Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to the Second Quarter 2026 Earnings Conference Call for Jones Lang LaSalle Incorporated. I will now hand the conference over to Sean Coghlan, Head of Investor Relations. Sean, please go ahead.
Thank you, and good morning. Welcome to the Second Quarter 2026 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release, along with the 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 certain 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 defined 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. Hello, and welcome to our second quarter 2026 earnings call. Q2 was a big quarter for JLL. We grew revenue by double digits and profit gains accelerated with adjusted EBITDA up 33% and adjusted earnings per share up 61%. At our investor briefing in March, we told you why we felt good about where JLL was headed, and this quarter is a proof of that. We are now a few months into Accelerate 2030, and I'm pleased with how the strategy is taking hold across the organization. I want to spend my time today on three parts of our business that give me continued conviction in our future: First, our resilient business lines, which represent nearly 80% of our revenue, are built for consistent growth and margin expansion. Multiyear client relationships, recurring revenue and a business model amplified by scale. That was evident again this quarter with real estate management services growing 8%, in line with the level of growth we have delivered over recent quarters while margin expansion also continued.
These businesses sit at the center of long-term secular tailwinds in the global economy as occupiers and investors increasingly choose to outsource more parts of their real estate operations rather than running it themselves. Within workplace management, most corporate real estate globally is still managed in-house today, underscoring how much runway remains. Project management sits at the intersection of our clients' evolving needs from multisite project management to capital planning to new development and our ability to execute that work end-to-end around the world. The longer we work with a client, the deeper we understand their current portfolio and strategic priorities and the more value we can create together through a One JLL approach. Our resilient businesses show what doable organic growth looks like in real estate services: high client retention, deeper enterprise relationships and a platform that becomes more efficient and resilient as it scales.
We firmly believe continued investment in data and AI will make these businesses even more scalable and valuable to our clients. Second, across our advisory businesses, the U.S. led a broad-based pickup in activity across leasing advisory and capital market services. Together, our advisory revenue growth accelerated to 21% this quarter and profit grew even faster, a reflection of the operating leverage building across our platform. Our performance in our advisory businesses reflects client trust built over years in our people, data and ability to execute at scale. That is why JLL has continued to take share over the past several years. Clients are choosing and expanding their relationship with JLL because we deliver intelligence and outcomes that are difficult to replicate. Our brand signals to the world's most sophisticated investors and occupiers that we are the partner for the most complex work.
The investments we are making in data, AI and our core businesses under Accelerate 2030 are designed to deepen our value proposition. None of this happens in isolation. Clients want an integrated partner who can advise them across the full real estate life cycle, backed by the intelligence of our entire firm. That is One JLL. It is the reason leading investors and occupiers are choosing to deepen their relationships with JLL. Third, when it comes to capital allocation, our deployment decisions are being made with rigor. Top line growth is most valuable to us if it converts into profitability, cash generation and returns that justify the investment behind it. This quarter alone, we generated $438 million of free cash flow, up 52% from a year ago. That gives us flexibility in how we deploy capital and reflects healthy margin expansion, greater capital efficiency and improving returns on our investments across the company.
We maintain a strong and agile balance sheet and are continuously assessing opportunities, including returning capital to shareholders. Our disciplined and through-cycle approach to capital allocation is central to how we intend to keep building value for our clients, our people and our shareholders over the long term. Put together, these factors give me high confidence in the outlook for JLL. At our investor briefing in March, we said we have the foundation platform and culture to compound value over the long term. While we are early days in our Accelerate 2030 strategy, the quarterly results and progress on our strategic initiatives reaffirm my conviction. With that, I will now turn the call over to Kelly Howe, our Chief Financial Officer, to provide more detail on our results for the quarter.
Thank you, Christian. Our strong second quarter results demonstrate the progress we are making on our key operating initiatives and reflect continued business momentum. Revenue growth of 11% as reported in U.S. dollars and 10% in local currency was almost entirely organic and was led by our advisory businesses, particularly in the U.S. We also continued to generate healthy margin expansion and robust profit growth. The combination of our financial strength and cash generation supported continued capital return to shareholders, which is already nearly double the full year 2025 amount. Looking ahead, we remain encouraged by the breadth of demand we see across our business lines and are well positioned to build on our momentum. 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 broad-based across all business lines.
The global service capabilities of our workplace management business continue to drive strong revenue growth, led by mandate expansions and complemented by new client wins. Our contract renewal rates and pipelines remain strong. Within Project Management, the increase in revenue was driven by mid-single-digit management fee growth, led by double-digit growth in the Americas, including momentum from data centers. Given a shift in contract mix, higher management fees were moderated by lower growth in pass-through costs. Following the strong increase in the prior year quarter, project management grew 25% on a 2-year stacked basis inclusive of 3% growth in the current quarter. Client activity remains healthy, positioning us for continued momentum over the near term. For Property Management, core business growth and new wins continue to be offset by the strategic contract exits as mentioned in the past two quarters.
We expect this growth headwind to largely dissipate over the coming quarters. Considering the varied business line trends within the segment, we affirm our mid- to high single-digit revenue growth target for the full year with our second half weighted to the fourth quarter. Additionally, we continue to focus on driving incremental platform leverage, which we anticipate outpacing continued investment for growth. Moving next to Leasing & Advisory. Revenue growth was driven by accelerated momentum across office, industrial and data centers. A meaningful increase in deal size was complemented by healthy volume growth globally, most notably the U.S. and in part due to resurgent demand from the technology sector, including from AI companies. Our global office leasing revenue growth of 20% materially outpaced the 2% increase in market volume. On a 2-year stacked basis, global leasing advisory revenue growth was 28%, inclusive of 24% in the current quarter, reflecting strong ongoing and broadening demand.
The increases in lease and advisory adjusted EBITDA and margins were driven by revenue growth, net of higher commission expense from both higher tiers being met sooner compared to a year ago, business mix and incremental platform leverage. We expect the commission tier headwind to moderate as the year progresses. Looking ahead, occupier demand and market fundamentals continue to strengthen, supported by improving net absorption trends across major markets and near record low new supply. Given the constructive global GDP growth outlook, increasing business confidence and our strong leasing pipeline, we are targeting mid- to high teens revenue growth for the full year as we start to lap higher growth comparables in the fourth quarter. We continue to execute our multiyear strategic investment plan to drive long-term growth with attractive returns. Shifting to our Capital Market Services segment, rising bid activity and highly liquid credit markets fueled strong growth across sectors and most geographies, led by the U.S., Japan and Australia, which significantly outpaced softness from elongated investment sales timelines in parts of Europe.
Debt advisory revenue led the growth of 44%, while investment sales revenue increased 20% and equity advisory revenue grew 53%. The continuation of robust underlying business momentum amidst the dynamic macro environment is reflected in the 2-year stacked growth rates for debt advisory and investment sales of 71% and 30%, respectively. U.S. investment sales revenue growth of 53% for the quarter was nearly double the broader market, reflecting our talent, platform and data advantages. Higher revenue, net of increased commissions, lower loan-related expenses versus prior year and continued platform leverage drove the adjusted EBITDA growth and margin expansion in the quarter. Looking ahead, capital markets fundamentals remain healthy overall as global direct investment activity has accelerated and credit markets remain competitive and diverse. Our global investment sales, debt and equity advisory pipeline and conversion rates continue to be strong, most notably in the U.S. For the full year, we are targeting mid-teens revenue growth, mindful of the robust growth comparables in the second half of last year.
Turning to Investment Management, advisory fee growth associated with the ongoing deployment of the $3.7 billion of capital raised over the past year was mostly offset by anticipated decline driven largely by dispositions in Asia Pacific. We continue to target advisory fee growth in the low single digits for the full year as the factors impacting the quarter results are expected to persist in the near term. Additionally, we anticipate incentive and transaction fees towards the lower end of our historical range and weighted to the fourth quarter. Shifting to free cash flow, balance sheet and capital allocation, free cash flow totaled $438 million in the quarter, up 52% from a year ago. The improvement was primarily attributable to higher cash earnings. Considering the strength of our cash flow to date, business mix and ongoing initiatives to improve capital efficiency, our free cash flow conversion ratio is trending comfortably above our long-term average of over 80% for the full year.
Growth in our adjusted EBITDA plus lower borrowings resulted in an improvement in our reported net leverage to 0.7x. Our investment-grade balance sheet remains a source of strength with $3.4 billion of corporate liquidity, providing us with ample flexibility to invest in the business while continuing to return capital to shareholders. We repurchased $110 million of shares in the quarter, bringing first half repurchases to $410 million and reducing the share count by nearly 3% from a year earlier. Looking ahead, we intend to remain active on the $2.6 billion remaining on our repurchase authorization, with the total annual amount dependent on the broader operating environment, our leverage outlook, valuation and relative returns to other investment opportunities, inclusive of M&A. We are encouraged by the underlying business momentum in the first half of the year and the strength of our pipelines across the business, particularly in the U.S., albeit mindful of the strong growth rates in the back half of last year.
With the segment revenue growth targets I outlined earlier as the basis, we are meaningfully increasing our full year 2026 adjusted EPS target range to $24.60 to $25.90, reflecting 34% growth at the midpoint. We entered the second half of the year with momentum and confidence in our ability to deliver healthy growth, robust margin expansion and meaningful cash flow. Christian, back to you.
Thank you, Kelly. Looking ahead to the second half of the year, our pipelines across the business and broader indicators are encouraging. We expect the U.S. to keep leading as capital deployment builds, credit markets remain active and demand for our core services grows. The broader environment globally will likely remain uneven but the strength of our people, platform and client relationships gives us conviction. We have built a very resilient business that can perform through evolving markets and with our Accelerate 2030 strategy execution underway, we intend to keep building on the momentum we have generated over the last several quarters. The updated targets that Kelly just outlined, including higher revenue growth outlooks for our Leasing & Advisory and Capital Market Services segments and a notably raised adjusted EPS range for the year reflect our confidence in the underlying momentum of our business as well as our strategy. Before I close, I would like to thank our colleagues around the world for their commitment to our strategy and continued dedication to our clients. Your work is what makes results like this possible. Operator, please explain the Q&A process.
Questions and answers
Your first question comes from the line of Tony Paolone from JPMorgan.
Great. My first question is on the margin side. The significant growth in transactional revenue, obviously, drove a lot of that. But can you maybe help parse out what you think was more company specific to JLL and talk perhaps about the leverage you might continue to see that could help margins even further going forward, just less related to the market and more around JLL?
Sure. Thanks, Tony, for the question. So yes, mix and ongoing EBITDA and revenue growth clearly drove some of the margin expansion. But in addition to that, as you know from our investor presentation and briefings, we have been very focused on investing against the platform that is providing meaningful operating leverage. We're seeing the benefits of that operating leverage come through as well. We look at fixed cost as it relates to our fee revenue. We look at variable costs, including commissions and other variable costs. And we're very happy with the performance of our fixed cost base against our fee revenue, and we're seeing a lot of improvement there. We have more runway as well. So we feel very confident we'll be able to continue to deliver on that margin expansion.
Okay. And then my follow-up is related to capital markets and investment management. It seems like it's been a slow first half of the year for capital raising for commercial real estate broadly. Is there a risk that at some point that has implications back to capital markets and that less robust fundraising creates less transactional activity going forward? Did my question go through?
Can you please repeat the question? I'll take it.
Yes, sure. Question is basically capital raising for commercial real estate just seems to be running at a slow pace so far this year for everybody. Should we think about that as having implications back to broader transaction activity going forward if it remains muted and there's not a lot of new capital coming into CRE broadly?
Yes. Thanks for the question. You've seen our capital raise numbers for our Investment Management business, which are $2.3 billion year-to-date. We are continuing, of course, to focus on capital raise. We do see continued dry powder on the sidelines. There's a lot of pent-up demand, and there is a lot of demand to reposition portfolios. So we do think that demand is going to continue to build. You're right, the first part of the year has been a little bit slower across the board. But we expect that demand to flow through. In the meantime, if you look at our capital markets business, our debt advisory business has been performing quite well because even as transactions are maybe a little bit slower for the first part of the year because of capital raises, the debt portion of the business is doing very strongly.
Your next question comes from the line of Jade Rahmani from KBW.
This is Jason Sabshon on for Jade. To start, what impact do you think the shifting interest rate outlook will have on capital markets pipelines? Do you see any deals moving to the sidelines or potential for repricing in lower cap rate areas like multifamily?
When we look at the interest rate environment, one of the things that we pay most attention to is stability of rates. We can withstand fluctuations up or down a bit without a huge amount of impact. So as we look at the interest rate environment through the rest of the year, we don't expect a meaningful impact to our transaction business for the remainder of the year. The other thing is there is a lot of pent-up demand on the sidelines and a lot of capital. The debt markets are very liquid at the moment. So we don't have huge concerns about the interest rate environment going through the rest of the year.
Do you see any risk of unbundling of services within the outsourcing businesses as a result of it?
Unbundling of services in the outsourcing business? One of the things, as we've articulated for our Accelerate 2030 strategy, is a real focus on targeting and serving clients in a very holistic way. We're seeing a huge amount of demand for that. When we look at outsourcing, clients are actually coming to us because they don't want to manage individual tasks or individual pieces of the offering. They're looking for somebody that can provide a more integrated offering to help with their outsourcing. We continue to see tailwinds in that space. You can see the healthy growth that we're posting, particularly in our Facilities Management business, and unbundling has not been a particular trend that we have been observing in the market.
Your next question comes from the line of Julien Blouin from Goldman Sachs.
Congrats on a strong quarter. Christian, I think you mentioned last quarter that you expected that the longer the conflict went on, the worse the impacts would get to the back half of the year. We've definitely seen the performance gap between the U.S. and your other markets widen. Wondering, where we stand today, how are you feeling about the likely impacts of the Middle East on Asia and Europe in the back half?
So Julien, Christian is having some trouble with his line. We continue to monitor the conflict quite carefully. I think the biggest impact associated with the conflict is on the broader macro outlook, both GDP growth and inflation. We're not seeing immediate and direct impact to our business in a material way today. In Europe, there is maybe a bit more concern, and so we have seen some elongation around transactions on the capital market side in Europe. Again, we're not seeing those fall out of the pipeline; we're just seeing some elongation of deal closing. In the U.S., in particular, we've seen continued strength. So while we monitor the conflict, we're not seeing impact in our business nor do we anticipate meaningful impact for the rest of the year if things do not get worse.
Got it. Focusing on U.S. investment sales, it was impressive how much you outpaced the broader market this quarter. Can you dig into the drivers of that, whether it's specific markets that were particularly strong or property types?
We're very happy with our investment sales performance for the quarter, and it has been relatively broad-based across asset classes. We've seen some uptick in office, which has been nice to see as valuations start to work themselves out. We've seen strength in industrial and logistics; those volumes grew quite significantly. Retail and hotels have both been up. Multifamily continues to grow, though a bit slower this year. From a geographic perspective, the U.S. has been a huge driver of the business, but we've also seen activity in parts of Asia as well. In Europe, we've seen some elongation in timelines.
Your next question comes from the line of Mitch Germain from Citizens Bank.
Kelly, I'm curious about what you're seeing in the M&A side. What's the biggest hesitation on your part or your company's part with regards to possibly considering closing or doing some sort of transaction?
It's Christian. Now I have unmuted my line, so I'm allowed to say something. On the M&A side, nothing has really changed. We are very disciplined and prudent in our underwriting and investment approach. We are constantly looking at opportunities. I'm certain that at some point, we will do more M&A again. In 2024, we scaled and raised through acquisitions, and in both of those transactions, we surpassed our own plans significantly. We would like to have more of those going forward, but we will not do something that does not drive value for our shareholders. It's not that we are unwilling; it's that we keep the bar as high as we have for many years. At some point, we will find and identify targets that pass that bar.
I think you cited strong pipelines in capital markets, particularly in the U.S. When do we see Europe and Asia return to a more normalized level of activity rather than volatility across quarters?
On the earlier question about the Middle East conflict: when you are in Europe, you have the war in Ukraine on one side and the Middle Eastern conflict on the other, and that has significant psychological impact on investors in Europe. We saw some signs of return before the conflict started in February, and then that momentum came down. Regarding Asia, Asia had some very interesting large transactions this year, showing good momentum. Asia is not a single region; a couple of countries make up most of Asia's capital markets business. For example, India is impacted by the war in the Middle East, so people there have been more cautious. I think the dynamics correlate with those conflicts. If they were to disappear, you would see both markets recover quite significantly because there's clearly pent-up interest on the sidelines.
Your next question comes from the line of Seth Bergey from Citigroup.
JLL is outpacing the market in the areas you disclosed in leasing and investment sales. How much of that is durable share gain versus a mix of deal size and timing? How does the guide assume that spread persists or compresses? Also, you attribute some share gain to your data and AI platform. What would we see numerically to prove that, such as win rates, revenue per producer or non-comp cost ratios?
We are obviously very focused on our platform, and while I can't provide comparisons to other players, I can address revenue per producer. In our capital markets business, we've been able to grow capital markets revenue over the last two years since recovery in 2024 very significantly without adding additional brokers. This growth has been absorbed by existing teams because our technology platform is enabling them to be much more productive. Going forward, we believe our colleagues have significant room to further grow their revenues per head within our existing environment. As long as clients appreciate the intelligence we bring and the quality of our brokers, we believe this trend will continue on both the capital markets and leasing sides.
I would add that we are confident from the market data that we're gaining share. Clients are looking for full-service providers that can bring a range of capabilities, and our leasing capability is one of those. Around data and AI specifically, we don't disclose granular metrics, but we track lead flow sources carefully and connect those leads to actual closed deals. We feel very good about the investments we're making in data and AI and the support that is providing to our momentum.
Great. As a follow-up, last quarter you mentioned commission tier headwinds would peak early and moderate through the year, but in this quarter they were consistent with the first quarter. What changed, and how should we think about that through the back half of the year? Do they reset cleanly in January?
It's a good question. In both our capital markets and leasing businesses, we've had outsized performance in the first half of the year driven by larger deal sizes, which pushed some producers into higher commission tiers earlier in the year. That had a bigger impact on the first and second quarters than we thought because of top-line performance. A lot of the growth has been driven from the U.S., which is a more variable-compensated environment, so the overall geographic mix has had a bigger impact than in a more balanced year. We do expect that to moderate as we go through the second half of the year, and then in January the tiers will reset again.
Your next question comes from the line of Stephen Sheldon with William Blair.
I wanted to circle back to the guidance increase because it's very notable. It sounds like things are broadly trending better than expected. Can you provide more detail on what's giving you the confidence to increase the adjusted EPS guidance by this much? Are there two or three main drivers boosting your expectations for the year?
There are a couple of drivers giving us confidence to increase adjusted EPS. First is the performance in the first half of the year, which we're very pleased with. Second, the mix of our business, particularly the advisory business, shows continued strength as we move through the second half. Pipelines are good, and broader indicators about business confidence and GDP growth are positive. Third, we are making progress on platform investments, and the operating leverage we expect from that combined with the revenue outlook gives us confidence to increase the targets for the year.
Makes sense. As a follow-up for Christian, welcome back. Can you update us on progress toward the One JLL approach? Where are you seeing successes serving client needs across business lines? Are you seeing notable improvements in cross-selling, and is that becoming a bigger driver of the strong growth?
We are working very hard on that. It's a muscle you train over time, and you don't see results immediately. The second quarter performance shouldn't be attributed solely to having fully trained that muscle yet, but there is an overall culture within our organization about sharing information and working together with clients. We are supporting that from a platform and technology perspective to make it easier for colleagues to cross-sell, not only within business lines and countries, but seamlessly across service lines and geographies. We recently had a strong transaction sourced in Asia and executed in Europe, and those are the differentiators for clients and competitors. Accelerate 2030 has provided early gains in platform efficiency, not only AI but general automation, where we are making significant progress and that underpins our confidence in forward performance. Our data and AI investments have been long-running, and we are starting from a strong base. The acceleration on platform efficiency and data and AI are already part of our Q2 results, and cross-selling and One JLL will continue to evolve with many more deals to come over the next couple of years.
Your next question comes from the line of Brendan Lynch with Barclays.
Can you talk about the pace of adoption for your software and Tech Solutions and the outlook for these initiatives to accelerate profitability this year?
As you know, we moved our software and technology business into our overall REMS P&L. We committed to investors that this would be profitable in 2027. It was profitable in the fourth quarter of 2025. After two quarters, we are well ahead of our own plan. The move has turned out to be the right decision; many friction points that existed before have disappeared. From a profitability point of view, it's going really well, and we are also expecting more revenue growth in that sector coming into the second half of the year.
Great. On global office leasing volume, it's on pace to come close to the peaks in 2019 and 2007. How much runway do you think is left for growth over the next couple of years?
We see new rent records for office space in almost every city around the world when new product comes to market. Even in geographies where the economic environment is weak, new product can command record rents, while other areas see vacant buildings. There is a bifurcation between the most successful companies focused on bringing people into the best available spaces and those less focused on employee experience. This bifurcation is ongoing, and overall volumes will likely continue to grow for the foreseeable future. For our business, the trend of bifurcation is more important than whether overall volume is up or down because we are very focused on Grade A space, where we have the majority of our market share.
Your next question comes from the line of Tony Paolone with JPMorgan.
Some follow-ups. You talked about free cash flow running above your target conversion rate. Besides buying back stock, where do you see the biggest opportunities to invest in the business? Where might you add capabilities?
Buying back stock is an important element of our capital allocation because we believe it's a good investment. Beyond that, we have a long list of potential investments into our platform. We are significantly increasing month by month our investment into AI tools, and we see real progress on adoption and value creation. There are always areas where we need to add capacity in certain geographies or asset classes, and we invest in new teams in those areas. We will not run short of ideas for investing in the platform to drive shareholder value.
Got it. On the data center side, can you give a sense of where the largest revenue and profit buckets lie today across the business lines? What growth rates are you seeing and where do you have the most strength or opportunity to build?
This is a super dynamic market. At the end of the quarter, we had 340 data centers in our facility management portfolio. Because we've contracted numerous very large data centers, we expect that number to grow by a third from a gigawatt perspective within the next two quarters, as those signed contracts will be finished in the coming months. This is recurring revenue, which we're very focused on. That is complemented by transactional revenue from data center deals, which in the moment of a transaction drives higher margins and profits, but is not recurring. Overall, our mix is about 80% recurring and 20% transactional, and that's probably what we want to see on the data center side as well.
We have reached the end of the Q&A session. I will now turn the call back to Christian Ulbrich, President and Chief Executive Officer, for the closing remarks.
Thank you, operator. With no further questions, we will close today's call. On behalf of the entire JLL team, we thank you all for joining our call today. We look forward to speaking with you again following the third quarter.
This concludes today's call. Thank you for attending. You may now disconnect.