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GOLDMAN SACHS GROUP INC (GS)·Q1 2025 Earnings Summary

Executive Summary

  • Goldman Sachs delivered a strong quarter: net revenues $15.06B, diluted EPS $14.12, ROE 16.9%, ROTE 18.0; results were the firm’s third-highest quarterly net revenues, with record Equities and record financing revenues in both Equities and FICC .
  • EPS materially beat Wall Street consensus, aided by robust Markets activity and a discrete tax benefit; governance catalysts included a new multiyear authorization to repurchase up to $40B of common stock and $4.36B buybacks in Q1 .
  • Asset & Wealth Management was softer sequentially on lower principal investment revenues despite record AUS of $3.17T and continued fee-based inflows .
  • Operating expenses rose YoY on higher transaction-based and compensation costs; efficiency ratio was 60.6% vs 65.5% in Q3 2024, indicating improved operating leverage .

What Went Well and What Went Wrong

  • What Went Well

    • Record Equities net revenues ($4.19B) and record financing revenues in both Equities and FICC; FICC financing up on mortgages and structured lending .
    • Investment banking backlog increased QoQ; debt underwriting net revenues rose (asset‑backed and IG activity), and the firm maintained #1 league table positions across M&A, equity-related, and common stock offerings YTD .
    • CEO David Solomon: “In times of great uncertainty, clients turn to Goldman Sachs for execution and insight,” underscoring franchise strength amid shifting sentiment .

  • What Went Wrong

    • Advisory revenues were significantly lower vs a strong prior year; investment banking fees down YoY despite backlog growth .
    • Asset & Wealth Management revenues declined YoY and QoQ on weaker equity and debt investment contributions, partially offset by higher management fees; pre-tax margin impacted by historical principal investments .
    • Operating expenses increased YoY (+5%) on transaction-based and compensation costs; provision for credit losses remained elevated at $287M (credit card portfolio) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Net Revenues ($USD Billions)$12.70 $13.87 $15.06
Diluted EPS ($)$8.40 $11.95 $14.12
Net Earnings ($USD Billions)$2.99 $4.11 $4.74
ROE (%)10.4% 14.6% 16.9%
Efficiency Ratio (%)65.5% ~63% (full-year commentary) 60.6%
Provision for Credit Losses ($USD Millions)$397 $351 $287
Effective Tax Rate (%)22.6% (YTD) 22.4% (FY 2024) 16.1%

Segment Net Revenues ($USD Billions)

SegmentQ3 2024Q4 2024Q1 2025
Global Banking & Markets$8.55 $8.48 $10.71
• Investment Banking Fees$1.87 $2.05 $1.91
• FICC$2.96 $2.74 $4.40
• Equities$3.50 $3.45 $4.19
Asset & Wealth Management$3.75 $4.72 $3.68
Platform Solutions$0.39 $0.67 $0.68
Total Net Revenues$12.70 $13.87 $15.06

Key KPIs

KPIQ3 2024Q4 2024Q1 2025
Assets Under Supervision (AUS) ($USD Trillions)$3.10 $3.14 $3.17
Long-term Fee-based Net Inflows ($USD Billions)$29 (LT) $22 (LT) $29 (LT)
Dividend per Common Share ($)$3.00 declared (Dec 30 payment) $3.00 (Q4 dividends $965M) $3.00 declared (Jun 27 payment)
Common Share Repurchases$1.00B (2.0M shares) $2.00B $4.36B (7.1M shares; avg $610.57)
Average GCLA ($USD Billions)$447 $422 $441

Actual vs S&P Global Consensus

Metric (Quarter)ActualConsensusSurprise
Revenue (Q1 2025)$15.06B $14.71B*+$0.35B (beat)*
Diluted EPS (Q1 2025)$14.12 $12.26*+$1.86 (beat)*
Revenue (Q4 2024)$13.87B $12.46B*+$1.41B (beat)*
Diluted EPS (Q4 2024)$11.95 $8.35*+$3.60 (beat)*

Values with asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY 2025~20% (Jan 2025 update) ~21% (ex discrete items) Raised
Severance Charge (Performance Mgmt)Q2 2025N/A~$150M expectedNew
Platform Solutions Pre‑taxFY 2025Drive to pre‑tax breakeven in 2025 Maintained targetMaintained
Dividend per ShareQuarterly$3.00 $3.00 declared for Q2 payment Maintained
Share Repurchase AuthorizationMultiyearN/AUp to $40B authorization approved New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/Technology & Efficiency3‑year efficiency plan; leveraging AI to transform engineering and modernize tech stack “Leveraging AI solutions… developer copilot… GSAI assistant” to scale productivity Execution progressing; broader internal adoption
Macro/Policy & TariffsPost‑election catalysts; regulatory clarity could improve activity Heightened uncertainty around trade policy; clients active despite volatility More caution; still supportive of client activity
Capital & BuybacksCET1 15.0%; $3B capital returned in Q4 CET1 14.8% (standardized); record $4.36B buybacks; $40B authorization Accelerated capital return
Investment Banking BacklogIncreased QoQ; constructive outlook for 2025 Backlog up again, notably in Advisory Continues to build
Markets (FICC/Equities)Record FICC financing; strong Equities Record Equities and record financing in Equities/FICC Strength broadens; financing mix rising
Alternatives Fundraising$72B raised in 2024; consistent in 2025 expected $19B raised in Q1; alternative AUS $341B Continued momentum

Management Commentary

  • David Solomon: “Our strong results this quarter have demonstrated that in times of great uncertainty, clients turn to Goldman Sachs for execution and insight.”
  • Denis Coleman: “Global Banking & Markets produced revenues of $10.7B… Equities net revenues were a record $4.2B… financing revenues of $2.7B rose 22% YoY to a new record.”
  • On macro: “We are entering the second quarter with a markedly different operating environment… clients remain very active.”
  • On capital deployment: “Board… authorized a multiyear share repurchase program of up to $40B” and the firm returned $5.34B to common shareholders in Q1 .

Q&A Highlights

  • Financing and prime balances: Management expects some moderation after asset price resets, but client financing demand remains strong across FICC and Equities .
  • Capital return sustainability: Record buybacks reflect strong earnings generation and dynamic capital management; priority remains client support, sustainable dividend, and returning excess capital .
  • Efficiency plan: Expect ~$150M severance in Q2 tied to pyramid structure adjustments; ongoing spend management to fund tech investments .
  • Tax rate: Q1 ETR 16.1% benefited from stock‑based comp; full‑year tax rate guided to ~21% .
  • HPI and consumer portfolios: HPI attributed equity ~$4B; similar magnitude across card portfolio; capital to be freed as assets sold down over time .

Estimates Context

  • Q1 2025 beat: EPS $14.12 vs $12.26 consensus; revenue $15.06B vs $14.71B consensus. Beat driven by record Equities intermediation/financing, record FICC financing, and a discrete ~$525M tax benefit increasing EPS by ~$1.63 . Values with asterisk (*) retrieved from S&P Global.
  • Q4 2024 also beat: EPS $11.95 vs $8.35; revenue $13.87B vs $12.46B, supported by strong markets and higher management and other fees . Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Markets strength is broadening with financing mix rising across FICC and Equities; expect continued resilience even if intermediation ebbs and flows .
  • Advisory softness vs a strong prior year offset by backlog growth; as policy clarity improves, IB fee realization should follow .
  • AWM underlying durability (fees and private banking) remains intact despite principal investment volatility; record AUS supports fee trajectory .
  • Capital return is a clear catalyst: $4.36B Q1 buybacks, $40B authorization provide flexibility; CET1 14.8% (standardized) maintains buffer .
  • Expense discipline ongoing; near‑term severance charge (~$150M in Q2) is part of a multi‑year efficiency program funding tech/AI investments .
  • Discrete tax benefits materially lifted Q1 EPS; normalize expectations to ~21% tax rate for the year .
  • Near‑term trading: Positive narrative around record Markets revenues and capital returns; watch advisory conversion, financing balances after April deleveraging, and card credit trends (provisions) .