Real estate brokerage and services firm Marcus & Millichap (NYSE: MMI) announced better-than-expected revenue in Q1 CY2026, with sales up 18.2% year on year to $171.5 million. Its GAAP loss of $0.08 per share was in line with analysts’ consensus estimates.

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Company Overview

Founded in 1971, Marcus & Millichap (NYSE: MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Marcus & Millichap grew its sales at a weak 1.9% compounded annual growth rate. This was below our standards and is a tough 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 annualized revenue growth of 12.3% over the last two years is above its five-year trend, which is encouraging.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Brokerage and Financing, which are 80.5% and 15.7% of revenue. Over the last two years, Marcus & Millichap’s Brokerage revenue (commission fees) averaged 8.9% year-on-year growth while its Financing revenue (financing fees) averaged 30.3% growth.

This quarter, Marcus & Millichap reported year-on-year revenue growth of 18.2%, and its $171.5 million of revenue exceeded Wall Street’s estimates by 5.7%.

Looking ahead, sell-side analysts expect revenue to grow 10.8% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its products and services will face some demand challenges.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Marcus & Millichap’s operating margin has risen over the last 12 months, but it still averaged negative 2.2% over the last two years. This is due to its large expense base and inefficient cost structure.

This quarter, Marcus & Millichap generated a negative 3.4% operating margin. The company's consistent lack of profits raise a flag.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Marcus & Millichap, its EPS declined by 15% annually over the last five years while its revenue grew by 1.9%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

In Q1, Marcus & Millichap reported EPS of negative $0.08, up from negative $0.11 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Marcus & Millichap’s full-year EPS of negative $0.01 will flip to positive $0.51.

Key Takeaways from Marcus & Millichap’s Q1 Results

We were impressed by how significantly Marcus & Millichap blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $29.01 immediately after reporting.

Sure, Marcus & Millichap had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).