Stifel Q1 2025 presentation: record revenue offset by legal expenses

Stifel Financial (NYSE:SF) reported record first-quarter revenue in its Q1 2025 financial presentation released on April 23, though significant legal expenses weighed heavily on the company’s bottom line. The financial services firm posted 8% year-over-year revenue growth while navigating challenges that compressed profit margins.

Quarterly Performance Highlights

Stifel achieved record first-quarter net revenue of $1,255 million, representing an 8% increase compared to Q1 2024. However, GAAP net earnings came in at $44 million with earnings per share of $0.39, falling short of analyst expectations. On a non-GAAP basis, net earnings were $54 million with EPS of $0.49.

The company’s performance was marked by several achievements, including record first-quarter revenue in Global Wealth Management, record asset management revenue, and the highest equity transactional revenue since the fourth quarter of 2021. Stifel also expanded its advisor base, adding 36 financial advisors from B. Riley Financial during the quarter.

As shown in the following snapshot of key financial metrics:

Detailed Financial Analysis

When excluding legal expenses, Stifel’s operating performance showed stronger fundamentals. The company’s pre-tax pre-provision income reached $268 million, up 19% year-over-year, with a return on tangible common equity (ROTCE) of 26.8%. However, legal matters had a substantial impact on the company’s financial results.

The following breakdown illustrates the operating results excluding legal expenses and shows the revenue bridge from Q1 2024 to Q1 2025:

Compared to analyst consensus estimates, Stifel’s operating revenues of $1,255 million fell 1% short of the mean estimate of $1,269 million. The company noted stronger revenue from institutional equities, advisory services, and equity underwriting, but highlighted that non-compensation expenses included $180 million related to legal matters.

The variance to consensus estimates is detailed in this comparison:

Segment Performance

Global Wealth Management

The Global Wealth Management segment delivered record first-quarter net revenue, driven by an 11% increase in asset management revenue, which reached $410 million. Transactional revenue grew 3% to $186 million, while net interest revenue increased 4% to $246 million. Total (EPA:TTEF) client assets stood at $485,860 million, with fee-based client assets at $189,693 million.

The following chart shows the segment’s revenue breakdown and performance trends:

Institutional Group

The Institutional Group also showed strong performance, with advisory revenue increasing 15% to $137 million and capital raising revenue up 5% to $95 million. Transactional revenue grew 4% to $149 million. Stifel maintained its leadership position in municipal issuance, ranking #1 in number of issues in 2025 with a 13.2% market share.

The segment’s revenue performance is illustrated in this breakdown:

Expense Management and Capital Allocation

Stifel’s expenses showed significant year-over-year increases, with compensation expense up 8% to $728 million and non-compensation expenses (excluding investment banking gross-up and credit loss provision) up 76% to $431 million. This substantial increase in non-compensation expenses was primarily attributed to legal matters, which significantly impacted the company’s pre-tax income, which declined 63% year-over-year.

On the capital management front, Stifel continued its share repurchase program, buying back 2.0 million common shares during the quarter. The company maintained strong bank fundamentals, with consistent net interest margin (NIM) of 3.10% despite declining interest rates, demonstrating resilience in its banking operations.

The following chart highlights the company’s strong bank fundamentals:

Market Context and Outlook

Stifel’s Q1 2025 results represent a significant shift from its Q4 2024 performance, when the company reported EPS of $2.23, exceeding forecasts of $1.96. The stock closed at $86.08 prior to the earnings release, having gained 3.64% in the previous session.

While the company did not provide specific forward guidance in its presentation, the strong revenue growth across key segments suggests underlying business strength despite the significant impact of legal expenses on bottom-line results. Stifel’s continued investment in expanding its advisor base and maintaining strong positions in key markets indicates confidence in its long-term growth strategy.

The company’s capital utilization strategy, including share repurchases and maintaining strong bank fundamentals, reflects a balanced approach to returning capital to shareholders while positioning for future growth opportunities.

Full presentation:

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