Marcus & Millichap posted its first quarterly profit of the year as the national investment brokerage joined its rivals in reporting double-digit revenue increases amid stepped-up deal activity.
The national investment brokerage posted its fifth straight quarter of year-over-year revenue growth, with jumps in brokerage commissions, transactions and financing fees driving revenue of $193.9 million in the third quarter, a 15% increase from the same time last year.
The gains helped the Calabasas, California-based firm post a modest $240,000 profit for the quarter, compared with a $5.4 million loss in the year-earlier period. It’s the firm's first quarterly profit since it posted net income of $8.5 million for the last quarter of 2024 in February.
Marcus & Millichap, the last of the publicly traded real estate services firms to post third-quarter results in recent weeks, joined CBRE, Cushman & Wakefield, Colliers , Newmark and JLL in reporting double-digit increases in revenue.
The firm's brokerage commissions jumped over 14% to $162.2 million as brokers closed more apartment and single-tenant retail investment deals. Revenue from mid-sized transactions in the $10 million to $20 million range rose 35%, partially offsetting a 12% decline in larger deals valued at over $20 million.
Revenue from mortgages and other financing rose almost 28% year over year to $26.3 million, as banks gradually increase their willingness to make loans, CEO Hassam Nadji said during the firm's earnings call on Friday.
"There's a marked difference from even a year ago in just the number of lenders at any given time willing to give us quotes on certain assets," Nadji said. "We have more lenders signaling to us that they're back in the market, and the quotes that are coming back are a lot closer to consummating a transaction."
Marcus & Millichap has not posted an annual profit since 2022, as investment property sales and financing fell to new lows during the early years of the pandemic.
While the company does not provide earnings guidance, Nadji said the firm expects quarter-over-quarter revenue growth in the last quarter of this year, consistent with normal year-end seasonality.
Chief Financial Officer Steven DeGennaro told analysts that the most recent quarter's performance marks a turnabout in the company's long climb back to profitability.
"We're kind of at that inflection point where you really see an acceleration of profitability — perhaps not all the way back to where we were at comparable revenue levels six, seven, eight years ago, but this is the inflection point," DeGennaro said.
The firm made several leadership changes last spring as part of a management reorganization to increase sales and streamline decision-making. The company has focused on recruiting, training and retaining brokers to stem high turnover in recent quarters.