Perella Weinberg Partners (PWP) Q2 2026 Earnings Report, Transcript and Summary

Shortly. Team will be happy to help you. Your meeting will begin shortly. If you need any assistance at any time, please press 0, and a member of our team will be happy to help you. Please stand by. Your meeting is about to begin. Good morning, everyone. Welcome to the Perella Weinberg Second Quarter 2026 Earnings Conference Call. After the prepared remarks, the call will be open for your questions. And finally, at any time, if you should need any operator assistance, please press 0. Please be advised that today's call is being recorded. I will now turn the call over to Ms. Taylor Reinhardt, Head of Communications and Marketing. Please go ahead, ma'am.

Thank you, operator, and welcome all. Joining me today are Andrew Bednar, Chief Executive Officer and Chairman, and Alexandra Gottschalk, Chief Financial Officer and Chief Operating Officer. Before we begin, I would 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 second quarter revenues of $157 million, bringing our first half revenues to $305 million, down 17% compared to last year. Booked revenue does not yet reflect the momentum we are seeing across our business. Announced transactions have picked up significantly. We are running ahead of where we were at this point in 2025. The pace has accelerated this summer, with nearly 40% of our year-to-date announcements occurring since the start of June. M&A weighted with recent elevated activity in our 10 transactions announced in the quarter. The number of companies facing significant 2029 and 2030 maturities and increasing rating agency pressure is larger than ever. And we expect the environment for our financing and capital solutions business to remain robust. We also reached an important milestone this quarter by closing on our private funds advisory business. We are encouraged by the pipeline we are building in that business, and we are pleased with how quickly this capability is gaining traction with our teams and with our clients. There are two metrics that are the strongest leading indicators of our business, our announced and pending backlog. This metric is up nearly 2.5x from a year ago. And adding that to booked revenue, our total booked plus announced and pending backlog is up over 30% year over year as of today. The A&P backlog includes a number of large fee events which will not all show up in our 2026 results. But we feel great about the direction of travel and our setup into the back half of 2026 and into 2027. As we indicated on the first quarter call, we expected the year to be back-half weighted, and that is exactly what we are seeing. And we continue to invest in talent to scale our business. We have six partners joining in the coming months from the Gleacher Shacklock acquisition and from continued lateral hiring. And we announced a new class of eight partner promotes earlier this week. The internally promoted partners represent roughly 45% of our overall partnership, which is a real testament to the depth of talent we have developed and our ability to grow leaders from within. These are important features of our brand. Congratulations to our new partners. It is an honor to have them join our partnership. And it is also a very well-deserved recognition. Looking at the partnership as a whole, more than a third are in the ramp-up stage with under three years as a partner. Which gives us meaningful runway as that group seasons on our platform. Taken together, the acceleration in announcements, the related growth in revenue backlog, our continued investment in partner-led talent, and the buildout of new capabilities in Private Funds Advisory, along with broader coverage in the UK, our platform continues to strengthen. And this gives us great confidence in our business heading into the back half of the year and well beyond. With that, I will now turn the call over to Alexandra to review our financial results and capital management in more detail.

Thank you, Andrew. Starting with expenses. Our adjusted compensation ratio was 71% for the first half of the year. With revenue weighted to the back half, we expect that ratio to come down toward our full-year target of 67% as additional revenue is recognized. Our adjusted non-compensation expense of $31 million for the quarter was down $5 million from the prior-year period, $6 million from the prior-quarter period. Driven in part by an insurance recovery. For the first half, adjusted non-compensation expenses totaled $69 million, down 20% from the same period last year. While we expect higher spend in the back half of the year, we remain on track for a single-digit percent decrease in full-year adjusted non-comp versus 2025. As it relates to taxes, we expect our underlying adjusted tax rate, excluding the benefit from RSU vesting, to be in the low- to mid-30% range for the remainder of 2026. Turning to capital management. Year to date, we have returned $73 million to equity holders through a combination of dividends, distributions, and RSU settlements. In our five years as a public company, we have returned over $765 million in aggregate. Including the retirement of 40 million shares or share equivalents. We remain committed to delivering value to our shareholders through prudent capital management. We ended the quarter with $116 million in cash, no debt, and 74 million Class A shares and 20 million partnership units outstanding. This morning, we declared a quarterly dividend of $0.07 per share. With that, operator, please open the line for questions.

Certainly, Ms. Gottschalk. Thank you, ma'am. Ladies and gentlemen, at this time, if you do have any questions, we will go first this morning to Devin Ryan of Citizens Bank.

Thanks. Good morning, Andrew and Alexandra. How are you? Very good. Hi, Jeff. Hi, Jennifer. Hi. I want to just start on the backlog commentary and just, Andrew, the momentum that you talked about and heard the comment that 40% of the year-to-date announced activity has occurred since June. So obviously, have been picking up quite a bit over the last couple of months here. So can you just talk about maybe what is changing to move conversations to announcement or speed things up? Is it conditions shifting? Or is it just the way these specific deals are evolving? And then if you can you just give a little bit more color around what you are seeing across kind of both the spectrum of kind of large deals versus smaller deals? And anything from geographic perspective too would be helpful. Thanks.

Sure. Thanks, Devin. It is more idiosyncratic, I think, just to the nature of our investments and the boots that we have on the ground. So we are not really tethered to the broader market as other firms might be where they are market share leaders. We are market share takers and growing our market share. So for us, it is all about where we have made investments. Those investments, as you know, take time. They are not light switch operations. And so, we have been very dogged in thinking about our client coverage. We have been very disciplined. I think we have made very good investments in our industrials business, in our consumer business, healthcare especially, and around some of our infrastructure and tech franchises. You know, those bankers have been on the platform now for a while and these transactions and relationships and then transactions follow, it just takes time. That curve for us is very evident. We just feel very good about people we have on the ground now and the progress they are making. Less about something that is fundamentally changed. We have not really changed what we are doing. It is more just the investments we have made and those particular client segments. They have been active and we see again really great progress in particular the last six weeks or so and the backlog is built up very nicely. On the question of large versus small, I think that when you look at the broader markets, you do not need me to tell you this, you can look at the data, but the transactions over $10 billion are accounting for pretty large percentage of overall volume. I think the $1 billion to $5 billion category on transaction count is down a bit. Again, because we are not tethered to the broader market stats, we continue to feel good about the investments we have made. We have had transactions in the over $20 billion level. We have had transactions in the $700 million to $2 billion level. And those are all good fee events for us. And again, building our franchise in a market where, as you begin transactions, as you increase your relevance, you know, it does have a compounding effect. So we are just in that stage of our investment cycle. In terms of the question about United States or North America versus rest of world, for us, the mix is pretty much the same as it has always been, something around 80/20. We are not seeing much divergence there. And we are seeing the same pace of activity in both of our key markets in Europe and the United States. I would say that a lot of the historic barriers to transactions and the excuses for not doing transactions have largely been removed from the boardroom. We are seeing now a very open-minded investment, in some cases, a very aggressive stance toward thinking about how to drive business forward, create value for stakeholders. So a lot of the prior excuses, whether it was tariffs or inflation or Iran war or whatever it might have been, yeah. We are just not feeling that. The boardrooms anymore. People are in transaction mode, we like that, particularly for our larger strategic clients.

Great color. Thank you, Andrew. And then just a follow-up on the kind of the partner composition. I appreciate a fair amount of changes just even this year with the three-year review and then kind of recent acquisitions, a big promo class, which is good to see. Can you just talk a little bit about the team on the field today and how you think that compares to kind of the team heading into the year? And appreciate kind of the comment on there is a lot of partners kind of still scaling their productivity. So how do you feel about kind of their ability to ramp? I do not know if it is to $15 million of revenue or how you guys think about kind of a more mature partner productivity level? And just intertwined with the question is, if productivity is increasing, what does mean for margin potential of the company? And the last part of the question sorry for multipart here, but just how to think about the just the growth now from here? You have kind of reset the base. You have some people in. Some people have been moved to adviser or moved out. How do we think about growing from now this level? Thanks.

Okay. I will try to get all that, Devin. If I missed something, just let me know. Understood. I mean, fundamentally, it is a question about our business and at its core, we are investors and business builders, we invest in people. So the product is our people. You invest in people, you have to make the investment upfront. As you know, I have had debates with the accountants on this, but our investments in people are not capitalized. They are expensed. And so it is a unique feature of the business where we are investing in people. We have to take that investment upfront. But then as people mature in this business, as they build their network, as they build transactions, and build relevance and get more experience. Actually, unlike products, which depreciate, and then you have to figure out how to reinvent the product and innovate the product. Our products actually get more valuable over time. It is a great feature to our business. Now we have to make the right decisions about the people we bring into the firm, the people we promote and develop. But it is just a great feature of the business. Now, the reality of the business also is at some point, you have people that will retire, will age out, will get less productive. So, I think changes we have made, without me being too derogatory, I think they have been misinterpreted by the marketplace, which is okay. I am not trying to correct everyone's viewpoint, but these are very natural and necessary changes if you are going to have a high-performing partnership. And you are being positioned for future growth and you are always in the next generation. We have a really great class of partners. We have announced earlier this week. As you mentioned, these are all highly qualified and highly productive people that we believe in, to be highly productive partners in the future. And we are still targeting that $15 million, but when we have promotions in particular, it takes time to ramp up. And so, there is a differential when we hire talent from the outside versus promote from within. The promotion from within does take longer to ramp. But the primary reason we have chosen this class of partners is that we believe in them. And believe that they can ramp. So, the profile right now is if you look at a third, even a little more than a third of the partnership is less than three years, we have experienced, particularly in post-COVID, do not know that it is a post-COVID thing. It just means that is when we looked at this, in fact, where historically, we would start to ramp up people one to two years, and that ramp is really three-plus years. And so we are managing the business as though our promotions are going to be three-plus-year ramps. And from external hires, a little faster, but generally that ramp-up is taking a bit longer. So we feel good about the growth from within here. Again, we are really disciplined on how we are thinking about coverage. And we feel like some of the investments we have made, particularly from within and from the outside are actually paying some real dividends now as we build up scale in those businesses. I hope I got all the questions, Devin, and I started to forget what you asked as I was talking.

Sorry. You did. And then the fundamental piece, we hit, and I appreciate the multipart of it, but I think we covered everything. So thank you.

Great. Okay. Thanks, Devin.

We will go next now to Alexander Bond with KBW.

Good morning, everyone. Thanks for taking the questions. Just wanted to start on good morning. Just wanted to start on the compensation outlook for the year here. So the first half of the adjusted compensation ratio was 71%, but just wondering how you are thinking about the full year just given the visibility into the back half. Obviously, a lot can change between now and the end of the year. But as we sit here, just would be great to kind of get your updated take on full-year expectations. And I think you have previously cited like that 67% ratio. Just wondering if that is still a reasonable target here for the full year?

Yes. As Alex said, the other Alexandra, our Alexandra, said in the upfront commentary, we are still targeting 67%. There will be some noise and lumpiness as we get there through the year because we said that revenue will be back-half weighted this year. But our target is still 67%. No change from what we said on the prior call.

Got it. Okay, great. And then maybe just wanted to try and drill a little bit deeper around expectations for the second half of the year. I mean, certainly does seem like in from what we see in the public data you noted, you know, the strength of the total pipeline, that it is going to be, you know, much stronger than the first half. But maybe just trying to get a better sense of how you are thinking about the revenue generation potential there given that you did highlight some of the there are some mandates that are going to flow into 2027 that are currently in the pipeline. So just any other color there would be great as well. Thank you.

Yes. We do not because we do not give revenue guidance. And for us, it is a much better metric as I said, and I realize you guys need to look at, you know, what is booked and what is in our financial reporting. But that is looking back, not looking forward. But looking forward, when we measure the strength of our business, the momentum is really about the booked plus the A&P. And as I said in the upfront commentary, that is up 30-plus percent from where we were this time last year. Now, the nature of the business where we do work on some very large fee events that are complex and have approval processes that take time. It is very, very difficult for anyone to predict when those various work streams and approvals are going to be completed. So, we do not see completion risk in the pipeline that we currently have, but we do have timeline risk that is very hard to influence and to judge exactly when those will become booked revenue. But again, that will be just something out of our control. We eventually believe that we will get that revenue as those transactions close. So, I know that may not be that helpful, Alexander, but that is the reality of our business.

No, it makes sense. And thank you for the color, Andrew. Thanks.

Thank you. We are with Goldman Sachs.

Good morning and thanks for taking the question. Andrew, I was hoping you might be able to speak to the morning. Could you just speak to the impact of higher long and short interest rates on M&A, particularly with a focus on sponsor M&A. Do you see the recovery in this part of the M&A market being once again pushed out at all?

Yes. Thanks, James. As you know from prior discussions and commentary that I have been more cautious on this floodgate opening from private equity. I think there are moments where we have had some surge activity from private equity, both buy side, sell side. We have got today about a little over a third of our business is private equity related. We have had historically a much heavier weighting on corporates, but given hiring we have done, we are, I think, making really good progress in that market. I think overall, rates always affect the ability to finance. I think right now, there is plenty of credit. The availability is enormous. It is in a lot of situations. There is probably more credit available than the buyer wants with maybe the exception of software-related transactions where there has been a little bit of a cap on loan to value. I think that costs are a bit higher than people would like. But I think the main driver of the lack of a floodgate opening for private equity has really been valuation and just still continued disconnect between what buyers are willing to pay and sellers are prepared to part ways with. And so until that gets resolved, I think you are still going to see activity for sure because the nature of private equity is to transact. That is the business they are in. And ultimately, all of those assets will find some transaction, whether it is an outright sell side, an IPO, some sort of continuation vehicle, or recapitalization. So private equity will continue to be extremely busy. But it may not be in traditional buy-side, sell-side until you have a better alignment between buyers and sellers. That is very clear.

I hope you might be able to just comment at least at a high level about the secondaries business that you have built after the investment you have made over the past few years?

Yes, it is still early days. We have made the acquisition last summer. It closed in October. We have got a few transactions already closed. We have got a number in the pipeline. I think the take-up has been very good. Our teams are understanding that product and capability better because we have never had it. So, I think having our relationship teams now focused on this particular product and capability has been very, very good in terms of how they have presented it to clients and the client take-up has been very good. So far, we feel good about the business. And like the capability and gives us again that greater dialogue with, in particular, our alternative asset manager clients who are looking for a broader set of capabilities from firms like ours.

Thanks for taking the questions.

Thank you.

Mr. Bednar, appears we have no further questions this morning, sir. I would like to turn the conference back to you for any closing comments.

Okay. Thank you, operator. Thank you, everyone, for joining today. We really appreciate your support. And look forward to speaking again in a few months. Take care. Bye.

Thank you, Mr. Bednar, and thank you, Ms. Gottschalk. Again, this concludes the Perella Weinberg Second Quarter 2026 Earnings Call and Webcast. You may disconnect your lines at this time and have a wonderful day.