Earnings call transcript: Canaccord Genuity misses Q4 2025 EPS forecast

Canaccord Genuity Group Inc. reported its fiscal Q4 2025 earnings, revealing a miss in earnings per share (EPS) forecasts with an actual EPS of $0.12 compared to the expected $0.2175. The company’s revenue also fell slightly short of predictions, coming in at $460 million against a forecast of $461.63 million. According to InvestingPro data, two analysts have recently revised their earnings estimates downward for the upcoming period. In response, the stock price experienced a minor decline of 0.11% in after-hours trading, closing at $9.10.

Key Takeaways

• Canaccord Genuity missed both EPS and revenue forecasts for Q4 2025.
• The stock saw a slight decline in after-hours trading.
• The company reported a 20% year-over-year increase in total fiscal 2025 revenue.
• Canaccord Genuity is focusing on organic growth in wealth management.
• The company anticipates improved operating margins in capital markets.

Company Performance

Canaccord Genuity Group Inc. showed robust growth over the fiscal year, with total revenue reaching $1.8 billion, a 20% increase from the previous year. However, Q4 revenue growth was more modest at 12% year-over-year. The company maintains a strong financial position with a healthy current ratio of 2.59 and has consistently paid dividends for nine consecutive years, currently yielding 2.18%. The company has been navigating a volatile market environment with cautious investor sentiment, especially in risk equities. For deeper insights into Canaccord’s financial health and valuation metrics, InvestingPro subscribers have access to over 30 additional financial metrics and expert analysis.

Financial Highlights

• Fiscal 2025 revenue: $1.8 billion (+20% YoY)
• Q4 revenue: $460 million (+12% YoY)
• Adjusted pretax net income for the fiscal year: $149 million (+12% YoY)
• Adjusted diluted EPS: $0.61 (+53% YoY)
• Profit margins decreased from 9% to 8.4%

Earnings vs. Forecast

Canaccord Genuity’s Q4 2025 EPS of $0.12 fell short of the forecasted $0.2175, marking a significant miss. The revenue of $460 million also came in below the expected $461.63 million. These results represent a challenge for the company, which had shown strong growth in previous quarters.

Market Reaction

Following the earnings announcement, Canaccord Genuity’s stock price decreased by 0.11% in after-hours trading. The stock is trading within its 52-week range, which has seen a high of $11.50 and a low of $7.45, indicating moderate investor caution.

Outlook & Guidance

Looking forward, Canaccord Genuity expects resilient M&A activity in its core sectors and aims for improved operating margins in capital markets. The company is also targeting both organic and inorganic growth in its wealth management division, with a continued focus on employee ownership programs.

Executive Commentary

CEO Dan Davio highlighted the company’s achievements, stating, "We delivered our highest quarterly revenue in the past eleven quarters." He also noted a record growth in client assets, reaching $120 billion, and identified exceptional opportunities in the Australian market.

Risks and Challenges

• Volatile market conditions could impact future earnings.
• Cautious investor sentiment in risk equities may limit growth potential.
• Pressure on profit margins poses a challenge to sustaining earnings growth.
• Regulatory matters and ongoing discussions could affect operations.
• The sale of the US wholesale market banking business could impact revenue streams.

Q&A

During the earnings call, analysts inquired about the rationale behind the sale of the US wholesale trading unit and the company’s strategy for growth in UK wealth management. Discussions also covered the employee loan program and options for the HPS stake as it approaches its five-year anniversary.

Full transcript - Canaccord Genuity Group Inc (CF) Q4 2025:

Conference Operator: Good morning, ladies and gentlemen. Thank you for standing by. I would like to welcome everyone to the Canaccord Genuity Group Inc. Fiscal twenty twenty five Fourth Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise.

Following the speakers’ prepared remarks, there will be a question and answer session. As a reminder, this conference call is being broadcast live online and recorded. I would now like to turn the conference call over to Mr. Dan Davio, Chairman and CEO. Please go ahead, Mr.

Davio.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Thank you, operator, and thanks to everyone joining us for today’s call. I’m joined by Nadine Ann, our Chief Financial Officer. Today’s remarks are complementary to our earnings release, MD and A and supplementary financials, copies of which have been made available for download on SEDAR plus and on the Investor Relations section of our website, cgf.com. Within our updates, certain reported information has been adjusted to exclude significant items to provide a more transparent and comparative view of our operating performance. These adjusted items are non IFRS items.

Please refer to our notice regarding forward looking statements and the description of non IFRS financial measures that appear in our investor presentation and in our MD and A. And with that, let’s discuss our fourth quarter and fiscal twenty twenty five results. Our fourth fiscal quarter saw us deliver our highest quarterly revenue in the past eleven quarters despite a volatile market environment. Revenue growth was fueled by record performance in our wealth management division and strong advisory fee contributions from capital markets. This contributed to an impressive top line results for the fiscal year with firm wide revenue of $1,800,000,000, an improvement of 20% compared to last year and our strongest results since 02/2022.

Our wealth management businesses in all geographies have continued to perform exceptionally well. Each business has been consistently executing against their respective plans, which are oriented towards sustainable growth and profitability. Client assets grew to a record of a hundred and 20 billion dollars with new record set in each region, driven by a mix of acquisitions and recruiting activity, improving market values, and positive net flows. While our strategies are focused on increasing contribution from fee based assets and strengthening net inflows, the aggregate value of our client assets is linked to market performance and is expected to reflect some of the volatility experienced in the current quarter. Having said that, I will note that market fluctuations do not typically drive outflows to the same extent as inflation and rising interest rates.

We’re seeing increased investing activity among our core clients driven by growing demand for personalized solutions. Throughout the three and twelve month periods, we continue to invest in the growth of our wealth management businesses while advancing our organic growth priorities. We completed three acquisitions in The UK and Crown Dependencies, enhancing the scale of our financial planning offering and extending our presence across both onshore and offshore markets. Acquisitions were completed in Cambridge and Glasgow and most recently in the Crown Dependencies through our acquisition of Brooks McDonald Asset Management International, which was completed in our fourth quarter. We also further expanded our talent base by bringing on professionals responsible for advancing our organic growth priorities and strengthening our investment management and financial planning capabilities.

In Canada and Australia, we welcomed new investment advisory teams, and we have good visibility on a solid pipeline in both regions. By focusing on high quality producers, our recruiting efforts are contributing to an increase in fee related revenues, enhancing the resilience of these businesses. Nadine will provide a more detailed overview of our operating performance, but I’d like to highlight that the fourth quarter adjusted pretax net income from this division rose 22% year over year to $41,000,000 contributing to a full year contribution of $149,000,000 While our fiscal twenty twenty five operating margin for the wealth division reflects ongoing investments in growth, we anticipate low single digit margin improvement over the coming year, which will be driven by our increased scale and the impact of our organic growth initiatives. Turning to capital markets. Despite the increased momentum for corporate finance activity in our core sectors during our second and third fiscal quarters, activity levels in this segment were subdued in the fourth quarter due to market volatility and uncertainty, largely stemming from the global trade policy disruptions.

Our advisory segment helped to offset this decline, delivering its strongest quarterly revenue of the fiscal year. This helped lift the revenue contribution from our capital markets division to its strongest result in three years and comfortably above pre pandemic levels. Although investors remain selective in their exposure to risk equities, we have defended our strong market position for corporate finance activity. We are consistently ranked among the lead table leaders in our target sectors and maintaining our status as the most active mid market dealer globally. Reflecting the cautious environment, the mining sector remained our most active throughout the three and twelve month period, but we also saw encouraging momentum across other core sectors.

As investor sentiment improves, we are also beginning to see renewed, albeit cautious, appetite for IPO activity. Profitability in our capital markets division for the three and twelve month period continued to be impacted by elevated non compensation expenses, which includes professional fees and provisions primarily in connection with our previous disclosed regulatory matter. We’ve maintained proactive and transparent engagement with our regulators to ensure alignment with their expectations as we continue to enhance the client experience and advance our strategic priorities. While our remediation efforts are largely complete, the time frame for resolution with respect to our U. S.

Enforcement matter remains uncertain. During the year, we took deliberate steps to sharpen the focus of our capital markets business by allocating resources and capital to the areas where we can deliver the greatest value to our clients and compete most effectively. As part of this strategic focus, subsequent to the end of our fourth fiscal quarter, we announced a definitive agreement to sell our U. S. Wholesale market banking business to Cantor.

This move enables us to concentrate our efforts on our investment banking and advisory driven capital market strategy in this region. The IEG business has been a valuable contributor to our US capital markets operation, but has historically operated adjacent to our core equity franchise and now has reached a level of scale and complexity better suited for a larger platform. The transaction remains on track for completion in the first half of our 2026 fiscal year. Until then, CG continues to fully support the employees and the clients of that business. While we certainly miss the daily contributions of this talented team, we are excited about the new opportunities that await them as part of cancer, and we wish them continued success.

In all, against the backdrop of increased volatility and cautious investor sentiment, we delivered solid top line growth in the three and twelve month periods. While our profitability fell short of expectations, we remain committed to supporting our clients in navigating complex business and investment decisions. We have continued to execute against our long term strategy, positioning the business for stronger future profitability and improved shareholder returns. And with that, I’ll pass things over to Nidhi.

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Thank you, Dan, and good morning, everyone. I’ll turn your attention to our firm wide performance highlights on Page four of our investor presentation. Revenue generation improved for both the three and twelve month periods. Firm wide profitability and earnings per share for the fourth fiscal quarter were lower on a year over year basis, but earnings for the fiscal year improved when compared to last year. Firm wide profit margins were under pressure in both periods, and I will walk you through the key drivers of that performance.

Firm wide revenue for the three month period increased by 12% year over year to 460,000,000. The increase was primarily driven by higher commissions and fees revenue of 237,000,000, an increase of 18% year over year, primarily driven by contributions from our wealth management division. In addition, advisory revenues increased 31 year over year to $90,000,000 reflecting increased completion activity in our core sectors. As Dan mentioned, revenue for the full fiscal year increased 20% year over year to 1,800,000,000.0. Wealth management was the largest contributor accounting for 51% of total revenue.

Capital markets contribute 47% of fiscal twenty twenty five revenue, representing a one percentage point increase year over year with the remaining revenue coming from our corporate and other segments. On the expense side, firm wide non compensation expenses remained elevated, totaling 149,000,000 for the three month period and 581,000,000 for the twelve month period, representing increases of 2419% respectively. The impact of elevated expenses led to a decrease in our pretax operating margin from 9% to 8.4% for fiscal twenty twenty five. Slide seven in our investor presentation provides a breakdown of our fiscal twenty twenty five expense drivers and the impact of foreign exchange, highlighting that noncore expenses accounted for approximately 24% of the year over year increase. Revenue and investment driven expenses drove the largest component of the increase and reflected increased interest or dividend costs as well as trading costs, which were primarily offset by higher revenues.

Discretionary expenses represented approximately 24% of the increase, primarily related to an increase in professional fees associated with remediation work in The U. S. As well as increased acquisition related costs as we continue to invest in the business. We are focused on cost discipline and generating an improvement in our operating margins. Our effective tax rate for the fiscal year decreased by 2.3 percentage points year over year to 26.9, largely due to a decrease in the effective tax rate in connection with the reduced impact of LTIP share price movement on deferred taxes.

Firm wide compensation ratio for the fiscal year was within our desired range of 59%. Excluding significant items, firm wide pretax net income for the three month period was $32,000,000, down 18% year over year and down 19% sequentially. For fiscal twenty twenty five, adjusted pretax net income totaled $149,000,000, up 12% year over year. These results translated to adjusted diluted earnings per share of $0.12 for the three month period, down $03 or 20% year over year, bringing our fiscal twenty twenty five adjusted diluted earnings per share 61¢, up 21¢ or 53% year over year. Turning to segment results.

Our wealth management division earned revenue of $239,000,000 during the fourth fiscal fiscal quarter and 905,000,000 for fiscal twenty twenty five, representing year over year increases of 1917% respectively. Increases for the three and twelve month period were primarily driven by higher commissions and fees revenues from all regions and a modest increase in contributions from the investment banking segments in our Canadian and Australian businesses. Our wealth business in The UK and Crown dependencies contributed record quarterly revenue of $118,000,000, up 12% year over year and 2% sequentially, bringing fiscal year to date revenue to a record $450,000,000. Slide 12 outlines client asset flows. Measured in local currency, client assets in this business increased by 8% year over year to 37,000,000,000 and net inflows, including assets from acquisitions, represented 11% of opening assets under management.

Fourth quarter adjusted pretax net income contribution of $28,000,000 represented a year over year improvement of 4%. Full year profitability in this business was flat compared to the prior fiscal year, largely due to higher development costs in connection with our acquisitions and organic growth activities in the region. The business achieved normalized EBITDA of £21,000,000 for the three month period and £79,000,000 for the full year, representing a year over year increase of 1.2%. Our Canadian wealth business earned fourth quarter revenue of $100,000,000, up 29% year over year. Fiscal twenty twenty five revenue increased 26% year over year to $375,000,000.

As outlined on slide 11, client assets in this business increased by 11% year over year to 43,000,000,000 and net inflows represented 7% of opening AUA. The adjusted pretax net income contribution amounted to 13,000,000 for the fourth quarter and 43,000,000 for the fiscal year, increases of ninety and twenty one percent respectively, but below desired ranges in the context of our revenue growth. In the three and twelve month period, this business incurred higher interest expense in connection with client cash balances, which were primarily offset by interest revenue as well as increased premises and equipment costs in connection with our new office in Vancouver and higher development costs to support our recruitment and retention activities. While our adjusted pretax operating margin for the quarter improved both year over year and sequentially, the fiscal year operating margin of 11.5% was half a percentage point lower than the prior year. Adding back the noncash development charges, normalized EBITDA in our Canadian wealth management business was $19,000,000 for the fourth quarter, which brought full year EBITDA to $69,000,000 an improvement of 26% compared to the prior fiscal year.

And finally, revenue earned by Australian wealth management business of 21,000,000 for the quarter increased 23% year over year, bringing fiscal year to date revenue to 80,000,000, an increase of 26% year over year, a new record for this business. Client assets increased by 31% year over year to 8,400,000,000.0 due to an increase in new client assets from our recruiting activities as well as higher market values. The adjusted pretax net income contribution amounted to $1,000,000 for the fourth quarter and $5,000,000 for the fiscal year, increases of 4553%, respectively. Our global capital markets division earned revenue of $212,000,000 for the fourth fiscal quarter and $831,000,000 in fiscal twenty twenty five, representing year over year increases of five percent and twenty two percent respectively. The fourth quarter increase primarily reflected the impact of higher advisory revenues in our core focus sectors.

Capital markets advisory revenue of 90,000,000 for the three month period was the strongest quarterly result of the year and on par with our fiscal twenty twenty three quarterly average, which was our second strongest year for advisory activity. The fiscal twenty twenty five revenue increase was primarily driven by increased advisory and corporate financing activities in our core mid market focused sectors. The shift in market conditions during our fourth quarter led to reduced risk appetite compared to prior periods, which negatively impacted corporate financing revenue across all regions. Despite this, full year revenue from this segment rose 44% year over year to $215,000,000 our strongest level in three years, demonstrating our team’s ability in helping clients access capital when market conditions are favorable. As noted earlier, profitability from our Capital Markets division continued to be affected by higher non compensation expenses, primarily in our U.

S. Business as fiscal twenty twenty five saw inflated professional fees as we continue to execute on the remediation work related to our regulatory matters. That said, stronger revenue generation alongside our ongoing efforts to reduce discretionary spending contributed to improved results for fiscal twenty twenty five compared to the prior year. This division contributed adjusted pretax net income of 1,000,000 for the fourth quarter and $44,000,000 for the full fiscal year compared to $3,300,000 and $6,000,000 respectively for the comparative period in the prior year. Going forward, we expect an overall improvement in operating margins in our capital markets business.

Turning to the balance sheet. We are maintaining sufficient working capital to support our strategic priorities and increase business activity, while also preserving the flexibility to reallocate capital as market conditions evolve. With that, I will turn things back to Dan.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Thank you, Nadine. Despite ongoing economic and trade policy uncertainty, M and A activity in our core sectors is expected to remain resilient. Corporate financing activity supported by our research, sales, and trading capabilities remains closely linked to the condition of the new issue market, which fluctuates with broader market dynamics. When these windows are open, we at CG have proven our ability to consistently outperform expectations. We are continuing to invest with discipline in the growth of our wealth management businesses while advancing our organic growth priorities.

At the same time, we remain firmly focused on reducing firm wide discretionary expenses. Together with our organic and inorganic growth initiatives, we expect our cost efficiency efforts to support firm wide margin improvements with a goal of achieving single digit growth in the upcoming fiscal year. Reflecting confidence in this outlook, our board of directors has approved a quarterly common share dividend of 8 and a half cents. With that, Nadine and I will be pleased to take your questions. Operator, please open the lines.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on the touch tone Your Your first question is from Jeff Fenwick from Cormark Securities.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Dan, I wanted to start off with, I noted in the release that there was an agreement to to lend some some incremental money out to employees to help facilitate more insider ownership. Yep. Just just wanted to has the board put some parameters around what that is? I mean, I I’m you know, obviously, we’re all aware that there’s a a sand fill from a prior buy buy out inside a buyout Right. To put it in place.

So how how are they what’s the thinking in terms of balancing, you know, higher insider buying, but, obviously, there’s a there’s a cohort there that that would potentially participate in a in a buyout or or was involved in the past? Yeah. I mean, I I I wouldn’t link the two things together. I mean, the the employee the employee partnership and and the loan program for the employee partnership, that was always meant and and certainly described to be a perpetual program. The idea is you’ve got employees that, quite frankly, didn’t get enough the first time and new and emerging employees.

And the idea was always to to to recycle the capital. Every year, a big chunk of those loans are repaid because they’re repaid through bonuses. So we started at 60 we started at 80. In the first year, we repaid 15, so it went down to 60 5. This year, the bonuses we just paid, we repaid another chunk of the loans.

The board gave us authorization to reloan a chunk of that money, quite frankly, a little bit more, but the vast majority of it was the loans that were just repaid to other partners, emerging partners, partners who didn’t didn’t didn’t get enough last time. So it’s not it is the bottoms up analysis. How much do we need to do to, you know, keep keep everybody aligned and motivated together with long term shareholder interest? And that number this year is a maximum of $27,000,000. So that that’s what that is.

The actual outstanding balance on the loans on our balance sheet because we just had a big repayment, and I think it was out the outstanding balance of about 65 will go up slightly, but just slightly here because we’re not solving for something other than what where the demand is. Does that answer your question, Jeff? Yeah. I I think so. And I I guess is there there’s some thinking just in terms of any restrictions on just it.

I guess, you can’t really restrict it, but the aggregate insider ownership as a percentage of the total, clearly. Yeah. Yeah. Obviously, over time, as we get, you know, closer to 20% or some, you know, that’s a relevant benchmark, you know, then then I think there, you know, I think there could could potentially be restrictions, but we haven’t really assessed that at this point. I mean, we’re going from roughly 11 and small change to 14% here.

I think that’s a couple years down the road before we really gotta sit down and make make those the the board needs to make those decisions. But it is a comprehensive board process for approvals. We can’t do the employee partnership can’t do this without the loans, and the loans come from the company. And board has a lot of oversight and approvals in the context of that. So, you know, we’ve had a long standing objective.

It’s in our investor presentation. It’s something that you’ve heard me talk about a lot that I believe running an investment bank and a and a material wealth management firm involves significant employee ownership. We think it is you know, aligns the interest of of our employees and our shareholders perfectly, and and this program is a great way to do it. So, you know, at the end of the day, increasing employee ownership in the business where they’re actually as you know, these are fully recourse loans. These these loans pay interest.

You know? The only the only the only benefit of them and and and quite frankly, your stocks locked up forever. So the only benefit of this program is we top up the bonus a little bit to help on the loan repayment, but that’s peanuts in the bigger picture of things. Okay. That’s helpful color.

Thank you. And and then I wanted just to ask about the the sale of the wholesale trading unit out of The US. Yep. Could you give us a little bit of color? When I look

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: at the financials there, would

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: that be the majority or all of what you would categorize as principal trading within The the majority. Yeah. The the the the yeah. Okay. And I think I understand that the the relative profitability of that group was was less than other other parts of CGUF.

So trying to think about how, going forward, should we be modeling The US unit, you know, obviously, the step down in revenue, but perhaps with a little better margin on the business? Yeah. I I think that’s I think that’s accurate. It it was a positive contributor to the business. Let’s be clear.

It has been for the last twenty years. And run by a phenomenal group of employees and partners. So but but, you know, this simplifies our business from a regulatory standpoint, from a risk standpoint. And, you know, sooner or later, this business in particular was a heavy tech was a heavy tech business. And there’s a lot of firms out there like cancer and others, quite frankly, that, you know, are are very focused on, you know, technology and trading and, you know, there’s there’s a bet there’s a long term, a better owner for this business.

I think the employees saw it that way, and we certainly saw it that way. It wasn’t a question of if if we were gonna dispose of this business. It was a question of when. Was it gonna be this year, next year, the year after? So I think we found a good buyer in Cantor, and, that deal will push towards a conclusion, you know, in the next three months or so.

Okay. And maybe one more for me on on UK Wealth Management. Yeah. So good good progress there, obviously, on on continuing to gather assets into that business, and you you called out, you know, efforts to invest in it and perhaps drive more net inflows from clients. What does it take there to get some real operating leverage out of the business?

I mean, the assets have been climbing, but the earnings have not been following along. Yeah. Fair fair point. The the the first point I’d make is, you know, we have and and and you you made this point. We have invested significantly in that business on our growth initiatives.

We have the people, systems, technology, millions and millions of pounds, and it’s working. It’s the good news. It doesn’t happen overnight. As as you know, Jeff, we bought a lot of businesses there. You know, it’s hard to buy things and integrate them and at the same time grow organically.

But that’s what we’ve done now. We’re at we’re at a position, and it’s it’s early. We’re three years, six months into it or four months into it now, where the business is growing organically, particularly in the areas where we wanted to grow organically. And this isn’t just happening. It’s happening because, you know, we’ve got an immense training and sales system that we set up there.

So it’s starting to work, and I think you’re gonna see the results of that as we continue to move forward. You see you’re starting to see them now, but that’s gonna improve. To answer your questions on margin on the business, maybe maybe you wanna take that?

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Yes. Thank you. Jeff, in terms of looking at the margin perspective, we obviously have a number of costs associated with the acquisitions, Dan mentioned, as well as our investments in the business as it relates to staff, etcetera, to further augment our drive towards that organic growth. So as we continue with the scale growth in that business, we definitely expect to see the margins improve through 2026.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Thanks for that color. I’ll read to you.

Conference Operator: Thank you. Your next question is from Rob Bluff from Bentham. Your line is now open.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Thank you, and good morning. Good morning, Rob. Thanks. Noted the the strength of the advisory business and in particular the The US tech advisory business stood out. Could you talk to your outlook in in that business going forward?

Yeah. I mean, you don’t know what you don’t know. But as I’ve always said, m and a is a little bit more predictable than some of our other businesses in capital markets. And, yeah, we continue to have a huge pipeline of activity and, you know, big client wins and big assignment wins that obviously all have to work through. You know, obviously, with if there’s continued market volatility, some of these things are delayed from time to time and deals get pushed out to the right, but that’s not what we’re seeing right now.

So, you know, I think we’ve articulated that we could we see a a strong pipeline, and we continue to see a strong pipeline. So, you know, I’m I guess, I’m I hate using the expression cautiously optimistic, but remain cautiously optimistic on our M and A business as we push forward here into this fiscal year. Thank you. And in your deck, you mentioned that you are pursuing organic and inorganic growth in all regions for wealth. Could you talk to The UK?

Is this a period of integration? Or are there further, you know, tuck ins for that region? Yeah. I think in The UK well, every time I say that we’re not buying anything, we end up buying something. But re realistically, it’s very targeted our acquisitions in The UK.

It’s really to provide a more fulsome service to our clients. So the days of us buying big, big UK wealth companies and integrating them in so that we got sufficient scale, that that’s over for the time being. And I’m not saying it won’t start up again, but certainly for now, it’s over. To the extent that we’re doing the acquisitions now, it’s mainly just to have a more holistic relationship with our clients, buying financial planning firms, you know, for example. Those, by definition, more more often than not, are small tuck in acquisitions.

And that’s, you know, that’s what you saw with our Cambridge acquisition. You know? So, yeah, we’ll continue to look at that, but there’s no, you know, I wouldn’t expect an announcement in the next three months that we bought something. Okay. Thank you.

And if I may, a last question, could you talk to what you’re seeing in the Aussie market on the bulk side? Yeah. We you know, when we first got into the Aussie wealth business five years ago, you know, we bought intentionally a fixer upper. Great partners, but a but a but a but a firm that needed to be reworked, And that has been reworked. And we’re really tracking a very similar strategy to the one we deployed in Canada where we went from $8,000,000,000 to $42,000,000,000 And Aussie market has presented a very similar opportunity for us to recruit and bring on board a select group of new advisers, nine this year, and that will continue to increase.

So yes, we’re seeing great growth there off a lower base, but 30% growth in our funds under management business there. So we continue to see exceptional opportunities there, and we think we’re in a remarkable competitive position to realize on those opportunities. Great. Thank you very much. Good luck.

Thank you.

Conference Operator: Thank you. Your next question is from Graham Ryding from TD Securities. Your line is now open.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Oh, hi. Good morning. Good morning, Graham. Maybe maybe maybe I could just start with you just debt went up quarter over quarter. I’ve seen some of that’s related to the bricks like dollar acquisition.

You maybe just talked about what drove the remainder. It looks like it was almost a hundred million dollar increase. And then maybe your comfort level, how do you measure how do you measure, you know, debt? And and what’s your sort of optimal level or your comfort level?

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Yeah. So the the debt increase primarily related from a year over year basis to the convert coming on over from within their end fiscal twenty twenty four. So we’ve been managing that interest expense. And, obviously, as we look at what we’ve portrayed as it relates to our our total expense base, you know, I think we’ve been very selective in terms of how we’ve been investing in the business. So that increased debt is really driving that leverage to be able to drive that revenue growth print that you’ve seen this year, and that’s primarily investing in the in The UK wealth business, as you mentioned.

But the big part of that contribution on a year over year basis was the convertible coming up.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Mhmm. And quarter over quarter? That was more

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Quarter over quarter, yeah, would have been with the acquisition. Yeah.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Okay. And how do you measure debt? Do you have a targeted sort of level that sort of a a band or a range that you wanna keep the business operating within?

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Well, we manage it against both looking at our overall capital base and and what we’re ability to invest in and what that return is gonna look like on that debt level from a leverage standpoint. So, yes, it’s it’s looked at in conjunction with our overall capital base and our operating capital.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: And, Graham, I know I know you know this, but the the debt, you know, the nonconvert debt, all the rest of the debt primarily, is all in the UK wealth subsidiary. And that’s, you know, you know, schedule a bank debt. You know? So the the leverage ratios are relatively modest given given the level of earnings in that business. K.

Understood. And then maybe just pivoting to the regulatory matter. I’m sure it’s your favorite topic, just, you know, is there any progress you can sort of flag? What sort of spend do you think might be left if material and any increased visibility here on potential timing? Yeah.

Yeah. The big the big spend I I won’t go in order to ask the questions, but the the big spend is all been around remediation efforts, consultants and remediation efforts, and and we’re mainly through that. We’ve mainly remediated everything that we think we need to remediate. And, you know, that involves a lot of historical look back and stuff like that. I think we’re pretty good.

So that spend should come down. Maybe you can speak to it more specifically. But, you know, I think we’re there. You know, on cleaning it up or getting rid of it, I mean, it’s it’s it’s we’re we’re on a real unfortunate timing with respect to The US regulators and really, you know, getting people’s attention given their competing priorities and concerns. So, you know, we we’d like to make progress on it.

Yeah. We’d like to have this thing disappear, and we’re, you know, aggressively working towards that. That being said, it takes two people to dance. So I’m I’m sure they’ll get their their their, you know, their house in order, and then we can have more intelligent conversations going forward. So I can’t I can’t give you I can’t give you a time frame, unfortunately.

I wish I could. No. Understood. And then my last question, you appreciate the slide you put in there just flagging the the different options or timeline for the HPS Yeah. Five year anniversary that’s coming up in July 2026.

So can you just sort of run through perhaps how you’re thinking about your preferred options as we approach that deadline and, you know, what are what are you sort of looking at at this point? Are you exploring any buyers from their stake or perhaps The UK business overall? Yeah. Yeah. I’d Are you looking at potentially financing options, pay them off?

Like, how are you how should we think about, you know, your Yeah. I’m not I I won’t be as clear as you’d like me to be, Graham. But, you know, we’re we’re all of the above. You know? Sale, refinance, buy them out.

You know? It’s like there’s there’s there’s probably 10 different options if I really thought through them. You know? So we continue to think through all of those. The important part about that business is we’re delighted with how it’s performing.

It’s performing remarkably well. Asset growth, we continue to integrate the firms that we bought. We’re getting net new asset growth in that business. We’re absolutely delighted to be a shareholder of this business, and we think it’s a massive value contributor to us. So that’s the beauty of it.

It it it that those statements allow me to have more options as opposed to less options with respect to the business because the business is performing so well. So yeah. But we can we’re we’re very cognizant, obviously, of of the the time frames that come up. We still have years to think about things if if we want to, but we’re obviously thinking through all of our options with respect to that business as we speak. K.

That’s helpful. Does it make sense to find some sort of exit before July 2026 so that that sort of IRR of 11.5% doesn’t just sort of start to accrue higher and higher? Yeah. Again, Graham, I’m not gonna be as clear as you like me to be. So, yeah, we’re we continue to look through all of all of our alternatives, and and and we’re cognizant of all the dates involved.

Okay. That’s okay. Thank you. Thank you.

Conference Operator: Thank you. Your next question is from Steven Bowen from Raymond James. Your line is now open.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Thanks. I just wanna go back to that waterfall slide seven. It’s really helpful. Can you just tell me what the difference between client expenses are and promotion and travel expenses?

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Sure. Thank you. It’s it’s so client expenses would relate to settlements or reserves, etcetera, with with particular clients, primarily?

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: You mean, or reserve part? Like, what is that the wealth management part

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: of the business? Or Primarily, yes. Yes.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Yes. Okay. Yeah. You know, I I don’t wanna pick on the discretionary expenses, but I understand the provisions professional fees. But within your fiscal twenty twenty four expenses, you you have conference costs and and client engagement costs buried in the fiscal twenty twenty four.

And then, you know, you’ve added another 8,000,000 in expenses. Like, it seems pretty material, like, I guess for a one year, you know, pop up. I mean, Dan, you mentioned in your intro remarks that you’re you’re gonna be trying to focus on discretionary expenses. So is that a number that is gonna be flattening out here? You know, when we’re Yeah.

Yeah. You should okay. I go ahead.

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Yeah. You’re absolutely right. We’ve got a we we’re definitely focused on those that area particular. And so it’s an opportunity for us given the fact that these are more discretionary. So we’ve got targets across the firm in every region to focus on this cost bucket.

Because to your point, we are spending you know, a reasonable amount of money already. So for it to go up in this year, so we’re we’re really focused on targets for each business. And so we’ve got plans in place to bring that number down on a year over year basis.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: Okay. So, theoretically, you know, if, you know, once the you know, as you said, the remaining professional fees and that’s pretty much done, you flatten out the commerce cost and increase client engagement. Like, that’s fine. You’re you’re looking at saving, like, 20,000,000, over $20,000,000 to disappear in terms of growth in the in the assets. Is that a fair comment?

Nadine Ann, Chief Financial Officer, Canaccord Genuity Group Inc.: Fair comment. Okay.

Dan Davio, Chairman and CEO, Canaccord Genuity Group Inc.: I think that’s all I had. Appreciate it. Thanks for the good questions. Okay. That concludes our call.

Thank you all again for joining us today. And as always, Nadine and I certainly can be available to take any questions. Our our next earnings update will be in early August when we release our first fiscal quarter results. So with that, operator, I think you can now close the lines, and thank you again, everybody.

Conference Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

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