What Marcus & Millichap (MMI) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 7.5% to $208 million and net income increased to $1 million. Brokerage transaction volume grew 13% to $9.4 billion, as larger deals helped lift results despite essentially flat transaction counts.
• Interest-rate volatility is widening the gap between buyers’ and sellers’ price expectations and slowing deals, especially in the Private Client Market. The company sees potential for more transactions in 2027–28 as an estimated $1.2 trillion in loans mature.
• Marcus & Millichap plans to invest in business expansion, systems and AI tools, with strategic spending expected to add 1%–2% of revenue over the next 18–24 months. It expects Q4 revenue to rise sequentially on seasonality but remains cautious about year-over-year results amid rate uncertainty.

Marcus & Millichap NYSE: MMI reported higher third-quarter revenue and earnings as larger commercial real estate transactions helped offset the effects of rising interest rates on property valuations and deal activity.

Revenue increased 7.5% to $208 million from $194 million a year earlier, while net income rose to $1 million, or $0.03 per share, from $240,000, or $0.01 per share. Adjusted EBITDA increased to $8.2 million from $6.9 million.

President and CEO Hessam Nadji said the 10-year Treasury yield rose 80 basis points between late June and late September, widening the gap between buyers’ and sellers’ price expectations and prompting property repricing. He said interest rate volatility remains the company’s biggest challenge to more consistent revenue growth.

Larger deals drive brokerage growth

Real estate brokerage commissions rose 7% to $174 million and represented 84% of third-quarter revenue, CFO Steve DeGennaro said. The company completed 1,584 brokerage transactions, essentially unchanged from a year earlier, while transaction volume rose 13% to $9.4 billion.

DeGennaro said the higher volume and a nine-basis-point decline in the average commission rate reflected a shift toward larger transactions. Revenue in the Private Client Market rose 4% to $106 million, Middle Market revenue increased 17% to $31 million, and revenue from transactions above $20 million climbed 20% to $31 million.

Financing revenue increased 3% to $27 million. For the first nine months of 2026, total company revenue rose 14% to $583 million, and adjusted EBITDA reached $23.3 million, compared with an adjusted EBITDA loss of $400,000 a year earlier.

Total operating expenses increased to $209 million in the quarter from $196 million. Cost of services rose to 64% of revenue, up 160 basis points, partly because larger transactions were typically generated by senior producers receiving higher commission splits, DeGennaro said.

Rates pressure deals, but maturities could spur sales

Nadji said rate volatility has lengthened marketing and closing processes, leaving brokers less time to develop new business. Higher borrowing costs have been particularly disruptive in the Private Client Market, where lower-priced properties are more sensitive to debt costs, he said.

“Our biggest challenge really is more around the sellability of the current inventory that is on the market,” Nadji said. He described inventory heading into 2027 as near record levels and said relatively few deals have been abandoned outright; many instead require buyers, sellers and lenders to realign on pricing.

At the same time, Nadji said discussions with lenders have shifted toward more decisive action on underperforming properties and upcoming maturities, rather than loan modifications and waiting for rates to fall. He said the company expects more transactions in 2027 and 2028, when it estimates $1.2 trillion of loans will mature.

Multifamily and retail loans are expected to account for nearly half of those maturities, according to Nadji. He cautioned that recent rate increases continue to affect the transaction pipeline, even though rates had retreated in recent weeks.

Investment plans and fourth-quarter outlook

The company outlined plans to expand its private client, institutional brokerage, financing, auction and leasing businesses while upgrading enterprise systems and introducing AI-enabled tools. Nadji said retail leasing is a priority, but the company does not expect a meaningful revenue contribution from the leasing initiative in 2027.

DeGennaro said investment in strategic initiatives is expected to add approximately 1% to 2% of revenue in spending over the next 18 to 24 months. The company is also evaluating potential acquisitions, including opportunities in financing and brokerage.

Marcus & Millichap ended the quarter with $373 million in cash, cash equivalents and marketable securities and no debt. Asked about the absence of share repurchases during the quarter, DeGennaro said the company was retaining more capital for potential opportunities.

For the fourth quarter, DeGennaro said the company expects revenue to rise sequentially because of normal year-end seasonality, but remains measured about the comparison with a year earlier because of interest rate uncertainty. He said the prior-year quarter also benefited from bonus depreciation being made permanent, an effect the company does not expect to be as significant this year.

About Marcus & Millichap (NYSE:MMI)

Marcus & Millichap, Inc is a commercial real estate brokerage company that specializes in investment sales, financing and advisory services. The company serves owners and investors in a range of property sectors, including multifamily, office, retail, industrial, self-storage, hospitality and land.

Through its brokerage professionals and investment banking platform, Marcus & Millichap helps clients market and acquire commercial properties, arrange financing and evaluate real estate investment opportunities.

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