Perella Weinberg Partners Q1 FY2025 earnings call

• Andrew Bednar noted first quarter revenues of $212 million, the highest first quarter revenue in history, with US and Europe revenue up twofold due to larger fees per transaction. Clients are pausing deals due to uncertainty from US government policy actions, but client engagement dashboard stats are at all-time highs and pipeline is strong. Backlog has declined, but restructuring and recruiting show bright spots.
• Alex Gottschalk discussed revenues including $23 million from Q2 closings recorded in Q1. Adjusted compensation margin was 67% of revenues, in line with full-year 2024 accrual. Adjusted non-compensation expense was $49 million, with over $10 million in litigation-related costs. Adjusted effective tax rate reflected tax benefit from stock comp, and the firm returned $121 million to equity holders in Q1, with plans to continue capital deployment for buybacks.

Perella Weinberg Partners reported first quarter revenues of $212 million, which is up more than 100% year-over-year and is the highest first quarter revenue in the company's history. Revenue in the US and Europe was up twofold, driven by larger fees per transaction. The restructuring liability management and financing advisory business experienced a meaningful uptick in demand from early April. In the first quarter, the firm added a Managing Director focused on transportation, leasing and logistics, and has several other partners and Managing Directors slated to join in the coming months. Revenue contribution details weren't broken out by specific segments, but overall the firm saw growth across all areas.

• Prior guidance of a single-digit increase in non-comp expense for the full year 2025 remains the best estimate. The compensation margin was set based on end-of-quarter assumptions and may be adjusted as business conditions progress. The adjusted if converted effective tax rate for Q1 was affected by stock comp vesting, but excluding that, the rate was in line with expectations for the rest of the year.

• Litigation costs of over $10 million in the quarter were a primary driver of year-over-year and quarter-over-quarter increases in non-compensation expense, but this is considered a one-time event. Forward-looking statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those discussed.

Q: How much of the recent M&A slowdown is due to companies changing plans vs. market volatility and when might transaction activity accelerate?

A: Clients are pausing deals, not terminating them. It's a natural moment due to volatility and broad uncertainty. Once clarity on tariff and trade policy increases, transaction activity is expected to accelerate similar to past dislocations like 2008-2009 and COVID periods.

Q: Can you give a sense of non-M&A business contribution and restructuring market share?

A: The firm feels strong in the restructuring liability management business, with the brand gaining traction. However, revenue elements aren't broken out, but the client-centric model allows quick mobilization to address client needs. The market is conducive to restructuring services during volatile periods.

Q: Thoughts on activity in Europe vs. US and recruiting trends?

A: Europe is more unified post-April policy actions with a more accommodative regulatory backdrop, but both regions saw balanced trends in Q1. Recruiting is seeing more talent due to slower announcement cadence, and the firm is continuing to add talent while maintaining criteria.

Q: Clarity on 67% comp ratio and non-comp expense guidance?

A: The 67% comp ratio reflects best estimate at quarter-end and may adjust as the year progresses. Litigation costs in the quarter were over $11 million, a one-time item, and the single-digit year-on-year increase in non-comp expense remains the best estimate for the full year 2025