• Revenue: $665.5 million, up 21.8% from $546.5 million.
• Adjusted EPS: Increased by 40% to $0.21 from $0.15.
• Adjusted EBITDA: $89.2 million, up 40.5% from $63.5 million.
• Adjusted EBITDA Margin: Improved by approximately 180 basis points to 13.4%.
• Leasing Revenues: Increased by 31%.
• Capital Markets Revenues: Grew by 32.7%.
• Management and Servicing Revenues: Increased by 10.5%.
• Compensation Expenses: Increased by 21.8%.
• Tax Rate for Adjusted Earnings: 14.3%.
• Cash and Cash Equivalents: $157.1 million.
• Net Leverage: 1.3 times.
• Share Repurchase Program: $371.9 million remaining.

• Warning! GuruFocus has detected 4 Warning Signs with NMRK.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Newmark Group Inc (NASDAQ:NMRK) reported a 22% increase in revenues and approximately 40% growth in earnings metrics for the first quarter of 2025.
• Capital markets grew by 33%, with Newmark outpacing the industry in investment sales and origination.
• Leasing fees increased by 31%, driven by strong activity in major cities like New York City, Boston, and San Francisco.
• Management and servicing revenues rose by over 10%, reflecting strong valuation and advisory growth.
• The company maintains a strong balance sheet and cash flow generation, positioning it well for future growth and market share gains.

Negative Points

• Compensation expenses increased by 21.8%, reflecting higher commission-based revenues and growth initiatives.
• Non-compensation expenses rose due to higher pass-through costs and other revenue-related items.
• The macroeconomic environment remains uncertain, with potential impacts from tariffs and interest rate volatility.
• The CMBS market has slowed down, with banks stepping in to bridge the gap.
• Despite strong performance, the company maintained its guidance due to broader macroeconomic uncertainties.

Q & A Highlights

Q: How is Newmark Group interpreting the macroeconomic uncertainty in relation to its business activities, particularly in leasing and transactions? A: Barry Gosin, CEO, stated that despite macroeconomic uncertainties, deals and leases are continuing to go through without significant changes in decision-making. The CMBS market has slowed, but banks are bridging the gap. It's too early to predict long-term impacts, but the first 100 days have been active, and they will monitor the next 90 days closely.

Q: Are there any changes in the transaction market, such as pulling buildings from the market due to capital market conditions? A: Barry Gosin noted that while interest rates could influence market behavior, they haven't seen a significant slowdown in putting properties on the market. The uncertainty is concerning, but transactions are still occurring.

Q: What is Newmark Group's stance on stock buybacks given the current economic climate? A: Michael Rispoli, CFO, expressed confidence in engaging in stock buybacks, citing a clean balance sheet and low net leverage. Although no shares were repurchased in the first quarter, they plan to pivot towards buybacks in the second quarter.

Q: What differentiates Newmark's management services, and what is driving growth in this area? A: Barry Gosin highlighted Newmark's managed service program, fund administration, and property accounting as differentiators. These services align with their strategy, elevate their brand, and provide value-added, sticky business. Their investment advisory sales and loan origination business have significantly increased market share, supporting growth in management services.

Q: Why did Newmark maintain its guidance despite a strong first quarter? A: Michael Rispoli explained that while they had a strong start and pipelines are up 10% year-over-year, the decision to maintain guidance is due to macroeconomic uncertainties. They have good visibility into the first half of the year and expect low single-digit growth in transaction business for the second half to meet guidance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.