Perella Weinberg Partners Q2 FY2025 earnings call

• Leading indicators like active engagement count and gross revenue pipeline are at peak levels. First half revenues flat y-o-y but with broader industry, product, and geography, and higher average fee per engagement.
• Significant investments in senior talent: 6 partners and 3 managing directors joining by year-end, with 6 managing directors promoted to partner in July, expecting 76 partners/managing directors by year-end.
• Acquisition of Devon Park Advisors, a private funds advisory firm, enhancing private funds advisory business and expanding coverage of alternative asset managers, with immediate financial impact expected upon closing.

Second quarter revenues were $155 million, with first half revenues at $367 million. Adjusted compensation margin remained at 67% of revenues. Q2 adjusted non-compensation expense was $36 million, a meaningful drop from prior year. First half non-compensation expenses totaled $86 million, up 9.5% year-over-year, with a mid-single-digit increase now modeled for full year. Adjusted tax rate for first half was 30%, in line with expectations for remainder of year.

• No specific revenue guidance provided. Leading indicators are positive, with broadening revenue base and confidence in future due to Devon Park acquisition.
• Confident in broader acceleration of announcements despite some transactions taking longer to convert, with leading indicators suggesting positive momentum.

• Forward-looking statements subject to risks, uncertainties, and assumptions that could cause actual results to differ materially.
• Transactions taking longer to convert to announcements due to factors like financing challenges, valuation gaps between buyers and sellers, or operating weakness in certain industries.

Q: So a question on the comment about peak level of gross fee backlog, is that including announced deals? Or is it off of announced deals? And talk more about backlog, momentum, and complexity relative to a year ago.

A: Backlog is defined as announced and pending. Pipeline is all activity including engagement letters. Leading indicators like engagement letter executions and client activity are growing, with a better announcement cadence in July compared to April/May.

Q: On the revenue outlook for the remainder of the year, could you speak to confidence in meeting or exceeding 2024 revenues?

A: We don't give revenue guidance. We're happy with last year's record, but broadened revenue base makes us less reliant on large fee events. Leading indicators positive, but hard to predict quarter-to-quarter due to transaction timing.

Q: On the large cap deal outlook and restructuring outlook, how have activity levels evolved?

A: Large-scale transactions trending positive as transactions beget transactions. Restructuring business is part of broader financing/capital solutions and trending toward a record year, with strong activity continuing.

Q: On capital return aspirations going forward given organic investment?

A: Laser-focused on growing EPS by managing share count. Currently, investment in business is a prudent use of capital, but will still look to return capital to shareholders while investing.