Moelis & pany(MC) - 2025 Q2 - Quarterly Results

Financial Performance Summary This section provides an overview of the firm's strong financial results for Q2 and H1 2025, alongside key strategic and operational achievements Second Quarter 2025 Performance Moelis & Company reported significant year-over-year growth in the second quarter of 2025, with revenues increasing by 38% to $365.4 million. Both GAAP and Adjusted net income saw substantial increases, with diluted EPS rising to $0.53 from $0.17-$0.18 in the prior year period, reflecting a stronger operational performance and improved pre-tax margins Second Quarter 2025 Financial Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $365.4 M | $264.6 M | +38% | | GAAP Net Income | $46.8 M | $14.9 M | +213% | | Adjusted Net Income | $45.5 M | $14.5 M | +214% | | GAAP Diluted EPS | $0.53 | $0.17 | +212% | | Adjusted Diluted EPS | $0.53 | $0.18 | +194% | | Adjusted Pre-tax Margin | 17.6% | 8.3% | N/A | First Half 2025 Performance For the first half of 2025, the firm's revenues grew 39% to $672.0 million. Net income and EPS more than tripled compared to the first half of 2024, partly driven by net tax benefits of approximately $0.28 per share related to share-based awards settlement First Half 2025 Financial Highlights | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $672.0 M | $482.1 M | +39% | | GAAP Net Income | $100.5 M | $32.4 M | +210% | | Adjusted Net Income | $99.9 M | $32.8 M | +205% | | GAAP Diluted EPS | $1.17 | $0.39 | +200% | | Adjusted Diluted EPS | $1.17 | $0.40 | +193% | | Adjusted Pre-tax Margin | 16.0% | 6.7% | N/A | - GAAP and Adjusted net income for the first half of 2025 included net tax benefits of approximately $0.28 per share (diluted) from the settlement of share-based awards[3] Strategic and Operational Highlights The company attributes its strong performance to its integrated global platform and a more favorable deal environment. It continued its organic growth strategy by adding five Managing Directors in key advisory sectors during the second quarter - CEO Ken Moelis stated the firm enters the second half of the year in a "more favorable deal environment and with a significantly expanded range of expertise"[4] - The firm continued its growth strategy by hiring five new Managing Directors in Q2 2025: - Three in Private Capital Advisory - One in Technology (Europe) - One in Business Services (Europe)[7][12] Detailed Financial Analysis This section provides an in-depth analysis of the firm's revenue drivers, expense trends, and tax considerations for the reporting periods Revenues Revenue growth for both the second quarter and first half of 2025 was primarily driven by an increase in the average fees earned per completed transaction. The firm noted particular strength in its M&A and Capital Markets advisory services compared to the prior year periods - Second quarter 2025 revenues increased 38% to $365.4 million, attributed to higher average fees per transaction, especially in M&A and Capital Markets[10] - First half 2025 revenues increased 39% to $672.0 million, also driven by an increase in average fees earned per completed transaction[11] Expenses Operating expenses rose in 2025, driven by increases in both compensation and non-compensation categories. Compensation expenses grew due to higher headcount and increased bonus accruals tied to stronger revenues. Non-compensation expenses were pushed up by increased travel and technology costs, also related to higher headcount Adjusted Operating Expenses as a Percentage of Revenues | Expense Category (% of Revenues) | Q2 2025 (Adjusted) | Q2 2024 (Adjusted) | H1 2025 (Adjusted) | H1 2024 (Adjusted) | | :--- | :--- | :--- | :--- | :--- | | Compensation & Benefits | 69.0% | 75.1% | 69.0% | 75.1% | | Non-Compensation Expenses | 14.4% | 17.6% | 16.5% | 19.5% | | Total Operating Expenses | 83.4% | 92.7% | 85.5% | 94.6% | - The increase in compensation and benefits expenses was primarily due to increased headcount and a higher bonus expense accrual resulting from higher revenues[15] - The rise in non-compensation expenses was mainly driven by increased travel and related expenses, along with higher communications and technology costs due to increased headcount[16] Other Income and Taxes Other income increased significantly in both the second quarter and first half of 2025 compared to the prior year. For tax purposes, the company's Adjusted results assume a 100% corporate effective tax rate of 29.5% for the second quarter of 2025 Other Income (Loss) | Other Income ($ in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP | $3,510 | $1,708 | $9,651 | $5,937 | | Adjusted | $3,789 | $2,696 | $9,930 | $6,002 | - For Adjusted reporting, the firm assumed that 100% of its Q2 2025 operating results were taxed at a corporate effective tax rate of 29.5%[20] Capital Management and Shareholder Returns This section outlines the firm's robust financial position, including its liquidity and capital structure, and details its commitment to shareholder returns through dividend declarations Balance Sheet and Liquidity The company maintained a strong and liquid financial position as of June 30, 2025, holding $474.9 million in cash and liquid investments with no funded debt or goodwill on its balance sheet - As of June 30, 2025, the company held cash and short-term investments of $474.9 million[7][21] - The balance sheet remains strong with no funded debt or goodwill[7][21] Dividend Declaration The Board of Directors has declared a regular quarterly dividend of $0.65 per share, payable in September 2025 to stockholders of record in August 2025 - A regular quarterly dividend of $0.65 per share was declared[1][21] - The dividend is payable on September 18, 2025, to stockholders of record on August 4, 2025[21] Appendix: Financial Statements and Reconciliations This appendix provides detailed GAAP financial statements and comprehensive reconciliations to Adjusted (non-GAAP) figures, outlining key adjustments for tax and share-based awards GAAP Consolidated Statement of Operations This section presents the detailed unaudited GAAP Consolidated Statement of Operations for the three and six-month periods ending June 30, 2025, and 2024, providing a line-by-line breakdown of revenues, expenses, and net income GAAP Consolidated Statement of Operations (Unaudited) | ($ in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Revenues | $365,376 | $671,969 | | Total Expenses | $304,747 | $574,428 | | Operating income (loss) | $60,629 | $97,541 | | Income (loss) before income taxes | $64,139 | $107,192 | | Net income (loss) | $46,755 | $100,530 | | Net income (loss) attributable to Moelis & Company | $41,538 | $91,806 | Reconciliation of GAAP to Adjusted (non-GAAP) Financials This section provides detailed tables reconciling the company's GAAP financial results to its Adjusted (non-GAAP) figures for the second quarters and first halves of 2025 and 2024. Key adjustments include reclassifying Tax Receivable Agreement (TRA) liability impacts, assuming a 100% corporate tax rate, and assuming all partnership units are exchanged into Class A common stock - Adjustments are made to illustrate results as if 100% of the Firm's income is taxed at the corporate effective tax rate[40][44][46] - The reconciliation assumes all outstanding Class A partnership units have been exchanged into Class A common stock to calculate Adjusted weighted-average shares[41][44][46] - Adjustments related to the Tax Receivable Agreement (TRA) liability are reclassified from 'other income (expenses)' to the 'provision for income taxes' for Adjusted results[39][44][46]