Newmark (NMRK) Q2 2025: Capital Markets Revenue Jumps 38%, Unlocking Global Platform Leverage
Newmark’s Q2 results underscore a step-change in capital markets execution, with outsized debt origination growth and expanding global reach fueling both top-line and margin gains. Strategic hiring, disciplined platform expansion, and a sharp focus on recurring revenue are reshaping the business mix, while management signals a pivot to M&A for the back half of the year. Investors now face a company with accelerating cash generation, a robust deal pipeline, and a playbook built for cyclical and secular opportunity.
Summary
- Global Platform Expansion: International business now exceeds 13% of volume, with Germany and Asia in early growth phases.
- Capital Markets Outperformance: Data center and debt origination drove market share gains well above industry averages.
- M&A Pivot Ahead: Management signals a shift from buybacks to targeted acquisitions, aiming to boost recurring revenue streams.
Performance Analysis
Newmark delivered broad-based double-digit growth across all major business lines, with total revenues up nearly 20% and adjusted EPS surging over 40%. The capital markets segment was the standout, posting a 38% revenue increase, fueled by a 135% jump in total debt volumes and robust investment sales activity. Notably, Newmark’s debt origination growth far outpaced the U.S. commercial and multifamily industry, which grew just 38% in the same period, underscoring clear market share capture.
Leasing revenues advanced nearly 14%, led by strength in retail and a rebound in key gateway office markets, particularly San Francisco and New York. Management services and asset servicing rose 14%, with valuation and advisory up nearly 30%, highlighting the company’s push into high-margin, recurring revenue streams. Adjusted EBITDA margin improved by 139 basis points to 15%, reflecting operating leverage as scale builds. The company’s new adjusted free cash flow metric showed a 121% year-over-year improvement on a trailing 12-month basis, reaching $228 million, further reinforcing strong cash conversion and capital flexibility.
- Debt Origination Outpaces Market: Total debt volumes up 135%, vastly exceeding industry growth rates.
- Recurring Revenue Emphasis: Management services, servicing, and valuation lines saw double-digit gains, supporting margin expansion.
- Share Repurchase and Leverage: 10.8 million shares repurchased for $125.5 million, with net leverage at 1.4x, leaving capacity for further growth initiatives.
Newmark’s operational discipline and capital allocation flexibility are increasingly visible in both financial results and forward guidance, setting a higher bar for peer performance.
Executive Commentary
"Newmark delivered strong revenue and earnings growth, validating our strategic vision and commitment to creating value for our clients and stakeholders...we continue to expand our occupier solutions and leasing footprint, providing corporations with comprehensive real estate solutions on a global scale in nearly 100 countries."
Barry Gosselin, Chief Executive Officer
"We increased management services, servicing, and other by 13.6%, which reflected approximately 30% growth from our valuation and advisory business, as well as continued improvement in our high-margin servicing and asset management platform...our adjusted free cash flow was $228 million, a 121.4% improvement year-over-year."
Mike Rispoli, Chief Financial Officer
Strategic Positioning
1. Global Platform Buildout
Newmark’s international expansion is gaining momentum, particularly in Europe where Germany has rapidly become a focal point. The company has signed 70 brokers in Germany in the past year, with a formal launch set for October’s Expo Real. International business now accounts for over 13% of total volume, up from virtually zero two years ago, and leadership sees “enormous runway” in both Europe and Asia. This global push is intended to provide fully integrated services—from leasing to capital markets and consulting—to multinational clients, positioning Newmark for outsized share gains as cross-border investment rebounds.
2. Capital Markets and Data Center Leadership
Capital markets outperformance is underpinned by market-leading activity in data centers, a sector management views as having a “long runway” driven by AI and digital infrastructure demand. The company’s approach is to build centers of excellence with top talent, focusing on equity and finance transactions as well as powered land opportunities. Data center deals command similar fee rates as other segments, but Newmark’s expertise and global reach offer the potential for higher volume and stickier client relationships. Management also highlighted untapped opportunities in project and facilities management for data centers, which could further enhance recurring revenues.
3. Recurring Revenue and Management Services
Recurring revenue remains a strategic priority, with management targeting $2 billion in management services revenue by 2029. The company is investing in valuation, advisory, and asset servicing—business lines with higher margins and more predictable cash flow. Bolt-on M&A is expected to accelerate in the back half of 2025, with a focus on management services businesses that complement Newmark’s platform and deepen client relationships. This approach is intended to mitigate cyclicality and support more stable earnings growth across cycles.
4. Talent Acquisition and Culture
Talent remains a core “superpower” for Newmark, with targeted hiring of high-revenue professionals across geographies and services. Despite industry competition, management reports strong traction in attracting top brokers, especially those seeking a platform with global reach and integrated services. The company’s preference for bolt-on acquisitions and curated team additions reflects a disciplined approach to growth and integration, minimizing disruption while maximizing cultural fit.
5. Capital Allocation Flexibility
Capital allocation is shifting from buybacks to M&A in the near term, as management sees opportunities to deploy growth capital into synergistic acquisitions, especially in management services. However, buybacks remain in play longer-term, with management citing the stock’s attractive free cash flow yield relative to peers and the S&P 500. Net leverage remains moderate, supporting both organic and inorganic growth initiatives.
Key Considerations
Newmark’s quarter signals a company in transition from cyclical brokerage to a more diversified, recurring-revenue enterprise, with global ambitions and a sharpened focus on capital efficiency.
Key Considerations:
- International Growth Acceleration: European and Asian operations are scaling from a low base, offering significant white space for future expansion.
- Data Center and AI-Driven Demand: Data center transactions are a current growth engine, but management is cautious to avoid overstaffing and overexposure, learning from past life sciences volatility.
- Recurring Revenue Mix: Asset management, servicing, and valuation now drive a larger share of profits, supporting margin stability and cash flow visibility.
- Pipeline and Market Visibility: Deal pipelines remain strong with no signs of slowdown, but management is watchful for macro shocks in the back half of the year.
- Capital Allocation Discipline: M&A activity is expected to increase, with bolt-on deals preferred for cultural fit and limited integration risk.
Risks
Macro uncertainty, including interest rate volatility and geopolitical events, could disrupt transaction volumes or delay deal closings, especially in capital markets. Rapid expansion in international markets and data centers introduces integration and execution risk, while overreliance on a few high-growth sectors could expose the business to cyclical swings. Talent retention and acquisition remain competitive, and any slowdown in hiring or integration could dampen growth momentum.
Forward Outlook
For Q3 2025, Newmark guided to:
- Management and leasing businesses: high single-digit to low double-digit revenue growth
- Capital markets revenue: mid to high teens growth
For full-year 2025, management raised guidance:
- Total revenues: $3.05 billion to $3.25 billion (up ~15% at midpoint)
- Adjusted EPS: $1.47 to $1.57 (up 20% to 28%)
- Adjusted EBITDA: $523 million to $573 million (up 17% to 29%)
Management emphasized a robust deal pipeline, ongoing hiring, and a strategic pivot to M&A, while cautioning that macro events could affect activity in the back half. Confidence in achieving 2026 targets was reiterated, with current momentum supporting high single-digit revenue and mid-teens earnings growth into next year.
- Deal pipeline remains strong with no major slowdowns detected
- 2026 targets ($1.75 EPS and $630 million EBITDA) reaffirmed as achievable
Takeaways
Newmark is executing a playbook that blends cyclical upside with secular growth, leveraging platform scale, recurring revenue, and global expansion to drive both top- and bottom-line outperformance.
- Capital Markets Outperformance: Outsized growth in debt origination and data centers is not just a cyclical bounce, but a signal of platform leverage and market share gains.
- Recurring Revenue Emphasis: The shift to management services and asset servicing is de-risking the model and supporting margin expansion, a critical differentiator in a volatile market.
- Global and M&A Opportunity: Early-stage international growth and a disciplined M&A approach set the stage for further diversification and scale, but execution and integration will be key watchpoints in the coming quarters.
Conclusion
Newmark’s Q2 performance reflects a business in strategic transition, with global ambitions, recurring revenue growth, and capital allocation flexibility. The company’s ability to sustain outperformance as it scales internationally and integrates new businesses will define its long-term trajectory.
Industry Read-Through
The strength in Newmark’s capital markets and data center activity provides a bullish read-through for commercial real estate services broadly, especially for firms positioned to capture AI-driven digital infrastructure demand. The company’s pivot to recurring revenue and global expansion reflects an industry-wide shift toward platform diversification and cash flow stability. Competitors will need to match both operational discipline and capital allocation agility to keep pace, while investors should watch for similar moves in M&A and management services across the sector. Data center and digital infrastructure remain outsized growth areas, but disciplined exposure and integration will separate long-term winners from those chasing near-term trends.