Moelis Surpasses 2024 Revenue, Margin Gaps Widen

Date of Call: Feb 4, 2026

Financials Results

• Revenue: Record fourth quarter revenues of $488 million, up 11% YOY. Full year adjusted revenues grew 28% to $1.54 billion.
• EPS: Full year adjusted EPS of $2.99 per share, up 64% from $1.82 per share in 2024.
• Operating Margin: Adjusted pre-tax margin was 28.6% for Q4 and 21.5% for full year 2025, representing 510 basis points of improvement from 16.4% in 2024.

Guidance:

• Constructive backdrop with near-record pipeline and expectations for an active transaction environment in 2026.
• Full year 2026 non-compensation expenses anticipated to grow at a similar rate to 2025.
• No specific revenue or EPS guidance provided, but revenue growth and operating leverage expected to continue.

Business Commentary:

Strong Financial Performance in 2025:

• Moelis & Company reported record fourth-quarter revenues of $488 million, contributing to full-year adjusted revenues of $1.54 billion, a 28% increase from 2024.
• Revenue growth was driven by a 35% increase in M&A, record-setting capital markets, and double-digit growth in both average fees and completed transactions.

M&A and Capital Markets Activity:

• The company's M&A business saw a 35% growth, with notable transactions including the Netflix acquisition of Warner Bros. Discovery and the Allied Gold sale to Zijin Gold.
• The growth in capital markets was supported by increased investor appetite across growth-oriented sectors and strong capabilities in both public and private markets.

Operating Leverage and Compensation Efficiency:

• Moelis achieved a 320 basis point improvement in its adjusted compensation ratio, ending at 65.8% for the full year.
• This improvement was due to increased revenues and strategic investments in technology, data, and headcount.

Capital Structure and Restructuring Opportunities:

• The capital structure advisory business is expected to see flat to up activity in 2026, driven by significant leverage across companies and the impact of technology disruption.
• The company has bolstered its creditor-side capabilities, positioning itself well for both out-of-court and in-court restructuring assignments.

Private Capital Advisory Expansion:

• Moelis & Company is gaining traction in its private capital advisory business, with plans to enhance its team with additional managing directors.
• The growth in this sector is attributed to the firm's strong relationships with financial sponsors and the increasing importance of GP-led secondary markets.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We close 2025 with significant momentum and enter 2026 from a position of strength.' and 'Our business outlook is positive, and our pipeline is near record levels.' CFO noted 'We reported record fourth quarter revenues' and 'Our adjusted pre-tax margin...representing 510 basis points of improvement.'

Q&A:

• Question from Devin Ryan (Citizens Bank): On the broader advisory outlook, how much upside exists if sponsors reengage to a normal level, and how should we think about the base case for restructuring/liability management activity?
  Response: Management sees significant upside as sponsor deal velocity increases and the market opens up, especially in the middle market. For restructuring, a long runway is expected due to companies grappling with balance sheets amid technology disruption, predicting flat to up activity in 2026.

• Question from James Yarrow (Goldman Sachs): What is the outlook for large-cap M&A versus smaller deals in 2026, and when might smaller deals catch up?
  Response: Large-cap transactions are expected to continue due to strategic motivations for scale and technology positioning. Middle-market activity is poised to increase as sponsor pressure to return capital grows and financing markets improve, with expectations for this to happen in 2026.

• Question from Alex Bond (KBW): How do you expect the revenue recognition cadence to play out over the coming year given a slower start to the year?
  Response: Management sees a constructive environment with record new business generation and pipeline but declined to predict quarterly cadence, noting a typical seasonal build through the year and overall optimism for 2026 and beyond.

• Question from Brendan O’Brien (Wolfe Research): How do you view AI disruption's impact on M&A, particularly for software companies in PE portfolios?
  Response: AI is an accelerant for strategic M&A in many industries but could create balance sheet stress for software companies, potentially leading to liability management transactions. The firm is monitoring trends closely and is positioned to advise clients on navigating disruption.

• Question from Brennan Hawken (BMO Capital Markets): Given the active marketplace, why continue aggressive recruiting, and how big is the software sector for your business?
  Response: Recruiting is balanced with cultural fit and unique talent; timing is sometimes out of control but the firm remains selective. Software is a major and productive sector, and the firm's integrated capabilities across products position it well for client needs amid disruption.

• Question from Ryan Kenney (Morgan Stanley): What percentage of MDs are ramped, and does PCA ramp faster, providing less drag on the comp ratio?
  Response: About a third of MDs have been on the platform less than 3 years, with many younger MDs ahead of their most productive years. PCA ramps faster due to existing sponsor and industry relationships, requiring less ramp-up time.

• Question from Nathan Stein (Deutsche Bank): What were trends in the PCA business in Q4 2025, and what is the timing for the $300 million buyback authorization?
  Response: PCA was still ramping with minimal revenue in Q4 2025; meaningful revenue growth is expected in 2026. The buyback authorization is for mitigating share dilution from equity issuances, maintaining the dividend, and preserving a strong balance sheet as a strategic advantage.

• Question from Daniel Cocchiara (Bank of America): Has diminished regulatory scrutiny on GSIBs led to increased competition from bulge brackets, and can Moelis gain market share in this environment?
  Response: Competition from bulge brackets remains strong but steady; the main competitive action is against other independent firms. Moelis competes effectively in its market segment, gaining incremental market share.

Contradiction Point 1

Restructuring/CSA Business Outlook

Contradiction on 2026 activity level for restructuring/liability management.

What is the estimated upside magnitude for advisory services returning to normal with sponsors and its impact on Moelis, and what is the base case for restructuring/liability management activity levels? - Devin Ryan (Citizens Bank)

2025Q4: For Capital Structure Advisory (CSA), there is a long runway of companies needing balance sheet work... Activity may include out-of-court liability management or in-court restructuring. - Navid Mahmoodzadegan(CEO)

With the Fed's rate cuts, what is your outlook for the restructuring business in Q4 and 2026? - Brendan O'Brien (Wolfe Research, LLC)

2025Q3: The Restructuring/CSA business faces a tougher comparison after a record 2024... The business is expected to be down slightly in 2025. - Navid Mahmoodzadegan(CEO)

Contradiction Point 2

Compensation Ratio Outlook

Contradiction on the trend and normalization path of the compensation expense ratio.

How will revenue recognition cadence unfold this year with lighter recent data, and what's the updated view on reaching the low 60s normalized compensation range? - Alex Bond (KBW)

2025Q4: The comp ratio has improved from 69% to 65.8%. Further progress depends on revenue levels, banker pay environment, and the pace of hiring top talent. - Navid Mahmoodzadegan(CEO)

How should we interpret the year-to-date 68% compensation expense ratio, and is there potential for revenue upside and comp leverage as the M&A recovery continues? - Devin Ryan (Citizens JMP Securities, LLC)

2025Q3: The current 68% YoD is progress toward a more normalized ratio. The firm is committed to lowering the ratio further as the market improves... - Navid Mahmoodzadegan(CEO)

Contradiction Point 3

PCA Revenue Growth Timeline

Contradiction on when PCA will generate significant revenue.

How does AI disruption impact the M&A outlook considering PE software inventory risks? What's the update on the PCA build-out timeline? - Brendan O’Brien (Wolfe Research)

2025Q4: The Private Capital Advisory (PCA) team is ramping well... Revenue growth will become more meaningful in 2026. - Navid Mahmoodzadegan(Co-Founder, Co-President)

Can you elaborate on the progression of sponsor reengagement and its sector-specific variations, particularly in technology, and also discuss the addressable market size for the private capital advisory business and the resource requirements to realize its potential? - Devin Patrick Ryan (Citizens JMP Securities)

2025Q2: The firm has hired three top industry leaders in Q2 and plans aggressive, ongoing hiring to build a market-leading platform. - Kenneth David Moelis(CEO) and Navid Mahmoodzadegan(Co-Founder, Co-President)

Contradiction Point 4

Characterization of Deal Environment and Backlog

Contradiction on whether current deal delays are temporary or indicative of a fundamental shift.

What is the potential upside magnitude as sponsor activity returns to normal, and how will it impact Moelis? - Devin Ryan (Citizens Bank)

2025Q4: Sponsor deal velocity is increasing, with more activity expected in 2026. - Navid Mahmoodzadegan(CEO)

When do backlog deals get canceled versus delayed? - Devin Ryan (Citizens)

2025Q1: The slowdown is driven by a specific policy dynamic (tariffs), which is considered temporary... some deals have been shelved and are no longer in the backlog... - Kenneth Moelis(CEO)

Contradiction Point 5

Restructuring Activity Outlook

Contradiction on the near-term trend for restructuring revenue.

What is the base case activity level for restructuring and liability management? - Devin Ryan (Citizens Bank)

2025Q4: For Capital Structure Advisory (CSA), there is a long runway of companies needing balance sheet work due to past leverage and technology disruption. Activity may include out-of-court liability management or in-court restructuring. - Navid Mahmoodzadegan(Co-Founder, Co-President)

How have restructuring activities trended since April 2, and how should we think about the firm's ability to flex its compensation ratio as revenue improves, considering the strong first half and aggressive PCA hiring? - Brendan James O'Brien (Wolfe Research)

2025Q2: For 2025, restructuring revenue has trended flattish to slightly down. The firm expects this trend to continue as companies may opt for refinancing or M&A over restructuring in a market with ample capital. - Kenneth David Moelis(CEO)