[Management View]
Moelis reported a 34% increase in adjusted revenue for Q3 2025, driven by growth in M&A and capital markets. The firm emphasized strategic priorities in expanding its PCA business and maintaining a strong focus on client engagement and talent acquisition.

[Outlook]
Management provided performance guidance indicating continued momentum in capital markets and M&A activities, with expectations for PCA to become a significant growth driver. The firm is optimistic about the transaction environment despite potential regulatory delays due to a U.S. Government shutdown.

[Financial Performance]
Moelis achieved a 34% YoY increase in adjusted revenue for Q3 2025, with a 37% rise for the first nine months. The adjusted compensation expense ratio improved to 66.2% in Q3, down from 69% in 2024, while non-compensation expenses rose due to investments in technology and client engagement.

[Q&A Highlights]
Question 1: Are you seeing AI-related restructuring risks in client dialogues, and could AI impact restructuring in the next 1-2 years?
Answer: AI is expected to have a profound impact on the economy and sectors, potentially creating restructuring opportunities as its effects become apparent in corporate P&Ls. While direct mandates are not yet evident, disruption is anticipated.

Question 2: How do you view the state of private credit markets amid recent defaults, and could this affect M&A?
Answer: The growth of private credit is beneficial for Moelis, providing advisory opportunities. Despite some high-profile defaults, there is no systemic problem, and private credit is expected to continue growing, supporting M&A activities.

Question 3: How is the breadth of M&A market activity evolving, particularly for smaller and sponsored deals?
Answer: Larger transactions currently dominate, but there is evidence of broadening activity, especially in the middle market. An uptick in sponsor activity is anticipated as we move into 2026.

Question 4: Can you provide insights on the adjusted compensation ratio and potential for further leverage?
Answer: The comp ratio has improved from 75% last year to 68% year-to-date, with expectations for further normalization as market conditions improve and investments yield returns.

Question 5: How is the regulatory environment under the current administration affecting deal activity?
Answer: The more accommodative regulatory outlook is encouraging larger transactions, with flexibility around remedies enhancing deal-making. This trend is expected to continue unless unforeseen actions occur.

Question 6: What is the strategic importance of GP-led secondaries in PCA, and how does it relate to sponsor exits?
Answer: GP-led secondaries are seen as a permanent product, independent of M&A or IPO market health, allowing sponsors to retain ownership while providing liquidity. This complements traditional exit strategies.

Question 7: How does the current regulatory environment impact corporate client sentiment, and are there industry-specific nuances?
Answer: While the overall regulatory environment is supportive, certain sectors face idiosyncratic challenges. Generally, the thrust is accommodative, but nuances exist in sectors like media and technology.

Question 8: What drove the $19 million gain from Moelis Australia, and are more sales expected?
Answer: The gain resulted from selling shares in MA Financial Group, considered non-strategic. Future sales may occur, but the strategic alliance remains intact.

Question 9: How is Moelis managing MD count and compensation forfeitures?
Answer: MD count increased from 157 to 170 over the past year, with a mix of internal promotions and external hires. Compensation forfeitures are not indicative of elevated churn.

Question 10: What is the outlook for restructuring given current credit conditions and Fed rate changes?
Answer: Restructuring activity is muted due to ample capital markets and a strong economy, with expectations for a slight decline compared to last year's record levels.

Question 11: How is sponsor exit activity evolving, and is there broadening beyond high-quality assets?
Answer: Sponsor activity is broadening, with increased engagement and dialogue. The outlook is positive, with further improvement expected in 2026.

Question 12: What are Moelis's hiring plans for 2026, particularly in PCA?
Answer: Hiring remains a priority, with focus on PCA and other large TAMs. The firm aims to prudently expand its talent pool to capitalize on strategic opportunities.

Question 13: How do Fed comments impact market outlook and M&A activity?
Answer: Interest rates are a variable in transactional activity, but strategic needs and sponsor requirements drive M&A. Fed comments are not expected to fundamentally alter business direction.

Question 14: What sectors are showing strong M&A pipeline activity?
Answer: Broad-based strength is observed across sectors, with notable activity in technology, healthcare, industrials, and sports/media/entertainment.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on growth opportunities and strategic priorities. Management expressed confidence in navigating regulatory changes and leveraging market conditions.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 | YoY Change |
|--------|---------|---------|------------|
| Adjusted Revenue | $376M | $280M | +34% |
| Adjusted Comp Ratio | 66.2% | 69% | -2.8% |
| Pre-Tax Margin | 22.2% | 18% | +4.2% |

[Risks and Concerns]
Potential U.S. Government shutdown could delay regulatory reviews, impacting deal timelines. AI disruption may create restructuring opportunities, but its full impact is yet to be seen.

[Final Takeaway]
Moelis demonstrated strong financial performance in Q3 2025, driven by M&A and capital markets growth. The firm is strategically expanding its PCA business and capitalizing on a favorable regulatory environment. Despite potential regulatory delays, management remains optimistic about transaction activity and continues to prioritize talent acquisition and client engagement. Investors should monitor the evolving impact of AI and regulatory changes on future business opportunities.