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RJ

RAYMOND JAMES FINANCIAL INC (RJF)·Q2 2025 Earnings Summary

Executive Summary

  • Net revenues were $3.40B, up 9% y/y but down 4% q/q; adjusted diluted EPS was $2.42 and GAAP diluted EPS $2.36, with pre-tax margin at 19.7% as investment banking activity slowed amid tariff-related macro volatility and fewer billing days .
  • Consensus for Q2 2025 EPS was ~$2.44 vs actual adjusted $2.42; revenue consensus ~$3.42B vs actual $3.40B — a slight miss on both; prior quarter EPS beat while revenue was near consensus* [GetEstimates].
  • Segments: PCG net revenues $2.49B (+6% y/y; -2% q/q), Capital Markets $396M (+23% y/y; -18% q/q), Asset Management $289M (+15% y/y; -2% q/q), Bank $434M (+2% y/y; +2% q/q) .
  • Management reiterated strong recruiting and robust IB pipeline, resumed share repurchases ($250M in Q2; $190M more in April) and signaled a $400–$500M quarterly buyback run-rate absent acquisitions — a potential near-term sentiment catalyst .
  • Outlook: Asset management fees and spread revenues guided roughly flat sequentially for Q3; effective tax rate ~25% for FY25; non-comp expenses ~$2.1B, continuing disciplined investment in technology .

What Went Well and What Went Wrong

What Went Well

  • Asset-based businesses delivered: Asset Management net revenues $289M (+15% y/y) and pre-tax income $121M (+21% y/y) on higher AUM and fee-based inflows .
  • Bank segment stable: Net interest margin expanded to 2.67% (+7 bps q/q), with record net loans $48.3B and strong credit metrics (criticized loans 1.14% of loans) .
  • Capital deployment: Repurchased $250M in Q2 at $146/share and $190M in April at $125/share; management indicated a $400–$500M quarterly buyback target absent deals .
  • Quote: “Our strong balance sheet… should help us navigate this period from a position of strength.” — CEO Paul Shoukry .

What Went Wrong

  • Investment banking softness: IB revenues $207M, -35% q/q as macro uncertainty and tariff negotiations delayed closings; Capital Markets net revenues fell 18% q/q .
  • Fewer billing days and higher tax rate affected sequential results: Asset management fees dipped (~1% q/q), effective tax rate rose to 26.2% (vs 19.9% prior quarter) impacting net income .
  • Sweep balances down seasonally: Clients’ domestic cash sweep & ESP balances decreased 3% q/q to $57.8B due to fee billings/tax timing; RJBDP third-party yield fell to 3.00% with rate cuts .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Net Revenues ($USD Billions)$3.46 $3.54 $3.40
Diluted EPS ($)$2.86 $2.86 $2.36
Adjusted Diluted EPS ($)$2.95 $2.93 $2.42
Pre-tax Margin (%)22.0% 21.2% 19.7%

Segment net revenues and pre-tax income:

SegmentQ4 2024 Net Rev ($MM)Q1 2025 Net Rev ($MM)Q2 2025 Net Rev ($MM)Q4 2024 Pre-tax ($MM)Q1 2025 Pre-tax ($MM)Q2 2025 Pre-tax ($MM)
Private Client Group$2,480 $2,548 $2,486 $461 $462 $431
Capital Markets$483 $480 $396 $95 $74 $36
Asset Management$275 $294 $289 $116 $125 $121
Bank$433 $425 $434 $98 $118 $117

Key KPIs:

KPIQ4 2024Q1 2025Q2 2025
Client AUA ($T)$1.57 $1.56 $1.54
PCG Fee-based AUA ($B)$875.2 $876.6 $872.8
Sweep + ESP ($B)$57.9 $59.7 $57.8
Bank Net Loans ($B)$46.0 $47.2 $48.3
Bank NIM (%)2.62% 2.60% 2.67%
Domestic PCG Net New Assets ($B)$13.0 (4.0% ann.) $14.0 (4.0% ann.) $8.8 (2.6% ann.)
Net Interest Income + RJBDP Fees (Third-Party) ($MM)$678 $673 $651
RJBDP Yield – Third Party Banks (%)3.34% 3.12% 3.00%

Results vs Wall Street Consensus (S&P Global):

MetricQ4 2024 ConsensusQ4 2024 ActualQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 Actual
EPS ($)2.41*2.95 2.69*2.93 2.44*2.42 (Adjusted Diluted)
Revenue ($MM)3,320*3,464 3,480*3,537 3,423*3,403

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Asset Mgmt & Related FeesQ3 FY25Q2 FY25 expected down ~2% due to 2 fewer billing days Q3 FY25 relatively flat vs Q2 (benefit from +1 billing day) Raised vs prior directional (flat vs down)
NII + RJBDP Third-Party FeesQ3 FY25Q2 FY25 down 2–3% q/q due to fewer billing days Q3 FY25 relatively unchanged q/q on spot balances Raised
Effective Tax RateFY25~24–25% ~25% Maintained (narrowed to ~25%)
Non-Comp Expenses (ex items)FY25~$2.1B ~$2.1B; ramp in H2 (Tech, communications/IT) Maintained
Share RepurchasesOngoingOffset dilution; opportunistic Target $400–$500M per quarter absent M&A/loan growth Raised consistency/size
Dividends (Common)OngoingIncreased to $0.50 in Dec 2024 $0.50 per quarter declared May 21, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Investment BankingQ4: strong M&A/advisory; IB revenues up 58% y/y . Q1: near-record M&A; healthy pipeline Pipeline remains strong; closings delayed by tariff-linked volatility; IB revenues -35% q/q Momentum intact; timing pushed out
Advisor Recruiting/NNAQ1: strong pipeline; NNA 4.0% ann., mid-5% ex one OSJ departure Domestic NNA $8.8B (2.6% ann.); pipelines improving into March/April Improving commits; slower Q2 seasonality
AI/TechnologyQ1: highlighted tech investments; planned deeper disclosure at Investor Day Established Chief AI Officer; proprietary AI search tool rolled out; focus on adviser enablement Formalizing AI strategy; early deployment
Bank NIM & LoansQ4: NIM 2.62%; loans +5% y/y NIM 2.67%; record loans $48.3B; SBL growth strong Tailwind from mix shift; ongoing SBL growth
Cash Sweep/RJBDP YieldQ1: sweep + ESP $59.7B; RJBDP yield down with Fed cuts Sweep + ESP $57.8B; RJBDP yield 3.00% Seasonal decline; yields lower with rate cuts
Capital/BuybacksQ1: ample capital; opportunistic repurchases $250M repurchases in Q2; $190M in April; plan $400–$500M/quarter More consistent, higher run-rate

Management Commentary

  • “Financial advisor recruiting activity remains strong… The investment banking pipeline remains robust… Our strong balance sheet… should help us navigate this period from a position of strength.” — CEO Paul Shoukry .
  • “We established [a] dedicated [AI] function… goal of deploying it to help our financial professionals serve their clients more effectively and efficiently… rolled out an in-house proprietary AI search tool.” — CEO Paul Shoukry .
  • “Our current plan is to continue repurchasing shares on a more consistent basis, likely at an amount greater than the $250 million we repurchased in the fiscal second quarter.” — CEO Paul Shoukry .
  • “Based on current interest rates and quarter end balances… we would expect [aggregate of NII and RJBDP third-party fees] to be relatively unchanged in the fiscal third quarter.” — CFO Jonathan Oorlog .
  • “For the fiscal year 2025 we estimate our effective tax rate… approximately 25%.” — CFO Jonathan Oorlog .

Q&A Highlights

  • Recruiting and NNA: Pipelines improved through March/April; large teams across channels; minimal attrition vs prior quarters; optimism for H2 net new assets .
  • Loan Demand & CECL: Corporate loan demand tepid amid volatility; SBL growth robust (>$600M in Q2); tariff-related macro changes to be reflected in Q3 provision via CECL models .
  • Capital return: Management articulated a $400–$500M quarterly buyback run-rate to keep ratios from building; flexibility to dial down if loan growth/M&A accelerates .
  • Spread revenues: Guide for NII + RJBDP fees flat sequentially on spot balances; deposit beta dynamics differ across ESP (near 100%) vs sweep products (lower) .
  • Non-comp expenses: Still tracking to ~$2.1B for FY25, with H2 ramp for communications/IT and technology investments; variable components move with revenues .

Estimates Context

  • Q2 2025: EPS consensus ~$2.44 vs actual adjusted $2.42 (slight miss); revenue consensus ~$3.42B vs actual $3.40B (slight miss)*.
  • Q1 2025: EPS beat (~$2.69 vs $2.93 actual) while revenue was near consensus; Q4 2024 saw notable beats on both revenue and EPS versus consensus*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue/EPS modestly below consensus on timing of IB closings, fewer billing days, and higher tax rate; watch tariff-related macro for IB recovery timing .
  • Asset-based engines remain resilient: AUM/AUA elevated, Asset Management growing double-digits y/y, and PCG fee-based assets stable despite volatility .
  • Bank NIM inflecting higher with mix shift and lower-cost deposits; record loan balances anchored by SBL support spread revenue stability into Q3 .
  • Capital deployment is a positive catalyst: resumed buybacks with an indicated $400–$500M quarterly run-rate, alongside ample capital (Tier 1 leverage 13.3%) .
  • Guidance implies steadier Q3 fundamentals (flat AM fees and spread revenues); model effective tax rate ~25% and non-comp ~$2.1B amid ongoing tech investment .
  • Near-term narrative drivers: IB activity normalization, recruiting momentum translating into NNA acceleration, and AI/tech enhancements improving adviser productivity .
  • Dividend maintained at $0.50 per quarter; continued shareholder returns alongside balance-sheet flexibility .
Notes: 
- All company-reported figures and segment data cited from RJF press releases, 8-K exhibits, and the Q2 2025 earnings call transcript. 
- Consensus estimates sourced from S&P Global; cells marked with * reflect S&P Global data.