Moelis & Company Q4 FY2025 earnings call

• Closed 2025 with significant momentum, including elevated client activity, record new business, and highest quality talent.
• Earned record fourth quarter revenues of $488 million and full year adjusted revenues grew 28% to $1.54 billion.
• Notable M&A transactions like Netflix acquiring Warner Bros., etc., and other advisory work.
• Constructive financing and equity markets set stage for active 2026.
• Strategics and sponsors becoming more active.
• PCA business gaining traction with investment and hiring, aiming to be a fourth pillar.
• Added 21 managing directors in 2025, promoted 13 in early 2026, total MD count 178.
• Delivered operating leverage with comp ratio improvement to 65.8% full year.

Moelis & Company reported record fourth quarter revenues of $488 million. For the full year, adjusted revenues grew 28% to $1.54 billion. Revenue growth was driven by 35% growth in M&A, a record-setting year for capital markets, and double-digit increases in average fees and completed transactions in M&A. Capital structure advisory decreased. The private capital advisory (PCA) business is ramping, with most activity in 2025 being new mandate wins; meaningful revenue growth expected in 2026. Revenue contribution: M&A and capital markets were key drivers, with capital structure advisory down, and PCA ramping.

• Constructive transaction environment expected in 2026 with expanding M&A activity across sizes.
• PCA business anticipated to be a meaningful part of the firm, ramping as expected.
• Board authorized a new share repurchase program of up to $300 million.
• Declared regular quarterly dividend of $0.65 per share.
• Confident in continuing growth and generating operating leverage.

• Geopolitical uncertainty could impact transaction activity.
• AI disruption may affect software companies and potentially lead to different types of transactions (e.g., liability management vs. M&A).
• Competition for talent could impact comp ratio and hiring plans.

Q: Broader advisory outlook, especially sponsor activity?

A: Navid mentions sponsor activity building as valuation alignment improves, GP-led secondary market at record levels, and PCA well-positioned to serve sponsor clients.

Q: Restructuring liability management outlook?

A: Navid says there's a long runway of liability management assignments due to leveraged balance sheets of many companies and technology disruption, with potential for traditional restructurings as out-of-court solutions run course.

Q: M&A composition outlook, large vs. small deals?

A: Navid states larger cap transactions likely continue, but middle market deals will pick up as buyer-seller expectations align and LP pressure on sponsors to return capital increases.

Q: Revenue recognition cadence in 2026?

A: Navid says new business and pipeline are at all-time highs, but seasonality may have first quarter as weakest, with improvement through the year.

Q: AI disruption impact on M&A and software companies?

A: Navid notes AI disruption accelerates M&A in some areas but may create balance sheet stress in software, leading to different transaction types, and Moelis is monitoring and advising clients on these trends.

Q: PCA business trajectory?

A: Navid says PCA team is ramping, with activity ramping quickly as it plugs into existing client relationships, and expects it to be a meaningful business like other segments.

Q: Comp ratio outlook in 2026?

A: Navid says comp ratio improvement depends on revenue, banker pay competition, and hiring; aims to lower comp ratio while capitalizing on opportunities.