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Investing.com -- International Workplace Group Plc (LON:IWG) reported record system-wide revenue of $2.2 billion for the first half of 2025, up 2% from a year earlier.
However, shares fell sharply after the office rental company said it now expects full-year operating profit to come in at the lower end of its guidance range.
The stock was down nearly 17% at 190.70p in London trading as of 08:24 GMT.
Group revenue edged down 1% to $1.85 billion due to the loss of a legacy contract, but adjusted EBITDA rose 6% to $262 million.
Operating profit was stable at $68 million, while EPS improved to 1.1 cents from 0.9 cents.
Cash flow before corporate activities increased to $48 million, a 33% rise year-on-year, with full-year cash flow now expected to reach at least $140 million, up 40% from March guidance.
The Managed & Franchised division was the growth driver, delivering 26% system-revenue growth to $361 million and a 2.6x increase in recurring management fees to $19 million.
Company-owned centres achieved margin expansion, with adjusted gross margin rising 210 basis points to 24%, even as RevPAR slipped 3% to $346.
Digital & Professional Services saw underlying revenue growth of 6% but headline revenue fell 7% after a contract loss.
The company returned $59 million to shareholders since March via dividends and buybacks and lifted its buyback target to at least $130 million for 2025.
“In the last six months, more locations were opened than in the entire first decade of our existence," CEO Mark Dixon said in the release. "We now have around 1 million rooms in 121 countries with a significant pipeline. This is expected to drive our future growth.”
He added that the shift to hybrid and localised working is “propelling our business forward with the fastest growth that we have ever seen in history."
Looking ahead, IWG reaffirmed its full-year (FY) adjusted EBITDA guidance of $525–565 million, though it expects to come in toward the lower end due to investment in Managed & Franchised growth. The consensus estimate sits at $540 million, according to broker Jefferies.
Free cash flow (FCF) is expected to be at least $140 million, missing the consensus estimate of at least $160 million.
"FY EBITDA guidance is now at the lower end of $525-565m range (cons $540m) as the company looks to invest to support mid-term growth and FCF outlook at > $140m also looks disappointing, suggesting consensus downgrades," Jefferies analyst Allen Wells said in a note.