Piper Sandler Companies Q2 2025 Earnings Report

Piper Sandler Companies EPS Results

• Actual EPS: $2.95
• Consensus EPS: $1.99
• Beat/Miss: Beat by +$0.96
• One Year Ago EPS: $2.52

Piper Sandler Companies Revenue Results

• Actual Revenue: $405.39 million
• Expected Revenue: $349.40 million
• Beat/Miss: Beat by +$55.99 million
• YoY Revenue Growth: +13.40%

Piper Sandler Companies Announcement Details

• Quarter: Q2 2025
• Date: 8/1/2025
• Time: Before Market Opens
• Conference Call Date: Friday, August 1, 2025
• Conference Call Time: 8:00AM ET

Piper Sandler Companies (NYSE:PIPR) operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. It offers investment banking services and institutional sales, trading, and research services for various equity and fixed income products; advisory services, such as mergers and acquisitions, equity and debt private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. It also provides public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, housing, and transportation sectors. In addition, the company offers equity and fixed income advisory and trade execution services for institutional investors, corporations, and government and non-profit entities. Further, it is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.

Piper Sandler Companies Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q2, Piper Sandler delivered $405 million in adjusted net revenues, an 18.1% operating margin, and $2.95 EPS, all higher year-over-year.
• Positive Sentiment: Advisory revenues rose 12% to $206 million on 71 transactions, led by Services & Industrials, and management expects Q3 advisory revenues to be consistent with Q2.
• Negative Sentiment: Corporate financing revenues declined 31% to $35 million, driven by sector-specific headwinds including a 19% drop in the sub-$5 billion fee pool and a 61% fall in biopharma.
• Positive Sentiment: Public finance and brokerage segments set records: municipal financing up 66% to $42 million, equity brokerage up 12% to $58 million, and fixed income up 37% to $54 million.
• Positive Sentiment: Piper Sandler returned $189 million to shareholders in H1 via repurchases and dividends, and increased its quarterly dividend by $0.05 to $0.70 per share.

Presentation

[Operator]

Morning, and welcome to the Piper Sandler Company Second Quarter twenty twenty five Earnings Conference Call. Today's call is being recorded and will

[Operator]

I'll begin by turning the call over to Kate Winslow. Please go ahead.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

Thank you, operator. Good morning, and thank you for joining the Piper Sandler Companies second quarter twenty twenty five earnings conference call. Hosting the call today are Chairman and CEO, Chad Abraham our President, Deb Schoneman and CFO, Kate Klune.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

Earlier this morning, we issued a press release announcing Piper Sandler's second quarter twenty twenty five financial results, which is available on our website @piperSandler.comslashearnings. Today's discussion of the results is complementary to the press release. A replay of this call will also be available at that same website later today. Before we begin, let me remind you that remarks made on today's call may contain forward looking statements that are not historical or current facts, including statements about beliefs and expectations and involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's reports on file with the SEC, which are available on our website at pipersandler.com and on the SEC website at sec.gov.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

Today's discussion also includes statements regarding certain non GAAP financial measures that management believes are meaningful when evaluating the company's performance. The non GAAP measures should be considered in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these non GAAP financial measures to the most directly comparable GAAP measure is provided in our earnings release issued today. I will now turn the call over to Chad.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Thank you, Kate. Good morning, everyone. Thank you for joining our second quarter twenty twenty five earnings call. When we spoke with you after the first quarter, the macro environment was challenging, and the second quarter began with uncertainty and persistent volatility. By mid May, market sentiment shifted, equity markets recovered, and confidence improved.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

As a more constructive outlook took hold, client engagement across businesses gained momentum. As a result, we closed the second quarter with adjusted net revenues of $4.00 $5,000,000 an 18.1% operating margin, and adjusted EPS of $2.95 all higher compared to the same period last year. Advisory revenues were $2.00 $6,000,000 during the quarter, up 12% year over year driven by our broad set of products and a higher average fee. We completed 71 transactions during the period, up compared to the second quarter of last year. Performance was led by our Services and Industrials group, which delivered one of their best quarters since 2021.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

The strong performance of our Services and Industrials team reflects the continued addition of high quality talent that focuses on sub verticals important to our clients. During the 2025, advisory revenues were $423,000,000 up 24% compared to the year ago period. This growth was driven by higher revenues from M and A as well as increased non M and A revenues, which include debt advisory, private capital advisory, and restructuring. Our investments in non M and A advisory capabilities continue to gain traction as total revenues from these product lines grew at a rate in excess of our overall advisory revenues. We have strategically expanded our industry and product capabilities, which has not only deepened client relationships but also enhanced our ability to deliver comprehensive advice throughout the entire market cycle.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

For example, our debt advisory team has been very active, and we continue to experience strong demand for their services. Our best in class team, which leverages deep industry expertise and strong lending relationships, is delivering effective solutions for our clients. Overall, our market leadership, broad industry coverage, and product capabilities continue to drive strong relative performance. Diversification from both a sector and product perspective benefited us during the 2025, even as the number of completed middle market M and A transactions declined year over year. Although volatility early in the quarter impacted some deal processes, the outlook for advisory services has improved.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We have a robust pipeline of announced and in process transactions, and we expect our third quarter advisory revenues to be largely consistent with the second quarter. Turning to corporate financing. Revenues were $35,000,000 during the second quarter, down 31% from the year ago period. We completed 26 financings, raising $10,000,000,000 for corporate clients. Performance was driven by financial services.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

The team served as book runner on 14 of the 17 deals completed for financial services clients, which accounted for over half of our corporate financing revenues. While we're encouraged that corporate financing activity is improving in certain areas, other areas continue to be impacted by sector specific factors. For the first half of the year, the economic fee pool for companies with sub-five billion dollars of market cap decreased 19% year over year. Within that, some core sectors were down more meaningfully, such as a 61% decline in the economic fee pool for biopharma companies. As we look ahead, our pipeline remains strong and diverse, and we're pleased the third quarter is off to a good start.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Shifting to talent. We finished the quarter with 182 managing directors, consistent with first quarter levels and up 7% from a year ago. During the quarter, we hired five MDs to strengthen both sector and product expertise. These hires will strengthen our coverage in biopharma, insurance and technology and enhance our secondary capital advisory and debt advisory capabilities. The additions were offset by some reductions in force actions, which reflect our ongoing focus on broader talent management.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We remain intentional about strategically managing headcount and driving productivity while looking for opportunities to strengthen our platform. Overall, our second quarter results were strong, and we are pleased with our performance. As we look ahead, we are entering the back half of the year with solid momentum and are well positioned to gain share. With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.

[Deb Schoneman, President at Piper Sandler Companies]

Thanks, Chad. I'll begin with an update on our public finance business. Market conditions remained favorable during the second quarter, driven by growing infrastructure needs, relatively stable borrowing conditions, and strong investor demand due to higher yields. These dynamics led issuers to more actively access the market. For the 2025, we generated $42,000,000 of municipal financing revenues, up 66% year over year, exceeding the market issuance growth in par value of 15%.

[Deb Schoneman, President at Piper Sandler Companies]

Activity was robust across both our governmental and specialty sectors with strong performance attributable to the breadth of our clients and geographic reach. Performance was broad based across several of our leading franchises, including those in Kansas and California, as well as our special district and health care groups. Looking ahead, we have a robust pipeline yet expect third quarter revenues to moderate from the very strong second quarter. Now turning to our brokerage businesses. After a sharp sell off in April, the equity markets recovered with major indices reaching all time highs.

[Deb Schoneman, President at Piper Sandler Companies]

Equity brokerage generated $58,000,000 of revenues for the 2025, an increase of 12% year over year. We traded 2,900,000,000.0 shares on behalf of over 1,200 unique clients as we assisted clients in navigating the heightened volatility and rapidly changing landscape. Additionally, activity has been robust on our derivatives desk. We have consistently grown the number of clients and revenue per client on our derivatives desk through our strategic focus on enhancing client relationships and delivering tailored solutions. We expect revenues to moderate from second quarter levels as volatility has normalized, with the VIX declining to 17 at the June.

[Deb Schoneman, President at Piper Sandler Companies]

Lastly, turning to fixed income. We generated $54,000,000 of revenues for the 2025, up 21% from the first quarter and 37% from the year ago period, driven by robust activity with our depository clients. Notably, we completed several large balance sheet restructuring trades in conjunction with the closing of bank M and A transactions. While engagement is high and the team continues to provide differentiated advice, activity with nondepository clients has been subdued caused by spread tightening and relative value concerns. The combination of potential Fed rate cuts and a steepening yield curve should continue to enhance client engagement and activity.

[Deb Schoneman, President at Piper Sandler Companies]

However, given our strong second quarter, we anticipate fixed income revenues to soften in the third quarter. Now I will turn the call over to Kate to review our financial results and provide an update on capital use.

[Kate Clune, CFO at Piper Sandler Companies]

Thanks, Deb. Before reviewing our non GAAP financial results, let me discuss an item impacting our GAAP results this quarter. For the 2025, our GAAP results include a $5,000,000 restructuring charge related to headcount reductions as well as vacated office space associated with our acquisition of Avidity Advisors.

[Kate Clune, CFO at Piper Sandler Companies]

Turning now to our adjusted non GAAP financial results, which should be considered in addition to and not a substitute for the corresponding GAAP financial measures. We generated net revenues of 405,000,000 for the 2025. Operating income was 73,000,000, resulting in an operating margin of 18.1%. We delivered $53,000,000 of net income and $2.95 of diluted EPS. For the 2025, net revenues totaled $789,000,000 operating income amounted to a 142,000,000, and our operating margin was 18%.

[Kate Clune, CFO at Piper Sandler Companies]

We generated a 126,000,000 of net income and $7.04 of diluted EPS. Net revenues for the 2025 increased 6% from the first quarter of this year and 14% compared to the second quarter of last year, driven primarily by strong activity in our municipal financing and institutional brokerage businesses. In addition, we benefited from increased advisory services revenues compared to the year ago quarter. Net revenues for the 2025 increased 14% over last year driven by advisory services, which accounted for 54% of total net revenues and increased 24% year over year. Additionally, our municipal financing and equity brokerage businesses both delivered record revenues for the first half period.

[Kate Clune, CFO at Piper Sandler Companies]

Turning to expenses. We reported a compensation ratio of 62% for the 2025 and sixty two point two percent for the first half of the year, an improvement from the comparable periods driven by increased net revenues. We remain committed to exercising operating discipline and balancing employee retention and strategic investment opportunities. For the 2025, noncompensation expenses, excluding reimbursed deal costs, were 69,000,000, consistent with the first quarter and increased 6% year over year driven by higher legal fees as well as increased professional fees associated with technology and consulting services. Noncompensation costs for the 2025, excluding reimbursed deal expenses, totaled 139,000,000, an increase of 10% compared to the first half of last year.

[Kate Clune, CFO at Piper Sandler Companies]

Moving to income tax expense. Our income tax rate in the quarter was 28.111% for the first half of the year. Income tax expense for the year to date period was reduced by 26,000,000 of tax benefits related to the vesting of restricted stock awards. Excluding the 26,000,000 of benefits, our effective tax rate for the year to date period was 29.6%. Now finishing with capital.

[Kate Clune, CFO at Piper Sandler Companies]

During the quarter, we repurchased approximately 85,000 shares or 21,000,000 of our common stock and paid an aggregate of 17,000,000 to shareholders through our quarterly dividend. For the first half of this year, we returned an aggregate of a 189,000,000 to shareholders. This includes repurchases of approximately 351,000 shares or a 102,000,000 of our common stock, primarily related to employee tax withholdings on the vesting of restricted stock awards. It also includes an aggregate of 87,000,000 or $4.30 per share paid to shareholders through our quarterly and special cash dividends. Lastly, I am pleased to announce that effective today, the board approved a $05 increase to our quarterly cash dividend to $0.70 per share.

[Kate Clune, CFO at Piper Sandler Companies]

The dividend will be paid on September 12 to shareholders of record as of the close of business on August 29.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Thanks, Kate. Before taking questions, let me close with a few remarks on our acquisition announcement from earlier this morning. We've entered into a definitive agreement to acquire G Squared Capital Partners, a boutique investment bank specializing in government services and defense technology. The transaction is expected to close in the 2025. Based in Washington, D.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

C. Area, G Squared consists of 10 professionals, including three managing directors. The pending acquisition will further the growth of our technology investment banking group by combining their deep government sector experience with our cybersecurity and broader technology expertise as well as our strong access and relevance to private equity. In addition, we will provide gSquared access to our full suite of product capabilities to better serve their clients. This transaction is consistent with the strategic goal we've articulated previously to continue growing our M and A business and technology.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

With that, we can now open up the call for questions.

[Operator]

Thank

[Operator]

And we'll move right to Devin Ryan with Citizens. Please go ahead.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

First question on consolidation in the depository space. Obviously, the Sandler team has been active in the nonbank space over the last few years, which was just good. But starting to see some bank M and A finally, and you guys are obviously starting to participate in that as well. So just want to get a sense of how you would frame what a more normal bank consolidation market could mean for revenue for Piper. And then just in terms of what you're seeing in the backlog the timing, do you think that there's revenues potentially for this year ramping?

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Or is this much more of a point, like, fifth story and how you would bring that piece as well? Thank you.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. I do think the conditions have continued to, improve for depository m and a, obviously. Credit's been pretty good. There's capital available if that needs to be part of, transactions. We're definitely seeing proof of, regulatory approvals, being quicker.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. And I would say our our pace of announcements has increased, you know, kind of across the spectrum, the small deals, a few of the larger deals. I do think some of these will, you know, some of the stuff, because it's closing faster, will close later in the year, but I I still think we'll feel a a lot of this impact, next year. But the conversations are good, it's, you know honestly, it's it's hard to you know, besides, you know, the fact that that a lot of the bank stock prices haven't recovered, quite as much, it's hard to imagine, you know, much of the other criteria being a lot better.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Got it. Okay. Thanks, Jed. And then a follow-up here on AVIDITY and just kind of the the private capital solution. So almost one year in post closing.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Be great just to hear about how that business is enhancing connectivity with clients now that you've kind of been connected for some time in in the go to markets. I'm sure kind of pretty well developed right now. So can you just talk about how it's improving connectivity with clients? Then is there more that you can do there? Meaning, if you added a lot more resources or are there any capabilities you're learning you still might need to add for your your sponsor clients? Thanks.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. I would say, honestly, that that transaction has, worked out sort of exactly as we had hoped. You know, just as a reminder, they've got a couple large parts of the business, actually a few parts of the business, but, you know, new fund and existing fund raising. And then, obviously, the secondary market, they were, you know, heavily weighted to sort of new capital raising. We did recently announce, you know, a a significant hire to help just with more teams helping on the secondary side.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

You know, I I think what I've been really pleasantly surprised with is just, you know, the depth of relationships when you're raising money, you know, for a particular fund, you know, the the you're dealing with the senior partners, the decision makers, and I think that helps across all types of transactions that, you know, it helps us tell our story about our debt advisory business. It it helps us on sell side m and a. So, you know, relative to other things we've done, I think we've had quite a bit of pickup and, you know, certainly quicker than other things in terms of, you know, the bankers really locking on to this as an opportunity. So I think our timing was good. Transactions are picking up, and, you know, frankly, the results have been pretty good.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

So we're, yeah, we're very pleased with how that's going.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Okay. That's great. I will leave it there, but, thanks for taking the questions.

[Operator]

If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We move next to James Yarrow with Goldman Sachs.

[James Yaro, VP - Equity Research at Goldman Sachs]

Good morning, and thanks for taking the questions. Chad, I was I was hoping you might be able to touch a little bit on the IPO backdrop as we look ahead. And perhaps if you could also comment specifically on biotech. Any color you could offer on the scale, the pipelines, and and perhaps contextualize that versus history for the broader IPO for broader IPOs as well as biotech.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. So I I honestly think, you know, that question is really the tale of two cities. We're, you know, relative to the IPO market, now these are off of a a few years that were really slow. So we're but, you know, we're definitely seeing a pickup. And I, you know, I can just really comment on some of the sectors we're pretty active in.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

You know, we had a few years where we didn't see many IPOs in med tech, and now we've been, you know, this year on four or five IPOs in medtech, which is great to see. Obviously, we've heavily invested in insurance. We've been on a few great transactions there. So, you know, the backdrop, the conditions, the performance of some of these deals, I I do think that continues to set up for continued improvement in the IPO market. I would say, you know, relative to biotech, I mean, part of the reason our financing business has been down is, you know, we we we're we're heavily weighted to health care and and obviously weighted to biotech, and, you know, that fee pool has been way down, you know, frankly, follow ons, but, you know, especially IPOs.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I mean, I I can't, you know, can't recall, but it's it's been a while since we've seen a biotech IPO. So, those are always kinda different markets. So I'd say, you know, in general, the IPO market's improving. In general, we we're off in July here. We've done some nice transactions in biotech, but it's coming off of a slow pace.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

And so I think we're gonna need to see continued improvement before that hits the biotech IPO market.

[James Yaro, VP - Equity Research at Goldman Sachs]

That's very clear. Thank you. As just a second question, I'd just like to parse the the constructive bank m and a tone versus the weaker, three q fixed income trading commentary, and perhaps that's it's just a timing issue. But, some thoughts there. And then maybe also just on bank underwriting.

[James Yaro, VP - Equity Research at Goldman Sachs]

So specifically, you know, how does the weaker fixed income trading square with the improving bank m and a backdrop? And then if you could just comment on the outlook for bank equity and debt underwriting.

[Deb Schoneman, President at Piper Sandler Companies]

Yeah. I'll start, James, with the the fixed income side. So I would say it's a little more of just having a really strong q two than seeing anything that might seem inconsistent with the commentary on that Chad made on bank m and a. One of the things with our restructuring business and we did have a very strong a couple of strong track very large transactions in the second quarter. You know, for example, we had a a transaction a restructuring transaction that was over 2,500,000,000.0 in par relative to both the the buys and sells.

[Deb Schoneman, President at Piper Sandler Companies]

So very large. So just it's more about coming off of that strong second quarter. As we think about restructuring going forward, there's two pieces. One is maybe more a little bit tougher to predict, which is part of what's in our comments relative to restructuring. It is true that as m and a picks up, we will see and are seeing more of that activity.

[Deb Schoneman, President at Piper Sandler Companies]

It's just a little difficult to predict exactly when that will happen. There's a more predictable side to restructuring that we see more just seasonality around building into q four. So I don't if that answers your question, if you need more clarity, but I would say it's just more the strong strong second quarter.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. And the and the second part of your question about just capital raising and and DCM, we're definitely seeing a pickup there With banks, you know, we did a lot of this financing five years ago. A lot of that paper rolls off, and frankly, the terms just and coupons continue to get better. And, you know, we have very high market share there. So, you know, we commented that, you know, a good chunk of what we did do in financings came from FSG this quarter. So, you know, we we expect that to continue.

[James Yaro, VP - Equity Research at Goldman Sachs]

Really helpful. Thank you. And just to be clear, Deb, when you say restructuring, you mean balance sheet restructuring within fixed income?

[Deb Schoneman, President at Piper Sandler Companies]

Sorry. Yes. Yes. That's what I was thinking about. Yep. Thank you.

[James Yaro, VP - Equity Research at Goldman Sachs]

Perfect. Thank you.

[Operator]

We'll go next to Brendan O'Brien with Wolfe Research.

[Brendan O'Brien, SVP at Wolfe Research]

Good morning, and thanks for taking my questions. Just wanted to ask on the sponsor environment just given, you know, the increased pressure to return capital to LPs. You know, trends seem to have been improving of late, but just wanna get a sense as to how you would characterize the conversations, excuse me, you're having with your sponsor clients at the moment. Has there been any shifts in the tenor of those discussions, over the past, you know, few weeks even? It feels like we're starting to see some some acceleration there.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. I mean, obviously, I I have, we've said it's coming, several times. And, you know, I would say the data's a little bit better, but not a lot better. I would say I've been out with sponsors a lot the last month, and, you know, everybody seems pretty active. I do think there's a lot of transactions that have launched.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I think relative to sort of process, people are still being careful, but I I absolutely believe we're gonna see a nice pickup in the the back half and and into next year. Although, I agree it's probably been a little slower than we've than we've thought.

[Brendan O'Brien, SVP at Wolfe Research]

Helpful color. And then I guess for my follow-up question, more of a bigger picture one. You know, now that we're on our way or entering what feels like a recovery, you know, obviously, depending on how things react today and over the next few weeks with the trade deals. But, you know, now that we're on the path towards recovery, I just wanna get a sense as to your confidence and your ability to hit that $2,000,000,000 investment banking target that you outlined prior to this slowdown and how to think about the trajectory or the building blocks from here.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. I mean, every time I talk about that, it's that's really just related to sort of the diversity of the business and seeing within each of those industry teams where our pockets are to grow, and, you know, we continue to invest in in that. Obviously, we've talked a lot about, technology. We did a a small transaction today, Super complimentary to our cyber and security practice. You know, gets us a a new office in, DC.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I think there's just multiple, verticals and things like that that we're having success with. We talked a lot about, our services and industrial business, which, you know, we felt, you know, with the team we hired in Michigan. Frankly, that has a lot of traction. So I think we're still on the the brick by brick strategy with opportunity in every industry team. I'm always careful not to get pinned into a corner, like, exactly how many years is that gonna take.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

But I think we have even more conviction, you know, as time goes by relative to each industry team where we're gonna see the growth, where we're gonna add the MDs, and we still believe we'll see some increased productivity. Because even though we're growing revenues, you know, we're still not happy with the total productivity levels.

[Brendan O'Brien, SVP at Wolfe Research]

Great. Thank you for taking my questions.

[Operator]

We'll move next to Mike Grondahl with Northland Securities.

[Mike Grondahl, Head - Equities & Director - Research at Northland Capital Markets]

Thank you, and congrats on a strong quarter. First question, just, Chad, your health care advisory outlook, kinda what are you seeing there?

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. If you remember, relative to advisory, health care was our only team that was down last year. It's been quite strong this year, probably our team that's up the most in advisory, which which which has had a big part of, the improvement. So I think that's really twofold. You know, coming off of a very slow year, different regulatory environment that, people are willing to try sort of, you know, not completely, but mostly tariff proof relative to, you know, a lot of domestic businesses, a lot of service businesses.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

So we're we're having a very good good year in health care advisory.

[Mike Grondahl, Head - Equities & Director - Research at Northland Capital Markets]

Got it. And then within that overall advisory, could you kinda describe a debt advisory transaction in a private capital market transaction? Just I wanna better understand those two areas as that area along with restructuring is growing a lot.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yeah. We we obviously, we sort of called out, you know, we really look at the non m and a advisory business as capital advisory, which we already talked about, debt advisory. And restructuring. You know, our our pure sorta agented debt advisory has been one of the fastest growing parts of the firm over the last four or five years. A lot of that has to do with all the alternative sources for capital with, you know, various credit funds.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

And so, you know, like, a typical transaction, you know, obviously, there's there's never a typical transaction, but all site types of transactions relative to financing to a sponsor to do an acquisition, financing to a sponsor to recap, financing, you know, that they have, adding sort of, add on capital, all all sorts of things, you know, sometimes sort of exclusive to one buyer. Sometimes there's a couple of buyers, but it's you know, there's just been an explosion of various providers of credit, and, you know, that's been very good for our business. Because it's also it's hard for companies. You know, they they used to have to access capital with 10 or 12 banks. Now, you know, there's several 100 funds, and I would say we've got that same success with certain private equity funds.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Obviously, the really large ones have their own capital markets teams, but a lot of the mid market small capital markets groups, you know, they may they may not have professionals professionals there. There. So we've got several funds where we do all of their transactions, you know, whatever the debt capital requirement is. And then, you know, the other part of the debt business, which I think you asked about, in our FSG business, we do some sort of underwritten, but we do a lot of agented debt business. A lot of this bank business we just talked about, you know, is sold to other financial institutions, depositories, other types of financial institutions.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

It's usually sort of five year paper. You know, a lot of the banks, other financial institutions sort of have that paper. A lot of times, they're just rolling that over with other financing. Sometimes it's new capital.

[Mike Grondahl, Head - Equities & Director - Research at Northland Capital Markets]

Got it. Hey. That that's helpful, and, congratulations.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Thank you.

[Operator]

We'll return to James Yarrow with Goldman Sachs. Please go ahead.

[James Yaro, VP - Equity Research at Goldman Sachs]

Thanks for the follow-up. I just wanted to touch a little bit more on the comp and noncomp expenses. On the comp side, how would you think about the comp ratio trajectory from here now that you're comfortably within, I think, your target range? And on the noncomp, dollar side, growth, ex reimbursable expenses has been a bit higher than I think you'd you'd previously talked about. So so maybe just any update on how we should think about full year non comp expenses.

[Kate Clune, CFO at Piper Sandler Companies]

So thanks for the question, James. Starting on the comp ratio side, again, we continue to focus on that balance of, you know, driving leverage and then ensuring that we're also investing where those opportunities arise. You know, with the improved revenue this quarter, it allowed us to to drive for that leverage that you referenced, and we'd expect for the remainder of the year to be in this range, you know, without providing any sort of specific figure. To your point, we're kinda right in between our 61 and a half to 62 and a half sort of normalizing range for comp ratio, so feeling good about that. And that's really barring any significant outsized investments or, you know, kinda turn in the market conditions.

[Kate Clune, CFO at Piper Sandler Companies]

Just to take a moment on non comps, you're right. We are trending a bit above, you know, kind of that increased guided range that we provided for this year. I think about three material drivers there. One is the large occupancy expense increase that we have, you know, telegraphed out there, and that has to do with the relocation of our our headquarters here in Minneapolis. As we talked about at the end of the first quarter, T and E running a little bit ahead of of where we had expected.

[Kate Clune, CFO at Piper Sandler Companies]

Some of that just has to do with, you know, more people on the platform, higher cost of travel, etcetera. That has moderated a bit, although it does run a little bit ahead of where we thought we would still be kind of on a year to date basis. Then the third category that I think is really what's driving the differential as we referenced in the script for this quarter is kind of professional and legal fees. Legal fees, I think about in two categories. One is just sort of standard legal fees that, you know, come with running the business, a little bit ahead of of where we expected.

[Kate Clune, CFO at Piper Sandler Companies]

The other is a little bit more of a a legal expense associated with some of our ECM transactions given the ECM volatility we saw at the beginning of of the period here. We aren't adjusting that range. I think we'll be sort of between where we are here in the higher end of the range that we have provided for the remainder of the year, but we'll certainly update that guidance if if anything changes.

[James Yaro, VP - Equity Research at Goldman Sachs]

Okay. Thank you so much.

[Operator]

At this time, we have no further questions. I'd like to turn the floor back to Chad for any additional or closing remarks.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Okay. Thanks to everyone that joined us this morning. We look forward to updating you on our third quarter results. Have a great day.

[Operator]

This concludes today's conference. We thank you for your participation. You may disconnect your lines at this time.

Participants

Executives

• Kathy Winslow, Legal Administrator
• Chad Abraham, Chairman & CEO
• Deb Schoneman, President
• Kate Clune, CFO

Analysts

• Devin Ryan, Director of Financial Technology Research at Citizen JMP
• James Yaro, VP - Equity Research at Goldman Sachs
• Brendan O'Brien, SVP at Wolfe Research
• Mike Grondahl, Head - Equities & Director - Research at Northland Capital Markets