International Workplace Group plc

Good morning everyone and thank you for joining our trading update for the first quarter of 2026. We've made a strong start to the year with continued momentum across the business and clear progress against our strategy. And most importantly, we've delivered a 4% revenue growth at the group level. And system revenue grew at 9%. That's the best we've seen so far, so we're very pleased with that as well. And all of this despite a clear backdrop of macroeconomic uncertainty and geopolitical events. Anything in particular developments in the Middle East affects our business directly and indirectly. I think the fact that we're presenting these results today reflects the resilience of both demand and the strength of our model and our global platform. The key message from this quarter is a straightforward one. A capital-like model is scaling, demand remains robust, and the business becoming more and more predictable, more cash generative, and more resilient. As you've seen in the numbers, we continue to grow the platform in every way. and we did again so in this quarter. I think in particular the management franchise platform where fee income grew strongly and signings accelerated meaningfully was a very good performance in the quarter. Over the past years we've been really pressing the accelerator on our management franchise business And as a result, we've reduced our capital intensity, keeping the growth but reducing capital intensity. And this has enabled us to both grow faster and clearly with much less capital and generate structurally higher returns as we do this. What we're now seeing is that model working at scale. The growth in signings, the expansion of the pipeline, and the increase in recurring fee income all point to one thing. We're building a much higher quality earning space. At the same time, it's important to highlight that the company-owned segment has returned to headline revenue growth, as our strategy now converts into higher top line for these units. So we're now seeing both growth in the capital life platform and growth in the company-owned units. And together, that provides a much stronger and more balanced platform for the group. Turning briefly to the macro environments. Globally, there's clearly a higher level of uncertainty, whether that's in politics, whether that's in the expectation of inflation and just broader economic volatility. The world has become a much more uncertain place. But based upon the decades of experience we have in this industry, this sort of pattern can be benign and sometimes it can even be helpful for our business. Periods of uncertainty can accelerate demand for flexibility, not reduce it. So when we look at that uncertainty, we can see a lot of uncertainty around the changes that AI will bring. I mean, in fact, we believe that AI changes everything. It certainly is within our business, but we think that's going to affect many businesses around the world in the coming years. And what that is causing is an uncertainty into the future headcount requirements for companies. How many people and where do they want those people, the remaining people? So companies are hesitating from making long-term or fixed commitments and are seeking more flexibility. And they're changing also how they take space and generally taking less space, not more. So flexibility, less space really plays into our strategy and what we can offer. So, you know, coming back, just reiterating what companies are looking for, I think top of the list, with all the uncertainty and pressures on costs, which seem to be universal in the world today, I think the number one thing is companies don't want to spend capex, no capex, number one thing. Any finance director or CEO I speak to, that is the number one thing. The second is they want more flexible situations in everything they're doing. Flex, they put a high value on. It doesn't matter whether that's space. It doesn't matter if that's renting equipment. It doesn't really matter what it is. They want flexibility. They clearly want shorter-term requirements and they're clearly moving. to lower space requirements. We can see that happening. Lower space requirements, excellent for us. That is our business. We do small and medium space, we don't do large space. And that's certainly becoming a very clear trend. They're also seeking globally scalable solutions. Again, in a world of uncertainty, difficult and changing global politics, The ability to just access a solution that's ready to use, they put high value on. So all of this is greatly helping our model as we move into 26. It always helps us. We're seeing an uptick in the tailwinds here as we come into this year. As a result, our enterprise inquiries are strong, the activity from those inquiries is increasing and conversion into sales is robust. So we've got all this background macro going on, but we are seeing actually quite positive trends and good tailwinds in the business. So let me move on and just cover a different point. which is looking at our company-owned portfolio. We have a lot of conversations with investors, in particular new investors, where we endeavor to explain this portfolio. This portfolio is a highly attractive part of our business, very cash-generative and very low-risk, and that is the part that's misunderstood by the market. This portfolio, over many years, has been largely de-risked and hedged. And therefore, it is not a cyclical element in our business. It is not a high liability part of our business. It is very flexible. It is very much aligned and very similar to the other part of the business, which is managed space. So we will work on this as we go through 2026 and beyond to ensure that new investors and existing ones fully understand the very attractive aspects and considerations of a company-owned portfolio. The other key driver is the continued expansion of the network. We signed a new record of 380 deals in the quarter. and opened more than 200 centres. But you shouldn't just look at it as growth for growth's sake. The important thing is to understand that this further enhances the flywheel that is our business by adding more cities and more network and more depth in the cities that we're in. We created some network, a platform here that is much more relevant to our enterprise customers, to all customers. That relevance drives more demand. More demand drives more partner interest. We're able to fill up and monetize more space for our partners. And clearly, additional scale has huge economies of scale benefits and we continue to achieve those and that's partly why we're optimistic on our ability to control costs and not take the full hit that inflation will bring this year. So we're now at a scale where the flywheel is clearly accelerating and we're clearly seeing the benefits. So just to summarise, We've delivered growth in revenue and in the growth of the platform despite the backdrop economically and geopolitically. Our management franchise business is scaling strongly. Our growth and segment is growing top line revenue. The overall risk profile of the business is much lower than is often perceived and we're going to work on that during the course of this year. and very attractive opportunities in addition to all of that to buy back stock. And we'll continue to do this as we move forward, and Charlie will talk to that some more. So with that, I'll hand over to Charlie, our CFO, who will take us through the numbers and other matters.

Thanks, Mark, and good morning, everybody. Let me take you through the financial performance of the quarter, which we've been pleased with. System-wide revenue accelerated in the quarter, growing to $1.17 billion, up 9% year-on-year, and group revenue accelerated to grow by 4% year-on-year to $958 million, as company-owned grew more in the period. As Mark highlighted, the key dynamic here is continued shift towards the capital-like business. Growth is increasingly being driven by our management franchise platform, which is higher margin, more scalable, provides greater visibility, and more cash flow. In management franchise, system revenue grew strongly, 41% year-on-year in Q1 to $260 million, and fee income increased by 70% year-on-year. Recurring managed fee income grew 80% year-on-year to $16 million for Q1, reflecting the acceleration of openings and the maturity curve of centres. This has been the key number we have guided to as it reflects the recurring revenue from the growth in the managed network. We continue to see strong partner demand, with signings and openings both accelerating. This provides a high level of forward visibility on our future system revenue and fee income. The revenue potential of the managed and franchised business continues to grow further. We now have 336,000 rooms open across the managed and franchised segment and a further 231,000 in the pipeline of rooms that have been signed and not yet opened. When all of these rooms are open and mature, potential annual system revenue of managed and franchised is over $1.9 billion. In the company-owned business, revenue grew 2% year-on-year and rev power increased 6%. Performance in the first quarter of the year has been in line with expectations and we are maintaining our full year guidance as outlined with our results in March. That is, adjusted EBITDA in the range of $585 million to $625 million, company-owned revenue growth of at least 4%, recurring management fee income of $80 million and maintaining our investment grade credit rating. As Mark said earlier, our direct exposure to the Middle East is limited, but we are cognizant of the macroeconomic uncertainty and volatility. The impact of the Middle East conflict on the global economy remains unknown and includes global inflationary pressures which may impact the company. These have risen during the quarter and we are taking practice steps to reduce them in Q2 and beyond. Despite the microeconomic backdrop, signings and openings have continued to accelerate post-previous investments. Enterprise customer inquiries have accelerated, sales have risen, and pricing is positive. On financing, net deficit increased to $88 million during the quarter. This was primarily driven by share buybacks as we took advantage of lower prices, but also annual bonus payments and working capital timing effects. As you'll remember, in late 2025, we updated the date on which we invoice. In Q1, as part of an ongoing program to modernize and automate the business, we've updated the process by which we receive invoices. This update has reduced payment days significantly during the quarter. We expect this to normalize over the course of the year, and as a result, net debt should reduce from current levels by the end of this year. This program will also help us realize cost savings as we continue to improve efficiencies across the group. Importantly, our balance sheet remains strong. Our debt is at a fixed rate, there are no near-term financing requirements, and we maintain committed to maintaining an investment grade rating. On capital allocation, as the business continues to become more capital light and cash generative, we're able to return capital to shareholders whilst also continuing to grow. We've already returned over $70 million to investors so far this year through share buybacks, and over $230 million since our invest day in New York in December 2023. This is a direct outcome of our model. We have announced $100 million of share buybacks so far for 2026. As we did through the course of 2025, we will update the market accordingly in due course. So in summary, we delivered 9% system revenue growth, 4% group revenue growth. We've delivered strong growth in the management franchise business, continuing to grow our pipeline to add potential future revenue, company-owned delivering revenue and also red part growth, and allowing the flywheel to continue turning, which in turn leads to increased returns to shareholders. Thank you very much, and with that, we'll open the line for questions.

Thank you, Charlie. If you'd like to ask a question, please click on the raise hand icon. When you hear your name, please unmute your microphone before asking your question. We'll now take a few moments to collect your questions. So our first question is from Tim Ranskill. Please unmute your microphone before asking your question. And your line is open. Please go ahead.