A slowdown in investment banking activity during the third quarter dragged down results for Minneapolis-based Piper Sandler.
As deal activity slows, Piper Sandler's results sink
A slowdown in investment banking activity drags down Piper Sandler third quarter results.
October 28, 2022 at 4:56PM
The investment banking and institutional securities firm earned $14.5 million, or 87 cents a share, down 68% from the same quarter of 2021. Net revenue fell 26% to $331.8 million.
"Results for the quarter demonstrate the benefits and durability of our diversified and scaled business as net revenues exceeded $330 million despite the ongoing challenging market backdrop," said Chad Abraham, chief executive of Piper Sandler in a news release.
Earnings adjusted for certain acquisition-related and other costs for the quarter were $2.32 a share, down 49% from the same quarter a year ago but better than the consensus estimate of $2.04 a share from five analysts who cover the company.
M&A markets had a banner year in 2021 and the first few months of 2022 remained strong, but increasingly uncertain economic conditions and rising geopolitical conflicts hampered activity in the second and third quarters.
Piper's investment banking revenues, which include advisory services on mergers and acquisitions, fell 28%. Revenue from advisory services fell 18% from the third quarter last year.
Corporate financing activity also slowed and Piper's deal count dropped 60% in the third quarter. According to Piper Sandler, corporate financing activity did show some sequential improvement over second quarter results when market conditions turned briefly favorable in August.
Piper Sandler continued to invest in its own business, completing its third acquisition of the year. On Oct. 10 it closed on a deal for San Francisco-based DBO Partners, an independent investment banking firm that specializes in technology and emerging technology companies.
"DBO's franchise enhances our credibility with both large-cap corporate and large cap sponsor clients within the technology landscape, given their established track record of working with market-leading clients on high-profile transactions," Abraham told analysts on the earnings call.
Shares of Piper Sandler closed Friday at $125.88, up 3% on an up market day. Year to date, Piper shares are down 28%.
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