Evercore Q1 2025 Earnings Report

Evercore EPS Results

• Actual EPS: $3.49
• Consensus EPS: $1.60
• Beat/Miss: Beat by +$1.89
• One Year Ago EPS: $2.13

Evercore Revenue Results

• Actual Revenue: $699.02 million
• Expected Revenue: $704.54 million
• Beat/Miss: Missed by -$5.52 million
• YoY Revenue Growth: +19.20%

Evercore Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 8:00AM ET

Evercore (NYSE:EVR), together with its subsidiaries, operates as an independent investment banking advisory firm in the United States, Europe, Latin America, and internationally. It operates through two segments, Investment Banking & Equities, and Investment Management. The Investment Banking & Equities segment offers strategic advisory services, such as mergers, and acquisitions, strategic, defense, and shareholder advisory, special committee assignments, and real estate strategic advisory; private capital advisory and fundraising, market risk management and hedging, private capital markets and debt advisory, liability management and restructuring, and equity capital markets execution and advisory services; and research, sales, and trading professionals services on a content-led platform to its institutional investor clients. The Investment Management segment provides wealth management services to high-net-worth individuals, foundations, and endowments; and manages financial assets for institutional investors. The company was formerly known as Evercore Partners Inc. and changed its name to Evercore Inc. in August 2017. Evercore Inc. was founded in 1995 and is headquartered in New York, New York.

Evercore Q1 2025 Earnings Call Transcript

Key Takeaways

• Evercore delivered 19% year-over-year growth in adjusted net revenues to $700 million and a 64% increase in adjusted EPS to $3.49, with adjusted operating margin expanding to 16.6%.
• More than half of total revenues came from non-M&A sources, highlighted by a record Private Capital Advisory quarter led by GP-led continuation vehicles and LP secondaries.
• Transaction pipelines remain healthy with robust backlogs and active engagement letter signings across sectors, including major M&A deals such as Calpine’s $29.1 billion sale to Constellation Energy.
• The firm returned a record $454 million of capital in Q1 through share repurchases and a 5% dividend increase, reflecting a continued commitment to shareholder returns.
• Evercore maintained strategic talent investments, announcing several senior managing director hires and promotions, and adding former CIA Director Bill Burns as a senior adviser to strengthen global advisory capabilities.

Presentation

[Operator]

Good morning and welcome to the Evercore's First Quarter twenty twenty five Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question and answer session. I will now turn the call over to Katie Haber, Managing Director of Investor Relations at Evercore. Please go ahead.

[Katy Haber, MD, Head of Investor Relations & ESG at Evercore]

Thank you, operator. Good morning, and thank you for joining us today for Evercore's first quarter twenty twenty five financial results conference call. I'm Katie Haber, Evercore's Head of Investor Relations. Joining me on the call today is John Weinberg, our Chairman and CEO and Tim Lalonde, our CFO. After our prepared remarks, we will open up the call for questions.

[Katy Haber, MD, Head of Investor Relations & ESG at Evercore]

Earlier today, we issued a press release announcing Evercore's first quarter twenty twenty five financial results. Our discussion of our results today is complementary to the press release, which is available on our website at evercore.com. This conference call is being webcast live in the For Investors section of our website, and an archive of it will be available for thirty days beginning approximately one hour after the conclusion of this call. During the course of this conference call, we may make a number of forward looking statements. Any forward looking statements that we make are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.

[Katy Haber, MD, Head of Investor Relations & ESG at Evercore]

These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10 ks, quarterly reports on Form 10 Q and current reports on Form eight ks. I want to remind you that the company assumes no duty to update any forward looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non GAAP measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is posted on our website. We continue to believe that it is important to evaluate Evercore's performance on an annual basis.

[Katy Haber, MD, Head of Investor Relations & ESG at Evercore]

As we have noted previously, our results for any particular quarter are influenced by the timing of transaction closings. I will now turn the call over to John.

[John Weinberg, Chairman & CEO at Evercore]

Thank you, Katie, and good morning, everyone. Before we turn to the quarter, I want to first address the current environment. As a result of heightened geopolitical and trade tensions, we are experiencing increased volatility in global financial and asset markets. This reflects growing concerns about inflation, interest rates and the global and domestic economic outlook. While there are many unanswered questions at this time, the Evercore today is far better positioned than Evercore in the past.

[John Weinberg, Chairman & CEO at Evercore]

Our diversified platform across geographies, sectors, products, client types and deal sizes enables us to perform across varied market environments. Our global M and A advisory franchise has proven resilient through different markets. In addition, our capabilities in liability management and restructuring, private capital advisory and fundraising, debt capital markets advisory, equity underwriting, equity research and sales and trading continue to contribute meaningfully amid shifting market conditions. We are built to deliver for clients in all environments, including ones like this. In challenging markets, our ability to provide thoughtful, strategic and financial advice is more important than ever.

[John Weinberg, Chairman & CEO at Evercore]

Based on what we see today, market complexity has prompted greater caution and has weighed on CEO and Board confidence levels and in turn has impacted the broader transaction environment. We expect transaction levels to pick up once there is greater clarity and stability in the macroeconomic backdrop and financial markets. Client dialogues remain active and constructive, supporting our robust backlogs and new engagement letter signings, and there is a high degree of pent up demand to transact among both strategic and sponsor clients. While the timing and shape of the market recovery is uncertain at this time, we will continue to operate with the same long term client centric focus that has always defined Evercore. As we've discussed on prior calls, we continue to believe in our business model and expect to invest in talent through the cycle.

[John Weinberg, Chairman & CEO at Evercore]

In the first quarter, '2 senior managing directors have joined our investment banking practice, both of whom were announced in 2024. And four additional investment banking SMDs have committed to join our franchise, three of whom will be in our industrials, health care and private capital advisory practices and one in Europe. Also, earlier this month, we announced that Bill Burns, former Director of the CIA, will be joining Evercore in June as a senior adviser with a focus on global affairs. In addition to our externally hired SMDs, we started the year with a class of 11 promoted investment banking SMDs and an additional four in other areas of the firm. Developing our internal talent has always been a core priority for us.

[John Weinberg, Chairman & CEO at Evercore]

Now let me briefly discuss the quarter. We delivered solid year over year growth across nearly all areas of the firm, reflecting the strength of our diversified revenue base. In the first quarter, more than 50% of total Evercore revenues were from non M and A sources. In advisory, we've advised on a number of notable and complex transactions in the quarter, including Calpine on its sale to Constellation Energy for $29,100,000,000 which is one of the largest transactions so far this year and Ampere on a $6,500,000,000 sale to SoftBank. And momentum has carried into April with several significant transactions announced in recent weeks, including advising the shareholders of Colonial Enterprises on its $9,000,000,000 sale to Brookfield Infrastructure Partners Woodside Energy on its $5,700,000,000 sale of a 40% interest in Louisiana LNG infrastructure to Stone Peak Dotmatics on its $5,100,000,000 sale to Siemens and EQT on the minority stake sale of IFS for over €15,000,000,000 Turning to financial sponsors.

[John Weinberg, Chairman & CEO at Evercore]

Industry wide global volumes increased in the first quarter compared to the prior year, though the number of transactions declined due to the recent macroeconomic and market headwinds. Sponsor deal activity remains selective, dependent on asset quality and sector. That said, our sponsors team has meaningfully expanded its global client base and continues to see strong dialogue levels. Our Strategic Defense and Shareholder Advisory Group remains busy as the number of activist campaigns hit new records last quarter. Our liability management and restructuring group continues activity in the quarter, driven in part by private equity led liability management situations.

[John Weinberg, Chairman & CEO at Evercore]

Currently, we are focused on sectors expected to be impacted by newly announced tariffs. Our team continues to collaborate closely across the firm to support clients as they navigate increased uncertainty. Our industry leading Private Capital Advisory Group had a record first quarter. We continue to lead in GP led continuation vehicles, which remain the primary revenue driver for PCA. We also achieved a record quarter in LP secondaries and made significant progress in our securitized capital solutions business.

[John Weinberg, Chairman & CEO at Evercore]

Our private funds group continues to perform well as it broadens its client base. Underwriting had a strong first quarter with issuance activity showing solid momentum compared to historical periods. As we've experienced a slowdown in underwriting in the first few weeks of the quarter, we note that market conditions for this business can shift quickly in either direction. Our equities franchise had its strongest first quarter since the first quarter of twenty twenty, driven by market volatility and increased trading volumes. Our market leading macro and sector research teams have been highly engaged throughout the recent market volatility and together with sales and trading are supporting our institutional clients as they navigate a rapidly evolving environment.

[John Weinberg, Chairman & CEO at Evercore]

Lastly, Wealth Management delivered a solid quarter, achieving net new business amid a volatile environment. Before I turn it over to Tim to discuss the financial results, I want to wrap up with a few points. As we move through this period, we will continue to focus on long term value creation for our clients and shareholders. Our capital return philosophy has not changed, and we have returned a record amount of capital to our shareholders in the quarter. We remain optimistic about our prospects over the medium and long term and are committed to building our firm across the cycle.

[John Weinberg, Chairman & CEO at Evercore]

Historically, we've emerged from challenging periods stronger than when we entered them, and we believe we have the opportunity to do so again. And with that, let me turn it over to Tim.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Thank you, John. Evercore delivered strong performance in the first quarter. Our results reflected the early stages of a gradual recovery that had begun last year. That said, based on what we know today, we expect results in the second and third quarter will experience an impact from the volatility in the markets and broader uncertainty in the environment. I will now discuss our financial results.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

For the first quarter of twenty twenty five, net revenues, operating income and EPS on a GAAP basis were $695,000,000 1 hundred and 11 million dollars and $3.48 per share, respectively. My comments from here will focus on non GAAP metrics, which we believe are useful in evaluating our results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website. Our first quarter adjusted net revenues of $700,000,000 increased 19% versus the first quarter of twenty twenty four. First quarter adjusted operating income of $116,000,000 increased 28% versus the first quarter of twenty twenty four.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Adjusted earnings per share of $3.49 increased 64% versus the first quarter of last year. Our adjusted operating margin was 16.6% for the first quarter, up from 15.4% in the prior year period. In addition, we had significant net tax benefit this quarter, for which we will provide additional commentary. Turning to the businesses. First quarter adjusted advisory fees of $557,000,000 increased 29% year over year, representing the strength of both our M and A and non M and A advisory businesses.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Our first quarter underwriting revenues were $54,000,000 down 2% from a year ago. Lower levels of follow on activity were offset by improvement in the IPO market in the quarter and an increase for our business in the convertible area. Of course, activity in the equity capital markets business is sensitive to volatility and the overall health of public capital raising activities, and that market can open and close quickly. Commissions and related revenue of $55,000,000 in the first quarter increased 14% year over year, primarily reflecting increased trading volume relating to higher levels of volatility. And that business has gotten off to a good start in the second quarter.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

First quarter adjusted asset management and administration fees of $22,000,000 rose 8% year over year, driven by an increase in fees as AUM increased. First quarter adjusted other revenue net was approximately $11,000,000 which compares to $33,000,000 a year ago. The primary driver of the other revenue reflects lower performance of our DCCP hedge, which is correlated to the performance of the broader equity market and had a negative impact of $5,900,000 this year compared to a positive impact of $14,900,000 in the year ago quarter, an approximately $20,800,000 swing. The interest income was very similar to last year. Turning to expenses.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

The adjusted compensation ratio for the first quarter is 65.7%, down 30 basis points from the prior year period and consistent with our 2024 full year compensation ratio. As a reminder, on our last earnings call, we noted that we were striving to achieve meaningful improvement in our compensation ratio in 2025, which may prove more challenging in the current environment. As we have discussed in the past, one of the most significant drivers of the comp ratio is revenue. It is still early in the year, and therefore, our best judgment is to accrue at 65.7%, and we will adjust appropriately as we progress through the year and obtain better visibility. Non compensation expenses in the quarter were $124,000,000 up 14% from a year ago and less than 1% versus last quarter.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

The increase from a year ago is primarily driven by two things. First, communication and information services expense rose due to vendor rate increases and IT spend attributable to headcount growth. Subscription rates on information services generally have increased at a rate higher than inflation, and we believe this is broadly true in the industry. Second, occupancy and equipment increase related to the addition of new floors in our New York headquarters and the transition location for some of our corporate employees due to the expiration of a lease as well as a new office in Paris and one in Dubai. We are maintaining a disciplined focus on managing our non compensation expenses.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Our non comp expense ratio for the year also, of course, will be influenced by our revenues. And while activity levels are good, full year revenues are difficult to predict with a high level of certainty. Our adjusted tax rate for the quarter was negative 39.7%, which included a benefit of $78,000,000 related to the vesting of our RSUs and our share price at the time of vesting in relation to the price at the time of grant. This year, we received a greater benefit as our stock price appreciation at the time of vesting was significantly higher than appreciation a year ago. We anticipate that our effective tax rate in the remaining three quarters of this year will be more similar to or slightly higher than what we experienced in those quarters during prior years.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Turning to our balance sheet. As of March 31, our cash and investment securities totaled nearly $1,400,000,000 which is in line with our cash balance at the end of the first quarter a year ago. Our cash balance is down from year end due to the payout of bonus compensation in March and share repurchases consistent with historical practices. In the quarter, we returned $454,000,000 of capital, which was a record amount through the repurchase of 1,600,000.0 shares and the payment of dividends. Consistent with historical practice, we bought back stock through net settlements of vesting RSUs and in the open market, offsetting the dilution from the RSU grants that were issued in the quarter as part of our annual bonus compensation process.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

It is important to note that of the 1,600,000.0 shares we repurchased in the quarter, nearly 60% were through net settlements at an average price of approximately $285 which has been our practice since our IPO in 02/2006. In most recent years, this has been beneficial as our share prices trended upward. But in this year, it resulted in the net settlement of shares at a price materially higher than current levels. The remaining 40% was repurchased prior to quarter end at an average price of $227 with the last 400,000 shares repurchased at an average price of $2.01 Separately, our Board declared a dividend of $0.84 per share, an increase of 5% from the prior dividend declared. Our first quarter adjusted diluted share count was 44,400,000.0 shares, an increase from the prior year, but down nearly 600,000 shares from the fourth quarter.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

We expect that the same accounting impact with regard to unvested RSUs that increased our weighted average share count as our share price was rising should cause a modest decrease in share count during the second quarter due to the decline in our share price. We continue to maintain a strong cash position, taking into consideration the current economic and business environment, cash needs for the implementation of our strategic initiatives, including hiring plans and preserving a solid financial footing, which is particularly important in moments of volatility and uncertainty. It is still early in the year, and there are some bright spots. Since the April, we have announced a number of significant transactions, which John mentioned in his comments. Our backlogs, activity levels, engagement letter signings and client discussions remain strong.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

And our firm is durable and broadly diversified. We have confidence in the strength of our firm and our financial condition. We believe we are well positioned to execute on our strategy in all environments, including this one. With that, we will now open the line for questions.

[Operator]

Thank you. We will now conduct the question and answer portion of the conference. Our first question will come from Devin Ryan with Citizens. Please go ahead.

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

Thanks. Good morning. How are you guys?

[John Weinberg, Chairman & CEO at Evercore]

Good.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Thanks, Devin.

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

Good. Want us to start off on the backlogs. And obviously, you heard kind of the comment wrapping up, Tim, just about kind of backlogs and activity levels being strong. Would be great to get any of the nuance just amongst kind of client types or even geographies. And more than anything, I think people just trying to figure out, so I'd love to get your thoughts around what you guys think it will take to actually see things that are in the backlog progressing?

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

Is it just a few weeks of the markets settling down? Or is it just data suggesting the economy is not rolling over? Or just what do you think it will take to kind of get people to build conviction to actually move forward on these backlogs that, as you're talking about, still sound like they're pretty healthy?

[John Weinberg, Chairman & CEO at Evercore]

Thanks for the question, Devin. I'd like to start by just saying I'm really pleased with how our business and our team are responding to these conditions. As you indicated, there is a lot of uncertainty out there. Our backlogs are robust. They're at record levels, and they're growing.

[John Weinberg, Chairman & CEO at Evercore]

Our dialogues are very high and really across the board. Engagement letters are running at a very strong clip. And several of our areas are really doing extremely well. And obviously, there are others that are more impacted by the current uncertainty and the conditions regarding tariffs and other situations. But directly to your question, the backlog levels, we think that the businesses that we have that are doing quite well right now, which include our software business, our PCA business, our restructuring business, activism and defense, infrastructure and power.

[John Weinberg, Chairman & CEO at Evercore]

Those are going to continue, we think, at a decent clip. And we think that deals in the backlog on those will come through. In terms of the certainty level and really how it opens up for the whole for really the whole expanse of our client base, it's going to take time because the uncertainty created doesn't just immediately go away. Having said that, when there is more certainty and there is less volatility, we think there will be a pretty strong recovery. And in places like sponsors and in some of the other larger industry sectors, there's continuing to be a lot of work being done to prepare for the opening of the market.

[John Weinberg, Chairman & CEO at Evercore]

And so I'd say that it will begin. It's going to it's really impossible to say when this uncertainty is going to lift. And the uncertainty will impact the volatility. But clearly, the more progress that's made to stabilize really how people are thinking about the economy and people's view that there's not going to be radical changes to the extent that happens, it will go relatively quickly. So I guess the answer to your question is hard to call when the uncertainty is going to lift, but clearly the market is ready, clients are ready.

[John Weinberg, Chairman & CEO at Evercore]

And I think that with respect to what's in our backlog, we aren't seeing a lot of cancellations. We're seeing some pauses, but we're not seeing a lot of cancellations.

[Operator]

Thank you. Our next question will come from James Yarrow with Goldman Sachs. Please go ahead.

[James Yaro, VP - Equity Research at Goldman Sachs]

Good morning and thanks for taking my question. You indicated that you had a record first quarter contribution from private capital advisory. Could you speak to the outlook for the secondaries business from here in a weaker sponsor M and A backdrop than I think at the beginning of the year? And relatedly, is there any ability to provide anything more quantitative on how big this business has become?

[John Weinberg, Chairman & CEO at Evercore]

So our private capital advisory business is actually, as you indicated, strong. And as you know, there's the limited partner business and their general partner business. The general partner business is very much driven right now by continuity funds. And continuity funds are actually doing really quite well in terms of being a method that sponsors are thinking about to actually try to monetize. One of the things we all know is that there's a lot of pressure on financial sponsors to return capital to LPs.

[John Weinberg, Chairman & CEO at Evercore]

The continuity fund does that quite well. You asked in your question whether the M and A market slowing might impact kind of how this business really fares. And in fact, I think there's a lot more interest in continuity funds right now because it's a very strong and effective method of monetizing some of these assets and returning capital to the LPs. And so there's no question that, that is actually impacting that business, and we think it will sustain over the period. The LP business is actually doing quite well also.

[John Weinberg, Chairman & CEO at Evercore]

As we said, we're running at record levels there in the first quarter. That one is not going to be quite as buoyant, I think, but it will be actually strong through the end of the year. I think there's it's not going to be lifted as much by that overall economic power and thing that we talked about, which is the fact that the continuity funds are being driven by the fact that the margins aren't there. But the LP business will be quite strong. So generally, I think that, that business is going to continue to go along quite strongly.

[John Weinberg, Chairman & CEO at Evercore]

In terms of the size of that business, I don't think we disclosed that. So just to say it's a very significant and effective business.

[Operator]

Thank you. Our next question will come from Brendan O'Brien with Wolfe Research. Please go ahead.

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

Good morning and thanks for taking my question. I just wanted to ask on Europe. There's been a lot more positivity on the M and A backdrop in the region relative to The U. S, just given some of the potential positive steps by local governments there and a little bit more protection from tariffs. So I just want to get a sense as to how your conversations compare in Europe relative to those in The U.

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

S. And whether we could see a recovery in activity in the region more quickly in your view.

[John Weinberg, Chairman & CEO at Evercore]

I would say that from what I'm hearing from our European business, I don't think that there's that market is being driven by forces stronger than where things are in The United States. Think that in The U. S, there is clearly focus on regulatory and really how that's going to play out. I don't think any of us really know yet exactly how that's going to be. We've heard the sentiments.

[John Weinberg, Chairman & CEO at Evercore]

At one point, we were hearing that the current administration was going to echo the past administration. But on the other hand, there's a lot of people who are participants who believe that there will be a variation on that kind of regulation and that things may be, in many cases, loosened to a degree to allow business and allow deals that might not have gone in the last administration. But frankly, it's just too early to know. With respect to Europe, we think that there is it's a good activity level in terms of dialogues and transactions that are being contemplated. It really remains to be seen whether Reopra is really going to recover faster.

[John Weinberg, Chairman & CEO at Evercore]

As I said, from what we see and what I see, it doesn't look like it's going to be particularly stronger in terms of its recovery, but we do think that there is a good healthy level of activity and velocity going on there.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Yes. And the only other point I would add to that is that while the tariffs, of course, affect Europe, U. S. Trade flow, The trade flow within Europe itself is not hindered at the moment, which is a helpful factor.

[Operator]

Thank you. Our next question will come from Mike Brown with Wells Fargo Securities. Please go ahead.

[Michael Brown, Equity Research Analyst at Wells Fargo]

Great. Thank you. I wanted to follow-up on the comp ratio. So Tim, what kind

[Michael Brown, Equity Research Analyst at Wells Fargo]

of revenue growth do you think you need in 2025 to deliver year over year improvement? And then just given the headcount is up, there's inflationary pressure, deferred comp dynamics. Can you just give us a little color about how we can think about the fixed cost component for 2025 relative to 2024? Thank you.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Yes, sure. Look, we had talked about if you go back to the last couple of earnings calls, we had talked about trying to make progress, and we had, in fact, made progress. And so things were kind of humming along pretty well. We obviously saw last year each quarter in terms of revenues was a better revenue quarter than the quarter before. The year was up 23%.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

You've seen our first quarter results where our revenues were up 19%. And as John talked about, our backlog is pretty strong. And so in that environment, absent the trade issues and the uncertainty created by that, we felt like we were tracking pretty well to make continued improvement. And I think given the uncertainty we've seen in the market in this past month, now I might note that Evercore itself in this past month has actually performed reasonably well, I think. And you could see that if you went back and looked at the transactions we announced over the last month.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

And then as John alluded to the backlogs, our backlogs over this past month have actually increased, not decreased, which means we had more coming in than going out. And but nonetheless, revenues are a pretty important factor when you're thinking about comp ratio improvement because we've built the firm and we're a much stronger, more diversified firm than we were a few years back. But that in order to make real progress there, the revenues have to improve. And John mentioned in his Q and A comments that it's difficult to know exactly how long the level of uncertainty will last. And so I think I'm going to stop there and not try to make a prediction.

[Operator]

Thank you. And our next question will come from Jim Mitchell with Seaport Global Securities. Please go ahead.

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Hey, good morning. Maybe you could

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

just talk a little

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

bit about the restructuring environment. Obviously, lot of it's been liability management. Is there any issue in the debt markets in sort of fulfilling liability management assignments? Does that sort of put a pause on that business or push deal flow more towards Chapter 11 filings? Or is there still a good environment and a good ability to execute on those?

[John Weinberg, Chairman & CEO at Evercore]

Thanks, Jim. Restructuring business is running at a very healthy clip right now. The it had a very strong first quarter, and they had a really strong year last year. And they are running ahead at this time in their backlogs of last year. And so on many different accounts, the business is quite healthy.

[John Weinberg, Chairman & CEO at Evercore]

In terms of debt markets and liability management, we're not seeing any limitation on our ability to serve the clients on liability management. In fact, that part of the business continues to be strong and to power forward and to build. Obviously, there are people looking at bankruptcies and the fact that rates are relatively high and that there is some kind of a concern with respect to 2025 and the debt wall. But I'd say that the business is quite diversified. It's the debtor side.

[John Weinberg, Chairman & CEO at Evercore]

We significant creditor business. And the liability management piece just continues to power forward. And I don't think there's really any limitation right now. We feel very constructive about that business.

[Operator]

Our next question will come from Ryan Kinney with Morgan Stanley.

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

Can Can you talk a bit about the hiring environment and what your hiring plans are in a potentially slower M and A backdrop? Should we expect the pace of hiring versus last year to slow down or pick up? And any color on the areas that you're leaning into would be helpful. Thanks.

[John Weinberg, Chairman & CEO at Evercore]

Sure.

[John Weinberg, Chairman & CEO at Evercore]

As we've said before, our hiring philosophy is that we continue to look at the areas that we think that we need talent in and we hire. In addition, if there's A plus talent that would like to come over, we accommodate that. And frankly, we've been running at a pretty consistent clip in terms of the people coming over. We have a good pipeline, and we're going to continue to consistently hire very strong people who are who want to come over and are available. And we're going to stay on that.

[John Weinberg, Chairman & CEO at Evercore]

So I would say that I wouldn't think that we're going to change dramatically as we don't manage to numbers. And so to the extent that there are really good people available, we are going to move on that. And to the extent that those people in our pipeline go slower, that may slow down, and it may actually take more time. But I would say that we're going to try and remain pretty consistent, manage to this overall talent quality level. And in terms of in areas that we continue to look at, I mean, we frankly, there's a lot of opportunity, whether it's in tech and TMT or health care and technology and services.

[John Weinberg, Chairman & CEO at Evercore]

We look at consumer. We have big needs. As you've seen, we've grown Europe over time. We basically added a team in France, and we just hired someone in Italy. We're going to continue on all of those places.

[John Weinberg, Chairman & CEO at Evercore]

So we have a number of areas that we can fulfill. We clearly feel that talent drives opportunity, and that's, I think, where we're going with that.

[Operator]

Thank you. Next, we have a follow-up question from James Yarrow with Goldman Sachs. Please go ahead.

[James Yaro, VP - Equity Research at Goldman Sachs]

Thanks for taking the follow-up. I just wanted to touch on the Equity Capital Markets business. Could you perhaps update us on the backlogs there, your outlook for IPOs and perhaps how those have evolved, perhaps year to date with the recent market volatility?

[John Weinberg, Chairman & CEO at Evercore]

Sure, Dan. Equity capital markets right now, we're looking at it as somewhat episodic in that there are definitely movements to prepare for a window opening, and we'll see whether that happens. We have a pretty good backlog. We have several places where we're involved in some sound and, we think, upward strong IPO transactions. We'll see whether those actually roll out.

[John Weinberg, Chairman & CEO at Evercore]

I think our Equity Capital Markets group feels quite optimistic that we're going to start that activity up in the not too distant future. So I think that in terms of thinking about that, I would say that the market will actually take their cues from certainty and from volatility. And to the extent those do allow the market to open, I think you'll see it open. And I think there's a pretty good backlog of transactions that are ready to go that basically have gone through some of the filing processes and are actually loaded to go. So I think you'll see as that as the uncertainty level starts to diminish, you'll see that build.

[John Weinberg, Chairman & CEO at Evercore]

And so we feel I think we feel optimistic that, that business will begin to unfold some and really begin to transact in the not too distant future. But we'll see. As I said, it all depends on the market really volatility levels.

[Operator]

Thank you. Next, we do have a follow-up question from Jim Mitchell with Seaport Global Securities. Please go ahead.

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Hey, thanks for taking

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

the follow-up. Just on maybe Tim, you could talk about the non comp expense side. Is there ability to flex a little in a tougher environment and how you're thinking about growth in non comps this year?

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

Yes, sure. So if you kind of look at our results, what you saw is that they're up only slightly from the fourth quarter, and they were up 14% from the year earlier. And those were really driven by primarily by two things. One was occupancy. And so we took three floors in the building here.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

And then we relocated our finance team from one location to another in New York as the lease is expiring. We opened a Paris office for the team we added and which we talked about last quarter and then also moved a team in Dubai. So some of that was occupancy and then some of it was what we call communication and information services, which also has certain IT costs folded in. And that's kind of driven by really two things primarily. One is headcount increases because that, of course, increases subscription costs.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

And then the second would be the rates on the subscriptions themselves. And the information services companies are obviously important to our business and many businesses. They have some pricing power. Those rates have gone up faster than the rate of inflation. There's not a giant amount in the short term, not a giant amount in the short term.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

We've tried to run a pretty tight ship. I think our comp ratios, if you look at them in relation to the peer group, have been toward the lower end. And I think on travel side, we want our people out seeing clients. I think there's obviously been a benefit there from an increased post COVID, an increased use of Zoom for meetings. So it's not every meeting that we have to hop on a plane and fly somewhere for.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

But and so that, to some extent, will be probably permanently a little lower. And it's the normalization, I think, is starting to flatten a bit. So that's a good sign on there. And then I think the last thing you'd see is we do have revenue leverage. It's perfectly tied to our revenue.

[Tim LaLonde, Senior Managing Director & Chief Financial Officer at Evercore]

And so in a quarter like this one we just experienced where we outperformed on the revenue front, we were able to demonstrate some leverage on the comp ratio. And we hope that when the level of uncertainty decreases and we see revenues coming back in a stronger way, we'll continue to be able to demonstrate some leverage in that area and operate at non comp ratio levels that are lower than what we were operating at pre COVID.

[Operator]

Thank you. This concludes today's Evercore first quarter twenty twenty five earnings conference call. You may now disconnect.

Participants

Executives

• Katy Haber, MD, Head of Investor Relations & ESG
• John Weinberg, Chairman & CEO
• Tim LaLonde, Senior Managing Director & Chief Financial Officer

Analysts

• Devin Ryan, Director of Financial Technology Research at Citizen JMP
• James Yaro, VP - Equity Research at Goldman Sachs
• Brendan O'Brien, Senior Vice President at Wolfe Research
• Michael Brown, Equity Research Analyst at Wells Fargo
• James Mitchell, Senior Equity Analyst at Seaport Global Securities
• Ryan Kenny, Executive Director - Equity Research at Morgan Stanley