Marcus & Millichap, Inc.

Previous wording

The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025, including the “Risk Factors” section and the consolidated financial statements and notes included therein.

Current wording

The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025, or for any other future period. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025, including the “Risk Factors” section and the consolidated financial statements and notes included therein.

Previous wording

We are a leading national real estate services firm specializing in commercial real estate investment sales, financing services, research and advisory services. We have been the top commercial real estate investment broker in the United States based on the number of investment transactions for more than 15 years. As of June 30, 2025, we had 1,640 investment sales and financing professionals that are primarily exclusive independent contractors operating in more than 80 offices, who provide real estate brokerage and financing services to sellers and buyers of commercial real estate assets. During the three and six months ended June 30, 2025, we closed 2,070 and 3,776 investment sales, financing and other transactions with total sales volume of approximately $12.3 billion and $21.7 billion, respectively. During the year ended December 31, 2024, we closed 7,836 investment sales, financing and other transactions with total sales volume of approximately $49.6 billion.

Current wording

We are a leading national real estate services firm specializing in commercial real estate investment sales, financing services, research and advisory services. We have been the top commercial real estate investment broker in the United States based on the number of investment transactions for more than 15 years. As of September 30, 2025, we had 1,669 investment sales and financing professionals that are primarily exclusive independent contractors operating in more than 80 offices, who provide real estate brokerage and financing services to sellers and buyers of commercial real estate assets. During the three and nine months ended September 30, 2025, we closed 2,289 and 6,065 investment sales, financing and other transactions with total sales volume of approximately $12.2 billion and $33.9 billion, respectively. During the year ended December 31, 2024, we closed 7,836 investment sales, financing and other transactions with total sales volume of approximately $49.6 billion.

Previous wording

We generate revenue by collecting real estate brokerage commissions upon the sale, and financing fees upon the financing of commercial properties, by providing equity advisory services and loan sales, loan guarantees and by providing leasing, consulting and advisory services. Real estate brokerage commissions are typically based upon the value of the property and financing fees are typically based upon the size of the loan. During the three months ended June 30, 2025, approximately 82% of our revenue was generated from real estate brokerage commissions, 15% from financing fees and 3% from other real estate related services.

Current wording

We generate revenue by collecting real estate brokerage commissions upon the sale, and financing fees upon the financing of commercial properties, by providing equity advisory services and loan sales, loan guarantees and by providing leasing, consulting and advisory services. Real estate brokerage commissions are typically based upon the value of the property and financing fees are typically based upon the size of the loan. During the three months ended September 30, 2025, approximately 84% of our revenue was generated from real estate brokerage commissions, 13% from financing fees and 3% from other real estate related services.

Previous wording

We are the industry leader in serving private clients in the $1 million - $10 million private client market, which contributed approximately 66% and 63% of our real estate brokerage commissions during the three months ended June 30, 2025 and 2024, respectively, and approximately 65% of our real estate brokerage commissions during both the six months ended June 30, 2025 and 2024. The following table sets forth the number of transactions, sales volume and revenue by each commercial real estate market for real estate brokerage:

Current wording

We are the industry leader in serving private clients in the $1 million - $10 million Private Client Market, which contributed approximately 63% and 62% of our real estate brokerage commissions during the three months ended September 30, 2025 and 2024, respectively, and approximately 64% and 63% of our real estate brokerage commissions during the nine months ended September 30, 2025 and 2024, respectively. The following table sets forth the number of transactions, sales volume and revenue by each commercial real estate market for real estate brokerage:

Previous wording

Although the economy remains generally sound, the lack of clarity from the U.S. presidential administration regarding tariffs and trade policy has made it increasingly difficult to predict the economic outlook. Recession risk remains modestly elevated, and inflation risk continues to be a top concern. The Federal Reserve has remained cautious in its outlook, with most predictions of a potential reduction of the overnight rate occurring in September 2025 at the earliest. The U.S. presidential administration has announced a variety of trade deals, most notably with the U.K., Japan and the European Union. However, on July 31, 2025, the administration announced sweeping tariffs effective on August 7, 2025 on most countries that had not reached a trade deal. If additional trade deals are entered into, with tariffs being lowered and stabilized, the economic outlook could strengthen.

Current wording

Although the economy remains generally sound, the lack of clarity from the U.S. presidential administration regarding tariffs and trade policy together with the limited economic data available due to the government shutdown has made it increasingly difficult to predict the economic outlook. Recession risk remains modestly elevated, and inflation risk continues to be a top concern. The Federal Reserve has remained cautious, but a third 25 basis point rate reduction in December is expected. The U.S. presidential administration announced a variety of trade deals in recent weeks, most notably with Japan and South Korea, while committing to a tariff détente with China. However, additional tariffs on pharmaceuticals, Canadian lumber and other goods could impact some segments of the economy. The end of the government shutdown and a stabilization of trade and tariff policies could strengthen the economic outlook.

Previous wording

Although apartment and industrial construction remains elevated, the supply additions are concentrated in select markets and the pace of deliveries is tapering. Oversupply risks in most markets are beginning to diminish as elevated capital costs join rising tariffs on building materials and construction labor shortages to drive construction costs higher. Retail and office development was already low entering 2025, with little sign of a revival. Apartment starts have fallen by 77% from their peak in 2022, and industrial completions in 2025 are expected to fall to approximately 250 million square feet, their lowest level since 2015. As a result, receding new supply risks in 2025 should aid commercial real estate performance in the coming quarters.

Current wording

Although the pace of apartment and industrial construction has begun to abate, markets where the new additions were concentrated, predominantly in the Sun Belt, continue to face an overhang of inventory that is affecting fundamentals. Markets with limited new supply continue to generate modest performance gains. Oversupply risks are beginning to diminish as elevated capital costs join rising tariffs on building materials and construction labor shortages to increase construction costs. Retail and office development was already low entering 2025, with little sign of a revival. Apartment starts have fallen by 76% from their peak in 2022, and industrial completions in 2025 are expected to fall to approximately 250 million square feet, their lowest level since 2015. As a result, receding new supply risks should aid commercial real estate performance in the coming quarters.

Previous wording

Apartment vacancy rates continued to trend lower in the second quarter, reaching 4.4% with unit absorption totaling 790,000 units in the trailing 12 months – the strongest 12-month total in more than 30 years. If the pace of construction is further slowed by tariffs on construction materials and more stringent immigration policy reducing the available construction labor force, new supply risks would continue to abate, raising the prospect of strengthening multifamily fundamentals. Office demand has likewise continued to improve, marking a fifth consecutive quarter of positive space absorption. Though vacancy rates remain elevated for the sector as a whole, select sub-segments of office properties in a variety of markets continue to draw tenant demand. Retail space demand has modestly slackened, but the vacancy rate remains below 5%. Like retail space demand, hotel demand has eased, particularly as international travel to the United States has been impacted by trade policies. In addition, elevated uncertainty and weakened consumer confidence have impacted leisure travel. Should trade deals be established and policies normalized, confidence could improve and hotel room demand could quickly revive.

Current wording

While many Sun Belt markets face multifamily oversupply challenges, other metropolitan areas experienced only modest vacancy rate increases. Nationally, the vacancy rate increased 20 basis points to 4.6%, with unit absorption thinning to just 57,000 units in the third quarter. This follows the strongest 12-month total in more than 30 years which ended in the second quarter of 2025. Office demand has continued to improve, achieving a sixth consecutive quarter of positive space absorption. Though vacancy rates remain elevated for the sector as a whole, select sub-segments of office properties in a variety of markets continue to draw tenant demand. Retail space demand was positive in the third quarter, sustaining a vacancy rate below 5% led by neighborhood and community retail centers which maintained vacancy rates near 4%. Hotel demand remains down from last year as international travel to the United States has been impacted by trade policies. In addition, elevated uncertainty and weakened consumer confidence have impacted leisure travel. Should trade deals be established and policies normalized, confidence could improve and hotel room demand could quickly revive.

Previous wording

The commercial real estate space demand outlook remains difficult to discern amid the dramatic policy shifts enacted by the new U.S. presidential administration. Increased uncertainty, weakened sentiment and risks of a recession and higher inflation could slow decision making, causing commercial real estate space demand to falter. If policy clarity emerges, commercial real estate space demand could be reinvigorated. Nonetheless, all commercial real estate property types have entered the new cycle on sound footing, suggesting a durable performance outlook.

Current wording

The commercial real estate space demand outlook remains difficult to discern amid the dramatic policy shifts enacted by the U.S. presidential administration and the limited data available due to the government shutdown. Increased uncertainty, weakened sentiment and risks of a recession and higher inflation could slow decision making, causing commercial real estate space demand to falter. If policy clarity emerges, commercial real estate space demand could be reinvigorated. Nonetheless, all commercial real estate property types aside from office properties entered the new cycle on sound footing, suggesting a durable performance outlook.

Previous wording

Although economic uncertainty together with financial market and interest rate volatility normally tend to increase investor caution, capital flows into commercial real estate could potentially be bolstered. As a “hard asset” with some level of resistance to inflation, recessions and financial market volatility, investment into commercial real estate could benefit from the current economic climate. The repricing of commercial real estate assets over the last three years has enhanced the yield profile, supporting positive or neutral leverage in many markets and property types. In addition, the passage of the new tax act provides some benefits and additional clarity to the commercial real estate market. Bonus depreciation rules, increased state and local tax (“SALT”) allowances, and increased deductibility of interest paid on commercial real estate could bolster investment activity. Furthermore, by making many of the new tax rules permanent, investors can rely on greater tax policy certainty, allowing them to deploy longer-term investment strategies. Whether capital migrates to commercial properties will likely depend on the risk perception of the broader financial market, but other hard assets have already experienced increased demand in the wake of the rapid policy shifts and financial market downturn.

Current wording

Although economic uncertainty together with financial market and interest rate volatility normally tend to increase investor caution, capital flows into commercial real estate could potentially be bolstered. As a “hard asset” with some level of resistance to inflation, recessions and financial market volatility, investment into commercial real estate could benefit from the current economic climate. The repricing of commercial real estate assets over the last three years has enhanced the yield profile, supporting positive or neutral leverage in many markets and property types. In addition, the passage of the new tax act provides some benefits and additional clarity to the commercial real estate market. Bonus depreciation rules, increased state and local tax (“SALT”) allowances, and increased deductibility of interest paid on commercial real estate could bolster investment activity. Furthermore, by making many of the new tax rules permanent, investors can rely on greater tax policy certainty, allowing them to deploy longer-term investment strategies. Whether capital migrates to commercial properties will likely depend on the risk perception of the broader financial market, but other hard assets have already experienced increased demand in the wake of the rapid policy shifts

Previous wording

In the second quarter of 2025, commercial real estate transaction activity increased by 12% compared to the same quarter last year, led by velocity gains in office and retail property sales. Apartment transactions increased by 12% on a year-over-year basis, while industrial and seniors housing sales flattened and hotel property sales activity declined. The transaction uptick reflects the continuance of transactions initiated in the first quarter when the expectation gap had narrowed, but recent financial market volatility and uncertainty surrounding trade and the economy could re-widen expectations. Clarity on investor expectations in the new trade and economic climate have yet to fully emerge.

Current wording

In the third quarter of 2025, commercial real estate transaction activity increased by 8% compared to the same quarter last year, led by velocity gains in office and multi-tenant retail property sales. Apartment transactions increased by 8% on a year-over-year basis, while industrial, single-tenant retail and hotel property sales activity was modestly positive. The uptick in transactions reflects activity initiated in the second quarter when economic and financial market volatility were elevated. If the economy avoids a major disruption, increased stability and lower interest rates could bolster investment activity in coming quarters. Clarity on investor expectations in the new trade and economic climate have yet to fully emerge.

Previous wording

Several metrics traditionally associated with rising transaction activity velocity, including increased exclusive inventory being brought to market and rising requests for Broker Opinions of Value, suggest that transactional momentum could be sustained in the coming quarters. Nonetheless, the variety of potential headwinds facing the sector including the economy, interest rates, financial market trends, geopolitical and commercial real estate pricing clarity could ultimately suppress activity in the second half of 2025. In the current uncertain climate, defensive assets such as single-tenant net lease properties backed by high-credit tenants and medical office assets continue to receive buyer interest. Apartment properties, supported by positive long-term drivers including robust demographics of the renter-aged population and the high cost of homeownership is also a favored property segment. Another important factor influencing the investor outlook is the renewal of many of the 2017 Tax Cuts and Jobs Act provisions. Accelerated depreciation, pass-through entity deductions, increases in Low Income Housing Tax Credit (LIHTC) allocations, increased SALT deductions and the renewal of Opportunity Zones could benefit commercial real estate investment. Ultimately, market velocity will be dictated by a combination of the economic outlook, financial market trends, geopolitical forces, Federal Reserve action, interest rates and the buyer/seller expectation gap. If trade policy stabilizes, uncertainty abates and investor sentiment rises, we believe commercial real estate investment activity could gain additional momentum.

Current wording

Several metrics traditionally associated with rising transaction activity velocity, including increased exclusive inventory being brought to market and rising requests for Broker Opinions of Value, suggest that transactional momentum could be sustained in the coming quarters. Nonetheless, the variety of potential headwinds facing the sector including the economy, interest rates, financial market trends, geopolitical and commercial real estate pricing clarity could ultimately suppress activity. In the current uncertain climate, defensive assets such as single-tenant net lease properties backed by high-credit tenants and medical office assets continue to receive buyer interest. Apartment properties, supported by positive long-term drivers including robust demographics of the renter-aged population and the high cost of homeownership is also a favored property segment. Another important factor influencing the investor outlook is the renewal of many of the 2017 Tax Cuts and Jobs Act provisions. Accelerated depreciation, pass-through entity deductions, increases in Low Income Housing Tax Credit (LIHTC) allocations, increased SALT deductions and the renewal of Opportunity Zones could benefit commercial real estate investment. Ultimately, market velocity will be dictated by a combination of the economic outlook, financial market trends, geopolitical forces, Federal Reserve action, interest rates and the buyer/seller expectation gap. If trade policy stabilizes, uncertainty abates and investor sentiment rises, we believe commercial real estate investment activity could gain additional momentum.

Previous wording

We are subject to U.S. and Canadian federal taxes and individual state and local taxes based on the income generated in the jurisdictions in which we operate. Our effective tax rate fluctuates as a result of (i) a change in the second quarter of 2025 from the annual effective tax rate (“AETR”) to the discrete method, (ii) the change in the mix of our activities in the jurisdictions in which we operate due to differing tax rates in those jurisdictions and (iii) the impact of permanent items, including compensation charges, qualified transportation fringe benefits, uncertain tax positions, meals and entertainment and tax-exempt deferred compensation plan assets. Our provision (benefit) for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our Amended Plan and Amended ESPP. For a discussion of our determination to change from the application of the AETR method for quarterly periods to the discrete method, please see Note 10 – “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Current wording

We are subject to U.S. and Canadian federal taxes and individual state and local taxes based on the income generated in the jurisdictions in which we operate. Our effective tax rate fluctuates as a result of (i) the impact of applying the discrete method in the third quarter of 2025, (ii) the change in the mix of our activities in the jurisdictions in which we operate due to differing tax rates in those jurisdictions and (iii) the impact of permanent items, including compensation charges, qualified transportation fringe benefits, uncertain tax positions, meals and entertainment and tax-exempt deferred compensation plan assets. Our provision (benefit) for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our Amended Plan and Amended ESPP. For a discussion of our determination to change from the application of the AETR method for quarterly periods to the discrete method, please see Note 10 – “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Previous wording

On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law in the U.S. This bill contains a broad range of tax reform provisions. The Company is evaluating the future impact of these tax law changes. However, we do not expect the legislation to have a material impact on our consolidated financial statements.

Current wording

On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law in the U.S. This bill contains a broad range of tax reform provisions. The Company has assessed the legislation enacted during the quarter and does not anticipate a material impact on our consolidated financial statements.

Previous wording

The following is a discussion of our results of operations for the three and six months ended June 30, 2025 and 2024. The tables included in the period comparisons below provide summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results.

Current wording

The following is a discussion of our results of operations for the three and nine months ended September 30, 2025 and 2024. The tables included in the period comparisons below provide summaries of our results of operations. The period-to-period comparisons of financial results are not necessarily indicative of future results.

Previous wording

We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We also believe these metrics are relevant to investors’ and others’ assessment of our financial condition and results of operations. During the three months ended June 30, 2025 and 2024, we closed 2,070 and 1,800 investment sales, financing and other transactions, respectively, with total sales volume of approximately $12.3 billion and $9.5 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:

Current wording

We regularly review a number of key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We also believe these metrics are relevant to investors’ and others’ assessment of our financial condition and results of operations. During the three months ended September 30, 2025 and 2024, we closed 2,289 and 1,987 investment sales, financing and other transactions, respectively, with total sales volume of approximately $12.2 billion and $12.0 billion, respectively. During the nine months ended September 30, 2025 and 2024, we closed 6,065 and 5,351 investment sales, financing and other transactions, respectively, with total sales volume of approximately $33.9 billion and $31.2 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:

Previous wording

Total revenue was $172.3 million for the three months ended June 30, 2025 compared to $158.4 million for the same period in 2024, an increase of $13.9 million, or 8.8%. Total revenue increased as a result of increases in real estate brokerage commissions and financing fees, partially offset by a reduction in other revenue, as described below. See “Factors Affecting Our Business” for additional market information.

Current wording

Total revenue was $193.9 million for the three months ended September 30, 2025 compared to $168.5 million for the same period in 2024, an increase of $25.4 million, or 15.1%. Total revenue increased as a result of increases in real estate brokerage commissions and financing fees, partially offset by a reduction in other revenue, as described below. See “Factors Affecting Our Business” for additional market information.

Previous wording

Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $141.4 million for the three months ended June 30, 2025 from $135.4 million for the same period in 2024, an increase of $6.0 million, or 4.4%. The increase was the result of total sales volume increasing by 11.8%, partially offset by a reduction of 13 basis points in the average commission rate earned during the three months ended June 30, 2025 compared to the same period in 2024. The reduction in the average commission rate is primarily the result of the increase in the average transaction size as larger transactions generally have smaller commission rates. Private Client Market revenue increased by 10.3%, while the combined Middle Market and Larger Transaction Market revenue decreased by 6.6%. The overall average transaction size increased by 3.4%.

Current wording

Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $162.2 million for the three months ended September 30, 2025 from $142.0 million for the same period in 2024, an increase of $20.2 million, or 14.2%. The increase was the result of the total number of transactions increasing by 19.2% and the average commission rate earned increasing by 28 basis points, partially offset by a decrease of 2.0% in the total sales volume during the three months ended September 30, 2025 compared to the same period in 2024. The increase in the average commission rate is due to the shift in revenue from the Middle Market and Larger Transaction Market to the Private Client Market, which generally earns higher commission. The Private Client Market revenue increased by 16.9%, while the combined Middle Market and Larger Transaction Market revenue increased by 6.5%.

Previous wording

Financing fees. Revenue from financing fees increased to $26.3 million for the three months ended June 30, 2025 from $18.3 million for the same period in 2024, an increase of $8.0 million, or 43.5%, resulting primarily from a 86.0% increase in total financing volume, partially offset by 12 basis point decrease in the average fee rate during the three months ended June 30, 2025 compared to the same period in 2024. The reduction in the average fee rate is primarily the result of the increase in the average transaction size as larger transactions generally have smaller commission rates.

Current wording

Financing fees. Revenue from financing fees increased to $26.3 million for the three months ended September 30, 2025 from $20.6 million for the same period in 2024, an increase of $5.7 million, or 27.7%, resulting primarily from a 34.4% increase in total financing volume, partially offset by a four basis point decrease in the average fee rate earned during the three months ended September 30, 2025 compared to the same period in 2024. This decrease in average fee rate was primarily due to the 5.3% increase in average transaction size, as larger transactions tend to earn smaller commission rates.

Previous wording

Other revenue. Other revenue decreased to $7.9 million for the six months ended June 30, 2025 from $9.9 million for the same period in 2024, a decrease of $2.0 million, or 20.0%, resulting primarily from a decrease in leasing fees.

Current wording

Other revenue. Other revenue decreased to $5.4 million for the three months ended September 30, 2025 from $6.0 million for the same period in 2024, a decrease of $0.6 million, or 8.8%, resulting primarily from a decrease in leasing fees.

Previous wording

Total operating expenses were $181.3 million for the three months ended June 30, 2025 compared to $166.4 million for the same period in 2024, an increase of $14.9 million, or 9.0%. The change was primarily due to an increase of $8.5 million in cost of services and an increase of $6.5 million in selling, general and administrative expense as described below.

Current wording

Total operating expenses were $196.3 million for the three months ended September 30, 2025 compared to $180.0 million for the same period in 2024, an increase of $16.3 million, or 9.1%. The change was primarily due to an increase of $16.2 million in cost of services, as well as an increase of $1.9 million in selling, general and administrative expense, partially offset by a decrease of $1.8 million in depreciation and amortization expense as described below.

Previous wording

Cost of services. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services increased to $106.6 million for the three months ended June 30, 2025 from $98.1 million for the same period in 2024 as a result of increased revenue. Cost of services as a percentage of total revenue was 61.9% for the second quarters of both 2025 and 2024.

Current wording

Cost of services. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services increased to $121.0 million for the three months ended September 30, 2025 from $104.8 million for the same period in 2024 as a result of increased revenue. Cost of services as a percentage of total revenue increased by 20 basis points to 62.4% compared to 62.2% for the same period during prior year.

Previous wording

Selling, general, and administrative expense. Selling, general and administrative expense for the three months ended June 30, 2025 increased to $71.6 million, from $65.0 million for the same period in 2024, an increase of $6.6 million or 10.1%. The increase was primarily due to (i) an increase in compensation related costs, (ii) increased investment in business development, marketing and other support related to the long-term talent acquisition and retention of our investment sales and financing professionals and (iii) the change in valuation of deferred contingent consideration.

Current wording

Selling, general, and administrative expense. Selling, general and administrative expense for the three months ended September 30, 2025 increased to $72.5 million, from $70.7 million for the same period in 2024, an increase of $1.8 million or 2.6%. The increase was primarily due to a $4.0 million accrual related to an ongoing litigation matter, partially offset by a decrease in compensation related costs.

Previous wording

Depreciation and amortization expense. Depreciation and amortization expense decreased to $6.0 million for the six months ended June 30, 2025 from $6.8 million compared to the same period in 2024, a decrease of $0.7 million, or 11.1%. The decrease primarily relates to accelerated amortization and impairment of certain intangible assets recorded in the second half of 2024 resulting from changes in estimates.

Current wording

Depreciation and amortization expense. Depreciation and amortization expense decreased to $2.7 million for the three months ended September 30, 2025 from $4.5 million for the same period in 2024, a decrease of $1.8 million, or 39.7%. The decrease primarily relates to accelerated amortization and impairment of certain intangible assets recorded in the second half of 2024 resulting from changes in estimates.

Previous wording

Other income, net decreased to $9.5 million for the six months ended June 30, 2025 from $10.4 million for the same period in 2024. The decrease of $0.9 million was primarily driven by a decrease in interest income due to a decreased average yield on the Company's investments during the period compared to the same period in prior year.

Current wording

Other income, net decreased to $4.0 million for the three months ended September 30, 2025 from $5.3 million for the same period in 2024. The decrease of $1.3 million was primarily driven by a decrease in interest income due to a decreased average yield on the Company's investments during the period compared to the same period in prior year.

Previous wording

The provision for income taxes was $7.3 million for the three months ended June 30, 2025, compared to $2.1 million for the same period in 2024. The effective income tax rate for the three months ended June 30, 2025, was (194.5)% compared to (61.1)% for the same period in 2024. The change in the effective tax rate is primarily due to the application of the discrete method for the three and six months ended June 30, 2025 compared to the annual effective tax rate method for the three and six months ended June 30, 2024 as discussed in Note 10 – “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Current wording

The provision for income taxes was $1.2 million for the three months ended September 30, 2025, compared to a benefit for income taxes of $1.0 million for the same period in 2024. The effective income tax rate for the three months ended September 30, 2025, was 83.7% compared to 15.2% for the same period in 2024. The 83.7% effective income tax rate resulted primarily from non-deductible items, state income taxes, and income before the provision for income taxes that is relatively close to breakeven. The change in the effective tax rate is also impacted by the application of the discrete method for the three months ended September 30, 2025, compared to the annual effective tax rate method for the three months ended September 30, 2024, as discussed in Note 10 – “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Previous wording

Below are key operating results for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 (dollars in thousands):

Current wording

Below are key operating results for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 (dollars in thousands):

Previous wording

Total revenue was $317.3 million for the six months ended June 30, 2025 compared to $287.5 million for the same period in 2024, an increase of $29.8 million, or 10.4%. Total revenue increased as a result of increases in real estate brokerage commissions and financing fees, partially offset by a reduction in other revenue, as described below. See “Factors Affecting Our Business” for additional market information.

Current wording

Total revenue was $511.2 million for the nine months ended September 30, 2025 compared to $456.0 million for the same period in 2024, an increase of $55.2 million, or 12.1%. Total revenue increased as a result of increases in real estate brokerage commissions and financing fees, partially offset by a reduction in other revenue, as described below. See “Factors Affecting Our Business” for additional market information.

Previous wording

Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $265.0 million for the six months ended June 30, 2025 from $244.9 million for the same period in 2024, an increase of $20.1 million, or 8.2%. The increase was the result of total sales volume increasing by 14.4%, partially offset by a reduction of 10 basis points in the average commission rate earned during the six months ended June 30, 2025 compared to the same period in 2024. The reduction in the average commission rate is primarily the result of the increase in the average transaction size as larger transactions generally have smaller commission rates. Private Client Market revenue increased by 8.4%, and the combined Middle Market and Larger Transaction Market revenue increased by 8.3%. The overall average transaction size increased by 6.5%.

Current wording

Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $427.2 million for the nine months ended September 30, 2025 from $386.9 million for the same period in 2024, an increase of $40.3 million, or 10.4%. The increase was the result of total sales volume increasing by 7.8% and a four basis point increase in the average commission rate earned during the nine months ended September 30, 2025 compared to the same period in 2024. The increase in the average commission rate earned is due to the shift in revenue from the Middle Market and Larger Transaction Market to the Private Client Market, which generally earns higher commissions. The Private Client Market revenue increased by 11.4% and the combined Middle Market and Larger Transaction Market revenue increased by 7.6%.

Previous wording

Financing fees. Revenue from financing fees increased to $44.4 million for the six months ended June 30, 2025 from $32.7 million for the same period in 2024, an increase of $11.7 million, or 35.7%, resulting primarily from a 52.7% increase in total financing volume, partially offset by a four basis point decrease in the average fee rate during the six months ended June 30, 2025 compared to the same period in 2024. The reduction in the average fee rate is primarily the result of the increase in the average transaction size as larger transactions generally have smaller commission rates.

Current wording

Financing fees. Revenue from financing fees increased to $70.7 million for the nine months ended September 30, 2025 from $53.3 million for the same period in 2024, an increase of $17.4 million, or 32.6%, resulting primarily from a 45.7% increase in total financing volume, partially offset by a four basis point decrease in the average fee rate during the nine months ended September 30, 2025 compared to the same period in 2024. The reduction in the average fee rate is due to the shift from the smaller transactions to larger transactions, which generally earn smaller commission rates.

Previous wording

Other revenue. Other revenue of $4.6 million for the three months ended June 30, 2025 was comparable to the $4.7 million for the same period in 2024.

Current wording

Other revenue. Other revenue decreased to $13.3 million for the nine months ended September 30, 2025 from $15.8 million for the same period in 2024, a decrease of $2.5 million, or 15.8%, resulting primarily from a decrease in leasing fees.

Previous wording

Total operating expenses were $344.1 million for the six months ended June 30, 2025 compared to $315.6 million for the same period in 2024, an increase of $28.5 million, or 9.0%. The change was primarily due to an increase of $20.0 million in cost of services and an increase of $9.2 million in selling, general and administrative expenses as described below.

Current wording

Total operating expenses were $540.3 million for the nine months ended September 30, 2025 compared to $495.6 million for the same period in 2024, an increase of $44.7 million, or 9.0%. The change was primarily due to an increase of $36.3 million in cost of services and an increase of $11.0 million in selling, general and administrative expenses as described below.

Previous wording

Cost of services. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services increased to $195.0 million for the six months ended June 30, 2025 from $174.9 million for the same period in 2024 as a result of increased revenue. Cost of services as a percentage of total revenue increased by 50 basis points to 61.4% compared to the same period in 2024 primarily due to our senior investment sales and financing professionals earning a higher amount of additional commissions.

Current wording

Cost of services. Cost of services are variable commissions paid to our investment sales professionals and compensation-related costs in connection with our financing activities. Cost of services increased to $316.0 million for the nine months ended September 30, 2025 from $279.7 million for the same period in 2024 as a result of increased revenue. Cost of services as a percentage of total revenue increased by 50 basis points to 61.8% compared to 61.3% for the same period in 2024 primarily due to our senior investment sales and financing professionals earning a higher amount of additional commissions.

Previous wording

Selling, general, and administrative expense. Selling, general and administrative expense for the six months ended June 30, 2025 increased to $143.1 million, from $133.9 million for the same period in 2024, an increase of $9.2 million or 6.9%. The increase was primarily due to (i) an increase in compensation related costs and (ii) increased investment in business development, marketing and other support related to the long-term talent acquisition and retention of our investment sales and financing professionals.

Current wording

Selling, general, and administrative expense. Selling, general and administrative expense for the nine months ended September 30, 2025 increased to $215.6 million, from $204.6 million for the same period in 2024, an increase of $11.0 million or 5.4%. The increase was primarily due to (i) an increase in compensation related costs and (ii) increased investment in business development, marketing and other support related to the long-term talent acquisition and retention of our investment sales and financing professionals and (iii) a legal accrual related to an ongoing litigation matter.

Previous wording

Depreciation and amortization expense. Depreciation and amortization expense decreased to $3.1 million for the three months ended June 30, 2025 from $3.3 million compared to the same period in 2024, a decrease of $0.2 million, or 5.3%. The decrease primarily relates to accelerated amortization and impairment of certain intangible assets recorded in the second half of 2024 resulting from changes in estimates.

Current wording

Depreciation and amortization expense. Depreciation and amortization expense decreased to $8.7 million for the nine months ended September 30, 2025 from $11.3 million compared to the same period in 2024, a decrease of $2.6 million, or 22.6%. The decrease primarily relates to accelerated amortization and impairment of certain intangible assets recorded in the second half of 2024 resulting from changes in estimates.

Previous wording

Other income, net increased to $5.5 million for the three months ended June 30, 2025 from $4.8 million for the same period in 2024. The increase of $0.7 million was primarily driven by an increase investment gain related to the assets held in the rabbi trust, partially offset by decreased interest income due to a decreased average yield on the Company's investments during the period compared to the same period in prior year.

Current wording

Other income, net decreased to $13.5 million for the nine months ended September 30, 2025 from $15.7 million for the same period in 2024. The decrease of $2.2 million was primarily driven by a decrease in interest income due to a decreased average yield on the Company's investments during the period compared to the same period in prior year.

Previous wording

Interest expense decreased by an immaterial amount for the six months ended June 30, 2025 compared to the same period in 2024, and primarily relates to interest expense on the Company’s SARs liability.

Current wording

Interest expense decreased by an immaterial amount for the nine months ended September 30, 2025 compared to the same period in 2024, and primarily relates to interest expense on the Company’s SARs liability.

Previous wording

The benefit for income taxes was $2.2 million for the six months ended June 30, 2025, compared to $2.6 million for the same period in 2024. The effective income tax rate for the six months ended June 30, 2025, was 12.5% compared to 14.6% for the same period in 2024. The determination of the applicable tax rate was based on the discrete method for the six months ended June 30, 2025, compared to the annual effective tax rate method for the same period in 2024 as discussed in Note 10 – “Income Taxes” in the Notes to the Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Current wording

The benefit for income taxes was $1.0 million for the nine months ended September 30, 2025, compared to $3.6 million for the same period in 2024. The effective income tax rate for the nine months ended September 30, 2025, was 6.0% compared to 14.7% for the same period in 2024. The determination of the applicable tax rate was based on the discrete method for the nine months ended September 30, 2025, compared to the annual effective tax rate method for the same period in 2024 as discussed in Note 10 – “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q.

Previous wording

In this Quarterly Report on Form 10-Q, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net loss before (i) interest income and other, including net realized gains (losses) on marketable debt securities, available-for-sale and cash, cash equivalents, and restricted cash, (ii) interest expense, (iii) provision (benefit) for income taxes, (iv) depreciation and amortization, and (v) stock-based compensation. We use Adjusted EBITDA in our business operations to evaluate the performance of our business, develop budgets and measure our performance against those budgets, among other things. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate our overall operating performance. However, Adjusted EBITDA has material limitations as a supplemental metric and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. We find Adjusted EBITDA to be a useful management metric to assist in evaluating performance, because Adjusted EBITDA eliminates items related to capital structure, taxes and non-cash items. In light of the foregoing limitations, we do not rely solely on Adjusted EBITDA as a performance measure and also consider our U.S. GAAP results. Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net loss, operating loss or any other measures calculated in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. A reconciliation of the most directly comparable U.S. GAAP financial measure, net loss, to Adjusted EBITDA is as follows (in thousands):

Current wording

In this Quarterly Report on Form 10-Q, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) before (i) interest income and other, including net realized gains (losses) on marketable debt securities, available-for-sale and cash, cash equivalents, and restricted cash, (ii) interest expense, (iii) provision (benefit) for income taxes, (iv) depreciation and amortization, and (v) stock-based compensation. We use Adjusted EBITDA in our business operations to evaluate the performance of our business, develop budgets and measure our performance against those budgets, among other things. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate our overall operating performance. However, Adjusted EBITDA has material limitations as a supplemental metric and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. We find Adjusted EBITDA to be a useful management metric to assist in evaluating performance, because Adjusted EBITDA eliminates items related to capital structure, taxes and non-cash items. In light of the foregoing limitations, we do not rely solely on Adjusted EBITDA as a performance measure and also consider our U.S. GAAP results. Adjusted EBITDA is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss), operating income (loss) or any other measures calculated in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. A reconciliation of the most directly comparable U.S. GAAP financial measure, net loss, to Adjusted EBITDA is as follows (in thousands):

Previous wording

Our total cash, cash equivalents, and restricted cash balance decreased by $67.4 million to $86.0 million at June 30, 2025, compared to $153.4 million at December 31, 2024. The following table sets forth our summary cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Current wording

Our total cash, cash equivalents, and restricted cash balance decreased by $36.0 million to $117.4 million at September 30, 2025, compared to $153.4 million at December 31, 2024. The following table sets forth our summary cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

Cash flows used in operating activities were $31.8 million for the six months ended June 30, 2025 compared to $50.2 million for the same period in 2024. The $18.3 million decrease in cash flows used in operating activities for the six months ended June 30, 2025 compared to the same period in 2024 primarily relates to a reduction in advances and loans in the current year compared to the same period in prior year and the effect of the timing of certain cash receipts and payments.

Current wording

Cash flows provided by operating activities were $20.4 million for the nine months ended September 30, 2025 compared to cash flows used in operating activities of $34.9 million for the same period in 2024. The $55.3 million increase in cash flows from operating activities for the nine months ended September 30, 2025 compared to the same period in 2024 primarily relates to loan reimbursements and a reduction in the advances and loans granted in the current year compared to the same period in prior year and the effect of the timing of certain cash receipts and payments.