Oppenheimer(OPY) - 2025 Q2 - Quarterly Results

Overall Financial Performance Oppenheimer Holdings reported strong Q2 2025 results, with net income doubling and revenue increasing, driven by robust investment banking and wealth management activities Second Quarter 2025 Earnings Summary Oppenheimer Holdings reported a strong second quarter for 2025, with net income more than doubling to $21.7 million and revenue increasing by 12.9% to $373.2 million year-over-year. This significant growth was driven by higher investment banking revenue, increased transaction-based commissions, and greater advisory fees from a rise in assets under management (AUM). Consequently, both book value and tangible book value per share reached new record highs Quarterly Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $373.2 million | $330.6 million | +12.9% | | Net Income | $21.7 million | $10.3 million | +110.7% | | Basic EPS | $2.06 | $0.99 | +108.1% | Firm Summary Operating Results | Firm Summary Operating Results ('000s) | Q2-25 | Q2-24 | | :--- | :--- | :--- | | Revenue | $373,178 | $330,589 | | Pre-Tax Income | $32,210 | $15,865 | | Net Income | $21,674 | $10,266 | | Book Value Per Share | $85.27 | $78.63 | | Tangible Book Value Per Share | $68.25 | $61.56 | - Significantly higher investment banking revenue from increased underwriting and advisory mandates[9] - Rising markets lifted assets under administration and management to new records[9] - Increased compensation expenses were tied to higher production, while non-compensation expenses rose due to technology and travel costs[9] CEO's Commentary The CEO attributed the strong quarterly results to the firm's business strength and maturing investments in personnel. Despite initial market volatility from trade policy fears, a subsequent market rally to record highs benefited the Wealth Management business by driving AUM to new records. The Capital Markets division also saw a substantial revenue increase from strong trading volumes and a rebound in investment banking. The firm maintains an unlevered balance sheet with record-high capital and remains optimistic for the second half of the year - Rising markets proved favorable for the Wealth Management business, driving Assets Under Management (AUM) to a new record and resulting in higher asset-based advisory fees[3] - The Capital Markets businesses showed a substantial increase in total revenue, buoyed by strong institutional trading volumes and improved Investment Banking revenue from more advisory assignments and robust underwriting[4] - The firm maintains an unlevered balance sheet and ended the quarter with its capital reaching a new all-time high[5] Segment Performance Wealth Management revenue grew from record AUM, while Capital Markets recovered strongly, narrowing its pre-tax loss due to increased investment banking and trading Wealth Management The Wealth Management segment's revenue grew 5.1% to $246.4 million, primarily driven by a 7.2% increase in advisory fees from record-high AUM of $52.8 billion. However, pre-tax income slightly decreased by 2.2% to $62.8 million. This was due to a 7.1% rise in compensation expenses and a 9.7% increase in non-compensation expenses, coupled with a decline in bank deposit sweep income as clients moved cash to higher-yielding investments Wealth Management Segment Performance | Wealth Management ('000s) | Q2-25 | Q2-24 | | :--- | :--- | :--- | | Revenue | $246,421 | $234,526 | | Pre-Tax Income | $62,834 | $64,231 | | Pre-Tax Margin | 25.5% | 27.4% | | Assets Under Management (billions) | $52.8 | $47.5 | - Advisory Fees: Increased 7.2% due to higher AUM during the billing period[15] - Bank Deposit Sweep Income: Decreased by $6.2 million due to lower cash sweep balances and lower short-term interest rates[15] - AUM: Reached a record high of $52.8 billion at June 30, 2025[15] - Total expenses increased, with compensation expenses rising 7.1% due to higher production-related costs and non-compensation expenses up 9.7% from an increase in interest and other miscellaneous costs[15] Capital Markets The Capital Markets segment demonstrated a strong recovery, with revenue increasing 33.5% to $123.0 million. The pre-tax loss significantly narrowed to $3.9 million from $21.8 million a year ago. This improvement was fueled by substantial growth across its businesses, including an 83.0% surge in investment banking advisory fees, a 115.3% rise in fixed income underwriting, and double-digit growth in both equities and fixed income sales and trading revenue Capital Markets Segment Performance | Capital Markets ('000s) | Q2-25 | Q2-24 | | :--- | :--- | :--- | | Revenue | $122,981 | $92,141 | | Investment Banking Revenue | $43,394 | $26,699 | | Sales and Trading Revenue | $78,904 | $64,766 | | Pre-Tax Loss | $(3,864) | $(21,775) | | Pre-Tax Margin | (3.1)% | (23.6)% | - Investment Banking: Advisory fees increased 83.0% due to more deal volume and larger mandates. Fixed income underwriting fees grew 115.3% on higher issuance activity[20] - Sales and Trading: Equities revenue rose 20.2% and fixed income revenue rose 23.6%, both driven by higher trading volumes[20] Capital Management and Other Financial Information The company strengthened its capital position, continued shareholder returns, and improved cost efficiency with lower compensation and effective tax rates Capital Position and Shareholder Returns The company's financial position strengthened, with stockholders' equity increasing to $896.9 million from $812.1 million a year ago. The firm continued to return capital to shareholders, repurchasing 9,855 shares for $0.6 million and announcing a quarterly dividend of $0.18 per share Capital and Share Repurchase Details | Capital & Repurchases (In millions, except shares) | Q2-25 | Q2-24 | | :--- | :--- | :--- | | Stockholders' Equity | $896.9 | $812.1 | | Common Stock Repurchases | $0.6 | $0.9 | | Number of Shares Repurchased | 9,855 | 23,102 | - The Board of Directors announced a quarterly dividend of $0.18 per share, payable on August 29, 2025[22] Other Financial Details The company improved its cost efficiency, with the compensation expense as a percentage of revenue declining to 64.1% from 66.8% in the prior year. The effective tax rate for the quarter also decreased to 32.7% from 35.3%, benefiting from a reduced impact of certain permanent items and nondeductible foreign losses - Compensation expense as a percentage of revenue was 64.1% for the current period, a modest improvement from 66.8% during the same period last year[22] - The effective tax rate for the current period was 32.7%, compared with 35.3% for the prior year period[21][22] Consolidated Financial Statements The consolidated income statement shows robust revenue growth and improved profitability, with pre-tax and net income significantly increasing from strong operations Consolidated Income Statement The consolidated income statement for Q2 2025 shows a 12.9% increase in total revenue to $373.2 million, driven by strong growth in commissions, advisory fees, and investment banking. Total expenses rose by a slower 8.3%, leading to a 103.0% surge in pre-tax income to $32.2 million and a 111.1% increase in net income to $21.7 million compared to Q2 2024 Consolidated Income Statement Summary | Consolidated Income Statement ('000s) | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $373,178 | $330,589 | 12.9% | | Commissions | $110,025 | $97,055 | 13.4% | | Advisory fees | $125,628 | $117,197 | 7.2% | | Investment banking | $43,533 | $29,119 | 49.5% | | Bank deposit sweep income | $28,654 | $34,846 | (17.8)% | | Total expenses | $340,968 | $314,724 | 8.3% | | Compensation and related expenses | $239,074 | $220,727 | 8.3% | | Pre-Tax Income | $32,210 | $15,865 | 103.0% | | Net Income | $21,674 | $10,266 | 111.1% | Company Information Oppenheimer Holdings Inc. is a leading middle-market investment bank and broker-dealer, offering diverse financial services across global locations Company Overview Oppenheimer Holdings Inc. is a leading middle-market investment bank and full-service broker-dealer. Its services include retail securities brokerage, institutional sales and trading, investment banking, research, market-making, trust services, and asset management. Headquartered in New York, the company operates 88 retail branches in the U.S. and has institutional businesses in London, Tel Aviv, and Hong Kong - Oppenheimer Holdings Inc. is a leading middle-market investment bank and full-service broker-dealer engaged in a broad range of financial services, with roots tracing back to 1881[23] Forward-Looking Statements This press release contains forward-looking statements concerning anticipated future performance. For a comprehensive discussion of the factors and risks that could cause actual results to differ, readers are advised to consult the 'Factors Affecting "Forward-Looking Statements"' and 'Risk Factors' sections in the Company's Annual Report on Form 10-K - The report includes forward-looking statements; readers should refer to the Company's Annual Report on Form 10-K for a discussion of related risks and factors[24]