Cushman & Wakefield plc Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Transformational Strategy: Achieved majority of 3-year targets ahead of plan. Rebuilt the company, drove top line growth in nearly every region and service line. Adjusted EBITDA margin improved by 90 basis points year-to-date, adjusted EPS up 95% to $0.39 per share.
• Business Segments: Capital Markets expanding rapidly, leasing strong across asset classes, services turnaround with 6% organic growth. Prepaid $150 million in debt, reducing gross debt to $2.8 billion, resulting in $45 million annual interest savings.
• Market Outlook: Leaders making long-term real estate decisions, lender appetites boosting capital markets activity. Anticipate continued growth in leasing, capital markets, and services market share.

Segment Performance

• Leasing: Grew 8% in Q2. Americas leasing rose 9% with strong demand across asset types. EMEA leasing returned to growth with 8% revenue increase. APAC saw 3% decline but growth in India and Australia helped.
• Capital Markets: Americas delivered 30% growth, EMEA up 16%, APAC Capital Markets grew 4%. Q2 revenue grew 26%, and year-to-date in Americas, recruited capital markets brokers with annual average revenue 200% higher than 2024.
• Services: Achieved 6% fully organic growth in Q2. Americas posted 5% organic growth, EMEA 11% (retooled project management won new contracts in France and Italy), APAC 5% (supported by expansion in India, new business in Singapore, etc.). Equity method investments down $4.1 million due to lower Greystone performance.

Guidance

• Raised full year EPS guidance.
• Full year leasing revenue expected to grow 6%-8%, above previous forecast.
• Capital Markets revenue expected to grow mid- to high teens, up from previous expectations.
• Services on track for mid-single-digit organic top line growth.
• Full year 2025 adjusted EPS growth expected 25%-35%, ahead of initial expectations.

Risks

• Macro uncertainty and market volatility could impact business performance.
• Tariffs and their potential disruptive effects on capital markets activity.
• Dependence on continued investor confidence and lender appetites for capital markets growth.

Question and Answer

Q: How much of EMEA's pickup is due to operational improvements vs. easier comps?

A: Similar themes to US, management change driving progress, but also growing investor confidence and operational efficiency work.

Q: Services guidance and retention in GOS?

A: Guidance assumes mid-single-digit growth in back half; 96% annualized retention in GOS is notable improvement from historical.

Q: Leasing runway and industrial trends?

A: Industrial demand solid, net absorption in Q2, flight to quality and lease rollover driving growth; back half expected to continue momentum.

Q: EMEA Services turnaround and margins?

A: Project management saw wins in France and Italy, focus on margins and efficiency, with margin expansion expected as growth continues.

Q: Capital markets trends in July and tariffs?

A: July capital markets flow compelling, tariffs disruptive but not destructive, business leaders making decisions through noise.

Q: Broad-based hiring in capital markets and leasing?

A: Broad-based hiring, 200% more average revenue for capital markets brokers, 150% higher for leasing, with more teams and productivity per broker.