Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Piper Sandler Companies' unaudited consolidated financial statements as of June 30, 2025, including statements of financial condition, operations, cash flows, and detailed notes [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets decreased to **$1.96 billion** by June 30, 2025, from **$2.26 billion** at year-end 2024, mainly due to reduced cash and cash equivalents Consolidated Statements of Financial Condition (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,959,140** | **$2,255,936** | | Cash and cash equivalents | $123,323 | $482,834 | | Total financial instruments owned | $488,579 | $425,728 | | Goodwill | $311,944 | $312,024 | | **Total Liabilities** | **$559,726** | **$840,163** | | Accrued compensation | $299,903 | $563,088 | | **Total Shareholders' Equity** | **$1,399,414** | **$1,415,773** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 net revenues increased **17.0%** to **$396.8 million**, with diluted EPS rising to **$2.38**, while six-month net revenues grew **10.5%** to **$754.1 million** Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $398,577 | $340,844 | | Net Revenues | $396,778 | $339,179 | | Net Income Attributable to Piper Sandler | $42,182 | $34,773 | | Diluted EPS | $2.38 | $1.97 | Six Months 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Total Revenues | $757,131 | $685,283 | | Net Revenues | $754,050 | $682,235 | | Net Income Attributable to Piper Sandler | $107,097 | $77,266 | | Diluted EPS | $6.03 | $4.40 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$175.1 million** for the six months ended June 30, 2025, reversing from **$69.3 million** provided in 2024, leading to a **$359.5 million** decrease in cash Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $(175,081) | $69,289 | | Net cash used in investing activities | $(25,364) | $(4,652) | | Net cash used in financing activities | $(162,229) | $(126,291) | | **Net decrease in cash and cash equivalents** | **$(359,511)** | **$(62,163)** | | Cash and cash equivalents at end of period | $123,323 | $320,935 | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, acquisitions like Aviditi Advisors and G Squared Capital Partners, fair value measurements, equity activities, and compensation plans - On August 23, 2024, the company completed the acquisition of Aviditi Capital Advisors, LLC, an alternative investment bank, adding private capital advisory capabilities, which resulted in **$10.2 million** of goodwill[34](index=34&type=chunk)[35](index=35&type=chunk) - The company declared and paid quarterly cash dividends aggregating **$1.30 per share** and a special cash dividend of **$3.00 per share** during the first six months of 2025[113](index=113&type=chunk) - On August 1, 2025, the company announced a definitive agreement to acquire G Squared Capital Partners LLC, a boutique investment bank specializing in government services and defense technology, with the transaction expected to close in Q3 2025[177](index=177&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial performance, highlighting revenue growth, strategic acquisitions, market conditions, liquidity, capital resources, and risk management [Executive Overview](index=38&type=section&id=Executive%20Overview) The company, focusing on middle-market investment banking, completed the Aviditi Advisors acquisition and announced G Squared Capital Partners, with Q2 2025 GAAP net revenues up **17.0%** to **$396.8 million** - Recent strategic growth initiatives include the completed acquisition of Aviditi Advisors on August 23, 2024, and the announced definitive agreement to acquire G Squared Capital Partners LLC on August 1, 2025[184](index=184&type=chunk) Q2 2025 Financial Highlights (U.S. GAAP) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net revenues | $396,778 | $339,179 | 17.0% | | Net income attributable to Piper Sandler | $42,182 | $34,773 | 21.3% | | Earnings per diluted common share | $2.38 | $1.97 | 20.8% | [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q2 2025 net revenues increased **17.0%** to **$396.8 million**, driven by **9.0%** growth in investment banking and **22.5%** in institutional brokerage, despite a decline in corporate financing Q2 2025 vs Q2 2024 Revenue Breakdown (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total investment banking | $283,085 | $259,782 | 9.0% | | - Advisory services | $206,202 | $183,908 | 12.1% | | - Corporate financing | $34,976 | $50,641 | (30.9)% | | - Municipal financing | $41,907 | $25,233 | 66.1% | | Total institutional brokerage | $112,374 | $91,737 | 22.5% | | **Net revenues** | **$396,778** | **$339,179** | **17.0%** | - Compensation expenses for Q2 2025 increased **10.0%** to **$258.2 million** due to higher revenues, but the compensation ratio improved, decreasing to **65.1%** from **69.2%** in Q2 2024[209](index=209&type=chunk) - Restructuring and integration costs for Q2 2025 were **$5.0 million**, primarily consisting of **$2.9 million** in severance benefits and **$1.8 million** for vacated office space related to the Aviditi Advisors acquisition[216](index=216&type=chunk) [Liquidity, Funding and Capital Resources](index=54&type=section&id=Liquidity%2C%20Funding%20and%20Capital%20Resources) The company maintains robust liquidity, with an adjusted leverage ratio of **1.6x** as of June 30, 2025, and **$222.7 million** in net capital, significantly exceeding regulatory minimums - The company's board authorized a **$150.0 million** share repurchase program effective February 5, 2025, with **$16.6 million** in shares repurchased during the first six months of 2025 under this authorization[261](index=261&type=chunk) Leverage Ratios | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Leverage ratio | 1.4 | 1.6 | | Adjusted leverage ratio | 1.6 | 1.9 | - At June 30, 2025, the company's net capital was **$222.7 million**, which was **$221.7 million** in excess of the SEC's minimum requirement[278](index=278&type=chunk) [Risk Management](index=60&type=section&id=Risk%20Management) The company employs a formal risk management process to identify and monitor strategic, market, liquidity, credit, operational, human capital, and legal/regulatory risks, overseen by internal committees and the board - The company's principal risks are identified as strategic, market, liquidity, credit, operational, human capital, and legal/regulatory risk[291](index=291&type=chunk) - As of June 30, 2025, the company estimates that a parallel **50 basis point** adverse change in interest rates would result in a decrease of approximately **$0.7 million** in the carrying value of its fixed income securities inventory, including hedging effects[300](index=300&type=chunk) Credit Rating of Long Fixed Income Securities (June 30, 2025) | Rating | % of Total | | :--- | :--- | | AAA | 11.2% | | AA | 73.8% | | A | 11.1% | | BBB | 0.1% | | BB | 0.0% | | Not Rated | 3.8% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates by reference the detailed discussion of market risk from the 'Risk Management' section in Item 2 of this report - The disclosures about market risk are incorporated by reference from the 'Risk Management' section in Part I, Item 2 of the report[324](index=324&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the period[325](index=325&type=chunk) - No changes in internal control over financial reporting occurred during the second quarter that materially affected, or are reasonably likely to materially affect, internal controls[326](index=326&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings from Note 13, with management believing pending actions will not materially affect financial condition or operations - The discussion of legal proceedings is incorporated by reference from Note 13 to the consolidated financial statements[327](index=327&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[329](index=329&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased **84,608** shares at an average of **$246.88** per share, with **$133.4 million** remaining for future repurchases Share Repurchases for the Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 11,894 | $230.04 | — | | May 2025 | 64,777 | $249.02 | 61,850 | | June 2025 | 7,937 | $254.69 | 4,908 | | **Total** | **84,608** | **$246.88** | **66,758** | - As of the end of Q2 2025, **$133.4 million** remained under the company's share repurchase authorization, which is effective through December 31, 2026[332](index=332&type=chunk)

Core Viewpoint - Piper Sandler Companies (PIPR) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][4][6]. Earnings Estimates and Ratings - The Zacks rating system focuses on changes in earnings estimates, which are crucial for assessing a company's future performance and stock price movements [2][5]. - The Zacks Consensus Estimate for Piper Sandler Companies has increased by 8.5% over the past three months, reflecting analysts' growing confidence in the company's earnings potential [9]. Impact of Institutional Investors - Institutional investors often rely on earnings estimates to determine a company's fair value, leading to significant stock price movements when estimates are revised [5][6]. - The upgrade to Zacks Rank 1 positions Piper Sandler in the top 5% of stocks covered by Zacks, suggesting strong potential for market-beating returns in the near term [10][11]. Historical Performance of Zacks Rank - The Zacks Rank system has a proven track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988, highlighting the effectiveness of earnings estimate revisions in predicting stock performance [8]. Conclusion - The upgrade of Piper Sandler Companies reflects an overall improvement in its business outlook, which is expected to drive stock price appreciation as investor sentiment becomes more favorable [4][6].

Group 1 - Piper Sandler Companies reported quarterly earnings of $2.95 per share, exceeding the Zacks Consensus Estimate of $1.99 per share, and showing an increase from $2.52 per share a year ago, resulting in an earnings surprise of +48.24% [1] - The company achieved revenues of $405.39 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 17.61%, compared to $339.18 million in the same quarter last year [2] - Piper Sandler Companies has outperformed consensus EPS estimates in all four of the last quarters [2] Group 2 - The stock has increased approximately 5.1% since the beginning of the year, while the S&P 500 has gained 7.8% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is $2.92 on revenues of $406.9 million, and for the current fiscal year, it is $12.75 on revenues of $1.6 billion [7] Group 3 - The Financial - Investment Bank industry, to which Piper Sandler belongs, is currently ranked in the top 7% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Piper Sandler was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Data and Key Metrics Changes - Adjusted net revenues for the second quarter of 2025 were $405 million, with an operating margin of 18.1% and adjusted EPS of $2.95, all higher compared to the same period last year [6][20][21] - Advisory revenues reached $206 million during the quarter, up 12% year over year, driven by a higher average fee and a total of 71 transactions completed [6][7] - For the first half of 2025, net revenues totaled $789 million, with an operating income of $142 million and an operating margin of 18% [20][21] Business Line Data and Key Metrics Changes - Advisory services accounted for 54% of total net revenues, increasing 24% year over year, with strong performance in M&A and non-M&A advisory services [21][22] - Corporate financing revenues were $35 million, down 31% from the previous year, with 26 financings completed, raising $10 billion for corporate clients [10][11] - Municipal financing revenues increased by 66% year over year to $42 million, driven by strong demand and favorable market conditions [14] - Equity brokerage revenues were $58 million, up 12% year over year, with robust trading activity [16] - Fixed income revenues reached $54 million, up 21% from the first quarter and 37% from the previous year, driven by strong activity with depository clients [17] Market Data and Key Metrics Changes - The economic fee pool for companies with sub-five billion dollars of market cap decreased by 19% year over year, with a significant 61% decline in the biopharma sector [11] - The IPO market is showing signs of improvement, particularly in med tech, although biotech IPOs remain slow [43][44] Company Strategy and Development Direction - The company is focused on expanding its M&A business and technology capabilities, as evidenced by the acquisition of G Squared Capital Partners [26][28] - There is a strategic emphasis on managing headcount and driving productivity while enhancing sector and product expertise [12][13] Management's Comments on Operating Environment and Future Outlook - The macro environment has shown improvement, with increased client engagement and a robust pipeline of transactions expected to continue into the third quarter [5][9] - Management expressed optimism about the advisory services outlook, despite some volatility impacting deal processes earlier in the quarter [9][10] Other Important Information - The company repurchased approximately 85,000 shares for $21 million and paid $17 million in dividends during the quarter [24][25] - A $0.05 increase in the quarterly cash dividend to $0.70 per share was announced, effective September 12 [24][25] Q&A Session Summary Question: What does a more normal bank consolidation market mean for revenue? - Management noted that conditions for depository M&A have improved, with quicker regulatory approvals and an increase in transaction announcements expected to impact revenues positively [32][33] Question: How is the Avidity acquisition enhancing client connectivity? - Management reported that the acquisition has met expectations, enhancing relationships with senior partners and improving overall transaction activity [36][38] Question: What is the outlook for the IPO market, particularly in biotech? - Management indicated that while the IPO market is improving, biotech remains slow, with a need for continued improvement before significant activity resumes [43][44] Question: How do the fixed income trading and bank M&A outlooks align? - Management clarified that the strong second quarter in fixed income does not contradict the positive outlook for bank M&A, as both areas are experiencing different dynamics [46][50] Question: What is the current state of conversations with sponsor clients? - Management observed increased activity and a positive outlook for transactions in the second half of the year, although caution remains [55][56] Question: What is the trajectory for compensation and non-compensation expenses? - Management expects the compensation ratio to remain stable, while non-compensation expenses may trend higher due to increased occupancy and legal fees [76][78]

Financial Data and Key Metrics Changes - Adjusted net revenues for Q2 2025 were $405 million, with an operating margin of 18.1% and adjusted EPS of $2.95, all higher compared to the same period last year [5][19] - Advisory revenues reached $206 million during the quarter, up 12% year over year, driven by a higher average fee and an increase in completed transactions [5][6] - For the first half of 2025, net revenues totaled $789 million, with an operating income of $142 million and an operating margin of 18% [19][20] Business Line Data and Key Metrics Changes - Advisory revenues for the first half of 2025 were $423 million, up 24% compared to the previous year, with significant growth in M&A and non-M&A advisory services [6][20] - Corporate financing revenues were $35 million, down 31% year over year, with 26 financings completed, raising $10 billion for corporate clients [9][10] - Public finance revenues increased by 66% year over year to $42 million, driven by strong market conditions and demand [13] - Equity brokerage revenues were $58 million, a 12% increase year over year, with robust trading activity [15] - Fixed income revenues reached $54 million, up 37% from the previous year, driven by strong activity with depository clients [16] Market Data and Key Metrics Changes - The economic fee pool for companies with sub-five billion dollars market cap decreased by 19% year over year, with a notable 61% decline in the biopharma sector [10] - The municipal financing market saw a 15% growth in par value issuance, with Piper Sandler exceeding this growth with a 66% increase in revenues [13] Company Strategy and Development Direction - The company is focused on expanding its M&A business and enhancing its technology investment banking group through strategic acquisitions, such as the planned acquisition of G Squared Capital Partners [25][26] - Investments in non-M&A advisory capabilities are gaining traction, with total revenues from these product lines growing faster than overall advisory revenues [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in market sentiment and improved client engagement, leading to a robust pipeline of announced and in-process transactions [4][9] - The outlook for advisory services is positive, with expectations for third-quarter advisory revenues to be consistent with the second quarter [9] - Management expressed confidence in the recovery of the IPO market, particularly in sectors like med tech and insurance, while noting challenges in the biotech IPO space [40][42] Other Important Information - The company repurchased approximately 85,000 shares for $21 million and paid $17 million in dividends during the quarter [23][24] - A restructuring charge of $5 million was included in GAAP results due to headcount reductions and vacated office space [18] Q&A Session Summary Question: What does a more normal bank consolidation market mean for revenue? - Management indicated that conditions for depository M&A are improving, with quicker regulatory approvals and an increase in transaction announcements expected to impact revenues positively [30][32] Question: How is the Avidity acquisition enhancing client connectivity? - Management reported that the acquisition has met expectations, enhancing relationships with senior partners and improving overall transaction activity [34][36] Question: What is the outlook for the IPO market, especially in biotech? - Management noted a general improvement in the IPO market but highlighted that biotech IPOs remain slow, requiring continued improvement before significant activity resumes [42][43] Question: How do the fixed income trading and bank M&A outlooks align? - Management clarified that the strong Q2 results in fixed income do not contradict the positive outlook for bank M&A, attributing the fixed income performance to large transactions [44][46] Question: How are conversations with sponsor clients evolving? - Management observed increased activity and a positive outlook for transactions, although caution remains in the process [55][56] Question: What is the confidence level in achieving the $2 billion investment banking target? - Management expressed confidence in achieving the target, citing diverse growth opportunities across various industry teams [57][61]

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) [Second Quarter 2025 Performance Summary](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Summary) 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](index=3&type=chunk) [Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) 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](index=6&type=chunk) - 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](index=6&type=chunk) - 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](index=6&type=chunk) [U.S. GAAP Financial Results](index=2&type=section&id=U.S.%20GAAP%20Financial%20Results) [U.S. GAAP Selected Financial Data](index=2&type=section&id=U.S.%20GAAP%20Selected%20Financial%20Data) 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)](index=3&type=section&id=Detailed%20Revenue%20Analysis%20(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](index=13&type=chunk) [Expense and Profitability Analysis (GAAP)](index=4&type=section&id=Expense%20and%20Profitability%20Analysis%20(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](index=8&type=chunk)[19](index=19&type=chunk) - Non-compensation expenses increased **18% YoY**, driven by higher reimbursed deal expenses and **$5.0 million** in restructuring and integration costs[19](index=19&type=chunk) - 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](index=16&type=chunk) [Non-GAAP Financial Results](index=5&type=section&id=Non-GAAP%20Financial%20Results) [Non-GAAP Selected Financial Data](index=5&type=section&id=Non-GAAP%20Selected%20Financial%20Data) 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)](index=6&type=section&id=Detailed%20Revenue%2C%20Expense%2C%20and%20Profitability%20Analysis%20(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](index=25&type=chunk) - The adjusted compensation ratio decreased to **62.0%** from **62.9%** in Q2 2024, reflecting operating leverage from higher adjusted net revenues[30](index=30&type=chunk) - Adjusted non-compensation expenses rose **14% YoY**, primarily due to higher reimbursed deal expenses and increased outside services costs[30](index=30&type=chunk) [Capital Management](index=6&type=section&id=Capital%20Management) [Dividends](index=6&type=section&id=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](index=28&type=chunk) - Total dividends returned to shareholders in the first half of 2025 amounted to **$87.3 million**, or **$4.30 per share**[29](index=29&type=chunk) [Share Repurchases](index=7&type=section&id=Share%20Repurchases) 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](index=31&type=chunk) - 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](index=32&type=chunk) [Additional Information](index=7&type=section&id=Additional%20Information) [Human Capital and Shareholder Information](index=7&type=section&id=Human%20Capital%20and%20Shareholder%20Information) 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](index=8&type=section&id=Forward-Looking%20Statements) 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](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) [Financial Statements and Reconciliations](index=9&type=section&id=Financial%20Statements%20and%20Reconciliations) [U.S. GAAP Results of Operations](index=9&type=section&id=U.S.%20GAAP%20Results%20of%20Operations) 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](index=10&type=section&id=Non-GAAP%20Selected%20Summary%20Financial%20Information) 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](index=11&type=section&id=Reconciliation%20of%20U.S.%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliation tables bridging U.S. GAAP to adjusted non-GAAP measures, including adjustments for investment losses, compensation, and restructuring costs

Trade Policy & Legal Challenges - A federal appeals court is hearing arguments about whether President Trump overstepped his authority to impose tariffs, potentially rendering trade deals illegal [1] - Piper Sandler suggests the administration is struggling to justify the tariffs, arguing the President is claiming national emergency powers without statutory authority [2][3] - The legality of tariffs is questioned, citing Article 1, Section 8 of the Constitution, which grants Congress the authority to impose tariffs [4][5] - The case is likely headed to the Supreme Court, with potential rulings in the coming months and a decision possibly by June [6][7] - There is a possibility that the Supreme Court may strike down the tariffs, with originalist and liberal judges potentially aligning against broad presidential authority [7][8][9] Market Impact & Investor Sentiment - The market's reaction to a potential overturning of trade deals is uncertain, with investors seemingly unconcerned about the tariffs [10][11] - The market consensus appears to be that the worst of the tariffs is over, but this view is challenged as deals are raising, not lowering, tariffs [11][12][13]

Market Trend & Outlook - Piper Sandler's technical analysis indicates the market trend is still higher, targeting 6,600 for the year-end objective [4][5] - The market is making new highs despite some negative sentiment and down AI numbers, suggesting a "hated market" [5][6] - The S&P 500 has broken out to all-time new highs, contrasting with previous concerns of a potential breakdown to 2,000 levels [3] Valuation & Market Structure - Valuations matter, but the market has been shrinking with 20%-25% fewer stocks due to share buybacks [7] - The pool of available equity has decreased from 8,000 to about 3,800, while the amount of capital has increased [9] - Historical price-to-earnings ratios may not be as relevant due to the shrinking market [8] Cyclical Stocks & Housing Market - Cyclical stocks, including homebuilders like Horton (better-than-expected results), LAR, BLD, and BLDR, are showing constructive patterns and reversing downtrends [11][12] - Housing numbers are good, suggesting a stronger consumer environment than people are thinking [10][12] Commodity & Industrial Signals - Copper is breaking out to an all-time new high, signaling a healthy economy and a meaningful pickup in the industrials [12][13]

Group 1 - Barclays suggests it is time to apply brakes on the meme stock frenzy that has driven up the prices of companies like Kohl's (KSS.US) and Opendoor Technologies (OPEN.US) [1] - Retail traders have been flocking to these previously undervalued stocks, resulting in a cumulative increase of over 69% for Kohl's and more than 440% for Opendoor since July [1] - The rapid rise in stock prices raises concerns about a potential sudden decline, reminiscent of the speculative frenzy surrounding GameStop (GME.US) during the pandemic [1] Group 2 - Barclays' equity frenzy indicator, which quantifies investor sentiment through options data, has surged to its highest level since December of last year [3] - Analysts Stefano Pascale and Anshul Gupta have been warning since early July about excessive market enthusiasm, citing signs of a bubble market [3] - Pascale emphasizes that while many investors recognize the bubble, they struggle to identify which stocks will be the "losers" when the market corrects [3] Group 3 - Piper Sandler identifies Celsius Holdings (CELH.US) and NRG Energy (NRG.US) as suitable candidates for a dispersion trading strategy, given their significant price increases of 68% and 71% respectively this year [4] - Chief strategist Steve Sosnick notes that current market activity resembles the peak of the meme stock frenzy in 2021, but questions the effectiveness of dispersion trading in this context [4] - Sosnick highlights the challenge of predicting when a bubble will burst, stating that bubbles can persist for a long time, especially with liquidity injections in the market [4]

Market Overview & Trends - Small cap market shows signs of life with a good month-to-date performance versus large caps [2] - The small cap market is considered extraordinarily cheap with a good underlying economic environment [3] - Expectation of the Federal Reserve cutting rates in the back half of the year could act as a tailwind [3] - M&A activity has been quiet this year but backlogs are building, expected to materialize in the second half of the year [4] - Consumer spending has been strong, particularly on air travel, but a handoff to other sectors like tech, software, and semiconductors is anticipated [5][6] - Aerospace and defense sectors are performing well, with expectations of more IPO activity in the space sector [7] Company Specific Opportunities - Cheesecake Factory is highlighted as a Gen Z hotspot with good traffic trends expected throughout the summer [8] - Piper is expected to be an M&A story, benefiting from general capital markets recovery and a solid municipal bond business [9] - Site Time is mentioned as a company benefiting from increased connectivity demands within data centers, driven by AI development [15] Risk Factors & Mitigation - Companies have largely adjusted to high interest rates, which have been in place for almost 3 years [10] - Domestic focus of small caps is seen as an advantage, as companies have tightened supply chains and focused on the US market after previous tariff challenges [12][13] - Prior adjustments to semiconductor sourcing mitigate concerns about current tariffs, though future tariffs could potentially cap growth [17][18]