Marcus & Millichap, Inc.
For the period ended Dec 31, 2025. Filed Feb 26, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 26, 2026
MMI$27.75-3.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001578732-25-000015
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-26.
0001628280-26-012419
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 140 current paragraphs.
91 unchanged; 35 reworded; 14 added; 12 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Ongoing changes in U.S. trade and tariff policies combined with uncertainty in geopolitical and fiscal policies have sustained elevated economic headwinds. These challenges have restrained some investor and business leader decision making and impacted job creation. The policy-driven uncertainty has been exacerbated by the government shutdown in October 2025, which stalled government data releases. Broad-based expectations of an inflation surge have not flowed through to the market, and though inflation has been relatively stable near 3.0%, interest rates have remained range-bound with the 10-year treasury rate, remaining in the low-4% range. Since the tariffs were first announced in April 2025, job creation averaged just 11,600 per month through December, down from an average of more than 123,000 per month in the first four months of 2025. Unemployment ticked up to 4.4% at year end, which although still low by historical standards, has raised some concerns. To mitigate the slackening employment market, the Federal Reserve lowered the overnight rate three times in the second half of 2025, taking the rate to the 3.5% - 3.75% range, its lowest levels since November 2022. As of the last available data, in November 2025, retail sales were up 3.3% year-over-year, suggesting that tariffs had yet to impact consumption. However, the growth in retail sales appears to be bifurcated, with high earning households contributing nearly 60% of total consumption. This suggests that lower income households may be facing greater economic headwinds that could ultimately weigh on household formations and spending in some retail categories.
Current report
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 concern. The Federal Reserve has remained cautious, opting to hold rates flat in January 2026 as expected. Risks of additional government shutdowns, further U.S. military action in Venezuela, efforts to acquire Greenland and increased immigration enforcement action have garnered national and international media attention, further exacerbating economic uncertainty. Should policy uncertainty abate, the underlying strength of the U.S. economy could support a stronger economic outlook.
Current report
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 diminishing as elevated capital costs, rising tariffs on building materials, and construction labor shortages increase construction costs. Retail and office development was already low entering 2025 and showed little sign of a revival by year end. Apartment starts have fallen by 72% from their peak in 2022, and industrial completions in 2026 are expected to fall to approximately 200 million square feet, their lowest level since 2014. As a result, receding new supply risks should aid commercial real estate performance in the coming quarters.
Current report
While many Sun Belt markets face multifamily oversupply challenges, other metropolitan areas experienced only modest vacancy rate increases. Nationally, the vacancy rate remained unchanged on a year-over-year basis at 5.2% as of the fourth quarter of 2025, but unit absorption tapered in the second half of the year and fell to -40,000 units in the fourth quarter. This likely reflects the weaker pace of job creation and slowing new household formations. Office demand has continued to improve, achieving a seventh consecutive quarter of positive space absorption. Although 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 fourth quarter, sustaining a vacancy rate below 5% led by neighborhood and community retail centers which maintained vacancy rates in the mid-4% range. Hotel demand remains down from last year as international travel to the United States has been impacted by trade policies and fraying international relations. In addition, elevated uncertainty and weakened consumer confidence have impacted leisure travel. Should trade deals be established and policies normalized, confidence could improve and quickly revive hotel room demand.
Current report
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 shutdowns. 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.
Current report
Interest rates appear to have stabilized, with the 10-year treasury rate holding relatively steady in the low-4% range. While interest rate risks remain, the Federal Reserve initiated a series of rate reductions in the fourth quarter of 2025 that could restrain upward movement in lending rates. Some uncertainty surrounding Federal Reserve rate policies will linger into 2026 as Jerome Powell’s tenure as the Chairman of the Federal Reserve ends in May and a new leader assumes the role. Federal Reserve rate policy could also hinge on an impending Supreme Court decision on whether Federal Reserve Board Governor Lisa Cook can be terminated and replaced by the U.S. presidential administration. Lender spreads have continued to tighten, reducing commercial real estate lending rates to their lowest level since 2022, but the rate outlook is fluid. Debt capital liquidity remains healthy with the multifamily lending caps for Fannie Mae and Freddie Mac increasing by 20.5% for 2026 thus far and as regional banks reengage the market after stabilizing their balance sheets and gaining confidence from the probability of relaxed banking regulations.
Current report
Although economic uncertainty combined 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 their yield profile, supporting positive or neutral leverage in many markets and property types. In addition, the passage of the “One Big Beautiful Bill Act” in July 2025 provides some tax 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
Current report
Commercial real estate transaction activity increased by 17% in 2025 compared to 2024, led by velocity gains in retail and office property sales. In 2025, industrial transactions increased by 16% on a year-over-year basis and apartment transactions rose by 14%. Hotel property sales activity increased by a more modest 9% in 2025. The uptick in transactions reflects the increased cap rates and lower rates on commercial real estate lending. If the economy avoids a major disruption, the combination of increased stability, higher yields 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.
Current report
Several metrics traditionally associated with rising transaction activity, 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 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.
Current report
Provision (benefit) for Income Taxes
Current report
On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law in the U.S. This law contains a broad range of tax reform provisions. The Company has assessed the legislation enacted during the period and does not anticipate a material impact on our consolidated financial statements.
Current report
Other income, net decreased to $17.5 million in 2025 from $20.7 million in 2024. The $3.2 million decrease primarily relates to a $2.0 million decline in the estimated fair values of convertible notes compared to the corresponding 2024 amount due to a change in assumptions. The decrease is also due to a reduction in interest income as a result of lower yields on the marketable investment securities.
Current report
Provision (benefit) for Income Taxes
Current report
Nonetheless, the 10-year treasury rate has remained range-bound in the low- to mid-4% range, keeping the cost of debt capital elevated. The rate reductions by the Federal Reserve in late 2025 could support lower interest rates, but because the rate cuts were in response to a weakening labor market, economic headwinds could offset the lower interest rate climate.
Removed paragraphs (12)
Previous report
The economic landscape entering 2025 may change significantly due to the U.S. presidential and congressional elections in 2024 resulting in Republican control of both houses of Congress and the executive branch of government. Dramatic policy changes have the potential to reshape both growth and inflation outlooks, in turn spurring increased uncertainty. Following the two 25 basis point rate reductions by the Federal Reserve in November and December 2024, it appears further rate cuts will be placed on hold pending additional clarity on federal tax, budget, immigration, trade, deregulation and domestic policies.
Previous report
Positive readings of key fourth quarter metrics including the addition of more than 500,000 jobs, low unemployment, positive retail sales, rising small business optimism, increasing consumer sentiment and a variety of other metrics suggest economic durability, but the federal policy decisions could alter the trajectory of the economy. Policies such as the introduction of broad-based trade tariffs, tighter immigration control and reduced taxes could put upward pressure on inflation, keeping interest rates elevated. Nonetheless, positive fourth quarter economic momentum supported increased household formation, in turn supporting strong demand for rental housing. Likewise, sturdy consumption bolstered demand for both retail and industrial space. Office space demand also gained ground as more employees worked from the office more frequently, whether by choice or by corporate mandate. The strengthened housing and commercial real estate space demand trends, together with a generally positive economic outlook and the prospect of accretive commercial real estate tax policies have the potential to drive increased investor activity, particularly if uncertainty abates and interest rates are reduced.
Previous report
All four major property types saw positive space demand in the fourth quarter of 2024 and in the year ended December 31, 2024. Over 200,000 net apartment units were filled in the fourth quarter, taking the annual total apartment unit demand above 660,000, the second strongest annual total in the 32 years on record. The demand modestly outpaced the record 590,000 apartment completions delivered in 2024 to reduce vacancy by 60 basis points to 5.2%. Robust apartment demand outpaced expectations and bolstered multifamily investor confidence.
Previous report
The industrial vacancy rate increased in the fourth quarter of 2024 as still-elevated construction exceeded space demand. For the year, the industrial vacancy rate rose by 130 basis points to 6.9% as tempered space needs met the still-robust construction pipeline. Industrial completions are expected to fall by 40% in 2025 to 210 million square feet, the slowest construction pace since 2014. Although many retailers increased their inventories ahead of anticipated tariffs, warehouse industrial space needs have tapered significantly over the last two years. Retail vacancy rates have remained range-bound in the mid-4% range, near a record-low. Space absorption has been tempered by limited space availability and nominal construction levels. The limited availability of retail space is placing upward pressure on lease rates, but the pace of increases is restrained by extended pre-negotiated lease renewals. Office vacancy rates decreased an additional 20 basis points in the fourth quarter to 16.7% on positive absorption of 29 million square feet. For the year, total net office absorption approached 55 million square feet, the strongest annual office space demand since 2019. Although office space demand momentum appears to have shifted, office performance remains challenged by vacancy rates that are still near a record high.
Previous report
We expect the generally positive commercial real estate space demand will align with an anticipated falloff in commercial real estate construction this year. New industrial and multifamily completions are trending lower entering 2025, but the reduction in construction activity may be accelerated by the diversion of workers and construction materials to areas impacted by severe natural disasters. In addition, tariff-driven construction material cost increases and reduced construction labor availability could impact commercial real estate deliveries. The combination of strengthening space demand and reduced construction suggests key commercial real estate fundamentals could improve steadily in the coming year, supporting investment activity.
Previous report
The capital markets have been at the heart of the commercial real estate transaction slowdown over the last two years. The combination of sustained higher interest rates with tighter lender underwriting, reduced loan-to-value standards and a broad-based reduction in the volume of available debt capital have restrained market liquidity. This has forced investors to recalibrate their underwriting. This widened the buyer/seller expectation gap and reduced trading throughout 2023 and 2024.
Previous report
The 100-basis point rate reduction by the Federal Reserve in the latter part of 2024 initially improved investor sentiment, but the increase of the 10-year treasury rate following the rate cut negatively impacted borrowing rates. However, lending liquidity is gradually improving, and the competition to lend capital is rising, which is causing lenders to reduce their spreads over the underlying rates, in turn putting modest downward pressure on borrowing rates. At the same time, the slowing pace of new supply additions in conjunction with strengthening space demand suggests that asset performance could improve over the coming years. The prospect of falling vacancy rates and increasing rent growth have begun to encourage investors to recalibrate their underwriting on acquisition targets, helping to bridge the buyer/seller expectation gap. Despite still-high interest rates, improving fundamentals may be sufficient to offset the elevated cost of debt capital to bolster transactional velocity in the coming year if public policy remains accretive to household formation and rising sentiment levels.
Previous report
The commercial real estate sector experienced a modest upturn of sales activity in the fourth quarter of 2024 as investors capitalized on the short window of sub-4% 10-year treasury rates. While the 10-year treasury has returned to mid-4% range, the combination of improving fundamentals and the need for investors to place capital and reposition their portfolios may continue to support positive momentum. Investor sentiment rose in the fourth quarter as evidenced by the rise of small business optimism and consumer sentiment, suggesting that investor caution is beginning to abate. However, elevated uncertainty spawned by the rapidly evolving cadre of federal policies that could change has the potential to counterbalance investor enthusiasm.
Previous report
Several metrics including increased exclusive inventory being brought to market and a rising number of property tours in several markets and property types, suggest investor activity may rise in 2025. Nonetheless, a variety of factors including the economy, interest rates, financial market trends, geopolitical and commercial real estate pricing clarity could suppress activity in 2025. Should the Federal Reserve continue to reduce rates, it would support positive momentum, but a full market recovery will take additional time. Lenders are becoming more assertive with borrowers, and though loan extensions and modification remain common, incidents of forced refinancing and distressed sales are becoming more frequent. Office properties, particularly those in the urban core, continue to face the greatest uncertainty and the greatest challenges in acquiring debt financing. Apartment financing, underpinned by Fannie Mae and Freddie Mac, has generally been the most attainable, with typically lower interest rates than other property types. Defensive assets, such as single-tenant net lease properties backed by high-credit tenants, and medical office assets continue to receive buyer interest, but sales of these types of properties have also fallen as the flow of 1031 exchange capital coming from other property types has diminished. Ultimately, the market velocity will be dictated by a combination of the economic outlook, geopolitical forces, Federal Reserve action, interest rates and the narrowing of the buyer/seller expectation gap. If interest rates trend lower, we believe commercial real estate investment activity could gain additional momentum.
Previous report
(Benefit) Provision for Income Taxes
Previous report
Other income, net increased to $20.7 million in 2024 from $19.9 million in 2023. The $0.8 million increase was primarily driven by an increase in interest income as a result of rebalancing the Company's investments to take advantage of higher yields.
Previous report
(Benefit) Provision for Income Taxes
Reworded paragraphs (35)
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 December 31, 2024, we had 1,712 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 year ended December 31, 2024, we closed 7,836 investment sales, financing and other transactions with total sales volume of approximately $49.6 billion. During the year ended December 31, 2023, we closed 7,546 investment sales, financing and other transactions with total sales volume of approximately $43.6 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 December 31, 2025, we had 1,808 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 year ended December 31, 2025, we closed 8,818 investment sales, financing and other transactions with total sales volume of approximately $50.8 billion. 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 providing 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 year ended December 31, 2024, approximately 85% of our revenue was generated from real estate brokerage commissions, 12% from financing fees and 3% from other revenue, including consulting and advisory 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 providing 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 year ended December 31, 2025, approximately 84% of our revenue was generated from real estate brokerage commissions, 14% from financing fees and 2% from other revenue, including consulting and advisory services.
Previous wording
Our real estate brokerage commissions and financing fees have tended to be seasonal and, combined with other factors, can affect an investor’s ability to compare our financial condition and results of operations on a quarter-by-quarter basis. Historically, this seasonality has generally caused our revenue, operating income, net income, and cash flows from operating activities to be lower in the first half of the year and higher in the second half of the year, particularly in the fourth quarter. The concentration of earnings and cash flows in the last six months of the year, particularly in the fourth quarter, is due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. This historical trend can be disrupted both positively and negatively by major economic events, political events, natural disasters, or public health crises, which may impact, among other things, investor sentiment for a particular property type or location, volatility in financial markets, current and future projections of interest rates, attractiveness of other asset classes, market liquidity, and the extent of limitations or availability of capital allocations for larger property buyers, among others. Private client investors may accelerate or delay transactions due to personal or business-related reasons unrelated to economic events. In addition, our operating margins are typically lower during the second half of each year due to our commission structure for some of our senior investment sales and financing professionals. These senior investment sales and financing professionals are on a graduated commission schedule that resets annually, pursuant to which higher commissions are paid for higher sales volumes. During 2024, seasonal fluctuations were disrupted by changes in overall market conditions and interest rates, and going forward our historical pattern of seasonality may or may not continue to the same degree experienced in prior years.
Current wording
Our real estate brokerage commissions and financing fees have tended to be seasonal and, combined with other factors, can affect an investor’s ability to compare our financial condition and results of operations on a quarter-by-quarter basis. Historically, this seasonality has generally caused our revenue, operating income, net income, and cash flows from operating activities to be lower in the first half of the year and higher in the second half of the year, particularly in the fourth quarter. The concentration of earnings and cash flows in the last six months of the year, particularly in the fourth quarter, is due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. This historical trend can be disrupted both positively and negatively by major economic events, political events, geopolitical events, natural disasters, or public health crises, which may impact, among other things, investor sentiment for a particular property type or location, volatility in financial markets, current and future projections of interest rates, attractiveness of other asset classes, market liquidity, and the extent of limitations or availability of capital allocations for larger property buyers, among others. Private client investors may accelerate or delay transactions due to personal or business-related reasons unrelated to economic events. In addition, our operating margins are typically lower during the second half of each year due to our commission structure for some of our senior investment sales and financing professionals. These senior investment sales and financing professionals are on a graduated commission schedule that resets annually, pursuant to which higher commissions are paid for higher sales volumes. During 2024, seasonal fluctuations were disrupted by changes in overall market conditions and interest rates. In 2025, the seasonal fluctuations were disrupted by tax law changes and federal policies related to trade, tariffs and immigration. Going forward, our historical pattern of seasonality may or may not continue to the same degree experienced in prior years.
Previous wording
To a lesser extent, we also earn fees on loan performance, equity advisory services, loan sales, loan guarantees and ancillary services associated with financing activities. We recognize guarantee fees over the term of the guarantee and other fees when we have no further obligations, generally upon the closing of the transaction. We no longer hold any mortgage servicing rights ("MSRs"), but prior to the third quarter of 2022, we recognized mortgage servicing revenue upon the acquisition of a servicing obligation. We generated mortgage servicing fees through the provision of collection, remittance, recordkeeping, reporting, and other related mortgage servicing functions, activities, and services.
Current wording
To a lesser extent, we also earn fees on loan performance, equity advisory services, loan sales, loan guarantees and ancillary services associated with financing activities. We recognize guarantee fees over the term of the guarantee and other fees when we have no further obligations, generally upon the closing of the transaction.
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) changes in our annual effective tax rate applied to current pre-tax income (loss), (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 (benefit) provision for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our Amended Plan and Amended ESPP.
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) changes in our annual effective tax rate applied to current pre-tax income (loss), (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.
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 years ended December 31, 2024, 2023, and 2022, we closed more than 7,800, 7,500 and 12,200 investment sales, financing and other transactions, respectively, with total sales volume of approximately $49.6 billion, $43.6 billion and $86.3 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 years ended December 31, 2025, 2024, and 2023, we closed more than 8,800, 7,800 and 7,500 investment sales, financing and other transactions, respectively, with total sales volume of approximately $50.8 billion, $49.6 billion and $43.6 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:
Previous wording
(1)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, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net (loss) income, which is the most directly comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measure” below.
Current wording
(1)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, operating income or any other measures derived in accordance with U.S. GAAP. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, which is the most directly comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measure” below.
Previous wording
Our total revenue was $696.1 million in 2024 compared to $645.9 million in 2023, an increase of $50.1 million, or 7.8%. Total revenue primarily increased as a result of increases in real estate brokerage commissions and financing fees, as described below. See "Factors Affecting Our Business" section for additional market information.
Current wording
Our total revenue was $755.2 million in 2025 compared to $696.1 million in 2024, an increase of $59.1 million, or 8.5%. Total revenue primarily increased as a result of increases in real estate brokerage commissions and financing fees, as described below. See "Factors Affecting Our Business" section for additional market information.
Previous wording
Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $589.7 million in 2024 from $559.8 million in 2023, an increase of $29.9 million, or 5.3%. The increase was primarily the result of a 9.1% increase in total sales volume, partially offset by a seven basis point decrease in the average commission rate earned, caused by the shift in the proportion of transactions to the Middle Market and Larger Transaction Market from the Private Client Market, as Middle Market and Larger Transaction Markets typically earn lower commission rates. The combined Middle Market and Larger Transaction Market revenue increased by 22.3%, while Private Client Market revenue decreased by 1.9%.
Current wording
Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $632.5 million in 2025 from $589.7 million in 2024, an increase of $42.8 million, or 7.3%. The increase was primarily attributed to a 3.5% increase in total sales volume and a seven basis point increase in the average commission rate earned. The increase in the average commission rate was due to the revenue shift from the Middle Market and Larger Transaction Market to the Private Client Market, which generally earns higher commission rates as rates generally have an inverse relationship to transaction size. The Private Client Market revenue increased by 11.1%, while the combined Middle Market and Larger Transaction Market revenue decreased by 1.3%.
Previous wording
Financing fees. Revenue from financing fees increased to $84.5 million in 2024 from $66.9 million in 2023, an increase of $17.6 million, or 26.3%. The increase was a result of a 35.2% increase in the total financing volume, partially offset by a decrease of eight basis points in the average fee rate earned compared to 2023.
Current wording
Financing fees. Revenue from financing fees increased to $103.9 million in 2025 from $84.5 million in 2024, an increase of $19.4 million, or 23.0%. The increase was a result of a 31.2% increase in the total financing volume, partially offset by a decrease of four basis points in the average fee rate earned compared to 2024.
Previous wording
Other revenue. Other revenue increased to $21.9 million in 2024 from $19.3 million in 2023, an increase of $2.6 million, or 13.4%. The increase was primarily driven by increases in leasing fees during 2024 compared to 2023.
Current wording
Other revenue. Other revenue decreased to $18.7 million in 2025 from $21.9 million in 2024, a decrease of $3.1 million, or 14.3%. The decrease was primarily driven by decreases in leasing fees during 2025 compared to 2024.
Previous wording
Our total operating expenses were $729.0 million in 2024 compared to $705.3 million in 2023, an increase of $23.7 million, or 3.4%. Cost of services increased by $24.8 million and selling, general, and administrative expenses decreased by $4.1 million, as described below.
Current wording
Our total operating expenses were $768.9 million in 2025 compared to $729.0 million in 2024, an increase of $39.9 million, or 5.5%. Cost of services increased by $39.0 million and selling, general, and administrative expenses increased by $5.4 million, partially offset by a decrease of $4.5 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 $431.5 million in 2024 from $406.6 million in 2023, an increase of $24.8 million, or 6.1%. The increase was primarily due to increased commission expenses driven by the related increased revenue discussed above. Cost of services as a percentage of total revenue decreased by 100 basis points to 62.0% compared to 2023 primarily due to our senior investment sales and financing professionals earning a lower amount of 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 $470.5 million in 2025 from $431.5 million in 2024, an increase of $39.0 million, or 9.0%. The increase was primarily due to increased commission expenses driven by the related increased revenue discussed above. Cost of services as a percentage of total revenue increased by 30 basis points to 62.3% compared to 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 decreased to $280.9 million in 2024 from $285.0 million in 2023, a decrease of $4.1 million or 1.4%. The decrease was primarily due to a reduction in marketing support costs, partially offset by an increase in compensation-related costs. As a percentage of revenue, selling, general and administrative expense decreased due to the fixed nature of certain of these expenses.
Current wording
Selling, general, and administrative expense. Selling, general and administrative expense increased to $286.3 million in 2025 from $280.9 million in 2024, an increase of $5.4 million or 1.9%. The increase was primarily due to an increase in a legal accrual related to an ongoing litigation matter and an increase in compensation related costs, partially offset by a decrease in facility expenses related to consolidation of office space in 2024. As a percentage of revenue, selling, general and administrative expense decreased due to the fixed nature of certain of these expenses.
Previous wording
Depreciation and amortization expense. Depreciation and amortization expense increased to $16.6 million in 2024 from $13.6 million in 2023, an increase of $3.0 million, or 21.7%. The increase primarily relates to accelerated amortization and impairment of certain intangible assets resulting from changes in estimates.
Current wording
Depreciation and amortization expense. Depreciation and amortization expense decreased to $12.1 million in 2025 from $16.6 million in 2024, a decrease of $4.5 million, or 27.1%. The decrease primarily relates to accelerated amortization and impairment of certain intangible assets in 2024 resulting from changes in estimates.
Previous wording
Interest expense increased by an immaterial amount in 2024 compared to 2023, and primarily relates to interest expense on our SARs liability.
Current wording
Interest expense decreased by an immaterial amount in 2025 compared to 2024, and primarily relates to interest expense on our SARs liability.
Previous wording
The benefit for income taxes was $0.7 million in 2024, compared to a benefit for income taxes of $6.4 million in 2023. The effective income tax rate for 2024 was 5.1% compared to 15.8% for 2023. The majority of the reduction in the effective tax rate is related to permanent and other items and stock based compensation expense as presented in Note 12 - "Income Taxes" of our accompanying Notes to Consolidated Financial Statements.
Current wording
The provision for income taxes was $4.9 million in 2025, compared to a benefit for income taxes of $0.7 million in 2024. The effective income tax rate for 2025 was 163.2% compared to 5.1% for 2024. The majority of the increase in the effective tax rate is related to permanent items, including officers’ compensation and stock compensation shortfalls as such amounts have a larger percentage impact on the effective tax rate, the closer that pre-tax income gets to breakeven. Additionally, the change in the valuation allowance resulted in tax provision amount in 2025 versus tax benefits in 2024. Refer to Note 12 – “Income Taxes” of our accompanying Notes to Consolidated Financial Statements for additional information.
Previous wording
Condition and Results of Operations – Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024, which is available on the SEC’s website atwww.sec.gov.
Current wording
A discussion regarding our results of operations for the year ended December 31, 2024 compared to the results for the year ended December 31, 2023 can be found under Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 27, 2025, which is available on the SEC’s website atwww.sec.gov.
Previous wording
In this Annual Report on Form 10-K, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net (loss) income 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) (benefit) provision 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) income, operating (loss) income 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 income, to Adjusted EBITDA is as follows (in thousands):
Current wording
In this Annual Report on Form 10-K, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net loss before (i) interest income and other, including interest on marketable debt securities, available-for-sale and cash, cash equivalents, and restricted cash, and net realized gains (losses) on marketable debt securities, available-for-sale, (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):
Previous wording
Our total cash, cash equivalents, and restricted cash balance decreased by $17.3 million to $153.4 million at December 31, 2024, compared to $170.8 million at December 31, 2023. The following table sets forth our summary cash flows for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Current wording
Our total cash, cash equivalents, and restricted cash balance increased by $8.5 million to $161.9 million at December 31, 2025, compared to $153.4 million at December 31, 2024. The following table sets forth our summary cash flows for the years ended December 31, 2025, 2024, and 2023 (in thousands):
Previous wording
Cash flows provided by operating activities were $21.7 million in 2024 compared to cash flows used in operating activities of $72.4 million in 2023. The $94.1 million increase in cash flows from operating activities in 2024 compared to 2023 was primarily due to (a) a reduction in net losses, as discussed above, (b) a reduction in bonus payments as the 2023 payment for bonuses related to amounts accrued in 2022 based in part on 2022 profits and (c) a reduction in payments in deferred compensation and commissions. The cash flows from operating activities were also affected by the timing of certain cash receipts and payments.
Current wording
Cash flows provided by operating activities were $66.7 million in 2025 compared to $21.7 million in 2024. The $45.0 million increase in cash flows from operating activities in 2025 compared to 2024 was primarily due to a reduction in net losses, as discussed above, and a reduction in advances and loans granted in 2025 compared to 2024. The cash flows from operating activities were also affected by the timing of certain cash receipts and payments.
Previous wording
Cash flows used in investing activities were $9.9 million in 2024 compared to cash flows provided by investing activities of $74.9 million in 2023. The $84.8 million decrease in cash from investing activities in 2024 compared to 2023 was primarily due to a decrease in net proceeds of $86.3 million from sales, purchases, and maturities of securities in 2024 compared to the same period in 2023.
Current wording
Cash flows used in investing activities were $3.8 million in 2025 compared to cash flows used in investing activities of $9.9 million in 2024. The $6.1 million decrease in cash used in investing activities in 2025 compared to 2024 was primarily due to a decrease in net proceeds of $6.1 million from sales, purchases, and maturities of securities in 2025 compared to the same period in 2024.
Previous wording
Cash flows used in financing activities were $28.8 million in 2024 compared to $67.7 million in 2023. The decrease of $38.9 million in cash flows used in financing activities in 2024 compared to 2023 was primarily due to a decrease of $38.7 million in stock repurchases.
Current wording
Cash flows used in financing activities were $54.6 million in 2025 compared to $28.8 million in 2024. The increase of $25.8 million in cash flows used in financing activities in 2025 compared to 2024 was primarily due to an increase of $24.6 million in stock repurchases.
Previous wording
We believe that our existing balances of cash and cash equivalents, cash flows expected to be generated from our operations, and proceeds from the sale of marketable debt securities, available-for-sale will be sufficient to satisfy our operating requirements for at least the next 12 months and beyond. If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could prevent us from funding acquisitions or otherwise financing our growth or operations. As of December 31, 2024, cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale, aggregated $394.2 million, which includes $10.7 million in restricted cash.
Current wording
We believe that our existing balances of cash and cash equivalents, cash flows expected to be generated from our operations, and proceeds from the sale of marketable debt securities, available-for-sale will be sufficient to satisfy our operating requirements for at least the next 12 months and beyond. If we need to raise additional capital through public or private debt or equity financings, strategic relationships or other arrangements, this capital might not be available to us in a timely manner, on acceptable terms, or at all. Our failure to raise sufficient capital when needed could prevent us from funding acquisitions or otherwise financing our growth or operations. As of December 31, 2025, cash, excluding restricted cash, cash equivalents, and marketable debt securities, available-for-sale, aggregated $386.9 million.
Previous wording
The Company, in connection with the Strategic Alliance with M&T Realty Capital Corporation (“MTRCC”), has agreed to provide loan opportunities that may be funded through MTRCC’s agreement with Fannie Mae, which requires MTRCC to guarantee a portion of each funded loan. On a loan-by-loan basis, the Company, at its option, can assume a portion of MTRCC’s guarantee obligation to Fannie Mae of loan opportunities presented to and closed by MTRCC. As of December 31, 2024, the Company has agreed to a maximum aggregate guarantee obligation of $296.3 million relating to loans with an unpaid balance of $1,831.8 million. The maximum guarantee obligation is not representative of the actual loss we 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, and the Company has recorded an allowance for losses of $174,000 as of December 31, 2024 related to these guarantee obligations. The Company is required to provide cash collateral to MTRCC for this obligation and this is reflected as $0.7 million of restricted cash as of December 31, 2024, which is included in cash, cash equivalents, and restricted cash on the consolidated balance sheet.
Current wording
The Company, in connection with the Strategic Alliance with M&T Realty Capital Corporation (“MTRCC”), has agreed to provide loan opportunities that may be funded through MTRCC’s agreement with Fannie Mae, which requires MTRCC to guarantee a portion of each funded loan. On a loan-by-loan basis, the Company, at its option, can assume a portion of MTRCC’s guarantee obligation to Fannie Mae of loan opportunities presented to and closed by MTRCC. As of December 31, 2025, the Company has agreed to a maximum aggregate guarantee obligation of $444.9 million relating to loans with an unpaid balance of $2,723.4 million. The maximum guarantee obligation is not representative of the actual loss we 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. The Company has recorded an allowance for losses of $292,000 as of December 31, 2025 related to these guarantee obligations. The Company is required to provide cash collateral to MTRCC for this obligation and this is reflected as $1.3 million of restricted cash as of December 31, 2025, which is included in cash, cash equivalents, and restricted cash on the consolidated balance sheet.
Previous wording
(2)Forecasted principal payments are based on each participant’s estimated retirement age and current contractual interest rate of 5.95% as of January 1, 2024 and reflect required payments that resulted from the retirement of certain executives. See Note 7 – “Selected Balance Sheet Data” of our accompanying Notes to Consolidated Financial Statements.
Current wording
(2)Forecasted principal payments are based on each participant’s estimated retirement age and current contractual interest rate of 6.57% as of January 1, 2025 and reflect required payments that resulted from the retirement of certain executives. See Note 7 – “Selected Balance Sheet Data” of our accompanying Notes to Consolidated Financial Statements.
Previous wording
(4)Represents current estimated payouts for participants currently receiving payments based on their elections at the time of deferral. We hold assets in a rabbi trust of $12.2 million to settle outstanding amounts when they become due. Amounts assume no increase or decrease in the liability due to future returns or losses. See Note 7 – “Selected Balance Sheet Data” of our accompanying Notes to the Consolidated Financial Statements.
Current wording
(4)Represents current estimated payouts for participants currently receiving payments based on their elections at the time of deferral. We hold assets in a rabbi trust of $13.5 million to settle outstanding amounts when they become due. Amounts assume no increase or decrease in the liability due to future returns or losses. See Note 7 – “Selected Balance Sheet Data” of our accompanying Notes to the Consolidated Financial Statements.
Previous wording
(5)Relates to contingent and deferred consideration in connection with our business acquisitions. See Note 6 – “Acquisitions, Goodwill and Other Intangible Assets” and Note 9 – “Fair Value Measurements” of our accompanying Notes to Consolidated Financial Statements.
Current wording
(5)Relates to contingent consideration in connection with our business acquisitions. See Note 6 – “Acquisitions, Goodwill and Other Intangible Assets” and Note 9 – “Fair Value Measurements” of our accompanying Notes to Consolidated Financial Statements.
Previous wording
The annual CPI inflation rate in the U.S. peaked at 9.1% in June 2022, the highest annual inflation rate since November 1981. CPI inflation has since fallen to 2.9% as of December 2024. In 2022 through 2023, the Federal Reserve increased the federal funds rate to the 5.25%-5.5% range in an effort to combat inflation, which had an adverse impact on commercial real estate transactions. In the latter part of 2024, the Federal Reserve lowered the overnight rate by 100 basis points to the 4.25%-4.5% range, which was a positive trend for investors, but the 10-year treasury has remained range-bound in the mid- to upper-4% range keeping the cost of debt capital elevated.
Current wording
The annual CPI inflation rate in the U.S. peaked at 9.1% in June 2022, the highest annual inflation rate since November 1981. CPI inflation fell to 2.4% as of March 2025 and ended 2025 at 2.7%. In 2022 through 2023, the Federal Reserve increased the federal funds rate to the 5.25%-5.5% range in an effort to combat inflation, which had an adverse impact on commercial real estate transactions. In the latter part of 2024, the Federal Reserve lowered the overnight rate by 100 basis points to the 4.25%-4.5% range, and by year-end 2025 the rate was 3.5%-3.75%, the lowest level since 2022.
Previous wording
Looking forward, the Federal Reserve has communicated a restrained interest rate outlook pending additional clarity on federal fiscal, trade, tax, regulatory and domestic policies. Several of the policies in consideration such as tariffs and more stringent immigration controls have the potential to be inflationary in nature, so future inflation risk may depend on when and how assertively the proposed policies are implemented.
Current wording
Looking forward, inflation could rise as the impact of tariffs flow-through to consumers. The Federal Reserve has communicated that they remain cautious pending additional clarity on federal fiscal, trade, tax, regulatory and domestic policies. Several of these policies, such as tariffs and more stringent immigration controls, have the potential to be inflationary in nature. Future inflation risk may depend on the timing and implementation of the proposed policies.
Previous wording
Due to the nature of our business, which includes activity in the U.S. and Canada, incorporating numerous states and provinces as well as local jurisdictions, our tax position can be complex. As such, our effective tax rate is subject to changes as a result of fluctuations in the mix of our activity in the various jurisdictions in which we operate including changes in tax rates, state apportionment, tax related interest and penalties, valuation allowances and other permanent items, including Sec. 162(m) and net windfalls and shortfalls related to stock-based compensation. Calculating some of the amounts involves a high degree of judgment. Our state taxes, net of federal benefit, has ranged from 1.5% to 4.5% over the past 3 years.
Current wording
Due to the nature of our business, which includes activity in the U.S. and Canada, incorporating numerous states and provinces as well as local jurisdictions, our tax position can be complex. As such, our effective tax rate is subject to changes as a result of fluctuations in the mix of our activity in the various jurisdictions in which we operate including changes in tax rates, state apportionment, tax related interest and penalties, valuation allowances and other permanent items, including Sec. 162(m) and net windfalls and shortfalls related to stock-based compensation. Calculating some of the amounts involves a high degree of judgment. Our state taxes, net of federal benefit, has ranged from 1.5% to 10.3% over the past three years.
Previous wording
The above factors create volatility in our effective tax rate from quarter to quarter and have caused our effective tax rates to range from 5.1% to 26.6% over the past three years.
Current wording
The above factors create volatility in our effective tax rate from quarter to quarter and have caused our effective tax rates to range from 5.1% to 163.2% over the past three years.
Previous wording
Operating lease ROU assets and liabilities are recognized on the commencement date based on the present value of lease payments over the lease term. Lease agreements may contain periods of free rent or reduced rent, predetermined fixed increases in the minimum rent and renewal or termination options, all of which add complexity and impact the determination of the lease term and lease payments to be used in calculating the lease liability. Certain facility leases provide for rental escalations related to increases in the lessors’ direct operating expenses. We use the implicit rate in the lease when determinable. As most of our leases do not have a determinable implicit rate, determining the rate to be used in our calculations is judgmental. We use an estimated incremental borrowing rate calculated on a spread over treasuries based on our estimated credit rating for the indicated term of the lease based on the information available on the commencement date of the lease. As a result, the incremental borrowing rate has and will continue to be impacted by market interest rates. The weighted average incremental borrowing rate was 5.2% in 2024 and 4.7% in 2023. Any payments for completed improvements, determined to be owed by the lessor, net of incentives received, are recorded as an increase to the ROU asset and considered in the determination of the lease cost.
Current wording
Operating lease ROU assets and liabilities are recognized on the commencement date based on the present value of lease payments over the lease term. Lease agreements may contain periods of free rent or reduced rent, predetermined fixed increases in the minimum rent and renewal or termination options, all of which add complexity and impact the determination of the lease term and lease payments to be used in calculating the lease liability. Certain facility leases provide for rental escalations related to increases in the lessors’ direct operating expenses. We use the implicit rate in the lease when determinable. As most of our leases do not have a determinable implicit rate, determining the rate to be used in our calculations is judgmental. We use an estimated incremental borrowing rate calculated on a spread over treasuries based on our estimated credit rating for the indicated term of the lease based on the information available on the commencement date of the lease. As a result, the incremental borrowing rate has and will continue to be impacted by market interest rates. The weighted average incremental borrowing rate was 5.4% in 2025 and 5.2% in 2024. Any payments for completed improvements, determined to be owed by the lessor, net of incentives received, are recorded as an increase to the ROU asset and are considered in the determination of the lease cost.
Previous wording
Unrealized losses on our marketable securities, available-for-sale, fluctuate based on changes in market interest rates due the fixed interest rates of most of the securities. Unrealized losses aggregated $1.6 million and $2.6 million as of December 31, 2024 and 2023, respectively. We review our investment portfolio quarterly for all securities in an unrealized loss position to determine if an impairment charge or credit reserve is required. We exclude accrued interest from both the fair value and the amortized cost basis of marketable debt securities, available-for-sale, for the purposes of identifying and measuring an impairment. An investment is impaired if the fair value is less than its amortized cost basis. Impairment relating to credit losses is recorded through a reduction in the amortized cost of the security or an allowance for credit losses and credit loss expense (included in selling, general and administrative expense), limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded as a credit loss is recorded through other comprehensive (loss) income, net of applicable taxes. We made an accounting policy election to not measure an allowance for credit losses for accrued interest receivable. We evaluate write-off of accrued interest receivable by the major security-type level at the time credit loss exists for the underlying security.
Current wording
Unrealized losses on our marketable securities, available-for-sale, fluctuate based on changes in market interest rates due the fixed interest rates of most of the securities. Unrealized losses aggregated $1.2 million and $1.6 million as of December 31, 2025 and 2024, respectively. We review our investment portfolio quarterly for all securities in an unrealized loss position to determine if an impairment charge or credit reserve is required. We exclude accrued interest from both the fair value and the amortized cost basis of marketable debt securities, available-for-sale, for the purposes of identifying and measuring an impairment. An investment is impaired if the fair value is less than its amortized cost basis. Impairment relating to credit losses is recorded through a reduction in the amortized cost of the security or an allowance for credit losses and credit loss expense (included in selling, general and administrative expense), limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded as a credit loss is recorded through other comprehensive loss, net of applicable taxes. We made an accounting policy election to not measure an allowance for credit losses for accrued interest receivable. We evaluate write-off of accrued interest receivable by the major security-type level at the time credit loss exists for the underlying security.
Previous wording
In its determination of fair value for contingent and deferred consideration, the Company uses judgment in determining the probability of achieving contractual performance targets and the time frame in which the settlements will occur. Further, judgment is used in determining the appropriate current and future interest rates to apply in each situation. The Company estimated the probability of achievement of contractual performance targets was between 0% to 100% based on each acquisition’s historical and estimated future performance and risk adjusted discount rates of between 4.8% to 6.1%, which resulted in a recorded fair value for the contingent consideration of $4.7 million and $5.5 million as of December 31, 2024, and 2023, respectively. The Company estimated the fair value of the deferred consideration using a discounted cash flow estimate using market rates, with the only remaining condition on such payments being the passage of time which resulted in a recorded fair value of $0.4 million and $1.6 million as of December 31, 2024, and 2023, respectively. The maximum undiscounted future settlements of contingent and deferred consideration was $12.0 million at December 31, 2024, and the Company is uncertain as to the extent of the volatility in the judgments and unobservable inputs will have on the ultimate settlement of these amounts in the foreseeable future.
Current wording
In its determination of fair value for contingent and deferred consideration, the Company uses judgment in determining the probability of achieving contractual performance targets and the time frame in which the settlements will occur. Further, judgment is used in determining the appropriate current and future interest rates to apply in each situation. The Company estimated the probability of achievement of contractual performance targets was between 0% to 100% based on each acquisition’s historical and estimated future performance and risk adjusted discount rates of between 4.8% to 6.1%, which resulted in a recorded fair value liability for the contingent consideration of $0.7 million and $4.7 million as of December 31, 2025, and 2024, respectively. The Company estimated the fair value of the deferred consideration using a discounted cash flow estimate using market rates, with the only remaining condition on such payments being the passage of time which resulted in a recorded fair value liability of $0.4 million as of December 31, 2024. As of December 31, 2025, there was no deferred consideration balance outstanding. The maximum undiscounted future settlements of contingent consideration was $6.8 million at December 31, 2025, and the Company is uncertain as to the extent of the volatility in the judgments and unobservable inputs will have on the ultimate settlement of these amounts in the foreseeable future.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
A discussion regarding our results of operations for the year ended December 31, 2023 compared to the results for the year ended December 31, 2022 can be found under Item 7 – “Management’s Discussion and Analysis of Financial