Newmark Group, Inc. Q3 FY2025 earnings call

• Newmark delivered strong quarterly top and bottom line improvements with double-digit gains across major business lines, all organic. - Acquired RealFoundations, which offers management consulting and outsourced managed services for institutional real estate clients. - Launched a fund administration business. - Expanded internationally, launching property and facility management services in India and APAC, and opened 9 international offices, hiring over 100 revenue-generating professionals outside the U.S. - Total revenues up 25.9%, adjusted EPS up 27.3% to $0.42, adjusted EBITDA up 28.9% to $145.2 million, with adjusted EBITDA margin improving to 16.8%. - Tax rate for adjusted earnings was 12.1% in the quarter, with full-year tax rate range adjusted to 13% to 15%.

Total revenues for the third quarter were $863.5 million, up 25.9% compared to $685.9 million in the year-earlier period. Management services, servicing and other grew by 12.6%, with valuation and advisory up 23.5%. Leasing revenues increased by 13.7%, achieving a record third quarter. Capital Markets revenues saw a 59.7% increase, with total debt volumes up approximately 129% and investment sales volumes up 67%.

• Updated 2025 outlook: total revenues between $3.175 billion and $3.325 billion, adjusted EPS between $1.53 and $1.63, adjusted EBITDA between $543 million and $579 million. - Confident in meeting or exceeding 2026 targets of over $630 million adjusted EBITDA and $1.75 per share adjusted EPS.

• Forward-looking statements subject to risks and uncertainties due to macroeconomic, social, political, and other factors that could cause actual results to differ from expectations.

Q: On data centers, do you think capital has gotten ahead of the physical ability to build infrastructure?

A: Barry Gosin said there's a lot of production going on, capital comes first, and Newmark is a beneficiary of the future capital needs. Mike Rispoli added investments are purposeful and will result in 10% earnings improvement next year.

Q: When were the 2026 targets conceived?

A: Michael Rispoli said they've been out there for a while, and they'll reevaluate next quarter for formal 2026 guidance.

Q: Any sign of impact from political risk in New York City on buyers?

A: Barry Gosin said there's a lot of noise around the mayor, but he doesn't see impact as New York's law firms, financial institutions, and clients are expanding.

Q: Cadence of capital markets across the quarter?

A: Michael Rispoli said the quarter was strong across the board, pipelines remain strong into Q4, and no slowing in transaction activity.

Q: View on RealFoundations fit and cross-selling?

A: Barry Gosin said RealFoundations' services fit neatly with Newmark's other services, bridging gaps for a holistic solution. Lou Alvarado added it augments growth in occupier solutions.

Q: Views on organic growth of services platform globally?

A: Barry Gosin said it's accelerating, putting pieces together like on the investor side, with talented people joining due to adaptable approach.

Q: Any callout on Q4 2024 comp?

A: Michael Rispoli said Q4 2024 is a tougher comp, but reflected in guidance, and pipeline remains strong.

Q: Data center team build and future growth?

A: Barry Gosin said they brought in experts early, hired quickly, built an incredible team, and are still building, focusing on talent.

Q: Staffing restraint for data centers?

A: Barry Gosin said they always view doing more with less, appropriately staffed to scale, and can flex up and down.