Marcus & Millichap Inc (MMI) Reports Q3 2023 Earnings: Revenue and Net Income Decline
Total revenue for Q3 2023 was $162.0 million, a 50.0% decrease compared to $323.8 million in Q3 2022
Net loss of $9.2 million, or $0.24 per common share, diluted, compared to net income of $21.4 million, or $0.53 per common share, diluted in Q3 2022
Brokerage commissions of $139.8 million, compared to $292.9 million in Q3 2022
Adjusted EBITDA of $(6.6) million, compared to $36.6 million in Q3 2022
On November 3, 2023, Marcus & Millichap Inc (NYSE:MMI), a leading national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, released its third quarter results for 2023. The company reported a decrease in total revenue and net income compared to the same period in 2022.
Financial Performance
MMI's total revenue for Q3 2023 was $162.0 million, a significant decrease of 50.0% compared to $323.8 million for Q3 2022. The company's brokerage commissions also saw a decline, standing at $139.8 million compared to $292.9 million in the same period last year. The company reported a net loss of $9.2 million, or $0.24 per common share, diluted, compared to a net income of $21.4 million, or $0.53 per common share, diluted, in Q3 2022.
Operational Challenges and Market Conditions
MMI's President and CEO, Hessam Nadji, attributed the company's Q3 results to the prolonged market dislocation caused by severe interest rate shock and financing constraints. He stated,
The widened bid/ask spread and high degree of uncertainty is limiting trading activity despite record capital on the sideline."
Despite these challenges, the company remains focused on client service and is leveraging its strong balance sheet and leading brand to attract leading professionals and enhance its technology and brokerage tools.
Future Outlook
Looking ahead, MMI is positioning itself to lead in the recovery, which may be delayed due to the Feds higher for longer stance on interest rates. The company believes that it remains well positioned to achieve long-term growth despite the current market challenges.
Capital Allocation and Share Repurchase
During the nine months ended September 30, 2023, the company repurchased 1,098,561 shares of common stock at an average price of $31.28 per share for a total price of $34.4 million. After accounting for shares repurchased through October 31, 2023, Marcus & Millichap has approximately $71.5 million available to repurchase shares under its program.
Key Financial Metrics
The company's average transaction size and the average commission per transaction decreased by 31.6% and 21.2%, respectively, compared to Q3 2022. The number of transactions decreased by 39.4%, reducing real estate brokerage commissions to $139.8 million, a 52.3% reduction from the same period in the prior year.
For financing fees, the average fee per transaction and the average transaction size increased by 11.9% and 8.7% respectively, while the number of transactions decreased by 46.7%, resulting in a decrease in financing fees to $17.3 million, a 38.6% reduction from the same period in the prior year.
Explore the complete 8-K earnings release (here) from Marcus & Millichap Inc for further details.
This article first appeared on GuruFocus.
