Moelis & Co

Previous wording

As of December 31, 2023, we served our clients globally with 817 advisory bankers. We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters which set forth our fees. We generally generate fees at key transaction milestones, such as closing, the timing of which is outside of our control. As a result, revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter. The performance of our business depends on the ability of our professionals to build relationships with clients over many years by providing trusted advice and exceptional transaction execution.

Current wording

As of December 31, 2024, we served our clients globally with 917 advisory bankers. We generate revenues primarily from providing advisory services on transactions that are subject to individually negotiated engagement letters which set forth our fees. We generally generate fees at key transaction milestones, such as closing, the timing of which is outside of our control. As a result, revenues and net income in any period may not be indicative of full year results or the results of any other period and may vary significantly from year to year and quarter to quarter. The performance of our business depends on the ability of our professionals to build relationships with clients over many years by providing trusted advice and exceptional transaction execution.

Previous wording

For the year ended December 31, 2023, we earned GAAP revenues of $854.7 million compared with $985.3 million earned during the same period in 2022. This represents a decrease of 13% compared to a 32% decrease in the number of global completed M&A transactions greater than $100 million in the same period.

Current wording

For the year ended December 31, 2024, we earned GAAP revenues of $1,194.5 million compared with $854.7 million earned during the same period in 2023. This represents an increase of 40% compared to a de minimis increase in the number of global completed M&A transactions greater than $100 million in the same period.

Previous wording

Despite lower M&A activity levels, we continue to see strong client dialogue and engagement as corporate boards continue to seek to use M&A and the capital markets as a tool to realize long-term strategic priorities. Additionally, the record levels of capital accumulated by financial sponsors combined with unsold portfolio companies and a dearth of exits over the last two years should provide for increased financial sponsor-related M&A over time. Our out-of-court liability management and in-court restructuring mandates increased during the year as a result of higher borrowing costs and more limited access to refinancing opportunities which have led to modestly rising default rates. We expect companies to turn to Moelis for capital structure advice as they continue to address significant debt maturity walls over the next several years. While the amount of new debt and equity issuance has been subdued over the last two years, our capital markets business continues to provide advice to companies across all sectors on their capital raising and liquidity needs. Improving macroeconomic conditions and investor sentiment could lead to better capital raising and financing conditions moving forward.

Current wording

The M&A market gradually improved throughout 2024 as companies adapted their M&A strategies and the Federal Reserve began cutting interest rates in the back half of the year. We expect to see continued improvement in the M&A market and our client dialogue and engagement is increasing as corporate boards continue to use M&A and the capital markets as a tool to realize long-term strategic priorities. Additionally, the near-record levels of capital accumulated by financial sponsors combined with unsold portfolio companies in recent years should provide for increased financial sponsor-related M&A. Improving macroeconomic and investor sentiment has led to better capital raising and financing conditions for our capital markets business. Additionally, the increasing role of alternative capital providers within the transaction financing ecosystem provides expanded opportunities for our team to provide the full suite of capital raising solutions to our clients. We anticipate a prolonged restructuring cycle driven by elevated borrowing costs which provides a constructive environment for out-of-court liability management and in-court restructurings.

Previous wording

The following is a discussion of our results of operations for the years ended December 31, 2023 and 2022. For a discussion of our results of operations for the year ended December 31, 2021, refer to “Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2022.

Current wording

The following is a discussion of our results of operations for the years ended December 31, 2024 and 2023. For a discussion of our results of operations for the year ended December 31, 2022, refer to “Item 7-

Previous wording

Revenues were $854.7 million for the year ended December 31, 2023 compared with $985.3 million for the same period in 2022, representing a decrease of 13%. The decrease in revenues was driven by a decrease in the number of completed transactions as compared to the prior year period.

Current wording

Revenues were $1,194.5 million for the year ended December 31, 2024 compared with $854.7 million for the same period in 2023, representing an increase of 40%. The increase in revenues was driven by an increase in the number of completed transactions as compared to the prior year period.

Previous wording

For the years ended December 31, 2023 and 2022, we earned revenues from 304 clients and 314 clients, respectively, and more importantly, the number of clients that paid fees equal to or greater than $1 million was 175 clients and 187 clients, respectively.

Current wording

For the years ended December 31, 2024 and 2023, we earned revenues from 406 clients and 304 clients, respectively, and more importantly, the number of clients that paid fees equal to or greater than $1 million was 241 clients and 175 clients, respectively.

Previous wording

Operating expenses were $895.1 million for the year ended December 31, 2023 and represented 105% of revenues, compared with $769.2 million for the same period in 2022 which represented 78% of revenues. The increase in operating expenses was primarily driven by increased compensation and benefits expense associated with significant new hires and, in addition, increased non-compensation expenses driven by transaction related expenses incurred in respect of completed deals compared to the prior period.

Current wording

Operating expenses were $1,021.6 million for the year ended December 31, 2024 and represented 86% of revenues, compared with $895.1 million for the same period in 2023 which represented 105% of revenues. The increase in operating expenses was primarily driven by increased compensation and benefits expense associated with higher revenues compared to the prior period.

Previous wording

For the year ended December 31, 2023, compensation-related expenses of $714.7 million represented 84% of revenues, compared with $618.2 million which represented 63% of revenues in the prior year. The increase in compensation expenses is primarily due to greater Managing Director headcount. As a percentage of revenues, compensation related expenses increased as compared to the prior year period due to a decline in revenues, new hire Managing Director guarantees, and greater headcount.

Current wording

For the year ended December 31, 2024, compensation-related expenses of $830.2 million represented 69% of revenues, compared with $714.7 million which represented 84% of revenues in the prior year. The increase in compensation expenses is primarily due to a higher discretionary bonus expense accrual, as a result of higher revenues earned, as compared with the prior year period.

Previous wording

For the year ended December 31, 2023, non-compensation expenses of $180.4 million represented 21% of revenues, compared with $151.0 million, which represented 15% of revenues in the prior year period. The increase in non-compensation expenses is primarily due to increased professional fees, communication and technology expenses, travel and deal-related expenses. As a percentage of revenues, non-compensation expenses increased as compared to the prior year period primarily due to a decline in revenues.

Current wording

For the year ended December 31, 2024, non-compensation expenses of $191.4 million represented 16% of revenues, compared with $180.4 million, which represented 21% of revenues in the prior year period. The increase in non-compensation expenses is broad-based and related to increased headcount and the expansion of our business.

Previous wording

Other income and expenses was income of $11.2 million and $0.2 million for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2023, the income was primarily related to income of $11.3 million on cash equivalent investments and sovereign debt securities, $5.3 million in gains on equity securities sold during the period, $3.4 million from the Company's share of earnings in MA Financial, and $3.6 million in benefits arising from the enforcement of non-compete provisions, partially offset by the $10.0 million SEC fine. In the prior year, the income was related to $7.0 million in benefits arising from the enforcement of non-compete provisions, as well as $6.3 million in earnings and dilution gains related to the Company's investment in MA Financial and $2.6 million in net gains on sovereign debt securities. These increases were partially offset by unrealized losses of $15.1 million from the mark-to-market impact on equity instruments measured at fair value.

Current wording

Other income and expenses was income of $23.1 million and $11.2 million for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, the income was primarily related to income of $12.4 million earned on cash equivalent investments and sovereign debt securities, a $7.0 million gain on the sale of 5,000,000 shares of our investment in MA Financial, and $3.3 million from the Company's share of earnings in MA Financial. In the prior year, the income was related to income of $11.3 million on cash equivalent investments and sovereign debt securities, $5.3 million in gains on equity securities sold during the period, $3.4 million from the Company's share of earnings in MA Financial, and $3.6 million in benefits arising from the enforcement of non-compete provisions, partially offset by the $10.0 million SEC fine.

Previous wording

The Company’s provision for income taxes was a benefit of $1.6 million against a pre-tax loss of $29.1 million and an expense of $47.6 million against pre-tax income of $216.3 million for the years ended December 31, 2023 and 2022, respectively. The income tax provision for the aforementioned periods primarily reflect the Company's allocable share of operating results from Group LP at the prevailing U.S.

Current wording

The Company’s provision for income taxes was an expense of $44.5 million against a pre-tax income of $196.0 million and a benefit of $1.6 million against pre-tax loss of $29.1 million for the years ended December 31, 2024 and 2023, respectively. The income tax provision for the aforementioned periods primarily reflects the Company's allocable share of operating results from Group LP at the prevailing U.S. federal, state, and local corporate income tax rate, and the effect of certain non-tax-deductible items, offset by the impact of the excess tax benefit recognized from equity compensation delivered at the time of vesting at a price above the grant date price for such equity.

Previous wording

We evaluate our cash needs on a regular basis in light of current market conditions. Cash and cash equivalents include all short term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of December 31, 2023 and 2022, the Company had cash equivalents of $137.4 million and $97.1 million, respectively, invested primarily in U.S. and U.K. sovereign debt securities and money market funds. Additionally, as of December 31, 2023 and 2022, the Company had cash of $49.1 million and $109.6 million, respectively, maintained in U.S. and non‑U.S. bank accounts, of which most bank account balances exceeded the U.S. Federal Deposit Insurance Corporation (“FDIC”) and U.K. Financial Services Compensation Scheme (“FSCS”) coverage limits.

Current wording

We evaluate our cash needs on a regular basis in light of current market conditions. Cash and cash equivalents include all short term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of December 31, 2024 and 2023, the Company had cash equivalents of $350.9 million and $137.4 million, respectively, invested primarily in U.S. and U.K. sovereign debt securities, money market funds, and certificates of deposit. Additionally, as of December 31, 2024 and 2023, the Company had cash of $61.5 million and $49.1 million, respectively, maintained in U.S. and non‑U.S. bank accounts, of which most bank account balances exceeded the U.S. Federal Deposit Insurance Corporation (“FDIC”) and U.K. Financial Services Compensation Scheme (“FSCS”) coverage limits.

Previous wording

In addition to cash and cash equivalents, we hold sovereign debt securities that are classified as investments on our consolidated statements of financial condition as they have original maturities of three months or more from the date of purchase. As of December 31, 2023, and 2022, the Company held $162.9 million and $205.8 million of sovereign debt securities classified as investments, respectively.

Current wording

In addition to cash and cash equivalents, we hold sovereign debt securities and certificates of deposit, which are both highly-liquid instruments in active markets, that are classified as investments on our consolidated statements of financial condition as they have original maturities of three months or more from the date of purchase. As of December 31, 2024, and 2023, the Company held $147.9 million and $162.9 million of primarily sovereign debt securities classified as investments, respectively.

Previous wording

Our liquidity is highly dependent upon cash receipts from clients which generally requires the successful completion of transactions. The timing of receivable collections typically occurs within 60 days of billing. As of December 31, 2023, and 2022, accounts receivable were $51.2 million and $47.8 million, respectively, net of allowances of $1.3 million and $1.7 million, respectively.

Current wording

Our liquidity is highly dependent upon cash receipts from clients which generally requires the successful completion of transactions. The timing of receivable collections typically occurs within 60 days of billing. As of December 31, 2024, and 2023, accounts receivable were $51.4 million and $51.2 million, respectively, net of allowances of $1.7 million and $1.3 million, respectively.

Previous wording

Unless the lender of the $65.0 million facility issues a notice of termination at least 60 days prior to the maturity date of June 28, 2024, this facility will automatically extend to June 30, 2025. Advances on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the Company’s option of (i) SOFR plus 1.1% or (ii) Prime minus 1.50%. As of December 31, 2023, the Company had no borrowings under the credit facility.

Current wording

To provide for additional working capital and other general corporate purposes, we maintain two revolving credit facilities with aggregate base credit commitments of $50.0 million. The facility for corporate purposes has a base credit commitment of $5.0 million, and we can request a temporary increase of the credit amount by up to $45.0 million, not to exceed the capacity available under the FINRA credit line discussed below. This option may be exercised up to two times per year during the twelve-month term of the credit line. Unless the lender issues a notice of termination prior to the maturity date of May 24, 2025, this facility will automatically extend to June 30, 2026. The Company incurs a 0.25% per annum fee on the amount of the unused commitment. Advances on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the Company’s option of (i) SOFR plus 1.3% or (ii) Prime minus 1.50%.

Previous wording

As of December 31, 2023, the Company’s available credit under this facility was $64.4 million as a result of the issuance of an aggregate amount of $0.6 million of various standby letters of credit, which were required in connection with certain office leases and other agreements. The Company incurs a 1% per annum fee on the outstanding balances of issued letters of credit.

Current wording

As of December 31, 2024, the Company had no borrowings under the $5.0 million credit facility and the Company’s available committed credit was $4.4 million as a result of the issuance of an aggregate amount of $0.6 million of various standby letters of credit, which were required in connection with certain office leases and other agreements.

Previous wording

Under the $30.0 million facility, U.S. Broker Dealer may borrow capital until May 24, 2024, the end of the credit period, and must repay aggregate principal balances by the maturity date of May 24, 2025. Borrowings on the facility bear interest equal to the Prime rate, payable quarterly in arrears on the last day of March, June, September, and December of each calendar year. U.S. Broker Dealer had no borrowing under the credit facility and the available credit under this facility was $30.0 million as of December 31, 2023.

Current wording

In addition, Moelis & Company LLC ("U.S. Broker Dealer") maintains a $45.0 million revolving credit facility agreement pre-approved by FINRA to provide additional regulatory capital as necessary. Under the facility, U.S. Broker Dealer may borrow capital until May 23, 2025, the end of the credit period, and must repay aggregate principal balances by the maturity date of May 24, 2026. The Company incurs a 0.25% per annum fee on the amount of the unused commitment. Borrowings on the facility bear interest equal to the Prime rate, payable quarterly in arrears on the last day of March, June, September, and December of each calendar year. U.S. Broker Dealer had no borrowing under the credit facility and the available committed credit under this facility was $45.0 million as of December 31, 2024.

Previous wording

During February 2024, the Board of Directors of Moelis & Company declared a regular quarterly dividend of $0.60 per share. The $0.60 per share will be paid on March 28, 2024 to Class A common stockholders of record on February 20, 2024. During the year ended December 31, 2023, the Company paid aggregate dividends of $2.40 per share.

Current wording

During February 2025, the Board of Directors of Moelis & Company declared a regular quarterly dividend of $0.65 per share. The $0.65 per share will be paid on March 27, 2025 to Class A common stockholders of record on February 18, 2025. During the year ended December 31, 2024, the Company paid aggregate dividends of $2.40 per share.

Previous wording

During the years ended December 31, 2023 and 2022, the Company repurchased 1,107,683 and 3,203,597 shares, respectively. The Company's share repurchases primarily consist of shares repurchased from its employees for the purpose of settling tax liabilities incurred upon delivery of equity-based compensation awards, and share buybacks pursuant to the Company's share repurchase program. In July 2021, the Board of Directors authorized the repurchase of up to $100 million of shares of Class A common stock and/or Class A partnership units of Group LP with no expiration date. The dollar value of shares that may yet be purchased under the program was $62.5 million as of December 31, 2023.

Current wording

During the years ended December 31, 2024 and 2023, the Company repurchased 196,416 shares and 1,107,683 shares, respectively, from its employees for the purpose of settling tax liabilities incurred upon delivery of equity-based compensation awards. In July 2021, the Board of Directors authorized the repurchase of up to $100 million of shares of Class A common stock and/or Class A partnership units of Group LP with no expiration date. The dollar value of shares that may yet be purchased under the program was $62.5 million as of December 31, 2024.

Previous wording

We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, record‑keeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 11 of the consolidated financial statements as of December 31, 2023 for further information. These regulations differ in the United States, United Kingdom, Hong Kong and other countries in which we operate a registered broker‑dealer. The license under which we operate in each such country is meant to be appropriate to conduct an advisory business. We believe that we provide each of our subsidiaries with sufficient capital and liquidity, consistent with their business and regulatory requirements.

Current wording

We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure general financial soundness and liquidity. This requires, among other things, that we comply with certain minimum capital requirements, record‑keeping, reporting procedures, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 11 of the consolidated financial statements for further information. These regulations differ in the United States, United Kingdom, Hong Kong and other countries in which we operate a registered broker‑dealer. The license under which we operate in each such country is meant to be appropriate to conduct an advisory business. We believe that we provide each of our subsidiaries with sufficient capital and liquidity, consistent with their business and regulatory requirements.

Previous wording

Cash, cash equivalents and restricted cash were $207.5 million as of December 31, 2022, a decrease of $313.5 million from $521.0 million as of December 31, 2021. Operating activities resulted in a net inflow of $33.0 million primarily attributable to cash collected from clients, net of cash operating expense outflows, including discretionary bonuses paid during the period. Investing activities resulted in a net outflow of $11.2 million primarily attributable to net cash outflows for equipment and leasehold improvements. Financing activities resulted in a net outflow of $326.9 million primarily related to the payment of dividends and tax distributions and treasury stock purchases.

Current wording

Cash, cash equivalents and restricted cash were $413.2 million as of December 31, 2024, an increase of $226.0 million from $187.2 million as of December 31, 2023. Operating activities resulted in a net inflow of $427.5 million primarily attributable to cash collected from clients, net of cash operating outflows, including discretionary bonuses paid during the period. Investing activities resulted in a net inflow of $17.1 million primarily attributable to net proceeds from the sale of investments. Financing activities resulted in a net outflow of $215.1 million primarily related to the payment of dividends and tax distributions and treasury stock purchases.

Previous wording

As of December 31, 2023, the Company has a total payable of $304.6 million due pursuant to the tax receivable agreement in the consolidated financial statements and of this amount an estimated $21.4 million will be due in less than one year. These amounts represent management’s best estimate of the amounts currently expected to be owed under the tax receivable agreement. Payments made under the tax receivable agreement are required to be made within 225 days of the filing of our tax returns. We generally expect to receive the tax savings prior to making the cash payments to the eligible selling holders of Group LP partnership units. We do not expect the cash payments to have a material impact on our liquidity. There were no payments made pursuant to the tax receivable agreement during 2023.

Current wording

As of December 31, 2024, the Company has a total payable of $290.8 million due pursuant to the tax receivable agreement in the consolidated financial statements. There is no payment due in less than one year. These amounts represent management’s best estimate of the amounts currently expected to be owed under the tax receivable agreement. Payments made under the tax receivable agreement are required to be made within 225 days of the filing of our tax returns. We generally expect to receive the tax savings prior to making the cash payments to the eligible selling holders of Group LP partnership units. The Company made a payment of $20.3 million pursuant to the tax receivable agreement during 2024.

Previous wording

The Company is exposed to the risk that the exchange rate of the U.S. dollar relative to other currencies may have an adverse effect on the reported value of the Company’s non‑U.S. dollar denominated assets and liabilities. Non‑functional currency‑related transaction gains and losses are recorded in the consolidated statements of operations. In addition, the reported amounts of our revenues and other income from investments may be affected by movements in the rate of exchange between the pound sterling, euro, Brazilian real, Hong Kong dollar, rupee, Australian dollar, Saudi riyal, Israeli shekel and the U.S. dollar, in which our financial statements are denominated. For the years ended December 31, 2023 and 2022, the net impact of the fluctuation of foreign currencies in other comprehensive income (loss) in the consolidated statements of comprehensive income were gains of $0.7 million and losses of $4.3 million, respectively. We have not entered into any transactions to hedge our exposure to these foreign currency fluctuations through the use of derivative instruments or other methods.

Current wording

The Company is exposed to the risk that the exchange rate of the U.S. dollar relative to other currencies may have an adverse effect on the reported value of the Company’s non‑U.S. dollar denominated assets and liabilities. Non‑functional currency‑related transaction gains and losses are recorded in the consolidated statements of operations. In addition, the reported amounts of our revenues and other income from investments may be affected by movements in the rate of exchange between the pound sterling, euro, Brazilian real, Hong Kong dollar, Israeli shekel, rupee, Australian dollar, Saudi riyal and the U.S. dollar, in which our financial statements are denominated. For the years ended December 31, 2024 and 2023, the net impact of the fluctuation of foreign currencies in other comprehensive income (loss) in the consolidated statements of comprehensive income were losses of $3.1 million and gains of $0.7 million, respectively. We have not entered into any transactions to hedge our exposure to these foreign currency fluctuations through the use of derivative instruments or other methods.

Previous wording

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This has the effect of reducing both the gross receivable and the allowance for credit losses. If a reserved accounts receivable is subsequently collected, such recoveries reduce the gross receivable and the allowance for credit losses and is a reduction of bad debt expense, which is recorded within other expenses on the consolidated statement of operations. The combination of recoveries and the provision for credit losses of a reported period comprise the Company’s bad debt expense.

Current wording

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This has the effect of reducing both the gross receivable and the allowance for credit losses. If a reserved accounts receivable is subsequently collected, such reversals reduce the gross receivable and the allowance for credit losses and is a reduction of bad debt expense, which is recorded within other expenses on the consolidated statement of operations. The combination of reversals and the provision for credit losses of a reported period comprise the Company’s bad debt expense.