Jones Lang LaSalle, Inc. 2026 Q3 Earnings Call

Welcome to the third quarter 2026 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release along with a slide presentation and Excel file intended to supplement our prepared remarks. These materials are available on the Investor Relations section of our website. Please visit ir.jll.com. During the call, as well as in our slide presentation and supplemental Excel file, we reference our non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release and slide presentation. We also reference resilient and advisory revenues, which we define in the footnotes of our earnings release. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website.

Any statements made about future results and performance, plans, expectations, and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in our annual report on Form 10-K and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. Finally, a reminder that percentage variances are against the prior year period in local currency, unless otherwise noted. I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Thank you, Sean. This morning, we reported a record third quarter at both the top and bottom line. Revenue increased 12%. Advisory growth accelerated to 22%, even against tougher comparisons, and our resilient businesses delivered continued growth in line with expectations. Adjusted EBITDA increased 33%, with margins expanding faster and notably higher than a year ago. Adjusted EPS accelerated even more, up 52%, a very strong result reflecting our track record of converting growth into profit for shareholders. Last quarter, I told you I was pleased with how Accelerate 2030 was taking hold across JLL. Even at this early stage, our momentum and progress are very encouraging. Our teams are aligned behind our strategy and we are evolving how we serve our clients, how we operate as one firm, and how we lead our industry.

That includes strengthening our leadership team, organization, and operations, evolving the foundation to achieve our long-term strategic and financial objectives. We have a clear and focused strategy with each of our six Accelerate 2030 imperatives positioned to extend our leadership across our core businesses. Today, I will update you on two of the six imperatives of Accelerate 2030. Deepen client relationships and unlock platform excellence. Let me start with deepen client relationships. Clients are consolidating around fewer, more strategic partners, and that favors an integrated firm like JLL. The objective of this imperative is to position JLL as the integrated partner that the world's leading occupiers and investors turn to across the full real estate lifecycle. That requires a programmatic One JLL approach across our global teams to service enterprise clients seamlessly.

We use our proprietary data to identify where we can deliver more value for each client and then focus our growth efforts on the right opportunities. The foundation is strong. Over the last 3 years, we have retained 99% of our top 100 clients, and working across business lines as One JLL is part of our culture. It gives us significant upside, more clients to win, and existing enterprise relationships to expand. We have established a team of country CEOs across our most important markets to deliver a seamless One JLL experience for clients wherever they engage with us. In each major market, the country CEO is our most senior leader on the ground. They coordinate across business lines and drive cross-selling so clients experience our global reach combined with local expertise. Earlier this month, we appointed Mark Gibson as our country CEO for the U.S., our largest market.

Mark has led Capital Markets Americas for 7 years, and before that, led HFF until we acquired it in 2019. He joins a very strong team of country leaders working together to capture the client opportunity. Platform excellence is the operational engine behind Accelerate 2030. For the last decade, we have built a unified global platform incorporating our operating structure, our leading technology tools, and our shared service model. The next phase is scaling that platform across our businesses globally and accelerating the value it creates so every business line can benefit from shared capabilities, consistent delivery, and greater efficiency. In September, we named Paul Morgan, previously CEO of Real Estate Management Services, as our Chief Operating Officer. Paul has joined our global executive board, and he is bringing our enterprise operations together in one global function.

Building on our platform, we are making progress quickly, and AI is an integrated part of it. Here are two recent examples. In July, we launched Ask JLL, an AI-powered front door for colleagues around the world, empowering them to find answers and act across our corporate functions, such as foundational HR and IT support. We are also redesigning invoicing and collections across our business lines globally using AI agents and automation. As our platform scales, it frees capacity for growth, unlocks cash faster, lowers the cost to serve, drives standardization, and tightens controls. Increasingly, it offers real-time opportunities to improve working capital efficiency. As part of Accelerate 2030, we expect the enhancement of our platform to contribute more than 20 basis points of annual margin expansion on average, increasing as years progress. That is roughly one-third of the annual expansion embedded in our Accelerate 2030 targets.

The advancements we have made on our Accelerate 2030 strategy reflect the steps we are taking across JLL to make our organization even more integrated, more efficient, and more resilient. With that, I will now turn the call over to Kelly Howe, our Chief Financial Officer, who will provide more details on our results for the quarter.

Thank you, Christian. Our third quarter results reflect the continued business momentum and ongoing progress on our operating initiatives. The pace of growth in both our advisory and resilient revenues increased, driving an acceleration in total revenue growth. Ongoing platform efficiency improvements converted the top-line gains into robust profit growth, healthy margin expansion, and meaningful cash flow generation. We continue to deploy capital with discipline, balancing investment in talent, capabilities, and platform, while also repurchasing shares and reviewing an active M&A pipeline. While the macro backdrop remains uneven, we are encouraged by the breadth of demand across our business lines and are well-positioned to build on our operating momentum and strategic initiatives. Now, a review of our operating performance by segment. The following commentary is in local currency to best reflect underlying operating performance.

Beginning with Real Estate Management Services, revenue growth was led by continued momentum in Workplace Management and an acceleration in Project Management. Within Workplace Management, a largely balanced mix of mandate expansions and new client wins drove double-digit growth. Our pipeline and contract renewal rates remained strong. For Project Management, higher pass-through costs augmented a mid-single-digit increase in management fees. Growth was led by double-digit growth in the U.S. and India, with particular strength in office and data centers. On a two-year stacked basis, Project Management revenue increased 38%, inclusive of 14% growth in the current quarter. Client activity remains healthy, albeit with softness in certain geographies. Within Property Management, underlying core business growth and new wins, primarily in North America, Japan, and India, continued to be largely offset by the strategic contract exits in Asia Pacific over the past year.

At quarter end, we had completed actions on approximately 80% of the identified contracts while retaining more than we anticipated, and importantly, at improved margins. We expect to complete the contract exits and modifications by year end and anticipate the associated growth headwinds to dissipate over the course of 2027. We continue to target mid to high single digit full year revenue growth for the Real Estate Management Services segment with variances by business line. Additionally, we remain focused on driving incremental platform leverage, which is evident in our year to date margin expansion. Moving next to Leasing Advisory, the acceleration in revenue growth to 27% was driven by continued momentum in the U.S., particularly within the industrial, office, and data center asset classes. On a two-year stacked basis, global Leasing Advisory revenue growth increased to 34%, reflecting strong, ongoing, and broadening demand, most notably in the U.S.

A meaningful rise in average deal size, as well as a few large data center transactions, drove the 39% increase in U.S. Leasing Advisory revenue. Global office leasing revenue growth comfortably outpaced market volumes, highlighted by meaningful U.S. outperformance. The U.S. industrial revenue growth also notably outperformed market volume. The increases in Leasing Advisory adjusted EBITDA and margin were driven by revenue growth, net of higher commission expense from higher tiers being met sooner compared to a year ago, incremental platform leverage, and business mix. We expect the commission tier headwind to moderate in the fourth quarter. Looking ahead, market fundamentals remain strong. The OECD Business Confidence Index, a 2 to 3 quarter forward indicator for leasing, reached its highest level since mid-2022 in September, while the economic growth outlook and employment trends remain constructive, particularly in the U.S.

We are increasing our full year revenue growth target to high teens from mid to high teens, even while considering the strong growth comparison in prior year fourth quarter. Shifting to our Capital Markets Services segment, revenue growth was broad based across nearly all major geographies and sectors, led by the U.S. and Japan, despite the rising bond yields late in the quarter. Global investment sales revenue increased 33%, led by the U.S., up 34%, both of which were over 3 times the market growth rates of 9% and 11%, respectively. Debt Advisory revenue increased 13%, and Equity Advisory was up 39%. The underlying momentum in our business, as well as strength of our talent, full-service capabilities, platform, and data advantages, are reflected in the 2-year stacked growth rates of 55% for investment sales, 61% for Debt Advisory, and 126% for Equity Advisory.