Services Contract Discipline Driving Margin Expansion and Record Revenue
Turned net income positive to $131.3M in FY2024 by imposing services contract discipline.
Cushman & Wakefield, a Large Enterprise Commercial Real Estate Services company, created value through Measurement and Analytics.
Cushman & Wakefield, a global commercial real estate services firm with approximately 52,000 employees across 400+ offices in roughly 60 countries, faced a severe market downturn in 2023. Total revenue fell 6% year-over-year to $9.5 billion and service line fee revenue declined 10% to $6.5 billion, driven by a 41% collapse in capital markets revenue and a 12% decline in leasing (FY2023 earnings press release, February 2024). The company posted a net loss of $35.4 million and adjusted EBITDA fell 37% to $570.1 million. While the services business (property, facilities, and project management) was more stable — growing 3% in 2023 — profitability was uneven. The company had limited visibility into which service contracts were value-creating versus margin-dilutive, and its services operations were siloed across geographies and service lines. Project management revenue was declining as office clients deferred expansion plans. CEO Michelle MacKay, who took the role in July 2023, identified the need for disciplined analysis of the services portfolio to determine which business areas could grow profitably and which were non-core (Commercial Observer, March 2024).
Beginning in late 2023, Cushman & Wakefield implemented a multi-pronged transformation of its services business focused on contract-level profitability discipline:
Contract profitability analysis and exits: The company conducted a systematic review of its services contract portfolio. As CEO MacKay stated publicly, the firm became "intentional about its contracts, walking away from those that are not profitable" (Facilities Dive, Q3 2025 coverage). This implied building granular visibility into which contracts were margin-accretive and which were destroying value, then acting on that analysis.
De-siloing services operations: CW restructured its services business through structural and leadership changes across the Americas and internationally, bringing leaders together to think more strategically about the business rather than operating in geographic or service-line silos. This enabled cross-market comparison of contract economics and consistent profitability standards.
European project management restructuring: The company specifically restructured its European project management business to improve margins, recognizing that this sub-segment was underperforming relative to its potential.
Cost savings initiatives: CW implemented targeted cost reductions across the organization, reducing overhead while preserving revenue-generating capacity. The company also completed two debt refinancings and began systematic deleveraging.
Selective growth investment: Rather than cutting uniformly, CW reinvested in facilities management and services segments showing healthy contract economics, supplemented by tuck-in acquisitions to build scale in profitable niches.
The contract discipline and operational restructuring produced measurable financial improvements across a two-year period:
Profitability turnaround (FY2024): Net income swung from a loss of $35.4 million (FY2023) to $131.3 million (FY2024). Adjusted EBITDA improved 2% to $581.9 million. Free cash flow increased $65.8 million to $167.0 million (FY2024 earnings press release, February 2025).
Record revenue and margin expansion (FY2025): Revenue reached a record $10.3 billion, up 9% year-over-year. Service line fee revenue grew 7% to $7.1 billion. Adjusted EBITDA rose 13% to $656.2 million, with adjusted EBITDA margin expanding 46 basis points to 9.3%. Adjusted diluted earnings per share grew 34% to $1.22 (FY2025 earnings press release, February 2026).
Services revenue reacceleration: After declining 3% in FY2024, services revenue returned to growth — up 8% in Q4 2025. The company achieved the fifth consecutive quarter of double-digit year-over-year capital markets revenue growth.
Cash flow and deleveraging: Free cash flow surged to $293.0 million in FY2025, an increase of $126.0 million from FY2024. The company prepaid $300 million in debt, reducing net leverage from 3.8x to 2.9x. Total liquidity stood at $1.8 billion at year-end 2025.
Margin math: Adjusted EBITDA margin improvement from 2023 to 2025: $570.1M / $9.5B = 6.0% (FY2023) → $656.2M / $10.3B = 6.4% (FY2025), a 40 basis point improvement on total revenue. On service line fee revenue: $570.1M / $6.5B = 8.8% (FY2023) → $656.2M / $7.1B = 9.2% (FY2025).
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Total revenue | $9.5B (-6%) | — | $10.3B (record, +9%) |
| Service line fee revenue | $6.5B (-10%) | $7.1B | $7.1B (+7%) |
| Net income | -$35.4M | +$131.3M | — |
| Adjusted EBITDA | $570.1M | $581.9M (+2%) | $656.2M (+13%) |
| Adjusted EBITDA margin | 6.0% | — | 6.4% (+40 bps) |
| Free cash flow | $101.2M | $167.0M | $293.0M |
| Net leverage | — | 3.8× | 2.9× |
Cushman & Wakefield's services portfolio before MacKay's review in 2023 carried contracts that were individually margin-dilutive — facilities management and project management engagements with unit economics that didn't justify the overhead they consumed. In a growth environment, the top-line contribution of these contracts obscures their drag. In the 2023 downturn — capital markets revenue down 41%, leasing down 12% — the drag was exposed because the transaction revenue that had been subsidizing weak services contracts disappeared.
The contract exits were the right response, not because growth is bad but because margin on retained revenue is what generates free cash flow. CW's adjusted EBITDA margin on service line fee revenue improved from 8.8% (FY2023) to 9.2% (FY2025) on revenue that grew $600M — the combination of exiting dilutive contracts and growing the profitable base. Free cash flow tripled from $101M to $293M over two years, enabling $300M in debt prepayment and reducing net leverage from 3.8× to 2.9×.
The CEO transition was the enabler. MacKay brought the mandate to make decisions that are organizationally difficult when the business is growing — walking away from contracts means giving up revenue that existing account managers are credited for, which requires both analytical clarity and leadership willingness to act on the analysis.
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