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Presentation

Moelis & Company misses on earnings expectations. Reported EPS is $0.5 EPS, expectations were $0.59.

Operator: Good afternoon, and welcome to the Moelis & Company First Quarter 2026 Earnings Conference Call. To begin, I’ll turn the call over to Mr. Matt Tsukroff.

Matthew Tsukroff: Good afternoon, and thank you for joining us for Moelis & Company’s First Quarter 2026 Financial Results Conference Call. On the phone today are Navid Mahmoodzadegan, CEO and Co-Founder; and Chris Callesano, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements that are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Moelis & Company’s filings with the SEC. Actual results could differ materially from those currently anticipated. Firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures.

We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods to better understand our operating results. The reconciliation of these adjusted financial measures with developing GAAP financial information and other information required by Reg G is provided in the firm’s earnings release, which can be found on our Investor Relations website at investors.moelis.com. I will now turn the call over to Navid.

Navid Mahmoodzadegan: Thank you, Matt. It’s great to be with you all this afternoon. We have had an active start to the year with record first quarter revenues of $320 million, record first quarter levels of announced transaction activity, strong momentum in senior hiring and continued execution of our strategic growth priorities. Since our last earnings call, we advised that a number of notable M&A transactions, including Clear Channel Outdoors $6.2 billion sale to Mubadala Capital and TWG Global, Tri Pointe Homes $4.5 billion sale to Sumitomo Forestry and Kennedy Wilson’s $9.5 billion take private. Beyond M&A, we advised TowerBrook on its $1.2 billion continuation vehicle for EisnerAmper, and most recently, we acted as an active book runner on X-energy’s $1.2 billion IPO.

We entered 2026 with high levels of new business origination and a constructive outlook. While the war in the Middle East, disruptions in private credit and the impact of AI on certain sectors, have created some near-term headwinds in parts of the transactional environment, the same forces create new opportunities for our firm. We remain confident about the trajectory of our business, supported by our pipeline near all-time highs and the fundamental drivers of transaction activity firmly in place. Let me briefly take you through an overview of what we’re seeing in each of our major product areas. In M&A, corporates continue to seek scale to strengthen their strategic positioning especially amid rapid technological disruption. This dynamic is most pronounced in large-cap transactions, which continue to drive M&A volumes and is further supported by a more accommodative U.S. regulatory backdrop.

Dislocation in various parts of the public equity markets is also driving take-private transactions, an area where our Board and special committee advisory practice is strong. In addition, our business continues to benefit from financial sponsors need to monetize an extensive backlog of investments. While the market is not yet seeing a broad-based increase in sponsor exit activity, our M&A revenues from sponsors grew double digits during the quarter. In private capital advisory, the market for GP-led secondaries continues to hit record levels, driven by sustained demand for liquidity solutions, increased adoption of continuation vehicles and a growing base of institutional investors seeking exposure to seasoned assets with more predictable return profiles.

Our thesis for PCA is playing out as expected with the team executing a number of live mandates and rapidly building a significant pipeline. With the recent addition of a Managing Director focused on private credit secondaries and another joining later this year, we will have 7 senior bankers dedicated to GP-led secondaries further strengthening our position in this important market for our sponsor clients. Turning to capital markets. Demand for growth capital from high-quality issuers is driving activity in our business, particularly in late-stage growth and pre-IPO issuance for AI, digital infrastructure and aerospace and defense oriented business models, just to name a few. IPO issuance is also strong with our team involved in a number of transactions coming to market in the near-term.

In addition, technology disruption is creating a more dynamic financing environment and accelerating opportunities for hybrid and structured solutions. We are further investing to meet the opportunities we see in capital markets. We’ve recently hired 2 managing directors in the space, including a Managing Director focused on securitization will help develop this important growth opportunity for the firm. And a Managing Director that complements our already strong private credit and debt capital markets capabilities. In capital structure advisory, liability management continues to be the most active segment of the market. increased lender selectivity is widening the gap between companies that can readily refinance and those requiring more complex solutions, which we expect will lead to more traditional restructurings over time.

Our CSA pipeline is meaningfully above last year’s levels and ongoing technological disruption and volatility in commodity prices are creating new opportunities. Additionally, our growing creditor coverage is diversifying our CSA business, contributing to a larger share of revenue and positioning us well with the creditor community. Turning to talent. We have hired 8 MDs year-to-date, 2 who have already joined and 6 who will join us over the course of the year. In addition, the PCA and Capital Markets hires previously mentioned, we’ve also invested across industries where we see attractive long-term opportunities. This includes recent Managing Director hires in key sectors, including energy and health care IT. In Europe, we’ve hired 2 managing directors to enhance our expertise in chemicals and deepen our sponsor coverage capabilities.

We recently relocated to a new and expanded office in London to support our talent, our clients and our continued growth in the region. In general, we remain intensely focused on attracting the best and brightest talent and are excited about our high level of engagement and dialogue with world-class candidates. With respect to capital return during the quarter, we repurchased 1.9 million shares including 895,000 shares in the open market while preserving the strength of our balance sheet with substantial cash and no debt. Finally, we are actively testing and deploying AI tools across our business with broad adoption from our teams. We see AI as a clear productivity lever supporting our bankers and providing the best possible advice to clients and driving greater efficiencies throughout our organization.

With a strong pipeline, including high levels of announced transaction activity and the most comprehensive capabilities at any point in our history, we are well positioned to support our clients and deliver long-term value for our shareholders. With that, I’ll pass the call to Chris to review our financial results in more detail.

Christopher Callesano: Thanks, Navid. Good afternoon, everyone. As Navid mentioned, we reported record first quarter revenues of $320 million, an increase of 4% versus the prior year period. Our revenue growth was driven by year-over-year increases in M&A and private capital advisory, partially offset by decline in capital structure advisory capital markets. Our business mix for the first quarter was approximately 2/3 M&A and 1/3 non-M&A. Turning to expenses. Our first quarter adjusted compensation expense ratio was 65.8%, down from 69% in the first quarter of 2025 and in line with our full year 2025 adjusted compensation ratio. As the year progresses, our compensation ratio will depend on the trajectory of revenues and the pace and magnitude of hiring throughout the year.

Adjusted noncompensation expenses were $67 million for the first quarter, resulting in a 21% noncompensation expense ratio. Main drivers of the expense growth were higher deal-related costs and increased communication and technology expenses. As previously communicated, we currently anticipate our full year 2026 noncompensation expenses grow at a similar rate to 2025 due to our ongoing investments in technology, including AI, increased deal-related travel expenses and growth in headcount. Our adjusted pretax margin was 15% for the first quarter of 2026 as compared to 14% in the prior year period. Regarding taxes, our underlying corporate tax rate was 29.3% for the quarter before the discrete tax benefit related to the vesting of equity. Turning to capital allocation.

We continue to maintain a strong balance sheet ending the quarter with $354 million of cash and no debt, allowing us to continue investing in the business while also returning meaningful capital to shareholders. Board declared a regular quarterly dividend of $0.65 per share and as Navid said, we repurchased 1.9 million shares during the quarter at an average price of $61.40 per share, including 1 million shares to settle employee tax obligations and 895,000 shares repurchased in the open market. Through the combination of net settlement and open market repurchases, we have offset more than half of our annual equity incentive compensation issuance. Including the dividend declared today, we have returned approximately $171 million of capital to shareholders with respect to the first quarter.

With that, we are happy to take your questions.

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Operator: [Operator Instructions] Your first question comes from the line of Devin Ryan with Citizens Bank.

Devin Ryan: I want to start with a question, kind of big picture just on the software sector. Obviously, you guys have made some investments there and have scaled nicely. Clearly, kind of one area that’s getting caught up in some of this AI dislocation. But curious kind of what you’re seeing kind of play out there relative to maybe what people were expecting heading into the year? And I know it’s not just one category. There’s a lot of kind of subsectors to it. But kind of where do you see activity there evolving do we see forced consolidation later this year? Are there take private to public companies? Maybe that’s a catalyst. Just would love to get some sense of how you see this mapping out and then how important that is for kind of the broader M&A recovery, just given that it is a kind of important subsector?

Navid Mahmoodzadegan: Sure. Thanks for the question, Devin. So you’re right, we have a great, great team in technology at the firm and within our technology group, software is a really important set of subsectors within that group. So the events of this quarter, essentially what you’ve seen is a repricing of software stocks in the public markets due to fears over what AI is going to do to a lot of these historically very sticky business models. That’s caused a revaluation in the public markets, that clearly leads over into the private markets, both in terms of the private M&A market and lenders’ desire to finance these types of companies. And so it’s definitely harder in the near-term to navigate traditional software M&A at the same rate as you’ve seen over the last few years.

I think if you take a step back, I think we’re likely to see because right now, the market is putting sort of a broad brush on all of these SaaS business models. And I think what’s likely to happen, if you sort of simplistically put all of these companies into 3 buckets, I think, in 1 bucket and time will tell. This will play out over a period of time. There will be companies that — where the AI threat is misperceived these companies will adapt and use AI to their advantage and prosper and grow through some of this disruption. And I think those companies, you’ll see active again in the M&A marketplace either as consolidators or as candidates for sale to other strategic or private equity firms. On the other end, I do think there’s a category of company that the business models are going to be significantly disrupted.

And if those companies carry a lot of leverage, either because they’re subject of a historical LBO, we’re owned by a sponsor, et cetera. I do think you’re going to likely see liability management and other actions to deal with those capital structures, which are not sustainable going forward given the disruption from AI. And I think there’s a category in the middle of companies where it’s just going to take some time to figure out what AI means for those businesses and those companies will need time and the owners of those companies will need time to adapt to kind of the changing landscape. And I think for those companies, things like bespoke capital hybrid solutions, things that delever the capital structures and give the owners of those businesses more time or continuation vehicles.

You’ll notice that in each of these different buckets, we have great product expertise to service those companies to leverage the deep relationships our technology team has with companies and with sponsors and with their deep expertise and knowledge in these spaces. And so I think we’re really well positioned as the market evolves and makes sense of AI disruption to these different categories of software companies I think we’re really well positioned to be able to provide great service to our clients to help them navigate that.

Devin Ryan: That’s terrific color. And then just as my follow-up, I heard the comments on sponsor engagement in the prepared remarks, but just curious kind of what you think bring sponsors back. I mean, this is supposed to be the year of the mid-market sponsor exit first few months, obviously, not very conducive. But do you still see that as likely if kind of the macro conditions settle down? Or what do you think needs to change to just unlock that reacceleration in sponsor activity?

Navid Mahmoodzadegan: Look, I can tell you, Devin, there is significant desire and need for these sponsors to transact with these portfolio companies. So the demand is there. It’s really a question of lining up that demand with market conditions that enable these transactions to happen. So geopolitical uncertainty, a widening out of spreads in certain sectors because some of the dynamics that are playing out in private credit. Those things in the near-term aren’t conducive to a full-scale reopening of the full breadth of the middle market M&A business, which is where a lot of the sponsor activity is. I think it’s coming. I think as we kind of hopefully get through the geopolitical uncertainty as some of the headlines around private credit subside.

I do think sponsors are going to take advantage of the need to transact with these portfolio companies. So you’re right, it hasn’t happened quite yet. And our sponsor business is growing through that, so I’m really proud of that. But I do think it’s going to take a little bit more time to see that full breadth of the market that we all anticipate will appear at some point, hopefully soon.

Operator: Your next question comes from the line of Alex Bond with KBW.

Alexander Bond: I want to start on the restructuring side. You noted in the release that the revenues declined there year-over-year in the quarter. A, can you just help us think about the magnitude of the decline there in the quarter? And then also if you could help put some context around the results here. The commentary from some of your peers has continued to be relatively upbeat and you noted the pipeline here is up meaningfully year-over-year. So maybe if you could just speak to the drivers behind the year-over-year decline and maybe it’s just timing. But any other color there would be helpful. And then additionally, any color around the pipeline would also be helpful.

Navid Mahmoodzadegan: Yes. Look, we’re not going to get into specific details of the quarter. But look, it’s really just timing. The transactions — the revenues in the quarter are a function of which transactions closed in the quarter. And so there’s always going to be a little bit of variability depending upon the quarter and the business segment. But as I said, we — our team is doing a great job. They’re working on a number of really important and significant mandates, got a lot of momentum. Their pipelines are up in a really positive way. And I do think some of the same volatility that we’ve been talking about in terms of raw material prices, input prices given the geopolitical uncertainty, tech disruption, AI disruption, some of those same themes that are potentially causing some near-term headwinds on the M&A side are creating opportunities for liability management and other things that our CSA teams get involved with.

So I feel really good about the trajectory of that business and feel really great about our team.

Alexander Bond: Okay. Great. And then maybe just on the PCA side, you noted the stronger year-over-year revenues there, which makes sense given the build-out of the platform. But maybe if you could just help us think about the contribution here in the quarter, maybe how that progressed sequentially. And then also, any updated thoughts around where you sit in the competitive landscape and progress in terms of market share gains to date, that would be helpful as well.

Navid Mahmoodzadegan: Yes. Look, we’re building that team aggressively, as I mentioned. We’ll have here soon 7 managing director — senior folks managing directors, building that business for us. We love the team. They’re doing a great job getting great reviews from clients who they’re going to see, and they’re getting hired on and building up their pipeline pretty significantly. So it’s still early days. We’re starting to see kind of the fruits of that early start-up phase in that business. But I think I said in the prepared remarks, our thesis is spot on. The client — the sponsor clients that we have these deep relationships with want us to be in that business. They want to support us and hire us. They want us to be involved with their portfolio companies.

And now that we’ve been able to put in place a world-class team in a really important product, both on the traditional GP-led secondary side and with private credit secondaries, both of those are growth areas and I suspect there’ll be growth areas for a while, and we’ve got a great team there that’s out there winning mandates and executing mandates. So I feel really good about that.

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

Ryan Kenny: So just to follow up on that last question on private capital advisory. So it sounds like it’s starting to contribute to revenues, which is great to hear. Is it accretive yet to pretax income, so revenues less expenses? And is that something that can happen this year?

Navid Mahmoodzadegan: I don’t know. Chris, do you want to take that, Chris? I don’t know.

Christopher Callesano: Yes. I mean it’s hard to tell during the quarter, right? But I would say this year, I think there’s sure it could be accretive. Like Navid said, it’s certainly growing. It’s part of our non-M&A, right? You mentioned that 2/3 of our business is M&A, 1/3 is non-M&A. That’s split between capital market, CSA and now with PCA, that’s a growing component of it.

Ryan Kenny: And then as a follow-up on private credit. So it came up a couple of times as one of the near-term headwinds. I’m wondering, are you seeing anything under the hood there? Or is this just headline specific with perceived risk impacting activity?

Christopher Callesano: Yes. I don’t think there’s systemic risk in the private credit market and a lot of the headlines you’re seeing around direct lending. Direct lending is a small part of the overall private credit complex. And most of the issues right now are around direct lending into software and concentration around some of those portfolios. I do think when things like the sort of revaluation of software companies happens, lenders, direct lenders, folks in the private credit industry tend to get a little more selective and tend to ask themselves the question of, right, what’s next? Are the risks that I haven’t seen in other parts of the marketplace. Now put that aside, there’s all sorts of other parts of the marketplace, many, many sectors that are really insulated from some of this technology disruption and/or our beneficiaries of the technology disruption.

And so the direct lenders are actively lending — continue to actively lend into all of those different bases and sectors at a very rapid pace. But I do think it does cause folks to say, are there other spaces where I didn’t see risk that — and we’re at mispriced risk essentially. And so — and causes them to be a little bit more cautious lending in some of those areas. And so those are — that’s a flavor for some of the headwinds that I was talking.

Operator: Your next question comes from the line of Ken Worthington with JPMorgan Chase.

Kenneth Worthington: As we think about the business environment for M&A and the puts and takes that you highlighted at the beginning of the call, how does the U.S. compare with Europe and with Asia as we think about the outlook for M&A activity for the next few quarters?

Navid Mahmoodzadegan: So I think the U.S. is still ahead of Europe. If you look at the announcements this quarter in Europe, there’s a little bit of a pop I think that’s really due to a few larger cap transactions, but the volumes just aren’t there in Europe yet. So Europe is still behind the U.S. in terms of momentum in the M&A market. I think that will change over time. And certainly, we’re super committed to our build in Europe. It’s a critically important part of the world. If you’re going to have a world-class investment bank on a global basis, you have to be strong in Europe, and we’re committed to that region. But the pace of the M&A market, the dynamism of the M&A market is still not what we’re seeing in the United States. Asia, there is pockets of activity in Asia, a little less on the cross-border side that we’re seeing, but there’s still activity there, and we have a presence there, and that’s obviously critically important as well.

Kenneth Worthington: Okay. And maybe just following up on Europe. Why is Europe maybe not coming together like we’re seeing in the U.S. M&A market? Is it a financing issue? Is it a sentiment issue? Is it just like a sector mix issue? What would you sort of put your finger on as to why we’re not seeing the same level of engagement?

Navid Mahmoodzadegan: I think that’s a longer philosophical question that you one could take a lot of time answering, but let me give you my views. I think, look, part of it is I think a different relationship between government and enterprise in some of those markets. I think there’s a different and more difficult regulatory environment in some of those markets. I think there’s a different approach to entrepreneurialism in Europe in some of those markets that you see in the United States. And I think there is a different pace to capital formation in parts of Europe, and you see in the United States. So I think you could talk about it for a long time, but I think some of the pillars of why you see a healthy growing dynamic M&A markets in the United States. Europe is just a little bit behind the United States in some of those areas.

Operator: Your next question comes from the line of James Yaro with Goldman Sachs.

James Yaro: I just want to touch a little bit more on the restructuring backdrop in 2026. Could you just comment a little bit on your view as to whether that could improve to a lesser or greater extent as a result of issues within private credit. And maybe if that’s true, then the cadence over which that could occur? And then just maybe if you could also comment on the mix of M&A versus non-M&A revenue?

Navid Mahmoodzadegan: Yes. On that last point, Chris.

Christopher Callesano: Yes. I mean the mix was 2/3 M&A, 1/3 non-M&A, split between CSA and capital markets. Generally, we don’t give a breakdown, but I would say they’re in the same ZIP code depending on the quarter. And then again, now we have PCA in that area, and that’s growing nicely.

Navid Mahmoodzadegan: Look, on the outlook for restructuring generally. But there’s still significant maturity walls as you kind of look out to the ’28 to ’29 to ’30 timeframe. I think something like $2 trillion of maturities that are set to hit the leverage loan in the high-yield market during those time periods. So those maturity walls have to be dealt with — some of that are prior maturity walls got kicked out to ’28, ’29 and ’30 and some of those companies may or may not be able to continue to refinance and down the road I do think some of the tech disruption and the AI disruption we talked about, some of the factors that come out of some of the geopolitical events in terms of raw material prices and fuel prices that are impacting some sectors.

All of those things create stress with companies that have levered balance sheets. And all of those are areas that were structuring teams are actively involved in conversations with clients. So I do think we’re in for continued liability management opportunities. And we think over time, liability management will turn into more traditional restructuring as well. Default rates are still sort of low, but we do think there’s plenty of activity for a number of years on the restructuring side.

James Yaro: Okay. That’s super helpful. I just wanted to touch again on the private equity backdrop. You made the comment that sponsor M&A is growing double digits. I assume that’s a year-on-year comment, but correct me if I’m wrong. And then I just wanted to touch on what’s driving your business to outperform the broader market on the sponsor side. Is it that you’re taking market share? Or are there specific types of sponsors that are particularly strong that you’re seeing, whether it’s in terms of geography, the size of deals that they’re transacting in or something else?

Navid Mahmoodzadegan: Yes. That — just to clarify, that is a year-over-year growth number. And look, just like if we don’t do well in 1 space in a quarter, I don’t want — you shouldn’t make too big a deal but I don’t want to make too big of a deal that the other way when we do well in the space relative to the market either. So look, I think, generally, sponsors has always been very much part of the DNA and fabric of our firm. We cover corporates actively. We cover sponsors actively. We have dedicated sponsor coverage teams. And really, even before sponsors were in vogue, we were doing that from the early days of the firm. So I think we are — our teams do a great job and are very focused on covering those entities like we cover corporates.

We think that’s a very symbiotic thing to do to understand all the players in a particular ecosystem or the corporate and sponsor and so I think really, it’s just — we do a good job of covering them, and it’s really an important thing we focus on. So again, I don’t want to overstate the market. The market is still not fully open in terms of — again, back to the demand the desire for activity. The level of actual activity is not meeting the demand yet. And I think once that happens, we’re going to be particularly well positioned to reap the benefit of it.

Operator: Your next question comes from the line of Brennan Hawken with BMO Capital.

Brennan Hawken: Excellent. So Navid, you spoke to expanding relationships in the creditor community in the capital structure advisory in the restructuring business which I thought was kind of interesting. Could you drill down on that a little bit, like which parts of the credit community have you been focused on? Is that shift or expansion in relationships sort of centered around an opportunity set that you believe is likely to become more robust. And I don’t think you touched on this before when you were talking about the fact that 1Q started off a little slower, but you had recently taken up your outlook for the year. Do you still expect that business to be flat to up here as we progress through ’26?

Navid Mahmoodzadegan: Sure. Thanks for the question. So yes, look, we — a couple of years ago, we hired a couple of senior professionals to really focus in on the creditor side of the business. Really, over the last number of years, the creditor side of the business has really evolved. I think post financial crisis and then for a number of years thereafter, a lot of the action in the creditor community really revolved around hedge funds and I think over time, that’s really shifted more to CLOs. And in order to make sure that we had best-in-class coverage of CLOs and the other constituents in the credit marketplace. We had to be more intentional about covering those players actively and really making decisions as we were going after corporate opportunities in the restructuring world, making a decision are really going to focus on a company side situation or we’re going to focus on a creditor-side situation because a healthy balance, I think, between those 2 businesses is important to have the biggest TSA business you can have.

And I think having a group of people who are really intentional about building relationships to make sure we were well positioned, especially, I think this is really, again, part of the secret sauce of how we go to market. Our CSA business, like all of our sectors, all of our product businesses are deeply collaborative with our sector teams. And so especially where we had a good relationship with the company, knowledge in a sector to make sure we were lining up with the right creditors, if we were chasing a creditor assignment and being really intentional about that, it’s been really, really important and it’s opened up a lot of opportunities for us. So that’s — that’s what I was referring to in the comments. And I think the investment in that side of the business being more intentional there has really paid off.

Brennan Hawken: And no change to the outlook, right, just to confirm?

Navid Mahmoodzadegan: Yes, I think I mentioned in the prepared remarks that our pipelines are up meaningfully and we’ll see how the year plays out, but we do expect growth in our CSA business.

Brennan Hawken: Great. Great. The next 1 is a little more ticky-tacky. So probably more for Chris accounting-oriented. Comp expense of $210 million. How close is that to a floor for you guys on comp. And if that layer above the floor is a little thinner than normal, is that a statement of optimism around the ability to accrue against more robust revenues as the year progresses?

Christopher Callesano: I mean I’d say a couple of things. Our Q1 comp ratio is down, right, over 300 basis points from this time last year. Q1 had equity comp in there and it’s higher, right, due to the acceleration of retirement eligible equity awards. So I think you’re aware of that. However, those awards are fully considered in our 65.8% full year estimated comp accrual. So I think right now, we’re just — we are projecting that 65.8% for our best estimate for the year. And as always, we plan to evaluate and adjust the comp as the year to develops, considering revenues, investment in the business and the competitive landscape.

Operator: Your next question comes from the line of Brendan O’Brien with Wolfe Research.

Brendan O’Brien: I guess to start. Just from what we can see in the public data, it seems like you have been having a lot more success with strategic clients in terms of share than what you have historically. I just want to get a sense as to whether this is a concerted effort on your part to focus more of your efforts on strategic clients, just given some of the softer activity among sponsors and whether you view this as being more sustainable share gains that you could hold on to as sponsor activity begins to recover?

Navid Mahmoodzadegan: Yes. Thanks for that observation and for the question. I agree with you. I think our platform and our bankers and the quality of the hiring we’ve been doing laterally. I think all of that has contributed to a more active transactional activity around strategics to go and pair with our always historical strength with sponsors. And so that’s very intentional. And I do think from my perspective, our best sector bankers know a lot of companies and transact with a lot of companies. They also understand sponsor space. They also understand our product capabilities and work collaboratively with our product folks and those are the kinds of people we’re hiring. Those are the kinds of people we’re developing through our internal development pipeline.

And I think really what you’re seeing is, yes, intentionality to make sure we’re covering corporates the right way. And to think big in terms of larger opportunities, we definitely have a concerted effort at the firm to make sure we’re thinking about the largest transactions and are pursuing the largest opportunities but it’s also, I think, a testament to our hiring and our talent development and the maturation of our plan.

Brendan O’Brien: That’s helpful color. And then — for my follow-up, I just wanted to touch or drill down a bit more on the comp ratio. I understand there’s a lot of uncertainty on the back half of the year at this point, but just struggling to reconcile the record 1Q pipeline commentary and just the overall optimism on activity trends across the business with the flat comp accruals. So I guess it would just be helpful to understand — and for the remainder of the year in the 1Q accrual and how we could think about comp leverage if activity continues on this positive trend?

Navid Mahmoodzadegan: So I think on the last call, as we were looking into 2026, even though we had made, I think, meaningful progress over the last couple of years to bring our comp ratio down. I think I was pretty clear that we don’t intend to be finished there. And our goal is to continue to work the comp ratio down as the investments that we’ve made over the last number of years in our people started to show up in terms of increased revenue as the market improved and as our business continues to grow, that’s still exactly the plan. And I’m hopeful and optimistic that we’ll see that as we roll through the next few quarters and have a great year this year. The first quarter was up. It wasn’t up a lot. You can see what percentage it was up. And I do think as we roll forward in fact, if we see the kind of growth numbers that I hope we see and I anticipate we’ll see, we will revisit comp ratio in subsequent quarters.

Christopher Callesano: Yes, I agree. I think it’s just a little too early. Just like last year, we started out at 69% and as the year progressed and saw our revenues come in and our investments, we were able to lower it over 300 basis points. So we’re hopeful — I’m not sure that it would be the same pace as we did last year, but we’re still hopeful to make increases in improvement on our comp ratio this year.

Operator: Your next question comes from the line of Mike Brown with UBS.

Michael Brown: I wanted to ask you about the pipeline here. So your pipeline that I guess, all-time highs. Public backlog does seem to support a good second quarter here, but it does seem like there’s a lot of market uncertainty could certainly elongate some of the deal closings for the industry, maybe impact the pace of new deals. So as you think about the next quarter or 2, can you just maybe give us a view on how you think those could shape up relative to the prior year? Any color there would just be helpful just given kind of a lot of the pockets of softness in the market currently?

Navid Mahmoodzadegan: Sure. Look, we feel really good about the overall level of our pipeline, as we mentioned in the prepared remarks, and we have a I think the highest at this point in a year, the first quarter in terms of our announced pipeline deals that have been announced that are waiting to close. So I think those are both really good data points as we kind of think about the rest of the year. But you’re correct that at the end of the day, we have to transact against that pipeline. Our teams are working extremely hard to service clients and give great advice and try to get transactions done, but some of that is out of our control. And as I pointed to in the remarks as well, some of the factors in the marketplace coming out of the geopolitical environment, AI disruption, do create some near-term headwinds that we’re working through, but they also create some opportunities in other parts of our business.

So a long way of saying we’ll see how the year plays out, but we’re optimistic the business is in a really good spot. And our teams are working exceptionally hard to make this a growth year.

Michael Brown: Okay. Great. And I wanted to ask maybe another question on the comp ratio come at it maybe a little bit of a different way. And again, with the theme of kind of wide range of outcomes here. So if we have a better environment here and continues to accelerate and you see revenue growth pick up from here. What would kind of be the level that could actually push that comp ratio down 100 basis points from that 65.8% level? And then conversely, if revs were to be more flattish for the year, could you hold the comp ratio flat to last year? Just trying to think through as you’re investing and then maybe the push and pull on some of your fixed comp costs.

Christopher Callesano: Yes. I don’t think we’re going to get into any sort of algorithm or percentages. I would say, yes, if the environment improves and we ultimately have revenues of what we would expect. We will have an improvement in comp ratio. I’m not going to give you the percentage because, again, we don’t know what kind of investments we’re making — we’re making all sorts of estimates based on revenues, investments and the competitive landscape at the end of the year. And yes, I think — sorry, what was your second part of the question?

Michael Brown: Just how to think about the comp ratio of revenue was to be more flattish year-over-year?

Christopher Callesano: Yes. I mean, right now, we’re not expecting that. But sure, if it was flat versus last year, we had an increase in heads, there’s a possibility that you would have to adjust that. We don’t expect that at this time.

Operator: Your next question comes from the line of Nathan Stein with Deutsche Bank.

Nathan Stein: I wanted to follow up on Devin’s question earlier in the call. So you said in your prepared remarks, large strategic transactions have been driving M&A volumes. That’s consistent with what we’ve seen in the data and also the trend last year. I was hoping you could talk about what’s going to get that core middle market strategic deals to really pick up speed here?

Navid Mahmoodzadegan: Look, I think — look, some stability. Look, as I mentioned earlier, I do think if you’re a sponsor and you own a company, you waited to monetize it because you’re holding out for a price. If — and you see war break out in the Middle East and that reduces the likelihood after waiting this long to monetize that asset that you’re going to actually hit the mark, you’re waiting for a little bit, right? If you see credit spreads gap out a little bit because there’s disruption in the private credit industry, you’re waiting a little bit to see that play out. High-quality assets have been trading. There is activity in the marketplace, but there’s also a bunch of — a whole suite of companies portfolio sitting inside private equity firms people have been waiting to do something, and they have a price in mind of what they want for the asset.

And they’re waiting for the optimal moment to go ahead and monetize that asset if they haven’t done a CV or if they haven’t done a refinancing or something like that. And I think it just takes some time. But these assets do have to move. There’s no doubt in my mind that these assets have to move, and they will come to market. And it will just take time for that middle market to open up, but it’s coming.

Operator: Your next question comes from the line of Daniel Cocchiara with Bank of America.

Daniel Cocchiara: Sticking with comp and just hiring, I was wondering if you could talk to us about the competitive dynamics you’re seeing on this front and whether or not you’re seeing any added pressure maybe from like the bulge brackets and their ability to retain talent.

Navid Mahmoodzadegan: Sure. It’s — look, it’s competitive. There’s no doubt hiring great people, what I call difference makers, it’s super competitive. It’s rare that you’re talking to somebody who is great in a space where they’re not talking to another firm as well. So we have to compete against bulge bracket firms. We have to compete against other independent firms, and we have to compete against people doing other things and staying at the firms they’re at. So look, what we’re looking for, again, are people who want to be part of a collaborative environment will fit in great and be accretive to our culture. and who are difference makers. And finding and cultivating those relationships takes time. And it’s definitely hand-to-hand combat to get those people here on terms that make sense for us and for them.

But again, hired 8 people this quarter. We’re excited about all those hires. It’s my #1 focus as CEO of the company is not just to make sure our bankers that are here continue to think Moelis & Company is the best place to work with the best culture, but also to recruit other super talented people from all over the world to join us. And we’re — I think we do a great job. Our teams do a great job of identifying those people. And as a senior management team, we spend a lot of time developing those relationships and trying to get those people to yes.

Operator: Your next question comes from the line of Devin Ryan with Citizens Bank.

Devin Ryan: Just had a quick follow-up on non-compensation expense. Obviously, you heard the guidance and pretty consistent with what you guys had said previously. It was a little bit higher than we had modeled. I think we were a little bit low and kind of building through the year. And I think the guidance implies kind of more of a steadier pace. But in the other expense line, obviously, that jumped up pretty meaningfully. I know there could be some kind of lumpy deal costs and things like that. So I’m just curious what drove that kind of step up and how much of that is kind of core versus like transitory or just one-off items?

Christopher Callesano: Yes. I mean — so I would say that other expenses, this line includes costs that don’t warrant their own separate category. So there are things like client conferences are in there, certain deal-related capital markets underwriting expenses, but we have other things like insurance, education, business taxes and just a number of other items. The individual — like you pointed out, individual non-comp line items fluctuate quarter-to-quarter. But in aggregate, they generally balance each other out. And we still anticipate full year non-comp expenses to grow at a similar rate to 2025.

Operator: I’ll now turn the call back over to Navid Mahmoodzadegan for closing remarks.

Navid Mahmoodzadegan: Thank you all for joining today. Really appreciate it, and we look forward to speaking to you all soon. Thanks so much.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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