☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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35-2478370
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(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
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23975 Park Sorrento, Suite 400
Calabasas, California
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91302
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading
Symbol(s) |
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Name of each exchange
on which registered |
Common Stock, par value $0.0001 per share
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MMI
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated
filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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39
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40
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41
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41
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41
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41
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42
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March 31,
2020
(Unaudited)
|
December 31,
2019 |
||||||
Assets
|
|
|
||||||
Current assets:
|
|
|
||||||
Cash and cash equivalents
|
$ |
189,760
|
$ |
232,670
|
||||
Commissions receivable, net
|
3,600
|
5,003
|
||||||
Prepaid expenses
|
9,072
|
10,676
|
||||||
Income tax receivable
|
929
|
4,999
|
||||||
Marketable debt securities,
available-for-sale
(includes amortized cost and an allowance for credit losses of $143,115 and $0, respectively, at March 31, 2020)
|
143,864
|
150,752
|
||||||
Advances and loans, net
|
1,969
|
2,882
|
||||||
Other assets
|
2,871
|
3,185
|
||||||
Total current assets
|
352,065
|
410,167
|
||||||
Property and equipment, net
|
23,173
|
22,643
|
||||||
Operating lease
right-of-use
assets, net
|
88,454
|
90,535
|
||||||
Marketable debt securities,
available-for-sale
(includes amortized cost and an allowance for credit losses of $44,954 and $0, respectively, at March 31, 2020)
|
45,210
|
60,809
|
||||||
Assets held in rabbi trust
|
7,992
|
9,452
|
||||||
Deferred tax assets, net
|
20,959
|
22,122
|
||||||
Goodwill and other intangible assets, net
|
31,254
|
22,312
|
||||||
Advances and loans, net
|
96,857
|
66,647
|
||||||
Other assets
|
4,365
|
4,347
|
||||||
Total assets
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$ |
670,329
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$ |
709,034
|
||||
Liabilities and stockholders’ equity
|
|
|
||||||
Current liabilities:
|
|
|
||||||
Accounts payable and other liabilities
|
$ |
10,642
|
$ |
10,790
|
||||
Notes payable to former stockholders
|
6,564
|
6,564
|
||||||
Deferred compensation and commissions
|
25,253
|
44,301
|
||||||
Operating lease liabilities
|
17,715
|
17,762
|
||||||
Accrued bonuses and other employee related expenses
|
5,339
|
22,388
|
||||||
Total current liabilities
|
65,513
|
101,805
|
||||||
Deferred compensation and commissions
|
28,220
|
45,628
|
||||||
Operating lease liabilities
|
61,677
|
63,155
|
||||||
Other liabilities
|
5,627
|
3,539
|
||||||
Total liabilities
|
161,037
|
214,127
|
||||||
Commitments and contingencies
|
—
|
—
|
||||||
Stockholders’ equity:
|
|
|
||||||
Preferred stock, $0.0001 par value:
|
|
|
||||||
Authorized shares – 25,000,000; issued and outstanding shares – none at March 31, 2020 and December 31, 2019, respectively
|
—
|
—
|
||||||
Common stock, $0.0001 par value:
|
|
|
||||||
Authorized shares – 150,000,000; issued and outstanding shares – 39,272,429 and 39,153,195 at March 31, 2020 and December 31, 2019, respectively
|
4
|
4
|
||||||
Additional
paid-in
capital
|
105,601
|
104,658
|
||||||
Stock notes receivable from employees
|
(4
|
) |
(4
|
) | ||||
Retained earnings
|
401,308
|
388,271
|
||||||
Accumulated other comprehensive income
|
2,383
|
1,978
|
||||||
Total stockholders’ equity
|
509,292
|
494,907
|
||||||
Total liabilities and stockholders’ equity
|
$ |
670,329
|
$ |
709,034
|
||||
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Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenues:
|
|
|||||||
Real estate brokerage commissions
|
$ |
171,829
|
$
|
144,937
|
||||
Financing fees
|
15,351
|
13,732
|
||||||
Other revenues
|
3,537
|
2,038
|
||||||
Total revenues
|
190,717
|
160,707
|
||||||
Operating expenses:
|
|
|
||||||
Cost of services
|
113,757
|
91,688
|
||||||
Selling, general and administrative expense
|
54,860
|
48,918
|
||||||
Depreciation and amortization expense
|
2,464
|
1,832
|
||||||
Total operating expenses
|
171,081
|
142,438
|
||||||
Operating income
|
19,636
|
18,269
|
||||||
Other (expense) income, net
|
(366
|
) |
3,375
|
|||||
Interest expense
|
(283
|
) |
(349
|
) | ||||
Income before provision for income taxes
|
18,987
|
21,295
|
||||||
Provision for income taxes
|
5,917
|
5,657
|
||||||
Net income
|
13,070
|
15,638
|
||||||
Other comprehensive (loss) income:
|
|
|
||||||
Marketable debt securities,
available-for-sale:
|
|
|
||||||
Change in unrealized (losses) gains
|
(497
|
) |
858
|
|||||
Less: reclassification adjustment for net losses (gains) included in other (expense) income, net
|
11
|
(9
|
) | |||||
Net change, net of tax of $(168) and $288 for the three months ended March 31, 2020 and 2019, respectively
|
(486
|
) |
849
|
|||||
Foreign currency translation gain (loss), net of tax of $0 for each of the three months ended March 31, 2020 and 2019
|
891
|
(98
|
) | |||||
Total other comprehensive income
|
405
|
751
|
||||||
Comprehensive income
|
$ |
13,475
|
$ |
16,389
|
||||
Earnings per share:
|
|
|
||||||
Basic
|
$ |
0.33
|
$ |
0.40
|
||||
Diluted
|
$ |
0.33
|
$ |
0.40
|
||||
Weighted average common shares outstanding:
|
|
|
||||||
Basic
|
39,541
|
39,311
|
||||||
Diluted
|
39,646
|
39,515
|
|
Three Months Ended March 31, 2020
|
|||||||||||||||||||||||||||||||||||
|
Preferred Stock
|
Common Stock
|
Additional
Paid-In
Capital |
Stock Notes
Receivable
From
Employees |
Retained
Earnings |
Accumulated
Other Comprehensive Income |
Total
|
|||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
|
|
—
|
|
|
$
|
—
|
|
|
|
39,153,195
|
|
|
$
|
4
|
|
|
$
|
104,658
|
|
|
$
|
(4
|
)
|
|
$
|
388,271
|
|
|
$
|
1,978
|
|
|
$
|
494,907
|
|
Cumulative effect of a change in accounting principle, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2020, as adjusted
|
|
|
—
|
|
|
|
—
|
|
|
|
39,153,195
|
|
|
|
4
|
|
|
|
104,658
|
|
|
|
(4
|
)
|
|
|
388,238
|
|
|
|
1,978
|
|
|
|
494,874
|
|
Net and comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,070
|
|
|
|
405
|
|
|
|
13,475
|
|
Stock-based award activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,632
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,632
|
|
Issuance of common stock for vesting of restricted stock units
|
|
|
—
|
|
|
|
—
|
|
|
|
170,106
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Shares withheld related to net share settlement of stock-based awards
|
|
|
—
|
|
|
|
—
|
|
|
|
(50,872
|
)
|
|
|
—
|
|
|
|
(1,689
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,689
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020
|
|
|
—
|
|
|
$
|
—
|
|
|
|
39,272,429
|
|
|
$
|
4
|
|
|
$
|
105,601
|
|
|
$
|
(4
|
)
|
|
$
|
401,308
|
|
|
$
|
2,383
|
|
|
$
|
509,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||
Net income
|
$ |
13,070
|
$ |
15,638
|
||||
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
||||||
Depreciation and amortization expense
|
2,464
|
1,832
|
||||||
Amortization of
right-of-use
assets
|
5,500
|
5,081
|
||||||
Credit loss recovery
|
(120
|
) |
(104
|
) | ||||
Stock-based compensation
|
2,632
|
2,341
|
||||||
Deferred taxes, net
|
1,345
|
2,243
|
||||||
Unrealized f
oreign exchange lo
ss
|
|
|
1,024
|
|
|
|
—
|
|
Net realized (gains) losses on marketable debt securities,
available-for-sale
|
(53
|
) |
12
|
|||||
Other
non-cash
items
|
485
|
28
|
||||||
Changes in operating assets and liabilities:
|
|
|
||||||
Commissions receivable
|
1,350
|
(1,171
|
) | |||||
Prepaid expenses
|
1,576
|
(929
|
) | |||||
Advances and loans
|
(29,441
|
) |
(6,663
|
) | ||||
Other assets
|
(100
|
) |
(2,149
|
) | ||||
Accounts payable and other liabilities
|
(923
|
) |
2,067
|
|||||
Income tax receivable/payable
|
4,070
|
3,117
|
||||||
Accrued bonuses and other employee related expenses
|
(17,035
|
) |
(20,060
|
) | ||||
Deferred compensation and commissions
|
(33,898
|
) |
(35,838
|
) | ||||
Operating lease liabilities
|
(4,477
|
) |
(4,110
|
) | ||||
Other liabilities
|
(262
|
) |
67
|
|||||
Net cash used in operating activities
|
(52,793
|
) |
(38,598
|
) | ||||
Cash flows from investing activities
|
|
|
|
|
|
|
||
Acquisition, net of cash received
|
(6,000
|
) |
—
|
|||||
Purchases of marketable debt securities,
available-for-sale
|
(28,919
|
) |
(30,117
|
) | ||||
Proceeds from sales and maturities of marketable debt securities,
available-for-sale
|
50,623
|
55,833
|
||||||
Issuances of employee notes receivable
|
(211
|
) |
—
|
|||||
Payments received on employee notes receivable
|
1
|
1
|
||||||
Purchase of property and equipment
|
(2,397
|
) |
(1,644
|
) | ||||
Net cash provided by investing activities
|
13,097
|
24,073
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||
Taxes paid related to net share settlement of stock-based awards
|
(1,689
|
) |
(2,212
|
) | ||||
Principal payments on stock appreciation rights liability
|
(1,251
|
) |
186
|
|||||
Net cash used in financing activities
|
(2,940
|
) |
(2,026
|
) | ||||
Effect of currency exchange rate changes on cash and cash equivalents
|
(274
|
)
|
—
|
|||||
Net decrease in cash and cash equivalents
|
(42,910
|
) |
(16,551
|
) | ||||
Cash and cash equivalents at beginning of period
|
232,670
|
214,683
|
||||||
Cash and cash equivalents at end of period
|
$ |
189,760
|
$ |
198,132
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
||
Interest paid during the period
|
$ |
845
|
$ |
1,751
|
||||
Income taxes paid, net
|
$ |
503
|
$ |
296
|
||||
1.
|
Description of Business and Basis of Presentation
|
2.
|
Accounting Policies and Recent Accounting Pronouncements
|
3.
|
Property and Equipment, Net
|
|
March 31,
2020
|
December 31,
|
||||||
Computer software and hardware equipment
|
$ |
27,191
|
$ |
25,252
|
||||
Furniture, fixtures, and equipment
|
23,375
|
23,468
|
||||||
Less: accumulated depreciation and amortization
|
(27,393
|
) |
(26,077
|
) | ||||
|
$ |
23,173
|
$ |
22,643
|
||||
4.
|
Operating Leases
|
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Operating lease cost:
|
|
|
||||||
Lease cost
(1)
|
$
|
6,263
|
$
|
5,909
|
||||
Variable lease cost
(2)
|
1,396
|
1,206
|
||||||
Sublease income
|
(77
|
) |
(88
|
) | ||||
|
$ |
7,582
|
$ |
7,027
|
||||
(1)
|
Includes short-term lease cost and ROU asset amortization. |
(2)
|
Primarily relates to common area maintenance, property taxes, insurance, utilities and parking. |
|
March 31,
|
|||
Remainder of 2020
|
$ |
15,952
|
||
2021
|
19,294
|
|||
2022
|
15,342
|
|||
2023
|
12,065
|
|||
2024
|
9,887
|
|||
Thereafter
|
14,838
|
|||
Total future minimum lease payments
|
87,378
|
|||
Less imputed interest
|
(7,986
|
) | ||
Present value of operating lease liabilities
|
$ |
79,392
|
||
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Operating cash flow information:
|
|
|
||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$ |
5,223
|
$ |
4,842
|
||||
Noncash activity:
|
|
|
||||||
ROU assets obtained in exchange for operating lease liabilities
|
$
|
3,109
|
$
|
3,227
|
||||
Tenant improvements owned by lessor related to ROU assets
(1)
|
$ |
317
|
$ |
1,306
|
(1)
|
Reclassification from other assets current. |
|
March 31, 2020
|
December 31, 2019
|
||||||
Weighted average remaining operating lease term
|
5.04 years
|
5.04 years
|
||||||
Weighted average discount rate
|
3.7
|
% |
3.8
|
% |
5.
|
Investments in Marketable Debt Securities
|
|
March 31, 2020
|
|||||||||||||||||||
|
Amortized
Cost |
Allowance
for Credit Losses |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value
|
|||||||||||||||
Short-term investments:
|
|
|
|
|
|
|||||||||||||||
U.S. treasuries
|
$
|
113,885
|
$ |
—
|
$ |
835
|
$ |
—
|
$ |
114,720
|
||||||||||
U.S. government sponsored entities
|
9,128
|
—
|
9
|
—
|
9,137
|
|||||||||||||||
Corporate debt
|
19,801
|
—
|
5
|
(95
|
) |
19,711
|
||||||||||||||
ABS and other
|
301
|
—
|
—
|
(5
|
) |
296
|
||||||||||||||
|
$ |
143,115
|
$ |
—
|
$ |
849
|
$ |
(100
|
) | $ |
143,864
|
|||||||||
Long-term investments:
|
|
|
|
|
|
|||||||||||||||
U.S. treasuries
|
$ |
10,015
|
$ |
—
|
$ |
495
|
$ |
—
|
$ |
10,510
|
||||||||||
U.S. government sponsored entities
|
1,299
|
—
|
29
|
—
|
1,328
|
|||||||||||||||
Corporate debt
|
25,633
|
—
|
634
|
(661
|
) |
25,606
|
||||||||||||||
ABS and other
|
8,007
|
—
|
44
|
(285
|
) |
7,766
|
||||||||||||||
|
$ |
44,954
|
$ |
—
|
$ |
1,202
|
$ |
(946
|
) | $ |
45,210
|
|||||||||
|
December 31, 2019
|
|||||||||||||||
|
Amortized
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value
|
||||||||||||
Short-term investments:
|
|
|
|
|
||||||||||||
U.S. treasuries
|
$ |
124,389
|
$ |
196
|
$ |
(5
|
) | $ |
124,580
|
|||||||
U.S. government sponsored entities
|
—
|
—
|
—
|
—
|
||||||||||||
Corporate debt
|
26,128
|
44
|
—
|
26,172
|
||||||||||||
|
$ |
150,517
|
$ |
240
|
$ |
(5
|
) |
$
|
150,752
|
|||||||
Long-term investments:
|
|
|
|
|
||||||||||||
U.S. treasuries
|
$ |
24,188
|
$ |
235
|
$ |
—
|
$ |
24,423
|
||||||||
U.S. government sponsored entities
|
1,353
|
3
|
(1
|
) |
1,355
|
|||||||||||
Corporate debt
|
25,447
|
1,027
|
(3
|
) |
26,471
|
|||||||||||
ABS and other
|
8,480
|
93
|
(13
|
) |
8,560
|
|||||||||||
|
$ |
59,468
|
$ |
1,358
|
$ |
(17
|
) | $ |
60,809
|
|||||||
|
March 31, 2020
|
|||||||||||||||||||||||
|
Less than 12 months
|
12 months or
|
Total
|
|||||||||||||||||||||
|
Fair
Value
|
Gross
Unrealized Losses |
Fair
Value
|
Gross
Unrealized Losses |
Fair
Value
|
Gross
Unrealized Losses |
||||||||||||||||||
Corporate debt
|
$ |
17,553
|
$ |
(756
|
) | $ |
—
|
$ |
—
|
$ |
17,553
|
$ |
(756
|
) | ||||||||||
ABS and other
|
6,207
|
(290
|
) |
—
|
—
|
6,207
|
(290
|
) | ||||||||||||||||
|
$ |
23,760
|
$ |
(1,046
|
) | $ |
—
|
$ |
—
|
$ |
23,760
|
$ |
(1,046
|
) | ||||||||||
|
December 31, 2019
|
|||||||||||||||||||||||
|
Less than 12 months
|
12 months or greater
|
Total
|
|||||||||||||||||||||
|
Fair
Value
|
Gross
Unrealized Losses |
Fair
Value
|
Gross
Unrealized Losses |
Fair
Value
|
Gross
Unrealized Losses |
||||||||||||||||||
U.S. treasuries
|
$ |
39,823
|
$ |
(5
|
) | $ |
—
|
$ |
—
|
$ |
|
$ |
(5
|
) | ||||||||||
U.S. government sponsored entities
|
—
|
—
|
566
|
(1
|
) |
566
|
(1
|
) | ||||||||||||||||
Corporate debt
|
6,029
|
(3
|
) |
—
|
—
|
6,029
|
(3
|
) | ||||||||||||||||
ABS and other
|
1,971
|
(13
|
) |
—
|
—
|
1,971
|
(13
|
) | ||||||||||||||||
|
$
|
47,823
|
$ |
(21
|
) | $ |
566
|
$ |
(1
|
) | $ |
48,389
|
$ |
(22
|
) | |||||||||
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Gross realized gains
(1)
|
$
|
53
|
$
|
35
|
||||
Gross realized losses
(1)
|
$ |
—
|
$ |
(47
|
) | |||
(1)
|
Recorded in other (expense) income, net in the condensed consolidated statements of net and comprehensive income. The cost basis of securities sold were determined based on the specific identification method. |
|
March 31, 2020
|
December 31, 2019
|
||||||||||||||
|
Amortized
Cost |
Fair Value
|
Amortized
Cost |
Fair Value
|
||||||||||||
Due in one year or less
|
$ |
143,115
|
$ |
143,864
|
$ |
150,517
|
$ |
150,752
|
||||||||
Due after one year through five years
|
28,923
|
29,204
|
41,123
|
41,794
|
||||||||||||
Due after five years through ten years
|
10,840
|
10,960
|
12,813
|
13,467
|
||||||||||||
Due after ten years
|
5,191
|
5,046
|
5,532
|
5,548
|
||||||||||||
|
$ |
188,069
|
$ |
189,074
|
$ |
209,985
|
$ |
211,561
|
||||||||
Weighted average contractual maturity
|
|
1.8 years
|
|
1.7 years
|
6.
|
Acquisitions, Goodwill and Other Intangible Assets
|
|
March 31, 2020
|
December 31, 2019
|
||||||||||||||||||||||
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net Book
Value |
Gross
Carrying Amount |
Accumulated
Amortization |
Net Book
Value |
||||||||||||||||||
Goodwill and intangible assets:
|
|
|
|
|
|
|
||||||||||||||||||
Goodwill
(1)
|
$ |
19,062
|
$ |
—
|
$ |
19,062
|
$ |
15,072
|
$ |
—
|
$ |
15,072
|
||||||||||||
Intangible assets
(2)
|
14,851
|
(2,659
|
) |
12,192
|
9,050
|
(1,810
|
) |
7,240
|
||||||||||||||||
|
$ |
33,913
|
$ |
(2,659
|
) | $ |
31,254
|
$ |
24,122
|
$ |
(1,810
|
) | $ |
22,312
|
||||||||||
(1)
|
Represents additions from acquisitions. |
(2)
|
Total weighted average amortization period was 5.00 years and 4.37 years as of March 31, 2020 and December 31, 2019, respectively. |
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$
|
15,072
|
$
|
11,459
|
||||
Additions from acquisitions
|
3,990
|
—
|
||||||
Impairment losses
|
—
|
—
|
||||||
Ending balance
|
$ |
19,062
|
$ |
11,459
|
||||
|
March 31, 2020
|
|||
Remainder of 2020
|
$ |
2,589
|
||
2021
|
2,594
|
|||
2022
|
2,212
|
|||
2023
|
2,209
|
|||
2024
|
1,622
|
|||
Thereafter
|
966
|
|||
|
$ |
12,192
|
||
7.
|
Selected Balance Sheet Data
|
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$ |
512
|
$ |
514
|
||||
Credit loss recovery
|
(120
|
) |
(104
|
) | ||||
Write-offs
|
(2
|
) |
(3
|
) | ||||
Ending balance
|
$ |
390
|
$ |
407
|
||||
|
Current
|
Non-Current
|
||||||||||||||
|
March 31,
2020
|
December 31,
2019 |
March 31,
2020
|
December 31,
2019 |
||||||||||||
Mortgage servicing rights (“MSRs”), net of amortization
|
$ |
—
|
$ |
—
|
$ |
1,950
|
$ |
2,002
|
||||||||
Security deposits
|
—
|
—
|
1,391
|
1,345
|
||||||||||||
Employee notes receivable
(1)
|
166
|
65
|
432
|
323
|
||||||||||||
Customer trust accounts and other
|
2,705
|
3,120
|
592
|
677
|
||||||||||||
|
$ |
2,871
|
$ |
3,185
|
$ |
4,365
|
$ |
4,347
|
||||||||
(1)
|
Reduction of accrued bonuses and other employee related expenses in settlement of employee notes receivable were $0 and $60 for the three months ended March 31, 2020 and 2019, respectively. See Note 9 – “Related-Party Transactions” for additional information. |
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
|
$ |
2,002
|
$ |
2,209
|
||||
Additions from acquisition
|
—
|
—
|
||||||
Additions
|
77
|
129
|
||||||
Amortization
|
(129
|
) |
(135
|
) | ||||
Ending balance
|
$ |
1,950
|
$ |
2,203
|
||||
|
Current
|
Non-Current
|
||||||||||||||
|
March 31,
2020
|
December 31,
2019 |
March 31,
2020
|
December 31,
2019 |
||||||||||||
Stock appreciation rights (“SARs”) liability
(1)
|
$ |
2,162
|
$ |
2,080
|
$ |
16,138
|
$ |
18,122
|
||||||||
Commissions payable to investment sales and financing professionals
|
21,159
|
40,235
|
6,391
|
20,818
|
||||||||||||
Deferred compensation liability
(1)
|
1,553
|
1,553
|
5,691
|
6,688
|
||||||||||||
Other
|
379
|
433
|
—
|
—
|
||||||||||||
|
$ |
25,253
|
$ |
44,301
|
$ |
28,220
|
$ |
45,628
|
||||||||
(1)
|
The SARs and deferred compensation liability become subject to payout as a result of a participant no longer being considered as a service provider. As a result of the retirement of certain participants, estimated amounts to be paid to the participants within the next twelve months have been classified as current. |
|
Three Months Ended
March 31,
|
|||||||
|
|
2020
|
2019
|
|
||||
(Decrease) increase in the carrying value of the assets held in the rabbi trust
(1)
|
$ |
(1,388
|
) | $ |
703
|
|||
(Decrease) increase in the net carrying value of the deferred compensation obligation
(2)
|
$ |
(1,273
|
) | $ |
685
|
|||
(1)
|
Recorded in other (expense) income, net in the condensed consolidated statements of net and comprehensive income. |
(2)
|
Recorded in selling, general and administrative expense in the condensed consolidated statements of net and comprehensive income. |
|
Non-Current
|
|||||||
|
March 31,
2020
|
December 31,
2019 |
||||||
Deferred consideration and other
(1) (2)
|
$ |
3,129
|
$ |
830
|
||||
Contingent consideration
(1) (2)
|
2,498
|
2,709
|
||||||
|
$ |
5,627
|
$ |
3,539
|
||||
(1)
|
The current portions of deferred consideration in the amounts of $1,783 and $560 as of March 31, 2020 and December 31, 2019, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets. The current portions of contingent consideration in the amounts of $664 and $678 as of March 31, 2020 and December 31, 2019, respectively, are included in accounts payable and other liabilities in the condensed consolidated balance sheets. |
(2)
|
Deferred consideration in the aggregate amount of $1,401 was reclassified from contingent consideration during the three months ended March 31, 2020 and of this amount, $560 and $841 pertained to the current and
non-current
portions, respectively.
|
8.
|
Notes Payable to Former Stockholders
|
9.
|
Related-Party Transactions
|
10.
|
Fair Value Measurements
|
• |
Level 1:
|
• |
Level 2:
|
• |
Level 3:
|
(1)
|
Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets. |
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Beginning balance
(1)
|
$ |
|
$ |
2,875
|
||||
Contingent consideration in connection with acquisitions
(2)
|
—
|
—
|
||||||
Change in fair value of contingent consideration
|
(225
|
) |
48
|
|||||
Payments of contingent consideration
|
—
|
—
|
||||||
Ending balance
|
$ |
3,162
|
$
|
2,923
|
||||
(1)
|
Beginning balance for 2020 reflects the reclassification of $1,401 from contingent consideration related to deferred consideration. See Note 7 – “Selected Balance Sheet Data – Other Liabilities” for additional information. |
(2)
|
Contingent consideration in connections with acquisitions represents a noncash investing activity. |
|
|
Fair Value at
March 31, 2020
|
|
|
Valuation Technique
|
|
Unobservable inputs
|
|
Range (Weighted Average)
(1)
|
|
||
Contingent consideration
|
|
$
|
3,162
|
|
|
Discounted cash flow
|
|
Expected life of cash flows
|
|
|
0.2-5.5
years (2.1 years)
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.7%-6.9%
(6.8%)
|
|
|
|
|
|
|
|
|
|
Probability of achievement
|
|
|
33.0%-100.0%
(74.0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Fair Value at
December 31, 2019
|
|
|
Valuation Technique
|
|
Unobservable inputs
|
|
Range (Weighted Average)
(1)
|
|
||
Contingent consideration
|
|
$
|
3,387
|
|
|
Discounted cash flow
|
|
Expected life of cash flows
|
|
|
0.4-5.8
years (2.4 years)
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.6%-4.9%
(4.1%)
|
|
|
|
|
|
|
|
|
|
Probability of achievement
|
|
|
33.0%-100.0%
(74.3%)
|
|
(1)
|
Unobservable inputs were weighted by the relative fair value of the instruments.
|
|
|
Fair Value at
March 31, 2020
|
|
|
Valuation Technique
|
|
Unobservable inputs
|
|
Range (Weighted
Average)
(1)
|
|
||
MSRs
|
|
$
|
2,125
|
|
|
Discounted cash flow
|
|
Constant prepayment rates
|
|
|
0.0%-20.0%
(10.0%)
|
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
|
1.5%-1.5%
(1.5%)
|
|
|
|
|
|
|
|
|
|
Loss severity
|
|
|
30.2%-30.2%
(30.2%)
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
10.0%-10.0%
(10.0%)
|
|
|
|
Fair Value at
December 31, 2019
|
|
|
Valuation Technique
|
|
Unobservable inputs
|
|
Range (Weighted
Average)
(1)
|
|
||
MSRs
|
|
$
|
2,204
|
|
|
Discounted cash flow
|
|
Constant prepayment rates
|
|
|
0.0%-20.0%
(10.0%)
|
|
|
|
|
|
|
|
|
|
Constant default rate
|
|
|
2.0%-2.0%
(2.0%)
|
|
|
|
|
|
|
|
|
|
Loss severity
|
|
|
40.0%-40.0%
(40.0%)
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
9.5%-9.7%
(9.7%)
|
|
(1)
|
Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value. |
11.
|
Stockholders’ Equity
|
12.
|
Stock-Based Compensation Plans
|
|
RSA Grants to
Non-employee
Directors |
RSU Grants to
Employees |
RSU Grants to
Independent Contractors |
Total
|
Weighted-
Average Grant
Date Fair Value Per Share |
|||||||||||||||
Nonvested shares at December 31, 2019
|
17,480
|
525,115
|
257,480
|
800,075
|
$ |
33.91
|
||||||||||||||
Granted
|
—
|
229,315
|
20,384
|
249,699
|
36.74
|
|||||||||||||||
Vested
|
—
|
(139,152
|
) |
(30,954
|
) |
(170,106
|
) |
31.75
|
||||||||||||
Transferred
|
—
|
(14,911
|
) |
14,911
|
—
|
32.26
|
||||||||||||||
Forfeited/canceled
|
—
|
(8,087
|
) |
(223
|
) |
(8,310
|
) |
38.19
|
||||||||||||
Nonvested shares at March 31, 2020
(1)
|
17,480
|
592,280
|
261,598
|
871,358
|
$ |
35.10
|
||||||||||||||
Unrecognized stock-based compensation expense as of March 31, 2020
(2)
|
$ |
74
|
$ |
20,079
|
$ |
8,132
|
$ |
28,285
|
|
|||||||||||
Weighted average remaining vesting period (years) as of March 31, 2020
|
0.17
|
4.05
|
3.30
|
3.83
|
|
|||||||||||||||
(1)
|
Nonvested RSUs will be settled through the issuance of new shares of common stock. |
(2)
|
The total unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately 3.83 years. |
|
|
March 31, 2020
|
|
|
2021
|
60,373
|
|||
2022
|
281,193
|
|||
|
341,566
|
|||
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
ESPP
|
$ |
47
|
$ |
30
|
||||
RSAs –
non-employee
directors
|
160
|
170
|
||||||
RSUs – employees
(1)
|
1,656
|
1,345
|
||||||
RSUs – independent contractors
|
769
|
796
|
||||||
|
$ |
2,632
|
$ |
2,341
|
||||
(1)
|
Includes expense related to the acceleration of vesting of certain RSUs. |
13.
|
Income Taxes
|
|
Three Months Ended March 31,
|
|||||||||||||||
|
2020
|
2019
|
||||||||||||||
|
Amount
|
Rate
|
Amount
|
Rate
|
||||||||||||
Income tax expense at the federal statutory rate
|
$ |
3,987
|
21.0
|
% | $ |
4,472
|
21.0
|
% | ||||||||
State income tax expense, net of federal benefit
|
1,018
|
5.4
|
% |
894
|
4.2
|
% | ||||||||||
Windfall tax benefits, net related to stock-based compensation
|
(17
|
) |
(0.1
|
)% |
(265
|
) |
(1.2
|
)% | ||||||||
Change in valuation allowance
|
367
|
1.9
|
% |
259
|
1.2
|
% | ||||||||||
Permanent and other items
(1)
|
562
|
3.0
|
% |
297
|
1.4
|
% | ||||||||||
|
$
|
5,917
|
31.2
|
% |
$
|
5,657
|
26.6
|
% | ||||||||
(1) |
Permanent items relate principally to compensation charges, qualified transportation fringe benefits, reversal of uncertain tax positions, meals and entertainment and our
tax-exempt
deferred compensation plan assets.
|
14.
|
Earnings per Share
|
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Numerator (Basic and Diluted):
|
|
|
||||||
Net income
|
$ |
13,070
|
$ |
15,638
|
||||
Denominator:
|
|
|
||||||
Basic
|
|
|
||||||
Weighted average common shares issued and outstanding
|
39,217
|
38,996
|
||||||
Deduct: Unvested RSAs
(1)
|
(18
|
) |
(27
|
) | ||||
Add: Fully vested DSUs
(2)
|
342
|
342
|
||||||
Weighted Average Common Shares Outstanding
|
39,541
|
39,311
|
||||||
Basic earnings per common share
|
$ |
0.33
|
$ |
0.40
|
||||
Diluted
|
|
|
||||||
Weighted Average Common Shares Outstanding from above
|
39,541
|
39,311
|
||||||
Add: Dilutive effect of RSUs, RSAs & ESPP
|
105
|
204
|
||||||
Weighted Average Common Shares Outstanding
|
39,646
|
39,515
|
||||||
Diluted earnings per common share
|
$ |
0.33
|
$ |
0.40
|
||||
Antidilutive shares excluded from diluted earnings per common share
(3)
|
521
|
212
|
||||||
(1)
|
RSAs were issued and outstanding to the
non-employee
directors and have a one-year or three-year vesting term subject to service requirements. See Note 12 – “Stock-Based Compensation Plans” for additional information.
|
(2)
|
Shares are included in weighted average common shares outstanding as the shares are fully vested but have not yet been delivered. See Note 12 – “Stock-Based Compensation Plans” for additional information. |
(3)
|
Primarily pertaining to RSU grants to the Company’s employees and independent contractors. |
15.
|
Commitments and Contingencies
|
16.
|
Subsequent Events
|
• | Properties priced less than $1 million; |
• |
Private client market:
|
• |
Middle market:
|
• |
Larger transaction market:
|
|
Three Months Ended March 31,
|
|
||||||||||||||||||||||||||||||||||
|
2020
|
2019
|
Change
|
|||||||||||||||||||||||||||||||||
Real Estate Brokerage
|
Number
|
Volume
|
Revenues
|
Number
|
Volume
|
Revenues
|
Number
|
Volume
|
Revenues
|
|||||||||||||||||||||||||||
|
|
(in millions)
|
(in thousands)
|
|
(in millions)
|
(in thousands)
|
|
(in millions)
|
(in thousands)
|
|||||||||||||||||||||||||||
<$1 million
|
216
|
$ |
136
|
$ |
5,742
|
201
|
$ |
131
|
$ |
5,288
|
15
|
$ |
5
|
$ |
454
|
|||||||||||||||||||||
Private client market ($1 - $10 million)
|
1,242
|
4,001
|
114,264
|
1,060
|
3,320
|
96,058
|
182
|
681
|
18,206
|
|||||||||||||||||||||||||||
Middle market (
≥
$10 - $20 million)
|
91
|
1,222
|
22,668
|
92
|
1,245
|
23,580
|
(1
|
) |
(23
|
) |
(912
|
) | ||||||||||||||||||||||||
Larger transaction market (
≥
$20 million)
|
66
|
3,083
|
29,155
|
52
|
2,407
|
20,011
|
14
|
676
|
9,144
|
|||||||||||||||||||||||||||
|
1,615
|
$ |
8,442
|
$ |
171,829
|
1,405
|
$ |
7,103
|
$ |
144,937
|
210
|
$ |
1,339
|
$ |
26,892
|
|||||||||||||||||||||
|
Three Months Ended
March 31,
|
|||||||
Real Estate Brokerage
|
2020
|
2019
|
||||||
Average Number of Investment Sales Professionals
|
1,889
|
1,818
|
||||||
Average Number of Transactions per Investment Sales Professional
|
0.85
|
0.77
|
||||||
Average Commission per Transaction
|
$ |
106,396
|
$ |
103,158
|
||||
Average Commission Rate
|
2.04
|
% |
2.04
|
% | ||||
Average Transaction Size (in thousands)
|
$ |
5,227
|
$ |
5,056
|
||||
Total Number of Transactions
|
1,615
|
1,405
|
||||||
Total Sales Volume (in millions)
|
$ |
8,442
|
$ |
7,103
|
||||
|
Three Months Ended
March 31,
|
|||||||
Financing
(1)
|
2020
|
2019
|
||||||
Average Number of Financing Professionals
|
89
|
106
|
||||||
Average Number of Transactions per Financing Professional
|
5.37
|
3.66
|
||||||
Average Fee per Transaction
|
$ |
30,900
|
$ |
33,541
|
||||
Average Fee Rate
|
0.84
|
% |
0.89
|
% | ||||
Average Transaction Size (in thousands)
|
$ |
3,670
|
$ |
3,763
|
||||
Total Number of Transactions
|
478
|
388
|
||||||
Total Financing Volume (in millions)
|
$ |
1,754
|
$ |
1,460
|
(1)
|
Operating metrics calculated excluding certain financing fees not directly associated with transactions. |
|
Three Months
Ended March 31, 2020 |
Percentage
of Revenue |
Three Months
Ended March 31, 2019 |
Percentage
of Revenue |
Change
|
|||||||||||||||||||
|
Dollar
|
Percentage
|
||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
||||||||||||||||||
Real estate brokerage commissions
|
$ |
171,829
|
90.1
|
% | $ |
144,937
|
90.2
|
% | $ |
26,892
|
18.6
|
% | ||||||||||||
Financing fees
|
15,351
|
8.0
|
13,732
|
8.5
|
1,619
|
11.8
|
% | |||||||||||||||||
Other revenues
|
3,537
|
1.9
|
2,038
|
1.3
|
1,499
|
73.6
|
% | |||||||||||||||||
Total revenues
|
190,717
|
100.0
|
160,707
|
100.0
|
30,010
|
18.7
|
% | |||||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
||||||||||||||||||
Cost of services
|
113,757
|
59.6
|
91,688
|
57.1
|
22,069
|
24.1
|
% | |||||||||||||||||
Selling, general and administrative expense
|
54,860
|
28.8
|
48,918
|
30.4
|
5,942
|
12.1
|
% | |||||||||||||||||
Depreciation and amortization expense
|
2,464
|
1.3
|
1,832
|
1.1
|
632
|
34.5
|
% | |||||||||||||||||
Total operating expenses
|
171,081
|
89.7
|
142,438
|
88.6
|
28,643
|
20.1
|
% | |||||||||||||||||
Operating income
|
19,636
|
10.3
|
18,269
|
11.4
|
1,367
|
7.5
|
% | |||||||||||||||||
Other (expense) income, net
|
(366
|
) |
(0.2
|
) |
3,375
|
2.1
|
(3,741
|
) |
(110.8
|
)% | ||||||||||||||
Interest expense
|
(283
|
) |
(0.1
|
) |
(349
|
) |
(0.2
|
) |
66
|
(18.9
|
)% | |||||||||||||
Income before provision for income taxes
|
18,987
|
10.0
|
21,295
|
13.3
|
(2,308
|
) |
(10.8
|
)% | ||||||||||||||||
Provision for income taxes
|
5,917
|
3.1
|
5,657
|
3.6
|
260
|
4.6
|
% | |||||||||||||||||
Net income
|
$ |
13,070
|
6.9
|
% | $ |
15,638
|
9.7
|
% | $ |
(2,568
|
) |
(16.4
|
)% | |||||||||||
Adjusted EBITDA
(1)
|
$ |
22,378
|
11.7
|
% | $ |
23,159
|
14.4
|
% | $ |
(781
|
) |
(3.4
|
)% | |||||||||||
(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 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 income, see
“Non-GAAP
Financial Measure.”
|
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Net income
|
$ |
13,070
|
$ |
15,638
|
||||
Adjustments:
|
|
|
||||||
Interest income and other
(1)
|
(2,003
|
) |
(2,541
|
) | ||||
Interest expense
|
283
|
349
|
||||||
Provision for income taxes
|
5,917
|
5,657
|
||||||
Depreciation and amortization
|
2,464
|
1,832
|
||||||
Stock-based compensation
|
2,632
|
2,341
|
||||||
Non-cash
MSR activity
(2)
|
15
|
(117
|
) | |||||
Adjusted EBITDA
(3)
|
$ |
22,378
|
$ |
23,159
|
||||
(1)
|
Other includes net realized gains (losses) on marketable debt securities
available-for-sale.
|
(2)
|
Non-cash
MSR activity includes the assumption of servicing obligations.
|
(3)
|
The decrease in Adjusted EBITDA for the three months ended March 31, 2020 compared to the same period in 2019 is primarily due to a higher proportion of operating expenses compared to total revenues. |
|
Three Months Ended
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Net cash used in operating activities
|
$ |
(52,793
|
) | $ |
(38,598
|
) | ||
Net cash provided by investing activities
|
13,097
|
24,073
|
||||||
Net cash used in financing activities
|
(2,940
|
) |
(2,026
|
) | ||||
Effect of currency exchange rate changes on cash and cash equivalents
|
(274
|
) |
—
|
|||||
Net decrease in cash and cash equivalents
|
(42,910
|
) |
(16,551
|
) | ||||
Cash and cash equivalents at beginning of period
|
232,670
|
214,683
|
||||||
Cash and cash equivalents at end of period
|
$ |
189,760
|
$ |
198,132
|
||||
Change in Interest Rates
|
Approximate Change in
Fair Value of Investments Increase (Decrease) |
|||
2% Decrease
|
$ |
2,703
|
||
1% Decrease
|
$ |
1,469
|
||
1% Increase
|
$ |
(2,114
|
) | |
2% Increase
|
$ |
(4,228
|
) |
• |
Any impairment in value of our investments in marketable debt securities,
available-for-sale,
tangible or intangible assets, which could be recorded as a result of weaker economic conditions.
|
• | A potential negative impact on the health of our employees and investment sales and financing professionals, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during a disruption. |
• | If significant portions of our workforce are unable to work effectively, including because of quarantines, facility closures, ineffective remote work arrangements or technology failures or limitations, our operations would be adversely impacted. |
Exhibit No.
|
Description
|
|||
10.1*
|
||||
31.1*
|
||||
31.2*
|
||||
32.1**
|
||||
101
|
The following financial statements from the Company’s Quarterly Report on Form
10-Q
for the quarter ended March 31, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Net and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
|
|||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
*
|
Filed herewith. |
**
|
Furnished, not filed. |
|
|
|
Marcus & Millichap, Inc
.
|
|||
Date:
|
May 11, 2020
|
By:
|
/s/ Hessam Nadji
|
|||
|
|
|
Hessam Nadji
President and Chief Executive Officer
(Principal Executive Officer)
|
|||
Date:
|
May 11, 2020
|
By:
|
/s/ Martin E. Louie
|
|||
|
|
|
Martin E. Louie
Chief Financial Officer
(Principal Financial Officer)
|
Exhibit 10.1
CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement (Agreement) is made as of January 1, 2020 (Effective Date) (by and between L5K Investments, Inc. (CONSULTANT), and Marcus & Millichap, Inc. (Marcus & Millichap) wherein Marcus & Millichap engages CONSULTANT to provide consulting services. Therefore, CONSULTANT and Marcus & Millichap agree as follows:
1. |
TERM & CANCELLATION |
1.1 The Agreement shall commence on the Effective Date and continue until terminated by either Party in its discretion upon thirty (30) days written notice. Such termination shall not prejudice any rights and remedies herein.
2. |
SERVICES & COMPENSATION |
2.1. CONSULTANT will provide Marcus & Millichap with the services identified in Exhibit A attached hereto (Services). In consideration for the above consulting services, Marcus & Millichap shall pay CONSULTANT a fee as set forth in Exhibit A (Fee). Any Fee due to CONSULTANT shall be the full and complete payment owed under this Agreement. Marcus & Millichap shall reimburse CONSULTANT any expenses related to business travel, attending meetings or other events on behalf of Marcus & Millichap. Any such expense above $2,500 must be approved in advance by the CEO.
3. |
CONFIDENTIALITY |
3.1 With respect to the sharing of confidential and proprietary information and solicitation, CONSULTANT and Marcus & Millichap agree to the terms and conditions of this Paragraph 3. The provisions of this Paragraph 3 shall be binding upon CONSULTANT and its principals, employees, agents, officers, directors, and contractors (collectively Consultant Parties), and CONSULTANT shall indemnify, defend, and hold Marcus & Millichap harmless for any violations of such provisions by Consultant Parties.
3.2 Confidential Information is to be construed broadly to include, but not be limited to all information regarding conveyed under or in furtherance of the Services to be provided, including all financial, proprietary information, and other information relating to Marcus & Millichap or its affiliates, related entities, employees, officers, contractors, and salespersons, including without limitation, any information or material pertaining to products, formulae, specifications, designs, processes, plans, policies, procedures, employees, salespersons, work conditions, legal and regulatory affairs, assets, inventory, discoveries, trademarks, patents, packaging, distribution, sales, marketing, expenses, financial statements and data; business strategies, methodologies, and endeavors; software, hardware, APIs, and IS systems and technologies; customer, client, agent, salesperson, and supplier lists and procurement and retention; costs of goods, services, and relationships with third parties. Confidential Information also includes any notes, analyses, compilations, studies or other material or documents prepared by the recipient party which contain, reflect or are based, in whole or in part, on the Confidential Information. Confidential Information further includes this Agreement, and all discussions and communications. Information will not be considered Confidential Information if: (a) at the time of disclosure or thereafter, it is or becomes part of the public domain without the fault or action of either party; (b) a party can show through tangible records that it already knew the information before it was disclosed; or (c) a party obtained such information through legitimate, competitive means or from a third party without breach of an obligation of confidentiality that is known to the receiving party. The Parties understand and agree that all Confidential Information provided to the other is being provided for the sole purpose of facilitating this Agreement, that no Confidential Information would be provided otherwise, and that such Confidential Information may be used for no other purpose.
1
3.3 CONSULTANT understands that Marcus & Millichap is a publicly held company, which is subject to securities laws, and CONSULTANT and its representatives, agents, employees, directors, and officers cannot trade in Marcus & Millichap, Inc. stock on the basis of material non-public information.
4. |
MISCELLANEOUS |
4.1. Assignment. Neither party may assign this Agreement, or any interest, right or obligation under it, either voluntarily or by operation of law, without the written consent of the other party.
4.2. Independent Contractor. Nothing contained in this Agreement or in the relationship of CONSULTANT and Marcus & Millichap shall be deemed to constitute an employee/employer relationship, partnership, joint venture, or any other relationship between CONSULTANT and Marcus & Millichap except for the independent contractor relationship described in this Agreement. CONSULTANTS authority is limited solely to performing the Services set forth herein in accordance with the terms of this Agreement. CONSULTANT does not have any authority to execute any agreements for or on behalf of Marcus & Millichap and is not granted any authority to assume or create any obligation or liability or to make any representation, covenant, agreement or warranty, express or implied, on Marcus & Millichaps behalf or to bind Marcus & Millichap in any manner.
4.3 Authority. Each party represents that it has the authority to enter and sign this Agreement. The individuals signing this Agreement represent that they are authorized signatories.
4.4 Survival. This Agreement is binding upon the parties hereto and their respective successors and assigns. The term CONSULTANT and Marcus & Millichap includes affiliates, successors, and assigns.
4.5 Law and Interpretation. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to its conflicts of laws principles, with venue in Los Angeles Superior Court. This Agreement shall not be construed negatively against a party based on that partys drafting of the Agreement.
4.6 Severability. If any provision of this Agreement is held invalid, illegal or unenforceable for any reason, the provision shall be modified by the court to render it enforceable, and the remainder of the provisions will continue in full force and effect as if this Agreement had been executed with the invalid provision eliminated.
4.7 Entire Agreement. Nothing herein shall modify any rights or obligations of the parties hereto under any outstanding equity agreements, or any provisions governing Consultants post-employment obligations under the Employment Agreement dated March 31, 2016. This Agreement constitutes the entire agreement between CONSULTANT and Marcus & Millichap regarding the subject matter herein and supersedes all prior discussions. No modification of this Agreement will be effective unless made in writing and signed by both CONSULTANT and Marcus & Millichap.
CONSULTANT | Marcus & Millichap | |||||||
By: |
By: | |||||||
Name: |
Mitch LaBar | Name: | Hessam Nadji | |||||
Title: |
President |
|
Title: | President |
2
EXHIBIT A
SERVICES AND COMPENSATION
The following describes the scope of Services under the Agreement and related compensation. CONSULTANT shall provide the Services on the dates reasonably requested by Marcus & Millichap in writing.
DESCRIPTION OF SERVICE |
COMPENSATION |
|
CONSULTANT shall provide Marcus & Millichap with the following Services:
Executive, operational, and project management consulting and advisement. Such services are to be performed by Mitchell R. LaBar as directed by Marcus & Millichaps Chief Executive Officer. CONSULTANT and Marcus & Millichap expect such Services to require approximately twenty-five (25) hours per month. |
Marcus & Millichap shall pay CONSULTANT a Fee as follows, which shall be the entire payment for the Services.
Fee: $10,000 per month. CONSULTANT shall provide Marcus & Millichap with a W-9 for such payments. |
Acknowledged and Agreed | ||||||||
Initials: |
Initials: | |||||||
CONSULTANT |
Marcus & Millichap |
|||||||
Date: |
1/21/2020 | 11:00:14 PST |
Date: |
1/23/20 |
3
Exhibit 31.1
Certification of Chief Executive Officer of Marcus & Millichap, Inc. pursuant to
Rule 13a-14(a) under the Exchange Act,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Hessam Nadji, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 11, 2020 |
/s/ Hessam Nadji |
|||||
Hessam Nadji President and Chief Executive Officer |
Exhibit 31.2
Certification of Chief Financial Officer of Marcus & Millichap, Inc. pursuant to
Rule 13a-14(a) under the Exchange Act,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Martin E. Louie, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Marcus & Millichap, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 11, 2020 |
/s/ Martin E. Louie |
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Martin E. Louie Chief Financial Officer |
Exhibit 32.1
Certifications of Chief Executive Officer and Chief Financial Officer of Marcus & Millichap, Inc. Pursuant to
Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Marcus & Millichap, Inc. on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Hessam Nadji, President and Chief Executive Officer of the Company, and Martin E. Louie, Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | May 11, 2020 |
/s/ Hessam Nadji |
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Hessam Nadji President and Chief Executive Officer (Principal Executive Officer) |
Date: | May 11, 2020 |
/s/ Martin E. Louie |
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Martin E. Louie Chief Financial Officer (Principal Financial Officer) |