Moelis & Company

Second-quarter revenue was $409 million, up 12% year over year, and first-half revenue was $729 million, up 9%. Adjusted compensation ratio was 65.8% in both the second quarter and first half, versus 69% in the prior-year periods. Adjusted non-compensation expenses were $66.5 million in Q2 and $134 million in the first half, with pretax margin of 18.6% in Q2 and 17% year to date, both above last year. Management did not give formal revenue or EPS guidance, but said the announced pipeline was up over 80% year over year, the overall pipeline was at a record level, and it expected a strong second half. CFO commentary pointed to quarterly non-comp expenses in the mid to high $60 million range for the rest of the year; the dividend stayed at $0.65 per share, Q2 buybacks totaled about 337 thousand shares at an average price of $64.43, and the quarter ended with $481 million of cash and no debt.

Navid Mahmoodzadegan said the quarter reflected improving M&A conditions, record activity in non-M&A businesses, and the benefits of recent investment in talent and product expansion. He emphasized that larger transactions are becoming a bigger part of the franchise, sponsor engagement remains high, and the firm is seeing early signs of a broader M&A recovery, including a possible pickup in the $1 billion to $5 billion range. His tone was confident and optimistic, repeatedly pointing to a record pipeline, a strong second half, and continued progress on AI adoption.

Christopher Callesano focused on margin improvement and expense discipline. He said the adjusted compensation ratio improved to 65.8% from 69% a year ago, adjusted non-comp expenses were $66.5 million in Q2, and pretax margin improved to 18.6% from 17.6%; for the first half, non-comp expenses were $134 million and pretax margin was 17% versus 16% last year. He attributed higher non-comp costs mainly to more business activity, underwriting syndication costs tied to public equity capital markets, and ongoing investment in technology, data, and occupancy, and he said quarterly non-comp expenses should stay in the mid to high $60 million range. He also highlighted capital returns: a $0.65 quarterly dividend, roughly 337 thousand shares repurchased in Q2 at $64.43, about $141 million returned through repurchases and settlements in the first half, and $481 million of cash with no debt.

Analysts pressed on whether the firm can sustain a second-half revenue step-up, the rise in senior talent costs, the softer sponsor M&A backdrop, and the impact of AI on margins and productivity. Management said it is not making specific second-half revenue predictions, but the record announced pipeline and stronger new business activity give it confidence. On sponsor engagement, Navid said engagement is very high; the issue is that many sponsor-owned companies still have not grown into valuations that support exits, though capital markets solutions, liability management, and continuation vehicles are providing alternatives. On AI, management said the firm is still in early deployment, sees potential productivity gains, but is also focused on data protection and believes some benefits will be commoditized across the industry.