JONES LANG LASALLE INC 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, for the three and nine months ended September 30, 2024, and our audited Consolidated Financial Statements, including the notes thereto, for the fiscal year ended December 31, 2023, which are included in our 2023 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 2023 Annual Report on Form 10-K. The following discussion and analysis contains certain forward-looking statements generally identified by the words anticipates, believes, estimates, expects, forecasts, plans, intends and other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause JLL's actual results, performance, achievements, plans and objectives to be materially different from any future results, performance, achievements, plans and objectives expressed or implied by such forward-looking statements. See the Cautionary Note Regarding Forward-Looking Statements included within this section for further information. We present our quarterly Management's Discussion and Analysis in the following sections: (1) A summary of our critical accounting policies and estimates; (2) Certain items affecting the comparability of results and certain market and other risks we face; (3) The results of our operations, first on a consolidated basis and then for each of our business segments; and (4) Liquidity and capital resources. SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES An understanding of our accounting policies is necessary for a complete analysis of our results, financial position, liquidity and trends. See Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our 2023 Annual Report on Form 10-K for a complete summary of our significant accounting policies. The preparation of our financial statements requires management to make certain critical accounting estimates and judgments that impact (i) the stated amount of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the financial statements and (iii) the reported amount of revenue and expenses during the reporting periods. These accounting estimates are based on management's judgment. We consider them to be critical because of their significance to the financial statements and the possibility that future events may differ from current judgments or that the use of different assumptions could result in materially different estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts likely differ from such estimated amounts, we believe such differences are not likely to be material. 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, 2023. There have been no material changes to these critical accounting policies and estimates during the nine months ended September 30, 2024. ITEMS AFFECTING COMPARABILITY Macroeconomic Conditions Our results of operations and the variability of these results are significantly influenced by (i) macroeconomic trends, (ii) the geopolitical environment, (iii) the global and regional real estate markets and (iv) the financial and credit markets. These macroeconomic and other conditions have had, and we expect will continue to have, a significant impact on the variability of our results of operations. 26 Table of Contents Acquisitions and Dispositions The timing of acquisitions and dispositions may impact the comparability of our results on a year-over-year basis. Our results include incremental revenues and expenses following the completion date of an acquisition. Relating to dispositions, comparable results will include the revenues and expenses of recent dispositions and results may also include gains (losses) on the disposition. In addition, there is generally an initial adverse impact on net income from an acquisition as a result of pre-acquisition due diligence expenditures, transaction/deal costs and post-acquisition integration costs, such as fees from third-party advisors engaged to assist with onboarding and process alignment, retention and severance expense, early lease termination costs and other integration expenses. For dispositions, we may also incur such incremental costs during the disposition process and these costs could have an adverse impact on net income. Transaction-Based Revenues and Equity Earnings Transaction-based revenues are impacted by the size and timing of our clients' transactions. Such revenues include investment sales and other capital markets activities, agency and tenant representation leasing transactions, incentive fees, and other services/offerings, increase the variability of the revenue we earn. Specifically for LaSalle, the magnitude and timing of recognition of incentive fees are driven by one or a combination of the following: changes in valuations of the underlying investments, dispositions of managed assets and the contractual measurement periods with clients. The timing and the magnitude of transaction-based revenues can vary significantly from year to year and quarter to quarter and also vary geographically. 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. The comparability of these items can be seen in Note 4, Business Segments, of the Notes to Consolidated Financial Statements and is discussed further in Segment Operating Results included herein. Foreign Currency We conduct business using a variety of currencies, but we report our results in U.S. dollars. As a result, the volatility of currencies against the U.S. dollar may positively or negatively impact our results. This volatility can make it more difficult to perform period-to-period comparisons of the reported U.S. dollar results of operations, because such results may indicate a growth or decline rate that might not have been consistent with the real underlying growth or decline rates in the local operations. Consequently, we provide information about the impact of foreign currencies in the period-to-period comparisons of the reported results of operations in our discussion and analysis of financial condition in the Results of Operations section below. Seasonality 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. Other factors may affect seasonality. For example, we experienced disruption to our historical seasonality trends due to rising interest rates and widespread economic uncertainty in 2022 and 2023. A significant portion of our Compensation and benefits expense is from incentive compensation plans, which we generally accrue throughout the year based on progress toward annual performance targets. This quarterly estimation can result in significant fluctuations in quarterly Compensation and benefits expense from period to period. Consequently, the results for the periods ended September 30, 2024 and 2023 are not fully indicative of the results we expect to realize for the full fiscal year. 27 Table of Contents RESULTS OF OPERATIONS Definitions • Assets under management data for LaSalle is reported on a one-quarter lag. • n.m.: not meaningful, represented by a percentage change of greater than 1,000%, favorable or unfavorable. • We define "Resilient" revenue as (i) Property Management, within Markets Advisory, (ii) Value and Risk Advisory, and Loan Servicing, within Capital Markets, (iii) Workplace Management, within Work Dynamics, (iv) JLL Technologies and (v) Advisory Fees, within LaSalle. In addition, we define "Transactional" revenue as (i) Leasing and Advisory, Consulting and Other, within Markets Advisory, (ii) Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, (iii) Project Management and Portfolio Services and Other, within Work Dynamics and (iv) Incentive fees and Transaction fees and other, within LaSalle. • Gross contract costs represent certain costs associated with client-dedicated employees and third-party vendors and subcontractors and are directly or indirectly reimbursed through the fees we receive. These costs are presented on a gross basis in Operating expenses (with the corresponding fees in Revenue). • We define "Greater China" as China, Hong Kong, Macau and Taiwan. Consolidated Operating Results Three Months Ended September 30, Change in % Change in Local Currency ($ in millions) 2024 2023 U.S. dollars Markets Advisory $ 1,143.8 992.4 151.4 15 % 15 % Capital Markets 498.8 435.8 63.0 14 14 Work Dynamics 4,068.2 3,514.2 554.0 16 16 JLL Technologies 56.7 58.9 (2.2) (4) (4) LaSalle 101.3 110.1 (8.8) (8) (8) Revenue $ 5,868.8 5,111.4 757.4 15 % 15 % Platform compensation and benefits $ 1,406.9 1,299.8 107.1 8 % 8 % Platform operating, administrative and other expenses 315.1 274.7 40.4 15 14 Depreciation and amortization 65.5 59.1 6.4 11 10 Total platform operating expenses 1,787.5 1,633.6 153.9 9 9 Gross contract costs 3,861.8 3,327.1 534.7 16 16 Restructuring and acquisition charges (8.8) 31.6 (40.4) (128) (128) Total operating expenses $ 5,640.5 4,992.3 648.2 13 % 13 % Operating income $ 228.3 119.1 109.2 92 % 92 % Equity losses $ (0.9) (11.2) 10.3 92 % 92 % Net non-cash MSR and mortgage banking derivative activity $ (5.1) (7.1) 2.0 28 % 29 % Adjusted EBITDA $ 298.1 217.3 80.8 37 % 37 % 28 Table of Contents Consolidated Operating Results (continued) Nine Months Ended September 30, Change in % Change in Local Currency ($ in millions) 2024 2023 U.S. dollars Markets Advisory $ 3,172.7 2,924.2 248.5 8 % 9 % Capital Markets 1,334.0 1,240.9 93.1 8 8 Work Dynamics 11,641.0 10,165.0 1,476.0 15 15 JLL Technologies 167.0 180.9 (13.9) (8) (8) LaSalle 307.3 368.4 (61.1) (17) (16) Revenue $ 16,622.0 14,879.4 1,742.6 12 % 12 % Platform compensation and benefits $ 3,916.2 3,812.4 103.8 3 % 3 % Platform operating, administrative and other expenses 909.8 859.1 50.7 6 5 Depreciation and amortization 188.8 176.5 12.3 7 7 Total platform operating expenses $ 5,014.8 4,848.0 166.8 3 % 3 % Gross contract costs 11,107.9 9,666.2 1,441.7 15 15 Restructuring and acquisition charges 4.4 79.1 (74.7) (94) (95) Total operating expenses $ 16,127.1 14,593.3 1,533.8 11 % 11 % Operating income $ 494.9 286.1 208.8 73 % 76 % Equity losses $ (20.0) (117.3) 97.3 83 % 83 % Net non-cash MSR and mortgage banking derivative activity $ (25.9) (9.5) (16.4) (173) % (172) % Adjusted EBITDA $ 731.5 555.3 176.2 32 % 33 % 29 Table of Contents Non-GAAP Financial Measures Management uses certain non-GAAP financial measures to develop budgets and forecasts, measure and reward performance against those budgets and forecasts, and enhance comparability to prior periods. These measures are believed to be useful to investors and other external stakeholders as supplemental measures of core operating performance and include the following: • Adjusted EBITDA attributable to common shareholders ("Adjusted EBITDA") and • Percentage changes against prior periods, presented on a local currency basis. However, non-GAAP financial measures should not be considered alternatives to measures determined in accordance with U.S. GAAP. Any measure that eliminates components of a company’s capital structure, cost of operations or investments, or other results has limitations as a performance measure. In light of these limitations, management also considers U.S. GAAP financial measures and does not rely solely on non-GAAP financial measures. Because our non-GAAP financial measures are not calculated in accordance with U.S. GAAP, they may not be comparable to similarly titled measures used by other companies. Effective January 1, 2024, we updated the definition of Adjusted EBITDA to exclude certain equity earnings/losses as further described below. Comparable periods have been recast to conform to the revised presentation. Also effective with first-quarter 2024 reporting, we no longer report the non-GAAP measures "Fee revenue" and "Fee-based operating expenses" following the conclusion of a comment letter from the Securities and Exchange Commission Staff in February 2024. Adjustments to U.S. GAAP Financial Measures Used to Calculate non-GAAP Financial Measures Net non-cash MSR and mortgage banking derivative activity consists of the balances presented within Revenue composed of (i) derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity and (ii) gains recognized from the retention of MSR upon origination and sale of mortgage loans, offset by (iii) amortization of MSR intangible assets over the period that net servicing income is projected to be received. Non-cash derivative gains/losses resulting from mortgage banking loan commitment and warehousing activity are calculated as the estimated fair value of loan commitments and subsequent changes thereof, primarily represented by the estimated net cash flows associated with future servicing rights. MSR gains and corresponding MSR intangible assets are calculated as the present value of estimated net cash flows over the estimated mortgage servicing periods. The above activity is reported entirely within Revenue of the Capital Markets segment. Excluding net non-cash MSR and mortgage banking derivative activity reflects how we manage and evaluate performance because the excluded activity is non-cash in nature. Restructuring and acquisition charges primarily consist of (i) severance and employment-related charges, including those related to external service providers, incurred in conjunction with a structural business shift, which can be represented by a notable change in headcount, change in leadership or transformation of business processes; (ii) acquisition, transaction and integration-related charges, including fair value adjustments, which are generally non-cash in the periods such adjustments are made, to assets and liabilities recorded in purchase accounting such as earn-out liabilities and intangible assets; and (iii) other restructuring, including lease exit charges. Such activity is excluded as the amounts are generally either non-cash in nature or the anticipated benefits from the expenditures would not likely be fully realized until future periods. Restructuring and acquisition charges are excluded from segment operating results and therefore not a line item in the segments’ reconciliation to Adjusted EBITDA. Gain/loss on disposition reflects the gain or loss recognized on the sale or disposition of businesses. Given the low frequency of business disposals by the Company historically, the gain or loss directly associated with such activity is excluded as it is not considered indicative of core operating performance. In 2023, the $0.5 million net loss included $1.8 million of loss related to the disposition of a business in Markets Advisory, partially offset by a $1.3 million gain related to the disposition of a business in Markets Advisory and Capital Markets. Interest on employee loans, net of forgiveness reflects interest accrued on employee loans less the amount of accrued interest forgiven. Certain employees (predominantly in Leasing and Capital Markets) receive cash payments structured as loans, with interest. Employees earn forgiveness of the loan based on performance, generally calculated as a percentage of revenue production. Such forgiven amounts are reflected in Compensation and benefits expense. Given the interest accrued on these employee loans and subsequent forgiveness are non-cash and the amounts perfectly offset over the life of the loan, the activity is not indicative of core operating performance and is excluded from non-GAAP measures. 30 Table of Contents Equity earnings/losses (JLL Technologies and LaSalle) primarily reflects valuation changes on investments reported at fair value. Investments reported at fair value are increased or decreased each reporting period by the change in the fair value of the investment. Where the measurement alternative has been elected, our investment is increased or decreased upon observable price changes. Such activity is excluded as the amounts are generally non‑cash in nature and not indicative of core operating performance. Note: Equity earnings/losses in the remaining segments represent the results of unconsolidated operating ventures (not investments), and therefore, the amounts are included in Adjusted EBITDA on both a segment and consolidated basis. 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 JLL Technologies' investments and are therefore consistently excluded from adjusted measures. Reconciliation of Non-GAAP Financial Measures Below is a reconciliation of Net income attributable to common shareholders to Adjusted EBITDA. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 Net income attributable to common shareholders $ 155.1 59.7 $ 305.6 53.0 Add: Interest expense, net of interest income 38.1 37.1 110.3 103.9 Income tax provision 37.4 14.5 73.8 13.0 Depreciation and amortization (1) 64.5 58.1 185.9 173.6 Adjustments: Restructuring and acquisition charges (8.8) 31.6 4.4 79.1 Net (gain) loss on disposition — (1.3) — 0.5 Net non-cash MSR and mortgage banking derivative activity 5.1 7.1 25.9 9.5 Interest on employee loans, net of forgiveness (1.8) (1.6) (4.1) (2.3) Equity losses - JLL Technologies and LaSalle 2.2 12.1 23.4 125.0 Credit losses on convertible note investments 6.3 — 6.3 — Adjusted EBITDA $ 298.1 217.3 $ 731.5 555.3 (1) This adjustment excludes the noncontrolling interest portion of amortization of acquisition-related intangibles which is not attributable to common shareholders. 31 Table of Contents In discussing our operating results, we report percentage changes in local currency, unless otherwise noted. Amounts presented on a local currency basis are calculated by translating the current period results of our foreign operations to U.S. dollars using the foreign currency exchange rates from the comparative period. We believe this methodology provides a framework for assessing performance and operations excluding the effect of foreign currency fluctuations. The following table reflects the reconciliation to local currency amounts for consolidated (i) Revenue, (ii) Operating income and (iii) Adjusted EBITDA. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2024 % Change 2024 % Change Revenue: At current period exchange rates $ 5,868.8 15 % $ 16,622.0 12 % Impact of change in exchange rates (8.5) n/a 29.5 n/a At comparative period exchange rates $ 5,860.3 15 % $ 16,651.5 12 % Operating income: At current period exchange rates $ 228.3 92 % $ 494.9 73 % Impact of change in exchange rates 0.2 n/a 8.3 n/a At comparative period exchange rates $ 228.5 92 % $ 503.2 76 % Adjusted EBITDA: At current period exchange rates $ 298.1 37 % $ 731.5 32 % Impact of change in exchange rates (0.1) n/a 7.9 n/a At comparative period exchange rates $ 298.0 37 % $ 739.4 33 % 32 Table of Contents Revenue Revenue increased 15% compared with the prior-year quarter. The collective 11% increase in Transactional revenue was led by Leasing, within Markets Advisory, up 21%, and Investment Sales, Debt/Equity Advisory and Other, within Capital Markets, up 19%. Several businesses with Resilient revenues continued to deliver strong revenue growth, collectively up 16%, highlighted by Workplace Management, within Work Dynamics, up 20%, and Property Management, within Markets Advisory, up 8%. Growth in these businesses outpaced declines in LaSalle Advisory Fees, down 10%, and JLL Technologies, down 4%. For the first nine months of 2024, consolidated revenue was up 12% compared with 2023. The year-to-date drivers were largely consistent with the quarter-to-date drivers noted above. The following highlights Revenue by segment, for the third quarter and first nine months of 2024 and 2023 ($ in millions). Refer to segment operating results for further detail. Operating Expenses Consolidated operating expenses were $5.6 billion for the third quarter, up 13% from the same period in 2023. Gross contract costs were $3.9 billion, up 16% from the prior-year quarter, attributable to growth from businesses with higher client pass-through expenses such as Workplace Management, within Work Dynamics, and Property Management, within Markets Advisory. Platform operating expenses were $1.8 billion for the third quarter, a 9% increase from the prior-year quarter, largely due to revenue-related expense growth as well as a couple discrete items, including: (i) nearly $10 million of expense associated with the timing of accruals related to gross receipts taxes in a handful of U.S. states, associated with Work Dynamics, and (ii) $6.3 million of non-cash credit losses from convertible notes associated with JLL Technologies investments (which are excluded from Adjusted EBITDA consistent with equity earnings/losses from investments). Expense growth was largely offset by the benefit of continued cost discipline and enhanced leverage of our platform. 33 Table of Contents For the third quarter of 2024, Restructuring and acquisition charges reflected (i) an expense credit in the current quarter associated with a lower expected earn-out payout related to a 2021 U.S. property management joint venture as well as (ii) lower employment-related costs given the significant cost-out actions in 2023. Refer to the following table for detail on Restructuring and acquisition charges. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 Severance and other employment-related charges $ 6.1 16.4 $ 17.8 47.9 Restructuring, pre-acquisition and post-acquisition charges 6.0 15.1 20.1 31.7 Fair value adjustments that resulted in a net (decrease) increase to earn-out liabilities from prior-period acquisition activity (20.9) 0.1 (33.5) (0.5) Restructuring and acquisition charges $ (8.8) 31.6 $ 4.4 79.1 Specific to severance and restructuring charges, the current quarter and first nine months of 2024 reflect the impact of lower cost-out actions compared to 2023. Interest Expense Interest expense, net of interest income, for the three and nine months ended September 30, 2024 was $38.1 million and $110.3 million, respectively, compared with $37.1 million and $103.9 million in the prior-year periods. Equity (Losses) Earnings The following details Equity (losses) earnings by relevant segment. In the prior year, the significant equity losses were largely attributable to valuation declines in two JLL Technologies investments. Refer to the segment discussions for additional details. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 JLL Technologies $ 11.6 (3.0) $ 1.6 (102.0) LaSalle (13.8) (9.1) (25.0) (23.0) Other 1.3 0.9 3.4 7.7 Equity losses $ (0.9) (11.2) $ (20.0) (117.3) Income Taxes The Income tax provision was $37.4 million and $73.8 million for the three and nine months ended September 30, 2024, respectively, representing an effective tax rate ("ETR") of 19.5% for both periods. For the three and nine months ended September 30, 2023, the income tax provision was $14.5 million and $13.0 million, representing an ETR of 19.6% and 19.3%, respectively. A number of countries in which we have a taxable presence have enacted legislation effective in 2024 correlated to the Organization for Economic Co-operation and Development (OECD) guidance for a global minimum tax rate of 15%, referred to as “Pillar Two” taxation. Such legislation enacted through September 30, 2024 did not have a material impact on our effective tax rate for the first nine months of 2024 and is not presently expected to have a material impact for the full year 2024. 34 Table of Contents Net Income and Adjusted EBITDA Net income attributable to common shareholders was $155.1 million for the three months ended September 30, 2024, compared with $59.7 million in the prior-year quarter. For the first nine months of 2024, net income attributable to common shareholders was $305.6 million, compared with $53.0 million in 2023. Adjusted EBITDA was $298.1 million and $731.5 million for the third quarter and first nine months of 2024, compared with $217.3 million and $555.3 million in the respective prior-year periods. The growth in consolidated profit was primarily attributable to (i) higher revenues, both Transactional and certain Resilient revenues, including Workplace Management within Work Dynamics, and (ii) cost discipline and enhanced leverage of the company's platform. These drivers notably outpaced outsized the timing of revenue-related expense accruals in Work Dynamics this quarter and lower contributions from LaSalle. The following charts reflects the aggregation of segment Adjusted EBITDA for the third quarter and first nine months of 2024 and 2023. 35 Table of Contents Segment Operating Results We manage and report our operations as five business segments: Markets Advisory, Capital Markets, Work Dynamics, JLL Technologies and LaSalle. Markets Advisory offers a wide range of real estate services, including agency leasing and tenant representation, property management, and advisory and consulting services. Our Capital Markets service offerings include investment sales, debt and equity advisory, value and risk advisory, and loan servicing. Our Work Dynamics business provides a broad suite of integrated services to occupiers of real estate, including facility and project management, as well as portfolio and other services. We consider "Property Management" to be services provided to non-occupying property investors and "Workplace Management" to be services provided to facility occupiers. Our JLL Technologies segment offers software products, solutions and services, while LaSalle provides investment management services on a global basis to institutional investors and high-net-worth individuals. 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. Markets Advisory % Change Three Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Leasing $ 665.4 547.7 117.7 21 % 21 % Property Management 452.3 419.2 33.1 8 8 Advisory, Consulting and Other 26.1 25.5 0.6 2 2 Revenue $ 1,143.8 992.4 151.4 15 % 15 % Platform compensation and benefits $ 582.5 531.2 51.3 10 % 10 % Platform operating, administrative and other 87.7 86.5 1.2 1 1 Depreciation and amortization 17.3 16.9 0.4 2 3 Segment platform operating expenses 687.5 634.6 52.9 8 8 Gross contract costs 320.9 288.4 32.5 11 11 Segment operating expenses $ 1,008.4 923.0 85.4 9 % 9 % Equity earnings $ 0.1 0.1 — — % (6) % Adjusted EBITDA $ 151.9 85.1 66.8 78 % 77 % 36 Table of Contents Markets Advisory (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Leasing $ 1,781.8 1,626.1 155.7 10 % 10 % Property Management 1,318.6 1,229.3 89.3 7 8 Advisory, Consulting and Other 72.3 68.8 3.5 5 5 Revenue $ 3,172.7 2,924.2 248.5 8 % 9 % Platform compensation and benefits $ 1,588.4 1,538.6 49.8 3 % 3 % Platform operating, administrative and other 266.7 273.4 (6.7) (2) (2) Depreciation and amortization 52.1 51.4 0.7 1 2 Segment platform operating expenses 1,907.2 1,863.4 43.8 2 3 Gross contract costs 938.5 851.8 86.7 10 11 Segment operating expenses $ 2,845.7 2,715.2 130.5 5 % 5 % Equity earnings $ 0.5 0.3 0.2 67 % 112 % Adjusted EBITDA $ 376.8 256.1 120.7 47 % 46 % For the third quarter and first nine months of 2024, the broad-based increase in Markets Advisory revenue was primarily driven by Leasing and was led by the office sector. Most geographies achieved double-digit growth for the quarter and first nine months of 2024, notably the U.S., India, UK, Australia and Greater China. Globally, industrial was flat to the prior-year quarter (versus down double-digits on a year-to-date basis), ending a multi-quarter trend of declines in the sector as deal size rebounded. In addition, the number of larger-scale Leasing deals, where JLL has historically had a greater presence, increased over the prior-year quarter in nearly all asset classes. Property Management revenue growth was led by expansion in the U.S. and several countries in Asia Pacific, including incremental revenue in the U.S. associated with pass-through expenses. The net increases in segment platform operating expenses for the quarter and first nine months of the year were due to an increase in revenue-related variable compensation expense, offset by continued cost discipline. Higher gross contract costs over the prior-year periods was largely due to Property Management. The Adjusted EBITDA increases for the third quarter and first nine months of the year were predominantly driven by revenue growth and cost discipline described above. In addition, the timing of incentive compensation accruals positively impacted profit performance for the third quarter. 37 Table of Contents Capital Markets % Change Three Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Investment Sales, Debt/Equity Advisory and Other $ 371.8 310.2 61.6 20 % 19 % Value and Risk Advisory 86.0 87.5 (1.5) (2) (3) Loan Servicing 41.0 38.1 2.9 8 8 Revenue $ 498.8 435.8 63.0 14 % 14 % Platform compensation and benefits $ 365.5 323.8 41.7 13 % 12 % Platform operating, administrative and other 62.3 58.3 4.0 7 6 Depreciation and amortization 16.6 16.4 0.2 1 1 Segment platform operating expenses 444.4 398.5 45.9 12 11 Gross contract costs 11.5 11.5 — — (1) Segment operating expenses $ 455.9 410.0 45.9 11 % 11 % Equity earnings $ 0.2 0.7 (0.5) (71) % (67) % Net non-cash MSR and mortgage banking derivative activity $ (5.1) (7.1) 2.0 28 % 29 % Adjusted EBITDA $ 65.7 50.3 15.4 31 % 30 % 38 Table of Contents Capital Markets (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Investment Sales, Debt/Equity Advisory and Other $ 950.8 870.3 80.5 9 % 9 % Value and Risk Advisory 262.0 256.1 5.9 2 2 Loan Servicing 121.2 114.5 6.7 6 6 Revenue $ 1,334.0 1,240.9 93.1 8 % 8 % Platform compensation and benefits $ 994.2 943.1 51.1 5 % 5 % Platform operating, administrative and other 206.4 183.6 22.8 12 12 Depreciation and amortization 50.3 48.5 1.8 4 4 Segment platform operating expenses 1,250.9 1,175.2 75.7 6 6 Gross contract costs 36.9 33.9 3.0 9 10 Segment operating expenses $ 1,287.8 1,209.1 78.7 7 % 7 % Equity earnings $ 0.8 6.1 (5.3) (87) % (86) % Net non-cash MSR and mortgage banking derivative activity $ (25.9) (9.5) (16.4) (173) % (172) % Adjusted EBITDA $ 124.5 97.0 27.5 28 % 29 % For the third quarter and first nine months of the year, Capital Markets revenue growth was led by Investment Sales, Debt/Equity Advisory and Other, as investor sentiment strengthened. This revenue growth was geographically broad-based, most notably in the United States and Europe, and was across nearly all asset classes, with hotels, office and industrial leading the way. Investment sales in the U.S. grew approximately 30% over the prior-year quarter, outperforming the broader market for investment sales, which grew 23% according to JLL Research. On a year-to-date basis, revenue growth, driven by Investment Sales, overcame a headwind of $16.4 million related to the impact of net non-cash MSR and mortgage banking derivative activity. The current-quarter and year-to-date increases in operating expenses were largely driven by higher variable compensation expense compared with the prior-year periods, as segment profit grew. The increase in variable compensation overshadowed the impact of continued cost discipline. Further, segment platform operating expenses for the first nine months of 2024 reflected a $17.8 million impact associated with the August 2024 repurchase of a loan originated and sold to Fannie Mae, for which the associated expenses were predominantly recognized in the second quarter of 2024. This impact included the amount of the repurchase price in excess of unpaid principal balance, for items such as unpaid interest, as well as estimated losses associated with the repurchased loan, reflecting the underlying value of the collateral. The Adjusted EBITDA improvement was largely attributable to the transactional revenue growth described above and continued cost discipline. These drivers overcame the headwind attributable to the expenses associated with the finalization of the loan repurchase described above. 39 Table of Contents Work Dynamics % Change Three Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Workplace Management $ 3,164.6 2,637.1 527.5 20 % 20 % Project Management 771.3 747.0 24.3 3 3 Portfolio Services and Other 132.3 130.1 2.2 2 1 Revenue $ 4,068.2 3,514.2 554.0 16 % 16 % Platform compensation and benefits $ 348.8 332.9 15.9 5 % 5 % Platform operating, administrative and other 127.3 103.3 24.0 23 24 Depreciation and amortization 24.8 19.7 5.1 26 25 Segment platform operating expenses 500.9 455.9 45.0 10 10 Gross contract costs 3,518.7 3,016.5 502.2 17 17 Segment operating expenses $ 4,019.6 3,472.4 547.2 16 % 16 % Equity earnings $ 1.0 0.1 0.9 900 % n.m. Adjusted EBITDA $ 74.3 61.6 12.7 21 % 20 % 40 Table of Contents Work Dynamics (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Workplace Management $ 9,057.4 7,687.7 1,369.7 18 % 18 % Project Management 2,215.8 2,126.5 89.3 4 4 Portfolio Services and Other 367.8 350.8 17.0 5 4 Revenue $ 11,641.0 10,165.0 1,476.0 15 % 15 % Platform compensation and benefits $ 1,002.4 958.9 43.5 5 % 5 % Platform operating, administrative and other 342.6 316.0 26.6 8 9 Depreciation and amortization 66.3 58.9 7.4 13 12 Segment platform operating expenses 1,411.3 1,333.8 77.5 6 6 Gross contract costs 10,102.0 8,747.5 1,354.5 15 16 Segment operating expenses $ 11,513.3 10,081.3 1,432.0 14 % 14 % Equity earnings $ 2.1 1.3 0.8 62 % 58 % Adjusted EBITDA $ 196.3 143.5 52.8 37 % 37 % For the third quarter, Work Dynamics revenue growth was led by continued strong performance in Workplace Management, largely from U.S. mandate expansions. In addition, Workplace Management also drove year-to-date growth from the onboarding of new contracts won in 2023 as well as the mandate expansions driving current quarter revenue performance. Project Management revenue performance varied across geographies given shifts in business mix as lower pass-through costs partially offset management fees increases in the mid-single digits. Greater activity in Portfolio Services and Other was largely offset by the absence of fees associated with a large transaction on behalf of a U.S. client in the third quarter of 2023. The increases in segment operating expenses for the third quarter and first nine months of the year, compared with the prior-year periods, were primarily due to revenue-related expense growth, including gross contract costs, partially tempered by continued cost discipline and the timing of incentive compensation accruals. The current quarter increase was also driven by nearly $10 million of expense associated with the timing of accruals related to gross receipts taxes in a handful of U.S. states. The increase in Adjusted EBITDA for the third quarter and first nine months of 2024 was primarily attributable to the top-line performance described above. 41 Table of Contents JLL Technologies % Change Three Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Revenue $ 56.7 58.9 (2.2) (4) % (4) % Platform compensation and benefits (1) $ 50.3 48.7 1.6 3 % 3 % Platform operating, administrative and other 19.1 12.6 6.5 52 52 Depreciation and amortization 4.9 3.9 1.0 26 26 Segment platform operating expenses 74.3 65.2 9.1 14 14 Gross contract costs 1.4 3.3 (1.9) (58) (59) Segment operating expenses $ 75.7 68.5 7.2 11 % 10 % Adjusted EBITDA (2) $ (7.8) (5.7) (2.1) (37) % (39) % Equity earnings (losses) $ 11.6 (3.0) 14.6 487 % 490 % 42 Table of Contents JLL Technologies (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Revenue $ 167.0 180.9 (13.9) (8) % (8) % Platform compensation and benefits (1) $ 151.1 155.3 (4.2) (3) % (3) % Platform operating, administrative and other 42.0 39.8 2.2 6 5 Depreciation and amortization 14.2 11.9 2.3 19 19 Segment platform operating expenses 207.3 207.0 0.3 — — Gross contract costs 4.0 11.0 (7.0) (64) (64) Segment operating expenses $ 211.3 218.0 (6.7) (3) % (3) % Adjusted EBITDA (2) $ (23.8) (25.2) 1.4 6 % 6 % Equity earnings (losses) $ 1.6 (102.0) 103.6 102 % 102 % (1) Included in Platform compensation and benefits expense is carried interest expense of $2.2 million and $4.3 million for the three and nine months ended September 30, 2024, and a carried interest benefit of $0.1 million and $9.4 million for the three and nine months ended September 30, 2023, related to Equity earnings (losses) of the segment. (2) Adjusted EBITDA excludes Equity earnings (losses) for JLL Technologies. The decline in JLL Technologies revenue for the current quarter and first nine months of 2024 was due to lower contract signings over the trailing twelve months in services offerings. This impact was partially offset in the third quarter by continued growth in software offerings. Segment operating expenses includes carried interest, which was a $0.1 million reduction to expense in the prior-year quarter ($9.4 million reduction to expense for the first nine months of 2023), versus incremental expense of $2.2 million this quarter (incremental expense of $4.3 million for the first nine months of 2024). Carried interest expense is associated with equity earnings/losses on certain investments within the JLL Technologies Spark Venture Funds. The incremental expense in the current quarter and first nine months of 2024 were due to net equity earnings from the investments, while the reduction to expense in the prior year periods reflected equity losses on certain investments in 2023. The increase in segment operating expenses is primarily driven by 1) $6.3 million of non-cash credit losses from convertible notes associated with JLL Technologies investments, which are excluded from Adjusted EBITDA consistent with equity earnings/losses from investments, 2) an approximate $5 million reduction to incentive compensation in the prior-year quarter for true-ups related to performance against certain targets, and 3) the incremental carried interest expense described above. These discrete items more than offset the impact of cost management actions over the trailing twelve months and ongoing cost discipline. Third-quarter Adjusted EBITDA contraction was primarily attributable to lower revenue as well as the bonus and carried interest expenses items described above, which overshadowed the benefits of cost discipline and improved operating efficiency over the trailing twelve months. Year-to-date, those cost management actions and improved operating efficiency drove margin improvement, as the results of the ongoing cost discipline outpaced the impact of carried interest and lower revenue. Equity losses for the first nine months of 2023 were due to subsequent financing rounds at decreased per-share values and were predominantly driven by two investments for which we previously recognized significant equity earnings. 43 Table of Contents LaSalle % Change Three Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Advisory fees $ 92.7 102.7 (10.0) (10) % (10) % Transaction fees and other 8.6 7.4 1.2 16 17 Incentive fees — — — n.m. n.m. Revenue $ 101.3 110.1 (8.8) (8) % (8) % Platform compensation and benefits $ 59.8 63.2 (3.4) (5) % (6) % Platform operating, administrative and other 18.7 14.0 4.7 34 32 Depreciation and amortization 1.9 2.2 (0.3) (14) (14) Segment platform operating expenses 80.4 79.4 1.0 1 1 Gross contract costs 9.3 7.4 1.9 26 26 Segment operating expenses $ 89.7 86.8 2.9 3 % 3 % Adjusted EBITDA (1) $ 14.0 26.0 (12.0) (46) % (45) % Equity losses $ (13.8) (9.1) (4.7) (52) % (51) % 44 Table of Contents LaSalle (continued) % Change Nine Months Ended September 30, Change in in Local ($ in millions) 2024 2023 U.S. dollars Currency Advisory fees $ 278.1 306.3 (28.2) (9) % (8) % Transaction fees and other 24.4 22.8 1.6 7 10 Incentive fees 4.8 39.3 (34.5) (88) (87) Revenue $ 307.3 368.4 (61.1) (17) % (16) % Platform compensation and benefits $ 180.1 216.5 (36.4) (17) % (17) % Platform operating, administrative and other 52.1 46.3 5.8 13 12 Depreciation and amortization 5.9 5.8 0.1 2 2 Segment platform operating expenses 238.1 268.6 (30.5) (11) (11) Gross contract costs 26.5 22.0 4.5 20 21 Segment operating expenses $ 264.6 290.6 (26.0) (9) % (9) % Adjusted EBITDA (1) $ 57.7 83.9 (26.2) (31) % (28) % Equity losses $ (25.0) (23.0) (2.0) (9) % (8) % (1) Adjusted EBITDA excludes Equity losses for LaSalle. For the third quarter and first nine months of 2024, LaSalle’s decrease in revenue was largely attributable to declines in assets under management ("AUM") over the trailing twelve months, most notably in North America and Europe, and lower fees in Europe as a result of structural changes to a lower-margin business, as discussed in previous quarters this year. Further, on a year-to-date basis, incentive fees decreased considerably, as fees earned in 2023 in Japan and the United States did not reoccur. Operating expenses were nearly flat for the third quarter of 2024, and declined on a year-to-date basis, due to lower variable compensation accruals in 2024 as well as continued cost discipline. In addition, the prior-year quarter included a one-time reduction to a legacy incentive compensation accrual upon final determination of performance relative to target. The Adjusted EBITDA contraction over the prior-year quarter and first nine months of 2023 was driven by lower revenues and the expense activity described above. On a year-to-date basis, 2024 results included an $8.2 million gain recognized following the purchase of a controlling interest in a LaSalle-managed fund during the second quarter. As of September 30, 2024, LaSalle had $84.6 billion of AUM. Compared with AUM of $92.9 billion as of September 30, 2023, the AUM as of September 30, 2024, decreased 9% in USD (7% in local currency). The net decrease in AUM over the trailing twelve months resulted from (i) $5.4 billion of dispositions and withdrawals, (ii) $3.9 billion of net valuation decreases, (iii) $1.7 billion of foreign currency decreases, and (iv) a $0.8 billion decrease in uncalled committed capital and cash held, partially offset by (v) $3.5 billion of acquisitions and takeovers. 45 Table of Contents LIQUIDITY AND CAPITAL RESOURCES We finance our operations, co-investment activity, share repurchases, capital expenditures and business acquisitions with internally generated funds, borrowings on our Facility, and through issuance of Long-term debt and commercial paper. Cash Flows from Operating Activities Operating activities used $142.0 million of cash in the first nine months of 2024, compared with $153.6 million of cash used in operating activities during the same period in 2023. The incremental cash inflows associated with higher cash provided by earnings and lower incentive compensation payments in 2024, compared with 2023, were more than offset by (i) $117.0 million higher cash taxes paid for the first nine months of 2024, (ii) cash paid to repurchase a loan from Fannie Mae (refer to Note 10, Commitments and Contingencies, in the Notes to Consolidated Financial Statements for additional information) and (iii) nearly $50.0 million of headwind from Net reimbursables driven by growth in Workplace Management. Cash Flows from Investing Activities We used $219.0 million of cash for investing activities during the first nine months of 2024, compared with $220.4 million used during the same period in 2023. Lower net capital contributions to investments and net capital additions were largely offset by higher cash paid for acquisitions. We discuss these drivers, along with other investing activities, individually below in further detail. Cash Flows from Financing Activities Financing activities provided $349.0 million of cash during the first nine months of 2024, compared with $231.2 million provided during the same period in 2023. This increase in cash provided by financing activities reflected greater net borrowings. Debt On June 27, 2024, we established a commercial paper program (the “Program”) in which we may issue up to $2.5 billion of short-term, unsecured and unsubordinated commercial paper notes at any time, under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Our $3.3 billion Facility matures on November 3, 2028, and bears a variable interest rate. Outstanding borrowings, including the balance of the Facility, Short-term borrowings (financing lease obligations, overdrawn bank accounts and local overdraft facilities) and the balance outstanding under the Program are presented below. (in millions) September 30, 2024 December 31, 2023 Outstanding borrowings under the Facility $ 345.0 625.0 Short-term borrowings 99.6 147.9 Outstanding commercial paper 800.0 — In addition to our Facility, we had the capacity to borrow up to $55.5 million under local overdraft facilities as of September 30, 2024. The following table provides additional information on our Facility, Uncommitted Facility and the Program, collectively. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2024 2023 2024 2023 Average outstanding borrowings $ 1,575.7 2,011.9 $ 1,446.6 2,017.0 Average effective interest rate 5.9 % 6.1 % 6.1 % 5.8 % We will continue to use the Facility for working capital needs (including payment of accrued incentive compensation), co-investment activities, share repurchases, capital expenditures and acquisitions. Refer to Note 9, Debt, in the Notes to Consolidated Financial Statements for additional information on our debt. 46 Table of Contents Investment Activity As of September 30, 2024, we had a carrying value of $866.5 million in Investments, primarily related to investments by JLL Technologies in early to mid-stage proptech companies as well as proptech funds, and LaSalle co-investments. For the first nine months ended September 30, 2024 and 2023, funding of investments exceeded return of capital by $54.9 million and $65.3 million, respectively. We expect continued investment activity by both JLL Technologies and LaSalle. See Note 6, Investments, in the Notes to Consolidated Financial Statements for additional information on our investment activity. Capital Expenditures Net capital additions for the nine months ended September 30, 2024 and 2023 were $126.3 million and $137.7 million, respectively. Our capital expenditures in 2024 were primarily for purchased/developed software and leasehold improvements. Business Acquisitions During the nine months ended September 30, 2024, we paid $45.9 million for business acquisitions. This included $40.8 million of payments relating to acquisitions in 2024 and $5.1 million for deferred business acquisition and earn-out obligations related to acquisitions completed in prior years, which are primarily reflected in cash flow from financing activities. 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 $14.1 million as of September 30, 2024. 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, 2024, we had the potential to make earn-out payments for a maximum of $108.9 million on 13 completed acquisitions subject to the achievement of certain performance conditions. Refer to Note 5, Business Combinations, Goodwill and Other Intangible Assets, in the Notes to the Consolidated Financial Statements for further information on Business Acquisitions. We will continue to consider acquisitions that we believe will strengthen our market position, increase our profitability and supplement our organic growth. Share Repurchase and Dividend Programs The number of shares repurchased and cash paid for repurchases is noted in the following table. Three Months Ended September 30, Nine Months Ended September 30, ($ in millions) 2024 2023 2024 2023 Total number of shares repurchased (in 000's) 83.5 123.2 297.9 262.5 Total paid for shares repurchased $ 20.1 20.1 $ 60.3 40.1 As of September 30, 2024, $1,033.3 million remained authorized for repurchases under our share repurchase program. Repatriation of Foreign Earnings 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, 2024, and December 31, 2023, we had total Cash and cash equivalents of $437.8 million and $410.0 million, respectively, of which approximately $328.2 million and $310.1 million, respectively, was held by foreign subsidiaries. 47 Table of Contents Restricted Net Assets We face regulatory restrictions in certain countries that limit or prevent the transfer of funds to other countries or the exchange of the local currency to other currencies. However, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries. The assets of these countries aggregated to approximately 4% of our total assets as of both September 30, 2024, and December 31, 2023. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report, including this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may also be included in our other public filings, press releases, our website, and oral and written presentations by management. Statements in the future tense, and all statements accompanied by terms such as “believe,” “will,” “may,” “could,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan” and variations thereof and similar terms, are intended to be forward-looking statements. Such statements do not relate strictly to historical or current facts as they relate to our intent, belief and current expectations about our strategic direction, prospects and future results, and give our current expectations or forecasts of future events. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. 48 Table of Contents