Colliers International Group Inc. Q4 FY2025 earnings call

• 2025 was an exceptional year for Colliers with over 70% of earnings from resilient businesses, approaching 75% with recent acquisitions. • Agreed to acquire Ayesa Engineering, which will expand growth avenues, strengthen scaling ability, and enable cross-selling of engineering capabilities. • In commercial real estate, capital markets rebounded, especially in the US, leasing activity was steady, and outsourcing solutions grew. • Engineering delivered strong growth with internal performance and acquisitions, and growth to accelerate with Ayesa's inclusion. • Investment management ended the year with over $108 billion in assets under management. • Colliers views AI as a productivity and growth enabler, helping automate routine work, improve efficiency, and enhance data and insights for clients while not replacing human judgment and relationships.

For the fourth quarter, Colliers generated revenues of $1,600,000,000, up 5% year over year. The Commercial Real Estate segment net revenue was up 7%. Capital markets revenues increased 13% led by strong activity and market share gains in the US. Leasing revenues were up 3%, with the US, office, and industrial asset classes driving growth. Outsourcing grew 8%, with the valuation practice contributing. The Engineering segment net revenue was up 8% led by recent acquisitions. End market demand was strong in certain areas but had a temporary slowdown in some project management operations. The Investment management segment net revenues increased 6% driven by a recent acquisition, with year-end AUM at $108,000,000,000.

• Commercial real estate: Expecting low teens top line growth and modest increase in net margin, predicated on continuing capital markets recovery. • Engineering segment: Expecting mid single digit internal growth and over 25% total top line growth including the impact of acquisitions like Ayesa, supported by strong backlog and favorable trends in infrastructure, urbanization, energy transition, and data center demand. • Investment management: Net revenue growth expected in the low teens led by higher management fees as fundraising accelerates. • Overall: Expecting mid teens growth in all three key operating metrics.

• AI near-term impact may be overhyped, but long-term value is underappreciated. • Potential challenges in fully realizing the benefits of acquisitions and integrating operations.

Q: Tony Paolone from JPMorgan asked about organic growth in engineering and AI implications.

A: Christian Mayer said demand for engineering services is strong, pricing is increasing, they are hiring professionals, and AI helps with design margins by allowing professionals to focus on higher value add tasks.

Q: Daryl Young from Stifel asked about capital allocation and investment management integration.

A: Jay Hennick said not currently planning buybacks as they have significant projects in the pipe, and Christian Mayer said integration costs for investment management will continue in 2026 as they work to unify operations under the Harrison Street brand.

Q: Erin Kyle from CIBC asked about macro capital market pipeline and engineering internal growth.

A: Jay Hennick said capital markets are benefiting from pent-up supply of transactions, and Christian Mayer said engineering internal growth was roughly flat on the quarter and 5% on a full year basis.

Q: Stephen MacLeod from BMO Capital Markets asked about AI leverage and investment management margins.

A: Jay Hennick talked about AI enhancing the business by making professionals better and increasing efficiency, and Christian Mayer said investment management margins will decline to the high 30s in 2026 and return to mid-40s in 2027 as integration efforts progress.

Q: Julien Blouin from Goldman Sachs asked about Ayesa acquisition and engineering project management slowdown.

A: Jay Hennick talked about Ayesa's market presence and potential for growth, and Christian Mayer said the project management slowdown in certain operations was temporary and not a concern for 2026.

Q: Himanshu Gupta from Scotiabank asked about commercial real estate growth breakdown and fundraising.

A: Christian Mayer said commercial real estate growth is split with capital markets expecting high teens growth and leasing expecting mid to high single digit growth, and Christian Mayer talked about fundraising platforms including the new vintage infrastructure fund and other products driving the $6-9 billion fundraising target.

Q: Jimmy Chan from RBC Capital Markets asked about leverage and AI.

A: Christian Mayer talked about the plan to return to 2 times leverage through organic EBITDA growth and cash flow generation, and Jay Hennick said AI is a margin enhancer and not a disruptor to their complex transactions.

Q: Steven Sheldon from William Blair asked about Ayesa growth and staffing.

A: Christian Mayer talked about Ayesa's historical growth and expected high single digit organic growth going forward, and Jay Hennick said they are actively recruiting to be staffed to capture upside in transactional volumes.

Q: Frederic Bastien from Raymond James asked about Ayesa cross-selling and 2025 fundraising.

A: Christian Mayer talked about potential cross-selling of Ayesa's expertise in areas like desalination, and Christian Mayer mentioned 2025 fundraising was $5,300,000,000.

Q: Maxim Sytchev from National Bank Financial asked about engineering organic growth and Harrison Street margins.

A: Christian Mayer said engineering internal growth was on a net revenue basis, and Christian Mayer talked about Harrison Street margin dip due to system integration and headcount additions for unifying operations.