Finance  ·  earnings

JLL Revenue Up in Q4 as Cash Flow Down Sharply in 2023

The firm saw its earnings before expenses decline 41% last year behind a plummet in transactions


Things are looking up for JLL (JLL) as the brokerage begins 2024. But that’s only because the global commercial real estate powerhouse had such a challenging 2023. 

The firm reported revenues of $5.8 billion for the fourth quarter of 2023, an increase of 4 percent from the prior quarter. And while annual revenues remained flat for the year at $20.7 billion, the firm’s consolidated fee revenue dropped 11 percent in 2023 to $7.4 billion, and its cash flow fell by a whopping 41 percent, declining from $1.2 billion to $736 million. 

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“We remain focused on positioning our business to capitalize on newer and long-term opportunities to drive growth, profitability and cash flow,” said JLL Chief Financial Officer Karen Brennan on the earnings call Tuesday. “Our fourth-quarter results reflect the diversity of our revenue base and the resiliency of our platform.” 

Much of the revenue decline can be attributed to lower leasing numbers: fee revenues from leasing declined 15 percent on the year, falling from $2.7 billion in 2022 to $2.3 billion in 2023. Revenue from the firm’s advisory and consulting divisions dropped by 24 percent on the year, going from $123 million to $94 million. On the whole, cash flow from markets advisory services declined from $528 million to $417 million, while cash flow from JLL’s capital markets business cratered from $444 million to $173 million year-over-year, a decline of 61 percent. . 

Brennan said that approximately 50 percent of the decline in annual EBITDA – earnings before interest, taxes, depreciation and amortization —  was from “the adverse change in equity earnings with the balance largely from lower transaction revenue.” 

“These items overshadowed resilient revenue growth and cost-management action,” she added.  

One highlight for the firm is its strong balance sheet performance. 

Buoyed by a $400 million senior note public offering during the fourth quarter of 2023, JLL saw its corporate liquidity increase to $3.1 billion, up from $2.6 billion in the fourth quarter of 2022. The firm has more than $400 million cash on hand and net debt of $1.1 billion — only 1.6 times EBITDA, a generally healthy ratio for a CRE firm.

“This past year has proven our operating model can deliver solid margin performance despite a slower transaction environment,” said CEO Christian Ulbrich, who added that the steps taken by JLL to streamline its operating model “will strengthen the long-term margin profile of our business.”

During the earnings call, Ulbrich said there are reasons for “cautious optimism” in the CRE capital markets, noting that as interest rates stabilize, lenders and investors will be able to price assets, which in turn will lead to a tightening of the bid-ask spread. As a market emerges around this long-awaited price discovery, increased investor interest will fuel more transactions, he said. 

“The price discovery process can take time to play out, and as a result, 2024 is likely to be a year of transition for the commercial real estate market,” said Ulbrich. “As a global player with a diversified platform and strong balance sheet, we are well positioned to help clients make their way through that transition.”  

Brian Pascus can be reached at