Colliers International Group Inc. (CIGI:CA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects a generally positive outlook, with strong financial metrics like a 10% AUM increase and optimistic guidance for future growth in multiple segments. Despite some challenges in Investment Management, the expected decline in leverage and strong fundraising targets indicate sound financial health. The Q&A session revealed management's confidence in AI as a growth enabler and strategic acquisitions like Ayesa to bolster market presence. The absence of share buybacks was noted, but overall, the sentiment remains positive with anticipated growth in key areas.
Key Financial Performance
Revenues (Q4) $1.6 billion, up 5% year-over-year. Growth across all segments. Internal growth for the quarter was flat due to a strong prior year comparison.
Full Year Internal Revenue Growth Up 5%. Reflects solid performance across the year.
Adjusted EBITDA (Q4) $245 million, up 6% year-over-year. Growth in line with revenue increase.
Commercial Real Estate Segment Net Revenue (Q4) Up 7%. Capital Markets revenues increased 13% due to strong activity and market share gains in the U.S. Leasing revenues were up 3%, led by the U.S. in office and industrial asset classes. Outsourcing grew 8%, driven by valuation practice. Segment net margin was 15.8%, up 50 basis points year-over-year due to operating leverage from higher transactional revenues.
Engineering Segment Net Revenue (Q4) Up 8%, led by recent acquisitions. Strong demand in infrastructure, transportation, and environmental consulting. Temporary slowdown in certain project management operations. Net margin was 12.4%, slightly lower than last year due to lower productivity.
Investment Management Net Revenues (Q4) Increased 6%, driven by a recent acquisition. Net margin declined slightly to 42.5% due to integration costs under the Harrison Street Asset Management brand.
Assets Under Management (Year-end) $108 billion, flat relative to September 30. New capital raised offset by asset sales in older vintage funds and returns of capital to LPs.
Capital Commitments Raised (Q4) $2.1 billion in new capital commitments. $5.3 billion raised for the full year, in line with expectations.
Leverage (Year-end) Declined to 2x as of December 31 due to strong seasonal cash flows. Ayesa acquisition will add approximately 0.7 turns of leverage.
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Operating Highlights
Acquisition of Ayesa Engineering: Colliers agreed to acquire Ayesa Engineering, significantly expanding its global engineering capabilities and presence in Europe, Latin America, and the Middle East. This acquisition positions Colliers Engineering among the top 30 global engineering firms.
AI Integration: Colliers is leveraging AI to enhance productivity, automate routine tasks, and improve efficiency. AI is being used to strengthen data capabilities and provide better insights for clients.
Market Expansion in Engineering: The acquisition of Ayesa Engineering expands Colliers' market presence in Europe, Latin America, and the Middle East.
Capital Markets Rebound: Capital markets showed strong recovery, particularly in the U.S., with increased activity and market share gains.
Revenue Growth: Fourth quarter revenues reached $1.6 billion, a 5% year-over-year increase, with growth across all segments.
Investment Management Growth: Investment Management ended the year with $108 billion in assets under management, reflecting strong investor confidence.
Fundraising Momentum: Raised $5.3 billion in new capital commitments for the year, with a 2026 target of $6 billion to $9 billion.
Diversified Revenue Streams: Over 70% of earnings now come from recurring professional services, with expectations to approach 75% after recent acquisitions.
Long-term Growth Strategy: Colliers aims for mid-teens growth across key operating metrics in 2026, supported by acquisitions, internal growth, and market recovery.
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Risk or Challenges
Capital Markets Activity: Despite a recovery in capital markets, activity remains well below prior peaks, indicating potential challenges in achieving historical performance levels.
Engineering Segment Productivity: The engineering segment experienced a temporary slowdown in certain project management operations, leading to slightly lower productivity and net margins.
Investment Management Margins: Integration costs under the Harrison Street Asset Management brand are impacting margins, with expectations of continued pressure through the first half of 2026.
Leverage and Acquisition Funding: The Ayesa acquisition will increase leverage by approximately 0.7 turns, funded through the revolving credit facility, which could pose financial risks if market conditions change.
Fundraising Targets: The 2026 fundraising target of $6 billion to $9 billion may face challenges due to market uncertainties and competition for institutional and private wealth investors.
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Guidance & Outlook
2026 Revenue Growth: Colliers expects mid-teens growth in all three key operating metrics for 2026, driven by diversified segments.
Commercial Real Estate Segment: Low teens top-line growth is anticipated, with a modest increase in net margin, supported by a continuing recovery in Capital Markets.
Engineering Segment: Mid-single-digit internal growth is expected, with total top-line growth exceeding 25% due to acquisitions, including Ayesa. Growth is supported by a strong backlog and favorable trends in infrastructure, urbanization, energy transition, and data center demand.
Investment Management Segment: Net revenue growth is projected in the low teens, led by higher management fees as fundraising accelerates. Fundraising target for 2026 is $6 billion to $9 billion.
Ayesa Acquisition Impact: The acquisition of Ayesa is expected to significantly contribute to growth, adding approximately 0.7 turns of leverage and enhancing capabilities in Europe, Latin America, and the Middle East.
AI Integration: AI is expected to enhance productivity, expand margins, and improve efficiency, enabling professionals to focus on higher-value advisory services. Long-term potential for AI is seen as a significant growth enabler for Colliers.
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Shareholder Return Plan
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Key Q&A
Q:Can you discuss the organic growth trends in the engineering business, including pricing, hours, and professional hiring?
A:Demand for services is strong across all end markets. Pricing opportunities are increasing due to strong demand, and the company is hiring despite a tight market for qualified engineers. Backlogs are strong, driving utilization and margins. About 60% of the engineering business is design-based, which generates higher margins, while the rest is project management with long-term hourly rate structures.
Q:How does AI impact the engineering business, particularly in terms of billable hours and revenue?
A:AI and automation help drive margins up by enabling professionals to complete mundane tasks faster and focus on value-added work. This is particularly beneficial for the design aspect of the business.
Q:What are your thoughts on capital allocation, particularly regarding share buybacks or an SIB?
A:The company is not planning corporate share buybacks due to ongoing projects like Ayesa. However, personal-level buybacks might be considered.
Q:Why have integration cost pressures in Investment Management continued longer than expected?
A:The company is becoming more ambitious with integration initiatives to create a unified brand. Integration costs are expected to continue through the first half of 2026.
Q:What is the macroeconomic outlook for the capital markets pipeline, and does it depend on rate cuts?
A:The outlook does not depend on rate cuts. Capital markets are benefiting from pent-up demand and supply of transactions, with strong activity expected in 2025 and 2026, particularly in the U.S., with potential growth in EMEA and Asia Pac.
Q:What is the U.S. exposure in Capital Markets as a percentage of the business?
A:Approximately 50%.
Q:What was the internal growth in the Engineering segment for the quarter and the year?
A:Internal growth was roughly flat for the quarter and 5% for the full year.
Q:How does the company plan to leverage AI in the future, and are there any risks?
A:AI will enhance efficiency, reduce redundancy, and provide better data for professionals, enabling them to execute transactions faster. The company does not see AI as a risk but as an enabler to improve margins and operations.
Q:What are the margin expectations for the Investment Management business post-integration?
A:Margins are expected to decline to the high 30s in 2026 and return to the mid-40s in 2027 as fundraising accelerates and integration efforts conclude.
Q:How does the Ayesa acquisition align with the company's growth strategy?
A:Ayesa provides a foothold in Europe and other markets, with strong management and profitable platforms. The acquisition allows for growth through M&A and leveraging Ayesa's expertise in areas like desalinization and water.
Q:What caused the temporary slowdown in project management operations, and will it recur?
A:Lower activity levels in legacy local project management in EMEA and Asia Pac caused the slowdown, which is considered temporary and unlikely to recur.
Q:What are the growth expectations for the Commercial Real Estate segment in 2026?
A:The segment is expected to grow in the low teens, with high teens growth in Capital Markets and mid- to high single-digit growth in Leasing.
Q:What are the expectations for industrial and office leasing in 2026?
A:Industrial and office leasing, particularly in the U.S., are expected to remain strong and drive growth, along with data centers.
Q:What is the fundraising target for 2026, and which platforms will contribute?
A:The target is $6 billion to $9 billion, driven by the infrastructure fund, Harrison Street Fund X, and other new and existing products, including credit.
Q:How did the funds in the Investment Management segment perform in 2025?
A:Fund performance was strong, with top quartile rankings across alts, credit, and infrastructure. The Harrison Street Core Fund exceeded the ODCE Index by 100 basis points.
Q:What is the plan to reduce leverage from 2.7x to 2x?
A:The plan involves generating strong operating cash flow and organic EBITDA growth to achieve a deleveraging effect.
Q:Will AI lead to fee pressure in the company's services?
A:No, AI is expected to enhance margins and efficiency without causing fee pressure. It will enable professionals to execute complex transactions more effectively.
Q:What are the growth and margin expectations for Ayesa?
A:Ayesa is expected to grow organically at high single digits, with strong margins driven by high-value services in public transit, water, and energy transition markets.
Q:Is the company appropriately staffed to handle a potential recovery in transactional volumes in 2026?
A:Yes, the company is actively recruiting and has capacity within existing producers to handle increased volumes.
Q:What are the organic growth expectations for the Engineering segment in 2026?
A:Mid-single-digit internal growth is expected, supported by strong backlogs and recent acquisitions, including Ayesa.
Q:What is driving the temporary margin dip in the Investment Management segment?
A:The dip is due to IT systems integration, headcount additions, and planned efficiencies, which will yield cost savings by late 2026.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about share buybacks, stating that it is not in the corporate plan but might be considered on a personal level. Additionally, the response to the question about the temporary slowdown in project management operations lacked detailed clarity on the specific causes and measures to prevent recurrence.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI advantage
AI productivity
AI rage
AI segment
AI term
America Middle
Asset platform
CFO deck
Christian comment
Cloud party
Colliers AI
Colliers Engineering
Colliers future
Colliers model
Colliers repeat
Colliers size
Colliers strength
Demand outsourcing
East Operationally
Engineering contribution
Engineering engineering
Engineering world
Europe Latin
Google Cloud
International end
Investment asset
Latin America
Middle East
Operationally estate
Today business
Today opening
ability acquisition
accountability qualification
acquisition avenue
contribution acquisition
enabler
judgment
professional
relationship
CIGI Transcript
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The earnings call highlights several negative factors: high tariffs impacting prices, production curtailments, high leverage, and economic uncertainties. Despite some positive cash flow and inventory management, the Q&A reveals continued operational challenges and cautious production increases. The reluctance to provide specific guidance further adds to the uncertainty. Collectively, these factors suggest a negative sentiment towards the company's short-term outlook.
Colliers International Group Inc. (CIGI:CA) Q4 2025 Earnings Call Transcript
Positive2-13
The earnings call reflects a generally positive outlook, with strong financial metrics like a 10% AUM increase and optimistic guidance for future growth in multiple segments. Despite some challenges in Investment Management, the expected decline in leverage and strong fundraising targets indicate sound financial health. The Q&A session revealed management's confidence in AI as a growth enabler and strategic acquisitions like Ayesa to bolster market presence. The absence of share buybacks was noted, but overall, the sentiment remains positive with anticipated growth in key areas.
Colliers International Group Inc. (CIGI:CA) Q3 2025 Earnings Call Transcript
Positive11-4
The earnings call highlights strong financial performance, positive client feedback, and strategic growth plans, particularly in the U.S. The company is optimistic about fundraising targets, with a raised revenue outlook and a focus on long-term growth over immediate margins. Despite some uncertainties in global capital markets and margin pressures, the overall sentiment is positive, supported by strong leasing recovery and strategic acquisitions.
Colliers International Group Inc. (CIGI) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call summary and Q&A section provide a positive outlook with strong financial performance, strategic growth in the engineering segment, and significant fundraising achievements. The company is actively pursuing acquisitions and expanding in promising markets like Europe. Despite some uncertainties in leasing and specific fundraising details, the overall sentiment is optimistic with expectations of margin improvements and continued revenue growth. The positive guidance and strategic initiatives are likely to result in a positive stock price movement over the next two weeks.
CIGI Slides
CIGI Report
Frequently Asked Questions
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