Q2 2026 International Workplace Group PLC Earnings Call

August 11, 2026

Speaker #1: Good morning, and welcome to the IWG First Half Results 2026 presentation. Hosting today's call will be Christian Smits, Chief Executive Officer, and Charlie Steel, Chief Financial Officer.

Operator: Good morning, and welcome to the IWG H1 2026 presentation. Hosting today's call will be Christian Schmitz, Chief Executive Officer, and Charlie Steel, Chief Financial Officer, supported by Mark Dixon, Founder and Executive Chair. After the presentation, there will be an opportunity to ask questions. As a reminder, this call is being recorded. I will now turn over the call to Christian to begin. Please go ahead.

Speaker #1: Supported by Mark Dixon, Founder and Executive Chair. After the presentation, there will be an opportunity to ask questions. As a reminder, this call is being recorded.

Speaker #1: An alternative call to Christian to begin: please go ahead.

Speaker #2: Good morning, and thank you for joining us. I'm Christian Schmitz. I became Chief Executive in June. I'll take you through the first half and strategy, and Charlie will follow with the numbers.

Christian Schmitz: Good morning, and thank you for joining us. I am Christian Schmitz. I became chief executive in June. I will take you through the H1 and strategy, and Charlie will follow with the numbers. I will start with the market. For decades, an office meant a long lease, significant capital, and fixed costs carried whether the space was used or not. That is changing. Companies want real estate as a service. They want to flex up and down. They want to pay for what they use. This shift is structural, and we are still early in it. IWG is positioned for it. We have the network, the brands, and the platform. No other operator has comparable coverage. My starting point, therefore, is straightforward. The opportunity ahead of us is larger than the one behind us, and that is exactly why I joined IWG. This slide summarizes the H1.

Speaker #2: I will start with the market. For decades, an office meant a long lease, significant capital, and fixed costs carried whether the space was used or not.

Speaker #2: That is changing. Companies want real estate as a service. They want to flex up and down. They want to pay for what they use.

Speaker #2: This shift is structural, and we're still early in it. IWG is positioned for it. We have the network, the brands, and the platform. No other operator has comparable coverage.

Speaker #2: My starting point, therefore, is straightforward: the opportunity ahead of us is larger than the one behind us. And that is exactly why I joined IWG.

Speaker #2: This slide summarizes the first half. System-wide revenue grew substantially by 11%. Group revenue grew 6%. Company-owned revenue grew 5%. And recurring management fees grew 84%.

Christian Schmitz: System-wide revenue grew substantially by 11%. Group revenue grew 6%, company-owned revenue grew 5%, and recurring management fees grew 84%. That is our capital light, recurring, high margin income, and it is growing fast. We returned $100 million to shareholders in the half, and we have announced a $150 million buyback for the year. We are reiterating our guidance for 2026 and our medium target of at least $1 billion of EBITDA. The strategy is simple, and it has not changed. Expand margins in company-owned. Grow fee income in managed and franchised. Build the most extensive coverage network in the industry. The shift shown on this slide is significant. In the H1 of 2023, managed and franchised was 12% of system revenue, 19% of locations, and 14% of rooms. Today, 22%, 46%, and 32%. Include the pipeline and around 45% of our rooms are managed and franchised.

Speaker #2: That is our capitalized, recurring, high-margin income, and it is growing fastest. We returned $100 million to shareholders in the half, and we have announced a $150 million buyback for the year.

Speaker #2: We are reiterating our guidance for 2026 and our medium-term target of at least $1 billion of EBITDA. The strategy is simple, and it hasn't changed.

Speaker #2: Expand margins in company-owned. Grow fee income in managed and franchised. Build the most extensive coverage network in the industry. The shift shown on this slide is significant.

Speaker #2: In the first half of 2023, managed and franchise was 12% of system revenue, 19% of locations, and 14% of rooms. Today, that's 22%, 46%, and 32%, respectively.

Speaker #2: Including the pipeline, around 45% of our rooms are managed and franchised. That is a substantial change in three years. We have achieved that by retaining everything we had already built.

Christian Schmitz: That is a substantial change in three years. We have achieved that while retaining everything we had already built. Company-owned created the brands, the customer base and the coverage, and that is why partners choose to sign with us. This is our direction of travel. The hotel industry made this transition before us. The leading global operators built brands, distribution, operating systems, then expanded those networks using third-party capital and earned fees. We are following the same path. Rooms under management are climbing fast, and the recurring fees climb behind them as those rooms open and mature. The comparison on the right is instructive. The asset light hotel groups earn 40% to 56% of revenues from fees. They convert 80% to 98% of EBITDA into free cash flow. They trade on 18 to 20 times EBITDA. We trade on five times.

Speaker #2: Company-owned created the brands, the customer base, and the coverage, and that is why partners choose to sign with us. This is our direction of travel.

Speaker #2: The hotel industry made this transition before us. The leading global operators built brands, distribution, and operating systems, then expanded those networks using third-party capital and earned fees.

Speaker #2: We are following the same path. Rooms under management are climbing fast, and the recurring fees climb behind them as those rooms open and mature.

Speaker #2: The comparison on the right is instructive. The asset-light hotel groups earned 40 to 56% of revenues from fees. They convert 80 to 98% of EBITDA into free cash flow.

Speaker #2: They trade on 18 to 20 times EBITDA; we trade on 5 times. These businesses differ in important respects, and I would not claim otherwise.

Christian Schmitz: These businesses differ in important respects. I would not claim otherwise. But the direction of travel is the same: brands, distribution, scale, partner capital, and recurring fees. Turning to company-owned, where I believe the risk profile is frequently misunderstood. We run it as an operating business, center by center. We see occupancy, price, service revenue, and local costs in every single location. Where a center underperforms, we diagnose it, and we remediate it. Where remediation is insufficient, we restructure, transfer, or exit. The profile continues to improve. 26% of the estate is now on variable rent. Pricing is dynamic, and demand is drawn from a global platform spanning more than 100 countries. Enterprise is where our scale delivers the most value. Large companies are changing how they buy space. They want flexibility. They want to scale up and down. They want several products in many locations through one relationship.

Speaker #2: But the direction of travel is the same: brands, distribution, scale, partner capital, and recurring fees. Turning to company-owned, where I believe the risk profile is frequently misunderstood.

Speaker #2: We run it as an operating business, center by center. We see occupancy, price, service revenue, and local costs in every single location. Where a center underperforms, we diagnose it and we remediate it.

Speaker #2: Where remediation is insufficient, we restructure, transfer, or exit. The profile continues to improve. Twenty-six percent of the estate is now in variable rent. Pricing is dynamic, and demand is drawn from a global platform spanning more than 100 countries.

Speaker #2: Enterprise is where our scale delivers the most value. Large companies are changing how they buy space. They want flexibility. They want to scale up and down.

Speaker #2: They want several products in many locations through one relationship. Verisure providers can deliver that globally. We can. We also carry the full range of price points, from value through to premium.

Christian Schmitz: Very few providers can deliver that globally. We can. We also carry the full range of price points, from value through to premium. Whatever the budget and whatever the requirement, we have a product that fits. What they buy is one IWG, one proposition, one family of brands, one global sales channel. Every additional location, therefore, increases the value of the network to the next enterprise client, makes it harder for others to match. Coverage is a durable, competitive advantage. That is evident in the client base. 85% of the Fortune 500 use us. Average spend is up 7%. The Fortune 500 is only part of it. Our enterprise base runs much wider than that. 52% of our enterprise clients now use three or more of our product lines. The final figure is the one I would emphasize.

Speaker #2: Whatever the budget and whatever the requirement, we have a product that fits. And what they buy is one IWG, one proposition, one family of brands, one global sales channel.

Speaker #2: Every additional location, therefore, increases the value of the network to the next enterprise client and makes it harder for others to match. Coverage is a durable, competitive advantage.

Speaker #2: That is evident in the client base. Eighty-five percent of the Fortune 500 users’ average spend is up 7%. And the Fortune 500 is only part of it.

Speaker #2: Our enterprise base runs much wider than that. Fifty-two percent of our enterprise clients now use three or more of our product lines. The final figure is the one I would emphasize.

Speaker #2: A significant part of our growth comes from clients we already serve, taking more of the platform—permanent offices, short-stay space, meeting rooms, memberships, services.

Christian Schmitz: A significant part of our growth comes from clients we already serve, taking more of the platform: permanent offices, short stay space, meeting rooms, memberships, services. Those relationships deepen each year and deeper relationships are more durable. Sustainability matters increasingly to these clients and is central to how we operate. We recently published a detailed sustainability report setting out our work across this area. This is the right product at the right moment. On the evidence of the last two years, there is more upside here than we have taken so far. Turning to technology. We already run a great deal of automation across IWG. We are now layering AI on top of this. There are three areas where this delivers value. Cost. We automate more internal processes, so central costs do not grow in line with the network. Performance.

Speaker #2: Those relationships deepen each year, and deeper relationships are more durable. Sustainability matters increasingly to these clients, and it is central to how we operate.

Speaker #2: We recently published a detailed sustainability report, setting out our work across this area. This is the right product at the right moment. And on the evidence of the last two years, there is more upside here than we have taken so far.

Speaker #2: Turning to technology, we already run a great deal of automation across IWG. We are now layering AI on top of this. There are three areas where this delivers value.

Speaker #2: Cost. We automate more internal processes, so central costs do not grow in line with the network. Performance. Better data supports better pricing, better demand forecasting, and better occupancy management.

Christian Schmitz: Better data supports better pricing, better demand forecasting, and better occupancy management. Pricing alone represents a significant opportunity. Customer. Faster, easier, and more consistent service at scale in every location. We already have the scale and the data. The task now is to make the platform more productive so that more of our revenue growth converts into earnings and cash. Taken together, this is how I see the investment case. Growth is accelerating. Earnings quality is improving on two fronts. Company-owned is performing better and recurring fees are becoming a bigger share of the business. The risk profile is lower than the market perceives. Free cash flow is set to grow strongly as the investment we have already made matures, and our buybacks are steadily reducing the share count. To close, cash flow performance is expected to improve in the second half.

Speaker #2: Pricing alone represents a significant opportunity. Customers receive faster, easier, and more consistent service at scale in every location. We already have the scale and the data.

Speaker #2: The task now is to make the platform more productive, so that more of our revenue growth converts into earnings and cash. Taken together, this is how I see the investment case.

Speaker #2: Growth is accelerating. Earnings quality is improving on two fronts: company-owned is performing better, and recurring fees are becoming a bigger share of the business.

Speaker #2: The risk profile is lower than the market perceives. Free cash flow is set to grow strongly, as the investment we have already made matures.

Speaker #2: And our buybacks are steadily reducing the share count. To close, cash flow performance is expected to improve in the second half. The structural drivers are moving in our favor, and we remain early in that shift.

Christian Schmitz: The structural drivers are moving in our favor and we remain early in that shift. The capitalized strategy is working and you can see it in the numbers. Managed and franchise is scaling fast with over $2 billion of system revenue potential already signed. Company-owned is growing revenue with material margin upside still ahead. The model is resilient with increasing earnings visibility. My priorities are therefore execution, simplification, and operational discipline. We will convert this growth into earnings and cash, and we will do so consistently. The H1 positions us well for the full year. I am confident in our guidance, and I look forward to updating you on our progress. I will now hand over to Charlie who will take us through the financial performance in detail.

Speaker #2: The capital-light strategy is working, and you can see it in the numbers. Managed and franchise is scaling fast, with over $2 billion of system revenue potential already assigned.

Speaker #2: Company-owned is growing revenue, with material margin upside still ahead. The model is resilient, with increasing earnings visibility. My priorities are, therefore, execution, simplification, and operational discipline.

Speaker #2: We will convert this growth into earnings and cash, and we will do so consistently. The first half positions us well for the full year.

Speaker #2: I'm confident in our guidance, and I look forward to updating you on our progress. I will now hand over to Charlie, who will take us through the financial performance in detail.

Charlie Steel: Thank you, Christian, and good morning, everyone. I will now take you through the financial performance in detail, starting with the headline revenue and EBITDA delivery, then the two segments, cash flow, leverage, capital structure, capital allocation, and the outlook for the rest of 2026 and the medium term. The H1 shows strong revenue momentum following our investment into getting the flywheel spinning, and our focus in the H2 is on converting that growth into cash flow and earnings growth. The H1 delivered strong revenue momentum across the group. System-wide revenue increased by 11% to $2.4 billion, while adjusted EBITDA increased to $265 million. Network growth remained very strong, with 728 new centers signed and 425 opened in the H1. Managed and franchise system-wide revenue increased by 36%, while recurring management fees increased by 84% to $35 million.

Speaker #1: Thank you, Christian, and good morning, everyone. I'll now take you through the financial performance in detail, starting with the headline revenue and EBITDA delivery, then the two segments, cash flow, leverage, capital structure, capital allocation, and the outlook for the rest of 2026 and the medium term.

Speaker #1: The first half shows strong revenue momentum following our investment into getting the flywheel spinning, and our focus in the second half is on converting that growth into cash flow and earnings growth.

Speaker #1: The first half delivers strong revenue momentum across the group. System-wide revenue increased by 11% to $2.4 billion, while adjusted EBITDA increased to $265 million.

Speaker #1: Network growth remained very strong, with 728 new centers signed and 425 opened in the first half. Managed and franchise system-wide revenue increased by 36%, while recurring management fees increased by 84% to $35 million.

Speaker #1: Company-owned revenue grew by 5% to $1.9 billion, and we also returned $109 million to shareholders during the half, comprising $100 million of share buybacks and $9 million of dividends.

Charlie Steel: Company-owned revenue grew by 5% to $1.9 billion, and we also returned $109 million to shareholders during the half, comprising $100 million of share buybacks and $9 million of dividends. All of this was done while maintaining our investment-grade credit rating, a core part of our guidance. Our H1 cash flow profile is affected by the transitory working capital changes around payables that were communicated at Q1, but underlying cash flow is strong, and I will come to that later. Turning first to managed and franchised. System-wide revenue grew 36% to $535 million, and gross profit increased by 48% in the H1 to $90 million from $61 million. Within that, recurring management fees grew by 84%, and franchise and JV fees also continued to grow. Franchise fees are also recurring. So taken together, total recurring fees were $57 million in the H1 of 2026.

Speaker #1: All of this was done while maintaining our investment-grade credit rating, a core part of our guidance. Our first half cash flow profile is affected by the transitory working capital changes around payables that were communicated at Q1, but underlying cash flow is strong, and I'll come to that later.

Speaker #1: Turning first to managed and franchise: System-wide revenue grew 36% to $535 million, and gross profit increased by 48% in the first half to $90 million from $61 million.

Speaker #1: Within that, recurring management fees grew by 84%, and franchise and AV fees also continued to grow. Franchise fees are also recurring, so taken together, total recurring fees were $57 million in the first half of 2026.

Speaker #1: We ended June with approximately 358,000 managed and franchise rooms open, having added around 51,000 net rooms since December. In addition, there are 257,000 rooms in the signed pipeline.

Charlie Steel: We ended June with approximately 358,000 managed and franchised rooms open, having added around 51,000 net rooms since December. In addition, there are 257,000 rooms in the signed pipeline. This gives us a total of over 610,000 rooms either open or contracted in total. This is also where operating leverage becomes important. As the estate grows, the fee base grows with it, and the capital required to grow the business is limited. That is the core attraction of this model. The open managed and franchise network is performing as expected, and the maturation profile remains similar across cohorts as can be seen from the chart. This is important because a significant proportion of the estate is still growing. As those rooms mature, they generate additional system revenue and importantly, additional recurring fee revenue.

Speaker #1: This gives us a total of over 610,000 rooms, either open or contracted, in total. This is also where operating leverage becomes important. As the estate grows, the fee base grows with it, and the capital required to grow the business is limited.

Speaker #1: That is the core attraction of this model. The open, managed, and franchise network is performing as expected, and the maturation profile remains similar across cohorts, as can be seen from the chart.

Speaker #1: This is important because a significant proportion of the estate is still growing. As those rooms mature, they generate additional system revenue and, importantly, additional recurring fee revenue.

Speaker #1: The managed and franchise segment delivered $535 million of system revenue in the first half, as I've already mentioned. However, once recurrent open rooms are mature, and those in the pipeline are open and mature, potential system revenue for the division is over $2 billion annually.

Charlie Steel: The managed and franchise segment delivered $535 million of system revenue in H1, as I have already mentioned. However, once the current open rooms are mature and those in the pipeline are open and mature, potential system revenue for the division is over $2 billion annually. This gives us very substantial embedded growth. That maturity profile also gives us considerable visibility over future management fee growth. Recurring management fees were only $7 million in H1 2024. They increased to $19 million in H1 2025, and to $35 million in H1 2026. We continue to expect $80 million of recurring management fee income for 2026, and $125 million for 2027. That represents roughly six times the 2024 level. It is important to point out the value of rooms is far more important than just purely the quantity.

Speaker #1: This gives us very substantial embedded growth. That maturity profile also gives us considerable visibility over future management fee growth. Recurring management fees were only $7 million in the first half of 2024.

Speaker #1: They increased to $19 million in the first half of 2025, and to $35 million in the first half of 2026. We continue to expect $80 million of recurring management fee income for 2026, and $125 million for 2027.

Speaker #1: That represents roughly six times the 2024 level. It is important to point out that the value of rooms is far more important than just purely the quantity.

Speaker #1: So, the number to focus on here is very much the system revenue number and the recurring fees number that comes through from that. The growth has been driven by three factors.

Charlie Steel: The numbers to focus on here is very much the system revenue number and the recurring fees number that comes through from that. The growth has been driven by three factors, the maturation of the existing estate, the opening and maturation of the signed pipeline, and new agreements have yet to be signed. There can, of course, be some short-term variation in the opening dates and the timing of maturity. The underlying trajectory remains very strong. Turning to company-owned. Revenue increased by 5% to $1.9 billion. This is in line with our guidance of at least 4% growth for 2026, and this is only to the end of June. Adjusted gross profit increased 4% to $479 million. We are getting good operating leverage here. RevPAR increased by 11%, reflecting the pricing actions we have discussed previously.

Speaker #1: The maturation of the existing estate, the opening and maturation of the signed pipeline, and new agreements have yet to be signed. There can, of course, be some short-term variation in the opening dates, and the timing of maturity for the underlying trajectory remains very strong.

Speaker #1: Turning to company-owned, revenue increased by 5% to $1.9 billion. This is in line with our guidance of at least 4% growth for 2026, and this is only to the end of June.

Speaker #1: Adjusted gross profit increased 4% to $479 million. We are getting good operating leverage here. RevPAR increased by 11%, reflecting the pricing actions we've discussed previously.

Speaker #1: RevPAR has been driven by increases across all maturities, as well as the closure of low-RevPAR rooms, and this is an encouraging combination. We have also completed bolt-on center acquisitions at attractive valuations, which provide additional opportunities for margin improvement as we integrate those locations into the IWG platform.

Charlie Steel: RevPAR has been driven by increase across all maturities as well as the closure of low RevPAR rooms, and this is an encouraging combination. We have also completed bolt-on center acquisitions at attractive valuations, which provide additional opportunities for margin improvement as we integrate those locations into the IWG platform. Due to the phasing of CapEx, there has been some increase in H1 2026, but we maintain a total net CapEx guidance of $150 million for the year for growth and maintenance CapEx combined. As we have said previously, we operate a flywheel business. At this stage in the year, we spoke about incremental investments to get the flywheel going quickly last year. This has delivered incremental gross profit in both the company-owned and also the managed segments. I expect this to continue in both segments for the rest of 2026.

Speaker #1: Due to the phasing of CapEx, there's been some increase in the first half of 2026, but we maintain a total net CapEx guidance of $150 million for the year, for growth and maintenance CapEx combined.

Speaker #1: As we've said previously, we operate a flywheel business. At this stage in the year, we spoke about how incremental investments got the flywheel going quickly last year.

Speaker #1: This has delivered incremental gross profit in both the company-owned and also the managed segments. I expect this to continue in both segments for the rest of 2026.

Speaker #1: You'll see the forward look on the managed segment. Today, I also have contracted visibility to an incremental $30 million in the company-owned segment, which drops directly to EBITDA.

Charlie Steel: You will see the forward look on the managed segment. Today, I also have contracted visibility to an incremental $30 million in the company-owned segment, which drops directly to EBITDA. This gives $40 million of additional revenue visibility without any of the initiatives that Christian has in place to deliver for H2. Now the flywheel is turning, we can also focus on becoming more efficient. Many of these cost efficiencies were executed in late June and July, and again, I have visibility on full-year costs. I think we can do more than we have already done. That gives me a lot of confidence for the full-year outturn today. On P&L, the group has delivered high revenue, high gross profit, and stable adjusted EBITDA outcome despite the additional investments. System-wide revenue growth was 11% to $2.4 billion, group revenue 6%.

Speaker #1: This gives $40 million of additional revenue visibility without any of the initiatives that Christian has in place to deliver for the second half. Now that the flywheel is turning, we can also focus on becoming more efficient.

Speaker #1: Many of these cost efficiencies were executed in late June and July, and again, I have visibility on full-year costs. I think we can do more than we've already done.

Speaker #1: So that gives me a lot of confidence for the full-year outturn today. On P&L, the Group has delivered high revenue, high gross profit, and a stable adjusted EBITDA outcome despite the additional investment.

Speaker #1: System-wide revenue growth was 11%, to $2.4 billion; group revenue grew 6%. The increase in gross profit was offset by the planned increase in SG&A and the additional investment overhead, and that's getting more efficient, as I've just discussed.

Charlie Steel: The increase in gross profit was offset by the planned increase in SG&A and the additional investment overhead, and that is getting more efficient as I just discussed. The key message here is that revenue growth is there. The H2 focus is on converting more of that growth into EBITDA, operating profit, and cash flow. Cash flow is impacted in the Q1 by the transitory payments change we discussed at the Q1 stage. Of the $83 million working capital outflow that you can see here, $87 million is linked to the reduction in accounts payable balance and the corresponding reduction in payment dates that occurred in the Q1. You can see that on the balance sheet, where the accounts payable balance moved from $297 million at year-end to $262 million at 30 June.

Speaker #1: The key message here is that revenue growth is there. The second half focus is on converting more of that growth into EBITDA, operating profit, and cash flow.

Speaker #1: Cash flow was impacted in the first quarter by the transitory payment changes we discussed at the Q1 stage. Of the $83 million working capital outflow that you can see here, $87 million is linked to the reduction in the accounts payable balance and the corresponding reduction in payment dates that occurred in the first quarter.

Speaker #1: You can see that on the balance sheet, where the accounts payable balance moved from $297 million at year-end to $262 million at 30 June.

Speaker #1: And that 30 June balance includes additional working capital balances being added from the acquisitions. The important point is that this is a timing issue rather than a change in the fundamental earning power of the business.

Charlie Steel: That 30 June balance includes additional working capital balances being added from the acquisitions. The important point is that this is a timing issue rather than changing the fundamental earning power of the business. We expect H2 cash flow to improve and look much more like Q2, and I have a lot of confidence in that delivery. Net debt rose materially in Q1 because of that working capital outflow linked to invoicing automation and reduced supplier payment dates I just spoke about. We obviously announced that at the Q1 earnings. in the Q2, cash flow before corporate activities returned to a $36 million inflow. Net debt closed H1 at $880 million, up by $22 million in the quarter after buybacks, dividends, and small M&A.

Speaker #1: We expect H2 cash flow to improve and look much more like Q2, and I've got a lot of confidence in that delivery. Net debt rose materially in Q1 because of that working capital outflow linked to invoicing automation and reduced supplier payment dates I've just spoken about.

Speaker #1: We obviously announced that at the Q1 earnings. In the second quarter, cash flow before corporate activity has returned to a $36 million inflow. Net debt closed H1 at $880 million, up by $22 million in the quarter after buybacks, dividends, and small M&A.

Speaker #1: We remain committed to maintaining our investment-grade credit rating, and we expect net debt to EBITDA to finish 2026 slightly elevated versus December 2025. The leverage move across the half is modest once you separate out the moving parts.

Charlie Steel: We remain committed to maintaining our investment-grade credit rating, and we expect net debt to EBITDA to finish 2026 slightly elevated versus December 2025. The leverage move across the half is modest once you separate out the moving parts. Starting at 1.35x net debt to EBITDA at the start of the period, the business absorbed maintenance CapEx, finance and tax, working capital, growth CapEx, M&A, non-cash financing items, and shareholder returns. Even after all of those items, the half-year position only shows a modest increase in leverage on a last 12 months net debt to EBITDA basis. The business has continued to invest, return capital, and maintain a disciplined balance sheet at the same time. in July, we increased the RCF to $1 billion and extended it to 2031, so this is after the 2030 corporate bond is expected to mature.

Speaker #1: Starting at 1.35 times net debt to EBITDA at the start of the period, the business absorbed maintenance CapEx, finance and tax, working capital, gross CapEx, M&A, non-cash financing items, and shareholder returns.

Speaker #1: Even after all of those items, the half-year position only shows a modest increase in leverage on the last 12 months' net debt to EBITDA basis.

Speaker #1: The business has continued to invest, returning capital and maintaining a disciplined balance sheet at the same time. In July, we increased the RCF to $1 billion and extended it to 2031.

Speaker #1: So this is after the 2030 corporate bond is expected to mature. We also increased the 2032 corporate bond to $500 million from $300 million.

Charlie Steel: We also increased the 2032 corporate bond to €500 million from €300 million. The 2030 bond remains at €625 million and there are no refinancing needs until at least 2030 now. Fitch reaffirmed the investment-grade credit rating in June, and we remain committed to maintaining our investment-grade credit rating. That gives us a much stronger funding profile and a very solid base from which to continue investing in the business and returning capital to shareholders. Our capital allocation framework remains very clear. The first priority is financial resilience, the second is investing in the business, and then returning capital to shareholders. We announced a $50 million buyback for 2026 in December, upsized it twice to $150 million in 2026, and we have already spent $100 million of that in the H1, repurchasing 37.9 million shares and reducing the share count by 3.8%.

Speaker #1: The 2030 bond remains at $625 million, and there are no refinancing needs until at least 2030 now. Fitch reaffirmed the investment-grade credit rating in June, and we remain committed to maintaining our investment-grade credit rating.

Speaker #1: That gives us a much stronger funding profile and a very solid base from which to continue investing in the business and returning capital to shareholders.

Speaker #1: Our capital allocation framework remains very clear. The first priority is financial resilience; the second is investing in the business; and then returning capital to shareholders.

Speaker #1: We announced a $50 million buyback for 2026 in December, upsized it twice to $150 million in 2026, and we've already spent $100 million of that in the first half.

Speaker #1: Repurchasing 37.9 million shares and reducing the share count by 3.8%. That discipline matters because it means growth and earnings can be translated into a better per-share outcome as well as stronger absolute cash generation.

Charlie Steel: That discipline matters because it means growth in earnings can be translated into a better per share outcome, as well as stronger absolute cash generation. We have positive momentum into the H2, and we are confident in the FY 2026 outcome. In summary, our guidance for 2026 is reiterated and remains unchanged. We reiterate adjusted EBITDA guidance of $585 million to $625 million. I have been very clear about how we get there from where we are today. Company-owned revenue of at least 4%, we are on track on that and actually slightly ahead. Recurring management fee income of $80 million. We are on track for that. A $150 million share buyback program for 2026. We still expect margin progression from increased scale efficiencies, and we expect incremental EBITDA to translate into cash flow. The message for the H2 is straightforward.

Speaker #1: We have positive momentum into the second half, and we're confident in the FY2026 outturn. In summary, our guidance for 2026 is reiterated and remains unchanged.

Speaker #1: We reiterate adjusted EBITDA guidance of $585 million to $625 million and have been very clear about how we get there from where we are today.

Speaker #1: Company-owned revenue of at least 4%—we are on track on that, and actually slightly ahead. Recurring management fee income of $80 million—we are on track for that.

Speaker #1: And a $150 million share buyback program for 2026. We still expect margin progression from increased scale efficiencies, and we expect incremental EBITDA to translate into cash flow.

Speaker #1: So, for the message for the second half, it is straightforward: the business is growing, the mix is improving, the balance sheet is stronger, and we remain confident in the full-year outturn on guidance.

Charlie Steel: The business is growing, the mix is improving, the balance sheet is stronger, and we remain confident in the full-year outturn on guidance. We also reiterate our medium-term adjusted EBITDA guidance of at least $1 billion, with a cash conversion ratio of over 50% at that point. With that, I will hand over to questions.

Speaker #1: We also reiterate our medium-term adjusted EBITDA guidance of at least $1 billion, with a cash conversion ratio of over 50% at that point. And with that, I'll hand over to questions.

Speaker #2: Thank you, Charlie. If you'd like to ask a question, please click on the 'Raise Hand' icon. Once you hear your name, you will be prompted to unmute your microphone before asking your question.

Operator: Thank you, Charlie. If you would like to ask a question, please click on the raise hand icon. Once you hear your name, you will be prompted to unmute your microphone before asking your question. We will now take a few moments to collect your questions. Our first question is from Michael Donnelly. Your line is now unmuted. Please go ahead.

Speaker #2: We will now take a few moments to collect your questions. Our first question is from Michael Donnelly. Your line is now unmuted. Please go ahead.

Speaker #3: Good morning. Thank you. Can you hear me okay?

Michael Donnelly: Good morning. Thank you. Can you hear me okay?

Speaker #1: Yes, we can. Thanks.

Charlie Steel: Yes, we can, thanks.

Speaker #3: Good, good. Two quick ones from me, please. Number one, Charlie, on page 19, you said, "I think we can do more than we've already done." So, just to be absolutely clear, did you mean by that that in the second half, you're confident that you can take out more than the $55 million that was taken from overheads on that page?

Michael Donnelly: Good, good. Two quick ones from me, please. Number one, Charlie, on page 19, you said, "I think we can do more than we've already done." Just to be absolutely clear, did you mean by that in the H2, you're confident that you can take out more than the 55 million that was taken from overheads on that page? Number two is for you, Christian. When you moved from your transformation remit to running the regions day-to-day, what one thing surprised you most, would you say, about how the business actually executes on the ground? Thank you.

Speaker #3: And then, number two is for you, Christian. When you moved from your transformation remit to running the regions day-to-day, what one thing surprised you most, would you say, about how the business actually executes on the ground?

Speaker #3: Thank you.

Speaker #1: So I'll take the first one, obviously, and then Christian can do the second. So just to be very clear on the EBITDA for the second half, I've got visibility into the contracted revenue.

Charlie Steel: I'll take the first one, obviously, then Christian can do the second. Just to be very clear on the EBITDA for the H2. I've got visibility into the contracted revenue, number one, and I think we can do a lot on overheads. I'm thinking we can do around USD 30 million of overheads improvement in the H2 versus the H1, and that's what I've got penciled in. I'm not quite sure, Michael, where you got the 55 from. Maybe we can catch up on that offline. The expectation is at least 30. Then Christian, I'll hand over to you.

Speaker #1: Number one, and I think we can do a lot on overheads. I'm thinking we can do around $30 million of overheads improvement in the second half versus the first half, and that's what I've got penciled in.

Speaker #1: So I'm not quite sure, Michael, where you got the $55 from. Maybe we can catch up on that offline. But the expectation is at least $30.

Speaker #1: And then, Christian, I'll hand over to you.

Speaker #4: So, look, thank you for your question. I'm not sure there's been big surprises with the change. I've been with the business already for a while, and I had all the regions or markets—all the regions—report to me.

Christian Schmitz: Look, thank you for your question. Look, I'm not sure there's been big surprises with the change. I've been with the business already for a while, and I had all the regions, all the markets, all the regions report to me. I guess it's kind of knew what I was getting into. There's one thing that I see every day is just the opportunity that's ahead of us. As I mentioned in my introduction, it's an incredible platform. I think the flywheel is going. There's more growth coming our way, and the focus is on execution and delivering cash flow. That's what I'm going to spend my time on.

Speaker #4: So I guess it's kind of new, what I was getting into. There's one thing that I see every day—it's just the opportunity that's ahead of us.

Speaker #4: As I mentioned in my introduction, it's an incredible platform. I think the flywheel is going. There's more growth coming our way, and the focus is on execution and delivering cash flow.

Speaker #4: That's what I'm going to spend my time on.

Speaker #3: Super. Thank you both.

Michael Donnelly: Super. Thank you both.

Speaker #4: Thank you.

Christian Schmitz: Thank you.

Speaker #2: Thank you. Our next question is from Paul May. Your line is now unmuted. Please go ahead.

Operator: Thank you. Our next question is from Paul May. Your line is now unmuted. Please go ahead.

Speaker #5: Guys, just a couple of questions from me. Just on the company-owned release—obviously, it's positive to see the growth coming through better than expected. Are there any concerns that you have around the competitive environment for that business?

Paul May: Guys, just a couple of questions from me. Just on the company-owned and leased, obviously positive to see the growth coming through better than expected. Are there any concerns that you have around the competitive environment for that business? Obviously, your managed business is growing very, very strongly, and I understand that that is also of appeal to other operators in the market who can set up very quickly. We just wondered, are you seeing any competition from others on your company-owned and leased or any price sort of undercutting that is coming through? Obviously, you have the fixed rent issue, whereas on an operator model, they do not have that. Just wondering if you are seeing any issues there or any challenges in any specific markets would be great.

Speaker #5: Obviously, your managed business is growing very, very strongly, and I understand that that is also of appeal to other operators in the market who can set up very quickly.

Speaker #5: We just wondered, are you seeing any competition from others on your company-owned and leased, or any price sort of undercutting that's coming through? Obviously, you've got the fixed rent issue, whereas on an operator model, they don't have that.

Speaker #5: I'm just wondering if you're seeing any issues there, or any challenges in any specific markets—that would be great to know. And then, the second one, and this is probably the biggest question and the feedback we've had today: historically, as a business, you've not been able to show growth and free cash flow generation at the same time. Either growth slows and free cash flow improves, or growth improves and free cash flow suffers.

Paul May: The second one, and this is probably the biggest question and feedback we have had today, is historically as a business, you have not been able to show growth and free cash flow generation at the same time. Either growth slows, free cash flow improves, or growth improves and free cash flow suffers. What gives you confidence that this time it is different, that the H2 improvement is going to come through, that it is going to continue to flow into FY27 improvements and as you mentioned, the billion translating into 50% free cash flow. Why is this the point that we are going to see the history of IWG change effectively, growth with free cash flow generation? Thanks.

Speaker #5: What gives you confidence that this time it's different? The H2 improvement is going to come through, and that is going to continue to flow into FY27 improvement.

Speaker #5: And as you mentioned, the $1 billion translating into 50% free cash flow. Why is this the point where we're going to see the history of IWG change, effectively?

Speaker #5: Growth with free cash flow generation. Thanks.

Speaker #1: Thanks, Paul.

Charlie Steel: Thanks, Paul. I will let Christian answer the first, and then I will cover the second one.

Speaker #3: So, I'd like Christian to answer the first, and then I'll cover the second one.

Speaker #4: Yeah. Look, on the comparative dynamics—look, I mean, overall, I think it's a challenging economy out there, right? Which is good and bad at the same time.

Christian Schmitz: Yeah. Look, on the competitive dynamics, I mean overall, I think it is a challenging economy out there, which is good and bad at the same time. The good thing is, I think people are looking for flexibility. So the offer that we have, I think in the market, it is a great match and there is a lot more runway for that. I think it is going to change a lot over the next years. At the same time, people are watching costs, like everyone does. That is the environment we are in. I think we have demonstrated in the H1 that we had very good top line in that environment, and unless something really unforeseen happens, we expect that to continue into the H2. There is not really a difference whether it is a company-owned or a managed center.

Speaker #4: And the good thing is, I think people are looking for flexibility. So the offer that we have, I think, in the market is a great match, and there's a lot more runway for that.

Speaker #4: I think it's going to change a lot, a lot over the next few years. At the same time, right, people are watching costs, right? Like everyone does.

Speaker #4: And that's the environment we are in. I think we've demonstrated in the first half that we had a very good top line, in that environment, right?

Speaker #4: And unless something really unforeseen happens, we expect that to continue into the second half. And there isn't really a difference whether it's a company-owned or a managed center, right?

Speaker #4: It's a center. And I think we've got robust demand, as we've seen in the top-line growth. Charlie?

Christian Schmitz: It is a center, and I think we have got robust demand as we have seen in the top line growth. Charlie?

Speaker #3: Great. Thanks, Christian. So to cover the second point, Paul, I think, look, historically, the business—when you talk about the growth and cash flow trade-off—that was because you needed the capex in order to grow out the company incentives.

Charlie Steel: Great. Thanks, Christian. To cover the second point, Paul, I think, look, historically, the business, when you say about the growth and cash flow trade-off, that was because you needed the CapEx in order to grow out the company-owned centers. As you can see from the numbers, when you look at the historic CapEx, and we cover this at the capital markets day as well. CapEx is currently at a historic all-time low, well within the guidance of GBP 150 million total for the year. So now there is not a trade-off between CapEx, i.e. free cash flow and growth. We are growing that system-wide revenue really strongly at the moment without any incremental CapEx, and I do not think you have ever really seen that in the business before.

Speaker #3: As you can see from the numbers, and if you look at the historic capex—and we covered this at the Capital Markets Day as well—capex is currently at a historic all-time low.

Speaker #3: Well within the guidance of $150 million total for the year. So now there is not a trade-off between capex—i.e., free cash flow—and growth.

Speaker #3: We're growing that system-wide revenue really strongly at the moment, without any incremental capex. And I don't think you've ever really seen that in the business before.

Speaker #3: The capex over the last two years has been low and will remain low going forward. We’re seeing that cash flow coming through in the managed business, and it will continue to come through for the rest of the year.

Charlie Steel: The CapEx over the last 2 years has been low, will remain low going forwards, and we are seeing that cash flow coming through in the managed business and will continue to come through the rest of the year. It is also worth noting that once you include some of the efficiencies that we are getting on the OpEx side, that translates directly through into cash. That investment in the overhead we have got has really turned that flywheel. I think we were sitting here this time last year talking about that additional investment and that was coming through in particular in marketing and salespeople. We have really got that flywheel going.

Speaker #3: It's also worth noting that, once you include some of the efficiencies that we're getting on the opex side, that translates directly through into cash.

Speaker #3: And that investment in the overhead we've got has really turned that flywheel. I think, sort of, we're sitting here this time last year, talking about that additional investment, and that was coming through particularly in marketing and salespeople.

Speaker #3: We've really got that flywheel going. It's now coming through in that revenue, and I'm really confident, actually, in the second half of the year that we've got great visibility through to meeting that EBITDA guidance range, and actually a good chance of exceeding it as well.

Charlie Steel: It is now coming through in that revenue and I am really confident actually in the H2 of the year that we have got great visibility through to meeting that EBITDA guidance range and actually a good chance of exceeding it as well and also delivering the cash flow at the same time in the H2. So look, I think as everybody knows on this call, I have absolutely no problem with saying bottom end of the guidance range if I think it is going to be bottom end of the guidance range. I do not think that at this point in time, and you just heard I think we have got a good chance of exceeding it as well. So I think all to play for in the H2.

Speaker #3: And also, delivering the cash flow at the same time in the second half. So, look, I think, as everybody knows on this call, I have absolutely no problem with saying bottom end of the guidance range if I think it's going to be bottom end of the guidance range.

Speaker #3: I do not think that at this point in time. And, as you just heard, I think we've got a good chance of exceeding it as well.

Speaker #3: So, I think it's all to play for in the second half.

Paul May: No, that is great. Just to follow up on that and obviously a lot of the H1 driven by that one-off on the payables side and the payment system. Are you confident saying now that that is the kind of end of the one-offs? I appreciate that is always easier said than done and nobody has got perfect foresight, but from where you sit today, is that it for any sort of changes that could effectively bite you in the future? You are done, you have changed all of the things you want to change, and now it is about seeing that drop through of EBITDA growth into free cash flow.

Speaker #5: No, that's great. And just to follow up on that, and obviously a lot of the first half was driven by that one-off on the payables side and the payment system. Are you confident saying now that that is the end of the one-offs?

Speaker #5: And I appreciate that's always easier said than done, and nobody's got perfect foresight. But from where you sit today, is that it for any sort of changes that could effectively bite you in the future? You're done, you've changed all of the things you want to change, and now it's about seeing that drop-through of EBITDA growth into free cash flow?

Speaker #4: Yeah, I think there are a couple of things. I think, first of all, actually, I see some one-off benefits coming through in the second half as we claw some of that back.

Charlie Steel: Yeah, I think there are a couple things. I think first of all, actually, I see some one-off benefits coming through in the H2 as we claw some of that back. As I said, it was transitory, and we now process payments and invoice incredibly quickly because we have an AR OCR system that does that. As soon as an invoice is sent in, it basically processes it and posts it straight into the system which is significantly more efficient than what we have had before. As I say, I think we claw some of that back. I think as you would also see in this, and I sort of reiterated this at the capital markets day as well, the way we are presenting the financials is completely unchanged in the H1 compared to what we did at the full year.

Speaker #4: So, as I said, it was transitory. We now process payments and invoicing incredibly quickly, and we've got an AR OCR system that does that.

Speaker #4: So as soon as an invoice is sent in, it basically processes it and posts it straight into the system, which is significantly more efficient than what we've had before.

Speaker #4: So, as I say, I think we claw some of that back. I think, as you'd also see in this—and I sort of reiterate this at the Capital Markets Day as well—the way we're presenting the financials is completely unchanged in the first half compared to what we did at the full year.

Speaker #4: We expect that to be the same going forward. So yes, no further impacts from one-offs in the second half from where we stand today.

Charlie Steel: We expect that to be the same going forwards. Yes, no sort of further impacts from sort of one-offs in the H2 from where we stand today.

Speaker #5: Perfect. Thank you.

Paul May: Perfect. Thank you.

Speaker #2: Thank you. Our next question is from Tim Nymanskill. Your line is now open. Please go ahead.

Operator: Thank you. Our next question is from Tim Lamskill. Your line is now open. Please go ahead.

Operator: Thank you. Our next question is from Tim Ramskill. Your line is now open. Please go ahead.

Speaker #3: Tim, we can't hear you if you're unmuted. Maybe let's move on to the next one.

Charlie Steel: Tim, we can't hear you if you're unmuted. Maybe let's move on to the next one.

Speaker #2: Our next question, then, will be from Alex Smith. Your line is now open. Please remember to unmute before asking your question.

Operator: Our next question then will be from Alex Smith. Your line is now open. Please remember to unmute before asking your question.

Speaker #5: Yeah. Morning, guys. Can you hear me?

Alex Smith: Yeah. Morning, guys. Can you hear me?

Speaker #3: Yes, we can. Thanks. Cool. Yeah. You just mentioned some small bolt-on M&A in the announcement. That's kind of, I guess that's become increasingly part of the rhetoric in terms of strategy.

Charlie Steel: Yes, we can. Thanks.

Alex Smith: Cool. Yeah. You mentioned some small bolt-on M&A in the announcement. I guess that has become increasingly part of the rhetoric in terms of strategy. Is this something we should probably expect a bit more going forward? Secondly, just on strong growth in enterprise inquiries that you also mentioned, how do you plan to capture that growth? You mentioned 50% have more than three services. Plans to take that percentage a bit higher? A bit more color on both of those would be great. Thank you.

Speaker #3: Is this something we should probably expect a bit more going forward? And then secondly, just on kind of strong growth in enterprise inquiries that you also mentioned, it's just how do you plan to kind of capture that growth?

Speaker #3: Like you mentioned, 50% have more than free services. Any kind of plans to take that percentage a bit higher? A bit more color on both of those would be great.

Speaker #3: Thank you. So maybe I'll just cover the acquisitions, and I've got Mark and Christian here as well to go with that. Look, I think we're being opportunistic about where we find bolt-on acquisitions.

Charlie Steel: So maybe I will just cover the acquisitions. I have Mark and Christian here as well to go with that. Look, I think we are being opportunistic about where we find bolt-on acquisitions. We have acquired a few very attractive centers in attractive locations and where we see those at good prices. You will see that from the cash flow statement, we are paying absolutely minimal amounts for these. We will continue to do that. We think it is accretive to our business. We know how to run these centers at scale and can eke out a lot of cost efficiencies from them. So it is just further ways we can deliver further free cash flow and further earnings as well. In terms of how we think about additional services from enterprise customers, I will hand over to Christian.

Speaker #3: We've acquired a few very attractive centers in attractive locations, and we've secured those at good prices. You'll see from the cash flow statement that we're paying absolutely minimal amounts for these.

Speaker #3: We will continue to do that. We think it's accretive to our business. We know how to run these centers at scale and can eke out a lot of cost efficiencies from them.

Speaker #3: So it's just sort of further ways we can deliver additional free cash flow and further earnings as well. In terms of how we think about additional services from enterprise customers, I'll hand it over to Christian.

Speaker #4: Look, yeah. I mean, I think enterprise overall—I mentioned it in the presentation—a lot of runway, a lot of potential, right? We've got access to a lot of customers.

Christian Schmitz: Look, yeah, I think enterprise overall, I mentioned it in the presentation, a lot of runway, a lot of potential. We got access to a lot of customers. You have seen that. When you look at the percentage of the Fortune 500, and it is more than a Fortune 500, by the way, that we have, and now it is about deepening the relationships, doing more with them, more locations, more countries. I think overall, a lot of companies are just going through this thinking process, in particular with everything that is happening in the world, AI, the lack of visibility for them into what space they need in the future. It is going to drive that further in that direction, so we are very confident in our enterprise growth.

Speaker #4: You've seen that. When you look at the percentage of the Fortune 500—and it's more than just the Fortune 500, by the way—that we have.

Speaker #4: And now it's about deepening the relationships, doing more with them—more locations, more countries. And I think, overall, a lot of companies are just going through this thinking process, in particular with everything that's happening in the world: AI, the lack of visibility for them into what space they need in the future.

Speaker #4: It's going to drive that further in that direction. So we're very confident in our enterprise growth. And by the way, part of the investments that we've made also in the first half of the year has been in that space as well.

Christian Schmitz: By the way, part of the investments that we have made also in the H1 of the year has also been in that space, so we can further accelerate that going forward.

Speaker #4: So, we can further accelerate that going forward.

Speaker #3: Very clear. Thank you.

Charlie Steel: Very clear. Thank you.

Alex Smith: Very clear. Thank you.

Speaker #2: Thank you. Our next question is from Christopher Bamburi. Your line is now open. Please go ahead.

Operator: Thank you. Our next question is from Christopher Banbury. Your line is now open. Please go ahead.

Speaker #3: Can't hear you.

Charlie Steel: Can't hear you.

Speaker #6: Can you hear me?

Christopher Banbury: Can you hear me?

Christopher Bamberry: Can you hear me?

Speaker #3: Yes, we can now.

Charlie Steel: Yes, we can now.

Speaker #4: Yeah, we can. Yes.

Christian Schmitz: Now we can, yes.

Speaker #6: All right, sorry about that. Just three questions. Of the $83 million working cap, how much do you expect that to reverse in the second half?

Christopher Banbury: Right. Sorry about that. Just three questions. Of the GBP 83 million working capital outflow in the H1, how much do you expect that to reverse in the H2? Secondly, you've talked about slightly elevated leverage this year against last year's 1.35. Something just under 1.5 seems sensible. Finally, as part of that reduction in overheads, you've talked about, I think if what our member says correctly, significantly reducing marketing spend. I guess the obvious question would that be, what's the risk to network expansion and growth in 2027 on the back of that? Thank you.

Christopher Bamberry: Right. Sorry about that. Just three questions. Of the GBP 83 million working capital outflow in the H1, how much do you expect that to reverse in the H2? Secondly, you've talked about slightly elevated leverage this year against last year's 1.35. Something just under 1.5 seems sensible. Finally, as part of that reduction in overheads, you've talked about, I think if what our member says correctly, significantly reducing marketing spend. I guess the obvious question would that be, what's the risk to network expansion and growth in 2027 on the back of that? Thank you.

Speaker #6: Secondly, you've talked about slightly elevated leverage this year against last year's 1.35. So something just under 1.5 seems sensible. And finally, as part of that reduction in overheads, you've talked about, I think if I remember correctly, significantly reducing marketing spend.

Speaker #6: I guess the obvious question would be, what’s the risk to network expansion and growth in '27 on the back of that? Thank you.

Speaker #4: Yes. So I think I'll cover all of these. So the first thing is, of the $83 million working capital outflow, I sort of mentioned that we've got the one-off transitory payments outflow at the $89 million.

Charlie Steel: Yeah. I think I'll cover all of these. The first thing is off of GBP 83 million working capital outflow, I sort of mentioned that we've got the one-off transitory payments outflow of the GBP 89 million. We basically expect working capital to be broadly flat in the H2 to slightly negative. We've got some differential in the cash rent versus the P&L rent, as you'll see from the cash flow statement, and that's expected obviously to continue because that's embedded within the rents. On the overhead reductions, the main thing to point out on here is it's to get the flywheel moving. We're not seeing any impact at all on the top line revenue from that at all. What I would say is we've already started doing it and we have not seen that reduction.

Speaker #4: We basically expect working capital to be broadly flat in the second half, to slightly negative. We've got some differential in the cash rent versus the P&L rent, as you'll see from the cash flow statement.

Speaker #4: And that's expected, obviously, to continue because that's embedded within the rents. On the overhead reductions, the main thing to point out here is it's to get the flywheel moving.

Speaker #4: So we're not seeing any impact at all on the top-line revenue from that. And what I would say is we've already started doing it, and we have not seen that reduction.

Speaker #4: So confident that, yeah, as I say, to get the flow wheel moving, it's about efficiency—not about kind of total spend—just mapping through directly into revenue.

Charlie Steel: So confident that, as I say, to get the flywheel moving, it is about efficiency, not about kind of total spend just mapping through directly into revenue. So, no problem with that. Then on the slightly elevated leverage guidance, I think, Chris, exactly as you say, I think slightly higher means less than 1.5 times.

Speaker #4: So no problem with that. And then on the slightly elevated leverage guidance, I think, Chris, exactly as you say, I think slightly higher means less than 1.5 times.

Speaker #6: Thank you very much.

Christopher Banbury: Thank you very much.

Christopher Bamberry: Thank you very much.

Speaker #2: Thank you. Our next question comes from Tim Mamskill. Your line is now open. Please go ahead.

Operator: Thank you. Our next question comes from Tim Lamskill. Your line is now open. Please go ahead.

Operator: Thank you. Our next question comes from Tim Ramskill. Your line is now open. Please go ahead.

Speaker #5: Go ahead.

Tim Lamskill: Go ahead.

Charlie Steel: Go ahead.

Speaker #7: Can you hear me now, gents?

Tim Lamskill: Can you hear me now, gents?

Tim Ramskill: Can you hear me now, gents?

Speaker #3: Yes, we can. Thank you.

Charlie Steel: Yes, we can. Thank you.

Tim Lamskill: There we go.

Tim Ramskill: There we go.

Speaker #7: Good. Apologies for the error before. So I've got three questions, please. Maybe, Charlie, if we could just come back on the cost kind of shifts a little bit.

Tim Lamskill: Good. Apologies for the user error before. I've got three questions, please. Maybe, Charlie, if we just come back on the cost kind of shifts a little bit, I think it'd be helpful to get into a tiny bit more detail. I guess as you've talked about investing to support the growth and now paring things back, I guess the scale of what you're describing, GBP 30 million or so of delta, H2 on H1 is not inconsiderable. Just kind of help us understand what actions you are taking to invest, what specific areas, and then what you feel you're able to pull back on. I think just a bit more context would help build people's confidence around that. Then a little bit around, again, sort of working capital sort of related items.

Tim Ramskill: Good. Apologies for the user error before. I've got three questions, please. Maybe, Charlie, if we just come back on the cost kind of shifts a little bit, I think it'd be helpful to get into a tiny bit more detail. I guess as you've talked about investing to support the growth and now paring things back, I guess the scale of what you're describing, GBP 30 million or so of delta, H2 on H1 is not inconsiderable. Just kind of help us understand what actions you are taking to invest, what specific areas, and then what you feel you're able to pull back on. I think just a bit more context would help build people's confidence around that. Then a little bit around, again, sort of working capital sort of related items.

Speaker #7: I think it'd be helpful to get into a tiny bit more detail. So, I guess as you've talked about—investing to support the growth, and now paring things back.

Speaker #7: I guess the scale of what you're describing, $30 million, sort of delta H2 on H1, is not inconsiderable. So, just kind of help us understand what actions you were taking to invest, what specific areas, and then what you feel you're able to pull back on.

Speaker #7: I think just a bit more context would help build people's confidence around that, and then a little bit around, again, sort of working capital–related items.

Speaker #7: Obviously, you had the PSAs introduced at the end of last year. And then they were settled in January, I think is what you said at the time.

Tim Lamskill: Obviously, you had the PSAs introduced at the end of last year, then they were settled in January, I think is what you said at the time, then they were going to be reintroduced, now you expect them to phase down, I think is the comment. Just some understanding as to how that might play out. Then just moving to a more operational question. You have referenced kind of dynamic pricing. Just interested in the extent to which dynamic pricing, to what proportion of your business does that apply? Because I guess you have got some longer term sort of contractual stuff with customers that I suspect is less dynamic. But again, just interested in sort of where you are at on that journey of kind of more yield management and dynamic pricing. That would be helpful to understand. Thank you.

Tim Ramskill: Obviously, you had the PSAs introduced at the end of last year, then they were settled in January, I think is what you said at the time, then they were going to be reintroduced, now you expect them to phase down, I think is the comment. Just some understanding as to how that might play out. Then just moving to a more operational question. You have referenced kind of dynamic pricing. Just interested in the extent to which dynamic pricing, to what proportion of your business does that apply? Because I guess you have got some longer term sort of contractual stuff with customers that I suspect is less dynamic. But again, just interested in sort of where you are at on that journey of kind of more yield management and dynamic pricing. That would be helpful to understand. Thank you.

Speaker #7: Then they've effectively been reintroduced, and now you expect them to phase down, I think, is the comment. So, again, just some understanding as to how that might play out.

Speaker #7: And then, just moving to a more operational question, you've referenced dynamic pricing. I'm just interested in the extent to which dynamic pricing applies—what proportion of your business does that cover?

Speaker #7: Because I guess you've got some longer-term, sort of contractual stuff with customers that I suspect is less dynamic. But again, just interested in where you're at on that journey of more yield management and dynamic pricing.

Speaker #7: That would be helpful to understand. Thank you.

Speaker #3: Great. Thanks, Tim.

Charlie Steel: Great. Thanks, Tim. Look, on the first one, the first thing I would say is GBP 30 million is only 5% of total overhead spend, right? It is not an inconsiderable amount of money, but in terms of the total sort of grand scheme of things, it is actually relatively small. Basically it is all about efficiencies and we are just getting more efficient with that. I think sort of when you are in a very big growth phase, you spend some money here and there and you work out sort of where you are getting the biggest bang for your buck on that, and we are just getting better at doing that. It is about getting that flywheel moving. I think you have seen considerable growth since 2024 in the managed business, and Christian spoke about that in the presentation. This is just about getting that more efficient.

Speaker #4: So look, on the first one, the first thing I'd say is $30 million is only 5% of total overhead spend, right? It's actually not an inconsiderable amount of money, but in terms of the total grand scheme of things, it's actually relatively small.

Speaker #4: And basically, it's all about efficiencies, and we are just getting more efficient with that. I think, sort of, when you're in a very big growth phase, you spend some money here and then you work out where you're getting the biggest bang for your buck on that.

Speaker #4: And we're just getting better at doing that. And it's really about getting that flywheel moving. I think you've seen considerable growth since 2024 in the managed business.

Speaker #4: And I spoke about that, and Christian spoke about that, in the presentation. This is just about getting that more efficient. So, as I say, it's not expected to have an impact on top-line revenue.

Charlie Steel: As I say, it is not expected to have an impact on top line revenue. I think sort of on the working capital, as you correctly say, we are expecting to wind down the use of the payment service agreement. You have already actually seen a reduction in that from December into the H1, and as we have noted in the text, we expect to see that continue to reduce. The reason for that is basically we just got better pricing from suppliers by paying some stuff in advance, and that is the reason why we are using that facility. But at the same time, though, we are looking to convert some of those deals into permanent deals with suppliers, so therefore we do not need to be able to do those advance payments. As I say, that is coming down. We expect to eliminate it in the short to medium term entirely.

Speaker #4: I think, sort of on the working capital, as you correctly say, we're expecting to wind down the use of the payment service agreement. You've already actually seen a reduction in that from December into the first half.

Speaker #4: And we expect, as we've noted in the text, we expect to see that continue to reduce. And the reason for that is basically we just got better pricing from suppliers by paying some stuff in advance.

Speaker #4: And that's the reason why we're using that facility. But at the same time, we're looking to convert some of those deals into permanent deals with suppliers.

Speaker #4: So therefore, we don't need the service to be able to do those advanced payments. As I say, that's coming down. We expect to eliminate it in the short to medium term entirely.

Speaker #4: And that's where we're going with that one. And then on the dynamic pricing, I'll let Christian take over from this one. Yeah. Look, I mean, on pricing—as said in the presentation—I think there's a lot of opportunity here.

Charlie Steel: That is where we are going with that one. Then on the dynamic pricing, I will let Christian take over from this one.

Christian Schmitz: Yeah. Look, on pricing, as I said in the presentation, I think there is a lot of opportunity here. When you get a little more specific, what do you think AI can do for you on pricing? There is a couple of things when you think about it. We got centers that are in the city of London, where you got a lot of competition across the street. You got centers in suburban areas. Obviously, price elasticity is probably different there. We got centers that are highly occupied. There are centers that get less occupied. What AI can do for you is just help you process all the data and information and then come up with better pricing decisions. That is what we are going to work on over the next months to come.

Speaker #4: Now, when you get a little more specific, what do you think AI can do for you on pricing, right? There are a couple of things.

Speaker #4: When you think about it, we've got centers that are in the city of London, right, where we've got a lot of competition across the street.

Speaker #4: You've got centers in suburban areas. Obviously, price elasticity is probably different there. And we've got centers that are highly occupied, whereas other centers are less occupied.

Speaker #4: What AI can do for you is just help you process all the data and information, and then come up with better pricing decisions. And that's what we're going to work on over the next months to come.

Speaker #7: So, still pretty early days, you'd say, in terms of that piece?

Tim Lamskill: Still pretty early days, you would say, in terms of that piece?

Tim Ramskill: Still pretty early days, you would say, in terms of that piece?

Speaker #4: I think there's still a lot of opportunity here, and that's how we think about it.

Christian Schmitz: I think there is still a lot of opportunity here, and that is how we think about it.

Speaker #7: Okay. All right. Thanks, guys.

Tim Lamskill: Okay. All right. Thanks, guys.

Tim Ramskill: Okay. All right. Thanks, guys.

Speaker #2: Thank you. Our next question comes from Samuel Dindall. Your line is now open. Please go ahead.

Operator: Thank you. Our next question comes from Samuel Dindal. Your line is now open. Please go ahead.

Operator: Thank you. Our next question comes from Samuel Dindol. Your line is now open. Please go ahead.

Speaker #7: Hi, guys. Hopefully you can hear me. Two questions from me, please. Firstly, on the management franchise, obviously good growth in New Zealand, deals signed.

Samuel Dindal: Hi, guys. Hopefully you can hear me. Two questions from me, please. Firstly, on the management franchise, obviously good growth in new center deals signed. I was just wondering if you could give us some insight into the difference between the partners you have now versus when you started this management franchise piece two, three years ago. Is it difference in scale and things like that would be interesting. Secondly, on free cash flow and buybacks. The buyback will be a bit above free cash flow this year. Is that a dynamic you are comfortable with continuing, or is there a certain leverage point where you would want that to match going forward? Thank you.

Samuel Dindol: Hi, guys. Hopefully you can hear me. Two questions from me, please. Firstly, on the management franchise, obviously good growth in new center deals signed. I was just wondering if you could give us some insight into the difference between the partners you have now versus when you started this management franchise piece two, three years ago. Is it difference in scale and things like that would be interesting. Secondly, on free cash flow and buybacks. The buyback will be a bit above free cash flow this year. Is that a dynamic you are comfortable with continuing, or is there a certain leverage point where you would want that to match going forward? Thank you.

Speaker #7: I was just wondering if you'd give us some insight into the difference between sort of the partners you have now versus when you sort of started this management franchise piece sort of two, three years ago.

Speaker #7: Is it sort of a difference in scale and things like that? That would be interesting. And then secondly, on free cash flow and buybacks— I mean, the buyback would be a bit above free cash flow this year.

Speaker #7: Is that a dynamic you're comfortable with continuing, or is there a certain leverage point where you'd want that to sort of match going forward? Thank you.

Speaker #3: Great, thanks. So, I'll let Christian answer the first, then I'll take the second.

Charlie Steel: Great, thanks. I will let Christian answer the first one, I will take the second.

Speaker #4: Yeah. Look, I mean, on the partner side, obviously great dynamic, right? When you look at it—signatures, openings—it's all going in the right direction.

Christian Schmitz: Yeah. Look, on the partner side obviously great dynamic, right? When you look at it, signatures, openings, so it is all going the right direction. The good thing is, really what we are seeing is a mix. We get new partners coming on board, and we also got partners who are doing more centers with us. I think that is really when you see the model working, right, when people do the second, third, fourth, fifth center, and we get a mix of that. Obviously there are still a lot of territory to cover, but that is really what we got here.

Speaker #4: The good thing is, really, what we're seeing is a mix. We get new partners coming on board, and we also have partners who are doing more centers with us.

Speaker #4: And I think that's really when you see the model working, right? People do the second, third, fourth, fifth center. And we get a mix of that.

Speaker #4: And then obviously, there is still a lot of territory to cover. But that's really what we've got here.

Speaker #3: Yeah. And then just cover the free cash flow and buyback. So as EBITDA expands, and obviously we get more capacity on the debt side to be able to buy back more shares on that as well.

Charlie Steel: Yeah. Then just to cover the free cash flow and buyback. As EBITDA expands, obviously we get more capacity on the debt side to be able to buy back more shares on that as well. We are comfortable with buying back more shares above free cash flow. We will continue to be doing that. As I say, the number one thing is making sure that we have financial resilience and maintain that investment-grade credit rating. That is why we are comfortable to increase leverage only slightly. That does give us more capacity to buy back shares. If you had the same amount of leverage at the GBP 1 billion EBITDA target, that basically is GBP 1.5 billion of net debt or just below that.

Speaker #3: So, we are comfortable with buying back more shares above free cash flow. We'll continue to be doing that. But, as I say, the number one thing is making sure that we have financial resilience and maintain that investment-grade credit rating.

Speaker #3: And that's why we're comfortable to increase leverage only slightly. But that does give us more capacity to buy back shares. And look, if you have the same amount of leverage, at the $1 billion EBITDA target, that basically is $1.5 billion of net debt.

Speaker #3: Or just below that. So clearly, there are more share buybacks going into it, and that's how I see it playing out for the rest of the year.

Charlie Steel: Clearly there is more share buybacks that is going into it, and that is how I see it playing out for the rest of the year.

Speaker #7: Thank you.

Samuel Dindal: Thank you.

Samuel Dindol: Thank you.

Speaker #2: Thank you. We have no further questions, so I'll now hand back to Charlie for closing remarks.

Operator: Thank you. We have no further questions, so I will now hand back to Charlie for closing remarks.

Speaker #3: Great. So, thank you very much, everybody, for joining the call. Look, I think it's a really exciting inflection point for the business. I think we've got Christian on board now, delivering some great initiatives—really seeing those coming through as well.

Charlie Steel: Great. So thank you very much, everybody, for joining the call. Look, I think it is a really exciting inflection point for the business. I think we have Christian on board now delivering some great initiatives, really seeing those coming through as well. I am personally very excited about where we can end up at the full year. We are in a place where we can reiterate guidance and confidently reiterate guidance, seeing more free cash coming through. I think we have so much opportunity. As Christian said, for me as well, personally, one of the most exciting things about this business is the level of opportunity we have ahead of us. We have everything to play for and looking forward to delivering that through the H2 of the year. So thank you very much, everybody, for joining the call. With that, we can close.

Speaker #3: I'm personally very excited about where we can end up for the full year. We're in a place where we can reiterate guidance—and confidently reiterate guidance—seeing more free cash coming through.

Speaker #3: I think we've got so much opportunity. As Christian said, for me as well, personally, one of the most exciting things about this business is the level of opportunity we've got ahead of us.

Speaker #3: We've got everything to play for and are looking forward to delivering that through the second half of the year. So thank you very much, everybody, for joining the call.

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Q2 2026 International Workplace Group PLC Earnings Call

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