Sign in

You're signed outSign in or to get full access.

RJ

RAYMOND JAMES FINANCIAL INC (RJF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net revenues were $3.40B (flat q/q; +5% y/y) and diluted EPS was $2.12, with adjusted EPS of $2.18; EPS was impacted by a $58M legal reserve tied to a legacy underwriting matter and $19M acquisition-related expenses .
  • Segment performance was resilient: Private Client Group $2.49B (+3% y/y), Asset Management $291M (+10% y/y), Bank $458M (+10% y/y); Capital Markets posted $381M net revenues (+15% y/y) but a pre-tax loss due to the legal reserve .
  • Key KPIs strengthened: record client AUA $1.64T (+11% y/y), fee-based PCG assets $943.9B (+15% y/y), bank NIM 2.74% (+7bps q/q), and net loans $49.8B (+10% y/y) .
  • Guidance: management expects Q4 asset management and related administrative fees up ~9% q/q, aggregate NII+RJBDP fees down ~2% q/q, FY25 effective tax rate ~24%, and share repurchases similar to Q3; adjusted pre-tax margin target of 20% remains intact .
  • Stock reaction catalyst: an EPS miss despite in-line revenues, driven by the $58M legal reserve in Capital Markets, partially offset by strong AUM-driven fees and improving bank NIM; recruiting momentum provides medium-term support .

What Went Well and What Went Wrong

What Went Well

  • Record-scale fee-based assets and client AUA supported asset management and related administrative fees of $1.73B; PCG fee-based assets ended at $943.9B (+15% y/y), contributing to resilient revenue mix .
  • Bank NIM expanded to 2.74% (+7bps q/q), with net loans reaching $49.8B (+3% q/q), led by securities-based lending (+5% q/q; +20% y/y) and stable credit quality .
  • Management highlighted “150th consecutive quarter of profitability” and accelerating advisor recruiting, calling recent activity “the largest acceleration since the financial crisis,” underscoring medium-term growth confidence .

What Went Wrong

  • EPS missed consensus due to a $58M legal reserve increase and higher seasonal non-comp expenses; pre-tax margin fell to 16.6% (adjusted 17.1%) vs 19.7% in Q2 .
  • Clients’ domestic cash sweep and ESP balances declined sequentially to $55.2B (-4% q/q), reflecting tax season and fee billings; management noted July balances also declined given record fee billings .
  • Capital Markets posted a pre-tax loss of $54M as the reserve flowed through “Other” expense, and sequential investment banking revenues fell 2% with lower M&A activity .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Revenues ($USD Billions)$3.54 $3.40 $3.40
Diluted EPS ($)$2.86 $2.36 $2.12
Adjusted Diluted EPS ($)$2.93 $2.42 $2.18
Pre-tax Margin (%)21.2% 19.7% 16.6%
Adjusted Pre-tax Margin (%)21.7% 20.3% 17.1%
Revenue Consensus Mean ($USD Billions)3.480*3.422*3.378*
Primary EPS Consensus Mean ($)2.693*2.437*2.358*

Values marked with * retrieved from S&P Global.

Segment Net Revenues ($USD Millions)Q1 2025Q2 2025Q3 2025
Private Client Group2,550 2,486 2,488
Capital Markets480 396 381
Asset Management294 289 291
Bank425 434 458
KPIsQ1 2025Q2 2025Q3 2025
Client Assets Under Administration ($USD Trillions)$1.56 $1.54 $1.64
PCG Fee-Based Assets ($USD Billions)$876.6 $872.8 $943.9
Domestic PCG Net New Assets ($USD Billions)$14.0 $8.8 $11.651
Cash Sweep + ESP Balances ($USD Billions)$59.7 $57.8 $55.18
Bank Net Loans ($USD Billions)$47.2 $48.3 $49.84
Bank Segment NIM (%)2.60% 2.67% 2.74%
Actual vs ConsensusQ1 2025Q2 2025Q3 2025
Net Revenues: Actual ($B)$3.54 $3.40 $3.40
Net Revenues: Consensus ($B)*3.480*3.422*3.378*
OutcomeBeatMissBeat
EPS: Actual ($)$2.86 $2.36 $2.12
EPS: Consensus ($)*2.693*2.437*2.358*
OutcomeBeatMissMiss

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Asset management & related administrative feesQ4 2025N/A~+9% q/q vs Q3 expectedRaised directional
Aggregate NII + RJBDP feesQ4 2025N/A~–2% q/q expectedLower sequential
Non-compensation expenses (ex CL, unexpected legal/regulatory, non-GAAP)FY 2025~$2.1BOn trackMaintained
Effective tax rateFY 2025~24%~24% reaffirmedMaintained
Share repurchasesH2 2025Consistent cadenceSimilar to Q3 (~$451M) expectedMaintained
Investment banking activityNext 2 quartersN/A“Should be better than the prior two”Raised expectations
Adjusted pre-tax margin targetLong-term20%Reiterated targetMaintained
Common dividendFY 2025$0.50 per share (raised in Q1)MaintainedMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Advisor recruiting & pipelineStrong recruiting; solid NNA (4.0% annualized) Recruiting strong across affiliations “Largest acceleration since the financial crisis”; robust pipeline across options Accelerating
Investment banking pipeline & macro (tariffs)Robust IB; strong M&A Pipeline robust; timing impacted by tariff-related uncertainty Next two quarters should be better; April tariff shock fading Improving
Cash sweep balances$59.7B; +3% y/y $57.8B; –3% q/q $55.18B; –4% q/q; June +$1B; July down with record fee billings Normalizing post-seasonality
Bank NIM & securities-based lendingNIM 2.60% NIM 2.67%; SBL growth NIM 2.74%; SBL +5% q/q, +20% y/y Improving
Technology/AI initiativesN/AN/AInvesting in AI to automate and boost advisor capacity Increasing focus
Regulatory/legalN/AN/A$58M legal reserve impacting Capital Markets One-time headwind

Management Commentary

  • Strategic focus: “150th consecutive quarter of profitability,” reflecting resilient, diversified businesses and client-first culture; optimism on recruiting and macro while acknowledging uncertainty .
  • Capital deployment: “Repurchased $451M of common stock” in Q3 and expect similar cadence, with ample capital for organic growth and acquisitions .
  • Quotes:
    • “We are growing increasingly optimistic about macroeconomic conditions although the environment remains uncertain” .
    • “We have not seen this type of acceleration in activity since the financial crisis” (on recruiting pipeline) .
    • “We are making investments to automate and streamline processes… including AI” .
    • “Next two quarters should be better than the prior two” (investment banking outlook) .
    • “We’re not going to push [alternatives] products… it will be driven by client demand” .

Q&A Highlights

  • Recruiting and competitive dynamics: Activity accelerating across affiliation options; PE-backed roll-ups remain competitive but tone is moderating; focus on seamless transitions without diluting service levels .
  • Balance sheet and SBL trajectory: SBL utilization up 20% y/y; strong deposit base supports continued loan growth; mortgages up 8% y/y .
  • Cash balances: Seasonal tax/fee billings pressured Q3, June saw +$1B recovery; July down with record $1.7B fee billings .
  • Investment banking pipeline and tariffs: April shock cooling; motivated buyers/sellers (PE ~60% of M&A) and greater certainty should improve conversions .
  • Alternatives and digital assets: Alternatives have headroom but will be demand-led; cautious on digital assets pending regulatory clarity; monitoring and preparing capabilities .

Estimates Context

  • Q3 2025: Net revenues modestly beat consensus (Actual $3.40B vs $3.378B*), while EPS missed (Actual $2.12 vs $2.358*), primarily due to the $58M legal reserve and seasonal non-comp expense elevating costs .
  • Q2 2025: Both net revenues and EPS slightly missed consensus amid lower investment banking activity .
  • Q1 2025: Both net revenues and EPS beat, supported by robust asset management fees and strong M&A .
  • Forward adjustments: Management’s Q4 expectation of ~+9% q/q asset management fees and –2% q/q aggregate NII+RJBDP fees implies mix shifts that may nudge revenue estimates higher and net interest-related estimates slightly lower; full-year non-comp expense guidance ($2.1B) and ~24% ETR should anchor model assumptions .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue resilience anchored by record AUA and fee-based penetration offsets near-term EPS headwinds from the legal reserve; medium-term margin recovery hinges on capital markets normalization and cost discipline .
  • Bank NIM expansion and SBL growth are tangible positives amid stable credit metrics, supporting earnings quality and balance sheet strength .
  • Recruiting momentum (largest acceleration since the financial crisis) is a structural tailwind for flows and fee billings into FY26 .
  • Expect Q4 fee-billing uplift (+9% q/q) and modest headwind in aggregate NII+RJBDP (–2% q/q); adjust models accordingly .
  • Capital deployment remains shareholder-friendly (consistent buybacks), with ample capital for opportunistic M&A and organic investments .
  • Watch for investment banking recovery over the next two quarters as tariff uncertainty recedes and PE activity normalizes .
  • Risk checks: seasonal cash movements, competitive recruiting packages, and episodic legal/regulatory items can introduce quarterly volatility .