Q2 2026 Evercore Inc Earnings Call

July 29, 2026

Speaker #1: Good morning and welcome to Evercore's second quarter 2026 earnings conference call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question-and-answer session.

Operator 1: Good morning. Welcome to Evercore's Second Quarter 2026 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Evercore management and the question-and-answer session. To ask a question, please press the star key followed by the number 1 on your touch-tone phone at any time. I will now turn the call over to Katy Huberty, Head of Investor Relations at Evercore. Please go ahead.

Operator: Good morning. Welcome to Evercore's Second Quarter 2026 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question-and-answer session. To ask a question, please press the star key followed by the number one on your touch-tone phone at any time. I will now turn the call over to Katy Haber, Head of Investor Relations at Evercore. Please go ahead.

Speaker #1: To ask a question, please press the star key followed by the number 1 on your touchtone phone at any time. I will now turn the call over to Katy Haber, Head of Investor Relations at Evercore.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator. Good morning, and thank you for joining us today for Evercore's second quarter 2026 financial results conference call. I'm Katy Haber, Evercore's Head of Investor Relations.

Katy Huberty: Thank you, operator. Good morning. Thank you for joining us today for Evercore's Q2 2026 financial results conference call. I'm Katy Huberty, Evercore's Head of Investor Relations. Joining me on the call today is John Weinberg, our Chairman and CEO, and Tim LaLonde, our CFO. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's Q2 2026 financial results. Our discussion of our results today is complementary to the press release, which is available on our website at evercore.com. This conference call is being webcast live in the For Investors section of our website. An archive of it will be available for 30 days, beginning approximately 1 hour after the conclusion of this call. During the course of this conference call, we may make a number of forward-looking statements.

Katy Haber: Thank you, operator. Good morning. Thank you for joining us today for Evercore's Q2 2026 financial results conference call. I'm Katy Haber, Evercore's Head of Investor Relations. Joining me on the call today is John Weinberg, our Chairman and Chief Executive Officer, and Tim LaLonde, our Chief Financial Officer. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's Q2 2026 financial results. Our discussion of our results today is complementary to the press release, which is available on our website at evercore.com. This conference call is being webcast live in the For Investors section of our website. An archive of it will be available for 30 days, beginning approximately 1 hour after the conclusion of this call. During the course of this conference call, we may make a number of forward-looking statements.

Speaker #2: Joining me on the call today is John Weinberg, our Chairman and CEO, and Timothy LaLonde, our CFO. After our prepared remarks, we will open up the call for questions.

Speaker #2: Earlier today, we issued a press release announcing Evercore's second quarter 2026 financial results. Our discussion of our results today is complementary to the press release which is available on our website at evercore.com.

Speaker #2: This conference call is being webcast live in the "For Investors" section of our website, and an archive of it will be available for 30 days, beginning approximately one hour after the conclusion of this call.

Speaker #2: During the course of this conference call, we may make a number of forward-looking statements. Any forward-looking statements that we make are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements.

Katy Huberty: Any forward-looking statements that we make are subject to various risks and uncertainties. There are important factors that could cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is posted on our website.

Katy Haber: Any forward-looking statements that we make are subject to various risks and uncertainties. There are important factors that could cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance. For detailed disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is posted on our website.

Speaker #2: These factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Speaker #2: I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance.

Speaker #2: For details disclosures on these measures and the GAAP reconciliations, you should refer to the financial data contained within our press release, which is posted on our website.

Speaker #2: We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings.

Katy Huberty: We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I will now turn the call over to John.

Katy Haber: We continue to believe that it is important to evaluate Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I will now turn the call over to John.

Speaker #2: I would now like to turn the call over to John.

Speaker #3: Thank you, Katy. And good morning, everyone. Our record second quarter revenues capped off a record first half for the firm underscoring the strength of our platform and strategy.

John Weinberg: Thank you, Katy. Good morning, everyone. Our record Q2 revenues capped off a record H1 for the firm, underscoring the strength of our platform and strategy. For the quarter, we generated $1 billion of adjusted net revenues and adjusted diluted earnings per share of $2.91, up 19% and 20% respectively from the Q2 of last year. For the H1, our revenues were $2.4 billion, up 56% year over year. Performance in the quarter continued to be broad-based across nearly all of our businesses, with record Q2 revenues in our North American Strategic Advisory business, the Private Funds Group, and the equities business. It was the best quarter ever for underwriting and wealth management.

Speaker #3: For the quarter, we generated $1 billion of adjusted net revenues and adjusted diluted earnings per share of $2.91, up 19% and 20%, respectively, from the second quarter of last year.

Speaker #3: And for the first half, our revenues were $2.4 billion, up 56% year over year. Performance in the quarter continued to be broad-based across nearly all of our businesses, with record second quarter revenues in our North American Strategic Advisory business, the Private Funds Group, and the Equities business.

Speaker #3: And it was the best quarter ever for Underwriting and Wealth Management. Our results reflect the strength of our client franchise, the benefits of our diversified business model, and the continued execution of our long-term strategy, despite pockets of market uncertainty experienced throughout the year.

John Weinberg: Our results reflect the strength of our client franchise, the benefits of our diversified business model, and the continued execution of our long-term strategy despite pockets of market uncertainty experienced throughout the year. Global industry-wide announced M&A activity remains healthy and is currently tracking well above last year's year-to-date levels, which was the second most active year for M&A on record. Large cap strategic M&A remains the primary driver of activity, while middle market and sponsor-related deals, though active, continue to run below historical levels. Equity markets have been resilient, reaching all-time highs in the quarter. Broader financing markets remain active. All in all, the building blocks are in place for a healthy deal-making environment. As it relates to Evercore, we continue to see solid activity across a broad range of sectors, products, and geographies.

Speaker #3: Global industry-wide, announced M&A activity remains healthy and is currently tracking well above last year's year-to-date levels, which was the second most active year for M&A on record.

Speaker #3: Large-cap strategic M&A remains the primary driver of activity, while middle-market and sponsor-related deals—though active—continue to run below historical levels. Equity markets have been resilient, reaching all-time highs in the quarter, and broader financing markets remain active.

Speaker #3: All in all, the building blocks are in place for a healthy dealmaking environment. As it relates to Evercore, we continue to see solid activity across a broad range of sectors, products, and geographies.

Speaker #3: Looking ahead to the second half of the year, client engagement remains strong, and our backlog currently sits near record levels, though, as is always the case, the timing of backlog conversion into revenue can vary from quarter to quarter, and it is best to evaluate our business on a longer-term basis.

John Weinberg: Looking ahead to H2, client engagement remains strong, and our backlog currently sits near record levels. As is always the case, the timing of backlog conversion into revenue can vary from quarter to quarter, and it is best to evaluate our business on a longer-term basis. We believe the M&A cycle has further room to run over the medium to longer term, supported by both large cap activity and increased participation from financial sponsors in the middle market. We are also seeing more companies pursue M&A to achieve scale and to respond to the technological transformation and disruption brought on by AI, which we expect to be a driver of activity across a number of sectors over time.

Speaker #3: We believe the M&A cycle has further room to run over the medium to longer term, supported by both large-cap activity and increased participation from financial sponsors and the middle market.

Speaker #3: We are also seeing more companies pursue M&A to achieve scale and to respond to the technological transformation and disruption brought on by AI, which we expect to be a driver of activity across a number of sectors over time.

Speaker #3: While the market backdrop remains dynamic, we are encouraged by the outlook for our business and expect to see continued activity in the latter part of this year and into next year.

John Weinberg: While the market backdrop remains dynamic, we are encouraged by the outlook for our business and expect to see continued activity in the latter part of this year and into next. Turning to talent. Since our last earnings call, four Senior Managing Directors have joined our investment banking practice in healthcare, industrials, Private Capital Advisory, and our Private Capital Markets Group, all based in New York. Seven additional SMDs have committed to join our growing global investment banking franchise in key areas, including restructuring in the US and Europe, healthcare, chemicals, and Equity Capital Markets, as well as two new hires based in our Frankfurt office. As of today, we have 19 new SMD additions year to date, 11 external hires, including those that have committed but not yet joined, and eight internal promotions.

Speaker #3: Turning to earnings call, four senior managing directors have joined our investment banking practice in healthcare, industrials, private capital advisory, and our private capital markets group, all based in New York.

Speaker #3: Further, seven additional SMDs have committed to join our growing global investment banking franchise in key areas, including restructuring in the US and Europe, healthcare, chemicals, and equity capital markets, as well as two new hires based in our Frankfurt office.

Speaker #3: As of today, we have 19 new SMD additions year to date: 11 external hires, including those who have committed but not yet joined, and eight internal promotions.

Speaker #3: That brings the total number of SMDs in our global investment banking practice to 188, with more than 50 currently ramping. In addition, we had one SMD join our equities business in equity trading.

John Weinberg: That brings the total of SMDs in our global investment banking practice to 188, with more than 50 currently ramping. We had one SMD join our equities business in equity trading. Investing in talent is core to our strategy, and we remain committed to thoughtfully expanding our platform over time. Now let me turn to our businesses. In North America, strategic advisory activity was robust in nearly all sectors with particular strength in healthcare, technology, and industrials. While industry-wide announcement trends among financial sponsors are still below historical average levels, our sponsor-related activity is up meaningfully year over year as we expand our coverage effort with that client base. Our EMEA strategic advisory business had a strong quarter and a record H1. In 2025, we announced the Robey Warshaw transaction, and we also established local presence in new European markets.

Speaker #3: Investing in talent is core to our strategy, and we remain committed to thoughtfully expanding our platform over time. Now, let me turn to our businesses.

Speaker #3: In North America's strategic advisory activity was robust in nearly all sectors, with particular strengths in healthcare, technology, and industrials. While industry-wide announcement trends among financial sponsors are still below historical average levels, our sponsor-related activity is up meaningfully year over year, as we expand our coverage effort with that client base.

Speaker #3: Our EMEA Strategic Advisory business had a strong quarter and a record first half. In 2025, we announced the Robey Warshaw transaction, and we also established a local presence in new European markets.

Speaker #3: Our enhanced and integrated teams across the region are seeing a real pickup in activity. Our Strategic Defense and Shareholder Advisory group continued to be busy, as activist campaigns pushed companies to explore sales and strategic reviews.

John Weinberg: Our enhanced and integrated teams across the region are seeing a real pickup in activity. Our strategic defense and shareholder advisory group continued to be busy as activist campaigns push companies to explore sales and strategic reviews. Globally, in Q2, we advised on a number of significant transactions, including Arcosa's $8.5 billion sale to CRH, Iridium Communications' $8 billion sale to Rocket Lab, National Grid's $1.75 billion investment in Joulent, and Victoria's Secret in its successful proxy fight against BBRC. We also continued to see strong performance across our non-M&A businesses, which generated more than 40% of total revenues over the last 12 months as of Q2. Liability management and restructuring business maintained strong activity and dialogue levels consistent with trends we have seen over the last several quarters.

Speaker #3: Globally, in the second quarter, we advised on a number of significant transactions, including COSA's $8.5 billion sale to CRH, Iridium Communications' $8 billion sale to Rocket Lab, National Grid's $1.75 billion investment in Julent, and Victoria's Secret in its successful proxy fight against BBRC.

Speaker #3: We also continued to see strong performance across our non-M&A businesses, which generated more than 40% of total revenues over the last 12 months, as of the second quarter.

Speaker #3: Liability management and restructuring business maintained strong activity and dialogue levels consistent with trends we have seen over the last several quarters. Our private capital markets and debt advisory team remained active with particular strengths in structured equity transactions and securitizations, as clients continue to seek innovative capital solutions.

John Weinberg: Our Private Capital Markets and Debt Advisory team remains active, with particular strength in structured equity transactions and securitizations as clients continue to seek innovative capital solutions. Private Capital Advisory maintained its position as the market-leading business in this space and delivered another strong quarter. Our Private Funds Group delivered a record Q2, even as the fundraising market remains subdued, driven by continued strong demand for the highest quality funds. Our Equity Capital Markets business had its best quarter ever, supported by more receptive issuance markets and strong investor demand. We served as an active bookrunner on 19 transactions with a balanced mix of IPOs and follow-on offerings, and benefited from a resurgence in healthcare activity as well as strength across several other sectors.

Speaker #3: Private capital advisory maintained its position as the market-leading business in this space and delivered another strong quarter. Our private funds group delivered a record second quarter even as the fundraising market remained subdued, driven by continued strong demand for the highest quality funds.

Speaker #3: Our Equity Capital Markets business had its best quarter ever, supported by more receptive issuance markets and strong investor demand. We served as an active bookrunner on 19 transactions, with a balanced mix of IPOs and follow-on offerings, and benefited from a resurgence in healthcare activity as well as strengths across several other sectors.

Speaker #3: In the second quarter, we were active book runner on Parabolis Medicine's $771 million IPO, the largest biotech IPO of all time, and lead-left book runner on Red Cat's $259 million follow-on offering.

John Weinberg: In Q2, we were active bookrunner on Parabilis Medicines' $771 million IPO, the largest biotech IPO of all time, and lead left bookrunner on Redcat's $259 million follow-on offering. Our equities business had record Q2 revenues as our team continues to deliver best-in-class content, corporate access, and execution services to our institutional client base. Finally, our wealth management business delivered its best revenue quarter and finished with quarter-end AUM of 16.2 billion. In summary, our record H1 results reflect the breadth and durability of our platform and the continued execution of our long-term strategy. We remain encouraged by the level of client dialogue and engagement we are seeing across our global franchise. We continue to invest in our business, positioning us to capture opportunities as they emerge. With that, let me turn it over to Tim.

Speaker #3: Our equities business had record second quarter revenues as our team continues to deliver best-in-class content, corporate access, and execution services to our institutional client base.

Speaker #3: And finally, our wealth management business delivered its best revenue quarter and finished with quarter-end AUM of $16.2 billion. In summary, our record first-half results reflect the breadth and durability of our platform and the continued execution of our long-term strategy.

Speaker #3: We remain encouraged by the level of client dialogue and engagement we are seeing across our global franchise. We continue to invest in our business, positioning us to capture opportunities as they emerge.

Speaker #3: With that, let me turn it over to Tim.

Speaker #1: Thank you, John. We are pleased with our results, which reflect the progress we have made in growing and strengthening our firm, and diversifying our revenue streams.

Tim LaLonde: Thank you, John. We are pleased with our results, which reflect the progress we have made growing and strengthening our firm and diversifying our revenue streams. For Q2 2026, net revenues, operating income, and EPS on a GAAP basis were $990 million, $147 million, and $2.32 per share, respectively. My comments from here will focus on non-GAAP metrics, which we believe are useful when evaluating our results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website. Our adjusted net revenues of approximately $1 billion were a record for Q2, up 19% versus a year ago. Throughout the quarter, activity levels and revenues strengthened relative to our expectations at the start of the quarter as the market environment experienced some improvement and deal activity increased.

Speaker #1: For the second quarter of 2026, net revenues operating income and EPS on a gap basis were $990 million; $147 million; and $2.32 per share, respectively.

Speaker #1: My comments from here will focus on non-GAAP metrics, which we believe are useful when evaluating our results. Our standard GAAP reporting, and a reconciliation of GAAP-to-adjusted results, can be found in our press release, which is on our website.

Speaker #1: Our adjusted net revenues of approximately $1 billion were a record for the second quarter, up 19% versus a year ago. Throughout the quarter, activity levels and revenues strengthened relative to our expectations at the start of the quarter, as the market environment experienced some improvement and deal activity increased.

Speaker #1: We have consistently said that our business, both revenues and expenses, should be evaluated across multiple quarters, and that continues to be the case. For the first half of 2026, adjusted net revenues were approximately $2.4 billion, up 56% versus the first half of last year, and represents a record first half for the firm.

Tim LaLonde: We have consistently said that our business, both revenues and expenses, should be evaluated across multiple quarters, that continues to be the case. For H1 2026, adjusted net revenues were approximately $2.4 billion, up 56% versus H1 of last year, represents a record H1 for the firm. Adjusted operating income was $190 million for Q2 and $544 million for H1, up 21% and 99%, respectively, year over year. Adjusted earnings per share were $2.91 for Q2 and $10.48 for H1, up 20% and 77% year over year, respectively. Our adjusted operating margins for Q2 and H1 were 19% and 22.7%, respectively. Turning to the businesses. Adjusted advisory fees were approximately $776 million in Q2, up 11% year over year. For H1, advisory revenues were up 61%.

Speaker #1: Adjusted operating income was $190 million, for the second quarter, and $544 million for the first half, up 21%, and $99%, respectively, year over year.

Speaker #1: Adjusted earnings per share were $2.91 for the second quarter and half, up 20% and 77% year over year, respectively. Our adjusted operating margins for the second quarter and first half were 19% and 22.7%, respectively.

Speaker #1: Turning to the businesses, adjusted advisory fees were approximately $776 million in the quarter, up 11% year over year. For the first half, advisory revenues were up 61%.

Speaker #1: Our advisory revenues are a record for the second quarter, with strength across nearly every area as well as increased productivity levels. Underwriting fees of $97 million represented our best quarter to date, increased $201% from the prior year period.

Tim LaLonde: Our advisory revenues are a record for Q2, with strength across nearly every area, as well as increased productivity levels. Underwriting fees of $97 million represented our best quarter to date, increased 201% from the prior year period. In H1, underwriting revenues were up 76%. The strength was driven by robust follow-on and IPO issuance. Commissions and related revenue was $64 million, a record Q2 and up 9% year over year. Adjusted asset management and administration fees were approximately $25 million, up 15% versus the prior year. Adjusted other revenue net was approximately $39 million, with a little over half due to gains on our DCCP hedge portfolio, as equity markets rallied in the quarter, and a little less than half due to interest income. Turning to expenses.

Speaker #1: In the first half, underwriting revenues were up 76%. The strength was driven by robust follow-on and IPO issuance. Commissions and related revenue were $64 million.

Speaker #1: A record second quarter and up 9% year over year. Adjusted asset management and administration fees were approximately $25 million. Up 15% versus the prior year.

Speaker #1: Adjusted other revenue net was approximately $39 million, with a little over half due to gains on our DCCP hedge portfolio as equity markets rallied in the quarter, and a little less than half due to interest income.

Speaker #1: Turning to expenses, our adjusted compensation ratio for the quarter was 63.5%, down approximately 190 basis points from the second quarter of last year, and down approximately 50 basis points from last quarter.

Tim LaLonde: Our adjusted compensation ratio for the quarter was 63.5%, down approximately 190 basis points from Q2 of last year, and down approximately 50 basis points from last quarter. We remain focused on making gradual progress over time and balancing that with continued investment in our business. Adjusted non-compensation expenses were $175 million, resulting in a 17.5% non-comp ratio. While this is up significantly from last quarter and from the year ago quarter, like revenues, non-comp expenses and ratios are best evaluated across multiple quarters. Our non-comp expense ratio for the first six months is 13.5%. Nonetheless, the increase for the quarter was larger than normal and is primarily due to investments that are intended to yield near-term results for the firm, such as conferences and client events, or expenses incurred in deal pitching and execution.

Speaker #1: We remain focused on making gradual progress over time, and balancing that with continued investment in our business. Adjusted noncompensation expenses were $175 million. Resulting in a 17.5% noncomp ratio.

Speaker #1: While this is up significantly from last quarter and from the year-ago quarter, like revenues, non-comp expenses and ratios are best evaluated across multiple quarters.

Speaker #1: Our noncomp expense ratio for the first six months is 13.5%. Nonetheless, the increase for the quarter was larger than normal, and is primarily due to investments that are intended to yield near-term results for the firm, such as conferences and client events, or expenses incurred in deal pitching and execution.

Speaker #1: Also, investments that are intended to build our business with medium- to longer-term results, such as technology—including AI and data management strategies—search and placement fees related to SMD and non-SMD hiring, and occupancy costs related to offices for our growing team of professionals.

Tim LaLonde: Also, investments that are intended to build our business with medium to longer term results, such as technology, including AI and data management strategies, search and placement fees related to SMD and non-SMD hiring, and occupancy costs related to offices for our growing team of professionals. Further, there is some element of seasonality or episodic costs, which we expect may be reduced in coming quarters. For the full year, we would expect to see a modestly higher growth rate in non-comps relative to what we have experienced over the last couple of years. We are striving to achieve an annual non-comp ratio that is approximately in line with what we achieved last year. Our adjusted tax rate for the quarter was 29.4%, compared to 30% a year ago.

Speaker #1: Further, there is some element of seasonality or episodic costs, which we expect may be reduced in the coming quarters. For the full year, we would expect to see a modestly higher growth rate in non-comps relative to what we have experienced over the last couple of years.

Speaker #1: We are striving to achieve an annual noncomp ratio that is approximately in line with what we achieved last year. Our adjusted tax rate for the quarter was 29.4%, compared to 30% a year ago.

Speaker #1: We anticipate that our effective tax rate for the remaining quarters of the year will be similar to what we have experienced in those quarters over the last few years.

Tim LaLonde: We anticipate that our effective tax rate for the remaining quarters of the year will be similar to what we have experienced in those quarters over the last few years. Turning to our balance sheet. As of 30 June, our cash and investment securities totaled nearly $2.4 billion. In the quarter, we returned a total of $150 million of capital through the repurchase of approximately 330,000 shares and the payment of dividends. For H1 of the year, we have returned a total of $823 million, of which $734 million was through share repurchases at an average price of approximately $325 per share. We have already surpassed the full year record for share repurchases based on dollar amount. Our Q2 adjusted diluted share count was 43.7 million shares, down over 730,000 shares from Q1.

Speaker #1: Turning to our balance sheet, as of June 30th, our cash and investment securities totaled nearly $2.4 billion. In the quarter, we returned a total of $150 million, of capital through the repurchase of approximately $330,000 shares, and the payment of dividends.

Speaker #1: For the first half of the year, we have returned a total of $823 million, of which $734 million was through share repurchases at an average price of approximately $325 per share.

Speaker #1: We have already surpassed the full-year record for share repurchases based on dollar amount. Our second quarter adjusted diluted share count was 43.7 million shares, down over 730,000 shares from the first quarter.

Speaker #1: We continue to maintain a strong cash position, which enables us to meet regulatory, capital, and operating requirements, while also providing us with the resources to implement our strategic plan.

Tim LaLonde: We continue to maintain a strong cash position, which enables us to meet regulatory, capital, and operating requirements while providing us with the resources to implement our strategic plan. As we enter H2 of the year, our business remains healthy. We are confident in our plan and optimistic about the opportunities that lie ahead as we remain committed to investing in our business and creating value for our shareholders over time. With that, we'll now open the line for questions.

Speaker #1: As we enter the second half of the year, our business remains healthy. We are confident in our plan and optimistic about the opportunities that lie ahead, as we remain committed to investing in our business and creating value for our shareholders over time.

Speaker #1: With that, we'll now open the line for questions.

Speaker #2: Thank you. We will now conduct the question-and-answer portion of the conference. Please limit yourselves to one question only. You are welcome to rejoin the queue for any additional questions, time permitting.

Operator 3: Thank you. We will now conduct the question and answer portion of the conference. Please limit yourself to one question only. You are welcome to rejoin the queue for any additional questions, time permitting. Again, if you would like to ask a question, please press star one on your touch-tone phone. Our first question will come from Steven Chubak with Wolfe Research. Please go ahead.

Operator: Thank you. We will now conduct the question and answer portion of the conference. Please limit yourself to one question only. You are welcome to rejoin the queue for any additional questions, time permitting. Again, if you would like to ask a question, please press star one on your touch-tone phone. Our first question will come from Steven Chubak with Wolfe Research. Please go ahead.

Speaker #2: Again, if you would like to ask a question, please press *1 on your touchtone phone. Our first question will come from Steven Chubak with Wolfe Research.

Speaker #2: Please go ahead.

Speaker #3: Hi, good morning, and thanks for taking my question. So. So, Tim, I was hoping to double-click into some of your comments around noncomps just given the bulk of noncomps admittedly are fixed.

Steven Chubak: Hi. Good morning. Thanks for taking my question.

Tim LaLonde: Hi, Steven.

Steven Chubak: Tim, I was hoping to double-click into some of your comments around non-comps. Given the bulk of non-comps admittedly are fixed, it's a big driver of operating leverage for you and peers historically. I recognize that some of the investments will be episodic, but the headcount growth is up 10% year-on-year. Senior MD count is up mid to upper teens, and the non-comps up 30% year to date on a year-on-year basis. Thinking about all the areas that you're looking to invest more heavily, still trying to understand, given some of the items you cited might appear to be table stakes, why you're not seeing more non-comp leverage relative to your peers. Is there anything we can infer about the H2 ramp in activity given the near record backlog and the fact that you tethered it to deal pitches, which you referenced earlier?

Speaker #3: It's been a big driver of operating leverage for you and your peers historically. I recognize that some of the investments will be episodic, but the headcount growth is up 10% year over year.

Speaker #3: Senior MD count is up mid to upper teens. And the noncomps are up 30% year to date on a year-on-year basis. So, thinking about all the areas that you're looking to invest more heavily, still trying to understand, given some of the items you cited, might appear to be table stakes, why you're not seeing more noncomp leverage relative to your peers, and is there anything we can infer about the second half ramp in activity given the near-record backlog and the fact that you tethered it to deal pitches, which you referenced earlier?

Speaker #1: Yeah, sure. There's a lot packed into that, but happy to tackle it. First, let me take a moment to reiterate or reframe what people have often heard from us.

Tim LaLonde: Yeah, sure. There's a lot packed into that, but happy to tackle it. First, let me take a moment to reiterate or reframe that people have heard often from us, including on this call, which is, our business needs to be evaluated on a multi-quarter basis. Our comp ratio for the quarter is, of course, 17.5%. We're not happy with that. For the H1, it's 13.5%, okay? That would be the first point. This compares to a pre-COVID non-comp ratio of more than 17%. Also, in my prepared remarks, I mentioned that we would expect the growth rate in non-comps this year to be modestly higher than what we experienced the last few years, and that we are striving to finish with a non-comp ratio that's approximately similar or in line with what we experienced last year. Then to remind folks, last year it was 14.2%.

Speaker #1: Including on this call, which is our business needs to be evaluated on a multi-quarter basis. And our comparison for the quarter is, of course, 17.5%.

Speaker #1: We're not happy with that. For the first half, for the first half, it's 13.5%, okay? That would be the first point. This compares to a pre-COVID noncomp ratio of more than 17%.

Speaker #1: Also, in my prepared remarks, I mentioned that we would expect the growth rate in noncomps this year to be modestly higher than what we experienced the last few years, and that we are striving to finish with a noncomp ratio that's approximately similar or in line with what we experienced last year, and then to remind folks, last year it was 14.2%.

Speaker #1: And so, those are the first things, which is multi-quarter, it's 13.5% for the first half. And we're expecting something more in line with what we achieved last year.

Tim LaLonde: Those are the first things, which is multi-quarter, it's 13.5% for the H1, we're expecting something more in line with what we achieved last year. Now, let me double back on the increases we did have. First, this is important, the majority of this is investments in our company for growth. Some of that growth is realized in the very near term. That's related to things like conferences, client events, deal pitches, deal execution, which result in travel and professional fees. Some of that is just related to what we expect to be near-term revenue and near-term increased activity. Second, investments that provide returns in the medium term. That's client hires. You mentioned Senior MDs up. This year we've added 11 through external hires. We promoted eight internally. That's 19 more. We've got 50 who are ramping. That's a lot.

Speaker #1: Now, let me double back on the increases. We did have—first, and this is important—the majority of this is investments in our company for growth.

Speaker #1: Some of that growth is realized in the very near term. That's related to things like conferences, client events, deal pitches, and deal execution, which result in travel and professional fees.

Speaker #1: So, some of that is just related to what we expect to be near-term revenue and near-term increased activity. Second, investments that provide returns in the medium term.

Speaker #1: That's client hires. You mentioned senior MDs up. This year, we've added 11 through external hires. We promoted 8 internally. That's 19 more. We've got 50 who are ramping.

Speaker #1: That's a lot. And beyond that, we, of course, can hardly turn on the news or pick up a magazine without reading about AI and technology.

Tim LaLonde: Beyond that, we of course, can hardly turn on the news or pick up a magazine without reading about AI and technology. We have doubled down on our investment there. We added a terrific new Chief Information Officer in 2025. We built out a senior team around him. We have a number of projects underway. We expect that those projects will pay dividends for us over the coming years. That's the next point. Then as you mentioned, I mentioned in my prepared remarks, there are episodic items, or items that are seasonal in nature, those include things like the arrival of our interns and certain conferences and/or off-sites that happen to be held in that quarter.

Speaker #1: And we have doubled down on our investment there. We added a terrific new Chief Information Officer in 2025, and we built out a senior team around him.

Speaker #1: We have a number of projects underway. And we expect that those projects will pay dividends for us over the coming years. And so, that's the next point.

Speaker #1: And then, as you mentioned, and I mentioned in my prepared remarks, there are episodic items, and some items that are seasonal in nature. Those include things like the arrival of our interns and certain conferences and/or offsites that happen to be held in that quarter.

Speaker #1: And so, we're hopeful that those are not going to be things that we're going to either see or see in the same magnitude over the next several quarters.

Tim LaLonde: We're hopeful that those are not going to be things that we're going to either see or see in the same magnitude over the next several quarters. We should get some help there as well. There's nothing really overly complicated. It's really just that simple. Multi-quarter, $13.5 for H1. Something similar to last year for the full year is what we're striving for. The increases you are seeing are primarily due to investments. Then to a lesser extent, to things that we hope will either be smaller or not present in some of the upcoming quarters. That's that. I think you asked about second half ramp on revenues as well. John, I don't know if you want to maybe share some thoughts on that, and then I can chime in, but.

Speaker #1: And so, we should get some help there as well. And so, there's nothing really overly complicated; it's really just that simple. Multi-quarter, $13.5 million for the first half, something similar to last year.

Speaker #1: For the full year is what we're striving for. And what we the increases you are seeing are primarily due to investments and then to a lesser extent to things that we hope will either be smaller or not present in some of the upcoming quarters.

Speaker #1: That's that. And I thank you asked about second half ramp on revenues as well. And John, I don't know if you want to maybe share some thoughts on that, and then I can chime in, but.

Speaker #3: Sure. On the second half, we are looking at a very strong second half. We are seeing substantial client engagement; it remains very strong.

John Weinberg: Sure. On H2, we are looking at really a very strong H2. We are seeing substantial client engagement. It remains very strong. Backlogs continue at near record levels, which are also echoed by engagement letters and conflict checks. We're very encouraged by the business and the outlook for our business, and we expect continued strong performance through the year and into next year.

Speaker #3: Backlogs continue at near-record levels, which are also echoed by engagement letters and conflict checks. And we're very encouraged by the business and the outlook for our business.

Speaker #3: And we expect continued strong performance through the year and into next year.

Speaker #1: Yeah, and the only thing I might add to that is, as you're thinking about comparative results, just recall that Q3 and Q4 last year were both record quarters.

Tim LaLonde: Yeah. The only thing I might add to that is, as you're thinking about comparative results, just recall that Q3 and Q4 last year were both record quarters.

Speaker #2: Thank you. Our next question comes from James Yarrow with Goldman Sachs. Please go ahead.

Operator 3: Thank you. Our next question comes from James Yaro with Goldman Sachs. Please go ahead.

Operator: Thank you. Our next question comes from James Yaro with Goldman Sachs. Please go ahead.

Speaker #4: Thanks for the question. So, it feels like there's a two-speed investment banking or M&A market right now with large-cap strategics. Outperforming the mid-caps and sponsors.

James Yaro: Thanks for the question. It feels like there's a two-speed in investment banking or M&A market right now, with large cap strategics outperforming the mid caps and sponsors. I was hoping you could perhaps provide a little bit of additional color around the midcap and sponsor component of the M&A market, and what you think actually gets that to improve more fully, and perhaps any sense of timeline as well.

Speaker #4: I was hoping you could perhaps provide a little bit of additional color around the mid-cap and sponsor component of the M&A market and what you think actually gets that to improve more fully and perhaps any sense of timeline as well.

Speaker #3: Absolutely. So, we're seeing increased activity both in the middle mid-cap area as well as sponsors. It is not clear that this is going to drive and open the dams type rally in these sectors.

John Weinberg: Absolutely. We're seeing increased activity both in the midcap area as well as sponsors. It is not clear that this is going to drive an open-the-dams type rally in these sectors, but clearly there's real activity and there's a lot of movement in terms of, especially in sponsors, there's a lot of dialogue and thought about when is the opportunity going to come, and when are people going to really start moving. Our business is actually in a very good place. We've added substantial numbers of people in sponsor coverage, and our pitch rate is up substantially from where it was this time last year, and our win rate is also up. We're seeing sponsor activity up in a material way.

Speaker #3: But clearly, there is real activity and there's a lot of movement, especially among sponsors. There's a lot of dialogue and thought about when the opportunity is going to come, and when people are really going to start moving.

Speaker #3: Our business is actually in a very good place. We've added substantial numbers of people in sponsors in sponsor coverage. And our pitch rate is up substantially from where it was this time last year.

Speaker #3: And our win rate is also up. So, we're seeing sponsor activity up in a material way. In addition, we've continued to invest in bringing together our private capital advisory businesses and our classic sponsor M&A business.

John Weinberg: In addition, we've continued to invest in bringing together our private capital advisory businesses and our classic sponsor M&A business, and we're seeing some real fruits to that labor. Our sponsor business seems to be in a very good place, and we're actually very optimistic about where that is going. In terms of middle market, we've added several players in the middle markets, and what we're seeing is that the dialogues are quite healthy. They certainly aren't following the very strong large cap strategics, but there's a lot of dialogue and activity that we feel is going to continue to build the strength of that sector. All in all, those two sectors we see as a build.

Speaker #3: And we're seeing some real fruits to that labor. So, our sponsor business seems to be in a very good place and we're actually very optimistic about where that is going.

Speaker #3: In terms of middle market, we've added several players in the middle markets. And what we're seeing is that the dialogues are quite healthy. They certainly aren't following the very strong large-cap strategics.

Speaker #3: But there's a lot of dialogue and activity that we feel is going to continue to build the strength of that sector. So, all in all, those two sectors we see as a build.

Speaker #2: Thank you. Our next question will come from Brendan Hawkin with BMO Capital Markets. Please go ahead.

Operator 3: Thank you. Our next question will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Operator: Thank you. Our next question will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Speaker #4: Good morning. Thanks for taking my questions. Tim, and John, you spoke to the strength in the business. Tim, you spoke to tough comps in the back half of '25.

Brennan Hawken: Good morning. Thanks for taking my questions. Tim and John, you spoke to the strength in the business. Tim, you spoke to tough comps in H2 2025. Typically we see H2 revenue exceed H1 revenue for you, just given the seasonality of the business. H1 had Q1, which was remarkably strong, especially for a Q1. Is it still reasonable to think that H2 revenues can exceed H1, or is that going to just be too tough a comp in addition to H2 2025 being tough?

Speaker #4: But typically, we see the second half of revenue exceed the first half of revenue for you, just given the seasonality of the business. The first half was had the first quarter, which was remarkably strong, especially for our first quarter.

Speaker #4: Is it still reasonable to think that the back half revenues can exceed the first half, or is that going to just be too tough a comp in addition to the back half of '25 being tough?

Speaker #1: Yeah, hi, Brendan. And thanks for the question. I think the way I'd think about it is it is the case if you look back at our historical quarterly revenues, for the last, let's call it, decade, to the best of my recollection, I think the fourth quarter is just about always been the best of those four quarters.

Tim LaLonde: Hi, Brennan, thanks for the question. I think the way I'd think about it is, it is the case if you look back at our historical quarterly revenues for the last, let's call it decade. To the best of my recollection, I think Q4 has just about always been the best of those four quarters. As you mentioned, Q1 also was an extraordinary quarter at $1.4 billion, which is the biggest quarter in the history of the firm, and $100 million higher than our Q4 last year. Look, we stopped short of giving revenue guidance, I don't want to go too much further than that, other than to say, as John said in his remarks, we have near record levels of backlogs. Activity levels are good.

Speaker #1: As you mentioned, first quarter also was an extraordinary quarter at 1.4 billion dollars. Which is the biggest quarter in the history of the firm and 100 million dollars higher than our fourth quarter last year.

Speaker #1: And look, we stopped short of giving revenue guidance. And so I don't want to go too much further than that. Other than to say, as John said, and his remarks, we have near-record levels of backlogs, activity levels are good.

Speaker #1: We feel good about our business and a continued gradual build, particularly into the latter part of this year and next year. But, particularly given uncertainties that always exist in the environment, we're going to stop short of being any more specific than that.

Tim LaLonde: We feel good about our business in a continued gradual build, particularly into the latter part of this year and next year. Particularly given uncertainties that always exist in the environment, we are going to stop short of being any more specific than that.

Speaker #3: But what I would say, Brendan, is that the dialogue levels the deals that are in-house and the likelihood of these deals coming to fruition is all quite strong.

John Weinberg: What I would say, Brennan, is that the dialogue levels, the deals that are in-house, and the likelihood of these deals coming to fruition is all quite strong. We feel good about the tone of the business. As Tim said, we can't predict, we're certainly not going to give guidance, I think the business is healthy.

Speaker #3: And so we feel good about the tone of the business. As Tim said, we can't predict and we're certainly not going to give guidance.

Speaker #3: But I think the business is healthy.

Speaker #2: Thank you. Our next question will come from Devin Ryan with Citizens Bank. Please go ahead.

Operator 3: Thank you. Our next question will come from Devin Ryan with Citizens JMP. Please go ahead.

Operator: Thank you. Our next question will come from Devin Ryan with Citizens JMP. Please go ahead.

Speaker #4: Hey, guys. This is Neo Eloff on for Devin. The question we got is just kind of on how AI is impacting both buyer and seller expectations.

Neil Eloff: Hey, guys. This is Neil Eloff on for Devin. The question we got is just on how AI is impacting both buyer and seller expectations, and how that's maybe evolved over the past few months. Obviously, software's in an area that's been heavily affected. Maybe you can discuss that as well as some of the other verticals. Maybe if you can give some insight into how spreads are tightening or whether you're seeing that or not.

Neo Eloff: Hey, guys. This is Neil Eloff on for Devin. The question we got is just on how AI is impacting both buyer and seller expectations, and how that's maybe evolved over the past few months. Obviously, software's in an area that's been heavily affected. Maybe you can discuss that as well as some of the other verticals. Maybe if you can give some insight into how spreads are tightening or whether you're seeing that or not.

Speaker #4: And kind of how that's maybe evolved over the past few months. Obviously, software has been an area that's been heavily affected. So maybe you can discuss that as well as kind of some of the other verticals.

Speaker #4: And then maybe, if you can, give some insight into how spreads are tightening or whether you're seeing that or not.

Speaker #3: Oh, what? What was the last part of that question?

John Weinberg: A what? What was the last part of that question?

Speaker #1: Whether spreads are tightening.

Tim LaLonde: Whether spreads are tightening.

Speaker #3: Okay, so let me start with software. Obviously, there was a pause in the market for software several months ago. What we're seeing is that the software sector—especially on the M&A side and the dialogues connected with those—have started to warm up again.

John Weinberg: Okay. Let me start with software. Obviously, there was a pause in the market for software several months ago. What we're seeing is that the software sector, especially in the M&A side, and the dialogues connected with those, have started to warm up again. Whereas it is somewhat bifurcated in that the very high-quality software companies are actually in dialogue, both to do M&A on the acquisition side, as well the sponsors who own software companies thinking about whether they sell them or not. That activity has picked up, and what we're seeing in our really software coverage business is that the activity level looks to be quite healthy, and we anticipate that that will continue to warm and there'll be more activity. In terms of the activity level, generally for AI is a source of really a great deal of M&A discussion.

Speaker #3: And so whereas it is somewhat bifurcated in that the very high-quality software companies are actually in dialogue both to do M&A on the acquisition side as well as the sponsors who own software companies thinking about whether they sell them or not, that activity has picked up.

Speaker #3: And what we're seeing in our really software coverage business is that the activity level looks to be quite healthy. And we anticipate that that will continue to warm.

Speaker #3: And there'll be more activity. In terms of the activity level generally for AI, AI is a source of really a great deal of M&A discussion.

Speaker #3: Obviously, AI is driving strategic thought for lots of the big strategics and that's why you're seeing some of the big strategics look to really do some much stronger and bigger acquisitions.

John Weinberg: Obviously, AI is driving strategic thought for lots of the big strategics, and that's why you're seeing some of the big strategics look to really do some much stronger and bigger acquisitions. You're also seeing a lot of the big strategics look at capabilities they think they need and the view that they need to scale to be able to compete in AI with a lot of their competitors. On really all fronts, that's been a catalyst for continuing stronger dialogues. In addition, the AI software relationship has really driven more dialogue in the restructuring side of our business, where there are some good software companies that need some support on the liability management side. We're also seeing activity and expect some activity coming out of software, and AI, and the impact that AI will have on some of those software companies.

Speaker #3: You're also seeing a lot of the big strategics look at capabilities they think they need, and the view that they need to scale to be able to compete in AI with a lot of their competitors.

Speaker #3: So on really all fronts, that's been a catalyst for continuing stronger dialogues. In addition, the AI software relationship has really driven more dialogue in the restructuring side of our business where there are some good support on the liability management side.

Speaker #3: And so we're also seeing activity and expects some activity coming out of software and AI and the impact that AI will have on some of those software companies.

Speaker #3: So, there are any number of places where those relationships, which you pointed out, will actually drive some investment banking activity.

John Weinberg: There are any number of places where those relationships, which you pointed out, will actually drive some investment banking activity.

Speaker #1: Yeah, the only thing I'd add to that is we are seeing green shoots of improvements in that space on the M&A side.

Tim LaLonde: Yeah. The only thing I'd add to that is we are seeing green shoots of improvements in that space on the M&A side.

Speaker #2: Thank you. Our next question comes from Mike Brown with UBS. Please go ahead.

Operator 3: Thank you. Our next question comes from Michael Brown with UBS. Please go ahead.

Operator: Thank you. Our next question comes from Michael Brown with UBS. Please go ahead.

Speaker #4: Okay, great. Thanks for taking my question. Maybe just a quick clarification on that last point and then I'll kind of ask my question. But is that comment that you said at the end, is that kind of sponsors and strategics when you talked about the green shoots and the software space?

Michael Brown: Okay, great. Thanks for taking my question. Maybe just a quick clarification on that last point, and then I'm going to ask my question. Is that comment you said at the end, is that kind of sponsors and strategics when you talked about the green shoots in the software space?

Speaker #3: Yes. We think that there is continuing activity. Our dialogue really are across the board. So with respect to sponsors, the sponsors, especially the ones that have really been focused on software, are seeing real opportunities.

John Weinberg: Yes. We think that there is continuing activity. Our dialogues really are across the board. With respect to sponsors, the sponsors, especially the ones that have really been focused on software, are seeing real opportunities, and we're in a number of dialogues for that. On strategics, there is a very strong point of view that software is actually continuing to be powerful, that the blip that happened several months ago was an overreaction. There is real opportunity both in buying and selling software companies going forward.

Speaker #3: And we're in a number of dialogues for that. And then on strategics, there is a very strong point of view that software is actually continuing to be powerful, that the blip that happened several months ago was an overreaction.

Speaker #3: And there is real opportunity both in buying and selling software companies going forward.

Speaker #4: Okay, great. Thanks for that clarification. I did really want to ask you about Europe. So with the Roby Warshaw acquisition, that seems like it's really been a good strategic home run for you guys, partnered together now.

Michael Brown: Okay, great. Thanks for that clarification. I did really want to ask you about Europe. With the Robey Warshaw acquisition, that seems like it's really been a good strategic home run for you guys, partnered together now. Maybe just discuss a little bit about what you're seeing in Europe, specifically on the M&A front. How's the confidence levels for continued activity there and expectations for that market? Do you think that there's still a good pace of acceleration that can come through there? Do you see that as an opportunity to continue to take share in the region? Maybe just a quick update on what you're seeing on the hiring front as well.

Speaker #4: Maybe just discuss a little bit about what you're seeing in Europe specifically on the M&A front. How's the confidence levels for continued activity there and expectations for that market?

Speaker #4: Do you think that there's still a good pace of acceleration that can come through there? And then do you see that as an opportunity to continue to take share in the region, maybe just a quick update on what you're seeing on the hiring front as well?

Speaker #3: Sure. So we see real strength in our European businesses. As you've seen and you've heard from us, we continue to add to our capabilities and also our coverage of companies in Europe.

John Weinberg: Sure. We see real strength in our European businesses. As you've seen and you've heard from us, we continue to add to our capabilities and also our coverage of companies in Europe. You mentioned Robey Warshaw. That has gone extremely well. The integration has been smooth, and we are really pleased with the way our two firms have come together. We've been involved in several important and large transactions where Robey Warshaw and Evercore have worked together, and we're really pleased with that. As you know, we've also added capabilities throughout Europe. For example, you've seen that we've just added two very strong people in Frankfurt. We have also added a Stockholm office. We are building out our Milan operation and our Paris operation, which is a couple of years old, is actually doing extremely well.

Speaker #3: You mentioned Roby Warshaw. That has gone extremely well. The integration has been smooth. And we are really pleased with the way our two firms have come together.

Speaker #3: And we've been involved in several important and large transactions where Roby Warshaw and Evercore have worked together. And we're really pleased with that. As you know, we've also added capability throughout Europe.

Speaker #3: So for example, you've seen that we just did that we've just added two very strong people in Frankfurt we have also added a Stockholm office we are building out our Milan operation and our Paris operation which is a couple of years old is actually doing extremely well.

Speaker #3: And so really across the board, joining Spain we really have built out a business and then what we've done is we've actually built in capability in terms of products that we can add.

John Weinberg: Really across the board, joining Spain, we really have built out a business. What we've done is we've actually built in capability in terms of products that we can add. For example, whether it's debt advisory or whether it's restructuring, we've added to both of those also. On the restructuring side, which was a business which we were really, I think, under-invested in. We have actually put in some significant investments in European restructuring and liability management, and we're seeing real fruits to that also. We feel really enthusiastic and optimistic about the business that we've built. We feel really good about the people we've recruited, and we feel like it's coming together really nicely. That is a business that we do expect to really compete even more effectively.

Speaker #3: So for example, whether it's debt advisory or whether it's restructuring, we've added to both of those also. And so in the restructuring side, which was a business which we were really I think underinvested in, we have actually put in some significant investments in European restructuring and liability management.

Speaker #3: And we're seeing real fruits to that also. So we feel really enthusiastic and optimistic about the business that we've built. We feel really good about the people we've recruited.

Speaker #3: And we feel like it's coming together really nicely. And so that is a business that we do expect to really compete even more effectively.

Speaker #3: We think we are going to build share. And we really think that the ambitions we have for that business are well-founded.

John Weinberg: We think we are going to build share. We really think that the ambitions we have for that business are well-founded.

Speaker #2: Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Please go ahead.

Operator 3: Thank you. Our next question comes from James Mitchell with Seaport Global Securities. Please go ahead.

Operator: Thank you. Our next question comes from James Mitchell with Seaport Global Securities. Please go ahead.

Speaker #5: Hey, good morning. Maybe just on ECM, a record quarter in the second quarter. So I guess how are you feeling about the pipeline in that business?

James Mitchell: Hey, good morning. Maybe just on ECM, a record quarter in Q2. I guess, how are you feeling about the pipeline in that business? How much of the quarter would you attribute to just a really strong environment versus your efforts to diversify your sector coverage and gain share? Maybe thinking about higher lows and higher highs from here? Just any broader discussion on ECM would be great.

Jim Mitchell: Hey, good morning. Maybe just on ECM, a record quarter in Q2. I guess, how are you feeling about the pipeline in that business? How much of the quarter would you attribute to just a really strong environment versus your efforts to diversify your sector coverage and gain share? Maybe thinking about higher lows and higher highs from here? Just any broader discussion on ECM would be great.

Speaker #5: How much of the quarter would you attribute to just a really strong environment versus sort of your efforts to diversify your sector coverage and gain share and maybe thinking about higher lows and higher highs from here?

Speaker #5: Just any broader discussion on ECM would be great.

Speaker #3: We feel really good about our ECM operation. I think we're making real progress. It's going to be it's going to be up and down.

John Weinberg: We feel really good about our ECM operation. I think we're making real progress. It's going to be up and down. The market is clearly going to determine some of that. We did get the benefit of a very good market, and as we look out, we see good backlog and really significant business in the next couple of quarters, as far as we can see. We feel really good about the people that we've added. We also feel really good about the way that we are approaching the ECM business. Evercore has really taken seriously how we market ECM and really how we engage ECM in how we call on the corporates that we are dealing with really throughout. I'd say that you can expect our ECM business is going to continue to grow. We have an aspiration to be a top 10 underwriter.

Speaker #3: The market is clearly going to determine some of that. We did get the benefit of a very good market. And we see as we look out, we see a good backlog and really significant business in the next couple of quarters.

Speaker #3: As far as we can see, we feel really good about the people that we've added. We also feel really good about the way that we are approaching the ECM business.

Speaker #3: Evercore has really taken seriously how we market ECM. And really how we engage ECM in how we call on the corporates that we are dealing with really throughout.

Speaker #3: And so I'd say that you can expect our ECM business is going to continue to grow. We have an aspiration to be a top 10 underwriter.

Speaker #3: I think, personally, I'm very optimistic about that. I think we have some really high-quality people, both who are inside ECM and also people who are selling that product.

John Weinberg: Personally, I'm very optimistic about that. I think we have some really high-quality people, both who are inside ECM and also people who are selling that product. I think we feel that it's actually realizing some real potential.

Speaker #3: So, I think we feel that it's actually realizing some real potential.

Speaker #2: Thank you. Our next question will come from Ryan Kinney with Morgan Stanley. Please go ahead.

Operator 3: Thank you. Our next question will come from Ryan Kenny with Morgan Stanley. Please go ahead.

Operator: Thank you. Our next question will come from Ryan Kenny with Morgan Stanley. Please go ahead.

Speaker #6: Hi, good morning. All right. So it's FOMC day. And I'm wondering if we can get more details on what your current dialogue with clients is around the potential for additional rate hikes and what the resilience of the pipeline is if we get a surprise hike or if we get lingering uncertainty on future hikes.

Ryan Kenny: Hi, good morning. All right.

John Weinberg: Good morning.

Ryan Kenny: It's FOMC day, and I'm wondering if we can get more details on what your current dialogue with clients is around the potential for additional rate hikes and what the resilience of the pipeline is if we get a surprise hike or if we get lingering uncertainty on future hikes. Would that be a material headwind to any parts of the business?

Speaker #6: Would that be a material headwind to any parts of the business?

Speaker #3: Well, we do not think that the rates at this point are really going to determine merger activity or even activity within other parts of our business.

John Weinberg: Well, we do not think that the rates at this point are really going to determine merger activity or even activity within other parts of our business. We think that the market is being driven by other forces right now, and financeability is not really an issue in any of the M&A that we're seeing, nor is it really an issue with respect to the sponsor businesses. As we all know, if rates go up substantially, that may put some stress on some of the sponsor portfolio companies. We really think that the market is actually pretty non-committal to really where rates are going to be. I think that it's not really going to impact this market.

Speaker #3: We think that the market is being driven by other forces right now. And financeability is not really an issue in any of the M&A that we're seeing, nor is it really an issue with respect to the sponsor businesses.

Speaker #3: Although, as we all know, if rates go up substantially, that may put some stress on some of the sponsor portfolio companies. But we really think that the market is actually pretty non-committal to really where rates are going to be.

Speaker #3: I think that it's not really going to impact really this market. We do in terms of you're asking us how are we thinking about rate hikes.

John Weinberg: In terms of you asking us how are we thinking about rate hikes, right now our projection in ISI is that it is going to be pretty neutral through the end of the year. I think that is the way I think we are approaching it and thinking about it. Generally, we think that where rates are not really going to drive the merger market, at least in the near term.

Speaker #3: Right now, our projection and ISI is that it's going to be pretty neutral through the end of the year. So, I think that's the way we're approaching it and thinking about it.

Speaker #3: But generally, we think that we're rates are not really going to drive the merger market. At least in the near term.

Speaker #2: Thank you. And as a reminder that is STAR 1 to ask a question. And our next question will come from Alex Bond with KBW.

Operator 3: Thank you. As a reminder, that is star one to ask a question. Our next question will come from Alex Bond with KBW. Please go ahead.

Operator: Thank you. As a reminder, that is star one to ask a question. Our next question will come from Alex Bond with KBW. Please go ahead.

Speaker #2: Please go ahead.

Speaker #5: Hey, good morning, everyone. Thanks for taking the question. Maybe one on PCA, just from looking at the industry data and commentary, it suggests that secondary volumes may have slowed sequentially at the industry level in Q2.

Alex Bond: Hey, good morning, everyone. Thanks for taking the question. Maybe one on PCA. Just from looking at the industry data and commentary, it suggests that secondary volumes may have slowed sequentially at the industry level in Q2. From your remarks, sounds like it was another strong quarter for this part of the business. Wondering if you can share with us your expectations for PCA through year-end, also to the extent you think your leading position in the space may help you weather periods where industry volumes may slow to a degree. Also it would be helpful to get any color around how what is happening in software is impacting both current activity levels across the secondary space as well as forward expectations here. Thank you.

Speaker #5: But from your remarks, it sounds like it was another strong quarter for this part of the business. But I'm wondering if you can share with us your expectations for PCA through year-end, and also to what extent you think your leading position in the space may help you weather periods where industry volumes may slow to a degree.

Speaker #5: And then also it'd be helpful to get any color around how what's happening in software is impacting both current activity levels across the secondary space as well as forward expectations here.

Speaker #5: Thank you.

Speaker #3: So our PCA business is actually performing well. And we feel really good about the prospects going forward. As you know, we have a very large market share.

John Weinberg: Our PCA business is actually performing well, and we feel really good about the prospects going forward. As you know, we have a very large market share, and we really expect that we will be able to protect that market share. Really, the activity level is very healthy right now, and we see that continuing through the end of the year. As we have discussions with them, there is a very strong inflow of business. They are seeing a lot, and it is really across the board. It is both CVs as well as LPs and GP business. We have some new products that we are also marketing, and that is all going well. Generally, that business is quite healthy. The second part of the question was on software. Software is a really important part of the business in terms of the way we run our business.

Speaker #3: And we really expect that we'll be able to protect that market share. And really, the activity level is very healthy right now. And we see that continuing through the end of the year.

Speaker #3: As we have discussions with them, there is a very strong inflow of business. They are seeing a lot, and it's really across the board.

Speaker #3: It's both CVs as well as LPs and GP business. We have some new products that we're also marketing. And those are that's all going well.

Speaker #3: And so, generally, that business is quite healthy. The second part of the question was on software. Software is a really important part of the business in terms of the way we run our business.

Speaker #3: In terms of software, opportunities I think that those opportunities are consistent with really what we've seen in the past, which is software is an asset that is being considered on all different levels.

John Weinberg: In terms of software opportunities I think that those opportunities are consistent with really what we've seen in the past, which is software is an asset that is being considered on all different levels. As you know, CVs are an option in terms of how you monetize. There are many circumstances where the sponsor owner of a set of software assets, and we're seeing this quite a number of times, where there's a real belief in that asset that the market may not be sharing. The CV may be a very good alternative to go to the next level and get some monetization in that asset. I think what we're seeing is that software is really continuing to be a part of the PCA business.

Speaker #3: As you know, CVs are an option in terms of how you monetize. There are many circumstances where the sponsor owner of a soft set of software assets and we're seeing this quite a number of times where there's a real belief in that asset that the market may not be sharing.

Speaker #3: So the CV may be a very good alternative to kind of go to the next level and get some monetization in that asset. So I think what we're seeing is that software is really continuing to be a part of the PCA business.

Speaker #3: I think those healthy around all the different aspects. And I think we're feeling like this is going to provide some real fuel for that business going

John Weinberg: I think those dialogues are quite healthy around all the different aspects, and I think we're feeling like this is going to provide some real fuel for that business going forward.

Speaker #2: Thank you. Our next question comes from Nathan Stein with Deutsche Bank. Please go ahead.

Operator 3: Thank you. Our next question comes from Nathan Stein with Deutsche Bank. Please go ahead.

Operator: Thank you. Our next question comes from Nathan Stein with Deutsche Bank. Please go ahead.

Speaker #7: Hey, good morning. I wanted to follow up on the non-comp side of the expense base. Is the higher growth rate expected in non-comp dollars this year all really from the episodic components in Q2 and investments into the business that you already highlighted?

Nathan Stein: Hey, good morning. I wanted to follow up on the non-comp side of the expense base. Is the higher growth rate expected in non-comp dollars this year all really from the episodic components in Q2 and investments into the business that you already highlighted? Or does this mean that non-comp expense dollars should overall be higher in the H2 of the year versus the H1? Separately, in the press release, you note there was a provision for credit losses that drove some of the increase in non-comp. Can you just talk more about what that was and how much this drove the overall increase? Thanks.

Speaker #7: Or does this mean that non-comp expense dollars should overall be higher in the second half of the year versus the first half? And separately, in the press release, you note there was a provision for credit losses that drove some of the increase in non-comp.

Speaker #7: Can you just talk more about what that was and how much this drove the overall increase?

Speaker #5: Yeah, sure. So that, of course, has multiple facets to it. But when you think about I mean, the crux of the question was non-comp growth and what we expect from that and what it's attributable to.

Tim LaLonde: Sure. When you think about it, the crux of the question was non-comp growth and what we expect from that, and what it is attributable to. The way I would think about it is there is a baseline growth that will exist because we are a firm that has obviously grown quite substantially over the last 3 years, 5 years, 7 years, 10 years, whatever timeframe you pick. There is obviously some correlation between headcount growth and non-comps. In the past, what we had talked about with people a little bit was to think about headcount growth. That is on the order of 10% recently. Then inflation. Then you have certain elements that might appreciate at a cost faster than inflation.

Speaker #5: The way I would think about it is there's a baseline growth that will exist because we're a firm that's obviously grown quite substantially over the last three years, five years, seven years, 10 years, whatever time frame so there is obviously some correlation between headcount growth and non-comps.

Speaker #5: And so what I in the past, what we had talked about with people a little bit was to think about headcount growth. And so that's on the order of 10% recently.

Speaker #5: And then inflation. And then you've got certain elements that might appreciate at a cost faster than inflation. But let me pause on headcount for a second.

Tim LaLonde: Let me pause on headcount for a second, because one of the things we have tried to do over the years, and I think have done a pretty good job of, is making sure we grow our revenues faster than we grow our headcount. Now, given the cyclicality of the industry, that might not be true in any single year, but across any meaningful number of years, whether it is 1 year, 3 years, 7 years, 10 years, we have grown our revenues faster than we have grown our headcount. That is important, and that is one of the things that helps give us leverage. That accounts for some of it. Then there are certain elements of non-comps that are going to grow faster than the cost of inflation. One of those is data or information. We are obviously living in the information age. Data is at a premium.

Speaker #5: One of the things we've tried to do over the years—and I think we've done a pretty good job of it—is making sure we grow our revenues faster than we grow our headcount.

Speaker #5: Now, given the cyclicality of the industry, that might not be true in any single year. But across any meaningful number of years, whether it's one year, three years, seven years, 10 years, we've grown our revenues faster.

Speaker #5: Then we've grown our headcount. And that's important. And that's one of the things that helps give us leverage. So that accounts for some of it.

Speaker #5: Then there are certain elements of non-comps that are going to grow faster than the cost of inflation. One of those is data. Or information.

Speaker #5: We're obviously living in the information age. Data is at a premium. We see that all over the place. And there's a little bit of pricing power there.

Tim LaLonde: We see that all over the place. There is a little bit of pricing power there. That is one element of our cost that has increased a little faster. An element that has increased a little more slowly would be certain parts of travel. What COVID did, if there was perhaps one thing that was helpful that came out of it, was that it accelerated the transition to video conference calls. If you look at the number of trips, for instance, we are only just now, on an unadjusted basis, taking as many trips as we were taking pre-COVID to do our business. On a headcount-adjusted basis, we are actually still something around 30% lower per head. We are seeing some benefits there. Partially offsetting that, you have things like oil prices are higher.

Speaker #5: And so that's one element of our cost that's increased a little faster. An element that's increased a little more slowly would be certain parts as what COVID did, if there was perhaps one thing that was helpful that came out of it was that it accelerated the transition to video conference calls.

Speaker #5: And so if you look at the number of trips, for instance, we're only just now on an unadjusted basis taking as many trips as we were taking pre-COVID to do our business on a headcount adjusted basis.

Speaker #5: We're actually still something around 30% lower per head. And so we're seeing some benefits there. But along kind of partially offsetting that, you've got things like oil prices are higher.

Speaker #5: That translates to higher jet fuel costs. And so flights are a little more expensive. Hotels are a little more expensive. And so we go through with each of these components.

Tim LaLonde: That translates to higher jet fuel costs, so flights are a little more expensive. Hotels are a little more expensive. We go through with each of these components, and some of them are headcount related, some inflation related, and some travel to the beat of their own drummer. Then you have technology, right? We are at an inflection point in the technology curve, and what we see is technology is obviously accelerating at a rate that is faster than it has historically. Any management team worth its salt is doubling down there and making sure they take advantage of the opportunities that are available. Some element of the increase is investing there. As long as the business is growing, the absolute dollar amount of non-comps will tend to grow. The point is we would like to grow revenues faster.

Speaker #5: And some of them are headcount related, some inflation related, some travel to the beat of their own drummer. And then you've got technology. Right?

Speaker #5: And that's we're at an inflection point in the technology curve. And what we see is technology is obviously accelerating at a rate that's faster than it has historically.

Speaker #5: And any management team worth its salt is doubling down there. And making sure they take advantage of the opportunities that are available. And so some element of the increase is investing there.

Speaker #5: And then and so as long as the business is growing, the absolute dollar amount of non-comps will tend to grow. The point is we want we'd like to grow revenues faster.

Speaker #5: And if you look at us over a sustained period of time—three, four, five, six, seven years—I think we've done a pretty good job of that.

Tim LaLonde: If you look at us over a sustained period of time, three, four, five, six, seven years, I think we've done a pretty good job of that. By the way, if you look at the question implicitly gets at the one of, is there operating leverage in the business?

Speaker #5: And by the way, if you look at the question implicitly gets at the one of is there operating leverage in the business? And if you look at our first half results, what you would see is revenues up 56%, earnings up 77%.

John Weinberg: If you look at our H1 results, what you would see is revenues up 56%, earnings up 77%. Okay? That's the definition of leverage. We're striving to achieve more of it in the long run. In the short run, there are some investments to be made as we build out our business.

Speaker #5: Okay? That's the definition of leverage. And we're striving to achieve more of it in the long run. In the short run, there are some investments to be made as we build out our business.

Speaker #2: Thank you. Our next question comes from Gabriel Angelini with Bank of America. Please go ahead.

Operator 3: Thank you. Our next question comes from Gabriel Angelini with Bank of America. Please go ahead.

Operator: Thank you. Our next question comes from Gabriel Angelini with Bank of America. Please go ahead.

Speaker #8: Hi, good morning. And thank you for taking the question. I think the hiring backdrop has been quite competitive for some time now. And you even called out search and placement fees as one of the drivers of both elevated non-comps.

Gabriel Angelini: Hi, good morning, thank you for taking the question. I think the hiring backdrop has been quite competitive for some time now, you even called out search and placement fees, one of the drivers of those elevated non-comps. Maybe, can you give us a mark-to-market around whether your appetite on the hiring front has changed at all? Does just the degree of competition on hiring make it more attractive to do whole business acquisitions at this point? Thank you.

Speaker #8: But maybe can you give us a mark-to-market around whether your appetite on the hiring front has changed at all? And does just the degree of competition on hiring make it more attractive to do a whole business acquisitions at this point?

Speaker #8: Thank you.

Speaker #6: Thanks, Gabriel. So we are not really in the business of doing big liftouts. You've seen we've really only done a couple of situations in recruiting where we've done multiple people.

John Weinberg: Thanks, Gabriel. We are not really in the business of doing big lift-outs. You have seen we have really only done a couple of situations in recruiting where we have done multiple people. We have the capacity to do it, and we have the appetite, really this question is really much more about how we think about talent. What we really do is our production in terms of how many people we bring in is more an output than an input, meaning that we really are in the market looking for highly talented people, A-plus people, and we are continuing to do that. In fact, our pipeline is very healthy right now. You heard that we have brought in 11 new people this year, and we continue to be in the market and in several really important dialogues with some very talented people. We will continue to build those.

Speaker #6: We have the capacity to do it. And we have the appetite. But really, this question is really much more about how we think about talent.

Speaker #6: And what we really do is we are production in terms of how many people we bring in is more an out is more an out an input I mean, output than an input.

Speaker #6: Meaning that we really are in the market looking for highly talented people—A-plus people. And we're continuing to do that. In fact, our pipeline is very healthy right now.

Speaker #6: You heard that we've brought in 11 new people this year. And we continue to be in the market. And in several really important dialogues with some very talented people.

Speaker #6: So, we will continue to build those. We're not really, though, looking at big lift-out type opportunities. There may be a couple where we have two or three people who we would bring in together.

John Weinberg: We are not really, though, looking at big lift-out type opportunities. There may be a couple where we have two or three people who we would bring in together. Really, it is much more a one by one. We have always done it one by one. We have always done it in a very custom approach, filling needs we have with A-plus people. Frankly, it really all starts with the quality of the person. We are going to keep that consistent.

Speaker #6: But really, it's much more a one-by-one. We've always done it one-by-one. We've always done it in a very custom approach filling needs we have, with A-plus people.

Speaker #6: And frankly, it really all starts with the quality of the person. And so we're going to keep that consistent.

Speaker #2: Thank you. Next, we have a follow-up question from Steven Jubak with Wolf Research. Please go ahead.

Operator 3: Thank you. Next, we have a follow-up question from Steven Chubak with Wolfe Research. Please go ahead.

Operator: Thank you. Next, we have a follow-up question from Steven Chubak with Wolfe Research. Please go ahead.

Speaker #7: Hey, John. I have a bit more of a nuanced question on comp leverage. Just given, historically, you've recruited much more actively from both bracket peers versus some of the independents.

Steven Chubak: Hey, John. I have a bit of a more nuanced question on comp leverage. Given historically, you have recruited much more actively from bulge bracket peers versus some of the independents. As we think about the cost of buying out deferred for senior talent at the bulges, the cost has gone up meaningfully, given the share price appreciation we have seen the last three years. Whereas the deferred equity appreciation at some of your smaller independent peers has been far less. I was hoping you could speak to how you are evaluating the cost to recruit from bulges and whether you are still focusing more of your recruiting efforts there versus the independents, and how that might inform the longer-term comp trajectory.

Speaker #7: As we think about the cost of buying out deferred for senior talent at the bulges, the cost has gone up meaningfully just given the share price appreciation we've seen the last three years.

Speaker #7: Whereas the deferred equity appreciation at some of your smaller independent peers has been far less. I was hoping you could speak to how you're evaluating the cost to recruit from bulges, and whether you're still focusing more of your recruiting efforts there versus the independents—and how that might inform the longer-term comp trajectory.

Speaker #6: So Steven, really, to be honest with you, we've never really considered focusing on the bulge bracket versus focusing on independents. We really have done it one-by-one.

John Weinberg: Steven, to be honest with you, we've never really considered focusing on the bulge bracket versus focusing on independents. We really have done it one by one. The way we do it is we look for the people who we've identified as highly talented, A-plus talent, who we think will fit culturally to the firm. Those are the people we focus on. Believe it or not, the way we recruit, I don't really see a real material difference between the people we take out of the bulge bracket versus the people we get from the independent side. It's as much as anything, their business, the business they've constructed, and how they go about it.

Speaker #6: And the way we do it is we look for the people who we've identified as highly talented A-plus talent who we think will fit culturally to the firm.

Speaker #6: And those are the people we focus on. Believe it or not, the way we recruit, I don't really see a real material difference between the people we take out of the bulge bracket versus the people we get from the independent side.

Speaker #6: Really, it's as much as anything their business, the business they've constructed, and how they go about it. So I think if you're really trying to figure out how we're going to really proceed in terms of growing the business with the external hiring process, I think what you should assume is we're going to continue to look across the board it's going to be really both bulge bracket and independents.

John Weinberg: I think if you're really trying to figure out how we're going to really proceed in terms of growing the business with the external hiring process, I think what you should assume is we're going to continue to look across the board. It's going to be really both bulge bracket and independents. We're going to be looking for the most highly talented people. We may have to pay for the most highly talented people, but I think we do it in a way where I think the firm really benefits. The ROI on the talent that we bring in when they come into our platform, and they start to really work in the Evercore system is very good. If we go back and we do this, we look at how do we do in terms of the people we've recruited.

Speaker #6: We're going to be looking for the most highly talented people. We may have to pay for the most highly talented people, but I think we do it in a way where the firm really benefits.

Speaker #6: The ROI on the talent that we bring in, when they come onto our platform and start to really work in the Evercore system, is very good.

Speaker #6: And if we go back and we do do this, we look at, kind of, how did we do in terms of the people we've recruited.

Speaker #6: I think we feel really good about it. And that's why we continue to kind of move forward and drive growth this way. Obviously, internal promotions are something that we care about and we're spending a lot of time making sure that we are developing our programs to do it.

John Weinberg: I think we feel really good about it, that's why we continue to move forward and drive growth this way. Obviously, internal promotions are something that we care about, we're spending a lot of time making sure that we are developing our programs to do it. I think you can assume that we're going to continue the process of really looking broadly at the market and hiring the most effective people who are going to drive our business the best.

Speaker #6: But I think you can assume that we're going to continue the process of really looking broadly at the market and hiring the most important, the most effective people who are going to drive our business to the best.

Speaker #2: Thank you. Next, we have a follow-up question from James Yarrow with Goldman Sachs. Please go ahead.

Operator 3: Thank you. Next, we have a follow-up question from James Yaro with Goldman Sachs. Please go ahead.

Operator: Thank you. Next, we have a follow-up question from James Yaro with Goldman Sachs. Please go ahead.

Speaker #5: Thanks for taking the follow-up. I hope to just put a fine point on margins. So I think if we look back from 2016 to 2022, your annual adjusted operating margins were in the rough range of 24 and a half to 34%.

James Yaro: Thanks. Taking the follow-up. I hope to just put a fine point on margins. I think if we look back from 2016 to 2022, your annual adjusted operating margins were in the rough range of 24.5% to 34%. If I take out the outliers. Specifically, 2021's elevated 34%, and the low in 2019 of roughly 24.5%. The other years in that range were quite tightly clustered around 26% to 28.5%. That compares to 22.7% in the H1 of this year. Tim, I was just hoping you might be able to comment a little bit on the operating margin more broadly from here and whether it could return to those historic levels or whether anything has changed structurally.

Speaker #5: If I take out the outliers specifically 2021's elevated 34% and the low in 2019 of roughly 24 and a half percent, the other years in that range were quite tightly clustered around 26 to 28 and a half percent.

Speaker #5: That compares to 22.7% in the first half of this year. So Tim, I was just hoping you might be able to comment a little bit on the operating margin more broadly.

Speaker #5: From here and whether it could return to those historic levels or whether anything has changed structurally.

Speaker #7: Yeah, sure. But by the way though, we probably have at least a slightly different perspective on the way one looks at the historical margins.

Tim LaLonde: Yeah, sure. By the way, though, we probably have at least a slightly different perspective on the way one looks at the historical margins, and think about it being more in the kind of 24.5% to 25% range, because it really has to be looked across full cycle, without exceptions. Taking that into mind, I think what we've seen is that we are coming off in 2023, what I would call probably the worst investment banking market in the last 15 years, going back to the financial crisis. We're coming back. The margins were tight. We've been improving them each year. I know people like to focus on comp ratios a lot. That has been higher, but as I pointed out in one of my previous answers, the non-comp has been lower.

Speaker #7: And think about it being more in the kind of 24 and a half to 25% range. Because it really has to be looked across full cycle.

Speaker #7: Without exceptions. And so but taking that into mind, I think what we've seen is that we are coming off in '23. What I would call probably the worst investment banking market in the last 15 years going back to the financial crisis.

Speaker #7: And so, we're coming back. The margins were tight. We've been improving them each year. I think, if you look at—I know people like to focus on comp ratios a lot.

Speaker #7: And that has been higher. But as I pointed out, one of my previous answers, the non-comp has been lower. And so we're probably ballpark 300 basis points lower than we were in the pre-COVID years.

Tim LaLonde: We're probably ballpark 300 basis points lower than we were in the pre-COVID years, and that offsets some of the higher level of comp ratio. We've also talked a bit about investment. In my view, margins cannot be looked at in a vacuum. They have to be looked at hand in glove with growth. Okay? What I would point out on that front is that we've just delivered a H1, where the revenues are essentially the same as they were for the entire year in 2023. That if you go back a ways, I was looking at our revenues for a different exercise I was doing, and was reminded that a dozen years ago, our revenues were in the $800 to $900 million range, a dozen years ago. Okay? In the last 4 quarters, they're $4.7 billion.

Speaker #7: And that offsets some of the higher level of comp ratio. We've also talked a bit about investment. And so in my view, margins cannot be looked at in a vacuum.

Speaker #7: They have to be looked at hand in glove with growth. Okay? And so what I would point out on that front is that we've just delivered a first half where the revenues are essentially the same as they were for the entire year.

Speaker #7: In 2023. And that if you go back a ways, I was looking at our revenues for a different exercise I was doing. And was reminded that a dozen years ago, our revenues were in the 8 to 900 million dollar range a dozen years ago.

Speaker #7: Okay? In the last four quarters, they're 4.7 billion dollars. And so when we think about our business and about creating value for our shareholders, at maximizing value, which is a combination of growth and margins.

Tim LaLonde: When we think about our business and about creating value for our shareholders, what we're really doing is looking at maximizing value, which is a combination of growth and margins. On that measure, I would say I'm pretty happy with what we've accomplished these last several years.

Speaker #7: And on that measure, I would say I'm pretty happy with what we've accomplished these last several years.

Speaker #2: Thank you. Our last question will come from a friend with BMO Capital Markets. Please go ahead.

Operator 3: Thank you. Our last question will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Operator: Thank you. Our last question will come from Brennan Hawken with BMO Capital Markets. Please go ahead.

Speaker #7: Hi, thanks for taking the follow-up. Just a real granular question, Tim. You flagged one-timers in the non-comp here in the second quarter. Could you just quantify them, please?

Brennan Hawken: Thanks for taking the follow-up. Just a real granular question, Tim. You flagged one-timers in the non-comp here in Q2. Could you just quantify them, please?

Tim LaLonde: I'll quantify some of it. Some of it gets down into levels of detail that are probably not appropriate for broad consumption. There was bad debt expense, which was somewhat significant. There are things like legal filing, audit types of fees, which are somewhat significant. We had search and placement costs, where an unusual number of the commission type arrangements that we pay on those happen to fall in this Q2. Then there's other seasonal things like conferences, off-sites, and summer interns arriving. All of that adds up to a number that I would say hits into the double-digit millions if you sum them all up. Those differences. Some of them we expect to either not be there or to be there in smaller quantities as we move into the next couple of quarters. This quarter, you saw a pretty significant sequential increase in non-comps.

Speaker #6: I'll quantify some of it. I mean, some of it gets down into levels of detail that are probably not appropriate for broad consumption, but there was bad debt expense.

Speaker #6: Which was somewhat significant. There are things like legal filing audit types of fees. Which are somewhat significant. We had search and placement costs. Where an unusual number of the commission type arrangements that we pay on those happened to fall in this second quarter.

Speaker #6: And then there's other seasonal things like conferences off sites. And summer interns arriving. All of that adds up to a number that I would say is hits into the double-digit millions.

Speaker #6: If you sum them all up. Those differences. And some of them we expect to either not be there or to be there in smaller quantities as we move into the next couple of quarters.

Speaker #6: And so, I would not expect to see—this quarter, you saw a pretty significant sequential increase in non-comps. I would not expect to see a sequential increase like that this upcoming quarter.

Tim LaLonde: I would not expect to see a sequential increase like that this upcoming quarter.

Operator 3: Thank you. Ladies and gentlemen, this concludes today's Evercore Q2 2026 earnings conference call. You may now disconnect.

Operator: Thank you. Ladies and gentlemen, this concludes today's Evercore Q2 2026 earnings conference call. You may now disconnect.

Q2 2026 Evercore Inc Earnings Call

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