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PW

Perella Weinberg Partners (PWP)·Q1 2025 Earnings Summary

Executive Summary

  • Record quarter: Revenue of $0.212B, up 107% y/y; Adjusted EPS $0.28 and GAAP diluted EPS $0.24, with GAAP operating margin 5.5% and adjusted operating margin 9.7% .
  • Announcements slowed post early-April U.S. policy actions (tariffs/trade), but management emphasized clients are pausing, not terminating; pipeline strong, announced/pending backlog down from record levels .
  • Non-compensation expenses elevated by litigation; CFO flagged >$11M in Q1 litigation costs and maintained guidance for a single-digit full‑year non-comp increase; adjusted tax rate ex-stock comp benefit guided to ~29.5% for the remainder of 2025 .
  • Capital returns continue: $121.3M returned in Q1, dividend maintained at $0.07/share, $111.2M cash and no debt at quarter-end; proactive buybacks and unit exchanges executed .
  • Accounting nuance: ~$23M of closings from early Q2 were recorded in Q1 under relevant accounting principles; investors should normalize for timing in quarterly trend analysis .

What Went Well and What Went Wrong

What Went Well

  • Highest Q1 on record; revenue up across products, sectors, geographies, driven by larger fees per transaction. “Our first quarter revenues represented our highest Q1 on record...” — Andrew Bednar (CEO) .
  • Restructuring/liability management demand surged starting in April amid market volatility; firm quickly pivoting resources to client needs .
  • Talent momentum: Four MDs added YTD; additional partners/MDs joining in coming months, leaning into growth in healthcare, software, financials, industrials .

What Went Wrong

  • Macro/policy uncertainty (tariffs/trade) slowed deal announcements; backlog declined from records despite strong engagement metrics .
  • Non-compensation expenses rose materially due to litigation (over $11M in Q1), pressuring margins; adjusted non-compensation $49.3M vs $37.0M y/y .
  • Compensation ratio remained elevated at 67% adjusted (70% GAAP); management expects leverage over time but noted ratio may adjust as the year progresses .

Financial Results

Quarterly Comparison (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$278.242 $225.672 $211.831
GAAP Diluted EPS ($USD)$0.24 $0.30 $0.24
Adjusted EPS ($USD)$0.34 $0.26 $0.28
GAAP Operating Income Margin (%)12.9% 9.5% 5.5%
Adjusted Operating Income Margin (%)18.4% 14.8% 9.7%
GAAP Compensation Ratio (%)73% 69% 70%
Adjusted Compensation Ratio (%)68% 65% 67%
Non-compensation Exp ($USD Millions, GAAP)$40.0 $48.239 $50.919
Non-compensation Exp ($USD Millions, Adjusted)$37.914 $46.308 $49.274

Note: Q1 includes ~$23M of closings from early Q2 recorded in Q1 under GAAP .

Year-over-Year (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$102.127 $211.831
GAAP Diluted EPS ($USD)$(0.91) $0.24
Adjusted EPS ($USD)$(0.10) $0.28
GAAP Operating Income Margin (%)(52.4)% 5.5%
Adjusted Operating Income Margin (%)(20.6)% 9.7%
GAAP Compensation Ratio (%)113% 70%
Adjusted Compensation Ratio (%)84% 67%
GAAP Effective Tax Rate (%)(38)% (80)%
Adjusted If-Converted Effective Tax Rate (%)48% (40)%

Segment Breakdown

  • Not disclosed; revenues were higher across product lines, sectors, and geographies, driven by larger transactions and fee events .

KPIs (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
Cash & ST Investments ($USD Millions)$335.1 $407.4 $111.2
DebtNone None None
Class A Shares Outstanding (Millions)57.0 59.2 62.2
Partnership Units Outstanding (Millions)31.2 27.5 26.2
Dividend per Share ($)$0.07 $0.07 $0.07
Capital Returned ($USD Millions)$215.1 YTD $281.9 FY $121.3 Q1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-compensation expense growth (y/y)FY 2025Single-digit increase Single-digit increase maintained Maintained
Adjusted if-converted effective tax rateRemainder of FY 2025~30% reference (FY 2024 adjusted tax rate) ~29.5% excluding stock comp vesting benefit Clarified/slightly lower
Dividend per shareQuarterly$0.07 $0.07 declared for Q1 (payable 5/30/25) Maintained
Capital returns (buybacks/unit exchanges)Ongoing 2025Continue opportunistic buybacks/exchanges Continue opportunistic buybacks/exchanges; focus on proactive share count mgmt Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024; Q4 2024)Current Period (Q1 2025)Trend
Tariffs/macro policyImproving operating environment; record nine-month revenue Early-April U.S. policy actions slowed announcements; clients pausing, not terminating Deteriorated near term; expect re‑acceleration with clarity
Restructuring/liability mgmtNot highlighted in PR; broader strength across services “Meaningful uptick” starting in April; strong demand Improving
Regional trends (Europe vs U.S.)Broadening client coverage; momentum across platform Europe more unified; regulatory backdrop more accommodative; both regions paused awaiting clarity Slightly more positive for Europe
RecruitingAdded five partners/11 MDs in 2024 ; strong YTD additions 1Q adds + forthcoming hires in healthcare/software/financials/industrial; volatility aids recruiting Accelerating
Litigation/regulatorySEC settlement referenced in prior reconciliations Litigation spend >$11M in Q1; concluded; not expected to recur in balance of year Transitory headwind
Capital managementSignificant capital returns; high cash, no debt $121.3M returned; dividend maintained; proactive share count management Ongoing discipline

Management Commentary

  • “Our first quarter revenues represented our highest Q1 on record and demonstrate the strength of our brand across industries and geographies.” — Andrew Bednar, CEO .
  • “Policy action from the U.S. government at the start of April… have slowed [deal announcements]. Our clients are… awaiting clarity on ultimate tariff and trade policy.” — Bednar .
  • “Our adjusted non‑compensation expense of $49 million… included more than $10 million of litigation‑related costs… Our prior guidance of a single‑digit increase in non‑comp expense for the full year 2025 remains our best estimate.” — Alexandra Gottschalk, CFO .
  • “Excluding [stock comp vesting] impact, the adjusted tax rate would have been 29.5%, in line with our tax rate expectation for the remainder of the year.” — Gottschalk .

Q&A Highlights

  • M&A backdrop: Clients tapping brakes amid volatility; interest in M&A intact; management anticipates sharper activity as policy clarity improves, more akin to post‑COVID re‑acceleration than prolonged slog .
  • Non‑M&A businesses: Liability management/restructuring demand strong; brand compounding; firm mobilizes for financing/balance sheet advisory as needs arise .
  • Europe vs U.S.: Europe unified, more accommodative regulatory backdrop; both regions pausing pending tariff clarity; thin layer of ice expected to thaw .
  • Compensation ratio: 67% reflects best estimate; could adjust with recruiting/performance; committed to providing leverage over time .
  • Non‑compensation/litigation: >$11M litigation spend in Q1 tied to trial; seasonal, not expected to recur; single-digit y/y non‑comp increase for FY maintained .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable for Q1 2025 and recent quarters; as a result, we cannot quantify beats/misses versus EPS and revenue estimates at this time (values attempted via S&P Global).
  • Given the lack of consensus data, investors should focus on year‑over‑year outperformance and qualitative drivers (macro/tariffs, litigation normalization, restructuring demand) when updating models .

Key Takeaways for Investors

  • Revenue strength and positive EPS reflect franchise momentum, but the inclusion of ~$23M of early‑Q2 closings in Q1 and elevated litigation spend suggest near‑term noise; normalize for timing and one‑offs in trend analysis .
  • Macro/policy uncertainty is the primary overhang; management sees “pause” rather than cancellations and expects activity to re‑accelerate as tariff/trade clarity improves — a potential catalyst for shares when policy ranges narrow .
  • Restructuring/liability management is a bright spot benefiting from volatility; pipeline is strong, providing an offset if M&A announcements remain slower near term .
  • Operating leverage remains a medium‑term thesis: adjusted comp ratio at 67% with commitment to leverage; watch for mix shift, recruiting productivity, and non‑comp normalization post‑litigation .
  • Capital discipline continues: $121.3M returned in Q1, dividend consistent at $0.07/share, cash of $111.2M and no debt; proactive share count management supports per‑share value accretion .
  • Tax normalization: excluding stock comp vesting benefits, adjusted tax rate guided to ~29.5% for the remainder of 2025; factor into model updates for run‑rate EPS .
  • Europe may modestly outpace U.S. near term on regulatory flexibility; diversified geography and product mix should help navigate policy headwinds .