PJT Partners Q3 Earnings Call Highlights

Key Points

• Q3 results declined as fewer transactions closed: revenue fell 14% year over year to $385 million, and adjusted EPS dropped 24% to $1.41. For the first nine months, however, revenue reached a record $1.29 billion, with adjusted if-converted EPS up 11% to a record $4.92.
• Management said PJT remains on track for record full-year performance, including record Strategic Advisory revenue and record PJT Park Hill revenue, driven by Private Capital Solutions. It cited a stronger M&A pipeline but cautioned that deal conversion remains difficult; restructuring demand is elevated, though the firm is not budgeting for an acceleration.
• PJT ended the quarter with a record $766 million in cash and no funded debt, repurchased about 200,000 shares during Q3, and approved a $0.25-per-share dividend. The firm also expects 2026 to be its largest year for partner recruiting.

PJT Partners NYSE: PJT reported lower third-quarter revenue and earnings as fewer transaction completions weighed on all three of its principal businesses, while nine-month results reached records and management said the firm remains on track for record full-year performance.

Third-quarter revenue totaled $385 million, down 14% from a year earlier. Adjusted pre-tax income fell 23% to $72 million, while adjusted earnings per share declined 24% to $1.41. Chairman and Chief Executive Officer Paul Taubman said quarterly results can be significantly affected by transaction closing dates and that the firm evaluates its progress over longer periods rather than individual quarters.

For the first nine months of 2026, revenue rose 9% year over year to a record $1.29 billion. Adjusted pre-tax income was $262 million, and adjusted if-converted earnings per share reached a record $4.92, up 11% from the comparable period last year. Taubman said the nine-month performance was led by record results in Strategic Advisory and Restructuring.

Margins, Expenses and Capital Returns

Chief Financial Officer Arun Kalra said PJT Partners accrued adjusted compensation expense equal to 66.5% of revenue for the first nine months, compared with 67.5% a year earlier. The company said the 66.5% ratio remains its best estimate for the full year.

Adjusted non-compensation expense increased 10% year over year to $57 million in the third quarter and rose 11% to $170 million for the first nine months. The company attributed the nine-month increase primarily to higher occupancy and depreciation costs associated with its expanded global office footprint, as well as increased travel, business-related, communications and technology expenses.

Adjusted pre-tax margin was 18.8% in the third quarter, compared with 21% a year earlier. For the first nine months, margin increased to 20.3% from 19.5% in the prior-year period.

The company revised its expected full-year effective tax rate to 19.2%, from a prior estimate of 20.5%, primarily reflecting an updated estimate of income allocations among state, local and foreign jurisdictions. The third-quarter effective tax rate was 16.9% as a result of the revised annual estimate.

PJT Partners ended the quarter with a record $766 million in cash equivalents and short-term investments and no funded debt outstanding. During the quarter, it repurchased about 200,000 shares and share equivalents, mainly through open-market purchases. Nine-month repurchases totaled roughly 2.3 million shares and share equivalents. The board also approved a quarterly dividend of $0.25 per share.

The company extended its existing $100 million credit facility for three years on substantially the same terms, with Bank of America, Truist and PNC serving as lenders.

Advisory, Restructuring and Private Capital Outlook

Taubman said the firm continues to see elevated global demand for liability management and restructuring advice as companies confront higher interest rates, challenged business models, technological disruption and geopolitical uncertainty. He said PJT’s restructuring and liability-management team has a record pipeline of transactions across industries.

Management said restructuring activity could remain at current levels or increase, though the company is not budgeting for an acceleration. Taubman said rising debt maturities, elevated refinancing costs and stresses facing certain industries could create additional opportunities. He added that the balance of activity may be shifting modestly toward more in-court restructurings after companies have exhausted proactive liability-management measures.

In Strategic Advisory, Taubman said annualized global announced M&A volume was trending modestly above year-ago levels and that 2026 was on track to be the second-best year for announced M&A volume. He said the strategic rationale for mergers and acquisitions remains strong and that the regulatory environment is more favorable than in the past, though elevated rates, geopolitical risks, market volatility and uncertainty around artificial-intelligence investment continue to make closing transactions more difficult.

Taubman characterized the current deal market as having greater activity at the top of the funnel but lower conversion rates than in a more risk-on environment. He said smaller private transactions may be less exposed to some of the regulatory and public-market factors affecting larger deals. PJT expects its Strategic Advisory business to post record revenue for the full year and said it expects to begin next year with a meaningfully improved pipeline of announced transactions awaiting closing.

PJT Park Hill recorded significant nine-month growth in its Private Capital Solutions business, while primary fundraising experienced modest declines. Taubman said asset managers and limited partners are increasingly pursuing secondary, structured and other alternative liquidity solutions as portfolio monetizations and mid-sized-company IPOs remain challenging. Despite a weaker third quarter, management said PJT Park Hill remains on track for record 2026 revenue, driven by Private Capital Solutions.

Recruiting and 2027 Tax Considerations

Taubman said 2026 is likely to be PJT’s largest year for partner recruiting, with most additions expected to appear in the partner count by early next year. He said the firm continues to invest in its geographic footprint, industry coverage and capabilities as it seeks to expand market share.

Asked about the potential effect of an expansion of tax code Section 162(m), Kalra said the company was still modeling the impact. He said PJT views an effective tax rate of about 25% as an appropriate starting point for 2027, including the expected impact of the provision, and plans to provide a more refined estimate with fourth-quarter results.

About PJT Partners (NYSE:PJT)

PJT Partners Inc NYSE: PJT is a global, advisory-focused investment banking and financial services firm. The company provides strategic advice to corporations, financial sponsors, institutional investors and other clients on mergers and acquisitions, divestitures, capital raising, liability management and other complex financial matters.

Its businesses also include restructuring and special situations advisory, private capital advisory and placement services, and shareholder engagement and governance advice.

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