Day, welcome to the Newmark first quarter 2026 public financial results call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jason McGruder, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning. Newmark issued its first quarter 2026 financial results press release earlier today. Unless otherwise stated, the results provided on today's call compare only the three months ending March 31, 2026 with the year earlier period. Except as otherwise specified, we'll be referring to results only on a non-GAAP basis, including the terms Adjusted Earnings, Adjusted EBITDA, and Adjusted Free Cash Flow. Unless otherwise stated, any figures discussed today with respect to cash flow from operations refer to net cash provided by operating activities, excluding the impact of GSE-FHA loan origination sales. We may also use the term cash generated by the business, which is that 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 quarter 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 the cash flow measures, as well as relevant industry or economic statistics. The outlook discussed today excludes the potential impact of any future acquisitions and assumes no material changes to Newmark's stock price compared with yesterday's close. Our expectations are subject to change based on various macroeconomic, social, political, and other factors. None of our targets or goals beyond 2026 should be considered formal guidance. I also 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 complete discussion of 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'm now happy to turn the call over to our host and Chief Executive Officer, Barry Gosin.
Good morning, and thank you for joining us. Newmark continued its strong momentum in the first quarter by increasing total revenues 27% and Adjusted EPS 57%. This was our seventh consecutive quarter of double-digit top-line growth and eighth quarter in a row of double-digit earnings improvement. Our results reflected broad-based gains across management services and servicing, leasing, and Capital Markets, driving record first quarter revenues for each of these service lines. Newmark improved management and servicing revenues by 21%. We generated double-digit organic growth from our managed services offerings, which include outsourced fund administration, portfolio analysis, due diligence, and loan sizing. We integrated RealFoundations into this platform, and we expect to drive further growth between these businesses and our other investor and lender solutions.
We remain on pace to achieve our goal of over $2 billion of management and servicing revenues by 2029, compared to $1.3 billion over the trailing 12 months. With respect to leasing, we increased fees by 20%. This reflected a meaningful acceleration in U.S. office leasing volumes, particularly in San Francisco and New York City, as well as the continued expansion of our global footprint. Our performance underscores Newmark's ability to capture complex cross-market leasing mandates from global clients as occupiers increasingly prioritize portfolio optimization, flexibility, and access to specialized talent hubs. We expect leasing activity to benefit from normalizing return to office trends and improving industrial leasing fundamentals in the U.S. and U.K. We increased Capital Markets revenues by 45%. Our performance reflected the investments we made in building out an industry-leading advisory business.
Newmark is the go-to advisor for the largest and most complex transactions in the market. Real Estate Alert ranked Newmark number four in real estate M&A in 2025, the only full-service real estate intermediary in the top 10, alongside leading investment banks. Thus far in 2026, we have continued to invest in our M&A and capital raising business in both the U.S. and Europe. The company's ongoing success is due to the consistent execution of our strategy of leading with the industry's best talent, deepening client relationships, and expanding our international footprint, which together drive growth across all of our service lines. Given the strong start to the year and our healthy transaction pipeline, we are raising our full-year outlook and expect Newmark to deliver double-digit top and bottom line growth for the third consecutive year in 2026.
With that, I'm happy to turn the call over to our CFO, Mike Rispoli.
Thank you, Barry, and good morning. Total revenues were up 27.2% to an all-time first quarter best of $846.5 million, compared with $665.5 million. We increased management services, servicing, and other by 21.2%. This was due to double-digit organic growth as well as recent acquisitions. Leasing was up 20.2%. This was led by significant office activity. Capital markets increased by 45.5%, reflecting strong gains in senior housing and higher activity in our affordable housing business. We also produced robust improvement from transactions in lodging, industrial, and office. We grew our overall Capital markets volumes by 67.6%, led by 112.3% improvement in total debt.
This was a 10th quarter in a row of double-digit revenue and volume growth as Newmark continues to expand its market share. Moving on to expenses. Total expenses were up by 24.5%. This reflected commission and pass-through expense growth generally in line with related revenue improvement, with the remaining increase largely attributed to our global growth initiatives. With respect to taxes, the company's tax rate for Adjusted Earnings was 14.7% compared with 14.3% a year earlier. Turning to earnings. We increased Adjusted EPS by 57.1% to $0.33, compared with $0.21. Adjusted EBITDA was $121.2 million, up 35.8% versus $89.2 million. Our Adjusted EBITDA margin on total revenues improved by 91 basis points.
With respect to share count, our fully diluted weighted average share count was up 0.3% to 256 million. Through April twenty-ninth, Newmark repurchased 10.4 million shares at an average price of $14.58, for a total of $151.1 million. Turning to the balance sheet. We ended the quarter with $212.1 million of cash and cash equivalents, $832 million of total corporate debt, and 1 times net leverage. After quarter end, we renewed our revolving credit facility and increased it 50% to $900 million. On a trailing twelve-month basis, the company increased Adjusted Free Cash Flow by 111.7% to $361.5 million.
This represented 82.4% of Adjusted Earnings, which is at the high end of our expected range of 65%-85%. Newmark increased its dividend for the first time since 2022 from $0.03 to $0.06, reflecting our expectation for sustained earnings growth. Moving to guidance. We are raising our outlook for full year 2026 to the following. We now expect total revenues between $3.775 billion and $3.875 billion, an increase of 15%-18%. We continue to 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 $656 million-$694 million, an increase of 17%-23%.
We expect our Adjusted Earnings tax rate to be between 13%-15% versus 11.4%. We anticipate Adjusted EPS between $1.87 and $1.98, up 15%-22%. With that, I would now like to open the call for questions.
Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star one to ask a question. We will take our first question from Alexander Goldfarb with Piper Sandler.
Morning. Morning down there. Two questions. First, Mike, you know, the guidance increase, great. You know, it's, you know, impressive. Curious how your expectation for cash flow growth, you know, has changed. Is it mirroring the growth that you now expect in the Adjusted EPS, or is cash flow expected to grow differently from earnings?
Morning, Alex. Yeah, I think our cash flow is gonna grow in line with earnings. As we said, as you can see in the release, it's up significantly year-over-year on a trailing 12-month basis. We continue to just generate a lot of cash flow from the business, which gives us a significant amount of flexibility.
Okay. The second question is, Barry, you guys have expanded into data centers. Obviously, there's a lot of leasing from AI and office, there are all these stories that we read about, you know, CapEx loads. You can see with the big tech have increased their CapEx. There's concern about power availability and whether or not there's too much capital chasing data centers or not. As you work with your clients in data centers, are these, you know, playing out and affecting how data centers are being invested in or how your clients are looking at them?
Are these headlines that we read sort of, I don't want to say noise, but sort of noise around the edges, and it hasn't changed the velocity at which people are, you know, investing and breaking ground on new data centers?
Yeah. The change from using the grid to behind the meter and developing distributed power requires additional expertise in structuring these transactions. Which is good for us because we've been involved in the more complex transactions around structuring credit and the ability to get money for compute. We think the velocity as we see it now, the pipeline looks really, really good. It's still people are aggressively pursuing opportunities. Some of the deck chairs are changing. Some more of the power companies are getting involved closer up into the, you know, the hyperscaler side of the business because they're holding the cards. Understanding in how to navigate in this environment is really interesting and good for us.
We're really actively pursuing today powered land where you were next to the grid or next to an oil or gas basin is almost any piece of dirt is available subject to the community pushback to be created into either some form of digital infrastructure and hyperscaling, as opposed to the limited supply of land that was available right next to the grid, and the ability for the grid to provide power. It actually opens it up and requires people to be more expert about this. We think it's good for us.
Okay. net, you're not seeing any slowdown in the appetite as people face these challenges. You're seeing continued strength in your data center business?
Yes.
Okay, cool. Thank you.
Thank you. We will take our next question from Mitch Germain with Citizens Bank.
Thank you, congrats on the quarter. Just curious, obviously a couple acquisitions. I think you even mentioned one or so on the call so far. I'm curious about the integration and cross-sell that you've been able to experience so far.
The cross-sell is incredible. I mean, the opportunity to service our institutional investor portfolio by providing them with things like fund administration, real estate property accounting, staffing, portfolio analysis, cost monitoring, all of those businesses, and appraisal, is incredibly well connected to the things that we do on the, on the, on the product side of selling property and financing property and placing debt.
Great. You guys provided some perspective on some of the hiring and share that you've gotten outside the U.S. I'm curious, I think, Barry, you've talked in the past about, you know, garden leave and a lot of that had to burn off. Where are you with regards to productivity of the producers that you've hired outside the U.S.? I mean, are you at, you know, 50% of them, you know, still on the sidelines or is that some of that really, you know, accelerated and you're starting to get a lot more activity from them?
As we continue to grow, we're going to still have people in garden leave, but the garden leave is burning off. In France, for example, we projected probably to a break even in year three. We're profitable in year two. You know, we think the same thing is going to happen in Germany. We're building out Italy, there was always be a certain amount of garden leave and burn off, but it's burning off. That's in the U.K., we're more mature. As we continue to mature, it will continue to burn off.
I mean, the capital up front and the requirements up front in Europe and other parts of the world will be less than the, what we have to do in the United States. The United States is pretty well built out.
Yeah. Mitch, this is Mike. I would add to that. You, you could see in our earnings presentation, we show that the rest of the world is growing faster than revenue in the U.S. Part of the reason is because the people are starting to ramp up that we hired 12, 18 months ago. We're growing 37.9% outside of the U.S., and 26.6% in the U.S. It's, it's starting to happen.
To clarify, outside the U.S. and U.K., 37.9%.
Thank you, Jason .
Yeah. All right, great. Last one from me, Mike, or Barry maybe. listen, great first quarter, but it's early in the year. and you know, the backdrop remains sort of turbulent. I'm curious about your confidence in raising the outlook so soon.
You know, Mitch, we're always a little bit on the conservative side, at least I am. Good start to the year, obviously. Pipelines remain strong. We don't see transactions falling out of the pipeline. They're closing. Maybe they take a few more days to close because of the complexity of the market. You know, in our recurring businesses, we obviously have very good visibility there. Up over 20% in the first quarter. We continue to grow our servicing book. It's now over $220 billion. We feel really good about the guidance.
Thank you. Congrats.
Thank you. We will take our next question from Brendan Lynch with Barclays.
Great. Thanks for taking my questions. Maybe just one to clarify on the guidance. Leasing revenue growth is below the midpoint of revenue growth guidance following a pretty strong Q1. Is this just comps, or are you being conservative, or is there something else that we should be aware of?
Mostly comps. We had a very, very strong leasing business in the second half of last year. The business still looks really good. I think we had talked about San Francisco, New York, Texas being really strong markets. That continues to happen, but the comps get a little tougher as we move through the year.
Okay. Makes sense. On Capital Markets, it seems like the industrial operators have suggested there is some momentum around advanced manufacturing. Just tell us what you are seeing on the ground and what you see as the opportunity going forward?
There's enormous activity around advanced manufacturing. There's a lot of incentives. I mean, it started with the CHIP Act. It's now with the administration's investment in infrastructure and power and attracting and encouraging people to come to the United States to build these plants. I think you're gonna see a trend towards matching hyperscalers with advanced manufacturing because there is pushback on some of these data centers by communities because it is a burden on the grid, and it's a burden on the normal rate payer. If you, if you come along with the jobs in, principalities will be encouraged to invite you in and the bonus will be bring me your chip manufacturing, and then we'll give you the ability, we'll give you a few gigs for data centers.
I think that, and we're seeing more of that in parts of the country where they've sort of smartened up on trying to encourage job growth, which is what this country is looking for.
Great. That's very helpful color. Maybe just to dig in on that a little bit more. Or I guess what percentage of the hyperscale deals are you seeing that are coming in kind of some sort of conjunction with an advanced manufacturing, kind of a package deal?
It's early, we're working on it. It's early. I think that's a trend that will continue to build because of the nature of the community, sort of the NIMBY, the not, you know, don't build it in my neighborhood, and the lack of power and the need for power. I think if, you know, if advanced manufacturing is smart, they will hook together with hyperscalers or become hyperscalers.
Okay, great. Thank you.
Thank you. We will take our next question from Jade Rahmani with KBW.
Thank you very much. Can you talk about how you're rolling out AI, what percentage of the teams are using it, what safeguards you're putting in place to protect Newmark's data, and where you see the biggest impact to the business?
As we've said previously, we think we're in a terrific position to benefit from AI on a productivity basis. People look to, you know, the results in terms of enhanced margin. That's a piece of it. For us, since our whole strategy has been around getting the best talent and doing more with less, if we can provide the better people with the infrastructure and technology to help them do more with less, they'll be in front of clients more. We believe in innovation at the cellular level, the same as evolution is, and we're seeing our smart people upskilling themselves, and we're supporting that to make them better with AI.
We're getting a relatively broad and continuously accelerated adoption in AI and a variety of different platforms.
are you looking to expand management services, that whole business area into infrastructure management?
Of course.
What might that include? I'm talking about, you know, energy, utilities, potentially government agency work as the government expands its AI investments.
All those.
Some of the most critical infrastructure.
I mean, we've hired some energy and infrastructure bankers. We're doing banking along that side, where clients of ours need power, understanding how to get power and how to contract for power and how to structure leases around having the power is really important. We think that's important. Managing facilities that are more technical is certainly a business that we're moving into. Cost monitoring around infrastructure building is a business that we are in in a smaller way, but we're gonna expand that.
Construction, project management around infrastructure is an area that is just at the beginning for us, and we see that as a real avenue of opportunity, especially in light of how active we are on the infrastructure and data center space.
Thank you.
Thank you. Once again, if you would like to ask a question, please signal by pressing star one. We will take our next question from Julien Blouin with Goldman Sachs.
Yeah, thank you for taking my question. Just, I was wondering if you could dig a little bit more into the financing volume success you're seeing. I mean, there were some large transactions, but even beyond that, a really strong quarter there. Also, I think there was a note about affordable housing business now really starting to contribute in a meaningful way. What's going on there?
Well, in the affordable space, we hired the number one team in the country, which is now a year and a half, two years. As you may or may not know, to do an affordable deal or get HUD approval, it's a year and a half process to get started. We're seeing that ramp. I think investors are looking for alternative asset classes. Affordable is in that bucket. You know, senior housing is having a real charge. Student housing and medical office buildings, those kind of things, which in some cases to investors seems to be AI-proof because it's distributed, local, nothing's gonna impact that. It's needed. We're seeing investors move into those areas. Affordable is one of those areas.
A big part Section 8 and another part LIHTC. With LIHTC, it's not, it has no party. Basically, from a Democratic point of view, you want more housing. From a Republican point of view, it's fueled by private tax credits, so it fits perfectly and it's more housing, so it's, you know, it's a good category to invest in.
Yeah, that's really helpful. Thank you. I guess, you know, slightly related to that, what about on sort of the AI risks business? You know, I hear worries out there that some parts of GSE loan origination or loan servicing could be disruptable. I guess, do you agree with those views?
You know, there will be, I mean, if you have a loan serving business, you're gonna be able to bring margin to the equation. That's in a bunch of businesses. We certainly will take advantage of that. I don't see that changing much other than enhancing margin at this moment.
That makes sense. Thank you very much.
Thank you. This concludes today's question and answer session. I would now like to turn the call back to Barry Gosin, CEO, for any additional or closing remarks.
We look forward to speaking to you next quarter.
This does conclude today's call. Thank you for your participation. You may now disconnect.