Cushman & Wakefield's Q3 2025: Contradictions Emerge on Services Growth, Capital Markets Execution, and Recession Impact

Date of Call: None provided

Financials Results

• Revenue: $1.8B, up 8% YOY (organic +9%)
• EPS: $0.29 adjusted EPS, up 26% YOY (from $0.23)

Guidance:

• Raised full-year 2025 adjusted EPS growth to 30%–35% (from prior 25%–35%).
• Full-year leasing revenue expected toward the high end of the 6%–8% range.
• Expect mid-single-digit services revenue growth for the full year.
• Full-year capital markets revenue expected to grow mid-to-high teens.
• Expect to exit the year within a 60%–80% free cash flow conversion range.

Business Commentary:

• Strong Financial Performance and Earnings Growth:
• Cushman & Wakefield reported leasing revenue of $1.8 billion for Q3 2025, up 8% year-over-year, with organic revenue growth of 9%.

• The growth was driven by momentum across all business segments, market trends, and strategic investments in data and AI infrastructure.

• Capital Markets Expansion:

• The company's capital markets business saw 20% year-over-year growth in Q3 2025, with notable contributions from the Americas and EMEA regions.

• This expansion was supported by enhancements to the capital markets platform, attracting high-quality advisors, and favorable market conditions.

• Services Segment Growth and Margin Improvement:

• Cushman & Wakefield's services revenue grew by 17% in EMEA and 6% in the Americas and APAC, with a focus on project management and facility services.

• Margin improvement was attributed to retooling the project management business, higher brokerage revenue, and effective expense management.

• Balance Sheet Transformation and Debt Reduction:

• The company reduced its net leverage ratio to 3.4x, the lowest since Q4 2022, through significant debt repayments and refinancing.

• This transformation was achieved by strong cash flow generation, reduced interest burden, and strategic debt management.

• Geographic Performance and Client Focus:

• In the Americas, leasing and capital markets grew significantly, driven by a flight to quality in office and industrial sectors.
• The strong performance in EMEA and APAC was supported by market resilience, stable economies, and a focus on serving high-value clients.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted “momentum across all areas,” the “largest third quarter leasing revenue in company history,” raised full-year adjusted EPS growth to 30%–35%, and noted balance-sheet progress (net leverage 3.4x, $500M debt repaid over two years).

Q&A:

• Question from Julien Blouin (Goldman Sachs): How quickly will the 45 hired capital markets advisors (with >200% gross revenue) drive Americas capital markets growth and what explains EMEA margin dynamics?
  Response: Capital markets hires are still ramping and should drive continued growth into 2026 as the firm builds a global platform; EMEA margins improved ~170 bps YOY but last quarter benefited from FX and incentive timing, with further upside from scale in brokerage and services.

• Question from Stephen Hardy Sheldon (William Blair): How much of Americas outperformance is market backdrop versus execution, and what is driving services strength (by service line/geography)?
  Response: Both stronger market conditions and better execution; services strength is driven by project management and retooled design/build capabilities with notable wins in the UK, Netherlands, Spain, India and Greater China.

• Question from Stephen Hardy Sheldon (William Blair): Any signs of slowing in October or is momentum persisting into Q4?
  Response: Momentum continued into early Q4 with no signs of meaningful slowdown.

• Question from Stephen Hardy Sheldon (William Blair): How is Cushman & Wakefield positioned to capture data center build-out and optimization opportunities?
  Response: C&W is scaling a full-platform data center capability—research, specialized advisors, facilities/project management and the Athena site‑selection tool—to capture a large, multi-year capacity expansion.

• Question from Anthony Paolone (JPMorgan Chase): How confident are you that services can sustain mid-single-digit growth and improve profitability?
  Response: Highly confident—services have been retooled, moving up the value chain into higher‑margin technical and project management work, focusing on profitable growth and cross‑sell to drive retention and margin expansion.

• Question from Seth Bogue (Citi): How do you balance debt paydown vs. continued organic investment and M&A, and will APAC JV (OneWork) normalize?
  Response: Free cash flow lets the company simultaneously deleverage and fund organic investments; M&A will be selective and opportunistic; the APAC OneWork shortfall was a $5M timing headwind and is expected to be roughly flat for the full year.

• Question from Ronald Kamdem (Morgan Stanley): What will drive the next leg of margin improvement in services and how competitive is recruiting for new talent?
  Response: Margin upside will come from technology adoption, moving into higher‑margin mechanical/engineering and better cross‑sell/retention; recruiting remains constructive—inbound interest strong and compensation not escalating materially.

• Question from Mitchell Bradley Germain (Citizens Bank): What internal changes are you making to drive cross‑sell and how are you capturing flight‑to‑quality demand?
  Response: Implementing a 'Plus One' desiloing and incentive program to increase cross‑sell and stickiness; leveraging leasing strength to capture flight‑to‑quality demand, evidenced by a >40% increase in large/mega deals pipeline.

Contradiction Point 1

Services Growth and Profitability

It involves differing perspectives on the growth and profitability of the services segment, which are critical for understanding the company's financial performance and strategic focus.

Can you discuss your confidence in the business's future prospects? - Anthony Paolone (JPMorgan Chase)

2025Q3: As you've seen, we've made incredible progress this year in services, which has seen accelerated growth for the past three quarters. Importantly, we're moving up the value chain of services into more technical services. We've also successfully retooled the services business in a number of ways. - Michelle MacKay(CEO)

Can you discuss the services segment's profitability given mid-single-digit growth? - Anthony Paolone (JPMorgan)

2025Q2: We're extremely pleased with the execution on this front. We experienced an improvement in our services profitability, specifically in our project management business. We're working with our clients to deliver on the projects. The transformation of our businesses enabled us to deliver a first half margin expansion, despite the ongoing macroeconomic uncertainty. - Neil O. Johnston(CFO)

Contradiction Point 2

Capital Markets Growth and Execution

It involves differing perspectives on the progress and execution in the capital markets segment, which is a key driver of revenue growth and market presence.

Are you still early in seeing the impact of those hires on Americas capital markets growth? - Julien Blouin (Goldman Sachs)

2025Q3: We are definitely in the ramp-up stages with regard to our ability to execute in the markets and the capital markets in particular. There's a lot of runway in front of us. We anticipate continued growth going into 2026. We're not done building the platform either. I just want to point out that we're building a global capital markets platform, not a U.S. institutional platform. - Michelle MacKay(CEO)

Can you update on leasing trends across property types and H2 growth, particularly in industrial? - Anthony Paolone (JPMorgan)

2025Q2: We are still very early in the process with regard to the impact of the hires that we made a year ago. So we're not done building the platform, and we continue to invest in that area. As we look at the balance of this year, we feel very good about the growth that we're seeing, particularly in the U.S. - Michelle MacKay(CEO)

Contradiction Point 3

Tariff Impact on Leasing and Capital Markets Businesses

It highlights differing views on the impact of tariff uncertainty on the leasing and capital markets businesses, which could affect investor perceptions of the company's resilience.

Are you still early in seeing the flow-through impact from those hires on Americas capital markets growth? - Julien Blouin(Goldman Sachs)

2025Q3: We are definitely in the ramp-up stages with regard to our ability to execute in the markets and the capital markets in particular. - Michelle MacKay(CEO)

Can you discuss recruiting and retention, and how your current talent strategy differs from six months ago? - Anthony Paolone(JPMorgan)

2025Q1: The tariff uncertainty has not significantly impacted our sector. Clients are either moving forward with decisions or delaying them but not freezing. Decision-making is largely unaffected, with 90%-95% of clients proceeding as planned. - Michelle MacKay(CEO)

Contradiction Point 4

Services and Leasing Growth

It involves differing expectations and trends in the growth of services and leasing, which are critical for understanding the company's financial performance and strategic focus.

Can you discuss your confidence in the business's future continuation and its prospects? - Anthony Paolone (JPMorgan Chase)

2025Q3: As you've seen, we've made incredible progress this year in services, which has seen accelerated growth for the past three quarters. - Michelle MacKay(CEO)

How should we assess Services growth in the first half of the year, given the mid-single-digit growth target by midyear? - Anthony Paolone (JPMorgan)

2024Q4: We expect gradual improvement. 80% of Services comes from recurring contracts. Property Management and Facility Services returned to growth. Project Management will pick up quickly once there's momentum. - Neil Johnston(CFO)

Contradiction Point 5

Recession Impact on Office Leasing

It involves differing perspectives on the impact of a potential recession on the office leasing business, which could affect investor confidence in the company's stability.

How much of the Americas' strength is due to a changed backdrop versus better execution, and what factors are driving stronger services growth there? - Stephen Hardy Sheldon(William Blair)

2025Q3: The Americas continues to outperform. Leasing fundamentals are strong, with a healthy increase in transaction volume. - Michelle MacKay(CEO)

How might a recession impact the office leasing business? - Anthony Paolone(JPMorgan)

2025Q1: Office leasing demand remains strong. Lease terms are lengthening to around 77 months. Sensitivity analysis accounts for some softening, but the impact is not expected to be significant. - Michelle MacKay(CEO)