PW
Perella Weinberg Partners (PWP)·Q4 2024 Earnings Summary
Executive Summary
- Record full-year performance with FY 2024 revenues of $878.0M (+35% YoY), culminating in Q4 2024 revenues of $225.7M (+6% YoY) and GAAP diluted EPS of $0.30; adjusted EPS was $0.26 .
- Compensation leverage improved: Q4 adjusted compensation ratio 65% (vs. 76% in Q4 2023), and FY adjusted compensation ratio 67% (vs. 70% in FY 2023) .
- Balance sheet remained strong with $407.4M cash/short-term investments and no debt; $281.9M returned to equity holders in 2024 and a $0.07 dividend declared for March 10, 2025 .
- Management highlighted tailwinds across M&A and liability management/capital solutions, increased early 2025 activity in Europe, and expects 2025 non-comp expenses to grow at a single-digit rate; longer-term compensation ratio target remains mid-60s .
- Potential stock reaction catalysts: record year and capital returns, sequential normalization from Q3’s record, visibility into 2025 cost moderation, and strengthening cross-border pipelines, particularly Europe/U.S. flows .
What Went Well and What Went Wrong
What Went Well
- Broad-based strength: “higher year-over-year revenue recorded in all service lines” driven by larger and more complex transactions; FY revenues up to a firm record $878M .
- Cost discipline and leverage: Q4 adjusted compensation ratio improved to 65% (vs. 76% a year ago), adjusted operating margin of 14.8%, and FY non-comp ratio moderated to 18% from 22% .
- Management momentum: CEO emphasized “record-setting year” and closing in on $1B annual revenue target; cited strong U.S. leadership and improving European activity early 2025 .
What Went Wrong
- Sequential revenue reset: Q4 revenues ($225.7M) were below the Q3 record ($278.2M); management noted Q4 M&A revenues were lower partly due to a single large prior-year fee dynamic .
- Elevated GAAP compensation in FY 2024 from one-time vesting acceleration and equity amortization, pressuring GAAP results (FY GAAP net loss of $(89.3)M) despite strong adjusted profitability .
- Non-comp expenses rose YoY in Q4 (adjusted $46.3M vs. $38.9M) driven by professional fees tied to revenue contribution and certain litigation-related and bad debt items over the year .
Financial Results
Quarterly Results (levels)
Year-over-Year (Q4 2023 vs. Q4 2024)
Segment/Activity Commentary (no formal segment disclosure)
KPIs
Non-GAAP Adjustments (selected)
- Major FY adjustments included equity-based comp not dilutive to PWP/PWP OpCo investors, public company transaction-related incentives, business realignment costs, TPH intangible amortization, and business combination expenses; Q4 adjusted operating income was $33.4M vs. GAAP operating income of $21.4M .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO: “2024 was a year of records… we are now closing in on our first operating financial goal of $1 billion in annual revenue” and expect tailwinds in global M&A with high demand for restructuring/liability mgmt services amidst volatility .
- CFO: “Adjusted compensation margin was 67% for the full year 2024… adjusted non-compensation expense was $162M… In 2025, we expect the increase in non-comp expense to moderate to the single-digit percent range… We ended the quarter and year with $407M in cash and short-term investments and no debt” .
- CEO on Europe: “European markets are about half the size of the U.S.… We feel very good about the year-end discussions… early indicators on Europe are quite promising” .
Q&A Highlights
- M&A Outlook: Larger transformative transactions are back in conversations post-election; volatility expected but boards/management more confident to transact .
- Non-M&A Businesses: Financing and capital solutions/liability management fee pools are large; coexist with M&A strength without historical counter-cyclicality .
- Europe/U.S. Cross-Border & Tariffs/Currency: Early 2025 Europe activity improving; tariff impacts not yet visible; currency/valuation gaps may drive U.S. acquisitions in Europe and European listings/exposure to U.S. markets .
- Sponsors & Rates: Elevated rates likely persist; sponsors have capital and credit access; expect a “slower grind up” rather than sharp snapback; IPO market not yet fully recovered .
- Cost & Comp Leverage: FY adjusted comp ratio at 67%; as scale grows, expect more comp and non-comp leverage over time; too early to quantify for 2025 .
- Non-Comp Guidance: Single-digit growth expected; 2024 had anomalies (bad debt, litigation) that shouldn’t recur similarly .
Estimates Context
- Wall Street consensus estimates from S&P Global were unavailable due to API request limits at the time of this analysis, so beat/miss vs. consensus could not be determined. We default to S&P Global for consensus when accessible; in this instance, comparisons to estimates are omitted pending availability.
Key Takeaways for Investors
- Q4 closed a record FY with balanced strength across advisory lines; despite a sequential reset from Q3’s record, Q4 delivered YoY revenue growth and improved margins .
- Cost structure is normalizing: adjusted comp ratio at 65% in Q4 (67% FY), with 2025 non-comp expected to grow single-digit—supportive of margin leverage if revenue momentum persists .
- Cross-border pipeline is a potential 2025 catalyst—management sees improving European activity and strategic flows influenced by valuation gaps and currency dynamics .
- Liability management/capital solutions are structurally larger fee pools and should remain active alongside M&A in an elevated-rate, volatile environment—a portfolio diversification of fee drivers .
- Balance sheet strength and capital returns ($281.9M in 2024, $0.07 dividend) underpin shareholder yield while the firm scales toward a $1B revenue ambition .
- Talent investments continue (additions of senior hires including European partner Erik Maris) and recruiting pace is expected to pick up in 2025, supporting coverage expansion .
- Near-term trading: watch for deal announcements/conversions of active pipelines (M&A, financing/capital solutions) and any signs of accelerating sponsor/IPO activity; medium-term thesis hinges on scaling revenues with comp/non-comp leverage and sustained cross-border advisory strength .