What Moelis & Company (MC) Said on Its Q3 Earnings Call

Key Points

• Third-quarter revenue rose 13% year over year to $426 million, while revenue for the first nine months increased 10% to a record $1.15 billion. Record average transaction fees reflected Moelis advising on larger, more complex assignments.
• M&A revenue grew 40% in the quarter, and new-business origination and announced deal pipeline were each up about 20% year over year, with the total pipeline at a record high. The CEO remained constructive on deal activity but flagged volatility, geopolitical tensions, higher interest rates, and uncertainty around AI infrastructure financing as risks.
• Moelis expects full-year non-compensation expenses to rise about 19%, while continuing to expect a lower compensation ratio for the year. The firm ended the quarter with $659 million in cash and no debt, declared a $0.65-per-share dividend, and expects to return about $318 million to shareholders for the first nine months.

Moelis & Company NYSE: MC reported third-quarter 2026 revenue of $426 million, up 13% from a year earlier, as growth in mergers and acquisitions and capital structure advisory offset a softer quarter in capital markets.

Revenue for the first nine months rose 10% to a record $1.15 billion, CEO and co-founder Navid Mahmoodzadegan said on the company’s earnings call. The average fee per completed transaction also reached a record for both the quarter and the nine-month period, as the firm advised on larger and more complex assignments.

Mahmoodzadegan said new business origination and the announced deal pipeline were each up approximately 20% year over year, while the total pipeline stood at a record high. He maintained a constructive outlook for transactions but cautioned that volatility, geopolitical tensions, higher interest rates and uncertainty around artificial intelligence infrastructure financing could affect activity.

M&A Growth and Pipeline Outlook

Third-quarter M&A revenue rose 40% from a year earlier, driven by strategic transactions. Mahmoodzadegan said the firm’s investments in talent and capabilities were helping it win more assignments from large corporate clients.

In his prepared remarks, Mahmoodzadegan said the number of sponsor M&A transactions on which Moelis advised increased approximately 30% in the first nine months. During the question-and-answer session, he clarified that the figure referred to sponsor transactions generally, not just M&A. He said overall sponsor activity remained muted, although Moelis believed it was gaining a larger share of sponsor business.

The CEO said announced deals typically convert to revenue at a high rate, with regulatory problems among the main potential obstacles. Capital structure and private capital advisory mandates also tend to have high conversion rates, he said, while capital markets transactions are more exposed to market conditions.

Asked whether the market had moved beyond the early stages of the M&A cycle, Mahmoodzadegan said cycles were difficult to predict. He cited demand for scale and growth, technology disruption and pressure on sponsors to return capital to investors as reasons for continued dealmaking, while acknowledging risks to completion timing.

Capital Structure and Private Capital Advisory

Capital structure advisory delivered one of its strongest quarters on record, Mahmoodzadegan said. Liability management transactions remain a major source of activity, and he expects traditional restructurings to increase over time as lenders become less willing to extend upcoming maturities.

He said Moelis was advising some leveraged software companies on potential liability management, though much of that work remained at an early stage. He expects a significant amount of liability management activity over the next 12 to 18 months, noting that software accounts for a meaningful portion of debt maturities coming due in 2028 and 2029.

In private capital advisory, the firm has assembled seven managing directors focused on general-partner-led secondaries and hired three managing directors focused on primary fundraising. Mahmoodzadegan said the business was still developing: Revenue from the GP-led team was not yet meaningful this year or quarter, but a meaningful pipeline was building for next year. He added that the capability had helped Moelis win mandates where sponsors were considering either an M&A transaction or a continuation vehicle.

Across the firm, Moelis has hired 24 managing directors year to date, its most active recruiting year on record. Thirteen had joined, while the remaining 11 were expected to arrive through the rest of 2026 and into 2027.

Expenses, Capital Returns and Tax Outlook

The adjusted compensation ratio was 65.8% for both the third quarter and the first nine months, down from 66.2% and 68%, respectively, in the comparable prior-year periods. Mahmoodzadegan said he continued to expect a lower compensation ratio for the full year.

Adjusted non-compensation expenses rose 19% to $195 million for the first nine months. CFO Christopher Callesano cited higher office occupancy costs, technology and data spending, and increased client activity. The firm expects full-year non-compensation expenses to grow approximately 19% from 2025.

Callesano said it was too early to provide a 2027 expense outlook, although technology costs could continue to rise. He also said Moelis was evaluating the potential effect of a tax provision taking effect next year and estimated it could add a few points to the company’s tax rate, subject to several variables.

The board declared a quarterly dividend of $0.65 per share. Moelis ended the quarter with $659 million in cash and no debt, Callesano said. Including the declared dividend, the firm expects to have returned approximately $318 million to shareholders with respect to the first nine months of 2026.

About Moelis & Company (NYSE:MC)

Moelis & Company NYSE: MC is an independent global investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments and other institutions. Its advisory platform focuses on mergers and acquisitions, recapitalizations, restructurings, capital raising and other complex corporate finance matters.

The firm advises clients across a range of industries, including technology, media and telecommunications; financial services; consumer and retail; energy and infrastructure; healthcare; and industrials.

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