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CBRE GROUP, INC. (CBRE) Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was solid on profitability and broad-based growth: Core EPS rose to $0.86 (+10% YoY) and Core EBITDA to $540M (+27% YoY), with net revenue up 15% to $5.11B and total revenue up 12% to $8.91B . Versus consensus, Core EPS of $0.86 beat $0.76*, while revenue of $8.91B was slightly below $8.96B* (EPS beat; revenue slight miss)*. “Most of our businesses were performing better than expected… pipelines were strong,” CEO Sulentic noted .
  • Resilient businesses continued to anchor results (net revenue +14% to $3.70B), while Transactional businesses grew faster (+16% revenue to ~$1.4B); BOE margin expanded 100 bps (local currency) aided by 2024 cost actions .
  • Guidance maintained: management kept FY 2025 Core EPS guidance at $5.80–$6.10 despite tariff-driven uncertainty; absent large-scale M&A or recession, they still expect to end 2025 under 1x net leverage .
  • Potential stock reaction catalysts: strong office leasing momentum (U.S. office leasing +38%) and accelerating capital markets/mortgage origination (+52%), offset by tariff uncertainty and REI development losses in Q1; FX headwinds in Q1 (2–3%) could flip to tailwinds in Q2 per CFO .

Note: Values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Leasing strength above expectations: Global leasing revenue +18% (+19% LC), led by U.S. (+24%) with office +38%—“United States set the pace…” .
  • Mortgage origination acceleration: revenue +52% (+53% LC) as banks and insurers drove refinancing and acquisition financing; April rate-locks increased when the 10-year dipped below 4% .
  • BOE margin expansion and cost discipline: net revenue +20% (+22% LC), SOP on net revenue margin up ~100 bps in LC due to 2024 cost efforts; property management net revenue +36% aided by Industrious acquisition .
  • Management quote: “CBRE had a strong start to 2025… better than expected… pipelines were strong” – CEO Sulentic .
  • Recession resilience improved: resilient SOP now ~60% of total; declines in a GFC-like recession would be “materially lower… less than half” of prior 85% peak-to-trough, per CFO .

What Went Wrong

  • Tariff-driven uncertainty: “outlook has become less clear” with some corporates slowing big programs; pipelines “strong, just somewhat less” .
  • REI development loss: global development operating loss of $25M vs $4M last year; segment SOP down to $25M (-26.5% YoY) .
  • Free cash outflow in Q1: FCF of -$610M (seasonal working capital/compensation), though TTM FCF ~$1.48B and 93% conversion .
  • FX headwinds: consolidated results included ~2–3% currency headwind in Q1 .
  • Core corporate operating loss increased by ~$12M .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$9.036 $10.404 $8.910
Net Revenue ($USD Billions)$5.318 $6.134 $5.112
GAAP Net Income ($USD Millions)$225 $487 $163
GAAP EPS ($)$0.73 $1.58 $0.54
Core EPS ($)$1.20 $2.32 $0.86
Core EBITDA ($USD Millions)$688 $1,086 $540

Actuals vs Wall Street Consensus (S&P Global)

MetricQ3 2024Q4 2024Q1 2025
EPS Actual ($)$1.20 $2.32 $0.86
EPS Consensus ($)$1.06*$2.23*$0.76*
Revenue Actual ($USD Billions)$9.036 $10.404 $8.910
Revenue Consensus ($USD Billions)$8.800*$10.285*$8.965*

Note: Values retrieved from S&P Global.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentMetricQ1 2024Q1 2025
Advisory ServicesRevenue ($MM)$1,494 $1,694
Net Revenue ($MM)$1,480 $1,682
Segment Operating Profit ($MM)$232 $301
SOP on Net Revenue Margin (%)15.7% 17.9%
Building Operations & ExperienceRevenue ($MM)$4,700 $5,355
Net Revenue ($MM)$2,017 $2,427
Segment Operating Profit ($MM)$161 $217
SOP on Net Revenue Margin (%)8.0% 8.9%
Project ManagementRevenue ($MM)$1,519 $1,632
Net Revenue ($MM)$725 $774
Segment Operating Profit ($MM)$101 $113
SOP on Net Revenue Margin (%)13.9% 14.6%
Real Estate InvestmentsRevenue ($MM)$228 $233
Segment Operating Profit ($MM)$34 $25

KPIs and Balance Sheet Trajectory

KPIQ3 2024Q4 2024Q1 2025
AUM ($USD Billions)$148.3 $146.2 $149.1
Loan Servicing Portfolio ($USD Billions)>$435 ~$433 $440
Net Leverage (x)1.26x 0.93x 1.45x
Liquidity ($USD Billions)~$4.0 ~$4.4 ~$3.5
TTM Core EBITDA ($USD Billions)$2.354 $2.704 $2.819
Shares Repurchased (period context)$62M in Q3 $806M since Q3 YE $585M since YE 2024

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core EPSFY 2025$5.80–$6.10 (Feb Q4 call/PR) $5.80–$6.10 (maintained) Maintained
Net LeverageYE 2025Under 1.0x absent large M&A/recession Under 1.0x absent large M&A/recession Maintained
FX ImpactQ2 2025Headwind in Q1 (2–3%) Likely tailwind in Q2 if forwards hold (volatile) Improving (conditional)

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Tariffs/Macro UncertaintyNot a focus in Q3 materials Not emphasized in Q4 PR Became a key uncertainty dampening pipelines modestly Emerging headwind
Office Leasing MomentumGlobal office leasing hit a Q3 high; U.S. +26% U.S. office +28% in Q4 U.S. office +38% in Q1; scarcity in gateway markets Strengthening
Capital Markets RecoveryProperty sales growth resumed (+14% YoY) Accelerated in Q4 (+35% global) Strong in Q1; pipelines solid; activity ok if 10Y <5% Improving with rate stability
Mortgage Origination+52% in Q3 (same LC) +37% in Q4 (same LC) +52% in Q1; rate locks accelerated sub-4% 10Y Strong/accelerating
Data Centers/TechGWS/PM strength; Turner & Townsend busy; resiliency Strong sector contributions in GWS BOE/PM benefited from hyperscale clients; DirectLine outperforming Sustained demand
FXNot highlighted Limited reference 2–3% headwind in Q1; potential tailwind Q2 Improving (conditional)
Cost Discipline/MarginsSOP margins up across segments BOE margins expanded BOE net margin +100 bps LC; PM margin trending to mid/high-teens LT Positive leverage
REI/DevelopmentLoss narrowed in Q3 (no monetizations) Monetizations strong in Q4 (data center sites) Development loss in Q1; AUM up to $149.1B Mixed; AUM up

Management Commentary

  • Strategic positioning: “This was equally true for both our Resilient and Transactional businesses… strategic positioning and resource set have created for sustained, resilient growth” – CEO Sulentic .
  • Segment reconfiguration benefits: “Project Management and Building Operations & Experience… generated strong financial results… evidenc[ing] operational and strategic gains” – CEO Sulentic .
  • Guidance stance and leverage: “Maintaining our 2025 core EPS guidance… absent large-scale M&A or the onset of a recession, we continue to expect to end the year with under 1 turn of net leverage” – CFO Giamartino .
  • Office leasing dynamics: “Scarcity… in gateway markets… office space… in big demand” – CEO Sulentic .
  • Project Management margin trajectory: “Long-term margin… should trend towards mid- to high-teens” – CFO Giamartino .

Q&A Highlights

  • Pipeline/uncertainty: Tariffs created “choppiness”; pipelines remained strong but “somewhat less”; corporates slowed big programs; office leasing demand relatively unaffected due to scarcity .
  • Capital markets sensitivity to rates: Activity continues if 10-year remains below ~5% and rates are stable; loan origination bolstered by refinancing demand .
  • Recession resilience: With ~60% resilient SOP, declines in a GFC-type recession would be “materially lower… less than half” of prior cycle .
  • Industrial leasing outlook: Q1 outperformance expected to normalize to flattish YoY; 3PLs absorbing demand amid uncertainty .
  • Cost levers: Variable comp, discretionary spend, hiring/recruiting flexibility; no change to hiring plans yet .
  • Data centers: Services demand strong (DirectLine outperforming; T&T near capacity); development risk mitigants via GMP contracts/contingencies; rental increases could offset potential tariff-driven cost inflation .

Estimates Context

  • Q1 2025 vs consensus: Core EPS $0.86 beat $0.76*; revenue $8.91B slightly below $8.96B*. Q4 and Q3 also showed EPS beats and revenue outperformance versus consensus*.
  • Estimate inputs (# of estimates): Q1 2025 EPS (10), revenue (6), which may tighten after stronger transactional activity but tempered by tariff uncertainty.
  • Implication: Street may raise FY Core EPS probabilities toward high end of $5.80–$6.10 if rate stability persists and office/capital markets momentum continues, but tariff outlook remains a gating factor per management .

Note: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Profitability momentum with operating leverage: Q1 Core EPS $0.86 and Core EBITDA $540M on 15% net revenue growth; BOE and Advisory margins improved .
  • Transactional recovery broadening: Leasing (U.S. office +38%), property sales (+11% global), mortgage origination (+52%) indicate healthier capital flows if the 10-year stays <5% and stable .
  • Guidance intact; leverage discipline: FY 2025 Core EPS maintained at $5.80–$6.10; under-1x net leverage target reiterated absent large M&A/recession .
  • Resilience mix de-risks downturns: ~60% resilient SOP and cost variability enhance defensiveness; management expects materially smaller drawdown vs GFC .
  • FX pivot and cost actions: Q1 FX headwind (2–3%) may reverse to Q2 tailwind; 2024 cost actions drove BOE margin gains; further PM synergies expected .
  • Capital allocation: ~$585M buybacks since YE 2024; active M&A/REI pipeline; liquidity ~$3.5B supports optionality .
  • Watch tariff developments: Management flagged choppiness and paused corporates; office scarcity theme offsets near-term macro uncertainty .

Appendix: Additional Data Points

  • Free Cash Flow: Q1 FCF -$610M; TTM FCF ~$1.48B with 93% conversion (above 75–85% target) .
  • Liquidity/Leverage: Liquidity ~$3.5B; net leverage 1.45x vs 4.25x covenant .
  • Segment change: New segments BOE and PM established in Jan 2025; Industrious acquisition closed mid-January .
  • REI AUM: $149.1B (+$2.9B vs YE 2024) on net inflows, asset values, FX .
  • ENGIE partnership: CBRE IM partnered on 2.4GW battery storage portfolio, aligned with “macro digitalization and decarbonization tailwinds” .

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