Newmark : Q3 2022 Earnings Release

Newmark Group, Inc. Reports Third Quarter 2022 Financial Results

NEW YORK - October 28, 2022 - Newmark Group, Inc. (Nasdaq: NMRK) ("Newmark" or "the Company"), a leading full-service commercial real estate business, today reported its financial results for the quarter and nine months ended September 30, 2022 and updated its full year outlook.

Barry M. Gosin, Chief Executive Officer of Newmark, said:1

"The rapid rise of global interest rates has materially impacted transaction volumes. We do not expect volumes to rebound until interest and capitalization rates stabilize and the strong fundamentals of commercial real estate reemerge. While we anticipate lower volumes well into next year, we expect to continue generating solid Adjusted EBITDA and cash flow due to our diversified revenue streams and variable cost structure.

"Newmark again generated double-digit fee growth from our recurring revenue businesses, which we expect to grow throughout the cycle. With over $410 billion of global institutional real-estate focused capital waiting to be deployed and $2.5 trillion of commercial and multifamily debt maturing over the next five years, we expect industry volumes to bounce back relatively quickly once interest rates are no longer rising and have stabilized.

"Our meaningful scale, low leverage, and strong cash flow, together with our $600 million undrawn revolving credit facility, position us to invest in growth across our diverse business lines and geographies as we execute our 2025 plan. Given the tremendous white space on our global map, we expect to have many opportunities to further expand Newmark's platform as the industry consolidates around well capitalized full service providers".

SELECT RESULTS COMPARED WITH THE YEAR-EARLIER PERIOD2

Highlights of Consolidated Results	3Q22	3Q21	Change	YTD 22	YTD 21	Change
(USD millions, except per share data)
Revenues	$664.6	$788.1	(15.7)%	$2,098.2	$1,922.0	9.2%
GAAP income before income taxes and noncontrolling	51.2	217.1	(76.4)%	136.1	999.6	(86.4)%
interests ("GAAP pre-tax income")
GAAP pre-tax income excluding other income and the	51.3	130.3	(60.6)%	237.6	256.8	(7.5)%
2021 Equity Event
GAAP net income per fully diluted share	$0.15	$0.63	(76.2)%	$0.41	$3.06	(86.6)%
Adjusted Earnings before noncontrolling interests and	105.8	160.6	(34.2)%	356.9	327.8	8.9%
taxes ("Pre-tax Adjusted Earnings")
Adjusted EBITDA ("AEBITDA")	122.5	174.5	(29.8)%	408.5	372.1	9.8%
Post-tax Adjusted Earnings per share ("Adjusted EPS")	$0.35	$0.50	(30.0)%	$1.16	$1.00	16.0%

THIRD QUARTER 2022 HIGHLIGHTS3

• 10.8% increase in recurring fee revenues from management services, servicing fees, and other.
• Gained further market share in U.S. investment sales, ranking number three year-to-date by RCA, up from number four in 2021.
• Repurchased 10.1 million shares during the quarter, reducing fully diluted weighted-average share count by 5.6% year-on- year to 243.5 million.
• Maintained low net leverage at 0.5X and have access to an undrawn $600 million revolving credit facility.

ONLINE AVAILABILITY OF INVESTOR PRESENTATION AND ADDITIONAL FINANCIAL TABLES

Newmark's quarterly supplemental Excel tables show revenues, earnings, and other metrics for periods from 2018 through the third quarter of 2022. The Excel tables and the Company's quarterly financial results presentation are available for download at ir.nmrk.com. These materials include other useful information that may not be contained herein.

DIVIDEND INFORMATION

On October 27, 2022, Newmark's Board of Directors (the "Board") declared a qualified quarterly dividend of $0.03 per share payable on November 30, 2022, to Class A and Class B common stockholders of record as of November 11, 2022. The ex- dividend date will be November 29, 2022.

• Unless otherwise stated, all financial results and volume figures in the narrative portion of this document compare the third quarter of 2022 with the year-earlier period. See the footnote to "Revenue Detail" table for more information on fee and non-fee revenues. The investible funds figure is from Preqin, while debt maturities are as per Newmark Research and MSCI Real Capital Analytics ("RCA").
  2 U.S. Generally Accepted Accounting Principles or "GAAP". See the sections of this document including "Non-GAAP Financial Measures", "Adjusted Earnings Defined", "Reconciliation of GAAP Net Income Available to Common Stockholders to Adjusted Earnings Before Noncontrolling Interests and Taxes and GAAP Fully Diluted EPS to Post-Tax Adjusted EPS", "Fully diluted weighted-average share count for GAAP and Adjusted Earnings", "Adjusted EBITDA Defined", "Liquidity Defined", and "Reconciliation of GAAP Net Income (Loss) Available to Common Stockholders to Adjusted EBITDA", including any footnotes to these sections, for the complete and/or updated definitions of these non-GAAP terms and how, when and why management uses them, and the differences between results under GAAP and non-GAAP for the periods discussed herein. For more information about receipt of shares from Nasdaq, Inc. ("Nasdaq"), the Impact of Nasdaq, and the Impact of the 2021 Equity Event, see the section of this document titled "Other Useful Information". Please also see the table towards the end of this document titled "Reconciliation of GAAP pre-tax income to GAAP pre-tax income excluding other income and the 2021 Equity Event".
  3 Including no margin pass-through revenues, management services, servicing fees, and other declined by 9.0%.

1

REVENUES4

Consolidated Revenues	3Q22	3Q21	Change	YTD 22	YTD 21	Change
(USD millions)
Fee management services, servicing fees, and other	$159.1	$143.6	10.8%	$475.6	$367.6	29.4%
Non-fee management services revenue	63.2	100.8	(37.3)%	213.6	284.1	(24.8)%
Management services, servicing fees, and other	222.4	244.5	(9.0)%	689.2	651.7	5.7%
Leasing and other commissions	219.9	231.5	(5.0)%	631.7	563.3	12.1%
Investment sales	131.7	208.8	(36.9)%	492.9	452.6	8.9%
Fee commercial mortgage origination, net	63.2	69.7	(9.3)%	196.1	166.2	18.0%
OMSR revenue	27.4	33.6	(18.6)%	88.4	88.2	0.2%
Commercial mortgage origination, net	90.6	103.3	(12.3)%	284.5	254.4	11.8%
Total revenues	664.6	788.1	(15.7)%	2,098.2	1,922.0	9.2%

Revenues from Fee management services, servicing fees, and other increased by 10.8%, while total revenues for these businesses decreased by 9.0%, due to a decline in non-margin,pass-through revenues. This growth was led by strong improvements from the Company's servicing business, which continues to benefit from rising short-term interest rates, as well as from Newmark's flexible workspace platform and Global Corporate Services. The Company also generated stronger leasing activity in industrial and retail, offset by lower office volumes. Excluding non-cash OMSR revenues, fee revenues for commercial mortgage origination, net, declined by 9.3%. This change reflected improved year-on-year volumes for Fannie Mae originations and mortgage brokerage in office, industrial, and hotel/lodging, offset by reduced activity in other areas.

For the nine months ended September 30, 2022, Newmark increased its investment sales and total debt volumes by 17.1% and 26.5% year-on-year, respectively, outpacing the industry. The Company expects overall U.S. investment sales and debt origination volumes to decline in the fourth quarter of 2022 compared with record industry-wide activity a year earlier.

CONSOLIDATED EXPENSES5

Consolidated Expenses	3Q22	3Q21	Change	YTD 22	YTD 21	Change
(USD millions)
Compensation and employee benefits under	$388.9	$444.4	(12.5)%	$1,198.1	$1,274.9	(6.0)%
GAAP
Equity-based compensation and allocations of net	44.1	34.0	29.8%	103.0	315.7	(67.4)%
income to limited partnership units and FPUs
Non-compensation expenses under GAAP	173.0	186.9	(7.4)%	535.5	493.0	8.6%
Total expenses under GAAP	606.0	665.3	(8.9)%	1,836.6	2,083.7	(11.9)%
Compensation and employee benefits for	388.4	427.9	(9.2)%	1,195.6	1,067.7	12.0%
Adjusted Earnings
Non-compensation expenses for Adjusted	135.9	158.9	(14.4)%	433.7	413.8	4.8%
Earnings
Total expenses for Adjusted Earnings	524.4	586.8	(10.6)%	1,629.3	1,481.5	10.0%

The change in quarterly expenses reflects lower variable compensation primarily related to decreased commission-based revenues. Newmark's GAAP compensation expense in the year earlier periods included $16.0 million and $444.6 million, respectively, of tax deductible GAAP compensation charges with respect to the 2021 Equity Event. Approximately 70% of the Company's total expenses for Adjusted Earnings are variable, as discussed in the accompanying investor presentation.

• The Company's total revenues under GAAP include no margin, pass-through management services revenues (which equal their related expenses) and revenues related to originated mortgage servicing rights ("OMSRs"). Newmark may refer to these two items together as "non-fee revenue", and the remainder of its top line as "fee revenues". In the third quarter of 2022, fee revenues declined by 12.2% to $574.0 million versus $653.6 million, while non-fee revenues were down by 32.6% to $90.6 million compared with $134.5 million. Year to date, fee revenues increased by 15.9% to $1,796.3 million versus $1,549.6 million, while non-fee revenues were down by 18.9% to $302.0 million compared with $372.3 million. Additional details on current and historical amounts for fee and non-fee revenues and a comparison to total revenues are available in the Company's quarterly supplemental Excel tables. For a discussion of a recast of various revenue items, and for more information on industry volumes, please see the section of this document titled "Other Useful Information." "Servicing and other revenues" include servicing fees, interest income on loans held for sale, escrow interest, and yield maintenance fees, all of which are part of Newmark's GSE/FHA origination business.
  5 Please see "Non-GAAP Financial Measures" for information on how non-cash GAAP gains attributable to OMSRs and GAAP amortization of mortgage servicing rights ("MSRs") affect non-GAAP results.

2

OTHER INCOME

Other Income (USD millions)	3Q22	3Q21	Change	YTD 22	YTD 21	Change
Nasdaq Impact	$-	$74.9	(100.0)%	$(87.4)	$1,157.0	(107.6)%
Mark-to-market gains (losses) on non-marketable	-	-	NMF	(13.9)	2.5	(656.0)%
investments, net
Other items, net	(0.1)	27.8	(100.4)%	(0.1)	27.8	(100.4)%
Other income (loss), net under GAAP	(0.1)	102.7	(100.1)%	(101.4)	1,187.3	(108.5)%
Exclude:
Nasdaq Impact	-	(73.4)	100.0%	87.6	(1,155.5)	107.6%
Mark-to-market (gains) losses on non-marketable	-	-	NMF	13.9	(2.5)	656.0%
investments, net
Other items, net	0.3	(27.8)	101.1%	0.3	(27.8)	101.1%
Other income (loss), net for Pre-tax Adjusted Earnings	0.2	1.5	(86.7)%	0.3	1.5	(80.0)%
and Adjusted EBITDA

Newmark's "Other income (loss), net" under GAAP includes gains and losses related to the Nasdaq shares the Company received in 2021, equity method investments that represent Newmark's pro rata share of the net gains (losses) on investments, and mark-to-market gains or losses on non-marketable investments. "Other income (loss), net for Pre-tax Adjusted Earnings and Adjusted EBITDA" excludes these items. The main difference between the two measures of "other income (loss)" relate to GAAP realized and unrealized gains with respect to Nasdaq shares, as discussed later under "Other Useful Information." In addition, the Company recorded a net total of $(13.9) million of mark-to- market gains (losses) on non-marketable investments in the first nine months of 2022 compared with $2.5 million a year earlier. Newmark also recorded a $27.8 million GAAP non-cash gain related to the acquisition of Deskeo in the third quarter of 2021.

TAXES AND NONCONTROLLING INTEREST

Taxes And Noncontrolling Interest (USD millions)	3Q22	3Q21	Change	YTD 22	YTD 21	Change
GAAP provision for income taxes	$13.3	$53.8	(75.3)%	$35.7	$206.6	(82.7)%
Provision for income taxes for Adjusted Earnings	20.1	30.5	(34.1)%	67.8	59.1	14.7%
Net income attributable to noncontrolling interests for	9.9	34.7	(71.3)%	23.6	191.6	(87.7)%
GAAP
Net income attributable to noncontrolling interests for	0.6	1.0	(33.5)%	0.6	2.4	(76.3)%
Adjusted Earnings

Taxes and net income attributable to noncontrolling interests generally move in tandem with the Company's earnings.

CONSOLIDATED SHARE COUNT6

Consolidated Share Count (shares in millions)	3Q22	3Q21	Change	YTD 22	YTD 21	Change
Fully diluted weighted-average share count under GAAP	243.5	205.3	18.6%	248.1	194.3	27.7%
Fully diluted weighted-average share count for Adjusted	243.5	257.8	(5.6)%	248.1	267.3	(7.2)%
Earnings
Fully diluted period-end share count	237.3	252.9	(6.2)%	237.3	252.9	(6.2)%

Newmark's repurchases from January 1 through September 30, 2022 are summarized below. As of quarter end, Newmark had $146.9 million remaining under its $400.0 million share repurchase and unit redemption authorization.

Fully Diluted Share Count Reduction	1Q22	2Q22	3Q22	YTD 22
Share and/or units repurchased or redeemed (in millions)	1.7	11.4	10.1	23.2
Average price per share/unit	$18.35	$12.75	$10.35	$12.10

• "Spot" may be used interchangeably with the end-of-period share count. Newmark's fully diluted period-end share count for Adjusted Earnings as of September 30, 2022, included 199.5 million Class A common shares, 21.3 million Class B common shares, (49.0) million of treasury stock, 61.9 million limited partnership units and 3.6 million of other share equivalents. Newmark's fully diluted period-end share count for Adjusted Earnings as of September 30, 2021, included 190.7 million Class A common shares, 21.3 million Class B common shares, (16.3) million of treasury stock, 51.4 million limited partnership units and 5.9 million of other share equivalents. Newmark's fully diluted share count moves in tandem with its stock price over a given period, all else equal, due to the treatment of RSUs under the treasury stock method. In addition, the fully diluted weighted-average share count under GAAP may differ in certain periods from the fully diluted weighted-average share count for Adjusted Earnings in order to avoid anti-dilution, which also impacts GAAP net income for fully diluted shares.

3

SELECT BALANCE SHEET DATA7

Select Balance Sheet Data	September 30, 2022	December 31, 2021
(USD millions)
Cash and cash equivalents	$229.7	$191.3
Liquidity	230.7	566.9
Long-term debt	547.1	545.2
Total Equity	1,501.1	1,685.1

The changes in Newmark's cash and liquidity since the end of 2021 reflect cash generated by the business in the first nine months of 2022, offset by the purchase or redemption of 23.2 million Newmark shares or units for $281.2 million, cash used for acquisitions, and normal uses of working capital. The Company's liquidity was also affected by the decline in value of the Nasdaq stock held as of year-end 2021 and its subsequent sale. Newmark expects to use its cash and cash equivalents, $600 million undrawn credit facility, and cash generation to invest in growth and to return capital to shareholders, while continuing to operate with investment-grade credit metrics.

UPDATED OUTLOOK FOR 2022

The Company updated its full-year guidance for total revenues and Adjusted EBITDA, as shown below. This update primarily reflects the expected significant year-on-year decline in industry-wide capital markets transactions volumes in the second half of 2022.

Metric (in millions, except tax rate)	Year-earlier	Guidance	Change YoY	Prior Outlook
Actual
FY22 Total Revenues	$2,906.4	$2,700 - $2,800	(7% - 4%)	3%	- 7%
FY22 Adjusted EBITDA	$597.5	$500 - $550	(16% - 8%)	4%	- 9%
FY22 Adjusted Earnings Tax Rate	18.9%	~19%	N/A	17%	- 19%
FY22 Fully Diluted Weighted Average Share Count for	264.0		(6% - 7%)	(4%	- 5%)
Adjusted Earnings

The Company's outlook excludes the potential impact of additional share repurchases, as well as any material future acquisitions, and is subject to change based on various macroeconomic, social, political, and other factors, including the COVID-19 pandemic.

CONFERENCE CALL AND INVESTOR PRESENTATION

Newmark will host a conference call at 10:00 a.m. ET today to discuss these results. A webcast of the call, along with an investor presentation summarizing the Company's Non-GAAP results, is expected to be accessible via the following sites:

http://ir.nmrk.comorhttps://www.webcast-eqs.com/newmarkgroup20221028.

A webcast replay of the conference call is expected to be accessible at the same websites within 24 hours of the live call and will be available for 365 days following the call. The Company highly recommends that investors use the webcast to access the call to avoid experiencing extended wait times via the dial-in phone numbers. Participants who cannot access the webcast are strongly encouraged to pre-register to gain immediate access to the call and bypass the live operator. Pre-registration may be completed at any time by accessing the pre-registration link on Newmark's Investor Relations website, or by navigating to:

http://services.incommconferencing.com/DiamondPassRegistration/register?

confirmationNumber=13733896&linkSecurityString=132841ab38

After pre-registering, you will receive your access details via email. Participants who have not pre-registeredmay join the call using the following information. Please note that those who do not pre-registermay experience greater than normal wait times before being able to join the live call.

LIVE CONFERENCE CALL DETAILS

Date - Start Time:	10/28/2022 at 10:00 a.m. ET
U.S. Toll Free / Local:	877-407-0312
All Other Locations:	1-201-389-0899

• "Total equity" in this table is the sum of "redeemable partnership interests," "noncontrolling interests" and "total stockholders' equity". "Long-term debt" in this table excludes "Warehouse facilities collateralized by U.S. Government Sponsored Enterprises". Newmark uses its warehouse lines and repurchase agreements for short- term funding of mortgage loans originated under its GSE and FHA lending programs, and such amounts are generally offset by "Loans held for sale, at fair value" on the balance sheet. These loans are typically sold within 45 days. Loans made using Newmark's warehouse lines are recourse to Berkeley Point Capital LLC, but non- recourse to Newmark Group. "Liquidity", when shown, excludes marketable securities that have been financed. See the section titled "Liquidity Defined" and the related reconciliation tables later in this document. "Net debt", when used, is defined as total debt, net of cash or, if applicable, total liquidity, while "net leverage", when used, equals net debt divided by trailing twelve month Adjusted EBITDA.

4

REPLAY

Expected Available From - To:	10/28/2022 at 1:00 p.m. ET - 11/4/2022 at 11:59 p.m. ET
U.S. Toll Free / Local:	877-660-6853
All Other Locations:	1-201-612-7415
Conference ID:	13733896

DISCUSSION OF CERTAIN FINANCIAL RESULTS

Newmark's "Other income (loss), net" under GAAP reflects certain items that are not related to the Company's ordinary and ongoing operations. These included gains and losses related to the Nasdaq stock it held in 2021 and the sold in first quarter of 2022, for which it recorded a GAAP loss of $87.4 million for the nine months ended September 30, 2022. Newmark recorded GAAP gains of $74.9 million and $1,157.0 million, respectively, related to these shares for the three and nine months ended September 30, 2021. In the same respective periods, Newmark recognized $16.0 million and $444.6 million of tax deductible GAAP compensation charges with respect to the 2021 Equity Event. The Company also recorded $27.8 million of non-cash GAAP "other income" related to the acquisition of Deskeo in the third quarter of 2021. But for the impact of GAAP "other income", the Company's GAAP pre-tax income would have declined in the third quarter and first nine months of 2022 by 60.6% and 7.5%, respectively. In addition, the year-on-year changes in GAAP net income reflect other items that are excluded from non-GAAP earnings measures, including as detailed under "Consolidated Expenses" and in the reconciliation tables later in this document.

OTHER USEFUL INFORMATION

Recent Acquisitions

Newmark acquired three companies in the first nine months of 2022. For more information, please see the Company's Investor Relations website or the "Media" section of its main website for the press releases titled "Newmark Acquires Esteemed Boston- Based Firm McCall & Almy", "Newmark Acquires Premier London Capital Markets and Leasing Real Estate Advisory Firm, BH2" and "Newmark Acquires Renowned North American Retail Advisory Business, Open Realty".

The Impact of Nasdaq

The receipt of shares from Nasdaq may also be referred to as the "Earn-out". In the second quarter of 2021, Newmark recorded a gain of $1,093.9 million related to the final Earn-out, based on the June 30, 2021, closing price of $175.80. Between that date and March 31, 2022, the Company sold 100% of these shares, which contributed to gains in the second through fourth quarters of 2021 and a loss in the first quarter of 2022, all recorded as part of GAAP other income or loss. In aggregate, Newmark sold its Nasdaq stock over this timeframe for the effective price of $180.66 per share, resulting in cumulative proceeds of $1,124.1 million and an additional net gain of $30.2 million.8

For additional information about the Earn-out and related monetization transactions (the "Nasdaq Forwards"), which were a component of GAAP other income for certain periods from the third quarter of 2017 through the first quarter of 2022, see the sections of the Company's most recent SEC filings on Form 10-Q or Form 10-K titled "Nasdaq Monetization Transactions" and "Exchangeable Preferred Partnership Units and Forward Contract", as well as any updates regarding these topics in subsequent SEC filings. For the definition of the "Impact of Nasdaq", see the section of this document called "Calculation of Other (income) losses for Adjusted Earnings and Adjusted EBITDA (Beginning in Third Quarter 2021, as Updated)" under "Non-GAAP Financial Measures".

The 2021 Equity Event

The "Impact the 2021 Equity Event" is defined in the section of this document called "Excluded Compensation-Related Items with Respect to the 2021 Equity Event under Adjusted Earnings and Adjusted EBITDA (Beginning in Third Quarter 2021, as Updated)" under "Non-GAAP Financial Measures". For additional details on how the 2021 Equity Event impacted share count and GAAP expenses, see the section of the Company's second quarter 2021 financial results press release titled "Additional Details About the Impact of Nasdaq and the 2021 Equity Event" and the related SEC filing on Form 8-K, as well as any subsequent disclosures in filings on Forms 10-Q and/or 10-K.

Revenue and Non-GAAP Earnings Recast

Beginning with the first quarter of 2022, the Company adjusted its line items under "Revenue Detail". "Gains from mortgage banking activities/origination, net" has been combined with commercial mortgage brokerage revenues as "Commercial mortgage origination, net", while "Investment sales" is a stand-aloneline-item. This change in presentation had no impact on any period's consolidated revenues or earnings. Since the second quarter of 2021, Newmark has reported Adjusted Earnings and Adjusted EBITDA excluding the Impact of Nasdaq and the 2021 Equity Event. Figures for these items in prior periods under their current and former presentations are contained in the Excel supplements on Newmark's Investor Relations website.

Beginning with the first quarter of 2022, the Company has reclassified an immaterial amount of revenues related to its flexible

• The effective price per share of Nasdaq is: (a) the sum of all realized gains related to the 6,222,340 shares from June 30, 2021, through March 31, 2022, divided by
  (b) that number of shares. These realized gains include all proceeds related to open market sales, hedging transactions, and dividends paid to Nasdaq stockholders. The numerator used to calculate the effective price also reflects the 944,329 shares the Company used to settle the 2021 and 2022 Nasdaq Forwards, based on a price of $176.36 per share. Excluding these 944,329 shares, the effective price was $181.43 per share. All Nasdaq closing prices are nominal as of those dates and not adjusted for any subsequent dividends. Please see the slide titled "Cumulative Nasdaq GAAP Gains from June 30, 2021 through Q20222" in Newmark's first quarter 2022 Financial Results presentation on its investor relations website for further details.

5