Perella Weinberg Partners (PWP)·Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue was $164.6M, down 41% YoY from a record Q3’24, with GAAP diluted EPS of $0.08 and adjusted EPS of $0.13; adjusted operating margin was 10.6% and compensation ratio remained 67% .
• CFO flagged a timing effect: ~$8.5M tied to a closing in early Q4 was recognized in Q3 under accounting rules; management also lowered FY25 non-comp expense growth guidance to “low single-digit” from “mid single-digit” in Q2, signaling tighter opex control .
• Strategic build-out continued: PWP closed the Devon Park Advisors acquisition on Oct 1 (creating a private funds advisory capability) and added 25 senior bankers YTD; Europe revenue is up >50% YoY, with record active engagements and pipeline .
• Capital and returns: $185.5M cash, no debt; YTD capital returned totals $157.5M via RSU net settlement, unit exchanges/repurchases, and dividends; quarterly dividend maintained at $0.07 per share .
• Estimates context: S&P Global consensus for Q3 and next quarter was unavailable via the tool; we cannot quantify beats/misses this quarter. As-reported results plus lowered opex growth guidance and record pipeline are likely the key stock narrative catalysts near term [functions.GetEstimates].

What Went Well and What Went Wrong

• What Went Well

  • Record activity indicators: “number of active engagements is at a record” and “overall pipeline is at a record”; Europe up >50% YoY, with higher average and median fees—supporting durable revenue potential as conversion improves .
  • Platform expansion: Closed Devon Park to launch private funds advisory, broadening sponsor relationships and addressable market; management expects meaningful contribution as the group scales across 75 partners .
  • Expense discipline and capital strength: Adjusted compensation ratio held at 67%; adjusted non-comp expense ~$36.8M, roughly flat vs Q2; guidance cut to low single-digit FY25 growth; cash $185.5M and no debt .

• What Went Wrong

  • Tough comps and M&A closings: Revenues down 41% YoY vs a record Q3’24, driven by fewer M&A closings; management highlighted timing variability and conversion challenges .
  • GAAP margins compressed vs prior year: GAAP operating margin fell to 5.4% vs 12.9% in Q3’24; GAAP comp ratio ticked up to 71% vs 73% in Q3’24 amid lower revenue base (still operating discipline, but mix and volume pressured GAAP margins) .
  • Litigation/tech/travel elevated YTD: Nine-month non-comp expense rose YoY on litigation in Q1, higher travel, and increased technology spend (though the run-rate improved in Q2–Q3) .

Financial Results

Sequential performance (Q1–Q3 2025)

YoY comp (Q3 2025 vs Q3 2024)

Notes:

• ~$8.5M of revenue recognized in Q3 related to a closing that occurred in the first days of Q4, per accounting rules .
• Nine-month revenue was $531.7M, down 18% YoY, with restructuring/liability management partially offsetting fewer M&A closings .

KPIs and Capital

Non-GAAP adjustments (Q3 highlights): add-backs include public company transaction-related incentives ($6.0M), TPH intangible amortization ($1.6M), Devon Park transaction costs ($1.0M), and minor non-operating adjustments; adjusted operating income $17.5M vs GAAP $8.9M .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “The number of active engagements is at a record, our overall pipeline is at a record, and our European business is up over 50% from last year.” — Andrew Bednar, CEO .
• “On October 1, we closed our acquisition of Devon Park… a new capability, new capital relationships, and new sponsor clients overnight.” — CEO .
• “Adjusted compensation margin remained at 67%… adjusted non-compensation expense… roughly flat with Q2… lowering our guidance further to a low single-digit increase for the full year 2025.” — Alex Gottschalk, CFO .
• “We are seeing just a very steady pace of activity in our broad liability management business… not systemic… higher contributing business this year than last year.” — CEO (Q&A) .

Q&A Highlights

• Mix and timing: Non-M&A activity supported 2025 YTD; forward pipeline increasingly traditional M&A, but announcements/closings remain hard to time .
• Hiring ramp and Devon Park: 25 senior bankers added; 9 already on platform; Devon Park expected to be a significant group-level contributor as it integrates across ~75 partners .
• Restructuring backdrop: Steady liability management activity; isolated credit stress, not systemic; higher 2025 contribution vs 2024 .
• Capital returns vs investment: Limited Q3 buybacks as capital prioritized for Devon Park and talent; YTD returns still >$157M with dividend maintained .
• Accounting timing: ~$8.5M revenue recognized in Q3 tied to an early Q4 closing per accounting rules, illustrating period timing noise .

Estimates Context

• We attempted to retrieve S&P Global consensus EPS and revenue for Q3 2025 and Q4 2025 but no data was returned by the tool; therefore, we cannot quantify beats/misses this quarter. Values would normally be retrieved from S&P Global, but were unavailable via the tool at this time [functions.GetEstimates].
• Implications: Lowered FY25 non-comp expense growth (to low-single-digit) and steady adjusted comp ratio (67%) may support upward revisions to FY25 margin/EPS forecasts, while the Q3 timing benefit (~$8.5M) should be normalized in models .

Key Takeaways for Investors

• Near-term revenue timing remains variable, but leading indicators (record pipeline/engagements) and Europe strength (>50% YoY) suggest improving setup into 2026 as M&A conversion accelerates .
• The Devon Park acquisition creates a new, scalable private funds advisory product for alternative asset managers, broadening PWP’s sponsor coverage and revenue mix beyond traditional M&A .
• Expense discipline is tangible: adjusted comp ratio held at 67% and FY25 adjusted non-comp growth was cut to low-single-digit, supporting margins even on a lower revenue base .
• Balance sheet flexibility (no debt, $185.5M cash) and ongoing capital returns (>$157M YTD; $0.07 dividend) offer downside protection and optionality for continued investment and repurchases .
• Non-GAAP to GAAP reconciliation shows material discrete items (e.g., transaction-related incentives, TPH intangible amortization, Devon Park costs); investors should focus on adjusted operating income margin trajectory (10.6% in Q3) as activity scales .
• Absent consensus prints this quarter, the stock narrative will likely hinge on pipeline conversion, Devon Park integration synergies, and operating leverage from opex control .
• Watch for Q4 seasonality and potential normalization of the ~$8.5M timing pull-forward; management’s tone on near-term announcements remained constructive .

Appendix: Additional Relevant Press Releases (Q3 period)

• Talent: David Wyles (ex-Greenhill President/Head of EMEA) joined as Partner to lead UK/Europe—strengthening the franchise in an “extremely active” UK market .
• Scheduling: PWP announced Q3 results date on Oct 24 (administrative; no financial updates) .

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