Marcus & Millichap, Inc.: Form 10-Q for the period ended Mar 31, 2026

Unless the context requires otherwise, the words “Marcus & Millichap,” “MMI,” “we,” the “Company,” “us” and “our” refer to Marcus & Millichap, Inc., and its consolidated subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, including our expectations regarding the long-term outlook of the commercial real estate transaction market, and our positioning within it, our belief relating to the Company’s long-term growth, our assessment of the key factors influencing the Company’s business outlook, including the expectation for future interest rate cuts or rising inflation and likely impact of such cuts or inflation on commercial real estate demand, and the execution of our capital return program, including a semi-annual dividend and stock repurchase program. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

• general uncertainty in the capital markets, a worsening of economic conditions, and the rate and pace of economic recovery following an economic downturn;
• changes in our business operations;
• market trends in the commercial real estate market or the general economy, including the impact of inflation and changes to interest rates;
• our ability to attract and retain qualified senior executives, managers, and investment sales and financing professionals;
• the impact of forgivable loans and related expense resulting from the recruitment and retention of agents;
• the impact of litigation and our success in appealing any judgments entered against us;
• the effects of increased competition on our business;
• our ability to successfully enter new markets or increase our market share;
• our ability to successfully expand our services and businesses and to manage any such expansions;
• our ability to retain existing clients and develop new clients;
• our ability to keep pace with changes in technology;
• any business interruption or technology failure, including cybersecurity risks and ransomware attacks, and any related impact on our brand reputation or clients;
• changes in interest rates, availability of capital, tax laws, tariffs and trade regulations, executive orders, employment laws, or other government regulation affecting our business;
• our ability to successfully identify, negotiate, execute, and integrate accretive acquisitions; and
• 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.

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.

Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

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.

Overview

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.

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.

We divide commercial real estate into four major markets, characterized by price:

• Properties priced less than $1 million;
• Private client market: properties priced from $1 million to up to but less than $10 million;
• Middle market: properties priced from $10 million to up to but less than $20 million; and
• Larger transaction market: properties priced from $20 million and above.

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:

(in millions)

(in thousands)

(in millions)

(in thousands)

(in millions)

(in thousands)

Factors Affecting Our Business

Our business and our operating results, financial condition and liquidity are significantly affected by the number and size of commercial real estate investment sales and financing transactions that we close in any period. The number and size of these transactions are affected by our ability to recruit and retain investment sales and financing professionals, identify and contract properties for sale, and identify those that need financing and refinancing. We principally monitor the commercial real estate market through four factors, which generally drive our business. The factors are the economy, commercial real estate supply and demand, capital markets, and investor sentiment and investment activity.

The Economy

Our business is dependent on economic conditions within the markets in which we operate. Changes in the economy on a global, national, regional, or local basis can have a positive or negative impact on our business. Economic indicators and projections related to job growth, unemployment, interest rates, retail spending and consumer confidence trends can have a positive or negative impact on our business. Overall market conditions, including global trade, interest rate changes, inflation, job creation, and global events can affect investor sentiment and, ultimately, the demand for our services from investors in real estate.

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.

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.

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.

Commercial Real Estate Supply and Demand

Our business is dependent on the willingness of investors to invest in or sell commercial real estate, which is affected by many factors beyond our control. These factors include the supply of commercial real estate, coupled with user demand for these properties, and the performance of real estate assets, when compared with other investment alternatives, such as stocks and bonds.

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.

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.

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.

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.

Capital Markets

Credit and liquidity issues in the financial markets have a direct impact on the flow of capital to the commercial real estate market. Real estate purchases are often financed with debt, and as a result, credit and liquidity impact transaction activity and prices. Movements of interest rates in one direction, whether increasing or decreasing, could adversely or positively affect the operations and income potential of commercial real estate properties, as well as lender and equity underwriting for real estate investments. These changes directly influence investor demand for commercial real estate investments and what they are willing to pay. Furthermore, the use of debt or loan-to-value ratios can shift along with lender confidence and underwriting standards. At times of heightened uncertainty or liquidity issues, loan-to-values decline, requiring buyers to provide more equity and take more risk to close deals.

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.

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.

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.

Investor Sentiment and Investment Activity

We facilitate investors buying, selling, and financing properties in order to generate commissions. Investors’ desires and need to engage in real estate transactions are dependent on many factors that are beyond our control. The economy, supply and demand for properly positioned properties, available credit and market events impact investor sentiment and, therefore, transaction velocity. In addition, our private clients, who make up the largest source of revenue, are often motivated to buy, sell and/or refinance properties due to personal circumstances, such as death, divorce, partnership breakups and estate planning.

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.

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.

Key Financial Measures and Indicators

Revenue

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.

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.

A small percentage of our transactions include retainer fees and/or breakage fees. Retainer fees are credited against a success-based fee paid upon the closing of a transaction or a breakage fee. Transactions that are terminated before completion will sometimes generate breakage fees, which are usually calculated as a set amount or a percentage of the fee we would have received had the transaction closed.

Real Estate Brokerage Commissions

We earn real estate brokerage commissions by acting as a broker for commercial real estate owners seeking to sell or investors seeking to buy properties. Revenue from real estate brokerage commissions is recognized at the close of escrow.

Financing Fees

We earn financing fees by securing financing on purchase transactions or by securing refinancing of our clients’ existing mortgage debt. We recognize financing fee revenue at the time the loan closes, and we have no remaining significant obligations in connection with the transaction.

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.

Other Revenue

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.

Operating Expenses

Our operating expenses consist of cost of services, selling, general and administrative expenses and depreciation and amortization. The significant components of our expenses are further described below.

Cost of Services

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.

Selling, General and Administrative Expenses

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”).

Depreciation and Amortization Expense

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.

Other Income, Net

Other income, net primarily consists of interest income, realized gains and losses on our marketable debt securities, available-for-sale, net gains or losses on our deferred compensation plan assets, foreign currency gains and losses and other non-operating income and expenses.

Interest Expense

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).

Provision (benefit) for Income Taxes

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.

We record deferred taxes, net based on the tax rate expected to be in effect at the time those items are expected to be recognized for tax purposes.

Results of Operations

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.

Key Operating Metrics

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:

35

(1) Operating metrics exclude certain financing fees not directly associated to transactions.

Comparison of Three Months Ended March 31, 2026 and 2025

Below are key operating results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 (dollars in thousands):

(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.

Revenue

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.

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

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%.

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.

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.

Total Operating Expenses

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.

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.

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.

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.

Other Income, Net

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.

Interest Expense

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.

Provision (benefit) for Income Taxes

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.

Non-GAAP Financial Measure

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):

(1) Other includes net realized gains (losses) on marketable debt securities, available-for-sale.

Liquidity and Capital Resources

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.

Cash Flows

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):

Operating Activities

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.

Investing Activities

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.

Financing Activities

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.

Liquidity

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.

Credit Agreement

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

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.

Off Balance Sheet Arrangements

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.

Material Cash Requirements

There have been no material changes in our commitments under contractual obligations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 through the date the condensed consolidated financial statements were issued, other than for the payment on April 3, 2026 of a semi-annual regular dividend of $0.25 per share on outstanding common stock declared by our Board of Directors on February 10, 2026, aggregating $9.5 million.

Inflation

Our commissions and other variable costs related to revenue are primarily affected by real estate market supply and demand, which may be affected by uncertain or changing economic and market conditions, including inflation/deflation arising in connection with and in response to various macroeconomic factors and impact of increased interest rates on the broader economy.

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.

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.

Critical Accounting Estimates

We prepare our financial statements in accordance with U.S. GAAP. In applying many of these accounting principles, we make assumptions, estimates and/or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our condensed consolidated financial statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates and/or judgments, however, are often subjective and our actual results may change based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. There were no significant changes in our critical accounting policies, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 26, 2026.

We maintain a portfolio of investments in a variety of fixed and variable debt rate securities, including U.S. Treasuries, U.S. government sponsored entities, corporate debt, asset-backed securities and others. As of March 31, 2026, the fair value of investments in marketable debt securities, available-for-sale was $198.0 million. The primary objective of our investment activity is to maintain the safety of principal and to provide for future liquidity requirements while maximizing yields without significantly increasing risk. While some investments may be securities of companies in foreign countries, all investments are denominated and payable in U.S. Dollars. We do not enter into investments for trading or speculative purposes. While our intent is not to sell these investment securities prior to their stated maturities, we may choose to sell any of the securities for strategic reasons including, but not limited to, anticipated capital requirements, anticipation of credit deterioration, duration management, yield management and because a security no longer meets the criteria of our investment policy. We do not use derivatives or similar instruments to manage our interest rate risk. We seek to invest in high quality investments. The weighted average credit rating of our portfolio investments (exclusive of cash, cash equivalents, and restricted cash) was A+ as of March 31, 2026. Maturities are maintained consistent with our short-, medium- and long-term liquidity objectives.

Currently, our portfolio of investments predominantly consists of fixed interest rate debt securities; however, a portion of our investment portfolio may consist of variable interest rate debt securities. Our investments in fixed interest rate debt securities are subject to various market risks. Changes in prevailing interest rates may adversely or positively impact their fair market value should interest rates generally rise or fall. Accordingly, we also may have interest rate risk with variable interest rate debt securities as the income produced may decrease if interest rates fall. Contraction in market liquidity may adversely affect the value of portions of our portfolio and affect our ability to sell securities in the time frames required and at acceptable prices. Uncertainty in future market conditions may raise market participants’ expectations of returns, thus impacting the value of securities in our portfolio as well. The following table sets forth the impact on the fair value of our investments as of March 31, 2026 from changes in interest rates based on the weighted average duration of the debt securities in our portfolio (in thousands):

Due to the nature of our business and the manner in which we conduct our operations, we believe we do not face any material interest rate risk with respect to other assets and liabilities, equity price risk or other market risks. The functional currency of our Canadian operations is the Canadian dollar. We are exposed to foreign currency exchange rate risk for the settlement of transactions of the Canadian operations as well as unrealized translation adjustments. Historically foreign exchange rate risk has not been material.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f), including maintenance of (i) records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, and (ii) policies and procedures that provide reasonable assurance that (a) transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, (b) our receipts and expenditures are being made only in accordance with authorizations of management and our Board of Directors, and (c) we will prevent or timely detect unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Our management, with the supervision and participation of our chief executive officer (“CEO”) and chief financial officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)

and 15d- 15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, based on the criteria established under the Internal Control Integrated Framework (the “2013 framework”) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on such evaluation, our management has concluded that as of March 31, 2026, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as set forth below, there have been no material changes from the risk factors described in our Annual Report on form 10-K for the year ended December 31, 2025.

We have been subject to cybersecurity incidents in the past and may be the target of future attacks. The failure to maintain the security of our information and technology networks, including personally identifiable and client information, could adversely affect us.

Security breaches and other disruptions could compromise our and our clients' information and expose us to liability, which could cause our business and reputation to suffer. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and intellectual property and that of our clients and personally identifiable information of our employees and contractors, in third-party data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Our information technology and infrastructure have been subject to, and may in the future be vulnerable to various cyber-attacks, such as hacking, spoofing and phishing attacks and ransomware attacks, exploitation of system or application vulnerabilities or our systems may be breached due to employee error, malfeasance or other disruptions. We may also not have sufficient logs available to fully investigate the scope of a cyber-attack.

In April 2026, the Company experienced a cybersecurity incident in which a threat actor used social engineering techniques to obtain an employee's login credentials and gain unauthorized access to certain Company systems, resulting in the exfiltration of certain customer, employee, and internal business data. The Company promptly detected the incident, contained the unauthorized access, and engaged outside cybersecurity and legal counsel to assist with its response. The Company's systems and business operations were not disrupted, and the Company does not believe the incident has had a material impact on its business, financial condition or results of operations. The Company's investigation remains ongoing, and there can be no assurance that this or future cybersecurity incidents will not adversely affect our reputation, brand, business, financial condition, and results of operations, or result in future costs, litigation, or regulatory proceedings.