Marcus & Millichap's Two-Track Pivot: A Broadening Recovery Plus a Real Diversification Ambition

MMI's best half since 2022 arrives with an unusual twist — management unveils leasing, appraisal, and investment management as growth lanes, turning AI from a threat into an acquisition target.

MMI · Earnings Call · 2026-08-06

The Recovery, Finally, Is Broad

There is a clean, unglamorous story at the heart of Marcus & Millichap's second quarter: every segment grew at once, the first time since the 2022 market break. Total revenue climbed 18% to $203 million, with private client brokerage up 13%, middle market up 13%, the larger-transaction segment up a striking 43%, and the financing business up 15%. CEO Hessam Nadji framed it in a single line: “continuing the momentum from the first quarter and delivering the company's best first half since 2022” — Hessam Nadji, President and Chief Executive Officer · 2026-08-06. Net income swung from a $11 million loss to a $4 million profit, and adjusted EBITDA quadrupled to $12 million. The operating leverage that management flagged for two years is now visible in the numbers. CFO Steve DeGennaro noted that “SG&A for the quarter was 35% compared to 42% in the prior year, reflecting positive operating leverage” — Steve Degennaro, Chief Financial Officer · 2026-08-06. The market has noticed — the stock is up roughly 23% over the past 90 days — though revenue is still a long way from the $386 million peak of 2022Q2: Total Revenue remains roughly 10% below that high in nominal terms. Still, the 2026 trajectory — after an 18% first-half revenue increase — validates the endurance thesis.

The New Pivot: Business Lines Beyond Brokerage

What makes this call different is not the recovery, which analysts had been prodding toward for a year, but a concrete expansion agenda. When asked about leasing, property management, and other diversification, Hessam gave the fullest articulation yet of a multi-line strategy — and the fresh keyword trackers caught it. Leasings and appraisal spiked as new high-momentum themes this quarter, along with investment management. The CEO was explicit about leasing as the most leveragable adjacency: “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” — Hessam Nadji, President and Chief Executive Officer · 2026-08-06. He then named two more lanes — tech-enabled appraisal/valuation and investment management — both aimed at the "greatly underserved and very fragmented" middle market. This is a meaningful shift in messaging. In the past two years, management's external-growth talk centered on boutique brokerage teams and experienced producers. Now the frame is broader: a deliberate reconstruction of MMI as a multi-service intermediary, not a pure brokerage. Notably, Hessam coupled the ambition with a commitment to stay true to the core: “We are not abandoning the core reason the company exists… it is an integrated choice” — Hessam Nadji, President and Chief Executive Officer · 2026-08-06. The strategic intent is real, even if revenue contribution from these lanes is years out.

AI: From Displacement Fear to an Acquisition Lens

Perhaps the sharpest narrative shift in this call is the reframing of AI. On the February 2026 call — when broker stocks were rattled by AI displacement worries — Hessam had just come off a CNBC appearance defending the broker. Today, the same concern is inverted into an M&A hunting ground. In describing appetite for appraisal acquisitions, he said:

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
Hessam Nadji, President and Chief Executive Officer · 2026-08-06

. The lead-in to that remark — AI endorsed appraisal — is a genuinely new, company-unique keyword that did not appear in any of the five prior calls. It converts the February fear ("There's almost countless ways that AI is going to improve the manual processes that are so labor intensive in our business," he said then) into a procurement thesis today, layered on top of an existing appraisal-M&A thread that first surfaced in August 2025, when Hessam mentioned “a couple of new opportunities… more in the advisory and appraisal valuation space” — Hessam Nadji, President and Chief Executive Officer · 2025-08-08. The incremental pieces now are the AI framing and the explicit pairing with leasing and investment management.

The Cost and Talent Conundrum That Underwrites the Pitch

Underneath the optimism sits a structural cost reality that management is candid about and that the fundamentals confirm. Stock-based compensation has risen 365% over the past nine years — the largest expense increase the CEO attributes to the talent war: Stock Based Compensation Add-Back. That elevated cost base is exactly why the recovery had to be this broad before profits inflected. As Hessam framed it on the peak-profitability question: “We absolutely have conviction that we will return to very exciting profitability levels and much better operating margins” — Hessam Nadji, President and Chief Executive Officer · 2026-08-06 — but the composition of expenses has changed and the path runs through revenue-per-agent, not just cost cuts. The headcount strategy is the other half of that story. Rather than flooding the top of the funnel, MMI is deliberately slowing traditional hiring and leaning into fellowship program and internship channels, while importing semi experienced brokers from boutiques — two new keyword themes this quarter. The dividend and a fresh $90M buyback authorization (on top of the $24M repurchased this quarter) underscore the confidence. Operating margin, though still negative at -3.4% for the latest quarter, is inflecting up by 8.8 points YoY: Operating Margin. In sum, MMI is telling a two-part story: the long-promised operating leverage from the recovery is finally materializing, and management is using that confidence to sketch a genuine diversification playbook — leasing, AI-endorsed appraisal, and investment management — that could make the next up-cycle look very different from the last one.