Colliers International(CIGI) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2025, the company generated revenues of $1.6 billion, up 5% year-over-year, with overall internal growth for the quarter being essentially flat due to strong prior comparisons [10] - Adjusted EBITDA for the quarter was $245 million, reflecting a 6% increase over the previous year, in line with revenue growth [10] - The company's leverage declined to 2x as of December 31, benefiting from strong seasonal cash flows [15] Business Line Data and Key Metrics Changes - The commercial real estate segment net revenue increased by 7% in Q4, with Capital Markets revenues rising by 13%, primarily driven by strong activity in the U.S. [11] - Leasing revenues grew by 3%, led by the U.S. in office and industrial asset classes [11] - The engineering segment net revenue was up 8%, supported by recent acquisitions, while investment management net revenues increased by 6% [12] Market Data and Key Metrics Changes - The U.S. market continued to show strength, particularly in Capital Markets, which is expected to maintain high teens growth in 2026 [64] - EMEA and Asia Pacific markets experienced modest growth, with expectations for improvement in 2026 [36] Company Strategy and Development Direction - The company is focused on expanding its diversified platform and has recently agreed to acquire Ayesa Engineering, which will enhance growth avenues and strengthen its global presence [5] - The strategy emphasizes leveraging AI as a productivity and growth enabler, improving efficiency and margins while allowing professionals to focus on higher-value advisory services [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2026 with strong momentum and a healthy pipeline, expecting solid internal growth and contributions from recent acquisitions [7] - The company anticipates mid-teens growth across its key operating metrics for 2026, driven by a recovery in Capital Markets and strong demand in engineering and investment management [16] Other Important Information - The company raised $2.1 billion in new capital commitments during Q4 and $5.3 billion for the full year, with a fundraising target of $6 billion to $9 billion for 2026 [13][66] - The integration costs in the investment management segment are expected to continue impacting margins through the first half of 2026 [12][32] Q&A Session Summary Question: Organic growth in engineering - Management noted strong demand for services and opportunities to increase pricing, with hiring ongoing to meet demand [19][20] Question: Capital allocation and share buybacks - Management indicated a preference for careful capital management and highlighted the focus on acquisitions rather than share buybacks at this time [29] Question: Macro perspective on Capital Markets - Management does not expect rate cuts to influence their outlook, citing pent-up demand for transactions as a key driver for growth [36] Question: AI's impact on business - Management views AI as a margin enhancer rather than a disruptor, emphasizing its role in improving efficiency and enabling professionals to focus on complex transactions [71][72] Question: Ayesa acquisition and future growth - Management highlighted the strategic importance of the Ayesa acquisition for expanding into new markets and leveraging existing capabilities [56][87]