Perella Weinberg Partners - Ordinary Shares - Class A Stock

Good morning, everyone, and welcome to the Perella Weinberg Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded.

I will now turn the call over to Ms. Taylor Reinhardt, Head of Communications and Marketing. Please go ahead, ma'am.

Thank you, operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer and Chairman; and Alex Gottschalk, Chief Financial Officer and Chief Operating Officer. Before we begin, I'd like to note that this call may contain forward-looking statements, including Perella Weinberg's expectations of future financial and business performance and conditions and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance.

Please refer to Perella Weinberg's most recent SEC filings for a discussion of certain of these risks and uncertainties. The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statements. During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8-K, which can be found on the company's website.

I will now turn the call over to Andrew Bednar to discuss our results.

Thank you, Taylor, and good morning. Today, we reported second quarter revenues of $157 million, up 1% from a year ago, bringing our first half revenues to $305 million, down 17% compared to last year. Our booked revenue does not yet reflect the momentum we're seeing across our business. Announced transactions have picked up significantly. We're running ahead of where we were at this point in 2025, and the pace has accelerated this summer with nearly 40% of our year-to-date announcements occurring since the start of June. Our announcements are M&A weighted with recent elevated activity in our health care, industrials, energy and TMT businesses. In addition, our restructuring and liability management pipeline continues to grow with new mandates and with 10 transactions announced in the quarter. The number of companies facing significant 2028 and 2029 maturities and increasing rating agency pressure is larger than ever, and we expect the environment for our financing and capital solutions business to remain robust.

We also reached an important milestone this quarter by closing transactions in our private funds advisory business. We're encouraged by the pipeline we're building in that business, and we're pleased with how quickly this capability is gaining traction with our teams and with our clients. There are 2 metrics that are the strongest leading indicators of our business, our announced and pending backlog, and this metric is up nearly 2.5x from a year ago. And adding that to booked revenue, our total booked plus announced and pending backlog is up over 30% year-over-year as of today.

The A&P backlog includes a number of large fee events, which won't all show up in our 2026 results, but we feel great about the direction of travel and our setup into the back half of '26 and into 2027. As we indicated on the first quarter call, we expected the year to be back half weighted, and that is exactly what we are seeing. And we continue to invest in talent to scale our business. We have 6 partners joining in the coming months from the Gleacher Shacklock acquisition and from continued lateral hiring. And we announced a new class of 8 partner promotes earlier this week.

Today, our internally promoted partners represent roughly 45% of our overall partnership, which is a real testament to the depth of talent we developed and our ability to grow leaders from within. These are important features of our brand. Congratulations to our new partners, and it's also a very well-deserved recognition.

Looking at the partnership as a whole, more than a 1/3 are in the ramp-up stage with under 3 years as a partner, which gives us meaningful runway as that group seasons on our platform. Taken together, the acceleration in announcements, the related growth in revenue backlog, our continued investment in partner-led talent and the build-out of new capabilities in private funds advisory, along with broader coverage in the U.K., our platform continues to strengthen, and this gives us great confidence in our business heading into the back half of the year and well beyond.

With that, I'll now turn the call over to Alex to review our financial results and capital management in more detail.

Thank you, Andrew. Starting with expenses. Our adjusted compensation ratio was 71% for the first half of the year. With revenue weighted to the back half, we expect that ratio to come down towards our full year target of 67% as additional revenue is recognized. Our adjusted non-compensation expense of $31 million for the quarter was down $5 million from the prior year period and $6 million from the prior quarter period, driven in part by an insurance recovery and lower bad debt expense. For the first half, adjusted non-compensation expenses totaled $69 million, down 20% from the same period last year. While we expect higher spend in the back half of the year, we remain on track for a single-digit percent decrease in full year adjusted noncomp versus 2025. As it relates to taxes, we expect our underlying adjusted tax rate, excluding the benefit from RSU vesting to be in the low to mid-30% range for the remainder of 2026.

Turning to capital management. Year-to-date, we have returned $73 million to equity holders through a combination of dividends, distributions and RSV settlements. In our 5 years as a public company, we returned over $765 million in aggregate, including the retirement of 40 million shares or share equivalents. We remain committed to delivering value to our shareholders through prudent capital management. We ended the quarter with $116 million in cash, no debt and 74 million Class A shares and 20 million partnership units outstanding. This morning, we declared a quarterly dividend of $0.07 per share.

With that, operator, please open the line for questions.

[Operator Instructions] We'll go first this morning to Devin Ryan of Citizens Bank.

I wanted to just maybe start on the backlog commentary and just, Andrew, the momentum that you talked about and heard the comment that I think 40% of the year-to-date announced activity has occurred since June. So obviously, things have been picking up quite a bit over the last couple of months here. So, can you just talk about maybe what is changing to move conversations to announcement or speed things up? Is it conditions shifting? Or is it just the way these specific deals are evolving? And then if you just can give a little bit more color around what you're seeing across kind of both the spectrum of kind of large deals versus smaller deals? And anything from a geographic perspective, too, would be helpful.

Sure. Thanks, Devin. It's more idiosyncratic, I think, just to the nature of our investments and the boots that we have on the ground. So, we're not really tethered to the broader market as other firms might be where they're market share leaders, we're market share takers and growing our market share. So for us, it's all about where we've made investments. Those investments, as you know, take time. They're not light switch operations. And so we've been very dogged in thinking about our client coverage. We've been very disciplined. I think we've made very good investments in our industrial business, in our consumer business, healthcare, especially and around some of our infrastructure and tech franchises. And those bankers have been on the platform now for a while and these transactions and relationships and then transactions follow. It just takes time. That curve for us is very evident we just feel very good about the people we have on the ground now and the progress they're making.

So less about something that's fundamentally changed. We haven't really changed what we're doing. It's more just the investments we've made in those particular client segments, they've been active, and we see, again, really great progress in particular in the last 6 weeks or so, and the backlog has built up very nicely.

On the question of large versus small, I think that when you look at the broader markets, you don't need me to tell you this. You can look at the data, but the transactions over $10 billion are accounting for a pretty large percentage of overall volume. I think the $1 billion to $5 billion category on transaction count is down a bit. Again, because we're not tethered to the broader market stats, we continue to feel good about the investments we've made. We've had transactions in the over $20 billion level. We've had transactions in the $700 million to $2 billion level, and those are all good fee events for us. And again, building our franchise in a market where transactions get transactions as you increase your relevance, it does have a compounding effect. So we're just in that stage of our investment cycle.

In terms of the question about United States or North America versus rest of world, for us, the mix is pretty much the same as it's always been, something around 80-20. We're not seeing much divergence there. And we're seeing the same pace of activity in both of our key markets. A lot of the historic barriers to transactions and the excuses for not doing transactions have largely been removed from the boardroom. We're seeing now a very open-mind investment and in some cases, a very aggressive stance toward thinking about how to drive business forward, create value for stakeholders. So lot of the prior excuses, whether it was tariffs or inflation or the rand war or whatever it might have been, we're just not feeling that in the boardrooms anymore. People are in transaction mode, and we like that, particularly for our larger strategic clients.

Great color. And then just a follow-up on just the kind of the partner composition. I appreciate a fair amount of changes just even this year with the 3-year review and then kind of recent acquisitions and a big promote class, which is good to see. Can you just talk a little bit about the team on the field today and how you think that compares to kind of the kind of the team heading into the year? And I appreciate kind of the comment on there's a lot of partners kind of still scaling their productivity. So, how do you feel about kind of their ability to ramp? I don't know if it's to $15 million of revenue or how you guys think about kind of a more mature partner productivity level? And just intertwined with the question is, if productivity is increasing, what does that mean for margin potential of the company? And the last part of the question, sorry for multiparts here, but just how to think about the -- just the growth now from here. You've kind of reset the base. You brought some people in, some people have been moved to adviser or moved out. How do we think about growing from now this level?

Okay. I'll try to get all of that, Devin, if I missed something, just let [indiscernible] I mean fundamentally, as your question about our business. And at its core, we're investors and business builders, and we invest in people. So in effect, the product is our people. And when you invest in people, you have to make the investment upfront. As you know, I've had debates with the accountants on this but our investments in people are not capitalized. They're expensed. And so it's a unique feature of the business where we're investing in people, we have to take that investment upfront. But then as people mature in this business, as they build their network, as they build transactions and build relevance and get more experience, actually, unlike products, which depreciate and then you have to figure out how to reinvent the product and innovate the product.

Our products actually get more valuable over time. So it's a great feature of our business. Now we have to make the right decisions about the people we bring into the firm, the people we promote and develop, but it's just a great feature of the business. Now reality of the business also is at some point, you have people that will retire, will age out, we will get less productive. So I think the changes we made without me being too derogatory, I think they've been misinterpreted by the marketplace, which is okay. I'm not trying to correct everyone's viewpoint, but these are very natural and necessary changes if you're going to have a high-performing partnership and you're being positioned for future growth, and you're always investing in the next generation. We have a really great class of partners we've announced earlier this week. As you mentioned, these are all highly qualified and highly productive people that we believe in to be highly productive partners in the future. And we're still targeting that $15 million. But when we have promotions, in particular, it takes time to ramp up. And so our -- there is a differential when we hire talent from the outside versus promote from within the promotion from within does take longer to ramp. But the primary reason we have chosen this class of partners is that we believe in them and believe that they can ramp.

So, our profile right now is if you look at 1/3, even a little more than 1/3 of the partnership is here less than 3 years, we have experienced, particularly in post-COVID though. I don't know that it's a post-COVID thing. It just means that's when we looked at this inflection where historically, we start to ramp up people 1 to 2 years, and that ramp is really 3-plus years. And so we're managing the business as though our promotions are going to be 3-plus year ramps and from external hires, maybe a little faster, but generally, that ramp-up is taking a bit longer. So we feel good about the growth from within here. Again, we're really disciplined on how we're thinking about coverage. And we feel like some of the investments we've made, particularly from outside within and from the outside are actually paying some real dividends now as we build up scale in those businesses. I hope I got all the questions, Dev and I did forget what you asked because I was talking sorry.

You did. And the fundamental piece we hit, and I appreciate the multipart of it, but I think we covered everything. So, thank you.

We'll go next now to Alex Bond with KBW.

Just wanted to start on the compensation outlook for the year here. So the first half, the adjusted compensation ratio was 71%. But just -- wondering how you're thinking about the full year, just given the visibility into the back half. Obviously, a lot can change between now and the end of the year. But as we sit here, just would be great to kind of get your updated take on full year expectations. And I think you've previously cited like that 67% ratio. Just wondering if that is still a reasonable target here for the full year.

Yes. As Alex said, the other Alex -- or Alex said in the upfront commentary, we're still targeting 67%. There'll be some noise and lumpiness as we get there through the year because we said that revenue will be back half weighted this year, but our target is still 67%, no change from what we said on the other -- on the prior call.

Got it. Okay. Great. And then maybe just wanted to try and drill a little bit deeper around expectations for the second half of the year. I mean, it certainly does seem like from what we've seen in the public data and you noted the strength of the total pipeline that it's going to be much stronger than the first half. But maybe just trying to get a better sense of how you're thinking about the revenue generation potential there, given that you did highlight some of the -- there are some mandates that are going to flow into 2027 that are currently in the pipeline. So, just any other color there would be great as well.

Yes. We don't, as you know, give revenue guidance. And for us, it's a much better metric, as I said, and I realize you guys need to look at what's booked and what's in our financial reporting, but that's looking back, not looking forward. But looking forward, when we measure the strength of our business, the momentum is really about the booked plus the A&P. And as I said in the upfront commentary, that's up 30-plus percent from where we were this time last year. Now because of the nature of the business where we do work on some very large fee events that are complex and have approval processes that take time, it's very, very difficult for anyone to predict when those various work streams and approvals are going to be completed. So we don't see completion risk in the pipeline that we currently have, but we do have timeline risk that's very hard to influence and to judge exactly when those will become booked revenue. But again, that will be just something out of our control, but we eventually believe that we will get that revenue as those transactions close.

So, I know that may not be that helpful, Alex, but that's the reality of our business.

We go next now to James Yaro with Goldman Sachs.

Andrew, I was hoping you might be able to speak to -- good morning. Could you just speak to the impact of higher long and short interest rates on M&A with a particular focus on sponsor M&A. Do you see the recovery in this part of the M&A market being once again pushed out at all?

Yes. Thanks, James. As you know from prior discussions and commentary that I've been more cautious on this floodgate opening from private equity. I think there are moments where we've had some surge activity from private equity, both buy side, sell side. We've got today about a little over 1/3 of our business is private equity related. We've had historically a much heavier weighting on corporates. But given hiring we've done, we're, I think, making really good progress in that market. I think overall, rates always affect the ability to finance. I think right now, there's plenty of credit, availability is enormous in a lot of situations, there's probably more credit available than the buyer wants with maybe the exception of software-related transactions where there's been a little bit of a cap on loan to value.

I think that costs are a bit higher than people would like. But I think the main driver of the lack of a floodgate opening for private equity has really been valuation and just still continued disconnect between what buyers are willing to pay and sellers are prepared to part ways with. And so until that gets resolved, I think you're still going to see activity for sure because the nature of private equity is to transact. That's the business they're in. And ultimately, all of those assets will find some transaction, whether it's a outright sell side, an IPO, some sort of continuation vehicle or recapitalization. So, private equity continue to be extremely busy, but it may not be in traditional buy-side sell side until you have a better alignment between buyers and sellers.

That's very clear. I hope you might be able to just comment at least at a high level about the secondaries business that you've built after the investments you've made over the past few years.

It's still early days. We've made the acquisition last summer. It closed in October. We've got a few transactions already closed. We've got a number in the pipeline. I think the take-up has been very good. Our teams are understanding that product and capability better because we've never had it. So I think having our relationship teams now focused on this particular product and capability has been very, very good in terms of how they've presented it to clients and the client take-up has been very good so far. So we feel good about the business and like the capability and gives us, again, that greater dialogue with our in particular, our alternative asset manager clients who are looking for a broader set of capabilities from firms like ours.

Thank you Mr. Bednar, it appears we have no further questions this morning. Sir, I'd like to turn the conference back to you for any closing comments.

Okay. Thank you, operator. Thank you, everyone, for joining today. We really appreciate your support and look forward to speaking again in a few months. Take care. Bye-bye.

Thank you, Mr. Bednar. Thank you, Ms.Gottschalk. Again, this concludes the Perella Weinberg Second Quarter 2026 Earnings Call and Webcast. You may disconnect your lines at this time, and have a wonderful day.

Good morning, and welcome to the Perella Weinberg First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to turn the call over to Taylor Reinhardt, Head of Communications and Marketing.

Thank you, operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer; and Alex Gottschalk, Chief Financial Officer and Chief Operating Officer. Before we begin, I'd like to note that this call may contain forward-looking statements, including Perella Weinberg's expectations of future financial and business performance and conditions and industry outlook.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance.

Please refer to Perella Weinberg's most recent SEC filings for a discussion of certain of these risks and uncertainties. The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statements.

During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8-K, which can be found on the company's website. I will now turn the call over to Andrew Bednar to discuss our results.

Thank you, Taylor, and good morning. Today, we reported first quarter revenues of $149 million, down 30% from our record first quarter last year. These results don't align with the current state of our business. Client dialogue is very strong. Our announced and pending backlog at quarter end was at a 2-year quarterly high, and our overall pipeline continues to grow.

Furthermore, we continue to build scale with the recently announced acquisition of Gleacher Shacklock. The M&A market is active and overall volumes are strong, but the activity is concentrated and driven by a record number of mega cap transactions. We were involved in 2 of the 12 transactions in the quarter valued at $15 billion or above. Everything we do is taking more time. We advise on larger and more complex situations, and it's taking longer to get the mandate, longer to announce and longer to close.

The environment, whether it's macro, geopolitical, sector-specific, is all making clients deliberate more, and this is natural and it's healthy. Clients are not walking away from transactions, but they are being careful, and that is adding to the time to completion. Restructuring and liability management remained active in Q1, though revenue contribution softened coming off a record 2025 that saw a number of large deals completed in the period.

We are rebuilding the pipeline, but the ramp from initial mandate to revenue recognition does take time. We have to be there for our clients in every market through thick and thin. We are not changing our view on our opportunity. The relationships and the revenue potential are there. It is just a question of time to conversion. Based on where our transactions sit today, we expect our revenue to be meaningfully back half weighted this year.

Now let me spend a minute on our recently announced acquisition of Gleacher Shacklock. Europe has always been a meaningful part of our business, and the U.K. is the largest advisory market in Europe. But historically, we have not had the presence there that matched our brand. Gleacher Shacklock changes that overnight.

They are one of the most respected independent advisory firms in the U.K. with 20-plus years of trusted relationships with FTSE 250 corporates, sovereign wealth funds, pension funds and sponsors. They bring us five partners, two of whom are still in ramp mode. And with access to our global platform, we expect their productivity to multiply once we combine. Importantly, Gleacher Shacklock operates with the same values as we do, trust, integrity and teamwork. And like us, they put clients first.

The Gleacher Shacklock team has built something very special, mirroring what we have built, a firm known for deftly guiding clients through complexity and one where repeat clients are a significant part of the business. I look forward to welcoming the entire team to our firm later this year. In the last 12 months, we have added exceptional talent across the firm, launched our private funds advisory business through the Devon Park acquisition and now have further invested in our European business with Gleacher Shacklock.

We continue to build a platform that can perform across cycles and one that today is broader geographically and by industry and product than it has ever been, and we are attracting world-class clients and exceptional bankers to our platform. We do expect that our results will be more variable as we continue to build scale, but our direction is clear, and I'm very confident in our future.

Before I turn the call over to Alex to review our financial results and capital management in more detail, I want to take a moment to congratulate Alex on her expanded role, which now includes serving as Chief Operating Officer of the firm. Since becoming CFO in 2024, Alex has had tremendous impact on our firm and helped keep us focused on our mission. I have no doubt that in this combined role, she will help drive more growth, greater discipline and better results. So congratulations, Alex. This is a very well-deserved promotion.

Thank you, Andrew, for your kind words and confidence in me and our team. I'm excited for this new chapter. Now turning back to earnings. Our first quarter revenues of $149 million included just over $10 million related to closings that occurred within the first few days of the second quarter, which in accordance with relevant accounting principles were recorded in the first quarter.

Our adjusted compensation margin was 79% of revenues for the quarter, above the intended 67% indicated on our fourth quarter call. The 79% reflects the impact of a lower revenue denominator against a higher non-bonus compensation base compounded by the timing of RSU vesting's from prior stock-based compensation awards, which was concentrated in the first quarter.

Excluding the bonus decrease in the current period, compensation expense increased year-over-year due to higher cash compensation and equity amortization from investments in new hires and higher headcount. As revenues build through the year, we expect the comp margin to moderate and come in line with our historical target range by year-end. This is the same dynamic we experienced in the first quarter of 2024.

Our adjusted non-compensation expense was $37 million in the quarter, down 24% versus a year ago, a direct result of prudent cost management, which we expect to sustain through the year. Our prior guidance of a single-digit percent decrease in full year non-comp expense versus 2025 remains our best estimate at this time. Turning to capital management.

In the first quarter, we returned nearly $64 million to equity holders through dividends and RSU settlements. At the end of the first quarter, we had 71 million shares of Class A common stock and 22 million partnership units outstanding. We ended the quarter with $78 million in cash and no debt. This morning, we declared a quarterly dividend of $0.07 per share. With that, operator, please open the line for questions.

[Operator Instructions] We'll take our first question from Alex Bond with KBW.

Just wanted to start maybe specifically on what you're seeing in the large-cap strategic backdrop on the M&A side at the moment. It seems, for the most part, like large corporates have been willing to look through geopolitical concerns and AI fears. And even in the case of AI, maybe that's potentially spurring some further activity in that area. It would just be great to get your thoughts around that space more broadly, especially in light of your commentary around the extended deal time lines.

Yes. Sure, Alex. Thanks for the question. We're seeing great activity in that segment of the market. And I think that's evident in the number of announcements broadly in the market. We're tracking broadly ahead of last year. There were about 72 transactions last year above $10 billion. I think we're on pace for 80-plus this year. That part of the market is very strong.

Strategics are looking through war and other sort of aspects of geopolitical mapping that's changing and other issues that may be starting to affect the consumer. I think these long-term large transactions are still very much in vogue. Part of it is also a very accommodative administration.

And so I think that's also putting some pressure on people to transact on a little faster time line versus historical norms. So we feel very good about that market. We'd like to be in more of those deals always, and that's what we aspire to, but that part of the market is very, very healthy, Alex. Thanks for the question.

Great. That's helpful color. And maybe as a follow-up, just on the revenue expectations for the full year. I think back half weighted certainly makes sense given what we can see in the pipeline and some of your commentary in the prepared remarks. But I wanted to ask specifically around the second quarter. Maybe any color you could share just some of the near-term pipeline and if we should expect that the second quarter to look relatively similar to the first quarter from a revenue standpoint.

Yes. As you know, Alex, we don't provide revenue guidance for the year for any specific quarter. I don't think, though, that as we look at our particular mix of transactions, the announcements and the time lines to close, we don't see a lot of closing risk in our pipeline, which is always good, but we do see the timing issues are very prevalent.

So I think this will be a progression through the year. I don't see a quick reversal coming in the next period, but we see a really good progression through the year and similar to what we were facing when we look at our 2024 results, we had our lowest quarter in Q1 '24 as a company, and then we ended up having a record full year.

But trying to predict when those things happen during the course of the year is always very hard. But we do believe it will be very back-end weighted just given the nature of the pipeline that we have and what you guys are seeing also in Dealogic, you can track that as well.

Our next question will come from Brendan O'Brien with Wolfe Research.

To start, I just wanted to touch on Europe. There's some interesting dynamics playing out in that market at the moment. On the one hand, obviously, more exposed to energy shock driven by the conflict in the Middle East. But on the other, there's clearly a push towards deregulation that's more favorable to large-cap M&A. Just want to get a sense as to what you're hearing and seeing in the region at the moment and whether you see potential for this fee pool to outpace that in the U.S.

Yes, Brendan, I think you've described the situation on the ground very well. I think that the impact of this war is very uneven. And I think it's been widely reported that Europe is particularly vulnerable to the energy price shock that's occurred. And I think they have to grapple with that and likely have some impact and long-term implications for the consumer through Europe.

But there's something else going on, which is a reimagining of Europe's position in the world, and that has started back now 1.5 years ago. And that has led to a very significant change in defense budgets, for example, and rethinking regulation across border within Europe, which has paved the way for some larger scale transactions and things that historically once may have been unimaginable that are now becoming in the frame as a possibility. So those are good dynamics for our business.

Generally, when we have more accommodative regulators, that's a good thing. And when we have a change to the circumstance and sort of reimagining of a region, that's also positive. So we are seeing an increase in dialogue, an increase in the art of the possible there. I think that's good for our industry. We are optimistic about our investment in the U.K. Obviously, we feel very good about that.

Otherwise, we wouldn't have done that. That's a very large market around -- if you look at the other European markets, the U.K. fee pool is the largest. I don't think it will outpace the United States. The United States is the largest M&A market. It's the largest fee payer market. I don't see Europe catching up to that.

But for the better part of the last decade as European contribution to overall M&A fee pool and M&A activity has been historically low. We've all talked about not just me, but others in the industry, how that is an anomaly and should catch up. It hasn't, but it certainly has the opportunity now with the changes that are afoot to catch up to its historic contribution.

That's helpful color. And then for my follow-up, I guess, on the energy side of the equation, you guys obviously have a really strong business in the oil and gas space or energy space broadly. I just want to get a sense as to how the increase in oil and gas prices has impacted the willingness of energy companies to transact and whether that's driving increased activity levels or pipeline?

Historically, when you have oil prices above $90, it makes the transaction dynamics quite challenging for M&A. So usually, we see a cessation of activity, which we have seen. I think there's only been eight transactions in energy announced all year. And I think there's only three above $1 billion, which kind of be in our sweet spot. So it's a very, very, very limited market right now. I mean we are in the midst of the war.

We are in the midst of what many have described as the most significant oil shock to our world. And so it's not, I think, surprising that the activity now is lower in M&A and many of these companies are very, very focused on operations. Now we've had some exceptions to that with Shell's acquisition earlier this week.

Now that's in natural gas, which largely has been flat to even somewhat down since the beginning of this war on February 28. So that's a quite different market. Generally, the discussions are very, very active about what happens when the fog of war lifts. I don't think the cessation of activity is indicative of long term.

I think it will be temporary. I think there will be quite a bit of consolidation when we get some of the fog lifted and prices sort of settle back down to what people can then plan for a long-term mid-cycle price deck in terms of transacting. But that fog of war definitely has an impact on everyone's energy business. I think everybody is down, and we're seeing the same thing.

Our next question will come from Devin Ryan with Citizens Bank.

I want to come back to the advisory outlook. Obviously, you cited the remark announced and pending backlog at a 2-year high. It'd be good if we get some maybe quantification or even characterization on how some of the other kind of early forward-looking indicators are tracking, whether that's mandates or even customer engagement metrics and whether those are also growing, or those at 2-year highs or how you would kind of frame the leading indicator for business?

Yes. Look, the things that -- I know investors and analysts have to look at the quarterly results, and those are important, but they don't really tell us a lot about the future of the business. That's what I'm focused on and what my teams are focused on. So I look at the client engagement level in M&A is up, I look at our overall pipeline, it is up. Importantly, within that overall pipeline, the amount of pipeline that's actually engaged.

So there's a signed engagement letter that is also up. I mentioned announced and pending in my upfront remarks that we're sitting at an 8-quarter high. So that's, I think, encouraging as well. And I think importantly, we'll have another period of time here where we just have phenomenal repeat clients. Our repeat clients are paying some of our highest fees. I mean that is true and, I think, a time-honored strength -- indication of the strength of our franchise.

And so I like all of that. That all looks very, very good. I think where we have some challenges is just on scale. When you look at 150 or so fee events, you have a couple of things at the top of that list that shift, and that's going to affect the quarterly results, which, again, I always find hard to predict. And I just look at the strength of the overall business, which I like what I see.

We've got 23 partners that are still ramping. We've got to always look carefully at our investments. We're constantly assessing our partnership and how we think about covering clients. We're continuing to be very deliberate there. But generally, all those KPIs, Devin, are quite strong and in some cases, have never been stronger in our history.

And then kind of interrelated on the comp ratio, I know the first quarter is a bit of just a math equation. And obviously, the revenues in the year are going to be more back half weighted, which we can see. How should we take kind of signal in the first quarter accrual? Is there anything to read there? Or is that just primarily the math of the fixed cost? And then just talk more broadly about timing to get back to more of a normal range? Like what type of environment do we need to be in to get there?

Yes. I think as you said correctly, it is math, #1. As Alex said, there are a couple of seasonal items that don't repeat around RSU vesting and around some of the investments and the timing of prior investments and when those payments get made. So we have things that just don't appear as we move through the year. And then we build revenue, and that's when we build the bonus pool.

So -- we've seen this before, again. We've seen it in 2024, where we had a comp margin in Q1, which was obviously not our target, and we ended up in around target. We're going to end up in around target, and we're not going to depart from what we've historically said. We'll get back to on target for a 67% accrual as we get through the year. It's not going to reverse, as I said to Brendan's question earlier, maybe it was Alex, but we won't reverse it entirely as we go to Q2.

It's just a progression through the year. And the most important thing is that we're building the ANP. And as long as we're building the ANP, we're in good shape for the future. But the short answer is it's not saying anything about -- there is no return to any environment. That's not the issue. It's just timing. We'll stay on target for the comp ratio.

Great. Okay. I guess just the quote the last line. On the -- if I can just squeeze one more in here on Gleacher Shacklock, obviously, we follow them over time. I know it's not a huge acquisition, but I think a well-known brand and really kind of presence in the U.K. where PWP has always had a strong European platform, but U.K. has been a little bit light.

So -- at least relative to other parts of Europe. So can you maybe talk about adding these 5 partners, how you think about kind of the contribution potential partner productivity relative to Perella today, how that potential could evolve over time, just having more capabilities with a more scaled platform?

Sure. Yes. As I said in my upfront remarks, I mean we're really excited about this transaction. We're adding terrific partners. They think like us, they operate like us. They focus on clients the way we do. We're really kindred spirits, and we feel like this is plug and play. They have a lot of limitations on revenue because they do only one thing.

And while we don't do 100 things like a money center bank, we do more than one. And so we think adding our restructuring capabilities, our debt advisory capabilities and shareholder activism capability as well as continuation vehicles will allow the Gleacher team to now provide more service to their clients.

In addition, they are very, very focused on the U.K. takeover market, but also across Europe, but having our capabilities across Europe as well as into North America also gives them a greater dialogue with clients. So while today, they may have a bit -- they may be a bit under our targets for partner productivity, we're very confident that they'll reach and exceed them as we get this combination completed.

Our next question comes from James Yaro with Goldman Sachs.

Divyam here. I'm speaking on behalf of James. Could you please speak to the impact of a steeper yield curve and fewer rate cuts on sponsor M&A? And when do you expect the long-awaited sponsor recovery to take off?

Yes, not seeing a big change to the sponsor activity level. It's roughly been about one-third of our business. I think the long-awaited return may take a little bit longer. It's a little bit rate driven, but also when you really do some subsurface work on the S&P 500, you go below the top 7 and anything around AI, multiples are actually quite a lot lower in many, many industries than where they were in '21 and 2022 when a lot of these transactions by sponsors were affected.

And so it's still not the ripest of conditions for a lot of sell-side activity. And now you have the circumstances around AI and SaaS that just has a lot of people on sort of pause and doing more work to figure out the investments they're making, whether they are AI-proof or whether they are part of the AI story rather than part of the AI demolition story, which obviously is not where you want to be as an investor.

So I think we saw, as I said in the last 2 calls, we've seen a very significant increase in our pitch activity with sponsors. Sponsors seem to be lining up a number of assets. We continue to see sponsors wanting to talk about potentially monetizing some of their holdings. On the buy side, it's been a bit slower, but there are pockets of activity. But I think this is just a pretty steady market right now, and I'm not seeing like a floodgate type dynamic with sponsors.

I just see a very steady market. They've got a lot of capital deploy. They will deploy it. They have assets that they will sell for their constituents and their -- in particular, their LPs. We'll see that continue. I think it's a fine market where we are with rates with where they are. And I don't think they need to see rate cuts to continue to be active.

That was helpful. Just one follow-up from my side. Could you contextualize the outlook for restructuring ahead and any potential upside risks from private credit and software over here?

Yes. So I think the cyclical moves in restructuring have largely abated, like the amplitude is much, much lower than historically it has been in restructuring. It's just a steady business now. And I think it's growing as clients see the value of bringing on an adviser to manage through debt maturities and maturity walls and amend and extend and covenant reworks, things like that and liability management exercises. So I think those trends are quite good for the industry, and we feel very good about that.

I think bankruptcies have gotten very, very expensive. I think there's a movement to try to avoid bankruptcies. There's some sort of pre-wiring in credit agreements that's designed to avoid that process. So I wouldn't expect that we're going to have a huge wave of bankruptcy going forward, but you don't really need that to continue to serve clients, continue to address their needs and along the way, generate revenue for our firm. So we feel good about that opportunity.

As I said, our pipeline is -- we're in build mode on that pipeline after coming off a record year. And I think the software complex will absolutely see increased activity. Again, I don't think you see bankruptcies overnight. Software companies are still performing quite well. And so they have the revenue and cash flow.

The issue is going to be refinancing and then new issuance in connection with transactions, which has been a bit more quiet in the current period. But again, that will change because you do have maturities and you will have capital to deploy, and there will be transactions in and around software as you start to see these valuations reset.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Andrew Bednar for any additional or closing remarks.

Okay. Thank you, operator, and thank you, everyone, for joining today. Thank you for your continued support as we build our business and looking forward to seeing everyone on the next call. And I also want to thank all of our Perella Weinberg teammates around the world that are continuing to work every day and very, very focused on our clients. And so I wanted to make sure that they hear my expression of gratitude for that. And again, look forward to seeing everyone on our call in a couple of months. Thank you. Bye-bye.

This concludes the Perella Weinberg First Quarter 2026 Earnings Call and Webcast. You may disconnect your line at this time and have a wonderful day.

Good morning, and welcome to the Perella Weinberg Full Year and Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded.

I will now turn the call over to Taylor Reinhardt, Head of Communications and Marketing. You may begin.

Thank you, operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer; and Alex Gottschalk, Chief Financial Officer.

Before we begin, I'd like to note that this call may contain forward-looking statements, including Perella Weinberg's expectations of future financial and business performance and conditions and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance. Please refer to Perella Weinberg's most recent SEC filings for a discussion of certain of these risks and uncertainties. The forward-looking statements are based on our current beliefs and expectations and the firm undertakes no obligation to update any forward-looking statements.

During the call, there will also be a discussion of some metrics, which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8-K, which can be found on the company's website.

I will now turn the call over to Andrew Bednar to discuss our results.

Thank you, Taylor, and good morning. Today, we reported full year 2025 revenues of $751 million and fourth quarter revenues of $219 million. While 2025 revenues were down 14% from 2024 as record results, 2025 was the third highest revenue year in our firm's 20-year history, a testament to the strength and resilience of our business and the result of our deliberate investment in building a focused and differentiated platform that can perform across market conditions.

In M&A, it was a productive year for expanding and deepening our coverage and expertise that we fell short of our revenue ambitions as several large transactions we advised on did not complete as we had hoped. That said, we are pleased with our progress and have confidence that our investments and laser focus on clients will deliver in 2026 and beyond.

In Europe, we delivered record revenues, further cementing our position as a leading adviser in the most active regions on the continent. Our restructuring practice also hit record revenues gaining market share in a market that continues to grow.

Consistently delivering superior results for our clients is attracting more high-profile and high-value assignments, especially in debtor side mandates. This positions us extremely well going forward across our financing and capital solutions business.

On talent, 2025 was a record year for both recruiting and promoting senior bankers and new hire momentum continues. We see a flywheel effect. Top talent is attracting more top talent, and our pipeline of future senior hires remains very strong. During the year, we added 23 new senior bankers to our platform. And already in 2026, we added 2 more partners, one reflecting our continued build-out of our health care services business and the other strengthening our U.S. software coverage following a recent partner addition in Europe.

Looking ahead, the opportunity to grow our business is exceptional. Our gross pipeline stands at record highs, our announced and pending backlog is strong and building. Sentiment is positive across our client base from corporates to sponsors, and we see momentum building.

As we enter our 20th year as a firm, we feel great about our position. We're incredibly proud of the firm we've built over 2 decades, and we're excited to write the next chapter, one that builds on our strength to deliver both superior outcomes for our clients and attractive returns for our shareholders in a sense, we're really just getting started.

With that, I'll now turn the call over to Alex to review our financial results and capital management in more detail.

Thank you, Andrew. Our fourth quarter revenues of $219 million included $18.5 million related to closings that occurred within the first 2 days of 2026, which in accordance with relevant accounting principles were recorded in the fourth quarter.

Our adjusted compensation margin was 68% for the full year 2025 compared to 67% in 2024. We maintained strong discipline in managing our compensation ratio despite, as Andrew mentioned, a year of record talent investment, including the Devon Park acquisition.

We remain highly aligned with our shareholders, with partners and our broader team owning over 30% of the firm, and we are committed to thoughtfully managing our compensation ratio as we drive profitability while strategically investing in top talent.

Our adjusted non-compensation expense was $159 million for the full year 2025, down 2% from a year ago and well below the single-digit growth range we originally projected earlier in the year. Looking ahead to 2026 with certain nonrecurring items now behind us, we expect a further single-digit percent decrease.

Turning to capital management. We returned over $163 million to equity holders in 2025 through dividends, RSU settlements, share repurchases and unit exchanges. As a part of these efforts, we retired 6.5 million shares during the year, reflecting our continued focus on managing our share count. At year-end, we had 67 million shares of Class A common stock and 22 million partnership units outstanding. Finally, we closed the year with $256 million in cash and no debt. And this morning, we declared a quarterly dividend of $0.07 per share.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question will come from Devin Ryan with Citizens Bank.

Question, just first on kind of the advisory environment and kind of outlook. Obviously, I don't want to dwell too much on what happened in 2025. But you did mention there were some kind of large deals that didn't come together. Any sense of like order of magnitude, how much that impacted results on the year? And then as we think about 2026, assuming your kind of batting average is more normal versus maybe it's a little below normal on those large deals, how much of an impact does that have as you look at your kind of record backlog, as you noted, and how much is kind of large deals versus kind of a broadening out in the M&A market?

Yes. Thanks, David. Look, we live for large-scale M&A transactions, but we don't die when they don't play out. I mean last year, there were 70 transactions, over $10 billion. The year before that $35 million. In the year where we had record results, we were in 4 transactions over $10 billion last year, we were not in any. This year, out of the gate, we're in one already. So I think generally, the trending is better. Because of our scale, we're just going to have a lower incident rate in really all segments in the market. But in particular, we all feel it a little bit more when we're not in the larger scale, larger fee transactions. There are several that where the ball just didn't bounce our way for us and for our clients. That's unfortunate. But that usually leads to some other type of strategic activities. So that doesn't usually lead to just a debt environment for deal flow generally, once you have that client relationship, you're thinking about the next thing. So that's encouraging. And generally, a few of them, the ball just didn't bounce our way. And we're more optimistic heading into 2016, again, given the starting point that we have here in January, where we announced a $15 billion transaction a couple of weeks ago.

Okay. That's great. And a follow-up here on the private capital, the Devon Park kind of addition. Now that that's been part of the business, obviously, not too long, but any anecdotes on how that's going, how it's making you more relevant in client conversations and just how we can think about maybe the order of magnitude of what that business could mean for Perella Weinberg over the intermediate term just like how is it going? And and the anecdotes you're seeing there?

Yes. Thanks. So far, we feel great about the combination. As you know, we look for situations where they're culturally and financially and strategically highly attractive to us and to our new partners. I think the Devon Park transaction has gone very well in all those regards, the take-up rate and the conversations with our private equity clients and our credit clients and real estate clients has gone very well, and we have already jointly won new mandates. So we're very encouraged by that. And the pipeline looks very good. We're only month 4, obviously. So it's early days, but we couldn't be happier with the early days.

Okay. Great. I'm going to try to squeeze one more in here, if I can, just on compensation. Obviously, [indiscernible] year where revenues go down, not surprising to see the comp ratio tick up a little bit in directionally that made sense. As we look ahead and the environment is improving, hopefully, a better hit rate in 2026 on some of these larger deals. How do we think about the algorithm from this jumping off point to get back into that mid-20s or even -- or sorry, mid-60s or below on the comp ratio, not 20?

Yes. Thanks for that. Look, we didn't hit our revenue targets for '25. And combined with our heavy investment, I always look at the balance of trade between our productive partners and our shareholders, and I've always committed to finding the right balance point between having partners invest in future growth and having shareholders invest in future growth. I think we've historically struck the right balance. We're all large shareholders, as you know. So we care about the equity of this company and we're looking at ways to drive it forward.

We do have comp leverage. We have flexed that in the past, as you know. We flexed in '21. We flexed it in '24, where we took it down 300 basis points from 2023. We need more scale. So we need the revenue progression to continue and get back on what we think we can earn here. I think last year, we underearned based on our capabilities and our capacity. So we're more optimistic going into 2016. But I don't have a specific algorithm because it really depends on this multivariable equation where we have to look at not only the revenue outcome but also what our investing is like.

And you know, Deb and I have a different view than the accountants, but the accountants control, the outcome on how it's reported, but some of our comp margin is CapEx. And I think that when we're wisely investing, we're going to see the results of that in the go-forward period. There's a bit of a mismatch where we had to invest before we get the revenue. So we feel really good about the 23 senior hires we had -- the 23 senior additions we had in 2025, 14 of them were new to the platform, which is great, and we see the pipeline looking pretty good for 2026 as well. But that's a constant balancing that we have to do to make sure that we're sharing appropriately how we think about CapEx here and this impact on comp margin. But as you get scale, we have that comp leverage flex, and we've done that in the past. We just weren't able to do it in 2025. And I think a 1 point increase from where we were accruing reflects the level of investments that we're doing.

Our next question will come from Alex Bond with KBW.

Just a question on the restructuring outlook. This has obviously been an increasingly important part of your business recently. But wondering if you can just speak to your outlook for 2026 year, maybe relative to 2025. Are you expecting revenues to be up here maybe year-over-year or maybe closer to flat or even down slightly? And then any color you could add just on the broader backdrop for restructuring from here would be helpful as well.

Yes. Thanks, Alex. We feel very, very good about the environment for our restructuring business, and we feel very good about across sectors in that market as well. We saw a record year for our business last year. We're not seeing any slowdown, particularly in liability management engagement, so not necessarily 911 going bankrupt tomorrow. But just generally really prudent and very proactive finance managers with our clients that are looking ahead of maturities or looking ahead at covenants or looking ahead at ways to enhance their balance sheet and we guide them through that and receive a fee in those circumstances. So I think the environment is very strong. I think with some of the disruption we've seen in software and recent sessions has created some level of concern with the credits in those particular sectors that I think will again lead to some more activity for us. So that business is quite strong, and we're feeling very good about heading into the rest of 2026.

Okay. Got it. That's helpful. And then maybe just another one on the recruiting backdrop. I think you've noted previously that this past year was an above average year for you all in terms of hiring. But maybe if you could just help us think about how you're thinking about the recruiting backdrop here, maybe what we should expect to see in terms of maybe not necessarily a number, but just in terms of your activity there on the hiring side? And also just any high-level thoughts around the recruiting backdrop as a whole would be helpful as well.

Sure. That's a continuous exercise for us. It's a core part of our strategy to add talent. We have a lot of open space in our platform still with only now 77 partners and we have covering about 1,500 to 2,000 clients. So we have a lot of open space for high-quality bankers to join our platform. And the pipeline looks very good. We have always every year more candidates that are interested in joining us then we will accept, and that's just a reality of how we think about additions to our platform. I think it will be likely a more normal year. I think it will go back to trend in the coming 12 months. I think, again, the pipeline looks good. But I don't see it as active as we were last year in terms of the sort of brick-by-brick strategy that we've been on, but we can get some surprises, and that will be great if we can add some more talent. But I think we're back on trend and the pipeline looks very good. So I'm happy about it.

Our next question will come from Brendan O'Brien with Wolf Research.

To start, I was just a bit surprised that you guys had the record year in Europe given from what we can see in the geologic data, trends have continued to lag those in the U.S. So I was just hoping you could unpack some of the drivers, what seems like pretty meaningful share gains in the region. And just what the tenor of discussions are like in Europe today and how you feel that fee pool will track relative to the U.S. over the near to or medium term?

Yes. I think for the better part of the decade, European volumes have been trending below normal and certainly trending disproportionate to the growth in the U.S. market. So I think it's a matter of -- just a matter of time before those activity levels get back to where they should be. Again, I think we're seeing the benefits of some of our investments and not only in new talent, but also our investments in clients that you have to make that are going to take time to actually convert to revenue. And we were fortunate to have some large-scale transactions, not only announced in the period, but also get done in the period because we're in a business where typically large-scale transactions don't announce and close in the same quarter or sometimes even in the same year. So I think we had some very good dynamics in our European business. We've got a terrific team there. We've got leading share in markets like in Germany and in France, and those were very active markets as we look back at 2025 results.

I think Europe is very, very focused on what their future is looking like. There's active investments around industries, around defense and energy security, things around infrastructure. So the dialogue has ticked up quite dramatically in the wake of all the geopolitical changes that we're all witnessing. Every day we wake up and read the news. And I think that's leading to more and more discussions on the continent about what the industries will look like in a go-forward Europe, which is good for our business. When people have complex situations, they tend to have experts around them. And so we're fortunate to get those calls and be around the table with industry leaders as they think about and contemplate the future of what Europe is going to look like. But we're right in the middle of those dialogues and feel good about our team and happy -- very happy with the results coming out in 2025.

That's helpful color. And I guess building on your comments on the geopolitical tensions ramping, that's obviously seen a pretty notable uptick as -- and then you've also seen an increase in policy uncertainty in the U.S., which is only likely to intensify into the midterm elections. Just wanted to get a sense as to whether you've seen any impact on dialogue at this point with U.S.-focused clients? And do you anticipate the midterm to have a negative impact?

The last point on the midterm, we're not seeing anything yet. I think it's a little too early for that to start bleeding into some of the decisions our clients have to make. So I think it's a little early on that. Geopolitical generally, as I mentioned a few seconds ago, it's just part of our environment now, very much part of the every day we wake up and and assess what's going on in the world. I think it creates a level of anxiety but not panic. And I think once we and our clients get through some of the thoughts, most of our clients, I would say, the overwhelming majority of clients see opportunities more than they see obstacles coming out of the geopolitical landscape. And that's true for the energy complex for global manufacturing and even for services companies that operate globally.

So I think once you get through the initial shock of some of the headlines and news flow I think the cooler heads prevailed, long-term thinking sets in and people are seeing more opportunities than they are seeing problems.

Our next question will come from James Yaro with Goldman Sachs.

Would you be able to help us think through at a high level, the mix of your advisory revenue across M&A versus the non-M&A businesses perhaps for 2025 in aggregate? Or however you'd be willing to break this down?

Yes. James, as you know, I've said on prior calls, at various conferences that we don't segment our business that way because we don't operate our business based on our products. [indiscernible] alliance, we organized by sector and therefore, organized by the coverage we have of our clients, not the products that we're trying to sell. So I know I get this question often, I'm respectfully declining to give that detail because it isn't how we operate the business. I do want to give some color on the different markets we operate in, which hopefully I've given in terms of M&A context as well as our financing and capital solutions business, which I mentioned was at a record, and we feel very good about particular our liability management engagements going forward and the activity we see there.

Understood. Could you just perhaps update us a little bit on your capital return priorities beyond the organic investment, which is clearly top of the list of priorities and that makes sense, but just beyond that, anything that we should be thinking about for capital deployment?

Our priority stack remains exactly the same as we can invest our capital in future revenue and future clients and building out businesses. That's by far the best use of our capital. We saw really good uses in '25. So we were weighted a bit more to that deployment in the prior period. '26, We don't -- it's early days, so we don't know. We may have some good investment opportunities and we'll take advantage of those that they present themselves, but we're still laser focused on our share count. We have our dividend, which we announced this morning. And we will take advantage of buyback opportunities either through exchanges and our typical RSU vesting where we buy in the shares to pay taxes. And from time to time, we're in the open market. But I don't see any departure from our priorities back there. And from time to time, we may emphasize one over the other, but the priorities remain in place, James. So no change there.

And maybe if I may, just one more. What is the right starting point for the comp ratio as we head into 2026? I'm just trying to make sure that we understand, I think different firms do it differently. Should we be looking at the full year '25 ratio, the jumping off point, the 4Q number? And then does the mid-60s comp ratio target still hold?

Yes, the Q4 number to me at least is irrelevant. That's just what the math shows to get to our annual comp ratio, which is 68%, which is 100 basis points above where we were accruing in the first 3 quarters, which I explained, I thought was a fair balance of trade for who will pay for future growth. And I think we're going to get that and it's a good investment.

Our jumping off point, we're going to have the same as last year. So we'll start at 67% for Q1. And I've just always asked all of our stakeholders, people on this phone and my partners, employees that own shares that we just need some flexibility in Q4 to assess what the final comp ratio needs to be in order to prudently manage our business and reflect our investments. So that's our typical cadence. We'll stick with that. But the jumping off point as you call it, for Q1 will be a 67% accrual.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Andrew Bednar for any additional or closing remarks.

Okay. Thank you, Katie, and thank you, everyone, for joining us today. As we marked our 20th anniversary as a firm, I want to express our gratitude to first, all of our clients who have trusted us with their most consequential transactions over the last 2 decades. Relationships are the foundation of everything we do, and we thank you for placing your trust and confidence in us over the years.

To our investors, many of you have been with us since we went public 5 years ago, then others have joined along the way or more recently, thank you for your confidence and for all your support. We're committed to delivering for you, as you know. As I've mentioned many times, we're also large shareholders.

And finally, to my teammates around the world, you make this firm what it is. Your exceptional talent and tireless dedication to our clients, drives their success every day and in turn, our success. Thank you. We look forward to updating all of you on our next quarter, and thanks again for joining us today.

This concludes the Perella Weinberg Full Year and Fourth Quarter 2025 Earnings Call and Webcast. You may disconnect your lines at this time, and have a wonderful day.

Good morning, and welcome to the Perella Weinberg Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's call is being recorded.

I will now turn the call over to Taylor Reinhardt, Head of Communications and Marketing. You may begin.

Thank you, operator, and welcome, all. Joining me today are Andrew Bednar, Chief Executive Officer; and Alex Gottschalk, Chief Financial Officer.

Before we begin, I'd like to note that this call may contain forward-looking statements, including Perella Weinberg's expectations of future financial and business performance and conditions and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in the forward-looking statements and are not guarantees of future events or performance. Please refer to Perella Weinberg's most recent SEC filings for a discussion of certain of these risks and uncertainties. The forward-looking statements are based on our current beliefs and expectations, and the firm undertakes no obligation to update any forward-looking statements.

During the call, there will also be a discussion of some metrics which are non-GAAP financial measures, which management believes are relevant in assessing the financial performance of the business. Perella Weinberg has reconciled these items to the most comparable GAAP measures in the press release filed with today's Form 8-K, which can be found on the company's website.

I will now turn the call over to Andrew Bednar to discuss our results.

Thank you, Taylor, and good morning. Today, we reported third quarter revenues of $165 million and year-to-date revenues of $532 million. While not records as we reported last year at this time, the underlying fundamentals of our business remain strong and continue to strengthen. The number of active engagements is at a record. Our overall pipeline is at a record. And our European business is up over 50% from last year. In addition, the number of fees above our target has increased meaningfully, and both our average fee and median fee across engagements are up as well. We've been deliberate in pursuing clients and assignments where we can add the most value, focusing our teams on complex, consequential transactions where our advice to clients matters the most.

Year-to-date, we have made the most significant annual investment in our firm's history, adding 25 senior bankers across sectors and regions. The partners who joined us in 2025 alone represent 18% of our total partner base, a clear signal of our commitment to scale and a large source of potential future revenue.

On October 1, we closed our acquisition of Devon Park, and the impact has been both immediate and notable. This transaction brought us a new capability, new capital relationships and new sponsor clients overnight, meaningfully expanding our addressable market and revenue potential. The timing of our acquisition could not have been better, with the secondaries market expected to exceed $200 billion this year as sponsors increasingly turn to continuation vehicles and other creative solutions to manage liquidity needs. Additionally, we are seeing private equity moving off the sidelines with a substantial exit backlog building for 2026.

The business building we've done this year is significant, expanding our client coverage and capabilities in strategically active industries for both corporates and private equity. We remain confident in our scaling strategy and believe these investments will drive significant revenue growth for our firm and create value for our shareholders.

With that, I'll now turn the call over to Alex to review our financial results and capital management in more detail.

Thank you, Andrew. Our third quarter revenues of $165 million included $8.5 million related to a closing that occurred within the first few days of the fourth quarter, in which in accordance with relevant accounting principles, was recorded in the third quarter. Consistent with the first 2 quarters, our adjusted compensation margin remained at 67% of revenues. Our adjusted noncompensation expense of $37 million for the quarter was down from last year and roughly flat with Q2. For the 9-month period, noncompensation expenses totaled $122 million, up 5% from last year.

Given our continued expense discipline, we are lowering our guidance further to a low single-digit increase for the full year of 2025. Our adjusted tax rate for the first 9 months was 4%. Excluding the benefit from stock-based compensation vesting at a higher price than the grant date, the adjusted tax rate would have been 32%.

Turning to capital management. In the third quarter, we returned an additional $12 million to equity holders, primarily through the net settlement of RSUs and through dividends. Share repurchase activity during this quarter was limited as we prioritize deploying capital towards strategic investments, including the Devon Park acquisition. Year-to-date, we have returned more than $157 million to equity holders through dividends, the net settlement of RSUs, open market repurchases and unit exchanges.

In 2025, we have retired more than 6 million shares, and our commitment to proactively managing our share count remains unchanged. At the end of the third quarter, we had 65 million shares of Class A common stock and 23.5 million partnership units outstanding. Finally, we closed the quarter with $186 million in cash and no debt. And this morning, we declared a quarterly dividend of $0.07 per share.

With that, operator, please open the line for questions.

[Operator Instructions] We'll take our first question from Devin Ryan of Citizens Bank.

First question, kind of a two-parter here. Just on Andrew, some of the pipeline commentary, so obviously heard kind of the record point. We're seeing a lot of non-M&A activity that doesn't seem to be getting picked up in the public data sources like debt advisory, et cetera. Can you talk about the mix of the pipeline? Is it more geared toward non-M&A right now? Or maybe if just the M&A is less visible? And that's kind of the point -- part 1 of the question. And part 2 is on the timing of the pipeline, should we expect normal fourth quarter seasonality positive? Or is it more geared toward 2026?

Yes. Thanks, Devin. I think on the look back, the mix is a bit more in the nontraditional M&A. So if you look back in the last 3 quarters, our liability management business, our capital raising business, [ Rx ] business are all showing very good growth through the course of the year. The pipeline, however, continues to show a significant increase in traditional M&A business. And as you know, it's really challenging to predict when transactions will get announced and closed. And as you also know, we are very much still early innings in scaling our business.

But when I look at those indicators that you guys don't see in terms of new business reviews, engagement letters, the mandates, the announcements that we expect in the course of the next several weeks and months, those all look very positive. And they're all much more weighted to traditional M&A versus our other products and services that we provide.

Okay. Great. And then just a follow-up on the recruiting environment, but then also the success you've had today, both external recruiting in 2025, but then also the acquisition as well. So 25 bankers, obviously, is a lot to digest in a year, but great for kind of forward momentum. Can you just talk about how these bankers are ramping on the platform? Are they going to be additive to 2026? Or is it further out than that? And then just more broadly, kind of the momentum in recruiting, can you do another kind of big year in 2026? Is that the expectation?

Yes. Of the 25 senior banker adds, 9 are already on the platform. So they will just continue to grow and expand their client base and hopefully contribute to revenue more near term. The external hires are the remainder, so we've got 16, including Devon Park. And we're very excited about those adds. They're in terrific industries and in areas where we have a right to win. And we think that they will be contributing to our business during the course of '26. I think with 7 weeks left of '25, it will be a bit of a high bar to have them announce and close transactions by the end of the year.

But again, looking at the forward indicators, these new partners where we have about now, 25% of our partners are here less than 2 years, that cohort seems to be [ seen ] in the ground running. And with the addition of Devon Park, as I said, that's different because that provides us with a new product category and a new group of clients that we didn't have prior to the acquisition. So that, for us, is a game changer because you get nonlinear growth and synergy out of that type of transaction where that product capability now is across 75 partners. So we're really excited about Devon Park and that capability. Our clients have been very excited that we have that capability. And that's, as I said in my upfront comments, Devin, the timing of that feels quite good.

Our next question is from Alex Bond of KBW.

I just wanted to ask on the restructuring -- just wanted to ask on the restructuring backdrop. Can you just maybe update us on what you're seeing in terms of the broader backdrop here in overall client engagement levels? Some of your peers have sounded a little bit more upbeat around restructuring volumes, while [ there's noted ] they've seen somewhat of a slowdown in new activity recently. Maybe have you seen any slowdown in recent weeks? And also, has there been any shift in terms of the mix between in-quarter, more traditional restructurings versus LME activity?

Yes. Thanks, Alex. We're seeing just a very steady pace of activity in our broad liability management business. I know there's been a lot of press reported about some cracks in credit markets and a couple of high-profile bankruptcies. We don't see that as something that's systemic. Those feel more isolated. But there are still large amount of clients, a large number of clients that need assistance with managing balance sheet in some cases, managing liquidity, and in some cases, going through a traditional workout or bankruptcy.

So for us, that business continues to grow. That will be a higher contributing business this year than last year, and that team continues to generate increasing revenue. We feel very, very good about our setup for '26.

Okay. Great. That's helpful. And then maybe just on the private capital side, now that the Devon Park deal has closed and those folks are on the platform, just trying to think about how soon or maybe how quickly we should expect that area of the business to meaningfully contribute to the revenue base? And maybe if there's any way to size up the potential contribution from that team relative to the M&A and restructuring sides once that team is fully up and running?

Yes. So we're doing our planning in terms of looking at targets and what our expectations will be for our groups heading into 2026, and we are going to treat the Devon Park business now fully part of Perella Weinberg as a group in terms of the expectations we have, and we think this will be a significant contributor, much like our other groups. We have 6 groups that are across our platform, plus our restructuring business. So we're expecting to just do the simple math on our revenue, and we expect Devon Park business to be that kind of contributor to our overall franchise.

And as I said earlier, we have 75 partners, all of whom have private equity relationships and relationships with private credit, infrastructure and real estate, which is where we really cover in the Devon Park business. So we're very excited about the product capability, which, again, a couple of months ago, we didn't have. And last year, we had 0 revenue in this area. So we're very excited about the setup there.

This concludes the Q&A portion of today's call. I would now like to turn the call back over to Andrew Bednar for any additional or closing remarks.

Okay. Thank you, Leo, and thanks, everyone, for joining us today. I also want to specifically thank our exceptional team. They have been working tirelessly both in recruiting top talent for our firm this year, but also of course, in covering our clients and their unwavering and very enthusiastic dedication and commitment to our mission, as these are the things that make our firm great. So we look forward to updating you on our progress next quarter, and thank you for your continued support.

This concludes the Perella Weinberg Third Quarter 2025 Earnings Call and Webcast. You may now disconnect your line at this time, and have a wonderful day.