Glossary of Terms, Abbreviations, and Acronyms This section defines key terms, abbreviations, and acronyms used in the report, covering corporate, financial, and real estate terminology Where You Can Find More Information This section directs readers to the SEC and company websites for public filings, including annual, quarterly, and current reports Special Note Regarding Forward-Looking Information This section highlights forward-looking statements, noting they are subject to macroeconomic, market, and regulatory risks, with no commitment to update - Key Risk Factors: - Macroeconomic and geopolitical uncertainties, including Ukraine-Russia, Middle East conflicts, interest rates, inflation, recession fears, and supply chain disruptions25 - Challenges in repositioning business due to changing commercial real estate demand, such as decreased urban office/retail and increased suburban office/data centers25 - Market conditions and volatility, including fluctuations in transaction volumes and governmental policies26 - Potential deterioration of equity and debt capital markets for commercial real estate26 - Competition for and retention of key personnel26 - Risks related to the company's relationship and transactions with Cantor and its affiliates27 - Impact of AI on the economy, industry, and business27 - Regulatory changes, including climate-related disclosures and potential FTC ban on non-compete provisions27 - Leadership changes and dependence on key employees28 - Financial risks, including potential losses, increased leverage, and access to capital28 - Impact of ESG ratings and policies28 - Potential dilution from stock offerings and other transactions29 - The company does not undertake to publicly update or revise any forward-looking statements28 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (unaudited) Condensed Consolidated Balance Sheets Total assets increased to $5.39 billion from $4.71 billion, driven by loans held for sale and receivables; total liabilities rose to $3.86 billion from $3.17 billion, mainly from warehouse facilities and debt Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :---------------------------------------------------------------- | :------------ | :---------------- | :----- | | Total Assets | $5,389,959 | $4,710,120 | +14.4% | | Total Liabilities | $3,864,970 | $3,172,051 | +21.8% | | Total Equity | $1,513,455 | $1,524,169 | -0.7% | | Cash and cash equivalents | $195,829 | $197,691 | -0.9% | | Loans held for sale, at fair value | $1,349,240 | $774,905 | +74.1% | | Loans, forgivable loans and other receivables from employees and partners, net | $870,612 | $769,395 | +13.2% | | Warehouse facilities collateralized by U.S. Government Sponsored Enterprises | $1,290,864 | $754,308 | +71.1% | | Long-term debt | $871,210 | $670,673 | +29.9% | Condensed Consolidated Statements of Operations Q2 2025 total revenues increased 19.9% year-over-year, driven by Capital Markets and Management Services, with net income rising to $20.8 million; six-month revenues grew 20.7%, and net income turned positive to $12.1 million Three Months Ended June 30 (in thousands, except per share data) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Total Revenues | $759,112 | $633,375 | +19.9% | | Management Services, Servicing Fees and Other | $298,397 | $262,778 | +13.6% | | Leasing and Other Commissions | $237,262 | $208,557 | +13.8% | | Capital Markets | $223,453 | $162,040 | +37.9% | | Total Compensation and Employee Benefits | $515,184 | $403,009 | +27.8% | | Income (loss) from operations | $42,743 | $40,719 | +5.0% | | Consolidated net income (loss) | $29,511 | $23,415 | +26.0% | | Net income (loss) available to common stockholders | $20,819 | $14,280 | +45.8% | | Basic earnings per share | $0.12 | $0.08 | +50.0% | | Fully diluted earnings per share | $0.11 | $0.08 | +37.5% | Six Months Ended June 30 (in thousands, except per share data) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Total Revenues | $1,424,606 | $1,179,874 | +20.7% | | Management Services, Servicing Fees and Other | $582,290 | $519,712 | +12.0% | | Leasing and Other Commissions | $445,336 | $367,356 | +21.2% | | Capital Markets | $396,980 | $292,806 | +35.6% | | Total Compensation and Employee Benefits | $989,042 | $782,646 | +26.4% | | Income (loss) from operations | $25,224 | $18,108 | +39.3% | | Consolidated net income (loss) | $13,562 | $(2,900) | N/A (from loss to profit) | | Net income (loss) available to common stockholders | $12,053 | $(1,973) | N/A (from loss to profit) | | Basic earnings per share | $0.07 | $(0.01) | N/A (from loss to profit) | | Fully diluted earnings per share | $0.06 | $(0.01) | N/A (from loss to profit) | Condensed Consolidated Statements of Comprehensive Income Q2 2025 consolidated net income was $29.5 million, resulting in comprehensive income of $42.7 million, up from $21.3 million due to foreign currency adjustments; six-month comprehensive income was $32.7 million, improving from an $8.0 million loss Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Consolidated net income (loss) | $29,511 | $23,415 | $13,562 | $(2,900) | | Foreign currency translation adjustments | $13,219 | $(2,151) | $19,147 | $(5,062) | | Comprehensive income (loss), net of tax | $42,730 | $21,264 | $32,709 | $(7,962) | | Comprehensive income (loss) available to common stockholders | $31,821 | $12,555 | $28,028 | $(6,025) | Condensed Consolidated Statements of Changes in Equity Total equity slightly decreased from $1.52 billion to $1.51 billion, influenced by net income, foreign currency adjustments, and $125.5 million in share repurchases, partially offset by dividends Equity Changes (in thousands) | Metric | Balance, January 1, 2025 | Balance, June 30, 2025 | | :----------------------------------- | :----------------------- | :--------------------- | | Total Equity | $1,524,169 | $1,513,455 | | Consolidated net income (loss) | N/A | $13,562 | | Foreign currency translation adjustments | N/A | $19,147 | | Dividends to common stockholders | N/A | $(10,965) | | Repurchase of Class A Common Stock | N/A | $(125,523) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was $559.1 million, primarily due to loan originations and receivables, largely offset by $575.8 million from financing activities Cash Flow Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(559,146) | $(327,269) | | Net cash used in investing activities | $(11,946) | $(16,620) | | Net cash provided by financing activities | $575,821 | $363,382 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $4,729 | $19,493 | | Cash and cash equivalents and restricted cash at end of period | $309,594 | $278,199 | Key Operating Adjustments (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Loan originations—loans held for sale | $(3,895,933) | $(3,198,267) | | Loan sales—loans held for sale | $3,360,791 | $2,924,275 | | Loans, forgivable loans and other receivables from employees and partners, net | $(157,926) | $(185,745) | Key Financing Activities (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Proceeds from warehouse facilities | $3,895,933 | $3,198,267 | | Principal payments on warehouse facilities | $(3,359,378) | $(2,904,037) | | Borrowing of debt | $420,000 | $775,000 | | Repayment of debt | $(220,000) | $(575,000) | | Treasury stock repurchases | $(125,523) | $(92,668) | Notes to Condensed Consolidated Financial Statements These notes detail the condensed consolidated financial statements, covering organization, accounting policies, equity, debt, related party transactions, and commitments and contingencies (1) Organization and Basis of Presentation Newmark is a leading commercial real estate advisor; its unaudited financial statements conform to U.S. GAAP, with recent accounting standard adoptions having no material impact - Newmark is a leading commercial real estate advisor and service provider, offering integrated services including capital markets, leasing, valuation, property management, and flexible workspace solutions42 - Recently Adopted Accounting Pronouncements: - ASU No. 2022-06 (Reference Rate Reform): Deferred sunset date to December 31, 2024; no impact on financial statements50 - ASU No. 2023-07 (Segment Reporting): Adopted January 1, 2024, for annual periods and January 1, 2025, for interim periods; no impact on financial statements51 - ASU No. 2024-01 (Compensation—Stock Compensation): Adopted January 1, 2025; no material impact52 - ASU No. 2024-02 (Codification Improvements): Adopted January 1, 2025; no material impact53 (2) Limited Partnership Interests in Newmark Holdings and BGC Holdings Newmark operates through consolidated VIEs with a complex equity structure involving various limited partnership interests, impacting compensation expense and noncontrolling interests through exchangeability into Class A common stock - As of June 30, 2025, the Exchange Ratio for Newmark Holdings limited partnership interests into Class A common stock was 0.92736375 - Redeemable Partnership Interests (FPUs) are accounted for outside permanent capital, redeemable upon partner termination, and receive quarterly net income allocations reflected as compensation expense6667 - Limited Partnership Units (LPUs) held by Newmark employees receive quarterly net income allocations (compensation expense) or are reflected in noncontrolling interests (for BGC employees); some are post-termination liability awards687071 - Preferred Units receive a fixed quarterly allocation of net profits (0.6875% or 2.75% annually) and are not exchangeable into Class A common stock or included in fully diluted share count71 - Cantor Units, held by Cantor, are reflected as noncontrolling interests and receive quarterly net income/loss allocations; they were exchangeable for up to 18.3 million shares of Class B common stock (convertible to Class A) as of June 30, 20257475 (3) Summary of Significant Accounting Policies This note confirms no significant changes to Newmark's accounting policies, detailing revenue recognition for Management Services, Leasing, and Capital Markets, and outlining policies for Goodwill, Intangible Assets, CECL, and segment reporting - Revenue Recognition: - Management Services, Servicing Fees and Other: Recognized when services performed, includes property/facilities management, flexible workspaces, and loan servicing fees78 - Leasing and Other Commissions: Recognized at lease signing date if not subject to significant reversal83 - Capital Markets: Investment sales recognized at close of escrow/transfer of title; commercial mortgage origination revenue (loan origination fees, sales premiums, OMSR fair value) recognized upon commitment to originate and sell85 - Goodwill is not amortized and is tested annually for impairment; definite-lived intangible assets are amortized on a straight-line basis8687 - Current Expected Credit Losses (CECL) methodology requires estimating lifetime expected credit losses for financial assets at amortized cost, leading to earlier recognition of credit loss provisions88 - Newmark operates as one reportable segment (real estate services), with the CEO as the chief operating decision maker evaluating results by revenues and net income93 Geographic Revenues (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | U.S. | $666,697 | $552,261 | $1,241,647 | $1,013,722 | | U.K. | $49,984 | $45,904 | $104,616 | $96,277 | | Other | $42,431 | $35,210 | $78,343 | $69,875 | | Total | $759,112 | $633,375 | $1,424,606 | $1,179,874 | (4) Earnings Per Share and Weighted-Average Shares Outstanding Basic EPS for Q2 2025 was $0.12, up from $0.08, and fully diluted EPS was $0.11, up from $0.08; six-month basic EPS was $0.07 (vs. $(0.01) in 2024) and fully diluted EPS was $0.06 (vs. $(0.01) in 2024), reflecting improved profitability Basic EPS (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) available to common stockholders | $20,819 | $14,280 | $12,053 | $(1,973) | | Basic weighted-average shares outstanding | 179,560 | 173,469 | 177,965 | 174,121 | | Basic earnings per share | $0.12 | $0.08 | $0.07 | $(0.01) | Fully Diluted EPS (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) for fully diluted shares | $28,773 | $20,582 | $16,101 | $(1,973) | | Fully diluted weighted-average shares outstanding | 252,614 | 255,604 | 253,670 | 174,121 | | Fully diluted earnings per share | $0.11 | $0.08 | $0.06 | $(0.01) | (5) Stock Transactions and Unit Purchases Newmark's Class A common stock outstanding decreased due to significant share repurchases, including 10.8 million shares from Mr. Lutnick in May 2025, with $125.5 million repurchased and $246.4 million remaining under authorization Class A Common Stock Outstanding | Period | Shares Outstanding at Beginning | Shares Outstanding at End | | :------------------------------- | :---------------------------- | :------------------------ | | Six Months Ended June 30, 2025 | 149,506,832 | 154,352,509 | | Six Months Ended June 30, 2024 | 152,639,359 | 150,384,929 | - Share Repurchases (Six Months Ended June 30, 2025): - Total Number of Shares Repurchased: 10,839,674108 - Average Price Paid per Share: $11.58108 - Total Value: $125.5 million108 - Remaining Authorization: $246.4 million109 - On May 16, 2025, Mr. Howard W. Lutnick agreed to sell 10.8 million shares of Class A common stock to Newmark for $11.58 per share, which closed on May 19, 2025109 (6) Investments Newmark's non-marketable investments had carrying values of $5.0 million as of June 30, 2025, and $5.2 million as of December 31, 2024, recognizing unrealized losses of $(0.2) million for Q2 and the six months ended June 30, 2025 Carrying Values of Investments (in thousands) | Date | Carrying Value | | :----------------- | :------------- | | June 30, 2025 | $5,031 | | December 31, 2024 | $5,213 | Unrealized Gains (Losses) (in thousands) | Period | Amount | | :------------------------------- | :------- | | Three Months Ended June 30, 2025 | $(200) | | Six Months Ended June 30, 2025 | $(200) | (7) Capital and Liquidity Requirements Newmark met all capital and liquidity requirements as of June 30, 2025, exceeding Fannie Mae's net worth by $381.6 million and maintaining sufficient collateral for GSE programs - Newmark exceeded Fannie Mae's minimum net worth requirement by $381.6 million as of June 30, 2025, and $370.2 million as of December 31, 2024114 - The company met all capital and liquidity requirements for GSEs and FHA as of June 30, 2025, and December 31, 2024114115 (8) Loans Held for Sale, at Fair Value Loans held for sale increased to $1.35 billion as of June 30, 2025, from $774.9 million, with fair value adjustment gains totaling $19.1 million for Q2 2025 and $39.2 million for the six months Loans Held for Sale (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :---------------- | | Cost Basis | $1,310,047 | $764,667 | | Fair Value | $1,349,240 | $774,905 | Gains (Losses) on Change in Fair Value (in thousands) | Period | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $19,072 | $6,853 | | Six Months Ended June 30 | $39,193 | $16,056 | Interest Income on Loans Held for Sale (in thousands) | Period | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $8,991 | $5,933 | | Six Months Ended June 30 | $17,298 | $12,815 | (9) Derivatives Newmark's derivative notional amounts significantly increased for rate lock commitments ($211.9 million) and Forward Sales Contracts ($1.52 billion) as of June 30, 2025, resulting in net losses of $(7.7) million for Q2 and $(10.5) million for the six months Derivative Contract Fair Value and Notional Amounts (in thousands) | Derivative Contract | June 30, 2025 Assets | June 30, 2025 Liabilities | June 30, 2025 Notional Amounts | December 31, 2024 Assets | December 31, 2024 Liabilities | December 31, 2024 Notional Amounts | | :------------------ | :------------------- | :---------------------- | :----------------------------- | :----------------------- | :------------------------ | :------------------------------- | | Rate lock commitments | $3,787 | $1,128 | $211,899 | $1,010 | $1,350 | $81,717 | | Forward Sales Contracts | $1,476 | $14,666 | $1,521,946 | $7,491 | $3,253 | $846,384 | | Total | $5,263 | $15,794 | $1,733,845 | $8,501 | $4,603 | $928,101 | Gains and Losses on Derivative Contracts (in thousands) | Location of gains (losses) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Capital markets (Rate lock commitments) | $(1,657) | $1,107 | $3,761 | $3,136 | | Compensation and employee benefits (Rate lock commitments) | $(68) | $(363) | $(1,102) | $(833) | | Capital markets (Forward Sale Contracts) | $(5,938) | $(3,452) | $(13,190) | $(2,177) | | Total | $(7,663) | $(2,708) | $(10,531) | $126 | (10) Revenues from Contracts with Customers Revenues from contracts with customers increased to $639.6 million for Q2 2025 (up 21.3% YoY) and $1.20 billion for the six months (up 22.3% YoY), driven by growth across all service lines, with $163.7 million in remaining performance obligations Revenues from Contracts with Customers (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Leasing and Other Commissions | $237,262 | $208,557 | $445,336 | $367,356 | | Investment sales | $106,623 | $91,731 | $199,481 | $162,554 | | Mortgage brokerage and debt placement | $65,137 | $28,260 | $102,323 | $55,360 | | Management Services | $230,613 | $198,778 | $448,725 | $392,199 | | Total | $639,635 | $527,326 | $1,195,865 | $977,469 | - Remaining performance obligations for Knotel and Deskeo totaled approximately $163.7 million as of June 30, 2025128130 (11) Capital markets Capital Markets revenues increased significantly by 37.9% to $223.5 million for Q2 2025 and by 35.6% to $397.0 million for the six months, driven by strong growth in investment sales and commercial mortgage origination Capital Markets Revenues (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Investment Sales | $106,623 | $91,731 | $199,481 | $162,554 | | Fair Value of Expected Net Future Cash Flows from Servicing Recognized at Commitment, Net | $24,747 | $23,395 | $46,150 | $39,539 | | Loan Originations Related Fees and Sales Premiums, Net | $26,946 | $18,654 | $49,026 | $35,353 | | Mortgage Brokerage and Debt Placement | $65,137 | $28,260 | $102,323 | $55,360 | | Total | $223,453 | $162,040 | $396,980 | $292,806 | (12) Mortgage Servicing Rights, Net The net balance of Mortgage Servicing Rights (MSRs) was $499.99 million as of June 30, 2025, a slight decrease from $517.58 million, with stable servicing fees and an estimated fair value of $644.5 million Mortgage Servicing Rights (MSRs) Net Balance (in thousands) | Date | Net Balance | | :----------------- | :---------- | | June 30, 2025 | $499,991 | | December 31, 2024 | $517,579 | - Estimated fair value of MSRs was $644.5 million as of June 30, 2025, and $658.1 million as of December 31, 2024133 Servicing Fees and Other (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Servicing fees | $45,323 | $42,175 | $89,866 | $84,131 | | Escrow interest and placement fees | $12,492 | $15,556 | $24,734 | $29,746 | | Ancillary fees | $978 | $354 | $1,667 | $822 | | Total | $58,793 | $58,085 | $116,267 | $114,699 | (13) Goodwill and Other Intangible Assets, Net Goodwill increased to $788.7 million from $770.9 million due to adjustments; other intangible assets, net, decreased to $58.7 million from $64.5 million, with a 3.4-year weighted-average remaining life Goodwill (in thousands) | Date | Balance | | :----------------- | :---------- | | June 30, 2025 | $788,687 | | December 31, 2024 | $770,886 | Other Intangible Assets, Net (in thousands) | Date | Net Carrying Amount | Weighted Average Remaining Life (Years) | | :----------------- | :------------------ | :------------------------------------ | | June 30, 2025 | $58,697 | 3.4 | | December 31, 2024 | $64,468 | 3.9 | Intangible Amortization Expense (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $4,000 | $4,400 | | Six Months Ended June 30 | $8,200 | $8,900 | (14) Fixed Assets, Net Fixed assets, net, decreased to $159.3 million from $166.7 million; depreciation expense increased for Q2 and the six months, with significant impairment charges recorded during the six-month period Fixed Assets, Net (in thousands) | Date | Total, Net | | :----------------- | :--------- | | June 30, 2025 | $159,266 | | December 31, 2024 | $166,729 | Depreciation Expense (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $10,400 | $9,200 | | Six Months Ended June 30 | $25,600 | $20,600 | Impairment Charges (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $100 | $300 | | Six Months Ended June 30 | $6,500 | $2,100 | (15) Leases Total lease liability was $590.8 million as of June 30, 2025, with a 5.15% weighted-average discount rate and 6.3-year remaining term; operating lease costs increased, and a $13.3 million credit was recognized from released accrued liabilities - Total lease liability was $590.8 million as of June 30, 2025, compared to $598.3 million as of December 31, 2024147148 - As of June 30, 2025, the weighted-average discount rate was 5.15% and the remaining weighted-average lease term was 6.3 years150 Operating Lease Costs (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $37,200 | $32,000 | | Six Months Ended June 30 | $71,000 | $65,500 | - A $13.3 million credit was recognized to "Operating, administrative and other" expense due to released accrued liabilities from the liquidation of an entity150 (16) Other Current Assets and Other Assets Other current assets increased to $118.1 million from $88.0 million, primarily due to higher other taxes; other assets also increased to $174.0 million from $147.9 million, mainly driven by an increase in deferred tax assets Other Current Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Derivative assets | $5,263 | $8,501 | | Prepaid expenses | $54,102 | $51,481 | | Other taxes | $31,905 | $2,973 | | Total | $118,068 | $87,976 | Other Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Deferred tax assets | $119,513 | $98,912 | | Non-marketable investments | $5,031 | $5,213 | | Other tax receivables | $10,670 | $8,900 | | Total | $174,008 | $147,926 | (17) Warehouse Facilities Collateralized by U.S. Government Sponsored Enterprises Borrowings under warehouse facilities significantly increased to $1.29 billion from $754.3 million; the company had $1.55 billion in committed lines and $1.60 billion in uncommitted lines available Warehouse Facilities Borrowings (in thousands) | Date | Balance Outstanding | | :----------------- | :------------------ | | June 30, 2025 | $1,290,864 | | December 31, 2024 | $754,308 | - As of June 30, 2025, Newmark had $1.55 billion in committed loan funding lines and $1.60 billion in uncommitted loan funding lines available156 (18) Debt Total corporate debt increased to $871.2 million from $670.7 million, primarily due to increased Credit Facility borrowings; 7.500% Senior Notes remained at $600.0 million, and the Delayed Draw Term Loan was repaid Total Corporate Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | 7.500% Senior Notes | $596,210 | $595,673 | | Credit Facility | $275,000 | $75,000 | | Total | $871,210 | $670,673 | - The 7.500% Senior Notes have a principal amount of $600.0 million, mature on January 12, 2029, and bear interest at 7.500% per year; their fair value was $636.6 million as of June 30, 2025159161 - Borrowings under the Credit Facility increased by $200.0 million during the six months ended June 30, 2025, reaching $275.0 million outstanding with a maturity date of April 26, 2027175177 - The $420.0 million Delayed Draw Term Loan was repaid and terminated on January 12, 2024, using proceeds from the 7.500% Senior Notes offering166 - Newmark had $50.0 million remaining under its debt repurchase authorization as of June 30, 2025169 (19) Financial Guarantee Liability The financial guarantee liability increased to $29.8 million from $26.3 million, reflecting a higher provision for expected credit losses; the maximum potential loss on credit risk loans serviced for Fannie Mae and Freddie Mac was approximately $10.5 billion Financial Guarantee Liability (in thousands) | Date | Balance | | :----------------- | :---------- | | June 30, 2025 | $29,790 | | December 31, 2024 | $26,315 | - Maximum potential loss on credit risk loans serviced for Fannie Mae and Freddie Mac was approximately $10.5 billion as of June 30, 2025, compared to $10.0 billion as of December 31, 2024182 Provision for Expected Credit Losses (in thousands) | Period | 2025 | 2024 | | :------------------------------- | :----------- | :----------- | | Three Months Ended June 30 | $2,000 | $100 | | Six Months Ended June 30 | $3,500 | $1,400 | (20) Concentrations of Credit Risk Newmark's credit risk is concentrated in Fannie Mae DUS and Freddie Mac TAH loans, with 18% of the maximum potential loss ($10.5 billion) for properties in California and 13% in Texas as of June 30, 2025 - As of June 30, 2025, 18% of the maximum potential loss ($10.5 billion) on credit risk loans was for properties located in California, and 13% was for properties located in Texas187 (21) Escrow and Custodial Funds Escrow and other custodial funds held by Newmark for borrowers amounted to $1.3 billion as of June 30, 2025, a decrease from $1.5 billion at December 31, 2024; these funds are segregated and excluded from Newmark's assets and liabilities Escrow and Custodial Funds (in thousands) | Date | Amount | | :----------------- | :----------- | | June 30, 2025 | $1,300,000 | | December 31, 2024 | $1,500,000 | (22) Fair Value of Financial Assets and Liabilities Newmark's financial assets and liabilities are measured at fair value using a three-level hierarchy; as of June 30, 2025, Level 2 assets totaled $1.35 billion, while Level 3 assets and liabilities were $5.3 million and $40.5 million, respectively Fair Value Hierarchy (in thousands, June 30, 2025) | Category | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------------ | :------ | :------------ | | Assets: | | | | | | Marketable securities | $79 | $— | $— | $79 | | Loans held for sale, at fair value | $— | $1,349,240 | $— | $1,349,240 | | Rate lock commitments | $— | $— | $3,787 | $3,787 | | Forward Sales Contracts | $— | $— | $1,476 | $1,476 | | Total Assets | $79 | $1,349,240 | $5,263 | $1,354,582 | | Liabilities: | | | | | | Contingent consideration | $— | $— | $24,726 | $24,726 | | Rate lock commitments | $— | $— | $1,128 | $1,128 | | Forward Sales Contracts | $— | $— | $14,666 | $14,666 | | Total Liabilities | $— | $— | $40,520 | $40,520 | - Level 3 Valuation Inputs (June 30, 2025): - Contingent consideration: Discount rate (0.0%-8.0%, weighted average 3.3%), Probability of meeting earnout (99.0%-100.0%, weighted average 99.6%)194 (23) Related Party Transactions Newmark engages in various transactions with related parties, primarily Cantor and its affiliates, including administrative services, employee loans, and capital markets activities, with significant events including Mr. Lutnick's stock sale and Cantor's unit exchange - Allocated expenses from Cantor for administrative services were $7.8 million for Q2 2025 (up 16.9% YoY) and $17.4 million for the six months ended June 30, 2025 (up 22.2% YoY)201 - Aggregate balance of employee loans was $870.6 million as of June 30, 2025; compensation expense for these loans was $31.2 million for Q2 2025 and $56.7 million for the six months ended June 30, 2025203 - Mr. Howard W. Lutnick sold 10,839,674 shares of Class A common stock to Newmark for $11.58 per share on May 19, 2025, as part of his divestiture to comply with U.S. government ethics rules207208 - On February 18, 2025, Cantor exchanged 7,782,387 exchangeable limited partnership interests for 7,221,277 shares of Class A common stock, which were then distributed to Cantor partners; this resulted in a $17.5 million tax receivable agreement liability to Cantor254255 - Cantor purchased $125.0 million aggregate principal amount of Newmark's 7.500% Senior Notes260 (24) Income Taxes Newmark accounts for income taxes using the asset and liability method, recognizing deferred tax assets and liabilities, providing for uncertain tax positions, and recording valuation allowances; the OECD Pillar Two Framework and U.S. OBBBA are being evaluated - Newmark accounts for income taxes using the asset and liability method, recognizing deferred tax assets and liabilities for temporary differences262263 - The company provides for uncertain tax positions and records a valuation allowance against deferred tax assets if realization is not more likely than not264 - The OECD Pillar Two Framework (15% minimum global effective tax rate) and the U.S. OBBBA (tax law changes) are being evaluated for potential impacts, with no material impact expected on 2024 and 2025 tax rates from Pillar Two330331 (25) Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses, and other current liabilities increased to $617.5 million from $577.9 million, driven by payroll taxes and derivative liabilities; other long-term liabilities rose to $250.4 million from $231.1 million, notably due to a new $17.5 million tax receivable agreement liability Accounts Payable, Accrued Expenses and Other Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accounts payable and accrued expenses | $288,678 | $272,324 | | Payroll taxes payable | $140,107 | $126,289 | | Derivative liability | $15,794 | $4,603 | | Total | $617,502 | $577,940 | Other Long-Term Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued compensation | $111,819 | $111,839 | | Financial guarantee liability | $29,790 | $26,315 | | Contingent consideration | $24,726 | $21,935 | | Tax receivable agreement liability | $17,511 | $— | | Total | $250,384 | $231,115 | (26) Compensation Total equity-based compensation and allocations significantly increased to $60.1 million for Q2 2025 (up 136.0% YoY) and $134.5 million for the six months (up 74.8% YoY), primarily due to timing of exchangeability grants and charges from Mr. Lutnick's unit exchanges Equity-based Compensation and Allocations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Issuance of common stock and exchangeability expenses | $36,953 | $11,852 | $89,232 | $47,958 | | Limited partnership units amortization | $6,782 | $7,169 | $16,321 | $14,516 | | RSU amortization | $14,017 | $5,920 | $26,365 | $13,679 | | Allocations of net income to limited partnership units and FPUs | $2,389 | $545 | $2,569 | $776 | | Total Equity-based compensation and allocations | $60,141 | $25,486 | $134,487 | $76,929 | - The increase in equity-based compensation is primarily due to the timing of grants of exchangeability, including contract renewals, and $21.1 million of charges related to the exchange and redemption of former Executive Chairman Mr. Lutnick's remaining limited partnership units in Q1 2025351 - The Equity Plan is authorized to issue up to 500.0 million shares of Class A common stock; as of June 30, 2025, 119.4 million shares had been granted and 380.6 million shares were available for future awards268 (27) Commitments and Contingencies Newmark had commitments to fund approximately $0.2 billion in construction loans and other forward commitments; the company is involved in legal actions, including a shareholder action regarding Mr. Lutnick's 2021 bonus, agreed to be settled for $50 million - Newmark was committed to fund approximately $0.2 billion in construction loans and other forward commitments as of June 30, 2025283 - Contingent cash consideration for acquisitions from 2022 through Q2 2025 amounted to $11.2 million284 - A consolidated shareholder action regarding Mr. Lutnick's December 2021 bonus award was agreed to be settled for a cash payment of $50 million to Newmark, to be paid by Newmark's D&O insurance carriers, pending court approval409410 (28) Subsequent Events On July 29, 2025, Newmark declared a quarterly dividend of $0.03 per share, payable on August 29, 2025 - A qualified quarterly dividend of $0.03 per share was declared on July 29, 2025, payable on August 29, 2025289 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes Newmark's financial performance, business environment, and key drivers for the three and six months ended June 30, 2025, detailing revenue and expense trends, macroeconomic factors, and liquidity Overview Newmark is a leading commercial real estate advisor and service provider, offering a diverse range of integrated services to institutional investors, global corporations, and other owners and occupiers - Newmark is a leading commercial real estate advisor and service provider to large institutional investors, global corporations, and other owners and occupiers292 - The company offers a diverse array of integrated services and products designed to meet the full needs of its clients292 Business Environment Newmark's business is influenced by attracting talent, outsourcing trends, and macroeconomic factors like GDP, job growth, and interest rates, with the company achieving productivity gains and market share increases despite fluctuating market conditions - Key business drivers include attracting and retaining revenue-generating headcount, employee productivity, and industry volumes, which are influenced by economic growth, interest rates, and demand for commercial real estate and debt financing294 - Revenue-generating headcount was flat or modestly up year-on-year from Q2 2024 through Q2 2025, with productivity gains being the primary driver of revenue growth295 - Management Services revenues grew by 13.6% year-on-year in Q2 2025, benefiting from increased outsourcing trends298 - Newmark's loan servicing and asset management portfolio was $182.0 billion as of June 30, 2025, with 38.2% in higher margin primary servicing297 - U.S. GDP contracted 0.5% in Q1 2025 but expanded 3.0% in Q2 2025; U.S. non-farm payroll employment increased by approximately 64,000 in Q2 2025, a slower rate than recent averages300301 - The 10-year U.S. Treasury yield decreased by approximately 17 basis points quarter-on-quarter and year-on-year to 4.2% as of June 30, 2025; U.S. and U.K. inflation measures remained above 2% targets303304 - Newmark's Q2 2025 Total Debt and investment sales volumes were up approximately 135% and 26% year-on-year, respectively, leading to significant market share gains in U.S. Total Debt (9.4%) and investment sales (9.9%) over the past twelve months309310 - The MBA expects a record $957 billion of U.S. mortgage maturities in 2025 alone, and approximately $2.1 trillion between 2025 and 2027, which is expected to drive increased debt and investment sales activity311 Financial Overview This section outlines Newmark's revenue sources and expense categories, discussing the impact of business mix and seasonality on pre-tax margins, with revenues typically lowest in Q1 and strongest in Q4 - Newmark derives revenues from Management Services, Servicing Fees and Other; Leasing and Other Commissions; and Capital Markets (investment sales and commercial mortgage origination)319 - The majority of operating costs consist of cash and non-cash compensation expenses, including base salaries, producer commissions, forgivable loans, discretionary bonuses, and equity-based compensation316 - Pre-tax margins are affected by revenue mix; servicing revenues generally have higher margins, while property management and some outsourcing businesses have lower margins due to pass-through revenues332 - The business exhibits seasonality, with revenues typically lowest in the first quarter (average 21%) and strongest in the fourth quarter (average 30%) for the five years from 2020 through 2024332 Results of Operations Newmark experienced significant revenue growth across all segments for both the three and six months ended June 30, 2025, driven by Capital Markets, Management Services, and Leasing; expenses increased, particularly equity-based compensation, leading to substantially improved net income - Three Months Ended June 30, 2025 vs. 2024: - Total Revenues: $759.1 million (up 19.9%)333 - Management Services, Servicing Fees and Other: $298.4 million (up 13.6%), driven by 30% V&A growth and Servicing & Asset Management335 - Leasing and Other Commissions: $237.3 million (up 13.8%), driven by strong retail and office transactions336 - Capital Markets: $223.5 million (up 37.9%), driven by 135% Total Debt and 26% investment sales volume improvement337 - Total Compensation and Employee Benefits: $515.2 million (up 27.8%), with Equity-based compensation and allocations up 136.0% due to timing of exchangeability grants338339 - Net Income Available to Common Stockholders: $20.8 million (up 45.8%)339 - Six Months Ended June 30, 2025 vs. 2024: - Total Revenues: $1,424.6 million (up 20.7%)333 - Management Services, Servicing Fees and Other: $582.3 million (up 12.0%), driven by 28% V&A growth, Servicing & Asset Management, and outsourcing347 - Leasing and Other Commissions: $445.3 million (up 21.2%), driven by strong office and retail transactions348 - Capital Markets: $397.0 million (up 35.6%), driven by 22.7% investment sales and 66.8% commercial mortgage origination growth349 - Total Compensation and Employee Benefits: $989.0 million (up 26.4%), with Equity-based compensation and allocations up 74.8% due to timing of exchangeability grants and $21.1 million from Mr. Lutnick's unit exchanges350351 - Net Income Available to Common Stockholders: $12.1 million (from $(2.0) million loss)352 Financial Position, Liquidity and Capital Resources Newmark's total assets increased to $5.4 billion and liabilities to $3.9 billion; the company maintains strong liquidity with $195.8 million in cash and $325.0 million available under its Credit Facility, with debt increasing to $871.2 million and $50.0 million remaining under debt repurchase authorization - Total assets were $5.4 billion and total liabilities were $3.9 billion as of June 30, 2025362363 - As of June 30, 2025, Newmark had $195.8 million in cash and cash equivalents and $325.0 million available under its $600.0 million revolving Credit Facility364 Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | 7.500% Senior Notes | $596,210 | $595,673 | | Credit Facility | $275,000 | $75,000 | | Total Corporate Debt | $871,210 | $670,673 | - Newmark had $50.0 million remaining under its debt repurchase authorization as of June 30, 2025387 Cash Flows (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(559,146) | $(327,269) | | Net cash provided by financing activities | $575,821 | $363,382 | Credit Ratings (June 30, 2025) | Rating Agency | Rating | Outlook | | :-------------------- | :----- | :------ | | Fitch Ratings Inc. | BBB- | Stable | | JCRA | BBB+ | Stable | | Kroll Bond Rating Agency | BBB- | Stable | | S&P Global Ratings | BB+ | Stable | Equity Newmark's fully diluted weighted-average share count for the six months ended June 30, 2025, was 253.7 million; the company repurchased $125.5 million of Class A common stock, with $246.4 million remaining under authorization, and maintains a dual-class system with Cantor and CFGM holding significant voting power Fully Diluted Weighted-Average Shares Outstanding (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Common stock outstanding | 177,965 | 174,121 | | Partnership units | 71,684 | — | | RSUs (Treasury stock method) | 3,724 | — | | Newmark exchange shares | 297 | — | | Total | 253,670 | 174,121 | - Newmark repurchased approximately $125.5 million of Class A common stock during Q2 2025, with $246.4 million remaining under its Share Repurchase and Unit Purchase Authorization as of June 30, 2025448 - Newmark maintains a dual-class structure (Class A: 1 vote, Class B: 10 votes); as of June 30, 2025, Cantor and CFGM collectively held 21,285,533 shares of Class B common stock and 1,025,612 shares of Class A common stock, representing approximately 58.3% of total voting power449 - The Exchange Ratio between Newmark Holdings limited partnership interests and common stock was 0.9273 as of June 30, 2025461 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Newmark faces credit risk from Fannie Mae DUS and Freddie Mac TAH loans, concentrated in California and Texas; interest rate risk affects earnings from escrows and borrowing costs, with a 100-basis point SOFR change impacting annual earnings by $12.9 million; foreign currency risk is not material but expected to grow - Credit Risk: - Exposure: Fannie Mae DUS and Freddie Mac TAH loans473 - Maximum Contingent Liability: Approximately 33% of outstanding principal balance473 - Concentration (June 30, 2025): 18% of maximum loss in California, 13% in Texas474 - Interest Rate Risk: - 7.500% Senior Notes: Not currently subject to interest rate fluctuations475 - Credit Facility: Interest rate based on SOFR475 - Earnings from Escrows: A 100-basis point increase/decrease in 30-day SOFR would increase/decrease annual earnings by $12.9 million (based on June 30, 2025, escrow balances)477 - Warehouse Facilities Borrowing Costs: A 100-basis point increase/decrease in 30-day SOFR would decrease/increase annual earnings by $12.9 million (based on June 30, 2025, outstanding balances)478 - During 2024, borrowing costs on warehouse facilities exceeded interest income from loans held for sale due to the inverted yield curve478 - Foreign Currency Risk: Not currently material, but expected to grow with international expansion, potentially presenting a material risk in the future479 ITEM 4. CONTROLS AND PROCEDURES Newmark's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that Newmark Group, Inc.'s disclosure controls and procedures were effective as of June 30, 2025480 - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2025481 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section refers to the detailed descriptions of legal proceedings provided in Note 27 of the financial statements and the 'Legal Proceedings' subsection within Management's Discussion and Analysis - Legal proceedings are described in Note 27 to the unaudited condensed consolidated financial statements and the "Legal Proceedings" section of Item 2484 ITEM 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024485 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section incorporates by reference the information regarding unregistered sales of equity securities and use of proceeds from Note 5 ('Stock Transactions and Unit Purchases') and Note 26 ('Compensation') of the financial statements - Information regarding unregistered sales of equity securities and use of proceeds is incorporated by reference from Note 5 and Note 26 of the financial statements486 ITEM 3. DEFAULTS UPON SENIOR SECURITIES This item is not applicable to the company - This item is not applicable487 ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company - This item is not applicable488 ITEM 5. OTHER INFORMATION During the quarter ended June 30, 2025, none of the company's directors or executive officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' - None of the company's directors or executive officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025489 ITEM 6. EXHIBITS This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including offer letters, certifications, and XBRL formatted financial statements - The Exhibit Index includes an Offer Letter for Luis Alvarado, Section 302 and 906 Certifications, and iXBRL formatted financial statements491
Newmark(NMRK) - 2025 Q2 - Quarterly Report