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DATE

Thursday, Aug. 6, 2026 at 10:30 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer - Hessam Nadji
• Chief Financial Officer - Steve DeGennaro

TAKEAWAYS

• Total Revenue -- $203 million, an 18% increase compared to $172 million in the prior year, driven by growth across all business segments.
• Brokerage Revenue -- $167 million, rising 18% year over year as price adjustments and healthier lender balance sheets fostered higher transaction volumes.
• Private Client Market Revenue -- $106 million, up 14% year over year reflecting improvements in trading volumes for multifamily and single-tenant retail assets.
• Middle Market Revenue -- $22 million, representing a 13% increase compared to the prior year.
• Larger Transaction Market Revenue -- $33 million, a 43% increase year over year, representing the strongest growth in this segment since the fourth quarter of 2024.
• Financing Revenue -- $30 million, up 15% year over year following 43.5% growth in the second quarter of 2025.
• Brokerage Transaction Count -- 1,530 transactions, an 11% increase compared to the second quarter of 2025.
• Brokerage Sales Volume -- $10 billion, an 18% increase year over year reflecting narrowed bid-ask spreads and increased seller motivation.
• Financing Transaction Count -- 480 loans, a 17% increase year over year driven by expansion in IPA Capital Markets and agency financing.
• Financing Sales Volume -- $4 billion, up 5% compared to the prior year.
• Net Income -- $4 million, or $0.10 per share, compared to a net loss of $11 million in the second quarter of the previous year.
• Adjusted EBITDA -- $12 million, an improvement from $1.5 million in the prior year quarter.
• Six-Month Total Revenue -- $374 million, an 18% increase compared to $317 million during the first half of the prior year.
• Cost of Services -- $127 million, or 62.4% of revenue, an increase of 50 basis points year over year reflecting higher commissions earned by senior professionals.
• SG&A Expense -- $72 million, flat on a dollar basis year over year but decreasing as a percentage of revenue to 35% from 42%.
• Cash and Marketable Securities -- $345 million, up from $335 million at the end of the first quarter, reflecting continued operating cash generation.
• Share Repurchases -- 913,000 shares for $24 million year to date at an average price of $26.22 per share.
• Investment Sales Professionals -- 1,575 professionals at quarter end, up modestly year over year despite intentional shifts toward organic growth through internships.
• Refinancing Revenue Mix -- 47% of financing revenue, compared to 39% a year ago, as more owners secured new loans in an improving environment.
• Lender Network -- 207 separate lenders utilized during the quarter and 304 lenders during the first half of the year.
• Dividend -- $0.25 per share, declared by the board and payable on Oct. 6, 2026.
• LTM Private Client Growth -- 19% growth in multifamily and 16% growth in single-tenant retail revenue over the last 12 months.
• Treasury Yield Impact -- 50 basis points increase in the 10-year treasury yield since the start of the year, contributing to extended transaction timelines.
• Six-Month EPS -- $0.02 per share, compared to a net loss of $0.40 per share in the first half of the prior year.

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RISKS

• Nadji stated, "interest rate volatility challenges deal underwriting, marketing, making it more difficult to keep buyers, sellers and lenders aligned and getting deals across the finish line," noting that this has led to extended transaction timelines.
• DeGennaro noted that cost of services as a percentage of revenue is expected to be sequentially higher in the third quarter than in the second quarter.

SUMMARY

Management reported broad-based improvement across the **Marcus & Millichap, Inc.** (MMI +2.02%) platform, with all business segments achieving growth for the first time since the start of recent market disruptions. The company achieved profitability through increased transaction volumes in the Private Client and Larger Transaction segments, alongside positive operating leverage as SG&A expenses remained flat against an 18% revenue increase. The financing division benefited from expanded lender relationships and agency debt origination, while the company maintained a high liquidity position to support strategic acquisitions and capital returns through dividends and share repurchases. Management indicated a focus on diversifying revenue streams through potential expansions into leasing, appraisal, and investment management while maintaining disciplined cost controls during the market recovery.

• CEO Nadji noted that the company is shifting its organic growth strategy toward internship and fellowship programs, stating these channels show "higher productivity and higher retention rates among this cadre."
• Management identified the expansion of leasing capabilities as a priority, with Nadji stating it "can be one of the most effective and largest needle-moving ways that the company can leverage its existing brand infrastructure."
• The company reported that its partnership with M&T Bank has made it the largest nondirect multifamily debt originator for Freddie Mac and Fannie Mae.
• CEO Nadji attributed the return to growth in larger asset sales to "further price adjustments and the rising tide of loan maturities," which have driven increased activity among institutional investors.
• Management stated that while they entered the year expecting interest rate reductions, the focus has shifted to the degree and timing of potential hikes due to geopolitical conflicts and energy price volatility.
• CFO DeGennaro projected that SG&A expenses will increase modestly on a dollar basis in the third quarter while income tax expense is expected to range between $1.5 million to $2 million.
• CEO Nadji reported that bid-ask spreads are narrowing as investors seek assets priced realistically, particularly those offering a discount to replacement cost.

INDUSTRY GLOSSARY

• Agency Financing: Commercial mortgage loans initiated through government-sponsored enterprises such as Fannie Mae and Freddie Mac.
• IPA (Institutional Property Advisors): A division of Marcus & Millichap that focuses on serving institutional and major private real estate investors.
• Larger Transaction Market: Commercial real estate transactions with a value of $20 million or more.
• Middle Market: Commercial real estate transactions with values ranging from $10 million to less than $20 million.
• Private Client Market: Commercial real estate transactions with values ranging from $1 million to less than $10 million.
• RPO (Remaining Performance Obligations): The amount of contracted future revenue that has not yet been recognized.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Marcus & Millichap's Second Quarter 2026 Earnings Conference Call. 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.

Jacques Cornet: Thank you, operator. Good morning, and welcome to Marcus & Millichap's Second Quarter 2026 Earnings Conference Call. With us today are President and Chief Executive Officer, Hessam Nadji; and Chief Financial Officer, Steve DeGennaro. 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, the company's ability to retain its business philosophy and partnership culture amid competitive pressures, the 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 26, 2026. 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.

The 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, includes a reconciliation to the appropriate GAAP measures and explains why the company believes such non-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 www.marcusmillichap.com, along with the slide presentation you may reference during the prepared remarks. With that, it's my pleasure to turn the call over to CEO, Hessam Nadji.

Hessam Nadji: Thank you, Jacques. On behalf of the entire Marcus & Millichap team, good morning, and welcome to our second quarter 2026 earnings call. I'm pleased to report that MMI had a strong second quarter, continuing the momentum from the first quarter and delivering the company's best first half since 2022. Total revenue increased 18% in the second quarter with all business segments registering growth. Brokerage revenue for the quarter grew 18% year-over-year, and our financing business was up 15% as the company's recovery broadened. Private client and middle market brokerage segments posted more than 13% revenue growth, while larger transaction revenue jumped 43%.

Over the last 2 years, private client and larger transactions moved at different trajectories due to a variety of factors. In the first half of 2026, however, the company achieved solid growth across the board for the first time since the market disruption began. This is driven by our team's persistent client outreach finally resulting in more transactions as values adjust and healthier lender balance sheets foster more financing options across the full price spectrum. I'm also pleased to report significant progress in MMI's profitability in the quarter. During the market disruption, we remained committed to strengthening the company's leading brand, attracting and retaining top talent and enhancing the infrastructure that supports growth.

This strategy pressured our near-term earnings largely due to the expensing of these investments, but it allowed us to keep strategic initiatives on track and maintain a high level of producer support when it matters the most. Maximizing revenue growth per producer, positioning the company for market share gains and gaining operating leverage in the recovery continue to guide our strategy. With this backdrop, net income for the quarter came in at $4 million, while adjusted EBITDA improved to $12 million. Steve will elaborate on more details. We view this as a critical stepping stone toward more ambitious margin improvements as a better functioning market environment enables revenue growth.

Looking at various revenue drivers, the largest contribution to the top line results came from our private client brokerage business. Microcap multifamily and single-tenant retail deals continue to show improvement in trading volumes as significant price adjustments recalibrate to higher interest rates and as more banks and credit unions reengage in the marketplace. In the last 12 months, revenue from private client multifamily and single-tenant retail grew 19% and 16%, respectively. On the larger deal segment, major investors and institutions became highly selective last year after the initial wave of institutional capital returned to the market in 2024.

Institutional investors are opting to pay a premium for top-tier assets in top-tier markets, widening the gap with older and lower quality assets. Further price adjustments and the rising tide of loan maturities have driven increased activity in larger asset sales this year. Operating challenges in many markets and among many property types have also been the catalyst for inventory coming to market at more realistic prices. Our financing business delivered another strong quarter with revenue up 15% on top of the 43.5% growth registered in the second quarter of 2025. Our expansion strategy into IPA Capital Markets, progress on expanding agency financing, investments in technology and lender relationships continue to drive growth.

MMI has become Freddie Mac and Fannie Mae's largest nondirect multifamily debt originator through our partnership with M&T Bank. We expect further expansion in our financing business as we emphasize collaboration between our sales and financing teams, evaluate strategic acquisitions and add to the roster of experienced originators. IPA Capital Markets, in particular, continues its expansion with highly experienced originators added this year. Refinancings picked up meaningfully during the quarter, accounting for 47% of revenue compared to 39% a year ago as more owners were able to secure new loans in an improving environment.

Lastly, on our financing, the team closed with 207 separate lenders during the quarter and 304 lenders for the first half of the year, illustrating our market-leading reach into a vast network of capital sources for MMI's clients as a key strategic advantage. Turning to our sales force. We ended the quarter with 1,575 investment sales professionals, up modestly on a year-over-year basis. As we've discussed previously, the first quarter is typically our highest attrition period. In addition, quarter-to-quarter variability is primarily due to our tightened performance standards, leading to faster separation from underperforming agents and trainees.

Our head count composition and quarterly numbers also reflect an intentional shift toward heavier reliance on our expanded internship and fellowship programs as primary sources of the company's organic growth strategy. These channels are a slower path to nominal head count growth. However, recent enhancements are starting to show higher productivity and higher retention rates among this cadre. At the same time, our focus on recruiting experienced professionals and teams remains on track with meaningful gains so far this year. Looking ahead at the broader market, we continue to see a balancing act between lingering uncertainty and higher interest rates on one hand and more motivation among sellers to move forward with transactions on the other.

We entered 2026 expecting rate reductions by the Fed, but the debate has since shifted to the degree and timing of potential rate hikes due to the Middle East war, its impact on energy prices and resurging inflation. The 10-year treasury yield is 50 basis points higher than the start of the year and 70 basis points higher than the low point prior to the start of the military conflict in February. As I've shared on previous calls, interest rate volatility challenges deal underwriting, marketing, making it more difficult to keep buyers, sellers and lenders aligned and getting deals across the finish line. As a result, we continue to experience extended transaction time lines.

Our team is leveraging ample liquidity in the market with investors eager to act on realistically priced assets, particularly when there is a discount to replacement cost for buyers. Many transactions that could not be brought together previously are now starting to work as bid-ask spreads narrow and net proceeds for borrowers improve, thanks to more accommodating lenders. We believe this dynamic, combined with improving property fundamentals across most property types, supports the market's positive long-term trajectory even as the recovery in the transaction cycle remains somewhat choppy. We're encouraged by early-stage dialogue with some acquisition targets, particularly on the financing side, which have emerged as the market improves.

MMI is ideally positioned to sustain our strong balance sheet as well as our strategy to return capital to shareholders while maintaining a high level of liquidity for strategic acquisitions. With that, I will turn the call over to Steve for more details on our financial results. Steve?

Steve Degennaro: Thank you, Hessam. Total revenue for the second quarter was $203 million, an increase of 18% compared to $172 million in the second quarter of last year. For the 6-month period, total revenue was $374 million, also an increase of 18% compared to $317 million a year ago. Breaking down revenue by segment, real estate brokerage commissions were $167 million for the quarter, an increase of 18% year-over-year and accounted for 82% of total revenue. We completed 1,530 brokerage transactions for total volume of $10 billion, representing increases of 11% and 18%, respectively, compared to the second quarter of 2025. For the 6-month period, brokerage commissions were $305 million, an increase of 15% compared to the prior year.

Within brokerage, our core private client market business grew 14% year-over-year to $106 million. Our middle market business grew 13% to $22 million and our larger transaction segment covering deals above $20 million grew 43% to $33 million. This is the strongest growth we've seen in this segment since the fourth quarter of 2024 following an extended period of institutional softness. Revenue from our financing business was $30 million in the second quarter, an increase of 15% compared to $26 million in the prior year quarter, driven by a 17% increase in transaction count to 480 loans and a 5% increase in dollar volume to $4 billion.

For the 6-month period, financing revenue was $57 million, an increase of 29% compared to the prior year. Other revenue was $6 million in the quarter compared to $5 million in the second quarter of last year. For the 6-month period, other revenue totaled $12 million compared to $8 million a year ago. Turning to expenses. Total operating expense for the quarter was $201 million compared to $181 million a year ago. Cost of services was $127 million or 62.4% of revenue, an increase of 50 basis points compared to the same period last year, primarily reflecting higher commissions earned by our more senior investment sales and financing professionals.

For the 6-month period, cost of services was 61.5% of revenue, up 10 basis points year-over-year. Selling, general and administrative expense was $72 million for the quarter, virtually flat on a dollar basis with the second quarter of 2025. As a percentage of revenue, SG&A for the quarter was 35% compared to 42% in the prior year, reflecting positive operating leverage. For the 6-month period, SG&A totaled $143 million, slightly below the prior year. Net income for the quarter was $4 million or $0.10 per share compared to a net loss of $11 million or $0.28 per share in the prior year. Adjusted EBITDA was $12 million compared to $1.5 million a year ago.

For the 6-month period, earnings were $0.02 per share compared to a net loss of $0.40 per share in the prior year, and adjusted EBITDA was $15 million year-to-date compared to a loss of $7 million in the same period last year. Together, these results reflect a notable improvement in the business year-over-year. Our effective tax rate for the quarter was approximately 38% compared to negative 195% in the second quarter of last year. As a reminder, our tax rate may fluctuate from quarter-to-quarter as we continue our recovery towards higher profitability. Moving to the balance sheet.

We ended the quarter with $345 million in cash, cash equivalents and marketable securities, up from $335 million at the end of Q1 and up from $333 million at the end of Q2 last year. The increase reflects continued operating cash generation and is inclusive of the semiannual dividend paid in April as well as share repurchases. As part of our ongoing efforts to create value and return capital to shareholders, in the quarter, we repurchased approximately 913,000 shares of common stock for a total of $24 million at an average price of $26.22 per share. Since the program's inception in 2022, we have repurchased approximately 4 million shares for a total of $120 million.

During the quarter, our Board of Directors approved an additional share repurchase authorization, bringing our remaining program authorization to approximately $90 million. Last week, the Board also declared a semiannual dividend of $0.25 per share payable on October 6, 2026, to shareholders of record as of September 15, 2026. Between dividends and share repurchases over the last 4 years, we have returned more than $251 million of capital to shareholders. Looking ahead, we entered the third quarter with modest year-over-year growth in our pipeline due to the latest period of interest rate volatility. That said, we are encouraged by increased motivation to sell, improved liquidity in the market and more realistic price expectations.

Cost of services as a percentage of revenue in the third quarter is expected to follow the usual pattern as revenue builds through the year and be sequentially higher than the second quarter. On a dollar basis, SG&A is expected to increase modestly over the second quarter. Income tax expense should be in the range of $1.5 million to $2 million. In summary, the second quarter reflected broad-based improvement across our platform, balanced growth between brokerage and financing, a return to growth in our larger transaction business and continued discipline on cost. We remain confident in the long-term recovery of the commercial real estate transaction market and our ability to capture a growing share of that opportunity.

With that, operator, we can now open the call for Q&A.

Operator: [Operator Instructions] Our first question is from Mitch Germain with Citizens Bank.

Mitch Germain: Hessam, your secret sauce has been the ability to tap into that private client network, sourcing deals out of state and using your [ best ] platform to be able to connect your clients to deals. Are you seeing any competition or competitive pressures when it comes to your ability to tap into those customers?

Hessam Nadji: Mitch, great to connect with you. Nothing unusual. We have the usual competitive forces, predominantly local small firms and maybe some regional boutiques. Some of our larger competitors do a modest amount of private client transactions, predominantly in the industrial sector. And we're not seeing anything unusual. The retention and recruiting competitiveness has always been there and it remains. What's interesting is that we are able to attract more semi-experienced professionals from a lot of the boutiques and regional firms in the past several quarters because they're starting to see the benefits of being with a larger platform as the market improves. And we've had some successes there.

Therefore, there's a little bit more focus on that between our recruiting department and our local market leaders. And one of the interesting trends that I can share is that even semi-experienced brokers that come into the Marcus & Millichap network really give us the feedback that going through our training program and being put through what our inexperienced hires go through really makes a visible difference in their performance and the way that they go about the business. So the training systems and support systems that we've had for years, and we continue to refine every single day, seem to be getting recognized as one of the key advantages even from semi-experienced brokers from these local firms and boutiques.

Mitch Germain: That's super helpful. It seems like number of professionals, I think it's about a 50-person increase year-over-year, I'm curious, Hessam, what is the breakdown? You talked about the semi-professionals that have some kind of seasoning already. But if I think about that increase in the number of professionals from kind of year-over-year, kind of how much of that is new and how much of that are individuals coming in with some knowledge and capabilities?

Hessam Nadji: Generally, Mitch, somewhere around 25% of our hires are coming in with some experience. That number is increasing because of the fact that we're actually slowing down our top-of-the-funnel traditional and experienced individual recruiting. As I mentioned in my comments, we're shifting a lot more aggressively toward our internship program, which we've expanded over the last couple of years and have also added some new-generation candidate testing and screening systems that are slowing down the nominal number of people coming in through the top of the funnel, but improving the quality. We're also relying more heavily on our fellowship program.

Both the fellowship program and the internship program that have been enhanced over the last, let's say, 3 years are starting to show meaningful advantages as they graduate individuals and those individuals come back and join us as it is reflected in their productivity and their speed to becoming productive agents. So we're really encouraged by all that. And again, this arena of being able to attract semi-experienced brokers is also gaining traction.

I wouldn't put too much on the percent of the net increase being experienced or not only because there's going to be some noise in our net hiring, sort of, reported data because of all these changes that we're implementing to improve our organic growth part of the strategy. Let me also reiterate, Mitch, that the efforts to bring in very experienced individuals and teams has not slowed down at all. That's sort of a third parallel track of our recruiting strategy, which has worked incredibly well over the last 5 years, especially when it comes to our finance division. We started on the IPA Capital Markets pretty much from scratch about 5 years ago.

And that has become one of the largest contributors to our financing business growth, and highly successful. In that arena, those experienced loan originators that are coming into the system, whether they have their own boutique firms, in a couple of instances that we acquired, or were at other brands or independent originators are really finding the ability to collaborate with our sales force and kind of be a member of the broader Marcus & Millichap network and the benefits of getting referrals and leads and being able to do joint pitches has also been identified as a major advantage.

Steve Degennaro: Mitch, to add to that, directionally, you'll start seeing the benefits of these various programs in our number of transactions per agent, which during -- at least year-to-date, we're up 9%, 10% on that metric. So we'll start slowly seeing an increase as a result of these 3 tracks.

Mitch Germain: Great. Last one, Steve, while I have you, just a clarification. It's 913,000 shares acquired or bought back year-to-date, not in the quarter, correct?

Steve Degennaro: That is correct. That is correct.

Operator: Our next question is from Blaine Heck with Wells Fargo.

Blaine Heck: Can you guys talk a little bit about any other potential business lines that you might be interested in exploring at this point, whether that be maybe on the leasing side or property management or anything else that might have given some of your peers a bit more of diversification or stabilization of revenue during times of volatility in the transaction market? Is that something you guys are looking into at all?

Hessam Nadji: The answer is yes.

And also, let me elaborate that the diversification and having more stable revenue streams, of course, is very important but we view the synergies of various other businesses with our core business as importantly and, to some extent, maybe more importantly in that we believe, for example, the expansion of our current leasing capabilities and footprint can be one of the most effective and largest needle-moving ways that the company can leverage its existing brand infrastructure and it's essentially boots on the ground to ramp up additional revenue from a new business line in markets where we don't have leasing, but as importantly, for whatever additional leasing professionals we would bring in to collaborate with our investment sales brokers and essentially deliver a more well-rounded overall service to the same client.

And we've identified that as one of the most exciting expansion opportunities, particularly for multi-tenant retail and industrial, where we have great market share, especially on the retail side. We're a leading brokerage firm by a number of deals and by volume, but there is so much more potential growth within multi-tenant retail and within industrial, where we have a much smaller presence currently.

So those are -- have really been a priority in terms of ways that we can enhance the current value proposition, build up the current market share gains in our private client business in our investment brokerage core business, but at the same time, add a very logical additional revenue contributor and being able to leverage expenses of having the footprint and management capacity, offices and so on and so forth. The other really important arena for us is to keep expanding our finance division.

And if you look at our success with M&T Bank and the way that we've been able to achieve much more stable financing in the institutional arena, especially in our IPA multifamily division, having built up the finance and debt placement capacity in that niche has really felt -- served the company well, particularly in the capture rate of being able to finance our own brokerage transactions. That's probably the most important bright spot. Therefore, we now have even more confidence and conviction that scaling that capability can be a significant contributor to revenue and profits, but also, to your point, diversification. Other business lines we've been interested in for quite a while are appraisal and consultation.

That industry is going through lots of change, of course, with AI and technology. Nonetheless, we really believe that the core need for an AI-endorsed appraisal, both for internal purposes and as related to transaction-related appraisals, is here to stay. The process of getting to those appraisals is dramatically changing. So we have an eye out for tech-enabled appraisal and consultation groups that we might be able to acquire and then scale around. We've had a few conversations around that particular space in an M&A realm. And investment management has been another arena where we believe there are significant synergies within our existing brokerage and financing business.

And all of this, by the way, wrapped around the private client market and especially the middle quasi-institutional market where a lot of our larger competitors are, for the most part, predominantly focused on uber institutional and very large transactions where IPA competes very effectively. But essentially 1 or 2 levels below that by price point is a greatly underserved and very fragmented market. And that comment relates to leasing, it relates to appraisals, it relates to investment management. And because of that, we believe we've got a lot of runway for creating external growth revenue and profit contribution channels if you kind of look at all of those things that I just summarized.

Blaine Heck: Great. That's really great to hear, and I look forward to updates on those initiatives. I guess just a follow-up, what percentage of NOI or revenue do you think those business lines, leasing and financing in particular, but appraisal, investment management as well, what percentage do you think those could potentially end up contributing to overall operations?

Hessam Nadji: I'm not really trying to back into a predetermined percent of revenue in the way that we're exploring and actively talking to folks about bringing them on board or initiating an entry or expansion into some of these concepts. But it's fair to say that, over the next 5 to 7 years, a significant amount of our nominal growth and, of course, a degree of diversification is going to come from these channels that I just summarized. But that also, Blaine, gives me an opportunity to reiterate that Marcus & Millichap is essentially committed to being the premier brokerage and finance intermediary for the commercial real estate industry.

Many of our competitors have stated that they view the transaction market because of its volatility, and understandably so, as an arena where they don't want to invest. And therefore, they're really focusing on other activities and other businesses, and we wish them well and hope that works for them. We are not abandoning the core reason the company exists, which is to create value for buyers and sellers and to have long-term relationships with, hopefully someday, 100% of every owner of commercial assets in the United States and Canada. However, we see lots of opportunities to do a better job in our core business and gain more share while adding these synergistic services.

It's not a one-or-the-other kind of a choice; it is an integrated choice, reinforcing who we know we are, and we want to be even bigger at it.

Blaine Heck: Great. That's really helpful. Maybe switching over to the cost side. You guys have talked about a focus on increasing profitability through cost controls, and you've discussed the investments that you made in technology and recruiting over the past few years. I guess, is that the main area of savings you see as you look forward? When should we expect to see that incremental margin improvement fully online? Just any guidelines for trends in margins you guys can provide, especially related to the cost side would be really helpful.

Steve Degennaro: Yes, Blaine, this is Steve. Our -- all themes getting to increased profitability, and that comes from 2 aspects. One, the certain level of investment that we're making in infrastructure and cost of running the business. And as we look at last year's revenue, $755 million got us to essentially breakeven, so revenue growth above that level creates -- certainly creates operating leverage. We're seeing that here as we -- particularly here in Q2. So you've got top line growth, obviously, that will create efficiency and leverage. And then on the cost side, investments in our infrastructure that increase and improve workflows, processes, create efficiency, whether that's with AI or just additional applications and tools.

But we're doing a lot more in the area of data capture to improve productivity, whether it's in underwriting, whether it's in how we -- down to how we close the books, how proposals get done, how BORs get done as well. So there's 2 aspects. There's the cost containment, making smart investments, but then there's the leverage generated by improved revenue at these levels and above.

Hessam Nadji: Blaine, the only thing I'll add is that one of our focuses is to redeploy current costs to new areas where as we evaluate the firm all the time, but formally twice a year at midpoint, midyear and year-end, for our budgeting purposes and really have a 0 base budgeting process and reexamine everything every year, we're looking at ways to take the current cost structure and focus more of the capital on client-facing, lead-generating and innovations around marketing that enables the individual producer to do what they do quicker and better and for the company to contribute more attribution to their revenue growth. And that's another important aspect of our cost-related strategy.

And as we've looked at the company every time, there's always room for tightening. There's always room for making sure there's no waste or duplication of effort. But in general, we have been pretty disciplined in making sure costs don't basically get a life of their own or become runaway on a year-over-year basis because it's easy to react to a recovering market as transaction velocity is picking up and the average agent feels like they need another analyst and office feels like they need 1 or 2 more graphic production folks.

It's very important to use this period of a market recovery to also be rethinking about the model in which we provide the support at a lower cost at the same time so you're not just essentially throwing more bodies and dollars at a recovering market.

Blaine Heck: Okay. Great. That's all really helpful. Maybe just putting it all together, and I'm sure this is an impossible question to answer, but you guys have shown solid improvement in revenue, NOI and EBITDA this year, but EBITDA levels are still materially off the peak levels of $150 million to $200 million we saw in '21 and '22. Understanding that those were uniquely positive environments, do you feel like those levels are even achievable or repeatable or stabilized or kind of optimal EBITDA somewhere lower than that? And do you have any sense of kind of how long it might take to get back to whatever that stabilized level is, excluding any major kind of needle-moving transactions?

Hessam Nadji: We absolutely have conviction that we will return to very exciting profitability levels and much better operating margins. The composition of how we get there from an expense allocation perspective is changing rapidly. If you look at the industry, Blaine, and look at Marcus & Millichap's cost structure, a very large portion of our expenses that show up on EPS every quarter are noncash expenses related to the expensing of investments we've made predominantly on talent acquisition and retention. That is by far the largest cost increase if you look at MMI in 2025 versus, say, 2018 or 2019 pre-pandemic. That's a reflection of how the industry has become much more competitive. And we've been right there to compete.

The timing of that investment, of course, coincided with an incredibly high level of volatility in the market from the pandemic on in that the last 3 years, the talent retained and acquired has not been in a normal operating environment where they can essentially produce what they're capable of producing 100% based on a mechanical market breakdown because of the interest rate shock and everything else that we've talked about. Therefore, as the market improves and becomes more functional, the leveraging of expenses on the revenue growth side of it will really start to make a material difference, as Steve just mentioned.

So it's really important for us to take a look at where the expense increases are occurring and is there an ROI for every line item that increases the company's cost structure. So that's one element that will be different because the composition of our P&L has changed in the last 5 to 7 years.

Therefore, the focus on revenue per agent, the focus on ROI per expense category becomes really important on how fast we can get to that $150 million pretax level that you're recalling, and whether it takes the same amount of revenue to generate that pretax income or we have to think about different ways to get to that profitability by adding other revenue streams because it's costing more to be competitive in the investment brokerage arena, which is absolutely the case, as you well know.

Operator: There are no further questions at this time. I would like to hand the floor back over to Hessam Nadji for any closing remarks.

Hessam Nadji: Thank you, operator, and thank you for joining our second quarter earnings call. We look forward to seeing a lot of you on the road and to have you back on our next call. The session is adjourned.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.