Executive Summary / Key Takeaways

• JLL is strategically enhancing its resilience through investments in its Real Estate Management Services and technology platforms, aiming to diversify revenue and stabilize earnings amidst market volatility.
• Recent financial performance, particularly in Q1 2025, shows robust double-digit revenue growth across both resilient and transactional segments, driven by strong performance in Workplace Management, Project Management, Leasing, and Capital Markets Services.
• The company's differentiated technology, including AI-powered platforms like JLL Partners and JLL Property Assistant, provides quantifiable operational efficiencies and competitive advantages, positioning it for market share gains and improved profitability.
• Despite increased macroeconomic and geopolitical uncertainty leading to some client decision delays, JLL maintains its full-year 2025 Adjusted EBITDA target range of $1.25 billion to $1.45 billion, reflecting cautious optimism for a gradual recovery in transactional markets.
• JLL's strong balance sheet, ample liquidity, and disciplined capital allocation strategy, prioritizing organic growth, debt reduction, and targeted M&A (especially in resilient areas and technology), underpin its ability to navigate market dynamics and drive long-term value.

A Foundation Built on Centuries, Focused on the Future

Jones Lang LaSalle Incorporated, with a history spanning over 200 years, has evolved into a global leader in commercial real estate services and investment management. This long journey has shaped a diversified platform, supporting clients across a wide spectrum of property types and services. In recent years, JLL has strategically intensified its focus on building a more resilient business model, aiming to mitigate the inherent cyclicality of transactional real estate markets. This involves significant investment in its recurring revenue streams and a deliberate pivot towards leveraging advanced technology to differentiate its offerings.

The company's strategic response to market dynamics is underpinned by a commitment to profitable and sustainable growth. This involves enhancing its global platform, investing in its people, and pursuing targeted acquisitions that complement its core strengths, particularly in areas offering greater revenue stability. This foundational strategy sets the stage for understanding JLL's recent performance and future outlook in a complex global environment.

Technological Edge: Powering Efficiency and Insight

At the heart of JLL's strategic differentiation is its commitment to technological innovation, particularly through the integration of artificial intelligence. The company has consolidated its AI capabilities into a platform called JLL Partners, designed to empower its workforce and enhance client service. This platform powers tools like JLL GPT, an AI assistant used by nearly half of JLL's colleagues, and JLL Azara, a data analysis application transforming how clients interact with real estate data.

Further expanding its AI suite, JLL recently announced JLL Property Assistant, an AI tool specifically for real estate owners to optimize property performance. These technologies are not merely buzzwords; they offer tangible benefits. While specific, comprehensive quantifiable metrics across all tools are still emerging, the stated goals include driving productivity gains, providing timely revenue-generating and cost-saving insights, and enabling more efficient workflows. For investors, this technological focus represents a critical competitive moat, potentially leading to improved operating margins, enhanced client retention through superior service, and faster market share capture in tech-enabled service areas.

Navigating the Competitive Terrain

JLL operates in a highly competitive global market, facing off against major players like CBRE Group (CBRE), Cushman & Wakefield (CWK), and Colliers International (CIGI), as well as increasingly sophisticated PropTech firms. While CBRE holds a larger scale advantage with a significantly higher market capitalization and market share, JLL strategically positions itself through its integrated service model and technological focus. JLL's emphasis on data-driven advisory and sustainability consulting provides differentiation in niche markets.

Quantitatively, JLL's operational efficiency, particularly in areas benefiting from its digital platforms, can be higher than some peers. For example, its technology integration aims for faster processing speeds in deal execution and project management. While JLL's overall operating margins and ROIC may trail CBRE's scale-driven efficiencies, its net margins remain comparable, indicating profitability resilience. Against firms like Cushman & Wakefield and Colliers, JLL often demonstrates stronger profitability metrics and a more robust investment in technological innovation, which could translate into better market share capture in emerging, tech-integrated service areas. The proliferation of private credit, where JLL is the largest debt intermediary globally, also provides a competitive edge by bringing new capital sources and leveraging deep expertise for client advice and market share gains.

Segment Performance: Resilience Meets Transactional Momentum

JLL's business is structured across five global segments, reflecting its diversified service offering.

Real Estate Management Services (formerly Work Dynamics), encompassing Workplace Management, Project Management, and Property Management, is central to the company's resilience strategy. This segment delivered strong revenue growth in Q1 2025, up 14% in local currency, fueled by Workplace Management (+15% LC) and Project Management (+16% LC). This growth stems from new client wins, mandate expansions, and increased pass-through costs, demonstrating the value of integrated end-to-end building management solutions. Adjusted EBITDA for this segment saw a slight decline in Q1 2025 (-9% LC), attributed to continued investments in technology platforms (including AI) and human capital to support future growth, which outpaced near-term revenue expansion.

Leasing Advisory (formerly Markets Advisory) and Capital Markets Services (formerly Capital Markets) represent the company's key transactional businesses. Both segments showed significant momentum in Q1 2025, with Leasing Advisory revenue up 13% in local currency and Capital Markets Services revenue increasing 16% in local currency. Leasing growth was broad-based across asset classes and geographies, notably in office (+18% global growth, outpacing the market) and industrial. Capital Markets Services was fueled by debt advisory (up over 45%) and investment sales (up approximately 15%), particularly strong in the U.S. Adjusted EBITDA saw substantial increases in both segments (Leasing Advisory +29% LC, Capital Markets Services +90% LC), driven by higher transactional revenues and improved platform leverage.

Investment Management (formerly LaSalle) provides services to institutional and high-net-worth investors. Revenue declined 4% in local currency in Q1 2025, primarily due to lower advisory fees reflecting asset dispositions in late 2024 and structural changes in Europe, alongside a significant decrease in incentive fees. Adjusted EBITDA contracted 22% in local currency, impacted by lower revenue, foreign currency transaction losses, and expense timing. Despite this, the segment saw encouraging signs in capital raising, with $1.9 billion raised in Q1 2025, a notable increase from the prior year, particularly in demand for credit strategies.

Software and Technology Solutions (formerly JLL Technologies) offers software products and services. Revenue grew 6% in local currency in Q1 2025, driven by increased software bookings, partially offset by technology solutions. Adjusted EBITDA declined 37% in local currency, influenced by revenue-related expenses and the year-over-year change in carried interest benefit. The company continues to invest in this platform for growth while targeting sustained profitability, aiming for full-year profitability by 2026.

Financial Strength and Strategic Capital Allocation

JLL maintains a strong financial position, providing flexibility to pursue its strategic objectives. As of March 31, 2025, liquidity totaled $3.3 billion, including significant undrawn credit facility capacity and untapped commercial paper capacity. The company's reported net leverage stood at 1.4x, down from 1.9x a year earlier, reflecting a reduction in net debt and higher Adjusted EBITDA over the trailing twelve months. While leverage is typically highest in the first quarter due to seasonal cash outflows like incentive compensation payments, JLL manages to a full-year average target of around 1x.

Cash flow from operations in Q1 2025 saw an increased outflow compared to the prior year, primarily due to the timing of reimbursable activities and higher commission payments related to strong Q4 2024 transactional revenue. Investing activities also used more cash, notably due to a $100 million contribution to the JLL Income Property Trust. Financing activities provided a significant inflow, driven by the utilization of the commercial paper program to support these outflows.

Capital allocation priorities remain consistent: prioritizing organic growth through investments in people and platform, reducing leverage towards the target range, and pursuing selective, value-accretive acquisitions, particularly those that enhance resilient businesses or technological capabilities. Share repurchases are also a high priority, with the company committed to offsetting stock compensation dilution as a minimum. Recent acquisitions like Raise (digital leasing tech), SKAE (data center services), and the planned acquisition of Javelin Capital (energy/infrastructure capital markets) exemplify this targeted M&A approach.

Outlook, Guidance, and Key Risks

JLL is cautiously optimistic about the remainder of 2025, balancing encouraging business trends and pipelines with increased market uncertainty. The company is maintaining its full-year 2025 Adjusted EBITDA target range of $1.25 billion to $1.45 billion. This outlook is anchored in the assumption of a gradual recovery path for transactional businesses, based on current interest rates, GDP forecasts, and market momentum. The range allows for potential deviations based on a slower or faster recovery pace.

Management expects resilient businesses, particularly Real Estate Management Services, to continue delivering solid growth, albeit with some moderation in Workplace Management as large prior-year wins are lapped and potential near-term dampening in Project Management from corporate CapEx trends. The outlook for transactional businesses is influenced by the evolution of the interest rate and economic environment, which could impact the timing and pace of deal closings.

Key risks to this outlook include the dynamic macroeconomic and geopolitical environment, which has already led to some client decision delays and increased uncertainty in investor underwriting. Policy volatility, particularly regarding tariffs, could have spillover effects. Fluctuations in foreign exchange rates also impact reported results, given that approximately 40% of revenue is generated outside the U.S. While JLL uses forward contracts to manage some currency risk, significant volatility remains a factor. The company also monitors potential risks related to loan portfolios, including those with confirmed or suspected borrower fraud, although these currently represent a small portion of the overall portfolio. JLL's strategy of investing in resilience, technology, and operational efficiency is intended to mitigate these risks and enhance the company's ability to adapt to changing market conditions.

Conclusion

JLL's investment thesis is centered on its ability to leverage a diversified global platform, strategic investments in technology and resilient business lines, and operational efficiency to drive profitable growth and enhance stability in a dynamic real estate market. The company's recent performance, marked by broad-based revenue growth and strong Adjusted EBITDA expansion in key segments, underscores the effectiveness of this strategy. While macroeconomic and geopolitical uncertainties present ongoing challenges, JLL's strong balance sheet, disciplined capital allocation, and focus on high-growth areas like technology and resilient services position it to navigate these headwinds.

The maintenance of the 2025 Adjusted EBITDA guidance reflects management's cautious confidence in a gradual recovery and the underlying strength of the business. For investors, JLL represents an opportunity to participate in the recovery of global real estate markets, supported by a company actively building a more resilient and technologically advanced platform. Monitoring the pace of transactional market recovery, the impact of macro volatility on client decision-making, and the continued execution of JLL's technology roadmap will be key to assessing the company's trajectory towards its long-term financial targets and competitive positioning against global peers.