Cushman & Wakefield Ltd. Q1 FY2025 earnings call

• Momentum in growth strategy with mid single-digit organic growth in services business, two quarters ahead of target.
• Drove 100 basis points of year-over-year adjusted EBITDA margin improvement and paid down $25M in debt, with $230M repaid since CEO took over and debt refinanced/repriced 5x.
• Focus on growth now, delivering results ahead of schedule, with flat organizational culture enabling quick client adaptation and customized solutions.
• Talent attraction: Year-to-date in Americas, recruited leasing and capital markets brokers with more average annual revenue than all of 2024.
• Pipeline strength: Americas large capital markets deals pipeline 2x 1 year ago, Americas leasing and multi-market occupier group RFPs up 35%, valuation bid volume up 30% in Q1 with March setting 2-year record, APAC services with strong retention and 5 new contracts, CW services now 70% mechanical and engineering post major contract win.

Leasing business: Increased 9% in Q1. Americas leasing grew 14% (third consecutive quarter of double-digit growth). APAC leasing grew 16%, EMEA leasing contracted 26% due to tough comps. Capital markets: Grew 11% globally. Americas 4% growth, APAC 59% growth (driven by Japan), EMEA 17% growth (driven by UK and Netherlands). Services: Organic services revenue up 4% in Q1, near-term target of mid-single-digit growth achieved earlier. Americas organic services fee revenue up 6%, EMEA services saw reduction in project management work, APAC Services grew 3% (strong in India). Revenue contribution details: Leasing and capital markets, services each had their performance as outlined.

• Full year guidance mostly unchanged. Expect leasing growth in mid-single digits.
• Capital Markets growth to exceed 2024’s mid-single-digit growth rate.
• Services to achieve mid-single-digit top line growth for full year, an improvement from previous midyear target.
• EPS growth expected to exceed 2024 in 2025 and accelerate in 2026.

• Tariff uncertainty not materially impacting the sector yet, but economic environment monitored. EMEA being a weak economy could affect performance.

Q: Congrats on a great quarter. Can you talk about margin improvement?

A: Q1 margin beat was primarily due to top line strength (stronger than expected leasing and services) and some expense timing benefit, with some of the expense timing benefit reversing in Q2 and remainder depending on service line performance.

Q: How to characterize the environment in April and impact of tariffs on leasing and capital markets?

A: Tariff uncertainty not materially impacting the sector. 90%-95% of clients going forward with decisions, 5% or less delaying. Q2 and 2025 performance intact.

Q: View on office leasing business in recession?

A: Demand for office leasing remains strong, lease terms getting longer (avg 77 months in Q1), no significant softening expected.

Q: Thoughts on industrial leasing and trade war?

A: Still seeing positive trends in Americas industrial leasing, businesses still need industrial space for product delivery, executing on strategies despite tariff discussions.

Q: Rate outlook impact on capital markets business?

A: All-in borrowing costs considered, clients still closing deals and financing or using cash, not holding same view as competitor on 5% 10-year level.

Q: Commentary on EMEA region in services and macro?

A: EMEA is weakest economy, but some green shoots (capital markets growth in UK, property management growth in EMEA). Slow recovery expected.

Q: Balance between defense and offense?

A: Capital allocation strategy focused on growth and deleveraging, growth as higher percentage of allocation but continuing to de-lever.