Marcus & Millichap, Inc.
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 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-Q
Period ended 2025-09-30; filed 2025-11-07.
0001628280-25-050707
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001628280-26-032300
Item 2. 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 143 previous paragraphs and 133 current paragraphs.
71 unchanged; 41 reworded; 20 added; 27 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 6 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 (20)
Current report
The conflict in the Middle East and the closure of the Strait of Hormuz caused new economic headwinds compounding existing U.S. economic challenges. The conflict caused an immediate surge in fuel prices that spurred an 85 basis point increase in Consumer Price Index (“CPI”) inflation, pushing the inflation rate to 3.3%, its highest level since May 2024. The rapid inflationary rise reduced the likelihood of future interest rate reductions by the Federal Reserve, resulting in a 50 basis point increase in both the 5-year and 10-year treasury rates in the month of March. Longer-term inflationary risks driven by other commodities that rely on transit through the Strait of Hormuz could further exacerbate inflation and dampen the economic outlook. The duration of the conflict, extent of infrastructure destruction and the degree to which shipping through this region is curtailed will determine the significance of the inflationary and economic impact.
Current report
Following the U.S. Supreme Court’s invalidation of the tariffs applied using the International Emergency Economic Powers Act, President Trump relied on Section 122 of the Trade Act of 1974, to apply 10% universal tariffs. This reduced the net effective tariffs paid by U.S. citizens from 16% to 13.7% according to the Yale Budget Lab. While the tariffs are modestly lower, they remain a headwind for economic growth with the potential to increase inflation. The combination of the tariffs, the conflict in the Middle East and elevated immigration enforcement have aligned to raise business and consumer uncertainty and impact consumer sentiment which fell to a record low in March. Nonetheless the U.S. economy continues to generate positive economic growth as consumption fuels GDP. In March, retail sales posted a strong 4.0% year-over-year gain, suggesting consumer spending persists as a positive force despite the various economic headwinds. While job creation remains subdued, with just 260,000 new jobs added in the trailing 12-months ended March 2026, the unemployment rate is still healthy at 4.3% as of March 2026.
Current report
Although the economy remains generally sound, the initiation of the military engagement in the Middle East, together with a lack of clarity from the U.S. presidential administration regarding tariffs and trade policy has made it particularly difficult to predict the economic outlook. Recession risk remains modestly elevated, and inflation risk continues to be a concern. The Federal Reserve has adopted a cautious stance, opting to hold rates flat in March 2026 and April 2026 as expected. Risks of further U.S. military action and increased immigration enforcement 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
Multifamily housing demand revived in the first quarter of 2026 following the negative absorption in the fourth quarter of 2025. Although demand was moderate, it outpaced the now slowing pace of construction to deliver a 10 basis point vacancy reduction to 5.1%. The first quarter housing demand gains were broad based, with all tracked major markets delivering positive absorption. Sun Belt metro areas that still face a substantial supply overhang from the significant development over the past several years generated the strongest absorption, but metro areas outside the Sun Belt generally sustained the lowest vacancy rates and highest rent growth. With 2026 multifamily completions expected to total just 270,000 units, down by 34% from 2025 and 54% below the peak development year of 2024, multifamily performance could gain momentum this year. However, demand could be restrained by below average job creation and record low consumer sentiment. Combined, these economic forces could weigh on household formation and restrain occupancy gains.
Current report
The combined encumbrance of tariffs and economic uncertainty weighed on both retail and industrial space demand in the first quarter of 2026. While industrial absorption was positive, it fell marginally short of new completions for the quarter. The pace of construction continued to taper, with 46 million square feet of added supply in the first quarter of 2026, a reduction of 38% compared to the same quarter in 2025. Industrial vacancy rates remained stable for the third consecutive quarter at 7.8%. The conflict in the Middle East may begin to restrain industrial space demand in coming quarters. Since the conflict began, both shipping and flatbed trucking costs have increased by more than 25%. Shipping dislocation and the elevated cost of diesel fuel may impair supply chains and logistics in the coming months if the Middle East conflict continues for an extended period. This could moderate both industrial and retail space demand. The retail sector is showing signs of economic and geopolitical headwinds as many retailers have slowed their expansion plans. Retail space demand was modestly negative in the first quarter of 2026, raising the vacancy rate by 20 basis points to 5.0%. Nonetheless, retail property construction is limited and retail sales remain healthy, suggesting that when uncertainty abates space demand could revive quickly.
Current report
Demand for office space remains positive despite weak job creation as companies increasingly bring more of their workforce into the office. Office space absorption has been positive for eight consecutive quarters, with annual gains on par with the 10-year average prior to the pandemic. While space demand has been concentrated in Class A properties and suburban areas of primary markets, the gains have been sufficient to reduce the vacancy rate by 110 basis points from its peak of 17.2% in the second quarter of 2024. Opportunistic investors who have acquired office assets at a significant discount and who anticipate an extended office property recovery cycle have boosted office property transaction activity.
Current report
After a surge in March 2026 following the onset of the conflict in the Middle East, interest rates appear to have stabilized, with the 10-year treasury rate holding relatively steady in the low- to mid-4% range. Given the inflation risks spurred by the conflict, the Federal Reserve is currently expected to keep the Federal Funds Rate flat through the remainder of the year. However, with the Chairmanship of the Federal Reserve anticipated to pass to Kevin Warsh in the second quarter, there is a possibility that Federal Reserve policies could shift this year.
Current report
While commercial real estate lender spreads widened in March 2026, they have begun to tighten again, suggesting commercial real estate lending rates could return to a range comparable with the fourth quarter of 2025. However, the rate outlook remains fluid with geopolitical forces and a new Federal Reserve Chair being key variables in the outlook. Debt capital liquidity remains healthy with all lenders actively engaging the market.
Current report
Commercial real estate transaction activity increased by 7% in the first quarter of 2026 compared to the same period in 2025, led by gains in institutional grade seniors housing and hotel property sales. For the quarter, hotel transactions priced $20 million and higher nearly quintupled to 261 transactions while seniors housing transactions in the same price tranche grew by 137% to 317 transactions. First quarter transaction velocity of all property types priced between $2.5 million and $20 million, however, remained relatively stable, gaining just 1.9% versus the same period last year. If the Middle East conflict is resolved before major inflationary and economic disruptions occur, transaction velocity could gain momentum. However, if the conflict extends through the summer, it could potentially elevate inflation and recession risks, possibly eroding investor confidence. If economic and financial market stability is disrupted by the conflict and inflation accelerates, then commercial real estate could emerge as a favored investment option due to its more durable cash flows and inflation resistance.
Current report
Other Income, Net
Current report
Interest Expense
Current report
Real estate brokerage commissions. Revenue from real estate brokerage commissions increased to $138.1 million for the three months ended March 31, 2026 from $123.6 million for the same period in 2025, an increase of $14.5 million, or
Current report
11.7%. The increase was primarily attributed to an 18.5% increase in total sales volume, partially offset by an 11 basis point decrease in the average commission rate earned compared to the same period in 2025. The decrease in the average commission rate was due to revenue shifting from the Private Client Market to the Larger Transaction Market, which generally earns lower commission rates as rates generally have an inverse relationship to transaction size. The Larger Transaction Market revenue increased by 24.9%, while the Private Client Market revenue increased by 13.4%.
Current report
Other revenue. Other revenue increased to $6.5 million for the three months ended March 31, 2026 from $3.3 million for the same period in 2025, an increase of $3.2 million, or 98.1%. The increase was primarily driven by increases in leasing fees and consulting fees during the three months ended March 31, 2026 compared to the same period in 2025.
Current report
Selling, general, and administrative expense. Selling, general and administrative expense remained relatively consistent at $71.2 million for the three months ended March 31, 2026 compared to $71.6 million for the same period in 2025.
Current report
Other Income, Net
Current report
Other income, net decreased to $3.8 million for the three months ended March 31, 2026 from $4.0 million for the same period in 2025. The $0.2 million decrease primarily relates to a decrease in the carrying value of the assets held in the rabbi trust and an increase in the foreign currency unrealized losses.
Current report
Interest Expense
Current report
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 March 2026, largely due to the surge in oil and gas prices caused by the Middle East conflict, inflation increased to 3.3%. Although tariffs will likely play a role in the inflation outlook, the greater inflation risks largely center on the duration of the Middle East conflict and the amount of damage done to infrastructure. The uncertainty surrounding these variables has reduced expectations of rate reductions by the Federal Reserve this year, pushing interest rates higher. By the same token, the prospect of Kevin Warsh assuming the role of Chairman at the Federal Reserve could revive efforts to reduce the overnight rate.
Current report
Looking forward, inflation could rise as the impact of tariffs flow through to consumers and if the Middle East conflict and closure of the Strait of Hormuz continues for an extended period. The change of leadership at the Federal Reserve is another variable that could potentially alter the inflation and interest rate outlook. At this time, these variables remain opaque, clouding the inflation and interest rate outlook.
Removed paragraphs (27)
Previous report
The fluidity of U.S. trade and tariff policies since April has sustained elevated economic uncertainty, restraining some investor and business leader decision making and impacting job creation. The policy-driven uncertainty has been exacerbated by the government shutdown which has stalled government data releases. Broad-based expectations of an inflation surge have not flowed through to the market, and though inflation has increased to 3.0% as of September, interest rates have remained range-bound with the 10-year treasury rate, remaining near 4%. Year-to-date hiring through August, the most recent reading available, totaled 598,000 new jobs with a downward trend in monthly job creation over the course of the year. Unemployment in August had ticked up to 4.3%, which is still low by historical standards, but the upward trend has raised some concerns. To mitigate the slackening employment market, the Federal Reserve lowered the overnight rate by 25 basis points at their meetings in September and October, taking the rate to the 3.75% - 4.0% range, its lowest levels since November 2022. As of the last available data in August, retail sales were up 5.4% year-over-year, suggesting that tariffs had yet to weigh on consumption. Nonetheless, the growth in retail sales appears to be bifurcated, with high earning households contributing nearly 50% of the total. This suggests that lower income households may be facing greater economic headwinds which could ultimately weigh on household formations and spending in some retail categories.
Previous 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 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 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 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 report
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 report
Interest rates appear to have stabilized, with the 10-year treasury rate holding relatively steady in the 4% range. While interest rate risks remain, the Federal Reserve has initiated a series of rate reductions that could restrain upward movement in lending rates. Lender spreads have tightened, taking commercial real estate lending rates to their lowest level since 2022, but the rate outlook is fluid. Debt capital liquidity remains healthy and regional banks have begun to reengage the market as they have stabilized their balance sheets and are encouraged by the prospect of looser banking regulation.
Previous report
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 report
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 report
(2)Percentage not meaningful.
Previous report
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 report
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 report
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 report
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.
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Comparison of Nine Months Ended September 30, 2025 and 2024
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Revenue
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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 report
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 report
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 report
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.
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Total Operating Expenses
Previous report
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 report
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 report
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 report
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.
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Benefit for Income Taxes
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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 report
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, but has since risen to 3.0%. 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 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 September and October of this year 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.
Previous report
Looking forward, inflation could rise as the impact of tariffs flow-through to consumers, and the Federal Reserve has communicated that they remain cautious pending additional clarity on federal fiscal, trade, tax, regulatory and domestic policies. Several of the policies 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 ultimately implemented.
Reworded paragraphs (41)
Previous wording
•any business interruption or technology failure, including cybersecurity risks and ransomware attacks, and any related impact on our reputation;
Current wording
•any business interruption or technology failure, including cybersecurity risks and ransomware attacks, and any related impact on our brand reputation or clients;
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•changes in interest rates, availability of capital, tax laws, employment laws, tariffs and trade regulations, executive orders, or other government regulation affecting our business;
Current wording
•changes in interest rates, availability of capital, tax laws, tariffs and trade regulations, executive orders, employment laws, or other government regulation affecting our business;
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•other risk factors included under “Risk Factors” in our most recent Annual Report on Form 10-K.
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•other risk factors included under “Risk Factors” in our most recent Annual Report on Form 10-K, this Quarterly Report on Form 10-Q or in any subsequent SEC report.
Previous wording
In addition, in this Quarterly Report, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “goal,” “expect,” “predict,” “potential,” “should,” and similar expressions, as they relate to our Company, our business and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
Current wording
In addition, in this release, words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “goal,” “expect,” “predict,” “potential,” “should,” and similar expressions, as they relate to our Company, our business and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
Previous 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.
Current wording
The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026, 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, 2025, filed with the SEC on February 26, 2026, including the “Risk Factors” section and the consolidated financial statements and notes included therein.
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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.
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 March 31, 2026, we had 1,724 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 months ended March 31, 2026, we closed 2,022 investment sales, financing and other transactions with total sales volume of approximately $12.1 billion. 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.
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 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.
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 three months ended March 31, 2026, approximately 81% of our revenue was generated from real estate brokerage commissions, 15% from financing fees and 4% from other revenue, including consulting and advisory services.
Previous 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:
Current wording
We are the industry leader in serving private clients in the $1 million - $10 million private client market, which contributed approximately 64% and 63% of our real estate brokerage commissions during the three months ended March 31, 2026 and 2025, 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
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.
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. 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
Current wording
Although economic uncertainty combined with financial market and interest rate volatility normally tends 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.
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 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, 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 and foreign policy stabilize, uncertainty abates and investor sentiment rises, we believe commercial real estate investment activity could gain additional momentum.
Previous wording
Our revenue is primarily generated from our real estate investment sales business. In addition to real estate brokerage commissions, we generate revenue from financing fees and from other revenue, which are primarily comprised of leasing, consulting and advisory fees.
Current wording
Our revenue is primarily generated from our real estate investment sales business. In addition to real estate brokerage commissions, we generate revenue from financing fees and from other revenue, which are primarily comprised of consulting and advisory fees.
Previous wording
Because our business is transaction oriented, we rely on investment sales and financing professionals to continually develop leads, identify properties to sell and finance, market those properties and close the sale timely to generate a consistent flow of revenue. While our sales volume is impacted by seasonality factors, the timing of closings is also dependent on many market and personal factors unique to a particular client or transaction, particularly clients transacting in the $1 million to $10 million Private Client Market. These factors can cause transactions to be accelerated or delayed beyond our control. Further, commission rates earned are generally inversely related to the value of the property sold. As a result of our expansion into the middle and larger transaction markets, we have seen our overall commission rates fluctuate from period-to-period as a result of changes in the relative mix of the number and volume of investment sales transactions closed in the middle and larger transaction markets as compared to the $1 million to $10 million Private Client Market. These factors may result in period-to-period variations in our revenue that differ from historical patterns.
Current wording
Because our business is transaction oriented, we rely on investment sales and financing professionals to continually develop leads, identify properties to sell and finance, market those properties and close the sale or financing in a timely manner to generate a consistent flow of revenue. While our sales volume is impacted by seasonality factors, the timing of closings is also dependent on many market and personal factors unique to a particular client or transaction, particularly clients transacting in the $1 million to $10 million private client market. These factors can cause transactions to be accelerated or delayed beyond our control. Further, commission rates earned are generally inversely related to the value of the property sold or financed. As we have expanded our business into the middle and larger transaction markets, we have seen our overall commission rates fluctuate from period-to-period as a result of changes in the relative mix of the number and volume of investment sales transactions closed in the middle and larger transaction markets as compared to the $1 million to $10 million private client market. These factors may result in period-to-period variations in our revenue that differ from historical patterns.
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 performance obligations, generally upon the closing of a transaction.
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
Other revenue includes fees generated from leasing, consulting and advisory services, as well as ancillary fees from other real estate brokers, and are recognized when services are provided, upon closing of the transaction or when we have no further performance obligations.
Current wording
Other revenue includes fees generated from consulting and advisory services, leasing, as well as referral fees from other real estate brokers, and are recognized when services are provided, upon closing of the transaction or when we have no further obligations.
Previous wording
The majority of our cost of services expense is variable commissions paid to our investment sales and financing professionals and compensation-related costs related to our financing activities. Commission expenses are directly attributable to providing services to our clients for investment sales and financing services. Most of our investment sales and financing professionals are independent contractors and are paid commissions; however, because there are some who are initially paid a salary and certain of our financing professionals are employees, costs of services also include employee-related compensation, employer taxes and benefits for those employees. The commission rates we pay to our investment sales and financing professionals vary based on individual contracts negotiated and are generally higher for the more experienced professionals. Some of our most senior investment sales and financing professionals can also earn additional commissions after meeting certain annual financial thresholds. These additional commissions are recognized as cost of services in the period in which they are earned. Payment of a portion of these additional commissions are generally deferred for a period of three years, at our election, and paid at the end of the third calendar year. Cost of services also includes referral fees paid to other real estate brokers where we are the principal service provider. Cost of services, therefore, can vary based on the commission structure of the independent contractors that closed transactions in any particular period.
Current wording
The majority of our cost of services expense is variable commissions paid to our investment sales and financing professionals and compensation-related costs related to our financing activities. Commission expenses are directly attributable to providing services to our clients for investment sales and financing services. Most of our investment sales and financing professionals are independent contractors and are paid commissions; however, because there are some who are employees and initially paid a salary, costs of services also include employee-related compensation, employer taxes and benefits for those employees. The commission rates we pay to our investment sales and financing professionals vary based on individual contracts negotiated and are generally higher for the more experienced professionals. Some of our most senior investment sales and financing professionals can also earn additional commissions after meeting certain annual financial thresholds. These additional commissions are recognized as cost of services in the period in which they are earned. Payment of a portion of these additional commissions are generally deferred for a period of three years, at our election, and paid at the end of the third calendar year. Cost of services also includes referral fees paid to other real estate brokers where we are the principal service provider. Cost of services, therefore, can vary based on the commission structure of the investment sales and financing professionals that closed transactions in any particular period.
Previous wording
The largest expense component within selling, general and administrative expenses is personnel expenses for our management team and sales and support staff, as well as business development, marketing, and expensing of forgivable loans over the retention period of our sales and financing professionals. In addition, these costs include facilities costs (excluding depreciation and amortization), staff related expenses, sales, marketing, legal, telecommunication, network, data sources, changes in fair value for contingent and deferred consideration and other administrative expenses. Also included in selling, general and administrative are expenses for stock-based compensation to non-employee directors, employees and independent contractors (i.e. investment sales and financing professionals) under the Amended and Restated 2013 Omnibus Equity Incentive Plan (the “Amended Plan”) and the Amended and Restated 2013 Employee Stock Purchase Plan (the “Amended ESPP”).
Current wording
The largest expense component within selling, general and administrative expenses is compensation for our management team and sales and support staff, as well as business development, marketing, and expensing of forgivable loans provided to our investment sales and financing professionals over the contractual term of the loan. In addition, these costs include facility costs (excluding depreciation and amortization), sales and events, licenses and subscriptions, legal, information technology, telecommunications, changes in fair value for contingent and deferred consideration and other administrative expenses. Also included in selling, general and administrative are expenses for stock-based compensation to non-employee directors, employees and independent contractors (i.e. investment sales and financing professionals) under the Amended and Restated 2013 Omnibus Equity Incentive Plan (the “Amended Plan”) and the Amended and Restated 2013 Employee Stock Purchase Plan (the “Amended ESPP”).
Previous wording
Depreciation expense consists of depreciation recorded on our computer software and hardware, as well as our furniture, fixtures and equipment. Depreciation is recognized over estimated useful lives ranging from three to seven years for assets. Amortization expense consists of amortization recorded on intangible assets amortized on a straight-line basis using a useful life between one and seven years.
Current wording
Depreciation expense consists of depreciation recorded on our computer software and hardware equipment, as well as our furniture, fixtures and equipment. Depreciation is recognized over estimated useful lives ranging from three to seven years for assets. Amortization expense consists of amortization recorded on intangible assets amortized on a straight-line basis using a useful life between one and seven years.
Previous wording
Interest expense primarily consists of interest expense associated with the stock appreciation rights (“SARs”) liability, and our Credit Agreement.
Current wording
Interest expense primarily consists of interest expense associated with the stock appreciation rights (“SARs”) liability, and our Credit Agreement (as defined herein in Item 2).
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) 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.
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
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.
Current wording
The following is a discussion of our results of operations for the three months ended March 31, 2026 and 2025. 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 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:
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 March 31, 2026 and 2025, we closed 2,022 and 1,706 investment sales, financing and other transactions, respectively, with total sales volume of approximately $12.1 billion and $9.4 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:
Previous wording
(1)Operating metrics exclude certain financing fees not directly associated with transactions.
Current wording
(1)Operating metrics exclude certain financing fees not directly associated to transactions.
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 loss, 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.
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
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.
Current wording
Our total revenue was $171.5 million for the three months ended March 31, 2026 compared to $145.0 million for the same period in 2025, an increase of $26.4 million, or 18.2%. Total revenue primarily increased as a result of increases in real estate brokerage commissions and financing fees, as described below. See the “Factors Affecting Our Business” section for additional market information.
Previous 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.
Current wording
Financing fees. Revenue from financing fees increased to $26.8 million for the three months ended March 31, 2026 from $18.1 million for the same period in 2025, an increase of $8.7 million, or 48.1%. The increase was primarily attributed to a 60.1% increase in the total financing volume, partially offset by a four basis point decrease in the average fee rate earned compared to the same period in 2025.
Previous 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.
Current wording
Our total operating expenses were $177.2 million for the three months ended March 31, 2026 compared to $162.7 million for the same period in 2025, an increase of $14.5 million, or 8.9%. Cost of services increased by $15.3 million, partially offset by a decrease of $0.3 million in selling, general, and administrative expenses and a decrease of $0.5 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 $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.
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 $103.6 million for the three months ended March 31, 2026 from $88.3 million for the same period in 2025, an increase of $15.3 million, or 17.3%. 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 40 basis points to 60.5% compared to the same period in 2025 primarily due to our senior investment sales and financing professionals earning higher commissions in 2025.
Previous 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.
Current wording
Depreciation and amortization expense. Depreciation and amortization expense decreased to $2.4 million for the three months ended March 31, 2026 from $2.8 million for the same period in 2025, a decrease of $0.5 million, or 16.1%. The decrease primarily relates to assets that were fully depreciated in 2025.
Previous wording
Interest expense decreased by an immaterial amount for the three months ended September 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 three months ended March 31, 2026 compared to the same period in 2025, and primarily relates to interest expense on our SARs liability.
Previous 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.
Current wording
The provision for income taxes was $0.9 million for the three months ended March 31, 2026, compared to a benefit for income taxes of $9.5 million for the same period in 2025. The effective income tax rate for the three months ended March 31, 2026 was (43.1)% compared to 68.2% for the same period in 2025. The decrease in the effective tax rate for the three months ended March 31, 2026, compared to the same period in 2025, is primarily attributed to non-deductible items, state income taxes, and shortfall tax expenses, net related to stock-based compensation. Refer to Note 10 – “Income Taxes” of our accompanying Notes to Condensed Consolidated Financial Statements for additional information.
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 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):
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 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 primary sources of liquidity are cash, cash equivalents, and restricted cash, cash flows from operations, marketable debt securities, available-for-sale and, if necessary, borrowings under our Credit Agreement (as defined herein). In order to enhance yield to us, we have invested a portion of our cash in money market funds and fixed and variable income debt securities, in accordance with our investment policy approved by the Board of Directors. Certain of our investments in money market funds may not maintain a stable net asset value and may impose a discretionary liquidity fee. To date, the Company has not experienced any restrictions on its ability to redeem funds from money market funds. Although we have historically funded our operations through operating cash flows, there can be no assurance that we can continue to meet our cash requirements entirely through our operations, cash, net of restricted cash, cash equivalents, and proceeds from the sale of marketable debt securities, available-for-sale or availability under our Credit Agreement.
Current wording
Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, marketable debt securities, available-for-sale and, if necessary, borrowings under the Credit Agreement (as defined herein in Item 2). We have invested a portion of our cash in money market funds and fixed and variable income debt securities, in accordance with our investment policy approved by the Board of Directors. Certain of our investments in money market funds may not maintain a stable net asset value and may impose a discretionary liquidity fee. To date, we have not experienced any restrictions on our ability to redeem funds from money market funds. Although we have historically funded our operations through operating cash flows, there can be no assurance that we can continue to meet our cash requirements entirely through our operations, cash and cash equivalents, proceeds from the sale of marketable debt securities, available-for-sale or availability under the Credit Agreement.
Previous 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):
Current wording
Our total cash, cash equivalents, and restricted cash balance decreased by $25.4 million to $136.5 million at March 31, 2026, compared to $161.9 million at December 31, 2025. The following table sets forth our summary cash flows for the three months ended March 31, 2026 and 2025 (in thousands):
Previous 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.
Current wording
Cash flows used in operating activities were $27.6 million for the three months ended March 31, 2026 compared to $52.8 million for the same period in 2025. The $25.2 million decrease in cash flows used in operating activities for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to a reduction in operating losses, as discussed above, a $15.4 million decrease in change in deferred compensation and commissions and a $10.3 million decrease in net deferred taxes in the three months ended March 31, 2026 compared to the same period in 2025. The cash flows used in operating activities were also affected by the timing of certain cash receipts and payments.
Previous wording
Cash flows used in investing activities were $29.2 million for the nine months ended September 30, 2025 compared to cash flows provided by investing activities of $55.3 million for the same period in 2024. The $84.5 million increase in cash flows used in investing activities for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to an increase of $85.3 million in the amount of purchases of securities, net of proceeds from sales and maturities of securities in 2025 compared to the same period in 2024.
Current wording
Cash flows provided by investing activities were $33.8 million for the three months ended March 31, 2026 compared to $57.2 million for the same period in 2025. The $23.4 million decrease in cash provided by investing activities for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to a decrease in net proceeds of $21.9 million from sales, purchases, and maturities of securities in the three months ended March 31, 2026 compared to the same period in 2025.
Previous wording
Cash flows used in financing activities were $27.4 million for the nine months ended September 30, 2025 compared to $18.3 million for the same period in 2024. The $9.1 million increase in cash flows used in financing activities is primarily due to the $7.4 million increase in cash paid for stock repurchases in 2025 compared to the same period in 2024 along with $1.1 million in principal payments for deferred and contingent consideration in 2025 compared to no such payments in the same period in 2024.
Current wording
Cash flows used in financing activities were $31.5 million for the three months ended March 31, 2026 compared to $8.1 million for the same period in 2025. The $23.5 million increase in cash flows used in financing activities is primarily due to the $24.5 million increase in cash paid for stock repurchases in the three months ended March 31, 2026 compared to the same period in 2025.
Previous wording
We believe that our existing balances of cash, cash equivalents, cash flows expected to be generated from our operations, and proceeds from the maturities and possible sales of marketable debt securities, available-for-sale will be sufficient to satisfy our operating requirements for at least the next 12 months and the foreseeable future. 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 September 30, 2025, cash, excluding restricted cash, cash equivalents, and marketable debt securities, available-for-sale, aggregated $370.5 million.
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 March 31, 2026, cash (excluding restricted cash), cash equivalents, and marketable debt securities, available-for-sale, aggregated $323.1 million.
Previous wording
Our credit agreement with Wells Fargo Bank, National Association (as amended, the “Credit Agreement”) provides for a $10 million principal amount senior secured revolving credit facility that is guaranteed by all of our domestic subsidiaries and matures on June 1, 2026. The Company maintains a $10 million restricted cash balance in support of the Credit Agreement. The Company is monitoring covenant compliance on a regular basis to ensure continued compliance with the Credit Agreement. Our ability to borrow under our Credit Agreement is limited by our ability to comply with its covenants or obtain necessary waivers. See Note 12 – “Commitments and Contingencies” of our Notes to Condensed Consolidated Financial Statements in Item 1, Part I of this Quarterly Report on Form 10-Q for additional information on the Credit Agreement.
Current wording
We have a credit agreement with Wells Fargo Bank, National Association (as amended, the “Credit Agreement”) which provides for a $10 million principal amount senior secured revolving credit facility that is guaranteed by all of our domestic subsidiaries and matures on June 1, 2026. As of March 31, 2026, there were no amounts outstanding under the Credit Agreement. We monitor covenant compliance on a regular basis to ensure continued compliance with the Credit
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 September 30, 2025, the Company has agreed to a maximum aggregate guarantee obligation of $402.7 million relating to loans with an unpaid balance of $2,470.7 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 $271,000 as of September 30, 2025 related to these guarantee obligations. The Company is required to provide cash collateral to MTRCC for this obligation, and this is reflected as $1.0 million of restricted cash as of September 30, 2025, which is included in cash, cash equivalents, and restricted cash on the condensed consolidated balance sheets.
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 March 31, 2026, the Company has agreed to a maximum aggregate guarantee obligation of $477.8 million relating to loans with an unpaid balance of $2,921.3 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 $207,000 as of March 31, 2026 related to these guarantee obligations. The Company is required to provide cash collateral to MTRCC for this obligation and this is reflected as $1.5 million of restricted cash as of March 31, 2026, which is included in cash, cash equivalents, and restricted cash on the condensed consolidated balance sheet.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Agreement. Our ability to borrow under the Credit Agreement is limited by our ability to comply with its covenants or obtain necessary waivers. See Note 13 – “Commitments and Contingencies” of our accompanying Notes to Condensed Consolidated Financial Statements for additional information on the Credit Agreement.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
(1)Adjusted EBITDA is not a measurement of our financial performance under U.S. generally accepted accounting principles (“U.S. GAAP”) and should not be considered as an alternative to net loss, 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 report — wording carried elsewhere
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.