JONES LANG LASALLE INC

Previous wording

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the six months ended June 30, 2026, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2025, which are included in our 2025 Annual Report on Form 10-K, filed with the SEC and also available on our website (www.jll.com). You should also refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Annual Report on Form 10-K.

Current wording

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the nine months ended September 30, 2026, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2025, which are included in our 2025 Annual Report on Form 10-K, filed with the SEC and also available on our website (www.jll.com). You should also refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Annual Report on Form 10-K.

Previous wording

A discussion of our critical accounting policies and estimates used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to these critical accounting policies and estimates during the six months ended June 30, 2026.

Current wording

A discussion of our critical accounting policies and estimates used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to these critical accounting policies and estimates during the nine months ended September 30, 2026.

Previous wording

Equity earnings may vary substantially from period to period for a variety of reasons, including as a result of (i) valuation increases (decreases) on investments reported at fair value, (ii) gains (losses) on asset dispositions and (iii) impairment charges. The timing of recognition of these items may impact comparability between quarters, in any one year or compared to a prior year.

Current wording

Equity earnings may vary substantially from period to period for a variety of reasons, including as a result of (i) valuation increases (decreases) on investments reported at fair value, (ii) gains (losses) on asset dispositions and (iii) impairment charges. The timing of recognition of these items may impact comparability between quarters, in any one year or compared with a prior year.

Previous wording

Historically, we have reported a relatively smaller revenue and profit in the first quarter with both measures increasing each of the following three quarters. This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year end and the fact that certain expenses are constant through the year. Our seasonality excludes the recognition of investment-generated performance fees and realized and unrealized investment equity earnings and losses. Specifically, we recognize incentive fees when assets are sold or as a result of valuation increases in the portfolio, the timing of which may not be predictable or recurring. In addition, investment equity gains and losses are primarily dependent on valuations of underlying investments, and the direction and magnitude of changes to such valuations are not predictable. Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

Current wording

Historically, we have reported relatively lower revenue and profit in the first quarter with both measures increasing each of the following three quarters. This is a result of a general focus in the real estate industry on completing or documenting transactions by calendar year end and the fact that certain expenses are constant through the year. Our seasonality excludes the recognition of investment-generated performance fees and realized and unrealized investment equity earnings and losses. Specifically, we recognize incentive fees when assets are sold or as a result of valuation increases in the portfolio, the timing of which may not be predictable or recurring. In addition, investment equity gains and losses are primarily dependent on valuations of underlying investments, and the direction and magnitude of changes to such valuations are not predictable. Non-variable operating expenses, which we treat as expenses when incurred during the year, are relatively constant on a quarterly basis.

Previous wording

Credit losses on convertible note investments reflects credit impairments associated with pre-equity convertible note investments in early-stage proptech enterprises. Such losses are similar to the equity investment-related losses included in equity earnings/losses for Proptech Investments and are therefore consistently excluded from adjusted measures.

Current wording

Credit losses on convertible note investments, net reflects changes in the allowance for credit losses associated with pre-equity convertible note investments in early-stage proptech enterprises. Such activity is similar to the equity investment-related gains and losses included in Equity earnings/losses for Proptech Investments and is therefore consistently excluded from adjusted measures.

Previous wording

For the second quarter, revenue increased 10% compared with the prior-year quarter. Advisory revenues were collectively up 21%, led by Leasing Advisory, up 24%, and Investment Sales, Debt/Equity Advisory and Other, within Capital Markets Services, up 25% (excluding the impact of net non-cash MSR and mortgage banking derivative activity). The 8% increase in Resilient revenues was highlighted by Workplace Management, within Real Estate Management Services, up 10%.

Current wording

For the third quarter, revenue increased 12% compared with the prior-year quarter. Advisory revenues were collectively up 22%, led by Leasing Advisory, up 27%, and Investment Sales, Debt/Equity Advisory and Other, within Capital Markets Services, up 23% (excluding the impact of net non-cash MSR and mortgage banking derivative activity). The 9% increase in Resilient revenues was highlighted by Workplace Management, up 10%, and Project Management, up 14%, both within Real Estate Management Services.

Previous wording

On a year-to-date basis, revenue also increased 10%. Advisory revenues grew 19% collectively, led by Leasing Advisory, up 20%, and Investment Sales, Debt/Equity Advisory and Other, up 25% (excluding the impact of non-cash MSR and mortgage banking derivative activity). Resilient revenues increased 8% collectively, highlighted by Workplace Management, up 9%, and Project Management, up 6%.

Current wording

For the nine months ended September 30, revenue increased 10% compared with the prior-year period. Advisory revenues were collectively up 20%, led by Leasing Advisory, up 23%, and Investment Sales, Debt/Equity Advisory and Other, within Capital Markets Services, up 24% (excluding the impact of net non-cash MSR and mortgage banking derivative activity). The 8% increase in Resilient revenues was highlighted by Workplace Management, up 9%, and Project Management, up 9%, both within Real Estate Management Services.

Previous wording

The following highlights Resilient and Advisory revenue as a percentage of total revenue for the second quarter and first half of 2026, followed by the year-over-year change for each of the trailing eight quarters. Refer to segment operating results for further detail.

Current wording

The following highlights Resilient and Advisory revenue as a percentage of total revenue for the third quarter and first nine months of 2026, followed by the year-over-year change for each of the trailing eight quarters. Refer to segment operating results for further detail.

Previous wording

Consolidated operating expenses were $6.6 billion for the second quarter, up 9% from the same period in 2025. Gross contract costs were $4.6 billion, up 9% from the prior-year quarter, attributable to growth from businesses with higher client pass-through expenses such as Workplace Management (where higher costs were driven by mandate expansions and new client wins) and Project Management (where increased costs were attributable to changes in contract mix), both within Real Estate Management Services. Platform operating expenses were $2.0 billion for the second quarter, a 10% increase from the prior-year quarter, largely due to higher commission expense, driven by Advisory revenue growth.

Current wording

Consolidated operating expenses were $6.9 billion for the third quarter, up 11% from the same period in 2025. Gross contract costs were $4.7 billion, up 10% from the prior-year quarter, attributable to growth from businesses with higher client pass-through expenses such as Workplace Management and Project Management, both within Real Estate Management Services. Platform operating expenses were $2.2 billion for the third quarter, an 11% increase from the prior-year quarter, largely due to higher commission expense, driven by Advisory revenue growth.

Previous wording

The second-quarter increase in Restructuring and acquisition charges was primarily driven by the absence of earn-out fair value adjustments in the current quarter and lower severance and employment-related charges. The decrease for the first half of 2026 reflected the same lower severance and employment-related charges, which more than offset the impact from the change in earn-out fair value adjustments.

Current wording

The third-quarter increase in Restructuring and acquisition charges was primarily driven by higher severance and employment-related charges. The decrease for the first nine months of 2026 reflected lower restructuring, pre-acquisition and post-acquisition charges, which more than offset the impact from higher severance and employment-related charges and the change in earn-out fair value adjustments.

Previous wording

Interest expense, net of interest income, for the three and six months ended June 30, 2026, was $26.4 million and $43.4 million, respectively, compared with $35.3 million and $59.9 million in the prior-year periods. Lower expense was primarily due to lower average borrowings and a lower effective interest rate compared with the prior-year period.

Current wording

Interest expense, net of interest income, for the three and nine months ended September 30, 2026, was $19.7 million and $63.1 million, respectively, compared with $29.2 million and $89.1 million in the prior-year periods. The expense reduction was primarily due to (i) lower average borrowings and a lower effective interest rate compared with the prior-year period and (ii) the net interest benefit from our cross-currency swaps designated as net investment hedges.

Previous wording

The following details Equity earnings/losses by investment type. Equity losses in the current quarter, and prior-year periods, were largely attributable to valuation declines of certain Proptech Investments. Equity earnings in the first half of 2026, compared with equity losses in the prior-year period, reflected greater valuation increases in Investment Management as well as notably lower net valuation declines in Proptech Investments.

Current wording

The following details Equity earnings/losses by investment type. Equity earnings for the third quarter of 2026, compared with the prior-year quarter, were lower, reflecting lower valuation increases in Investment Management and Proptech Investments. Equity earnings for the first nine months of 2026, compared with equity losses in the prior-year period, reflect net valuation increases in Proptech Investments, versus net valuation declines in the prior-year period, as well as greater valuation increases in Investment Management.

Previous wording

The following details Net income attributable to common shareholders and Adjusted EBITDA for the three and six months ended June 30, 2026, and 2025.

Current wording

The following details Net income attributable to common shareholders and Adjusted EBITDA for the three and nine months ended September 30, 2026, and 2025.

Previous wording

For the second quarter and first half of 2026, higher Adjusted EBITDA and margin were primarily driven by Capital Markets Services and Leasing Advisory, reflecting strong revenue growth and enhanced platform leverage. In addition, profit growth included the absence of $14 million of loan loss expense recognized in the prior-year quarter associated with an enhanced loss-share agreement with Fannie Mae for a specific three-loan portfolio.

Current wording

For the third quarter and first nine months of 2026, higher Adjusted EBITDA and margin were primarily driven by Leasing Advisory and Capital Markets Services, reflecting strong revenue growth, with incremental profit contributions from Real Estate Management Services. In addition, margin expansion reflected enhanced platform leverage. Performance for the third quarter and first nine months of 2026 also reflected lower loan-related expenses, including the absence of loan loss expense recognized in the comparative periods.

Previous wording

The following chart reflects segment Adjusted EBITDA for the second quarter and first six months of 2026 and 2025. Proptech Investments are reflected outside of the reporting segments in "All Other;" Adjusted EBITDA for the segments, therefore, does not sum to the consolidated total.

Current wording

The following chart reflects segment Adjusted EBITDA for the third quarter and first nine months of 2026 and 2025. Proptech Investments are reflected outside of the reporting segments in "All Other;" Adjusted EBITDA for the segments, therefore, does not sum to the consolidated total.

Previous wording

Segment operating expenses comprise Gross contract costs and Segment platform operating expenses, which includes Platform compensation and benefits; Platform operating, administrative and other expenses; and Depreciation and amortization. Our measure of segment results excludes Restructuring and acquisition charges.

Current wording

Segment operating expenses comprise Gross contract costs and Segment platform operating expenses, which include Platform compensation and benefits; Platform operating, administrative and other expenses; and Depreciation and amortization. Our measure of segment results excludes Restructuring and acquisition charges.

Previous wording

Compared with the prior-year periods, Real Estate Management Services achieved revenue growth across nearly all business lines for both the second quarter and first half of 2026. For both periods, continued strength in Workplace Management highlighted the top-line increases, led by mandate expansions and complemented by new wins. Project Management revenue growth for the second quarter followed a strong increase in the prior-year quarter (up 22%), and reflected a low double-digit management fee increase in the Americas, augmented by higher pass-through costs due to contract mix, partially offset by slower growth in certain other geographies. First-half growth benefited from stronger first-quarter performance and also followed a meaningful increase in the prior-year period (up 19%).

Current wording

Compared with the prior-year periods, Real Estate Management Services revenue growth for the third quarter and first nine months of 2026 was attributable to continued momentum within Workplace Management and, for the quarter, accelerated growth in Project Management. Within Workplace Management, the increases for the third quarter and first nine months were driven by a largely balanced mix of mandate expansions and new client wins. Project Management's double-digit growth for the quarter follows a strong third-quarter 2025 (up 38% on a two-year stacked basis), with higher pass-through costs augmenting a mid single-digit management fee increase. This growth was led by the U.S. and India, which outpaced softness in Australia and certain geographies in Europe. Project Management growth in the first nine months of 2026 benefited from the stronger third-quarter performance and also followed a meaningful increase in the prior-year period (up 21%), also with higher pass-through costs augmenting a mid single-digit management fee increase.

Previous wording

The increases in Segment platform operating expenses for the second quarter and first half of 2026 were primarily driven by incremental revenue-related human capital investments. Higher gross contract costs for both periods correlated to top-line performance across the segment's business lines.

Current wording

The increases in segment platform operating expenses for the third quarter and first nine months of 2026 were largely driven by incremental revenue-related human capital investments. For the third quarter, certain discrete expenses contributed to the increase in Platform operating, administrative and other. Higher gross contract costs for both periods correlated to top-line performance across the segment's business lines.

Previous wording

Adjusted EBITDA improvements for the second quarter and first half of 2026 were primarily attributable to the revenue growth described above and incremental platform leverage.

Current wording

Higher Adjusted EBITDA and margin for the third quarter and first nine months of 2026 were primarily attributable to the revenue growth described above and incremental platform leverage.

Previous wording

The increases in Leasing Advisory revenue for the second quarter and first half of 2026 were driven by accelerated momentum in the office, industrial and data center asset classes, compared with the prior-year periods. Many geographies achieved double-digit revenue increases for both periods, highlighted by the U.S., with meaningful growth from Japan and the UK. For both the second quarter and first half of 2026, broad-based asset class growth across the U.S. was primarily driven by office and industrial, as a significant uptick in average deal size was complemented by higher volume. Office leasing revenue growth outperformed global office volumes for both the second quarter and first half of 2026 (up 20% and 17%, respectively, compared with global market volumes up 2% and 1%, according to JLL Research), with U.S. revenue outperformance for both periods (up 24% and 19%, respectively, compared with U.S. market volumes up 12% and 10%).

Current wording

Higher Leasing Advisory revenue for the third quarter and first nine months of 2026, compared with the prior-year periods, was driven by accelerated momentum in the U.S., most notably in the industrial, office and data center asset classes. Geographically, the strong U.S. growth (up 39% for the quarter and 30% for the first nine months of 2026) significantly outpaced softness in certain other geographies. Broad-based asset class growth across the U.S. was primarily due to a meaningful uptick in average deal size for the third quarter and first nine months of 2026. Leasing Advisory revenue growth outperformed market volumes in both office and industrial. Global office revenue was up 9% for the quarter and 14% for the first nine months of 2026, compared with market volumes(1) up 5% and 1%, respectively. In the U.S., office revenue was up 18% and 19%, compared with market volumes(1) up 2% and 7%, and industrial revenue was up 56% and 45%, compared with market volumes(1) up 38% and 35%.

Previous wording

The increases in Segment platform operating expenses for the second quarter and first half of 2026 were primarily attributable to higher commission expense, driven by the revenue growth. Consistent with the first quarter, larger average deal size drove a higher average commission rate for both periods, as higher commission tiers were achieved earlier this year.

Current wording

The increases in segment platform operating expenses for the third quarter and first nine months of 2026 were primarily attributable to higher commission expense, driven by the revenue growth. Consistent with the first half of 2026, larger average deal size drove a higher average commission rate for the third quarter as well as the nine-month period, as higher commission tiers were achieved earlier this year.

Previous wording

Adjusted EBITDA and margin expansion for the second quarter and first half of 2026 were driven by revenue growth, net of higher commission expense, coupled with incremental platform leverage.

Current wording

Adjusted EBITDA and margin expansion for the third quarter and first nine months of 2026 were driven by revenue growth, net of higher commission expense, coupled with incremental platform leverage.

Previous wording

(1) Adjusted EBITDA excludes Equity earnings (losses) attributable to common shareholders for Investment Management.

Current wording

(1) Adjusted EBITDA excludes Equity earnings attributable to common shareholders for Investment Management.

Previous wording

Investment Management revenue was largely consistent with the prior-year periods for both the second quarter and first half of 2026. Advisory fees reflected growth associated with continued capital raise momentum over the trailing twelve months, most notably in North America, offset by anticipated lower fees from funds in Asia Pacific, as discussed in the first quarter.

Current wording

Compared with the prior-year periods, lower Incentive and transaction fees drove the decline in Investment Management revenue for the third quarter and first nine months of 2026. Advisory fees were largely steady for both periods, as growth from recent capital raising in the Americas was offset by anticipated lower fees from funds in Asia Pacific, as discussed in recent quarters.

Previous wording

Equity earnings for the second quarter and first half of 2026 reflected valuation increases across the underlying investment portfolio, compared with equity losses in the prior-year periods, which were driven by valuation declines in Asia Pacific and North America funds.

Current wording

Equity earnings in the third quarter were driven by valuation increases across the portfolio, which were higher in the prior-year quarter. Equity earnings for the first nine months of 2026 were higher, reflecting first-half valuation increases across the underlying investment portfolio, compared with equity losses in the first half of 2025, which were driven by valuation declines in Asia Pacific and North America funds.

Previous wording

AUM was flat in USD and in local currency during the quarter, and increased 2% in USD and 1% in local currency over the trailing twelve months. Changes in AUM are detailed in the tables below (in billions):

Current wording

AUM increased 2% in both USD and in local currency during the quarter. Over the trailing twelve months, AUM was flat in USD and increased 2% in local currency. Changes in AUM are detailed in the tables below (in billions):

Previous wording

Operating activities used $266.9 million of cash in the first six months of 2026, compared with $434.8 million of cash used in operating activities during the same period in 2025. The improvement in operating cash flows was primarily attributable to higher cash provided by earnings, partially offset by higher trade receivables - correlated with the revenue growth - with net working capital adjustments in aggregate broadly consistent with the prior-year period.

Current wording

Operating activities provided $342.8 million of cash in the first nine months of 2026, compared with $182.3 million of cash provided by operating activities during the same period in 2025. The improvement in operating cash flows was primarily attributable to higher cash provided by earnings, partially offset by higher trade receivables, correlated with revenue growth, and the timing of net reimbursables activity.

Previous wording

We used $125.5 million of cash for investing activities during the first six months of 2026, compared with $200.4 million used during the same period in 2025. The decrease in cash used for investing activities was primarily attributable to our January 2025 $100.0 million contribution to JLL Income Property Trust ("JLL IPT"), partially offset by higher capital expenditures. We discuss these and other drivers of investing activity below in further detail.

Current wording

We used $254.4 million of cash for investing activities during the first nine months of 2026, compared with $251.6 million used during the same period in 2025. The increase in cash used for investing activities was primarily attributable to higher capital expenditures, largely offset by lower net contributions to investments (the largest of which was our 2025 $100.0 million contribution to JLL Income Property Trust ("JLL IPT")).

Previous wording

Financing activities provided $251.8 million of cash during the first six months of 2026, compared with $617.5 million provided during the same period in 2025. The decrease in cash provided by financing activities reflected lower net borrowings under the Facility and the Program, largely driven by a higher cash balance at the beginning of 2026 and lower cash used for investing activities. We discuss specific drivers of financing activities, including share repurchases, in further detail below.

Current wording

Financing activities used $179.3 million of cash during the first nine months of 2026, compared with $72.8 million provided during the same period in 2025. Net cash outflow reflected over $400 million of incremental share repurchases in 2026 (through the first nine months), partially offset by higher net borrowings compared with the prior-year period. We discuss specific drivers of financing activities, including share repurchases, in further detail below.

Previous wording

In addition to our Facility, we had the capacity to borrow up to $58.0 million under local overdraft facilities as of June 30, 2026.

Current wording

In addition to our Facility, we had the capacity to borrow up to $58.3 million under local overdraft facilities as of September 30, 2026.

Previous wording

As of June 30, 2026, we had a carrying value of $873.6 million in Investments, primarily related to Investment Management co-investments and investments in early-to-mid-stage proptech companies as well as proptech funds ("Proptech Investments"). For the six months ended June 30, 2026, return of capital exceeded funding of investments by $0.6 million, and during the same period in 2025, funding of investments exceeded return of capital by $104.5 million, primarily driven by our $100.0 million investment in JLL IPT. We have maximum potential unfunded commitments to direct investments or investment vehicles of $305.5 million and $5.8 million as of June 30, 2026, for our Investment Management business and Proptech Investments, respectively.

Current wording

As of September 30, 2026, we had a carrying value of $966.4 million in Investments, primarily related to Investment Management co-investments and investments in early-to-mid-stage proptech companies as well as proptech funds ("Proptech Investments"). For the nine months ended September 30, 2026 and 2025, funding of investments exceeded return of capital by $75.5 million and $106.2 million, respectively, with the 2025 amount primarily driven by our $100.0 million investment in JLL IPT. We have maximum potential unfunded commitments to direct investments or investment vehicles of $234.7 million and $5.3 million as of September 30, 2026, for our Investment Management business and Proptech Investments, respectively.

Previous wording

Net capital additions for the six months ended June 30, 2026 and 2025 were $115.0 million and $88.9 million, respectively. Our capital expenditures in 2026 were primarily for leasehold improvements, purchased/developed software and technology hardware. Leasehold improvement spend led the way, as we continue to invest in our global real estate footprint.

Current wording

Net capital additions for the nine months ended September 30, 2026 and 2025 were $168.6 million and $138.4 million, respectively. Our capital expenditures in 2026 were primarily for technology infrastructure and workspace optimization (including leasehold improvements).

Previous wording

Terms for many of our past acquisitions have typically included cash paid at closing with provisions for additional deferred consideration and earn-out payments subject to certain contract requirements, including the passage of time and performance, respectively. Deferred business acquisition obligations totaled $5.7 million as of June 30, 2026. These obligations represent the current discounted values of payments due to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time. As of June 30, 2026, we had the potential to make earn-out payments for a maximum of $66.8 million on 9 completed acquisitions subject to the achievement of certain performance conditions. Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Consolidated Financial Statements for further information on Business Acquisitions.

Current wording

Terms for many of our past acquisitions have typically included cash paid at closing with provisions for additional deferred consideration and earn-out payments subject to certain contract requirements, including the passage of time and performance, respectively. Deferred business acquisition obligations totaled $4.9 million as of September 30, 2026. These obligations represent the current discounted values of payments due to sellers of businesses for which our acquisition had been completed as of the balance sheet date and for which the only remaining condition on those payments is the passage of time. As of September 30, 2026, we had the potential to make earn-out payments for a maximum of $62.0 million on 9 completed acquisitions subject to the achievement of certain performance conditions. Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Consolidated Financial Statements for further information on Business Acquisitions.

Previous wording

As of June 30, 2026, $2,591.6 million remained authorized for repurchases under our share repurchase program.

Current wording

As of September 30, 2026, $2,450.0 million remained authorized for repurchases under our share repurchase program.

Previous wording

Based on our historical experience and future business plans, we do not expect to repatriate our foreign-sourced earnings to the United States. We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity. As of June 30, 2026 and December 31, 2025, we had total Cash and cash equivalents of $458.2 million and $599.1 million, respectively, of which approximately $378.1 million and $386.0 million, respectively, was held by foreign subsidiaries.

Current wording

Based on our historical experience and future business plans, we do not expect to repatriate our foreign-sourced earnings to the United States. We believe our policy of permanently investing earnings of foreign subsidiaries does not significantly impact our liquidity. As of September 30, 2026 and December 31, 2025, we had total Cash and cash equivalents of $514.3 million and $599.1 million, respectively, of which approximately $411.7 million and $386.0 million, respectively, was held by foreign subsidiaries.