Good day, and welcome to the Newmark 4Q 2025 public financial results call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jason McGruder, Head of Investor Relations. Please go ahead, sir.
Thank you, operator, and good morning, everyone. Newmark issued its fourth quarter and full year 2025 financial results press release this morning. Unless otherwise stated, the results provided on today's call compare only the three months ending December 31st, 2025, with the year earlier period. Except as otherwise specified, we will be referring to our results only on a non-GAAP basis, including the terms Adjusted Earnings and Adjusted EBITDA. Unless otherwise stated, any figures discussed today with respect to cash flow from operations referred to are net cash provided by operating activities, excluding the impact of GSE FHA loan origination and sales. We may also use the term cash generated by the business, which is the same operating cash flow measure before the impact of cash used for employee loans.
Please refer to today's press release, the supplemental tables, and the quarterly results presentation on our website for complete and updated definitions of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results, and how, when, and why management uses them. For additional information on our cash flow measures, as well as relevant industry or economic statistics. The outlook discussed today excludes the potential impact of any acquisitions that close after the first quarter of 2026 and assumes no meaningful changes in Newmark's stock price compared with yesterday's close. Our expectations are subject to change based on various macroeconomic, social, and political factors. None of our targets or goals beyond 2026 should be considered formal guidance. I remind you that information on this call contains forward-looking statements, including, without limitation, statements concerning our economic outlook and business.
Such statements are subject to risks and uncertainties, which could cause our actual results to differ from expectations. Except as required by law, we undertake no obligation to update any forward-looking statements. For a complete discussion of the risks and other factors that may impact these forward-looking statements, see our SEC filings, including, but not limited to, the risk factors and disclosures regarding forward-looking information in our most recent SEC filings, which are incorporated by reference. I am now happy to turn the call over to our host and Chief Executive Officer, Barry Gosin.
Good morning. Thank you for joining us. Newmark's strong momentum continued in the fourth quarter as we improved total revenues and Adjusted EPS by 15% and 24%, respectively. The investments Newmark has made in talent and our platform drove double-digit top-line improvement across every major business line, resulting in record total revenues for both the quarter and year. This included our best ever quarter and a year in our recurring revenue and leasing businesses. We increased leasing by 17% in 2025, which outpaced the growth of our public competitors and resulted in our first-ever $1 billion-plus year for the service line. Our leasing success is a result of the investments we have made in areas including industrial, retail, data centers, which augment our already strong office platform.
We expect to generate further growth from normalizing return to office trends, repositioning existing product and limited new construction, supporting property fundamentals. The ecosystem around artificial intelligence, digital infrastructure, cloud computing, and elevated investments in energy and manufacturing are creating enormous leasing opportunities for Newmark and our clients. Our nimble approach has allowed us to get in front of these trends early. We improved our full-year management and servicing revenues by 12% to a new high of over $1.24 billion. We continue to use our deep owner and occupier client relationships to drive growth across these recurring revenue businesses. Newmark remains on pace to achieve its goal of over $2 billion in management and servicing revenues by 2029.
In capital markets, Newmark gained market share and investment sales for the quarter, as our volumes were up 50%, compared with 21% industry growth in the U.S. and 15% in Europe. For the full year, our investment sales volumes were up 56%, compared with 20% for overall U.S. volumes and 12% for Europe. While Newmark quarterly debt volumes were up 12%, compared with 36% for overall U.S. originations, we gained share for the full year. Newmark's 2025 origination volumes were up 67%, while U.S. industry originations were up by 43%. As we continue our international expansion, we expect to grow our market share globally across nearly all our business lines over the next several years.
Our strong results validate our strategy of investing in the industry's best talent, leveraging our client relationships to drive recurring revenue growth and our ongoing global expansion. With respect to how artificial intelligence might impact Newmark, AI-led demand has helped fuel our strong results in areas including office leasing, particularly in New York and San Francisco, as well as data centers, capital markets, and our valuation business. We believe that there is significant white space and enormous opportunity across our service lines with respect to digital infrastructure. We continue to empower our extraordinary talent with world-class research, data analytics, and technology accelerated by AI, which we expect to continue to produce efficiency and margin enhancement to our business. Newmark and our other large competitors possess incredible amounts of proprietary data, which we can leverage to the benefits of our professionals and clients.
In short, we expect AI to provide an additional tailwind for our future results. Given the success of our strategy and the favorable macroeconomic backdrop for commercial real estate, we expect to achieve double-digit top and bottom-line growth for the third consecutive year in 2026, while generating our best-ever total revenues, Adjusted EPS, and Adjusted EBITDA. With that, I'm happy to turn the call over to Mike.
Thank you, Barry, and good morning. I'm happy to report that for the sixth consecutive quarter, Newmark produced double-digit revenue and earnings growth. Total revenues were up 15.3% to an all-time best of just over $1 billion, compared with $872.7 million. We increased management services, servicing, and other by 13%, leading to the company's best-ever quarter for these recurring businesses. This was led by strong organic growth from valuation and advisory and property management, as well as contributions from two recent acquisitions. In addition, our high-margin servicing and asset management portfolio surpassed $200 billion for the first time and ended the year with a balance of $211.2 billion. Related fees grew by 10.9% when excluding the impact of lower interest rates on escrow earnings.
Leasing was up 13.6%, resulting in a record quarter for this service line. This was led by strong activity in New York and Texas and across retail, office, and industrial. Capital markets increased by 19.2%, reflecting significant activity across office and retail, as well as multifamily, which was led by strong gains in senior housing. Turning to expenses. Total expenses were up by 15.7%. This reflected commission and pass-through expense growth generally in line with revenue improvement, with the majority of the remaining increase attributed to our global growth initiatives as we continue to accelerate our investments in future revenue and earnings. Excluding our 2025 investments in growth, expenses increased by approximately 6%.
With respect to taxes, the company's tax rate for Adjusted Earnings was 8.8% in the quarter and 11.4% for the year. The lower tax rate was driven by our favorable corporate structure, where an approximately 21% increase in our average closing stock price in 2025 resulted in higher tax deductions from grants of exchangeability to unitholders and additional deductions related to the conversion of units into common shares. These also reduced cash paid for taxes in 2025, contributing to our strong operating cash flows. Moving to earnings. We increased Adjusted EPS by 23.6% to $0.68, compared with $0.55. This was $0.04 above the midpoint of our previous guidance, with $0.01 on better performance and the remainder due to a lower tax rate.
Adjusted EBITDA was $214 million, up 17% versus $182.9 million. Our Adjusted EBITDA margin on total revenues improved by 32 basis points in the quarter and 81 basis points for the full year. Excluding the impact of our 2025 investments in growth, Newmark's full-year margins would have expanded by approximately 130 basis points. With respect to share count, our fully diluted weighted average share count was up 0.5% to 254.3 million. On February 18th, 2026, the company's board of directors increased our share repurchase authorization to $400 million. Turning to the balance sheet.
We ended 2025 with $229.1 million of cash and cash equivalents, $671.7 million of total corporate debt, essentially unchanged compared with a year earlier. Improved our net leverage to 0.8x. The balance sheet changes from year-end 2024 reflected record cash generated by the business of $518.4 million. This was offset by $220.2 million of cash used mainly to hire revenue-generating professionals, $127.1 million of share repurchases, $53.4 million of net cash payments for acquisitions, and normal movements in working capital. Our adjusted free cash flow was up 38.4% for the year to $268.9 million.
With a healthy balance sheet, strong cash generation, and growing earnings, Newmark is well positioned to continue investing for growth and to return capital to shareholders. Moving to guidance. Our outlook for full year 2026, compared with 2025, is as follows: We expect total revenues between $3.7 billion and $3.8 billion, an increase of 13.8% at the midpoint. We expect capital markets to increase faster than the midpoint, management and servicing growth to be roughly in line with the midpoint, and leasing improvement to be below the midpoint. We anticipate Adjusted EBITDA in the range of $635 million-$675 million, an increase of 13%-20%.
We expect our Adjusted Earnings Tax Rate to be between 13% and 15% versus 11.4%. We anticipate Adjusted EPS between $1.82 and $1.92, up 12%-19%. With that, I would now like to open the call for questions.
If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll take our first question from Alexander Goldfarb with Piper Sandler.
Hey, good morning. Morning down there. Two questions. Very first, just the big elephant, AI. In a realistic way, can you just tell us what your, you know, the clients that you deal with, whether it's, you know, renters or occupiers, how they're thinking about AI vis-à-vis their office needs, employment, staffing? You know, we hear all these different stories and just wanna hear exactly what the latest thinking is from, you know, office users.
I think it's very early to have the full story. I mean, the last two months, AI has really revolutionized itself. I mean, we're still seeing increased activity, in increased return to the office. You could possibly look at it that, you know, people who are working from home are more at risk than people that come into the office, but nobody knows that at this moment. I see AI as an accelerant.
For us, I believe this is really a gift, that having AI as an enabler of the great talent that we have to do more and to expand more, to give them the tools, the data, the infrastructure to improve their business and accelerate the opportunities that they will see, is really well suited for a company of our size. It actually gives us a moment in time to catch up. We all have a certain amount of proprietary data, and we've been very diligently collecting data over a long period of time, and we have an incredible amount of proprietary data. In terms of margin enhancement, there is certainly opportunities in the margin enhancement side.
We're excited about the new business opportunities, the ability to create more agents and human beings, if you have the best human beings, they're gonna be the producers of the content and the utilization of that kind of AI. It's really an incredible moment. We're excited about it.
Barry, what you're saying is from, you know, office using jobs, you're not seeing any of your clients talk about reducing-
No, we're not.
Okay.
I mean, it's certainly in the primary markets, you know, we don't expect to see that. You know, time will ultimately tell.
Then the second question is, on the debt, on your debt book, you know, your, you know, capital markets, 2021 was a monstrous year for multifamily, you know, both in aggressive underwriting and low debt, costs, and obviously, that stuff is coming due. Do you expect a surge of refinancing and restructuring over the next sort of 12-18 months? Or is your view that, you know, while there technically should be a surge in maturities, this stuff takes time to work out, and therefore, you know, it's not like we're going to see a sudden ramp in all these loans coming due, they'll be processed over time. Just trying to gauge what the opportunity is and what that means for you guys as the market addresses the 21, multifamily debt maturities.
There, I mean, in general, there's $2 trillion of debt coming due over the next three years, you know, $600 billion a year. The market titrates between sales and debt. Every time you look at a capital event, you decide, should I finance more? Should I finance less? Should I raise equity? We think that that's ripe for the market to take action. People have been sitting on portfolios for way longer than they would have liked, and there's a certain amount of fatigue, which I've said once before, I think I said last quarter. We're seeing the investors want to unleash the opportunity and the capital to go play in the new market at new levels with new opportunities where they could capture promotes.
There's a lot of activity, and a lot of that's gonna be in debt. I think that there'll be a lot of maturities that we'll be involved in.
Thank you.
We'll go next to Jade Rahmani with KBW.
Thank you very much. There's a robust debate going on about the commercial real estate services, businesses, and, essentially, the risk of the data that they control becoming public. You know, we know from experience that there's a lot of property-level cash flow data that, building owners, lenders, servicers, brokers, you know, keep closely held. I'm wondering, you know, what you see as the risks of that property-level data becoming truly public. Do you see that risk as greater in the low to middle market, more commodity-type assets, or elsewhere in the market?
Certainly, some data is confidential, and owners are going to protect their data. I mean, we're seeing every vendor and every person in the business now asking to be able to use data. We're very aware of that. We've collected an enormous amount of proprietary data over years, recognizing some of the data we have is confidential, some we could use as derived data, and it drives opportunities for us to do evaluations on a broader scale, and some of it we won't be able to use. It'll, but we have no shortage of opportunities to use our data to create value for our clients.
Putting that in context of your leading capital markets team, some of the institutional teams you've acquired, do you see that this proprietary data in combination with AI advances those, you know, star quality type teams? Do you think that the younger teams will have a better chance to compete, you know, within a company like Newmark?
I think you basically hit the nail on the head. The reality is both. The older teams have the credibility of the book that they've been selling and the reputation and the gratitude created over selling product for many, many years. The young people on their teams, the talent on their teams, will use AI to increase margin and increase opportunity. If it takes less time to do certain things, and you can put your best people in front of clients and spend more time with their clients, you're going to do more business. We think our whole strategy of hiring the best talent and doing more with less plays into the world that we're living in right now. We think that's, that is an accelerant for us.
Thank you very much.
We'll move to our next question from Julien Blouin with Goldman Sachs.
Thank you for taking my question. Maybe to ask the AI question slightly differently. When I think of Newmark's sort of capital markets brokerage business, I think of a platform that operates at sort of the highest tier of transaction size, of complexity, with the most sophisticated counterparties in the industry. As we think about the disruptive risk of AI, do you believe there's more of a risk to peers or players that are sort of more middle-market focused?
I'm without question that smaller deals that could be perceived to be more commoditized would be more at risk. You know, just the same, it's still about contacts with clients. It's still about marketing opportunities, and it's about having a certain amount of time to find those opportunities and then market those opportunities. I think what's going to happen is the process by which those buildings will be able to create an offering memorandum and do e-blasts, do qualified through a list of qualified buyers and automated CAs and those kind of things, will just accelerate the opportunities. I think you'll see more business, the same business, done with less people. Again, that's a that we think that's a good thing for us.
Thank you. That's really helpful. I guess just moving over to capital allocation, you've been very active in making investments in growth and to expand your platform internationally. Just wondering if the recent increase in the share repurchase authorization signals that maybe you'll be shifting some of your capital allocation towards being more aggressive on share repurchases, given where the stock trades today.
I think the second part is certainly true, where the stock is today. We'll be more aggressive buying back the shares given the outlook in, on earnings, for next year. You know, we have very little leverage on the balance sheet. We were generating record cash flow in 2025. We'll continue to generate a lot of cash flow from the business. We have more room to borrow debt and lever up the balance sheet, so I don't think it's going to slow down in any way, our ability to invest.
We've also
Okay, great.
You know, we launched Europe 36 months ago. We have 1,200 people in Europe. Every year, when we enter a new market, the new market gets excited because what we bring to the table is a much more talent-friendly enabling platform. We are, we've done better than we had originally anticipated, and we've, you know, opened up Spain and Italy, and we've done a great deal in Germany and UK and France, and, you know, we're doing it in the Middle East, and we're doing it in Singapore. We're hiring people, and they want to come work for us. As long as the right people want to come to the platform, we're going to continue to hire the right people. It's a really good way to build a platform.
In some cases, although the accounting is a little bit different, you know, you're hiring brokers, and it takes time to ramp up, you have the better shot at getting the plums as opposed to the pits sometimes when you buy a company with a lot of people.
Thank you for the insights. All right. Thanks, team.
We'll go next to Mitch Germain with Citizens Bank.
Thanks for taking my question. I, Barry, just want to follow up on that comment you said about some of the hiring outside the US. I'm curious, you've previously talked about the lag time as many of those producers are sitting on a garden leave. Where are you in terms of productivity with regard to some of that hiring? Are you around 50%, or is that even less in terms of how many are up and running and performing for you?
Hey, Mitch, it's Mike. I would say it depends on the country because we started different countries at different times. Like France, we started probably two years ago. That should be fully ramped up next year in 2026, or I should say this year in 2026. Germany, we're still ramping, probably comes online in full speed in 2027. Italy, we just started, that'll take a year and a half. It really is market dependent. You know, we are seeing after 12-18 months, the producers we hired really starting to produce on our platform. That's good news.
France, after probably, even though we started two years ago, we had garden leaves. We probably are a year and a few months in operation. We're break even.
Yeah
-the first year. I mean.
Hmm
That's astounding. We anticipated that it would take us three years to go cash flow positive, where we've done it in one year and four months, one year and three months. UK, we came out of the gate, we didn't miss a beat. We built a good business in the UK. The same in Germany. We have an incredible list of talented people that have come on board after our initial hiring of a very senior broker, who from another firm. I mean, we're getting the calls. People are calling. They want to join. They like what we're doing. They like how we're doing it.
There is an element of the strategy of more with less, enabling and empowering talent to do more and not necessarily be crowded, that incidentally will work in the AI environment.
Great. That's helpful. You know, last quarter, you guys provided some perspective on the RealFoundations transaction. I'm curious about the Altus deal and kind of how it fits into the puzzle here.
Yeah, we had an opportunity to buy a valuation firm in Canada. Canada is a market that we think is a good opportunity for us to grow. We have some brokers up there. We think this can help us recruit more and better talent and continue to grow the business up in Canada. It was part of a software-focused firm, so I think we'll be able to really improve the business and show them some love on our platform, and I think they're going to do great for us.
You know, right out of the gate, we took the original leader of the company, who wanted to join, who left, to pursue other avenues, came back. When you think about our appraisal as prototypical of how we've built this company, we hired one person in appraisal. You know, we now have a business approaching $200 million in appraisals with a profitable margin, and all over the world, we are building out, we're building out the appraisal platform, and many of these institutions give global and regional mandates. Having that platform is a great opportunity for us.
As we build out the global platform, which we think is somewhere between 18 and 24 months, we will have our ducks in a row, be in all the markets that we need to be, that in any opportunity where we get an RFP and to pitch that business, that the, you know, the gap between us and winning the business will be diminished precipitously. We expect that organic growth, as a result of winning business without cost, is gonna be an avenue of white space that we will achieve great growth.
Congrats.
Thanks.
We'll move to our next question from Brendan Lynch with Barclays.
Great. Thanks for taking my question. Barry, I appreciate all your comments on AI, and not to belabor the point, but it is the theme of the day. it's probably going much beyond office as well. Maybe just looking at your industrial and retail leasing businesses, maybe talk about some of the top priorities or concerns that you're discussing with clients as they're considering leasing new space in this AI backdrop. I'd imagine there's a lot of elements that Newmark is helping them navigate regarding power and robotics and flexibility and fulfillment, et cetera. Any commentary there could would be helpful. Thank you.
We have a fairly robust data center business. We're well-versed in the issues of power, GPUs, the kind of things that are necessary, and the locational issues with opening data centers. We could advise our clients on how and where to take data centers. We've been doing that for conventional data center business for 20 years, advising people on where and when and how and what the criteria for opening data centers are. I think, it's interesting to see the whole data center business as on AI that will be sort of aggregated into, you know, six or seven major AI companies and how that will impact the world. Our clients are, you know. I mean, we've always looked at power as an important feature in any of our financial institution lease negotiations.
Now it's just a more important point.
Okay. Thank you. Maybe another high-level question. Can you discuss the competitive landscape for talent now and how it's evolved throughout the cycle versus previous cycles and how the recruiting process has changed?
Well, in capital markets, we generally have, whatever the vertical is in the geography, we have usually one team, because if you have more than one team, it becomes like a mosh pit and competitive. We think we've, you know, we've now, in many of the markets, we've actually accomplished our objectives. There are places where we have one space. In leasing, we have, you know, we have plenty of room to grow in certain areas, and we continue to offer an opportunity for a broker who might be at a platform that is really crowded and covered, to come on board and not have as much competition internally, and that fits in with our model.
We'd rather see a higher revenue per capita and higher revenue per employee and provide the, you know, the infrastructure and the research and the data to help them do more business. That is our goal. We're not having a problem recruiting.
Great. Thank you.
Once again, ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We'll move now to Jade Rahmani with KBW.
Thank you very much. Just on the revenue growth outlook, 12%-15%, could you provide any comments as to your expectations on leasing, whether that should be above or below that, management services, and capital markets? Thanks so much.
Sure. As I said in my prepared remarks, Jade, I think we'll be above the midpoint in capital markets. You know, debt, market debt is expected to grow 20% plus next year, and sales, double digits. We'll perform really well there and continue to take market share. On the management servicing business, we expect to be roughly in line with the midpoint of the guide, then in the leasing business, a little bit below the midpoint of the guide.
Thanks very much.
That concludes our Q&A session today. I'll turn it over for any additional or closing remarks.
Thank you all for coming, and I look forward to the next quarter.
Ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now disconnect and have a great day.