Raymond James Financial, Inc. Q3 FY2025 earnings call

• The firm achieved its 150th consecutive quarter of profitability. • Topped J.D. Power rankings as #1 wealth management firm for advised investor satisfaction. • Fiscal third quarter net revenues $3.4 billion, up 5% YOY; pretax income $563 million, down 13% YOY (impacted by $58 million legal reserve). • YTD fiscal 2025: Record net revenues $10.3 billion, record pretax income $1.98 billion, up 10% and 5% YOY. • Private Client Group ended with $1.57T client assets under administration, up 11% YOY. • Recruited financial advisers with $336M tailing 12 production and $52B client assets; total client assets recruited over 12 months over $60B. • Invested in platforms, technology, and private wealth adviser program. • Capital Markets pipeline strong, Asset Management had strong net inflows, Bank saw loan growth and strong credit quality.

Private Client Group: Ended the quarter with a record $1.57 trillion of client assets under administration, representing year-over-year growth of 11%. Quarterly domestic net new assets equaled $11.7 billion, a 3.4% annualized growth rate. Capital Markets: Generated quarterly net revenues of $381 million and a pretax loss of $54 million. Net revenues grew 15% year-over-year but declined 4% sequentially. Asset Management: Generated record pretax income of $125 million on net revenues of $291 million, largely due to higher financial assets under management and strong net inflows into PCG fee-based accounts. Bank: Generated net revenues of $458 million and pretax income of $123 million. Sequential net interest income grew 5%, with net interest margin expanding to 2.74%.

• Expect fourth quarter asset management and related administrative fees to be higher by ~9% over third quarter. • Optimistic about recruiting pipeline converting, though notes lag in NNA impact. • Expect investment banking environment to be better in next two quarters than prior two. • Has ample capital to support organic growth, acquisitions, and share repurchases similar to third quarter.

• Unpredictability of litigation outcomes related to legal matter reserve. • Competitive recruiting environment with PE-backed roll-ups offering high valuations. • Macroeconomic uncertainties and regulatory developments impacting business. • Volatility in capital markets affecting segments like Capital Markets.

Q: Michael Cho asked about recruiting pipeline and June exit rate.

A: Paul Shoukry said recruiting activity is accelerating, with teams hosting more events and meeting more advisers. Transition teams are invested in to ensure seamless transitions.

Q: Dan Fannon asked about NNA growth.

A: Paul Shoukry noted recruiting pipeline is accelerating but conversion to NNA has a lag as new advisers bring over clients and assets.

Q: Daniel Fannon asked about fixed income outlook.

A: Paul Shoukry said fixed income brokerage is focused on depositories, banks, and credit unions; spread volatility helps SumRidge but spreads have been tight.

Q: Devin Ryan asked about cash balances and Canadian investment.

A: Jonathan Oorlog said cash balances have seasonal factors but June saw growth. Paul Shoukry said Canada is an important market with investment in digital transformation.

Q: Kyle Voigt asked about competitive recruiting environment.

A: Paul Shoukry said environment remains competitive with PE-backed roll-ups at an inflection point.

Q: Bill Katz asked about M&A strategy and comp ratio.

A: Paul Shoukry said disciplined in M&A, looking for cultural, strategic fit, and valuation. Jonathan Oorlog discussed pretax margin target.

Q: Alex Blostein asked about wealth platform leverage and private markets.

A: Paul Shoukry said private markets penetration has headroom, driven by client demand, not quotas.

Q: Jim Mitchell asked about fee-based flows and recruiting.

A: Paul Marone Reilly said fee-based flows stronger than overall, recruiting broad-based across options.

Q: Michael Cyprys asked about investment banking and digital assets.

A: Paul Shoukry said investment banking outlook improved with less shock, and digital assets are monitored with regulatory focus.