NMRK Q1 Earnings Call: Revenue Growth Outpaces Expectations, Management Maintains Cautious Outlook

Real estate services firm Newmark (NASDAQ: NMRK) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 21.8% year on year to $665.5 million. The company expects the full year’s revenue to be around $3 billion, close to analysts’ estimates. Its non-GAAP profit of $0.21 per share was 12.9% above analysts’ consensus estimates.

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StockStory’s Take

Newmark’s first quarter was defined by broad-based revenue gains across capital markets, leasing, and management services, as management attributed the results to both market share gains and ongoing investment in talent and service expansion. CEO Barry Gosin pointed to double-digit increases in every major business line, citing a 33% rise in capital markets and 31% growth in leasing revenues, supported by strong activity in key cities like New York and San Francisco.

Looking ahead, management reaffirmed its full-year outlook but expressed caution due to macroeconomic uncertainty, including interest rate volatility and potential tariff impacts. CFO Mike Rispoli emphasized the company’s visibility into its revenue pipeline for the first half of the year, but noted that the decision to hold guidance steady was driven by a conservative approach given external risks. Rispoli stated, “Had the macroenvironment been different, we certainly would have been considering guiding towards the higher end of the range.”

Key Insights from Management’s Remarks

Management highlighted that Newmark’s first quarter performance was led by significant volume growth and ongoing expansion into new markets and service lines. The company noted that its results outpaced broader industry trends, and that its business mix is increasingly diversified.

• Capital Markets Expansion: Capital markets revenues rose sharply, fueled by a 62.5% increase in deal volume and growth across all major property types. Management cited gains in both investment sales and origination, including a notable 40% increase in government-sponsored enterprise (GSE) and Federal Housing Administration (FHA) origination.
• Leasing Activity Rebound: Office and retail leasing volumes both recorded double-digit growth, with the San Francisco Bay Area, New York City, and Boston highlighted as especially active. Management noted no significant pullback in client decision-making, despite industry macro uncertainty.
• Management Services Diversification: Revenues in management and servicing increased for the seventh consecutive quarter, reflecting growth in areas such as fund administration, property accounting, staffing solutions, and expanded facility management. Leadership emphasized that these recurring revenue streams are becoming a larger part of the business.
• Talent Acquisition Focus: Newmark continued to prioritize strategic hires and expanding its professional base, particularly in Europe and in high-value service lines. Management indicated that hiring high-performing individuals has been more cost-effective than large-scale acquisitions, supporting both organic growth and margin improvement.
• Competitive Environment and Geographic Expansion: The company pointed to successful entry into new markets, including Germany, and highlighted its ability to attract experienced professionals as a differentiator. Management sees continued growth opportunities in both U.S. and international markets, despite competitive recruiting pressures.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on maintaining revenue momentum while navigating persistent macroeconomic uncertainty and competitive pressures.

• Macroeconomic Headwinds: Management cited tariffs, potential interest rate volatility, and broader geopolitical risks as ongoing uncertainties that could impact both client activity and transaction volumes, particularly in the second half of the year.
• Recurring Revenue Growth: The company expects recurring streams—such as management and servicing—to provide increased earnings stability, with about 40% of annual revenues now recurring and visibility into those segments supporting the revenue base.
• Strategic Talent Investments: Newmark’s future performance will depend on the continued success of its targeted hiring strategy, with management emphasizing that bringing on experienced professionals—rather than large acquisitions—remains a priority for driving market share gains and expanding into new service lines.

Top Analyst Questions

• Alex Goldfarb (Piper Sandler): Asked whether macro uncertainty is affecting client behavior or transaction activity. CEO Barry Gosin replied that deals and leases are continuing to close, with no material slowdown observed, though he acknowledged that interest rate policy could introduce volatility.
• Alex Goldfarb (Piper Sandler): Inquired about the company’s willingness to execute share buybacks amid economic uncertainty. CFO Mike Rispoli responded that the company is comfortable with buybacks given its balance sheet strength, though no repurchases occurred in the quarter.
• Jade Rahmani (KBW): Queried drivers behind growth in management services and differentiation in that segment. Gosin pointed to service breadth, including fund administration and property accounting, as well as a focus on recurring, value-added offerings.
• Julien Blouin (Goldman Sachs): Questioned the decision to maintain guidance despite strong first quarter results. Rispoli said the company is being cautious due to macroeconomic risks, despite building revenue pipelines and transaction momentum.
• Patrick O’Shaughnessy (Raymond James): Asked about the company’s appetite for mergers and acquisitions versus hiring broker teams. Gosin explained that bolt-on hiring has been more cost-effective and less disruptive than large acquisitions, though management remains open to both strategies.

Catalysts in Upcoming Quarters

Looking to the next few quarters, the StockStory team will be monitoring (1) the pace of growth in recurring management and servicing revenues as a buffer against transaction-driven volatility, (2) whether Newmark’s talent acquisition and retention strategy continues to drive market share gains, and (3) the impact of shifting macroeconomic conditions—including interest rates and regulatory changes—on capital markets activity. Execution in new markets and service lines will also be key indicators of sustainable growth.

Newmark currently trades at a forward P/E ratio of 8.4×. Should you double down or take your chips? See for yourself in our free research report.

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