Piper Sandler(PIPR) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Results Overview Second Quarter 2025 Performance Summary Piper Sandler reported strong Q2 2025 results with significant year-over-year revenue and EPS growth across both GAAP and adjusted metrics, alongside a dividend increase | Metric | U.S. GAAP | vs. Q2-24 | Adjusted (Non-GAAP) | vs. Q2-24 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $397 million | 17% | $405 million | 14% | | Pre-tax Margin | 12.3% | +4.0pp | 18.1% | +0.8pp | | Net Income | $42 million | 21% | $53 million | 17% | | Diluted EPS | $2.38 | 21% | $2.95 | 17% | - The strong quarterly results were attributed to year-over-year revenue growth across many businesses, highlighting the benefits of product and sector diversification in a more constructive market environment[3] Financial & Business Highlights The company achieved robust revenue growth in key segments, pursued strategic acquisitions and talent acquisition, and returned $189 million to shareholders in H1 2025 - Key revenue drivers for Q2 2025 included: Advisory services revenues of $206 million, up 12% YoY; Municipal financing revenues of $42 million, the best quarter since 2021; and Institutional brokerage revenues of $112 million, up 22% YoY[6] - Strategic growth initiatives included the pending acquisition of G Squared Capital Partners and the hiring of several managing directors to strengthen various advisory groups[6] - Capital management included an increased quarterly cash dividend to $0.70 per share and a total of $189 million returned to shareholders in H1 2025 through repurchases and dividends[6] U.S. GAAP Financial Results U.S. GAAP Selected Financial Data Q2 2025 U.S. GAAP net revenues increased 17% to $396.8 million, with net income up 21% to $42.2 million or $2.38 per diluted share | U.S. GAAP (in thousands) | Q2 2025 | Q2 2024 | Change vs. Q2-24 | | :--- | :--- | :--- | :--- | | Net Revenues | $396,778 | $339,179 | 17% | | Total Non-interest Expenses | $347,854 | $310,933 | 12% | | Income Before Income Tax | $48,924 | $28,246 | 73% | | Net Income Attributable to Piper Sandler | $42,182 | $34,773 | 21% | | Earnings Per Diluted Share | $2.38 | $1.97 | 21% | | Business Metrics | Q2 2025 | Q2 2024 | Change vs. Q2-24 | | :--- | :--- | :--- | :--- | | Total Completed Advisory Transactions | 71 | 68 | 4% | | Municipal Negotiated Issues (Par Value) | $5.7 billion | $3.2 billion | 78% | | Equity Brokerage Shares Traded | 2.9 billion | 2.8 billion | 4% | Detailed Revenue Analysis (GAAP) Q2 2025 total net revenues increased 17% to $396.8 million, driven by 9% growth in investment banking and 22% in institutional brokerage | Revenue Segment (GAAP) | Q2 2025 ($M) | vs. Q2 2024 | | :--- | :--- | :--- | | Advisory Services | $206.2 | 12% | | Corporate Financing | $35.0 | -31% | | Municipal Financing | $41.9 | 66% | | Total Investment Banking | $283.1 | 9% | | Equity Brokerage | $58.1 | 12% | | Fixed Income Services | $54.3 | 37% | | Total Institutional Brokerage | $112.4 | 22% | - Significant growth in municipal financing was driven by increased issuance activity, while fixed income services benefited from increased depository client activity and balance sheet restructuring trades[13] Expense and Profitability Analysis (GAAP) Total non-interest expenses increased 12% to $347.9 million, yet the pre-tax margin improved to 12.3% due to higher revenues and a lower compensation ratio - The compensation ratio decreased to 65.1% from 69.2% in Q2 2024, primarily due to higher net revenues[8][19] - Non-compensation expenses increased 18% YoY, driven by higher reimbursed deal expenses and $5.0 million in restructuring and integration costs[19] - The pre-tax margin expanded to 12.3% in Q2 2025 from 8.3% in Q2 2024, driven by revenue growth and a lower compensation ratio[16] Non-GAAP Financial Results Non-GAAP Selected Financial Data Q2 2025 adjusted net revenues grew 14% to $405.4 million, with adjusted operating income up 19% to $73.4 million and diluted EPS at $2.95 | Adjusted (Non-GAAP) (in thousands) | Q2 2025 | Q2 2024 | Change vs. Q2-24 | | :--- | :--- | :--- | :--- | | Adjusted Net Revenues | $405,388 | $356,710 | 14% | | Adjusted Total Operating Expenses | $332,016 | $295,116 | 13% | | Adjusted Operating Income | $73,372 | $61,594 | 19% | | Adjusted Net Income | $52,741 | $45,221 | 17% | | Adjusted Earnings Per Diluted Share | $2.95 | $2.52 | 17% | Detailed Revenue, Expense, and Profitability Analysis (Non-GAAP) Adjusted net revenues grew 14% YoY, leading to an improved adjusted operating margin of 18.1% due to higher revenues and a lower compensation ratio - Adjusted operating margin improved to 18.1% in Q2 2025 from 17.3% in Q2 2024, driven by higher adjusted net revenues and a lower adjusted compensation ratio[25] - The adjusted compensation ratio decreased to 62.0% from 62.9% in Q2 2024, reflecting operating leverage from higher adjusted net revenues[30] - Adjusted non-compensation expenses rose 14% YoY, primarily due to higher reimbursed deal expenses and increased outside services costs[30] Capital Management Dividends The company increased its quarterly cash dividend to $0.70 per share and returned $87.3 million to shareholders through dividends in H1 2025 - The quarterly cash dividend was increased by $0.05 to $0.70 per share, payable on September 12, 2025[28] - Total dividends returned to shareholders in the first half of 2025 amounted to $87.3 million, or $4.30 per share[29] Share Repurchases In Q2 2025, the company repurchased 85,000 shares for $20.9 million, contributing to $101.5 million in repurchases for H1 2025 - During Q2 2025, the company repurchased $20.9 million of its common stock (85,000 shares) at an average price of $246.88 per share[31] - For the first half of 2025, total share repurchases were $101.5 million (351,000 shares), with a significant portion covering tax obligations for vesting restricted stock awards[32] Additional Information Human Capital and Shareholder Information As of June 30, 2025, Piper Sandler had 1,845 full-time employees and 182 corporate investment banking managing directors, with common shareholders' equity at $1.23 billion | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Full-time employees | 1,845 | 1,768 | | Corporate investment banking managing directors | 182 | 170 | | Common shareholders' equity | $1,229.9 million | $1,126.3 million | Forward-Looking Statements This section contains forward-looking statements subject to significant risks and uncertainties, including market volatility and geopolitical conditions, which may cause actual results to differ materially - The company provides a cautionary note that forward-looking statements are not guarantees of future performance and are subject to risks detailed in its SEC filings[37][38][39] Financial Statements and Reconciliations U.S. GAAP Results of Operations This section presents the unaudited consolidated statements of operations on a U.S. GAAP basis for the three and six months ended June 30, 2025 and 2024 Non-GAAP Selected Summary Financial Information This section summarizes the company's adjusted, non-GAAP financial results for the three and six months ended June 30, 2025 and 2024, for comparative analysis Reconciliation of U.S. GAAP to Non-GAAP Measures This section provides detailed reconciliation tables bridging U.S. GAAP to adjusted non-GAAP measures, including adjustments for investment losses, compensation, and restructuring costs