Executive Summary / Key Takeaways

• Cushman & Wakefield is executing a strategic pivot towards accelerated growth in 2025, leveraging a fortified balance sheet and disciplined investments in talent, technology, and its core service lines, particularly Services and Capital Markets.
• First quarter 2025 results demonstrate tangible momentum, with revenue increasing 5% year-over-year, Adjusted EBITDA rising 23%, and Adjusted EBITDA margin expanding by 103 basis points, driven by broad-based strength across service lines and regions, notably Leasing in the Americas and Capital Markets globally.
• The company's integrated service platform and strategic investments in technology, including AI-driven tools, enhance operational efficiency and client engagement, contributing to a competitive edge in a dynamic market.
• Management maintains its full-year 2025 guidance, anticipating mid-single-digit growth in Leasing and Services (Services target achieved ahead of schedule), and Capital Markets growth exceeding the 2024 rate, signaling confidence in a multiyear commercial real estate recovery.
• Despite macroeconomic uncertainties and specific litigation risks, CWK's improved liquidity ($1.7 billion as of Q1 2025) and proactive debt management (no funded long-term debt maturities until 2028, multiple repricings) provide a solid financial foundation to fund growth initiatives and navigate potential headwinds.

A Pivot to Growth: Cushman & Wakefield's Strategic Evolution

Cushman & Wakefield plc, a global leader in commercial real estate services with roots tracing back to 1784, stands today as a firm managing approximately 6 billion square feet across nearly 400 offices in some 60 countries. Its extensive platform delivers a comprehensive suite of services spanning Services, Leasing, Capital Markets, and Valuation and other offerings to a diverse client base of occupiers and owners. Over its long history, the company has adapted to evolving market dynamics, expanding its global footprint through strategic actions like the 2014 acquisition of the DTZ Group and establishing key joint ventures such as Cushman Wakefield Greystone LLC and CWVS Holding Limited.

In recent years, CWK has navigated a period of significant macroeconomic uncertainty and market recalibration, particularly in response to higher interest rates. During this phase, management strategically prioritized fortifying the company's financial foundation. This involved a concerted effort to improve operating cash flows through working capital efficiencies, leading to substantial free cash flow generation, and aggressively managing its debt profile. Since the current CEO took leadership, the company has repaid $230 million in debt and successfully refinanced and repriced its debt five times, significantly reducing its annual cash interest burden. This culminated in the prepayment of approximately $200 million of 2025 debt maturities ahead of schedule by October 2024 and multiple term loan repricings in 2024 and early 2025, including a 25-basis point reduction on the 2030 Tranche-1 term loan in Q1 2025. As of March 31, 2025, the company holds a strong liquidity position of $1.7 billion, comprising $1.1 billion in undrawn revolver capacity and $0.6 billion in cash and cash equivalents, with no funded long-term debt maturities until 2028. This disciplined financial management has lowered net leverage to 3.9x EBITDA, creating a robust platform from which to pursue future opportunities.

With its balance sheet strengthened, Cushman & Wakefield is now executing a strategic pivot towards accelerated growth. Management believes the commercial real estate market is in the early innings of a multiyear recovery, supported by a largely favorable macroeconomic environment characterized by economic growth, job creation, and healthy corporate profits. While macroeconomic uncertainty persists, particularly regarding international trade policy and tariffs, client decision-making has largely continued, with management observing that 90-95% of clients are proceeding with decisions on their existing timelines, indicating a lack of a widespread "freeze."

The company's growth strategy is a multifaceted, layered approach focused on driving steady expansion in earnings per share. This involves accelerating investments across the platform in 2025, targeting three main categories: funding and fueling the brokerage business (leaning into the Capital Markets recovery), re-accelerating Services revenue and profitability (organic investments and tuck-in acquisitions), and continuing opportunistic deleveraging. Talent acquisition and retention are critical components, with the company actively recruiting top-tier brokers in Leasing and Capital Markets, having already hired more average annual revenue producers in the Americas year-to-date in 2025 than in all of 2024.

CWK operates within a competitive landscape dominated by large global firms like CBRE (CBRE), JLL (JLL), and Colliers International (CIGI), as well as data and technology-focused players like CoStar Group (CSGP) and various proptech firms. While competitors like CBRE and JLL hold larger market shares and often demonstrate stronger financial metrics such as higher ROIC and EBITDA margins, CWK differentiates itself through a client-centric approach, delivering customized, bespoke solutions. The company's strategic focus on integrating its platform and breaking down silos aims to provide a more connected and agile service delivery model. Compared to competitors, CWK's AI adoption, while perhaps not as broad as some tech-focused firms, is a key differentiator in enhancing operational efficiency and client engagement, particularly in areas like content generation and marketing.

Central to Cushman & Wakefield's strategy is its investment in technology and data analytics. The company is making targeted investments to connect talent, data, and technology across its platform to drive both efficiencies and revenue opportunities. This includes enhancing labor management systems and cross-pollinating best practices across its Services businesses. While specific quantitative details on the performance metrics of all its technological tools are not extensively disclosed, the company highlights the use of AI-driven tools that contribute to operational efficiency and client engagement. For instance, AI adoption can lead to faster content generation and potentially lower operating costs per client engagement. This technological focus is intended to strengthen the company's competitive moat by improving service delivery, enhancing data-driven insights for clients, and streamlining internal operations. The strategic intent behind these R&D and technology investments is to support organic growth, improve profitability, and maintain relevance in an increasingly digital industry, positioning CWK to compete effectively against rivals who may have broader or more deeply integrated tech platforms.

Performance Reflecting Strategic Momentum

Cushman & Wakefield's first quarter 2025 results provide tangible evidence that its strategic pivot is gaining traction. Total revenue increased 5% to $2.3 billion compared to the first quarter of 2024. This growth was broad-based across service lines and regions.

Leasing revenue continued its robust expansion, growing 8% globally (9% in local currency). The Americas segment remained a standout, with Leasing revenue increasing 14%, driven by strong tenant representation activity in the office and industrial sectors, including a relatively higher number of large deals. APAC Leasing also saw significant growth, up 16% in local currency, while EMEA Leasing contracted 26% in local currency, facing a difficult comparison to the prior year.

Capital Markets revenue showed strong momentum, increasing 11% globally (11% in local currency). This performance was broad-based, with APAC leading the way with 59% growth in local currency (driven by strength in Japan), followed by EMEA up 17% in local currency (with particular strength in the U.K. and the Netherlands), and the Americas up 4%. Management noted that rate stability, improved debt market liquidity, and built-up demand positively impacted investment sales activity.

The Services business, a key area of strategic focus, achieved mid-single-digit organic growth in the quarter, reaching this target two quarters ahead of schedule. While reported Services revenue decreased 1% year-over-year, excluding the impact of the August 2024 non-core divestiture, Services revenue increased 3% (4% organic local currency growth). This growth was driven by higher facilities services revenue, particularly in the Americas (up 5% organic local currency, excluding divestiture), partially offset by lower project management revenue in EMEA (down 8% local currency, partly due to proactive efforts to exit low-margin contracts). APAC Services revenue increased 3% in local currency, with significant growth in Gross contract reimbursables (up 53% local currency) due to a large facilities management contract. Valuation and other revenue also saw modest growth, increasing 1% (3% in local currency), with management highlighting a 30% increase in bid volume in Q1, setting a 2-year record in March.
`

This top-line strength, combined with the impact of cost savings initiatives and lower interest and depreciation expenses, significantly improved profitability. Operating income rose to $45.3 million in Q1 2025 from $18.8 million in Q1 2024. Adjusted EBITDA increased 23% to $96.2 million, and the Adjusted EBITDA margin, measured against service line fee revenue, expanded by 103 basis points to 6.2%. This margin expansion exceeded expectations, primarily due to stronger-than-expected revenue performance in Leasing and Services and some expense timing benefits. Earnings from equity method investments were $11.1 million, a slight decrease from $11.7 million in Q1 2024, primarily due to lower earnings from the Greystone JV, partially offset by higher earnings from the Onewo JV.

Financially, the first quarter typically represents the lowest point for operating cash flow due to seasonality, and Q1 2025 was a use of $162 million, an increase in usage compared to Q1 2024. This was primarily driven by higher net working capital used for operations, including higher cash payments for prepaid expenses and bonuses, and lower collections of trade receivables and contract assets, partially offset by higher accounts payable. Investing activities generated $20.6 million, an improvement from the prior year, benefiting from increased net capital funding from the AR Securitization facility and lower capital expenditures. Financing activities used $41.3 million, a decrease from the prior year, mainly due to lower principal repayments under the 2018 Credit Agreement. The company's AR Securitization facility provides additional funding capacity, with $130 million outstanding against a $200 million limit as of March 31, 2025.

Outlook and Risks

Looking ahead, Cushman & Wakefield maintains the full-year 2025 guidance provided in February. The company expects Leasing growth in the mid-single digits, Capital Markets growth to exceed the mid-single-digit rate reported for the full year 2024, and Services to achieve mid-single-digit top-line growth for the full year (an improvement from the previous target of reaching this run rate by midyear). Management anticipates EPS growth in 2025 to exceed the growth reported in 2024 and to further accelerate in 2026, driven by core business strength, disciplined execution, and the impact of accelerated investments. These investments are expected to be a near-term headwind to margin improvements, particularly in seasonally lower volume quarters, as the company balances investment spend with a focus on long-term returns.

While the outlook is positive, several risks warrant investor attention. Macroeconomic uncertainty, including potential impacts from international trade policy and tariffs, could negatively affect demand for services. Volatility in capital and credit markets remains a factor. The proposed redomicile to Bermuda is subject to shareholder and court approvals and may not be completed or yield anticipated benefits. The company is also subject to various claims and litigation in the normal course of business. Notably, a dispute with a non-U.S. tax authority regarding payroll taxes could result in a reasonably possible loss of up to $43 million net of tax benefit, in excess of accrued amounts. Additionally, the company has been added as a defendant in a civil lawsuit against RealPage, Inc. (RP) concerning revenue management software use; however, CWK states it is not a landlord, does not set pricing, and does not expect the outcome to have a material impact on its business or financial results. Seasonality in operating cash flow, typically lowest in Q1, also presents a recurring challenge managed through available liquidity.

Conclusion

Cushman & Wakefield is demonstrating tangible momentum in its strategic pivot towards growth. Having successfully fortified its balance sheet and enhanced its financial flexibility through proactive debt management and improved cash flow generation in 2024, the company is now accelerating investments in its core business, talent, and technology. The strong first quarter 2025 results, marked by broad revenue growth and significant margin expansion, underscore the effectiveness of this strategy and management's ability to execute in a dynamic market.

With a clear focus on leveraging its integrated platform, attracting top talent, and utilizing technology to enhance efficiency and client solutions, CWK is positioning itself to capitalize on the anticipated multiyear recovery in commercial real estate. While macroeconomic risks and specific legal challenges persist, the company's robust liquidity and disciplined capital allocation strategy provide a solid foundation. The maintained full-year guidance and expectation for accelerating EPS growth in the coming years suggest that Cushman & Wakefield is well-positioned to deliver value for investors as the market continues to improve.