07-May-2025
Jones Lang LaSalle, Inc. (JLL)
Q1 2025 Earnings Call
CORPORATE PARTICIPANTS
Sean Coghlan
Head-Investor Relations, Jones Lang LaSalle, Inc.
Christian Ulbrich
President, Chief Executive Officer & Director, Jones Lang LaSalle, Inc.
Karen Brennan
Chief Financial Officer, Jones Lang LaSalle, Inc.
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OTHER PARTICIPANTS
Peter Abramowitz
Analyst, Jefferies LLC
Anthony Paolone
Analyst, JPMorgan Securities LLC
Patrick Mcilwee
Analyst, William Blair & Co. LLC
Julien Blouin
Analyst, Goldman Sachs & Co. LLC
Jade J. Rahmani
Analyst, Keefe, Bruyette & Woods, Inc.
Seth Bergey
Analyst, Citigroup Global Markets, Inc.
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MANAGEMENT DISCUSSION SECTION
Operator: Good morning. My name is Aaron and I will be your conference operator for today. At this time, I would like to welcome everyone to the Jones Lang LaSalle Incorporated Q1 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]
With that, I am pleased to turn the call over to Sean Coghlan, Head of Investor Relations. Sean, you may begin.
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Sean Coghlan
Head-Investor Relations, Jones Lang LaSalle, Inc.
Thank you and good morning. Welcome to the first quarter 2025 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release along with a slide presentation and Excel file intended to supplement our prepared remarks. These materials are available on the Investor Relations section of our website. Please visit ir.jll.com.
During the call as well as in our slide presentation and supplemental Excel file, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release and slide presentation. We also reference Resilient and Transactional revenues, which we define in the footnotes of our earnings release.
Effective with first quarter results, we updated our definition to shift Project Management from Transactional to Resilient. Categorizations of all other business lines remain unchanged.
As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about future results and performance, plans, expectations and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in our Annual Report on Form 10-K and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements.
Finally, a reminder that percentage variances are against the prior-year period in local currency, unless otherwise noted.
I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.
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Christian Ulbrich
President, Chief Executive Officer & Director, Jones Lang LaSalle, Inc.
Thank you, Sean. Hello and welcome to our first quarter 2025 earnings call. As we look back at the first quarter, we are pleased with our financial results with double-digit revenue gains across both our Resilient and Transactional businesses and 28% growth in adjusted EPS. The continued improvement of our leasing and investment sales, debt and equity advisory businesses was a key driver of higher profit and margin, as momentum from the second half of 2024 supported stability in real estate fundamentals.
Sustained growth of double-digit Resilient revenue further amplified these gains, driving a strong start for our newly formed Real Estate Management Services segment. Clients are looking to JLL for integrated end-to-end building management solutions, industry expertise and data-driven insights.
Since the end of the quarter, the market backdrop has become more dynamic and is creating a more challenging operating environment for companies. JLL has a long history of navigating market uncertainty at least over the past five years, while also gaining market share and growing at over 3 times the rate of global GDP through cycles.
We remain confident in the strength and resilience of our company and our industry-leading platform. To date, there have been limited direct impacts on our results from the recent policy volatility and uncertainty, although some clients are delaying decision-making as they monitor macro developments. Slower economic growth could have spillover effects for our industry, but it is still too early to predict the future implications for our business.
Despite the challenges of the current economic climate, we maintain high conviction in our strategy and the longterm structural drivers for our industry. We remain focused on profitable and sustainable growth and will continue to strategically invest in our people and platform. We have built leading businesses that will remain key contributors to our outperformance through market volatility. I will highlight three of these areas today.
First, our Real Estate Management Services business has capitalized on the growing trend of outsourcing as well as the increased focus on building operations and tenant experience across occupier and investor portfolios. We are building differentiated and scalable platforms across our Workplace Management and Project Management businesses, and we are now globalizing our Property Management business with a shift into this segment, which went into effect on January 1.
We believe many geographies and industries have significant untapped potential for outsourcing penetration and advancements in technology, including in artificial intelligence, which will further transform how we serve clients in
the future. Across our people, data and technology, we are investing to grow the revenue and profit contributions, in particular of our Resilient businesses.
Second, JLL has been a beneficiary of increasing capital flows to real estate for many decades, creating product and services to meet the needs of our investor clients throughout the asset's life cycle. The proliferation of private credit has brought new sources of debt capital into the market and has become a key driver of our business with notable growth prospect ahead. We are the largest debt intermediary in commercial real estate globally through our debt advisory business, where revenue growth exceeded 45% in the first quarter.
In Investment Management, our business has experienced operating credit funds across Europe and North America dating back 15 years. We are seeing strong fundraising demand in both regions today, particularly for our US credit strategy. Our deep expertise in real estate debt is providing us with an unparalleled level of data and insights in the industry, allowing us to better advise clients and gain market share while introducing a degree of resilience to our Transactional revenue.
Third, tailwinds are emerging, which support a broader recovery in the office sector, supported by the expansion of return-to-office mandates, moderation of downsizing rates in office leasing activity and liquidity improvements for office sales and financing. Corporates around the world are gaining more clarity on future space needs. And with historically low development pipelines in the US and Europe, office fundamentals and trends are likely to continue to strengthen for top-tier buildings.
Quality assets are also growing more scarce, creating spillover demand for the next tier of buildings. We have seen positive improvements in office Transactional revenues of the past year, in particular in the US, where pressures on the sector have been most pronounced. As clients optimize office holdings, increase acquisition activity in the sector and reinvest in buildings and spaces, JLL is well positioned to lead the office sector's rebound with a collective data and insight of the [ph] full firm (00:08:32).
Before handing it over to Karen, I want to get back to the important changes to our senior leadership team announced earlier today. After five years as CFO, I'm pleased to share that Karen will be taking on a new role on our Global Executive Board as Chief Executive Officer of our Leasing Advisory business globally, effective July 1.
Andy Poppink, current CEO of Leasing Advisory, will assume the role of CEO, Leasing Advisory, EMEA and Asia Pacific, reporting to Karen and based out of Europe. Throughout Karen's more than 25-year tenure at JLL, she has exemplified strategic vision, excellence in execution and dedication to our clients, as she has taken on numerous leadership roles across our business globally.
I'm also pleased to announce that Kelly Howe will succeed Karen as JLL's Chief Financial Officer. Kelly joined JLL as the CFO of Leasing Advisory in January 2024, after 23-plus years of experience in professional services with Boston Consulting Group, most recently as their North America CFO. Kelly will join our Global Executive Board.
With that, I will now turn the call over to Karen to provide details on our results for the quarter.
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Karen Brennan
Chief Financial Officer, Jones Lang LaSalle, Inc.
Thank you, Christian. I have enjoyed working closely with our investor community over the past five years and look forward to continuing to work with you all in my new capacity as CEO of Leasing Advisory. We are excited to
introduce to you all to Kelly later this year. Kelly's financial leadership and growth mindset position her well to lead and carry forward the strategic priorities of the CFO's office and our finance organization.
Now to our results. Our first quarter reflects the continuation of positive business momentum as well as the impact of our ongoing investments to unify our data, technology and people that enhance the outcomes we deliver to clients. Additionally, our focus on operating efficiency produced meaningful margin expansion and earnings growth. I will now review our operating performance by segment.
Beginning with Real Estate Management Services, revenue growth for the quarter was led by Workplace Management as incremental pass-through costs augmented high single-digit management fee growth that stemmed from both new client wins and mandate expansions. On a two-year stacked basis, Workplace Management revenue increased nearly 30% in the quarter, which reflects the value of our differentiated platform and services.
Within Project Management, new client wins and an increase in existing client activity, most notably in the US and Asia Pacific, drove near double-digit growth in management fees and it was supplemented by higher pass-through costs. The investments in our technology platform, including artificial intelligence and Project Management workflow tools, and the incremental human capital investments we made in the latter part of 2024 to support future business growth, notably within Project Management, weighed on the segment adjusted EBITDA performance.
Looking ahead, we continue to expect Workplace Management growth to moderate from the elevated levels of the past year, as we lap large contract wins and mandate expansions. In addition, certain clients have delayed decisions as they monitor policy and macro development. Still, we remain confident in the long-term trajectory of the Workplace Management business, as our sales pipeline is strong and contract renewal rates are healthy and stable.
For Project Management, the strong growth in leasing over the past several quarters is supportive of continued client activity. However, slowing corporate CapEx and the recent shift in the macro environment may temper near-term growth rates. Within Property Management, we expect revenue trends of the past few quarters to continue in the near term as we work to bring together our team, realize synergies and evolve our positioning, which comes with some transitory incremental costs. For this segment, we continue to target healthy annual margin expansion, though it is not likely to be linear as we balance long-term growth and profitability alongside near-term business performance, mix and investments.
Moving next to Leasing Advisory. Broad-based revenue growth across asset classes was led by an 18% increase in office and accelerated momentum within industrial, which was up 14%. The office revenue growth outpaced the 9% market increase, while industrial compared favorably to the 10% market decline, according to JLL Research. Most geographies achieved double-digit leasing revenue growth, notably the US, Canada, Greater China and Germany.
US office leasing increased for the fifth consecutive quarter, exceeding first quarter 2019 levels, driven in part by growth in the number of large leasing transactions. Large transactions in the US, where JLL historically has had a greater share of the market, remain approximately 30% below pre-pandemic averages, according to JLL Research. Higher Leasing Advisory adjusted EBITDA and margin for the quarter was primarily driven by leasing revenue growth as well as continued improvement in platform leverage.
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Jones Lang LaSalle Inc. published this content on May 07, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 08, 2025 at 02:13 UTC.
