Marcus & Millichap, Inc.

As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Jacques Cornet. Thank you, you may begin.

Thank you, operator. Good morning, and welcome to Marcus and Millichap's second quarter 2025 earnings conference call. With us today are President and Chief Executive Officer Hisam Najee and Chief Financial Officer Steve DiGenerro. Before I turn the call over to management, please remember that our prepared remarks and the responses to questions may contain forward-looking statements. Words such as may, will, expect, believe, estimate, anticipate, goal, and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results can differ materially from those implied by such forward-looking statements due to a variety of factors, including but not limited to general economic conditions and commercial real estate market conditions. The company's ability to retain and attract transactional professionals, company's ability to retain its business philosophy and partnership culture amid competitive pressures, company's ability to integrate new agents and sustain its growth, and other factors discussed in the company's public filings, including its annual report on Form 10-K filed with the Securities and Exchange Commission on February 27th, 2025. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can make no assurance that its expectations will be attained. Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release, which was issued this morning and is available on the company's website, represents a reconciliation to the appropriate GAAP measures and explains why the company believes such GAAP measures are useful to investors. This conference call is being webcast. The webcast link is available on the Investor Relations section of the company's website at .marcusmillichap.com, along with the slide presentation you may reference during the prepared remarks. With that, it is my pleasure to turn the call over to CEO, Hossam Najee.

Thank you, Jacques. Good morning and welcome to our second quarter 2025 earnings call. Our business continued to show improvement during the quarter, despite ongoing headwinds from the prolonged market disruption and a degree of added volatility from the initial tariff announcements. At the same time, we're encouraged by the upward trajectory of internal metrics and several positive market factors, which I will highlight shortly. Total revenue for the second quarter was $172 million, representing approximately 9% growth year over year, with some notable shifts in revenue mix. Brokerage revenue grew 4%, while our financing revenue posted an impressive 44% gain over the second quarter of 2024. Growth in our financing revenue was driven by three key factors, including contributions from recent additions to our IPA CalPERS Markets team and their ability to execute larger transactions. Healthy gains among the majority of our originators, thanks to a gradually improving lending environment and progress toward integrating financing and investment sales. The integration of services has particularly been strong among our IPA multifamily sales and CalPERS Markets teams, resulting in sizable gains in our agency debt origination over the last two years. The company's private client brokerage business reflected revenue and transaction growth of .3% and 12%, respectively, after lagging larger transactions for the past several quarters. The increased momentum in the second quarter is attributed in part to our expanded client outreach and price discovery as more sellers align with more realistic asset values. We're seeing improvement in loan terms and more lenders quoting on our private client financing assignments as well. Private client apartments showed solid gains, while net lease retail showed the largest year over year increase as prices and cap rates are finally resetting at a faster pace. By contrast, our revenue from larger transactions valued at $20 million and above declined by nearly 12% for the quarter. This was driven by some clients temporarily going pencils down in the aftermath of the initial tariff announcements in April, resulting in fewer sales as well as a tough comparison given MMI's outsized growth in the segment over the past year. The company's $20 million plus brokerage revenue grew an average of 38% year over year over the past four quarters as our team capitalized on institutional capital returning to the market. As a proxy, this compares to a .5% average growth rate for the same period for 20 million plus sales volume in the overall market as reported by RCA. We continue to pursue long-term growth in our private client business as well as larger transactions predominantly executed through our IPA division, which has a healthy pipeline and listening inventory moving forward. MMI has a unique position of leading the private client market, which remains highly fragmented while making progress on leveraging significant runway for future expansion of our IPA division at the same time. Adjusted EBITDA for the quarter was a million and a half dollars as we continue to balance cost controls with strategic investments critical to long-term growth. Expenses were impacted by one-time factors and the timing of certain items in the second quarter, which we'll level off in future quarters as Steve will cover in his presentation. Notwithstanding the near-term pressure on profitability, we believe investments in talent, technology, key industry and client events, client outreach programs, research and market intelligence are essential to our competitiveness. We're also modernizing production support through the adoption of AI and centralized resources to lower costs over time while improving speed and output. It's important to note that our current cost structure includes the expensing of investments made over the past several years, particularly in the retention and acquisition of experienced producers. Revenue production for many of these professionals remains below potential due to market conditions. Given the caliber of the professionals we have retained and acquired, we expect the return to production capacity and historical track record to be positive forces in the recovery with expense leveraging. Looking forward, we're encouraged by improvements in our marketing timelines and record volume of exclusive inventory accumulated through internal and client-facing marketing campaigns. These indicators are especially constructive as our main obstacle to faster recovery over the past 18 months has been the drag on our sales forces' productivity. Pricing uncertainty, extended closing timelines and an elevated ratio of transaction delays and cancellations have limited new business development bandwidth. Other positive indicators include traction in our auction business, which is creating a new revenue stream and also showing success as an alternative marketing channel for our sales force. Marcus and Milchap's auction division sold 273 transactions over the past 12 months, which accounts for 27% of all commercially auction assets in the US. We're aggressively growing this complementary business by adding experienced auction specialists in key regions and further educating our sales force on leveraging this platform for their clients. Although the market is still characterized by wide, badass spread and frequent sentiment swings, the passage of time and realism are fostering incremental improvement in the transaction market. We believe the worst of the tariff-driven volatilities behind us as investor sentiment and capital markets have stabilized and the broader economy continues to show resilience. The recently passed tax package is expected to be a tailwind for commercial real estate, given its favorable market conditions and favorable provisions for our sector. The preservation of the 1031 tax deferred exchange were in statement of 100% bonus depreciation and expanded support for opportunity zone investments are viewed as key advantages by investors. The recent slowdown in the labor market and retail sales has increased the odds of rate cuts this year. Uncertainty regarding the impact of higher tariffs on consumers and corporate profits has increased in recent weeks and could lead to a more significant slowdown in the coming months. However, demand for commercial real estate appears to be solid for most property types, given the overall strength of the economy, while the recent pullback in construction bodes well for generally healthy property fundamentals. The rising tide of return to office is another catalyst for improvement in the hardest hit asset class, while record low home affordability fostered record apartment absorption in the second quarter. Demand for industrial and retail is somewhat impacted by the tariff factor and hotels are seeing some weakness from the fall off in tourism. Retail is benefiting from very little new supply over the past decade, which is helping to shore up occupancies to the best levels in at least 15 years. Industrial construction starts are rapidly falling, which should bring relief to a number of overbuilt metros. Looking ahead, we believe these dynamics will be favorable across all our business segments. Our strategy is on wavering, driven by investment and talent, technology, further expansion of capital markets capabilities, growing the MMI brand and positioning the company to outperform throughout the recovery. As I reported last quarter, we initiated a broad-based management reorganization on May 1st to streamline decision-making and execute strategies more consistently across the firm. Some positions were consolidated and others reassigned, while our most effective brokerage executives were promoted with expanded responsibilities. Importantly, our team is energized with heightened accountability and focus on the most critical initiatives for the company. These priorities include raising agent production, growing the sales force with experienced and new professionals, and improving the adoption of tools and technology we've rolled out in recent years. One of the key areas with additional resource allocation is our recruiting team and tools. As we have discussed on previous calls, the elevated dropout rate of trainees as a result of the pandemic, unusually competitive labor market conditions, and the market dislocation of the past three years resulted in declines in our sales force. In recent quarters, we've also proactively terminated individuals unlikely to succeed in a tougher market environment, which we believe is critical in fostering a high standard of performance. At the same time, several initiatives are working that are designed to generate higher quality, albeit fewer new agent candidates, which we believe will result in productivity gains in the years ahead. In the meantime, our success in attracting market leaders to join the MMI platform has been a bright spot and is being leveraged to gain additional traction in recruiting the next wave of experienced talent with little over-op to our existing producers. We remain confident in the long-term potential for MMI's unique platform and the opportunities that lie ahead, including scaling our core business and expanding into adjacent businesses that add value to our clients and sales force. We continue to evaluate a number of acquisition opportunities in both areas, undeterred by the bid-ask spread we've experienced on the M&A front over the past two years. Our capital position and strategy, which balances returning capital to shareholders while maintaining significant buying power, remain key advantages that we're committed to building on for our shareholders, clients, and the MMIT. With that, I will turn the call over to Steve for more details on our results.