Perella Weinberg Partners (PWP) Q1 2026 Earnings Report, Transcript and Summary

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.