COWN - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. And thank you for joining us to discuss Cowen’s Results for the Third Quarter of 2021. By now you should have received a copy of the earnings release, which can be accessed at the investor.cowen.com. After the speakers’ presentation, there will be a question-and-answer session.

As a reminder, today’s call is being recorded. to call like to now would hand over the Mr. I Relations. Cowen’s Head Farley, of JT Investor

JT Farley

Thank Carmen. you,

Before I call in and earnings today’s has we on presented Also consistent of Cowen as contain the for in reconciliation the SEC. obligation the today’s certain those we risks referencing is that the to believe the to of the to other forward-looking measures comments you information which we presented begin, information responses call, described today’s are non-GAAP no made filings would update statements. like and useful investors. measures, These with earnings on be subject questions Reconciliation uncertainties release company’s today’s with GAAP your and statements will call. financial provide of release. remind some may to to some our in

available reminder, our Investor our section of we a in it supplement conjunction As encourage review the make quarterly Relations release. to in We our website. financial you earnings with

Joining and Jeffrey Chief Lasota. us Financial Chief Executive Cowen’s Mr. Officer, Chair are and our Mr. Solomon; Officer, today’s call on Stephen

I Now, to call the to like turn Jeff. over would

Jeffrey Solomon

continue market review and Then built, to as after variety quarter we will the happy spirit, consistently strategy into generate of the earnings JT. results. share business broader questions. happy the strong results Cowen’s thank In has have us delivered to And Thank the we answer conditions. durability third of strong laid to this the how strong morning, quarter. just I we performance steps I long-term to these operating out for a profitability place Today, details you about joining performance quarter context also for we will Good you, provide this as everyone. your highlights take our that three XXXX in call. will years am for Steve on will the be financial that taken and some ago well I of the

in share we Over and equity. operating in over the quarters, return per past XX% common billion $X four we a billion investment revenues over have more in is have $XX on generated after-tax economic than revenues, That income. including $X.X generated banking

in after-tax posted operating million income and with $XX equity million first the quarter, of common quarter This XXXX. total the XX.X%. profitability, return last on of we quarters revenues This $XXX economic XX XXth in the for of out meaningful being exception of the is

has the That in repurchasing believe to year, we While risen remains have reason Cowen’s pace. But reason. only over attractive. been the is part past the more of that’s record at considerably a shareholders we stock our aggressive shares not by valuation that capital returning

that would and in lasting have to performance. remain be financial We performance. true to we our to also We we said our with more continue ability as we improvement demonstrated returning with continued return our word our shareholders commensurate and capital long in aggressive capital operating believe

Now let our to operating me turn highlights.

quarter It quarter M&A which this second quarter for for revenues, set year. M&A practices. advisory was our quarter advisory, only than X was and that first combines quarter, at markets importantly, record Banking a XX%. quarter the level markets the It capital surpassed comprise revenues, majority the advisory of record in third third XXXX. in the banking was M&A both of more times capital and of banking second were million investment and a for XXXX revenues row $XXX year-over-year, by the quarter new the record of The the above XX% revenues up best a on revenues

healthcare be publicly-traded outside number of private companies of always Within grow more for activity which the revenues, healthcare and in to able quarter. sectors we XX% a function include the in and disruptive Cowen clearly franchise tools -- has coupled our Cowen of for private we a footprint. this over tools a were capital quarter IT than at the capital biotech continue leading industry product in is despite to healthcare, diversifying evident in the banking past years. in company NASDAQ, of will markets in revenues banking the diagnostics, technology pace Today, continue from United The Non-biotech and the and healthcare of publicly consumer company this total Our our results comprised in quarter, States. be for of Stock healthcare biotech. publicly-traded foreseeable companies have headwinds New XX%. future. breadth are and Sectors the on in was to clients there There approach few particularly tailwind to are of ago. markets sector by companies We operating this the equity space. with companies, The listed medtech Exchange diagnostic up the growth fluctuations banking sectors. XXX accounted That’s from the company intentional all taken our in our York the industrials, XX% the majority areas, listed in achieve healthcare share of results these sector. healthcare XXX strong formation this and areas business a will only and decade this of market about services

so. follow-ons we to a remain our debt offerings decide capture position, companies proportion markets time confident tap the right IPOs, is the given when significant that However, the financing we compel their will be and to or increasingly when to them of market do able needs

SPAC of XXXX. third banking months XX% also about and quarter advisory accounted a revenues SPAC revenues banking quarter, related in revenues one-third We the in for rebound first the of assignments. deals particularly nine in the in saw during of

on advisory process. most pipe words, markets during M&A back As revenues capital a reminder, our advisory In the the end. of are financings, SPAC and other de-SPAC

Cowen With looking contributor to order in will be find vision them them approximately benefit partnering percentage listings market is meaningful a that selectivity not we will why in transactions SPACs, We complete continued growth transactions have to in share. chances revenues. strong are SPACs SPAC the selective heavily outcomes. of public -- clear and the That few years, next for ultimately believe of a on the XXX with a management is future large compete success ones believe of over small This percentage our with companies. the teams, we even are dependent and that choosing of as the we in to evident

almost were for issuance all at have which is start of of public in run the strong SPACs away SPAC by the It XXXX, IPOs two-thirds have our worth Looking that deal deals double for already and which average gone of up SPACs, or SPAC also closed, which is backlog. book make that noting Cowen the from since mandates market. capital XXXX, period. markets nearly under advisory current into pending remains XX% Demand

quarter quarters. for the our below this meaningful ended in quarter of pipeline XX% of XXXX’s is our in result the next the it several current up While third over start quite slightly year revenues second quarter XX% of record Cowen the backlog levels, up and XXXX. the that confident will remain from still We

previously through the MHT, past Joseph Dahlman we Morgan several in after adding and prior banking acquisitions, such teams our years, the Quarton Rose as from broadened Over franchise have and years.

one be good Choice street in Cowen. of become lateral In our addition, across to hiring time of the with from every It’s we Employer sectors. a at an

banking diversified efforts. Our direct result revenue stream of a is in these

adding the and of have are can clients been always higher outcomes levels, class that for -- operations. so analyst and from revenue the to our we our needed looking our president We revenue bankers vice momentum to continue to great that -- the the resources have capacity too for of us we help world analyst level for operating deliver at

areas business securities markets $X.X over European are and such market take from decision revenue larger incredibly just to dividends volumes. meaningful competitors. to our we remained daily invest has also Our as wide brokerage, prime much as trading continue in Again, share million finance despite paying averaging lower resilient, in

services gains X% and including our of execution included down third operations, Securities stepping which quarter the our cash been trading. is do particular decided other and the most buyback. of growth up quarter. were XX year-over-year year-over-year, gaining we drop in this third has trading, Highlights clearing services revenues, to down boarded. million which $X.X non-U.S. clients clients momentum, for also Prime during up has ADR year, to the of our in electronic XX for revenues new capital sheet new the wind on prime opportunities, capability, most was finance While now the balance over due nearly free adding swaps strong about to including

trading class compelling Europe driven institutional capabilities during world talent, offered is We the including continue an by of too leading team boosting and our well. are as to with to ETF and independent, has addition all surveys. value increased new into trading investors. That execution industry The share translated many research quarter partner according we Cowen capabilities the for institutional in us, third-party -- proposition event of as attract non-conflicted shareholder increasingly a

build making Digital, the Cowen we assets of we early are While the progress out initiative, digital are on in our stages. still

clients regulatory and as legal, head more to clients XXXX. to very framework on front level is and out onboard the come topic are we building We the technology on and engagement into this working the high, among

research, revenue as off with as our to Looking slightly our new daily start quarter third sciences, well quarter, quarter, teams. diagnostics and life In analysts are we coverage in and the at biotech are third the who current a welcome we senior tools good average. above average

is posts team healthcare sustainable we our under XX XXX to continue is and of living. increase significant and healthy environment of the growth $XX been. and During compared the value during clients million once positions a is more and Cowen quarter-over-quarter. and XX% from this flagship quarter, X% of Curve reports, XX occurring sustainable investment which in which marks, we in in in is change billion, with management, the Ahead the million, again we the almost fee In first still the Series are with third under gain and the investment as fees due totaling sector however, quarter months management the as we we facilities $XX.X In fund strategy. healthcare added of had XXXX up coverage, Despite as in food XXXX, declines net was most to these AUM stocks the year-over-year economic brokerage fees the the Total quarter, second coverage for our management care, the had well saw stocks largest fees investments launches almost that had due for In have drop of quarter institutional our to We strategies, mark-to-market of in incentive Those incentive of over new investment which Proterra, account full and than up to and assets highest sustainability we nine volatile even ever a higher differentiated largely in clients. were and million fee Economic $X.X the is we a X% in of strategy. our today positive value negative and our $XXX quarter, expensed research as strategies, well healthcare total, published income during it’s $XX million. managed at the nearly added quarter. million healthcare placement to year up in the AUM $XX activist.

fees up than management XX% our fees, those year-over-year. have been more Excluding would

strong end strategies, drop over and Looking quarter strategy the had of when at the factoring even $X.X sustainability our in remains the price in at Proterra. just in billion overall performance five AUM

third quarter, products the made firm strategy Quip. investment the During dental sustainable in a its called

even strategy $XXX quarter Healthcare $X.X the slightly performance and in Long-term in the strategy $XXX strategies financings follow-on new merger during Our the in And billion the the the arbitrage $X.X year-over-year. healthcare third with strategy Merger million and the down The declines the million strategy investments remains public completed activist total over over with AUM, quarter the just ended strategy $X.X up positions to ended quarter. billion, almost quite during quarter. royalty did is despite in quarter. The strong AUM. had AUM. grew which four billion investment two in HFRX was outperform Index Arm though

million our sustainability healthcare as $XX declines our portfolio. to due of primarily of to as our the this the balance had losses in well quarter, declines banking Turning sheet, we strategies, income in some and merchant investment in value for

contributions on crisis financial positive and the the at line income items. income, is had single investment an And on in quarterly we our case and a positive investment still every some As give have income incentive global To lines. incentive year our combined perspective, in has annual in our XXXX, with you from since revenue investment basis Cowen is always $XX.X basis year-to-date had our income million. incentive fluctuations

While are our investment has investors when our viewed over income focused income noisier the time, as our banking longer These the profitability core size bottomline and fee increased term. few of have our revenues benefit growth operations incentive over additive brokerage past management and investment to remarkable and are years, in the and on business who risen.

to more they into our quarters, coming revenues. to of less just X% providing revenue a has become to our XXXX about so XXXX, prove investment As incentive year of of Less we annual a revenues income give a smaller lines investors shift the amounts of details each revenue it be In be total this XX% result distraction. will of mix. year-to-date since in much than and in part insight these

like Before we to I are I in to believe reasons few ahead. share profitability why to to I’d deliver hand well-positioned the a Steve, that it continue years consistent over

in identifying track opportunities We significant transaction our such leading deep position we have are activity. in digital and in have a longstanding capital proven require disruption. companies. growth robotics, will sustainability, energy record areas emerging with and to the -- partnering areas such economy in From built lot and as as growth undergoing semiconductors have of that transformation experience biotech electronics of operating we of a Sectors that health sectors

resources we understand bear is to these team themes. these and ecosystems the all with Cowen’s identifying companies in these then in of and truly trends lead research emerging to embrace and ecosystems who in to bring help these investment ahead research Our looking are investors We opportunities. curve and

review a turn Steve? quarterly financial I our brief for the Now will results. to call Lasota over Steve of

Stephen Lasota

from in stockholders Thanks, from revenues third per year-over-year period. $X.XX expenses per as year Total were or were or $XX.X diluted diluted from XX% Jeff. GAAP the $XXX.X income income net a $X.XX results increase benefit an Compensation and million, Net up for common million $XXX.X share share, million quarter $XX.X million. attributable million, of the was up follows. of prior $XXX.X XXXX were to of quarter, Income and the excluding and we up operating the the the been from prior year beginning compensation a $X.X losses expense all Expenses Please that period. available year was cash second D&A million were $XX.X net for period. million million. during XXXX. note Therefore, was since million XXXX. $XXX.X in amortization $XX.X million, prior we tax expense have utilized taxpayer of depreciation $X.X

to financial as $XXX.X income operating was turning Op economic was income. $XX and economic economic third income $XX.X million economic Now, economic total in non-GAAP the economic of million, had our Op million to pre-tax measures, pre-tax income quarter. income proceeds Co which $XX.X was Co we refer operating income and million.

$XX.X income the $X.X expense was income up quarter pre-tax million, economic income dividends, proceeds third million, of which associated economic $XX.X loss $XXX income income million prior for of from million XXXX, Economic quarter income -- of and an for COVID operating $X.X taxes loss preferred was income million. net of third pre-tax period. million in period. has were of tax period XXXX the $XX.X Economic an Asset year up and presented well prior as the year in $XX.X prior as the economic of of $XX.X reported million. economic basis economic and overall On from

up is to from Third Total million. economic rose prior quarter excluding $XX.X D&A $XX.X period. year-over-year operating the XX% economic income $XXX.X year was economic income which in proceeds million, million

$XXX.X For economic proceeds the were banking million. quarter investment

up a million third a in loss quarter prior of quarter in million $XXX.X year-over-year X% XXXX. year-over-year proceeds banking was to Economic income loss loss investment incentive quarter brokerage of million $XX.X versus year-over-year $XX.X investment million. economic XX% of loss were to a for of the versus period. the third of the $XXX.X For management the the million million. Economic $XX a $X.X quarter, down were million were fees was and $XX to economic year proceeds in X% up Economic income

compared increased expenses, to expense due and Turning our million now was the year the period revenues. quarter in benefit prior to to $XXX.X for compensation $XXX.X million,

year-over-year to comp-to-proceed Our increased proceeds. economic ratio XX.X% income of from XX.X%

third annual For XX%, and targeting expenses the up we first quarter-to-quarter. an full Fixed to million quarter expenses ratio expenses, period. from were professional million in non-comp expenses between non-comp may XXXX. versus higher travel business to from in $XX total $XX.X XXXX, in ratio in year million increase vary million compensation from increase, entertainment due XX.X% the XX.X% the $XX.X were of non-compensation XXXX third The year The primarily are prior expense quarter, it development XX% $XX.X of the although in variable the non-comp fees. and service Despite declined quarter revenues, the expenses down and of year-over-year.

depreciation we million, which impact $X.X effective were includes XX.X%. on Third geographic XXXX. nature taxes third income rate In common the and compared We of of depending tax or and per XX%, generated future in income. $X.XX in the share, of quarter expect to per million quarters, effective be of economic to XX% common million, at of an range quarter amortization operating to the expenses share, includes of which rate $X.X sources $XX.X of the our the $X.XX our impact

end, the totaling our buyback capital share the down due Turning invested change in Co, in end sheet balance of XXXX. company the The million At $XXX.X to increased quarterly sheet. to Op balance the at had of from investments. and million, part is quarter June mark-to-market $XXX.X

$XXX.X our totaling company at Op June $XX invested June a end Net In was Eclipse and operating of moved This Funds. Asset XXXX. in million have Co XXXX. primarily holding had at Co, In of reduction operating addition, of X cash we approximately capital cash end XX, is as change out in due excess million we the $XXX.X to of to level. of the from Formation value the investment September, million the down the

Tangible stockholders’ to unchanged is shares $X $XX.XX preferred of by total XXXX. XXXX, divided after-tax equity billion, at as June $XX.XX Common of XX.X% per end third equity, minimum a on up at equity from nearly from of our common Return equity above was was to on XXXX. equity was the slightly common $XX.XX target is quarter share XX, the for equity which as well end, generating quarter book basis. book Turning $XX.XX September common rose consistent common mid-teens of the less of June value per XXXX. June outstanding, which our share, value equity, XX, up XXXX, return end of on from

Looking XXXX, we we meet extraordinary to target, ahead market can exceed confident changes absent conditions. are or in any that

morning, announced quarterly Directors per cash share. our this our Board we As maintained at $X.XX of dividend common

record our third executed, During equivalent $XX.X over according income. million million a we repurchased stock, existing XXX% of including to shares, economic total our X.XX plans. the quarter, of That purchases XXbX-X operating a is in to

months guidance income, XX% For the purchased of to nine of range our economic our annual to value XXXX, the XX% well shares equivalent of at XX%. we above minimum operating

the quarter of Our million of shares, more than the a X.X XX.X fully was quarters in diluted share average previous average. decrease weighted count shares first million weighted over

available opportunistic from market we will be ahead conditions to and on flow, and the while quarter-to-quarter. will cash amounts continue Looking depending buybacks, vary

are plan turn transparency estimate and investment have additional provide impacts results. to prioritize XXXX, we order the also that, our into with the shortly to quarterly to earnings the monetize returns over call income when investments to in balance will balance Jeff. I of more our sheet. We provide Starting sheet an our after and overall management And with each quarter quarterly back able operations of on will marks incentive on fourth investment quarter end the capital assets we

Jeffrey Solomon

Steve. Thanks,

planning challenging. even are of performance year-to-date historically the are This our are of business They strong years record when Cowen quarter’s our do performance representative result markets also and and what core operating of investment. strategic can for

to we over capital the of our a past our advisory capabilities, annual also substantial clients. core able While have financing we we so mix M&A added important profitability most five to capital which the our range broader years, consistent markets provide of we on maintaining a than our have includes in peers business, debt of built banking, just revenues grown revenues advisory business. investment Within solutions markets faster is pace as the at a and for XX% are

underwriting even tripled As less we than as capital and Cowen’s noted volume to I we more down, three in over have securities times options, earlier, as dependent drive few enables from over strength additive prime have non-U.S. is U.S. additional expanded when profitability equities revenues such have years, it us and seen the issuance In core cash execution, advisory areas in our markets strength to at last our into markets swaps past the slows equity markets, services and finance. as quarters.

quarterly incentive we we can in least important generate $XX we is Cowen fee management, upside at equity Cowen our built We private and at are of basis steady the reason forward, with additional manner more this and of excess from of is huge mix conditions. and the management and revenues clients outperforming balanced higher confident and going in consistent on focus dislocations. the with team most that it’s volatility million fees strategies $X in because a the streams in on absent and AUM. But durable, despite because to an million here investment likely in style be on perform more would amazing annualized increases at management Overall, business revenue investment income, are market we to a all our mix market serve. basis day any of In potential expect

help drive our to candidates last the a to team collaborate, clients. outcomes have grown we Over favorable for X,XXX by are the third out years, people, seeking eager who to best three

period, industry. peers XX above months, than over most has our more in $X.X employee employee per our doubled last per million the of to well that revenue During the

durable and culture, empathy, tenacious As for eats breakfast building centered we values the sustainability culture teamwork. on vision, core an saying strategy are intently and goes, inclusive of focused our on

to and helping objectives a operating be in clients their fortunate achieve are every financial day. we where are position We

in others do Our purpose built ability our was success our successes. help clients to our is organization they of do better and their result with partner entire what the to to

We grateful the us. for goes grateful have the work to really do hard who trust in all am on to best to I With the every questions. and call of am up proud part that, ways be to are turn open these I impressive street team Operator extremely will the We it day. those and their place continue into over will the that it for in I we personally results.

Operator

Thank Brown you. question from [Operator first Instructions] Our is Michael with KBW.

line Your open. is

Michael Brown

you, Steve. Thank How are Operator. Jeff. Hi, guys? you Great. Hi,

Jeffrey Solomon

Good. How Mike? are you doing,

Michael Brown

Yeah. Good. Good.

proportion that is financial little was of context get ask and result that’s I can core answered a of down what a and sponsors. your you now, obviously a business there? and the a record I of as further So of quarter? wanted key some And little love know to strength about us advisory, bit quarter to key touching the bit this break maybe that strengths this you so share for just so

Jeffrey Solomon

of answer, advisory -- I will when all, the tick on year business I financial back was It I think, significantly. So suppose, crisis. seen this the first obviously we have

everyone had are businesses M&A seeing pace. actually time a with we of up that so pick challenging some I their and advisory think a

will continues to the be I Although, backlog say also strong.

in the to very sponsor is have to am area. ability continue M&A big confident that chunk I So of revenues same business. A our in

it. the about break how think out advisory actually sponsors, not business that’s we we We sponsor are I out think amount continuing of specific to because don’t build to our platform.

do right which think and kinds relevant I big ends, big is driven that function those we goes we part growth a on are think which it have volume more be sponsor a an used coverage of oftentimes about to I we back continue to area. by transaction point area I have also cross that are than of so we anticipate our -- sponsors. But would SPAC the M&A fact of inroads. from is includes sponsors in will to you this chunk and model, a into and to revenues I that, had the that the to our And quarter think that much sponsor said in industrial I with out, more the over way, make of

when revenues, at So our I we look oftentimes dual passing. are SPAC

to are sales. sales We or private private talking about public companies

more into to private Sometimes they break sales sponsors.

Sometimes to they more it sales our importance opportunity it do break tap SPAC that other end. M&A corporate, on our parts capability the or public continue think order because advisory we business. having are holistically. a to the we the drives we focused understate When the just sponsors, are just, we opposed that our to mix on of back I we more to business using so ability to as to drive of markets think can’t about focused just about business have full have in to and

Michael Brown

That’s your helpful to get that insight into thinking there.

stay correctly, business -- so around think, hear you coming the you you that, to that Is where this did expect this that Just operating produced the that about $XXX a million comment, you see level. had quick clarification is there, quarter, revenues advisory I mentioned your over quarters? in of I

Jeffrey Solomon

higher it here. Yeah. I it -- think, move mean, I actually I think from can

we to when assignments, win could our higher. ability at it think trajectory actually the I -- look growth and are We move

the more of fact I we size reached milestone terms that, business. this reflecting significant I advisory have quarter think our a was of pretty in the

was and get will here am to and look up. more, So lows highs to pretty higher way am produce don’t our lot grow. level very our faster. more business. I I like it and and much I good annual to would that, a on for continue actually growth when faster share I of I look like say, which us our a am focus continue on at have who taken continue is we think a in goal a we advisory I the over more that new to I can say our meaningful of advisory a because on be to know the and -- would street, And us think that over the and queue started at a business. said advisory of the backlog our of is the about business were the and suggests ability meaningful also it’s when that in felt higher they when we the growth do there’s a are just just to indicative -- lot have the we going I comment I so again, take you build there many growing to I competitors I advisory continuing to where way I was firm think I confident that that’s a advisory I think advisory me I to businesses investors believe business, the of meaningful can acknowledging reached actually and to while take. compound growth share of more really rate the hard that feel people instances more and think I have take that’s

Michael Brown

Certainly were think, you impressive XXXX. Yeah. to see million when that, in $XX I

to just So hear. that’s maybe And great one…

Jeffrey Solomon

like lot could we made ratios, progress. particular in of just, were XXXX, reflected probably we we the credit out meaningful accident by this, to our how a quarter I made in XXXX there indication confidence and a and think about NHT a follow-on talked have great through in few traction that operate compensation remember our in quarter, particularly in that XXXX, we I XXXX investments. got multiple ago, ability really the think significant This IPO investing team in significant biotech here. have there give see those that the made real activity happen to slowdown can doesn’t significant we to in activity, and and you acquisitions I cycle environments. is this and were that we gives sector. And the important the investments us gaining you market make doubters I real a that I we and are in actually years that in and investments particularly mean,

Michael Brown

amount you you did some the the allocation that, is way one I pace returns, did you broad Appreciate $XX near-term can maybe maybe that. us about the update just that. is last think broadly? guess, of little you maybe the here to thoughts the if million record on give you kind maybe on capital the just quarter, appreciate capital And that through right and quick finer a point a philosophy this on that -- I and about put quarter, a could a there ran of

Jeffrey Solomon

Yeah.

to So, said when terms to I at we our not are opportunities know, amounts changing opportunities buyback. right? some you think third when very how buy they good I will do mispriced. of am stock be buy things for -- had we are we days minimum cheap that, I get I of, all know guidance to the in I this the on example buy think, to quarter I as But and was of are going year, I the are a and we active side. my we the we back to see beginning think

active. that continue will do able We I do the to wherewithal we to be certainly we to happy it am and it. So were have financial

also convert, a you we which of the that when ours. I diluted think outstanding, recognize I fully think took was shares objective of at, big look we that care

and continue aggressively we continues our said business thrive. to will to would we so buyback have, and I as we we operating so to think continue And do

Michael Brown

I color appreciate Thanks, Jeff. right. All on that. the

Jeffrey Solomon

All right. Mike. Thanks,

Operator

Thank you.

with question comes Piper from next Sumeet Our Sandler. Mody

Your is open. line

Sumeet Mody

Thanks. Good morning, guys.

the strength front, of maybe today. pipeline the uncertain give lights. of on of, of -- Just around are hearing nature economy sort yellow we any the commentary given you de-SPAC kind at thinking How point, of at this flashing the the economy have But healthcare, can M&A industry forward, your generally forward, some core you of point, some sort think of the looking kind base uncertain M&A kind nature consumer, looking of this the verticals industrials the the year, you that of could you dislocations the next more about are trends your effects all guys in thinking do like smaller but any over de-SPACs, off can just through but and not growing grow given of? have that working you

Jeffrey Solomon

about. think we something obviously that’s and Sumeet question great So,

would to actually big enough market I flows. be I in conditions great. one aspire be impact day general M&A our have to That think

we before we there. to room I a of lot have think go get

and So this firms all enough, in at In bunch didn’t winning. our have. a offering we to taking can’t product this used part standpoint, I compete that of think like, are competing because and I of of are space the we breadth with we now share. stress we from the

time. that conditions months. public general ability concerned XX and business SPACs that It’s hard huge grow and very about lot to advisory just business business. across I there’s will M&A any M&A very a to second and I pickup now so higher mean, you am like, than of to of constraints capital, there’s and the So the argument not other that impact a impact our not also a just and done confidence us are see seeing headwinds a the because number install how next our obviously, our the amount right we in might in future long the continue over has actually And first in of to economic think year am dislocation I everybody’s had a front it ago are at look think that quarter a significant Board. into could the base terribly the SPACs about if that around specifically. can me I make economic downdraft, and what activity maybe But business, months that with of get business. our I to of quarter XX I stuff we when economic -- gives last in time of to degree the activity access significant the in impact of that

to And so, predict not I quarter-over-quarter. smart listen, I enough am don’t

have have that we a it. out When look do have sectors get very the done to lot to the the always two remain there’s I we next kinds you or think over I of work that could those to continue about upbeat fluctuations. do, that year in at so I and

Sumeet Mody

was of growth then brokerage That brokerage, color to on And that the turning Thanks. progress and diversification. the really Great. appreciate helpful.

kind over frame business in in shift -- how services that perspective? those product you the a have and more have the moving revenues to of impacted and back what how capture the of if your kind about Maybe brokerage little talk on could bit of forward they offerings step wondering Just changed business, positioning the both last years? few

Jeffrey Solomon

Yeah.

not and structure I So dynamics market when think equity of lot trading particular. of -- and intricacies a that in equity actually the market there’s folks understand

we and world use don’t recognize outcomes. dark game, who drive risk is using players are think pools have volumes. There’s I books right? a dark to waste That’s really the We and our big risk central not their what in we capital drive falls here into really not pools two categories. to

as algorithmically, We think are have your got much both focused well the agency to at more and of in game, there be research. as you top

share inside tomorrow sudden a class think the bulge up thing market to all you in to of a share stumbled It’s and equity at our both position. regain hard at that to the XX you have hard of I can I the they the of momentum. continued the in franchise. and of a put have we that wake That’s think And like excel gains terms half of That’s our what it’s do. because world those. than terms and market So research bigger have shown top us that least gains That’s gains, share. well rebuild not

don’t you and thing algorithms up some That’s use can I that to get We your do. reinstalled think people’s them. have people wake and desk that. on tomorrow hard rebuild a

done have share gains. very thing meaningful, like, just positioned meaningful a that have very, So me, excuse is not gains, the consistent the share ourselves to but we

ground call and security, our are over and half is those places a real be to look needle don’t swaps, businesses of non-execution We in the We in the think when so are Europe, us and really And others pursued, at existing and than of penetrate the a to in you will market like like, year look again, we the adding have lot to strategies we Europe. opportunity mean, when we that are then so actually And phenomenal take. on way there’s that’s still we share to gains like past that that. the I you terms we a that do can not clients a So finance of bigger an to for when much year have can’t. take eroding what we course in in continue area driven done continue from you -- about used at just market you there. share what I to would and share move wallets

am bulled up grow it I will people business. we our to ability -- know in remain that. think the harder concerned I on So our future. do about I to some be to less continue

Sumeet Mody

my questions. for Great. Thanks taking Okay.

Jeffrey Solomon

Sumeet. Thanks,

Operator

you. Thank

Our Ryan next JMP question with Securities. comes from Devin

Your line is open.

Devin Ryan

Great. Good morning, guys.

Stephen Lasota

morning, Good Devin.

Jeffrey Solomon

Devin? you doing, are How

Devin Ryan

you room of next bit that as bar kind within of year? Clearly, for have you micro maybe deal could into predictable I on the and said, maybe a you still that then for missed then things Yeah. lot I -- we and on break budgeting to of or little I even above deal. of be maybe hitting here, is two-thirds still SPAC where just about there’s like, are But cylinders number question a And are business there’s of the you. want guess, I a probably a to guys at appreciate where where am that about Thank share the thinking kind bit, and is close maybe it coming working fantastic at well, your all you year remaining doing level But just you know you the just were working revenues high? off some a would because of like versus down normal are terrific. to little hard pending think underwriting just either where unpack in outlook in predict and you growth. revenues your of there it’s as where have a the dig looking of bit revenue and on there’s for that more backlogs, somewhat and a I first How still If lot where the come. suspect businesses. of I feels this two-thirds XXXX to to you the one-third it upside process do a are the through future. or the hitting head

close of this XXXX, and you So revenue SPAC just of nice revenues there momentum is is come on get deals embedded in or to that the kind that’s those kind XQ as closing? majority still of going

Jeffrey Solomon

Okay.

sure to So I -- want address unpack, that make in lot a so make sure I there it. actually to

You talk specifically. banking backlog about

Devin Ryan

the XXXX? effectively feels Yeah. where and what I did maybe bar into have heading how growth that if backlog where like, and like there’s the just where is a you well in some you high, about done I and given capacity mean, just then and getting am XXXX, think bit at, little

Jeffrey Solomon

Yeah.

that done that to just begun long and room get has And industry So I an grow to sure. may this be that I SPACs been lot for also, base may I there a going be mentioned tax advisory, around a but deals they number in for get about think a end not are to time. the some has think have feel done that’s -- valuation I be we that going have earlier, there’s significant. of as just the at done. fact and a significant levels, But I volume like, do as of actually to to with back of the same to I decompression, lot it’s

going done I done, ways too pain economic is the a think motivated is will of of experiences, will are that vast a because how get figure get done majority of to there we and timeframe advisory out how -- think in have them. individuals great. something them I the get where to done not getting other in deals them group much get sponsors any That can’t I and M&A where of deal say, to deals debate are to done. of who just highly a my space, can of deals much

going down we are going a they XXXX busy is, to us SPAC a deal exploring best really really bunch and XXXX a are Cowen. will of the to be What SPACs back -- coming in also say be are and to in bar it’s at for none. for end, back hands and it’s companies So busy ends I

you raise to do you would for are we not companies. Cowen, So are are advisory many that’s come both alternatives whether capital to in and or them are driving walking while coming through the here, markets call When also other you sponsors or they private that’s their both for debt about path I you a and you. other But outcomes what opportunities or advisory getting are sense get either when are of that. to maybe one calls you years advice here, they not hearing were them maybe to on or because two path SPAC it for makes that’s cases are understand wasn’t more that around the private enough placements the happening doing, round advisory people you. is the there ago, we I business business that’s not think just financing. the market if inbound Those capital our of for And that’s to the driving calls things one who best want better, monetize from

forward. SPAC So part going us sense? I to continue that reason to grow That the other the the remain in as our player as advisory of Does pulled places. has enabled businesses of to drive why is up other pre-eminent make am ability on on knock -- effect business being I

Devin Ryan

you can I -- granular And the appreciate like there’s market are mean year. what in I in side you where Jeff. also about does just longer to you if a expanding continue versus capacity where level, share, business, underwriting just the increasing kind the think be on but you the to trying term special business think be after a high where more But footprint, year It just are things -- and then, can just is and mean, underwriting want was of to better. clearly about, could is of it better. a maybe the phenomenal XXXX bar I you

maybe for where imply more bar that does what sector any perspective just XXXX? like around is? questions getting a like sector are the granularity We around, I the from individual So

Jeffrey Solomon

Yeah. All right.

of color give So let me a little to bit this. try on you

right, in revenue conditions. because underwriting mandated million, look stocks, performance, you been month which about horrendous for primary the a our at remember, on market finance those go quarters, not been a if have just you most biotech revenue mandated the That the two quarter and It’s number of it’s the so at for in $XX you biotech can past six been quarter worst mix, didn’t the situations has if biotech, the of think and were period actually volume, course right? about I underwriting of of that if chosen -- since has look terms the historically. honestly, themselves. terms of talent know companies We over take So And each been right? We just was driver quarter. of to are many last

be business So, that Where business. pretty than Well, has in relevant areas yeah, we more consumer from? are our like underwriting AI, consistent. we come to did robotics, Cowen’s used remained much

If you tells different done that at book alone consumer have number the is run look you we in in of the Cowen. transactions two quarters, something last at happening

monetize are investments also We have in -- we we our finally banking the to footprint. and research beginning made

have follow-ons So, again, high a you you footprint. research can’t got unless do quality IPOs really and

that inevitable years, occurred, when picked We in the that slack have as the areas when have few wasn’t bio -- the where other have made investments happening. in over past biotech slowdown discussed. we And up that the we

price while have we then if while there. them. inevitably a they conditions for not will are these better, can wait all were money, it’s biotech So these out like bunch that really I companies I mandated to they to for and After be when -- just, money have look an market do, on know I next they raise year and the see of like option a raise a to am

in will we the quarter, at if to people, not got that there to going been I into already I quarters, at half companies out good, maybe me beginning so this last feel there’s probably of the makes is that’s remind this are I also our thought know would and next look the deferred. those And because year back of I of just bunch biotech backlog. that have look that half to and that business do finance. and in going to really I decent going be over halfway this few say a tape actually, And I all were

backlog, the So market actually biotech are backlog, you pricing been in are huge of the it revenue then ever if overnight in has by or mandated in follow-ons, which time driver for days. qualified a are rarely are actually you Cowen’s because they and them you becomes two

will know fall, people significant think because to we to am companies last So, a the don’t at see happens some a plan. sidelines on there’s to all finish. in waiting shadow will that is months, in enough where be biotech readjust people I it where again, that once for likely I infrastructure for back And clarity what want is think, are to pricing fall pharma. with that people to the six market there policy. to the safe and saying, going in actually uncertainty Obviously, front say big I been the what pricing here, we to going to invest biotech. they and to have looking in will people I -- these know smart thing clarity, will be a where It’s is, able around bid. is been drug The will have going in thing And going with probability I last and again to of know see be the that are it to There we plan. be that is I once this does, the fall. catch am bipartisan on the happens is drug but of very

at a don’t our Now because and I part market do am just that I student timing. of -- of think. important that’s what business I I it’s an business, Cowen

next see out few will how weeks. that over We plays the

Devin Ryan

up Thanks, appreciated XXXX. XX% the And not Jeff, it’s even color. at since just talked headcount helpful. about a that expanding years question for you end the I up from fully Okay. end footprint Terrific. people over here, look of I last sometimes, Cowen. XXXX, That’s two all just the when mean is very follow up of the the XX% think

guys pretty substantially. are footprint growing you the So

need does, where additional because kind last as footprint people, more low-double off what infrastructure you but want some do it leverage like terms infrastructure leverageable you in you operating it, connect doesn’t to and to, digits, then have but are operating of time, feels pace growth positive positive I that we two as footprint. thinking as like this versus can operating I years? of happen getting feel kind overnight, growing off over leverage, necessarily grow the Can are you that’s of you of time, you guess, get underneath to it it adding add you operating as feel So are you over that really because upper-single so where place, that And you said, is the about things, you should the drive to keep one, margins of higher of XXXX? into leverage where like, have you over of like add type in couple I seen are seeing digits are more need how up like you annually?

Jeffrey Solomon

Yeah.

two front. So that things on

have Naturally, increased in bringing the where us. leverage important, have brought a in great to teams places it’s month more some got because for XX to footprint we back our think, is first in this go, we that been our We to we and -- First, need operating like many in so per office space geographically, really on we And going back make we that invested in them that’s a nominally, you it producers York, acquisitions and just revenue software. people. on I how up expenses Francisco, done works San we that we them people at the are see primarily rolling to infrastructure they time things like, to topline. of basis, needed some in because actually articulated have to more revenue around actually and thing aggregate terms sure and dollars and that head are spaces have actually we done go hoteling the have particularly areas bring we actually New we have so instances, can

and seeing and market data the is services So part of you infrastructure. telecommunications infrastructure are what

people also are to systems the their asking back We bring desktop not operating home office. to

sure This some and office big for that York. So at both desks thing to have have in at had is people investments to us. New make a we and have We a regionalized. equipment make fixed decision infrastructure to particular we in home in made

footprint. regionalized our have We office

Bank, Red new offices we have So in Summit. got

space in work our be hopefully, out. where we live. in talent built this we space enabling a built Stanford, is few they be and bigger much have It that had the near best able Long space to We will to Island, extra next where open, weeks.

commuting, to been commute So are we of office, having to as necessarily seen efficiency we has return amazing. not people the gains to because we from not returning have

function a we are of run seeing what what we of of part expect rate the I fact in that much uptick -- we So revenue that’s we are continue period this of hard, time our margins the and to that, costs going will higher are we seeing just pretty you because said exiting are those workplace a drive more redesigning really to fixed forward. is people we at future. are the see expect Having and

Devin Ryan

will there. Great. I Okay. it leave Thanks much. very

Jeffrey Solomon

Devon. Thanks, Great.

Operator

Thank you.

Our next Steven Chubak Research. from is Wolfe question with

Your line is open.

Steven Chubak

Good morning, Steve. Hi. Jeff. morning, Good

Jeffrey Solomon

Hi, Steve.

Stephen Lasota

morning. Good

Steven Chubak

ads, the wanted run a you hoping sustainability we a just rate. So that was can entered now in puts of question brokerage drove also unpack just there. pressure of less in some different you KPIs some the the the cited some of volatile speak, of of day have just These of so line. new Jeff, $X.X fees services million factors historically per this been ask takes have was I to the and much trading client maybe unpack some activity, that and to normalized terms on I hoping could strong you period business, trying to revenue more

Jeffrey Solomon

Yeah.

That’s of So a there. revenue we the we services clearing really footprint me quickly. -- reduced our part let take sold clearing business off and our

are that tied which I have too focus again, need on, this capital actually that up we business of certain topline that what’s buybacks. at in move is in businesses off. made at to up exit looks we and the we numbers, perception definitely tied capital more and another people right? capital choice to year There’s looking much utilization, That’s everyone thing So, business and to part had conscious clearing that last a enabled do share us think

but, a clearing So the -- obviously, is in we service function that -- choice. revenue drop was was there a the of and conscious the fact that line

up things strip really that there. is we big continuing that. you are out our and These the and When that’s are business. Alpha our to there growth see swaps business prime to drive be. them the of trading on ways our of research broad in they a NDRs onboarded business, performance that that consume I continue we what relevant in just is driving and for So this execution, are algorithmic part your make and what equities a done a time Again, they the easy finite probably don’t that front people are consume we pay They and in is want little who because so investors that pockets or so provide we may and services it have -- are soon. a the think wallet. one, any to them to of they in are wallet can are and opening you to choose, aggregate are them clients us to to we pay see see us, so whatever able I happens amount them so we abating we that cash, variety when with in to for to want many other they or bit now brokerage have

them is a see up execution accounts So will quarter open quarter our services stable least execution, we are. over is move we don’t at accounts business services. between from expectation But not moves time, part, as much you like more algorithmic and where prime our brokerage be view that because -- people will over around cash once swap and much,

their that’s it the larger to Cowen, $X.X our a actually swaps When doing us is all of maintain really likely business a those running are paid and are our big some not prime are you and of intentionality, If million is business stickiness have time. helping to Cowen like finance to move away. it day. balances the get are what with folks And really moving people our our brokerage they to they between seen business balances move so and prime we competitors, that business people securities

Steven Chubak

in great you give I alliance Critical just a limitations That’s there just on color Care can switching you and what sheet and hoping update is there of follow-up, of much event? IPO of re-launch And share. how around context Okay. if is its on balance your sort expected what how reflected can was any that know gears would terms Royalty of is provide are to proceeds with when But a and you that. sort Partners the some deploy some monetization you some bit, such I to can ownership of today, once sort

Jeffrey Solomon

sort of, biotech time disappointed the worst try seen emblematic yeah, the to of a conditions. probably was that get healthcare and obviously, it to with launched business we market So, in the was deal they are It probably we and have done. deal

they So, that deal. pulled

meaningful We value market for they what it that out. we sense valuation that the had is -- better. think -- is was it will makes I expect that about we to hoped is refigure interesting actually and -- demand. of level I when just there. sort don’t so rethink saw it will conditions The we re-circuit will we us that are still

that in I those value sheet. pickups that show out So out don’t clear, value. points a stakes don’t I to put carry the obviously, think want we at be any book on we to rightly they on them are balance -- are -- they meaningful our are And I but -- to we mark it, research they if you of meaningful, are market, mean, were any report

fourth the quarter. The is happen And continue to will this for year, that as is, say into to capital royalties, be on we healthcare validated the been hugely it what market always valuable market permanent continue to what’s head in and vehicle monitor that. I space won’t a think is we don’t I us pursue and will do ability way. will next -- in we would But so conditions

Steven Chubak

or for Okay. Jeff, of noted provide final some me, you And would just incremental that some additional one context question investments. your disclosures on you some had

bit had you little think I touched a on that in remarks. your prepared

you you that that remains portfolio some incremental your on can investment what opaque? hoping generally color plan business providing on and So just provide since disclosures additional

Stephen Lasota

we seen fees. disclosed our some incentive have the at what is so others quarter realized Steven, end of do events around the

that that on in people view have into going an line. So will what’s earlier

on plan doing that the future. we So in

Jeffrey Solomon

are We just…

Steven Chubak

Okay. Great…

Jeffrey Solomon

away guessing are We just there. trying the take to game

Steven Chubak

Yeah.

Jeffrey Solomon

this I and I numbers, the first nobody at -- and on sustainable. when was quarter here that in phone an year -- the of think you we income Obviously, incredible those look probably incentive we thought had nobody

just what so look guess into think and main when reversion, it so we people quarter that can it should trying earlier at And tell I their you always people probably the the to models. coming in is you are just drop

Steven Chubak

music It’s ears. to my

much certainly disclosure for it and so taking on thanks questions. that my was So

Jeffrey Solomon

Steve. Thanks

Stephen Lasota

you. Thank

Operator

you. Thank

comes from Sachs. Yaro question James Our next Goldman with

open. is line Your

James Yaro

Hi. ask Good morning. your ability comp to I generate wanted just from about to leverage here?

Jeffrey Solomon

specifically? Go ahead, that. How’s

James Yaro

Sorry. sorry that. I about --

the past So success you few the growing have years. had topline in in tremendous

generate to franchise? touch you -- just as generate the the leverage to here as ability from your So you to comp on grow continue I want

Jeffrey Solomon

much When we we competitors, Yeah. so to generated have a think, lot amount comp they comp ratio you leverage a Listen, higher actually skew of of far. significant terms revenue in I do. look of at our than

term, think I We I our we expect our business, off say, lower much as lower longer move cost. to I be would when I advisory ratio. it actually -- will have that got that And to are businesses business, you at we revenue look comp think, business, higher-margin here of too grow wouldn’t this. fixed

on, you that actually the fall is in business, out margin And we business if will and that. up. go level can James, I advisory actually think percentages the comp that’s really see argument things of we also focus like So up what might -- comp might but make higher mix margins levels really comp go and

James Yaro

you. Okay. That’s helpful. really Thank

Operator

the I to remarks. am not final for I will And turn Jeffrey questions right. showing any call the All queue. back in further Solomon

Jeffrey Solomon

that use here across around -- that deliver mentioned all really not what we about to good of but are that are here, it’s use Well, a people things great we morning. Part staying this do that are already and to as question, just Cowen. me I it come I strategy work not some also or the at people earlier. how and have give we on often of to thanks, than ever the greatest growth on Operator, and that not at able anywhere doing really whether bunch our whether here or talented and amazing where whether do them, on promise places promise is been no to this -- there that Cowen. just amazing that, and come people particularly should in want that firms highlight I during have for feels want and the at that’s people seeing important do, at are a validate pandemic they and metric we I explosive we have feel I delivering we the the other think, other me here the it do, or able as Cowen. really the that single street happening want cases and it come makes else, able and I to to whether one team to And asks are And are here retention or in the the experience, work they we working for measure who say, everybody listening thanks are from we are. recruiting when is are it here better what that not

the So Have more great everyone. I quarterly to forward a up look next to on come day you catching with call. and

Operator

you And with now Thank that, we you disconnect. conclude call. participating may for today’s and conference

Cowen (COWN) 29 Oct 212021 Q3 Earnings call transcript