Piper Sandler Companies

NYSE:PIPR

Earnings Call Analysis

Strong Q2 performance with significant growth in Corporate Investment Banking

In the second quarter of 2024, Piper Sandler achieved strong year-over-year growth with adjusted net revenues of $357 million and an operating margin of 17.3%. Corporate Investment Banking led the way with $235 million in revenue, a 41% increase from last year. The firm also announced the acquisition of Aviditi Advisors, expected to boost their private equity capabilities. Compensation ratios were kept in check, and non-compensation expenses rose marginally due to legal fees. For the first half of 2024, net revenues were $691 million, up 22% from the previous year. The board approved an 8% increase in the quarterly cash dividend to $0.65 per share.

A Quarter of Significant Growth

In the second quarter of 2024, Piper Sandler showcased robust growth with adjusted net revenues reaching $357 million, marking a substantial year-over-year increase. This growth translated into a solid operating margin of 17.3% and an adjusted Earnings Per Share (EPS) of $2.52. This performance indicates the firm's ability to navigate a volatile market while maintaining profitability and positions it well for a promising second half of the year.

Strong Performance in Corporate Investment Banking

Corporate Investment Banking was a standout performer, generating $235 million in revenue during Q2 2024, which represented a remarkable 41% increase compared to the same period last year. For the first half of 2024, revenues surged by 33%, driven primarily by M&A and restructuring activities which accounted for 65% of the total revenues. Equity financings and debt advisory together contributed the remaining 35%. This division's success was fueled by higher advisory transaction revenues, the revival of equity and debt capital markets, and heightened private equity activity.

Strategic Acquisition and Expansion

Piper Sandler made strategic strides by announcing the acquisition of Aviditi Advisors. This acquisition, expected to close by the end of Q3 or early Q4, brings a team of approximately 45 professionals. Aviditi Advisors specializes in lifecycle advisory services for private equity General Partners (GPs) and Limited Partners (LPs). The acquisition is anticipated to bolster Piper Sandler’s Private Capital Advisory Group by enhancing its services and expanding client relationships, particularly within the private equity sector.

Operating Expenses and Profitability

The company's compensation ratio for Q2 2024 was 62.9%, a decrease from both the previous quarter and the second quarter of the prior year, owing to increased net revenue. Non-compensation expenses, excluding reimbursed deal expenses, stood at $65 million, marking a 6% sequential increase but a 3% year-over-year decrease. Legal expenses and recruitment fees were the primary drivers of the higher costs this quarter. Despite these increases, Piper Sandler's focus on managing actionable expenses has resulted in a year-to-date total of $126 million in non-compensation expenses.

Revenue Guidance and Market Outlook

Looking ahead, Piper Sandler expects the advisory market to keep improving as CEO confidence strengthens. The firm forecasts that Q3 advisory revenues will be consistent with Q2, with potential upside leading into a strong Q4. However, it also anticipates a slowdown in corporate financing activity for the third quarter due to a subdued market in July.

Capital Allocation and Shareholder Returns

Piper Sandler’s capital allocation strategy remains robust, with significant cash deployment through share repurchases and dividends. The Board approved an 8% increase in the quarterly cash dividend to $0.65 per share, emphasizing the firm's commitment to enhancing shareholder value. In the second quarter, the company returned $20 million to shareholders primarily through dividends, with an aggregate of $108 million returned in the first half of the year via share repurchases and dividends paid.

Equity Brokerage and Fixed Income Overview

Equity brokerage revenues were relatively stable, increasing by 3% year-over-year to $52 million in Q2. The firm traded 2.8 billion shares for over 1,200 clients, demonstrating a broad and active client base. Fixed income revenues, at $40 million, remained muted as market participants awaited more certainty on interest rates. Despite current headwinds, the outlook for fixed income is cautiously optimistic, with expectations of a stronger performance towards the end of the year.

Future Prospects and Strategic Focus

Piper Sandler remains focused on strategic growth, particularly in sectors where it sees significant opportunities like technology and public finance. The firm is committed to enhancing its capabilities through selective hiring and technological investments, ensuring it remains well-positioned to capture market share and drive future growth.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, and welcome to the Piper Sandler Company's Second Quarter 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 will begin by turning the call over to Kate Winslow. Please go ahead.

[Kathy Winslow, executive]

Thank you, operator. Good morning, and thank you for joining the Piper Sandler Company's Second Quarter 2024 Earnings Conference Call. Hosting the call today are Chairman and CEO, Chad Abraham; our President, Deb Schoneman; and CFO, Kate Clune. Earlier this morning, we issued a press release announcing Piper Sandler's Second Quarter 2024 financial results, which is available on our website at pipersandler.com/earnings. Today's discussion of the results is complementary to the press release. 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 at pipersandler.com and on the SEC website at sec.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. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in our earnings release issued today.

I will now turn the call over to Chad.

[Chad Abraham, executive]

Good morning, everyone. It's great to be with you to talk about our second quarter 2024 results. We delivered strong year-over-year growth generating adjusted net revenues of $357 million, a 17.3% operating margin and adjusted EPS of $2.52. Our diversified platform continues to deliver solid profitability and as market conditions continue improving, we are well positioned for a strong second half of the year. Corporate Investment Banking generated $235 million of revenues during the second quarter, an increase of 41% over the same period last year. For the first half of 2024, Corporate Investment Banking revenues were up 33% from last year with M&A and restructuring activity generating 65% of total Corporate Investment Banking revenues. Equity financings contributing 22% and debt advisory and financings, generating 13% of revenues.

Results were driven by higher revenues from advisory transactions, the reopening of equity and debt capital markets and strong relative performance. In addition, revenues generated from private equity clients were up significantly during the first half of 2024. During the year, we have deepened our sector coverage, expanded our product capabilities and grown our geographic coverage while closely managing headcount and productivity. In early June, we announced the pending acquisition of Aviditi Advisors, a full life cycle adviser to private equity GPs and LPs. Aviditi was co-founded by Ryan Schlitt and John Robertshaw. After previously holding senior positions in private capital advisory groups and asset management at Credit Suisse and DLJ. Ryan and John and their team will bring a wealth of experience and relationships to Piper Sandler. The Aviditi team consists of approximately 45 professionals, including 11 Managing Directors and will form Piper Sandler's Private Capital Advisory Group.

The team provides fundraising services, secondary solutions to GPs and LPs, including continuation vehicles, and comprehensive capital market solutions for GPs across the life cycle of their portfolio companies. The addition of these key capabilities will enhance the value of our platform to our single largest client base, private equity. By leveraging the combined network of financial sponsors with our broad sector coverage, significant opportunities exist to grow revenues over time. Specific to advisory services, revenues were $184 million during the second quarter of 2024, up significantly year-over-year, driven by higher fees and more completed transactions. We benefited from broad-based contributions across our industry teams, along with increased revenues from PE clients. We completed 67 advisory transactions during the quarter. Performance was led by the financial services team, which closed several significant transactions that were announced prior to this year.

In addition, our services and industrials, chemicals and debt advisory teams all had strong quarters. Our market leadership, broad industry coverage and product capabilities are driving strong relative performance with our first half 2024 advisory revenues, up 26% over the first half of last year compared to middle market activity that was flat. Looking forward, the advisory market is gradually improving as CEO confidence strengthens. We expect our third quarter advisory revenues to be largely consistent with the second quarter with the potential for upside as we build into a strong Q4.

Turning to corporate financing. Revenues were $51 million during the second quarter, down modestly from the first quarter. We completed 31 equity and debt financings, raising over $5 billion for corporate clients. Performance was led by our health care and financial services franchises. The health care team served as bookrunner on all nine equity deals priced during the quarter, and the financial services team completed a couple of large equity capital raises in the depository space. For the first half of 2024, the Equity Capital Markets economic fee pool increased 54% over last year, while our economic fees increased 61%. The strength of our platform continues to drive market share growth. Looking ahead, corporate financing activity has slowed in July, and we expect revenues for the third quarter to be down from the first half 2024 run rate.

Turning to Investment Banking Managing Director headcount. Our approach has not changed, and we continue to target the addition of five to seven MDs annually. We ended the second quarter with 170 managing directors as we remain focused on selectively adding MDs while managing retirements and productivity. We continue to invest in our technology franchise adding two managing directors focused on financial technology. In addition, we recently announced the hiring of three managing directors to our services and industrials team who will focus on residential and commercial services. They joined 18 professionals based out of our new Birmingham, Michigan location, the majority of whom started during the second quarter.

With that, I will turn the call over to Deb to discuss our public finance and brokerage businesses.

[Debbra Schoneman, executive]

Thanks, Chad. I'll begin with an update on our public finance business where market conditions improved during the second quarter. Tight credit spreads, solid investor demand and increased governmental issuance led to better market conditions. We generated $25 million of municipal financing revenues during the second quarter of 2024, up 22% on a sequential basis. We underwrote 110 municipal negotiated transactions, raising over $3 billion of par value for our clients. Performance during the quarter was driven by governmental issuance in the Midwest and California as well as solid results from our special district group, which specializes in financing the public infrastructure needs of growing communities. As we look ahead, we believe additional improvements during the second half are achievable as the market continues to improve.

Turning to our equity brokerage business. Equity markets saw muted volatility during the second quarter as indices ground higher, albeit with limited breadth. We generated revenues of $52 million, up 3% from the second quarter of last year. We traded 2.8 billion shares during the quarter on behalf of over 1,200 unique clients. The breadth of our client base and our daily volume allow us to frequently cross client activity internally, a key differentiator for us in the marketplace. We continue to see client research votes improving as we demonstrate the value of our capabilities. Our expanded scale is winning mind and wallet share with our largest clients, helping to offset the impact from a declining market wallet. With muted volatility, we anticipate near-term results relatively consistent with the second quarter.

Lastly, turning to fixed income. We generated revenues of $40 million for the second quarter of 2024 down slightly from the first quarter. Client activity remains fairly muted as market participants wait for more certainty on interest rates. The headwinds in fixed income markets have not yet turned to tailwinds. However, we're optimistic that the markets are improving. We expect near-term results similar to this quarter before a stronger finish to the year.

Now I will turn the call over to Kate to review our financial results and provide an update on capital use.

[Kathy Winslow, executive]

Thanks, Deb. 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. We generated net revenues of $357 million for the second quarter of 2024, an increase of 7% from the sequential quarter and 29% compared to the second quarter of last year, driven by higher Corporate Investment Banking revenues. For the first half of 2024, net revenues totaled $691 million, up 22% year-over-year, again, driven by increased Corporate Investment Banking activity as we continue to benefit from our broad and diverse platform as well as more accommodative market conditions relative to 2023.

Turning to operating expenses and margin. Our compensation ratio was 62.9% for the second quarter of 2024. Lower compared to the sequential quarter and the second quarter of last year, driven by increased net revenue. For the first half of 2024, our compensation ratio was 63%. Our compensation philosophy remains unchanged, exercising solid operating discipline, while balancing employee retention, investment opportunities and near-term margins. Based on our current outlook, we continue to expect our full year compensation ratio to be near this level. Noncompensation expenses for the second quarter of 2024, excluding reimbursed deal expenses, were $65 million, an increase of 6% on a sequential basis and down 3% compared to the year ago quarter. Noncompensation expenses during the quarter were higher compared to our guided range due to elevated legal expenses that were unique to the quarter as well as increased recruiting and placement fees.

On a year-to-date basis, excluding reimbursed deal costs, noncompensation expenses totaled $126 million or an average of $63 million per quarter. We remain focused on managing the actionable expenses as they are a key driver of operating leverage. During the second quarter of 2024, we generated operating income of $62 million and an operating margin of 17.3%. For the first half of 2024, operating income totaled $118 million, a meaningful increase over the prior year period, highlighting the operating leverage of our platform. Operating margin for the first half of the year was 17%. Our income tax rate was 26.6% for the second quarter of 2024 and 19% for the first half of the year. Income tax expense for the year-to-date period was reduced by $12 million of tax benefits related to restricted stock award vested. Excluding these benefits, our tax rate for the first half of the year was 29.1%. We continue to expect our full year tax rate to be within a range of 27% to 29%, excluding the impact from stock vesting.

During the second quarter of 2024, we generated net income of $45 million and diluted EPS of $2.52. For the first half of this year, net income totaled $95 million and diluted EPS was $5.31. Let me finish with an update on capital allocation. Our earnings capacity, combined with our capital-light approach enables us to generate meaningful amounts of excess cash to deploy through share repurchases, dividends and corporate development. Today, the Board approved an 8% increase to our quarterly cash dividend to $0.65 per share. The dividend will be paid on September 13 to shareholders of record as of the close of business on August 29. During the second quarter of 2024, we returned an aggregate of $20 million to shareholders, primarily through dividends paid.

For the first half of the year, we returned an aggregate of $108 million to shareholders through share repurchases and dividends paid. We repurchased approximately 316,000 shares of our common stock or $58 million 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 grant. We also paid an aggregate of 50 million or $2.20 per share to our shareholders through our quarterly and special cash dividends.

Our results for the second quarter and the first half of 2024 continue to reflect strong performance relative to our peer set. We remain focused on providing near-term value to our shareholders, while continuing to grow our platform. We're strongly positioned to accelerate earnings growth as markets continue to normalize.

With that, we can open up the call for questions.

[Operator]

[Operator Instructions] We will take our first question from James Yaro with Goldman Sachs.

[James Yaro, analyst]

Chad, maybe if you could just touch on how your bank clients are thinking about the environment for conducting M&A after a number of years of nearly no activity. Are you seeing early signs of more bank M&A discussions? And what do you think we need for more normalization at this point?

[Chad Abraham, executive]

I would actually say the last month or two does feel a bit more constructive. It really doesn't have much to do with the regulatory environment. I think it's as simple as a lot of small-cap banks, the stocks are up 20%, 30%. That feels better. And obviously, we've been through a tough period of time and CEO has got to look out and figure out how to drive value and earnings and consolidation is a big part of that. So I think it's certainly early to make that call, but we've definitely seen a pickup in those conversations. And obviously, those deals take time, and it's not going to impact this year. But yes, we feel a lot better about how that's going now.

[James Yaro, analyst]

Maybe just keeping on the bank theme. One for you, Deb. I think we are coming obviously closer to the point of rate cuts after Powell's comments recently. Could you speak to what you are hearing from banks in terms of their appetite as we move ahead in terms of willingness or desire to immunize balance sheets ahead of lower rates?

[Debbra Schoneman, executive]

I would say there's more discussion that feels better. I think there's been so many head fakes relative to rate cuts that banks are still a little bit just waiting for almost even a more clear signal before they step in and become more active. So as part of the reason for in my comments, we said we feel like there's some tailwinds. I mean that's part of that. It's just a little bit a matter of timing.

[Operator]

We will take our next question from Devin Ryan with Citizens JMP.

[Devin Ryan, analyst]

First question, I guess, really a two part on advisory near term and maybe longer term. Just on the near term, I love to get a little bit more color around what you think is driving maybe the positive shift around the edges with sponsor clients and whether you're seeing it across all industries or if it's concentrated and then kind of taking a step back on the longer term, let's just get maybe an update on Piper's advisory coverage footprint today? And where do you feel like you're lined up against the potential fee pools. Meaning, where is there maybe still opportunity where you're undersized relative to the fee opportunity?

[Chad Abraham, executive]

I would say with sponsors, I mean, I feel a little like a broken record because we've said this the last couple of quarters, it's been slow, steady improvement, and we've definitely seen an uptick this summer in terms of pitch activity and new proposed transactions, obviously, you never know how much of that's going to make this year or next year. But I still think, Devin, the main driving factor besides financing, getting a little bit better is just how long in the tooth some of these funds have been without returning liquidity and I think the longer that time goes on, the more pressure they get from LPs, the more realistic valuations become. And we're certainly feeling that, and there's more funds that are specifically trying to get a particular deal done.

What I would say about the sponsor deals, while all that feels good, it's still not super easy at the end of the road when you're trying to close a deal where we used to have multiple bidders at the end of the process. The processes are still thin, but I would say we are now in a functioning private equity deal market, the calendars definitely open up, pitches are happening more and it's sort of like we said, it's getting better. Relative to your second question about just opportunities. I think the thing we like about our advisory business is just how diverse it is across industry teams, while we just talked about depositories will that stay tough. We're doing really well in energy. We've had a nice return in our -- invested in technology and seen some nice announcements there.

And I would say, frankly, our first half health care has been kind of slow where 10 years ago, if we were slow in health care, that would have had a bigger impact. But the diversity is pretty good. And we actually think we're going to have a pretty strong back half in health care. But I think within each one of these sectors, especially when it comes to the sponsor community, there's sort of tremendous focus on particular areas. And I would just highlight as an example, the team we just hired in Michigan, they're going to be part of our diversified industrials and services team, and they specifically spend all their time with sponsors in commercial and residential services. So that's a pretty small sliver. Another area we invested in is auto aftermarket. That's a small sliver. So I would say within each of these industry groups, this tremendous depth and focus is really important. And there's quite a bit of runway in many of the industry groups.

[Devin Ryan, analyst]

And then a follow-up here, probably for Deb, just on fixed income brokerage. Appreciate participants are waiting for more certainty on interest rates. The backdrop is still relatively challenged, but then I also heard the comment about optimism that the markets are improving. So I just love to -- I think I've asked this question several times, over the last couple of years, but just how we should think about what a more normal level of business is for Piper in fixed income brokerage. Is that $50 million or so a quarter? And then how do you think about the inputs into the algorithm for intermediate term growth off of that. So once we get to something more normal, whenever that happens, what does this business growth look like? Is it mid-single digits, upper single digits? Or how should we think about the actual growth of the underlying business based on the wallet and then what Piper is specifically doing?

[Debbra Schoneman, executive]

I think it's hard to predict the timing of when. I think your $50 million a quarter is really in the ballpark of what would be sort of a normalized fixed income business, if there is such a thing anymore. But I would also say then off of that from a growth perspective, we are looking -- we've made some hires in municipals and continue to -- even though that's been a strength for us, focus on some areas, maybe softer yield just below IG and having increased capabilities there as well as leveraging more technology. We're also looking at and have not yet completed everything we'd like to do relative to growing out structured credit sort of the nongovernment backed to the RMBS, ABS, CLO, those types of products. We also think we have significant opportunity in loan strategies where we have strength there, but see the opportunity both with our bank coverage and in particular, even the nonbank coverage to do more there. So those are areas of focus that we're looking at as we move forward.

[Devin Ryan, analyst]

And then I just had one last question here. I received the question just around kind of the back half guidance for the M&A advisory business. I believe it sounded like third quarter should be similar to second quarter was maybe a little bit of upside and then fourth quarter, hopeful that could improve further. But I just -- again, based on what you guys are seeing today, I want to make sure we understand how you're framing kind of the back half of the year?

[Chad Abraham, executive]

I would say, Devin, we're at that difficult point in the year where, like I said, the new pitch activity with sponsors and others has been really, really good this summer, but you never know when you're going to start those processes and you never know exactly how many you're going to close end of your early next year. Obviously, we have visibility into how July closing started. And so we made the comment that Q3 look -- for advisory a lot like Q2. Obviously, that's still up nicely over last year. And yes, and then the big question becomes just how good is Q4? I would say relative to last year and just relative performance, we had a very strong Q4. So we recognize it's a difficult comp. But like we said, business is absolutely improving with the pitch calendar and if the pace stays like it is, we feel good about that.

[Operator]

We will take our next question from Brendan O'Brien with Wolfe Research.

[Brendan O'Brien, analyst]

I guess to start, I just want to talk about the Aviditi acquisition. There's rest of a clear gap in your product offering and while the business may not have a material impact on near-term earnings, there's clearly you could see significant synergies plugging the business into your sponsor coverage platform. So I just wanted to get a sense as to how large a business this could become for you over time? And then separately, at this point, do you see any significant gaps in your product offering that you would maybe look to do another acquisition for? Or do you expect acquisitions moving forward to look more like the DBO deal?

[Chad Abraham, executive]

I'll take Aviditi first. We're very excited about this. I mean it's something I and others at the firm have been looking at for a long time, met a bunch of firms. I think one of the things we like about Aviditi is just quite a bit of overlap with the PE community in the middle market, where we spend a lot of time. I mean there's lots of capital advisory in tangential areas, but these guys do capital raising really in our sweet spot, and it's already just been fun with lots of good private equity clients to kind of share the stories and talk about the opportunities. And you can see it on both sides, like -- can we move the needle on particular new primary capital raisings for them to have access to our full advisory team, absolutely.

Can they move the needle for us? I mean some of these funds they've been working with for many years. They've got relationships at the top of the house. So they can move the needle on helping us win particular advisory business. And I would say that is all before you even talk about secondaries and continuation vehicles, which we are really, really excited about and, frankly, have already started to line up some of those opportunities. So it's only 45 people. It likely doesn't close until end of Q3, early Q4. So it's not going to make a big impact on numbers this year, but we're really excited about just how well this aligns with our core focus on PE.

And then yes, I would say when it comes to other acquisitions, the larger our advisory platform has gotten and it's broader across industries. It gets harder to find the really big stuff. We would love to do another Sandler type deal. But for the most part, we are still seeing plenty of 50-person boutiques in areas where we've got not a lot of penetration. So I think tech and software, frankly, we're doing quite well with some of the DBO stuff, particularly in security and cyber. And I think there's a lot more we can do there. So there's plenty of stuff like that on the road map.

[Brendan O'Brien, analyst]

And then I guess for my follow-up, I wanted to touch on the election and specifically how a more accommodative FTC could impact activity levels in your view, especially within the bank sector and also on the sponsor side, where I know there's been some challenges within the health care space.

[Chad Abraham, executive]

I mean I think it's hard to argue that if we had an administration change that we wouldn't see quite a bit of change with sort of some of the regulations. So you can never predict that, but I'd be pretty optimistic that would be good for our depository business and good for several of our industry teams. I mean we've seen -- yes, we've definitely seen some stuff relative to regulation and deal review in some parts of our strong sectors like health care, that's quite a bit different than the scrutiny we saw 10 years ago, say. So I do think that would be a positive for our M&A business.

[Operator]

We will take our next question from Mike Grondahl with Northland Securities.

[Mike Grondahl, analyst]

One more question, Chad, on Aviditi. The 11 MDs you're picking up, how do we think about sort of average fee or revenue per MD kind of compared to like the Piper investment banking average. Any color there, just how we should think about that?

[Chad Abraham, executive]

I think it actually, [ Grandy ], it fits pretty well with our overall averages. I think with where we want to get in the long term. I think at the starting point, in our troughs, the productivity is probably closer to 5, which is where we'd be starting out probably for next year. But we see the same opportunity to grow productivity just based on the combination and synergies. But that's going to take some time.

[Mike Grondahl, analyst]

And then just jumping back to M&A quick. How would you say your visibility into 4Q has changed over the last three months? I mean has it gotten a lot better, a little bit better? Just maybe a little color there would be helpful.

[Chad Abraham, executive]

Again, I mean, obviously, when you ask -- if people asked this question in February, March, April, it's almost impossible to answer. It gets a little easier as you get to the summer. But you got to remember, there are certain things that are going to close in Q4 that we haven't even started yet. I mean, there's pitches happening and trying to figure out with those teams are we going to launch right away, so we can close in November, December? Are we going to launch after Labor Day or we're going to wait for the election. So our visibility is definitely better, but we're not going to come out and make some big claim on Q4.

[Operator]

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

[James Yaro, analyst]

Chad, I think IPOs have improved somewhat less than I think we might have hoped year-to-date. Could you offer some detail on what you're hearing today that's holding back IPOs? I guess, how that's changed year-to-date? And then maybe any sort of context on what your backlogs look like, let's say, versus, let's say, at the beginning of the year.

[Chad Abraham, executive]

I'm glad you asked the question on ECM. I mean, obviously, we made some commentary that Q3 will be a little softer than the first couple of quarters. Obviously, ECM changes really quickly. So I can't really predict what it's going to be like in September. But for us, we're very weighted to health care and biotech. And certainly, in the end of June and July, that market has slowed. We still do a plenty of financings when there's sort of big catalysts, but just opportunistic financings. We were seeing a lot more of that in the first half in biotech, and we're not quite seeing as much there. I would say relative -- and I think if you just look at the overall ECM fee pool, I think July across the market is the first month that probably wasn't up over last year. And the first six months were and so obviously, for us, the first six months were better than July.

But I don't -- August is always a difficult month. And then when there's any market volatility in August, people just wait. So we don't have tremendous visibility into that. I do feel like just getting passed an outcome and an election, people always sort of ask us how that's going to impact. No matter what happens, just putting that behind us will make for a better Q4 for ECM. But I agree with you. We are seeing some of the very largest IPOs we have in backlog, the very strongest sort of profile, those all are teeing up and are ready to go, but they haven't decided or they going to go right after Labor Day or right after the election. So there's definitely a pickup coming there, but it's not going to be this summer.

[James Yaro, analyst]

Maybe just one last one for Kate. I think you demonstrated robust noncomp discipline once again. But maybe you could just speak to the longer-term inflationary dynamics for non-comp costs as we look ahead the back half in 2025? And any changes to the guidance there?

[Kate Clune, executive]

So you're right, while there are inflationary pressures that we're facing, particularly in spaces like datacom fees and market data services and a little bit on the T&E front, our guidance really remains unchanged. For the near term here at $62 million a quarter, of course, ex those reimbursable deal expenses. We are constantly evaluating opportunities to be more disciplined, more efficient there. But we are seeing that as I think the peer set is as well. So again, we'd reiterate the $62 million for the near term here, but we are seeing those categories that we'll be really focused on, and we'll be sure to update the group should that guidance change.

[Operator]

We do not have any further questions. I would like to turn the call back over to Chad Abraham for closing remarks.

[Chad Abraham, executive]

Thank you, operator, and everyone that joined. We very much look forward to updating you on our third quarter results. Have a great day.

[Operator]

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