MMI 10-K & 10-Q changes, risk factors and insider trading

Over the past several years, macroeconomic factors have caused significant volatility to the U.S. economy. The impact of these factors has led to uncertainty in the financial markets, inflation, increasedand elevated interest rates, which has adversely impacted the commercial real estate industry. The commercial real estate industry, in particular, has seen significant slowing, and we experienced a significant decline in revenues in 2024 and 2023 compared to 2022, resulting in operating losses. Although revenue increased in 2025, it remains below 2022 levels, and we continue to experience operating losses. We may continue to be negatively impacted by periods of economic downturns, recessions and disruptions in the capital markets; credit and liquidity issues in the capital markets, including international, national, regional and local markets; inflationary pressures; tax and regulatory changes and corresponding declines in the demand for commercial real estate investment and related services. Historically, commercial real estate markets and, in particular, the U.S. commercial real estate market, have tended to be cyclical and related to the flow of capital to the sector, the condition of the economy as a whole, and to the perceptions and confidence of market participants to the economic outlook. Cycles in the real estate markets may lead to similar cycles in our earnings and significant volatility in our stock price. Further real estate markets may “lag” behind the broader economy such that even when underlying economic fundamentals improve in a given market, additional time may be required for these improvements to translate into strength in the real estate markets. The “lag” may be exacerbated when banks delay their resolution of commercial real estate assets whose values are less than their associated loans.

Negative economic conditions, changes in interest rates, credit and the availability of capital, both debt and/or equity, disruptions in capital markets, uncertainty of the tax and regulatory environment and/or declines in the demand for commercial real estate investment and related services in international and domestic markets or in significant markets in which we do business, had a significant impact to our financial results in 2025, 2024 and 2023 and could have in the future a material adverse effect on our business, results of operations and/or financial condition. In particular, the commercial real estate market is directly impacted by (i) the availability of debt and/or equity financing for commercial real estate transactions, (ii) increased interest rates and changes in monetary policies by the U.S. Federal Reserve, (iii) changes in the perception that commercial real estate is an accepted asset class for portfolio diversification, (iv) changes in tax policy affecting the attractiveness of real estate as an investment choice, (v) changes in regulatory policy impacting real estate development opportunities and capital markets, (vi) slowdowns in economic activity that could cause residential and commercial tenant demand to decline, (vii) declines in the regional or local demand for commercial real estate, or (viii) significant disruptions in other areas of the real estate markets could adversely affect our results of operations. Any of the foregoing could adversely affect the operation and income of commercial real estate properties. Additionally, we are subject to inflationary pressures on employee and contractor wages and salaries, which materially impact our financial results.

Our business has been and may continue to be materially affected by the trend of hybrid work and hoteling arrangements resulting in lower office real estate occupancy rates. TheIf adoptioncompanies ofcontinue to adopt hybrid work arrangements,models, wherethe employeesdemand splitfor theirtraditional timeoffice betweenspaces workingmay remotelydecrease resulting in lower transaction volumes and workingproperty values for property sales, acquisitions, and financing. This may lead to a decline in revenues generated from thesuch office,property has gained significant momentum due to advancements in technology and changing employee preferences.transactions.

The trend of hybrid work and lower office real estate occupancy rates may continue to have material impacts on our business. We must adapt our strategies, offerings and portfolio management approaches to stay ahead of market trends, identify emerging opportunities, and mitigate risks associated with the changing dynamics of the office real estate landscape.

Interest rates remained at historically low levels through much of 2020 and 2021, with the U.S. Federal Reserve maintaining the federal funds target range at 0.0% to 0.25%. During 2022, the Federal Reserve raised interest rates by an aggregate of 425 basis points.points, These increaseswhich resulted in a slowdown in activity during the second half of 2022. During 2023, the Federal Reserve raised rates by an additional 100 basis points, which further contributed to the market slowdown. In 2024, the Federal Reserve reduced rates three times, reducing the federal funds target by a cumulative 100 basis points to a range of 4.25%-4.5%. In 2025, the Federal Reserve reduced rates another three times, reducing the federal funds target by a cumulative 75 basis points to a range of 3.5%-3.75%. The current market consensus is that the Federal Reserve will further decrease the federal funds rate interest rates during 2025.2026. If interest rates continuebegin atto current rates or increase further,increase, the resulting reduction in commercial real estate transactions and subsequent price reduction of commercial real estate may result in us continuing to closeclosing fewer brokerage, financing and other transactions, which would result in further decreased revenue and adversely impact our business.

Restrictions on the availability of capital, both debt and/or equity, can create significant reductions in the liquidity and flow of capital to the commercial real estate markets. Severe restrictions in debt or equity liquidity as well as the lack of the availability of credit in the markets we service can significantly reduce the volume and pace of commercial real estate transactions. These restrictions can also have a general negative effect upon commercial real estate prices themselves. Our business is particularly sensitive to the volume of activity and pricing in the commercial real estate market. Beginning in the second half of 2022 and continuing throughout 2023 and 2024, this had, and may have in the future, a significant adverse effect on our business. Although activity levels increased in 2025, the investment market remains fluid as it adapts to the broader economic and financial market climate.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The annual inflation rate in the U.S. increased to 9.1% in June 2022, the highest annual inflation rate since November 1981, but decreased to 3.4% in December 2023 and further declined to 2.9% as of December 2024. In 2025, the U.S. imposed numerous tariffs, potentially risking a new inflationary cycle. At year end 2025, the inflation rate was 2.7%. Inflation has increased the wages paid to our employees and commissions paid to independent contractors. Furthermore, our clients are also affected by inflation and increased interest rates. A significant and continued increase in interest rates and inflation would be expected to have a further negative impact on client demand for commercial real estate and demand for our services, which would, in turn, affect our profitability.

Our revenue and profits have historically tended to be significantly higher in the second half of each year than in the first half of the year. This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year end and because certain of our expenses are relatively constant throughout the year. This historical trend can be disrupted both positively and negatively by major economic, regulatory or political events impacting investor sentiment for a particular property type or location, current and future projections of interest rates and tax rates, attractiveness of other asset classes, market liquidity and the extent of limitations or availability of capital allocations for larger institutional buyers, to name a few. During 2024 and 2023, seasonal fluctuations were disrupted by continued volatility in overall market conditions and interest rates. In 2025, federal policies regarding tariffs, trade and immigration, among others, weighed on investor decision making and disrupted the normal seasonal fluctuations. As a result, our historical pattern of seasonality may or may not continue to the same degree experienced in the prior years and may make it difficult to determine, during the course of the year, whether planned results will be achieved, and thus to adjust to changes in expectations.

As the size and scope of commercial real estate transactions have increased significantly during the past several years, both the difficulty of ensuring compliance with numerous licensing regimes and the possible loss resulting from non-compliance have increased. New or revised legislation or regulations applicable to our business, both within and outside of the U.S., as well as changes in administrations or enforcement priorities may have an adverse effect on our business. Such new or revised legislation or regulations applicable to our business may impact transaction volumes and values, increase the costs of compliance or prevent us from providing certain types of services in certain jurisdictions or in connection with certain transactions or clients. For example, legislation which limits or prohibits dual agency could have an adverse impact on our revenue. We are unable to predict how any of these new laws, rules, regulations and proposals will be implemented or in what form, or whether any additional or similar changes to laws or regulations, including the interpretation or implementation thereof, will occur in the future. Risks of legislative changes, including as a result of interpretive guidance or other directives from the current administration, and new laws, regulations and interpretations may also come into effect. The impact of any new or revised legislation or regulations under the current administration is unknown. Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our business, financial condition and results of operations.

Our most important asset is people, and our continued success isdepends highly dependent upon the efforts ofon our managers and investment sales and financing professionals. If these managers or investment sales and financing professionalspeople depart, we will lose the substantial time and resources we have invested in training and developing those individualsthem, and our business, financial condition and results of operations may suffer. Additionally, such departures may have a disproportionate adverse effect on our operations if our most experienced investment sales and financing professionals do not remain with us or if departures occur in geographic areas where substantial amounts of our real estate brokerage commissions and financing fee revenue are generated. Departures of senior people or those in key revenue-generating markets could have a disproportionate adverse effect.

Our competitorsCompetitors frequently attempt to recruit our investment sales and financing professionalsprofessionals. or change commission structures in the marketplace. For a variety of reasons, the exclusiveOur independent contractor and employment arrangements we have entered into or may enter into with these professionals may not prevent these professionalspeople from departing and competing against us. AsBecause the majoritymost of our investment sales and financing professionals are independent contractors and we currently do not have employment agreements with most key employees, there is no assurance that we will be able to retain their services. Similarly, most key employees inincluding sales leadership roles, which includes our experienced managers, currentlyleadership, do not have employment agreements, and there is no assurance that we willmay be ableunable to retain theirthese services.people.

An important component of maintaining and growing our business includes theis recruiting, training and retention ofretaining new and experienced investment sales and financing professionals. Any futureFuture growth willdepends be dependent uponon the continued availability of qualified candidates fittingwho thefit our culture of our firm thatand can be recruited and retained on favorable economic terms and conditions.terms. However, our competitors compete vigorously with us to recruit and retain investment sales and financing professionals and may offer lucrative compensation packages and commission splits that we may not be able to match on terms that arecannot economically favorable to us.match.

The recruitment and retention of key experienced professionals may require substantialsignificant investments, such as lucrativeincluding compensation packages, support agreements,agreements and commission splits. Additionally,We inmay order to recruit and retain investment sales and financing professionals, we may, and often have had to,also advance funds in the form of forgivable loansloans, which would be expensed over thetheir contractual termterms. of the loan agreement. All of theseThese investments involvecarry the risk thatof suchunderperformance professionalsand willmisjudgment notof performvalue, resulting in accordance with performance expectations under such arrangements and that the business judgments concerning the value, strengths and weaknesses of such professionals will prove incorrect, and therefore may not have been worth the substantial investment.losses.

During a downturn in the commercial real estate industry, the number of experienced professionals may beleave due to reduced temporarilytransaction because they have a harder time transacting in a difficult marketactivity and may need to seek income fromopportunities. other sources. In addition, it is more difficult to recruitRecruiting and retainretaining less experienced professionals becausealso becomes more difficult as the industry is less attractive during downturns from an income opportunity perspective.downturns.

Our success depends in a large part upon the continued service ofon our senior management team, who are important to our vision, strategic direction and culture. Our current long-term business strategy was developed in large part by our senior-level managementthis team and depends in part on their skills and knowledge to implement. Our focus on new growthGrowth and investment initiatives may require additional management expertise to successfully execute our strategy.expertise. We may not be able to offset the impact on our business of thelosing loss of the services of our senior-levelsenior management team or other key officers or employees or be able to recruit additional or replacement talent,replacements, which could negatively impactaffect our business, financial condition and results of operations.

Our most successful investment sales and financing professionals are responsible forgenerate a significant percentageportion of our revenue. They also serve as mentors and role models, and provide invaluable training for younger professionals, which is an integral part ofsupporting our culture. ThisLosing concentration among our top investment sales and financing professionals of real estate brokerage commissions and financing fees revenue can lead to greater and more concentrated risk of loss if we are unable to retain them, andthem could havematerially a material adverse impact onharm our business and financial condition. Furthermore, many of our investment sales and financingMany professionals work in teams.teams; Ifif a team leader or manager leaves our Company, his or herleaves, team members may leave with the team leader or manager.them. Additionally, induring economic downturnsdownturns, sales are often further concentrated among our top investment sales and financing professionals who have negotiatedwith high commission splitssplits, that further reduce ourreducing profits and couldincreasing haverisk a material adverse impact onto our business and financial condition.

Our investment sales professionals are retained as independent contractors, and we are subject to the Internal Revenue Service regulationsIRS and applicable state law guidelines regarding independent contractor classification.regulations. These regulations andmay guidelinesbe are subjectinterpreted to judicial and agency interpretation, and it could be determined that the independent contractor classification is inapplicable toreclassify some or all of our investment sales professionals. Further, if legal standards for classification of these investment sales professionals as independentemployees. contractors change or appear to be changing, it may be necessary to modify our compensation or commission structure for these investment sales professionalsChanges in someclassification orcould allrequire of our markets, including paying additionalmodifying compensation or reimbursing expenses. If we are forced to classify these investment sales professionals as employees, we would also becomebe subject to employment laws regarding employee classification and compensation, and to claims regarding overtime, minimum wage, and meal and rest periods. We could also incur substantial costs, penalties and damages due to futurefrom challenges by current or former investment sales professionals to our classification or compensation practices. Any of these outcomes could resultmaterially in substantial costs to us, could significantly impairharm our financial conditioncondition, operations, reputation, and our ability to conduct our business as we choose, and could damage our reputation and impair our ability to attract clients and investment sales professionals.

If our employees or investment sales and financing professionals engage in misconduct, our businesswe could besuffer adverselyserious affected.consequences. It is not always possible to deter misconduct, and the precautions we take to deter and prevent this activityMisconduct may notoccur bedespite effectiveour inpreventive all cases.measures. If our employees or investment sales and financing professionals were tothey engage in unethical business practices, improperlymisuse use, disseminate,or fail to disseminate or disclose informationclient provided by our clients,information, we could be subject toface regulatory sanctions, sufferreputational seriousharm, harmfinancial losses, and damage to our reputation, financial position and current client relationshipsrelationships, and significantly impairreducing our ability to attract futurenew clients. These events could adverselymaterially harm our business and financial condition. Losses exceeding insurance coverage could further materially affect our business, financial condition and results of operations. To the extent any fraud or theft of funds or misconduct result in losses that exceeds our insurance coverage, our business could be materially adversely affected.business.

We intend to continue to expand our specialty groups, particularly multi-tenant retail, office, industrial and hospitality, as well as various niche markets, including multifamily tax credit, affordable housing, student housing, manufactured housing, seniors housing and self-storage. We also plan to further grow our financing services provided through our subsidiary, Marcus & Millichap Capital Corporation.MMCC. We expect to incur expenses relating to acquisitions, recruitment, training, and expanding our markets and services. The planned expansion of services and platforms requires significant resources, and there can be no assurance we will be able to continue to expand or compete effectively, attract or train a sufficient number of professionals to support the expansion, or operate these businesses profitably. We may incur significant expenses for these plans without corresponding returns, which would harm our business, financial condition and results of operations.

In addition, the acquisitions of businesses involve risks that the businesses acquired will not perform in accordance with expectations, that the expected synergies associated with acquisitions will not be achieved, that we will experience attrition from professionals licensed or associated with the acquired companies and that business judgments concerning the value, strengths and weaknesses of the businesses acquired will prove incorrect, which could have an adverse effect on our business, financial condition and results of operations. Furthermore, if we are unable to find suitable acquisition candidates, if we are unable to attract the interest of such candidates, or if we are unable to successfully negotiate and complete such acquisitions, that could limit our ability to grow.

We historically have earned a majority of our revenue from real estate brokerage transactions and financing fees. We expect that we will continue to rely heavily on revenue from these sources for substantially all our revenue for the foreseeable future. A continuedcontinuous decline in the number of transactions completed or in the value of the commercial real estate we sell could significantly decrease our revenue further,revenue, which would adversely affect our business, financial condition and results of operations.

We are substantially dependent on long-term client relationships and on revenue received for services provided for them. Our listing agreements generally expire within six months and depend on the cooperation of the client during the pendency of the agreement, as is typical in the industry. In this competitive market, if we are unable to maintain these relationships or are otherwise unable to retain existing clients and develop new clients, our business, results of operations and/or financial condition may be materially adversely affected. Historically, a global economic downturn and weaknesses in the markets in which our clients and potential clients compete have led to a lower volume of transactions and fewer real estate clients generally, whichhindering makesour it more difficultability to maintain existing and establish new client relationships. These effects have in the past and could increase again in the wake of the continuing political and economic uncertainties in the U.S. and in other countries.

Failure to appropriately deal withaddress actual or perceived conflicts of interest could adversely affect our businesses.

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 ourthird-party data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Our security measures vary in maturity across our business. 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 logginglogs available to fully investigate the scope of a cyber-attack.

George M. Marcus, our Chair and founder beneficially owns approximately 15.0 million shares, or approximately 39% of our outstanding common stock as of December 31, 2024.2025. Because of Mr. Marcus’ substantial ownership of our outstanding common stock, he may be able to significantly influence the outcome of corporate actions requiring stockholder approval, including the election and removal of directors, so long as he controls a significant portion of our common stock. Mr. Marcus’ shares may also be sold in a public or private sale which could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through the future sales of equity securities.

Several metrics traditionally associated with rising transaction activity, including increased exclusive inventory being brought to market and a rising numberrequests for Broker Opinions of propertyValue, tourssuggest that transactional momentum could be sustained in severalthe marketscoming and property types, suggest investor activity may rise in 2025.quarters. Nonetheless, athe variety of factorspotential headwinds facing the sector, including the economy, interest rates, financial market trends, geopolitical and commercial real estate pricing clarityclarity, could suppress activityactivity. in 2025. ShouldIn the Federalcurrent Reserveuncertain continueclimate, todefensive reduce rates, it would support positive momentum, but a full market recovery will take additional time. Lenders are becoming more assertive with borrowers, and though loan extensions and modification remain common, incidents of forced refinancing and distressed sales are becoming more frequent. Office properties, particularly those in the urban core, continue to face the greatest uncertainty and the greatest challenges in acquiring debt financing. Apartment financing, underpinned by Fannie Mae and Freddie Mac, has generally been the most attainable, with typically lower interest rates than other property types. Defensive assets,assets such as single-tenant net lease properties backed by high-credit tenants,tenants and medical office assets continue to receive buyer interest,interest. butApartment salesproperties, supported by positive long-term drivers, including robust demographics of thesethe typesrenter-aged population and the high cost of propertieshomeownership, haveis also fallena asfavored property segment. Another important factor influencing the flowinvestor outlook is the renewal of 1031many exchangeof capitalthe coming2017 fromTax otherCuts propertyand typesJobs hasAct diminished.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, the market velocity will be dictated by a combination of the economic outlook, financial market trends, geopolitical forces, Federal Reserve action, interest rates and the narrowing of the buyer/seller expectation gap. If interesttrade ratespolicy trendstabilizes, lower,uncertainty abates and investor sentiment rises, we believe commercial real estate investment activity could gain additional momentum.

Our real estate brokerage commissions and financing fees have tended to be seasonal and, combined with other factors, can affect an investor’s ability to compare our financial condition and results of operations on a quarter-by-quarter basis. Historically, this seasonality has generally caused our revenue, operating income, net income, and cash flows from operating activities to be lower in the first half of the year and higher in the second half of the year, particularly in the fourth quarter. The concentration of earnings and cash flows in the last six months of the year, particularly in the fourth quarter, is due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. This historical trend can be disrupted both positively and negatively by major economic events, political events, geopolitical events, natural disasters, or public health crises, which may impact, among other things, investor sentiment for a particular property type or location, volatility in financial markets, current and future projections of interest rates, attractiveness of other asset classes, market liquidity, and the extent of limitations or availability of capital allocations for larger property buyers, among others. Private client investors may accelerate or delay transactions due to personal or business-related reasons unrelated to economic events. In addition, our operating margins are typically lower during the second half of each year due to our commission structure for some of our senior investment sales and financing professionals. These senior investment sales and financing professionals are on a graduated commission schedule that resets annually, pursuant to which higher commissions are paid for higher sales volumes. During 2024, seasonal fluctuations were disrupted by changes in overall market conditions and interest rates,rates. In 2025, the seasonal fluctuations were disrupted by tax law changes and goingfederal forwardpolicies related to trade, tariffs and immigration. Going forward, our historical pattern of seasonality may or may not continue to the same degree experienced in prior years.

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. We no longer hold any mortgage servicing rights ("MSRs"), but prior to the third quarter of 2022, we recognized mortgage servicing revenue upon the acquisition of a servicing obligation. We generated mortgage servicing fees through the provision of collection, remittance, recordkeeping, reporting, and other related mortgage servicing functions, activities, and services.

Provision (Benefitbenefit) Provision 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) provision for income taxes includes the windfall tax benefits and shortfall expenses, net, from shares issued in connection with our Amended Plan and Amended ESPP.

In this Annual Report on Form 10-K, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net (loss) income before (i) interest income and other, including net realized gains (losses)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) provision 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) income,loss, operating (loss) income 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 income,loss, to Adjusted EBITDA is as follows (in thousands):

Our total cash, cash equivalents, and restricted cash balance decreasedincreased by $17.3$8.5 million to $161.9 million at December 31, 2025, compared to $153.4 million at December 31, 2024, compared to $170.8 million at December 31, 2023.2024. The following table sets forth our summary cash flows for the years ended December 31, 2025, 2024, 2023, and 20222023 (in thousands):

Cash flows provided by operating activities were $66.7 million in 2025 compared to $21.7 million in 2024 compared to cash flows used in operating activities of $72.4 million in 2023.2024. The $94.1$45.0 million increase in cash flows from operating activities in 20242025 compared to 20232024 was primarily due to (a) a reduction in net losses, as discussed above, (b)and a reduction in bonusadvances paymentsand asloans thegranted 2023in payment2025 for bonuses relatedcompared to amounts accrued in 2022 based in part on 2022 profits and (c) a reduction in payments in deferred compensation and commissions.2024. The cash flows from operating activities were also affected by the timing of certain cash receipts and payments.

Cash flows used in investing activities were $9.9$3.8 million in 20242025 compared to cash flows providedused byin investing activities of $74.9$9.9 million in 2023.2024. The $84.8$6.1 million decrease in cash fromused in investing activities in 20242025 compared to 20232024 was primarily due to a decrease in net proceeds of $86.3$6.1 million from sales, purchases, and maturities of securities in 20242025 compared to the same period in 2023.2024.

Cash flows used in financing activities were $54.6 million in 2025 compared to $28.8 million in 2024 compared to $67.7 million in 2023.2024. The decreaseincrease of $38.9$25.8 million in cash flows used in financing activities in 20242025 compared to 20232024 was primarily due to aan decreaseincrease of $38.7$24.6 million in stock repurchases.

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 December 31, 2024,2025, cash, excluding restricted cash, cash equivalents, and restricted cash and marketable debt securities, available-for-sale, aggregated $394.2$386.9 million, which includes $10.7 million in restricted cash.million.

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 December 31, 2024,2025, the Company has agreed to a maximum aggregate guarantee obligation of $296.3$444.9 million relating to loans with an unpaid balance of $1,831.8$2,723.4 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,settlement. and theThe Company has recorded an allowance for losses of $174,000$292,000 as of December 31, 20242025 related to these guarantee obligations. The Company is required to provide cash collateral to MTRCC for this obligation and this is reflected as $0.7$1.3 million of restricted cash as of December 31, 2024,2025, which is included in cash, cash equivalents, and restricted cash on the consolidated balance sheet.

(5)Relates to contingent and deferred consideration in connection with our business acquisitions. See Note 6 – “Acquisitions, Goodwill and Other Intangible Assets” and Note 9 – “Fair Value Measurements” of our accompanying Notes to Consolidated Financial Statements.

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 thereThere 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.

•our ability to attract and retain qualified senior executives, managers,managers and investment sales and financing professionals;

•our ability to successfully identify, negotiate, execute,execute and integrate accretive acquisitions; and

The results of operations for the threesix months ended MarchJune 31,30, 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.

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 MarchJune 31,30, 2026, we had 1,7241,677 investment sales and financing professionals that are primarily exclusive independent contractors operating in more than 80 offices, who provide real estate brokerage and financing services to sellers and buyers of commercial real estate assets. During the three and six months ended MarchJune 31,30, 2026, we closed 2,0222,306 and 4,328 investment sales, financing and other transactions with total sales volume of approximately $12.1$14.1 billion.billion and $26.2 billion, respectively. 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 MarchJune 31,30, 2026, approximately 81%82% of our revenue was generated from real estate brokerage commissions, 15% from financing fees and 4%3% from other revenue, including consulting and advisory services.

We are the industry leader in serving private clients in the $1 million - $10 million private client market, which contributed approximately 64% and 63%66% of our real estate brokerage commissions during the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately 64% and 65% for the six months ended June 30, 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:

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 eightnine 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 110140 basis points from its peak of 17.2%17.3% in the secondfirst 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.

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 keepraise therates Federallater Funds Rate flat through the remainder of thethis year. However, withthis outlook is somewhat tempered by the ascension of Kevin Warsh to the Chairmanship of the Federal ReserveReserve. anticipatedWhile Warsh has reiterated the Federal Reserve’s commitment to passstabilizing inflation, he has launched five task forces to Kevinreevaluate WarshFederal Reserve practices. The task forces will review communications policies, assess how the Federal Reserve measures and manages inflation, including which data sources they rely on. They will also consider U.S. worker productivity and jobs as well as the strategy for managing the Federal Reserve’s balance sheet. While the Federal Reserve’s objectives remain the same, changes in the seconddata quarter,they thereuse isand ahow possibilitythey thatmake Federal Reserve policiesdecisions could shiftinfluence thisrate year.policy in the latter part of the year or in 2027.

While commercialCommercial real estate lender spreads widened infollowing Marchthe 2026,start of the Middle East conflict, but they have begunsince totightened tightenmodestly again,then suggestingstabilized. Interest rates for multifamily properties remain markedly higher than before the start of the conflict, but interest rates on commercial realproperties estatehave lendingtapered ratesback couldinto return to a range comparablealignment with thepre-conflict fourth quarter of 2025.levels. However, the rate outlook remains fluid with geopolitical forces and a new Federal Reserve Chair being key variables in the outlook.variables. Debt capital liquidity remains healthy with all lenders actively engaging the market.

Commercial real estate transaction activity increased by 7%3% in the firstsecond quarter of 2026 compared to the same period in 2025, led by gains in institutional grade seniorsindustrial, housingretail and hotel property sales. ForIn the second quarter, hotelindustrial transactions priced $20 million and higher nearly quintupledsurged to 261753 transactions while seniorsretail housingand hotel transactions inabove the$20 samemillion price tranche grewincreased by 137%42% toand 31723% transactions.respectively. FirstSecond quarter transaction velocity of all property types priced between $2.5 million and $20$10 million,million however,edged remaineddown relativelyby stable,4% gainingcompared just 1.9% versusto the same periodquarter last year.year while the $10 million to $20 million segment gained 11%. The Middle East conflict remains a wildcard in the commercial real estate investment outlook. If the Middle East conflict is resolved before major inflationary and economic disruptions occur, transaction velocity could gain momentum. However, if the conflict extendscarries throughinto the summer,fourth quarter, 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.

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 tax expenses, net, from shares issued in connection with our Amended Plan and Amended ESPP.

The following is a discussion of our results of operations for the three and six months ended MarchJune 31,30, 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.

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 MarchJune 31,30, 2026 and 2025, we closed 2,0222,306 and 1,7062,070 investment sales, financing and other transactions, respectively, with total sales volume of approximately $12.1$14.1 billion and $9.4$12.3 billion, respectively. During the six months ended June 30, 2026 and 2025, we closed 4,328 and 3,776 investment sales, financing and other transactions, respectively, with total sales volume of approximately $26.2 billion and $21.7 billion, respectively. Such key metrics for real estate brokerage and financing activities (excluding other transactions) are as follows:

Comparison of Three Months Ended MarchJune 31,30, 2026 and 2025

Below are key operating results for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 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,income (loss), operating income (loss) 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,income (loss), which is the most directly comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measure” below.

Our total revenue was $171.5$202.9 million for the three months ended MarchJune 31,30, 2026 compared to $145.0$172.3 million for the same period in 2025, an increase of $26.4$30.6 million, or 18.2%.17.8%. 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$167.0 million for the three months ended MarchJune 31,30, 2026 from $123.6$141.4 million for the same period in 2025, an increase of $14.5$25.6 million, or 11.7%.18.1%. The increase was primarily attributed to an 18.5%18.4% increase in total sales volume,volume partially offset by an 11 basis point decrease in the average commission rate earned compared to the same period in 2025. The decrease inas 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.constant. The Larger Transaction Market revenue increased by 24.9%,43.2%, whileand the Private Client Market revenue increased by 13.4%.13.6%.

Financing fees. Revenue from financing fees increased to $26.8$30.3 million for the three months ended MarchJune 31,30, 2026 from $18.1$26.3 million for the same period in 2025, an increase of $8.7$4.0 million, or 48.1%.15.3%. The increase was primarily attributed to a 60.1%5.4% increase in the total financing volume,volume partially offset byand a four10 basis point decreaseincrease in the average fee rate earned compared to the same period in 2025.

Other revenue. Other revenue increased to $6.5$5.6 million for the three months ended MarchJune 31,30, 2026 from $3.3$4.6 million for the same period in 2025, an increase of $3.2$1.0 million, or 98.1%.22.8%. The increase was primarily driven by increases in leasing fees and consulting fees during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025.

Our total operating expenses were $177.2$200.7 million for the three months ended MarchJune 31,30, 2026 compared to $162.7$181.3 million for the same period in 2025, an increase of $14.5$19.4 million, or 8.9%.10.7%. Cost of services increased by $15.3$20.0 million, partially offset by a decrease of $0.3 million in selling, general, and administrative expenses and a decrease of $0.5$0.8 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$126.7 million for the three months ended MarchJune 31,30, 2026 from $88.3$106.6 million for the same period in 2025, an increase of $15.3$20.0 million, or 17.3%.18.8%. 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 decreasedincreased by 4050 basis points to 60.5%62.4% compared to the same period in 2025 primarily due to our senior investment sales and financing professionals earning higher commissions in 2025.2026.

Selling, general, and administrative expense. Selling, general and administrative expense remained relatively consistent at $71.2$71.7 million for the three months ended MarchJune 31,30, 2026 compared to $71.6 million for the same period in 2025.

Depreciation and amortization expense. Depreciation and amortization expense decreased to $2.4$2.3 million for the three months ended MarchJune 31,30, 2026 from $2.8$3.1 million for the same period in 2025, a decrease of $0.5$0.8 million, or 16.1%.25.5%. The decrease primarily relates to assets that were fully depreciated in 2025 and impairment of certain assets recorded in 2025.

Other income, net decreased to $3.8$4.2 million for the three months ended MarchJune 31,30, 2026 from $4.0$5.5 million for the same period in 2025. The $0.2$1.3 million decrease is primarily relatesdue to a decreaselower average yield on the Company's investments and a change in the carrying value of the assets held in the rabbi trust and an increase in theunrealized foreign currency unrealizedgains losses.and losses during the period compared to the same period in prior year.

Interest expense decreased by an immaterial amount for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and primarily relates to interest expense on our SARs liability.

The provision for income taxes was $0.9$3.3 million for the threesix months ended MarchJune 31,30, 2026, compared to a benefit for income taxes of $9.5$2.2 million for the same period in 2025. The effective income tax rate for the threesix months ended MarchJune 31,30, 2026 was (43.1)%80.3% compared to 68.2%12.5% for the same period in 2025. The decreaseincrease in the effective tax rate for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, is primarily attributedreflects the use of the estimated AETR methodology in 2026, compared to the discrete method in 2025. In addition, the effective tax rate for the six months ended June 30, 2026 was impacted by non-deductible items, state income taxes, and shortfall tax expenses, netnet, related to stock-based compensation. Refer to Note 10 – “Income Taxes” of our accompanying Notes to Condensed Consolidated Financial Statements for additional information.

In this Quarterly Report on Form 10-Q, we include a non-GAAP financial measure, Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) before (i) interest income and other, including 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,income (loss), operating income (loss) or any other measures calculated in accordance with U.S. GAAP. Because Adjusted EBITDA is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies. A reconciliation of the most directly comparable U.S. GAAP financial measure, net loss,income (loss), to Adjusted EBITDA is as follows (in thousands):