Ryan Specialty (RYAN) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Ryan Specialty reported strong financial results for Q2 2025, driven by robust revenue growth and strategic acquisitions Key Financial Highlights Ryan Specialty achieved robust financial performance in Q2 2025, with total revenue up 23.0% to $855.2 million, Adjusted EBITDAC up 24.5% to $308.4 million, and Adjusted Diluted EPS up 13.8% to $0.66 | Metric | Q2 2025 | Y-o-Y Growth | Q2 2024 | | :-------------------------------- | :--------------- | :------- | :--------------- | | Total Revenue | $855.2 million USD | 23.0% | $695.4 million USD | | Organic Revenue Growth Rate | 7.1% | - | 14.2% | | Net Income | $124.7 million USD | 5.6% | $118.0 million USD | | Diluted EPS | $0.38 | - | - | | Adjusted EBITDAC | $308.4 million USD | 24.5% | $247.7 million USD | | Adjusted EBITDAC Margin | 36.1% | - | 35.6% | | Adjusted Net Income | $184.7 million USD | 15.0% | $160.6 million USD | | Adjusted Diluted EPS | $0.66 | 13.8% | $0.58 | | Capital Returned to Shareholders | $21.9 million USD | - | - | Management Commentary Management highlighted robust performance despite challenging property rate environments and high comparables, driven by recent M&A and strong organic growth, further solidifying leadership in delegated underwriting through strategic alliances and acquisitions - The company achieved 23% total revenue growth and 24.5% Adjusted EBITDAC growth amidst a rapidly declining property rate environment and challenging year-over-year comparisons, highlighting the resilience of its differentiated platform[3] - Management noted recent M&A and organic growth in a difficult climate contributed significantly to performance, successfully completing three acquisitions to further solidify the company's leadership in delegated underwriting[3] - The company is expanding strategic carrier alliances, expected to significantly enhance its ability to generate new business, and remains committed to achieving its full-year double-digit organic growth target[3] Second Quarter 2025 Financial Review This section provides a detailed financial review of Q2 2025, covering revenue, operating expenses, net income, and adjusted earnings metrics Total Revenue Performance Total revenue reached $855.2 million in Q2 2025, a 23.0% year-over-year increase, driven by 7.1% organic growth, new client acquisition, expanded client relationships, E&S market expansion, recent acquisitions, contingent commission changes, and foreign exchange impacts, with casualty growth offsetting a slight property decline | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :---------------- | :--------------- | :--------------- | :------- | :------- | | Total Revenue | $855,170 | $695,441 | $159,729 | 23.0% | | Net Commissions and Fees | $840,857 | $680,248 | $160,609 | 23.6% | - Revenue growth was primarily driven by 7.1% organic revenue growth, benefiting from successful new client acquisition, deepened existing client relationships, and continued expansion in the E&S market[7] - Recently completed acquisitions, changes in contingent commissions, and favorable foreign exchange rates also contributed positively to total revenue growth[7] Operating Expenses Analysis Total operating expenses in Q2 2025 increased 25.1% to $664.1 million, primarily due to higher compensation and benefits from headcount and revenue growth, acquisition-related costs, long-term incentive compensation, IT, professional services, travel, entertainment, and foreign exchange, partially offset by reduced restructuring expenses from the ACCELERATE 2025 program completion | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--------------------- | :--------------- | :--------------- | :------- | :------- | | Total Operating Expenses | $664,118 | $531,073 | $133,045 | 25.1% | | Compensation and Benefits | $485,272 | $414,049 | $71,223 | 17.2% | | General and Administrative Expenses | $107,049 | $82,967 | $24,082 | 29.0% | - Compensation and benefits expense increased due to higher compensation from headcount and revenue growth, as well as acquisition-related expenses and increased long-term incentive compensation[8][9] - General and administrative expenses increased due to higher IT and professional services, travel and entertainment, and foreign exchange expenses, partially offset by reduced restructuring-related costs from the completion of the ACCELERATE 2025 program[9] Net Income and Adjusted EBITDAC Performance Net income grew 5.6% to $124.7 million in Q2 2025, driven by strong revenue and lower income tax expense, partially offset by higher operating expenses and interest; Adjusted EBITDAC increased 24.5% to $308.4 million, with margin rising to 36.1%, primarily due to robust revenue growth | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :--------------- | :--------------- | :------- | :------- | | Net Income | $124,705 | $118,038 | $6,667 | 5.6% | | Adjusted EBITDAC | $308,406 | $247,691 | $60,715 | 24.5% | | Adjusted EBITDAC Margin | 36.1% | 35.6% | - | - | - Net income growth was primarily attributable to strong revenue growth and lower income tax expense, partially offset by higher total operating expenses and net interest expense[10] - Adjusted EBITDAC growth was primarily driven by strong revenue growth, partially offset by higher adjusted compensation and benefits expense and adjusted general and administrative expenses[11] Adjusted Net Income and Diluted EPS Performance Adjusted net income increased 15.0% to $184.7 million in Q2 2025, with Adjusted Diluted EPS up 13.8% to $0.66; overall profitability grew despite a slight decrease in Adjusted Net Income Margin | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :------------------------- | :--------------- | :--------------- | :------- | :------- | | Adjusted Net Income | $184,682 | $160,554 | $24,128 | 15.0% | | Adjusted Net Income Margin | 21.6% | 23.1% | - | - | | Adjusted Diluted EPS | $0.66 | $0.58 | $0.08 | 13.8% | Net Commissions and Fees Breakdown This section details net commissions and fees by specialty and type, highlighting growth across all segments Net Commissions and Fees by Specialty In Q2 2025, net commissions and fees grew across all specialty segments, with Underwriting Management notably up 73.1% to $269.2 million, and Wholesale Brokerage and Delegated Underwriting growing 7.4% and 17.2% respectively | Specialty Segment | Q2 2025 (thousand USD) | Q2 2025 (%) | Q2 2024 (thousand USD) | Q2 2024 (%) | Change (thousand USD) | Change (%) | | :--------------- | :------------------- | :----------------- | :------------------- | :----------------- | :---------- | :------- | | Wholesale Brokerage | 477,165 | 56.7% | 444,129 | 65.3% | 33,036 | 7.4% | | Delegated Underwriting | 94,524 | 11.2% | 80,630 | 11.8% | 13,894 | 17.2% | | Underwriting Management | 269,168 | 32.1% | 155,489 | 22.9% | 113,679 | 73.1% | | Total Net Commissions and Fees | 840,857 | | 680,248 | | 160,609 | 23.6% | - Net commissions and fees growth across all specialty segments was primarily driven by robust organic growth[14] Revenue by Type of Commission and Fees Net commissions and policy fees remained the primary revenue source in Q2 2025, growing 19.8%; notably, supplemental and contingent commissions surged 299.1% year-over-year to $35.63 million | Commission and Fee Type | Q2 2025 (thousand USD) | Q2 2025 (%) | Q2 2024 (thousand USD) | Q2 2024 (%) | Change (thousand USD) | Change (%) | | :----------------------- | :------------------- | :----------------- | :------------------- | :----------------- | :---------- | :------- | | Net Commissions and Policy Fees | 787,074 | 93.6% | 656,938 | 96.6% | 130,136 | 19.8% | | Supplemental and Contingent Commissions | 35,630 | 4.2% | 8,927 | 1.3% | 26,703 | 299.1% | | Loss Mitigation and Other Fees | 18,153 | 2.2% | 14,383 | 2.1% | 3,770 | 26.2% | | Total Net Commissions and Fees | 840,857 | | 680,248 | | 160,609 | 23.6% | Liquidity and Capital Management The company's liquidity position and capital management strategies are reviewed, including cash, debt, and dividend declarations Liquidity and Financial Condition As of June 30, 2025, the company held $172.6 million in cash and cash equivalents and had $3.5 billion in outstanding debt principal | Metric | As of June 30, 2025 ($) | | :------------------- | :---------------- | | Cash and Cash Equivalents | 172.6 million USD | | Outstanding Debt Principal | 3.5 billion USD | Quarterly Dividend Declaration The Board declared a quarterly dividend of $0.12 per share for Class A common stock on July 31, 2025, payable August 26, 2025, to shareholders of record on August 12, 2025, with $0.05 per share funded by Ryan Specialty, LLC's free cash flow - The Board declared a quarterly dividend of $0.12 per share, with $0.05 per share funded by Ryan Specialty, LLC's free cash flow[19] - The dividend will be paid on August 26, 2025, to Class A common stockholders and LLC common unit holders of record as of the close of business on August 12, 2025[19] Full Year 2025 Outlook The company updated its full-year 2025 guidance, lowering organic revenue growth expectations to 9.0%–11.0% and adjusting Adjusted EBITDAC margin to 32.5%–33.0% | Metric | New Guidance (Full Year 2025) | Original Guidance (Full Year 2025) | | :---------------------- | :------------------ | :------------------ | | Organic Revenue Growth Rate | 9.0% – 11.0% | 11.0% – 13.0% | | Adjusted EBITDAC Margin | 32.5% – 33.0% | 32.5% – 33.5% | - The company cannot provide a comparable outlook or reconciliation for total revenue growth rate or net income margin due to the inherent difficulty in forecasting certain reconciling items, such as effective tax rates, acquisition activity expenses, and one-time items[20] Company Information This section provides essential company information, including conference call details, company overview, and forward-looking statements Conference Call Details Ryan Specialty will host a conference call on July 31, 2025, at 4:45 PM ET to discuss financial results, accessible via webcast or the company's investor relations website - The conference call will be held on July 31, 2025, at 4:45 PM ET to discuss financial results[22] - A webcast replay will be available for one year on the investor section of the company's website[23] About Ryan Specialty Founded in 2010, Ryan Specialty is a leading provider of specialty insurance products and services, offering distribution, underwriting, product development, administration, and risk management to brokers, agents, and carriers through wholesale brokerage and delegated underwriting manager roles - Ryan Specialty, founded in 2010, is a service provider offering specialty products and solutions to insurance brokers, agents, and carriers[24] - The company provides distribution, underwriting, product development, administration, and risk management services through its wholesale brokerage and delegated underwriting manager roles for insurance carriers[24] Forward-Looking Statements All non-historical statements in this report are 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995, involving significant risks and uncertainties; investors are cautioned not to place undue reliance, as actual results may differ materially from expectations - All statements regarding estimated costs, expenditures, cash flows, growth rates, and financial results, as well as plans and objectives for future operations, growth plans, or strategies, are forward-looking statements[25] - Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the company's expectations[26] - The company undertakes no obligation to publicly update any forward-looking statements and cautions investors not to place undue reliance on these statements or view past financial performance as a reliable indicator of future performance[27] Non-GAAP Financial Measures and Key Performance Indicators This section defines the non-GAAP financial measures and key performance indicators used to assess the company's business performance Definitions of Non-GAAP Measures This section defines non-GAAP financial measures used to assess business performance, including organic revenue growth rate, adjusted compensation and benefits expense, adjusted general and administrative expenses, adjusted EBITDAC, adjusted net income, adjusted diluted EPS, and credit adjusted EBITDAC, emphasizing their supplementary role to GAAP financials - Non-GAAP financial measures are used by management and investors to assess operating performance by excluding potential differences from capital structure, taxes, depreciation, amortization, and certain other items not representative of core business[28] - Organic revenue growth rate measures the percentage change in net commissions and fees, adjusted for acquisitions, dispositions, contingent commissions, and foreign exchange impacts[30] - Adjusted EBITDAC is defined as net income, adjusted for interest expense, income tax expense, depreciation, amortization, and changes in contingent consideration, further adjusted for equity-based compensation, acquisition-related expenses, and other non-recurring items[34] Unaudited Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including income statements, balance sheets, and cash flow statements Consolidated Statements of Income This section presents Ryan Specialty's unaudited consolidated statements of income, detailing key financial data such as revenue, expenses, net income, and EPS for Q2 and H1 2025 and 2024 | (thousand USD, except per share data) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------- | :--------------- | :--------------- | :----------- | :----------- | | Total Revenue | $855,170 | $695,441 | $1,545,336 | $1,247,487 | | Total Operating Expenses | $664,118 | $531,073 | $1,254,049 | $1,010,470 | | Operating Income | $191,052 | $164,368 | $291,287 | $237,017 | | Net Income | $124,705 | $118,038 | $120,316 | $158,715 | | Diluted EPS | $0.38 | $0.37 | $0.18 | $0.49 | Consolidated Balance Sheets This section presents Ryan Specialty's unaudited consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing the company's assets, liabilities, and stockholders' equity | (thousand USD) | As of June 30, 2025 | As of Dec 31, 2024 | | :----------------------- | :------------- | :------------- | | Total Assets | $10,625,772 | $9,649,918 | | Total Liabilities | $9,443,623 | $8,551,633 | | Total Stockholders' Equity | $1,182,149 | $1,098,285 | | Cash and Cash Equivalents | $172,589 | $540,203 | | Goodwill | $3,085,182 | $2,646,676 | Consolidated Statements of Cash Flows This section provides Ryan Specialty's unaudited consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, covering operating, investing, and financing activities | (thousand USD) | H1 2025 | H1 2024 | | :------------------------- | :----------- | :----------- | | Net Cash Provided by Operating Activities | $210,760 | $154,288 | | Net Cash Used in Investing Activities | ($618,980) | ($236,698) | | Net Cash Provided by Financing Activities | $234,370 | $72,191 | | Cash and Cash Equivalents, End of Period | $1,518,762 | $1,744,103 | - Net cash used in investing activities was primarily impacted by business combinations (net of cash), totaling $565.1 million in H1 2025, significantly higher than $214.1 million in H1 2024[48] Reconciliation of Non-GAAP Financial Measures This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures Organic Revenue Growth Rate Reconciliation This section provides a detailed reconciliation of organic revenue growth rate, showing Q2 2025 organic revenue growth at 7.1%, down from 14.2% in the prior year, with adjustments for contingent commissions, revenue from sold businesses, M&A, and foreign exchange impacts | (thousand USD, except percentages) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | Current Period Net Commissions and Fees Revenue | $840,857 | $680,248 | | Less: Current Period Contingent Commissions | ($27,392) | ($5,396) | | Less: Revenue from Businesses Sold | ($144) | — | | Net Commissions and Fees Revenue (Excluding Contingent Commissions) | $813,321 | $674,852 | | Organic Revenue Growth (Non-GAAP) | $48,429 | $80,535 | | Organic Revenue Growth Rate (Non-GAAP) | 7.1% | 14.2% | Adjusted Compensation and Benefits Expense Reconciliation This section reconciles compensation and benefits expense to adjusted compensation and benefits expense, showing Q2 2025 adjusted compensation and benefits expense at $453.4 million, with an adjusted expense ratio of 53.0%, lower than GAAP's 56.7% | (thousand USD, except percentages) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | Compensation and Benefits Expense | $485,272 | $414,049 | | Acquisition-Related Expenses | ($1,484) | ($1,160) | | Acquisition-Related Long-Term Incentive Compensation | ($9,321) | ($2,891) | | Restructuring and Related Expenses | — | ($3,799) | | Equity-Based Compensation | ($14,853) | ($12,756) | | Adjusted Compensation and Benefits Expense | $453,414 | $383,960 | | Compensation and Benefits Expense Ratio | 56.7% | 59.5% | | Adjusted Compensation and Benefits Expense Ratio | 53.0% | 55.2% | Adjusted General and Administrative Expense Reconciliation This section reconciles general and administrative expenses to adjusted general and administrative expenses, showing Q2 2025 adjusted general and administrative expenses at $93.35 million, with an adjusted expense ratio of 10.9%, lower than GAAP's 12.5% | (thousand USD, except percentages) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | General and Administrative Expenses | $107,049 | $82,967 | | Acquisition-Related Expenses | ($13,699) | ($15,008) | | Restructuring and Related Expenses | — | ($4,169) | | Adjusted General and Administrative Expenses | $93,350 | $63,790 | | General and Administrative Expense Ratio | 12.5% | 11.9% | | Adjusted General and Administrative Expense Ratio | 10.9% | 9.2% | Adjusted EBITDAC Reconciliation This section reconciles net income to Adjusted EBITDAC, showing Q2 2025 Adjusted EBITDAC at $308.4 million, with an Adjusted EBITDAC margin of 36.1%, higher than 35.6% in the prior year | (thousand USD, except percentages) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | Net Income | $124,705 | $118,038 | | Interest Expense, Net | 58,334 | 31,128 | | Income Tax Expense | 13,026 | 18,691 | | Depreciation | 2,888 | 2,273 | | Amortization | 69,668 | 30,541 | | Change in Contingent Consideration | (759) | 1,243 | | EBITDAC | $267,862 | $201,914 | | Acquisition-Related Expenses | 15,183 | 16,168 | | Equity-Based Compensation | 14,853 | 12,756 | | Adjusted EBITDAC | $308,406 | $247,691 | | Adjusted EBITDAC Margin | 36.1% | 35.6% | Adjusted Net Income Reconciliation This section reconciles net income to Adjusted Net Income, showing Q2 2025 Adjusted Net Income at $184.7 million, with an Adjusted Net Income margin of 21.6%, slightly lower than 23.1% in the prior year | (thousand USD, except percentages) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | Net Income | $124,705 | $118,038 | | Income Tax Expense | 13,026 | 18,691 | | Amortization | 69,668 | 30,541 | | Acquisition-Related Expenses | 15,183 | 16,168 | | Equity-Based Compensation | 14,853 | 12,756 | | Adjusted Pre-Tax Income | $249,570 | $217,317 | | Adjusted Income Tax Expense | ($64,888) | ($56,763) | | Adjusted Net Income | $184,682 | $160,554 | | Adjusted Net Income Margin | 21.6% | 23.1% | Adjusted Diluted Earnings per Share Reconciliation This section reconciles diluted EPS to Adjusted Diluted EPS, showing Q2 2025 Adjusted Diluted EPS at $0.66, higher than $0.58 in the prior year | (except per share data) | Q2 2025 | Q2 2024 | | :---------------------------------------------------------------- | :--------------- | :--------------- | | Diluted EPS for Class A Common Stock | $0.38 | $0.37 | | Less: Net Income Impact Attributable to Diluted Shares and Substantially Vested RSUs | ($0.19) | ($0.20) | | Add: Impact of All LLC Common Units Converted to Class A Shares | $0.26 | $0.27 | | Add: Adjustments to Adjusted Net Income | $0.22 | $0.15 | | Adjusted Diluted EPS | $0.66 | $0.58 | Credit Adjusted EBITDAC Reconciliation This section reconciles net income to Credit Adjusted EBITDAC, showing Credit Adjusted EBITDAC for the twelve months ended June 30, 2025, at $956.2 million | (thousand USD) | For the twelve months ended June 30, 2025 | | :---------------------------------------------------------------- | :--------------------------- | | Net Income | $191,514 | | Interest Expense, Net | 210,762 | | Income Tax Expense | 85,980 | | Depreciation | 10,959 | | Amortization | 233,969 | | EBITDAC | $694,346 | | Acquisition-Related Expenses | 77,722 | | Equity-Based Compensation | 59,189 | | Adjusted EBITDAC | $915,217 | | Credit Adjustment | 40,991 | | Credit Adjusted EBITDAC | $956,208 |