Perella Weinberg Partners (PWP)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue of $155.3M declined 43% YoY versus a record Q2 2024 that included a single fee equal to ~one-third of that period’s revenue; GAAP diluted EPS was $0.04 and Adjusted EPS $0.09. Management cited a materially improved environment exiting the quarter and a pipeline at “peak levels,” with several mandates near announcement despite longer conversion times earlier in the quarter .
• Mix shift: lower M&A contribution was partially offset by strength in financing and capital solutions, which the CEO said is trending toward a record year; adjusted non-comp expense fell sequentially and YoY on reduced litigation spend, and full‑year non-comp growth is now modeled mid‑single‑digit (lower than previously indicated) .
• Strategic expansion: PWP announced the acquisition of Devon Park Advisors to launch a Private Funds Advisory platform focused on GP‑led secondaries; expected close early Q4 and “immediate” contribution post‑close. The firm added significant senior talent and two independent directors, reinforcing growth and governance depth .
• Capital management: Cash of $145.0M with no debt; H1 2025 capital returned of $145.2M via net settlements, exchanges, buybacks, and dividends; quarterly dividend of $0.07 declared. CFO reiterated intent to offset SBC dilution while prioritizing high‑return investment opportunities near term (e.g., Devon Park, senior hires) .

What Went Well and What Went Wrong

What Went Well

• “Leading indicators… specifically our active engagement count and our gross revenue pipeline, are at peak levels,” with July announcements reverting to a more typical cadence versus April/May softness .
• Financing and capital solutions strength provided ballast; CEO: restructuring/financing “trending toward a record year… a steady ballast for the rest of our activity” .
• Strategic build‑out: acquisition of Devon Park Advisors establishes Private Funds Advisory, broadening sponsor coverage; expected to contribute immediately upon close and create “meaningful revenue opportunities across our business globally” .

What Went Wrong

• Revenue fell 43% YoY to $155.3M from a record $272.0M in Q2 2024, which had an outsized single fee; lower M&A contribution weighed on the quarter despite stronger financing activity .
• Conversion delays: management cited financing challenges, valuation gaps, and consumer‑driven operating weakness in some industries that pushed several mandates to the “edge of announcement,” elongating timing within the quarter .
• Compensation pressure: while absolute comp dollars fell with revenue, management noted a “higher effective compensation margin versus the second quarter of 2024” on an adjusted basis; Q2 2025 adjusted comp ratio was 67% vs. 62% in Q2 2024 .

Financial Results

Headline P&L and Key Ratios

Notes and drivers:

• Q2 2025 revenue decline reflects the absence of last year’s outsized fee and lower M&A, partially offset by stronger financing/capital solutions activity .
• CFO noted $28M of fees tied to closings in the first days of Q3 were recorded in Q2 under GAAP, and that adjusted non‑comp costs fell meaningfully YoY and QoQ as litigation spend subsided .

Segment/Mix (qualitative)

Cash, Capital, Shares

Non‑GAAP reconciliation highlights:

• Q2 2025 Adjusted operating income $14.9M vs GAAP $8.9M; key adjustments include transaction‑related incentives and TPH intangible amortization .
• H1 2025 adjusted if‑converted tax rate was (15)% due to $14.9M vesting benefit; ex‑benefit would be ~30% .

Guidance Changes

Note: PWP does not provide revenue/EPS formal guidance; management refrains from revenue guidance .

Earnings Call Themes & Trends

Management Commentary

• CEO on demand indicators: “Leading indicators… active engagement count and gross revenue pipeline are at peak levels… many active mandates currently in the red zone” .
• Market tone: “The tone has changed dramatically… April and May were… pretty tough… already in July, we have seen a reversion back to a more typical announcement cadence” .
• Strategic rationale for Devon Park: “Creates our private funds advisory business… expands our coverage of alternative asset managers… will contribute to our financial performance immediately upon closing” .
• CFO on costs/tax: “Adjusted non‑comp expense… was a meaningful drop… largely driven by… decline in litigation‑related costs… now modeling a mid‑single‑digit increase for the full year… adjusted tax rate… 30%… in line with our expectation for the remainder of the year” .
• Capital management: “We are laser‑focused on… growing EPS through taking down the share count… more attractive use of our capital to build the business… while mitigating stock‑based comp dilution” .

Q&A Highlights

• Pipeline/Backlog vs Dealogic: PWP defines backlog as announced/pending; pipeline includes signed engagements and near‑mandates; un‑risked pipeline at peak levels despite slower conversion in April/May .
• Devon Park scope: Small financially but strategically material; expands into GP‑led secondaries across PE, credit, infrastructure, venture, and real estate; strong cultural fit and client pull‑through .
• Hiring scale: Partners ended June at 64; today ~70; targeting at least 76 by YE 2025; intention to balance internal promotions and selective external hires .
• Large‑cap M&A momentum: Noted a “thaw” and increased strategic tie‑ups; expects transactions to spur further activity .
• Capital returns vs investment: Near term skew toward investing in growth (talent, Devon Park), while continuing to offset SBC dilution and maintain dividend .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue was not available in our SPGI query at the time of analysis; therefore, a beat/miss assessment versus estimates cannot be provided [Values retrieved from S&P Global].
• Given management’s comments and mix dynamics, estimate revisions may focus on: slightly higher non‑comp expense for FY (but below prior expectations), and potential H2 revenue cadence as announcements/closings convert.

Key Takeaways for Investors

• H2 setup improving: Pipeline at peak levels and July cadence normalized after early‑quarter delays—watch for an acceleration in announcements and closings into Q3/Q4 .
• Mix diversification: Financing and capital solutions are providing resilient earnings ballast; management says the business is trending toward a record year in this area .
• Strategic catalyst: Devon Park Advisors adds Private Funds Advisory to capture GP‑led secondaries—expect immediate contribution post‑close (early Q4) and deeper sponsor relationships .
• Cost outlook easing: Litigation spend decline and lowered non‑comp growth view (mid‑single‑digit) support margins; adjusted comp margin accrual remains at 67% pending H2 revenue visibility .
• Capital strength and returns: $145.0M cash, no debt; continued buybacks/net settlement to mitigate dilution and a maintained $0.07 dividend provide shareholder support while funding organic/inorganic growth .
• Near‑term trading implications: Stock likely sensitive to H2 deal announcements/closures and tangible evidence of sponsor‑led secondaries traction post Devon Park close; lowered non‑comp growth outlook is a modest positive for margins .
• Medium‑term thesis: Scaling senior banker headcount, broadened product mix, and deeper sponsor coverage aim to reduce reliance on outsized single fees and smooth earnings power through cycles .

Appendix: Additional Data Points

• Q2 2025 income statement (GAAP): Revenue $155.3M; operating income $8.9M; GAAP diluted EPS $0.04; adjusted operating income $14.9M; adjusted EPS $0.09 .
• H1 2025 totals: Revenue $367.1M (down 2% YoY), adjusted pre‑tax income $33.1M, GAAP pre‑tax income $18.1M; adjusted tax rate ex RSU benefit ~30% .
• Capital returned H1 2025: $145.2M via net settlement, cash exchanges, open‑market repurchases, and dividends; Class A shares outstanding 62.6M; partnership units 25.0M as of June 30 .
• Governance additions: Two independent directors (Edwin Bennett, Houda Dabboussi) added in July 2025; quarterly dividend maintained .