, gross carrying amount, total | 70,545 | 58,045 | ||
Intangible assets, accumulated amortization | (13,453) | (9,940) | ||
Goodwill, net book value | 38,101 | 34,071 | $ 34,071 | $ 33,375 |
Intangible assets, net book value | 18,991 | 14,034 | ||
Goodwill and intangible assets, net book value | $ 57,092 | $ 48,105 | ||
Weighted average amortization intangible assets | 4 years 8 months 12 days | 4 years 4 months 24 days |
Acquisitions, Goodwill and Other Intangible Assets - Summary of Net Change in Carrying Value of Goodwill (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 34,071 | $ 33,375 |
Additions from acquisitions | 4,030 | 696 |
Impairment losses | 0 | 0 |
Ending balance | $ 38,101 | $ 34,071 |
Acquisitions, Goodwill and Other Intangible Assets - Schedule of Estimated Amortization Expense for Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Business Combination and Asset Acquisition [Abstract] | ||
Remainder of 2022 | $ 1,171 | |
2023 | 4,617 | |
2024 | 4,101 | |
2025 | 3,881 | |
2026 | 2,156 | |
Thereafter | 3,065 | |
Total | $ 18,991 | $ 14,034 |
Selected Balance Sheet Data - Schedule of Other Assets (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
Other Assets [Line Items] | ||
Other assets, current | $ 5,964 | $ 5,270 |
Other assets, non-current | $ 15,170 | 13,146 |
Treasury note term | 1 year | |
Mortgage servicing rights (“MSRs”), net of amortization | ||
Other Assets [Line Items] | ||
Other assets, current | $ 0 | 0 |
Other assets, non-current | 0 | 1,855 |
Security deposits | ||
Other Assets [Line Items] | ||
Other assets, current | 0 | 0 |
Other assets, non-current | 1,680 | 1,395 |
Employee notes receivable | ||
Other Assets [Line Items] | ||
Other assets, current | 1 | 40 |
Other assets, non-current | 0 | 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 | 564 | 0 |
Other assets, non-current | 3,990 | 0 |
Prepaid lease costs and other | ||
Other Assets [Line Items] | ||
Other assets, current | 5,399 | 5,230 |
Other assets, non-current | $ 0 | $ 396 |
Selected Balance Sheet Data - Summary of Net Change in Carrying Value of MSRs (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Beginning balance | $ 1,855 | $ 1,897 |
Additions | 0 | 421 |
Amortization | (1,275) | (399) |
Reclassification to assets held for sale | (280) | 0 |
Loss on sale | (300) | 0 |
Ending balance | $ 0 | $ 1,919 |
Selected Balance Sheet Data - Components of Deferred Compensation and Commissions (Detail) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Current | ||
Stock appreciation rights ("SARs") liability | $ 2,323 | $ 2,241 |
Commissions payable to investment sales and financing professionals | 59,507 | 110,769 |
Deferred compensation liability | 524 | 1,080 |
Other | 193 | 595 |
Deferred compensation and commissions | 62,547 | 114,685 |
Non-Current | ||
Stock appreciation rights ("SARs") liability | 13,002 | 14,918 |
Commissions payable to investment sales and financing professionals | 36,789 | 31,697 |
Deferred compensation liability | 6,034 | 6,921 |
Other | 0 | 0 |
Deferred compensation and commissions | $ 55,825 | $ 53,536 |
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 | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
(Decrease) increase in the carrying value of the assets held in the rabbi trust | $ (347) | $ (59) | $ (2,131) | $ 932 |
Decrease (increase) in the net carrying value of the deferred compensation obligation | $ 317 | $ 43 | $ 2,108 | $ (720) |
Selected Balance Sheet Data - Schedule of Other Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Current | ||
Deferred consideration | $ 4,692 | $ 5,112 |
Contingent consideration | 2,414 | 2,681 |
Dividends payable | 10,784 | 0 |
Stock repurchase payable | 1,918 | 0 |
Other | 795 | 991 |
Other liabilities | 20,603 | 8,784 |
Non-Current | ||
Deferred consideration | 1,467 | 4,689 |
Contingent consideration | 5,610 | 6,631 |
Dividends payable | 1,627 | 0 |
Stock repurchase payable | 0 | 0 |
Other | 1,919 | 74 |
Other liabilities | $ 10,623 | $ 11,394 |
Related-Party Transactions - Narrative (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
Related Party Transaction [Line Items] | |||||
Aggregate principal amount for employee notes receivable | $ 1 | $ 1 | $ 40 | ||
MMC | |||||
Related Party Transaction [Line Items] | |||||
Real estate brokerage commissions and financing fees from transactions with subsidiaries of Marcus & Millichap Company | 650 | $ 603 | 3,200 | $ 1,400 | |
Commission expenses for transactions with subsidiaries of Marcus & Millichap Company | 388 | 363 | 1,900 | 840 | |
Operating lease cost | 296 | 333 | 967 | 998 | |
Accounts payable and other liabilities - related party | 90 | 90 | $ 93 | ||
MMC | Transition Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Selling, general and administrative expense | $ (17) | $ (11) | $ (35) | $ 4 | |
Chairman And Founder | |||||
Related Party Transaction [Line Items] | |||||
Beneficial ownership percentage | 38.00% |
Fair Value Measurements - Narrative (Detail) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Dec. 31, 2021 |
|
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 | $ 23,800,000 | $ 28,600,000 | |
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 | 5 years |
Fair Value Measurements - Schedule of Reconciliation of Contingent Consideration Measured at Fair Value on Recurring Basis (Detail) - Contingent consideration - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 9,312 | $ 5,572 |
Contingent consideration in connection with acquisitions | 0 | (100) |
Change in fair value of contingent consideration | (248) | 3,246 |
Payments of contingent consideration | (1,040) | (620) |
Ending balance | $ 8,024 | $ 8,098 |
Stock-Based Compensation Plans - 2013 Omnibus Equity Incentive Plan (Detail) - USD ($) $ / shares in Units, $ in Millions |
Oct. 06, 2022 |
Sep. 30, 2022 |
Aug. 02, 2022 |
Feb. 16, 2022 |
---|---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock shares available for grant (in shares) | 3,801,591 | |||
Semi Annual Regular Dividend | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividends payable amount per share (in dollars per share) | $ 0.25 | $ 0.25 | ||
Dividends payable | $ 10.5 | |||
Unvested Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividends payable | $ 12.4 | |||
Unvested Restricted Stock | Subsequent Event | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividends payable | $ 2.4 | |||
2013 Omnibus Equity Incentive Plan | Unvested Restricted Stock and Deferred Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividends payable | $ 0.5 |
Stock-Based Compensation Plans - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | $ 4,544 | $ 2,703 | $ 12,675 | $ 7,653 |
ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | 66 | 33 | 151 | 107 |
RSUs and RSAs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | $ 4,478 | $ 2,670 | $ 12,524 | $ 7,546 |
Income Taxes - Narrative (Detail) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 31.70% | 26.00% | 27.00% | 26.70% |
Income Taxes - Components of Provision for Income Taxes and Income before Provision for Income Taxes (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Amount | ||||
Income tax expense at the federal statutory rate | $ 6,573 | $ 9,627 | $ 27,712 | $ 23,052 |
State income tax expense, net of federal benefit | 1,707 | 2,111 | 6,129 | 5,157 |
(Windfall) shortfall tax benefits, net related to stock-based compensation | (54) | (443) | (2,118) | (522) |
Change in valuation allowance | 1,073 | 55 | 992 | 243 |
Permanent and other items | 640 | 571 | 2,936 | 1,374 |
Provision for income taxes | $ 9,939 | $ 11,921 | $ 35,651 | $ 29,304 |
Rate | ||||
Income tax expense at the federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
State income tax expense, net of federal benefit | 5.50% | 4.60% | 4.60% | 4.70% |
(Windfall) shortfall tax benefits, net related to stock-based compensation | (0.20%) | (1.00%) | (1.60%) | (0.50%) |
Change in valuation allowance | 3.40% | 0.10% | 0.80% | 0.20% |
Permanent and other items | 2.00% | 1.30% | 2.20% | 1.30% |
Provision for income taxes | 31.70% | 26.00% | 27.00% | 26.70% |
Subsequent Events - Narrative (Detail) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 06, 2022 |
Oct. 31, 2022 |
Sep. 30, 2022 |
Aug. 02, 2022 |
Feb. 16, 2022 |
|
Subsequent Event [Line Items] | |||||
Stock repurchased and retired (in shares) | 226,795 | ||||
Stock repurchased and retired | $ 7.6 | ||||
Unvested Restricted Stock | |||||
Subsequent Event [Line Items] | |||||
Dividends payable | $ 12.4 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Stock repurchased and retired (in shares) | 431,700 | ||||
Stock repurchased and retired | $ 14.9 | ||||
Subsequent Event | Unvested Restricted Stock | |||||
Subsequent Event [Line Items] | |||||
Dividends payable | $ 2.4 | ||||
Dividends | $ 10.0 | ||||
Semi Annual Regular Dividend | |||||
Subsequent Event [Line Items] | |||||
Dividends payable amount per share (in dollars per share) | $ 0.25 | $ 0.25 | |||
Dividends payable | $ 10.5 |
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