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Operator
Hello, everyone, and welcome to Newmark's third quarter 2021 earnings conference call. At this time, all participants will be on listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the call over to Jason McGruder from the Interim Head of Investor Relations. Thank you, and please go ahead.
Jason McGruder
Hi, I'm actually permanent head now. Thank you and good morning. Newmark issued its third quarter 2021 financial results press release in a presentation summarizing the results.
Operator
my apology apologies everyone it appears we have lost connection with our speakers please stand by as we reconnect them Thank you. Thank you.
Jason McGruder
Non-GAAP terms include adjusted earnings and adjusted EBITDA based on our current methodology, which exclude the impact of NASDAQ and the 2021 equity event. Unless otherwise stated, any figures with respect to cash flow from operations discussed on today's call refer to net cash provided by operating activities excluding loan originations and sales, as well as the impact of the 2021 equity event. Please see the sections in today's press release for a complete and updated definition for any non-GAAP term. reconciliations of these items to the corresponding GAAP results and how, when, and why management uses them. Additional information with respect to our GAAP and non-GAAP results mentioned on today's call is available on our website in supplemental Excel tables and the quarterly financial results presentation. Any outlook discussed on today's call assumes no material acquisitions, share repurchases, or meaningful changes in the company's stock price. These expectations are subject to change based on various macroeconomic, social, political, and other factors, including the COVID-19 pandemic. I also remind you that information on this call regarding our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Such statements involve risks and uncertainties. These include statements about the effects of the COVID-19 pandemic on the company's business results, financial position, liquidity and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements. For discussion of additional risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Newmark Securities and Exchange Commission filings, including but not limited to the risk factors set forth in our most recent Form 10-K, Form 10-Q, or Form 8-K filings. I'm now happy to turn the call over to our host, Barry Gossin, Chief Executive Officer of Newmark Group, Inc.
spk05
Thank you, Jason. Good morning, and thank you for joining us for Newmark's third quarter 2021 conference call. With me today are Newmark's Chief Financial Officer, Mike Rispoli, the Chief Strategy Officer, Jeff Day, and our Chief Revenue Officer, Lou Alvarado. Newmark continued its rapid growth, producing record quarterly revenues and our best-ever third quarter earnings. Virtually all of our growth was organic, as we benefited from our investments across life science, industrial, multifamily, commercial mortgage brokerage, and management services. Our world-class professionals and collaborative culture have created a platform that continues to win market share across all asset classes and service lines. Newmark's revenue growth was led by a 204% increase in capital markets and an all-time quarterly high. Newmark's investment sales, mortgage brokerage, and multifamily originations were a record $35 billion in the quarter. We continue to gain market share in both investment sales and debt placement. our investment sales volumes were up 208 percent, and our debt placement and origination volumes increased by 126 percent, both outperforming the industry. Fees from leasing and other commissions were up by 101 percent as we continued to capture market share. Our overall revenues benefited from much stronger demand across all major property types, led by multifamily, industrial, and office. Our recurring management services, servicing fees, and other revenues grew by 67 percent to an all-time quarterly high of $245 million. We expect these businesses to grow as a percentage of our revenues over time. As part of our global expansion plan, we acquired Deskio, a leading flexible workspace provider with over 50 locations in Europe. We also expanded our capital markets and corporate service business in Hong Kong, Singapore, and Dubai. Newmark now currently operates in over 30 countries. Due to our record third quarter results and our strong fourth quarter pipeline, we have raised our guidance for the full year 2021. Newmark has no debt, net debt. We anticipate leveraging our strong financial position to grow organically and strategically acquire as we drive towards our 2025 goal of $900 million in adjusted EBITDA. With that, I'm happy to turn the call over to Mike.
Jason
Thank you, Barry, and good morning. Newmark generated record quarterly revenues of $788.1 million, up 80.8%. our adjusted EBITDA was up 229.3% to a quarterly record of $174.5 million compared with $53 million. EPS was up 318.6% to 50 cents compared to 12 cents. Our adjusted EBITDA margin improved to 22.1% as compared to 12.2% last year. In comparison to the third quarter of 2019, Total revenues and adjusted EBITDA were up 34.3% and 47.4% respectively. Turning to expenses. Total expenses increased $266.5 million, of which $157 million was variable compensation related to growth in commission-based revenues. $61.1 million was due to higher pass-through expenses and support and operational expenses were up 36.4% based on an increase in business activity. During the quarter, we repurchased 6.3 million shares at $13.44, and year to date, 27.2 million shares and units for $12.69. This was partially offset by ordinary compensation-related share issuance and an increase of 6.2 million shares because of Newmark's stock appreciation, which impacted previously issued RSUs accounted for using the Treasury stock method. Our fully diluted share count was 252.9 million, down 11 million year over year. Moving to the balance sheet, we ended the third quarter with $566.9 million of liquidity more than $1.6 billion of total equity, and no net debt. Our strong financial position, continued cash flow generation, and our $465 million undrawn credit facility provide us with ample means to invest in growth, return capital to shareholders, and maintain our investment grade credit metrics. Moving to guidance. We have increased our outlook for 2021 to reflect our strong pipeline and continued market share gains. For the full year 2021, we expect revenues between $2.7 and $2.75 billion, up 42 to 44%, and adjusted EBITDA of $537 to $557 million, up 113 to 120% compared to 2020, and up 17% at the midpoint compared to 2019. As Barry mentioned, our plan is to achieve $900 million of adjusted EBITDA by 2025, which we believe is well within our reach given historical earnings growth of the company and available capital. Operator, we would now like to open the call for questions.
Operator
Thank you very much. If anyone would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure you are unmuted locally. As a reminder, that is star followed by one on your telephone keypad to register a question. Our first question comes from Jade Romani from Keefe, Brouillette and Woods. Jade, please go ahead, your line is open. Hello, Jade, your line is open. Please ensure you are unmuted locally. We will move on to our second question. Henry Coffey from Wedbush, your line is open. Please go ahead.
Henry Coffey
Yes, good morning and congratulations on a solid beat. Looking at the New York Manhattan rental market, anecdotally I can tell you that rents just absolutely snap back from where they were in February. Is there anything comparable going on in in major commercial office space, either in Manhattan or other large cities?
spk03
Henry, this is Lou Alvarado. Look, we're seeing recovery, really across all the markets, as you saw by the pickup and activity. Primarily, this is really being driven by people finally making some decisions and making commitments to space. Although in our gateway cities, I would tell you the office volume is still not back to the 2019 levels, but certainly what's driven it is that a lot of the changes have been driven by growth in life science and industrial, which is more than making up by some of the volume that is down in the office. You know, we believe that in those markets where we historically had a significant market share, as these things improve, which we believe will happen in January as people go back to the office, we're going to continue to pick up market share and our revenues will continue to grow. So we're very pleased with what has happened and we're optimistic about the return to the office in the January, and specifically as you saw with the recent OSHA release, that gives a little more guidance as to how people will return to the office.
Henry Coffey
Great.
spk08
Thank you.
Jason McGruder
All right. Next question, operator.
Operator
Our next question comes from Patrick O'Shaughnessy from Raymond James. Please go ahead.
Patrick O'Shaughnessy
Hey, good morning, guys. So obviously, you guys announced some key hires and kind of foreshadowed some more global expansion and push into property and facilities management. Can you talk about what impact you think that's going to have on Newmark's margin profile over time?
Jason
Sure. Hi, Patrick. It's Mike. So I think what you're seeing is on a fee revenue basis, we expect our margins to expand probably 50 to 100 basis points this year. as compared to 2019. And, you know, we think that we could continue to expand those margins over time. Obviously, it'll depend on mix, but we feel pretty good about our ability to expand margins over time.
Patrick O'Shaughnessy
Got it. Okay, thank you. And then, you know, as we look at your liquidity at the end of the third quarter, still pretty robust. You still have, I think, a good chunk of the NASDAQ shares on your balance sheet. How are you thinking about deploying that liquidity between repurchases, hires, M&A, and other potential uses?
Jason
Well, I think you've seen we continue to buy back shares in the third quarter. And I think we'll continue to do that into the fourth quarter, particularly where the stock is trading. We still think there's a lot of room for upside there. And then we think there's a lot of opportunity to invest in the business. which we've been doing. You saw we did some things internationally in the quarter. We'll continue to look globally and as well as in the US, we still think there's a lot of white space to grow our business across all the business lines. So we'll continue to invest back into the business.
Patrick O'Shaughnessy
To follow up on that, would you think you'd be relatively more inclined to invest in the business by hiring and potentially some acquisitions as opposed to the pretty aggressive pace of repurchases last couple of quarters or would you still expect to be pretty aggressive on the repurchase front?
spk05
I think we could do both. We have, as we said in the last quarter, we have built the foundation for an opportunity to have significant gearing and scale. We have lots of markets that are mature in respect of infrastructure, but not in terms of market share. It's really offering us enough white space to get the benefit of an increased margin and growth. So we have lots of opportunities and lots of places to use our capital to grow smartly while maintaining margin. We also have an enormous amount of white space and runway around the globe, which we've now opened up. And we're seeing quite a bit of reach outs on the part of people who want to be a participant in what we've created as a company. And we're very excited about that global expansion.
Jason
Yeah, and the last point I would add to that is, in addition to the billion dollars of capital we have available to us today, more than a billion, you know, we generate $400 to $500 million of cash flow from the business every year, and we expect that number to continue to grow over time.
Patrick O'Shaughnessy
Got it. Terrific. And then, you know, one last question from me. Last quarter, you know, there was a conversation about the tax rate and the, you know, impact of Maybe pulling forward some of that tax yield, I think this quarter the non-GAAP adjusted tax rate was around 21%. Is that the right number to be using going forward as well?
Jason
I think we should be around 18% on a go-forward basis, Patrick, somewhere in that neighborhood, both this year on a full-year basis and as we look ahead.
Patrick O'Shaughnessy
Okay, terrific. Thank you.
Operator
Thank you, Patrick. We have Jade Romani back on the line from Keith Brouillette and Woods. So, Jade, please go ahead. Your line is open.
Patrick
Thank you very much. For the market overall, what kind of growth rates do you think are reasonable next year for investment sales, GSC, multifamily, and leasing? We're thinking something around 7% to 10% is reasonable for capital markets and for leasing, something in the 15% to 25% range. And I would assume that Newmark could outgrow those estimates given its market share gains of late.
spk05
You know, it's hard to determine exactly what the growth rate is. I will tell you there's pent-up demand in the office leasing once it settles out and people are secure about how they're going to come back to the office. What we're not seeing is a lot of concierge, multiple people using single desks. Companies are using their headquarters and their office space more as a place to attract people, give them room and space to communicate and collaborate, which is important. So I think that the growth rate on office will certainly pick up. On capital markets, there's still the same enormous amount of liquidity. You know, 17 or so trillion dollars of negative yield, of zero yield, negative yield around the world. The U.S. and other parts are very attractive to invest, and the allocation of institutional money towards real estate still continues to grow, and interest rates remain low. So interest rates remain low. Money is available. Demand will pick up. The categories that have driven the market, like multifamily, industrial, life science, seem to have a really good runway ahead of us. And office coming back is actually an opportunity. The fact that New York and San Fran have not come back and we've done so well, to me, is a plus. It's just once it starts to pick up and once the opportunity is there and we hit our volumes, it will bode well for our company.
Patrick
Thank you. And many industries are facing a lot of issues with supply chain as well as labor constraints. Is that starting to impact Newmark's business with respect to hiring, perhaps pressure on wages, as some of your peers have mentioned? And in terms of the management services business as well as some of the other businesses, are there any supply chain impacts currently being experienced?
spk05
So low interest rates and high inflation are generally historically good for real estate. The one issue that could have an impact is supply chain, but most people believe this is a temporary supply chain impediment, which will be corrected. And once the supply chain gets corrected, there's pent-up demand for goods and services, and so that will pick up and catch up.
Patrick
And lastly, just wanted to clarify, excluding the equity-based comp and allocation of net income line, Is the comp and employee benefits line item all cash?
Jason
Yeah, it would be all cash, yes.
Patrick
Thank you very much.
Operator
As a reminder, if you would like to register a question, please press star followed by 1. It appears we have no further questions, so I'll hand back over for any closing remarks.
spk05
We expect Newmark to continue to grow and gain market share and are incredibly excited about our global prospects. We also look forward to seeing you at our Analyst and Investor Day on December 7th. So have a great time.
Operator
Thank you, everyone, for joining today's call. You may now disconnect your lines and have a lovely day.
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