Moelis & Company Q1 2025 Earnings Report

Moelis & Company EPS Results

• Actual EPS: $0.64
• Consensus EPS: $0.57
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.22

Moelis & Company Revenue Results

• Actual Revenue: $306.59 million
• Expected Revenue: $309.67 million
• Beat/Miss: Missed by -$3.08 million
• YoY Revenue Growth: +41.00%

Moelis & Company Announcement Details

• Quarter: Q1 2025
• Date: 4/23/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, April 23, 2025
• Conference Call Time: 5:00PM ET

Moelis & Co. operates as a holding company. It engages in the provision of financial advisory, capital raising and asset management services to a client base including corporations, governments, sovereign wealth funds and financial sponsors. The firm focuses on clients including large public multinational corporations, middle market private companies, financial sponsors, entrepreneurs and governments. The company was founded by Kenneth David Moelis, Navid Mahmoodzadegan, Jeffrey Raich and Elizabeth Ann Crain in July 2007 and is headquartered in New York, NY.

Moelis & Company Q1 2025 Earnings Call Transcript

Key Takeaways

• First quarter revenues of $307 million rose 41% year-over-year, driven by strength in M&A and capital markets businesses.
• Compensation expense ratio was 69% and non-compensation expense ratio was 19%, with full-year non-comp expense growth expected at approximately 15%.
• The Board declared a regular quarterly dividend of $0.65 per share and the firm remains debt-free with a strong cash position.
• Despite record new business origination and a robust pipeline, post-April volatility temporarily slowed M&A deal activity, though management expects a quick rebound once policy uncertainty resolves.
• Ongoing investments include a build-out of the private funds advisory team and senior hires in technology and energy, positioning the firm to lead in private capital solutions.

Presentation

[Operator]

Good afternoon, and welcome to the and Company Earnings Conference Call for the First Quarter twenty twenty five. To begin, I'll turn the call over to Mr. Matt Sukroff.

[Matt Tsukroff, Vice President - IR at Moelis & Company]

Good afternoon, and thank you for joining us for Mullis and Company's first quarter twenty twenty five financial results conference call. On the phone today are Ken Moelis, Chairman and CEO and Chris Calisano, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward looking statements, which are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Mullis and 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.

[Matt Tsukroff, Vice President - IR at Moelis & Company]

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 and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found in our Investor Relations website at investors.molis.com. I will now turn the

[Matt Tsukroff, Vice President - IR at Moelis & Company]

call over to Chris to discuss our results.

[Christopher Callesano, CFO at Moelis & Company]

Thanks, Matt, and good afternoon, everyone. On today's call, I will go through our financial results and then Ken will comment further on the business. We achieved revenues of $3.00 $7,000,000 in the first quarter, representing an increase of 41% over the prior year period. The revenue increase is attributable to growth in M and A and capital markets versus the prior year period.

[Christopher Callesano, CFO at Moelis & Company]

Moving to expenses. Our first quarter compensation expense ratio was 69%. As the year progresses, our compensation ratio will depend on the trajectory of revenues and the pace and magnitude of hiring throughout the year. Our first quarter non comp ratio was 19%. The quarterly year over year growth in non compensation dollars is primarily attributable to increased costs associated with our investment in client conferences, many of which occurred during the first quarter.

[Christopher Callesano, CFO at Moelis & Company]

As indicated previously, we currently anticipate the full year growth of non compensation expense to be approximately 15%. Moving to taxes. Our underlying corporate tax rate was 29.5% for the quarter before the discrete tax benefit related to the vesting of equity awards. Adding in this discrete benefit resulted in an overall net tax benefit for the quarter. Regarding capital allocation, the Board declared a regular quarterly dividend of $0.65 per share.

[Christopher Callesano, CFO at Moelis & Company]

And lastly, we continue to maintain a strong balance sheet with no funded debt. I will now turn the call over to Ken.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thanks, Chris, and welcome to your first earnings call as CEO CFO, sorry, not CEO. We finished the first quarter, we had record new business origination and a record pipeline. Our go to market, including the maturation of our investments in tech and energy are extremely strong, and we finished the quarter with a very bullish point of view for 2025. However, the new wave of volatility introduced into the capital markets post April 2 has definitely slowed M and A transaction activity. Although the scale and timeframe is hard to predict, we believe this is a temporary phenomenon and we are planning our business accordingly.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

The silver lining is that no matter the outcome, our clients will need strategic advice and will turn to our team to help them better understand their capital needs and how can they can adapt or transform their business models. We continue to invest in the growth of our private funds advisory business. Following the announcement earlier this year of a senior banker to lead the team, we have a robust pipeline of additional senior talent and expect to have more news on that in the coming weeks. Private capital solutions and continuation vehicles will continue to be an important liquidity tool for sponsors and our goal is to be the market leader in this space. We also remain focused on adding talent to fill other areas of strategic importance to the firm.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Technology focused Managing Director based in Europe recently joined the firm and one focused on business services in Europe will also join shortly. We're optimistic about the road ahead and are well positioned. Remember, there are no tariffs on relationships and the world class advice we deliver to our clients every day. We have no debt and a strong cash position. And our talent, breadth of experience and culture of collaboration are stronger than ever before.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And with that, I'll open it up for questions.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Devin Ryan from Citizens. Your line is open.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Hey, great. Hi, Ken. Hi, Chris. Welcome.

[Christopher Callesano, CFO at Moelis & Company]

Hi, Devin.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

First question, Ken, great to hear about, obviously, the backlogs where they are right now and appreciate we're in a pretty uncertain moment here. So I guess there's still a little bit of TBD on the year. But I'm curious, just with the backlogs, at what point do they get canceled versus just pushed out? And I guess I'm just trying to think through, there's a lot of competing forces here. Sponsors have a lot of pressure on them to do something with kind of the long duration of their portfolios today.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

So it feels like there's lot of pressure there. At the same time, volatile asset prices make it challenging. So just love to get a sense of how the backlogs kind of move from here and what potentially would cancel them, if at all.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

It's a tough question to answer. It's a very specific policy dynamic that's going on right now. The reason I'm I believe it's temporary because it's in the control. I'm not saying that it might not work out to be exactly what the markets want, but it is in the control of the administration. Whereas I look back to prior problems like COVID and even the GFC back in 02/08, they seem to be outside the control of an individual COVID definitely was.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

We didn't know what was going to happen and it was very hard to know when the end would come. We've lost some from the quarter end backlog that I talked about. We have lost some. Strategics are might be quicker to put down their pencils on supply chain affected transactions. Sponsors will put things on hold.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I think the go to market on sponsors that need liquidity are probably timing. Those you can't hold them forever. The sponsor liquidity backlog has been there for a while and people are going to have to push to markets. I'd say the majority of those, I think are on delay and pushback just because they have to be. But there are some transactions that have gotten shelved and we do not we no longer have them in backlog.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So our backlog is down from threethirty one as a result of it. And it's really hard to say what the effect of the day to day volatility. You have two things, policy volatility and then the market volatility and pricing, interest rate volatility. So that's all taken a toll on it. But for now, we've lost some, but I would say the vast majority are in pushback, I think, or timeframe pushback.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Yep. Got it. Okay. Thanks, Ken. Really helpful.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

And then just a follow-up on the restructuring business. Just great

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

to get a little bit of

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

a maybe flavor for what you guys are seeing there, kind of whether there's been any tone shift just with some of the uncertainty in the markets, anything around tariffs. I'm not sure if anything has changed there and just the trajectory of kind of new mandates coming in, in

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

that business as well.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I think, again, first quarter, it's a tale. Remember, tariff thing was April 2. So you sort of have a first quarter in which you were going along in a different world than the next two or three weeks before this call. So I'd say the first quarter restructuring was kind of flat. It was what we were expecting, which was there's a good economy, the strong consumer, interest rates seem to be coming down.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So we weren't expecting a big year out of restructuring. And you're talking about a two to three week period since then in which, yes, there are lots of conversations starting to develop about things that might happen, but haven't happened, but could happen. So that conversation is picking up. Have there been a substantial increase in mandates due to events around April 2? I'd say no.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I'd call it an increase of significant conversation. More so, I think it's in the capital market side where people are companies are trying to figure out if they've got to fund inventory purchases, supply chain transactions that have tariffs associated with them. So working capital financing has gone up. They have to actually finance the acquisition of supply chain goods that might have gone up significant amount due to tariffs, etcetera. I think there's almost been more conversation around financing options than goes than this idea of going straight to restructuring.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And that's why we kind of combine the two when we talk about it because they kind of subsume each other. And that's where we are. I think we're financing is probably the primary thing being talked about, not quite yet to restructuring.

[Devin Ryan, Director of Financial Technology Research at Citizen JMP]

Yes. Very interesting. I'll leave it there, but thanks Ken. I appreciate it.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thanks, Devin.

[Operator]

Your next question comes from the line of Kenneth Worthington from JPMorgan. Your line is open.

[Ken Worthington, Financial Analyst at JP Morgan]

Hey, great. Good afternoon. Thanks for taking the questions. Ken, I would love to hear your thoughts when thinking about the volatility and the impact looking at things three ways. One is sort of geographic.

[Ken Worthington, Financial Analyst at JP Morgan]

U. S. Versus Europe and Asia, any sort of differences that the volatility has sort of brought out? I know it's really recent, but thus far, sponsor versus non sponsor and then big versus small. Your guess is like what's sort of more resilient, what's more vulnerable, what

[Ken Worthington, Financial Analyst at JP Morgan]

are

[Ken Worthington, Financial Analyst at JP Morgan]

your thoughts and to the extent you've heard, what have you heard?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And Ken, I think what you're asking me is post April 2, right?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Because they're two different environments Post two.

[Ken Worthington, Financial Analyst at JP Morgan]

Yes. I'm sorry.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So look, I actually think, again, I always say The U. S. Is the most dynamic market. But I think Europe is an interesting market post April 2, they've been less effective. They're trading better.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

They don't have some of the supply chain issues. So I think transactions in Europe haven't hiccuped as much. There are obviously less transactions to begin with, but they're not directly in the line of fire right now. And there have been some indications that the economies in Europe are going to spend some capital and take some actions that I think could be actually positive for Europe. So I'll say that, that's a three week read.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Remember, I'm reading the tea leaves while they're still falling off the tree, I would say. Asia, I haven't seen. Obviously, China, Asia is going to be very different. And I don't know that I have enough data to tell you what happens to Hong Kong, Asia. Japan, Asia by the way seems pretty there's a lot of optimism around Japan as a market.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

But again, we're early on and I assume China is going to be there's going to be without resolution, there'll be a lot of difficulties out of China. I know you said big versus small. What was the second sponsor? I think if you're it depends on the sector, right? If you're American based, you're not a supply chain oriented transaction, a lot of that's going forward.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

There is a lot of financing available. The private credit is out there looking to put capital to work. The bank market, a little more difficult, but private credit is out there. And if you have a healthcare business in The United States that's not affected by supply chain, you're probably going to get your transactions done and that's both strategic and sponsor. I would actually think that it's more of what sector you're talking about than strategic versus sponsor.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Are you affected? And when I say affected, I think there are people now trying to figure out kind of third derivatives of if there's no containers shipped for another month because of the tariffs, you're starting to think of second and third derivatives. So I think the effects might get more widespread than people think. But right now, I don't see a big difference in those so long as you're talking about the effect of the supply chain. And I would say that kind of goes to your big versus small, which is very hard to have.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

You don't have a lot of big companies that don't have a supply chain that is complicated. By just by the characterization of being large companies, they have a very good chance of encountering a supply chain issue that would cause a transaction to go on hold. And I think it's because it's such a digital outcome on the policy that it's very hard to underwrite. People companies and sponsors can underwrite uncertainty, but not when it's digital and in the total outcome of the administration, I think. So, lot of those are going to go on hold and it's going to it really starts with is your supply chain affect are you affected by the supply chain?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I think that's where it breaks.

[Ken Worthington, Financial Analyst at JP Morgan]

Okay, great. I feel like that was three questions. So I won't be able take over queue. I appreciate it.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thanks, Ken.

[Operator]

Your next question comes from the line of James Yarrow from Goldman Sachs. Your line is open.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Good afternoon. Thanks for taking the questions. So I just wanted to touch again quickly on CEO confidence. Ken, you've been through plenty of cycles and so you've seen various exogenous shocks. Maybe you could just help us think about how long it has taken on average perhaps in historic episodes that you think are most similar to this with this sort of exogenous shock before CEOs come back to the table and engaging in M and A transactions?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Well, I'm trying to I'm now trying to think of a good analogy. You're supposed to have a forty year history and come up with a great analogy. And I'm not I don't have a great one because the last two or three I remember are COVID, regional banking, even the Fed hiking interest rates, the GFC before that. And you could even go back to some of the let's say, I remember when the Iraq war, shut down it, people were out on roadshows and you kind of blew a whistle and said, everybody come back home. This was by the way, this was the first Iraq war.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And you just sent a signal out, everybody come home, there's nothing to do until we figure out what's going to happen here. But that was a more complicated decision. I really believe this my gut on this is it will be short, sharp because there will be a policy outcome. That policy outcome could be very negative or it could move on very quickly. And I think it's in control, right?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

We're not waiting to see is COVID a disease that will rampage throughout the planet and have no solution. We sort of have people could call it off tomorrow if they wanted to, right? You go back almost with some shocks to the system. So it is a directed policy decision. My belief is that if you told me somebody snapped their fingers and they and and all of the policy was settled, I believe m and a would return very rapidly, very rapidly.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

People have growth plans, they have strategic things they want to affect, even what I just talked about, about our own firm. I mean, we have a deal slowdown and yet we are very actively hiring in private capital advisory. We are hiring into our we are hiring into a world that is going to be very active in M and A. And I think that tells you what I think about the world. Don't look what I say, look what I do.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And I am going to continue to put together a team that is ready to advise as soon as this policy situation is over because I think it will snap back pretty quickly to an active deal market where people will want to execute on their plans that they've been waiting to execute on and got disrupted. So I think it'll be pretty quick is the answer.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Okay. That's super clear. Maybe just another one on restructuring here. I think within restructuring, you've seen a lot of the activity over the recent years be driven by liability management. And I think a significant portion of that has been refinancing of sponsor portfolio company debt stacks.

[James Yaro, Vice President Equity Research at Goldman Sachs]

So let's just say we do end up with a harder landing. How would you think about the trajectory for restructuring revenue? Obviously, liability management exercises are shorter in duration and Chapter 11 and traditional bankruptcy are longer and the fees are back end weighted. So how would you think about the path for restructuring in a weaker economic scenario if that is

[James Yaro, Vice President Equity Research at Goldman Sachs]

what we end up with?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Yes. I think a lot of it would be liability management. I believe as opposed to the restructuring environment, let's say you go back ten years ago in the GFC and there's so much more equity inside of in most sponsor deals now have more than 50% of the purchase price in equity. It just leaves you a lot of value to go to private capital or alternative sources and structure some pretty interesting securities to extend out the runway and try to figure out is this a temporary shock to the system.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And as I said, everybody would prefer high cost debt to Chapter 11. There's no choice between those two. And I just think that you don't have an over levered well, when I say you don't have an over levered balance sheet, you might have leveraged vis a vis the cash flow, but some of these companies were valued at 15 to 18 times EBITDA. So they may have cash flow difficulties, but the valuation, the amount of equity put in under the value, I think will be make liability management a very interesting part and that will be where all the activity is I think. Unless you have a tremendously unexpected continuation of tariffs that are so difficult that it actually does disrupt the whole global order for a long period of time.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

That would be the alternative that we really do have a long term very punitive tariff system that really does disrupt American business. I don't expect that.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Okay. Super clear. Just one ticky tacky one. Do you could you give us the split of revenue this quarter perhaps across M and A, cat markets and restructuring?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

It's about two thirds M and A and one third cat markets and restructuring. And again, I'm going to combine those two because they really are a blendable item.

[James Yaro, Vice President Equity Research at Goldman Sachs]

Okay. Thanks so much.

[Operator]

Your next question comes from the line of Brendan O'Brien from Wolfe Research. Your line is open.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

Good afternoon. Thanks for taking my questions. I just want to talk about the recruiting backdrop. I know that recruiting this year was, expected to be focused on a build out of your private capital advisory team, which it sounds like you're off to a good start on. Given activity to start the year has been a bit slower, I just wanted to get a sense as to whether you're seeing any improvement in the recruiting environment and whether you might look to lean in more aggressively than you expected at the start of the year?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Again, you're talking about a three week period. And so because the first quarter, I think everybody's pretty bullish. It was going to be a great year for everybody. I haven't seen a dramatic change in the last three weeks. I think it would be too soon for almost for me to see it, but we're seeing good talent.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I think again, one of the things I always talk about is we are an unlevered company with a lot of excess capital. Most of the big banks are very heavily levered, whether they are deposit institutions with nine to one leverage. And so I do think as if the world stays this volatile, I continue to believe that talent will leave nine to one levered institutions that have mismatched deposits versus assets and liabilities and are very shaky in a volatile. I think people have learned that no matter what you're told, balance sheets are not as clean as they're portrayed in a shaky volatile world. As I said, if you were 10 to one levered right now, I don't know any asset that I own that's not down 10% since April 2.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So you'd have to wonder about how you can be 10 to one levered and say and be confident in your balance sheet. So I think we'll be the beneficiary of that. It's one of the reasons we keep a very strong balance sheet. We know it's attractive to that banker that is looking where to place their lifetime, their family and their lifetime future career. And I think more and more people look at it and go, yes, that's where I want to be.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So we keep that's one of the reasons we do keep our balance sheet so strong. And so I don't see a big change right now. We're going to go after the private capital advisory situation very hard. We'll fill in, but we were always planning on filling in some of our other places, but you'll see us be strong in private capital. And I think we have a good line of sight into some very strategic hires right now that I can't talk about.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

That's great. And then for my follow-up, I just wanted to touch on the comp ratio. Understand there's a lot of unknowns at the moment and the accrual is somewhat of a reflection of like the bifurcated potentially outcomes of this year. But I was hoping you could help us or help frame how to think about the level of revenue growth needed to keep your comp ratio flat year on year or maybe like what the breakeven point is?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I'm going to try to stay away from the algorithm. Last year, we were at a point where you know, we had we had invested a lot in the tech group, and we had made so much investment. We had to give you a road map. And I was very nervous that we were giving you the right road map because there's so many movable there's so many movable things. So I I don't want to I'm not gonna try to get back into that because it will how fast we hire people, how long this stays, how rapidly know, if it's if this is a six week downturn and then it rapidly springs back like I'm saying, I'm going to continue to build pretty significantly for what I think are a strong next twelve months is really what I want to do anyway.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So I think it's just too volatile and there are too many moving parts for me to

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

give you an

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

algorithm. But our intention is to get the comp ratio down while building a great business. And that is I just don't want to get caught into some algorithm that doesn't match the opportunity or the volatility inherent in the market.

[Brendan O'Brien, Senior Vice President at Wolfe Research]

Totally fair. Thanks for taking the questions. Thanks.

[Operator]

Your next question comes from the line of Mike Brown from Wells Fargo Securities. Your line is open.

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

Great, thanks. Good afternoon. Ted, just wanted to dive into 2Q here. We're just a few weeks into the quarter, certainly a much more volatile environment. Can you maybe just give us a little bit of views into the quarter relative to 1Q?

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

It's not easy from really anyone's perspective, but maybe you can shine a light on to how to think about the revenue potential just based on either what you can see in terms of the deals that are set to close and which ones you maybe have some greater confidence in, the contribution of non M and A? Just some color relative to 2Q would be helpful as we think about the near term. Thank you.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So things we're getting pushed out. Some things are getting delayed that we thought would be in Q2 and we don't think and then there are some that are dying. Like I said, our pipeline is down, not dramatically, but it's down from March 31. Interestingly, there are some things that were announced and are in process of closing. So it's not like there's a shutdown on the quarter.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

But the quarter, we're having trouble getting our handle on exactly when things we thought were going to get pushed in the market are going to go to market. It's difficult for us to know that as well. So I would just say it's things are being pushed out. It's not I don't look at it as horror it's not horrible. It's not as bad as the volatility of the market, which would imply in terms of just how difficult it is for people to understand what's going on.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Because again, things that were announced during the first quarter will close in the second, but there's many things getting pushed out. So I'm going to leave it at that, which is, I don't think it's disastrous, but it's not as good as I was hoping it was going to be.

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

Okay. Yes, that's fair. Wanted to maybe follow-up on the talent question. So with this M and A upswing being pushed out, perhaps this tariff related turmoil is quick. But if it's not and the eventual recovery is is kind of slower with more fits and starts and maybe just a bit weaker overall or more spread out, what I'm interested to hear about is how do you think about protecting the margins, investing in the talent, building out the private capital business?

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

What do you do in terms of retaining talent? Do you take a closer look at the mix of talent that you currently have and what the opportunities are? And do you kind of reassess or maybe do some rightsizing? Just if could talk through that a little bit for us.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

We

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

would look at all the above, which we do look at every year. We do believe that the private capital by the way, I think we're transitioning the names. It's private funds advisory. We're thinking of transitioning the names. These names get confusing, but it is the group that does the secondaries.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And I think that's an important part of the world by the way. So we're not going to slow down. We think that is key and maybe even as the M and A environment and the IPO market gets more difficult, like you said, if you think they're going to be in a difficult mode, you want to have that asset, that expertise and go to market. So that's very important. And then we're going to fight to keep all our good talent.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

We think in the last couple of years, what we did in technology and energy and then our existing fantastic people in and by the way, in industrials, we hired some great people, our media, our healthcare franchises, we're extremely happy with where the fourth quarter came in, where the first quarter was trending to, up 40 what were we up 41%, I think was the number. Those are not bad numbers. If a policy event didn't happen on April 2, and you can't put it on the sidelines and come back and just say, well, come back. We sent you out for on vacation. We put together an extraordinary go to market team and we're going to protect it unless we see something that is so awful that we think it extends out over a period of time.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And I can't imagine that a policy decision over tariffs is that item. This is not a world war, maybe a world tariff war, but it's not a it's I believe it is a policy issue that's going on and not a fundamental degradation of business and especially the transaction business.

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

Okay, great. Thanks for taking my questions guys.

[Operator]

Your next question comes from the line of Ryan Kenny from Morgan Stanley. Your line is open.

[Ryan Kenny, Executive Director - Equity Research at Morgan Stanley]

Hey, good afternoon. Thanks for taking my question. I want to follow-up on the comp ratio discussion earlier. Understand that you're not giving us a formula this year, which makes a lot of sense given the uncertainty. But can you just clarify, was the 69% in the first quarter based on your revenue assumption for the full year as of March 31?

[Ryan Kenny, Executive Director - Equity Research at Morgan Stanley]

Or is that your current expectation if this environment persists, is it fair to assume that that could go up for the rest of the year?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Yes. I'll have Chris answer. But as my understanding is the requirement is you take your best efforts guess and that's what that is on revenue and estimate for the year.

[Christopher Callesano, CFO at Moelis & Company]

Yes.

[Christopher Callesano, CFO at Moelis & Company]

I mean 69% for the quarter, it's our best estimate for the second quarter and the full year at this time. As Ken said, it's dependent on the trajectory of revenues and the hiring as we make investments in strategic areas like private funds advisory. But yes, it's our best estimate currently at this time.

[Ryan Kenny, Executive Director - Equity Research at Morgan Stanley]

So it's your best estimate after the tariff announcement, not as of March 31?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Yes. It's our best estimate given everything we know and it includes even a pretty good hiring. We want to hire into private funds advisory. We know that. So we included that in there and things may change, but that's our best estimate given all the elements that we know and hope to succeed on and the Liberation Day event.

[Ryan Kenny, Executive Director - Equity Research at Morgan Stanley]

All right, great. Thank you.

[Operator]

Your next question comes from the line of Ben Rubin from UBS. Your line is open.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Hi, thanks for taking my questions. Last week you announced another senior hire for your tech franchise over in London. So I'm just curious, what are you seeing from the tech team that you lifted out in 2023? Have they been performing better or worse than your original expectations? And maybe how does their productivity compare to your broader M and

[Benjamin Rubin, Director, Equity Research at UBS Group]

A business at large?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thanks. Thank you for that question. The tech team has been a stunning success. Now I don't want to tell Jason that it's better than I expected because then he'll think I thought he wasn't a good guy.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

I thought we hired a great team and it's been a great team. And I wish we didn't have the April 2 event because I think it would have shown how successful an operation that was. And by the way, the same with the energy, I think people we quietly have hired a significant energy team that has an incredible backlog and is making real gains there as well. But the technology team has been just a phenomenal addition. And what it's done is, again, in the sponsor world, we want to be important to sponsors.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

We want them to think, okay, as Molla's showing us their best and are we giving them enough? It's kind of a bilateral trade, right? I'll bring the trade agreement into this with sponsors and advisors like, are we showing you too much goods? I should get Trump in here to negotiate for me. But are we showing you too many good ideas and you're not giving us back enough?

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

And that kind of goes on, it's trade. And what the tech team does has added like 6,000 or 7,000 calls, idea calls where we're in the over and above everything we were doing. So if we were important in the halls of sponsors prior to that, not only are they producing significant revenue backlog, but they're also improving everybody else's impact at the sponsor level. So it's been phenomenal. So energy is doing the same thing.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

So it's been if I have to admit it, it's been even better than we thought when we did it.

[Benjamin Rubin, Director, Equity Research at UBS Group]

That's great to hear. I'm not going to ask explicitly about the comp ratio, but is there any chance you could share the dollar impact to comp expense in the first quarter from the accelerated vesting of retirement eligible bankers? Thanks.

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

Maybe Chris

[Christopher Callesano, CFO at Moelis & Company]

will Yes. I mean, think you're going to see that in the October. So the Q1 always has a higher fixed comp ratio due to the retirement eligible equity hitting all in Q1. I would say it's about double the expense than a normal quarter. And so we also accrue an incentive comp, right?

[Christopher Callesano, CFO at Moelis & Company]

It just means that there's a higher proportion of fixed comp versus variable comp in the first quarter and we balance it out over the year.

[Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo]

Great. Thanks, Chris.

[Operator]

And there are no further questions at this time. I will now turn the call back over to Ken for closing remarks.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thank you. Pleasure to be with you. This the first time I think we were first to go. And I think with the every day you want to be later and later, maybe there'll be a resolution before some other people tell you what's going on in the world in the whole tariff war. But look forward to seeing you and hopefully we'll have this all behind us and talking about some brighter future.

[Ken Moelis, Chairman, CEO & Founder at Moelis & Company]

Thanks.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Matt Tsukroff, Vice President - IR
• Christopher Callesano, CFO
• Ken Moelis, Chairman, CEO & Founder

Analysts

• Devin Ryan, Director of Financial Technology Research at Citizen JMP
• Ken Worthington, Financial Analyst at JP Morgan
• James Yaro, Vice President Equity Research at Goldman Sachs
• Brendan O'Brien, Senior Vice President at Wolfe Research
• Michael C. Brown, Equity Research Analyst - Asset Managers, Brokers and Exchanges at Wells Fargo
• Ryan Kenny, Executive Director - Equity Research at Morgan Stanley
• Benjamin Rubin, Director, Equity Research at UBS Group