Good morning, and welcome to Evercore's first quarter 2026 earnings conference call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question and answer session. In order to ask a question, please press the star key, followed by the number one on your touchstone phone at any time. I will now turn the call over to Katie Haber, head of investor relations at Evercore. Please go ahead.

Thank you, operator. Good morning and thank you for joining us today for Evercore's first quarter 2026 financial results conference call. I'm Katie Haver, Evercore's Head of Investor Relations. Joining me on the call today is John Weinberg, our Chairman and CEO, and Tim Maland, our CFO. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's first quarter 2026 financial results. Our discussion of our results today is complementary to the press release, which is available on our website at Evercore.com. This conference call is being webcast live in the For Investor section of our website, and an archive of it will be available for 30 days beginning approximately one hour after the conclusion of this call. During the course of this conference call, we may make a number of forward-looking statements. Any forward-looking statements that we make are subject to various risks and uncertainties, and there are important factors that may cause actual outcomes to differ materially from those indicated in these statements. These factors include, but are not limited to those discussed in Evercourse filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. I want to remind you that the company assumes no duty to update any forward-looking statements. In our presentation today, unless otherwise indicated, we will be discussing adjusted financial measures, which are non-GAAP measures that we believe are meaningful when evaluating the company's performance for detailed disclosures on these measures and the gap reconciliations you should refer to the financial data contained within our press release which is posted on our website we continue to believe that it is important to evaluate a request performance on an annual basis as we've noted previously our results for any particular quarter are influenced by the timing of transaction closings i will now turn the call over to john thank you katie and good morning everyone.

Our record first quarter results reflect the strong momentum that built throughout the second half of 2025, as well as the benefits of our multi-year investment strategy. Firm-wide adjusted net revenues were $1.4 billion, double from a year ago, and a newly quarterly record for the firm. Revenues increased 8% sequentially from the fourth quarter, marking the first time in 15 years we've delivered growth from that period we've now delivered three consecutive quarters of adjusted firm wide net revenues over 1 billion dollars performance in the quarter was broad based across all of our businesses with our rev with our strongest revenue quarter ever for our North American advisory business and a record first quarter for amia advisory pca pfg equities and wealth management further our results continue to underscore the strength of our client franchise the benefits of our diversified business model and the consistent execution of our long-term strategy First, I want to briefly discuss the current market environment. As we entered 2026, the backdrop for dealmaking was robust, supported by healthy levels of strategic activity and continued engagement from both corporates and financial sponsors, with the expectation that these trends would carry into the year. We are seeing continued CEO and boardroom confidence, particularly around large-cap transactions, and financing markets are open. However, conditions have become more mixed in recent months. Despite this, M&A activity experienced a strong quarter. Industry-wide, announced global M&A activity, excluding several large direct AI investments, totaled over $1 trillion in the first quarter, up 11% from the prior year period, with large-cap strategic transactions continuing to outperform. At Evercore, client engagement remains strong. we continue to see healthy levels of activity across a broad range of sectors products and geographies with particular strengths in large cap strategic m a including in areas where we have made recent investments many sectors including health care industrials real estate infrastructure financials and certain areas of technology continue to operate at high levels Our backlog remains strong and is replenishing at a healthy rate. This quarter was an exceptional quarter, demonstrating the breadth of the firm's capabilities, and we are pleased with our results. As we have noted in the past, investors should not place too much emphasis on any one quarter. This holds true in very strong quarters, as well as challenging ones. And we would encourage you not to extrapolate these results. We are constructive on the outlook of our business and believe we are well-positioned to serve our clients across a range of market environments. While ongoing geopolitical and macroeconomic uncertainty could extend transaction timelines if it persists throughout the year, we believe the underlying conditions for a strong M&A environment remain, albeit with some bumps along the way. Turning to talent, since our last call, three senior managing directors have joined our investment banking practice in healthcare, equity capital markets, and private capital advisory all three committed in 2025 and were included in our year-end smd count of 171 three additional smds have committed to join our franchise in key areas including healthcare industrials and private capital advisory this year in addition to our externally hired talent we started the year with a class of eight promoted investment banking smds In total, we now have 182 SMDs in investment banking, with more than 45 ramping, positioning us to drive sustained growth in activity over time. Now let me turn to our businesses. In North America Strategic Advisory, we achieved a new quarterly record for revenue, reflecting strong transaction announcements, trends carrying on from 2025, and strong activity levels across both corporates and financial sponsors. While exit activity among financial sponsors has been mixed recently, we continue to see increased engagement from a year ago our emia strategic advisory business delivered a record first quarter with strong activity across a number of sectors and geographies in the first quarter we advised on a number of significant transactions globally including warner brothers discovery on its 110 billion dollar sale to paramount skydance devon energy on its $58 billion merger with Cotera Energy, Jetro Restaurant Depot on its sale to Cisco for $29 billion, Apellas on its sale to Biogen for approximately $5.6 billion, and Beasley on its recommended cash offer by Zurich Insurance Group for $8.2 billion. Industry-wide activist campaigns declined in the first quarter, although our strategic defense and shareholder advisory group continue to be busy. The liability management and restructuring business maintained robust activity levels in the quarter with continued strength in client dialogues in recent months. Our private capital markets and debt advisory team remained active, particularly with structured minority deals, despite some lengthening in transaction timelines. The private capital advisory business delivered a record first quarter. New deal activity continues to be elevated, particularly on the LP side, while GEP-led continuation funds remain active. We are also seeing strong momentum in newer product areas, including private credit and secondaries the private funds group also delivered a record first quarter despite a challenging environment for fundraising our equity capital markets business had a solid quarter with revenues in line with the prior year the business experienced strength across healthcare and energy as ipo and follow-on issuance trends are were very healthy in the quarter we led we we were lead left book runner on Diamond Energy's $2.2 billion follow-on for the third largest U.S. E&P follow-on offering ever. Our equities business delivered a record first quarter driven by healthy levels of volatility, which contributed to strong performance across our trading businesses. Our teams continued to provide differentiated insights and thought leadership to clients amid increased market volatility. And finally, our wealth management business had record first quarter revenues. While we saw some moderation in performance and AUM relative to the year-end reflecting weaker markets, client engagement remains strong. Overall, our performance in the quarter highlights the progress we've made in scaling our platform and expanding our capabilities as we continue to support clients in an increasingly complex environment we remain encouraged by the level of dialogue and activity we are seeing across our global franchise looking ahead we recognize the potential for continued uncertainty in the near term we believe the underlying long-term drivers for for growth remain intact and position us well to navigate the environment and capture opportunities over time let me now turn it over to tim thanks john

as john mentioned we are pleased with our strong performance in the first quarter before i get into the details i want to highlight some factors that drove the outperformance including several large transactions that looked as if they might close in the fourth quarter and then slowed and closed in the first quarter of this year. In addition, there were other large transactions that were on track for a second quarter closing this year and then accelerated into the first quarter. Given this and the strong environment of the last several quarters, we experienced the greatest number of large transaction closings in any quarter in our history. Accordingly, we would expect our second quarter to be closer to what we experienced in last year's second quarter, which was a record. And in aggregate, we believe our first half will reflect continued strong performance, and we remain enthusiastic about the outlook for our business. Now, turning to the quarter. For the first quarter of 2026, net revenues, operating income, and EPS on a GAAP basis were $1.4 billion, $331 million, and $7.20 per share, respectively. My comments from here will focus on non-GAAP metrics, which we believe are useful when evaluating our results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website. Our first quarter adjusted net revenues were approximately $1.4 billion, up 100% versus the first quarter of 2025, and up 8% sequentially, representing a new record quarter for the firm. Adjusted operating income for the quarter was $354 million, up 205% year over year. And adjusted earnings per share was $7.53, up 116% versus the prior year period. Our adjusted operating margin for the quarter was 25.3 percent, up from 16.6 percent a year ago, an improvement of approximately 870 basis points, reflecting a combination of the strong environment and our high first quarter revenues. Turning to the businesses, adjusted advisory fees were approximately $1.2 billion in the quarter, up 123% year-over-year, representing a record quarter. The growth was driven by a significant increase in large transaction closings, as mentioned at the start of my remarks, as well as a continued increase in productivity across our platform. Underwriting fees were $55 million, in line with the prior year period commissions and related revenue was 63 million dollars of 14 percent year over year driven primarily by higher trading volumes adjusted asset management and administration fees were approximately 24 million dollars up eight percent versus the prior year Adjusted other revenue net was approximately $15 million, reflecting higher interest income, partially offset by losses on our DCCP hedge portfolio as equity markets modestly declined in the quarter. Turning to expenses, our adjusted compensation ratio for the quarter was 64%, down approximately 170 basis points from the first quarter of last year, and down 20 basis points from the full year of 2025. The decline in our compensation ratio was driven by a continued improvement in revenues, reflecting market share gains, partially offset by our continued investment in talent, which is core to our growth strategy. We are striving to make additional progress on our compensation ratio over time, balancing that with investment in our business and the competitive market environment. While compensation expense and our ratio depend on numerous factors, including some for which we have limited visibility at this point, as I mentioned last quarter, we expect compensation ratio improvement this year will likely be meaningfully more modest than what we achieved in each of the last two years. Our goals are constant, to deliver excellence to our clients and to create value for our shareholders over the medium to longer term adjusted non-compensation expenses were 150 million dollars of 21 percent year over year the non-compensation ratio was 10.7 percent an improvement of approximately 700 basis points versus the first quarter of 2025 driven by stronger revenues. The increase in non-comp expenses year over year was primarily attributable to, first, higher technology and information services costs, reflecting increased licensing costs and investment in development and technology, which are intended to yield future benefits. Second, higher professional fees, including certain costs related to higher client activity levels, some of which may be recoverable, and a variety of other general corporate costs. And third, increased travel and related expenses, driven by higher levels of client activity and engagement. In order to support our growth, business diversification, and technology initiatives, we would expect to see a similar growth rate in non-comps in 2026, in line with what we experienced in the last couple of years. Our adjusted tax rate for the quarter was 3%, compared to a negative 39.7% a year ago. Our tax rate in the first quarter is primarily impacted by depreciation of the firm's share price upon vesting of RSU grants above the original grant price, generating a substantial tax benefit. We anticipate that our effective tax rate in the remaining three quarters of this year will be more similar to what we have experienced in those quarters during prior years. Turning to our balance sheet, as of March 31st, our cash and investment securities totaled nearly $2 billion. Similar to past years, our cash balance is down from year-end due to the payout of bonus compensation in March and share repurchases. In the quarter we returned a total of 673 million dollars of capital which is a new quarterly record amount through the repurchase of 1.9 million shares and the payment of dividends. Consistent with historical practice we bought back stock through net settlements of RSU vesting and in the open market, offsetting the dilution from the RSU grants that were issued in the quarter is part of our annual bonus compensation process. It is important to note that of the 1.9 million shares we repurchased in the quarter, approximately 900,000 were through net settlements of besting RSUs in early February at an average price of approximately $345 per share, which has been our historic practice. The remaining approximate 1 million shares were repurchased in the open market at an average price of approximately $302 per share. Altogether, the blended price per share was three hundred and twenty two dollars separately our board declared a dividend of 89 cents per share an increase of six percent from the prior dividend declared our first quarter adjusted diluted share count was forty four point four million shares down over five hundred thousand shares from the fourth quarter driven by share repurchases in the quarter partially offset by the vesting of RSUs. We remain committed to repurchasing shares to offset dilution from our bonus-related RSU grants. For the sixth year in a row, we have repurchased a number of shares greater than RSUs issued as part of our bonus process. We continue to remain or maintain a strong cash position and take into consideration our regulatory requirements the current economic and business environment cash needs for the implementation of our strategic initiatives including hiring plans and preserving financial flexibility we are pleased with our record performance in the first quarter and while we continue to be mindful of the continued market uncertainty, we remain optimistic about our medium and longer-term prospects. With that, we will now open the line for questions.

Thank you. We will now conduct the question and answer portion of the conference. Please limit to one question only. You are welcome to rejoin the queue for additional questions, time permitting. Again, in order to ask a question, please press the star key followed by one on your touchtone phone. And our first question comes from Alex Bond with KBW. Your line is now open.

Hey, good morning, everyone. Thanks for taking the question. I guess just to start, it would be great to get your thoughts around what's happening in the software space at the moment and how stress and lower valuations in the public market there have impacted both deal activity and sentiment on the M&A side. And then also, it would be great to get your thoughts around what the potential opportunity could be there on the longer term, on the restructuring side, you know, if stress persists in that market, and if you view that as an opportunity just given the scale of your tech M&A practice.

So, yeah, just any thoughts there would be helpful. Thank you.

Sure. On software, there's definitely a slowdown, But it's not a standstill. And it really does depend on the companies themselves. We're seeing, on the one hand, there's some certain situations we were working on that have actually slowed substantially. There are other situations that we're in the middle of right now where we're seeing real opportunity in discussions with respect to consolidation as well as other opportunities that people are looking for. As you know, software is very different in terms of how it really is applicable to the markets that it's in. And not everyone is going to be really responding the same way to what looks like a hesitation in the software markets. On the M&A side, we're seeing, as I said, we're seeing activity. on the public offering side, we are in discussions, and we just have to see how that plays out. I think in many respects, and it won't surprise you that I say this, we're going to have to see some of this play out. In terms of restructuring, we're seeing a lot of activity really across the board, multiple sectors. We definitely are seeing software opportunities on the restructuring side, but our business is so diverse with so much opportunity and we are really seeing an expansion as you know we had a record year last year and we are on a very good pace this year so i'd say that we're seeing it um but it's not really dominating the business or lots of other things there's a lot of liability management opportunities out there that we're participating and we are doing a lot of business with corporates as well as sponsors. So from our perspective, the restructuring business is strong, but software is not dictating it, but there is software opportunities within it. Great. That's helpful, caller. Thanks, John.

Thank you. Our next question comes from Ryan Kinney with Morgan Stanley. Your line is now open.

Hi. Good morning. Wanted to dig in a little bit on the Europe side. So you've been focusing on expanding into Europe, and you do have the EU weighing, overhauling the merger rules. So are you seeing any uptick in demand, or is there a pause and kind of wait and see what happens with the merger rules and any impact from energy prices in Europe is viewed kind of as disproportionately impacting Europe versus U.S.?

So what are your thoughts on Europe right now?

Well, as you saw, or as I said, our European business had a record first quarter. And as you know, a big part of our experience in Europe right now is that we've been in a real build mode, and we've added substantial people and assets throughout Europe. We feel really good about those people, and we feel like we've really been able to build a much more diverse and deep business. So we're seeing a lot of activity and our dialogues are up. And I think because we have such high quality people, we're in a lot of the boardrooms and really having the opportunity to really have really consequential conversations. So from our perspective, what we're seeing, and maybe this is limited more to us because we're growing it so much, but we're seeing a lot of activity and we're in the middle of some really consequential strategic discussions. Do I think that Europe will slow down because of the examination of merger rules? I really don't right now until people really decide that they don't think they're going to be able to get things done. And that, from our experience, is not the case at this time.

Thank you.

Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Your line is now open.

Hey, good morning.

John, maybe just a follow-up question on financial sponsors, particularly as it relates to the middle market, which has been kind of the slowest in rebounding. We all understand the AI and software valuation impact, but outside of that, it still seems sluggish.

So can you discuss how much of a pause maybe the IRN war has caused and other factors still holding sponsors back and how you see activity levels shaping up for the remainder year, just particularly in the middle market side? Well, I think you nailed it, which is the larger, large cap market in financial sponsors where they have big, high-quality assets, we're still in the art of the possible. There's a lot of activity there. When there's a really good, big asset, there is a lot of activity and a lot of interest. Middle market is slowed. There is no question. It's a slowdown. It's not a standstill. There are transactions getting done. Our experience is that we are seeing a real pickup in our opportunity to pitch. Our pitch rate is higher now than it was this time last year. So we're seeing a lot more now. Some of that, I think, is that we've really built out our sponsor business. And as you know, one of our big objectives was to take what we thought were several really powerful sponsor-related franchises and bring them together to really have a coherent offering to financial sponsors generally. And we actually see the fruits of that and that we're seeing a lot more. So our pitch rate is up. Actually, our win rate is up. And so we're feeling momentum in that business. Having said that, your original premise is what we are feeling and what I've been seeing, which is smaller deals, middle market things are really slowed. And it's not to say they won't happen, but I think that it's not nearly as buoyant as we hoped it would be in the beginning of the year.

Okay, great.

Thanks.

Our next question comes from Daniel Kocaira with Bank of America. Your line is now open.

Hi, good morning. In your prepared remarks, you mentioned that some deals were accelerated from 2Q and to the end of 1Q. Just given added uncertainties within the market, I would think that it would be more likely to see those conversations extended rather than shortened. So I'd love to hear maybe just some of the nature of those conversations in terms of why they may accelerate them, and is this a trend that's continued into the second quarter? Thank you.

Yeah, thanks for the question, Daniel. Look, really, I would say don't read too much into that, the acceleration. I mean, at any one time, you know, we're working on a very large number of transactions, and each one has its own story. And this, you know, there's some element of randomness and lumpiness to our business. It's always been that way. And it just so happened that this quarter there were a couple of them that got on a little faster track and went a little more smoothly than anticipated. And they happen to have significant fees attached to them. And that's all. There's not some broader trend at play here.

Thank you. And I guess just kind of one follow-up. In a saturated market with so many different players spanning from the pure play investment banks to bulge brackets, what exactly does Evercore do to differentiate themselves? And what is it about your franchise that really makes clients want to work with you over the competition on these larger scale transactions? Thank you.

Well, I think what we hopefully are able to communicate to clients is that we understand their business, that we put their interests first, and that we are highly capable. You know, what we've tried to build is a firm that has extraordinarily capable and competent people who really know the business and know their sectors, but at the same time are serving the clients in every respect and that we've been able to engender confidence in both management teams and boards. And that's really what we aspire to do. We've hired some really high-quality people. I think the people of Evercore in today's world are top-notch and A-plus level, and that's what we really have worked really hard to do and we hope we have given them a culture which has them working together so that we have everybody pulling on the same war in the same direction and so I'm hoping that really what really is our competitive edge is we're able to deliver better results for our clients in an ethical and client-oriented fashion and that's what we that's really what we hope our clients see and hopefully why they choose us right thank

you for taking my questions thank you our next question comes from brendan o'brien with wolf research your line is now open good morning and thanks for taking my question i just want to drill down on the dynamics in the pca business you know on the one hand volatility and valuation concerns could impact price discovery and potentially weigh on activity, but on the other, you could also argue that the slower pace of the exits could prove to be a tailwind for the business.

So I just want to get a sense as to what you're seeing and hearing from clients, and also if you could potentially just provide some color on what's driving the relative strength in LP leads relative to GP leads. well as as i think we said in the call pca had a record year last year and it's had a record first quarter this year so far so there's real momentum to the business we we have a pretty equal balance between lp and gp we're quite balanced i think the dynamics of the business is that that it continues to be able to present clients with real alternatives in terms of how they want to get liquidity concept you know um to to to move assets to a ownership position that they're comfortable with and really allows people the flexibility beyond the pure merger or ipo market to really monetize and to actual assign ownership. And so what we're seeing is there is just a continued interest in the flexibility that PCA is able to offer. In addition, there are lots of different new products that our PCA group is undertaking. They're very creative in how they think about the market. And as secondaries grow and as becomes more powerful, they are doing better and better. As you know, they have a very high market position, and they are really, I think, presenting to the market highest quality advice. And so, really, what we're seeing is that this is a very powerful growth engine for our firm, and I think we feel really comfortable with the way they're defining their market and how they're addressing that market. it.

Thank you for taking my question.

Thank you. Our next question comes from Nathan Stein with Deutsche Bank. Your line is now open.

Hey, good morning. I was hoping you could break down the advisory revenue split across M&A and non-M&A businesses broadly, and how do you expect that to trend from here?

Yeah, sure. I think, you know, what we've seen in the past is it's been about kind of 45-ish percent. I would say it's still over 40%. And by the way, the non-M&A businesses are doing great. We're really pleased with the strength of their performance, the backlog, the outlook. And having said that, we may be at a point in the cycle where M&A is strengthening a bit relative to some of the other businesses. And so it's possible that, you know, as we move forward, you could see that statistic come down a bit due to the strength of the M&A market. But those businesses continue to perform well, and we're really pleased with both their performance and their outlook.

Yeah, and what you probably have seen is that we continue to invest in our M&A business, which clearly is a very important part of what we offer clients. But we've also been allocating capital and investing in non-M&A businesses to diversify what we're able to provide to clients and really what we're able to deliver for shareholders, which is some diversification. We are not a balance sheet bank, which all of you know, so there's certain things we're not going to be in. But everything that is not really balance sheet driven, we're thinking very aggressively about how do we participate and can we really create a position where we have some competitive edge. I think we really feel good about the people who come to Evercore and the people we hire, and therefore I think we have real opportunity across the board.

Once again, if you would like to ask a question, please press star and 1 on your keypad now. We'll go next to Brennan Hawken with BMO Capital Markets. Your line is now open.

Good morning. Thanks for taking my question. I wanted to drill into the lesser comp leverage expected this year versus recent years. So I recognize I think it's probably a push and pull. You guys also said that you don't expect all that much revenue growth. year-over-year in the second quarter. So the sort of strong note we're starting on here is not indicative.

But can you talk about the differing factors and how much of a factor it is maybe, you know, tougher comps and therefore slowing revenue growth versus the continued elevated market, competitive market for talent, both acquisition and retention out there? yeah sure uh brennan i'm happy to answer that the first thing i would do is is point out and you you did characterize my comments correctly but i'd point out that uh in the um last couple of years um i i would say we made by my measure pretty um strong improvement meaning we went from 67.6% down to 65.7, so that was 190 basis points. Then as we moved from 24 to 25, we went from 65.7 to 64.2. That's another 150. And so that's 340 basis points. Then we reduced another 20 basis points this quarter. So that's 360 basis points in just a little over two years, which at least by in my measure, is pretty strong improvement. And we're striving to continue to make improvement. And we're hopeful that we can and we will. I think what I intended to convey is that it just won't be the same magnitude, we don't think, as we saw in the last couple of years, because it's just hard to keep it going at that rate. And then you raised the question, And were my comments based on outlook for revenue and or outlook for the continued competitiveness in the environment for hiring and retention? And I think on the revenue, as you heard in John's comments, I think we remain optimistic and enthusiastic about our outlook. You know, the backlogs, pipelines, you know, continue to look good. Activity levels remain high. And, you know, we're hopeful that this recovery has, and our performance in it, has some real legs to it. And so I wouldn't interpret anything I've said as a reflection of our views on the revenue outlook. It is the case, I think, that competition remains high for the best talent. We're, of course, committed to obtaining the best talent. And, you know, as you've seen these last couple of years and into the early part of this year, we've continued to be pretty proactive in augmenting our partner ranks and really strengthening that in a way that looks like it's earning positive returns for us. And we're, you know, continuing to attempt to do that. So I think the key takeaways here is we are striving to make continued progress, although it might not be the same magnitude we've seen in the last couple of years, where we remain optimistic about the outlook. But, yes, the market for talent remains competitive.

Got it. Thanks for that. I know it's one question. I can re-queue for sure, but do you mind if I have to follow up? We have to just fold, so I'm guessing we're towards the end here. Sure. Please. Great. Thank you. So it's sort of a related – it's actually a real follow-up, Tim. On that point, like, you know, you guys – clearly the revenue's been great. Your productivity number's been great. So the hiring is very effective. Like, you know, this is not a criticism. It's just a question of, like, mind facts. Is sort of the competition for talent, has it, like, scaled to a level, and is it that the talent you guys are hiring has also scaled to a level where, you know, maybe a return to the sub-60% comp ratio is going to be more challenging? And therefore, like, you guys are driving business, and you want to make sure that you're not compromising on standards and whatnot. So that's just sort of, like, reality and a law of nature now? Or is that the way we should think about it? Yeah.

Brennan, thanks again for the follow-up question. I think, you know, it's interesting. As part of, as you can imagine, we're always doing internal exercises that analyze our results and our returns and where we can do better and so forth. And, you know, I've just been through some exercises recently to look at the returns on our partner hiring. And, you know, I would say that, you know, the NPVs and the IRRs have been pretty good. And, you know, what we're focused on, first and foremost, is serving our clients with excellence, but secondarily, you know, building value for the firm. And I'm wanting to be careful that, you know, when we're doing what I would call positive NPV partner hiring and partner hiring that has pretty good, you know, IRRs associated with it, I don't sub-optimize by focusing solely on the comp ratio and thereby, you know, foregoing certain hires or additions that are clearly adding value. And so that would that would be the first point. You know, look, and on the sub 60 percent, you know, what I've been, I think, saying hopefully pretty consistently over these last quarters and even years is, you know, we're focused on making improvement next quarter and the quarter after and the quarter after that. And I, you know, we're still a ways from from sub 60. And so I'm just trying to do better than we did last year. And then at the end of next year, you can ask me, you know, how much improvement I think I can make in 27. But for now, we're just trying to improve from where we are.

Let me make one comment about the marketplace for talent. Your presumption, which is that it's more competitive and it's hard to get people, is absolutely true. The ante has been raised. Spending virtually every day in the market talking about it, I'm sure you know that a big piece of our strategy is bringing in A-plus players. And an A-plus player will, without doubt, create value for the firm. And so we're spending a lot of time on really bringing in the high-quality people. And I think what's happening for our firm is that because we have really been able to create momentum for our franchise, that we are seeing more and more highly talented people who actually are interested in coming to us. because we have a firm I think that people really think has momentum and really is going to provide them an opportunity to work with other talented people and to provide even better service for their clients. And so I think that as it's getting more competitive and as difficult as it is, I think it's not easier for us, but I think that we are actually finding real success with high-quality people continuing even as the market gets more competitive.

That's clearly in numbers, too. Thanks for taking my question.

Thanks, Brian.

Thank you. Our next question comes from James Yarrow with Goldman Sachs. Your line is now open.

Good morning, and thanks for taking the question. So 2025 was a heavily large, strategic, M&A-driven market. I'd just love to get your thoughts on a few things as it relates to that particular part of the market. To what degree do you believe the large strategic deals could actually accelerate from here, which is already a fairly strong base? Maybe within the answer, could you speak to the ingredients that you hear in the boardroom that are driving a large-cap activity? And could you also comment on considerations around the antitrust backdrop in the U.S., perhaps ahead of and after the U.S. midterms? Okay.

Well, with respect to the M&A market generally and large cap, there is no question that large cap has been a major part of the market probably for the last 18 months or so, maybe even more. And part of that is that companies and managements are seeing that it is more and more acceptable and actually welcomed by shareholders. As you know, throughout the time that certainly I've been on Wall Street, there are times when the market is really excited about big strategic deals, and there are other times when the market really is looking for something else. And right now, amidst uncertainty and some instability, big deals are actually welcomed. And there is an opportunity in the current regulatory environment to get deals done, whereas there have been other regulatory environments that are not as friendly to larger deals. And I think there is a perception that if you're going to do a larger deal and a management team and a board, you better put it on the agenda and be looking at it and make a decision if you want to do it because this is a good time. Not every deal is going to be waived in, but there is a willingness to consider these on the regulatory side that I think is quite promising and positive. And so we see this continuing. We see that there is going to continue to be strength. Some of the fact you asked what the factors are. Well, clearly, there are some factors that really exist that that really have existed before, but they're quite strong right now. Number one, CEO confidence is very sound and quite high. Number two, the economy, despite the fact that there is dislocation and there is some uncertainty geopolitically, politically, the economy is quite resilient. Number three, the financing markets are not just open, but they're really abundant. And so there's real financing opportunity. And so there is a real can-do attitude. And I think, finally, I think boards are very comfortable that scale is good right now for lots of different reasons, whether it has to do with how do you deal with AI, How do you deal with the world around you? How are you thinking about your supply chains and things? Scale is actually looked upon as a positive, not a negative. And so that's another reason. So I think all those factors are pointing to the fact that not that everybody's going to do a big deal, but there's a lot of very large companies that are thinking about deals. And, you know, we're seeing those in the boardrooms that we're in.

That's a very helpful answer. Thanks a lot, John.

Thank you. our next question comes from mike brown with ubs your line is now open great good morning thanks taking my question so uh cash continues to really run at at high levels here and the buyback activity was accelerated in the quarter how are you thinking about maybe that cash level and can you just give us an update on capital allocation here as you think about share buybacks And then is it possible that we could see more inorganic M&A here? You've had some quite good success here with Robbie Warshaw. Could we see more deals in the future? Thanks.

Yeah, sure. And so, look, we've always been committed to returning capital to our shareholders. And I think if you look back, we're pretty proud of our track record, which includes 18 consecutive years of dividend increases, six consecutive years of repurchasing shares at least equivalent to our RSU issuance as part of the bonus process, and in fact, in many years, significantly more. And so we're very cognizant of the return of capital to shareholders and committed to it. And then with respect to acquisitions, look, we're always seeking to create value, whether it's through developing our people internally, hiring people externally. We certainly evaluate situations from time to time, but I would say, you know, we've not been a serial acquirer, and we're highly selective.

Yeah, and what I'd say about the strategic acquisition side is Roby Warshaw was a unique opportunity for us, and we were really excited to do that. We're not looking to use our capital by doing acquisitions. In fact, to do an acquisition is a very high bar for us. So I would just say if you're thinking about how we're going to use our capital, it's going to be in terms of we're going to return capital. We're going to be looking at really high quality talent to bring in and really drive our base businesses. We're going to look at new businesses and talent that can help us drive those and build those out. And I think probably last on the agenda is we are looking at the landscape and we're always open to thinking about something strategically. But I think what I'd like to make sure you understand is it's not a priority for us. We do it if something really came along that was really exciting for our franchise, but I think it's a very high bar. Got it. Thank you both. Very clear.

Thank you. Our next question comes from Devin Ryan with Citizens Bank. Your line is now open.

Hi, guys. Neo Elop on here for Devin. Our question is on AI and the impact to the business model. There have been a lot of headlines suggesting that AI will eventually lead to some decompression. So we'd love to get your thoughts on the narrative and maybe the most that protects the sector. and then also if you guys could quickly touch on like AI implementation at the firm and what productivity gains you're already seeing. Why don't I start and let Tim carry it through in terms of implementation at the firm. We think that AI provides tremendous opportunity and we're spending a lot of time understanding both how it impacts us internally as well as how it's going to impact businesses in the longer term. There is no question that there is an investment theme that having AI as a part of business, there are going to be certain businesses that are going to do a lot better because they have AI and they're using AI. There are other businesses that are going to feel impaired by what AI can do to basically somehow undermine what they actually do and what they bring to the market. and both of those possibilities create value if you're looking at the strategic side and the M&A side. So we think that we have to be very cognizant of what's happening in the market, the impact AI has on different companies, and really how that's going to change the competitive landscape, sector by sector, business by business. For us internally, I'll let Tim answer it, but we're spending a lot of time on it.

Yeah, sure. Look, I'd echo John's comments about the landscape, which is, you know, we're excited about AI in two ways. And one is what John just described, because we think it may change, you know, the very structure of certain industries or types of businesses. And that type of structural change is good for a firm like ours, which advises on situations like that. So, we do think that, over time, AI, with respect to our market, will create opportunities. We're, of course, in the middle of that, doing what we can to assist our clients in evaluating all of that. And then, internally, we're also excited. We, by the way, in the past year, we have a new chief information officer who has joined us. And then we've also continued to augment that team at the top levels. And it's an area in which we're investing. And we think that in the shorter run, you know, what one is likely to see is productivity enhancements. And those could be both with our banking team and possibly with the way we run our business inside of corporate. And then in the longer term, I think you could see opportunities for continued deal efficiencies, and I'm talking about processing now, and potentially idea generation. And so, you know, we're working hard at this, as I'm sure many firms are. and we think there's some real opportunity, but I think I'll leave it at that.

Thanks for answering the question.

Thank you. And we'll take a follow-up from Alex Bond with KBW. Your line is now open.

Hey, thanks for taking the follow-up. Just wanted to ask around the ECM outlook for the remainder of the year. It does seem like there's a decent amount of pre-IPO activity at the moment, especially with some of the larger deals rumored to launch later this year. So could you just share how you're thinking about the ECM opportunity through year-end and also maybe help us size up the potential there maybe relative to last year's full-year results? Well, we see that the ECM business looks quite healthy. There's some very high-quality, large companies that would like to get to market, and we don't see any reason why that's not going to happen. there you know as you all know there if if geopolitical gets really difficult that could interrupt some of the some of the equity market opportunities but we don't really see that right now and we think that it's very possible that this could sustain itself we do a lot in the biotech side, and we see real opportunities there throughout the year. So I think our point of view is that equities is going to continue to be strong, that the ECM opportunities will actually play out quite nicely, and that some of these big deals will be successful, and they will fuel the market and create excitement. So we think that for the most part, unless there's a real interruption, we could easily see, you know, a healthy ECM market that compares quite well to last year. Got it. That's helpful.

Thank you. And our final question is a follow-up from James Yarrow with Goldman Sachs. Your line is now open.

Thanks for taking the follow-up. I just wanted to clarify one of your comments and then thinking about the run rate further afield. So I just wanted to confirm that you expect the second quarter revenues of this year to be closer to 2Q25 levels. And then is that in part because of your comment around certain larger deals closing faster in the first quarter? So then if I sort of run that out further, that would mean that maybe a more normal cadence of deal closings not impacted by deals closing faster would be sort of the back half of the year. Is that a fair way to think about it?

Yeah, I think the first part of your question, I think you characterized things appropriately. We did talk about some deals that looked like they would close in 4Q being a bit prolonged in closing in 1Q, and then other deals that were significant that looked like they were going to close in 2Q accelerating and therefore ended up with a quite large 1Q. And then we would encourage people to look at our business and evaluate it across a multi-quarter time frame. And, you know, that's kind of always our business. The nature of our business has been that it's a little bit lumpy, and that's been true for years. And so we're encouraging a multi-quarter outlook. And then secondly, I think, and you heard it quite strongly from John, and I have exactly the same view, which is we think business is good. We are coming off, you know, a record year last year, a record quarter this quarter. Activity levels remain strong across essentially all of our businesses. And so we're enthusiastic about the outlook. And that's probably, I think, if you take all of those comments in totality, that's a fair representation of what we think.

Yeah, I agree with that. And one thing that I'm sure that you're aware of and seeing as we are, the fee environment, there are more large fees and big deals that are in and around than really I can remember. And I think what that does is it does create lumpiness. So, you know, I don't think that's going to be something that we're going to be rid of in the near future, and maybe I hope we don't. You know, I think that we are seeing really high quality, big things inside the firm right now. We anticipate that some of those will not happen, but we believe that some will happen. And I think that, you know, there is a it's a very healthy, very healthy market right now. And I think we feel really good about the fact that we're participating in a very tangible way. How that translates into quarter by quarter by quarter, I think we've always said, you know, it's going to actually play out and there will be lumpiness. But I'm sure that you're used to that and you've seen it, and maybe there's even more lumpiness if the fees are big.

That's very helpful. Thanks a lot.

Thank you. This does conclude today's question and answer session, as well as the Evercore First Quarter 2026 Earnings Conference Call. You may now disconnect.