Real estate brokerage and services firm Marcus & Millichap (NYSE:MMI) reported Q4 CY2024 results beating Wall Street’s revenue expectations, with sales up 44.4% year on year to $240.1 million. Its GAAP profit of $0.22 per share was significantly above analysts’ consensus estimates.
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Marcus & Millichap (MMI) Q4 CY2024 Highlights:
- Revenue: $240.1 million vs analyst estimates of $199.8 million (44.4% year-on-year growth, 20.2% beat)
- EPS (GAAP): $0.22 vs analyst estimates of -$0.02 (significant beat)
- Adjusted EBITDA: $18.03 million vs analyst estimates of -$1.1 million (7.5% margin, significant beat)
- Operating Margin: 2.8%, up from -10.2% in the same quarter last year
- Market Capitalization: $1.42 billion
Company Overview
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Real Estate Services
Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Marcus & Millichap’s demand was weak over the last five years as its sales fell at a 2.9% annual rate. This fell short of our benchmarks and is a sign of poor business quality.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Marcus & Millichap’s recent history shows its demand has stayed suppressed as its revenue has declined by 26.9% annually over the last two years. 
This quarter, Marcus & Millichap reported magnificent year-on-year revenue growth of 44.4%, and its $240.1 million of revenue beat Wall Street’s estimates by 20.2%.
Looking ahead, sell-side analysts expect revenue to grow 18.5% over the next 12 months, an improvement versus the last two years. This projection is commendable and suggests its newer products and services will spur better top-line performance.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
Over the last two years, Marcus & Millichap’s demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 11.2%, meaning it lit $11.17 of cash on fire for every $100 in revenue.
Key Takeaways from Marcus & Millichap’s Q4 Results
We were impressed by how significantly Marcus & Millichap blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid quarter. The stock traded up 4.6% to $39 immediately following the results.
Indeed, Marcus & Millichap had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
