Moelis & Co (MC)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q and our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Forward-Looking Statements and Certain Factors that May Affect Our Business

The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this Form 10-Q. We have made statements in this discussion that are forward-looking statements. You can identify these forward looking statements by the use of words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. You should consider the numerous risks outlined under “Risk Factors” in our Annual Report on Form 10-K and in this Form 10-Q.

Although we believe the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward looking statements. You should not rely upon forward looking statements as a prediction of future events. We are under no duty to and we do not undertake any obligation to update or review any of these forward looking statements after the date of this filing to conform our prior statements to actual results or revised expectations whether as a result of new information, future developments or otherwise.

Executive Overview

Moelis & Company is a leading global independent investment bank that provides innovative strategic advice and solutions to a diverse client base, including corporations, governments, and financial sponsors. We assist our clients in achieving their strategic goals by offering comprehensive integrated financial advisory services across all major industry sectors. With over 20 locations in North and South America, Europe, the Middle East, Asia and Australia, we advise clients on their most critical decisions, including mergers and acquisitions, recapitalizations and restructurings, capital markets transactions and other corporate finance matters. Our ability to provide confidential, independent advisory services to our clients across sectors and regions and through all phases of the business cycle has led to long-term client relationships and a diversified revenue base.

As of June 30, 2026, we served our clients globally with 1,016 advisory bankers. We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters which set forth our fees. We generally generate fees at key transaction milestones, such as closing, the timing of which is outside of our control. As a result, revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter. The performance of our business depends on the ability of our professionals to build relationships with clients over many years by providing trusted advice and exceptional transaction execution.

Business Environment and Outlook

Economic and global financial conditions can materially affect our operational and financial performance. See “Risk Factors” in Part II. Other Information of this Form 10-Q and in our Form 10-K for a discussion of some of the factors that can affect our performance. The M&A market data for announced and completed transactions during the three and six months ended June 30, 2026 and 2025, referenced throughout this Form 10-Q was obtained from LSEG - Financial Technology & Data (formerly known as Refinitiv) as of July 7, 2026 and July 7, 2025, respectively.

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For the first six months of 2026, we earned GAAP revenues of $729.2 million compared with $672.0 million earned during the same period in 2025. This represents an increase of 9% compared to a 13% increase in the number of global completed M&A transactions greater than $100 million in the same period.

We continue to observe strong levels of deal activity and client engagement across our businesses. The pursuit of scale, supported by a more accommodative U.S. regulatory environment, is a primary driver of M&A activity, and rapid technological change, particularly related to artificial intelligence technologies ("AI"), continues to drive companies to revalue their positioning and long-term competitiveness, supporting the need for strategic transactions. Financial sponsor engagement continues to increase, reflecting ongoing efforts to monetize a substantial backlog of investments. Evolving credit conditions and increased lender selectivity are contributing to increased demand for liability management transactions and are expected to support more traditional restructuring activity over time. The expansion of our capital markets platform spanning both the public and private capital markets has positioned us to deliver comprehensive financing solutions amid constructive capital markets conditions. Through our continued investment, our private capital advisory business has become a core pillar of our client offering and the team is actively executing and winning new mandates.

Our transaction activity levels and the timing of our revenues may be impacted by the volatility driven by geopolitical events, evolving conditions in the private credit market and AI-driven disruption. AI-driven disruption is weighing particularly on M&A sentiment within the software sector. However, we believe we are well-positioned to navigate these dynamic markets given our diversified capabilities, strong balance sheet, substantial liquidity and zero debt.

Results of Operations

The following is a discussion of our results of operations for the three and six months ended June 30, 2026 and 2025.

Revenues

We operate in a highly competitive environment. Each revenue-generating engagement is separately solicited, awarded and negotiated, and there are usually no long-term contracted sources of revenue. As a consequence, our fee-paying client engagements are not predictable, and high levels of revenues in one period are not necessarily predictive of continued high levels of revenues in future periods. To develop new business, our professionals maintain an active dialogue with a large number of existing and potential clients. We add new clients each year as our bankers continue to expand their relationships, as we hire senior bankers who bring their client relationships and as we receive introductions from our relationship network of senior executives, board members, attorneys and other third parties. We also lose clients each year as a result of the sale or merger of clients, changes in clients’ senior management, competition from other financial services firms and other causes.

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We earn substantially all of our revenues from advisory engagements, and, in many cases, we are not paid until the completion of an underlying transaction. The vast majority of our advisory revenues are recognized over time, although the recognition of our transaction fees are constrained until the engagement is substantially complete.

Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive advisory fees that would have been received if the transaction had been completed, despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client, or the inability of our client to restructure its operations, or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out-of-pocket expenses.

We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our holistic approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements, and capital markets expertise can be instrumental on both M&A and restructuring assignments.

Three Months Ended June 30, 2026 versus 2025

Revenues were $409.4 million for the three months ended June 30, 2026 as compared with $365.4 million for the same period in 2025, representing an increase of 12%. The increase in revenues is primarily attributable to an increase in average fees earned per completed transaction, as compared with the prior year period.

For the three months ended June 30, 2026 and 2025, we earned revenues from 144 clients and 136 clients, respectively, and the number of clients that paid fees equal to or greater than $1 million was 67 clients and 60 clients, respectively.

Six Months Ended June 30, 2026 versus 2025

Revenues were $729.2 million for the six months ended June 30, 2026 as compared with $672.0 million for the same period in 2025, representing an increase of 9%. The increase in revenues is primarily attributable to an increase in average fees earned per completed transaction, as compared with the prior year period.

For the six months ended June 30, 2026 and 2025, we earned revenues from 218 clients and 220 clients, respectively, and the number of clients that paid fees equal to or greater than $1 million was 121 clients and 117 clients, respectively.

Operating Expenses

The following table sets forth information relating to ou

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 10‑K. Actual results and the timing of events may differ significantly from those expressed or implied in such forward‑looking statements due to a number of factors, including those set forth in the sections entitled “Risk Factors” and “Special Note Regarding Forward‑Looking Statements” and elsewhere in this Form 10‑K.

Executive Overview

Moelis & Company is a leading global independent investment bank that provides innovative strategic advice and solutions to a diverse client base, including corporations, governments, and financial sponsors. We assist our clients in achieving their strategic goals by offering comprehensive integrated financial advisory services across all major industry sectors. With over 20 locations in North and South America, Europe, the Middle East, Asia and Australia, we advise clients on their most critical decisions, including mergers and acquisitions, recapitalizations and restructurings, capital markets transactions, and other corporate finance matters. Our ability to provide confidential, independent advisory services to our clients across sectors and regions and through all phases of the business cycle has led to long-term client relationships and a diversified revenue base.

As of December 31, 2025, we served our clients globally with 1,012 advisory bankers. We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters which set forth our fees. We generally generate fees at key transaction milestones, such as closing, the timing of which is outside of our control. As a result, revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter. The performance of our business depends on the ability of our professionals to build relationships with clients over many years by providing trusted advice and exceptional transaction execution.

Business Environment and Outlook

Economic and global financial conditions can materially affect our operational and financial performance. See “Risk Factors” elsewhere in this Form 10‑K for a discussion of some of the factors that can affect our performance. The M&A market data for announced and completed transactions in 2025 and 2024 referenced throughout this Form 10-K was obtained from LSEG - Financial Technology & Data (formerly known as Refinitiv), as of January 5, 2026 and January 6, 2025, respectively.

For the year ended December 31, 2025, we earned GAAP revenues of $1,516.8 million compared with $1,194.5 million earned during the same period in 2024. This represents an increase of 27% compared to a 7% increase in the number of global completed M&A transactions greater than $100 million in the same period.

Our new business origination and deal activity are strong. The breadth and depth of M&A activity that emerged in late 2025 is expanding. Strategic acquirers are becoming more active as corporate boards demonstrate increased willingness to pursue larger, transformational transactions to enhance scale and address ongoing technological change. Financial sponsor activity is also increasing, supported by improved valuation alignment and the need to deploy and return capital to investors. Activity in our capital structure advisory business continues to be driven by liability management assignments and we anticipate more traditional restructurings as prior liability management solutions run their course. Our capital markets business has experienced significant growth, benefiting from increased investor risk appetite across growth-oriented sectors with strong capabilities in both the public and private markets. Following substantial investment in 2025, our private capital advisory business is gaining meaningful traction as the GP-led secondaries market continues to hit record levels.

Recent geopolitical events and market volatility may impact transaction activity levels and the timing of our revenues. However, we believe we are well-positioned to navigate these dynamic markets given our diversified capabilities, strong balance sheet, substantial liquidity and zero debt.

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Results of Operations

The following is a discussion of our results of operations for the years ended December 31, 2025 and 2024. For a discussion of our results of operations for the year ended December 31, 2023, refer to “Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2024.

Revenues

We operate in a highly competitive environment. Each revenue‑generating engagement is separately solicited, awarded and negotiated, and there are usually no long‑term contracted sources of revenue. As a consequence, our fee‑paying client engagements are not predictable, and high levels of revenues in one period are not necessarily predictive of continued high levels of revenues in future periods. To develop new business, our professionals maintain an active dialogue with a large number of existing and potential clients. We add new clients each year as our bankers continue to expand their relationships, as we hire senior bankers who bring their client relationships and as we receive introductions from our relationship network of senior executives, board members, attorneys and other third parties. We also lose clients each year as a result of the sale or merger of clients, changes in clients’ senior management, competition from other financial services firms and other causes.

We earn substantially all of our revenues from advisory engagements, and, in many cases, we are not paid until the completion of an underlying transaction. The vast majority of our advisory revenues are recognized over time, although the recognition of our transaction fees are constrained until the engagement is substantially complete.

Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive advisory fees that would have been received if the transaction had been completed, despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client, or the inability of our client to restructure its operations, or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out‑of‑pocket expenses.

We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our holistic approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements, and capital markets expertise can be instrumental on both M&A and restructuring assignments.

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Year Ended December 31, 2025 versus 2024

Revenues were $1,516.8 million for the year ended December 31, 2025 compared with $1,194.5 million for the same period in 2024, representing an increase of 27%. The increase in revenues was driven by an increase in the average fees per completed transaction as compared to the prior year period.

For the years ended December 31, 2025 and 2024, we earned revenues from 363 clients and 406 clients, respectively, but more importantly, the number of clients that paid fees equal to or greater than $1 million was 254 clients and 241 clients, respectively.

Operating Expenses

The following table sets forth information relating to our operating expenses:

Our operating expenses are classified as compensation and benefits expenses and non-compensation expenses. Compensation and benefits expenses account for the majority of our operating expenses. Non-compensation expenses, which include the costs of professional fees, travel and related expenses, communication, technology and information services, occupancy, depreciation and other expenses, generally have been less significant in comparison with compensation and benefits expenses.

Year Ended December 31, 2025 versus 2024

Operating expenses were $1,242.9 million for the year ended December 31, 2025 and represented 82% of revenues, compared with $1,021.6 million for the same period in 2024 which represented 86% of revenues. The increase in operating expenses was primarily driven by increased compensation and benefits expense associated with higher revenues compared to the prior period.

Compensation and Benefits Expenses

Our compensation and benefits expenses are determined by management based on revenues earned, the results from investments where our employees and the Moelis advisory platform contributed meaningfully to the acquisition of the asset, the competitiveness of the prevailing labor market and anticipated compensation requirements for our employees, the level of recruitment of new Managing Directors and other bankers, the amount of compensation expenses amortized related to equity awards and other relevant factors. As a result, our compensation expenses may fluctuate materially in any particular period. Accordingly, the amount of compensation expenses recognized in any particular period may not be consistent with prior periods or indicative of future periods.

Our compensation expenses

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