Evercore(EVR) - 2025 Q2 - Quarterly Results

Financial & Business Highlights Evercore achieved record Q2 and H1 2025 revenues, driven by strong growth in both GAAP and Adjusted metrics and strategic business developments Q2 & YTD 2025 Financial Performance Summary | Metric | Q2 2025 (GAAP) ($ mm) | Q2 2024 (GAAP) ($ mm) | Q2 2025 (Adjusted) ($ mm) | Q2 2024 (Adjusted) ($ mm) | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $833.8 | $689.2 | $838.9 | $695.3 | | Operating Income | $150.4 | $108.2 | $157.1 | $114.3 | | Net Income Attributable to Evercore Inc. | $97.2 | $73.8 | $105.4 | $78.7 | | Diluted EPS ($) | $2.36 | $1.81 | $2.42 | $1.81 | | Operating Margin | 18.0% | 15.7% | 18.7% | 16.4% | - Announced an agreement to acquire Robey Warshaw, a successful independent advisory firm based in the United Kingdom[2] - The Advisory business achieved record second quarter and first half revenues, advising on 4 of the 10 largest transactions year-to-date[2] - Year-to-date, nine Investment Banking Senior Managing Directors (SMDs) and one Senior Advisor have started or will join the firm, with four joining since the last earnings call[2] - Returned $532.1 million to shareholders in the first half of 2025 through dividends and the repurchase of 1.7 million shares[2] Leadership Commentary Leadership expressed satisfaction with record Q2 and H1 revenues, emphasizing strong forward momentum for the second half of the year - John S. Weinberg, Chairman and CEO, stated: "We are pleased with our forward momentum and remain focused on our client coverage, the quality of our execution, and our longer term strategy"[4] - Roger C. Altman, Founder and Senior Chairman, noted: "We delivered the strongest second quarter and first half revenues in our history, and are entering the second half of the year with meaningful momentum"[4] Basis of Financial Presentation Financial results are presented across two segments, utilizing non-GAAP Adjusted measures for comparability and reflecting a reclassification of technology expenses - The company's results are categorized into two segments: Investment Banking & Equities and Investment Management[6] - The report uses non-GAAP 'Adjusted' financial measures, which exclude certain items like acquisition costs and reflect the conversion of LP Units, to help investors understand operating performance[7] - In Q2 2025, the company reclassified technology and related expenses from 'Professional Fees' to a newly renamed 'Technology and Information Services' category. This change was applied to prior periods for comparability and did not affect previously reported Operating Income or EPS[10][11] U.S. GAAP Financial Results GAAP Q2 2025 net revenues rose 21% to $833.8 million, with operating income up 39% to $150.4 million, driven by advisory fees and improved margins Net Revenues GAAP Net Revenues for Q2 2025 increased 21% to $833.8 million, primarily driven by a 23% rise in Advisory Fees U.S. GAAP Net Revenues by Source (in thousands) | Revenue Source | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Advisory Fees | $697,744 | $568,231 | 23% | | Underwriting Fees | $32,206 | $30,999 | 4% | | Commissions and Related Revenue | $58,272 | $53,199 | 10% | | Asset Management and Administration Fees | $20,684 | $19,200 | 8% | | Total Net Revenues | $833,830 | $689,224 | 21% | - The number of advisory and underwriting client fees of at least $1 million increased by 17% YoY to 111 in Q2 2025[14] - Assets Under Management (AUM) in the Wealth Management business grew 10% YoY to $14.48 billion, primarily due to market appreciation[14][18] Expenses Total GAAP expenses were $683.4 million, with employee compensation up 20% to $548.6 million, and an improved compensation ratio of 65.8% U.S. GAAP Expenses (in thousands) | Expense Category | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Employee Compensation and Benefits | $548,611 | $458,935 | 20% | | Non-Compensation Costs | $134,830 | $122,046 | 10% | | Total Expenses | $683,441 | $580,981 | 18% | - The GAAP compensation ratio for Q2 2025 improved to 65.8% from 66.6% in Q2 2024, while the non-compensation ratio improved to 16.2% from 17.7%[20] Effective Tax Rate The GAAP effective tax rate for Q2 2025 was 29.3%, while the year-to-date rate was 1.0% due to share-based award deductions - The Q2 2025 effective tax rate was 29.3%, compared to 25.8% in Q2 2024[23] - The year-to-date effective tax rate was 1.0%, down from 11.0% in the prior year, mainly due to deductions from vested employee share-based awards[23] Adjusted Financial Results Adjusted Q2 2025 net revenues increased 21% to $838.9 million, with operating income up 37% to $157.1 million and an 18.7% operating margin Adjusted Net Revenues Adjusted Net Revenues for Q2 2025 rose 21% to $838.9 million, primarily driven by a 23% increase in Adjusted Advisory Fees Adjusted Net Revenues by Source (in thousands) | Revenue Source | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Advisory Fees | $697,755 | $568,378 | 23% | | Underwriting Fees | $32,206 | $30,999 | 4% | | Commissions and Related Revenue | $58,272 | $53,199 | 10% | | Asset Management and Administration Fees | $21,488 | $20,910 | 3% | | Total Net Revenues | $838,855 | $695,270 | 21% | Adjusted Expenses Adjusted Employee Compensation and Benefits increased 20% to $548.6 million, with the adjusted compensation ratio improving to 65.4% Adjusted Expenses (in thousands) | Expense Category | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Employee Compensation and Benefits | $548,611 | $458,935 | 20% | | Non-Compensation Costs | $133,193 | $122,046 | 9% | | Total Expenses | $681,804 | $580,981 | 17% | - The adjusted compensation ratio for Q2 2025 improved to 65.4% from 66.0% in Q2 2024[34] Adjusted Effective Tax Rate The adjusted effective tax rate for Q2 2025 was 30.0%, while the year-to-date rate was 0.5% due to share-based award benefits - The Q2 2025 adjusted effective tax rate was 30.0%, compared to 26.9% in Q2 2024[36] - The year-to-date adjusted effective tax rate was 0.5%, down from 11.0% in the prior year[36] Balance Sheet and Operational Metrics Evercore maintains strong liquidity with $617.3 million cash and $1.6 billion net current assets, alongside increased headcount and deferred compensation Liquidity As of June 30, 2025, the company held $617.3 million in cash and $1.1 billion in investment securities, with $1.6 billion net current assets - As of June 30, 2025, cash and cash equivalents were $617.3 million and investment securities were $1.1 billion[37] Headcount Total headcount increased to approximately 2,455 as of June 30, 2025, with Investment Banking Senior Managing Directors growing to 159 - Total employees increased to approximately 2,455 as of June 30, 2025, from 2,330 a year earlier[38] - The number of Investment Banking Senior Managing Directors increased to 159 as of June 30, 2025, from 143 as of June 30, 2024[38] Deferred Compensation Year-to-date, 1.7 million RSUs valued at $435.2 million and $83.0 million in deferred cash awards were granted, with $899.3 million in unvested RSUs - Year-to-date, the company granted 1.7 million RSUs with a grant date fair value of $435.2 million and $83.0 million of deferred cash awards[39] - As of June 30, 2025, the company had 4.7 million unvested RSUs with an aggregate grant date fair value of $899.3 million[41] - The company expects to pay an aggregate of $340.9 million related to its deferred cash compensation program through 2029[42] Capital Return Evercore declared a $0.84 quarterly dividend and repurchased 1.7 million shares year-to-date at an average price of $258.50 - The Board of Directors declared a quarterly dividend of $0.84 per share, payable on September 12, 2025[44] - Year-to-date, the Company repurchased an aggregate of 1.7 million shares at an average price of $258.50 per share. This includes 0.8 million shares under the share repurchase program and 0.9 million shares for net settlement of stock-based awards[45] Financial Statements and Reconciliations (Appendix) This appendix provides detailed unaudited financial statements, including GAAP and Adjusted reconciliations, segment results, and explanatory notes for non-GAAP adjustments Condensed Consolidated Statements of Operations (U.S. GAAP) Presents the detailed unaudited U.S. GAAP income statement for the three and six months ended June 30, 2025 and 2024 U.S. GAAP to Adjusted Results Reconciliation Details the reconciliation of key financial metrics from U.S. GAAP to Adjusted results, including Net Revenues, Operating Income, Net Income, and Diluted EPS Segment Results and Reconciliations Presents a breakdown of financial results for Investment Banking & Equities and Investment Management segments on both GAAP and Adjusted bases Non-Compensation Costs Reconciliation Details the components of U.S. GAAP non-compensation costs and adjustments to derive Adjusted non-compensation cost figures Notes to Financial Data Provides explanatory notes for adjustments used in reconciling U.S. GAAP to Adjusted financial data, covering various financial items