Right, well, good morning, everyone, and welcome to our presentation for the International Workplace Group, full-year results for the year ending 31st of December 2024. I'm delighted to present the results this morning. Right. One. Record system-wide revenue, which we'll talk about today. Record EBITDA, which we're very happy with, and record new openings added to the network. And all of this, additional performances and evidence to announce our first share buyback for quite a long while with a 50 million buyback. Charlie will talk to you more about that later.
So our business very much, as we came through 2024, at an inflection point. You know, hard work really since 2019 really started to pay off. We've changed the entire business model really to move it much more towards services, much more towards managing centers and franchising centers rather than investing in them.
And you'll see the results of that coming through in these results, and you'll see more of it in 2025. Just wanna start, and I'm gonna spend a little bit more time today just talking about what we do. And Charlie, you know, Charlie and I have seen in 2024 too many instances of people not really understanding what our business is about. They think somehow really office business. It is important to us, but that is, we do a lot more than that, and offices are becoming a smaller part of the overall offer.
So if we look at the investment case, we're market leader by a long, long way in what is gonna be a future mega industry. It, it's an industry of the conversion of real estate into products that people can buy, products that companies can buy.
It allows companies to be more asset-light and more OpEx-heavy. That's pretty much all companies are looking for that. I had a conversation with our sales team, the senior people from a top six company in the world that have massive cash flow, and even they are focused on being asset-light, cash-light, you know, just throughout business, and we help with that. We're growing the business, and again, it's inflection point. You'll see the revenue flat this year, but it hides the inflection point.
The inflection point is that the company-owned units, which, remember, is a static group pretty much, has gone up by 5% revenue, like for like, and the revenue, the system-wide revenue, which is coming through the management, is going up strongly. We're generating cash while we're growing the business, which is another very good attribute of the business.
We've got huge advantage with our global platform. I've got questions this morning from news outlets about the impact of tariffs, blah, blah, blah, and everything, global volatility, but we are pretty well hedged around the world, and you know, that network is growing in pretty much every country we have, so we've got a super advantage.
Now, that translates also into better savings, you know, cost management, key part of this business, and better working more and more on supply chain, more and more on making that more efficient, lower cost, you know, great performance last year, holding costs pretty much, very small increase in costs in an inflationary year. We're very happy with them. We're working very hard to do the same again this year. Experienced management team, so you know, again, when you look at our business, it's not a business of just Mark Dixon, Charlie Steel.
We've got a super management team out there, which we have invested in greatly during 2024. So we became more confident in the outlook, and we started to strengthen up the business, put in succession planning, which we're still doing, up and down the business. It's growing quickly, and those investments can give us a great return to business.
But it is a lot about people, and we've taken that much more seriously, and we've had the money to do it much more seriously in 2024, and we'll continue doing it in 2025. I think then that's coming through in the results, reliable, predictable numbers, that we've managed to achieve now for several years, and we hope to continue to in the future. You'll see Charlie will talk to the first time we've actually given an outlook on the business and so on.
I think what's important is, again, the way I look at things as an investor is, where's the cash? And I'm sure we'll get some questions on that, today, but, you know, better and better cash conversions became through 2024, and even better cash conversion in 2025. A lot of the legacy stuff's out the way. A lot of the investments are out the way, you know, and the whole platform for finance and so on has been completely rebuilt.
There's a little bit left, but not much, so you know, we should get this year a very good outcome in the cash flow, and I think that will be another inflection point that's gonna help in 2025, it is a huge opportunity.
So these sort of platforms, each side of us, you know, have built businesses around supplying the customer with what they want in an easy-to-consume way. That's what they do, and that is exactly what IWG does, making it easy to support your people however they want to work and wherever they want to work. That's what we're about. And that platform, pretty much everything we do now is that two-sided model where we have people that wanna sell and people that wanna buy. We provide everything in the middle, and that we're gonna grow into this opportunity.
And certainly, I think the business is at the most exciting place it's ever been, as we start 2025. So how do we support landlords? So this is a two-sided model. Landlords and corporate real estate investors, what's important to them?
Well, the number one thing is that we can provide them with cash flow. In a world where it's quite hard for many to get cash flow from their existing investments, we can open it up, and that is what we're doing. Charlie is gonna talk a bit more to the numbers, but when you look at the RevPAR that we're achieving for landlords, we're getting, you know, commercially fantastic performances from them, and we're getting more and more repeat landlords that are coming back, building one building after another.
It's also an amenity that makes the building more attractive or the development more attractive, lots of things that they're interested in. They can control cash flows 'cause it's their business. They control that cash flow and do it as long as they want, and they get more sustainable revenues.
They don't have this sawtooth that you normally have in real estate where people come in, they sign a five-year or ten-year lease. It's, you know, it's good, and then it's not good. It just takes all that away. Valuations, I think this is the most important point on the page, are moving much more towards cash flow and away from NAV. NAV, sort of completely discredited, cash flow is what people are looking for, and the more that happens, the easier it will be for people to work with us, and so on.
They like our scale, our brands, the fact that we've been doing this for a long time through thick and thin, good partner to have. You're gonna do it, do it with them. We have everything they want.
And for them, it also opens up their properties to a completely new market that they just haven't been touching before. So that has remarkable results for them in terms of their cash flow, and, you know, they are very interested in seeing this. Every single building we do pretty much is diligent, so they check with other owners that we've already done, check on performance. They're very happy with the performance. That's how we're getting so many new buildings. Productization of real estate, what's it about? So I'm gonna talk to you a bit about the products in a second.
This is straight from our building owner pitch. So we can do any building in any location. We're doing everything from converted farm buildings, the quality ones. We're not doing sort of barns just yet, but right through to airports.
You can see we've got a lot of major airports now in the U.S., for example. We're doing more and more. U.S. airports aren't right out on the gates with drop-in pods and so on, so very exciting as we start to broaden the types of location that we do. We also, you know, so if you look at those locations, you've got a whole selection of types of things that you can do. So we do members' clubs, science labs we launched at the beginning of this year.
We do medical centers we launched at the beginning of this year, so you've got a broader range of activities that we can convert your building into so that it generates cash flow, and we think, for example, medical suites. Well, from early interest that we've got, that's gonna be very big, and that's a global thing.
Huge, huge growth in well-being in medical, in everything that goes with it makes that quite an exciting addition. We do managed space for companies, huge companies. This will be 5,000 people in a managed suite, which is fixed margin. It's packaged with the building and so that the user can just go in and use it on a monthly basis. 18 brands. So, you know, we sort of spent a lot of time talking about Regus and Spaces and so on, but there are 18 brands in total all hitting different niches, different prices.
And this is, again, what property owners are looking for to say, "Have you got something that fits my building? Do you can you add value?" And these brands here add value. We add amenities to that with 3D printing centers, meeting and conference centers, food and beverage units, and so on.
So you know, from an owner's point of view, they can add as much or as little as they want to make their building a more attractive place, a better destination. All of these we can provide, and some of them we do with partners, some of them we do ourselves. A lot of growth coming through. You've got, you know, very, very significant numbers of centers coming through, and we've transformed what was a very small thing for us two years ago. This is now a major part of our business, which is the actual building of the center. That's the complete supply chain to get in and constructed quicker and at lower cost.
And we've built up a whole team of people, very good team on this, and they're starting to have, you know, more and more success in speeding up the level of openings. And, you know, that translates into openings in the pipeline. So, you know, just to put it into perspective here, we have more centers that we've signed up yet to open than every one of the people on the other competitors on the page has in total with all of their growth. So it's just we're moving further ahead. And scale in this business is critically important.
That is what adds the value. That is what the customers are looking for. So then it comes through to the blocks that we've been talking about, Charlie's been talking about over the last couple of years.
So this is the IWG network split into company-owned, managed, and franchised. Managed and franchised, no capital investment. We operate on behalf of the owner, and we do that efficiently. This is growing very quickly, as you can see. Company-owned got smaller last year, so the revenues went up. That got slightly smaller, but it will pick up in size this year. So we've got quite a lot of pipeline of more company-owned coming. It's company-owned that are capital-light, though, so it's not a lot of investment.
Charlie will talk to that, and we're very focused on making sure that the structure of these is very, very defendable and very flexible. But, you know, good progress here, margin from company-owned going up, growth and fee and fee revenue coming up on the managed and franchised. Then third block, which is digital and professional services.
You can see here, you know, in previous meetings and many investor meetings, we get asked, "What is Worka?" We spent too much time not exactly sort of trying to explain something that was unexplainable, not explaining actually what we do. What you can see here is a vast array of brands that are doing different things. You've got a recruitment agency in here for the flexible work industry. You've got pricing and yield management for the flexible work industry. You have the Worka platform, which I'm very pleased to say was launched over the weekend or Friday.
It will be if it's not there this morning. Is it there this morning, Richard? Not yet. Right. Okay. Apple are holding it up at the moment. But all finished and just going through Apple and Android to get on the app stores.
But many other things. So this is a varied business. It's about professional services, big consulting business, consulting for some of the world's largest companies. The biggest one is about for 220,000 people, very large bank. As they move to a different way of working, technology changes everything, and it's changing how people are working. So this is an exciting area, and, you know, we expect the performance here to just continue to pick up, and it will be an important third leg of the business. Took a little bit longer than we planned, but we're there now.
I think we've also changed the structure of this and got it much more aligned to what the customers want. Onto customers. So technology is really changing the way companies can employ and support their people, and we're in the business of supporting people to be more productive by all the things that we do. And that those technology advances will continue, and that sort of starts to change even more, how companies look at things and our ability to help them. These are the discussions we have with companies.
We're not sort of talking about coworking or offices. We're talking about how they support their people. Demand is increasing, you know, quite, you know, very healthy demand increases as we went through 2024. CapEx to OpEx rule helps us a great deal. We basically turn everything to OpEx, make it easy to consume. Tools, very, very important. So companies need tools to manage this new workplace.
So we have them, not just at the Worka platform, but we have a lot of other dashboards that allow companies to actually start to manage people that are working in lots of different places, for example, and to get visibility on that. And we think, you know, that and the ability to start using it to measure productivity will be an important thing that companies will find attractive in 2025 and beyond, so we're broadening those services. We've got bolt-on acquisitions that we did last year. We got more coming this year.
They're small, but they're meaningful because we can take small things and put them out over a global platform down the channels that we have, and services, as I've said, will become quite an important part of the overall offer in two or three years' time as we keep growing it.
Services offered to customers. This is directly out of one of our pitch decks. If you're a customer, we're talking to you about this, which is, you know, how you support your people on the road, how you support people working from home, how you arrange things in your business so that you can properly support your people. These are, you know, this is everything to a new service we launched this year, which is we'll provide you with a sales office and do all the work for you. Rather than you rent an office, hire a person, do it, we do everything.
We have the salesperson. We can do all the phone work, all the follow-up work, and we can show the widgets in demonstration rooms. You can be on Teams. You can do that in 24 hours if you want to.
In Sydney, you can be set up. This also will start to change things. So you move above the office, and you start to provide more of an outsourced service much more efficiently for companies. That's what they're looking for, but many other things on here that you might, if you get time, have a look through. Business tools, really important. So we have a sustainability set of products that we can offer you. Consulting, more and more important here. So companies find it very hard to change. They need specialists to help them.
This consulting is very good business for us. We're looking to expand that more rapidly in 2025. A whole work-from-home product range. Even though you hear many stories about people going back to the office, there's a lot of people also working from home because it's very effective for some people and so on.
We're moving more towards financial products as well, 2025, 2026, which is what companies really want is to get the whole thing off the balance sheet, get the whole thing outsourced, get the whole thing as OpEx. And so we're having early discussions on that, and I think, you know, when we're speaking in a year or two's time, that will start to become a bigger part of the business. You've seen some customer examples before. This is one here, very large company, 120,000 people using us in near 1,000 locations, 44 countries.
You know, this we've got thousands of these companies, and, you know, that so this direct model to the companies buying those services, more than and we are putting more investment in sales force. Charlie's gonna talk to that when we talk to the overhead, more people added to be more proactive.
We are slightly proactive, but the majority of our business in 2024 and before has been reactive. We've got so many people coming in the front door, but we are moving towards being having that and being more proactive going forward. So in summary, we're in a very good place here. Inflection point. It is where the market's going. We're already there. You can see that coming through in the numbers and both financially and operationally. So the work we've done on the structure, and I was chatting about that a little earlier on today, is very important in terms of how we manage it.
The opportunity's enormous. It's all about how you manage it, and we've put quite a bit of investment in there, and we'll do more in 2025. We're delivering on the strategy, you know, giving good guidance, no surprises, which we also think is very important.
Expanding the concepts and brands, important as well. So it gives us more range, and more professional services becoming an important part. So, you know, market leader, definitely, but we've got to move ahead. We mustn't be looking behind. We're looking ahead and looking most of all to be providing globally what customers actually want. And with that, I hand over to Charlie.
Thanks, Mark, and good morning, everybody. This is the first set of results that I have now delivered at this great company. And I joined this business because I just could not believe that a market leader in such a huge TAM industry could be so undervalued. And I maintain that, that position. And I just wanted to be part of that journey to change that representation. When I arrived at IWG, I put together a plan.
That plan can be viewed on slides 7 to slide 16 from our Investor Day in December 2023. We have delivered on every single item in that plan. You can see that here, delivering from three sources of cash. All three divisions are delivering underlying growth and cash flow. Revenue is up 9% since 2022, and cash flow is up 60% since 2022. We also have a laser-like focus on costs. Core overhead, as Mark mentioned, is controlled, and center costs have fallen by 3% in 2022 despite high inflation globally. Growth CapEx falls as capital light accelerates.
We have had 952 new centers open since the year-end 2022. Growth CapEx has fallen 49% in that period as well. Maintenance CapEx falling as we generate efficiencies, and maintenance CapEx has fallen 16% since 2022. Constant delivery of EBITDA that delivers cash flow. EBITDA is up 46% since 2022.
Net debt falling post the Instant acquisition. Net debt has fallen from $861 million to $712 million since 2022. We have a new credit rating, first time ever for IWG, which is investment-grade, trouble-free, flat and stable. We are also delivering the first dividend since 2019 in 2024, and we've done that. Today, as you know, we've announced the $50 million share buyback. From a finance perspective, we have transitioned to U.S. dollars as our reporting currency, and we're also committing to do U.S. GAAP by the half year.
This has been a record year for us in many senses. Highest system-wide revenue in the company's history, 6% growth in open centers and 2% net revenue growth to $4.2 billion. Highest ever EBITDA with growth of 11% to $557 million from $503 million.
And the highest ever network growth with 899 new centers signed and 624 opened. In context, that's nearly 20% of our existing estate. Fee income growth is coming through as well, 30% growth in managed and franchise to $79 million. And the contribution margin, as Mark said, continuing to increase to 25% on the company-owned side. All of this delivery is driving the share buyback program and the dividend, which is a progressive dividend policy. So if we look at managed and franchise, 30% growth in fee income, and the big item here is the 79% growth in recurring fee income.
I think what's important to note then, and we'll come on to some of the forecasts on the later slides for this, is that the numbers are still quite small on absolute basis, but as we're signing up hundreds, literally hundreds of new centers and opening hundreds of new centers, this is gonna be a very important part of the business's cash flow going forward. Last time at the half-year, I showed how we were performing on a RevPAR basis with these new centers opening, and I'm pleased to say that we're continuing to perform on this.
The solid line is the one that I showed at the half-year, so basically, the cohort that was open at the half-year and how they performed at month one through to month 12 at the half-year point.
What I've now shown with the dotted line is how this performs through the 18-month period. So basically, the center that is at 18 months now was at 12, the older centers at 18 months now were at 12 months at the half year. And what you can see is the new centers we're adding and performing in exactly the same way as all the other ones do. We're filling the centers. We're driving the revenue, driving the cash flow. Some of you have also asked to see how that these signings and these openings are translating through to future fee income.
And you can see that in the bottom right. So we're showing forward-looking fee income, on a half-year basis. And you'll see that that's basically doubling, or, going up by about sort of 70%, half year on half year, continuing to grow.
Company-owned, seeing good level of revenue growth on open centers. 5% on open centers on a like-for-like basis. That contribution margin, again, continues to increase, seeing 25% contribution margin at year-end 2024. Where are we getting the bits of that contribution margin from? Overall, 251 basis points improving, of improvement, of which 184 basis points that is recurring. The one-offs, we overestimated some property taxes in 2023, and also we thought the utility costs would be high and be pervasive for a bit longer.
That's, that's the one-offs on, on those. We've also reduced facility costs overall by re-engineering some of our cleaning contracts, and discipline cost control. Digital and pro-professional services, Mark said, reaching inflection point for that growth now. 8% revenue growth on an underlying basis and 18% EBITDA growth.
That's excluding the underlying basis, excluding the one contract exit that we flagged to you before. Got very disciplined cost control. We see that cost control is a key competitive advantage for this business, and the scale really helps drive that. So on the core overheads, cost has actually gone down 1% year on year. We then have this concept that we call discretionary overhead, which is effectively OpEx that we cannot capitalize.
So things like investment in new finance systems, things like delivery of the U.S. GAAP project, delivery of new partnership sales, all goes through OpEx, and we've spent quite a lot of money on that this year. But we see that as entirely discretionary, and we can reduce that cost should we like.
So bringing all of this together, you can see the free cash flow per division continuing to increase on all three divisions. Growth CapEx, no growth CapEx managed and franchise, and CapEx and the company-owned continues to fall. We have delivered around $200 million of free cash flow from business operations. So that's before interest and tax, and around $100 million free cash flow to equity. The record EBITDA, again, we see coming through as a result of revenue growth. A few net openings, managed and franchise continuing to grow, and then we've got the offset from the overheads at the end.
It's also been a transformation year for the finance division. A lot of this $10 million that you see that we've made investments into the finance division goes through OpEx again. So that's part of the discretionary OpEx.
It's the first full year with U.S. dollars as the functional currency, and that has reduced the volatility between constant currency and actual currency in our reporting. Net debt is now denominated in sterling. All of our debt, with the exception of small amounts in euros, is swapped into U.S. dollars. U.S. GAAP financials will be finalized by the half year, and working capital improvements that we've made through the first half of 2024 are now delivering more and more cash flow in the second part of the year. We've also refinanced $1.4 billion of our debt facilities.
As I mentioned earlier, our first-ever credit rating, the first-ever public bond, and the transaction's been recognized with a Deal of the Year award. It's been nominated for Deal of the Year award. I don't wanna preempt that.
CapEx continues to decline, and you see that across the center CapEx, which we estimate will be no bigger than $25 million in 2025. Again, maintenance CapEx will remain flat, and maintenance CapEx we estimate will remain around $100 million for 2025. This comes through to our summary P&L. Very pleased to announce that for the first time in a while, we have a positive EPS result, and we think that that will continue to improve year- over- year. I just wanna touch very quickly on why we focus on pre-IFRS EBITDA, so we get this question a little bit.
Adjusted EBITDA on an IFRS basis is $1.8 billion, but this excludes IWG's largest cost, which is our leases. And therefore, we just don't believe that EBITDA is an accurate reflection on an IFRS basis of the performance of the business.
We therefore deduct the rent expense from this IFRS EBITDA to and some other small adjustments to arrive at the pre-IFRS EBITDA, and this number is used by most equity research analysts, credit rating agencies, but also, crucially, our covenants within all of our debt structure, but overall, though, as Mark said, our focus is on cash. We continue to deliver a lot of cash in 2024.
We had the working capital adjustments at the start of the year, which I'll go into very shortly, so if cash flow from business activities was around $300 million for the year, cash flow before growth CapEx and dividends, $190 million for the year, and cash flow before financing activities and dividends, around $100 million for the year. I mentioned about the working capital movements.
You'll see that nearly all of the negative working capital position for us took place at the start of 2024 and stabilized in the second half of 2024, and we expect this position to continue, so in summary, what you saw in the second half of 2024 is that the drag from the working capital has basically gone away. Net debt to EBITDA, that has fallen through the year from 1.5x to 1.3x .
The items on the right that you see here, $34 million, are effectively non-cash items or items, because banks are very expensive and like to take lots of fees. So that's $34 million one-off basis, and you won't see the fees again, or at least for seven years, and the other items, FX impact and non-cash costs as well going through there.
You then see around $93 million of discretionary expenditure. So this is on CapEx and acquisitions. So without those two things, we actually generated around $200 million of cash flow in 2024, significantly higher than the number you actually see on the reduction, which is around $65 million. So the fact that we're also paying dividends, everything else also, compounds into that. But net debt has fallen and will continue to fall as a multiple of EBITDA.
Our financial model now supports enhanced shareholder returns, and we now have the bedrock and the foundation to deliver those enhanced shareholder returns as you've seen today. The capital allocation policy of leverage reduction and a progressive dividend policy remain in place, but today we've added a $50 million share buyback. We maintain our commitment to our BBB flat credit rating, and that is absolutely paramount for us.
Additionally, we'll be acquiring the remaining 10.7% minority shares in The Instant Group at the acquisition price from 2022, and we'll do that predominantly in shares. Looking to 2025 and beyond, today we issue explicit EBITDA guidance, and that is in the range of $580 million-$620 million for 2025. Cash flow generation in 2025 is expected to be higher than in 2024, and we reiterate our medium-term EBITDA guidance of $1 billion. U.S. GAAP numbers will be delivered by the half year, and the final dividend of $0.009 is being recommended to shareholders.
We have announced the $50 million share buyback program, and on top of that, we're also gonna do another investor day in New York, which is on the 4th of December, 2025. Apparently, there's a flight sale on now, so get booking. Thank you very much.
Go straight to questions .
Hi there. Sorry. It's Paul May from Barclays. Couple of questions on the market and then a couple of questions on the sort of outlook from here. On the market side, I think it's right you mentioned around the focus on NTA versus cash flow. You know, we've mentioned NAV equals not actual value. Do you see that changing now in Europe? 'Cause I know Europe's not been as far forward in their change and their thought process as the U.S. So are you starting to see more discussions on the managed side in European locations?
Second one is on the outlook for the company-owned business and the utilization levels. I think the target was to get back to pre-COVID levels. Just wonder where you are on that trajectory and how that's moving forwards. And then on the financing, so the outlook side, the guidance range 580-620, relatively wide range. Just wanted to see the thought process that goes into that range and how stretching are those targets. You know, could they be exceeded? And then finally, on the share buyback, $50 million, obviously an initial notional amount.
Do you see that accelerating and increasing over the next 12, 18, 24 months? Thank you.
Go on to the last two.
Yeah. So on the share buyback, look, we want to make sure we put our money where our mouth is and deliver. So we've done $50 million. We'll show that we can deliver that and then look to do more as we like.
So I'd hope to be able to be doing more than that, and this is just the start. On the 580 to 620, I think the way we think about it is a combination of how the business is performing, in line with how we think about getting to that billion dollars of EBITDA target. Some years we'll be slightly ahead. Some years we'll be slightly behind on a straight-line trajectory. But we see good momentum in the business right now, so we're confident in that range.
Just dealing with the other two. I think your question is, first, this European question. We've actually improved the performance of Europe, and we've seen that coming through end of 2024 and quite strongly at the beginning of this year. We're starting to get more balance in the growth.
We've also put a change in the structure through which drives sort of the action much closer to the field or the country, and that is also, and we expect to more so in the future, affects our ability to grow in each country. I think we're, you know, well set for growth in the franchised and managed, and having it more even between the U.S. and rest of the world. Company-owned, look, we've set out a target to get the margin on company-owned to 30%+ . That hasn't changed. Again, how we squeeze the margin out is all structural.
We've changed our structure and how we manage. Again, similarly, moved the planning further down in the business, providing tools for people to plan better at ground level to work on the gap. It's all about managing the gap.
So there's quite a lot of activity there. We're very focused on improving utilization and price at the same time. And in terms of company-owned, as I mentioned earlier, we are adding more company-owned. That also dilutes the margin. So we're not splitting out new centers from old centers at the moment. But new centers added sort of will dilute the margin at the beginning. So that's with the dilution in 2024. You've got to the number that Charlie discussed earlier.
There will be more this year, and but not nearly as much as franchise, obviously, and they're very capital-light, but they are more like a lease, less like a management contract. But you know, overall, we're quite happy with where we are.
A lot of it, a lot of the management changes that we put through at the end of last year, beginning of this, will make a difference in performance.
Well, thank you. And then just one, sorry, one additional [question]: Have you noticed any impact in the U.S. market from the recent slowdown in the U.S. economy or the contemplated slowdown, or are you still seeing that growing very, very strongly?
Still growing. It's. I had this question this morning. Look, the world is a more volatile place, and it's getting more volatile by the day, it seems. So a bit more uncertainty can help us. You know, people want flexibility even more if they're not sure of the future. But I think overall, in the U.S., there's a general level of confidence, and, you know, it's a time for people to be in business.
So I think the underlying trend is there. You know, we'll see how it turns out. And you know, we're cautiously optimistic, but you know, more cautious by the day. In the end, the demand for what we're doing is not really to do with the economy, and we're opening up so many new places in so many new cities and filling them up. It's not economically driven. You're providing something that customers want. You know, so we're pretty as we see it today, Charlie. We're okay with the outlook.
Great. Thank you.
Michael Donnelly from Investec. Two questions, both, I think, for you, Mark. First of all, digital professional services. You gave us that intriguing example of a consulting project, I think, for a bank.
Yeah.
You said, could you just expand a bit more on that and maybe help us understand, is this like 12 months time and materials fee-based, and how much a proportion of revenue is that now and is likely to become? and then secondly, on Industrious, can you just give us your impression, qualitatively about the comparability of their network with your own, just to help investors understand how relevant any read-through might be from the Industrious business? Thanks.
Look, it's Industrious, just dealing with that first, is a very good look-through 'cause that CBRE paid $800 million for 200 centers. Now, on that basis, I shouldn't be sitting here today in front of you. So, you know, we've got 4,500 centers and 5,200 coming, right? So, you know, there's just no comparison. Almost all their centers are in the U.S.
And, you know, we know them very well. I know Jamie Hodari very well, who's the founder. And, yeah, look, it, I think, it's a good thing. It sort of brings what we are doing much more to the fore. So everyone else has to now compete. CBRE are the elephant in the room. Everyone needs to be where CBRE is, and we're open to work with everyone that wants to be there. So I think it's good for our distribution, number one. But it's a small thing, Industrious, just to be clear. Consulting business, I think, is a good example of the value that we had.
I mean, they're the only consulting firm that sort of consult on sort of moving to different ways of working and who are specialists in that.
We added an acquisition in the United States, and we will add more of consulting firms that are in that general direction. This is all about talented people who basically can help a company make transition, which they're not very good at doing internally. And that's what they did for this very large bank. It's a study on how they're working today, what the future looks like, and how you actually get to that future, period. I can't tell. I think it's a quite long-term contract. It's taken time. It's very big. I don't know exactly how long.
And it is it's time materials. It's consulting, con you know, standard consulting business. But it uses all the knowledge we have. They use the knowledge that we have in terms of, sort of making the transitions. It's very synergistic with the rest of the business.
Thank you.
Hi, it's Sam Dindol from Stifel. A couple from me, please. Firstly, on the management franchise, I think you signed 725 in 2024. Just any sense of how you expect that to trend this year? And also, what is your experience as these centers mature? Is the timeline you gave before about, I think, 10 months to opening, 18 months to maturity? Is that still the same, or is there any sort of variation in geography you're seeing there?
And then finally, on the services element, is there an educational piece needed around that in terms of letting your customers know you now do these services? And what percentage of revenue do you think they could be over time? Thank you.
Do with this little last question first, and then Charlie can do the other. There is an education piece, but we are what you saw there. If you look at that, those are pages from the decks that we would show to a customer. There's very all sorts of variations on them, but so that is what we are selling. So that has become much more synergized from a customer point of view. We also, you know, through Instant Office support operators, there's a you know, there's another pitch which allows them to get to the customers.
So there's really two angles out of there. So for the customer, it's about understanding the breadth of our services. And we pulled that together a lot more at the end of 2024. That is how we present today. And we would expect to get more and more benefits from that.
Now, for example, you know, we have hundreds of thousands of companies that use us today and large numbers of people, but we hadn't presented to them our consulting operations before. We are now doing that because that is important to any company of size and actually, midsize companies that want to make transition, they just don't have the resources to do it and that sort of that, that's an important help to them.
What can it be? I think we said at the beginning, it's an important third leg of the business and, you know, it will be a significant part of the margin contribution in two, three years' time, even with the others growing so, you know, we're quite confident in this. It's what people want in the end. That is what will drive the growth there.
On the management franchise sign-ups, guidance 2025s will do more than 2024, which I think 2024s will do more than 2023. We did do that. In time from signing to opening, we haven't seen a lot of change in that. I think what you've also seen from that evolution chart is once they're open, they are continuing to mature at the same rate as they were before and continue to that sort of upward trajectory. Again, not seeing a lot of movement, either way on that, but also that gives us a lot more confidence that we can then articulate the fee revenue better, which is the reason why we've given those forward projections.
Morning, Steve Woolf, Deutsche Bank. Just to follow up on some of those sort of, I guess, it's extra services, extra buildings that you're looking into beyond offices.
So you mentioned in things like wellness and areas like that. How does the revenue model change from there, you know, from the pure office and space elements that you might be looking at if you're, you know, taking on other types of buildings?
No, they're part of the same buildings generally.
Right.
So if you think of a business park or something, you know, we're already there with a building doing office. And they'll say, "We aren't working on a few of these at the moment. They want to add a medical and wellness center." They have empty buildings. So if it's in the right location, those can work very well. They may want to add more amenity, but they're all management contracts, Steve. So it's just another form of thing that we can deliver.
For example, the gyms. We're doing those in partnership with probably the leading, you know, equipment manufacturer in the world, of gyms, so it's just an amenity, and then we've got people that can operate it, supervise it, clean it on the site, but that's what companies are looking for. They want better F&B, makes the building or the selected collection of buildings a more attractive place to be.
Right, so it's taking, you know, what would have been the traditional model of managing someone's office space, which is sort of how it all began, and then taking it to basically the message of, you know, we can manage anything.
Yes, for you. You see, building investors are not very, you know, equipped. They just don't have the scale, or they don't have the skills to manage operational businesses.
And what they want to do is, you know, they may have previously leased some space to a café and done. But it's all very disorganized. They can't control the quality. They, a lot of these people aren't very successful. And so on. So by taking it in-house and effectively saying, "This is what I want to offer. I don't have the people to set it up, manage it, operate it," they can use us to do that. And, you know, that is what we're good at, you know, operationally set up, operate, clean, make sure it works for the customer.
These typically sort of fee-based, you know.
All fee-based.
Sort of fixed fee-based rather than, you know, some of the other models have worked necessarily with, you know, revenue variable, revenue-based models.
They are more fixed than variable.
These will be fixed.
Yeah.
Okay. No worries.
It's a sort of added management. It's a tack-on.
Yeah.
That you say, "Well, once we're there, you can tack these other things." Medical centers, same as an office center. Wellness, same as office.
Gotcha. Okay. Yeah. Thanks.
Always a two-sided model. So we've got to actually find the customers and provide the building. Find the building.
All right. Thanks.
Morning. Dan Cowan from HSBC. Just a, I guess, a housekeeping question, please. Just looking at the segmental split, for company-owned, I noticed the workstation revenue is up very slightly year on year, but the customer service revenue is down like 4%-5% year on year. Just wondering what's behind that. Is it just a lagged impact of center rationalization, or is there something else that we should understand?
No, it's that we've been charging lower late payment fees. So it's actually just late payment fees in particular in the U.S.
So that's more normalized.
It's just normalized. It's a normalization.
Thanks.
We got better at collecting money as well, so. Yeah. Basically. Yeah. Let's play with it. So yeah. And we're very so now some of the investment that Charlie's making with his team in the financial system is accelerating the cash flow by much more digital payment methods. There's a big program coming through this year, like payment orchestration globally, big investment from us, but that will make it even better. Really important, all these sort of making it all run better, less people, more digital, more AI, this is transformational.
Good? Nothing online? Yeah. Thank you all very much for joining us this morning. Thank you. We'll be available for any follow-ups that you have as usual. Thank you.