Moelis & pany(US:MC)2025-07-24 21:33PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company presents its unaudited condensed consolidated financial statements and accompanying notes for the period Condensed Consolidated Statements of Financial Condition Condensed Consolidated Statements of Financial Condition (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (vs. Dec 31, 2024) | | :--------------------------------- | :----------------------------- | :------------------------------- | :------------------------ | | Total Assets | $1,342,535 | $1,378,936 | -$36,401 | | Cash and cash equivalents | $221,718 | $412,467 | -$190,749 | | Total Receivables | $102,759 | $73,709 | +$29,050 | | Investments | $290,175 | $184,601 | +$105,574 | | Total Liabilities | $746,525 | $899,553 | -$153,028 | | Compensation payable | $189,249 | $346,323 | -$157,074 | | Total Equity | $596,010 | $479,383 | +$116,627 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Revenues | $365,376 | $264,586 | +38% | | Total expenses | $304,747 | $244,518 | +25% | | Operating income (loss) | $60,629 | $20,068 | +202% | | Net income (loss) | $46,755 | $14,921 | +213% | | Net income (loss) attributable to Moelis & Company | $41,538 | $13,161 | +216% | | Diluted EPS | $0.53 | $0.17 | +212% | Condensed Consolidated Statements of Operations (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Revenues | $671,969 | $482,071 | +39% | | Total expenses | $574,428 | $456,201 | +26% | | Operating income (loss) | $97,541 | $25,870 | +277% | | Net income (loss) | $100,530 | $32,406 | +210% | | Net income (loss) attributable to Moelis & Company | $91,806 | $29,727 | +209% | | Diluted EPS | $1.17 | $0.39 | +200% | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------------------------------------------ | :------------------ | :------------------ | :----------- | | Net income (loss) | $100,530 | $32,406 | +210% | | Foreign currency translation adjustment and other, net of tax | $2,602 | -$275 | N/A | | Comprehensive income (loss) attributable to Moelis & Company | $94,186 | $29,484 | +219% | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :------------------ | :------------------ | :----------- | | Net cash provided by (used in) operating activities | $38,687 | -$25,036 | N/A | | Net cash provided by (used in) investing activities | -$113,057 | $108,760 | N/A | | Net cash provided by (used in) financing activities | -$117,796 | -$119,555 | -1.5% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | -$190,663 | -$35,972 | N/A | | Cash, cash equivalents, and restricted cash, end of period | $222,516 | $151,243 | +47.1% | Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Changes in Equity (June 30, 2025 vs. January 1, 2025) | Metric | Balance as of Jan 1, 2025 (in thousands) | Balance as of June 30, 2025 (in thousands) | Change | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :----- | | Total Moelis & Company equity | $441,606 | $515,982 | +$74,376 | | Noncontrolling interests | $37,777 | $80,028 | +$42,251 | | Total Equity | $479,383 | $596,010 | +$116,627 | - The increase in total equity is primarily driven by net income and equity-based compensation, partially offset by dividends declared and treasury stock purchases21 Notes to Condensed Consolidated Financial Statements 1. Organization and Basis of Presentation - Moelis & Company is a global investment bank providing advisory services in M&A, recapitalizations, restructurings, and other corporate finance matters, operating as a single business segment2425 - The company's structure involves Moelis & Company controlling Group LP and its operating subsidiaries, with noncontrolling interests held by Group LP partnership unit owners2426 - Key subsidiaries include U.S. Broker Dealer, Moelis International, and an equity method investment in MA Financial Group Limited2732 2. Summary of Significant Accounting Policies - Financial statements are prepared in conformity with U.S. GAAP, with estimates and assumptions affecting reported amounts2830 - The company consolidates entities where it has a controlling financial interest or is the primary beneficiary of variable interest entities29 - Revenue from advisory services is mostly recognized over time, with transaction fees constrained until substantially all services are provided and conditions met59606162 - Equity-based compensation is recognized over the service period based on grant-date fair value, adjusted for retirement eligibility6970 - Income taxes are accounted for under ASC 740, recognizing deferred tax assets/liabilities on temporary differences71 3. Recent Accounting Pronouncements - ASU No. 2023-09 (Income Taxes) requires more detailed disclosures for tax rate reconciliation and income taxes paid, effective for fiscal years beginning after December 15, 202476 - ASU No. 2024-03 (Disaggregation of Income Statement Expenses) requires disaggregation of certain expense categories, effective for fiscal years beginning after December 15, 202677 4. Fixed and Intangible Assets Equipment and Leasehold Improvements, Net (June 30, 2025 vs. December 31, 2024) | Asset Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------- | :----------------------------- | :------------------------------- | | Office equipment | $23,760 | $22,154 | | Furniture and fixtures | $17,126 | $16,842 | | Leasehold improvements | $77,043 | $75,295 | | Construction in progress | $6,403 | $2,556 | | Total | $124,332 | $116,847 | | Less: Accumulated depreciation and amortization | ($56,564) | ($51,396) | | Equipment and leasehold improvements, net | $67,768 | $65,451 | - Depreciation and amortization expenses for fixed assets increased to $5,539 thousand for the six months ended June 30, 2025, from $4,809 thousand in the prior year78 - Capitalized costs for cloud computing arrangements, net of amortization, were $861 thousand as of June 30, 202579 5. Investments Fair Value of Financial Assets (June 30, 2025) | Asset Category | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :------------------------------------ | :------------------- | :--------------------- | :--------------------- | :--------------------- | | Money market funds | $115,642 | — | $115,642 | — | | Certificates of Deposit (Cash & CE) | $4,000 | — | $4,000 | — | | Sovereign debt securities (Investments) | $235,210 | — | $235,210 | — | | Certificates of Deposit (Investments) | $18,000 | — | $18,000 | — | | Total fair value assets | $372,852 | — | $372,852 | — | - The company recognized unrealized gains of $192 thousand for Q2 2025 and unrealized losses of $527 thousand for H1 2025 on sovereign debt securities83 - The carrying value of the equity method investment in MA Financial was $36,965 thousand as of June 30, 20258586 6. Net Income (Loss) Per Share Attributable to Class A Common Shareholders Net Income (Loss) Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :--- | :--- | | Net income (loss) attributable to Class A common stock—basic | $41,538 | $13,161 | | Basic EPS | $0.55 | $0.18 | | Diluted EPS | $0.53 | $0.17 | Net Income (Loss) Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------ | :--- | :--- | | Net income (loss) attributable to Class A common stock—basic | $91,806 | $29,727 | | Basic EPS | $1.23 | $0.42 | | Diluted EPS | $1.17 | $0.39 | - The assumed exchange of Class A partnership units for Class A common stock was not dilutive for the periods presented90 7. Equity-Based Compensation - The 2024 Omnibus Incentive Plan replaced the 2014 Plan, authorizing the issuance of up to 15,000,000 shares plus forfeited shares from the prior plan9293 - For H1 2025, the company recognized $127,843 thousand in expenses related to RSUs and other stock-based awards, an increase from $85,935 thousand in 202494 - The company granted 822,931 Partnership Units and 450,000 Performance Units during H1 20259697 - Total unrecognized compensation expense for unvested awards was $304,163 thousand as of June 30, 2025, to be recognized over a weighted-average period of 2.2 years98 8. Stockholders Equity Class A Common Stock (Shares Issued and Outstanding) | Date | Shares Issued | Shares Outstanding | | :---------------- | :------------ | :----------------- | | June 30, 2025 | 84,745,796 | 74,178,031 | | December 31, 2024 | 80,970,827 | 70,589,951 | - Changes in Class A common stock are primarily due to follow-on offerings, exchanges of partnership units, and RSU vesting102 - The company repurchased 186,889 shares for $13,270 thousand during H1 2025105 - As of June 30, 2025, $61,115 thousand remained available under the $100 million share repurchase program106 - Noncontrolling interests accounted for 8% of Moelis & Company as of June 30, 2025107 9. Related-Party Transactions - The company entered into a new aircraft dry lease with a related party, incurring lease costs of $628 thousand for H1 2025110111 - Unsecured promissory notes from employees totaled $9,441 thousand as of June 30, 2025112 - Revenues from advisory transactions with affiliated entities decreased significantly to $131 thousand for H1 2025 from $9,663 thousand in the prior year114 10. Regulatory Requirements - U.S. Broker Dealer had net capital of $230,593 thousand as of June 30, 2025, exceeding its minimum requirement by $230,343 thousand115 - Non-U.S. subsidiaries consistently exceeded their local capital adequacy requirements116 11. Commitments and Contingencies - The company renewed its revolving credit facilities, maintaining aggregate base credit commitments of $50,000 thousand, with no borrowings as of June 30, 2025117119120 - Operating lease liabilities totaled $218,825 thousand as of June 30, 2025, with a weighted-average remaining lease term of 10.37 years121122124 - A new office lease in London will add approximately $50,000 thousand in ROU assets and lease liabilities124 - The company is involved in legal proceedings, including an appeal of a Delaware Court order and a dismissed class action lawsuit related to the Archer Aviation merger126127222 12. Employee Benefit Plans - The company accrued $2,038 thousand in employer matching contributions to its 401(k) plan for H1 2025129 13. Income Taxes Provision for Income Taxes (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | Provision (benefit) for income taxes | $6,662 | -$599 | - The income tax provision for H1 2025 reflects the company's share of operating results from Group LP, offset by $22,452 thousand in excess tax benefits from equity-based compensation131 - Group LP is currently under IRS examination for the 2020 tax year132133 14. Segment Information - The company operates as a single segment advisory business globally134135 Revenues by Geographic Location (Six Months Ended June 30) | Region | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :------------ | :------------------ | :------------------ | :----------- | | United States | $520,215 | $355,310 | +46.4% | | Europe | $90,791 | $70,233 | +29.3% | | Rest of World | $60,963 | $56,528 | +7.9% | | Total | $671,969 | $482,071 | +39.4% | Assets by Geographic Location (June 30, 2025 vs. December 31, 2024) | Region | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :------------ | :----------------------------- | :------------------------------- | :----- | | United States | $1,084,456 | $1,169,236 | -$84,780 | | Europe | $96,520 | $65,380 | +$31,140 | | Rest of World | $161,559 | $144,320 | +$17,239 | | Total | $1,342,535 | $1,378,936 | -$36,401 | 15. Subsequent Events - The Board of Directors declared a dividend of $0.65 per share, payable on September 18, 2025140 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, business outlook, liquidity, and critical accounting policies for the period Executive Overview - Moelis & Company is a leading global independent investment bank offering strategic advice and solutions across M&A, recapitalizations, and restructurings144 - As of June 30, 2025, the company served clients with 940 advisory bankers, generating revenues primarily from advisory services on transactions145 Business Environment and Outlook - For H1 2025, GAAP revenues increased by 39% to $672.0 million, significantly outpacing the 2% increase in global completed M&A transactions147 - The company is encouraged by new business origination and deal pipeline strength, with M&A market improvement driven by strategic priorities148 - Optimism for growth in the private capital advisory business is high due to near-record levels of capital accumulated by financial sponsors148149 - The company maintains a strong balance sheet with substantial liquidity and zero debt149 Results of Operations Key Financial Results (Three and Six Months Ended June 30) | Metric | 3 Months 2025 (in thousands) | 3 Months 2024 (in thousands) | 3 Months Variance | 6 Months 2025 (in thousands) | 6 Months 2024 (in thousands) | 6 Months Variance | | :-------------------------- | :--------------------------- | :--------------------------- | :---------------- | :--------------------------- | :--------------------------- | :---------------- | | Revenues | $365,376 | $264,586 | 38% | $671,969 | $482,071 | 39% | | Total operating expenses | $304,747 | $244,518 | 25% | $574,428 | $456,201 | 26% | | Operating income (loss) | $60,629 | $20,068 | 202% | $97,541 | $25,870 | 277% | | Net income (loss) | $46,755 | $14,921 | 213% | $100,530 | $32,406 | 210% | Revenues - Revenues increased by 38% in Q2 2025 and 39% in H1 2025, primarily due to an increase in average fees earned per completed transaction156158 - The number of clients paying fees of $1 million or more was 117 for H1 2025, consistent with the prior year157159 - Revenue recognition is largely over time, but transaction fees are constrained, making revenue unpredictable due to transaction complexities153154 Operating Expenses Operating Expenses (Three and Six Months Ended June 30) | Expense Category | 3 Months 2025 (in thousands) | % of Revenues 2025 | 3 Months 2024 (in thousands) | % of Revenues 2024 | 6 Months 2025 (in thousands) | % of Revenues 2025 | 6 Months 2024 (in thousands) | % of Revenues 2024 | | :-------------------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | :--------------------------- | :----------------- | | Compensation and benefits | $252,110 | 69% | $197,873 | 75% | $463,659 | 69% | $362,348 | 75% | | Non-compensation expenses | $52,637 | 14% | $46,645 | 18% | $110,769 | 16% | $93,853 | 19% | | Total operating expenses | $304,747 | 83% | $244,518 | 92% | $574,428 | 85% | $456,201 | 95% | - Total operating expenses increased by 26% to $574.4 million for H1 2025, primarily due to higher compensation and benefits expenses161162166167 - As a percentage of revenues, total operating expenses decreased from 95% to 85% for H1 2025, indicating improved operating leverage161162 Compensation and Benefits Expenses - Compensation and benefits expenses increased due to increased headcount and a higher discretionary bonus accrual, reflecting higher revenues166167 - As a percentage of revenues, compensation and benefits decreased from 75% to 69% for H1 2025, indicating improved efficiency166167 Non-Compensation Expenses - Non-compensation expenses increased by 18% to $110.8 million for H1 2025, primarily due to increased travel, communication, and technology expenses169170 - As a percentage of revenues, non-compensation expenses decreased from 19% to 16% for H1 2025169170 Other Income and Expenses - Other income and expenses increased to $9.7 million for H1 2025, driven by net gains on financial assets and earnings in MA Financial172173 Provision for Income Taxes - Income tax expense for Q2 2025 was $17.4 million on pre-tax income of $64.1 million175 - For H1 2025, income tax expense was $6.7 million on pre-tax income of $107.2 million, a significant change from a benefit in 2024176 Liquidity and Capital Resources The company maintains strong liquidity through advisory fees, cash, investments, and credit facilities Regulatory Capital - U.S. Broker Dealer's net capital of $230,593 thousand as of June 30, 2025, significantly exceeded its minimum requirement187115 Tax Receivable Agreement - The company has a tax receivable agreement to pay eligible Managing Directors 85% of cash savings from tax basis increases188 - As of June 30, 2025, $298.8 million is payable under the agreement, with an estimated $31.6 million due within one year191196 - Early termination or change of control could trigger accelerated payments based on assumptions192 Cash Flows Summary of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | | Operating Activities | $38,687 | -$25,036 | | Investing Activities | -$113,057 | $108,760 | | Financing Activities | -$117,796 | -$119,555 | | Net increase (decrease) in cash | -$190,663 | -$35,972 | | Cash, cash equivalents, and restricted cash, end of period | $222,516 | $151,243 | - Operating activities generated a net inflow of $38.7 million in H1 2025, a reversal from a $25.0 million outflow in H1 2024193 - Investing activities resulted in a net outflow of $113.1 million in H1 2025, mainly due to net purchases of investments193 - Financing activities resulted in a net outflow of $117.8 million in H1 2025, primarily for dividends and stock repurchases193 Contractual Obligations - The company has a total payable of $298.8 million under the tax receivable agreement196 - Contractual obligations also include operating leases for corporate office space and an aircraft197 Market Risk and Credit Risk The company is not subject to significant market or credit risk due to its business model Risks Related to Cash and Short-Term Investments - Cash and cash equivalents are primarily invested in U.S. and U.K. sovereign debt and money market securities199 - Cash and short-term investments are not considered subject to material market risks199 Credit Risk - The company regularly reviews accounts receivable and maintains an allowance for credit losses200 Exchange Rate Risk - The company is exposed to exchange rate risk from non-U.S. dollar denominated assets and liabilities201 - Other comprehensive income included gains of $2.6 million for H1 2025 from foreign currency fluctuations201 - No derivative instruments are used to hedge foreign currency fluctuations201 Critical Accounting Policies and Estimates This section outlines critical accounting policies requiring significant management judgment Revenue and Expense Recognition - Most advisory revenue is recognized over time as performance obligations are fulfilled205206 - Transaction fees are constrained until substantial completion and specified conditions are met to prevent significant revenue reversal207208 Accounts Receivable and Allowance for Credit Losses - Accounts receivable are presented net of an allowance for credit losses, determined by assessing collectability210211 - Receivables are stratified into short-term and private capital advisory categories for separate evaluation211 Income Taxes - Income taxes are accounted for under ASC 740, recognizing tax benefits/expenses on temporary differences and deferred tax assets214 - The company applies a two-step approach for uncertain tax positions, with no unrecognized tax benefits recorded215 Recent Accounting Developments - Refer to Note 3 for a discussion of recently issued accounting developments216 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the market risk disclosures provided in Item 2, Management's Discussion and Analysis - Quantitative and qualitative disclosures about market risk are set forth in 'Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risk and Credit Risk'217 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period217 - No material changes in internal control over financial reporting occurred during the period218 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company discloses ongoing legal proceedings, including an appeal and a dismissed class action lawsuit - The company is involved in judicial or regulatory proceedings, but believes no current proceedings would have a significant adverse effect220 - An appeal is ongoing regarding a Delaware Court of Chancery order that found certain provisions of the Stockholders Agreement invalid221 - Claims against Moelis entities in a class action lawsuit related to the Archer Aviation merger were dismissed by the Court222 Item 1A. Risk Factors There have been no material changes to the Risk Factors previously described in the company's Annual Report - No material changes to the Risk Factors described in the Annual Report on Form 10-K for the year ended December 31, 2024223 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports share repurchases during the quarter, with $61.1 million remaining under its program - No unregistered sales of equity securities occurred224 Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan or Programs | | :---------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------- | :-------------------------------------------------------------------------------------- | | April 1 - April 30 | 9,796 | $52.12 | 9,796 | $62.0 million | | May 1 - May 31 | 20,988 | $53.26 | 17,232 | $61.1 million | | June 1 - June 30 | — | — | — | $61.1 million | | Total | 30,784 | $52.90 | 27,028 | $61.1 million | - The share repurchase program, authorized for up to $100 million, had $61.1 million remaining as of June 30, 2025226 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities227 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable228 Item 5. Other Information The company reported no other information for the period - None229 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q - Includes organizational documents, incentive plan forms, related-party agreements, CEO/CFO Certifications, and Inline XBRL documents230 SIGNATURES - Report signed by Kenneth Moelis (CEO) and Christopher Callesano (CFO) on July 24, 2025233