Moelis & Company Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Q2 2026 Revenues: $409 million, up 12% year-over-year.

First Half 2026 Revenues: $729 million, a 9% increase from the prior year.

Adjusted Compensation Ratio: 65.8%, improved from 69% in prior year periods.

Adjusted Non-Compensation Expenses: $66.5 million in Q2, with a non-compensation expense ratio of 16.2%.

Adjusted Pretax Margin: 18.6% for Q2, up from 17.6% in the prior year.

Cash Position: $481 million with no debt.

Dividend: Declared a quarterly dividend of $0.65 per share.

2Strategic Updates and Business Highlights

Record Revenues: Achieved record revenues for both Q2 and the first half of the year, driven by higher average fees and contributions from non-M&A businesses, particularly capital markets and private capital advisory (PCA).

M&A Activity: Notable transactions included advising on major deals such as Taylor Morrison's sale to Berkshire Hathaway and Iqvia's sale to Eli Lilly. The M&A market is showing signs of improvement, particularly for larger transactions.

Capital Markets Growth: The capital markets segment reported record revenues, supported by strong demand for pre-IPO financings and healthy IPO activity.

PCA Expansion: The PCA business is growing, with significant hiring to enhance capabilities in GP-led secondaries and other areas.

Investment in Talent: Hired 12 managing directors year-to-date, focusing on both lateral hires and internal promotions to strengthen the firm's capabilities.

3Forward Guidance and Outlook

Strong Pipeline: The announced pipeline has increased by over 80% year-over-year, indicating robust future activity.

Optimistic Outlook: Management expressed confidence in a strong second half of the year, supported by a record total pipeline and improved market conditions.

Continued Investment: Plans to maintain investments in technology, including AI, to enhance operational efficiency and client engagement.

4Bad News, Challenges, or Points of Concern

Market Volatility: Ongoing geopolitical tensions, particularly the war in the Middle East, and concerns about private credit redemptions could impact market conditions.

Competitive Talent Market: The competitive environment for hiring senior talent is increasing, which could affect recruitment and retention strategies.

Refinancing Challenges: Some highly leveraged companies are facing difficulties accessing capital, which may impact the capital structure advisory segment.

AI Risks: While AI presents opportunities for efficiency, there are concerns about data protection and the potential commoditization of services, which could pressure margins.

5Notable Q&A Insights

M&A Cycle: Management believes the firm is in the early stages of a prolonged M&A cycle, driven by the need for scale and technological disruption.

Talent Acquisition: The firm is focused on hiring top talent that aligns with its collaborative culture, with a balanced approach between lateral hires and internal promotions.

PCA Business Potential: The PCA business is expected to grow in line with the firm's overall performance, with early successes noted in GP-led continuation vehicles.

Capital Use Strategy: The firm prioritizes protecting dividends, share repurchases, and is open to acquisitions that align with its culture and growth strategy. Overall, Moelis & Company reported strong financial performance in Q2 2026, with positive strategic developments and a favorable outlook, though challenges related to market conditions and talent acquisition persist.