Newmark Group, Inc. Class A Stock

Good day, and welcome to the Newmark 3Q 2026 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.

Operator, good morning. Newmark issued its third quarter 2026 financial results press release earlier today. Unless otherwise stated, the results provided on today's call compare only the 3 months ended September 30, 2026, with the earlier period. Except as otherwise stated, we will only refer to results on a non-GAAP basis, including terms of Adjusted EBITDA, adjusted earnings 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 originations 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 when, how 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 future acquisitions 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, political and other factors. None of our targets or goals beyond 2026 should be considered formal guidance.

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 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 required 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. In advance, I'll apologize, I'm a little bit under the weather, but I'm happy to be here. Good morning, and thank you for joining us. With me today are Newmark's Chief Financial Officer, Mike Rispoli; and our Chief Operating Officer, Luis Alvarado.

Newmark once again generated strong top and bottom line improvement, including record third quarter revenues. Our growth was led by management and servicing, which increased 18%, leading to the company's fifth consecutive record quarter for these resilient businesses. We increased leasing by 26%, resulting in its all-time best third quarter. This was led by higher demand across artificial intelligence, data centers and other technology sectors as well as manufacturing, legal services, aerospace, defense and health care.

Our transaction pipelines remain active and robust. We continue to expect double-digit growth in revenues, adjusted EBITDA and adjusted earnings per share and anticipating achieving the best annual results for each of these metrics. However, the volatility in the macroeconomic environment creates challenges with regard to the timing and certainty of deal closings. And as a result, we are revising our 2026 outlook.

We remain confident that our investments in resilient service lines, ongoing international expansion, the strength of the company's brand and the continuing collaboration between our industry-leading professionals will together drive Newmark's long-term growth and market share gains.

I want to take a moment to talk about our accomplishments over the past 15 years. Newmark had a simple plan, elevate our brand by recruiting the industry's best talent, provide them with a differentiated platform, build credibility and earn our way into the rooms where decisions are made.

Starting in 2014, we chose to lead with capital markets because when you are advising a client on capitalizing the most important asset and portfolios, you are helping key decision-makers fully realize their business plans, and our strategy has worked. Newmark took its share of U.S. commercial and multifamily originations from under 2% then to around 10% now. We also moved up from #10 in U.S. investment sales in 2014 to #2 for the first 9 months of 2026.

Our success stems from our relentless focus on talent and from our professionals being innovative and entrepreneurial in everything they do. You have seen the same focus and market share gains across all of our businesses, including our recent strong growth in leasing and valuation and advisory. Over the last few years, we have used the sturdy foundation laid by these service lines to build out a growing suite of recurring revenue businesses.

As a result, we have successfully driven growth in the following areas: property, project and facility management, loan servicing and asset management, consulting, technology, advisory and lease administration and most recently, our fast-growing managed services solution for real estate lenders and investors. That is why recurring businesses increased from 24% of our total revenue in 2017 to around 40% year-to-date. We remain confident that management and servicing will produce more than $2 billion of annual revenue in 2029, which implies double-digit growth.

Our next chapter involves additional international growth. Over the coming 18 to 24 months, we anticipate further expansion of our global footprint across nearly all service lines. Today, we derive approximately 13% of our top line from outside the U.S., while our large full-service peers generate more than double or triple that percentage internationally. We view that gap as an opportunity. As we expand our geographic footprint, we also make Newmark a more credible alternative to win outsourcing assignments from large global occupiers. This has led to our occupier solutions teams competing in more pitches and being awarded more mandates.

Over time, our goal is for Newmark to be invited into every room with key decision-makers across nearly all of our service lines globally. Not only in New York and San Francisco, but in Berlin and London and Milan and Paris and Seoul and Sydney and Toronto and dozens of other major markets around the world. Based on our track record, I would not have bet against us.

Before I turn the call over to Mike, I want to briefly address Newmark's leadership. As previously announced, after 47 years, I am stepping down as CEO at the end of this year. I love this company. I will continue to be here to help through the transition. Both internal and external candidates are being evaluated, and we currently still expect to identify a new -- our new CEO by the end of the year. I'm confident in Newmark's senior leadership who collectively have decades of experience.

And with that, I'm happy to turn the call over to Mike.

Thank you, Barry, and good morning. Total revenues were up 12.7% to an all-time third quarter best of $973.2 million compared with $863.5 million. We increased management services, servicing and other by 18.3%. This was led by robust organic growth from Newmark's expanding suite of outsourcing businesses as well as strong same-store improvement for valuation and advisory. Management services fees also reflect 6 acquisitions completed since the third quarter of last year.

Leasing was up 26.5%. This reflected higher fees from industrial and office across several key West Coast markets and Texas. Capital markets revenues declined by 4.4% as Newmark's 33.4% rise in investment sales volumes was offset by lower origination activity. Our investment sales growth was led by senior housing and affordable housing as well as higher industrial and retail volumes.

Our origination business faced a difficult comparison due to the 129.1% rise in our total debt volumes in the third quarter of last year. In addition, GSE industry activity declined by approximately 30% in the third quarter. Over the trailing 12 months, Newmark gained over 70 basis points of combined Fannie Mae and Freddie Mac market share year-on-year.

Moving on to expenses. Total expenses were up 13.5%. Without pass-through items, total expenses would have increased 10.8%, with a large majority tied to the increase in commission-based revenues and our global growth initiatives. Regarding taxes, the company's tax rate for adjusted earnings was 12.9% compared with 12.1% last year.

Turning to earnings. We increased adjusted EPS by 14.3% to $0.48 compared with $0.42. Adjusted EBITDA was $166.4 million, up 14.6% versus $145.2 million. With respect to share count, our fully diluted weighted average share count was 252.7 million, up 0.4% year-on-year. We repurchased 3.9 million shares for $59.4 million towards the end of the quarter. On October 28, 2026, Newmark's Board reauthorized the company's $400 million buyback program. Given our strong financial position and recent share price, we anticipate further share repurchases.

Turning to the balance sheet. We ended the quarter with $240 million of cash and cash equivalents, $877.5 million of total corporate debt and 1x net leverage. On a trailing 12-month basis, the company increased adjusted free cash flow by 16% to $336.8 million. A key reason we have improved our cash flow metrics has been our increased focus on M&A. In the first 9 months of this year, our employee loan issuance dropped 36.9% compared with a year earlier. We expect this trend to continue for the foreseeable future.

Turning to guidance. We have revised our outlook due to the challenging macroeconomic environment and its anticipated impact on transaction volumes. Our full year guidance for 2026 compared with a year earlier is now as follows: we expect total revenues between $3.7 billion and $3.8 billion, an increase of 12% to 15%. We anticipate Adjusted EBITDA in the range of $629 million to $667 million, an increase of 12% to 19%.

We continue to expect our adjusted earnings tax rate to be between 13% and 15% versus 11.4%. And we anticipate adjusted EPS between $1.80 and $1.90, up 11% to 17%. These results would be Newmark's best ever full year revenue, adjusted EBITDA and adjusted EPS performance.

While it is too early to discuss guidance for 2027, we wanted to provide some additional color on how we view the market moving forward. We expect the fundamentals of our recurring businesses to remain strong and continue to expect double-digit growth. We also expect leasing volumes to improve, albeit with single-digit gains as compared to this year's strong double-digit improvement.

We expect industry capital markets volumes to be down through at least the first half of next year, given the recent rise in the level and volatility of rates. Given that market view, there could be a wide range of outcomes in terms of Newmark's 2027 results. Excluding any new acquisitions, we currently believe our 2027 earnings will be plus or minus 10% as compared with our record 2026 results.

With that, I would now like to open the call for any questions.

[Operator Instructions] And the first question will come from Alexander Goldfarb with Piper Sandler.

Barry, obviously, wishing you the best in -- I don't want to say retirement because I know you're going to stay busy and you love the business.

But your comment about the firm looking outside and inside, obviously, we've gotten to know a number of the inside folks, but you guys have a particular culture, very competitive, but very collegiate. How does the Board think about trying to bring in an outsider who would be new to Newmark versus promoting from within in terms of keeping that robust culture and the tightness intact?

We're basically evaluating all those things at the moment. And in the next certainly by 60 days, choice will be made.

Okay. The next question is on the data center front, it continues to be a hot topic. As you guys speak with your clients, and we've seen more pushback politically across the country, how is this tangibly manifesting into deal flow? Are you seeing projects being pulled? Or is this more about future deals that aren't even near coming to fruition being pulled back? I'm just trying to understand the practical implication on the field versus what all the headlines are.

I mean the fact that the election is next week has some impact on what's happening. The NIMBYism that is occurring around the country, I believe, will be temporary. Whether it's community development agreements, data centers deploying additional power to the grid in local communities, dealing with creating more jobs. I mean, things are just being pushed.

Our pipeline is incredibly robust. I mean the pipeline is there. We -- obviously, we -- the macro environment is a little confusing. So we're just being conservative about what the certainty is. But nothing has been -- nobody has walked from the table. They've just moved the table.

Okay. And then finally, Mike, on the free cash flow, I may have -- you talked about broker loans, I think, or something of that sort, but can you just walk back through ex settlement, why the adjusted free cash flow declined in the third quarter year-over-year?

Yes. In the third quarter alone, the -- if you remember last year, we had the settlement, which is about $42 million that was a positive impact last year. We're down about 10% if you take that out, and that's really just timing. There's nothing specific going on, on a trailing 12-month basis. We're up almost 36% free cash flow, and we always look at that metric on an annual basis. So there'll be quarters where it might be down a little or it might be up a little. But when you look at it on a trailing 12 basis, it's performing better than our earnings performance.

And our next question will come from Jade Rahmani with KBW.

Just wanted to ask about the 2027 comments. I mean, what scenarios would push earnings to be down 10% because you've got 40% of the business management services and about 30% leasing. So that's the preponderance of it. And capital markets could be down, you said in the first half, but maybe it stabilizes and then grows in the second half. So I guess what's the -- are we in a much worse scenario that gets earnings to be down by that magnitude?

Sure, Jade. It's all about the capital markets business because as you rightfully noted, we have a management business, the servicing business that will continue to grow double digits. The leasing business, we think will be -- will grow, it will just grow at a little bit of a slower pace than this year. And it's really all about capital markets.

So a downside scenario would be a sustained interest rate volatile environment, continued increase in the 10-year treasuries and volatility in that rate that sustains through the balance of next year, that could drive capital markets down probably in the 20% to 30% range. That's a downside scenario.

An upside scenario is there's some pain in the first half of the year and things get better in the second half. As you know, fourth quarter is usually the largest capital markets quarter. So if things improve in the second half of the year, we could perform towards the higher end of our range.

Wow, down 20% to 30%, that seems quite stark when you look at office has gone through a multiyear cycle and fundamentals are improving. Industrial is seeing a secondary use case with data center storage of all the components, advanced manufacturing, retail doing quite well, hospitality as well. So multifamily seems to be the main challenge, about 35% of the market. So I think your capital markets comments seem a bit severe.

Again, that's -- we gave a pretty wide range because I think there's a pretty wide range of outcomes that could happen in the market. And the base case is that things get better, and we have a pretty good year next year.

Good luck to you, Barry. Hope to still be in touch, too.

And the next question will come from Julien Blouin with Goldman Sachs.

Yes, I wanted to go back to the capital markets comment. I guess what are you seeing on the ground so far in October that sort of maybe informs this view of sort of a wide range of potential outcomes certainly to the downside. Are you seeing real signs of pause in activity levels? Because I do feel like we've heard sort of differing takes across your peer set in terms of how much of an impact we should expect?

Yes, Julien, this is Lou. Look, we definitely saw deals taking longer to close. I think when -- there are attack -- rates moved up another 50 basis points and the 10-year went up, it gives people either an opportunity to retrade deals or to wonder whether they should go to the market. We do believe that and we'll continue to advise our clients that I think we're living in the rate level that it's going to be, and therefore, this is a good -- is as good a time as anything if you're going to go to the market to go to the market.

But definitely, the spike in rates has also had a spike on cap rates, right, which then also on top of everything, the values go down. So that's primarily where we're looking at. We're looking at probably a little slower first and second quarter depending on how the elections go and how the rates go, and then also that continued pressure on cap rates because everybody is looking now on even the lenders on, hey, what's the exit cap rate going to be if I make this loan, right? So those are really what's driving a lot of the decision making.

That makes sense. And as we enter sort of a more choppy period potentially for capital markets, does that change at all how you're thinking about reinvesting into the business? And if not, how should we think about the potential for decremental margins sort of on the way down if we do sort of hit more severe scenarios in capital markets?

Yes. I mean, look, I don't think it changes our -- how we invest in the business. We've said that we're going to continue to invest in growing our managed services, which work hand-in-hand, frankly, with capital markets and leasing, right? It's primarily about driving that cross-selling of the services that we provide and driving our platform. As we drive that business more, that margin improved significantly because there's -- we've spent a fair amount of money.

So there's some fixed costs related to that business that as we continue to grow the revenue, we will further enhance the margin. Capital markets is not going away. It will still be a driver, and there will still be a way of how we get in front of the folks. And leasing will continue to help drive the cross-selling of our managed service platform, whether it be facilities, lease admin, workplace and so forth.

So I'm not really as concerned about that overall for the plan, and I'm not really worried that we're going to change our investment. We're going to continue to invest. We're going to continue to grow the platform. We're going to continue to grow globally. And I think we're in a really good path. And sometimes these things create tremendous opportunities for us to invest and grow the business.

All right. Great. Feel better, Barry.

Thank you.

And we'll take a question from Brendan Lynch with Barclays.

This is Annabelle on for Brendan. Thank you for your commentary on leasing expectations for 2027. How do you think about the contribution from different subsectors as availability in office and industrial start to tighten, but you start winning more data center leasing deals?

Yes. I mean I think we have been doing more data center leasing deals. I still think there's a lot of running room still for powered land and so forth. As far as leasing, we've been driving our leasing has continued to grow, and that's also helped grow our managed services, right, the support that goes with it. The challenge for leasing, frankly, is going to be that the demand is still at the Class A level and the vacancy rates at the Class A level are in the single digits across all the major markets.

So it's really more of a, where is the product that we can put people in. There's certainly a lot more investment going in and taking B buildings to A level so that they can become an attractive option for tenants. But that's really where we see the potential slowdown, not slowdown, but just bump in the leasing and why we think it won't grow as fast as it has in the past.

Okay. Great. And then can you just quantify how much data centers contributed to the leasing volume in the third quarter, given that they can be a bit lumpy?

Yes, we had some nice data center leases in the quarter. That part of the business for us seems to be ramping up, but we haven't put any specific numbers around it at this point.

And the next question will come from Patrick O'Shaughnessy with Raymond James.

How would you compare kind of the current market impact from the move higher in interest rates versus what the industry saw in 2022?

Yes. I mean I think in 2022, everybody was saying stay alive until '25, I think today, we're looking at a market where this is what it's going to be, here it move 50 basis points here and there, but there's no -- unless you have a really well-leased building that's got long-term and you want to hold, I think everybody is going to have to play in this arena. It's just getting the price discovery between where the sellers and the buyers are to kind of meet, right? So there's -- it's very different than it was in '23.

Got it. That's helpful. And then can you remind us why the capital allocation philosophy has kind of shifted away from hiring and lift-outs and towards M&A?

Sure. We probably started talking about this 18 to 24 months ago. The main reason is we spent a lot of time building out our U.S. platform, in particular, and filling a lot of the major gaps that we had on the capital market side. When we got to the end of that, and we're never completely done, but when we got towards the end of that, and we had enough talent to execute business in all major asset classes, we shifted more towards M&A and M&A mainly has been in the recurring revenue businesses.

As we mentioned, we've acquired 6 companies in the past almost year, and all of them, I believe, have been in the management and servicing business. So that shift started. It doesn't mean we're not hiring talent. It just means that the majority of our capital will go towards M&A and the recurring businesses.

[Operator Instructions] Our next question comes from Mitch Germain with Citizens Bank.

I'm curious, I think, Mike, you might have mentioned that GSE has seen a reduction there. Do you expect a bit of a pickup in 4Q? I know that there are certain levels that they have each year. So I'm curious how you think that plays out.

Yes, we're not seeing that. It's interesting. If you look at our volumes in multifamily debt, in particular, our volumes overall were up. It's just that the activity shifted from GSE to non-GSE debt. So I don't really see the GSEs getting to their caps this year. And the market seems to be -- continue to be a little bit down in the fourth quarter. We'll see what happens next year. I know they have a mandate to push more volumes through the GSEs. But hopefully, that will pick up as we move into '27.

Great. And obviously, you've got this dynamic playing out in -- within the investment sales market, given what's happened in the interest rate environment. But I'm curious, like, when you look at some of the M&A deals that you guys are in the midst of negotiating, does this sort of backdrop create an opportunity? Or does it create a repricing and maybe delay deals there as well?

I mean, we are incredibly ensconced in the large institutional size portfolios, M&A and deals. And that's probably one of the -- some of those deals just take longer. And in a volatile time, they're not -- they're going. They continue to go forward. And that side of the business is a little lumpy, but it's hard exactly to predict when they close. And -- but nothing has left the field.

Thank you. And that does conclude the question-and-answer session. I'll now turn the conference back over to Barry Gosin, CEO.

So thank you for joining us, and I really look forward to seeing all of you next quarter.

Thank you. That does conclude today's conference. We do thank you for your participation, and have an excellent day.

Good day, and welcome to the Newmark's Q2 2026 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. Newmark issued its second quarter 2026 financial results press release earlier today. Unless otherwise stated, these results compare only the 3 months ending June 30, 2026, with the year earlier period. Except as otherwise stated, we will 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 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 a complete and updated set of definitions for any non-GAAP items, 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 future acquisitions 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, political and other factors.

None of our targets or goals beyond 2026 should be considered formal guidance. Also, we 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'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. With me today are Newmark's Chief Financial Officer, Mike Rispoli; along with our Chief Operating Officer, Lou Alvarado. Newmark once again delivered strong financial results. We have now produced double-digit year-on-year revenue growth for 11 quarters in a row in Capital Markets. 8 consecutive quarters in management and servicing and 7 straight quarters in leasing. Our quarterly results also demonstrate the company's strong operating leverage as we increased total revenue 17% and adjusted EPS 26%. Our growth was led by management and servicing, which increased 18%, leading the company's fourth consecutive record quarter for these businesses.

We remain confident in the producing more than $2 billion in annual revenue by 2029, which implies a mid-teen growth over that period. With respect to leasing, we increased fees by 17% to an all-time best second quarter. This was driven by significantly higher office volumes in key markets, including New York City, San Francisco Bay Area and Los Angeles as well as the ongoing expansion of our global footprint.

We increased capital markets revenues by 16%. This reflected a broad recovery across property types and U.S. investment sales as well as our investments in talent driving international growth. We are also gaining domestic market share as Newmark moved up one spot to #2 in overall U.S. investment sales for the first half of 2026 according to MSCI.

Given Newmark's strong first half results and healthy transaction pipeline, we continue to expect double-digit top and bottom line growth for the third consecutive year in 2026. With respect to artificial intelligence, we view the advent of AI not only as a defining economic force of our era, but as the accelerant that will better enable our talented professionals across the company to efficiently bring new and innovative solutions to their clients and enhance productivity over time. We believe our investment in recurring revenue businesses, ongoing international expansion, improving industry fundamentals and our talented professionals will together drive Newmark's long-term growth and Newmark market share gains. With that, I'm happy to turn the call over to Mike.

Thank you, Barry, and good morning. Total revenues were up 17% to an all-time second quarter best of $888.4 million compared with $759.1 million. We increased management services, servicing and other by 17.7%. This was due to double-digit organic growth across our recurring revenue businesses as well as recent acquisitions.

Leasing was up 17.2%. This was led by significant office activity for clients across several major industry categories. Capital Markets grew by 16%, reflecting meaningfully higher multifamily sales volumes, particularly in senior housing and affordable housing. We also produced strong improvement in industrial and office sales. This was partially offset by lower origination activity, mainly due to several significant transactions in the prior year quarter. These helped drive Newmark's 134.8% year-on-year increase in total debt volumes in the second quarter of 2025. In the first half of 2026, we improved our total debt and investment sales volumes by 26.7% and 64.8%, respectively, compared with a year earlier, and we continue to have a strong pipeline.

Moving on to expenses. Total expenses were up 16.6%. 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. Excluding both pass-through items and the impact of our global growth initiatives, total expenses would have increased by 9.6%.

Regarding taxes, the company's tax rate for adjusted earnings was 14.7% compared with 14% last year.

Turning to earnings. We increased adjusted EPS by 25.8% to $0.39 compared with $0.31. Adjusted EBITDA was $139.2 million, up 22.1% versus $114 million. Our adjusted EBITDA margin on total revenues improved by 65 basis points, slightly ahead of the midpoint of our full year guidance range. Excluding the impact of pass-through items as well as recent M&A and international growth investments, our margin expansion would have been approximately 100 basis points higher.

With respect to share count, our fully diluted weighted average share count was 251.9 million, roughly flat versus a year ago. Turning to the balance sheet. We ended the quarter with $259.7 million of cash and cash equivalents, $867.3 million of total corporate debt and 1x net leverage. On a trailing 12-month basis, the company increased adjusted free cash flow by 71.6% to $391.1 million. This represented 85.3% of adjusted earnings, which is at the high end of our target range of 65% to 85%. In terms of outlook, our guidance remains unchanged. At the midpoint for each metric, we expect total revenues to improve by approximately 16%, adjusted EPS to be up by approximately 19% and for adjusted EBITDA to grow by approximately 20%.

With that, I would now like to open the call for any questions.

And our first question comes from Alexander Goldfarb with Piper Sandler.

Mike, first question is just going to the debt. I understand that a year ago had some outsized transactions. But as we think about sort of the peak back in '21, '22 when rates are really low and originations really high, how are you guys thinking about your business this year, next year, et cetera, as those maturities mature? Just trying to understand what we should expect as far as quarterly cadence?

Sure. I would say our debt pipeline remains really strong through the back half of the year. Hard to say what it will be next year, but the market certainly has a significant amount of maturities over the next 3 years. So we would expect that to continue. In the quarter, as you know, last year, we had a one $7 billion transaction in the second quarter of last year. So that affected the year-over-year comp in the second quarter of this year. But outside of that, the pipeline remains really healthy.

And then we have a lot of large transactions in the pipeline with data centers, digital infrastructure and large deals and large office coming back, there is a need for capital, and there is an enormous amount of liquidity.

Okay. And then, Barry, as we think about the business overall, I mean, it seems like you guys are firing on all cylinders, double digit seems to be the permanently affixed in your press releases. So a little surprised that guidance wasn't increased, especially given the lack of supply and the acceleration that we're seeing from the REITs. Is there anything in the business that was holding you back? Because otherwise, as I say, from what the REITs are saying, the real estate markets only seem to be getting better, and therefore, I was a little surprised that the guidance wasn't bumped even just a small part?

Yes, I'll take that one, Alex. So if you remember, we did increase guidance last quarter. We continue to see really strong pipeline of activity. We continue to win management business. So everything looks pretty good. But we're up against a little bit of a tougher comp in the second half of the year. We were up 20% in the second half last year. And as Barry said, we have some pretty sizable transactions in the pipeline. It's a little bit difficult to determine the timing of that. And given the current macro environment, we just thought we wanted to see a little bit more data, and we'll update you on that next quarter.

And we'll go to our next question from Julien Blouin with Goldman Sachs.

Just in investment sales, another really strong quarter. You significantly outperformed the industry in the U.S. and obviously, internationally, given the push there on hiring. But I guess how much more ramp in productivity do you expect from U.S. producers? I wouldn't have guessed that you would still be sort of outperforming the industry by this much at this point?

Julian, this is Lou. I think we still have a lot of running room in that sector as well as in the international sector. As you know, right now, we're primarily Europe, but we're still looking to expand into Asia as well, which is very small for us right now. In the U.S., we still have some white space that we can continue to grow in. And so we don't see any real reason for a slowdown for us. And look, I think the things that we're doing, we will continue to pick up market share as you've seen us grow from where we were to where we are today. And so we're very happy with where we are, and we're very excited about where I think it's going to go.

Okay. Great. And then on the data center financing piece, I know some of these are sort of larger financings that can be a little chunky and difficult to time. But overall, just at a sort of high level, how are you thinking about the opportunity set? It does feel like this year, we've had a little less of these sort of large chunkier data center financing deals so far?

Well, we are involved in many of the large visible, high-profile opportunities, as you guys know that. And we see a very robust pipeline. I mean the need for compute is still enormous. There is not a sufficient amount of power for all of the compute requirements if AI proliferates the way everybody anticipates it to. So you're going to need -- so there's going to be not only hyperscaler deals, there will be infrastructure transactions and all of these need capital. And we're in the middle of a lot of it. And so that's still going to continue even in spite of some of the new leasing that's occurring around the country. There are still plenty of states that will allow data centers that are looking for more chip manufacturing and advanced manufacturing and data centers.

Also in the neocloud and smaller data centers will be a place that people are going to invest. Distributed power is something that's going to be needed more closer to where the demand is. So the -- every time we seem to see some moment where maybe there's a slowdown, there's just another -- there's more capacity required, another avenue that everybody is going to move to. And -- but that's -- this is still just at the beginning.

And we'll move to our next question from Mitch Germain with Citizens Bank.

I'm just curious if you could provide some perspective on performance of the recent M&A, the firms you acquired and maybe some ideas or some thoughts around the cross-sell opportunity that you've been able to realize to date?

Yes. I mean, look, the most recent one was RealFoundations, right, that we acquired. And we've been able to do a significant amount of cross-selling with them as well as growing them. That was an area where as we continue to grow our managed services, they provide services that kind of augment that. and we've integrated them into our consulting practices. And it's been a very successful so far transition and integration for us. And we continue to look at other opportunities, primarily focused in that managed service sector. And we believe that, that is going to be one of the driving forces. As you know, we're looking to grow our managed service area to about $2 billion. And I think those M&As will help us get to that point over the period of time through 2029.

That's helpful. And just one last question for me with regards to capital allocation. think the majority of your buyback activity occurred in the first quarter. And there really wasn't much done in the back part of the quarter. I think you did 1 million shares, which were announced when you announced your first quarter earnings already. Just maybe just some thoughts about buybacks or kind of your allocation of capital on a go-forward basis?

Sure. As you can see, Mitch, we continue to generate a lot of free cash flow. We're up 71%, almost 72% on a trailing 12-month basis. We did buy back a lot of stock mostly in the first quarter, but a little bit in the second quarter. And I think what we said at that time is we were going to transition capital allocation to M&A -- so we have a nice pipeline of M&A transactions. If they close, that's where the capital will go. If they don't, then we'll pivot back to buying back more stock towards the latter part of the year.

I think what's important for you to recognize is that everything we acquire has to have a frame of reference and a connection to the rest of the business. And so we're not going to -- we're not -- we're generally not focused on acquiring things that are outliers -- so we're putting together this puzzle. And the point of how are we creating synergies, literally, that is part of our goal. Everything that we buy, buying RealFoundations, they do implementation and integration of MRI and Yardi. Every -- all of the real estate funds and managers use either Yardi or MRI.

So we -- everything we can do to get us in front of the clients become a holistic solution in every part of the capital stack, every part of their business, partner with them to help leverage our resources to do a better job for their funds and their investors, investments we're doing. So we think there are a lot of things that we can do over the next year that will fill in the gaps, create more recurring revenue. We hope to get multiple expansion as a result of those efforts. We are very focused on it. We had a commitment to be in the top 3 in capital markets. We were 2 this year in the U.S. We're going to do the same thing around the country. That's our goal. As we build the gratitude machine of selling product to clients, we become an elevated brand, more important to our clients, and we're building around that and using the leverage of that to come up with acquisitions that fit like a glove into the whole puzzle.

And we'll go next to Jade Rahmani with KBW.

I was wondering what you're seeing on the multifamily side. CBRE called out some weakness in volumes on the GSE business. Newmark seemed to buck that trend and the press release noted strength in seniors and affordable housing. So any color on that?

Well, so we're building an incredible affordable housing platform. I mean we're the #1 investment sales platform in affordable. A good chunk of that is Section 8 and a part of that is LIHTC. The good news is that the country is very focused on affordability. It seems to be a popular word these days. And there is no disagreement between the Democrats and the Republicans with respect to the importance of building affordable housing. So we've managed to pick that just as we got into data centers 2 years, 3 years ago ahead of the curve, which has given us some momentum. In terms of multifamily, we're hiring great people. We're filling out the white space. We've managed to acquire the -- we have the deepest, widest bench of talented multifamily investment salespeople, coupled with Freddie and Fannie HUD GSE business, along with affordable, which is part of a mission-critical on the GSE business. So all of those pieces are giving us a lot of wind in the sales.

And Jade, I'll add to that, that our GSE pipeline heading into the back half of the year is pretty robust, very strong, and we just see the business as being very good in the back half of the year.

And the follow-up is, how do you think rates are impacting that business? Because multifamily in general, is a lower cap rate asset class, and so buyers are quite sensitive to where rates are. So are you seeing any pullback in volume as a result? Or are you seeing a pickup in refi but a slowdown in acquisitions? Any commentary there?

Well, it depends on the market. I mean some markets have been overbuilt, and that's an impact -- has had an impact on a variety of markets in terms of investment sales. Interest rates were the biggest impact -- had the biggest impact on multi. But when you have certainty in interest rates and the spreads are pretty secure, which they have been, that is a good market to transact in. And we think that even though there was a slowdown in a variety of markets, I think we think that will pick up.

And we'll go next to Brendan Lynch with Barclays.

On the U.S. office leasing, can you talk a little bit about your runway for continued new leasing growth as the A quality assets get leased up? Do you anticipate greater absorption in B quality assets going forward? And how are you positioned to capture that demand?

Yes, Brendan, this is Lou. Look, I think what you're seeing across the market is people improving their assets to be competitive in order to lease, right? So B assets are being looked at and amenitized in order to compete with the A assets. Yes, the A assets is where the bulk of the activity is. So everybody is preparing to that.

And that's what we're spending a lot of time, whether it's on our property management side or on our brokerage side or on our project management side is working with clients to reposition their assets in order to attract these folks. There still is some demand for B and C from those that can't afford to pay the A rates, right? So those buildings will still do some volume. But obviously, the bulk of the activity has been focused on the -- as and the bulk of the focus by the clients has been to how do we reposition ourselves or how do I purchase a building at a basis low enough so I can reposition it in order to compete with the As.

And I think you're going to continue to see that, and we're pretty well positioned to continue to work with clients related to addressing those needs.

Great. That all makes sense. Maybe one question for Mike on the adjusted EBITDA margin in the second quarter is kind of tracking ahead of what is implied for the full year, but I recognize the first quarter was a little lower. Can you just walk us through some of the seasonal components and any other considerations for the back half of the year?

Sure. Generally, our adjusted EBITDA margins grow in the back half of the year, particularly in the fourth quarter. That's pretty normal, and we saw that last year as well. So we expect continued margin expansion through the back half of the year, somewhere in the neighborhood of what we expect for the full year. But we're also investing while we're growing the business and expanding our EBITDA margin. So I think I noted that were we not investing to the level we were, our 65 basis point margin improvement in the quarter would have been about 100 basis points better. So we continue to see margin expansion through the balance of the year. We think we'll see margin expansion next year as well.

[Operator Instructions] We'll go next to Patrick O'Shaughnessy with Raymond James.

Curious if you're seeing any evidence of commission compression in sales or leasing or if things remain pretty stable on that front?

Yes. Patrick, this is Lou. I would say things remain pretty stable on that front. Obviously, when assets are trading 25% to 35% lower than they traded the last time, the fees are lower because of that, not because there's fee compression, but because just the asset value has gone down. I think what has demonstrated to us and to you guys is that even in spite of that market, because of our continued pickup in market share, we continue to grow, right? And that is the proof of the strength of our capital markets teams.

And you already had years of fee compression. that ship has sailed. There's been a lot of fee compression over years, but that's years ago.

Got it. Appreciate that. And then just curious about an update on the office to multifamily conversion pipeline. What does that look like at the moment? And how actively are you guys participating in that?

Well, the most robust market for conversions is really New York because the rental market is high enough to justify the conversions. It's a very costly process to take an office building and convert. I mean the recent New York buckling of 2 steel girders was not helpful. They have shut down 2 jobs in New York. There's about 11 million square feet under construction of conversions. There's $19 million in the pipeline. It is enormously beneficial for office because it takes inventory and by reverse in reverse, it creates demand for the existing inventory. So it's one way to retrofit our obsolete office, and that should be done in the rest of the market.

The government and most of these cities, especially in the Midwest, should figure out how to create some tax incentives, better tax incentives to convert these office buildings. In New York, certainly before the President administration, they had something called the 467-m, which is a great program for converting office building. And at the same time, it provides 25% affordable, of which 90% of the 25%, half of it is 90% AMI, the other half is 40% AMI. It's an incredibly productive way to convert office buildings to add to the affordable housing mix. and improve neighborhoods. So there are lots of cities around the country that should take note from what's going on in New York, and these should be done around the country. It's a great way to eliminate inventory and create more housing.

It appears there are no further questions at this time. I'll turn the conference back over to Barry Gosin for closing remarks.

Thank you again for joining us. I look forward to speaking to you next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the Newmark's 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 3 months ending March 31, 2026, with the year earlier period, except as noted -- as otherwise specified, we will be referring to are called 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 and 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 in the quarterly results presentation on our website for completing an updated definitions of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results and how we line 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.

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 a 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 real foundations 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 -- 0.3 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% and our performance reflected the investments we made in building out an industry-leading advisory business. Newmark is the go-to adviser for the largest and most complex transactions in the market.

Real Estate Alert ranked Newmark #4 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% and 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 the 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% and versus $89.2 million. Our adjusted EBITDA margin on total revenues improved by 9 basis points. With respect to share count, our fully diluted weighted average share count was up 0.3% to $256 million. Through April 29, 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 $21.1 million of cash and cash equivalents, $832 million of total corporate debt and 1x net leverage, after quarter end, we renewed our revolving credit facility and increased it 50% to $900 million. On a trailing 12-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% to 85%. Newmark increased its dividend for the first time since 2022 from $0.03 to $0.06 and 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% to 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 to $694 million, an increase of 17% to 23%. We expect our adjusted earnings tax rate to be between 13% and 15% versus 11.4%. And we anticipate adjusted EPS between $1.87 and $1.98, up 15% to 22%.

With that, I would now like to open the call for questions.

[Operator Instructions] And we will take our first question from Alex Goldfarb with Piper Sandler.

Two questions. First, Mike, the guidance increased great. It's impressive. Curious how your expectation for cash flow growth 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?

Alex. Yes, I think our cash flow is going to grow in line with earnings. As we said, and as you can see in the release, it's up significantly year-over-year on a trailing 12-month basis, and we continue to just generate a lot of cash flow from the business, which gives us a significant amount of flexibility.

Okay. And the second question is, Barry, you guys have expanded into data centers. Obviously, there's a lot of leasing from AI and office. But there are all these stories that we read about 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. But as you work with your clients and data centers, -- are -- is the power of the CapEx concerns are these playing out and affecting how data centers are being invested in or how your clients are looking at them?

Or 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 investing and breaking ground on new data centers.

Yes. 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.

And we think it's the velocity, as we see it now, the pipeline looks really, really good, and it's still people are aggressively pursuing opportunities. And the some of the deck chairs are changing, some more of the power companies are getting involved closer up into the hyperscaler side of the business because they're holding the cards. So understanding how to navigate in this environment is really interesting and good for us.

And 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. So it actually opens it up and requires people to be more expert about this. So we think it's good for us.

Okay. So 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.

And we will take our next question from Mitch Germain with Citizens Bank.

And congrats on the quarter. Just curious, obviously, a couple of acquisitions. I think you even mentioned 1 or so on the call so far. 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 -- 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 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. And I'm curious, I think, Barry, you've talked in the past about garden leave and a lot of that had to burn off. So where are you with regards to productivity of the producers that you've hired outside the U.S.? I mean, are you at -- 50% of them still on the sidelines? Or is that -- some of that really accelerated and you're starting to get a lot more activity from them?

Well, as we continue to grow, we're going to still have people in garden leave, but those -- the garden leave is burning off. So in France, for example, we projected a probably to a breakeven in year 3, we're profitable in year 2. So we think the same thing is going to happen in Germany. We're building out Italy. And so there will always be a certain amount of garden leave and burnoff, but it's burning off. That's in the U.K. were more mature. And as we continue to mature it will continue to burn off. So -- but the capital upfront and the requirements upfront in Europe and other parts of the world, less than what we have to do in the United States. And the United States is pretty well built out.

Yes. And Mitch, this is Mike. I would add to that. You could see in our earnings presentation, we show that the rest of the world is growing faster than revenue in the U.S. And 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. So it's starting to happen..

To clarify, it's outside the U.S. and U.K., 37.9%.

Yes. All right. Great. Last 1 for me, Mike, any maybe, early -- you've listened great first quarter, but it's early in the year. And the backdrop remains sort of turbulent -- so I'm curious about your confidence in raising the outlook soon.

Mitch, we're always a little bit on the conservative side, at least I am. So 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. But 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. So we feel really good about the guidance.

We will take our next question from Brendan Lynch with Barclays.

Maybe just 1 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. So 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. And then on capital markets, it seems like there -- the industrial operators have suggested there's some momentum around advanced manufacturing. Maybe just tell us what you're 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. We 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. You're also -- I think you're going to 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.

So if you come along with the jobs, 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 advance -- for data centers. So I think that -- and we're seeing more of that in parts of the country where they've gotten. 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. How many of the -- 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, but we're working on it but it's early. I think that's a trend that we'll continue to build, because of the nature of the community, sort of the NIM, the not -- don't build it in my neighborhood and the lack of power and the need for power -- so I think advanced manufacturing is smart, they will look together with hyperscalers or become hyperscaler.

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 the results in terms of enhanced margin, that's a piece of it. But for us, since we've -- 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.

So we're -- 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. So we're getting a relatively broad and continuously accelerated adoption in AI and a variety of different platforms.

And are you looking to expand management services, that whole business area into infrastructure management. Of course. What might that include -- I'm talking about energy, utilities, potentially government agency work as the government expands its AI investments the critical structure.

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. So 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 going to expand that.

And 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 in that space.

[Operator Instructions] And we will take our next question from Julien Blouin with Goldman Sachs.

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, so in the affordable space, we hired the #1 team in the country, which was -- is now 1.5 years, 2 years. As you may or may not know to do an affordable deal or get an approval, it's 1.5 years process to get started. So we are seeing that ramp. So it's -- so -- and I think Investors are looking for alternative asset classes and affordable is in that bucket.

Senior housing is having a real charge and 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 is going to impact that. It's needed. So we're seeing investors move into those areas. So all portable is 1 of those areas. I'm in a big part, Section 8 and another part, [ Liteq. ] With Liteq, 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 a good category to invest in.

No, that's really helpful. And then I guess, slightly related to that. What about on sort of the AI risk to that business? I hear worries out there that some parts of GSE loan origination or loan servicing could be disruptible. I guess do you agree with those views?

There will be -- I mean, if you have a loan serving business, you're going to be able to bring margin to the equation so that and that's in a bunch of businesses, we certainly will take advantage of that. But I don't see that changing much other than enhancing margin at this moment.

That makes sense. Thank you very much.

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.

And this does conclude today's call. Thank you for your participation. You may now disconnect.

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 Info Relations. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Newmark issued its fourth quarter and full year 2020 financial results press release this morning. Unless otherwise stated, the results provided on today's call compare only the 3 months ending December 31, 2021, with the year earlier period. Except as otherwise specified, we will be referring to our results only on a non-GAAP basis, including terms adjusted earnings and adjusted EBITDA. .

Unless otherwise stated, any figures discussed today with respect to cash flow from operations refer to our net cash provided by operating activities, excluding the impact of GSV 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 at close after first quarter of 2020 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.

Also, 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, and 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 and year in our recurring revenue and leasing businesses.

We increased leasing by 17% in 2025 to outpace the growth of our public competitors and resulted in our first-ever 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. And our nimble approach has allowed us to get in front of these trends early.

We improved our full year management and service 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 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% and 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 on 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 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 2 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% and 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. We're an approximately 21% increase in our average closing stock price in 2025 and 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% and to $254.3 million. On February 18, 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 and 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 higher revenue-generating professionals, $127.1 million of share repurchases and $5.4 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 to $675 million, an increase of 13% to 20%. We expect our adjusted earnings tax rate to be between 13% and 15% versus 11.4%. And we anticipate adjusted EPS between $1.82 and and $1.92, up 12% to 19%.

With that, I would now like to open the call for questions.

[Operator Instructions] And we'll take our first question from Alexander Goldfarb with Piper Sandler.

So 2 questions. Barry, first, just a big elephant, AI. In a realistic way, can you just tell us what your the clients that you deal with, whether it's renters or occupiers, how they're thinking about AI vis-a-vis their office needs employment, staffing. We hear all these different stories and just want to hear exactly what the latest thinking is from the office users.

And I think it's very early to have the full story. I mean the last 2 months, AI has really revolutionized itself. But I mean, we're still seeing increased activity and increased return to the office. You might you might -- you could possibly look at it that people who are working from home are more is that 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 for 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. So in terms of margin enhancement, there is certainly opportunities in the margin enhancement side. But 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 going to 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.

But Barry, what you're saying is from office using jobs, you're not seeing any of your clients talk about redoing.

I mean it's certainly in the primary markets, we don't expect to see that. But [indiscernible].

And then the second question is, on the debt -- on your debt book, your capital markets 2021 was a monstrous year for multifamily, both in aggressive underwriting and low debt cost. And obviously, that stuff is coming due. Do you expect a surge of refinancing and restructuring over the next sort of 12 to 18 months? Or is your view that while they're technically should be a surge of maturities this stuff takes time to work out.

And therefore, it's not like we're going to see a sudden ramp and all these loans coming due, it's -- 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 3 years, $600 billion a year. And the market titrates between sales and debt. Every time you look at it a capital event, you decide should I finance more, should I finance less? Should I raise equity? We think that's right 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, and 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 going to be in debt. So I think that there'll be a lot of maturities that we'll be involved in.

And we'll go next to Jade Jade Rahmani KBW.

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. We know from experience that there is a lot of property level cash flow data that building owners, lenders, servicers, brokers, keep closely held.

And so I'm wondering what you see as a risk to the property level data becoming truly public? And 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. So we're very aware of that. But we've collected an enormous amount of proprietary data over years recognize that 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. So it will be -- but we have no shortage of opportunities to use our data to create value for our clients. And so putting that in context of your leading capital markets team, some of the institutional teams you've acquired see that this proprietary data in combination with AI advances those star quality type teams? Or do you think that the younger teams will have a better chance to compete within a company like Newmark.

I think you basically hit the nail on the head. The reality is both. So 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. And the young people on their teams, the talent on their teams will use AI to increase margin and increase opportunity.

And if it takes less time to do and certain things and you can put your best people in front of clients and spend more time with their clients, you are going to do more business. And 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. And we think that is an accelerant for us.

And we'll move to our next question from Julien Blouin with Goldman Sachs.

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. But 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?

Without question at smaller deals that could be perceived to be more commoditized would be more at risk. But 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 eBlast to qualified through a list of qualified buyers and automated CAs and those kind of things, we'll just accelerate the opportunities. So I think you'll see more business -- same business done with less people.

And again, that's -- we think that's a good thing for us. That's really helpful. And I guess 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 on earnings for next year. But we have very low leverage on the balance sheet. We're generating -- we generated record cash flow in '25. 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 been -- we launched Europe 36 months ago. We have 1,200 people in Europe. Every -- 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. So we are we've done better than we had originally anticipated, and we've opened up Spain and Italy, and we've done a great deal in Germany and U.K. and France. And we're doing it in the Middle East, and we're doing it in Singapore.

So -- and we're hiring people and they want to come work for us. So 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. And in some cases, although the accounting is a little bit different, you're hiring brokers, and it takes time to ramp up. you have the better shot at getting the plumbs as opposed to the pits sometimes when you buy a company with a lot of people.

And we'll go next to Mitchell Germain with Citizens Bank.

Barry, I just want to follow up on that comment you said about some of the hiring outside the U.S. And I'm curious, I mean, 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? Or you were around 50%? Or is that even less in terms of how many are actually up and running and performing for you?

Mitch, it's Mike. I would say it depends on the country because we started different countries at different times. So like France, we started probably 2 years ago. that should be fully ramped up next year in '26 -- or I should say, this year in '26.

Germany, we're still ramping, so probably comes online in full speed in Italy, we just started. So that will take a year, 1.5 years. So it really is market-dependent. And -- but we are seeing after 12 to 18 months, the producers we hired really starting to produce on our platform. So that's a good news.

After probably -- even though we started 2 years ago, we had garden leaves. We probably are a year in a few months in operation, we're breakeven the first year. I mean that's a sound -- we anticipated that it would take us 3 years to go cash flow positive. We've done it in a year and 4 months. a year in 3 months. U.K., we came out of the gate. We didn't miss a beat.

We built a good business in the U.K. team 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. So I mean -- and 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, and 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. Last quarter, you guys provided some perspective on the real foundations transaction. I'm curious about the Altus deal and kind of how it fits into the puzzle here?

Yes. 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.

And right out of the gate, we took the original leader of the company who wanted to join who left to pursue other avenues but came back. When you think about our appraisal as protocol of how we've built this company, we hired 1 person in appraisal 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 the -- and many of these institutions give global and regional mandates. So having that platform is a great opportunity for us.

And 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, the gap between us and getting the -- winning the business will be diminished precipitously, and we expect that organic growth as a result of winning business without cost is going to be an avenue of white space that we will achieve great growth.

And we'll move to our next question from Brendan Lynch with Barclays.

Barry, I appreciate all your comments on AI and not to belabor the point, but it is the theme of the day. probably going much beyond office as well. So maybe just looking at your industrial and retail leasing businesses. Maybe you can 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. So any commentary there could -- would be helpful.

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 -- so we can 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 on AI that will be sort of aggregated into 6 or 7 major AI companies and how that will impact the world. But our clients are 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. And 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 1 team. because you have more than 1 team that becomes like a mosh pit and competitive. But -- so we think we've now, in many of the markets, we've actually accomplished our objectives. There are places where we have 1 space. In leasing, 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 cover to come on board and not have as much competition internally, and that fits in with our model. We'd rather see higher revenue per capita and higher revenue per employee and provide the infrastructure and the research and the data to help them do more business. That is our goal. So we don't -- we're not having a problem recruiting.

[Operator Instructions] And we'll move now to Jade Rahmani with KBW.

Just on the revenue growth outlook, 12% to 15% on -- could you provide any comments as to your expectations on leasing, whether that should be above or below that, management services and capital markets.

Sure. As I said in my prepared remarks, Jade, I think we'll be above the midpoint in Capital Markets. Debt market debt is expected to grow 20% plus next year and sales double digits. So 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. And then in the leasing business, a little bit below the midpoint of the guide.

And that concludes our Q&A session today. I'll turn it over for any additional or closing remarks.

Thank you all for coming and look forward to the next quarter.

And ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now disconnect, and have a great day.

Good day, and welcome to the Newmark Group Third Quarter 2025 Financial Results Call. Today's call is being recorded. At this time, I'd like to turn the call over to Jason McGruder, Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning. Newmark issued its third quarter 2025 financial results press release this morning. Unless otherwise stated, the results provided on today's call compare only the 3 months ending September 30, 2025, with the year earlier period.

Except as otherwise stated, 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 refer to 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 quarterly results presentation on our website for complete updated definitions of any non-GAAP terms, reconciliation 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 today -- discussed today assumes no material acquisitions or meaningful changes in our stock price. Our expectations are subject to change based on various macroeconomic, social, political and other factors. None of our targets or goals beyond 2025 should be considered formal guidance. Also, 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'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 again delivered strong quarterly top and bottom line improvements. Our record third quarter revenues included double-digit gains across every major business line. Newmark's growth was entirely organic. Earlier this month, we acquired RealFoundations, which offers management consulting and outsourced managed services for institutional real estate clients across the U.S., Europe and Asia Pacific. We also recently launched a fund administration business. Newmark now has one of the most comprehensive sets of investor solutions to drive value for owners of commercial real estate, banks and debt funds.

Coupled with our best-in-class talent and client relationships, we believe Newmark is poised for growth across all of our investor and occupier-focused businesses.

With respect to our international expansion, this week, we launched property and facility management services in India and the APAC region. Since the beginning of last year, we have opened 9 international offices and hired over 100 revenue-generating professionals based outside the U.S. This includes expansions in France, Germany, the U.K., Singapore, India, South Korea as well as the UAE. Newmark's client-centric approach, expanding global reach and our commitment to remaining agile, accountable and adaptable is resulting in seeing and winning more global occupier assignments. We are becoming the brand of choice. This gives us increased confidence in our stated goal of producing more than $2 billion of recurring revenues annually by 2029.

With that, I'm happy to turn the call over to our CFO, Mike Rispoli.

Thank you, Barry, and good morning. I'm pleased to report that for the fifth consecutive quarter, Newmark produced double-digit revenue and earnings growth. Total revenues were $863.5 million, up 25.9% compared with $685.9 million. We increased management services, servicing and other by 12.6%, leading to the company's best ever quarter for these recurring businesses. This included 23.5% growth from valuation and advisory.

In addition, our high-margin servicing and asset management platform grew by over 12% when excluding the impact of lower interest rates on escrow earnings. Leasing revenues were up 13.7%, resulting in a record third quarter for this service line. This was led by strong activity in New York, Texas and Northern California, where we generated growth in office and industrial.

Capital Markets revenues increased by 59.7%, which reflected an approximately 129% improvement in our total debt volumes, nearly 2.5x faster than the industry. We increased our investment sales volumes by 67%, also significantly outpacing the industry.

Turning to expenses. Total expenses were up by 24.9%, which reflected a 32.9% increase in our commission-based revenues, higher pass-through costs as well as investments in growth. We are more confident than ever in meeting or exceeding our 2026 targets of generating record earnings of over $630 million in adjusted EBITDA and $1.75 per share of adjusted EPS.

With respect to taxes, the company's tax rate for adjusted earnings was 12.1% in the quarter and 13.2% year-to-date. The lower rate was primarily driven by higher tax deductible stock compensation. We have, therefore, adjusted our full year range to 13% to 15%.

Moving to earnings. We increased adjusted EPS by 27.3% to $0.42 compared with $0.33. Adjusted EBITDA was $145.2 million, up 28.9% versus $112.6 million. Our adjusted EBITDA margin on total revenues improved by 40 basis points to 16.8%. For the first 9 months of 2025, this margin improved by approximately 116 basis points to 15.2% compared with a year earlier.

With respect to share count, our fully diluted weighted average share count was down 1.3% to 251.7 million.

Turning to the balance sheet. We ended the quarter with $224.1 million of cash and cash equivalents and 1x net leverage. The balance sheet changes from year-end 2024 reflected cash generated by the business of $325.5 million and $75 million of incremental borrowing under Newmark's revolving credit facility. This was offset by $177.3 million of cash used mainly to hire revenue-generating professionals, $125.5 million of share repurchases and normal seasonal movements in working capital.

Newmark continues to generate significant cash flow. Our adjusted free cash flow for the trailing 12 months was up 134% to $291.9 million.

Moving to guidance. Our updated outlook for 2025 is as follows: we now expect total revenues of between $3.175 billion and $3.325 billion, an increase of 18.5% at the midpoint. We anticipate adjusted EPS between $1.53 and $1.63, up 24% to 33%. And we anticipate adjusted EBITDA in the range of $543 million to $579 million, an increase of 22% to 30%, and an EBITDA margin improvement of approximately 100 basis points at the midpoint of the range.

With that, I would now like to open the call for questions.

We'll take our first question from Alexander Goldfarb with Piper Sandler.

Barry, 2 questions. The first question is on data centers. It's been a topic we've discussed before with you guys and certainly just seems to show no slowdown in investor and capital enthusiasm. As your team looks at the amount of capital that's been committed versus the ability to actually build data centers over the next foreseeable future, do you think all the capital is -- can be put to work in the next, whatever, 5, 10 years? Or is there a lot more capital raised versus the physical ability to actually build data centers?

America is a big place. There is quite a bit of land and there's quite a bit of gas. And there's an effort long term to build nuclear, both micro and large-scale nuclear. We were just involved in a company going public, building a nuclear plant in Texas. We did a -- we were involved in a Series C and then they were taken public. And we'll see a lot more of that. I mean, on the exit, there'll be a lot of that in respect of some of these hyperscalers figuring a way to exit and raise more capital.

I mean, there is an endless amount of interest in data centers. I mean we produce about 3 gigs a year, I think, I believe that's a number. We've seen people and estimates as high as 100 to 200 gigawatts of power. So the country is going to require an enormous amount of infrastructure. So it's not just data centers, it's infrastructure, and infrastructure, meaning nuclear plants and power plants and pipelines and data centers and quantum computing and a host of other things that surround it and support it on the industrial side of the business. So generally, I mean, if you look at the GDP, the GDP was primarily the investment in this kind of infrastructure. So -- and I think it has a lot of traction. And again, as I said before probably 3 quarters ago, if you believe in AI, you believe in the future. And so there is runway.

But do you think it's -- I mean -- but the point is it sounds like there's -- we all know there's a lot out there of potential needs, but it just sounds like physically building the infrastructure, laying the utilities, building the power plants like all this stuff, it sounds like the capital has gotten ahead of itself. Do you think that's the case? Or do you think that the capital raise can commensurately basically go into production in pretty quickly?

Well, there is a lot of production going on, but there will be a lot more -- I mean, the capital comes first. We're on the capital side. So that's good for us. Raising the capital to build is good for us. I mean just look at the numbers. And the prediction is that there's going to be a lot more capital required. I mean, on the end, when it's built, we'll be there with financing and going public and doing all those kind of things. So we're following the continuum. We will be a beneficiary of the future, but we're also right there in the beginning.

Okay. And then the second question is, years ago, when you were investing in hiring a lot of different producers and expanding into new areas, acquiring smaller shops, there was a lot of drag initially from those hires. You spent the money to onboard them. It took a while for them to deliver. Recently, that seems to be a thing of the past, and you guys have been expanding into Europe. You mentioned the expansion in India, et cetera. Is all of that drag that we experienced years ago when you were onboarding producers, is that just a thing of the past? Or has the company gotten big enough? Or is it where the stock price is today? Just trying to understand because it's a pretty sharp contrast, now as you grow and expand, it doesn't seem to have a slowdown to earnings, whereas years ago, it did.

Alex, it's Mike. I'll take that one. Of course, it still has a drag on earnings. We're going to grow nicely this year and expand our EBITDA margins by 100 basis points. Have we not been investing for the future, that could have been double EBITDA expansion. What I would say is the investments we're making today, which are very purposeful, and you can see we've accelerated as we move throughout this year are going to result in 10% earnings improvement next year. And so that is our model. We're very intentional about it. And we can grow margin while expanding the business and continuing to invest, and we'll continue to do that.

I mean, we're going to continue to grow the company, Alex. And there are -- there's still running room, there's still white space, and we are still putting all the pieces together to be a complete -- to build a complete foundation. We are now winning more and seeing more, like I just said. What does that mean? That means we're going to -- we're just going to have more market share on the things that we have now put all the pieces together in whatever spectrum of activities that are required in that vertical. And once we're there, we pitch the business, we'll have a higher ratio of win rates, and our volume will go up without any capital requirements. And that you could see in some of our businesses, it's more apparent because we've already built it, it's happening. We're winning market share. So there's other verticals that we're working on, not to mention all of the recurring revenue businesses that are around the hoop and supporting all of the other businesses that we've created.

We'll take our next question from Jade Rahmani with KBW.

The 2026 targets that Mike reiterated, when were those conceived?

We've had those targets out there for a while, as you know. Certainly, we'll get through the fourth quarter, and we'll give formal guidance for 2026 probably on our next earnings call. But we feel very confident and that's still double-digit growth from the midpoint of our guidance range this year. So we'll certainly reevaluate that next quarter.

Jade, it was a couple of years ago. And we've been -- you just look back at the earnings calls, we've predicted that for a while.

Yes. Well, what I'm trying to imply or suggest is that since they were created prior to the very robust growth that Newmark has demonstrated across its businesses, particularly capital markets, plus the data center fundraising wave in which Newmark is taking part, the outlook 2026, as previously mentioned, seems quite conservative. Growth coming out of SRI recoveries tends to be a lot stronger than that and the recovery thus far, macro risks notwithstanding, seems to be gaining momentum. So do you believe that those targets are conservative? And are you also seeing anything in the macro economy that would cause you to be erring on this side of caution?

I would say it's always good to be a little cautious. Certainly, those are conservative targets. And we'll give you an update next quarter once we get through the full year.

We'll take our next question from Julien Blouin with Goldman Sachs.

Congrats on the strong quarter. Barry, I wanted to ask about New York City. I mean, third quarter CRE transactions and leasing in the city looked really strong, but we continue to hear signs from -- signs that institutional investors, especially abroad, are maybe beginning to worry about political risk in the city related to the mayor race. I guess, are you seeing any sign of impact or any cautiousness from buyers in the city?

Not really. I mean there's a lot of noise around the mayor. But as I said probably 2 calls ago, the mayor has limited power. The governor's race -- the governor really is the firewall for the city. That's really -- and the federal government on what the federal -- how the federal government is going to treat New York, but that's New York State as well as New York. So I don't really -- I believe it's just a lot of noise. New York is -- the law firms are doing great. The financial institutions are all expanding. All of our clients are expanding. So I don't really see it.

Got it. That's helpful. And then, Mike, can you help us understand maybe the cadence of capital markets across the quarter? Was September particularly strong given rates coming down? And did you see sort of a follow-through of that activity into October? And then maybe how do pipelines compare to this time last year?

I wouldn't say there was any particular -- anything within months that would stand out to me. It was a strong quarter across the board for us. The pipelines remain really strong into the fourth quarter. You could see that in our guidance. And we feel pretty good. We don't see anything in the market that is slowing transaction activity down at the moment.

[Operator Instructions] We'll go next to Mitchell Germain with Citizens Bank.

Congrats on the quarter. Just maybe on the RealFoundations transaction, Barry, just maybe talk about kind of your view of the fit and potential to expand or cross-sell that platform.

So we've been -- we look at ourselves as a pure play for the most part. We are designing a business to be able to be a partner with institutional investors to help them execute on their strategy. And that means all things for them to help them leverage companies like us to be able to do more. And what RealFoundations is, is both a consulting firm and a technology adviser. They implement and integrate, for example, MRI and Yardi, which are the 2 biggest technology platforms for investors and how they manage. They can go in and advise a company on which tech, how to integrate it and how to get the maximum out of it.

Now that's a piece of all the other things that we've done, real estate property accounting, staffing, due diligence, cost monitoring. So all those pieces fit neatly together and bridge the gaps between a holistic solution as becoming the go-to firm when a fund is thinking about how they want to operate and some would prefer to operate with everything in-house and some prefer to operate with some of this outsourced. We hire great people. We've bought great companies. Our strategy is about centers of excellence and people who are excellent.

And if we continue to hire the kind of talent that our clients rely on, we think we'll be the go-to brand for that kind of business. And we think that has enormous traction. We launched fund administration as well. And without RealFoundations, it would have been much harder for us to deliver on fund administration. So we put the pieces together very carefully, we thought about it, and we think we now have an incredible array of services to provide a very comprehensive solution.

Great. That's super helpful. And Mitch... Yes, go ahead, Mike.

No, this is Lou Alvarado. The other value that we saw in RealFoundations is to augment our growth in occupier solutions, right? So they were primarily investor focused, but we saw a lot of the skills that they have and the talent that they bring really blends well with our occupier platform as well. As we have significantly grown that and continue to focus on growing that, we think RealFoundations will be an excellent match for us. And that was part of the reason why RealFoundations also picked us to be a partner with them in their growth as well as ours.

Great. Barry, obviously, you've been making a lot of hires outside the U.S., opening new offices. I'm curious about your views about organically growing services platform, facilities management and other services versus more traditional brokerage and kind of how you view that organic growth and the time line to augment those capabilities on a global scale?

Well, we -- it's accelerating. We're putting all the pieces together the same way we're doing -- we did on the investor side. We're doing it the same way on the facility management and the occupier solutions side. Lou is absolutely right. I mean, when we have clients on the occupier side who use the same technology, and to be able to help them implement a technology strategy to manage their real estate better will give us a leg up on the competition.

We need to be in the geographies. We need to be in all the verticals, and we need to be out there. I think that our reception in Europe has been incredible. The same, the talented people want to be with us and they're joining the firm because of how we approach the business. As I said, agile, accountable, nimble. We provide customized solutions. It's easier for us to provide customized solutions for clients and not just a black box. We're not overly [ prevalent ] in certain areas. So it gives us the ability to be adaptable for our clients. So all the things are coming together. And as we continue to put in, hit a geography and have that geography, when we -- we're invited to many more parties.

We'll take a follow-up question from Jade Rahmani with KBW.

I just wanted to ask if there's anything in the fourth quarter '24 comp period that you want to call out. For example, leasing commissions were up 15.1%. So that's a tougher comp than what you dealt with this quarter. Capital markets, of course, was very strong last year. But given the strength this quarter, it seems achievable to exceed that. And then anything on the expense side, just so we're aware.

Sure. I think generally, Q4 is going to be a tougher comp for us. We were up 17% last year in '24 in the fourth quarter. But that's all been thought through and reflected in the guidance that we provided, both in terms of top line and bottom line. The pipeline continues to remain strong. And really, it just comes down to when do transactions close. And as you know, there's always some that are going to push out, some that are going to pull in. And we've thought through that as we gave you the guidance range that we put out today.

We'll take a follow-up question from Julien Blouin with Goldman Sachs.

Just a quick follow-up, Barry, following on from Alex's question on data centers. Your data center capital markets volumes have been really impressive this year, particularly on the financing side. Can you just maybe talk through the team you've built there, how you've been able to build such a dominant early foothold in the space? And then how should we think about the growth in data center financing volumes and investment sales going forward?

What's interesting, a couple of years ago, we brought in experts in our valuation group that did risk assessment and stress testing for banks. The idea is to be early and early as often as you can. We saw signs of the data center business. We acted quickly. That goes into the definition of nimble. We hired people quickly, and we got in front of it. And we have incredibly good people that can adapt as well. So we've put together an incredible team of people, and we're still building it actually. We're building more on the leasing side of it and the -- because there's still -- you're still going to have cloud computing, you're going to still have some of the old colocation facilities that are going to change out their racking systems to have better cooling and more capability for the new AI chips that provide much more heat and much higher level of computing.

So there's a whole business of adapting some of the old colocation facilities to the new environment, and we'll be involved in that kind of stuff. So we're still -- we still continue to hire good people. It's just all about talent. I mean, it's everything. In all of our verticals, it's about getting the right people in the right place and not overcrowding.

We'll take a follow-up question from Alexander Goldfarb with Piper Sandler.

And Barry, just want to continue that. A while back, if my recollection is right, when you and I discussed this, there was the comparison to life science and how you didn't want to overcommit from an investment to data centers, just given that real estate tends to follow boom-bust cycles. It doesn't mean it's out, it just means, hey, there's a big boom and then there's a cooling and then it grows from there. Obviously, life science went crazy during COVID and now it's dealing with the consequences. So from a staffing level, are you now feeling more bullish that this has longer legs to hire more? Or you're still of that restraint mentality, which is, hey, we don't want to get too far over our skis on this. It's a great sector, but every sector that has huge growth eventually has a cooling period, and we just want to maintain staffing appropriately?

We're always -- we always view doing more with less. That's just our operating model. If you have great people, you can flex up and down. When you get overly committed on anything, it's hard to go the other way. So we think we're appropriately staffed to scale now. We think there are parts of it that we could expand in the geographies more on the -- probably more on the leasing side of the data center business, but money is fungible. It travels everywhere. We can do it with our team and flexing our team the way it is. Our strategy is more with less, not more.

With no additional questions in queue at this time, I'd like to turn the call back over to Barry Gosin for any additional or closing remarks.

Once again, I'd like to thank everybody for joining, and I look forward to updating you next quarter.

That will conclude today's call. We appreciate your participation.