Moelis & Company Q1 2026 Earnings Call - Record Revenue Driven by M&A and Private Capital Advisory Momentum

Brendan O’Brien, Analyst, Wolfe Research2: Good afternoon, welcome to the Moelis & Company first quarter 2026 earnings conference call. To begin, I’ll turn the call over to Mr. Matthew Tsukroff.

Matthew Tsukroff, Head of Investor Relations, Moelis & Company: Good afternoon, thank you for joining us for Moelis & Company’s first quarter 2026 financial results conference call. On the phone today are Navid Mahmoodzadegan, CEO and co-founder, and Christopher Callesano, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements that are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Moelis & Company’s filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods to better understand our operating results.

The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in the firm’s earnings release, which can be found on our investor relations website at investors.moelis.com. I will now turn the call over to Navid.

Brendan O’Brien, Analyst, Wolfe Research1: Thank you, Matt. It’s great to be with you all this afternoon. We have had an active start to the year with record first quarter revenues of $320 million, record first quarter levels of announced transaction activity, strong momentum in senior hiring, and continued execution of our strategic growth priorities. Since our last earnings call, we advised on a number of notable M&A transactions, including Clear Channel Outdoors’ $6.2 billion sale to Mubadala Capital and TWG Global, Tri Pointe Homes’ four and a half billion dollars sale to Sumitomo Forestry, and Kennedy Wilson’s nine and a half billion dollars take private. Beyond M&A, we advised TowerBrook on its $1.2 billion continuation vehicle for EisnerAmper, and most recently, we acted as an active book runner on X-energy’s $1.2 billion IPO.

We entered 2026 with high levels of new business origination and a constructive outlook. While the war in the Middle East, disruptions in private credit, and the impact of AI on certain sectors have created some near-term headwinds in parts of the transactional environment, these same forces create new opportunities for our firm. We remain confident about the trajectory of our business, supported by our pipeline near all-time highs and the fundamental drivers of transaction activity firmly in place. Let me briefly take you through an overview of what we’re seeing in each of our one major product areas. In M&A, corporates continue to seek scale to strengthen their strategic positioning, especially amid rapid technological disruption. This dynamic is most pronounced in large cap transactions, which continue to drive M&A volumes, and is further supported by a more accommodative U.S. regulatory backdrop.

Dislocation in various parts of the public equity markets is also driving take private transactions, an area where our board and special committee advisory practice is strong. Our business continues to benefit from financial sponsors’ need to monetize an extensive backlog of investments. While the market is not yet seeing a broad-based increase in sponsor exit activity, our M&A business or our M&A revenues from sponsors grew double digits during the quarter. In private capital advisory, the market for GP-led secondaries continues to hit record levels driven by sustained demand for liquidity solutions, increased adoption of continuation vehicles, and a growing base of institutional investors seeking exposure to seasoned assets with more predictable return profiles. Our thesis for PCA is playing out as expected, with the team executing a number of live mandates and rapidly building a significant pipeline.

With the recent addition of a managing director focused on private credit secondaries, and another joining later this year, we will have seven senior bankers dedicated to GP-led secondaries, further strengthening our position in this important market for our sponsor clients. Turning to capital markets, demand for growth capital from high-quality issuers is driving activity in our business, particularly in late-stage growth and pre-IPO issuance for AI, digital infrastructure, and aerospace and defense-oriented business models, just to name a few. IPO issuance is also strong, with our team involved in a number of transactions coming to market in the near term. Technology disruption is creating a more dynamic financing environment and accelerating opportunities for hybrid and structured solutions. We are further investing to meet the opportunities we see in capital markets.

We’ve recently hired two managing directors in the space, including a managing director focused on securitization, who will help develop this important growth opportunity for the firm, and a managing director that complements our already strong private credit and debt capital markets capabilities. In capital structure advisory, liability management continues to be the most active segment of the market. Increased lender selectivity is widening the gap between companies that can readily refinance and those requiring more complex solutions, which we expect will lead to more traditional restructurings over time. Our CSA pipeline is meaningfully above last year’s levels, ongoing technological disruption and volatility in commodity prices are creating new opportunities. Additionally, our growing creditor coverage is diversifying our CSA business, contributing to a larger share of revenue and positioning us well with the creditor community.

Turning to talent, we have hired eight MDs year to date, two who have already joined and six who will join us over the course of the year. In addition to the PCA and capital markets hires previously mentioned, we have also invested across industries where we see attractive long-term opportunity. This includes recent managing director hires in key sectors, including energy and healthcare IT. In Europe, we’ve hired two managing directors to enhance our expertise in chemicals and deepen our sponsor coverage capabilities. We recently relocated to a new and expanded office in London to support our talent, our clients, and our continued growth in the region. In general, we remain intensely focused on attracting the best and brightest talent and are excited about our high level of engagement and dialogue with world-class candidates.

With respect to capital return during the quarter, we re-repurchased 1.9 million shares, including 895,000 shares in the open market, while preserving the strength of our balance sheet with substantial cash and no debt. We are actively testing and deploying AI tools across our business with broad adoption from our teams. We see AI as a clear productivity lever, supporting our bankers and providing the best possible advice to clients and driving greater efficiencies throughout our organization. With a strong pipeline, including high levels of announced transaction activity and the most comprehensive capabilities at any point in our history, we are well-positioned to support our clients and deliver long-term value for our shareholders. I’ll pass the call to Chris to review our financial results in more detail.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Thanks, Navid. Good afternoon, everyone. As Navid mentioned, we reported record first quarter revenues of $320 million, an increase of 4% versus the prior year period. Our revenue growth was driven by year-over-year increases in M&A and private capital advisory, partially offset by declines in capital structure advisory and capital markets. Our business mix for the first quarter was approximately 2/3 M&A and 1/3 non-M&A. Turning to expenses. Our first quarter adjusted compensation expense ratio was 65.8%, down from 69% in the first quarter of 2025, and in line with our full year 2025 adjusted compensation ratio. As the year progresses, our compensation ratio will depend on the trajectory of revenues and the pace and magnitude of hiring throughout the year.

Adjusted non-compensation expenses were $67 million for the first quarter, resulting in a 21% non-compensation expense ratio. Main drivers of the expense growth were higher deal-related costs and increased communication and technology expenses. As previously communicated, we currently anticipate our full year 2026 non-compensation expenses to grow a similar rate to 2025 through our ongoing investments in technology, including AI, increased deal-related travel expenses, and growth in headcount. Our adjusted pre-tax margin was 15% for the first quarter of 2026, as compared with 14% in the prior year period. Regarding taxes, our underlying corporate tax rate was 29.3% for the quarter before the discrete tax benefit related to the vesting of equity. Turning to capital allocation.

We continue to maintain a strong balance sheet, ending the quarter with $354 million of cash and no debt, allowing us to continue investing in the business while also returning meaningful capital to shareholders. The board declared a regular quarterly dividend of $0.65 per share. As Navid said, we repurchased 1.9 million shares during the quarter at an average price of $61.40 per share, including 1 million shares to settle employee tax obligations and 895,000 shares repurchased in the open market. Through the combination of net settlements and open market repurchases, we have offset more than half of our annual equity incentive compensation issuance. Including the dividend declared today, we have returned approximately $171 million capital to shareholders with respect to the first quarter.

With that, we are happy to take your questions.

Brendan O’Brien, Analyst, Wolfe Research2: Your first question comes from the line of Devin Ryan with Citizens JMP. Your line is open.

Devin Ryan, Analyst, Citizens JMP: Great. Hi, Navid. Hi, Chris. How are you?

Brendan O’Brien, Analyst, Wolfe Research1: Hi, Devin.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Great.

Devin Ryan, Analyst, Citizens JMP: I wanna start with a question, kind of big picture, just on the software sector. Obviously, you guys have made some investments there and have scaled nicely. Clearly, kind of one area that’s getting caught up in some of this AI dislocation. Curious kind of what you’re seeing, kind of play out there relative maybe what people were expecting heading into the year. I know it’s not just one category. There’s a lot of kind of subsectors to it. Kind of where do you see activity there evolving? You know, do we see forced consolidation later this year? Are there take private to public companies? Maybe that’s a catalyst.

Would love to get some sense of how you see this mapping out, and then how important that is for kind of the broader M&A recovery, just given that it is a kind of important subsector.

Brendan O’Brien, Analyst, Wolfe Research1: Sure. Thanks for the question, Devin. You’re right. We have a great team in technology at the firm, and, you know, within our technology group, software is a really important set of subsectors within that group. The events of this quarter, essentially what you’ve seen is a repricing of software stocks in the public markets due to fears over what AI is gonna do to a lot of these historically very sticky, you know, business models. That’s caused a revaluation of the public markets that clearly bleeds over into the private markets, both in terms of the private M&A market and lenders’ desire to finance these types of companies. It’s definitely harder in the near term to navigate traditional software M&A at the same rate as you’ve seen over the last few years.

I think if you take a step back, I think we’re likely to see, ’cause right now the market is putting sort of a broad brush on all of these SaaS business models. I think what’s likely to happen, if you sort of simplistically put all of these companies into three buckets, I think in one bucket, and time will tell, this will play out over a period of time. There will be companies that where the AI threat is misperceived. These companies will adapt and use AI to their advantage and prosper and grow through, you know, some of this disruption. I think those companies you’ll see active again in the M&A marketplace, either as consolidators or as candidates for sale to other, you know, strategic or private equity firms.

On the other end, I do think there’s a category of company that, where the business models are gonna be significantly disrupted. If those companies carry a lot of leverage, either because they’re subject of a historical LBO or owned by a sponsor, etc, I do think, you know, liability management and other actions to deal with those capital structures which are not sustainable going forward, given the disruption from AI. I think there’s a category in the middle of companies where it’s just gonna take some time to figure out what AI means for those businesses, and those companies will need time, and the owners of those companies will need time to adapt to kind of the changing landscape.

I think for those companies, you know, things like bespoke capital, hybrid solutions, things that de-lever the capital structures and give the owners of those businesses more time or continuation vehicles. You’ll notice that in each of these different buckets, we have great product expertise to service those companies, to leverage the deep relationships our technology teams have with companies and with sponsors and with their, you know, deep, you know, expertise and knowledge in these spaces. I think we’re really well positioned as the market evolves and makes sense of AI disruption to these different categories of software companies. I think we’re really well positioned to, you know, be able to provide great service to our clients to help them navigate that.

Devin Ryan, Analyst, Citizens JMP: That, that’s terrific color. Thank you, Navid. Just as my follow-up, heard the comments on sponsor engagement in prepared marks, but just curious kind of what you think brings sponsors back. I mean, this was supposed to be the year of the mid-market sponsor exit, you know, first few months obviously not very conducive. But do you still see that as likely, if kind of the macro conditions settle down? What do you think needs to change to just unlock that re-acceleration in sponsor activity?

Brendan O’Brien, Analyst, Wolfe Research1: Look, I can tell you, Devin, there’s significant desire and need for these sponsors to transact with these portfolio companies. The demand is there. It’s really a question of lining up that demand with, you know, market conditions that enable, you know, these transactions to happen. Geopolitical uncertainty, you know, a widening out of spreads in certain sectors because some of the dynamics that are playing out in, you know, private credit, those things in the near term, you know, aren’t conducive to a full-scale reopening of the full breadth of the middle market M&A business, which is where a lot of the sponsor activity is. I think it’s coming.

I think as we kind of hopefully get through the geopolitical uncertainty, as, you know, some of the headlines around private credit subside, you know, I do think sponsors are gonna take advantage of, you know, the need to transact with these portfolio companies. You’re right. It hasn’t happened quite yet, and our sponsor business is growing through that, so I’m really proud of that. I do think it’s gonna take a little bit more time to see that full breadth of the market that we all anticipate, will appear at some point, hopefully soon.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Alex Bolon with KBW. Your line is open.

Alex Bolon, Analyst, KBW: Hey, good afternoon, everyone. Thanks for taking the questions. Want to start on the restructuring side. You noted in the release, excuse me, that the revenues declined there year-over-year in the quarter. A, can you just help us think about the magnitude of the decline there in the quarter? Then also, if you could help put some context around the results here. The commentary from some of your peers has continued to be relatively upbeat and you noted the pipeline here is up meaningfully year-over-year. Maybe if you could just speak to the drivers behind the year-over-year decline and maybe it’s just timing. Any other color there would be helpful. Then additionally, any color around the pipeline would also be helpful. Thank you.

Brendan O’Brien, Analyst, Wolfe Research1: Yeah. Look, we’re not gonna get into specific details of the quarter, but look, it’s really just timing. You know, the transactions, the revenues in the quarter are a function of which transactions close in the quarter, there’s always gonna be a little bit of variability depending upon the quarter and the business segment. As I said, our team is doing a great job. They’re working on a number of really important and significant mandates. They’ve got a lot of momentum. Their pipelines are up in a really positive way.

I do think, you know, some of the same volatility that we’ve been talking about in terms of, you know, raw material prices, input prices, given the geopolitical uncertainty, tech disruption, AI disruption, some of those same themes that are potentially causing some near-term headwinds on the M&A side are creating opportunities for, you know, liability management and other things that our CSA teams get involved with. I feel really good about the trajectory of that business and feel really great about our team.

Alex Bolon, Analyst, KBW: Okay, great. Thanks for the color there. Maybe just on the PCA side, you know, you noted the stronger year-over-year revenues there, which makes sense, you know, given the build-out of the platform. But maybe if you could just help us think about the contribution here in the quarter, maybe how that progressed sequentially. Also any, you know, updated thoughts around where you sit in the competitive landscape and progress in terms of market share gains to date. That would be helpful as well. Thanks.

Brendan O’Brien, Analyst, Wolfe Research1: Yeah. Look, we’re building that team aggressively. As I mentioned, you know, we’ll have here soon seven managing direct senior, you know, folks, managing directors, you know, building that business for us. We love the team. They’re doing a great job, getting great reviews from clients who they’re going to see, and they’re getting hired on, you know, and building up their pipeline pretty significantly. It’s still early days. We’re starting to see kind of the fruits of that early startup phase in that business. I think I said in the prepared remarks, our thesis is spot on. The sponsor clients we have these deep relationships with want us to be in that business. They want to support us and hire us. They want us to be involved with their portfolio companies.

Now that we’ve been able to put in place a world-class team in a really important product, both, you know, on the traditional GP-led secondaries side and with private credit secondaries, you know, both of those are growth areas, and I suspect they’ll be growth areas for a while. We got a great team there that’s out there, you know, winning mandates and executing mandates. I feel really good about that business.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Ryan Kenny with Morgan Stanley. Your line is open.

Brendan O’Brien, Analyst, Wolfe Research3: Hey, good afternoon. Thanks for taking my question. Just to follow up on that last question on private capital advisory. It sounds like it’s starting to contribute to revenues, which is great to hear. Is it accretive yet to pre-tax income, so revenues, you know, less expenses? And is that something that can happen this year?

Brendan O’Brien, Analyst, Wolfe Research1: I don’t know. Chris, you want to take that, Chris?

Christopher Callesano, Chief Financial Officer, Moelis & Company: Yeah, I mean, it’s hard to tell during the quarter, right? I would say this year, I think there’s. Sure, it could be accretive. Like Navid said, it’s certainly growing. It’s part of our non-M&A, right? We mentioned that two-thirds of our business is M&A, one-third is non-M&A. That’s split between, you know, capital markets, CSA, and now with PCA, that’s a growing component of it.

Brendan O’Brien, Analyst, Wolfe Research3: As a follow-up on private credit, it came up a couple of times as one of the near-term headwinds, and wondering, are you seeing anything under the hood there, or is this just headline specific with perceived risk impacting activity?

Brendan O’Brien, Analyst, Wolfe Research1: I don’t think there’s systemic risk in the private credit market. A lot of the headlines you’re seeing, around, you know, direct lending. You know, direct lending is a small part of the overall private credit complex. You know, most of the issues right now are around, you know, direct lending into software and, you know, concentration around, you know, some of those portfolios. I do think, you know, when things like this sort of revaluation of software companies happens, lenders, direct lenders, folks in the private credit industry, tend to get a little more selective and tend to ask themselves the question of, "Right, what’s next?

Are there risks that I haven’t seen in other parts of the marketplace? Put that aside, there’s all sorts of other parts of the marketplace, many, many sectors that are really insulated from some of this technology disruption and/or are beneficiaries of the technology disruption. The direct lenders are actively lending, continue to actively lend into all of those different spaces and sectors at a very rapid pace. I do think it does cause, you know, folks to say, "Are there other spaces where I didn’t see risks that where I’ve mispriced risk, essentially?" and causes them to be a little bit more cautious lending in some of those areas. That’s a flavor for some of the headwinds that I was talking about.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Ken Worthington with JPMorgan Chase. Your line is open.

Ken Worthington, Analyst, JPMorgan Chase: Hi, good afternoon, and thanks for taking the question.

Brendan O’Brien, Analyst, Wolfe Research1: Yes.

Ken Worthington, Analyst, JPMorgan Chase: As we think about the business environment for M&A and the puts and takes that you highlighted at the beginning of the call, how does the U.S. compare with Europe and with Asia as we think about the outlook for M&A, M&A activity, for the next few quarters?

Brendan O’Brien, Analyst, Wolfe Research1: I think the U.S. is still ahead of Europe. You know, if you look at the announcements this quarter in Europe, there’s a little bit of a pop. I think that’s really due to a few larger cap transactions. The volumes just aren’t there in Europe yet. Europe is still behind the U.S. in terms of momentum in the M&A market. I think that will change over time, and certainly we’re, you know, super committed to our build in Europe. It’s a critically important part of the world. If you’re gonna have a world-class, you know, investment bank on a global basis, you have to be strong in Europe, and we’re committed to that region.

The pace of the M&A market, the dynamism of the M&A market is still not what we’re seeing in the United States. You know, Asia, you know, there is, you know, pockets of activity in Asia, a little less on the cross-border side that we’re seeing, but there’s still activity there, and we have a presence there, and that’s obviously critically important as well.

Ken Worthington, Analyst, JPMorgan Chase: Okay. Thank you. Maybe just following up on Europe. Why is Europe maybe not coming together like we’re seeing in the U.S. M&A market?

Is it a financing issue? Is it a sentiment issue? Is it just a, like a sector mix issue? What, what would you sort of put your finger on as to why we’re not seeing the same level of engagement?

Brendan O’Brien, Analyst, Wolfe Research1: It’s a longer philosophical question that could take a lot of time answering, but let me give you my views. I think part of it is, you know, I think, you know, a different relationship between government and enterprise in some of those markets. I think there’s a, you know, different and more difficult regulatory environment in some of those markets. I think there’s a different approach to entrepreneurialism in Europe and some of those markets that you see in the United States. I think there’s a different pace to capital formation in parts of Europe than you see in the United States.

I think you could talk about it for a long time, but I think some of the pillars of why you see, healthy, growing dynamic M&A markets in the United States, Europe is just a little bit behind the United States in some of those areas.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of James Yaro with Goldman Sachs. Your line is open.

James Yaro, Analyst, Goldman Sachs: Good afternoon, Thanks for taking the question. I just wanna touch a little bit more on the restructuring backdrop in 2026. Could you just comment a little bit on your view as to whether that could improve to a lesser or greater extent as a result of issues within private credit? Maybe if that’s true, the cadence over which that could occur. Just maybe if you could also comment on the mix of M&A versus non-M&A revenue.

Brendan O’Brien, Analyst, Wolfe Research1: Yeah, on that last point, Chris.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Yeah, I mean, the mix was two-thirds M&A, you know, one-third non-M&A. You know, split between CSA and capital markets. Generally, we don’t give a breakdown. I would say, you know, they’re in the same zip code, depending on the quarter. Again, now we have PCA in that area. That’s growing nicely.

Brendan O’Brien, Analyst, Wolfe Research1: Look, on the outlook for, you know, restructuring generally, look, there’s still, you know, significant, you know, maturity walls as you kind of look out to the 2028 to 2029 to 2030 timeframe. I think it’s something like $2 trillion of maturities, you know, that are set to hit, you know, the leverage loan and the high yield market during those time periods. You know, those maturity walls have to be dealt with. Some of that are prior maturity walls that got kicked out to 2028, 2029 and 2030, and some of those companies may or may not be able to continue to refinance down the road.

I do think some of the tech disruption and the AI disruption we talked about, some of the factors that come out of some of the geopolitical events, in terms of raw material prices and fuel prices that are impacting some sectors. All of those things, you know, create stress with, you know, companies that, you know, have levered balance sheets. You know, all of those are areas where structuring teams are actively involved in conversations with clients. I do think, you know, we’re in for continued, you know, liability management opportunities. We think over time, liability management will turn into more traditional restructurings as well. Default rates are still, you know, sort of low, but, you know, we do think there’s, you know, plenty of activity for a number of years on the restructuring side.

James Yaro, Analyst, Goldman Sachs: Okay, that’s super helpful. I just wanted to touch again on the private equity backdrop. You made the comment that sponsor M&A is growing double digits. I assume that’s a year-on-year comment, but correct me if I’m wrong. I just wanted to touch on, you know, what’s driving your business to outperform the broader market on the sponsor side? Is it that you’re taking market share, or are there specific types of sponsors that are particularly strong that you’re seeing, whether it’s in terms of geography, the size of deals that they’re transacting in or something else?

Brendan O’Brien, Analyst, Wolfe Research1: Yeah, that, just to clarify, that is a year-over-year growth number. Look, just like if we don’t do well in one space in a quarter, you know, you shouldn’t make too big a deal of it. I don’t wanna make too big of a deal of it the other way when we do well in a space relative to the market either. Look, I think generally sponsors has always been very much part of the DNA and fabric of our firm. We cover corporates actively. We cover sponsors actively. We have dedicated sponsor coverage teams. Really even before sponsors were in vogue, we were doing that from the early days of the firm.

I think Our teams do a great job, and we’re very focused on covering those entities like we cover corporates. We think that’s a very symbiotic thing to do, to understand all the players in a particular ecosystem, both corporate and sponsor. I think really it’s just, you know, we do a good job of covering them, and it’s really an important thing we focus on. Again, I don’t want to overstate, you know, the market. The market is, you know, still not fully open in terms of Again, back to the demand, the desire for activity. The level of actual activity is not meeting the demand yet. I think once that happens, we’re gonna be particularly well positioned to reap the benefit of it.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Brennan Hawken with BMO Capital Markets. Your line is open.

Brennan Hawken, Analyst, BMO Capital Markets: Hi, Navid. Hi, Chris. Thanks for taking my questions.

Brendan O’Brien, Analyst, Wolfe Research1: Hey.

Brennan Hawken, Analyst, BMO Capital Markets: How you doing?

Brendan O’Brien, Analyst, Wolfe Research1: Good.

Brennan Hawken, Analyst, BMO Capital Markets: Excellent. Navid, you spoke to expanding relationships in the creditor community in the capital structure advisory in the restructuring business, which I thought was kind of interesting. Could you drill down on that a little bit? Like which parts of the creditor community have you been focused on? Is that shift or expansion in relationships, sort of centered around an opportunity set that you believe is likely to become more robust? I don’t think you touched on this before when you were talking about the fact that one, two started off a little slower. You had recently taken up your outlook for the year. Do you still expect that business to be flat to up here as we progress through 2026?

Brendan O’Brien, Analyst, Wolfe Research1: Sure. Thanks for the question. Yeah, look, we, a couple of years ago, we hired a couple senior professionals to really focus in on the creditor side of the business. You know, really over the last number of years, the creditor side of the business has really evolved. I think, you know, post-financial crisis, and then for a number of years thereafter, you know, a lot of the action in the creditor community really revolved around hedge funds. I think over time, you know, that’s really shifted more to CLOs. In order to, you know, make sure that, you know, we had best-in-class coverage of CLOs, and the other constituents in the credit, you know, marketplace.

We had to be more intentional about covering those players actively and really making decisions. As we were going after corporate opportunities in the restructuring world, making a decision, are we really going to focus on a company-side situation or are we going to focus on a creditor-side situation? Because a healthy balance, I think, between those two businesses is important to have the biggest CSA business you can have. I think having a group of people who are really intentional about building relationships to make sure we were well-positioned, especially, I think this is really, again, part of the secret sauce of how we go to market.

You know, our CSA business, like our, all of our sectors, all of our product businesses are deeply collaborative with our sector teams. Especially where we had a good relationship, you know, with the company, knowledge in a sector, you know, to make sure we were lining up with the right, you know, creditors if we were chasing a creditor assignment, being really intentional about that has been really, really important and it’s opened up a lot of opportunities for us. That’s what I was referring to in the comments. I think the investment on that side of the business, being more intentional there has really paid off.

Brennan Hawken, Analyst, BMO Capital Markets: The no change to the outlook, right? Just to confirm.

Brendan O’Brien, Analyst, Wolfe Research1: Yeah, I think I mentioned in the, in the, in the prepared remarks that our, you know, pipelines are up meaningfully and, you know, we’ll see how the year plays out. We, we do expect, you know, growth in our CSA business this year.

Brennan Hawken, Analyst, BMO Capital Markets: Great. Great. The next one’s a little more ticky-tacky, so probably more for Chris, accounting-oriented. Comp expense of $210 million, you know, how close is that to, you know, the floor for you guys on comp? If that layer above the floor is a little thinner than normal, you know, is that a statement of optimism around the ability to accrue against more robust revenues as the year progresses?

Christopher Callesano, Chief Financial Officer, Moelis & Company: I mean, I’d say a couple of things. You know, our Q1 comp ratio is down, right, over 300 basis points from this time last year. You know, Q1 had equity comp in there, and it’s higher, right, due to the acceleration of retirement-eligible equity awards, so I think you’re aware of that. However, you know, those awards are fully considered in our 65.8% full year estimated comp goal. I think right now we are projecting that 65.8% is our best estimate for the year. As always, we’ll plan to evaluate and adjust the comp throughout the year develop, considering revenues, investment in the business, and the competitive landscape.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Brendan O’Brien with Wolfe Research, your line is open

Brendan O’Brien, Analyst, Wolfe Research: Good afternoon. Thanks for taking my questions.

Brendan O’Brien, Analyst, Wolfe Research1: Hello.

Brendan O’Brien, Analyst, Wolfe Research: I guess just to start, you know, just from what we can see in the public data, it seems like you have been having a lot more success with strategic clients in terms of share than what you’ve had historically. I just wanted to get a sense as to whether this is a concerted effort on your part to focus more of your efforts on strategic clients, just given some of the softer activity among sponsors, and whether you view this as being more sustainable share gains that you could hold onto as sponsor activity begins to recover.

Brendan O’Brien, Analyst, Wolfe Research1: Yeah. Thanks for that observation and for the question. I agree with you. I think our platform and our bankers and the quality of the hiring we’ve been doing laterally, I think all of that has attributed to a, you know, more active, you know, transactional activity around, you know, strategics to go and pair with our, you know, always historical strength, you know, with sponsors. That’s very intentional. And I, and I do think, you know, you know, from my perspective, you know, our best sector bankers know a lot of companies and transact with a lot of companies. They also understand sponsor space.

They also understand our product capabilities and work collaboratively with our product folks. Those are the kinds of people we’re hiring, those are the kinds of people we’re developing through our internal development pipeline. I think really what you’re seeing is, you know, yes, intentionality to make sure we’re covering corporates the right way and to think big in terms of, you know, larger opportunities. We definitely have a concerted effort at the firm to make sure we’re thinking about the largest transactions and are pursuing the largest opportunities. It’s also, I think, you know, a testament to our hiring and our talent development and the maturation of our plan.

Brendan O’Brien, Analyst, Wolfe Research: That’s helpful, Collier. For my follow-up, just wanted to touch or drill down a bit more on comp ratio. You know, I understand there’s a lot of uncertainty on the back half of the year at this point. We’re just struggling to reconcile the record 1Q pipeline commentary and just the overall optimism on activity trends across the business with the flat comp accruals. I guess it would just be helpful to understand and for the remainder of the year in the 1Q accrual, and how we could think about comp leverage if activity continues along this positive trend.

Brendan O’Brien, Analyst, Wolfe Research1: I think on the last call, you know, as we were looking into 2026, you know, even though we had made, I think, meaningful progress over the last couple of years to bring our comp ratio down, you know, I think I was pretty clear that we don’t intend to be finished there. You know, our goal is to continue to, you know, work the comp ratio down as, you know, the investments that we’ve made over the last number of years and our people, you know, started to, you know, show up in terms of increased revenue, as the market improved and as our, you know, business continued to grow. That’s still exactly the plan.

You know, hopeful and optimistic that, you know, we’ll see that as we roll through the next few quarters and have a great year this year. The first quarter was up. It wasn’t up a lot. You know, you can, you can see what percentage it was up. I do think, as we roll forward, in fact, if we see the kind of growth numbers that I hope we see and I anticipate we’ll see, we will revisit comp ratio in subsequent quarters.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Yeah, I agree. I think it’s just a little too early. Just like last year, we started out at 69% and as the year progressed and we saw our revenues come in and our investments, we were able to lower it over 300 basis points. We’re hopeful. I’m not sure that it would be the same pace as we did last year, but we’re still hopeful to make increases and improvement on our comp ratio this year.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Michael Brown with UBS. Your line is open.

Michael Brown, Analyst, UBS: Great. Good afternoon, Navid and Chris. Wanted to ask you about the pipeline here. Your pipeline’s at, I guess, all-time highs. Public backlog does seem to support a good second quarter here. It does seem like there’s, you know, a lot of market uncertainty could certainly elongate some of the deal closings for the industry, maybe impact the pace of new deals. As you think about the next quarter or two, can you just maybe give us a view on how you think those could shape up relative to the prior year? Collier, that would just be helpful, just given kind of a lot of the pockets of softness in the market currently.

Brendan O’Brien, Analyst, Wolfe Research1: Sure. Look, we feel really good about the overall level of our pipeline, as we mentioned, you know, in the prepared remarks. We have a, I think the highest at this point in a year, you know, the first quarter in terms of our announced pipeline. You know, deals that have been announced that we’re waiting to close. I think those are both really good, you know, data points as we kind of think about the rest of the year. You’re correct that at the end of the day, we have to, you know, transact against that pipeline. Our teams are working extremely hard to service clients and give great advice and try to get, you know, transactions done. Some of that is out of our control.

As I pointed to in the, in the remarks as well, you know, some of the factors in the, in the marketplace, coming out of, the geopolitical environment, AI disruption, you know, do create some near-term headwinds that we’re working through, but they also create some opportunities in other parts of our business. You know, long way of saying we’ll see how the year plays out, but we’re, you know, optimistic the business is in a really good spot. You know, our teams are working exceptionally hard to make this a growth year.

Michael Brown, Analyst, UBS: Okay, great. I wanted to ask maybe another question on the comp ratio. Come at it maybe a little bit of a different way. Again, with the theme of kind of wide range of outcomes here. If we have a better environment here and continues to accelerate, and you see revenue growth, pick up from here, what would kind of be the level that could actually push that comp ratio down 100 basis points from that 65.8% level? Then conversely, if revs were to be more flattish for the year, could you hold the comp ratio flat to last year? Just trying to think through as you’re investing and then maybe the push and pull on some of your fixed comp costs. Thank you.

Christopher Callesano, Chief Financial Officer, Moelis & Company: I don’t, I don’t think we’re gonna get into any sort of algorithm or percentages. I would say yes, if the environment improves and we ultimately have revenues of what we would expect, we will have an improvement in comp ratio. I’m not going to, you know, give you the percentage because again, we don’t know what kind of investments we’re making. We’re making all sorts of estimates based on revenues, investments. Competitive landscape at the end of the year. Yeah, I think. Sorry, what was your second part of the question?

Michael Brown, Analyst, UBS: Yeah, just how to think about the comp ratio if revenue was to be more flattish year-over-year.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Yeah, I mean, right now, we’re not expecting that. Sure, if it was flat versus last year and we had an increase in heads, there’s a possibility that you would have to adjust that. We don’t expect that at this time.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Nathan Stein with Deutsche Bank. Your line is open.

Brendan O’Brien, Analyst, Wolfe Research1: Hey, Nathan.

Brendan O’Brien, Analyst, Wolfe Research0: Hey, guys. I wanted to follow up on Devin’s question earlier in the call. You said in your prepared remarks, large strategic transactions have been driving M&A volumes. That’s consistent with what we’ve seen in the data and also the trend last year. I was hoping you could talk about what’s gonna get that core middle market strategic deals to really pick up speed here.

Brendan O’Brien, Analyst, Wolfe Research1: Look, I think, you know, look, some stability. Look, as I mentioned earlier, I do think, you know, if you’re a sponsor and you own a company, if you’ve waited to monetize it ’cause you’re holding out for a price, if, you know, and you see war break out in the Middle East and, you know, that reduces the likelihood after waiting this long to monetize that asset that you’re gonna actually hit the mark, you know, you’re waiting for a little bit, right? If you see credit spreads gap out a little bit because, you know, there’s disruption in the private credit industry, you know, you’re waiting a little bit to see that play out. High quality assets have been trading. You know, there is activity in the marketplace, but, you know, there’s also a bunch of.

a whole suite of companies portfolio, you know, sitting inside private equity firms. People have been waiting to do something and, you know, they have a price in mind of what they want for the asset and, you know, they’re waiting for the optimal moment to go ahead and monetize that asset if they haven’t done a CV or if they haven’t done a refinancing or something like that. I think it just takes some time. These assets do have to move. There’s no doubt in my mind these assets have to move, and they will come to market and, you know, it’ll just take time for that middle market to open up. It’s coming.

Brendan O’Brien, Analyst, Wolfe Research0: Thank you.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Daniel Cocca with Bank of America. Your line is open.

Daniel Cocca, Analyst, Bank of America: Hi, good afternoon. Sticking with, you know, comp and just hiring, I was wondering if you could talk to us about the competitive dynamics you’re seeing on this front, and whether or not you’re seeing any added pressure maybe from like the bulge brackets and their ability to retain talent. Thank you.

Brendan O’Brien, Analyst, Wolfe Research1: Sure. Look, it’s competitive. There’s no doubt hiring great people, you know, what I call difference makers, it’s super competitive. It’s rare that you’re talking to somebody who is great in a space where they’re not talking to one other firm as well. We have to compete against bulge bracket firms, we have to compete against other independent firms, and we have to compete, you know, against people doing other things, and staying at the firms they’re at. Look, what we’re looking for, again, are people who want to be part of a collaborative environment, will fit in great and be accretive to our culture, and who are difference makers.

You know, finding and cultivating those relationships takes time, and it’s definitely hand-to-hand combat to get those people here on, you know, terms that make sense for us and for them. Again, hired eight people this quarter. We’re excited about all those hires. It’s my number one focus as CEO of the company is, you know, not just to make sure, you know, our bankers that are here continue to think Moelis & Company is the best place to work with the best culture, but also to recruit other super talented people from all over the world to join us. I think we do a great job. Our teams do a great job of identifying those people.

As a senior management team, we spend a lot of time developing those relationships and trying to get those people to yes.

Daniel Cocca, Analyst, Bank of America: Great. Thank you very much.

Brendan O’Brien, Analyst, Wolfe Research2: Your next question comes from the line of Devin Ryan with Citizens JMP. Your line is open.

Devin Ryan, Analyst, Citizens JMP: Thanks so much. Just had a quick follow-up on non-compensation expense. You know, obviously you heard the guidance and pretty consistent with what you guys had said previously. It was a little bit higher than the WE model. I think we were a little bit low in kind of building through the year. And I think the guidance implies kind of more of a steadier pace. In the other expense line, you know, obviously that jumped up pretty meaningfully. I know there could be some kind of lumpy deal costs and things like that. I’m just curious what drove that kind of step up and how much of that is kind of core versus like transitory or just one-off items.

Christopher Callesano, Chief Financial Officer, Moelis & Company: I would say that other expenses, this line includes costs that don’t warrant their own separate category. There are things like client conferences are in there, certain deal related capital markets, underwriting expenses, but we have other things like insurance, education, business taxes, and just a number of other items. You know, the individual, like you pointed out, individual non-comp line items fluctuate from quarter to quarter, but in aggregate, you know, they generally balance each other out, and we still anticipate full year non-comp expenses to grow at a similar rate to 2025.

Devin Ryan, Analyst, Citizens JMP: Yeah. Okay. That’s great. Appreciate it. Just wanna get some more color. Thank you.

Christopher Callesano, Chief Financial Officer, Moelis & Company: Thanks, Devin.

Brendan O’Brien, Analyst, Wolfe Research2: I’ll now turn the call back over to Navid Mahmoodzadegan for closing remarks.

Brendan O’Brien, Analyst, Wolfe Research1: Thank you all for joining today. Really appreciate it, and we look forward to speaking to you all soon. Thanks so much.

Brendan O’Brien, Analyst, Wolfe Research2: Ladies and gentlemen, as that concludes today’s call. Thank you all for joining. You may now disconnect.