Canaccord Genuity Group Q3 2024 Earnings Call Transcript

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February 8, 2024

There are 6 speakers on the call.

Operator

Good morning, ladies and gentlemen. Thank you for standing by. I'd like to welcome everyone to the Canaccord Genuity Group Inc. Fiscal 20 24 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise.

Operator

As a reminder, this conference call is being broadcast live online and recorded. I would now like to turn the conference call over to Mr. Dan Daviot, President and CEO. Please go ahead, Mr. Daviot.

Speaker 1

Thank you, operator, and thanks to everyone joining us for today's call. As always, I'm joined by Don McFaden, our Chief Financial Officer. Today's remarks are complementary to our earnings release, MD and A and supplemental financials, copies of which have been made available for download on SEDAR Plus and on the Investor Relations section of our website atcgf.com. Within our update, certain reported information has been adjusted to exclude significant items to provide a transparent and comparative view of our operating With that, let's discuss Q3 fiscal 2024 results. During our 3rd fiscal quarter, the major benchmark indices enjoyed positive performances driven by increased investor confidence that we are nearing the end of the rate hiking cycle.

Speaker 1

Although global economic growth remains weak, We've been pleased to see headline and core inflation begin to come down and stronger corporate profits are helping to lift stock prices. Against this backdrop, our wealth businesses continued to deliver stable and growing earnings. Our capital markets businesses experienced an uptick in activity levels in both new issues and M and A when compared to the previous fiscal quarter, albeit still significantly muted compared to historical levels. Firm wide revenue improved by 15% sequentially and by 2% year over year to $390,000,000 This brings our fiscal year to date revenue to $1,100,000,000 which is 1% lower than the same period last year. Our Wealth Management and Capital Markets businesses were both earnings positive in the 3 month period.

Speaker 1

Excluding significant items, firm wide pretax net income was $45,000,000 which translates to diluted earnings per common share of $0.20 for the fiscal quarter, a year over year improvement of 25% and our best quarter of this fiscal year. Compensation expense declined by 7% compared to the same quarter a year ago, Partially related to changes in the value of certain stock based compensation awards. Was 57%. We continue to manage our balance sheet carefully in this reduced revenue environment As we manage through inflation, increased supplier and system costs, several planned office relocations and additional investments to advance our technology and compliance infrastructure. I will also note that our Board of Directors has approved a quarterly common share dividend of $0.085 reflecting their strong confidence in the stability of our Wealth Management Businesses.

Speaker 1

On a consolidated basis, our Global Wealth Management Businesses Earned revenue of $195,000,000 for the 3 month period. This brings the fiscal year to date revenue contribution to $573,000,000 which is 12% higher than the same period of last year. The value of firm wide client assets increased by 5% year over year to 99.2 $1,000,000,000 While we are still modestly below peak levels, client assets in each of our geographies improved on a year over year and sequential basis. We ended the quarter with modestly positive net flows in each of our businesses. Our organic growth initiatives have helped us drive strong gross inflows, which were unfortunately offset by some outflows as we continue to see clients access their assets for their own cash requirements in the current environment.

Speaker 1

The adjusted pre tax net income contribution from this division for the 3 9 month periods increased by 4% 20% respectively, bringing the fiscal year to date contribution to $106,000,000 Our U. K. Wealth Management business contributed 52% of the revenue and 67% of the adjusted pre tax net income earned in this division during the 3 month period. This business is on track to deliver record full year revenue and adjusted net income, reflecting the excellent progress against our efforts to improve synergies and drive organic growth. Looking ahead, we continue to advance our organic growth initiatives and we are also looking forward to completing our previously announced acquisition of Intelligent Capital in the current fiscal quarter.

Speaker 1

Our team is also augmenting our organic growth by pursuing modest strategic opportunities to become an even more holistic wealth manager. In addition, we've also begun to recruit teams to our industry leading platform with a number of advisors or planners having agreed to join in a reasonable pipeline of additional recruits. Revenue in our Canadian Wealth Management business was $77,000,000 which is in line with the same period of last year and 9% higher than the 2nd fiscal quarter. Transactional revenue in this business remained below historic levels, but we are pleased to see an uptick off the low in our 2nd fiscal quarter. VBASE revenue was 51%.

Speaker 1

On an adjusted basis, Pre tax net income of $11,000,000 was the strongest quarterly contribution from this business in the current fiscal year. Recruiting activity in Canada remains on track. We welcome 2 new teams in the Toronto region and our recruiting pipeline remains robust in all our branches. Our Australia wealth business delivered its strongest quarterly results for the current fiscal year with revenue of $16,000,000 increasing by 5% sequentially on improving commission and new issue revenues. Managed assets in Australia reached a record of $6,100,000,000 an increase of 17% year over year.

Speaker 1

The adjusted pre tax net income contribution of $1,500,000 is below the peak levels achieved in fiscal 2022, but 28% higher year over year. While improving, our net income continues to be impacted by continued planned investments that we are making to support growth in this business. We recently welcomed new advisors in Perth, Melbourne and our new office in Brisbane, And our recruiting activities in this region are positively contributing to the growth in fee based assets. These additions will positively add to revenue in the upcoming quarters. The potential for rate cuts over the coming year may be a headwind to interest revenue, which has accounted for 20% of our year to date revenue in our Wealth Management division.

Speaker 1

Traditionally, we would expect improving new issue activity in Canada and Australia to provide a substantial offset to any decline in this segment. Our Global Capital Markets division Return to profitability in the 3rd fiscal quarter and all geographies contributed positively. Consolidated revenue of $190,000,000 for the 3 month period was down 4% year over year, but increased 31% sequentially, driven by improved contributions from our U. S. And Canadian businesses.

Speaker 1

The quarterly revenue mix in this division was similar to the first half of the fiscal year, but we had a notable uptick in advisory completions driven by the stability in the market and improving liquidity. Revenue from advisory activities was flat compared to the Q3 of last year, but improved by 62% from the low in our 2nd fiscal quarter to $75,000,000 which is the strongest quarterly contribution this fiscal year. 58% of total advisory revenue was contributed by our U. S. Business, which continues to perform well in the technology and consumer sectors.

Speaker 1

Our UK business also experienced stronger completion activity during the quarter and contributed $21,000,000 or 28 percent of total advisory revenue. We are pleased to see increased contribution from the results team in the UK, which joined us in 2022 and brings a strong complement to our existing capabilities in the mid market technology and healthcare sectors. Our Australian business, which has not historically had a focused M and A practice, is now increasingly targeting advisory mandates and hiring dedicated resources to support this practice. We expect to see an improving M and A contribution from this region as we build out our capabilities. Consistent with broader industry sentiment, we believe we have passed the trough of activity levels in the advisory segment, but liquidity, market stability and valuation levels will dictate how quickly we return to historic levels.

Speaker 1

New issue activities have remained below normalized levels, But the revenue contribution from this segment improved by 6% year over year to $40,000,000 which was the strongest quarterly contribution of this fiscal year. The metals and mining sector continues to be the most active, primarily led by our Australian and Canadian businesses and we are also seeing excellent coordination across CG Geographies for distribution of new issues. Early into this calendar year, we continue to see increasing activity levels in of our geographies, but it is still too early to predict a return to pre pandemic levels given the uncertainties impacting the broader capital markets. And finally, principal trading revenue for the 3 month period decreased by 15% from Q3 of last year, but was up 47% from our 2nd quarter, reflecting higher activity levels in our institutional equity group, which tend to increase at the end of the calendar year. As a percentage of revenue, total expenses excluding significant items for the Q3 decreased by 4.9 percentage points.

Speaker 1

The previously mentioned changes in the fair value of Share based awards granted in prior periods contributed to a substantially lower compensation ratio in this division and this was particularly evident in our Canadian business. You will also recall that we undertook a substantial headcount reduction in this business earlier in the year, which brings me to highlight the improved efficiencies. Fiscal year to date revenue per employee in Canadian Capital Markets has improved by 76% year over year. In all, we are encouraged by improving sentiment and activity levels and looking forward to executing on a healthy pipeline of business as we support our clients' success. While I do not believe that we are entering into a normalized operating environment, Barring any major surprises in the macro backdrop, I do believe that we are at the beginning of a gradual transition back to normal.

Speaker 1

Markets are still navigating geopolitical and economic uncertainty, which has implications for the timing and quantity of rate cuts, a long awaited recovery in IPO and new issue activities and a more accommodating environment for advisory completions. Looking at how our business and talented professionals in all CG Geographies support one another and our broader business strategy Through the best and worst environments, I believe we are very well positioned to capitalize on the opportunities and maintain a strong market position, delivering profitable growth and improved value for our shareholders. With that, Don and I will be pleased to take your questions. Operator, can you please open the lines?

Operator

Thank you. Our first question comes from Jeff Fenwick from Cowen. Please go ahead. Your line is open.

Speaker 2

Hi, good morning everyone.

Speaker 1

Good morning, Jeff.

Speaker 2

Dan, I appreciate your comments there on Canadian Capital Markets at the end and was maybe just hoping for a bit of incremental color there. I mean it was a pretty significant change you did make in the headcount there. What was the sort of the mix there across those reductions? Was this about operational efficiency in terms of the back office? Was it maybe some reduction in emphasis in certain areas be it trading or banking or any color you can offer up there?

Speaker 1

Yes. I mean the easiest thing to say Jeff We didn't really cut into the bone. I don't even think we cut into the muscle, so to speak. So obviously in a Vibrant market, you tend to hire into a vibrant market when things are a little slower, I think you can cut around the edges. It was a big cut.

Speaker 1

At the end of the day, you can see our headcount Canada is down by about 50 people. I'd say it was primarily front office driven. It wasn't a back office cut. We did take out certain areas that we didn't feel were productive. So some of the cuts, for example, in our fixed income group would have been more substantial than some of our other groups.

Speaker 1

So but we really didn't cut any capabilities. I'd say we just kind of a heavy trimming around the edges is Probably the way I define it. Does that answer your question, Jeff?

Speaker 2

I think so. And then a follow on from that then is it I think about compensation as a percent of revenue, Should it sort of revert or run around the long term average then? We're not talking about a change necessarily in

Speaker 1

the comp? No, no. I don't want to say our compensation ratio is covenant with our shareholders, but the closest thing you can get to that absent weird markets. So we don't see a material change in that.

Speaker 2

Okay. And then maybe within Canada, we could shift over to the wealth management. It does sound like you're adding some advisors here and there. You do continue to refer to desire to shift towards more of the fee based product that's there and take away some of the volatility. It's always kind of hard to gauge the success because the commission revenue shifts around the percentage relative percentages, right?

Speaker 2

So Can you sort of speak to like what are you actually doing there to try and evolve that within Canada? Is it changes to the product mix that you're offering the advisors? I know it's not always easy to change their behavior.

Speaker 1

Yes. Good question. At some point, independent of this, we'll set you up with our wealth management folks and they can walk you through it in more detail. But maybe just as a background, just then I'll purposely use broad numbers, so because we don't disclose all of these numbers. But if you think of you'll see a couple of things in our public statements.

Speaker 1

First of all, you'll see that over a quarter of our assets are discretionarily managed. That's in our supplement. So obviously those are all fee based assets, Managed Assets. So that's over $10,000,000,000 of our almost $40,000,000,000 assets. You can see that.

Speaker 1

Number 2, when you look at are and we do disclose that 52% or over 50% is fee based. But that 52% is 52% of revenue. There's several elements of revenue and we kind of disclosed that as well that there's fee based asset revenue, there's commission based asset revenue, there's interest revenue, there's new issue revenue. So when you start thinking about Absent the new issue revenue and absent the interest revenue, which these days is significant as you can imagine, We start looking at what people are paying us to manage their assets, in other words, the commission based revenue and the fee based revenue. The fee based revenue would be the significant majority of it, when you of those revenues.

Speaker 1

Now we don't disclose that in a way to give you that, but perhaps later I can walk you through the color associated with that. But a huge proportion of our commission and fee based revenue is really fee based revenue, not commission based revenue. So in terms of what we're doing to do that, I mean, obviously, most of the advisors that we recruit and we've recruited almost 60 teams of advisors. Most of those advisors are all fee based advisors, first of all. So it's a natural kind of bias for those numbers to increase.

Speaker 1

Secondly, we've taken a much stronger approach on financial planning and putting up plans in front of people. That tends to end up more fee based than commission based. We've done over a 1,000 financial plans this year for our clients. And 3rd, we're giving our clients our advisors the tools to continue to grow their business and they've been immensely successful at growing their business. We've seen net new assets grow in Canada.

Speaker 1

We've seen gross new assets grow a lot, but these are difficult times. So people are pulling some money out of their from time to time, just to fund their lifestyle. We're not losing the clients. So it seems like it's working and I think in a more vibrant market, Jeff, it even works better. Hopefully that answered some of your questions.

Speaker 2

I appreciate that. That's very good color. Thanks. I'll re queue.

Operator

Thank you. Our next question comes from Rob Goff from Equin. Please go ahead. Your line is open.

Speaker 3

Thank you very much. And congratulations on both the revenue achievement and the efficiencies on the quarter. I know we already hard fought 1 Gains.

Speaker 1

Feels better.

Speaker 3

Yes, it looks better. Just perhaps following up on some of the questions from Jeff there. With respect to where you are currently with the efficiency gains, in the scenario you painted with a gradual transition to more normalized activity levels, would you be have sufficient resources on hand, I. E. A bit of extra capacity to handle that or do you foresee needing to add resources?

Speaker 1

Yes. I'll take a step back and then I'll answer your question, Rob. Jeff asked about comp ratio obviously and that won't change materially. So if we have more resources Then if we have more revenue because the environment is better, either we'll pay our people more or we'll hire more people, But that ratio won't change. And I think we're in an environment and I appreciate this, we've got a pretty good reputation here.

Speaker 1

If we needed to hire people, We can hire people. Like I'm not worried about that. I don't think that will be a constraint. So one way or another, Either people will work harder and make more or will hire more people. I'm not worried about it either way.

Speaker 3

Very good. And you've talked in the past about the countercyclical nature of advisory business versus underwriting business. Could you and we saw it on the quarter. Could you talk to your outlook in terms of both underwriting pipelines and advisory pipelines?

Speaker 1

Yes, great question. One of which I can answer, one of which I can't. We've got a pretty Obviously, we've got a pretty sophisticated CRM and like any good investment bank, we would track our M and A revenue pretty closely. And there's I'm not saying you can track it perfectly 12 months in advance, but 3 months in advance you can and 6 months a little less. So We understand where M and A revenue is, absent major changes in the market.

Speaker 1

The problem with M and A revenue and why we exceed or miss in a particular quarter is because something gets delayed by a week or 2 weeks. Like it's not because it vanishes or blows up. And that'll be the problem this upcoming quarter. I could tell you that the dollar, what we've closed within a month of quarter end, but I can't tell you right at quarter end. So we've got a pretty good perspective.

Speaker 1

And the pipeline is very similar to where it was this quarter, Maybe with some upside surprises depending on timing of closing of certain transactions, the broader pipeline as I look forward for the year continues to be robust, continues to be strong from where we are today and an uptick from where we are today. But again, really hard to Nail it down to a day, which is the day of a quarter end, and whether a particular transaction closes then or the other day. But over the course of a rolling average, generally moving up to the right. So we feel pretty good about that. Now that assumes no major sociopolitical, economic changes.

Speaker 1

It assumes liquidity stays open in the market because it is pretty open as you know right now. So in the current environment, we feel pretty strong on that. The new issue pipeline and the underwriting activity, you have as good as perspective on that as likely as we would, we have a robust pipeline of people who want to raise money, no doubt. And I think as we see The smaller and mid cap stocks start to perform better because even though the market is record highs, it's really weighted to very, very large cap stocks, as you know. The mid and small cap stocks have kind of relatively substantially underperformed.

Speaker 1

But as those stock prices come up and as the market does better, We'll see more new issuance. The uranium sector is a good example. I mean, lots and lots of demand out there. The companies didn't like stock price, uranium stocks went up a couple of weeks ago and all of a sudden you see a bunch of uranium deals. That's not rocket science.

Speaker 1

That's kind of obvious. So I think we'll continue to see a pretty robust pipeline of new issue activity. It's just impossible to predict. So it's really hard for me to sit here today and tell you our underwriting revenue is going up and it's going to be great next year. It's really a function of where the market is.

Speaker 1

And If I have to draw a line and make it go up or go down, I'd make it go up, but I'd be guessing a little bit.

Speaker 3

Very good. May rate cuts be your friends?

Speaker 1

May rate cuts be all our friends? Yes.

Speaker 3

Thank you.

Operator

Thank you. Our next question comes from Stephen Bohlen from Raymond James. Please go ahead. Your line is open.

Speaker 4

Thanks. Good morning, guys. First, appreciate your comments on advisory in general. Maybe if you just talk about The pipeline in the U. K, you mentioned some a couple of things in your comments.

Speaker 4

But the pipeline there, Is this a pent up demand quarter or is that particular segment in the UK, is this level sustainable because it was a marked improvement?

Speaker 1

Yes, the M and A pipeline in particular you're asking?

Speaker 4

Yes, in the UK.

Speaker 1

Yes, I mean, again, our UK business is our smallest of our Capital Markets It's an important business. It's critical to our global franchise. We've got we're interactive there globally, both on the tech and the mining and healthcare side. It's really part of our business. So when you look at it and say, is that particular geography going to do better 1 quarter over another when it's kind of broadly integrated in our broader business, it's really hard to predict.

Speaker 1

It was a robust quarter in Q3. Will we do the exact same revenue in Q4? I'd like to think so, but that could be a stretch. But we continue to have a bunch of activity. The good news about the UK is you know that we bought this team over a year ago called results.

Speaker 1

And they're well integrated in the firm. They're well integrated into our U. S. M and A practice as well and they're starting deliver. I mean, we bought them at a time when M and A was kind of becoming more difficult and we're finally starting to see the benefits of that and those results.

Speaker 1

But again, and I'm sorry to do this to you, really hard to predict quarter over quarter. Again, if you're asking me to draw a line, it's not going up to the right for a quarter, but over a year probably is. That's the best I can do at this stage.

Speaker 4

Okay. And maybe just on the UK Wealth Management business, one of the big you've seen over the past few quarters is definitely the interest costs

Speaker 1

in the

Speaker 4

MD and A and mentions some of the loans that you've taken out for acquisitions, I guess. Is that where is that in terms of priority of getting those costs down with the interest rate environment, is that a focus on your capital allocation?

Speaker 1

Not really. I mean, we've got a £200,000,000 loan, a little bit less than that outstanding, but we also have a lot of cash in that business. So our net debt, Don will give you the exact number in a second. I don't want to misquote it. So our net debt number is lower because we do have robust balance sheet over in our UK Wealth Business.

Speaker 1

But we're using that money to buy little things like intelligent capital and other things. So that money does get deployed. We're not the leverage in that business is negligible when you look at our net debt relative to our EBITDA. So We're not worried about it. The cost of debt, although increasing because it's floating is not really material relative to the size of our EBITDA in the business.

Speaker 1

And you know that our interest income has also gone up a lot. So there's a natural hedge in that business, which is why we left it floating in the 1st place when we did it, because we do earn a lot of interest income that offsets that. So we're not really looking at taking that down in any material way. In fact, we pursued our bank facility there recently And the business continues to perform pretty strongly. Don, our net debt number in the UK?

Speaker 5

Yes. If we just look at the loan balance versus excess cash, we're certainly sub £150,000,000 On that front, probably closer to £140,000,000 but it's regular traditional commercial bank loan type debt with fairly standard in form and certainly has a place in the capital structure for that particular unit.

Speaker 4

And just my final question, Dan, and you may guess what it is. Certainly, the U. Or well, The foreign jurisdiction that had the regulatory issue that was announced, has there been any update or any change in that?

Speaker 1

No, I wish I could report something to you, but I can't. No material changes. People operate under their own timeline.

Speaker 4

All right. Appreciate that. Thanks guys.

Operator

Thank you. Our next question comes from Graham Ryding from TD Securities. Please go ahead. Your line is open.

Speaker 4

Hi. Good morning. The comp ratio, I just noticed that it seemed to be much lower sort of across your wealth platforms relative sort of that historical range. Have there been any deliberate actions in your part to bring that wealth comp ratio down? Or is this entirely the fair market value adjustment from stock based comp that we're seeing in the quarter and also year to date?

Speaker 5

Hi, Graham, it's Don. There's been no changes in our comp structure and our payout models and so forth. They've been consistent this year, consistent with prior years. I think and as we've talked about before, you have to kind of it's difficult to sort of isolate a particular quarter and there's going to be some natural noise in any particular quarter's comp ratio, so you kind of have to extend it over a period of time. But the uptick in interest revenue makes that comp ratio look a little lower than it would be otherwise just because There's obviously a different structure

Speaker 4

around

Speaker 5

the interest revenue versus regular fee based type commission revenue.

Speaker 4

Okay. That makes sense. Can you give us an idea of what the comp ratio would have been this quarter or year to date if we didn't have the noise around the stock based comp adjustments?

Speaker 5

Well, we don't really get into that detail. I think just generally, there is a portion of the stock based compensation that does is tied to market. So there is some component of that.

Speaker 3

It

Speaker 5

wasn't so much this particular quarter, it would be sort of more over the year to date 9 month period.

Speaker 4

Is there any potential true upcoming in Q4 on the comp ratio side or Should we sort of been taking 60%, 61% as you're sort of

Speaker 5

I would continue to think in that we've always settled out in By the time we get to the end of the year, we've always settled out into that 60%, 61% type range. So I would continue to think along those terms. There's not, yes, I would continue to think along those terms.

Speaker 4

So some sort of catch up in fiscal Q4 then, is that the

Speaker 5

right We may see that. Yes, it will obviously depends on a number of factors, but

Speaker 4

Yes.

Speaker 1

Okay.

Speaker 4

Just jumping to your interest income on the wealth side. It seemed to be Like on a relative basis, you're getting more of a benefit here in your U. K. Platform from higher interest income, more so than we're seeing in Canada. Is there something structurally different here between the two platforms and the sort of degree of interest income that they would earn?

Speaker 1

And then

Speaker 4

I guess how should we think about Well, the difference is next year.

Speaker 1

Yes, in Canada, we self clear, Right, clients cash, we have that cash, we access that cash. Our interest income in Canada is primarily a function of the margin we make available to our clients. So as our margin balances go up, Our interest income goes up. As our margin balances go down, our interest income comes down. So it's really a function of how much our wealth clients are drawing down on their March.

Speaker 1

That's the biggest thing. So you see our interest income not going up as much as because people just don't have as much margin in their accounts because they don't want to have as much margin because interest rates are higher. So that's the difference. The UK is different, right? The UK, we take a spread effectively on cash that's in people's accounts, we pay them a certain interest rate, we use that cash to make a certain interest rate.

Speaker 1

So that's much more linear, a much more linear

Speaker 5

calculation. Yes, that's right. We don't do margin lending in the UK versus Canada. So that is quite a different structural difference between the two units.

Speaker 4

Okay. That's the piece. That makes sense. And my last question, if I could. Just you made some commentary around you're seeing some outflows on your wealth platform, I think, more so in Canada because it did look like the Canadian wealth growth was softer than I expected quarter over quarter, year over year.

Speaker 4

Anything you can quantify there in terms of Percentage of AUA that you're seeing from net outflows in your wealth platform?

Speaker 1

No, there's actually net inflows in Canada. We've seen net inflows. What I was referring to on the outflows was gross outflow. So our gross inflows minus our gross outflows results net inflows, our inflows are very strong and our outflows are stronger than I would like. So it was kind of a hidden positive comment that if outflow slowed down because people stopped needing their money to pay down their mortgage or do other things, then there's an opportunity for even better net inflows.

Speaker 1

In all of our markets, Canada, Australia and the UK, we've seen net inflows this year.

Speaker 4

Okay. Okay. That's it for me. Understood. Thanks.

Speaker 4

Great questions.

Operator

Thank you. There are no further questions. I will turn the conference back to Mr. Daviot.

Speaker 1

Okay. Well, that concludes our 3rd quarter Really appreciate everyone having looked through this and joining us today. Our next update is going to be in June. That's our Q4. We Later as you know, because it's our fiscal year end results.

Speaker 1

And as always, Don and I are available for follow-up questions. So, operator, thank you and then you can feel free to close the lines.

Operator

Thank you, ladies and gentlemen. This concludes the conference call for today. Thank you for participating. Please disconnect your lines.

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Key Takeaways

  • During Q3 fiscal 2024, firm-wide revenue rose to $390 million (+15% sequential, +2% YoY) and pretax net income reached $45 million (EPS $0.20, +25% YoY), marking the best quarter of the year.
  • Global Wealth Management reported $195 million of Q3 revenue (+12% YoY YTD), AUM of $99.2 billion (+5% YoY) with modest net inflows, and the Board approved a quarterly dividend of $0.085.
  • Global Capital Markets returned to profitability with $190 million of Q3 revenue (–4% YoY, +31% sequential), led by a 62% sequential jump in advisory fees and stronger new issue activity.
  • Disciplined cost management drove a 7% YoY decline in compensation expense, a 57% firm-wide compensation ratio, and a 4.9 ppt reduction in non-comp expense ratio, boosting Canadian capital markets revenue per employee by 76% YoY.
  • Management expects a gradual return to normalized market conditions as rate hikes wind down, while advancing technology investments, completing the Intelligent Capital acquisition, and recruiting advisors to fuel future growth.
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Earnings Conference Call
Canaccord Genuity Group Q3 2024
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