Cohen & Company (COHN) Q3 2025: CCM Revenue Jumps to 77% of Total, Signaling Strategic Pivot
Cohen & Company’s third quarter marked a decisive shift as its boutique investment bank, CCM, surged to 77% of total revenue, demonstrating the firm’s successful repositioning toward frontier capital markets. The quarter’s results highlight both the volatility and opportunity inherent in CCM’s focus on SPACs, digital assets, and emerging technologies. With a $300 million transaction pipeline and expanding trading revenue, management is signaling confidence in outpacing last year’s performance and reshaping the firm’s earnings profile for 2026.
Summary
- CCM Dominance Accelerates: Investment banking now drives the vast majority of revenue, reshaping the business model.
- Digital Asset Advisory Momentum: Leadership in crypto capital markets and SPACs is fueling both growth and volatility.
- Forward Pipeline Strength: Management expects record Q4 and full-year revenue, citing a robust deal pipeline and talent expansion.
Performance Analysis
Cohen & Company’s third quarter results underscore a radical transformation in its revenue mix, with Cohen & Company Capital Markets (CCM), its boutique investment bank, delivering $68.6 million in net revenue across 18 clients and now representing 77% of total company revenue for the first nine months of 2025. This is a dramatic increase from just 15% in 2021, reflecting a deliberate shift into SPACs, digital assets, and frontier technology capital markets.
While total revenue reached $84.2 million for the quarter, the volatility of CCM’s model was apparent in the outsized impact of non-cash advisory compensation, particularly the Nakamoto-KindlyMD transaction. This single deal generated $179 million in advisory revenue, but $159 million of that was in NACA shares, which rapidly lost value, creating a $146 million principal transaction loss. Still, net trading revenue rose 26% sequentially, benefiting from a declining rate environment and expanded repo activity. Asset management revenue continued its decline as legacy ALESCO CDO contracts were fully exited, cementing the firm’s pivot away from traditional fee streams.
- Investment Banking Model Transformation: CCM’s outsized contribution signals a new era for the company, but also introduces quarter-to-quarter lumpiness tied to large transactions and non-cash compensation.
- Trading Revenue Resilience: Trading desks saw broad-based growth, with trading revenue up $2.8 million QoQ, offsetting some volatility from principal transactions.
- Legacy Asset Management Exit: The sale of all ALESCO CDO contracts removes a stable but shrinking revenue base, reinforcing the company’s full commitment to high-growth, high-variance business lines.
Employee productivity also surged, with annualized revenue per employee projected to reach $1.8 million for 2025, up from $700,000 in 2024, reflecting the operational leverage of the new business mix. Compensation expense rose in line with revenue, maintaining a variable cost structure but also highlighting the need to manage incentive payouts amid revenue volatility.
Executive Commentary
"We are super excited about our present, our future, and what we really have been able to build. We're in the middle still of that build-out of Cohen & Company Securities into the premier frontier technology investment bank. But the results over the past few quarters show the potential."
Daniel Cohen, Executive Chairman
"Launched in 2021, CCM has become an increasingly important component of our company overall, generating $133 million in the first nine months of 2025, up from $22.7 million in full year 2021. CCM as a percentage of revenue, total revenue, total company revenue has grown to 77% for the first nine months of 2025, from 15% in the full year of 2021."
Lester, Chief Executive Officer
Strategic Positioning
1. CCM-Centric Business Model
The company’s strategic pivot to CCM as its primary earnings engine is now complete, with the investment bank’s focus on SPACs, digital assets, and frontier tech capital markets anchoring both growth and volatility. The firm’s dominance in SPAC IPO underwriting and D-SPAC advisory, as well as its expansion into rare earth and quantum computing, positions it as a go-to advisor for high-growth, high-risk sectors.
2. Digital Asset and Blockchain Leadership
CCM’s investment in digital asset capital markets has paid off, with over $12 billion raised for crypto clients and 26 transactions closed year-to-date. The firm is leveraging its early-mover status in tokenization and blockchain asset advisory, aiming to lead as traditional assets migrate to blockchain rails.
3. Revenue Pipeline and Transaction Visibility
The $300 million gross pipeline of possible transactions for CCM, more than double the $145 million at this point last year, provides significant near-term fee visibility. However, the lumpy nature of SPAC and crypto advisory deals means future quarters will be highly sensitive to deal timing and market conditions.
4. Trading and Repo Expansion
Trading revenue growth, supported by a $3.3 billion repo book, is a stabilizing force as the firm navigates the volatility of its advisory business. The declining interest rate environment has provided a tailwind, but sustainability will depend on market liquidity and risk appetite.
5. Talent and Operational Leverage
Management is aggressively adding talent and scaling operations, with headcount rising and revenue per employee more than doubling year-over-year. This operational leverage is a double-edged sword, amplifying both upside and downside as the business model matures.
Key Considerations
This quarter’s results highlight a firm in the midst of a high-conviction transformation, betting on volatile but potentially lucrative capital markets niches. Investors must weigh the upside of rapid growth and pipeline strength against the risks of deal-driven revenue swings and non-cash compensation exposures.
Key Considerations:
- SPAC and Digital Asset Market Sensitivity: CCM’s revenue is now heavily tied to SPAC, crypto, and frontier tech deal activity, exposing the business to sector cycles and regulatory shifts.
- Principal Transaction Volatility: Acceptance of equity as advisory compensation can create large P&L swings, as seen with the Nakamoto-KindlyMD deal’s rapid mark-to-market loss.
- Legacy Revenue Base Exit: The full exit from ALESCO CDO management contracts removes a predictable income stream, increasing reliance on less stable business lines.
- Cost Structure Flexibility: Compensation remains highly variable, but rising payouts could pressure margins if revenue growth stalls or reverses.
Risks
CCM’s deal-driven model is inherently volatile, with earnings highly sensitive to SPAC and digital asset market cycles. The use of equity as compensation introduces mark-to-market risk, and the exit from legacy asset management heightens exposure to capital markets disruptions. Regulatory scrutiny of SPACs and crypto markets could further complicate the outlook, while talent retention and incentive alignment remain ongoing challenges.
Forward Outlook
For Q4 2025, Cohen & Company guided to:
- Revenue exceeding $50 million
For full-year 2025, management raised guidance:
- Revenue above $220 million
- Compensation and benefits expense at 68%-72% of revenue
- Adjusted pre-tax income at 10%-15% of revenue
Management emphasized:
- Confidence in pipeline conversion as SPAC and digital asset activity accelerates
- Continued hiring and operational scaling to support growth in CCM and trading
Takeaways
The quarter cements Cohen & Company’s transformation into a high-growth, high-volatility investment bank focused on SPACs and digital assets, with legacy revenue streams now fully exited. The business is positioned for further expansion, but future performance will be dictated by deal flow, market conditions, and the ability to manage risk amid rapid scaling.
- Business Model Reinvention: CCM now dominates revenue, but brings increased earnings volatility and exposure to sector cycles.
- Talent and Pipeline Drive Upside: Management’s confidence is rooted in a robust transaction backlog and operational leverage, but execution risk remains high.
- Future Watchpoint: Investors should monitor deal conversion rates, principal transaction losses, and the sustainability of trading revenue as key indicators of ongoing strategic success.
Conclusion
Cohen & Company’s Q3 results showcase a full-throttle pivot to investment banking for frontier markets, with CCM now the clear growth engine. While the upside is substantial, investors must be prepared for ongoing earnings volatility and the challenges of scaling a deal-driven business model in unpredictable markets.
Industry Read-Through
Cohen & Company’s experience highlights both the promise and pitfalls of banking emerging markets like SPACs and digital assets. As traditional asset management fades, boutique firms chasing high-growth sectors can capture market share, but must manage extreme revenue volatility and regulatory risk. The rapid expansion of tokenization and blockchain advisory is a signal for other investment banks to invest in digital asset capabilities, but the principal transaction losses seen this quarter are a cautionary tale. Expect increased competition and scrutiny across SPAC and crypto advisory as these markets mature.