Real estate firm JLL (NYSE:JLL) reported Q1 CY2024 results exceeding Wall Street analysts' expectations , with revenue up 8.7% year on year to $5.12 billion. It made a non-GAAP profit of $1.78 per share, improving from its profit of $0.65 per share in the same quarter last year.

Is now the time to buy JLL? Find out in our full research report.

JLL (JLL) Q1 CY2024 Highlights:

• Revenue: $5.12 billion vs analyst estimates of $4.82 billion (6.4% beat)

• EPS (non-GAAP): $1.78 vs analyst estimates of $0.86 (106% beat)

• Gross Margin (GAAP): 50.6%, in line with the same quarter last year

• Free Cash Flow was -$720.7 million, down from $680.2 million in the previous quarter

• Market Capitalization: $8.81 billion

"JLL's strong start to 2024 was driven by growth in both our resilient and transactional business lines. In addition, the impact of our cost actions over the last year allowed us to meaningfully improve our profitability while still investing in our business to take advantage of growth opportunities ahead," said Christian Ulbrich, JLL CEO.

Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE:JLL) is a company specializing in real estate advisory and investment management services.

Real Estate Services

Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.

Sales Growth

A company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one may grow for years. JLL's annualized revenue growth rate of 5% over the last five years was weak for a consumer discretionary business.

Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. JLL's recent history shows the business has slowed as its annualized revenue growth of 2.5% over the last two years is below its five-year trend.

We can better understand the company's revenue dynamics by analyzing its three most important segments: Work Dynamics, Markets Advisory, and Capital Markets, which are 71%, 18.5%, and 7.4% of revenue. Over the last two years, JLL's Work Dynamics revenue (operational workflows) averaged 9% year-on-year growth while its Markets Advisory (real estate insights) and Capital Markets (financial transactions) revenues averaged declines of 1.9% and 16.8%.

This quarter, JLL reported solid year-on-year revenue growth of 8.7%, and its $5.12 billion of revenue outperformed Wall Street's estimates by 6.4%. Looking ahead, Wall Street expects sales to grow 5.9% over the next 12 months, a deceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, JLL has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 1%, subpar for a consumer discretionary business.

JLL burned through $720.7 million of cash in Q1, equivalent to a negative 14.1% margin, increasing its cash burn by 5.9% year on year.

Key Takeaways from JLL's Q1 Results

We were impressed by how significantly JLL blew past analysts' EPS expectations this quarter. We were also excited its operating margin outperformed Wall Street's estimates. Zooming out, we think this was a solid quarter. The stock is up 2.8% after reporting and currently trades at $190.5 per share.

JLL may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.