Colliers International Group Inc. Q2 FY2026 earnings call

• Overall Performance and Strategic Direction: Colliers delivered a strong second quarter with double-digit revenue growth across all three business segments, healthy internal growth, and improving earnings quality. The company is building out its third global platform (integrated investment management) alongside its established commercial real estate and engineering platforms, to create more client opportunities and long-term shareholder value. Recurring revenue now makes up 70% of earnings, delivering greater stability, stronger cash flow, and more growth flexibility. Cross-platform collaboration is a core strategic differentiator that allows Colliers to serve clients across the full asset value chain, creating additional growth beyond standalone segment opportunities. Data centers are a key example of this integrated model: Colliers supports site identification/acquisition, provides engineering/design/operations services, deploys capital via Harrison Street (which has invested over $6 billion in digital infrastructure over 6 years), and offers post-completion leasing, sales, and facility management. This integrated model is replicable across many high-growth asset ecosystems. - Acquisition Update: The acquisition of IESA was completed late in Q2 2026, expanding Colliers' global engineering capabilities and strengthening its position across Europe, Latin America, the Middle East, and Australia. IESA brings unique specialized expertise (including desalinization and marine engineering) and eliminates weather-related seasonal margin volatility that impacts Northern Hemisphere engineering operations. Early integration of IESA has been positive, with the team highly engaged in cross-platform collaboration and new growth opportunities. - Balance Sheet: After completing the IESA acquisition, Colliers ended Q2 with a leverage ratio of 2.8x, below the pre-acquisition expectation of ~3x. Management expects significant deleveraging in the second half of 2026 as seasonal cash flows are realized, targeting a year-end leverage ratio of ~2.3x.

Consolidated revenues for Q2 2026 were $1.6 billion, up 16% year-over-year, while net revenues were $1.4 billion, also up 16%. Adjusted EBITDA was $205 million, up 14%, and adjusted EPS increased 6% to $1.83, held back by higher interest expense. 1. Commercial Real Estate: Net revenue increased 12% year-over-year. Capital markets revenue rose 23% and leasing revenue rose 23% year-over-year, with broad growth across all regions, led by U.S. industrial. The segment's net margin was 11.9%, slightly up year-over-year. 2. Engineering: Net revenue increased 27% year-over-year, combining 5% internal organic growth and contribution from the recent IESA acquisition. Net margin was 14.5%, slightly up year-over-year. As of June 30, the engineering segment held a 12-month backlog, indicating strong near-term momentum. 3. Investment Management (Harrison Street): Net revenue increased 15% year-over-year, driven by acquisitions and internal growth from New Capital. Net margin was 36.5%, impacted by ongoing planned global platform expansion under the Harrison Street brand. Assets under management reached $110 billion, up 17% year-over-year. In Q2, the segment returned $1.9 billion of capital to limited partners ($3 billion year-to-date) and raised $2.2 billion in new capital commitments, bringing year-to-date fundraising to just under $3 billion. Recurring revenue streams now account for approximately 70% of total company earnings.

• Full-year 2026 outlook is reaffirmed, with key forward-looking indicators (transaction pipelines, engineering backlogs, fundraising pipelines) up nicely year-over-year. - The 2026 annual fundraising target for investment management remains unchanged at $6 to $9 billion, with fundraising expected to accelerate in the second half of the year. - Investment management segment margins are expected to remain pressured for the remainder of 2026 due to ongoing platform build-out, and will stabilize in the low 40% range in 2027. - For Q3 2026, management expects leasing revenue growth of mid-single digits year-over-year, and capital markets revenue growth of ~15% year-over-year. Q3 will face more difficult year-over-year comparables after the easy comps seen in Q2 2026. 5% internal organic growth for the engineering segment is expected to continue for the remainder of 2026. - Management may initiate stock buybacks in the second half of 2026 as leverage declines, given the current undervaluation of Colliers shares, with any buyback expected to be modest and not materially increase leverage. - Long-term leverage will remain disciplined, with deleveraging from the current post-acquisition 2.8x targeted by year-end 2026.

• Geopolitical risk and macroeconomic volatility remain elevated, though management does not expect these factors to materially impact full-year 2026 results. - Elevated interest rates remain a top-of-mind concern for real estate investors, though management noted that transaction activity holds up well as long as rates remain within a relatively wide stable range. - Seasonal volatility in engineering segment margins remains a factor for Northern Hemisphere operations, though the IESA acquisition reduces this variability over time. - Integration of new acquisitions and the global Harrison Street investment management platform requires ongoing investment that suppresses near-term margins.

Q: What is driving strong industrial commercial real estate growth, and what is your Q3 outlook for overall leasing and capital markets growth? / A: Industrial is a historic strength for Colliers, and Q2 growth was boosted by easy year-over-year comparables from last year's post-uncertainty slowdown. The strongest industrial demand is in the Americas, particularly the U.S. For Q3, management expects mid-single digit year-over-year leasing growth and ~15% year-over-year capital markets growth, with tougher comparables expected relative to Q2.

Q: How is internal engineering growth trending, and when will cross-selling opportunities with other Colliers platforms be fully realized? / A: Year-to-date internal organic engineering growth is 5%, and this pace is expected to continue for the rest of the year. The integration of IESA (which adds engineering presence to markets where Colliers already had strong commercial real estate market share) is already driving early cross-selling opportunities, allowing Colliers to offer end-to-end client solutions across the full asset lifecycle. Management expects this differentiated integrated model to become a clear competitive advantage over the next 2 years as collaboration deepens across all three platforms.

Q: How does management prioritize between share buybacks and tuck-in M&A as leverage declines, and how does AI impact acquisition valuation? / A: Management will always prioritize high-quality strategic acquisitions that deliver long-term value over share buybacks. Colliers has already incorporated AI into workflow automation for years, and increased investment in high-priority AI initiatives, but core business value still depends on professional expertise and client relationships. AI market sentiment has led to lower valuation multiples for smaller engineering firms, allowing Colliers to acquire high-quality smaller assets at better prices than in 2025, as larger firms like Colliers are better positioned to capitalize on AI productivity gains.

Q: What is Colliers' formal strategy for the high-growth data center sector? / A: All three Colliers platforms are already focused on capturing growth in data centers, with Harrison Street already owning $6 billion in data center assets that create natural cross-selling opportunities for commercial real estate and engineering services. While a fully uniform cross-platform strategy is not yet formalized as teams prioritize handling current strong organic growth, Colliers is already capturing outsized share as existing clients consistently award new data center work to the firm across markets, and the opportunity will be formalized as growth scales.