PIPER SANDLER COMPANIES Q1 FY2025 earnings call

• Market volatility in equity and debt markets led to increased client engagement. Adjusted net revenues were $383 million, with a 17.9% operating margin and adjusted EPS of $4.09. - Corporate investment banking saw advisory services up 38% Y/Y, but Q2 advisory revenues expected to decline from Q1. - Corporate financing was challenged due to weak equity underwriting market. - Hired 182 managing directors, expanding into infrastructure and healthcare sectors. - Public finance benefited from favorable start to the year but near-term outlook depends on market stabilization. - Equity brokerage had strong Q1 with 10% Y/Y revenue increase. - Fixed income had 7% Y/Y revenue increase but near-term outlook cautious.

Corporate investment banking revenues totaled $253 million, a 20% year-over-year increase, with advisory services at $217 million, a 38% increase. Corporate financing revenues were $36 million, down 32% year-over-year. Public finance generated $26 million, a 27% year-over-year increase. Equity brokerage had $54 million, a 10% year-over-year increase. Fixed income had $45 million, a 7% year-over-year increase. Advisory services accounted for 57% of total net revenues and increased 38% year-over-year. Institutional brokerage revenues increased 9% compared to Q1 2024.

• Anticipate advisory revenues to decline in Q2 from Q1 levels but expect strong rebound when market stabilizes. - Fixed income outlook cautious near-term but potential for improvement with Fed rate cuts, steepening yield curve, and reduced volatility. - Equity capital raising expected to remain slow until volatility subsides and valuations stabilize.

• Heightened volatility in equity and debt markets impacting M&A deal cycles. - Rate volatility affecting public finance transactions. - Uncertainty in equity underwriting and IPO markets. - Sector-specific challenges like consumer products affected by international sourcing and healthcare small cap stocks under pressure.

Q: How are M&A conditions affecting sponsor clients, with a focus on sell-side issues and sector impacts?

A: It's sector-dependent; some sectors like consumer (affected by international sourcing) have stalled processes, while others like certain services businesses have more interest. Sponsor clients with unaffected businesses can access diversified product teams.

Q: How does the counter-cyclicality of advisory business segments (secondary continuation funds, capital markets advisory, restructuring) contribute to durability in a weaker M&A backdrop?

A: Debt capital markets advisory has been built organically, restructuring team was acquired and expanded, and Aviditi team has good business; these segments are growing faster than M&A and provide ballast.

Q: What are customers' top concerns and sentiment change with recent market rebound?

A: CEO confidence is key due to uncertainty; while there's good pipeline, global trade impact on P&L and consumer spending is a concern. Recent market rebound shows sentiment can change quickly, but volatility still creates uncertainty for fixed income trading.