Piper Sandler Companies Q4 2024 Earnings Report

Volatus Aerospace EPS Results

• Actual EPS: C$4.80
• Consensus EPS: C$3.99
• Beat/Miss: Beat by +C$0.81
• One Year Ago EPS: C$4.03

Volatus Aerospace Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $454.36 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Volatus Aerospace Announcement Details

• Quarter: Q4 2024
• Date: 1/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, January 31, 2025
• Conference Call Time: 9:00AM ET

Volatus Aerospace (CVE:VOL) provides integrated drone solutions for commercial and defense markets in Canada, the United States, Latin America, and rest of Europe. The company offers drone services comprising of infrastructure inspection, mapping, survey, and imaging; public safety and defense equipment; and drone cargo and delivery solutions. It also provides pilot certification, flight skills, equipment training, beyond-visual-line-of-sight readiness services. In addition, the company offers client in-house program development, operational manuals, safety systems, waivers and SFOCs, OEM equipment testing, and certification consulting related services, as well as engaged in GIS related solutions. Further, it researches and develops, manufactures, tests, and commercializes various technologies. Additionally, the company offers public safety, aircraft management, charter, and cargo services. Volatus Aerospace Corp. is based in Oro-Medonte, Canada.

Volatus Aerospace Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to the Piper Sandler Company's 4th Quarter and Full Year 2024 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.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

Thank you, operator. Good morning, and thank you for joining The Piper Sandler Company's 4th quarter and full year 2024 earnings conference call. Hosting the call today are Chairman and CEO, Chad Abraham our President, Deb Schoneman and CFO, Kate Klune. Earlier this morning, we issued a press release announcing Piper Sandler's 4th quarter and full year 2024 financial results, which is available on our website at piper sandler.com/earnings. Today's discussion of the results is complementary to the press release.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

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. 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 atpipersandler.com and on the SEC website atsec.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.

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

A reconciliation of these non GAAP financial measures to the most directly comparable GAAP measure is provided in our earnings release issued directly comparable GAAP measure is provided in our earnings release issued today. I will now turn the

[Kathy Winslow, Legal Administrator at Piper Sandler Companies]

call over to Chad.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Thank you, Kate. Good morning, everyone. It's great to be with you to talk about our 4th quarter and full year 2024 results. Our platform performed well during 2024.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We finished the year strong with the 4th quarter representing our best quarter of 2024 as well as our 2nd highest quarterly revenues on record. We generated adjusted net revenues of $499,000,000 a 24.4 percent operating margin and adjusted EPS of $4.80 On a full year basis, adjusted net revenues were $1,500,000,000 achieving a 19.7% operating margin and adjusted EPS of $12.69 There are a number of notable highlights from 2024. The firm achieved 16% revenue growth compared to 2023 with all of our businesses contributing to the higher revenues leading to a 37% increase in net income. Advisory services accounted for over half of firm wide net revenues for the 4th consecutive year. Even with the headwinds in the depository space and healthcare sector, the breadth and strength of our platform resulted in 2024 being the 2nd strongest advisory year on record.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We grew our Investment Banking MD headcount to 183 Managing Directors as we continue to focus on deepening our sector and product coverage. We completed the acquisition of Avidity Advisors, a full lifecycle advisor to financial sponsors, global alternative investment managers and limited partner investors. And we returned $140,000,000 to shareholders through dividends and share repurchases. Overall, 2024 marks another successful year as we continue to broaden our product and client mix and expand our geographic footprint, while maintaining strong operating discipline to generate $228,000,000 of adjusted net income. Turning to Corporate Investment Banking.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We generated revenues of $332,000,000 during the Q4 of 2024, up sequentially and higher than the very strong Q4 of last year. Strong performance from advisory services and corporate financing drove 2024 Corporate Investment Banking revenues of $983,000,000 an increase of 17% over 2023. Sector contributions were relatively diverse and 6 of our 7 industry teams increased revenues over 2023. In addition, our agented debt business generated a record year fueled by revenue growth from private equity clients in this product. Specific to advisory services, we finished the year strong, generating 4th quarter revenues of $280,000,000 up 49% sequentially, driven by more completed transactions and a higher average fee.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

For the year, advisory services generated $809,000,000 in revenues, up 14% from 2023. Our team completed 2 88 advisory transactions during 2024. Industry team contributions were led by Financial Services followed by a record year from Energy and Power and solid contributions from Healthcare, Consumer and Services and Industrials. During 2024, Piper Sandler ranked as a top 3 advisor on announced U. S.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

M and A deals under $1,000,000,000 Our performance within Financial Services was led by depositories, even though 2024 was a challenging year for this sector. We were the number one advisor in U. S. Bank M and A based on the number of announced transactions and we advised on 3 of the 5 largest bank M and A transactions completed during 2024. Additionally, we saw solid contributions from our insurance and specialty finance teams.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Record performance from our Energy and Power Group in 2024 was driven by our leadership in oilfield services, where we were the top advisor based on the number of completed M and A deals. We continue to invest in this sector and recently added 2 MDs specializing in infrastructure for the energy, technology and transportation sectors. Another bright spot in 2024 was our Technology Investment Banking Group with significant year over year revenue growth. In the Q4 of 2022, we acquired DVO, which doubled the size of our technology franchise and strengthened our existing cybersecurity and software verticals, both of which performed well in 2024. We also added 2 managing directors to the platform during the year to help lead the FinTech vertical.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We remain committed to investing in our technology investment banking platform as we look to increase our share of this sector's large fee pool. Our focus on expanding revenues with private equity clients continued to yield strong results in 2024. Over the course of the last decade, we have expanded both our industry and product offerings to financial sponsors. These investments have produced meaningful contributions to the growth of the firm. For 2024, revenues from private equity clients grew north of 20%, exceeding both the value and volume growth of the overall sponsor M and A market.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Today, roughly 50% of our advisory services revenues are generated from private equity. Our acquisition of Avidity, which formed our private capital advisory group, has further expanded our ability to tap into private equity and increase our share of the wallet with this important client base. Looking forward, our advisory pipelines remain healthy and we're off to a strong start to 2025. With improving market conditions and an evolving regulatory landscape, we expect another year of growth in advisory revenues in 2025 with seasonality generally similar to 2024. Turning to corporate financing, we finished the year strong with our best quarter since 2021.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We generated revenues of $53,000,000 during the Q4, up significantly from the sequential and prior year quarters, driven by more completed deals as clients took advantage of favorable market conditions to raise capital. For the year, corporate financing revenues of $174,000,000 increased 33% from 2023, driven by more equity financings as market issuance during the year returned to more normalized levels. During 2024, we completed 117 equity debt and preferred financings raising $46,000,000,000 for corporate clients. Sector contributions for the year were again led by our healthcare team, which served as bookrunner on 40 of the 42 equity deals priced during 2024. We gained share in equity capital raising for financial services companies as we better leveraged our leading banking team with our book running equity capital markets franchise.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

The team completed several large capital raises in the depository space during 2024. We expect equity and debt financing activity to increase in 2025 as companies raise needed capital to execute on their strategic plans. Turning to Investment Banking Managing Director headcount. We finished the year with 183 Managing Directors, up 14 from 2023. During the year, we expanded product and sector coverage with MD additions in FinTech, residential and commercial services, asset management, chemicals and financial sponsor coverage.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

In addition, we added the Private Capital Advisory Group with the acquisition of Avidity. Over the last 10 years, we have grown MD headcount by an average of 13% annually. We remain intentional about strategically managing headcount and driving productivity, while consistently looking for opportunities to strengthen the platform. Before handing it off to Deb, let me make one additional remark on our growth outlook. We continue to focus on growing annual corporate investment banking revenues to $2,000,000,000 over the medium term by continuing to scale industry groups, increasing transaction and fee size, enhancing productivity and growing revenues from private equity clients.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We have capacity within the current team for growth, but also expect corporate development to be a significant component of achieving our goal. Now I will turn the call over to Deb to discuss our public finance and brokerage businesses.

[Deb Schoneman, President at Piper Sandler Companies]

Thanks, Chad. I'll begin with an update on our

[Deb Schoneman, President at Piper Sandler Companies]

public finance business. Market conditions steadily improved as the year progressed, culminating in a robust Q4. We generated $41,000,000 of municipal financing revenues for the quarter, up 15% sequentially and 40% from the prior year quarter, as increased sun flows and investor demand enabled us to execute more high yield offerings. For the year, we generated $123,000,000 of municipal financing revenues, up 47% from 2023 and our 2nd strongest year on record. During 20 24, par value During 2024, par value issuances in the municipal negotiated market increased approximately 34% from the prior year.

[Deb Schoneman, President at Piper Sandler Companies]

We underwrote 501 municipal negotiated transactions, raising 17,000,000,000 of par value for our clients. Additionally, we maintained our number 2 ranking based on the number of municipal negotiated underwriting. Our performance during 2024 benefited from our strength in specialty sectors. Our largest specialty sector is the Special District Group, which assists clients in raising capital to fund the public infrastructure needs of growing communities. We've expanded this group geographically and in 2024, they delivered a record year with 85 transactions raising $2,800,000,000 In addition to revenue growth in 2024, we've worked diligently to optimize the platform to drive higher productivity.

[Deb Schoneman, President at Piper Sandler Companies]

The enhanced productivity will allow for more investment into this business as we look to further grow market share. In terms of outlook for 2025, we anticipate public finance market conditions and issuance volumes to remain favorable. Turning to our equity brokerage business, equity markets steadily climbed higher during the year on better volumes and with generally muted volatility. 4th quarter 24 equity brokerage revenues of $61,000,000 a quarterly record led to record revenues of $215,000,000 for the full year. Performance was broad based with our high touch electronic and derivatives trading all generating strong client activity.

[Deb Schoneman, President at Piper Sandler Companies]

The strength of our platform attracted over 1600 unique clients and we traded 11,300,000,000 shares on their behalf. We continue to maintain one of the largest research platforms in the small and mid cap space with approximately 950 stocks under coverage. Additionally, our macro research capabilities continue to rank among the top on the street. As we look forward to 2025, we expect revenues similar to 2024. Lastly, turning to fixed income.

[Deb Schoneman, President at Piper Sandler Companies]

We generated revenues of $56,000,000 for the Q4 of 2024, up 16% sequentially and 17% compared to the year ago period. Our depository client activity was strong as banks and credit unions looked to deploy liquidity. In addition, our analytics team was active assisting clients in repositioning their balance sheets, and we executed on several restructuring trades during the quarter. For 2024, we generated $186,000,000 of fixed income revenues, up 11% from the prior year as we benefited from a normalizing yield curve as well as investments we've made in the business. Our fixed income strategy is focused on providing value to our clients with analytics and advice.

[Deb Schoneman, President at Piper Sandler Companies]

This advice centric model allows us to maintain a capital light approach with modest inventory levels and high inventory turnover. As we look to 2025, we expect clients to be more active as the yield curve continues to normalize. We are very focused on our medium term goal of growing annual fixed income revenues to 300,000,000 dollars by investing in talent that provides differentiated advice and expertise, building on our municipal franchise and increasing electronic trading. Now, I will turn the call over to Kate to review our financial results and provide an update on capital use.

[Kate Clune, CFO at Piper Sandler Companies]

Thanks, Deb.

[Kate Clune, CFO at Piper Sandler Companies]

As a reminder, 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 the Q4 of 2024, we generated net revenues of $499,000,000 up 42% from the sequential quarter and 9% compared to the Q4 of last year. For 2024, net revenues totaled $1,500,000,000 up 16% over last year as all of our businesses registered increased revenue. Our strong performance was by an improved operating environment combined with our scale, market leadership and deep client relationships. Turning to operating expenses and margin.

[Kate Clune, CFO at Piper Sandler Companies]

Our compensation ratio was 60.3% for the Q4 of 2024 62% for the full year, down 160 basis points from 2023 driven by increased net revenue. Looking to 2025, we expect to drive compensation leverage with a modest decline in our compensation ratio on a full year basis as we remain focused on balancing employee retention and investment opportunities while exercising strong operating discipline. Non compensation expenses for the Q4 of 2024, excluding reimbursed deal costs were $65,000,000 up 6% on a sequential basis and 7% compared to the year ago quarter. Non compensation costs were higher during the current quarter, driven primarily by increased recruiting and placement fees and a full quarter of avidity on our platform. For 2024, excluding reimbursed deal costs, non compensation expenses totaled $251,000,000 or an average of $63,000,000 per quarter and increased 3% over 2023.

[Kate Clune, CFO at Piper Sandler Companies]

We continue to drive operating leverage on our non compensation expenses with our non compensation ratio declining more than 2 percentage points compared to last year. Our expectations for non compensation expenses in 2025 have been adjusted to a range of $65,000,000 to $67,000,000 per quarter, excluding reimbursed deal costs. Increased non compensation expenses for 2025 are driven by relocating our Minneapolis office headquarters to support growth in the business. In addition to occupancy costs, inflationary increases in both data communication contracts and travel costs, the addition of new employees to our platform and the expectation of increased business activity will drive elevated costs. Non compensation expenses are a key driver of operating leverage and we remain focused on managing the actionable expenses.

[Kate Clune, CFO at Piper Sandler Companies]

During the Q4 of 2024, we generated operating income of 100 and $21,000,000 and an operating margin of 24.4 percent, up over both of the comparable quarters. For the year, operating income totaled $304,000,000 which resulted in a 19.7% operating margin. Our full year net revenues increased 16%, while our operating profits are up 43% compared to the prior year period. Our income tax rate was 28.5% for the Q4 of 2024 24.9 percent for the year. Income tax expense for the year was reduced by $14,000,000 of tax benefits related to the vesting of restricted stock awards.

[Kate Clune, CFO at Piper Sandler Companies]

Excluding these benefits, our 2024 income tax rate was 29 point 6%. For 2025, we expect our income tax rate on a full year basis to be around 30%, excluding the impact from the vesting of restricted stock awards. We have revised our income tax rate expectations as we're experiencing upward pressure as the result of increased non deductible expenses, including limitations on the deduction of compensation expense enacted with the American Rescue Plan Act of 2021. During the Q4 of 2024, we generated net income of $87,000,000 and a diluted EPS of $4.80 For the year, net income totaled $228,000,000 and diluted EPS was $12.69 I'll finish with an update on capital allocation. We remain committed to returning capital to shareholders.

[Kate Clune, CFO at Piper Sandler Companies]

And during 2024, we returned an aggregate of $140,000,000 to shareholders. We paid an aggregate of $74,000,000 or $3.50 per share to our shareholders through our quarterly and special cash dividend. We repurchased approximately 347,000 shares of our common stock or $66,000,000 related to employee tax withholding on the vesting of restricted stock awards. These repurchases more than offset the share count dilution from this year's annual stock grants. Given our level of earnings today, the Board approved a special cash dividend of $3 per share related to our 2024 full year results.

[Kate Clune, CFO at Piper Sandler Companies]

Including this special dividend, our total dividend for fiscal year 2024 equals $5.50 per share of common stock or a payout ratio of 43% of adjusted net income. In addition, the Board approved a quarterly cash dividend of $0.65 per share. Both the special and the quarterly cash dividend will be paid on March 14 to shareholders of record as of the close of business on March 4. 2024 marked a successful year for Piper Sandler. We grew revenues and profitability, while furthering the strategic expansion of our business.

[Kate Clune, CFO at Piper Sandler Companies]

As we look forward, we're focused on executing on our strategic priorities to drive revenue growth and strong return for our shareholders. With that, we can open up the call for questions.

[Operator]

Thank We can take our first question from Brendan O'Brien with Wolfe Research.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

Good morning, guys, and thank you for taking my question. I guess to start things off, you mentioned this a bit in your prepared remarks, Chad, the headwinds within Financial Services and Healthcare. And given that those two areas were arguably under the greatest scrutiny during the prior administration, I just want to get a sense as to how dialogues have developed over the last few months, whether you're starting to see even a further pickup within financial services just after what was a strong 2024?

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yes. I would just say, yes, in both sectors things are definitely better. I mean, first starting with healthcare, part of it was just some of the regulatory scrutiny and certainly fear that caused. I would also just say if you look at different subgroups and how stocks traded in the public markets, it was a pretty tough year for healthcare. And so for us, I mean, obviously, we got a 25, 30 year history in building this healthcare business.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

It's sort of rare when that business is tough, but it was a tough year. And I would say we've already certainly seen signs in the M and A market relative to healthcare. We were on a couple of really nice transactions this week in medtech. So I also I already think we're starting to see signs of improvement in healthcare. Relative to financial services, still our largest business last year, but most of my commentary was relative to depositories.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I do think it was still for most of the year pretty difficult in depositories. A lot of those conversations have started to improve. We definitely think 2025 is going to be better for depositories. How many deals actually get announced and closed, we'll have to watch that because we got to get a lot of that stuff announced by May or June. I would say even in depositories there were bright spots.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We did quite a bit of equity capital market raising which was great. And with that business in depositories, we have a pretty diversified revenue stream. But in general, it was still a if you just look at the league tables and amount of transactions, it was still a tough year for completed depository M and A transactions. Whether that improves a lot in 2025 or 2026, we definitely see it coming.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

That's great color. And then for my follow-up, I just wanted to touch on a follow-up on the advisory business. 2 of the biggest headwinds you cited have been deal elongation and buyer seller valuation disparities. It would be great to get a mark to market of how those two areas are trending, how close we are to more normal course type of activity.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yes. What I would say with the advisory business, I mean, it's really just more of the same. I know I sound like a broken record the last 4 quarters. It's just slow steady improvement. Pretty much in every sector, we're able to get deals done.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I would say we're not certainly in our private equity and sponsor business, we're not seeing frothy processes where we have 5, 6 buyers at the end. By the time we get to the end, it's pretty thin. We've got a couple of buyers. They can get financing. We can get them done.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

But I would just say it's slow steady improvement. We're absolutely not sort of off to the races there, which is okay. This slow steady build means we could have a nice more normal longer cycle here.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

Great. Thank you for taking my questions.

[Operator]

Thank you. We will take our next question from James Yaro with Goldman Sachs.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Good morning and thanks for taking my questions. I just wanted to touch on the ECM business, obviously very strong results in Corporate Finance in the quarter. Maybe you could just help us think through the outlook for IPOs generally, but specifically maybe you could just comment a little bit on the client appetite for healthcare transactions and what is clearly from a regulatory perspective a backdrop that has some crosswinds?

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yes. So it was a strong very strong quarter for us in ECM. That was after a pretty weak relative Q3. It's obviously it sort of depends on how many large transactions we have hit at the beginning or the end of the quarter, but certainly very strong for us. Specifically, relative to healthcare, obviously, biotech financings are sort of a big part of the market.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I would actually say in general, January has been only okay there. What I would say relative to your question with the IPO market is, it definitely feels like it's improving. It's not like I have 30 data points, but we have a few. And some of that is, we did we were part of a couple of energy transactions, an IPO that performed quite well. We were this week part of a medtech IPO, which we just haven't seen many of those the last few years.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

That performed really well. So I do think we're getting some breadth there. And some of that also has to do with it in these books relative to health care, a little more expansion into some of the generalist accounts, not just the health care specialists. So I do think we're in the early innings of seeing some pretty good improvement in the IPO market. And so if we see that continue and we see the debt breadth across sectors, that will be good for more improvement in our ECM business.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Great. That's very clear. So maybe just thinking about acquisitions here, you talked a little bit about a potentially longer cycle here. How does that longer cycle impact your ability to conduct acquisitions going forward?

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yes. I would say we're pretty good. We're pretty excited. We're kind of I think in what should be a pretty good market for acquisitions. We're long enough away kind of from the 2020 peak revenues where we've had for some of the boutiques and sectors a couple of tougher sectors in 2022, 2023.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

I think some of the businesses have normalized in 2024. So we're kind of dealing with realistic revenue outlooks, which makes sort of deal doing easier. And I think the companies we're talking to are looking at sort of pretty good pipelines, pretty good line of sight in revenues. And I think we're able to diligence that. Likewise, I think on a relative basis, we've performed really well.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

So we've got a lot of interest from folks to talk to us. So I'm pretty optimistic about the next couple of years here for that.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Very clear. Thanks so much, Chad.

[Operator]

Thank you. Our next question comes from Devin Ryan with Citizens JMP.

[Brian Fitzgerald, Associate at Citizens JMP Securities, LLC]

Hey, good morning. This is Brian Fitzgerald on for Devin. I wanted to start on fixed income. In the press release, you guys mentioned a new managing director hire that's going to head the structured products group. I wanted to get a sense on the opportunity you see in securitized products and any color on how your fixed income business could evolve?

[Brian Fitzgerald, Associate at Citizens JMP Securities, LLC]

Thanks.

[Deb Schoneman, President at Piper Sandler Companies]

Yes, thanks. Couple of things. If I start well, actually, I would say let me just answer that first that last question holistically on how the fixed income business can evolve, and I think that will lead into answering your first question as well. Couple of things. We mentioned in the script, I mentioned investing in talent and that MDHire was part of that talent.

[Deb Schoneman, President at Piper Sandler Companies]

We see the ability to continue to grow the non depository side of our business. And there actually is a nice link between the depository to non depository side as banks go through restructurings, bring parts of their balance sheet to the marketplace. It gives us a nice avenue to be able to build the non depository part of our business. Now specifically with the build out of structured products and securitizations, we see that in particular securitizations growing in the marketplace significantly. It aligns with parts of our Investment Banking team on the Financial Services side as well.

[Deb Schoneman, President at Piper Sandler Companies]

So that's one piece of this. Secondly, building out our municipal franchise is another piece that I mentioned. And that's really about taking what has been an incredibly strong new issue public finance business for us and leveraging that even more into our secondary business. So we've hired a couple of new traders in the soft yield space to complement the investment grade trading team and now we're focused on recruiting sales talent, again, to be able to do more on the secondary side. And lastly, this is also municipal's relative to electronic trading.

[Deb Schoneman, President at Piper Sandler Companies]

We have seen a significant rise in the number of SMAs out there in the marketplace and the level of retail and household holdings of municipals has increased significantly. So the percentage of trades in the marketplace in the municipal space that's 1,000,000 power below, so small trades has gone from somewhere around 3% a few years ago to over 30% of the market. And so if you're talking about that many transactions in smaller lot trades, it's really important that we can interact with those SMAs in a way and really the large funds who are managing these SMAs in a way that's efficient and effective. So those are the components of the fixed income build out. And let me know if I didn't hit what you were hoping for on the first one.

[Brian Fitzgerald, Associate at Citizens JMP Securities, LLC]

No, no, that was great. Thank you. And then as a follow-up, just the comp ratio is 62% for the full year. I think last quarter, guys were talking about that 61.5% to 62.5% range for 2025%. I guess given the revenue strength in 4Q, do you have any updates to that or is that still fair gain?

[Brian Fitzgerald, Associate at Citizens JMP Securities, LLC]

Thanks.

[Kate Clune, CFO at Piper Sandler Companies]

Hi, Brian. Thank you for the question. I think that range is still fair game, although we do continue to anticipate driving, we said, modest decline in the comp ratio as revenues continue to grow. Of course, that depends on the magnitude to which revenues grow and, of course, our continued investment in talent for the platform. So I think the range is reasonable.

[Kate Clune, CFO at Piper Sandler Companies]

Obviously, we concluded the year on a full year basis dead middle there. And I do expect continued leverage on that as we move into 2025 if expectations unfold as we're contemplating.

[Brian Fitzgerald, Associate at Citizens JMP Securities, LLC]

Great. Thank you.

[Operator]

Thank you. Our next question comes from Mike Grondahl with Northland Securities.

[Mike Grondahl, Senior Research Analyst at Northland Capital Markets]

Hey, guys. Thanks and congratulations on a strong finish. Chad, what would you highlight as your top two priorities for 2025?

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Yes, good. I would really look at a couple of things. In Investment Banking, I would say that the priorities are continuing to expand some of the industry teams. Obviously, we're there are still places in financial services and healthcare, our strongest areas where we can beef up talent. We had a record year in energy, and we saw massive improvement in sort of our technology and software team with sort of the industry focus.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

But I would say that is still a very high priority. We could easily double the size of the MDs and talent we have in technology over the next few years. And we really believe that business should be as big as our Financial Services and Healthcare business. And then I would also say within Investment Banking, we've added some great expertise over the years in products. We're building out our restructuring team.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

We added the capital advisory team. So I think it's the second focus is to really get leverage on our 185 Managing Directors across those various products. And then if you'd ask me to pick a third, which I think Deb highlighted relative to growth priorities outside of Investment Banking, we're going to emphasize just given the size of the fee pool and fixed income, there's a lot of opportunity for growth there for us.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Great. And maybe it's already answered with what Deb said earlier, but Deb, I'll just give you a chance to maybe add anything as you look at fixed income and the brokerage business.

[Deb Schoneman, President at Piper Sandler Companies]

Yes, relative to priorities, I would say for fixed income, I don't know if there's anything I would add. One of the things I would say is we have been adding talent. We're focused on adding the right talent. So it's a bit of a slow and steady build as we move forward in the future along all those areas that I spoke to, I would say the comments I made on municipals are just a little farther along and maybe a little more near term where you see some of the structured product and securitization, just a little more time to really build into that. We've hired some talent.

[Deb Schoneman, President at Piper Sandler Companies]

We have some coming, but we're also continuing to recruit in that area. And as it relates to equity brokerage, I've mentioned this on last quarter's call. Again, it is putting in place some pieces for some near term build over, I would say, over the next couple of years here, focused around products on the trading side, electronic trading in particular continuing to build that out and then geographically in the U. K, EU and rest of world where we see those market wallets growing a little more. So thanks for the question.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Yes, you bet. Thanks guys.

[Operator]

Thank you. It appears that we have no further questions at this time. Mr. Abraham, I will turn the conference back to you for closing remarks.

[Chad Abraham, Chairman & CEO at Piper Sandler Companies]

Thank you, Melissa, and thanks to everyone that joined. We look forward to updating you on our Q1 results in a few months. Have a great day and a good weekend.

[Operator]

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

Participants

Analysts

• Kathy Winslow, Legal Administrator at Piper Sandler Companies
• Chad Abraham, Chairman & CEO at Piper Sandler Companies
• Deb Schoneman, President at Piper Sandler Companies
• Kate Clune, CFO at Piper Sandler Companies
• Brendan O'Brien, Senior Vice President at Wolfe Research
• James Yaro, Vice President Equity Research at Goldman Sachs
• Brian Fitzgerald, Associate at Citizens JMP Securities, LLC
• Mike Grondahl, Senior Research Analyst at Northland Capital Markets
• Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets