Good day, and welcome to the Cushman & Wakefield Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Megan McGrath, Head of Investor Relations. Please go ahead.

Thank you, and welcome to Cushman & Wakefield's Fourth Quarter and Full Year 2025 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the period. This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com. Please turn to the page in our presentation labeled Cautionary Note on Forward-Looking Statements. Today's presentation contains forward-looking statements based on our current forecasts and estimates of future events. These statements should be considered estimates only, and actual results may differ materially. During today's call, we will refer to non-GAAP financial measures as outlined by SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures, definitions of non-GAAP financial measures and other related information are found within the financial tables of our earnings release and the appendix of today's presentation. Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2024 and in local currency unless otherwise stated. All revenue figures refer to fee revenue unless otherwise noted. And with that, I'd like to turn the call over to our CEO, Michelle MacKay.

Thank you, Megan. I want to start by saying I'm excited. I'm excited because of the exceptional results we delivered in 2025. I'm excited because of the 3-year financial targets and strategy we laid out at Investor Day. And I'm excited because of the transformational evolution we are seeing with AI. Starting with our 2025 results. We consistently and successfully executed against our targets outperforming on many fronts. In 2025, we delivered 34% adjusted earnings per share growth, the highest total revenue and highest leasing revenue in company history, more than 100% free cash flow conversion, and we ended the year at a net leverage ratio of 2.9x, nearly a full year ahead of our original expectations. In addition to this, we exited the year with momentum, especially in capital markets, where we delivered 15% growth in the fourth quarter. Our leasing business continued its consistent and solid performance, contributing to our strong free cash flow. And our services businesses continue to make strides on new business wins, retention and moving up the value chain. I am also excited about the 3-year financial targets we presented to you at Investor Day in December, including 15% to 20% annual adjusted EPS growth. We have confidence in these targets and the strategic growth priorities we outlined. We already see early indicators of success in these high-growth areas, particularly in the Americas, where capital markets was up 19% in Q4 and multi-market leasing grew 33% in 2025. We also spoke about how our organization shows up as an enterprise for our clients. Let me highlight an example of this work. We recently won an integrated portfolio management mandate from a large international corporation. But why did we win? During the RFP process, we showed up as a team, not just a group of…

Thank you, Michelle, and good morning, everyone. Before I get started, a quick reminder, all comparisons are to the prior year and in local currency. Unless otherwise noted, all revenue figures refer to fee revenue. We exited 2025 with strong momentum, capping off a year of meaningful improvements. For the full year 2025, we achieved top line growth in every service line and every reporting region. We expanded adjusted EBITDA margin by 46 basis points while continuing to invest for organic growth. We generated over $290 million in free cash flow, well exceeding our targeted free cash flow conversion rate. And we ended the fourth quarter below 3x net leverage for the first time since 2022 after prepaying $300 million in principal during the year. Looking at the year in more detail, revenue of $7.1 billion increased 7% and adjusted EBITDA grew 11% to $656 million. Adjusted EPS was $1.22, up 34% from last year and at the high end of our guidance range. We delivered $293 million in free cash flow for the year, representing 103% conversion rate and $126 million improvement versus 2024. The key drivers of our cash flow performance were strong earnings growth, continued prudent working capital management, higher accrued commissions and reduced interest costs. We believe this strength in free cash flow gives us ample flexibility to continue to balance our organic growth investments with our deleveraging targets. We closed the year with approximately $800 million in cash and cash equivalents and $1.8 billion in total liquidity. Our leverage ratio improved to 2.9x from 3.8x at the end of 2024. Moving on to our quarterly results. Fourth quarter revenue of $2 billion increased by 7%. Capital Markets revenue was up 15% globally as transaction markets remained healthy. Our leasing business delivered another strong quarter, growing…

Thank you, Neil. We have entered 2026 with confidence and momentum supported by a defined set of strategic priorities, a stronger balance sheet and operating leverage embedded across our platform. As we stated in December, our opportunity is undeniable and our path is clear. Our model aligns client success with our success, and we have compelling financial targets that we believe will generate long-term shareholder value. We are meeting the AI transformation with insight and actionable advice on how this will shape the built world. We invite you to join us on Monday on a webcast hosted by our think tank, where they will be presenting the first phase in a body of work focused on answering the most critical questions around AI and its impact on the commercial real estate industry. A big thank you to all of our employees who are change makers, enterprise-first thinkers and who focus on value creation for our clients and shareholders every day. Now I'll turn the call over to the operator for questions.

[Operator Instructions] The first question comes from Julien Blouin with Goldman Sachs.

Michelle, I appreciate your comments on AI creating winners and losers. One of the topics or debates that's out there is related to fears that one of the losers could be mid-market or smaller deal size brokerage businesses given sort of less complexity of deals, greater standardization, greater prevalence of digital buyers. When we look at your sort of average transaction size, it does seem to skew lower than some of your other peers. Wondering, do you think that, that is a real potential risk within the business?

Julien, thank you for question. We believe the concerns about AI disintermediating the commercial real estate brokerage on whole are materially overstated. This is not the residential sector. And yes, there are commercial real estate transactions that are large, complex, negotiation-driven decisions, but there are also midsized deals that are complex and negotiation driven. And in each case, there's significant financial and operational risk to those individuals signing those leases. So we believe that AI is absolutely going to enhance underwriting or market intelligence, efficiency, but it's far more likely to augment a trusted adviser than replace them. Think about making a 5- to 10-year decision, think about the financial impact of that on a company and as to whether or not they would turn that decision over to AI. We do not believe that will be the case.

That's really helpful. And Neil, maybe on the EMEA side, top line results were strong, but the margin came in a little lower year-over-year. Just wondering, are you still confident of driving EMEA margin growth in EMEA after the services business sort of restructuring you affected?

Yes, absolutely, Julien. I think the way to look at EMEA is really to look at it on an annual basis. And as one looks at the full year, we saw very, very nice improvement in margin overall. We are particularly pleased with what we're seeing on the services side, both in property management and in project management. The fourth quarter, we did have a little bit of a decline in margin, but that was really just driven by the timing of certain onetime expenses. I feel very confident as we look forward.

The next question comes from Ronald Kamdem with Morgan Stanley.

Great. Just staying with the AI theme, if you think about -- we talked about sort of large, mid and small, but there's also sort of different property types, right, whether it's office, industrial and retail. And as you guys are sort of reunderwriting the business, do you -- how do you sort of think about the risk to the end markets across those sort of subsectors? And does that make you want to position differently?

Yes. Great question, Ron. Thank you. The call that I mentioned that we're hosting on Monday that you're all welcome to attend is the conversation and are presenting the answers to the question that you're answering because most of the dialogue in our industry has rightfully been focused around data centers and AI, but this goes much further. When you talk about industrial, what are the needs for an industrial asset going forward? What makes an office building compelling? Our researchers and experts have been studying AI's impact to GDP, employment, demand, vacancy, rent values and has implications to your point, across nearly every sector and office class. So I would encourage you to attend our call on Monday because we're going to be creating practical tools for our clients to get a look -- a first look at our new AI impact barometer, which is the first-of-its-kind framework to help both real estate investors and our occupier clients make better long-term real estate decisions by understanding the trend lines of AI's impact as it unfolds.

Great. And then my quick follow-up. Just wanted to double-click on the guidance a little bit. I appreciate you guys gave 3-year targets. And I think you said in your opening comments that services revenue growth would be comparable in '26 to '25. But wondering if you could sort of comment on leasing revenue growth, capital markets revenue growth and just margin trajectory for the year.

Yes, absolutely, Ron. So in my prepared remarks, I did say that we expect '26 to unfold in a very similar fashion to what we saw in '25. And that not only applies to overall revenue, but also the revenue growth of each of our service lines. So we're very pleased -- you asked specifically about leasing, very pleased with what we're seeing in leasing. We hit the highest numbers Cushman ever has in the fourth quarter, and we see that continued growth moving into 2026. Certainly, as we look, economic indicators are strong, pipelines look good. So we feel pretty good about '26. In terms of margin, we gave a 3-year guide on margin, but we don't give full year guidance on margin. And so I would focus on our EPS guide of the 15% to 20% and then the other color around each of the service lines.

The next question comes from Stephen Sheldon with William Blair.

Maybe starting with Michelle, I think one of the things you talked about in the Investor Day quite a bit was trying to drive even more cross-selling motions between business lines. So can you talk about some of the things you're working on as an organization as we think about 2026 to support better cross-selling activity this year? I guess what are some of the big initiatives that you guys are trying to push those...

Yes, certainly. Thank you. You've watched us shift around our senior level leadership. You've watched us reorganize to get ourselves set up for what we call the spine. But I think equally important and where AI comes into this conversation again is how AI is driving that flow of data and information. So if you think about desiloing an organization, it's one thing to do it structurally and organizationally, it's something else to have the data flow freely throughout the organization. So a big piece of what we're doing aside from tracking the cross-selling and adjusting people's compensation going forward as it relates to that is that in capital markets, we have a capital markets CRM. In legal, we have contract and obligation management using AI in asset services, we have a proprietary platform with Guided Insights. In leasing, we're using OneAdvise, which helps automate digital tour books, lease negotiation, benchmarks and GOS, we have space planning, kind of et cetera, et cetera, et cetera. And what that does is that really creates a very strong data lake for us to work with as we're cross-selling to our clients.

Got it. That's really helpful. And maybe just on capital deployment, really nice to see Cushman end the year with sub-3 turns of leverage. So I know you have the goal of reaching 2x by 2028. So how aggressive do you plan to be in 2026 in terms of focusing on delevering? Is that still the big priority? Or could you be more aggressive in other areas such as continued organic reinvestment and potentially M&A? How are you generally thinking about it?

Yes, certainly very pleased with what we've -- how leverage has come down and the $300 million prepayment. As we look to 2026, we sort of expect to maintain a balanced approach to how we think about capital allocation. So certainly, we will be looking at organic growth, as you mentioned, that's a key component of our growth in our 3-year plan. But we will also continue to reduce debt. As we said, at our Investor Day, our plan is to get to 2x in 2028. And so that will involve additional debt repayment. But I think balance is the best way to think about it.

The next question comes from Seth Bergey with Citi.

I guess just first off, could you provide a bit more color on what your exposure is to office? I think that's come up as a sector that's viewed as more likely to be disrupted by AI.

Yes, sure. Office for us, overall, if one looks at leasing in particular, we have -- our mix is roughly 55%. And then on the capital markets side, it's around 21%. So overall, just over 40% is the way in which we think about office.

Yes. And just talking a bit more about office. Seth, the -- there was a Wall Street Journal article that came out this week, some follow-up articles around delinquencies. There's a couple of things to note. First, we generally do not work in the Class B office space, and that is the space that we feel is going to be the most impacted by this transition. Again, I reflect you back to joining the call on Monday for further discussion around that. And that as there are increasing delinquencies in real estate, I want you to understand we don't own any real estate. And the most important driver of our results is really velocity. So if the increase in delinquencies lead to more buildings changing hands and a bit more price discovery, that's a net positive not only for our brokerage business, but also for our services business as this means they've got the opportunity to manage buildings as they change hands.

Great. And then maybe just sticking a little bit with the AI topic. Does it change the way you think about kind of headcount needs for different parts of the organization?

We think a lot about AI as a tool to empower our employees. Remember, we have combinations of people who are deep experts, a lot of skilled labor out there that's on site. we do not anticipate a massive reduction in our labor force and our workforce and our white-collar jobs. We actually see this as a great opportunity for us to build and grow the platform without necessarily adding people. And so that's a great operating leverage point for us using AI in combination with the employee.

The next question comes from Anthony Paolone with JPMorgan.

My first question relates to just your '26 guidance relative to your 3-year outlook. If I look at your revenue growth, it's basically the same thing you expect for '26 as you laid out for your 3-year goal. And if I step back and think about like the transactional businesses having been bouncing off of like lower levels, I would think that those comps get tougher as you look out over the next 3 years, maybe that growth slows. So I was wondering, do you -- is that something you all foresee in the future and thus have other parts of the business that you think accelerate while those maybe come back down to more normalized levels? Or do you think your system just will be more steady than what the market might deliver in the next few years?

Tony, thanks for the question. The capital markets recovery is certainly underway, but we believe it's still in the early stages. So pricing has largely reset, capital has returned and the recovery has room to run. So we have always spoken about how we think this is going to be a very steady uplift in capital markets over a couple of years. We have all the elements that are really shaping up to be healthy for these markets. And we don't think, by the way, a 25 basis point move by the Fed in one direction or another really changes this. Industrial leasing demand has reaccelerated. Of the 83 markets that we track, 55 have already registered positive net absorption in 2025, and we think that's going to continue. Part of this is also in balance to the fact that there's been such a limited amount of construction, Tony, over the last several years. That those assets of higher quality are going to continue to gain value, and we think there's still momentum in most of these asset classes at the higher quality level.

Okay. And then just a follow-up on the capital allocation side. Just any thoughts on stock buyback, just given what's happened to the stock AI-driven downturn?

Look, we're certainly evaluating share buybacks, especially given where the stock has been trading recently. We believe our share price right now is holding extraordinary value. However, in terms of capital allocation, our main priority is investing for organic growth and deleveraging the company. In the longer term, share buybacks will certainly be on the table.

The next question comes from Alex Kramm with UBS.

Just maybe this is definitely a follow-up from the 2026 guidance. Neil, can you maybe be a little bit more specific on the services side because you said same as last year, but there were a lot of moving pieces, organic, nonorganic, a couple of business shutdowns. So maybe just help us specifically there. And while you're on that topic of services, maybe just flesh out where you're the most excited. It sounds like project management is an area of strength, but maybe talk about what you're expecting in some of these other businesses in services.

Sure, Alex. In terms of the guide, I've provided sort of high-level ranges for the full year and each of the service lines, we expect to be very similar to what we saw this year. So I don't really have any much more color there other than that guidance. Your question on services is a good one. I think we had a very, very strong year in services. Essentially, we moved from flat services growth the year before to 6% growth, organic growth in 2025. And that really is the number that we are picking to. We've said all along that we expect services to be in the mid- to high single growth rate, and we feel very good about what we're seeing in that business and what we expect to see. We had some great new wins in the year, and we've seen some real momentum. As you mentioned, we saw a strong improvement in project management in the back half of the year, especially outside the U.S. in EMEA and APAC. And we believe this is driven by confidence in the economy and confidence in people doing work and strong real estate fundamentals. So in Asset Services, we have a growing pipeline. Asset managers are and investors are reevaluating who is managing their buildings and how to manage that property, and we have a very, very strong presence there. So I think across all of our services lines, we expect some good momentum as we go into 2026.

Okay. No, that's helpful. And then just maybe very quickly on the margin side, I understand no specific guidance here, but maybe just flesh out a little bit the biggest areas of investing maybe by business line. But then also, I mean, you've been looking at efficiencies. I assume that's ongoing, maybe some areas that you're looking in particular? Or do you think the heavy lifting has been done here?

Alex, I think most of the heavy lifting on the cost side has been done, but that -- but we are maintaining our cost discipline, and that's a key part of everything we do, looking at profitability in our services business, looking at how we are driving growth in a profitable fashion. So cost has sort of become part of our culture, but it's not the key focus. The key focus is on growth as we go into 2026.

The next question comes from Mitch Germain with Citizens Bank.

Greystone, it just seems like was it the inputs in your calculation changed a bit because of the backdrop. Is that the way to consider the write-down?

That's exactly right. When we look at our assumptions for that acquisition as we look out compared to the original assumptions when we made the investment in 2021, we felt like adjusting the value of that joint venture was appropriate.

Got you. It seems like a different press release almost daily from you guys on new hiring. Michelle, I'm curious about how the company is approaching hiring in 2026. Do you think it's going to be greater than what you accomplished in 2025? Just some thoughts around that and maybe where the emphasis is in terms of where you're looking to add people.

Great. Thank you for the question. Yes, we'll continue on pace. We have a substantial budget for recruiting going into 2026. You'll continue to see us hire both in institutional capital markets globally and leasing as well. So no slowdown from us.

The next question comes from Brendan Lynch with Barclays.

Michelle, I wanted to follow up on your comment about capital markets still having room to run. What, if anything, needs to change to kind of keep things going at this level and get back to the levels seen in past cycles? Or is it just a matter of avoiding a recession that could kind of sustain the recent pace of growth?

Yes. I think to your point, avoiding any dramatic economic event will continue on pace here. And when you see the 10-year bumping around 4%, 4.5%, as most of us on this call know, the market likes that. You can transact in those zones, and we think that's most likely what's going to be happening over the next year plus. We continue to -- as I've said many times, we don't think there's going to be the kind of peakish recovery you saw in something like 2022 coming off a market that was totally shut down. We think there's just going to be continued growth, asset values are going to increase and transaction volume over time is going to increase as well.

Great. That's helpful. And Neil, to follow up on one of your comments about industrial demand being strong, particularly for sites that are greater than 500,000 square feet. Maybe you could talk a little bit more about how the customer base has evolved and what is driving the strength in demand for that particular size of asset?

Yes. So that reference is really particularly focused on the Americas. In the Americas, our industrial leasing was very strong, up 10%. And I think that the key thing is that we are continuing to benefit from flight quality. And so the sector has been very resilient. We certainly remain very optimistic about what we're seeing in the industrial space with the strong e-commerce, last mile delivery trends support these large industrial facilities. And so that certainly has been an area of strength for us and one that we see continuing into 2026.

Yes. And just to add a little more context there. Large users often seeking modern logistics facilities to support automation and higher power requirements were the primary drivers of demand, and we think that's what's going to keep industrial leasing on track. The overall vacancy rate has held steady for the past 3 quarters, and construction is down 62% from 2017. So you have a really healthy formula here for driving growth in industrial.

The next question comes from Patrick O'Shaughnessy with Raymond James.

Just one question for me. A bigger picture question on your multifamily origination strategy. Given some of the headwinds facing the Greystone JV, is there a potential for you to change up how you approach that multifamily origination business? And is the JV still the right structure versus owning the business outright?

That's a really interesting question and something we're certainly considering. I wouldn't say that we're going to change the way we do business. That business is pretty structured in the way that it operates. But let's just say we're being a little more hands-on in the JV with the operations and really helping to guide that management team to a more profitable business model.

This concludes our question-and-answer session. I would like to turn the conference back over to Michelle MacKay for closing remarks.

Thank you, everyone, and we hope to see you at our webcast on Monday, where we already have more than 2,000 clients registered to attend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.