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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)

MetricQ2 2024Q3 2024Q4 2024
Revenues ($USD Millions)$272.0 $278.2 $225.7
GAAP Diluted EPS ($)$(1.21) $0.24 $0.30
Adjusted EPS ($)$0.43 $0.34 $0.26
GAAP Operating Income Margin (%)(30.2)% 12.9% 9.5%
Adjusted Operating Income Margin (%)23.0% 18.4% 14.8%
Adjusted Compensation Ratio (%)62% 68% 65%

Year-over-Year (Q4 2023 vs. Q4 2024)

MetricQ4 2023Q4 2024
Revenues ($USD Millions)$212.7 $225.7
GAAP Diluted EPS ($)$(0.49) $0.30
Adjusted EPS ($)$0.08 $0.26
GAAP Operating Income Margin (%)(20.7)% 9.5%
Adjusted Operating Income Margin (%)5.2% 14.8%
Adjusted Compensation Ratio (%)76% 65%

Segment/Activity Commentary (no formal segment disclosure)

AreaQ4 2024 Commentary
M&A AdvisoryQ4 M&A revenues were lower YoY due to a single large fee in prior-year period .
Financing & Capital Solutions / Liability ManagementRevenues up FY; management sees large fee pools and coexisting strength alongside M&A through cycles .

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash & Short-Term Investments ($USD Millions)$185.3 $335.1 $407.4
Class A Shares Outstanding (Millions)52.5 57.0 59.2
Partnership Units Outstanding (Millions)33.3 31.2 27.5
Capital Returned to Equity Holders (Period-to-Date) ($USD Millions)$161.5 (YTD through Q2) $215.1 (YTD through Q3) $281.9 (FY)
Dividend per Share ($)$0.07 (declared for Sep 16, 2024) $0.07 (declared for Dec 18, 2024) $0.07 (payable Mar 10, 2025)

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

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-Compensation Expense GrowthFY 2025~10% pace previously indicated for 2024 (reference from prior call) Single-digit percent increase Lowered
Compensation Ratio (Long-Term Target)LTMid-60s target (since IPO) Reaffirmed mid-60s target Maintained
DividendQuarterly$0.07 per share (Q2/Q3 declarations) $0.07 per share declared for Mar 10, 2025 Maintained
Senior Hiring PaceFY 2025Below target in 2024 Expect acceleration with strong pipeline (partners/MDs) Raised pace

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
M&A Cycle & Market Tailwinds“Strong results… quarterly record” with improving environment; scaling strategy Revenues +100% YoY; improving operating environment Larger deal market “is back” in conversations; confidence post-election Improving breadth and scale
Financing/Capital Solutions & Liability MgmtActivity up; professional fees tied to revenue Strong contribution across business lines Coexists with M&A at peak; large fee pools; proactive liability mgmt Structural growth, not counter-cyclical
Regional Trends (Europe)Office renovations and relocations; no specific regional callouts Franchise strength; record quarter Early 2025 pick-up in Europe; cross-border dynamics, valuation gaps Europe improving from lag
Sponsors & IPO/Exit DynamicsBuilding momentum; scaling coverage Record revenue and scale Elevated rates imply “slower grind up” for sponsor activity; lots of dry powder; credit available Gradual ascent
Cost Trajectory & LeverageYTD adjusted comp accrual at 68%; one-time vesting acceleration impact Adjusted comp ratio 68%; non-comp 18% YTD FY adjusted comp 67%; 2025 non-comp single-digit growth expected Leverage improving

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 .