10-Q: Newmark Reports Soaring Q3 Earnings, Capital Markets Surge

Newmark Group, Inc. announced significantly increased revenues and net income for the third quarter and first nine months of 2025, driven by strong performance across all business segments and a major legal settlement.

Summary

• Total revenues for the three months ended September 30, 2025, increased by 25.9% to $863.5 million, up from $685.9 million in the prior year period.
• Net income available to common stockholders for Q3 2025 surged by 159.4% to $46.2 million, compared to $17.8 million in Q3 2024.
• Basic earnings per share (EPS) for Q3 2025 rose to $0.26 from $0.10 in Q3 2024, while fully diluted EPS increased to $0.25 from $0.10.
• For the nine months ended September 30, 2025, total revenues grew by 22.6% to $2.29 billion, up from $1.87 billion in the same period last year.
• Net income available to common stockholders for the nine months ended September 30, 2025, increased by 267.9% to $58.2 million, compared to $15.8 million in the prior year period.
• Basic EPS for the nine months ended September 30, 2025, was $0.33, up from $0.09, and fully diluted EPS was $0.32, up from $0.09.
• Capital Markets revenues saw a substantial increase of 59.7% to $301.3 million in Q3 2025, and 45.0% to $698.3 million for the nine months, reflecting significant client activity across various property types.
• Management Services, Servicing Fees and Other revenues grew by 12.6% to $318.1 million in Q3 2025 and 12.2% to $900.4 million for the nine months, benefiting from increased outsourcing and an expanded suite of services.
• Leasing and Other Commissions revenues increased by 13.7% to $244.0 million in Q3 2025 and 18.5% to $689.3 million for the nine months, driven by strong activity in office and industrial sectors.
• Other income (loss), net, for Q3 2025 included $42.3 million received from insurers as part of a previously disclosed shareholder action settlement.
• The company repurchased 10.8 million shares of Class A common stock at an average price of $11.58 per share during the nine months ended September 30, 2025.

Sentiment

Score: 8

Explanation: The company demonstrated robust financial performance with substantial revenue and EPS growth, particularly in Capital Markets. Strategic initiatives, including acquisitions and expansion into new services, are driving future growth. The resolution of a significant shareholder lawsuit removes a key overhang. Despite macroeconomic headwinds, the company is gaining market share and is well-positioned to capitalize on favorable industry trends like increased outsourcing and commercial mortgage maturities. The ongoing share repurchase program further supports shareholder value.

Positives

• Robust revenue growth across all segments, with Capital Markets leading at a 59.7% increase in Q3 2025 and 45.0% for the nine months.
• Significant increase in net income available to common stockholders, up 159.4% in Q3 2025 and 267.9% for the nine months.
• Strong basic and fully diluted EPS growth, reflecting improved profitability.
• Successful settlement of the Consolidated Shareholder Action, resulting in a $42.3 million income from insurers and removing a legal overhang.
• Continued market share gains in Capital Markets, with U.S. Total Debt volumes reaching 10.3% and U.S. investment sales volumes reaching 10.7% over the twelve months ended September 30, 2025.
• Strategic investments in Management Services, Servicing Fees and Other businesses, including the acquisition of RealFoundations and the launch of new fund administration and property/facilities management services, are expected to drive future growth.
• Positive net absorption in U.S. office space in Q3 2025, the first such quarter since late 2021, indicating a gradual improvement in office fundamentals.
• Anticipated continued improvement in industry debt volumes and investment sales activity due to record commercial and multifamily mortgage maturities ($957 billion in 2025, $2.1 trillion between 2025-2027) and interest rate stabilization.
• The company maintains strong liquidity with $224.1 million in cash and cash equivalents and $450.0 million available under its revolving Credit Facility as of September 30, 2025.
• Management believes the company has met all capital and liquidity requirements as of September 30, 2025.

Negatives

• Net cash used in operating activities increased to $446.5 million for the nine months ended September 30, 2025, compared to $412.5 million in the prior year period.
• Net cash used in investing activities significantly increased to $130.0 million for the nine months ended September 30, 2025, primarily due to purchases of short-term investments and fixed assets.
• Compensation and employee benefits expenses increased by 30.1% in Q3 2025 and 24.3% for the nine months, reflecting higher commission-based revenues and growth initiatives.
• Equity-based compensation and allocations of net income to limited partnership units and FPUs increased by 66.4% in Q3 2025 and 71.6% for the nine months, partly due to timing of tax-deductible exchangeability charges and higher stock price.
• Operating, administrative and other expenses increased by 15.4% in Q3 2025 and 9.8% for the nine months, due to higher pass-through costs and increased origination volumes in the Fannie Mae business, leading to a $6.6 million increase in CECL expense in Q3 2025.

Risks

• Macroeconomic and other challenges, including geopolitical conflicts, fluctuating global interest rates, current or expected inflation rates, stagflation, and potential recessions, could impact demand for commercial real estate and transaction volumes.
• Challenges related to repositioning business aspects to adapt to changing client needs, market uncertainty, and legal, cultural, and political events.
• Uncertainty in the timing of interest rate stabilization and recovery of transaction volumes, as well as changes in demand mix for commercial real estate space, particularly decreased demand for urban office and retail.
• Potential deterioration of equity and debt capital markets for commercial real estate and related services, and the availability of traditional financing sources.
• Intense competition for pricing, commissions, fees, and market position, with some competitors potentially having greater financial and operational resources.
• Uncertainties related to the integration of acquired businesses and the realization of anticipated synergies and revenue growth.
• Liabilities in connection with business activities, such as appraisal and valuation, sales and leasing, and property and facilities management, that may exceed insurance coverage.
• Liquidity, regulatory requirements, and the impact of credit market events, political events, and government actions on credit markets and interest rates.
• Risks associated with the company's relationship and transactions with Cantor and its affiliates, including potential conflicts of interest and challenges to tax law application.
• Competition for and retention of brokers, producers, managers, and key employees, and the time required for newly hired producers to achieve full productivity.
• Impact on stock price from any future reduction of dividends or changes in capital deployment priorities.
• Risks related to changes in relationships with Government-Sponsored Enterprises (GSEs) and HUD, including changes in administration, requirements, or reduction of governmental support programs.
• Risks inherent in doing business in and expanding into international markets, including economic or geopolitical conditions, foreign ownership restrictions, compliance with anti-corruption laws, and currency fluctuations.
• Political and/or civil unrest, including the impact of U.S. government shutdowns and uncertainties regarding the debt ceiling and federal budget.
• Impact of terrorist acts, acts of war, disasters, and pandemics on businesses, clients, and the economy.
• Effect of changes in U.S. and foreign tax and other laws, including the OBBBA, on the company's financial condition and results of operations.
• Risks related to leadership changes, dependence on key employees, and competing demands on the time of certain key employees who also serve Cantor and BGC.
• Extensive regulation of the business and clients, changes in regulations, and risks related to U.S. and foreign tax and compliance matters.
• Information technology risks, including capacity constraints, failures, disruptions, cybersecurity incidents, and compliance with data protection regulations.
• The impact of Artificial Intelligence (AI) on the economy, industry, business, clients, and vendors.
• The effect of ESG or sustainability ratings on decisions by clients, investors, and the market for the company's stock and debt securities.
• Potential dilution for existing stockholders from future offerings or transactions.
• Credit risk in lending activities, particularly related to Fannie Mae DUS and Freddie Mac TAH loans, where the company shares risk of loss.

Future Outlook

Newmark anticipates continued benefits from increased outsourcing trends in Management Services, Servicing Fees and Other businesses, driven by recent strategic investments and an expanding loan servicing portfolio. The company expects further improvements in productivity and earnings as recently hired international team members ramp up. Office fundamentals are projected to gradually improve due to a dropping pipeline of new construction, enhancement of Class B properties, and conversion of obsolete space. Demand for office space is expected to be driven by value resets from near-term debt maturities and increased need for high-quality space from technology and financial services companies. The company foresees continued improvement in industry debt volumes and investment sales activity, fueled by record commercial and multifamily mortgage maturities and interest rate stabilization. Newmark expects to gain further market share due to strong client relationships and brand strength. Short-term yields are expected to remain higher for the foreseeable future, and inflation is anticipated to stay above 2% targets for at least the next two calendar years. The company anticipates share repurchases and unit redemptions to remain a long-term capital allocation priority.

Management Comments

• We continued to solidify what we believe is our position as the platform of choice for many of the real estate industry's top professionals.
• As more of Newmark's recently hired team members ramp up, we expect to further improve our productivity and earnings over time, all else equal.
• We believe these newest Management Services, Servicing Fees and Other offerings will help drive future revenue and earnings growth over time.
• We expect our overall portfolio to continue providing a steady stream of income and cash flow over the life of the serviced loans.
• We believe the recent levels of such measures indicate that relevant mediumand long-term interest rates have stabilized relative to a year earlier.
• With the pipeline of new office construction expected to drop off dramatically after 2025 in our key markets, the ongoing enhancement of Class B office properties, and the conversion of obsolete space into multifamily and other uses, we expect office fundamentals to continue to gradually improve.
• We expect demand for office space to continue to be driven by the reset in values due to near-term debt maturities.
• We also continue to see increased need for high quality office space in an increasing number of markets, led by new demand driven by companies in technology, including AI, as well as financial services, as well as ongoing return-to-workplace plans.
• We believe that we once again gained meaningful share in Capital Markets even as overall industry volumes continued to improve.
• Given Newmark's deep relationships with clients and the strength of our brand, we anticipate further market share gains over time.
• Management believes that, as of September 30, 2025 and December 31, 2024, Newmark had met all capital requirements.
• Management believes that, as of September 30, 2025 and December 31, 2024, Newmark had met all liquidity requirements.
• Management believes that, based on currently available information, the final outcome of these current pending matters will not have a material adverse effect on Newmark's unaudited condensed consolidated financial statements and disclosures taken as a whole.
• Management is in the process of evaluating potential implications of the OBBBA on the Company's multinational activities. Based on a preliminary analysis, management does not expect that the OBBBA tax provisions will have a material impact on the Company, including with respect to its future financial condition, results of operations or liquidity.
• Newmark anticipates share repurchases and unit redemptions remaining a long term capital allocation priority.

Industry Context

The commercial real estate industry is experiencing a mixed environment with macroeconomic challenges like fluctuating interest rates and inflation, yet showing signs of recovery in certain segments. U.S. GDP growth has been volatile, contracting in Q1 2025 before expanding in Q2 and Q3. U.S. office space saw its first positive net absorption in Q3 2025 since late 2021, with strong activity in key cities like New York and Dallas, and overall U.K. office leasing also improved. Industrial leasing continues to gain momentum, and retail vacancy remains low. The market is poised for increased activity due to record commercial and multifamily mortgage maturities expected in 2025-2027, which should drive debt and investment sales volumes. Newmark is actively capitalizing on these trends by expanding its service offerings and gaining market share, particularly in Capital Markets, despite the broader economic uncertainties.

Comparison to Industry Standards

• Newmark's U.S. Total Debt volumes were 10.3% of total U.S. commercial and multifamily mortgage originations over the twelve months ended September 30, 2025, an increase of approximately 280 basis points year-on-year and over six times its 1.5% share in 2015.
• Newmark's U.S. investment sales volumes were 10.7% of overall U.S. MSCI volumes over the twelve months ended September 30, 2025, an increase of approximately 230 basis points versus the year-earlier period and more than three times its 3.3% share in 2015.
• In Q3 2025, Newmark's Total Debt and investment sales volumes were up year-on-year by approximately 129% and 67%, respectively, significantly outperforming the estimated industry-wide increases of 52% for U.S. commercial and multifamily originations and 25% for U.S. investment sales volumes (based on MSCI and MBA data).
• Newmark's Q3 2025 Capital Markets revenue growth of 59.7% substantially exceeded the industry's estimated U.S. commercial and multifamily originations growth of approximately 52% and U.S. and European investment sales volumes growth of 25% and 7%, respectively.

Management Changes

Corporate Governance

Legal Proceedings

• The Consolidated Shareholder Action (Robert Garfield v. Howard W. Lutnick, et al. and Cardinal Capital Management, LLC v. Howard W. Lutnick, et al.), alleging breach of fiduciary duty and corporate asset waste related to a December 2021 bonus award to Mr. Lutnick, was settled for a $50 million cash payment from Newmark's directors and officers insurance carriers. The settlement was approved by the Delaware Court of Chancery on August 13, 2025, and the case was dismissed.
• A class action complaint filed against Cantor, BGC Holdings, and Newmark Holdings in the U.S. District Court for the District of Delaware, alleging breach of contract and antitrust violations related to non-compete and economic forfeiture provisions, had its Second Amended Complaint dismissed by the District Court on December 2, 2024. The plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Third Circuit on December 16, 2024, with oral argument held on September 17, 2025. The Company believes the lawsuit has no merit and expects the dismissal to be affirmed on appeal.

Related Party Transactions

• Newmark receives administrative services from Cantor and its subsidiaries, with allocated expenses of $8.2 million for Q3 2025 and $25.5 million for the nine months ended September 30, 2025.
• The aggregate balance of loans, forgivable loans, and other receivables from employees and partners was $856.5 million as of September 30, 2025, with related compensation expense of $33.5 million for Q3 2025 and $90.2 million for the nine months.
• Newmark recognized servicing revenues of $0.4 million for Q3 2025 and $1.3 million for the nine months from servicing loans for CCRE on a fee-for-service basis.
• Howard W. Lutnick, former Executive Chairman, completed the divestiture of his holdings in the Company on October 6, 2025, in connection with his appointment as U.S. Secretary of Commerce. This included the sale of 10.8 million shares of Newmark Class A common stock to Newmark on May 19, 2025, and additional repurchases by the Company on October 6, 2025.
• Barry M. Gosin, CEO, entered into a new employment agreement on August 7, 2024, extending his term through December 31, 2026, and receiving a $5 million cash payment, 1,694,915 NPSUs, and a $1.5 million cash bonus for 2026. The Company also purchased 795,376 of his LPUs on September 23, 2024.
• Stephen M. Merkel, Chairman of the Board and Chief Legal Officer, was granted 68,302 shares of Newmark Class A common stock and had 73,657 non-exchangeable PPSUs redeemed on July 29, 2025. He also sold 35,006 shares of Class A common stock to the Company on January 2, 2024.
• Luis Alvarado, COO, has two sons employed by a Newmark subsidiary, with total compensation of approximately $960,000 and $215,000 respectively in 2024.
• Newmark exercised its redemption option for its investment in Real Estate LP on July 1, 2023, receiving $105.5 million from Cantor and terminating its interest.
• Cantor purchased $125.0 million aggregate principal amount of Newmark's 7.500% Senior Notes issued on January 12, 2024, and still holds these notes as of September 30, 2025.
• Cantor exercised exchange rights for 7,782,387 exchangeable limited partnership interests on February 18, 2025, receiving 7,221,277 shares of Newmark Class A common stock, which were then delivered to Cantor partners. This transaction is expected to increase Newmark's share of the tax basis of Newmark OpCo assets, reducing future tax liabilities, with Newmark paying Cantor 85% of the cash tax savings under a tax receivable agreement.

Stakeholder Impact

• Shareholders: Experienced significant increases in net income and EPS, along with a declared quarterly dividend. The ongoing share repurchase program aims to enhance shareholder value. The divestiture of Howard W. Lutnick's interests and the increased beneficial ownership of Brandon G. Lutnick represent a shift in control and ownership structure.
• Employees and Partners: Benefit from various equity-based compensation awards, including RSUs and limited partnership units, as well as forgivable loans. The company continues to attract and retain revenue-generating professionals, although international additions may take time to become fully productive.
• Customers: Benefit from an expanding array of integrated services and products, including new fund administration and property/facilities management offerings. Increased outsourcing trends suggest growing demand for Newmark's services.
• Creditors: The company maintains compliance with all financial covenants for its debt and warehouse facilities. Credit ratings and associated outlooks are stable, which is important for accessing debt financing on favorable terms.
• Regulatory Authorities: The company is subject to extensive regulation and is actively monitoring new accounting pronouncements and SEC rules, such as climate-related disclosures, to ensure compliance.

Next Steps

• Continue to attract and retain revenue-generating headcount, particularly in international markets, with an expectation of 6 to 18 months for new additions to produce meaningful fees.
• Further invest in Management Services, Servicing Fees and Other businesses, including property management, facilities management, consulting, underwriting and due diligence, outsourced lease administration, and property accounting.
• Drive further cross-selling between service lines to benefit the high-margin loan servicing and asset management business.
• Monitor and adapt to macroeconomic conditions, including interest rate fluctuations and inflation, and their impact on commercial real estate demand and transaction volumes.
• Capitalize on the expected record amounts of medium-term commercial and multifamily mortgage maturities between 2025 and 2027.
• Continue to pursue share repurchases and unit redemptions as a long-term capital allocation priority.
• Management will continue to assess the potential impact of the OBBBA tax provisions on the Company's future financial condition, results of operations, or liquidity.

Key Dates

Recommendation

Newmark Group, Inc. delivered exceptionally strong financial results for Q3 and the first nine months of 2025, significantly outperforming prior periods with substantial revenue and EPS growth across all key segments, particularly Capital Markets. The company's strategic investments in expanding its service offerings and its demonstrated ability to gain market share in a dynamic real estate environment position it favorably. The resolution of a major shareholder lawsuit removes a significant legal uncertainty. Despite ongoing macroeconomic headwinds, Newmark's management expresses confidence in its ability to capitalize on favorable industry trends, such as increasing outsourcing and record commercial mortgage maturities. The company's commitment to shareholder returns through dividends and an active share repurchase program further enhances its investment appeal. These factors collectively indicate a robust and well-managed company with strong growth prospects.

Keywords

Commercial Real Estate, Real Estate Services, Capital Markets, Leasing, Mortgage Origination, Property Management, Valuation and Advisory, SEC Filing, Earnings Report, Financial Performance, Investment Sales, Corporate Governance, Risk Management, Newmark Group