CBRE(CBRE) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Q2 2025 Performance Overview CBRE Group, Inc. reported strong financial results for the second quarter ended June 30, 2025, with significant growth in revenue, EPS, and core profitability, driven by resilient and transactional businesses - CBRE's chair and chief executive officer, Bob Sulentic, highlighted strong momentum, with resilient revenue rising 17% and transactional businesses growing 15%, surpassing expectations despite macro uncertainty. The company has increased its 2025 Core EPS outlook, expecting to set a new peak[1] Q2 2025 Key Financial Metrics | Metric | Q2 2025 Performance | | :-------------------------------- | :------------------ | | GAAP EPS | $0.72 | | Core EPS | $1.19 | | Revenue | $9.8 billion | | Resilient Businesses Revenue | $8.1 billion | | Transactional Businesses Revenue | Nearly $1.7 billion | | GAAP Net Income | $215 million | | Core EBITDA | $658 million | | Net Cash Flow from Operations (TTM) | $1.4 billion | | Free Cash Flow (TTM) | Nearly $1.3 billion | | Liquidity | $4.7 billion | 2025 Outlook CBRE has raised its Core EPS outlook for 2025, anticipating significant growth and a new peak in earnings, even with capital markets activity remaining below prior peak levels - The 2025 Core EPS outlook has been increased to $6.10 to $6.20 from the previous $5.80 to $6.10, reflecting better than 20% growth at the midpoint of the range. This forecast is based on constant currency and would increase by at least $0.10 based on current forward FX curves[1][2] Consolidated Financial Results Overview Q2 2025 Consolidated Performance CBRE's consolidated financial results for Q2 2025 showed significant growth across key metrics, including revenue, net income, and core profitability, while cash flow from operations and free cash flow saw a substantial decrease compared to the prior year Consolidated Operating and Cash Flow Results | Operating Results | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change (USD) | % Change (LC) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | :------------ | | Revenue | $9,754 | $8,391 | 16.2% | 15.1% | | Adjusted net revenue | $5,668 | $4,971 | 14.0% | 12.9% | | GAAP net income | $215 | $130 | 65.4% | 63.1% | | GAAP EPS | $0.72 | $0.42 | 71.4% | 69.0% | | Core adjusted net income | $358 | $248 | 44.4% | 42.7% | | Core EBITDA | $658 | $505 | 30.3% | 28.9% | | Core EPS | $1.19 | $0.81 | 46.9% | 45.7% | | Cash Flow Results | | | | | | Cash flow provided by operations | $57 | $287 | (80.1)% | | | Gain on disposition of real estate sales | $19 | — | NM | | | Less: Capital expenditures | $74 | $67 | 10.4% | | | Free cash flow | $2 | $220 | (99.1)% | | Segment Performance Advisory Services Segment The Advisory Services segment demonstrated robust growth in Q2 2025, with significant increases in revenue and operating profit, driven by strong performance in leasing, capital markets, and valuations across global regions Advisory Services Segment Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change (USD) | % Change (LC) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | :------------ | | Revenue | $1,996 | $1,744 | 14.4% | 13.8% | | Adjusted net revenue | $1,983 | $1,732 | 14.5% | 13.8% | | Segment operating profit | $380 | $287 | 32.4% | 31.3% | | Segment operating profit on revenue margin | 19.0% | 16.5% | +2.5 pts | +2.6 pts | | Segment operating profit on adjusted net revenue margin | 19.2% | 16.6% | +2.6 pts | +2.6 pts | Leasing Global leasing revenue achieved its highest second-quarter level in company history, with strong growth across all major regions, particularly in EMEA and the United States - Global leasing revenue increased 14% (13% local currency), reaching the highest level for any second quarter in company history[5] - The United States saw leasing revenue rise 14% overall, led by office and industrial sectors[5] - EMEA set the pace with leasing revenue growth of 18% (13% local currency), driven by the United Kingdom and Germany, while Asia Pacific (APAC) leasing revenue rose 12% (11% local currency), paced by India and Japan[5] Capital Markets Capital Markets experienced robust growth, with global property sales exceeding expectations and significant increases in mortgage origination revenue, while loan servicing and valuations also saw positive trends - Global property sales revenue rose 20% (19% local currency), exceeding expectations, with the United States registering 25% growth, notably in data centers, office, and retail[8] - Mortgage origination revenue rose 44% (same local currency), reflecting particularly strong lending by government agencies, debt funds, and CMBS lenders[8] - Loan servicing revenue ticked up 1% (same local currency), with the servicing portfolio totaling $443 billion, up 1% for the quarter and 4% over the past year. Valuations revenue increased 7% (5% local currency), with the United States showing the strongest growth[8] Building Operations & Experience (BOE) Segment The BOE segment delivered strong revenue and profit growth in Q2 2025, driven by significant increases in facilities management and property management, with contributions from recent acquisitions BOE Segment Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change (USD) | % Change (LC) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | :------------ | | Revenue | $5,764 | $4,855 | 18.7% | 17.5% | | Adjusted net revenue | $2,630 | $2,228 | 18.0% | 16.9% | | Segment operating profit | $261 | $213 | 22.5% | 21.1% | | Segment operating profit on revenue margin | 4.5% | 4.4% | +0.1 pts | +0.1 pts | | Segment operating profit on adjusted net revenue margin | 9.9% | 9.6% | +0.3 pts | +0.3 pts | Facilities Management Facilities management revenue saw strong growth across both Enterprise and Local businesses, particularly in data center hyperscalers and key industry sectors - Facilities management revenue increased 17% (16% local currency) with strong growth across the Enterprise and Local businesses. In Enterprise, growth was led by data center hyperscalers as well as the technology, healthcare and industrial sectors[9] Property Management Property management revenue experienced significant growth, boosted by contributions from the recent acquisition of Industrious - Property management revenue rose 30% (same local currency), with contributions from Industrious, the flexible workplace operator acquired in early January 2025, enhancing the growth rate[9] Project Management Segment The Project Management segment reported solid revenue and operating profit growth in Q2 2025, with broad-based global expansion and strong performance from both Turner & Townsend and legacy CBRE businesses Project Management Segment Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change (USD) | % Change (LC) | | :-------------------------------- | :----------------------- | :----------------------- | :------------- | :------------ | | Revenue | $1,786 | $1,563 | 14.3% | 12.9% | | Adjusted net revenue | $847 | $782 | 8.3% | 6.6% | | Segment operating profit | $121 | $102 | 18.6% | 17.6% | | Segment operating profit on revenue margin | 6.8% | 6.5% | +0.3 pts | +0.3 pts | | Segment operating profit on adjusted net revenue margin | 14.3% | 13.0% | +1.3 pts | +1.4 pts | - Project management revenue rose 14% (13% local currency), with broad-based growth globally. Turner & Townsend's legacy business delivered mid-teens revenue increases across most regions, with notable growth in its largest geography—the United Kingdom. Revenue rose by low double digits in the legacy CBRE Project Management business[14] Real Estate Investments (REI) Segment The REI segment experienced a decline in revenue but a significant increase in operating profit in Q2 2025, primarily due to a turnaround in global real estate development and recurring asset management fees, despite lower carried interest REI Segment Performance | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | % Change (USD) | % Change (LC) | | :----------------------- | :----------------------- | :----------------------- | :------------- | :------------ | | Revenue | $215 | $232 | (7.3)% | (9.1)% | | Segment operating profit | $25 | $10 | 150.0% | 140.0% | Investment Management Investment Management revenue declined due to the absence of significant carried interest, but recurring asset management fees showed growth, and Assets Under Management (AUM) increased - Revenue fell 3% (5% local currency) to $144 million, reflecting the absence of significant carried interest in the current quarter versus the year-ago period. Recurring asset management fees rose 5% (3% local currency)[15] - Investment Management operating profit totaled $31 million versus $39 million in last year's second quarter, driven by the lower carried interest[15] - Assets Under Management (AUM) totaled $155.3 billion, up $6.2 billion from first-quarter 2025, mainly driven by favorable foreign currency movement[15] Real Estate Development Global real estate development swung to an operating profit in Q2 2025, with a growing portfolio of in-process projects and pipeline - Global development swung to an operating profit of $3 million from a $26 million operating loss in last year's second quarter[15] - The portfolio of in-process projects and pipeline stood at $31.7 billion, up $0.6 billion for the quarter[15] Core Corporate Segment The Core Corporate segment reported an increased operating loss in Q2 2025 - Core corporate operating loss increased by approximately $22 million[16] Capital Allocation & Financial Position Leverage and Financing Overview CBRE's net leverage ratio remained well below its debt covenant, and total liquidity significantly increased during the quarter due to new financing activities - CBRE's net leverage ratio (net debt to trailing twelve-month core EBITDA) was 1.47x as of June 30, 2025, which is substantially below the company's primary debt covenant of 4.25x[18] Net Leverage Ratio Calculation | Metric | As of June 30, 2025 (Millions USD) | | :-------------------------------- | :--------------------------------- | | Total debt | $5,773 | | Less: Cash and cash equivalents | $1,395 | | Net debt | $4,378 | | Divided by: Trailing twelve-month Core EBITDA | $2,972 | | Net leverage ratio | 1.47x | - At the end of the second quarter, the company had approximately $4.7 billion of total liquidity, consisting of $1.4 billion in cash, plus the ability to borrow an aggregate of approximately $3.3 billion under its revolving credit facilities and commercial paper program. Total liquidity increased by $1.2 billion during the quarter from approximately $3.5 billion at the end of the first quarter, reflecting new financing activity[18] Free Cash Flow Free cash flow for Q2 2025 was minimal, but the trailing 12-month free cash flow remained strong - Free cash flow totaled $2 million during the second quarter of 2025, reflecting cash provided by operating activities of $57 million and gains on sale of real estate of $19 million, adjusted for total capital expenditures of $74 million[20] - On a trailing 12-month basis, free cash flow totaled nearly $1.3 billion[20] Stock Repurchase Program CBRE continued its stock repurchase program, buying back a significant number of shares since year-end 2024, with substantial capacity remaining - The company has repurchased approximately 5.2 million shares for $663 million ($127.82 average price per share) since year-end 2024[20] - There was approximately $5.2 billion of capacity remaining under the company's authorized stock repurchase program as of June 30, 2025[20] Acquisitions and Investments The company did not make any material acquisitions during the second quarter of 2025 - The company did not make any material acquisitions during the second quarter of 2025[20] Conference Call Details Conference Call Information Details for accessing the Q2 2025 earnings webcast and conference call, including replay information and where to find the transcript - The company's second quarter earnings webcast and conference call were held on Tuesday, July 29, 2025, at 8:30 a.m. Eastern Time[19] - A replay of the call was available starting at 1:00 p.m. Eastern Time on July 29, 2025, and a transcript of the call will be available on the company's Investor Relations website at https://ir.cbre.com[21](index=21&type=chunk)[22] About CBRE Group, Inc. Company Overview CBRE Group, Inc. is the world's largest commercial real estate services and investment firm, offering a broad range of services through its four main business segments globally - CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world's largest commercial real estate services and investment firm (based on 2024 revenue)[22] - The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries[22] - CBRE serves clients through four business segments: Advisory (leasing, sales, debt origination, mortgage serving, valuations); Building Operations & Experience (facilities management, property management, flex space & experience); Project Management (program management, project management, cost consulting); Real Estate Investments (investment management, development)[22] Safe Harbor and Footnotes Forward-Looking Statements and Risk Factors This section provides important disclaimers regarding forward-looking statements and outlines various risk factors that could impact the company's actual results and performance - This press release contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause the company's actual results and performance to be materially different from any future results or performance suggested[23] - Factors that could cause results to differ materially include disruptions in general economic, political and regulatory conditions, volatility or adverse developments in the securities, capital or credit markets, interest rate increases, and conditions affecting the value of real estate assets[23] - Additional information concerning factors that may influence the company's financial information is discussed under 'Risk Factors' in its Annual Report on Form 10-K and latest quarterly report on Form 10-Q[25] Non-GAAP Financial Measures Definitions This section defines and explains the various non-GAAP financial measures used in the press release, clarifying their purpose and how they are calculated - The terms 'adjusted net revenue,' 'core adjusted net income,' 'core EBITDA,' 'core EPS,' 'business line operating profit (loss),' 'segment operating profit on revenue margin,' 'segment operating profit on adjusted net revenue margin,' 'net debt' and 'free cash flow' are non-GAAP financial measures under SEC guidelines[26][45] - These measures are used by management to evaluate operating performance, provide a more complete understanding of ongoing operations, and enhance comparability of current results to prior periods by eliminating the impact of selected charges[41][43] - Adjusted net revenue excludes costs associated with subcontracted vendor work that are reimbursable by clients and generally have no margin, offering greater visibility into underlying business performance[42] - Core EBITDA, core EPS, and core adjusted net income are useful for evaluating operating performance compared to peers by generally eliminating the accounting effects of acquisitions, financings, income tax, capital spending, and volatile strategic non-core equity investments[43][46] - Resilient businesses include facilities management, project management, loan servicing, valuations, other portfolio services, property management and recurring investment management fees. Transactional businesses include property sales, leasing, mortgage origination, carry interest and incentive fees in the investment management business, and development fees[28] Financial Statements Operating Results This section presents the detailed consolidated operating results for the three and six months ended June 30, 2025, and 2024, including revenue, costs, operating income, and net income Consolidated Operating Results | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenue | $9,754 | $8,391 | $18,663 | $16,326 | | Total costs and expenses | $9,399 | $8,145 | $18,033 | $15,889 | | Operating income | $374 | $246 | $649 | $450 | | Net income attributable to CBRE Group, Inc. | $215 | $130 | $378 | $256 | | Diluted income per share attributable to CBRE Group, Inc. | $0.72 | $0.42 | $1.25 | $0.83 | | Core EBITDA | $658 | $505 | $1,198 | $930 | Segment Results This section provides a detailed breakdown of financial performance by segment for the three months ended June 30, 2025, and 2024, including revenue, costs, and operating income (loss) for Advisory Services, BOE, Project Management, REI, and Corporate segments Q2 2025 Segment Performance | Segment (Q2 2025) | Total Revenue (Millions USD) | Segment Operating Profit (Millions USD) | | :-------------------------------- | :--------------------------- | :-------------------------------------- | | Advisory Services | $1,996 | $380 | | Building Operations & Experience | $5,764 | $261 | | Project Management | $1,786 | $121 | | Real Estate Investments | $215 | $25 | | Corporate | $(7) | $(129) | Q2 2024 Segment Performance | Segment (Q2 2024) | Total Revenue (Millions USD) | Segment Operating Profit (Millions USD) | | :-------------------------------- | :--------------------------- | :-------------------------------------- | | Advisory Services | $1,744 | $287 | | Building Operations & Experience | $4,855 | $213 | | Project Management | $1,563 | $102 | | Real Estate Investments | $232 | $10 | | Corporate | $(3) | $(107) | Condensed Consolidated Balance Sheets This section presents the condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet Summary | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :------------------------------- | :--------------------------------- | | Total Assets | $27,693 | $24,383 | | Total Liabilities | $18,700 | $15,191 | | Total Equity | $8,585 | $9,192 | | Cash and cash equivalents | $1,395 | $1,114 | | Total debt (current + long-term) | $5,773 | $3,403 | Consolidated Statements of Cash Flows This section provides the consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, outlining cash flows from operating, investing, and financing activities Consolidated Cash Flow Statement | Metric | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(489) | $(205) | | Net cash used in investing activities | $(467) | $(1,307) | | Net cash provided by financing activities | $1,160 | $1,242 | | Net change in cash, cash equivalents and restricted cash | $311 | $(338) | | Cash, cash equivalents and restricted cash, at end of period | $1,532 | $1,033 | Non-GAAP Financial Measures Reconciliation Explanation of Non-GAAP Measures This sub-section details the rationale behind using non-GAAP financial measures, explaining how they provide a clearer view of operational performance by excluding certain non-recurring or non-cash items - CBRE uses non-GAAP financial measures like adjusted net revenue, core adjusted net income, core EBITDA, core EPS, segment operating profit, net debt, and free cash flow to provide a more complete understanding of ongoing operations and enhance comparability, excluding selected charges that may obscure underlying business performance[40][41][45] - Adjusted net revenue excludes costs associated with subcontracted vendor work that are reimbursable by clients and generally have no margin, offering greater visibility into underlying business performance[42] - Core EBITDA, core EPS, and core adjusted net income are useful for evaluating operating performance compared to peers by generally eliminating the accounting effects of acquisitions, financings, income tax, capital spending, and volatile strategic non-core equity investments[43][46] Core Net Income and EPS Reconciliation This sub-section provides a reconciliation of GAAP net income to core adjusted net income and core EPS for the three and six months ended June 30, 2025, and 2024, detailing the adjustments made Core Net Income and EPS Reconciliation | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income attributable to CBRE Group, Inc. | $215 | $130 | $378 | $256 | | Core net income attributable to CBRE Group, Inc., as adjusted | $358 | $248 | $618 | $489 | | Core diluted income per share attributable to CBRE Group, Inc., as adjusted | $1.19 | $0.81 | $2.05 | $1.59 | Core EBITDA Reconciliation This sub-section reconciles GAAP net income to Core EBITDA for the three and six months ended June 30, 2025, and 2024, and also provides the trailing twelve-month Core EBITDA Core EBITDA Reconciliation (Quarterly) | Metric | Three Months Ended June 30, 2025 (Millions USD) | Three Months Ended June 30, 2024 (Millions USD) | Six Months Ended June 30, 2025 (Millions USD) | Six Months Ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $239 | $142 | $431 | $290 | | Core EBITDA | $658 | $505 | $1,198 | $930 | Core EBITDA Reconciliation (Trailing Twelve Months) | Metric | Trailing Twelve Months Ended June 30, 2025 (Millions USD) | | :-------------------------------- | :------------------------------------------------ | | Net income | $1,176 | | Core EBITDA | $2,972 | REI Segment Operating Profit Reconciliation This sub-section reconciles the operating profitability of Investment Management and Global Real Estate Development to the overall REI segment operating profit for the three months ended June 30, 2025, and 2024 REI Segment Operating Profit Reconciliation | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | | :------------------------------------ | :----------------------- | :----------------------- | | Investment management operating profit | $31 | $39 | | Global real estate development operating profit (loss) | $3 | $(26) | | Segment overhead (and related adjustments) | $(9) | $(3) | | Real estate investments segment operating profit | $25 | $10 | Free Cash Flow Reconciliation This sub-section provides a reconciliation of cash flow provided by (used in) operations to free cash flow for the trailing twelve months ended June 30, 2025, broken down by quarter Free Cash Flow Reconciliation (Trailing Twelve Months) | Metric | Q3 2024 (Millions USD) | Q4 2024 (Millions USD) | Q1 2025 (Millions USD) | Q2 2025 (Millions USD) | Trailing twelve months (Millions USD) | | :-------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :------------------------------------ | | Cash flow provided by (used in) operations | $573 | $1,340 | $(546) | $57 | $1,424 | | (Losses) gains on disposition of real estate sales | $(1) | $130 | — | $19 | $148 | | Less: Capital expenditures | $79 | $93 | $64 | $74 | $310 | | Free cash flow | $493 | $1,377 | $(610) | $2 | $1,262 |