Real estate brokerage and services firm Marcus & Millichap (NYSE:MMI) missed analysts' expectations in Q2 CY2024, with revenue down 2.8% year on year to $158.4 million. It made a GAAP loss of $0.14 per share, improving from its loss of $0.23 per share in the same quarter last year.
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Marcus & Millichap (MMI) Q2 CY2024 Highlights:
- Revenue: $158.4 million vs analyst estimates of $160.7 million (1.5% miss)
- EPS: -$0.14 vs analyst expectations of -$0.15 (in line)
- Gross Margin (GAAP): 38.1%, in line with the same quarter last year
- EBITDA Margin: 0.9%, up from -6.5% in the same quarter last year
- Market Capitalization: $1.49 billion
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.
Real Estate Services
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Sales Growth
A company's long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last five years, Marcus & Millichap's revenue declined by 5.4% per year. This shows demand was weak, a rough starting point for our analysis. 
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Marcus & Millichap's recent history shows its demand has stayed suppressed as its revenue has declined by 36.8% annually over the last two years.
This quarter, Marcus & Millichap missed Wall Street's estimates and reported a rather uninspiring 2.8% year-on-year revenue decline, generating $158.4 million of revenue. Looking ahead, Wall Street expects sales to grow 27.3% over the next 12 months, an acceleration from this quarter.
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Operating Margin
Operating 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's operating margin has been trending down over the last year and averaged negative 3.3%. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they're spending loads of money to stay relevant, an unsustainable practice.
This quarter, Marcus & Millichap generated an operating profit margin of negative 5.1%, up 1.5 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was recently more efficient because it scaled down its expenses.
Key Takeaways from Marcus & Millichap's Q2 Results
It was good to see Marcus & Millichap beat analysts' EPS expectations this quarter. On the other hand, its revenue unfortunately missed. Overall, this quarter was mixed. The stock remained flat at $38.54 immediately following the results.
So should you invest in Marcus & Millichap right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.