Title

Presentation

Evercore Inc. beats earnings expectations. Reported EPS is $7.53, expectations were $5.43.

Operator: Good morning, and welcome to Evercore’s First Quarter 2026 Earnings Conference Call. Today’s call is scheduled to last about 1 hour, including remarks by Evercore management and the question-and-answer session. [Operator Instructions] I will now turn the call over to Katy Haber, Head of Investor Relations at Evercore. Please go ahead.

Katy Haber: Thank you, operator. Good morning, and thank you for joining us today for Evercore’s First Quarter 2026 Financial Results Conference Call. I’m Katy 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. Earlier today, we issued a press release announcing Evercore’s first quarter 2026 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 30 days beginning approximately 1 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 may cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to, those discussed in Evercore’s filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 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. As we’ve noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I will now turn the call over to John.

John Weinberg: Thank you, Katy, and good morning, everyone. Our record first quarter results reflect the strong momentum that built throughout the second half of 2025 as well as the benefits of our multiyear investment strategy. Firm-wide adjusted net revenues were $1.4 billion, double from a year ago and a newly quarterly record for the firm. Revenues increased 8% sequentially from the fourth quarter, marking the first time in 15 years, we’ve delivered growth from that period. We’ve now delivered 3 consecutive quarters of adjusted firm-wide net revenues over $1 billion. Performance in the quarter was broad-based across all of our businesses with our strongest revenue quarter ever for our North American advisory business and a record first quarter for EMEA Advisory, PCA, PFG, Equities and Wealth Management.

Further, our results continue to underscore the strength of our client franchise, the benefits of our diversified business model and the consistent execution of our long-term strategy. First, I want to briefly discuss the current market environment. As we entered 2026, the backdrop for dealmaking was robust, supported by healthy levels of strategic activity and continued engagement from both corporates and financial sponsors with the expectation that these trends would carry into the year. We are seeing continued CEO and boardroom confidence, particularly around large-cap transactions, and financing markets are open. However, conditions have become more mixed in recent months. Despite this, M&A activity experienced a strong quarter. Industry-wide, announced global M&A activity, excluding several large direct AI investments totaled over $1 trillion in the first quarter, up 11% from the prior year period with large-cap strategic transactions continuing to outperform.

At Evercore, client engagement remains strong. We continue to see healthy levels of activity across a broad range of sectors, products and geographies with particular strength in large-cap strategic M&A, including in areas where we have made recent investments. Many sectors, including health care, industrials, real estate, infrastructure, financials and certain areas of technology continue to operate at high levels. Our backlog remains strong and is replenishing at a healthy rate. This quarter was an exceptional quarter, demonstrating the breadth of the firm’s capabilities, and we are pleased with our results. As we have noted in the past, investors should not place too much emphasis on any one quarter. This holds true in very strong quarters as well as challenging ones.

And we would encourage you not to extrapolate these results. We are constructive on the outlook of our business and believe we are well positioned to serve our clients across a range of market environments. While ongoing geopolitical and macroeconomic certainty could extend transaction time lines if it persists throughout the year, we believe the underlying conditions for a strong M&A environment remain, albeit with some bumps along the way. Turning to Talent. Since our last call, 3 senior managing directors have joined our investment banking practice in health care, equity capital markets and private capital advisory. All 3 committed in 2025 and were included in our year-end SMD count of 171. 3 additional SMDs have committed to join our franchise in key areas, including health care, industrials and private capital advisory this year.

In addition to our externally hired talent, we started the year with a class of 8 promoted investment banking SMDs. In total, we now have 182 SMDs in investment banking with more than 45 ramping, positioning us to drive sustained growth in activity over time. Let me — now let me turn to our businesses. In North America Strategic Advisory, we achieved a new quarterly record for revenue reflecting strong transaction announcements, trends carrying on from 2025 and strong activity levels across both corporates and financial sponsors. While exit activity among financial sponsors has been mixed recently, we continue to see increased engagement from a year ago. Our EMEA Strategic Advisory business delivered a record first quarter with strong activity across a number of sectors and geographies.

In the first quarter, we advised on a number of significant transactions globally, including Warner Bros. Discovery on its $110 billion sale to Paramount Skydance, Devon Energy on its $58 billion merger with Coterra Energy Jetro Restaurant Depot, on its sale to Sysco for $29 billion, Apellis on its sale to Biogen for approximately $5.6 billion and Beazley, on its recommended cash offer by Zurich Insurance Group for 8.2 billion pounds. Industry-wide activist campaigns declined in the first quarter. Although our strategic defense and shareholder advisory group continue to be busy. The liability management and restructuring business maintained robust activity levels in the quarter with continued strength in client dialogues in recent months. Our private capital advisory — our private capital markets and debt advisory team remained active, particularly with structured minority deals despite some lengthening in transaction time lines.

The private capital advisory business delivered a record first quarter New deal activity continues to be elevated, particularly on the LP side, while GP-led continuation funds remain active. We are also seeing strong momentum in newer product areas, including private credit and secondaries. The Private Funds Group also delivered a record first quarter despite a challenging environment for fundraising. Our Equity Capital Markets business had a solid quarter with revenues in line with the prior year. The business experienced strength across health care and energy as IPO and follow-on issuance trends are — were very healthy. In the quarter, we led — we were lead left bookrunner on Diamond Energy’s $2.2 billion follow-on for the third largest U.S. E&P follow-on offering ever.

Our Equities business delivered a record first quarter driven by healthy levels of volatility, which contributed to strong performance across our trading businesses. Our teams continue to provide differentiated insights and thought leadership to clients amid increased market volatility. And finally, our wealth management business had record first quarter revenues. While we saw some moderation in performance and AUM relative to the year-end, reflecting weaker markets, client engagement remains strong. Overall, our performance in the quarter highlights the progress we’ve made in scaling our platform and expanding our capabilities as we continue to support clients in an increasingly complex environment. We remain encouraged by the level of dialogue and activity we are seeing across our global franchise.

Looking ahead, we recognize the potential for continued uncertainty in the near term. we believe the underlying long-term drivers for growth remain intact and position us well to navigate the environment and capture opportunities over time. Let me now turn it over to Tim.

Timothy LaLonde: Thanks, John. As John mentioned, we are pleased with our strong performance in the first quarter. Before I get into the details, I want to highlight some factors that drove the outperformance including several large transactions that looked as if they might close in the fourth quarter and then slowed and closed in the first quarter of this year. In addition, there were other large transactions that were on track for a second quarter closing this year and then accelerated into the first quarter. Given this and the strong environment of the last several quarters, we experienced the greatest number of large transaction closings in any quarter in our history. Accordingly, we would expect our second quarter to be closer to what we experienced in last year’s second quarter, which was a record.

And in aggregate, we believe our first half will reflect continued strong performance and we remain enthusiastic about the outlook for our business. Now turning to the quarter. For the first quarter of 2026, net revenues, operating income and EPS on a GAAP basis were $1.4 billion, $331 million and $7.20 per share, respectively. My comments from here will focus on non-GAAP metrics which we believe are useful when 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 were approximately $1.4 billion, up 100% versus the first quarter of 2025 and up 8% sequentially, representing a new record quarter for the firm.

Adjusted operating income for the quarter was $354 million, up 205% year-over-year and adjusted earnings per share was $7.53 and up 116% versus the prior year period. Our adjusted operating margin for the quarter was 25.3%, up from 16.6% a year ago, an improvement of approximately 870 basis points, reflecting a combination of the strong environment and our high first quarter revenues. Turning to the businesses. Adjusted advisory fees were approximately $1.2 billion in the quarter, up 123% year-over-year, representing a record quarter. The growth was driven by a significant increase in large transaction closings as mentioned at the start of my remarks as well as a continued increase in productivity across our platform. Underwriting fees were $55 million, in line with the prior year period.

Commissions and related revenue was $63 million, up 14% year-over-year driven primarily by higher trading volumes. Adjusted asset management and administration fees were approximately $24 million, up 8% versus the prior year. Adjusted other revenue net was approximately $15 million, reflecting higher interest income, partially offset by losses on our DCCP hedge portfolio as equity markets modestly declined in the quarter. Turning to expenses. Our adjusted compensation ratio for the quarter was 64% down approximately 170 basis points from the first quarter of last year and down 20 basis points from the full year of 2025. The decline in our compensation ratio was driven by continued improvement in revenues, reflecting market share gains, partially offset by our continued investment in talent which is core to our growth strategy.

We are striving to make additional progress on our compensation ratio over time. balancing that with investment in our business and the competitive market environment. While compensation expense and our ratio depend on numerous factors, including some for which we have limited visibility at this point. As I mentioned last quarter, we expect compensation ratio improvement this year will likely be meaningfully more modest than what we achieved in each of the last 2 years. Our goals are constant to deliver excellence to our clients, and to create value for our shareholders over the medium to longer term. Adjusted non-compensation expenses were $150 million, up 21% year-over-year. The non-compensation ratio was 10.7%, an improvement of approximately 700 basis points versus the first quarter of 2025, driven by stronger revenues.

The increase in noncomp expenses year-over-year was primarily attributable to: first, higher technology and information services costs reflecting increased licensing costs and investment in development and technology, which are intended to yield future benefits. Second, higher professional fees, including certain costs related to higher client activity levels, some of which may be recoverable and a variety of other general corporate costs. And third, increased travel and related expenses driven by higher levels of client activity and engagement. In order to support our growth, business diversification and technology initiatives, we would expect to see a similar growth rate in noncomps in 2026, in line with what we experienced in the last couple of years.

Our adjusted tax rate for the quarter was 3% compared to a negative 39.7% a year ago. Our tax rate in the first quarter is primarily impacted by depreciation of the firm’s share price upon vesting of RSU grants above the original grant price, generating a substantial tax benefit. We anticipate that our effective tax rate in the remaining 3 quarters of this year will be more similar to what we have experienced in those quarters during prior years. Turning to our balance sheet. As of March 31, our cash and investment securities totaled nearly $2 billion. Similar to past years, our cash balance is down from year-end due to the payout of bonus compensation in March and share repurchases. In the quarter, we returned a total of $673 million of capital, which is a new quarterly record amount.

through the repurchase of 1.9 million shares and the payment of dividends. Consistent with historical practice, we bought back stock through net settlements of RSU vesting 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. It is important to note that as the 1.9 million shares we repurchased in the quarter, approximately 900,000 were through net settlements of vesting RSUs in early February, at an average price of approximately $345 per share, which has been our historic practice. The remaining approximate million shares were repurchased in the open market at an average price of approximately $302 per share. Altogether, the blended price per share was $322.

Separately, our Board declared a dividend of $0.89 per share, an increase of 6% from the prior dividend declared. Our first quarter adjusted diluted share count was 44.4 million shares, down over 500,000 shares from the fourth quarter, driven by share repurchases in the quarter partially offset by the vesting of RSUs. We remain committed to repurchasing shares to offset dilution from our bonus-related RSU brands. For the sixth year in a row, we have repurchased a number of shares greater than RSUs issued as part of our bonus process. We continue to remain — maintain a strong cash position and take into consideration our regulatory requirements. The current economic and business environment, cash needs for the implementation of our strategic initiatives, including hiring plans, and preserving financial flexibility.

We are pleased with our record performance in the first quarter. And while we continue to be mindful of the continued market uncertainty, we remain optimistic about our medium- and longer-term prospects. With that, we will now open the line for questions.

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Operator: [Operator Instructions] And our first question comes from Alex Bond with KBW.

Alexander Bond: I guess to start, it would be great to get your thoughts around what’s happening in the software space at the moment and how stress and lower valuations in the public market there. have impacted both deal activity and sentiment on the M&A side? And then also, it would be great to get your thoughts around what the potential opportunity could be there. On the longer term, on the restructuring side, if stress persist in that market? And any of that — if you view that as an opportunity just given the scale of your tech M&A practice. So yes, just any thoughts there would be helpful.

John Weinberg: Sure. On software, there’s definitely a slowdown, but it’s not a standstill. And it really does depend on the companies themselves. We’re seeing, on the one hand, there are some certain situations that we are working on that have actually slowed substantially. There are other situations that we’re in the middle of right now where we’re seeing real opportunity in discussions with respect to consolidation as well as other opportunities that people are looking for. As you know, software is very different in terms of how it really is applicable to the market that it’s in. And not everyone is going to be really responding the same way to what looks like a hesitation in the software markets. On the M&A side, we’re seeing — as I said, we’re seeing activity.

On the public offering side, we are in discussions, and we just have to see how that plays out. I think in many respects, and it won’t surprise you that I say this, we’re going to have to see some of this play out. In terms of restructuring, we are seeing a lot of activity really across the board, multiple sectors. We definitely are seeing software opportunities on the restructuring side. But our business is so diverse with so much opportunity, and we are really seeing an expansion. As you know, we had a record year last year, and we are on a very good pace this year. So I’d say that we’re seeing it, but it’s not really dominating the business or lots of other things. There’s a lot of liability management opportunities out there that we’re participating in.

We are doing a lot of business with corporates as well as sponsors. So from our perspective, the restructuring business is strong, but software is not dictating it, but there is software opportunities within it.

Operator: Our next question comes from Ryan Kenny with Morgan Stanley.

Ryan Kenny: I want to dig in a little bit on the Europe side. So you’ve been focusing on expanding into Europe and you do have the EU weighing overhauling the merger rules. So are you seeing any uptick in demand? Or is there a pause and kind of wait and see what happens with the merger rules and any impact from energy prices in Europe is viewed kind of as disproportionately impacting Europe versus U.S. So what are your thoughts on Europe right now?

John Weinberg: Well, as you saw or as I said, our European business had a record first quarter. And as you know, a big part of our experience in Europe right now is that we’ve been in a real build mode, and we’ve added substantial people and assets throughout Europe. We feel really good about those people, and we feel like we’ve really been able to build a much more diverse and deep business. So we’re seeing a lot of activity. And our dialogues are up. And I think because we have such high-quality people, we’re in a lot of the boardrooms and really having the opportunity to really have really consequential conversations. So from our perspective, what we’re seeing and maybe this is limited more to us because we’re growing it so much, but we’re seeing a lot of activity, and we’re in the middle of some really consequential strategic discussions.

Do I think that Europe will slow down because of the examination of merger rules? I really don’t right now until people really decide that they don’t think they’re going to be able to get things done. And that, from our experience is not the case at this time.

Operator: Our next question comes from Jim Mitchell with Seaport Global Securities.

James Mitchell: John, maybe just a follow-up question on financial sponsors, I guess, particularly as it relates to the middle market, which has been kind of the slowest in rebounding. We understand the AI and software valuation impact. But outside of that, it still seems sluggish. So can you discuss how much of a pause maybe the IR wars caused and other factors still holding sponsors back and how you see activity levels shaping up for the remainder of the year, just particularly in the middle market side.

John Weinberg: Well, I think you nailed it, which is the larger large-cap market in financial sponsors where they have big high-quality assets, there is — we’re still in the art of the possible. There’s a lot of activity there when there’s a really good big asset. There is a lot of activity and a lot of interest. Middle market has slowed. There’s no question. It’s a slowdown. It’s not a standstill. There are business — there are transactions getting done. Our experience is that we are seeing a real pickup in our opportunity to pitch. Our pitch rate is higher now than it was this time last year. So we’re seeing a lot more in us. Some of that, I think, is that we’ve really built out our sponsor business. And as you know, our — one of our big objectives was to take what we thought were several really powerful sponsor-related franchises and bring them together to really have a coherent offering to financial sponsors generally.

And we actually see the fruits of that and that we’re seeing a lot more. So our pitch rate is up — actually, our win rate is up. And so we’re feeling momentum in that business. Having said that, your original premise is what we are feeling and what I’ve been seeing, which is smaller deals, middle market things are really slowed. And it’s not to say they won’t happen but I think that it’s not nearly as buoyant as we hoped it would be in the beginning of the year.

Operator: Our next question comes from Daniel Cocchiara with Bank of America.

Daniel Cocchiara: In your prepared remarks, you mentioned that some deals were accelerated from 2Q and to the end of 1Q, just given added uncertainties within the market, I would think that would be more likely to see those conversations extended rather than shorten. So I would love to hear maybe just like some of the nature of those conversations in terms of why they may accelerate them? And is this a trend that’s continued into the second quarter?

Timothy LaLonde: Yes. Thanks for the question, Daniel. Look, Really, I would say don’t read too much into that, the acceleration. I mean at any one time, we’re working on a very large number of transactions and each 1 has its own story. And this — there is some element of randomness and lumpiness to our business. It’s always been that way. And it just so happened that this quarter, there were a couple of them that got on a little faster track and went a little more smoothly than anticipated, and they happen to have significant fees attached to them. And that’s all. This is — there’s not some broader trend at play here.

Daniel Cocchiara: And I guess just kind of one follow-up. Like in a saturated market with so many different players spanning from the pure-play investment banks to bulge brackets, what exactly does Evercore do to differentiate themselves? And what is it about your franchise that really makes want to — make clients want to work with you over the competition on these larger-scale transactions?

John Weinberg: Well, I think what we hopefully are able to communicate to clients is that we understand their business, that we put their interests first and that we are highly capable. What we’ve tried to build as a firm that has extraordinarily capable and competent people who really know the business and know their sectors. But at the same time, are serving the clients in every respect and that we’ve been able to engender confidence in both management teams and boards. And that’s really what we aspire to do. We’ve hired some really high-quality people. I think the people of Evercore in today’s world are top-notch and A+ level, and that’s what we really have worked really hard to do. And we hope we have given them a culture, which has them working together so that we have everybody pulling on the same or in the same direction.

And so I’m hoping that really what really is our competitive edge is we’re able to deliver better results for our clients in an ethical and client-oriented fashion. And that’s what we — that’s really what we hope our clients see and hopefully, why they choose us.

Operator: Our next question comes from Brendan O’Brien with Wolfe Research.

Brendan O’Brien: I just want to drill down on the dynamics in the PCA business. On the one hand, volatility and valuation concerns could impact price discovery and potentially weigh on activity. But on the other, you could also argue that the slower pace of exits could prove to be a tailwind for the business. So just wanted to get a sense as to what you’re seeing and hearing from clients. And also if you could potentially just provide some color on what’s driving the relative strength in LP-leds relative to GP-led?

John Weinberg: Well, as I think we said in the call, PCA had a record year last year and has had a record first quarter this year so far. So there’s real momentum to the business. We have a pretty equal balance between LP and GP were quite balanced. I think the dynamics of the business is that it continues to be able to present clients with real alternatives in terms of how they want to get liquidity to move assets to an ownership position that they’re comfortable with and really allows people the flexibility beyond the pure merger or IPO market to really monetize and to actually assign ownership. And so what we’re seeing is there is just a continued interest in the flexibility that PCA is able to offer. In addition, there are lots of different new products that our PCA Group is undertaking.

They’re very creative in how they think about the market. And as secondaries grow and becomes more powerful, they are doing better and better. As you know, they have a very high market position, and they are really, I think, presenting to the market highest quality advice. And so really, what we’re seeing is that this is a very powerful growth engine for our firm. And I think we feel really comfortable with the way they’re defining their market and how they’re addressing that market.

Operator: Our next question comes from Nathan Stein with Deutsche Bank.

Nathan Stein: Was hoping you could break down the advisory revenue split across M&A and non-M&A businesses broadly? And how do you expect that to trend from here?

Timothy LaLonde: Yes, sure. I think what we’ve seen in the past as it’s been about kind of 45-ish percent. I would say it’s still over 40%. And by the way, the non-M&A businesses are doing great. We’re really pleased with the strength of their performance, the backlog, the outlook. And having said that, we may be at a point in the cycle where M&A is strengthening a bit relative to some of the other businesses. And so it’s possible that as we move forward, you could see that statistic come down a bit due to the strength of the M&A market. But those businesses continue to perform well, and we’re really pleased with both their performance and their outlook.

John Weinberg: Yes. And what you probably have seen is that we continue to invest in our M&A business, which clearly is a very important part of what we offer clients. But we’ve also been allocating capital and investing in non-M&A businesses to diversify what we’re able to provide to clients and really what we’re able to deliver for shareholders, which is some diversification. We are not a balance sheet bank, which all of you know. So there are certain things we’re not going to be in. But everything that is not really balance sheet driven, we’re thinking very aggressively about how do we participate and can we really create a position where we have some competitive edge. I think we really feel good about the people who come to Evercore and the people we hire. And therefore, I think we have real opportunity across the board.

Operator: [Operator Instructions] We’ll go next to Brennan Hawken with BMO Capital Markets.

Brennan Hawken: I wanted to drill into the lesser comp leverage expected this year versus recent years. So recognizing it’s probably a question poll, you guys also said that you don’t expect all that much revenue growth year-over-year in the second quarter. So the sort of strong note we’re starting on here is not indicative. But could you talk about the different factors and how much of a factor it is maybe tougher comps and therefore slowing revenue growth versus the continued elevated market — competitive market for talent, both acquisition and retention out there.

Timothy LaLonde: Yes. Sure, Brennan, I’m happy to answer that. The first thing I would do is point out — you did characterize my comments correctly. But I’d point out that in the last couple of years, I would say we made by my measure, pretty strong improvement, meaning we went from 67.6% down to 65.7%. So that was 190 basis points. And then as we move from ’24 to ’25, we went from 65.7% to 64.2%. That’s another 150. And so that’s 340 basis points, then we reduced another 20 basis points this quarter. So that’s 360 basis points in just a little over 2 years, which at least by my measure, is pretty strong improvement. And we’re striving to continue to make improvement and we’re hopeful that we can and we will I think what I intended to convey is that it just won’t be the same magnitude, we don’t think, as we saw in the last couple of years because it’s just hard to keep it going at that rate.

And then you raised the question is — whether my comments based on outlook for revenue or and/or outlook for the continued competitiveness in the environment for hiring and retention. And I think it’s the — on the revenue, as you heard in John’s comments, I think we remain optimistic and enthusiastic about our outlook. The backlogs, pipelines continue to look good. activity levels remain high. And we’re hopeful that this recovery has — and our performance in it has some real legs to it. And so I wouldn’t interpret anything I’ve said as a reflection of our views on the revenue outlook. It is the case, I think that competition remains high for the best talent. We’re, of course, committed to obtaining the best talent. And as you’ve seen these last couple of years and into the early part of this year, we’ve continued to be pretty proactive.

And augmenting our partner ranks and really strengthening that in a way that looks like it’s earning positive returns for us, and we’re continuing to attempt to do that. So I think I think the key takeaways here is we are striving to make continued progress, although it might not be the same magnitude we’ve seen in the last couple of years, where we remain optimistic about the outlook. And — but yes, the market for talent remains competitive.

Brendan O’Brien: Got it. I know it’s one question, I can re-queue for sure, but you mind if I ask a follow-up? With operator just on hold, so I’m guessing we’re towards the end here.

Timothy LaLonde: Sure. Please.

Brennan Hawken: Right. So it’s sort of a related — it’s actually a real follow-up, Tim, on that point, like you guys — and clearly, the revenue rate, your productivity numbers have been great. So the hiring is very effective, like this is not a criticism. It’s just a question of like mocking facts. Is sort of the competition for Talent, has it like scaled to a level? And is it that the talent you guys are hiring has also scaled to a level where maybe a return to the sub-60% comp ratio is going to be more challenging. And therefore, like you guys are driving the business and you want to make sure that you’re not compromising on standards and whatnot. So that’s just sort of like reality and a lot of nature now. Or is that the way we should think about it?

Timothy LaLonde: Yes. So Brennan, thanks again for the follow-up question. I think it’s interesting as part of — as you can imagine, we’re always doing internal exercises that analyze our results and our returns and where we can do better and so forth. And I’ve just been through some exercises recently to look at the returns on our partner hiring. And I would say that the NPVs and the IRRs have been pretty good. And what we’re focused on, first and foremost, is serving our clients with excellence. But secondarily, building value for the firm. And I’m wanting to be careful that when we’re doing what I would call positive NPV partner hiring and partner hiring that has pretty good IRRs associated with it. I don’t suboptimize by focusing solely on the comp ratio and thereby foregoing certain hires or additions that are clearly adding value.

And so that would be the first point. Look — and on the sub-60% what I’ve been, I think, saying hopefully, pretty consistently over these last quarters and even years is we’re focused on making improvement next quarter and the quarter after and the quarter after that. And I — we’re still a ways from sub-60. And so I’m just trying to do better than we did last year. And then at the end of next year, you can ask me how much improvement I think I can make in ’27. But for now, we’re just trying to improve from where we are.

John Weinberg: Let me make one comment about the marketplace for talent. Your presumption, which is that it’s more competitive and it’s hard to get people is absolutely true. The ante has been raised. Spending virtually every day in the market talking about it, you — I’m sure you know that a big piece of our strategy is bringing in A+ players. And an A+ player will without doubt, create value for the firm. And so we’re spending a lot of time on really bringing the high-quality people. And I think what’s happening for our firm is that because we have really been able to create momentum for our franchise that we are seeing more and more highly talented people who actually are interested in coming to us because we have a firm, I think that people really think has momentum and really is going to provide them an opportunity to work with other talented people and to provide even better service for their clients.

And so I think that as it’s getting more competitive as difficult as it is, I think it’s not easier for us, but I think that we are actually finding real success with high-quality people continuing even as the market gets more competitive.

Brennan Hawken: Yes. That’s clear in the numbers, too.

Operator: Our next question comes from James Yaro with Goldman Sachs.

James Yaro: So 2025 was a heavily large strategic M&A driven market. I’d just love to get your thoughts on a few things as it relates to that particular part of the market. To what degree do you believe the large strategic deals could actually accelerate from here, which is already a fairly strong base. Maybe within the answer, could you speak to the ingredients that you hear in the boardroom that are driving a large cap activity? And could you also comment on considerations around the antitrust backdrop in the U.S., perhaps ahead of and after the U.S. midterms?

John Weinberg: Okay. Well, with respect to the M&A market generally and large cap, there is no question that large cap has been a major part of the market probably for the last 18 months or so, maybe even more. And part of that is that companies and managements are seeing that it is more and more acceptable and actually welcomed by shareholders. As you know, throughout the time that certainly I’ve been on Wall Street, there are times when the market is really excited about big strategic deals and there are other times when the market really is looking for something else. And right now, amidst uncertainty and some instability, big deals are actually welcomed. And there is an opportunity in the current regulatory environment to get deals done, whereas there have been other regulatory environments that are not as friendly to larger deals.

And I think there is a perception that if you’re going to do a larger deal and a management team and a Board, you better put it on the agenda and be looking at it and make a decision if you want to do it because this is a good time. Not every deal is going to be waved in but there is a willingness to consider these on the regulatory side that I think is quite promising and positive. And so we see this continuing. We see that there is going to continue to be strength. Some of the factors — you asked what the factors are. Well, clearly, there are some factors that really exist that really have existed before, but they’re quite strong right now. Number one, CEO confidence is very sound and quite high. Number two, the economy despite the fact that there is a dislocation and there is some uncertainty geopolitically, the economy is quite resilient.

Number three, the financing markets are not just open, but they’re really abundant. And so there’s real financing opportunity. And so there is a real can-do attitude. And I think finally, I think Boards are very comfortable that scale is good right now for lots of different reasons whether it has to do with how do you deal with AI? How do you deal with the world around you? How are you thinking about your supply chains and things. Scale is actually looked upon as a positive, not a negative. And so that’s another reason. So I think all those factors are pointing to the fact that not that everybody is going to do a big deal, but there’s a lot of very large companies that are thinking about deals, and we’re seeing those in the boardrooms that we’re in.

Operator: Our next question comes from Mike Brown with UBS.

Michael Brown: So cash continues to really run at high levels here and the buyback activity was accelerated in the quarter. How are you thinking about maybe that cash level? And can you just give us an update on capital allocation here as you think about share buybacks? And then is it possible that we could see more inorganic M&A here? You’ve got some quite good success here with Robey Warshaw. Could we see more deals in the future?

Timothy LaLonde: Yes, sure. So Look, we’ve always been committed to returning capital to our shareholders. And I think if you look back, we’re pretty proud of our track record, which includes consecutive years of dividend increases, 6 consecutive years of repurchasing shares at least equivalent to our RSU issuance as part of the bonus process and, in fact, in many years, significantly more. And so we’re very cognizant of the return of capital to shareholders and committed to it. And then with respect to acquisitions, look, we’re always seeking to create value, whether it’s through developing our people internally, hiring people externally. We certainly evaluate situations from time to time. But I would say we’ve not been a serial acquirer, and we’re highly selective.

John Weinberg: Yes. And what I’d say about the strategic acquisition side is Robi Warshaw was a unique opportunity for us. and we were really excited to do that. We’re not looking to use our capital by doing acquisitions. In fact, to do an acquisition is a very high bar for us. So I would just say, if you’re thinking about how we’re going to use our capital, it’s going to be in terms of we’re going to return capital. We’re going to be looking at really high-quality talent to bring in and really drive our base businesses. We’re going to look at new businesses and talent that can help us drive those and build those out. And I think probably last on the agenda is we are looking at the landscape and we’re always open to thinking about something strategically.

But you can — I think what I’d like to make sure you understand is it’s not a priority for us. Where we do it if something really came along that was really exciting for our franchise, but I think it’s a very high bar.

Operator: Our next question comes from Devin Ryan with Citizens Bank.

Unknown Analyst: Neil Eloff on here for Devin. Our question is on AI and the impact of the business model. There have been a lot of headlines suggesting that AI will eventually lead to some decompression. So would love to get your thoughts on the narrative and maybe that protects the sector? And then also if you guys could quickly touch on like AI implementation at the firm and what productivity gains you’re already seeing?

John Weinberg: Why don’t I start and let Tim carry it through in terms of implementation of the firm. We think that AI provides tremendous opportunity. And we’re spending a lot of time understanding both how it impacts us internally as well as how it’s going to impact businesses in the longer term. There is no question that there is an investment theme that having AI as a part of business, there are going to be certain businesses that are going to do a lot better because they have AI and they’re doing — using AI. There are other businesses, they’re going to feel impaired by what AI can do to basically somehow undermine what they actually do and what they bring to the market. And both of those possibilities create value to — if you’re looking at the strategic side and the M&A side.

So we think that we have to be very cognizant of what’s happening in the market, the impact that AI has on different companies and really how that’s going to change the competitive landscape sector by sector, business by business. For us internally, I’ll let Tim answer it, but we’re spending a lot of time on it.

Timothy LaLonde: Yes, sure. Look, echo John’s comments about the landscape, which is we’re excited about AI in 2 ways. And one is what John just described because we think it may change the very structure of certain industries or types of businesses. And that type of structural change is good for a firm like ours, which advises on situations like that. So we do think that over time, AI with respect to our market will create opportunities, and we’re, of course, in the middle of that and doing what we can to assist our clients in evaluating all of that. And then internally, we’re also excited. We — by the way, in the past year, we have a new Chief Information Officer who has joined us. And then we’ve also continued to augment that team at the top levels.

And it’s an area in which we’re investing. And we think that in the shorter run, what one is likely to see is productivity enhancements, and those could be both with our banking team and possibly with the way we run our business inside of corporate. And then in the longer term, I think you could see opportunities for continued deal efficiencies, and I’m talking about processing now and potentially idea generation. And so we’re working hard at this, as I’m sure many firms are. And we think there’s some real opportunity. But I think I’ll leave it at that and…

Operator: And we’ll take a follow-up from Alex Bond with KBW.

Alexander Bond: Just wanted to ask around the ECM outlook for the remainder of the year. It does seem like there’s a decent amount of pre-IPO activity at the moment, especially with some of the larger deals rumored to launch later this year. So could you just share how you’re thinking about the ECM opportunity through year-end? And also maybe help us size up the potential there maybe relative to last year’s full year results.

John Weinberg: Well, we see that the ECM business looks quite healthy. There’s some very high-quality large companies that would like to get to market. And we don’t see any reason why that’s not going to happen. As you all know, there — if geopolitical gets really difficult, that could interrupt some of the equity market opportunities. But we don’t really see that right now. And we think that it’s very possible that this could sustain itself. We do a lot in the biotech side, and we see real opportunities there throughout the year. So I think our point of view is that equities is going to continue to be strong, that the ECM opportunities will actually play out quite nicely and that some of these big deals will be successful and they will fuel the market and create excitement. So we think that for the most part, unless there’s a real interruption we could easily see a healthy ECM market that compares quite well to last year.

Operator: And our final question is a follow-up from James Yaro with Goldman Sachs.

James Yaro: I just want to clarify one of your comments. And then thinking about the run rate further afield. So I just want to confirm that you expect the second quarter revenues this year to be closer to 2Q ’25 levels. And then is that in part because of your comments around certain larger deals closing faster in the first quarter. So then if I sort of run that out further, that would mean that maybe a more normal cadence of deal closings not impacted by deals closing faster would be sort of the back half of the year? Is that a fair way to think about it?

Timothy LaLonde: Yes. I think the first part of your question, I think you characterized things appropriately. We did talk about some deals that look like they would close in 4Q being a bit prolonged in closing in 1Q and then other deals that were significant that look like they were going to close in 2Q accelerating and therefore, ended up with a quite large 1Q. And then we’re — we would encourage people to look at our business and evaluate it across a multi-quarter time frame. And that’s kind of always — our business, the nature of our business has been that it’s a little bit lumpy, and that’s been true for years. And so we’re encouraging a multi-quarter outlook. And then secondly, I think — and you heard it quite strongly from John, and I have exactly the same view, which is we think business is good.

We are coming off a record year last year, a record quarter this quarter. Activity levels remained strong across essentially all of our businesses. And so we’re enthusiastic about the outlook. And that’s probably, I think, if you take all of those comments in totality, that’s a fair representation of what we think.

John Weinberg: Yes, I agree with that. And one thing that I’m sure that you’re aware of and seeing as we are, the fee environment, there are lots of — there are more large fees and big deals that are in and around than really I can remember. And I think what that does is it does create lumpiness. So I don’t think that’s going to be something that we’re going to be rid of in the near future, and maybe I hope we don’t. I think that we are seeing really high-quality big things inside the firm right now. We anticipate that some of those will not happen. But we believe that some will happen. And I think that there is a — it’s a very healthy market right now. And I think we feel really good about the fact that we’re participating in a very tangible way.

How that translates into quarter by quarter by quarter, I think we’ve always said it’s going to actually play out and there will be lumpiness. And — but I’m sure that you’re used to that, and you’ve seen it and maybe there’s even more lumpiness if the fees are big.

Operator: Thank you. This does conclude today’s question-and-answer session as well as the Evercore First Quarter 2026 Earnings Conference Call. You may now disconnect.

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