Cushman & Wakefield (NYSE:CWK) posts first-quarter sales in line with estimates

Real estate services firm Cushman & Wakefield (NYSE:CWK) reported results in line with analysts’ expectations in Q1 CY2024, with revenue down 2.9% year-over-year to $2.18 billion. It posted a non-GAAP loss of $0 per share, improving from a loss of $0.04 per share in the same quarter last year.

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“We reported strong first-quarter results that demonstrate the breadth and strength of our service offerings, as well as our commitment to consistently deliver on our strategic priorities,” said Michelle MacKay, Cushman & Wakefield Chief Executive Officer.

With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE:CWK) is a Chicago-based global real estate firm that provides a comprehensive range of client services.

Real estate services

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Sales growth

Examining a company’s long-term performance can provide clues about the quality of its business. Any business can have a good quarter or two, but the best ones grow steadily over the long term. Cushman & Wakefield’s annual revenue growth rate of 2.4% over the past five years has been poor for a consumer discretionary business. In consumer discretionary, product cycles are short and revenues can be impacted by rapidly changing trends. That’s why we also track short-term performance. Cushman & Wakefield’s recent history shows a reversal from its already weak five-year trend, as its revenue has seen annual declines of 1.9% over the past two years.

We can dig further into the company’s revenue dynamics by looking at its three most important segments: Management, Leasing, and Capital Markets, which account for 39.9%, 17.5%, and 6.5% of revenue. Over the past two years, Cushman & Wakefield’s Management (property management) revenues have averaged 4.5% year-on-year growth, while Leasing (tenant sourcing) and Capital Markets (financial advisory) revenues saw average declines of 3% and 25.8%.

This quarter, Cushman & Wakefield reported a rather uninspiring 2.9 percent year-over-year revenue decline to $2.18 billion, in line with Wall Street estimates. Looking ahead, Wall Street expects sales to grow 3.4% over the next 12 months, an acceleration from this quarter.

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Cash is king

While earnings are undoubtedly valuable for evaluating company performance, we believe cash is king because you can’t use book profits to pay the bills.

Over the past two years, Cushman & Wakefield has broken even from a non-conforming free cash flow perspective for a consumer discretionary business.

Cushman & Wakefield burned through $135.6 million in cash in Q1, equivalent to a negative margin of 6.2%, growing its cash burn by 43.7% year over year.

Key takeaways from Cushman & Wakefield’s Q1 results

It was good to see Cushman & Wakefield beat analysts’ expectations for revenue, EPS and EBITDA this quarter, thanks to better-than-expected performance in its capital markets segment. The company also restructured $1 billion in debt, which is expected to save $6 million annually. Overall, this quarter’s results looked pretty positive. The stock is flat after the report and currently trades at $9.91 per share.

So should you invest in Cushman & Wakefield right now? When making this decision, it is important to consider its valuation, the qualities of the business, as well as what happened in the last quarter. We cover this in our full research report which you can read here, it’s free.