Financial services giant State Street (NYSE: STT) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 8.8% year on year to $3.55 billion. Its non-GAAP profit of $2.78 per share was 5% above analysts’ consensus estimates.

Is now the time to buy STT? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

State Street’s third quarter results reflected broad-based growth, driven by higher servicing and management fees, as well as progress on strategic initiatives. CEO Ron O’Hanley attributed the company’s performance to disciplined execution and a constructive market environment, noting, “Our strong financial performance reflects disciplined execution against our strategic priorities and our ability to effectively capitalize on the constructive market environment in the quarter.” Management highlighted continued business momentum, with the seventh consecutive quarter of positive operating leverage, and cited robust client flows and product launches as important contributors to these results.

Looking ahead, State Street management indicated that product innovation, expansion into digital assets, and the recent partnership with Apex Fintech Solutions will be key to capturing future growth opportunities. CFO John Woods emphasized ongoing investments in technology and productivity, stating, “There is a lot ahead of us that we can accomplish together that’s got a lot of tailwinds associated with it heading into 2026.” Management also pointed to balance sheet optimization and the integration of new digital wealth services as central to their strategy for sustaining momentum and supporting long-term profitability.

Key Insights from Management’s Remarks

Management pointed to a combination of new product launches, expanded client relationships, and technology investments as key drivers of third quarter performance and future outlook.

• Servicing and management fee growth: State Street reported strong year-over-year increases in both servicing and management fees, driven by higher average market levels, net inflows, and new business wins. The company’s assets under custody and administration (AUCA) reached a new record, while assets under management (AUM) also hit an all-time high, reflecting robust client demand and successful expansion of product offerings.

• Strategic partnership with Apex: The company announced a minority investment in Apex Fintech Solutions, which will allow State Street to leverage Apex’s digital custody and clearing platform. This partnership is expected to enhance State Street’s wealth services offerings and support further growth in the high-growth wealth management sector by delivering a scalable, digital custody solution for advisors and self-directed platforms.

• Product innovation in investment management: State Street launched several new investment products, including sector-specific premium income ETFs and expanded actively managed fixed income offerings. Management cited these products as important for attracting new client inflows and strengthening the company’s position in key strategic areas such as fixed income and alternative investments.

• Momentum in markets and FX services: The markets franchise delivered strong growth in foreign exchange (FX) trading and securities finance, supported by increased client volumes and expanded multi-channel access. Management highlighted the integrated nature of these businesses with State Street’s core investment services, which enables cross-selling and deeper client relationships.

• Ongoing expense discipline and technology investment: Operating expenses increased modestly as the company continued investing in platform modernization, artificial intelligence (AI), and productivity initiatives. Management emphasized that ongoing cost savings from process improvements and technology upgrades are being reinvested to support strategic growth priorities, while still delivering positive operating leverage.

Drivers of Future Performance

Management expects that continued product innovation, digital asset expansion, and execution of strategic partnerships will support revenue growth and operating leverage in the coming quarters.

• Digital asset and wealth platform expansion: The soon-to-launch digital asset platform and the Apex partnership are expected to open new revenue streams by enabling tokenization and digital custody services. Management believes these capabilities will help State Street serve evolving client needs as institutional investors increasingly adopt digital solutions.

• Productivity and technology investments: The company is targeting further operating leverage in 2026 by maintaining expense discipline and advancing technology initiatives, particularly in AI and process automation. Management sees these investments as creating long-term efficiency gains and improved client experiences.

• Healthy business pipeline and backlog: With a record servicing fee backlog and a diversified pipeline, State Street expects to continue installing new mandates at a steady pace. Management noted that much of the backlog consists of core back office and private market solutions, which are viewed as higher-margin and supportive of organic fee revenue growth.

Catalysts in Upcoming Quarters

Our analyst team is closely monitoring (1) the rollout and adoption of State Street’s digital asset and wealth platforms, (2) the pace at which the servicing fee backlog converts to revenue, and (3) continued progress on technology-driven productivity initiatives and operating leverage. The impact of new product launches and evolving client preferences in global wealth and institutional markets will also be important markers of execution.

State Street currently trades at $113.06, in line with $112.98 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).

Now Could Be The Perfect Time To Invest In These Stocks

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.