Evercore Inc. (EVR)·Q2 2025 Earnings Summary

Executive Summary

• Record quarter: Net revenues were $833.8M GAAP (+21% YoY) and $838.9M adjusted (+21% YoY); adjusted EPS was $2.42 (+34% YoY), and adjusted operating margin rose 230 bps to 18.7% .
• Significant beat vs consensus: Q2 revenue and EPS materially exceeded S&P Global consensus; revenue by +$114.2M (+15.9%) and EPS by +$0.64 (+36.2%). Bold beats driven by large advisory closings, record Private Capital Advisory (PCA), and stronger equities trading ; estimates table below (Values retrieved from S&P Global).
• Strategic catalyst: Evercore announced the acquisition of Robey Warshaw (GBP 146M/~$196M), expected EPS accretive in first full year; enhances UK/EMEA platform and large-cap franchise breadth .
• Operating leverage: Compensation ratio improved to 65.4% adjusted (65.8% GAAP); non-comp ratio fell to 15.9% adjusted on higher revenue, despite tech/data investments and footprint expansion .

What Went Well and What Went Wrong

• What Went Well

  • “Record Second Quarter and First Half Net Revenues” with adjusted net revenues of $838.9M (+21% YoY); adjusted operating income up 37% YoY; adjusted operating margin 18.7% (+228 bps) .
  • Large-cap advisory momentum: advised on Cox–Charter ($34.5B), WBD separation, Foot Locker sale to Dick’s ($2.5B); July pipeline includes BD–Waters ($17.5B RMT) and Huntington–Veritex ($1.9B) .
  • PCA delivered “record second quarter and first half results”; equities had strongest Q2 ever on volatility and volume; AUM reached ~$14.5B, a record quarter-end level .

• What Went Wrong

  • Non-comp costs rose 9–10% YoY (tech/data licenses, occupancy, travel); management expects lag before comp ratio can move meaningfully lower given continued investment and hiring .
  • Other revenue variability: the hedge/investment portfolio drove mixed results intra-year; adjusted Other Revenue +34% YoY in Q2, but down 26–30% YTD vs prior year given lower fund returns and treasury yields .
  • Tax rate kinetics: adjusted ETR rose to 30.0% (vs 26.9% PY) on higher non-deductibles and state/local apportionment; GAAP ETR 29.3% (vs 25.8% PY) .

Financial Results

Actual vs S&P Global Consensus (Q2 2025)

Values retrieved from S&P Global.*

Segment Breakdown (GAAP net revenues)

KPIs

Non-GAAP adjustments and impact: Adjusted results exclude acquisition/transition costs and present equity-method income within revenue; adjusted diluted shares include LP units/RSUs, resulting in adjusted EPS of $2.42 vs GAAP $2.36 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “We are pleased with our forward momentum and remain focused on our client coverage, the quality of our execution, and our longer term strategy.”
• Founder/Senior Chairman: “We delivered the strongest second quarter and first half revenues in our history, and are entering the second half of the year with meaningful momentum.”
• CEO (on Robey Warshaw): “By combining Robey Warshaw's long-standing trusted relationships... with Evercore's broad product capabilities... we are enhancing the value we can deliver to clients around the world.”
• CFO (on operating leverage): Adjusted operating margin 18.7% (+230 bps YoY); comp ratio down 60 bps YoY/30 bps QoQ; non-comp ratio down 170–180 bps vs PY/Q1, while investing in tech and footprint .
• CFO (on financing): Issued $250M notes (5.17% 2030; 5.47% 2032) to refinance $86M maturities and for general corporate purposes .

Q&A Highlights

• Robey Warshaw scope/synergies: Top-tier strategic advisory, deep board/C-suite relationships; synergy is marrying RW relationships with Evercore’s product/sector platform to translate into broader revenues .
• Growth strategy: Primary growth via hiring high-quality talent “one by one”; acquisitions are opportunistic and culturally aligned; pipeline of senior hires remains healthy .
• PCA outlook/competition: Industry secondary volumes at highs; competition intensifying, but Evercore well positioned; expect strong levels to continue, albeit possibly not “ramp as fast” in H2 .
• Expenses and margin trajectory: Comp ratio progress but near-term step-downs unlikely; non-comp investments in tech and global offices are intentional; per-head non-comp up ~2.4% YoY in Q2; ~13% since pre-COVID (~2%/yr) .
• Financing/consideration mechanics: £146M (~$196M) payable in two tranches; first in stock; potential future consideration contingent on outperformance and synergy goals; strong consideration to repurchase shares issued .

Estimates Context

• Q2 2025 results materially beat Wall Street consensus (S&P Global): revenue $833.8M vs $719.6M*, EPS $2.42 vs $1.78*. The breadth of advisory closings, record PCA, and stronger equities volumes drove the beat; non-comp ratio fell on higher revenue despite investment spend .
• Near-term estimates may need upward revisions for non-M&A revenues (PCA, equities) and advisory trajectory, with tax rate normalized back to ~30% from Q1 anomaly; watch comp ratio discipline and tech/occupancy cost growth .
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Broad-based strength: Advisory, PCA, and equities drove a clean top-line and EPS beat; operating margin expansion signals healthy operating leverage .
• Strategic M&A catalyst: Robey Warshaw acquisition fortifies UK leadership and large-cap boardroom access; expected EPS accretive in year one, with synergy levers across products/sectors .
• Improving backdrop: CEO confidence rising; backlog building; ECM volumes recovering; shareholder advisory and restructuring remain active—supports diversified revenue durability .
• Cost watchpoints: Tech/data renewals and footprint expansion raise non-comp, but ratios declined on revenue scale; comp ratio progress is gradual as investment/hiring continues .
• Capital returns and balance sheet: Dividend maintained at $0.84; YTD capital return of $532.1M; new notes prudently refinance maturities while preserving liquidity .
• Monitor H2 execution: Track large-deal closings, PCA pipeline depth, ECM run-rate, and EMEA momentum post-RW announcement; comp ratio and tax-rate normalization are key model inputs .