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CBRE Group (CBRE) Q1 2026 Earnings Call Transcript

Date

Thursday, April 23, 2026 at 8:30 a.m. ET

Call participants

• Chair and Chief Executive Officer — Robert E. Sulentic
• Chief Financial Officer — Emma E. Giamartino
• Moderator — Chandni Luthra

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Takeaways

• Segment revenue growth -- Advisory, Building Operations and Experience (BOE), and Project Management segments increased revenue by 20% and operating profit by nearly 30%.
• Resilient businesses revenue -- Revenue grew 18%, reflecting a strategy focused on businesses less tied to real estate cycles and secular tailwinds.
• Transactional businesses growth -- Achieved 22% growth, the highest of the current cycle, driven by sales, leasing, financing, and real estate development activities.
• Infrastructure services revenue -- Generated over $3 billion from infrastructure activities in 2025, with nearly $950 million in the first quarter.
• Critical infrastructure services (BOE) -- Revenue in this business line reached $580 million for the quarter and is expected to grow over 60% in 2026.
• EPS guidance raised -- Full-year EPS range increased to $7.60-$7.80, implying over 20% growth at the midpoint.
• Services segment operating profit -- Operating profit in local currency rose 27%; with FX tailwinds, nearly 30%.
• Leasing revenue -- Global leasing revenue advanced 18%; U.S. leasing up 21%, with industrial leasing up 24% and office leasing up 15% in the U.S.
• Data center leasing -- Revenue more than tripled versus the prior year's first quarter.
• Global property sales revenue -- Increased 39% sequentially from Q4 2025, led by a 64% rise in U.S. property sales with all major property types delivering double-digit increases.
• Mortgage origination and loan servicing -- Mortgage origination revenue rose 53%; loan servicing portfolio expanded 5% to more than $460 billion.
• Advisory SOP -- Segment operating profit increased 35%, reflecting operating leverage.
• BOE segment revenue and SOP -- Revenue grew 16%; SOP rose 23%, with operating leverage aided by an amortization cost reclassification (excluding this effect, SOP growth matched revenue growth).
• Project management segment -- Revenue increased 11% while pass-through costs rose 9%; SOP grew 14% with broad-based growth led by double digits in Asia, the UK, and the U.S.
• Real estate investments (REI) segment -- SOP exceeded internal expectations due to early data center land sale profits; $900 million in embedded gains to be monetized over several years.
• Investment management and AUM -- Raised $1.3 billion of new capital; ended the quarter with over $155 billion in assets under management, flat compared to Q4 2025.
• Free cash flow and conversion -- Trailing twelve-month free cash flow totaled $1.7 billion with 78% conversion; year-end conversion expected at the high end of 75%-85% range.
• Share repurchases -- Repurchased nearly $540 million in shares year to date, citing undervaluation of the share price.
• Guidance detail -- Advisory is now guided to deliver high-teens SOP growth; BOE SOP expected to grow approximately 25% (including the cost reclassification); project management and REI outlooks unchanged.
• Seasonality in EPS -- Due to Q1 outperformance, nearly 40% of annual EPS is expected in the first half, higher than usual.
• Trammell Crow pipeline -- Largest share of pipeline in industrial, multifamily, and data center land; $900 million in embedded profits includes all types, not just land.
• Industrious unit expansion -- The unit addition rate is exceeding expectations, with continued momentum anticipated.
• AI and critical infrastructure talent -- Partnership with Meta to recruit, train, and deploy technical staff for data centers is described as ongoing and not a one-time project.
• Pierce acquisition performance -- Pierce is performing in line with expectations, with $600+ million revenue forecast for 2026; seasonality impacts revenue timing.
• Capital allocation approach -- M&A remains the top priority; AI investments will be pursued via internal capex and not through direct investments in AI companies.
• AI adoption -- Company is controlling access and use of AI to balance benefit with cost, especially under Chief Operating Officer Vikram Kohli.

Summary

CBRE Group (NYSE:CBRE) delivered substantial revenue and operating profit growth across all major segments, notably benefiting from surging demand in infrastructure-related services and critical data center capabilities, as explicitly supported by strong year-to-date pipelines and early monetization of embedded investment gains. Management’s upgraded 2026 EPS guidance, along with heightened SOP expectations for Advisory and BOE, reflects both outperformance in the opening quarter and sustained momentum heading into the next period under stable macroeconomic assumptions. Business diversification into secular tailwinds, strategic partnerships, and targeted capital allocation—including significant share repurchases and disciplined M&A priorities—signal a clear focus on ongoing margin expansion and adaptability through industry cycles.

• Management views margin improvement opportunities as steadier in BOE and Project Management than Advisory, where margins have recovered to pre-pandemic levels.
• Company affirmed that sales and loan origination pipelines are stronger than initially projected, even with elevated interest rates in the 4%-4.5% range for ten-year Treasuries.
• AI adoption is managed to prioritize cost control and operational efficiency, affecting functions such as HR, FP&A, and research, with significant impact expected over several years rather than immediately.
• Strategic collaborations, such as the Meta partnership and geographic expansion of data center services, underscore new and recurring revenue streams beyond the legacy office and industrial focus.

Industry glossary

• BOE (Building Operations and Experience): A CBRE business segment focused on facilities management, critical infrastructure services, and local/enterprise client operations.
• SOP (Segment Operating Profit): Operating profit calculated at the segment level before corporate allocations and certain adjustments.
• Trammell Crow Company: CBRE’s real estate development subsidiary with a pipeline weighted toward industrial, multifamily, and data center land opportunities.
• Industrious: A CBRE-owned flexible workspace platform targeted to both corporate and SME clients.
• Turner & Townsend: A CBRE-affiliated project management division with historic focus in EMEA and APAC, now expanding in the U.S.
• Pierce: An acquired CBRE subsidiary specializing in telecom, power, and critical infrastructure services, not primarily data center-focused.
• Pass-through costs: Project-related expenses billed directly to clients and recognized as both revenue and expense.

Full Conference Call Transcript

Also, as a reminder, our resilient businesses include facilities management, critical infrastructure services, property management, project management, loan servicing, valuation, other portfolio services, and recurring investment management fees. Our transactional business is comprised of sales, leasing, mortgage origination, carried interest and incentive fees in the investment management business, and development fees. Finally, beginning this quarter, our financial results reflect the financial reporting changes we discussed on our fourth quarter earnings call and in our March 24 8-Ks. Prior period results have been recast accordingly. I am joined on today’s call by Robert E. Sulentic, our Chair and CEO, and Emma E. Giamartino, our Chief Financial Officer. Now please turn to slide three as I turn the call over to Robert.

Robert E. Sulentic: Thank you, Chandni, and good morning, everyone. CBRE Group, Inc. continued to generate strong financial results while making important strategic gains during 2026. Together, our three services segments—Advisory, Building Operations and Experience, and Project Management—grew revenue by 20% and operating profit by nearly 30%. Additionally, profits from our data center land development program were delivered earlier in the year than anticipated. Our resilient businesses grew revenue by 18%. This reflects our strategy to grow businesses that are resistant to real estate cycles or benefit from secular tailwinds which support strong through-cycle growth.

Simultaneously, our transactional businesses achieved their highest growth rate of the current cycle at 22%, reflecting our strategy to maintain and extend our market leadership position in sales, leasing, financing, and real estate development. These businesses generate excellent margins and cash flow while providing data and market insights that help us across CBRE Group, Inc. Our work related to infrastructure assets has become a source of significant profits and growth spanning all four business segments. This consists of the services we perform for data centers as well as power, telecom, and transportation assets among others. This is also central to our strategy.

We generated more than $3 billion of total revenue from infrastructure activities in 2025, nearly $950 million in the first quarter. Within the BOE segment specifically, we have created a dedicated critical infrastructure services business line. This business line includes work for data centers along with telecom and power assets captured in the Pierce business we acquired last year. Revenue in this business line totaled $1.7 billion in 2025 and $580 million in the first quarter and is expected to grow in excess of 60% this year. The strong momentum we saw during the first quarter in infrastructure services and across other parts of our business has continued in the early weeks of the second quarter.

Considering this, we are upgrading our EPS expectations to a range of $7.60 to $7.80 for the year, which would result in more than 20% growth at the midpoint of the range. This assumes that the economic environment remains supportive. Emma will describe our outlook in more detail after she reviews the quarter. Emma?

Emma E. Giamartino: Thanks, Robert. Good morning, everyone. Our first quarter results exceeded expectations, even without the pull-forward of profits in our land development program. EPS beat our expectations by nearly 10%. In local currency, our services segments delivered 27% operating profit growth and, as Robert mentioned, nearly 30% with the benefit of FX. Given this relatively large FX tailwind, I will reference growth rates in local currency unless otherwise noted to best reflect our operating performance. Advisory Services revenue saw continued strength in leasing and accelerated growth in sales. Leasing revenue grew 18% globally and 21% in the U.S. Industrial leasing grew 24% in the U.S. as occupiers continue to act ahead of tightening supply for first-generation big-box facilities.

U.S. office leasing revenue increased by 15% with broad-based strength across gateway and non-gateway markets. Additionally, data center leasing revenue more than tripled from last year’s first quarter. Outside the U.S., leasing revenue rose by double digits in Asia Pacific, led by Japan, while EMEA saw mid-single-digit growth. Global property sales revenue growth accelerated from Q4, rising 39%, led by the U.S. and Asia Pacific. U.S. property sales revenue increased 64% as all major property types delivered double-digit increases. Outside the U.S., growth was notably strong in Japan. Mortgage origination revenue increased 53%, fueled by strong volumes from debt funds and the GSEs. Our loan servicing portfolio grew 5% to more than $460 billion.

Advisory SOP grew 35%, delivering strong operating leverage. Turning to the Building Operations and Experience segment, revenue grew 16%. In addition to significant growth in our new critical infrastructure services line of business, which Robert described earlier, our local facilities management business continued to increase revenue at a mid-teens rate. In the Americas, revenue was up almost 30% as this region had one of its best starts to a year. Enterprise Facilities Management revenue also grew by double digits, led by the technology, industrial, and life sciences sectors. BOE’s SOP increased 23% with operating leverage driven by an amortization cost reclassification. Excluding this change, SOP growth was in line with revenue growth, as expected.

Turning to our Project Management segment, revenue increased 11% while pass-through costs rose 9%. Growth was underpinned by strong infrastructure activity. Among real estate projects, growth was driven by the technology sector and was broad based, led by double-digit growth in Asia, the UK, and the U.S. SOP grew 14%, reflecting operating leverage. In the Real Estate Investments segment, SOP exceeded our expectations, driven by earlier-than-anticipated data center land sale profits. We continue to have embedded gains of approximately $900 million that will be monetized over the coming years. In Investment Management, recurring asset management fees increased, driven by higher net asset values. However, operating profit declined due to lower incentive fees and promote income.

We raised $1.3 billion of new capital during the quarter and ended Q1 with more than $155 billion of AUM, in line with Q4’s level. Now I will discuss free cash flow and capital allocation. We produced $1.7 billion of free cash flow on a trailing twelve-month basis, reflecting 78% conversion. As we have discussed previously, cash incentive compensation is paid out in the first quarter based on the prior year’s performance. Due to the strong performance in 2025, free cash flow conversion was lower than the prior year’s Q1. We expect to end 2026 with free cash flow conversion around the high end of our 75% to 85% target range.

We have repurchased nearly $540 million of shares year to date, reflecting our continued belief that our share price does not reflect the sustained long-term growth trajectory of our business. As Robert indicated, we now expect full-year core EPS of $7.60 to $7.80, up from $7.30 to $7.60 previously. The increase is driven by our outperformance in the first quarter and early second-quarter momentum in our infrastructure services-related businesses and strong pipelines across our company. We are increasing our outlook for Advisory and BOE. Advisory is now expected to deliver high-teens SOP growth.

We are expecting approximately 25% SOP growth for BOE, which includes high-teens growth due to improved performance in the underlying business and the remainder due to the cost reclassification. There will be an offsetting increase to depreciation and amortization, resulting in a neutral impact to net income. Our SOP expectations for Project Management and REI remain unchanged. Our outlook assumes no material changes to the macroeconomic interest rate environment, and in terms of seasonality, as a result of our first quarter outperformance, we expect to generate nearly 40% of EPS in the first half of the year, a higher percentage than we would typically achieve. With that, Operator, we will now open the call for questions.

Operator: We will now open the call for questions. May press 2 to remove yourself from the queue. It may be necessary to pick up the handset before pressing the star keys. Our first question comes from the line of Anthony Paolone with JPMorgan. Please proceed with your question.

Anthony Paolone: Great, thanks, and good morning, and nice quarter. My first question relates to how you are thinking about the second half of the year because the first quarter and first half look quite strong. Can you get into a little bit more of your thinking on how much of that was pulling forward items you thought would happen later in the year versus outright strength, and help us understand how you are thinking about 2H?

Emma E. Giamartino: Sure, Anthony. We increased the midpoint of our guidance from $7.45 to $7.70 of EPS. As Robert and I discussed, we pulled forward our development profits that we expected to generate later in the year to the first quarter. There is no impact to our guidance for our REI segment. In terms of the raise from $7.45 to $7.70, a third of that is based on the outperformance in the first quarter in Advisory and BOE, and two-thirds of that raise is increasing our expectations for the remainder of the year.

Within Advisory, we are seeing strong pipelines going into Q2, especially in the U.S., and so despite the uncertainty in the macro, we are raising our outlook for Advisory for the remainder of the year, but remember that growth will still decelerate in the second half given we are working against tough comparisons. Within BOE, we are raising our guidance for the remainder of the year slightly, given the strength in both critical infrastructure services and Local.

Anthony Paolone: Okay, got it. Thank you for that. And then my second question is about the roughly $30 billion in pipeline and projects in Trammell Crow right now. Can you talk about how much is industrial, data center, office, and so forth? And on the $900 million, the prospects of that potentially being further accelerated as the year progresses?

Robert E. Sulentic: Yes. The biggest portion of the Trammell Crow in-process and pipeline portfolio is in three areas: industrial, multifamily, and data center land. The thing to know about Trammell Crow Company—forever that business has been really good at acquiring land, entitling land, improving land, and positioning land to be more valuable than it was before we got involved with it. That is a core competency of that business. As we have moved through various parts of the cycle, we have aimed that business in areas that we thought had secular tailwinds.

Coming out of COVID, CBRE Group, Inc. was and continues to be a massive office building business, and COVID hammered everything about office buildings, but we moved aggressively into industrial land and multifamily land and multifamily development. Within two years, we were back to record earnings. What you are seeing now is a considerable amount of investment in multifamily and industrial because we believe there is a dearth of new development that will be coming on over the next few years, and we are well positioned to do that. We have talked a lot about that.

We also, around the country, have secured dozens of land sites that have the potential to be data center land sites over time, and we are working with various data center users, especially the hyperscalers, to get that land entitled and powered, get water to the land. We think we will have a relatively steady stream of opportunities in data center land over the next few years. It will be lumpy, for sure. As evidenced by the first quarter, our harvest so far this year is kind of what we thought it would be for the first year, and Emma gave you some perspective on that.

Emma E. Giamartino: Thank you.

Operator: As a reminder, we would like everyone in the queue to limit themselves to one question and one follow-up. Thank you. Our next question comes from the line of Stephen Hardy Sheldon with William Blair. Please proceed with your question.

Stephen Hardy Sheldon: Thanks, and really nice results here. First, I wanted to ask about the training partnership with Meta around data center capabilities. You were just talking about not being able to hire enough people in critical infrastructure. Do you see similar opportunities with other big tech and AI companies? And is this more of a one-time revenue opportunity, or are there recurring, resilient revenue streams that could be built and supported by a partnership like this? How are you thinking about these opportunities?

Robert E. Sulentic: It is definitively not a one-time thing. We are building capability in multiple cities around the U.S. to recruit, train, and place technical people to support Meta’s data center initiative. It is really hard to get those people. We are recruiting and training those people and sending them not only into CBRE Group, Inc.’s teams to support Meta, but into our competitors and others in the market. Meta viewed us as having a unique ability to hire and train people. We have a big operation in that regard; we hire something like 30,000 people a year.

The bottom line is, with these companies that we interface with to do critical infrastructure and data center work, there is a broad base of things that we can do to support them. This surfaced because of our brand and our scale and our breadth here in the U.S. and in other places around the world. We expect this to be an enduring service that we provide.

Stephen Hardy Sheldon: As a follow-up, on the commentary that average office lease durations are holding steady, what have you seen with Industrious? Have you seen demand for more flexible space start to pick up, and if average lease terms pull back, would you see an uptick in demand for solutions like Industrious that give companies more flexibility? How are you thinking about that?

Robert E. Sulentic: The number of Industrious units that we are adding is exceeding our expectations and underwriting when we bought the business. We are quite pleased with the pace at which we are adding those units, and we expect it to continue this year and into the foreseeable future. We bought that business because we thought it was a premium offering that would be interesting to corporates in addition to small and medium-sized businesses, and we are seeing that play out. Just like we are seeing strength in every other part of the office market, we are seeing good momentum there.

Industrious’ capability as an experience company is becoming an increasing opportunity for us with our corporate clients on the facilities management side of things. We are quite excited about it.

Operator: Thank you. Our next question comes from the line of Julien Blouin with Goldman Sachs. Please proceed with your question.

Julien Blouin: Thank you for taking my question, and congrats on the quarter. Clearly a very strong first quarter for both investment sales and leasing. On pipelines, one of your peers last week commented that they are seeing client decision-making slowing down given the lack of visibility. When you have instability, long-term investments become harder to make. Are you seeing any signs of that? And if there is an impact, do you expect to see that more in EMEA and APAC versus the U.S.?

Robert E. Sulentic: I think there is more worry in APAC and Continental Europe over the impacts of higher energy prices. We are not seeing decision-making slowing down as it relates to industrial leasing or office leasing. Where we are seeing some slower decision-making is in corporate capital investment—except for data center investment. We think part of what is going on is that resources are moving from other types of real estate-related capital investment to data center investment. There could also be a bit of uncertainty creeping into capital investment, which tends to slow when there is uncertainty. We have seen some slowdown there, but really not on the leasing side.

It certainly has not surfaced in data centers, and it has not surfaced in traditional warehouse leasing or traditional office leasing. Office leasing is strong around the world, maybe a little less so in Europe. We are not seeing a slowdown in decision-making right now.

Julien Blouin: Going back to AI, how have your thoughts on the risk from AI evolved since last quarter? Do you still believe that your BOE segment is where some risk of disintermediation lies and less so on the capital markets side? And what about headlines around smaller AI-based startups gaining traction in smaller commercial real estate transactions and bypassing traditional brokers—could that scale up to $10 million or $20 million transactions in 6 to 12 months?

Robert E. Sulentic: We start with strategy. Our strategy is to be diverse across asset types, service types, geography, and client types, and to push resources into areas with secular tailwinds. AI is creating a considerable secular tailwind for our company right now, and it is fairly broad based. Our move into critical infrastructure and data center services is going to be at least as profound as our move into outsourcing in the 1990s and early 2000s, and much faster. To reiterate, we generated $3 billion of revenue last year in our services businesses related to infrastructure, and almost $1 billion in the first quarter, growing almost 50% this year.

We see strong opportunities to do M&A in that area—targets view us as a good home for employees and clients. Second, we are enhancing our products across brokerage, building management, and project management with AI-enabled tools, and we have attracted strong technology and AI talent. We are bullish about those products and think they will help us do more business. Third, efficiency: we expect gains in offshore service centers, research, FP&A, and HR. The gains will be significant but will take time to develop, implement, and reorganize around. Where we think we are most protected is in our transactional businesses—our investing businesses, brokerage, and development—where you lead with strategy, negotiations, and creativity.

There is commentary that data work and financial analysis will be squeezed by AI, which will compress revenues. In reality, the vast majority of what we spend in that business goes to our brokers, whose value is strategic help, creativity, negotiation, and knowledge beyond the data. We are not going to use leverage to squeeze our brokers. The real value comes from that human element. The land development business at Trammell Crow Company is not going to be disintermediated by AI; it will be enabled by AI. We think we are reasonably well protected. As for anecdotes about proptech companies disintermediating brokerage, I would ask them to show you their revenue stream.

Operator: Our next question comes from the line of Analyst with Barclays. Please proceed with your question.

Analyst: Thanks for taking my questions. A few follow-ups on data centers. How is the Pierce acquisition trending versus the $90 million of EBITDA contribution you had originally anticipated for 2026? And in terms of expanding the data center platform, what are some of the other verticals or sub-verticals you could potentially expand into?

Robert E. Sulentic: I will answer the back half first, and Emma will address Pierce. Pierce, by the way, is not primarily a data center business; it is telecom, power, etc. In the data center business, we are seeing big impact in our brokerage business and in our Building Operations and Experience business where we formed the critical infrastructure line. We are doing a lot of project work and building management work. We do work on over 1,300 data centers around the world. In Turner & Townsend, our big project business, we continue to see a lot of work. We have opportunity to expand all those things.

Turner & Townsend has historically been Europe, Middle East, and Asia Pacific focused with some U.S. presence; now they are growing rapidly in the U.S., leveraging CBRE Group, Inc.’s network. Conversely, our data center services—building management and small projects in the white space—have been primarily U.S., and now we are seeing a big opportunity to expand in Europe and Asia. Those are areas we are focused on. From an M&A standpoint, our strategy and track record give us opportunity globally in those areas.

Emma E. Giamartino: Specifically on Pierce, it is performing well and in line with our expectations. One important note: if you take the $600-plus million of revenue that we forecasted for 2026, you cannot ratably spread that across the quarters because there is a seasonal element to the business given maintenance of cell towers and wind and solar assets. Weather impacts revenue timing. Excluding Pierce in the first quarter, our BOE revenue growth was mid-teens.

Analyst: Okay, great. Thanks. One follow-up. If I heard you correctly, was it about $9 million of embedded profit in the land bank? You talked about dozens of other land opportunities you could monetize in the future. How should we think about the steady-state contribution—understanding it will be lumpy—and your ability to acquire attractively priced land, add value, and keep that pipeline steady over the next couple of years?

Robert E. Sulentic: The $900 million is not just land profits; it is all profits captured in Trammell Crow Company, including land. On the data center land opportunity, we have lots of sites with potential to monetize, but it is hard. You have to get approvals, power, and water, and there can be public opposition. As a result, we have not been overly aggressive about forecasting what might happen. We are very excited about the potential, like the portfolio of sites we control, and have very little of our own capital in those. We like our ability to work with hyperscalers and other data center clients to help them get land positions.

Knowing how hard that business is and the scarcity challenges, we are being measured about the outlook we are establishing. But the $900 million is all the profits we see captured in Trammell Crow Company today. And we are filling that back up at the same rate we are emptying it out.

Operator: Thank you. Our next question comes from the line of Jade Joseph Rahmani with KBW. Please proceed with your question.

Jade Joseph Rahmani: Thanks very much. On AI and how you have rolled it out to your teams, could you quantify what percentage of your teams are using it, whether you are limiting who can use it, and what you are doing to maintain a closed-loop system for your data?

Robert E. Sulentic: We are, like everybody else, working our way through that. One of the things we are watching very closely is that it can get really expensive really fast if you do not control who has access and what they use it for. Our Chief Operating Officer, Vikram Kohli, who is over our cost control program and has the technology part of our business reporting to him right now, is watching very closely how and where we are using AI: how we are using it to improve our products versus using it randomly around the system. We are controlling access and use cases.

We are reasonably pleased that we are attacking new technology in a measured way where the benefit we are getting is in balance with the cost we are expending on it. But it is something you must watch very closely.

Jade Joseph Rahmani: Switching to transactions, has the pipeline slowed at all driven by the increase in rates and modest widening in CRE borrowing spreads that we have seen?

Emma E. Giamartino: The pipeline has not slowed at all. Going into Q2, the pipeline is actually stronger than we would have expected at the beginning of the year. On rates, as long as the 10-year has been around the 4% to 4.5% range, we have seen sales activity and loan origination activity continue to grow and accelerate. As long as there is not a significant spike above that, we do not expect to see any slowing.

Jade Joseph Rahmani: Thanks very much.

Chandni Luthra: Thank you.

Operator: Our next question comes from the line of Seth Eugene Bergey with Citi. Please proceed with your question.

Seth Eugene Bergey: Thanks for taking my question. Going back to capital allocation, you did the buybacks in the quarter. Has AI changed the way you think about capital allocation priorities as you weigh buybacks versus bolt-ons in resilient businesses? Are there any incremental AI-related investments you would look to add to the platform?

Emma E. Giamartino: Capital allocation priorities remain consistent. We always prioritize M&A, and if anything, we see even greater opportunity for M&A at this point than we have historically, especially in the data center space. We will continue to prioritize M&A, and as you have seen, as we monitor our pipeline and what we can convert in a year, we fill in with buybacks, especially when our share price remains undervalued. In terms of investing in AI, similar to technology generally, we are constantly investing organically through our capex to support our business. That will remain unchanged. Do not expect us to invest in AI companies directly; just as we did not make large investments in technology companies historically.

Seth Eugene Bergey: Thanks. You talked about rationalizing headcount where it makes sense and using AI to increase productivity. It might be early, but do you have a sense of how that can change the margin profiles of certain segments over time?

Emma E. Giamartino: It is difficult to speculate precisely how it will impact margins over time, but it will. It will take a number of years and will start in our functions—HR, shared services, research, FP&A. Even those headcount reductions are anticipated a few years from now versus immediately. Time will tell how that explicitly impacts our business.

Seth Eugene Bergey: Great. Thanks.

Operator: Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Ronald Kamdem: Great. A quick one going back to BOE. I think you mentioned earlier that excluding the acquisition, revenue growth would have been mid-teens, and that growth rate has been sustainable for quite some time. Is there a way to double-click on how much of that growth is driven by existing client expansion versus new business, and has that mix shifted as the business has changed over the past couple of years?

Emma E. Giamartino: We think about that business across Enterprise Facilities Management, Local, and now Critical Infrastructure Services. Enterprise is a solid double-digit grower—low double digits over time. Local, as it has been expanding into new markets, continues to show significant growth; our Local business in the Americas grew revenue about 30% this quarter, bringing segment growth above that low double-digit range. Critical Infrastructure Services, as you saw, has tremendous growth. Together, these will keep BOE growth in the mid-teens range and potentially above over time.

Ronald Kamdem: Thanks. As I think about Advisory Services versus BOE versus Project Management, at this point in the cycle, is the greatest margin upside still in Advisory because of potential transaction upside, or how do you think about potential margin uplift in the other segments?

Emma E. Giamartino: Advisory has already returned to 2019 margin levels, which we think is a relatively steady state for that business. There will be incremental margin uplift this year, but we see the more consistent opportunity in BOE and in Project Management. Those margin gains are steadier and more incremental over time, and we see opportunity for them to increase.

Operator: Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to CEO, Robert E. Sulentic, for closing remarks.

Robert E. Sulentic: Thanks, everyone, for joining us today, and we will talk to you again in ninety days when we report on our second quarter.

Operator: Thank you. This concludes today’s conference, and you may disconnect your line at this time. We thank you for your participation. Have a great day.

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