Q2 2026 Piper Sandler Companies Earnings Call

July 30, 2026

Speaker #2: Please stand by. Good morning, and welcome to the PIPER SANDLER COMPANIES second quarter 2026 earnings conference call. Today's call is being recorded and will include remarks by PIPER SANDLER management, followed by a question-and-answer session.

Operator: Please stand by. Good morning, and welcome to the Piper Sandler Companies Q2 2026 Earnings Conference Call. Today's call is being recorded and will include remarks by Piper Sandler management, followed by a question-and-answer session. I'll begin by turning the call over to Kate Winslow. Please go ahead.

Speaker #2: I'll begin by turning the call over to Kate Winslow. Please go ahead.

Speaker #3: Thank you, operator. Good morning, and thank you for joining the PIPER SANDLER COMPANIES second quarter 2026 earnings conference call. Hosting the call today are Chairman and CEO Chad Abraham, our President Deb Schoneman, and CFO Kate Clune.

Kate Winslow: Thank you, operator. Good morning, and thank you for joining THE PIPER SANDLER COMPANIES' Q2 2026 earnings conference call. Hosting the call today are Chairman and CEO, Chad Abraham, our President, Deb Schoneman, and CFO, Kate Clune. Earlier this morning, we issued a press release announcing Piper Sandler's Q2 2026 financial results, which is available on our website at pipersandler.com/earnings. 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.

Kate Winslow: Thank you, operator. Good morning and thank you for joining the Piper Sandler Companies Q2 2026 Earnings Conference Call. Hosting the call today are Chairman and CEO, Chad Abraham, our President, Deb Schoneman, and CFO, Kate Clune. Earlier this morning, we issued a press release announcing Piper Sandler's Q2 2026 financial results, which is available on our website at pipersandler.com/earnings. 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.

Speaker #3: Earlier this morning, we issued a press release announcing PIPER SANDLER's second quarter 2026 financial results, which is available on our website at pipersandler.com/earnings. Today's discussion of the results is complementary to the press release.

Speaker #3: 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.

Speaker #3: 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 the SEC website at sec.gov.

Kate Winslow: 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 the SEC website at sec.gov. 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #4: Thank you, Kate. Good morning, everyone, and thank you for joining us. We posted second quarter adjusted net revenues of $491 million, a 21.8% operating margin, and adjusted EPS of $1.04.

Chad Abraham: Thank you, Kate. Good morning, everyone. Thank you for joining us. We posted Q2 adjusted net revenues of $491 million, a 21.8% operating margin, and adjusted EPS of $1.04, all up significantly compared to the prior year. This marks our 11th consecutive quarter of year-over-year revenue growth, a testament to the durability of our model. Corporate investment banking revenues were $312 million for the quarter, up 31% year-over-year, driven by robust advisory activity. Financial services and healthcare remain our two largest franchises, and both delivered impressive quarterly results. During H1 2026, Corporate investment banking revenues totaled $636 million, a 30% increase over last year, and our strongest H1 performance on record. Our growth was broad-based, with nearly all of our sectors and products contributing.

Speaker #4: All up significantly, compared to the prior year. This marks our 11th consecutive quarter of year-over-year revenue growth, a testament to the durability of our model.

Speaker #4: Corporate investment banking revenues were $312 million for the quarter, up 31% year-over-year, driven by robust advisory activity. Financial services and healthcare remain our two largest franchises, and both delivered impressive quarterly results.

Speaker #4: During the first half of 2026, corporate investment banking revenues totaled $636 million, a 30% increase over last year, and are strongest first half performance on record.

Speaker #4: Our growth was broad-based, with nearly all of our sectors and products contributing. This momentum validates our strategy of combining deep sector expertise with a broad suite of products to serve our clients throughout their lifecycles and through a wide range of market conditions.

Chad Abraham: This momentum validates our strategy of combining deep sector expertise with a broad suite of products to serve our clients throughout their life cycles and through a wide range of market conditions. Advisory services achieved record Q2 revenues of $274 million, up 34% over last year, marking our 6th consecutive quarter of year-over-year growth. We completed 83 advisory transactions, a 17% increase in volume, and earned more larger fees. Performance was led by financial services with meaningful contributions from healthcare and services and industrials. Within financial services, our depository practice remains a market leader. While large-scale M&A activity continued to be lacking, middle market volume improved. We ranked as the number 1 advisor in US bank M&A by both announced transaction count and deal value in H1, reinforcing our position as the go-to partner for bank clients across the size spectrum.

Speaker #4: Advisory services achieved record second quarter revenues of $274 million, up 34% over last year. Marking our sixth consecutive quarter of year-over-year growth. We completed 83 advisory transactions, a 17% increase in volume, and earned more larger fees.

Speaker #4: Performance was led by financial services with meaningful contributions from healthcare, and services and industrials. Within financial services, our depository practice remains a market leader.

Speaker #4: While large-scale M&A activity continued to be lacking, middle market volume improved. We ranked as the number-one advisor in US Bank M&A by both announced transaction count and deal value in the first half.

Speaker #4: Reinforcing our position as the go-to partner for bank clients across the size spectrum. Our insurance and asset management franchises also contributed to our success.

Chad Abraham: Our insurance and asset management franchises also contributed to our success. Investments in these franchises over the past several years, combined with increased alignment with our broader private equity relationships, have driven meaningful growth. We are also experiencing positive momentum within our private capital advisory group, which recorded their best quarter on our platform, driven by the secondary business. By leveraging our sponsor relationships and sector expertise, we are well-positioned to capture share in this high-growth space. Our market-leading position, deep sector coverage, and extensive portfolio of solutions drove H1 advisory revenues of $525 million, up 25% over last year. In addition to financial services, our healthcare group contributed strong results led by our med tech team, which advised on several of the largest deals announced in the sector.

Speaker #4: Investments in these franchises over the past several years combined with increased alignment with our broader private equity relationships have driven meaningful growth. We are also experiencing positive momentum within our private capital advisory group.

Speaker #4: Which recorded their best quarter on our platform, driven by the secondary business. By leveraging our sponsor relationships and sector expertise, we are well-positioned to capture share in this high-growth space.

Speaker #4: Our market-leading position, deep sector coverage, and extensive portfolio of solutions drove first half advisory revenues of $525 million up 25% over last year. In addition to financial services, our healthcare group contributed strong results.

Speaker #4: Led by our medtech team, which advised on several of the largest deals announced in the sector. Market conditions for healthcare M&A are more constructive.

Chad Abraham: Market conditions for healthcare M&A are more constructive, and our role as the top advisor in med tech M&A by deal count continues to be a key differentiator as companies prioritize portfolio optimization, growth, and scale. Despite a challenging environment for sponsor activity during H1, our relative performance was strong. Advisory revenues from private equity clients grew 10% year over year, outperforming the broader US private equity market. This resilience highlights the value of our coverage model. As we continue to prioritize our private equity partners, we recently transitioned two senior leaders from our services and industrials group to serve alongside our existing head of financial sponsors, where they will focus on our private equity advisory efforts.

Speaker #4: And our role as the top advisor in medtech M&A by deal count continues to be a key differentiator as companies prioritize portfolio optimization growth and scale.

Speaker #4: Despite a. Environment for sponsor activity during the first half, our relative performance was strong. Advisory revenues from private equity clients grew 10% year-over-year, outperforming the broader US private equity market.

Speaker #4: This resilience highlights the value of our coverage model. As we continue to prioritize our private equity partners, we recently transitioned two senior leaders from our services and industrials group to serve alongside our existing head of financial sponsors, where they will focus on our private equity advisory efforts.

Speaker #4: We remain committed to scaling this practice and we are uniquely positioned to increase our share of transaction activity including M&A, debt capital markets advisory, continuation vehicles, and IPOs.

Chad Abraham: We remain committed to scaling this practice. We are uniquely positioned to increase our share of transaction activity, including M&A, debt capital markets advisory, continuation vehicles, and IPOs, as market conditions improve and transaction volumes accelerate. Turning to corporate financing, Q2 revenues were $38 million, up 10% year-over-year, but down from the very strong Q1. We completed 28 financings, raising $13 billion for corporate clients, primarily in the healthcare space. While corporate financing activity and our revenues fluctuate based on client and sector-specific dynamics as well as macroeconomic data, our H1 performance reflects a strong underlying trend. Revenues of $111 million are up 65% year-over-year, driven by a 33% increase in book-run transactions and higher average fees. Shifting to talent, we finished the quarter with 193 investment banking managing directors, a 6% increase year-over-year.

Speaker #4: As market conditions improve, and transaction volumes accelerate. Turning to corporate financing, second quarter revenues were $38 million, up 10% year-over-year, but down from the very strong first quarter.

Speaker #4: We completed 28 financings raising $13 billion for corporate clients, primarily in the healthcare space. While corporate financing activity and our revenues fluctuate based on client and sector-specific dynamics, as well as macroeconomic data, our first half performance reflects a strong underlying trend.

Speaker #4: Revenues of $111 million are up 65% year-over-year, driven by a 33% increase in book-run transactions and higher average fees. Shifting to talent, we finished the quarter with $193 investment banking managing directors.

Speaker #4: A 6% increase year-over-year. Since the beginning of 2026, we have added 12 new MDs through promotions and hiring. We remain focused on productivity by selectively adding top producers to offset retirements and the departure of less productive bankers in order to align the platform for long-term success.

Chad Abraham: Since the beginning of 2026, we have added 12 new MDs through promotions and hiring. We remain focused on productivity by selectively adding top producers to offset retirements and the departure of less productive bankers in order to align the platform for long-term success. With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.

Speaker #4: With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.

Speaker #5: Thanks, Chad. I'll begin with an update on our public finance business. We generated $50 million of municipal financing revenues double our first quarter revenues up 18% year-over-year and our strongest second quarter on record.

Deb Schoneman: Thanks, Chad. I will begin with an update on our public finance business. We generated $50 million of municipal financing revenues, double our Q1 revenues, up 18% year-over-year, and our strongest Q2 on record. We underwrote 141 municipal negotiated transactions, raising $5 billion of par value for our clients. This performance was attributable to the strength of our specialty business, particularly the special district and hospitality groups, which completed several large transactions. We have built a differentiated market-leading specialty franchise that combines our high-touch underwriting with superior distribution and trading capabilities, creating a compelling value proposition for both issuers and municipal investors. Our governmental business remained resilient during the quarter despite a year-over-year decline as market conditions were more accommodative during the Q2 of last year. Our performance for the H1 of 2026 was strong on a relative and absolute basis.

Speaker #5: We underwrote $141 municipal negotiated transactions raising $5 billion of par value for our clients. This performance was attributable to the strength of our specialty business, particularly the special district and hospitality groups, which completed several large transactions.

Speaker #5: We have built a differentiated market-leading specialty franchise that combines our high-touch underwriting with superior distribution and trading capabilities, creating a compelling value proposition for both issuers and municipal investors.

Speaker #5: Our governmental business remained resilient during the quarter despite a year-over-year decline as market conditions were more accommodative during the second quarter of last year.

Speaker #5: Our performance for the first half of 2026 was strong on a relative and absolute basis. Municipal financing revenues increased 7% over last year outpacing the 4% par value growth of the municipal negotiated market.

Deb Schoneman: Municipal financing revenues increased 7% over last year, outpacing the 4% par value growth of the municipal negotiated market. As we look ahead, similar to last year, we anticipate that revenues for the Q3 will decline from the robust Q2. Our equity brokerage business generated record Q2 revenues of $63 million, up 8% year-over-year. This result was driven by successful execution of our strategy and aided by a unique convergence of benchmark rebalancing events in June. Our trading capabilities enabled us to participate meaningfully in these events, which produced our three largest days in firm history as measured by notional volume. During the H1 of 2026, equity brokerage revenues totaled $123 million, a 10% increase over the prior year, and we traded 6.6 billion shares, up 14%. This performance underscores the strength of our platform and the value we provide clients.

Speaker #5: As we look ahead, similar to last year, we anticipate that revenues for the third quarter will decline from the robust second quarter. Our equity brokerage business generated record second quarter revenues of $63 million up 8% year-over-year.

Speaker #5: This result was driven by successful execution of our strategy and aided by a unique convergence of benchmark rebalancing events in June. Our trading capabilities enabled us to participate meaningfully in these events, which produced our three largest days in firm history as measured by notional volume.

Speaker #5: During the first half of 2026, equity brokerage revenues totaled $123 million, a 10% increase over the prior year, and we traded 6.6 billion shares, up 14%.

Speaker #5: This performance underscores the strength of our platform and the value we provide clients. Looking ahead, we expect the third quarter revenues will follow historical trends which typically reflect a seasonal decline.

Deb Schoneman: Looking ahead, we expect Q3 revenues will follow historical trends, which typically reflect a seasonal decline. Lastly, turning to fixed income. The market environment remained challenging this quarter as ongoing geopolitical events and interest rate uncertainty, combined with a flattening yield curve, dampened client activity. Against this backdrop, we recorded revenues of $49 million, down sequentially and year-over-year. While bank restructuring activity provided a partial offset to lower trading volumes during the quarter, it declined from the robust levels during Q2 of last year. We remain focused on providing tailored advice-driven solutions to help clients navigate the uncertain environment. Partnering with our banking colleagues to provide balance sheet restructuring advice following strategic events remains a differentiator for us. As we look ahead, we expect Q3 revenues to be similar to Q2.

Speaker #5: Lastly, turning to fixed income. The market environment remained challenging this quarter as ongoing geopolitical events and interest rate uncertainty combined with a flattening yield curve dampened client activity.

Speaker #5: Against this backdrop, we recorded revenues of $49 million down sequentially and year-over-year. While bank restructuring activity provided a partial offset to lower trading volumes during the quarter, it declined from the robust levels during second quarter of last year.

Speaker #5: We remain focused on providing tailored advice-driven solutions to help clients navigate the uncertain environment. Partnering with our banking colleagues to provide balance sheet restructuring advice following strategic events remains a differentiator for us.

Speaker #5: As we look ahead, we expect third quarter revenues to be similar to the second quarter. Now, I will turn the call over to Kate to review our financial results and provide an update on capital use.

Deb Schoneman: Now, I will turn the call over to Kate to review our financial results and provide an update on capital use.

Speaker #5: Thanks, Deb. My comments will address our adjusted non-gap financial results which should be considered in addition to and not a substitute for the corresponding gap financial measures.

Kate Clune: Thanks, Deb. My comments will address our adjusted non-GAAP financial results, which should be considered in addition to and not a substitute for the corresponding GAAP financial measures. For Q2 of 2026, we posted net revenues of $491 million, operating income of $107 million, and an operating margin of 21.8%. Net income totaled $74 million, and diluted EPS was $1.04. During H1 of 2026, net revenues totaled $961 million, operating income was $201 million, and our operating margin was 20.9%. We generated $146 million of net income and $2.04 of diluted EPS. Q2 net revenues increased 5% sequentially and 21% year-over-year, fueled by activity across advisory services, municipal financing, and equity brokerage. This momentum carried through H1, where net revenues rose 22% over the prior year period.

Speaker #5: For the second quarter of 2026, we posted net revenues of $491 million operating income of $107 million and an operating margin of 21.8%. Net income totaled $74 million and diluted EPS was $1.04.

Speaker #5: During the first half of 2026, net revenues totaled $961 million operating income was $201 million and our operating margin was 20.9%. We generated $146 million of net income and $2.04 of diluted EPS.

Speaker #5: Second quarter net revenues increased 5% sequentially and 21% year-over-year, fueled by activity across advisory services, municipal financing, and equity brokerage. This momentum carried through the first half, where net revenues rose 22% over the prior-year period.

Speaker #5: Corporate investment banking led this growth with advisory revenues increasing 25% year-over-year accounting for 55% of total net revenues. And corporate financing revenues rising 65%.

Kate Clune: Corporate investment banking led this growth, with advisory revenues increasing 25% year-over-year, accounting for 55% of total net revenues. Corporate financing revenues rising 65%. In addition, our municipal financing and equity brokerage businesses reached new revenue highs for the H1 period. Our strategy of sustaining revenue growth while yielding best-in-class profitability continues to play out. Operating income for H1 grew 42% over 2025, outpacing our 22% revenue growth and illustrating the inherent scalability of our model. Turning to expenses. We continue to exercise operating discipline. Our compensation ratio of 61.5% for both Q2 and H1 of 2026 improved year-over-year, reflecting our commitment to balancing employee retention with strategic investment opportunities. Non-compensation expenses for Q2 of 2026 were $82 million, or 16.7% of net revenues.

Speaker #5: In addition, our municipal financing and equity brokerage businesses reached new revenue highs for the half-year period. Our strategy of sustaining revenue growth while yielding best-in-class profitability continues to play out.

Speaker #5: Operating income for the first half grew 42% over 2025 outpacing our 22% revenue growth and illustrating the inherent scalability of our model. Turning to expenses.

Speaker #5: We continue to exercise operating discipline our compensation ratio of 61.5 for both the second quarter and the first half of 2026 improved year-over-year reflecting our commitment to balancing employee retention with strategic investment opportunities.

Speaker #5: Noncompensation expenses for the second quarter of 2026 were $82 million were 16.7% of net revenues. For the first half, noncompensation expenses totaled $168 million.

Kate Clune: For H1, non-compensation expenses totaled $168 million, up 8% year over year, primarily due to a litigation related expense taken during Q1. Non-compensation costs represented 17.5% of net revenues, a 230 basis point improvement from H1 of last year, highlighting our success in driving leverage as our revenue base expands. Our effective tax rate was 30.5% for the quarter and 27.1% for H1 of this year. Year to date, tax expense was reduced by $7 million of benefits related to the vesting of restricted stock awards. Excluding these benefits, our effective tax rate for H1 was 30.7%. Now finishing with capital. During Q2, we repurchased approximately 391,000 shares of our common stock for $31 million and paid an aggregate of $14 million to our shareholders through our quarterly cash dividend.

Speaker #5: Up 8% year-over-year primarily due to a litigation-related expense taken during the first quarter. Noncompensation costs represented 17.5% of net revenues. A $230 basis point improvement from the first half of last year.

Speaker #5: Highlighting our success in driving leverage as our revenue base expands. Our effective tax rate was 30.5% for the quarter and 27.1% for the first half of this year.

Speaker #5: Year-to-date tax expense was reduced by $7 million of benefits related to the vesting of restricted stock awards. Excluding these benefits, our effective tax rate for the first half was 30.7%.

Speaker #5: Now, finishing with capital. During the second quarter, we repurchased approximately $391,000 shares of our common stock for $31 million. And paid an aggregate of $14 million to our shareholders through our quarterly cash dividend.

Speaker #5: For the first half of this year, we returned an aggregate of $215 million to shareholders this includes $115 million in cash dividends or $1.62 and a half cents per share and repurchases of approximately $1.3 million shares of our common stock for $101 million.

Kate Clune: For H1 of this year, we returned an aggregate of $215 million to shareholders. This includes $115 million in cash dividends, or $1.62 per share, and repurchases of approximately 1.3 million shares of our common stock for $101 million. These buybacks have more than offset the share count dilution from the 2026 annual grants, reinforcing our commitment to disciplined capital management. Lastly, I am pleased to announce that effective today, the board approved a quarterly cash dividend of $0.20 per share to be paid on 11 September to shareholders of record as of the close of business on 28 August. To conclude, our performance reflects the successful execution of our long-term strategy. Regarding our outlook, we anticipate Q3 net revenues will be in line with Q3 of 2025. We enter the remainder of this year with a healthy pipeline and active client engagement.

Speaker #5: These buybacks have more than offset the share count dilution from the 2026 annual grants reinforcing our commitment to disciplined capital management. Lastly, I'm pleased to announce that effective today, the board approved a quarterly cash dividend of $0.20 per share to be paid on September 11th to shareholders of record as of the close of business on August 28th.

Speaker #5: To conclude, our performance reflects the successful execution of our long-term strategy. Regarding our outlook, we anticipate third quarter net revenues will be in line with the third quarter of 2025.

Speaker #5: We enter the remainder of this year with a healthy pipeline and active client engagement. With our differentiated platform and proven ability to execute, we are well positioned to drive continued long-term growth and value for our shareholders.

Kate Clune: With our differentiated platform and proven ability to execute, we are well-positioned to drive continued long-term growth and value for our shareholders. With that, we can open up the call for questions.

Speaker #5: With that, we can open up the call for questions.

Speaker #1: Thank you. If you are dialed in via the telephone, it would like to ask a question, please signal by pressing star one on your telephone keypad.

Operator: Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing *1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal through to our equipment. Again, press *1 to ask a question. We will go first to Devin Ryan with Citizens JMP.

Speaker #1: If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question.

Speaker #1: We'll go first to Deb and Ryan with Citizens Bank.

Speaker #3: Hey, this is Noah Katz on for Deb and thanks for taking my questions. So to start, I think maybe we should focus a little bit on the middle market more broadly.

[Analyst] (Citizens JMP): Hey, this is no taps on for Kevin. Thanks for taking my questions. To start, I think maybe we should focus a little bit on the middle market more broadly. advisory results were strong this quarter, but the middle market still appears to be developing gradually. Within sponsor activity and are you seeing a more meaningful shift from dialogue and pitching? Does the current level of activity give you confidence that the middle market M&A can build from here? What are your expectations on the H2 of the year? Thank you.

Noah Katz: Hey, this is no taps on for Kevin. Thanks for taking my questions. To start, I think maybe we should focus a little bit on the middle market more broadly. advisory results were strong this quarter, but the middle market still appears to be developing gradually. Within sponsor activity and are you seeing a more meaningful shift from dialogue and pitching? Does the current level of activity give you confidence that the middle market M&A can build from here? What are your expectations on the H2 of the year? Thank you.

Speaker #3: Advisory results were strong this quarter, but the middle market still appears to be developing gradually. Within sponsor activity and and are you seeing a more meaningful shift from dialogue and pitching and does the current level of activity give you confidence that the middle market M&A can can build from here?

Speaker #3: And what are your expectations on the second half of the year? Thank you.

Speaker #4: Yeah. Yeah, obviously we've seen sort of results all over the place from the peers. So I I do think it matters and depends on kind of what sectors you look at.

Chad Abraham: Yeah. Obviously, we've seen sort of results all over the place from the peers. I do think it matters and depends on kind of what sectors you look at. Obviously, our two biggest sectors are financial services and healthcare. In those two spaces, the middle markets have been pretty good, and we're out weighted in those two spaces. So obviously that's driving results. We did sort of say in the release that the sponsor business depends on what data source you look at. Is it down? Is it flat? Obviously, ours was up a little bit, so we do think we're gaining some share. There are still parts of the middle market and consumer parts of industrial, others that are tougher. I still think it's a pretty good market.

Speaker #4: Obviously, our two biggest sectors are financial services and healthcare. And in those two spaces, you know, the middle markets have been pretty good and we're outweighted in those two spaces and so, you know, obviously that's driving results.

Speaker #4: We did sort of say in the release that, you know, the sponsor business—it depends on what data source you look at.

Speaker #4: Is it down? Is it flat? Obviously, ours was up a little bit. So, we do think we've been gaining some share. But, you know, there are still parts of the middle market and consumer parts of industrial, you know, others that are tougher.

Speaker #4: I I still think it's a a pretty good market. It's just not it's just not great and robust. But the pitch calendars, new mandates, you know, things look pretty good for the back half.

Chad Abraham: It's just not great and robust, but the pitch calendars, new mandates, things look pretty good for the H2. It'll just depend on close rates. I do think across the industry, I've seen some data from various auctions where the close rates have been a little lower than in the past. We'll have to see.

Speaker #4: It'll just depend on close rates. I do think across the industry I've seen some data from, you know, various auctions where the close rates have been a little lower than in the past.

Speaker #4: So we'll have to see.

Speaker #3: That's great. Okay. Thanks for answering my question. And then switching gears a little bit, focusing specifically on fixed income, if short-term rates were to move higher from here, how much is that changing activity levels and and how would you think about the potential impacts across fixed income brokerage and then the municipal underwriting business?

[Analyst] (Citizens JMP): That's great. Okay. Thanks for answering my question. Switching gears a little bit, focusing specifically on fixed income. If short-term rates were to move higher from here, how much is that changing activity levels, and how would you think about the potential impacts across fixed income brokerage and then the municipal underwriting business? Thank you.

Noah Katz: That's great. Okay. Thanks for answering my question. Switching gears a little bit, focusing specifically on fixed income. If short-term rates were to move higher from here, how much is that changing activity levels, and how would you think about the potential impacts across fixed income brokerage and then the municipal underwriting business? Thank you.

Speaker #3: Thank you.

Speaker #5: Yeah. So, I would say one of the things that is very important for depositories—which is about half of our fixed income business—is, you know, very focused on that client set. And the Fed funds to five-year finally got into positive territory, which is good for banks.

Deb Schoneman: Yeah. I would say, one of the things that is very important for depositories, which is about half of our fixed income business, is very focused on that client set. The Fed funds to five-year finally got into positive territory, which is good for banks. If we see that turn around again, that's going to put some pressure on that segment of our client base for sure. I would say, when you think about the municipal business, which is another part of your question, and how rates ultimately impact that, of course, that we're looking out at longer term rates, right? You think about all the way out to 30 years. That's going to have less of an impact there. It's really what does that do to overall sentiment and where do rates go 10 year out to 30 years.

Speaker #5: So if we see that turn around again, that's going to put some pressure on that on that segment of our client base for sure.

Speaker #5: I would say when you think about the municipal business, which is another part of your question and how rates ultimately impact that, of course, that we're looking out at longer-term rates, right?

Speaker #5: You think about all the way out to 30-year so that's going to have less of an impact there. It's really what does that do to overall sentiment and where do rates go 10-year out to 30-year that's going to have a bigger impact on the municipal financing business.

Deb Schoneman: That's going to have a bigger impact on the municipal financing business. I don't know if I've answered all your questions there, or if you have a follow-up.

Speaker #5: So I don't know if I've answered all your questions there if you have a follow-up.

Speaker #3: No, I think that's helpful. Thank you.

[Analyst] (Citizens JMP): No, I think that's helpful. Thank you.

Noah Katz: No, I think that's helpful. Thank you.

Speaker #1: We'll go next to James Yarrow with Goldman Sachs.

Operator: We'll go next to James Yaro with Goldman Sachs.

Speaker #6: Oh, good morning and thanks for taking the questions. Chad, the ECM business has your ECM business specifically has been somewhat volatile this year. So far, notwithstanding a robust healthcare ECM backdrop, which you're obviously highly exposed to, could you just help us think through the ECM outlook for the business?

James Yaro: Good morning, and thanks for taking the questions. Chad, your ECM business specifically has been somewhat volatile this year so far, notwithstanding a robust healthcare ECM backdrop, which you are obviously highly exposed to. Could you just help us think through the ECM outlook for the business?

Speaker #4: Yeah, I—yeah, I would say you actually probably got some of both. Q1 was sort of a huge outperformance relative to the market.

Chad Abraham: Yeah. I would say you actually probably got some of both. Q1 was sort of huge outperformance relative to the market. Q2 is now pretty obviously underperformance. I think for the H1 in total, it is pretty good. It is really hard to benchmark on the quarter. If we happen to have a high single-digit biotech fee come into a quarter out of a quarter, it can impact those numbers. I do think we feel pretty good about the H2 because the lion's share of our ECM business is biotech healthcare related. I think that backlog is good. Where those indices and stocks is trading is good. Obviously, if we had a H2 like we had H1, it would be in total a pretty good ECM year.

Speaker #4: Q2, you know, is is now pretty obviously underperformance. I think for the first half in total, it's pretty good. It's really hard to benchmark on the quarter, you know, if we happen to have a, you know, high single-digit biotech fee come into a quarter out of a quarter, it can it can impact those numbers.

Speaker #4: I do think we feel pretty good about the back half because the, you know, the lion's share of our the lion's share of our ECM business is biotech, healthcare related.

Speaker #4: I think that that backlog's good. Where those indices and stocks is is is trading is is good. And and, you know, obviously if we had a second half like we had first half, it it would be in total a pretty good ECM ECM year.

Speaker #4: You know, some of the other spaces we're a little underrepresented in, you know, some of the industrial industrial tech, some of the aerospace, defense where you've seen some ECM pockets.

Chad Abraham: Some of the other spaces were a little underrepresented in some of the industrial tech, some of the aerospace defense where you have seen some ECM pockets. I think you really got to look sector by sector. In total for us, the majority of our ECM business is healthcare, and the part of healthcare related to biotech is quite healthy.

Speaker #4: So I think you really got to look sector by sector. But in total, for us, the majority of our ECM business is healthcare, and the part of healthcare related to biotech is quite healthy.

Speaker #6: Excellent. You have continued to deliver robust cost discipline which I would say is notably better than many of your peers in particular this quarter.

James Yaro: Excellent. You have continued to deliver robust cost discipline, which I would say is notably better than many of your peers, in particular this quarter. Could you just update us on your approach to managing costs and maybe what has allowed you to offset some of the upward structural drivers of cost, such as AI spend and data so effectively?

Speaker #6: Could you just update us on your approach to to managing costs and and maybe what's allowed you to offset some of the upward structural drivers of cost such as AI spend and data so effectively?

Speaker #4: Yeah, maybe we'll split this up. I'll take obviously the biggest part of cost is comp. You know, I think I think we've talked about this before.

Chad Abraham: Yeah. Maybe we'll split this up. I'll take, obviously the biggest part of cost is comp. I think we've talked about this before. It really helps us to sort of have a pretty diversified business with depositories and energy, which are sometimes different cycles than tech and healthcare. Obviously, we're still a little underweight in tech. Parts of the tech and software market have been tough for people. In total, our mix of industries and business and products has been quite good, which helps us on the comp rate. Plus, for many years, we run a very variable comp rate, which is pay for performance. Bankers that produce get paid really well, don't have a ton of fixed contracts, so you have the ups and downs with that. That does allow you to manage that comp ratio more tightly.

Speaker #4: It really helps us to sort of have a pretty diversified business with, you know, depositories and energy which are, you know, sometimes different cycles than tech and healthcare.

Speaker #4: Obviously, we're still a little underweight in tech. Parts of the tech and software market have been tough for people. So in total, our mix of industries and business and products has been quite good which which helps us on the comp rate.

Speaker #4: Plus, we're just for many years, we run a very variable comp rate which is, you know, it's pay for performance, you know, bankers that produce get paid paid really well.

Speaker #4: We don't have a ton of fixed contracts and, you know, so you have the ups and downs with that. But that does allow you to manage that comp ratio more more tightly.

Speaker #5: I'll take the non-comp side, James. A couple of things. We had a little bit of pressure through 2025 with the double expense with the move from Minneapolis.

Deb Schoneman: I'll take the non-comp side, James. A couple of things. We had a little bit of pressure through 2025 with the double expense with the move from Minneapolis. Not having that bleed into 2026 has given us some natural offset. In addition to that, I think we have talked about some of the pressure we're seeing from the renewal of data contracts, et cetera. I think it's really just about good hygiene on a day-to-day basis there. We've seen some upward pressure. We are going to continue to see some pressure while we are out of the window where we're paying double expense for Minnesota. This is the Q1 where we have a little bit of double expense for New York, and I expect that to trend a bit higher through the end of 2026 and into 2027.

Speaker #5: So not having that bleed into 2026 has given us some natural offset. In addition to that, I think we have talked about some of the pressure we're seeing from the renewal of data contracts, etc., so I think it's really just about good hygiene on a day-to-day basis there.

Speaker #5: You know, we've seen some upward pressure. We are going to continue to see some pressure while we are out of the window where we're paying double expense for Minnesota.

Speaker #5: This is the first quarter where we have a little bit of double expense for New York and I expect that to trend a bit higher through the end of 26 and into 27.

Speaker #5: So I'd say we've got some upward pressure with occupancy expense with a an offset from a one-time expense last year. And then on the data side, the tech side, the AI side, I think it's just about good hygiene, good control, good transparency internally in terms of how we're choosing to deploy those resources.

Deb Schoneman: I'd say we've got some upward pressure with occupancy expense with an offset from a one-time expense last year. On the data side, the tech side, the AI side, I think it's just about good hygiene, good control, good transparency internally in terms of how we're choosing to deploy those resources.

Speaker #6: That's very helpful. Thank you both.

Chad Abraham: That's very helpful. Thank you both.

Speaker #1: We'll go next to Mike Grandall with Northland Securities.

Operator: We'll go next to Mike Grondahl with Northland Securities.

Speaker #7: Hey guys, this is Luke on for Mike. Congrats on the quarter. Just wanted to touch on advisory revenues fewer completed transactions during the quarter.

[Analyst] (Northland Securities): Hey, guys, this is Luke on for Mike. Congrats on the quarter. Just wanted to touch on advisory revenues. Fewer completed transactions during the quarter. Was just wondering how much of that kind of average fee expansion was structural versus kind of deal mix driven or the sustainability of the higher fee.

Luke Horton: Hey, guys, this is Luke on for Mike. Congrats on the quarter. Just wanted to touch on advisory revenues. Fewer completed transactions during the quarter. Was just wondering how much of that kind of average fee expansion was structural versus kind of deal mix driven or the sustainability of the higher fee.

Speaker #7: Was just wondering how much of that kind of average fee expansion was structural versus kind of deal mix driven or the sustainability of that of the the higher fee.

Speaker #4: Yeah. Yeah, I do I do think relative to some of my comments on some of the sectors, you know, still still being a little tougher in the middle market probably impacts that total volume.

Chad Abraham: Yeah, I do think relative to some of my comments on some of the sectors still being a little tougher in the middle market probably impacts that total volume. I would say, I don't think we think we're going to see the same total deal volume uptick we saw last year necessarily in the back half. Our mix of larger fees is actually quite good and larger fees in the pipeline. It'll just come down to how many of those actually get announced in closing Q4. I do think this year's going to be a little more of a fee side story than just volume.

Speaker #4: And I would say I don't I don't think we we think we're going to see the same total deal volume uptick we saw as last year in necessarily in the back half.

Speaker #4: But our mix of larger fees is actually is is actually quite good. And larger fees in the pipeline so it'll just come down to, you know, how many of those actually get announced in in close in Q4.

Speaker #4: So I do think this year is going to be a little more of a fee-size story than just just volume.

Speaker #7: Okay. Got it. And then on on municipal kind of a nice uptick sequentially I guess how much of that was either timing or or or pull forward or maybe kind of leaked in from last quarter versus like genuine demand recovery there?

[Analyst] (Northland Securities): Okay. Got it. Then on municipal, kind of the nice uptick sequentially, I guess, how much of that was either timing or pull forward or maybe kind of leaked in from last quarter versus genuine demand recovery there?

Luke Horton: Okay. Got it. Then on municipal, kind of the nice uptick sequentially, I guess, how much of that was either timing or pull forward or maybe kind of leaked in from last quarter versus genuine demand recovery there?

Speaker #5: Yeah. I I would say there was both some demand recovery but also some nice transaction large transactions that came together in the same quarter you know normally we would see if you go pre-2025 we would see a steady increase quarter over quarter this sort of cyclical trend of improving quarter over quarter throughout the year.

Deb Schoneman: Yeah. I would say there was both some demand recovery but also some nice large transactions that came together in the same quarter. Normally we would see if you go pre-2025, we would see a steady increase quarter-over-quarter, this sort of cyclical trend of improving quarter-over-quarter throughout the year. Last year, we saw Q2 strong due to some fear of tax law changes, which drove some demand. I would say for us, this quarter was really just a number of larger transactions coming together in the same quarter, which is again going to make this year look more like last year in terms of trends than maybe historically.

Speaker #5: Last year we saw second quarter strong due to some fear of tax law changes withdrew some demand. I would say for us on this quarter it was really just a number of larger transactions coming together in the same quarter which is again going to make this year look more like last year in terms of trends than than maybe historically.

Speaker #7: Okay. Great. That that's helpful. Thanks for taking the questions.

[Analyst] (Northland Securities): Okay, great. That's helpful. Thanks for taking the questions.

Luke Horton: Okay, great. That's helpful. Thanks for taking the questions.

Speaker #1: We'll go next to Stephen Tubach with Wolf Research.

Operator: We'll go next to Steven Chubak with Wolfe Research.

Speaker #8: Hi, this is Annie on for Stephen. I just had a quick question on the outlook for advisory. So in prior years you've seen meaningful growth in the back half of the year relative to the first half.

[Analyst] (Wolfe Research): Hi, this is Annie on for Steven. I just had a quick question on the outlook for advisory. In prior years, we've seen meaningful growth in H2 relative to H1. Given momentum in the business, a more challenging backdrop for sponsor activity and bank M&A, you think it's fair to underwrite a similar ramp in H2 2026 similar to prior years?

Speaker #8: And given momentum in the business, so a more challenging backdrop for sponsor activity and bank M&A, do you think it's fair to underwrite a similar ramp in the back half of '26, similar to prior years?

Speaker #4: Yeah, I think I mean obviously for us our back half our back half last year was really really strong. And so the the comps get much tougher.

Chad Abraham: Yeah. Obviously for us, our H2 last year was really strong. The comps get much tougher. No, we do not think the growth rate on the H2 is going to be the same as on the H1. I would say, as I just said, some of that's going to depend on this big list of larger fee transactions closing in Q4. We have had some good depository announcements which will close in the H2. We still feel really good about our growth for the year, but this is a hard business to look always at just quarter-over-quarter growth.

Speaker #4: So no, we do not think the growth rate on the back half is going to be the same as on the front half. I I would say, you know, as I just said, some of that's going to depend on this big list of larger fee transactions closing in Q4.

Speaker #4: We have had some good depository announcements which will close in the back half. So we feel we still feel really good about our growth for the year but this is a this is a hard business to look always at just quarter over quarter growth.

Speaker #8: Okay. Great. Thanks so much for taking my question.

[Analyst] (Wolfe Research): Okay, great. Thanks so much for taking my question.

Speaker #1: And once again to ask a question on today's call that is star one on your telephone keypad. We'll go next to Gabriel Angelli with Bank of America.

Operator: Once again, to ask a question on today's call, that is star one on your telephone keypad. We'll go next to Gabriel Angeli with Bank of America.

Gabriel Angeli: Hi, good morning, and thanks for taking the question. Maybe to just ask on the non-compensation cost in a slightly different way. Obviously, the 230 basis point year-over-year improvement in the H1 is encouraging, but I think some of your peers have highlighted maybe accelerated investments and growth there just because of the generational shift that we're going through in terms of technology with AI. Maybe you can talk to us about how you're thinking about some of the investments there and whether you've thought about maybe taking advantage of the strong revenue backdrop to accelerate some investments. Thank you.

Gabriel Angelini: Hi, good morning, and thanks for taking the question. Maybe to just ask on the non-compensation cost in a slightly different way. Obviously, the 230 basis point year-over-year improvement in the H1 is encouraging, but I think some of your peers have highlighted maybe accelerated investments and growth there just because of the generational shift that we're going through in terms of technology with AI. Maybe you can talk to us about how you're thinking about some of the investments there and whether you've thought about maybe taking advantage of the strong revenue backdrop to accelerate some investments. Thank you.

Speaker #9: Hi. Good morning and thanks for taking the question. Maybe to just ask on the non-compensation costs and the slightly different way honestly the 230 basis point you're hearing from in the first half is encouraging but I think some of your peers have highlighted maybe accelerated investments and growth there just because of the generational shift that we're going through in terms of technology with AI.

Speaker #9: So maybe you can talk to us about how you're thinking about some of the investments there and and whether you've thought about maybe taking advantage of the strong revenue backdrop to accelerate some investments.

Speaker #9: Thank you.

Speaker #5: Thank you for the question. Yeah, AI is something obviously we're focused on. We have started that spend and investment. I think the firm has done a really nice job of prioritizing the way we're thinking about that rolling things out in batches rather than wholesale and then doing some auditing in terms of how we're using the tooling in the most efficient way to deploy it from there.

Kate Clune: Thank you for the question. Yeah, AI is something obviously we're focused on. We have started that spend and investment. I think the firm has done a really nice job of prioritizing the way we're thinking about that, rolling things out in batches rather than wholesale, and then doing some auditing in terms of how we're using the tooling in the most efficient way to deploy it from there. I think we're starting to see the impact from that investment, but I think we're going to continue to be measured given how quickly that technology is evolving.

Speaker #5: So I think we're starting to see the impacts from that investment but I think we're going to continue to be measured given how quickly that technology is evolving.

Speaker #9: Great. Thank you. And maybe just one on the competitive backdrop. I think recently several money center banks have announced a renewed focus on middle market banking and and advisory.

Gabriel Angeli: Great, thank you. Maybe just one on the competitive backdrop. I think recently several money center banks have announced a renewed focus on middle market banking and advisory. Maybe you can just give us a mark-to-market on how you're thinking about the competitive backdrop there and whether the re-entry of some of these larger banks would change your view of the competitive environment. Thank you.

Gabriel Angelini: Great, thank you. Maybe just one on the competitive backdrop. I think recently several money center banks have announced a renewed focus on middle market banking and advisory. Maybe you can just give us a mark-to-market on how you're thinking about the competitive backdrop there and whether the re-entry of some of these larger banks would change your view of the competitive environment. Thank you.

Speaker #9: So maybe you can just give us a mark to market on how you're thinking about the competitive backdrop there and whether the reentry of some of these larger banks would change your view on competitive environment.

Speaker #9: Thank you.

Speaker #4: Yeah. I mean this answer might sound a little sarcastic but I've been doing this 35 years and this is probably the sixth or seventh cycle where I've seen these sort of big bank announcements coming into the middle market.

Chad Abraham: Yeah. This answer might sound a little sarcastic, I've been doing this 35 years, and this is probably the sixth or seventh cycle where I've seen these sort of big bank announcements coming into the middle market. Honestly, I don't think we take it lightly, but I'm not too worried about that. It's really important, I always try to make this point in the middle market with sponsors, especially. Getting hired is about deal flow. It's not just about showing up at one meeting with a good banker that knows a space. It takes several years to build up that deal flow, and you get paid back by winning new transactions. It's not that easy in that world to just come in and out of. I certainly acknowledge on select transactions here or there, that could increase competition.

Speaker #4: And so honestly I I don't think we take it lightly but I'm I'm I'm not too worried about that. I mean it it's really important.

Speaker #4: I always try to make this point in the middle market with sponsors especially you know getting hired is about deal flow. It's not just about sort of showing up at one meeting with a good banker that knows a space.

Speaker #4: So it takes several years to sort of build up that deal flow and and you get paid back by you know winning new transactions.

Speaker #4: So it's not that easy in that world to just come in and out of, but I certainly acknowledge on select transactions here or there that could increase competition. But in general, that's not a trend I'm worried about.

Chad Abraham: In general, that's not a trend I'm worried about.

Speaker #9: Great. Thank you.

Gabriel Angeli: Great. Thank you.

Gabriel Angelini: Great. Thank you.

Speaker #1: At this time, there are no further questions. I'd like to hand the call back to Chad Abraham for any additional or closing remarks.

Operator: At this time, there are no further questions. I'd like to hand the call back to Chad Abraham for any additional or closing remarks.

Speaker #4: All right. Thank you operator and thanks to everyone that joined us this morning. We look forward to updating you on our third quarter results.

Chad Abraham: All right. Thank you, operator, and thanks to everyone that joined us this morning. We look forward to updating you on our Q3 results. Have a great day.

Speaker #4: Have a great day.

Operator: This concludes today's call. Thank you for your participation. You may now disconnect.

Q2 2026 Piper Sandler Companies Earnings Call

Request DemoDemo

Piper Sandler

Earnings