Real estate brokerage and services firm Marcus & Millichap (NYSE:MMI) reported results ahead of analysts' expectations in Q1 CY2024, with revenue down 16.6% year on year to $129.1 million. It made a GAAP loss of $0.26 per share, down from its loss of $0.15 per share in the same quarter last year.
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Marcus & Millichap (MMI) Q1 CY2024 Highlights:
- Revenue: $129.1 million vs analyst estimates of $127.5 million (1.3% beat)
- EPS: -$0.26 vs analyst estimates of -$0.28 (7.1% beat)
- Gross Margin (GAAP): 40.5%, up from 38.4% in the same quarter last year
- Market Capitalization: $1.29 billion
Real Estate ServicesTechnology 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 GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Marcus & Millichap's revenue declined over the last five years, dropping 5.3% annually. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Marcus & Millichap's recent history shows its demand has decreased even further as its revenue has shown annualized declines of 34.2% over the last two years.
This quarter, Marcus & Millichap's revenue fell 16.6% year on year to $129.1 million but beat Wall Street's estimates by 1.3%. Looking ahead, Wall Street expects sales to grow 31.6% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Marcus & Millichap was roughly breakeven when averaging the last two years of quarterly operating profits, weak for a consumer discretionary business. This quarter, Marcus & Millichap generated an operating profit margin of negative 15.6%, down 5.3 percentage points year on year.
Over the next 12 months, Wall Street expects Marcus & Millichap to break even on its operating profits. Analysts are expecting the company’s LTM operating margin of negative 10.2% to rise by 11 percentage points.Key Takeaways from Marcus & Millichap's Q1 Results It was good to see Marcus & Millichap beat analysts' revenue and operating margin expectations this quarter, helping it top Wall Street's EPS estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $33.34 per share.
