Earnings Call Transcript - CWK Q1 2022

Operator, Operator

Welcome to Cushman & Wakefield's First Quarter 2022 Earnings Conference Call. It's now my pleasure to introduce Len Texter, Head of Investor Relations, Global Controller and Chief Accounting Officer for Cushman & Wakefield. Mr. Texter, you may begin the conference.

Len Texter, Head of Investor Relations, Global Controller and Chief Accounting Officer

Thank you, and welcome to Cushman & Wakefield's first quarter 2022 earnings conference call. Earlier today, we issued a press release announcing our financial results for the period. This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com. Please turn to the page labeled Cautionary Note On Forward-Looking Statements. Today's presentation contains forward-looking statements based on current forecasts and estimates of future events. These statements should be considered estimates only, and actual results may differ materially. During today's call, we'll refer to non-GAAP financial measures as outlined by SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures, definitions of non-GAAP financial measures and other related information are found within our financial tables of our earnings release and appendix of today's presentation. Also, please note that throughout the presentation, comparison and growth rates are to comparable periods of 2021 and are in local currency, unless otherwise stated. For those of you following along with our presentation, we will begin on Page 4. And with that, I'd like to turn the call over to Brett White, our Executive Chairman.

Brett White, Executive Chairman

Thank you, Len, and thank you to everyone joining us again today. Joining me this afternoon is John Forrester, our CEO, who will give us an update on our operations and the broader market; and Neil Johnston, our CFO, who will review our financial results for the quarter. Before we begin, I want to recognize our local leaders and colleagues in Central and Eastern Europe who have been doing everything they can to alleviate the human impact of the crisis in Ukraine. I'm incredibly proud of our employees who have been supporting their colleagues throughout this region. Turning to our results. I'm pleased to report another strong quarter of earnings. In the first quarter, we reported fee revenue of $1.7 billion, up 29% over last year and adjusted EBITDA of $214 million, up 118% over last year, both of which represent first quarter records for the company. Our brokerage business continues to perform exceptionally well as investors seek attractive returns and yield, and commercial real estate's national inflation hedge is increasingly attractive in today's market. Additionally, our leasing activity continues to strengthen as the return to the office gains momentum and demand for industrial assets remains robust. Overall, we are optimistic about our business outlook for 2022. We are an industry leader with a comprehensive service offering that positions us well to capitalize on strong industry fundamentals and secular trends around the world, while delivering value to our shareholders. And with that, I'll turn the call over to our CEO, John Forrester.

John Forrester, CEO

Thank you, Brett. We're certainly off to a very pleasing start in 2022, a record first quarter marked by strong top-line growth across all segments and service lines. Our brokerage revenues were well above prior year, which was impacted by the pandemic, but more significantly, first quarter revenues were 32% higher than for the first quarter of 2019. Similarly, our PM/FM business continued to demonstrate strength, growing double digits versus prior year as we continue to win mandates of increasing scale. These results highlight the real progress we are making on our multi-year strategy of focusing and investing in the fastest-growing sectors in our industry, which in turn is driving a diversification and, therefore, resilience in our earnings profile as well as our continuing profile of material margin expansion. On our last earnings call, I touched on some of the secular trends that are powering the largest full-service providers in our industry. On this call, I'll go a little deeper and provide some additional comments on how Cushman & Wakefield continues to benefit and capitalize on these trends in four of the industry's largest sectors and service lines, namely multifamily, logistics, office, and corporate outsourcing. Against rising forecasts for the cost of debt, capital inflows to the commercial real estate sector continue to rise as investors seek assets that deliver competitive and attractive returns. The U.S. multifamily space accounted for nearly $63 billion of transaction volume or 37% of total market volume in the quarter, which is an increase of 56% versus prior year. This is a sector where through both acquisition and organic investment, we have built the U.S.'s first large-scale full-service platform. As evidenced in the first quarter, according to Real Capital Analytics, overall U.S. transaction volumes remain elevated with $171 billion of volume transacted, up 56% versus last year. And as Brett noted, commercial real estate's ability to reprice rents and grow yield to offset inflation is a significant driver of these inflows. In the ongoing performance of the logistics sector, there is no evidence of stalling momentum. Quarter 1 was the strongest first quarter on record in terms of absorption with U.S. occupancy at an all-time high of 96.7% and rental growth of 15.3% year-over-year, nearly double the current rate of inflation. Whilst there may be some supply constraints in the near future, this is a long-term global growth sector. In Asia-Pacific, as an example, there is tremendous potential that this region gets wealthier and climbs the online learning curve with some 4.6 billion potential customers versus 331 million in total in the U.S. Turning now to the office sector. We continue to see positive data points around office leasing fundamentals, signaling a return to higher volume activity in the space. Firstly, global cities are leading the jobs recovery, and they're also leading the office recovery. In addition, a growing number of global cities are absorbing office space again with preliminary data showing that 45% of office markets globally registered positive demand for office space in the first quarter. We're also seeing this reflected in total global office leasing activity, where preliminary data shows an increase of 19.1% in the first quarter versus prior year. And this is in line with the 90 U.S. markets that Cushman & Wakefield tracks, where total leasing activity was up 19% in the first quarter compared to prior year, and on a trailing 12-month basis was up 41% from the same period a year ago. Class A activity accelerated at an even greater pace of 47% against prior year as occupiers continue to seek out high-quality buildings to improve their employee experience. And as you may have seen from the Kastle Systems data, this indicates a return to office across the U.S. metropolitan districts that has more than doubled from December '21 compared to present. Given the complete cross-section of return-to-office dynamics that we're seeing globally, it is worth noting that our brokerage operations benefit from activity, not just the amount of space occupied, as occupiers and investors reconsider their portfolios, what is clear is that changes are given. And in this change, whether to align space with changing occupancy demands or to meet sustainability objectives, each move provides a revenue opportunity, not only for our brokers but also for our project and development service teams. As a final service line example of our increasingly diversified platform, we are continuing to see momentum in corporate outsourcing with major occupiers in all sectors within key supplier relationships on a global scale. On earlier earnings calls, we have highlighted our multi-year focus on building a world-class occupier outsourcing business to serve the largest global and multinational clients, ultimately taking advantage of this highly attractive and very large market. Our continuing revenue growth and earnings expansion in this area reflects our fast maturing capabilities, and I'm excited to share with you today that in the first quarter, we were awarded one of the industry's largest contracts by a major global financial institution based in the U.S. for a 17 million square foot portfolio across all service lines in the United States. This win represents another major milestone in our strategy to create value for large corporate clients, seeking to outsource across multiple service lines and geographies. Our diverse talent and platform expertise, integrated technology capabilities, and solution-oriented commercial model were all differentiating factors. As we have previously discussed and made clear by our words and actions, ESG is an important pillar for how we operate and work with our clients. In addition to being a driver for how owners and occupiers seek our expertise, ESG is a core focus internally at Cushman & Wakefield. As an example of how intentional we have become in this area, we recently amended our revolving credit facility and, in doing so, added incentives linked to sustainability features based on our greenhouse gas emissions targets. This is a true testament to Cushman & Wakefield's commitment to its ESG initiatives. Before turning the call over to Neil, I'd like to make some remarks on the humanitarian crisis in Ukraine. In March, we announced our decision to divest our business in Russia to a local operator. We believe this transition of business will allow the new owners to best support employees and maintain continuity of essential services to clients. I'd like to thank our colleagues for their hard work and dedication while recognizing the extraordinary circumstances and uncertainty those colleagues are experiencing. We are continuing to support our Ukrainian colleagues, including direct financial support through our Global Employee Assistance Fund and to our employees in neighboring countries who are responding to the humanitarian crisis in a variety of ways. Cushman & Wakefield stands firmly with the global community in the hope for peace. Overall, we remain optimistic and confident about the performance of our business in 2022. Despite the geopolitical and monetary policy environment and lingering uncertainty of the COVID-19 pandemic, we remain confident in our strategy for three fundamental reasons: Firstly, Cushman & Wakefield is one of the top or leading firms in the industry benefiting as one of the few globally diversified and comprehensive commercial real estate providers. Our leading cost management, disciplined capital deployment, and strong balance sheet all position the company for success. Second, we believe our investment in markets with secular demand drivers will differentiate Cushman & Wakefield, especially through periods of market volatility. For instance, our investment in Greystone is expected to benefit from the chronic undersupply of U.S. housing in a wide range of economic growth or interest rate environments. Similarly, the continued shift to e-commerce has a long runway and will drive warehouse logistics demand for years to come. And lastly, because of our people. Everything we do at Cushman & Wakefield is empowered and enhanced by the great talent, focus, and dedication of our people and teams around the world. With that, I'd like to turn the call over to Neil to discuss our financial performance.

Neil Johnston, CFO

Thank you, John, and good afternoon, everyone. Overall, we are encouraged by the strong start to 2022. For the first quarter, fee revenue of $1.7 billion and adjusted EBITDA of $214 million resulted in adjusted EBITDA margins of 12.6%, an increase of 512 basis points compared to the prior year, driven primarily by brokerage revenue. Adjusted earnings per share for the quarter was $0.48, an increase of $0.37 over prior year. Taking a look at our fee revenue by service line. In the first quarter, leasing and capital markets revenue increased 58% and 76% respectively, versus an easier prior year comparison as a result of the impact of COVID in the first quarter of 2021. This equates to brokerage growth of 64% in the first quarter, which is a similar growth rate to what we experienced in the second half of 2021, which grew at 67% versus the comparable period. Leasing fee revenue in the first quarter also exceeded pre-pandemic levels, increasing 22% over the first quarter of 2019. Leasing activity was driven by improvements in the Americas office sector, in addition to ongoing strength in the industrial logistics sector where demand continues to outpace supply. In capital markets, investment appetite remained strong with fee revenue growth of 51% compared to pre-pandemic levels in the first quarter of 2019, driven largely by the Americas segment, where nearly all property sectors showed growth. The environment for capital investments continues to be favorable, even with the upward pressure on interest rates. PM/FM and valuation and other service lines were up 11% and 10% respectively for the quarter. The performance across our entire PM/FM service offering was strong, particularly our facilities management business, which John mentioned earlier, highlighting a large contract win with a global financial institution client. Additionally, we got off to a strong start in our project management business as client activity has picked up across the board. Turning to our financial results for the quarter by segment. Americas fee revenue was up 34% year-over-year, driven by the strong performance in brokerage. Leasing and Capital Markets revenue improved 68% and 81% respectively year-over-year, which equates to 39% brokerage growth versus 2019 pre-pandemic levels. Adjusted EBITDA of $176 million improved $98 million versus prior year. Also, these results in our Americas segment include the performance of our joint venture with Greystone, which performed in line with our expectations for the first quarter. In EMEA and APAC, we generated adjusted EBITDA of 17 and $22 million respectively, which represents an improvement of 14 and $2 million respectively versus the first quarter of 2021. This performance reflects strong revenue growth of 19% and 17% respectively, led by brokerage activity where fee revenue improved 28% in EMEA and 43% in APAC for the quarter. Both EMEA and APAC brokerage were above 2019 pre-pandemic levels, up 5% and 9% respectively. Our financial position remains strong. We ended the first quarter with $1.6 billion of liquidity, consisting of cash on hand of $612 million and availability on our revolving credit facility of $1 billion. We had no outstanding borrowings on our revolver. Net leverage was 2.6x at the end of the first quarter, down from 2.8x we reported at the end of 2021. Also, as you heard from John earlier, subsequent to the first quarter, we amended our revolving credit facility, increasing availability from $1 billion to $1.1 billion and extending the maturity date out to 2027. We are well positioned to continue to fund operations and invest in future accretive infill M&A and broker onboarding opportunities, while maintaining optionality within our capital allocation framework. We have an active pipeline, which we are constantly evaluating to determine the best return for our shareholders. In summary, we are delighted with the performance of our entire portfolio to start the year, including both the continuing strength of our brokerage business as well as the stable growth of recurring revenue in our PM/FM business. We anticipate our brokerage businesses to continue to perform at record levels for 2022. On balance, we believe the global economy continues to be conducive for growth in our business this year. While it is our practice not to update guidance at this time of the year, we remain optimistic given the momentum in our business and look forward to revisiting this at the end of the third quarter. With that, I'll turn the call back to the operator for the Q&A portion of today's call. Thank you.

Operator, Operator

Our first question is from Anthony Paolone with JPMorgan. Please go ahead.

Anthony Paolone, Analyst

Great. I guess, Neil, just to understand on the guidance, I know you're not updating it, but how should we think about some of the brackets that you put around the different businesses last quarter and kind of what you think could play out as you kind of look at the world today?

Neil Johnston, CFO

Yes. Sure, Tony. We feel really good about the start of the business. You can see the first quarter exceeded even our expectations. So, as we look to the rest of the year, there is really nothing that suggests that the business is slowing down as we look at the first quarter and even as we look at April and the pipeline. So we see strength throughout the year. We see strength both in brokerage. Office for us was up in the first quarter over 2019 levels. And then, our recurring revenue businesses, our PM/FM, also had very nice growth above our expectations. So, we see nothing on the horizon that suggests that the business is slowing down at this point. At the same time, it's too early in the year to update guidance. It's our policy not to update right now. We'll revisit that as we finish up the second quarter and we have a better view to the full year.

Anthony Paolone, Analyst

Okay. And then, second question on the Greystone joint venture. I think it was $16 million of equity income. I'm guessing the bulk of that was Greystone. You said it was kind of performing in line. Can you make any comments on like how to think about that just seasonally as we look ahead and just any other further details in terms of how it's going so far?

Neil Johnston, CFO

Yes. The business is doing well. It's right in line with expectations. Not significant seasonality, you're right. The majority of that $16 million relates to Greystone. We guided to around $70 million of EBITDA for the full year, and we expect to be right in line with that as we finish up the year.

Anthony Paolone, Analyst

Okay. Got it. And then, last question on PM/FM, you talked about the outsourcing business generally a bit. If I think about it, the historical play was, you get these deals and you also give you the opportunity to cross-sell into like things like leasing and sales. What's the opportunity today? Is it still selling into those high-margin business lines? Or are there other things that you're doing with clients?

Brett White, Executive Chairman

John, why don't you take this please?

John Forrester, CEO

Yes. So, Tony, this is John. Our thesis on the outsourced market and these very large and very sticky contracts remains. The announcement we made about the very large contract win in Q1 is a full service contract where we will provide all services from one extreme to the other from transaction management and transaction delivery all the way through to FM and integrated FM. So, that is entirely what we are building our outsourced model on. And ultimately, there are only now three companies in our entire industry that have the skills, the capability, the infrastructure, the reach and geography to undertake contracts at that scale. And that outsourced market itself is a secular growing trend, with more clients outsourcing more of their operations in more geographies all of the time. So, we're building a real battleship outsourcing business for the future. We feel very good about the growth profile.

Operator, Operator

Our next question is from Chandni Luthra with Goldman Sachs. Please go ahead.

Chandni Luthra, Analyst

Could you guys perhaps give some color on geographies outside the U.S. Your APAC business obviously grew very nicely in the quarter. How do you think about business exposure across different markets there? And how should we think about performance of your JV with Vanke in mainland China? And on similar lines, could you perhaps talk about what you're seeing in Europe, given obviously the humanitarian crisis that you talked about, but just broader concerns and any malaise that's spreading because of it with investors looking to pause activity or something on those lines?

Brett White, Executive Chairman

John, do you want to take that?

John Forrester, CEO

I'll try to address the three questions you raised, which relate to geography and our operations. I want to emphasize what we mentioned in our prepared statements: across all regions and service lines, we've observed strong year-over-year performance. This reflects every aspect of our global platform. We're pleased with our overall business distribution, which shifts slightly from year to year, standing currently at 70% Americas and about 15% each for EMEA and APAC. We would like all regions to grow, and we have the momentum shown in our numbers that indicates growth across the board. Regarding the Vanke joint venture, I want to reinforce our earlier statements about the overall business performance, which aligns with our expectations. The first quarter is unusual in China due to the trading period falling during the quiet Chinese New Year and a lockdown. However, the first quarter results were exactly as we anticipated, and we are satisfied with that. Notably, we've experienced a significant increase in our brokerage business in APAC, with over 40% year-over-year growth. Moving to EMEA, we had an exceptional performance in the first quarter, contributing substantially to EBITDA. Typically, Q1 is quiet for profit contributions in our sector due to seasonality and bonus payments. The record performance in EMEA does not reflect any current or anticipated impacts from the situation in Eastern Europe and Ukraine. Europe has a unique ability to offer investors alternative markets and profiles. We are witnessing a reallocation of capital across various sectors and geographies in Europe, contributing to record volumes in the first quarter. We see no direct repercussions from the issues, but we monitor the situation very closely. Does that address all your questions, Chandni?

Chandni Luthra, Analyst

Yes. Just one quick one. Any update on your partnership with WeWork?

Brett White, Executive Chairman

Go ahead, John.

John Forrester, CEO

I'll keep going. Yes. We are currently transitioning the FM contract of WeWork into our global occupier services business, which is a significant contract win. Referring back to the major deal we secured in Q1 in our outsourced segment, our full-service offering, which includes Flex and our partnership with WeWork, played a crucial role in winning that bid. Our approach of providing clients with a comprehensive end-to-end service for utilizing and experiencing space continues to be a valuable asset as we enter the market. We are also excited about WeWork's performance and their investments in building relationships with Yardi, which will enhance both WeWork's capabilities and our partnership to deliver superior quality services and technologies to our clients.

Operator, Operator

Our next question is from Rich Hill with Morgan Stanley. Please go ahead.

Richard Hill, Analyst

First and foremost, congrats on a really impressive quarter. I just have two questions. First, maybe we can talk about capital deployment. You still have a fair amount of cash on balance sheet. It looks like that's growing given the strong performance. Have your views on how to deploy that cash changed given the macro backdrop over the past, call it, four to five months?

Neil Johnston, CFO

They haven't, Rich. If anything, I think we see opportunity to grow the platform. We do have cash. We'll be looking at ways in which to grow the business, both organically and using some of that cash. But we constantly evaluate the best use for it. We also consider whether we should pay down debt. Our leverage is right where we wanted it at 2.5x. But certainly, we could use cash to reduce our interest cost as we look forward at rising interest rates and then also look at other ways to return capital to shareholders. But at this stage, we still believe, especially with prices moving where they are, that there are opportunities for us to grow the business.

Richard Hill, Analyst

And maybe a bigger picture question on transaction volumes. You noted your brokerage business being quite strong. We track the RCA data very closely as well. And I do think there's a lot of handwringing right now about backup in interest rates and what that will do to transaction volumes. So maybe you could just comment a little bit on what you're hearing from your clients, why do investors in commercial real estate still find the asset class compelling? Is it because the unlevered returns are actually still pretty compelling for many investors here and they're less insulated from a rising interest rate environment? So, really it's just sort of a boots on the ground question. What are you seeing? What do you think is still driving these very robust transaction volumes in 1Q?

Brett White, Executive Chairman

Go ahead, John.

John Forrester, CEO

Yes, it's John. I believe you partially addressed your own question. Your response actually may be better than anything I could provide. This sector is appealing because many of its characteristics offer a solid hedge against inflation, with rental rates increasing over the course of lease agreements. Clients can effectively manage their tenant relationships to boost income and enhance the value of their properties. That being said, we have experienced rising debt costs for several months. The recent actions by the Fed have not surprised the market, as this has already been factored in. The high transaction volumes we observed in Q1 indicate that the market is eager to engage in transactions involving attractive assets. There are indeed valuable assets available for purchase. Ultimately, the market's liquidity is what significantly impacts our revenues, rather than the specific price of any individual asset.

Richard Hill, Analyst

Got it. And maybe just one follow-up question to that. Do you think your clients have sort of prefunded acquisitions? So do they have an opportunity to lock in cheap debt in advance of a rising interest rate environment and therefore they can be a little bit more acquisitive?

John Forrester, CEO

I can't say yes to all transactions, but we do focus on a large number of high-value transactions. This sophisticated market is often established before bids are even placed or deals are finalized. Therefore, there is a well-structured capital proposition ready before any transaction is pursued. Part of the sales process involves ensuring that all buyers have sufficient funding. The market clearly demonstrates a consistent demand alongside ample available equity and debt.

Operator, Operator

Our next question is from Michael Griffin with Citi. Please go ahead.

Michael Griffin, Analyst

I appreciate you taking the time and glad to join the call this quarter. Given that there has been more talk of recent potential recession on the medium term, just curious how that's factoring into your thinking across the different business lines, particularly segments that might be more volatile and susceptible to a downturn.

John Forrester, CEO

Yes, Michael, we don't see any immediate concerns. While interest rates are increasing, the combination of that and inflation does not significantly affect our PM/FM business due to the fixed nature of most contracts. We feel confident about this. The capital markets remain strong with significant capital inflows. The multifamily sector is also robust, with high demand evident. As we assess the year ahead, our outlook remains very positive, and there are no immediate issues arising.

Michael Griffin, Analyst

Yes. Great.

John Forrester, CEO

I just want to highlight, sorry, Michael. I was going to add that this is something Brett has brought up in several of these calls. As we look ahead to the upcoming quarters, the health of our industry is primarily dependent on positive GDP rather than any single factor like the cost of debt or inflation. So, we are closely monitoring the overall strength of the economy.

Michael Griffin, Analyst

Yes. I got you. And then, just touching on the PM/FM side of the business, you mentioned a big new client acquisition this quarter. I'm curious, how is your strategy? Has it changed at all for kind of winning new clients and getting into that kind of cross-selling feature that you mentioned?

John Forrester, CEO

We're witnessing the results of a multi-year strategy aimed at enhancing our capabilities to manage large and complex contracts. Clients and their advisers only invite bids from companies they are confident can provide high-quality services consistently over several years. Achieving this level of trust can take 18 to 24 months of effort. As mentioned earlier, we are focused on building a robust outsourcing business in a sector that is experiencing lasting growth.

Operator, Operator

Our next question is from Stephen Sheldon with William Blair. Please go ahead.

Matt Filek, Analyst

This is Matt Filek on for Stephen. First off, I was wondering if you could provide some additional commentary on leasing. For instance, what are you seeing in terms of lease durations versus historical averages? And then, what portion of your leasing revenue is derived from office space?

Brett White, Executive Chairman

John?

John Forrester, CEO

Okay. I presume when we're talking about lease duration, you're primarily focusing on office there, not because, of course, there's growth in logistics, for instance, to longer lease terms over the last 15 to 20 years. So, let me be specific around the office lease term question. We are seeing very significant lease term acquisitions in the tenant market, approaching the stabilized lease terms that we saw pre-pandemic. And a lot of this business is being driven by occupiers seeking to benefit from the incentives that can be achieved by taking long leases. That's always been part of the makeup of the market. But I think it does point to the fact that the office remains a fundamental part of the operational structure of companies and how they think about their workforce going forward. So we are seeing very good trend data on lease terms, particularly in the U.S. Was there another part to that question?

Matt Filek, Analyst

Yes. Just the last part was, what portion of leasing revenue was derived from office space, if you can remind me?

John Forrester, CEO

Okay. So we've mentioned this on prior calls. Historically, that's going back again, pre-pandemic office leasing laid up, but getting on towards 60% of our leasing total. We expect that to come back when offices are fully in volume again, and we do feel we're getting towards our projected '23-'24 full weight again in offices. We think it will come back to around about 50%. And if you look at our overall leasing growth, where we have material leasing growth over 2019, those, of course, come from growth in other sectors. And in the past, I would mention something that hasn't been spoken about for a little while now, but we've seen some very significant upticks in retail leasing, for instance, in 2021, where we've seen the largest amount of net absorption in the U.S. market since 2017. So it isn't just always that play off in leasing between logistics and office. We have secular growth markets elsewhere in large asset classes elsewhere to consider to focus on as a multidisciplinary company.

Matt Filek, Analyst

Great. That's very helpful. One more question for me. Can you also talk about your ability to source labor and meet future demand, particularly within the PM/FM segment with the tight labor market in mind?

Brett White, Executive Chairman

Go ahead, John.

John Forrester, CEO

We have the capacity to address the question directly while also discussing inflation and its impact on our business. When we provide labor or skilled technicians to clients, it is essential for those resources to be available to perform the work. In our facility management services, we transfer the labor costs directly to the client. Ultimately, clients expect the labor to arrive and are willing to pay a reasonable amount for the increased labor costs to ensure that the work gets done. Although the labor market is relatively tight, especially for certain skill sets in the U.S. right now, we have not encountered significant issues regarding labor availability or the effects of inflation on our margins.

Matt Filek, Analyst

That's great to hear. That's it for me.

Operator, Operator

Our next question is from Doug Harter with Credit Suisse. Please go ahead.

Doug Harter, Analyst

Can you talk about the pace at which FM or that the contracts are coming up for bidding now, meaning how do you view your opportunity to kind of continue to win new clients today versus kind of pre-COVID?

Brett White, Executive Chairman

Go ahead, John.

John Forrester, CEO

So, our ability to grow our business is made up both of new wins, but also retention. And of course, our existing contracts come up from time to time. They tend to be long and they tend to be very sticky. So our win rate is very high. And growth comes from basically winning more of our fair share in pursuits, but also that market is growing itself in terms of, as I discussed earlier, in the outsourcing. So, the pipeline at the moment, as we see the outsourced market for occupier services, is growing. And whilst we mentioned one contract, actually two now with WeWork on this call, we are onboarding a number of very significant wins right across our facilities business, both services and facilities management. And the pipeline looking forward is also very positive. So, it isn't just the revenues, of course, where we're seeing very healthy growth. It's actually the throw off of those revenues into our transactional business and into our project management business that is so attractive. Again, it plays back to building out customer weight for globally to be able to take advantage of the secular trends that we're seeing in expanding client spend landscape.

Brett White, Executive Chairman

I think about FM as having a consistent and steady flow of contracts coming back to the market, rather than seeing it as a fluctuating pattern of bids. What stands out is our increasing ability to compete for and win those contracts, which has been improving month by month and year by year. We've highlighted our significant financial services global outsourcing contract, which showcases our ability to gain higher-value contracts. It's not a matter of having more or fewer contracts; what's different for us is our growing competitiveness in the market, as demonstrated by our recent success.

Operator, Operator

That concludes today's question-and-answer session. I will now turn the call back to Brett White for concluding remarks.

Brett White, Executive Chairman

Great. Well, thank you, everyone, for dialing in. We look forward to talking to you at the end of the second quarter.

Operator, Operator

Thank you. This concludes today's conference. You may disconnect at this time. Thank you for your participation.