Colliers International Group Inc. Q3 FY2025 earnings call

• Engineering: Growth driven by 7 acquisitions and robust organic performance, with a strong pipeline and established global platform in 5 years.
• Real Estate Services: Delivered excellent results with surges in leasing and capital markets transactions, anticipating growth as interest rates stabilize, and unifying operations under the Harrison Street Asset Management brand.
• Investment Management: Highly resilient with over 85% of funds in long-dated vehicles, generating long-term earnings, and multiple new fund vintages launching later in the quarter and into 2026.

Engineering: Achieved 36% net revenue growth, with annualized revenue over $1.7 billion and over 10,000 professionals employed. Real Estate Services: Revenues increased 13%, with capital markets up 21%, leasing up 14%, and outsourcing up 8%. Investment Management: Net revenues increased 5%, assets under management totaled $108.3 billion as of September 30, up 5% from June 30, and had $9 billion in dry powder.

Consolidated outlook maintained. Real Estate Services and Engineering may exceed previous full year guidance. Investment Management expected to be slightly off due to fundraising timing and integration costs associated with unifying operations under the HSAM brand.

Q: Circling in on Engineering margins, service mix headwind?

A: Net margin down very slightly (20 to 30 basis points) due to pass-through costs at low margins and service mix across geographic markets.

Q: Investment Management fundraising mix and margin impact?

A: Close-ended funds have higher fee impact, open-ended and credit capital takes 3 to 6 months to deploy fees, with $9 billion dry powder ready to be deployed.

Q: Organic growth in Engineering?

A: Year-to-date organic growth in Engineering is around 8%, on track for mid-high single-digit for the year.

Q: Investment Management integration client feedback?

A: Client feedback has been terrific, with streamlined fundraising capability and more investment opportunities for clients.

Q: Capital markets fourth quarter outlook?

A: Pipelines are solid, confident of exceeding last year's performance in the fourth quarter.

Q: Data centers capabilities?

A: Colliers has full cycle capabilities in data centers, including design, entitlement, project management, and investment management, beyond traditional real estate services.

Q: Operating leverage in Real Estate Services?

A: Had about 22% operating leverage on an incremental revenue dollar in Q3, expect to continue as revenues increase.

Q: Dry powder breakdown?

A: Aggregate of available capital across funds, deployment of which drives returns, with different fee structures depending on fund type.

Q: Australian Engineering expansion?

A: Acquired a well-established urban development consultancy in Adelaide, a tuck-in acquisition that is accretive.

Q: Astris and Triovest integration?

A: Triovest has recurring revenue, being integrated into Canadian property management, and Astris has overperformed with existing relationships to investment management platforms.