06-Aug-2025
Jones Lang LaSalle, Inc. (JLL)
Q2 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.
Kelly Howe
Chief Financial Officer, Jones Lang LaSalle, Inc.
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OTHER PARTICIPANTS
Anthony Paolone
Analyst, JPMorgan Securities LLC
Stephen Sheldon
Analyst, William Blair & Co. LLC
Jade J. Rahmani
Analyst, Keefe, Bruyette & Woods, Inc.
Julien Blouin
Analyst, Goldman Sachs & Co. LLC
Seth Bergey
Analyst, Citigroup Global Markets, Inc.
Peter Abramowitz
Analyst, Jefferies LLC
Mitch Germain
Analyst, Citizens JMP Securities LLC
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MANAGEMENT DISCUSSION SECTION
Operator: Ladies and gentlemen, thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Jones Lang LaSalle Incorporated Second Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
I would now like to turn the conference 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 second quarter 2025 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release, along with the 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 referenced 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 referenced Resilient and Transactional revenues, which we define in the footnotes of our earnings release.
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 second quarter 2025 earnings call. I'm pleased to report strong results for the second quarter, demonstrating JLL's ability to deliver sustainable organic growth. We saw double-digit revenue gains for the fifth consecutive quarter, led by momentum in our Resilient business lines on both the top and bottom line.
The consolidated level revenue increased 10%. Adjusted EBITDA grew 17% and adjusted EPS was up 29%. Before sharing perspectives on our performance, I'd like to briefly address the impacts of the evolving policy environment on the market.
During the second quarter, we saw an uptick in the late and prolonged decision-making, particularly in industrial and manufacturing and for more significant capital projects and investment decisions. This had a greater impact on transactional markets where growth decelerated from first quarter levels in light of the confluence of geopolitical and trade policy pressures as well as fiscal policy uncertainty.
Within our Outsourcing business, most companies remain committed to enhancing the value of their workplaces and property investments. Supporting the pipeline for midsized capital spend projects and contract expansion opportunities. As we assess the pipeline for larger transaction and expansion opportunities, the markets are again becoming more constructive though remain sensitive to developments in the macro environment.
Turning to our results this quarter. The stability, organic growth and profit contribution of our Resilient businesses, validating our strategy and give us confidence in the depth and breadth of our platform. Growth in Resilient revenue was led by Workplace Management and a notable strengthening in Project Management. Last year, we announced the global unification and strategic restructuring of the Project Management business to enable a more cohesive approach to connecting people, processes and expertise and to expand our capabilities in high-growth sectors and industries.
Strong results this quarter are indicative of the momentum it has garnered and reflects our ability to drive greater client value as a globally unified business. The double-digit growth across our Resilient businesses in the current market demonstrates the resilience and scalability of our platform as well as the significant untapped potential for Outsourcing penetration across industries over the long term.
Our investments in data technology and artificial intelligence are integral to our growth strategy, to enhancing operational efficiency and to delivering on client demand for integrated end-to-end Real Estate Management Solutions and data-driven insights. We will continue to invest in the organic growth of these businesses and assess M&A opportunities on a risk-adjusted return basis as part of our disciplined approach to capital allocation.
With the backdrop of decelerating growth in the broader market, our Transactional businesses grew 7% in the quarter, led by Capital Market Services. The Investment Sales, Debt/Equity Advisory businesses saw growth of 14%, [ph] booed (00:06:35) by resilient debt markets and robust refinancing activity that continued to drive strong growth in our Debt Advisory business, up 27% with notable strength across the US and Europe.
Significant growth was led by the residential sector. Across our Transactional businesses, the stability of our pipeline gives us confidence that we are well positioned to see continued organic growth and market share gains.
With that, I will now turn the call over to Kelly Howe, our new Chief Financial Officer, who will provide more details on our results for the quarter.
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Kelly Howe
Chief Financial Officer, Jones Lang LaSalle, Inc.
Thank you, Christian. I'm delighted to join you all today in my new capacity as JLL's Global CFO. The transition into my new role has been smooth, reflecting the strength and continuity of our team. I am excited to work closely with the investment community and proud to continue to uphold JLL's commitment to transparent financial reporting. Most importantly, I look forward to partnering with Christian and our leaders across JLL to achieve our strategic priorities while building upon our strong foundation to drive long-term value creation.
Now to our results. I am pleased with our second quarter outcome, which reflects the continuation of positive business momentum as well as the strength of our platform and people. The meaningful margin expansion and earnings growth is a direct result of our ongoing cost discipline and improved platform leverage. Additionally, our focus on improving working capital efficiency is reflected in the increase in free cash flow in the quarter.
I will now review our operating performance by segment. Beginning with Real Estate Management Services, revenue growth was led by workplace management with client wins slightly outpacing mandate expansions as incremental pass-through costs augmented high single-digit management fee growth. On a two-year stack basis, workplace management revenue increased nearly 30% for the quarter, consistent with the first quarter and reflective of the value we bring to clients.
Project Management revenue growth was broad-based geographically, most notably from new and expanded contracts in the US and Asia Pacific, with mid-teens management fee growth supplemented by higher pass-through costs. The acceleration in growth within Project Management stems in part from the strong leasing activity over the past several quarters as well as recent incremental investments in our platform and human capital. The overall segment revenue growth, along with continued cost discipline, more than offset headwinds from the favorable prior year impact of incentive compensation accruals timing, leading to higher adjusted EBITDA and margin.
Looking ahead, we remain confident in the trajectory of the Workplace Management business as our sales pipeline is strong and contract renewal rates are stable. For Project Management, client activity continues to be healthy, though the recent moderation in office leasing growth as well as mixed corporate CapEx signals may temper growth later in the year.
Within Property Management, we are encouraged by the progress we have made in our transition to date as we are starting to see the benefits of bringing teams together as well as operating cost synergies. We are still early in the process and anticipates an elevated contract turnover in the near term, given our ongoing focus on long-term growth and margin potential.
From an overall segment perspective, we continue to target healthy annual margin expansion, though it's not likely to be linear as we balance long-term growth and profitability alongside near-term business performance, mix, investment and ongoing cost management.
Moving next to Leasing Advisory. Higher revenue was driven by continued Leasing growth across major asset classes, led by an 11% increase in industrial. The US led the growth primarily driven by 13% growth in industrial. This compares favorably to the 4% growth in US industrial market volume, which we attribute to the strength of our brand and platform as well as our market position.
Global Office Leasing revenue tracked in line with market volume, which showed a deceleration in growth according to JLL Research. US Office Leasing revenues increased for the sixth consecutive quarter growing nearly 3%, which compared favorably to the 3% decline in market volumes according to JLL Research. The increases in Leasing Advisory adjusted EBITDA and margin were primarily driven by Leasing revenue growth and an improved ratio of compensation and benefits to revenue partly offset by discrete variable operating expenses in the quarter.
Excluding the impact of the discrete expenses, the incremental margin would have been in line with the typical range for the segment. Looking ahead, our Leasing pipeline is stable and business confidence as measured by the OECD has been resilient considering the macro backdrop, providing reason for cautious optimism for continued modest growth in the near term. Client demand for high-quality and energy-efficient assets, which are becoming increasingly scarce, remains a consistent trend.
Within office, tenant requirements are generally studied with sectors such as professional services, finance and legal, driving demand in many markets. Though as we've seen in the recent past, this could evolve quickly as clients consider the macro outlook. For Industrial, clients continue to assess the impact of supply chain, production and the economy from the evolving policy backdrop, which may temper near-term growth.
Shifting to our Capital Market Services segment, increased investor desire to transact alongside strength in the debt markets and liquidity supported the continuation of favorable growth trends of the past few quarters albeit at a more moderate pace as geopolitical and fiscal policy uncertainty weighed on investor sentiment. Debt Advisory revenue increased 27% and Investment Sales grew 9% on the back of more challenging comparisons. On a two-year stacked basis, Investment Sales and Debt Advisory revenue each grew 25%.
During the quarter, we recognized approximately $14 million of incremental expense after reaching an enhanced loss share agreement with Fannie Mae for a specific three-loan portfolio with confirmed borrower fraud. This is the portfolio we mentioned during our fourth quarter earnings call. The increase in capital market services adjusted EBITDA and margin was largely attributable to higher Transactional revenues and the net impact of year-over-year loan-related losses.
Looking ahead, the strength of our differentiated data-driven global platform positions us to continue to gain market share. We are encouraged by the stability of the debt markets and capital availability alongside the amount of dry powder on the sidelines. Our global Investment Sales, Debt and Equity Advisory pipeline remains strong, though the timing and pace of deal closings will be influenced by the evolution of the economic outlook, investor sentiment and interest rates.
Turning to Investment Management. Lower assets under management compared with the year earlier, which primarily reflects dispositions of assets on behalf of certain clients in the fourth quarter of 2024, drove the decline in advisory fees. Higher valuations and capital raising led the sequential quarter increase in assets under
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Jones Lang LaSalle Inc. published this content on August 06, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on August 06, 2025 at 22:21 UTC.
