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NEWMARK GROUP, INC. (NMRK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong organic top-line growth: total revenues $888.3M (+18.8% YoY), Adjusted EPS $0.55 (+19.6% YoY), and Adjusted EBITDA $182.9M (+10.1% YoY; +19.2% excluding a prior-year legal settlement), driven by double-digit gains across Management & Servicing (+21.1%), Capital Markets (+20.0%), and Leasing (+15.1%) .
  • Management reiterated momentum into 2025 with FY 2025 guidance: revenues $2.9–$3.1B (+5–13% YoY), Adjusted EPS $1.40–$1.50 (+14–22%), Adjusted EBITDA $495–$545M (+11–22%), and tax rate 14–16%; targeting at least $630M AEBITDA in 2026 .
  • Capital markets materially outpaced industry as Newmark expanded share: ex-Signature volumes +113% YoY with >200% growth in industrial/hospitality and 85% in GSE/FHA originations; investment sales volumes +71% vs U.S. +32%/Europe +11% .
  • Catalysts: robust data center activity tied to AI demand (record $9.2B industrial volumes) and pipeline strength across segments; continued share repurchases ($224.9M in 2024) and net leverage at 1.1x provide capacity to invest and return capital .

What Went Well and What Went Wrong

What Went Well

  • Broad-based growth: Management & Servicing +21.1%, Capital Markets +20.0%, Leasing +15.1%; 100% of revenue growth was organic .
  • AI/data center tailwind: “all-time quarterly best of $9.2 billion in industrial volumes,” fueled by hyperscale AI users; CEO: “Our capital markets platform materially outpaced the industry… we expect further momentum throughout the year” .
  • Margin trajectory: Adjusted EBITDA up 10.1% YoY in Q4 (and +19.2% excluding prior-year legal settlement), with FY 2024 margin up ~55 bps; management guides at least 110 bps expansion in FY 2025 and another 110 bps in 2026 .

What Went Wrong

  • Higher non-comp expense growth: GAAP non-comp expenses +24.9% YoY; excluding pass-through and warehouse interest, Q4 non-comp was still +14.5% GAAP and +8.2% Adjusted .
  • Equity-based comp elevated: equity-based comp and allocations +8.7% YoY in Q4 (and +32.7% FY) alongside the stock price rise, modestly dilutive to margins even if tax-deductible .
  • Estimates comparison not available: S&P Global consensus data could not be retrieved at time of request; cannot formally score beat/miss vs Street for Q4 2024 (see Estimates Context).

Financial Results

Revenue, EPS, and Profitability vs prior quarters and prior year

MetricQ2 2024Q3 2024Q4 2024YoY (Q4)
Total Revenues ($M)$633.4 $685.9 $888.3 +18.8%
GAAP EPS (Fully Diluted)$0.08 $0.10 $0.26 +23.8%
Adjusted EPS$0.22 $0.33 $0.55 +19.6%
Adjusted EBITDA ($M)$86.3 $112.6 $182.9 +10.1%
Adjusted EBITDA Margin (%)13.6% (calc)16.4% (calc)20.6% (calc)+~55 bps FY noted

Note: margins are calculated from reported AEBITDA and revenues; FY margin expansion commentary per management .

Segment Revenue Breakdown

Segment ($M)Q2 2024Q3 2024Q4 2024YoY (Q4)
Management Services, Servicing, and Other$262.8 $282.6 $319.9 +21.1%
Leasing and Other Commissions$208.6 $214.6 $275.7 +15.1%
Capital Markets$162.0 $188.7 $292.7 +20.0%
Total Revenues$633.4 $685.9 $888.3 +18.8%

KPIs and Balance Sheet

KPIQ2 2024Q3 2024Q4 2024
Cash & Equivalents ($M)$176.4 $178.6 $197.7
Total Corporate Debt ($M)$745.2 $770.4 $670.7
Net Leverage (x)1.4x 1.4x 1.1x
Share Repurchases (QTD $M)$55.5 $100.8 $31.4
Dividend per Share$0.03 $0.03 $0.03 (declared for Mar 17, 2025)
Industrial Volumes (Leasing + CM, $B, QTD)——$9.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($B)FY 2025N/A$2.9–$3.1 New vs FY 2024 actual $2.754B (+5–13%)
Adjusted EPSFY 2025N/A$1.40–$1.50 New vs FY 2024 $1.23 (+14–22%)
Adjusted EBITDA ($M)FY 2025N/A$495–$545 New vs FY 2024 $445.3 (+11–22%)
Adjusted Earnings Tax RateFY 2025N/A14–16% Set within prior range
DividendQ1 2025N/A$0.03 declared; payable Mar 17, 2025 Maintained vs recent quarters

Management also reiterated targets: at least $630M Adjusted EBITDA in 2026 and ~+110 bps margin expansion in 2025 and again in 2026 .

Earnings Call Themes & Trends

TopicQ2 2024 (Previous-2)Q3 2024 (Previous-1)Q4 2024 (Current)Trend
AI/Data CentersIntroduced strong CM share gains; industry headwinds; added talent; noted industry volume shifts Announced AI/HPC data center JVs ($3.4B TX JV; up to $5B national JV) Record $9.2B industrial volumes; “close to $17B in data centers last year”; expect more; solving power/land/financing Accelerating
Capital Markets RecoveryCM rev +14.5%; mortgage brokerage +46% (fees); industry volumes down CM rev +18.5%; mortgage brokerage +76.8%; GSE down; share gains CM rev +20%; ex-Signature volumes +113%; strength across property types Strengthening, outpacing industry
Leasing/Office DemandLeasing +2.4% YoY; office +~16% Leasing +5.6% YoY; retail/industrial led Leasing +15.1% YoY; strong double-digit office growth; return-to-office narrative Improving
Recurring/Management Services+9.2% YoY; 4th straight strong quarter +11.4% YoY; 5th straight strong quarter +21.1% YoY; 6th straight strong quarter; >$1.1B FY revenue; targeting $2B in 5 years Robust, compounding
International ExpansionUK/EUR acquisitions support service breadth Germany launch; Paris/UK talent; UK rev +50% YoY in Q4 (commentary from CFO on call) UK brand alignment (Gerald Eve/BH2 now Newmark); continued EU build-out Expanding
Macro/PolicyStable rate environment; industry headwinds noted Improved macro/monetary environment aiding pipeline Expect stabilization of rates; ~$2.1T near-term CRE maturities; narrowing bid-ask; bank CRE overweight migrating to private capital Supportive for volumes
Regulatory/LegalNotable settlement items in non-GAAP adjustments Updated FY24 guidance; legal settlement excluded from EPS Settlement funded by insurance excluded from non-GAAP; note potential minor FY24 EPS adjustment ($0.01–$0.02) Neutral to non-GAAP

Management Commentary

  • CEO: “Newmark's growth continued to accelerate as we generated solid double-digit top line improvement across every major business line… Our Capital Markets platform materially outpaced the industry… We remain confident in our target of at least $630 million of Adjusted EBITDA in 2026.” .
  • CFO: “We increased adjusted EPS by 19.6% to $0.55. Adjusted EBITDA was $182.9 million, up 10.1%… At the midpoint of our 2025 guidance, we expect 16.5% adjusted EBITDA growth on a 9.1% increase in total revenues, representing at least 110 basis points of margin expansion.” .
  • CEO on data centers: “We did… close to $17 billion in data centers last year and we expect to do more… the advent of artificial intelligence makes the future look incredibly bright for that particular industry.” .

Q&A Highlights

  • G&A and D&O impact: Guidance reflects Howard Lutnick’s transition and investments in AI-driven efficiencies; potential D&O premium changes contemplated in guidance .
  • Data center sustainability: Management views AI/advanced manufacturing as secular; Newmark positioned to address power, land, financing, and hyperscaler needs—“more than euphoria” .
  • Growth investment cadence: ~$200M+ in employee/partner loans in 2024; expect at least similar investment pace in 2025 via loans or acquisitions based on returns .
  • FHFA/GSE outlook: No near-term expectation of structural change impacting multifamily activity; historical spreads would adjust modestly if changes occur .
  • Bank CRE portfolio sales: Expect gradual (“slow and steady”) loan sales as banks manage capital under Basel; migration of CRE debt financing toward private capital and insurance .
  • Segment assumptions for 2025: Capital Markets to grow faster than the ~9% revenue midpoint; Leasing slower; Management & Servicing roughly in line .
  • International margins: Expect international profit margins to be equal or better than U.S. over time as ramp continues (UK up 50% YoY in Q4) .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS, revenue, and EBITDA was unavailable at time of request due to a data access limit; therefore, formal beat/miss versus Street cannot be assessed from SPGI in this recap.
  • Implication: Sell-side models likely need to reflect stronger-than-expected organic growth across segments, margin expansion trajectory into 2025, and outsized share gains in Capital Markets, especially in data center/industrial and mortgage brokerage .

Key Takeaways for Investors

  • The quarter demonstrated operating leverage on organic growth with a clear path to multi-year margin expansion; FY 2025 guidance implies further EBITDA and EPS acceleration with at least 110 bps margin expansion .
  • Capital markets share gains appear durable, particularly in industrial/data centers tied to AI infrastructure demand; pipeline strength and industry tailwinds (rate stabilization, bid-ask narrowing, maturities) support double-digit CM growth .
  • Recurring businesses (Management & Servicing) continue compounding with >$1.1B FY revenue, underpinning cash generation and downside resilience .
  • Balance sheet and capital returns are supportive: net leverage at 1.1x, $197.7M cash, continued $0.03 quarterly dividend, and active buybacks ($224.9M in FY 2024) .
  • Near-term trading: stock narrative likely anchored on AI/data center exposure and visible margin trajectory; watch for updates on large mandates and continued international scaling .
  • Medium-term thesis: execution on guidance and 2026 targets (≥$630M AEBITDA) plus secular outsourcing/servicing growth and private capital displacement of bank CRE lending may drive continued multi-year EPS growth .
  • Risks: elevated non-comp expense run-rate, equity-based comp sensitivity to share price, macro/rate volatility, and regulatory changes in GSE/FHA or bank capital rules; management views impacts as manageable within guidance .

Appendix: Additional Supporting Data

  • Taxes and NCI: Q4 GAAP tax provision $31.4M; Adjusted Earnings tax provision $22.3M (13.9%); NCI $18.6M GAAP .
  • Share count: Q4 fully diluted GAAP 253.1M; Adjusted 253.1M; repurchased 2.1M shares/units ($31.4M) in Q4; $371.9M remaining authorization at YE 2024 .
  • Cash Flow: Q4 net cash from ops excluding loan originations/sales $169.4M ($171.5M excl. employee loans); FY 2024 $225.8M ($437.6M excl. employee loans) .
  • FY 2024 consolidated results: Revenues $2,754.1M (+11.5%), Adjusted EPS $1.23 (+17.1%), Adjusted EBITDA $445.3M (+11.8%) .