State Street’s fourth quarter results for 2025 outpaced Wall Street’s revenue and earnings expectations, yet the market reacted negatively, with shares declining over 4%. Management attributed the quarter’s growth to robust fee income from investment services and asset management, as well as ongoing operating leverage improvements. CEO Ron O’Hanley cited the launch of new digital asset platforms and double-digit servicing fee growth in private markets as notable contributors. However, software and processing fees declined due to a shift from on-premises to cloud-based offerings, with management noting this transition is central to future recurring revenue growth.
Is now the time to buy STT? Find out in our full research report (it’s free for active Edge members).
State Street (STT) Q4 CY2025 Highlights:
- Revenue: $3.67 billion vs analyst estimates of $3.61 billion (7.5% year-on-year growth, 1.5% beat)
- Adjusted EPS: $2.97 vs analyst estimates of $2.84 (4.7% beat)
- Adjusted Operating Income: $1.12 billion vs analyst estimates of $1.05 billion (30.7% margin, 7.2% beat)
- Operating Margin: 29.9%, in line with the same quarter last year
- Market Capitalization: $35.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From State Street’s Q4 Earnings Call
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Glenn Schorr (Evercore) asked about the balance between investing for growth and delivering higher operating leverage. CFO John Woods explained that discretionary investment in technology and business initiatives is prioritized, while productivity savings help maintain margin progress.
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Betsy Graseck (Morgan Stanley) questioned the scope of digital assets beyond crypto. CEO Ron O’Hanley clarified that client interest is focused on tokenizing traditional assets and bridging digital and traditional finance, with limited current impact on earnings.
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Ken Usdin (Autonomous) probed the sustainability of net interest income and margin. Woods pointed to seasonal deposit mix as a factor in Q4 strength and expects net interest margin to rise modestly in 2026, with some variability from hedging and funding costs.
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Brennan Hawken (BMO Capital Markets) asked about the timeline for the SaaS transition in software fees. Woods stated the migration will take one to two years, with recurring revenue gradually replacing upfront on-premises deals.
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Mike Mayo (Wells Fargo) pressed on long-term strategy and investor confidence. O’Hanley listed five pillars for owning State Street, including leadership in private markets, digital assets, and operational execution, while acknowledging the need to solidify recent momentum.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the pace of organic growth in private markets and wealth services, (2) progress in transitioning software clients to cloud-based offerings and stabilizing related fee revenue, and (3) measurable impacts from AI-enabled operational transformation on margins and efficiency. The rate of adoption for digital asset platforms and execution on strategic partnerships will also be important markers of success.
State Street currently trades at $128.50, down from $136.29 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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