MC

• Overall Financial Performance

  • Q2 2026 revenues hit a record $409 million (up 12% YoY), and H1 2026 revenues reached a record $729 million (up 9% YoY). Growth is driven by higher average transaction fees and expanded contributions from historically grown non-M&A businesses.
  • Adjusted pre-tax margin improved to 18.6% in Q2 2026 (from 17.6% YoY) and 17% in H1 2026 (from 16% YoY). The adjusted compensation ratio fell to 65.8% for both Q2 and H1 2026, down from 69% in the prior year periods.
  • Ended Q2 with $481 million in cash and no debt; returned ~$246 million to shareholders in H1 2026 via dividends and share repurchases, with a steady $0.65 per share quarterly dividend.

• Strategic Talent Investment

  • Talent recruitment and retention remains the highest strategic priority. 12 lateral managing director hires have been made year-to-date 2026, alongside 13 internal MD promotions.
  • Hires span core growth areas: 2 for PCA, 1 for CSA, 1 for European infrastructure, 2 for Capital Markets (debt capital markets/private credit, securitization), and 5 across key industry sectors.

• Product Segment Expansion

  • Capital Markets: Expanded capabilities with new MD hires to add debt capital markets, private credit, and securitization/asset-backed financing expertise to meet robust demand for hybrid and structured financing solutions.
  • Private Capital Advisory: Built out GP-led secondaries capabilities to critical mass with 7 dedicated MDs, and launched new LP-led secondaries and co-investment lines of business to create a full-service PCA platform.
  • Capital Structure Advisory: Adding a new MD to expand sponsor and creditor coverage to meet growing demand for liability management support for leveraged companies impacted by AI disruption.

• AI Integration

  • AI tools are being progressively embedded across firm workflows to improve client engagement quality, operational efficiency, and productivity. The firm is still in the early adoption phase, focused on spreading best practices for bottom-up adoption.

• Quarterly non-compensation expenses are expected to remain in the mid-to-high $60 million range for the remainder of 2026.
• Management expects the record pipeline (with an 80% year-over-year increase in the announced transaction pipeline) will support a strong second half of 2026, with overall activity shaping up positively consistent with historical seasonal trends.
• Management believes the current M&A growth cycle is still in early innings, with multi-year upside driven by scale demand, technological disruption, and backlog of sponsor portfolio assets needing exit.
• The PCA business is targeting reaching a scale and revenue per MD in line with firm-wide averages over the next few years, with faster ramping expected for GP-led secondary business and slower ramping for newer service lines.

Moelis & Company reported Q2 2026 total revenues of $409 million, a 12% year-over-year increase, and first half 2026 total revenues of $729 million, a 9% year-over-year increase. Overall business mix for the first half of 2026 was approximately 67% M&A and 33% non-M&A.

1. M&A: M&A activity improved in Q2 2026, supported by accessible financing, strong equity markets, strategic demand for scale, and a more favorable regulatory environment. Moelis saw growth in larger-cap transaction opportunities, with higher average fees and a strong sponsor M&A pipeline; sponsor M&A announcement activity grew meaningfully year-over-year in H1 2026. M&A contributes ~67% of total first half revenue.

2. Capital Markets: Capital Markets achieved record Q2 2026 and H1 2026 revenues, driven by strong demand for late-stage growth/pre-IPO financings and healthy IPO activity. The business is a core driver of overall company revenue growth, contributing to the non-M&A 33% total first half revenue share.

3. Private Capital Advisory (PCA): PCA delivered meaningful revenue growth in H1 2026 with strong momentum in deal completions and new client mandates. It is a key growing contributor to non-M&A revenue, part of the 33% total non-M&A revenue share.

4. Capital Structure Advisory (CSA): CSA revenues declined year-over-year in H1 2026, partially offsetting growth from Capital Markets and PCA. Client engagement remains high, with liability management dominating current activity.

• Market volatility driven by the Middle East war, private capital market uncertainties including private credit redemption concerns, and AI-related industry disruption could impact transaction activity and valuations.
• Highly competitive market for senior banking talent increases hiring costs and retention risks, which could pressure margins if talent investments do not generate expected returns.
• AI implementation carries inherent data security and client confidentiality risks, requiring ongoing oversight to protect sensitive firm and client information.
• Valuation mismatches for mid-market sponsor portfolio companies (acquired in pre-high interest rate environments) continue to suppress sponsor M&A exit activity, delaying expected revenue growth in this segment.
• Any shift in regulatory environment or market financing conditions could quickly reverse the current improving trend in M&A activity.

Q: What is driving Moelis' growing success in larger M&A deals, and how will this progress be sustained? / A: The broader M&A market has recently shifted toward larger $5 billion+ transactions, aligning with Moelis' increased activity in this segment. The progress stems from cumulative investments in senior talent (both lateral hires and internal development), expanded product capabilities, and intentional organizational focus on marshalling resources for larger-cap opportunities. Management also noted an emerging uptick in $1 billion to $5 billion middle market activity that could expand the overall market if the trend continues.

Q: Why has broader sponsor M&A engagement not picked up as expected, and when might improvement occur? / A: Sponsor client engagement is already very high, but exit activity is held back by valuation mismatches: many mid-market sponsor portfolio companies were acquired in a lower rate environment, and current valuations do not meet sponsors' expected return hurdles. Management expects improvement over time as companies grow into valuations or sponsors decide to move assets, and notes early improvement in $1 billion to $5 billion deal activity. Even with muted exit activity, Moelis generates meaningful revenue from sponsors via capital raising, secondary solutions, and continuation vehicles.

Q: Where is Moelis in the current M&A cycle, and how long can current growth continue? / A: Management believes the current M&A growth cycle is still in early innings. Sustaining drivers include persistent corporate demand for scale, large-scale AI-driven technology disruption that requires M&A consolidation, a large backlog of sponsor portfolio assets waiting to be sold, and a currently more relaxed regulatory environment for transactions. Management acknowledges there will be minor ups and downs within the broader multi-year upward trend.

Q: How does Moelis approach AI risks, and will AI actually improve industry margins? / A: Moelis prioritizes data security and client confidentiality, with dedicated legal, IT, and governance committees overseeing AI risk mitigation. While core AI tools will likely be commoditized across the industry, management expects firms that effectively integrate AI into workflows will become more efficient and better at serving clients, similar to past technological innovations like spreadsheets. The net result should be higher transaction volume per banker and improved long-term productivity, even with shared access to basic tools.

Q: What are Moelis' capital allocation priorities, and would it consider acquisitions? / A: Capital priorities, in order, are: 1) ongoing investment in long-term business growth; 2) protecting the current regular quarterly dividend; 3) share repurchases to offset dilution from employee equity compensation. For acquisitions, Moelis is open-minded but will only pursue deals that meet three criteria: add world-class talent, align with Moelis' collaborative culture, and have buy-in from the acquired team.