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Moelis & Co. 10-Q Summary: Q2 2026

Business Context and Reporting Period

This filing is a Quarterly Report on Form 10-Q for Moelis & Co., a global independent investment bank, for the period ended June 30, 2026. The Company operates as a single segment advisory business providing services in mergers and acquisitions, recapitalizations, restructurings, and capital markets transactions. As of the reporting date, the Company employed 1,016 advisory bankers across over 20 global locations.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenues increased 12% in Q2 2026 and 9% YTD compared to 2025, driven primarily by higher average fees per completed transaction rather than an increase in the number of clients.
• Expense Management: Operating expenses rose 10% in Q2 and 7% YTD. Compensation and benefits increased 7% and 3% respectively, while non-compensation expenses grew 28% (Q2) and 23% (YTD) due to occupancy costs for new office space, travel, and technology investments (including AI).
• Profitability: Operating income improved 20% in Q2 and 16% YTD. However, YTD Net Income attributable to Moelis & Company decreased 5% ($87.0M vs $91.8M) due to a significant increase in the provision for income taxes (up 261% YTD) and higher non-controlling interest allocations.
• Liquidity: Cash and cash equivalents decreased by approximately $301 million from year-end 2025 to June 30, 2026. This decline was driven by operating outflows (bonus payments), significant share repurchases ($140.8M), and dividend/tax distribution payments ($112.8M).

Outlook, Risks, and Management Commentary

• Market Environment: Management cites strong deal activity driven by the pursuit of scale and AI-driven revaluation of companies. However, AI disruption is weighing on M&A sentiment in the software sector. Geopolitical events and private credit market volatility remain risks.
• Capital Allocation: The Company maintains a zero-debt balance sheet. In February 2026, the Board authorized a new $300 million share repurchase program; $226.2 million remains available as of June 30, 2026. A quarterly dividend of $0.65 per share was declared for payment in September 2026.
• Legal Proceedings: The Company is a defendant in a consolidated class action lawsuit regarding the Archer Aviation merger. In July 2025, the Court dismissed aiding and abetting and unjust enrichment claims against Moelis entities, though other claims against co-defendants remain.
• Tax Receivable Agreement: The Company has a liability of $269.6 million related to tax receivable agreements with eligible Managing Directors, with an estimated $38.6 million due within one year.

Investor Verification Checklist

• Revenue Quality: Verify the sustainability of the "higher average fees per transaction" trend, as revenue is heavily dependent on the timing of deal closings.
• Tax Provision Volatility: Review the drivers behind the 261% increase in the YTD income tax provision, which significantly impacted net income despite higher operating income.
• Cash Burn Rate: Assess the impact of the $300 million cash outflow in the first half of the year on future liquidity, particularly given the seasonal nature of bonus payments.
• Non-Compensation Costs: Monitor the trajectory of non-compensation expenses (up 23% YTD) to ensure they do not erode operating margins as revenue growth normalizes.
• Legal Exposure: Confirm the status of the Archer Aviation litigation and any potential for future indemnification or settlement costs.