Piper Sandler Companies Q4 FY2025 earnings call

• The business performed well in 2025 driven by strong execution and improving market conditions. The fourth quarter had record adjusted net revenues of $635 million, a 27.2% operating margin, and adjusted EPS of $6.88. The full-year adjusted net revenues were $1.9 billion, with a 21.9% operating margin and adjusted EPS of $17.74.
• Adjusted net revenues grew 22% in 2025, with advisory revenues exceeding $1 billion, representing 55% of total net revenues. The Investment Banking MD headcount was grown to 187, and the acquisition of G2 was completed to expand the technology investment banking practice.
• Corporate investment banking had strong fourth quarter revenues due to robust M&A and debt capital markets activity. The yearly corporate investment banking revenues were $1.3 billion, a 28% increase. Advisory revenues rose 44% in the fourth quarter and reached $1 billion for the year, a 28% increase from 2024. 135 advisory transactions were completed in 2025, 16% more than the prior year.
• The public finance business had favorable market conditions with record issuance levels, generating $146 million in revenues for the year. Equity brokerage finished 2025 at record highs with $230 million in full-year revenues. Fixed income had $203 million in revenues for the year, a 9% increase from the prior year.
• $239 million was returned to shareholders in 2025 through share repurchases and dividends. The board approved a special cash dividend of $5 per share related to 2025 results and a quarterly cash dividend of $0.70 per share. A four-for-one forward split of the common stock was also approved.

In the fourth quarter, corporate investment banking generated $469 million in revenues, significantly higher than the prior year. For the full year, corporate investment banking revenues totaled $1.3 billion, a 28% increase from the previous year. Advisory revenues in the fourth quarter were $403 million, up 44% year-over-year. For the full year, advisory services generated $1 billion in revenues, a 28% increase from 2024. The public finance business had $39 million in revenues for the quarter, flat sequentially and down 5% from the prior year quarter, and $146 million for the year, the second strongest year on record. Equity brokerage finished 2025 at record highs, with $64 million in fourth quarter revenues and $230 million in full-year revenues. Fixed income generated $48 million in revenues for the fourth quarter, down from the prior year, and $203 million for the year, a 9% increase from the prior year. Adjusted net revenues in the fourth quarter were $635 million, with a 27.2% operating margin and adjusted EPS of $6.88. For the full year, adjusted net revenues were $1.9 billion, with a 21.9% operating margin and adjusted EPS of $17.74.

• Public finance market conditions are expected to remain favorable in 2026 with similar issuance volumes to 2025 but more normalized seasonality.
• Equity brokerage revenues in 2026 are expected to be similar to those in 2025.
• In fixed income, clients are anticipated to be more active in 2026 in anticipation of further rate cuts and due to a robust M&A environment.
• There is an anticipated modest increase in non-compensation expenses in 2026, with the relocation of the New York office being a notable driver. The full-year non-compensation expense ratio in 2026 is expected to be similar to the 2025 level with some quarterly variability depending on expense timing.
• The full-year tax rate is expected to be around 30% excluding the impact from the vesting of restricted stock awards.

Q: Good morning, everyone. I want to start on the advisory business. Talk about the activity with sponsored clients and bank M&A impact on revenue.

A: Thanks, Devin. Relative to the 28% growth, financial services and healthcare teams had good years in 2025. The sponsor business outperformed, and the diversified services and industrials team had a strong year. Bank M&A was a contributor but depositories are only half of financial services, so hard to move the top line meaningfully.

Q: Talk about capital allocation and M&A opportunities for 2026.

A: Capital has been consistent. There may be more chance to lean into buybacks as liquidity improves. There's optimism about the M&A pipeline as boutiques and sectors recover.

Q: Any other businesses being looked at for expansion?

A: Focused on continuing penetration in products like restructuring, private capital advisory, and debt capital advisory. Also evaluating opportunities in equities with private stock trading.

Q: Mark to market on deals under $1 billion and momentum in 2026.

A: More focused on middle market volume. The M&A market in the middle market range accelerated in the back half of 2025, and we'll watch the mix.

Q: Talk about advisory pipeline and 2026 cadence.

A: Backlogs are good. Seasonality is typical, with Q1 being the toughest to predict.

Q: On municipal and trading environment for 2026.

A: Municipal market remains solid with supply and demand factors. Spreads are tight causing pause for investors. Bank M&A repositioning is likely to continue in 2026.