Colliers International Group’s Earnings Call Contradictions: Margin Stabilization Timing and Fundraising Confidence Clash

Date of Call: Jul 30, 2026

Financials Results

• Revenue: $1.6B consolidated revenue, up 16% (local currency)
• EPS: $1.83 adjusted EPS, up 6%

Guidance:

• Leasing revenues expected up mid-single digits YOY in Q3.
• Capital markets expected ~15% YOY growth in Q3.
• Investment management margins to stabilize in low 40% range for 2027.
• Fundraising target for 2026 unchanged at $6 to $9 billion.
• Leverage expected to finish year around 2.3x.

Business Commentary:

Revenue Growth Across Platforms:

• Colliers International reported consolidated revenues of $1.6 billion for the second quarter, up 16%, with net revenues also increasing by 16% to $1.4 billion.
• Growth was driven by strong performance across its commercial real estate, engineering, and investment management platforms.

Commercial Real Estate Performance:

• Commercial real estate segment net revenue was up 12%, with capital markets and leasing revenues each increasing by 23%.
• The growth was supported by strong demand in the Americas, particularly in U.S. industrial property sales, and improved transaction activity.

Engineering Segment Expansion:

• Engineering net revenue increased by 27%, driven by recent acquisitions and a 5% internal growth rate.
• The expansion was attributed to strong demand across critical infrastructure, transportation, water, and buildings, along with strategic acquisitions like IESA.

Investment Management Growth:

• Investment management net revenues rose by 15%, with asset realizations generating strong gains and resulting in $3 billion in capital distributions year-to-date.
• Growth was supported by new capital commitments and the integration of global platforms under the Harrison Street brand.

Leasing Revenue and Capital Markets Outlook:

• Leasing revenues are expected to grow in the mid-single digit range, while capital markets are projected to see approximately 15% year-on-year growth in the third quarter.
• The positive outlook is based on strong market activity and strategic positioning in key geographical regions.

Sentiment Analysis:

Overall Tone: Positive

• Management stated 'delivered another strong quarter with double-digit revenue growth' and that 'momentum gives us confidence'. They noted a 'broader recovery across our markets' and that results 'reinforce the confidence we have in our future'. Visibility is described as 'strong' with pipelines 'up nicely'.

Q&A:

• Question from Himanshu Gupta (Scotiabank): What led to strong industrial leasing and capital markets trends, and how do you see momentum in Q3?
  Response: Strong demand in the Americas, especially the U.S., partly due to easier comps from last year, with momentum expected to continue but against tougher comps in Q3.

• Question from Himanshu Gupta (Scotiabank): Is the recovery pickup in investment management margins getting pushed to next year?
  Response: Margin pressure will persist for remainder of 2026 due to platform integration; expected to increase to low 40% range in 2027.

• Question from Himanshu Gupta (Scotiabank): Has the $2.2B raised been deployed, and when will it lead to fee-bearing capital?
  Response: Some capital becomes fee-bearing immediately, others take time to deploy; this is normal and reflected in full-year expectations.

• Question from Stephen Sheldon (William Blair): How is internal organic growth trending in engineering and what are cross-selling opportunities with CRE?
  Response: Year-to-date internal growth in engineering is 5%, expected to continue. Cross-selling is already occurring, with IESA already working with CRE and investment management, creating end-to-end solutions.

• Question from Stephen Sheldon (William Blair): What drove management fees as a percentage of AUM, and will fundraising get easier?
  Response: Fees driven by successful integration and standardization of global platform. Fundraising is aided by strong LP relationships and a variety of proven and new strategies.

• Question from Erin Kyle (CIBC Capital Markets): Is engineering utilization back to expected levels, given margin expansion?
  Response: Margin varies quarterly due to seasonality; IESA acquisition adds higher-margin work and geographic diversification, softening variability.

• Question from Erin Kyle (CIBC Capital Markets): Is strong CRE growth despite rate environment due to pent-up demand or market share gains?
  Response: Both: winning share through disciplined recruiting and benefiting from pent-up demand, with activity expected to continue as long as rates remain in a range.

• Question from Jimmy Sean (RBC Capital Market): How are you prioritizing share buybacks vs. tuck-in M&A as leverage decreases?
  Response: Will consider buybacks at current prices as leverage falls, but will default to great acquisitions that add long-term value, as the pipeline is abundant.

• Question from Jimmy Sean (RBC Capital Market): Has AI impacted multiples or underwriting for engineering acquisitions?
  Response: AI is not a major disruption; purchase prices are adjusted down as it benefits larger players more, allowing acquisition of exceptional smaller businesses at better valuations.

• Question from Daryl Young (Stifel): Why was outsourcing advisory weaker in Europe and Asia?
  Response: Weakness due to local project management timing in those regions; expected to pick up in Q4. Other services like property management were up.

• Question from Daryl Young (Stifel): Is there a formalized data center strategy evolving?
  Response: No uniform cross-platform strategy yet; growth is strong with internal synergies as engineering and Harrison Street naturally connect on client deals.

• Question from Daryl Young (Stifel): Will you take leverage back to 3x for NCIB?
  Response: No, 2.8x is the high watermark; buybacks could be accretive without materially impacting leverage, depending on M&A pipeline.

• Question from Mitch Germain (Citizens Bank): Is there thought to unify brands for cost savings and best practices sharing?
  Response: Some efficiencies already exist centrally (tech, shared services). Business connectivity is developing naturally; formalization may come in 1-2 years as opportunities are capitalized on.

• Question from Mitch Germain (Citizens Bank): What is the long-term leverage target?
  Response: Target range is 1.5x to 2x, with a bump for significant acquisitions or low share values.

• Question from Frederick Bastion (Raymond James): Any early surprises with IESA?
  Response: Very positive experience; team is engaged as equity partners and excited to explore opportunities with CRE and other engineering groups.

• Question from Frederick Bastion (Raymond James): What specific expertise in IESA is exciting for cross-selling?
  Response: Strong expertise in desalination (6-10 large plants) and marine/water engineering, which can be transferred to other markets.

• Question from Stephen McLeod (BMO Capital Markets): What is the foundation for strong back-half visibility in all three segments?
  Response: In CRE, disciplined pipeline tracking and high U.S. transaction visibility. In engineering, a 12-month backlog of work under contract provides comfort and visibility.

• Question from Stephen McLeod (BMO Capital Markets): What are top priorities for 2027 regarding capital deployment?
  Response: Nearest priority is completing the global build-out of Harrison Street Asset Management, then exploring consolidation and growth opportunities across all platforms globally.

Contradiction Point 1

Investment Management (IM) Margin Stabilization Timeline

Conflicting timelines for when IM margins will stabilize.

Himanshu Gupta (Scotiabank) - Himanshu Gupta (Scotiabank)

2026Q2: Margins expected to stabilize in the low 40% range in 2027. - Christian Mayer(CFO)

What led to the strong industrial trend, and has the recovery in investment management margins been delayed to next year? - Himanshu Gupta (Scotiabank)

2026Q1: Raising capital does not immediately pay dividends; it takes time to deploy, so the margin benefit is not material in the same year. - Christian Mayer(CFO)

Contradiction Point 2

Fundraising Momentum and Target Achievement

Contradiction on confidence and momentum in achieving the full-year fundraising target.

Himanshu Gupta (Scotiabank) - Himanshu Gupta (Scotiabank)

2026Q2: Fundraising, $2.2B was raised in Q2; capital becomes fee-bearing immediately for some funds and after deployment for others, which is normal and factored into annual expectations. - Christian Mayer(CFO)

What factors contributed to the strong industrial trend and will the recovery in investment management margins be delayed until next year? - Erin Kyle (CIBC Capital Markets)

2026Q1: Fundraising is way ahead of last year. Confidence stems from new strategies and open funds, strong investor interest... The company is optimistic about exceeding its target range. - Jay Hennick(CEO)

Contradiction Point 3

Engineering Segment Growth Rates

Contradiction in reported growth rates for the engineering segment.

Stephen Sheldon (William Blair) - Stephen Sheldon (William Blair)

2026Q2: Engineering internal growth year-to-date is 5%, expected to continue. - Christian Mayer(CFO)

How has internal organic growth in engineering trended, and what cross-selling potential exists between engineering and core CRE? - Maxim Sytchev (National Bank Capital Markets)

2026Q1: Engineering growth was in the mid-single digits for the quarter, a mix of organic growth and acquisitions. - Christian Mayer(CFO)

Contradiction Point 4

AI's Impact on Engineering Acquisition Valuations

Contradictory statements on whether AI disrupts the market or allows for better valuations.

Jimmy Sean (RBC Capital Market) - Jimmy Sean (RBC Capital Market)

2026Q2: Regarding AI, it’s seen as an opportunity...; AI is not expected to significantly disrupt major players, allowing acquisitions at better valuations. - Jay Hennick(CEO)

How are you balancing share buybacks and tuck-in M&A priorities amid low stock prices and AI-related uncertainties impacting engineering acquisition multiples? - Tony Palone (JPMorgan)

2025Q3: The engineering market is massive and fragmented, providing significant white space for tuck-in acquisitions. The goal is to enter markets as a top player and build a differentiated, scalable platform. - Jay Hennick(CEO)

Contradiction Point 5

Long-term Target Leverage Ratio

Different statements on the long-term target leverage ratio.

Mitch Germain (Citizens Bank) - Mitch Germain (Citizens Bank)

2026Q2: Long-term target leverage is 1.5x–2x, with a bump for major acquisitions or unusually low share prices. - Christian Mayer(CFO)

Are there plans to unify back-office functions or best practices across IESA, Englobe, and other executive-led businesses, and what is the long-term leverage target? - Mitch Germain (Citizens Bank)

2026Q2: The long-term target leverage range is 1.5x to 2x, with a bump for significant acquisitions or undervalued share opportunities. - Christian Mayer(CFO)