Ladies and gentlemen, good afternoon, and welcome to the Moelis & Company Fourth Quarter and Full Year 2025 Earnings Conference Call. To begin, I'll turn the call over to Mr. Matt Sucrose.

Good afternoon, and thank you for joining us for Moelis & Company's Fourth Quarter and Full Year 2025 Financial Results Conference Call. On the phone today are Navid Mahmoodzadegan, CEO and Co-Founder; and Chris Calosano, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements which are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Moelis & Company's filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our Investor Relations website at investors.moelis.com. I will now turn the call over to Navid.

Thank you, Matt. It's great to be with you all this afternoon. We closed 2025 with significant momentum and entered 2026 from a position of strength, underscored by elevated levels of client activity, record new business generation, and the highest quality talent and breadth of expertise we've ever had. We earned record fourth quarter revenues of $488 million. And for the full year, our adjusted revenues grew 28% to $1.54 billion. Our revenues in 2025 were driven by 35% growth in M&A, a record-setting year for our capital markets business, and double-digit increases in both average fees and the number of completed transactions. Momentum continues to build across our business. Since our last earnings call, we advised on a number of notable M&A transactions, including Netflix's acquisition of Warner Bros, Allied Gold's sale to Zijin Gold, and Ventix Biosciences' sale to Eli Lilly. Outside of M&A, we advised on USA Rare Earths' transformative partnership with the U.S. Department of Commerce, the debt restructuring of King Abdullah Economic City, and xEnergy's pre-IPO conversion transaction. Constructive financing markets and strong equity market performance are setting the stage for an active transaction environment in 2026. The breadth and depth of M&A activity that we saw at the end of last year is expanding and accelerating. Strategics are becoming even more active as the boards gain confidence to pursue larger transformational deals to drive scale and best position themselves for rapid technological shifts. Sponsor activity is also building as valuation alignment improves and sponsors respond to growing pressure to deploy and return capital to investors. While larger cap transactions have been driving the M&A market, momentum in our pipeline gives us increasing confidence that activity will broaden across transaction sizes as the year progresses. In capital markets, our team is benefiting from increased investor appetite across growth-oriented sectors with strong capabilities in both the public and private markets. With respect to capital structure advisory, we continue to see a long runway of liability management assignments driven by the significant leverage that exists across many companies, compounded by the accelerating pace of technological disruption. And over time, we anticipate more traditional restructurings as prior out-of-court solutions run their course. Finally, following substantial investment in 2025, our private capital advisory business is gaining meaningful traction and is well positioned to serve our sponsor clients as the GP-led secondary market continues to hit record levels. Our thesis for this business is clearly being validated. Our PCA team is fully integrated with our industry and financial sponsor bankers, and our secondaries pipeline is developing rapidly. We continue to invest in this area with the addition of a Managing Director focused on private credit secondaries joining next week, and with another MD joining later this year, we will have a team of 7 Managing Directors dedicated to GP-led secondaries. This growth enhances our ability to support sponsor clients and reinforces our conviction that PCA will be an increasingly important fourth pillar of our firm. Against this constructive backdrop, we see significant opportunity to continue growing our client capabilities and footprint. During 2025, we added 21 managing directors, including 9 lateral hires. In the beginning of 2026, we promoted an additional 13 professionals to Managing Director, bringing our total MD count to 178 as of today's call. These promotions, together with our continued hiring, deepen our global centers of excellence and further align the firm with the largest market opportunities. Given our strong revenue performance and the maturation of our recent investments, we delivered meaningful operating leverage this year highlighted by a 320 basis point improvement in our adjusted compensation ratio to 65.8%. Our capital position remains strong with no debt and substantial cash, and we materially increased our capital return through significant share buybacks in the fourth quarter. In summary, our coverage platform and our culture of collaboration have never been stronger, our business outlook is positive, and our pipeline is near record levels. We are confident in our ability to continue driving growth while generating operating leverage and delivering sustained value for our clients, our shareholders, and our team over the long term. With that, I'll pass the call to Chris to review our financial results in more detail.

Thanks, Navid, and good afternoon, everyone. We reported record fourth quarter revenues of $488 million, an increase of 11% versus the prior year period. For the full year, our adjusted revenues increased 28% to $1.54 billion. As Navid said, our revenue growth was driven by year-over-year increases in M&A and capital markets, partially offset by a decline in capital structure advisory. Our business mix for the fourth quarter and full year was approximately 2/3 M&A and 1/3 non-M&A. Turning to expenses. As Navid mentioned, we saw a significant improvement in our adjusted compensation expense ratios, which were 61.1% for the fourth quarter and 65.8% for the full year, down from 69% last year. Adjusted non-compensation expenses were $60 million for the fourth quarter, resulting in a 12.4% non-compensation expense ratio. Our adjusted noncompensation expenses for the full year 2025 were $224 million, resulting in a non-compensation expense ratio of 14.6%, down from 15.9% in the prior year. The main drivers of the expense growth for the year were increased deal-related travel and entertainment and client conferences, continued investments in technology and data, including AI, and higher occupancy costs due to headcount growth. Given our ongoing investments in technology, increased deal activity, and headcount, we currently anticipate full year 2026 non-compensation expenses to grow at a similar rate to 2025. Our adjusted pretax margin was 28.6% for the fourth quarter and 21.5% for the full year 2025, representing 510 basis points of improvement from a 16.4% adjusted pretax margin in 2024. Regarding taxes, our normalized corporate tax rate for the year was 29.8%, and our effective tax rate was 22.4%. The difference in rates is primarily driven by the excess tax benefit related to the delivery of equity-based compensation in the first quarter of 2025. As a reminder, consistent with prior years, the annual vesting of RSUs will occur later this month, and we expect to recognize an excess tax benefit, which will favorably impact Q1 EPS. Our revenue growth and reductions in both our comp and non-comp expense ratios contributed to EPS gains. For the full year 2025, we reported adjusted EPS of $2.99 per share, representing an increase of 64% from the $1.82 per share in 2024. Turning to capital allocation. The Board declared a regular quarterly dividend of $0.65 per share. During the fourth quarter, we increased buyback activity, repurchasing 716,000 shares in the open market at an average price of $62.96 per share, bringing total repurchases for the year to approximately 950,000 shares. For the 2025 performance year, we will have returned $284 million of capital to shareholders through dividends, net settlement of shares, and open market repurchases. Additionally, the Board authorized a new share repurchase program of up to $300 million with no expiration date. Lastly, we continue to maintain a strong balance sheet with $849 million of cash and no debt. With that, let's open the line for questions.

And our first question comes from Devin Ryan with Citizens Bank.

And good afternoon Navid and Chris, how are you?

Good, Devin. How are you doing?

Doing great. First question, just kind of on the broader advisory outlook. So clearly, a good year in 2025, growing 28% year-over-year even without having kind of sponsors at their, I'd say, potential, and this is clearly an important customer base for us. So this shows that you guys were able to kind of work with a number of different sizes of customers and types of customers. But on the sponsor specifically, how would you frame kind of the order of magnitude of how much upside there is towards kind of more of a normal level and the impact for Moelis because you're coming off of a very good year, but it still feels like there's probably maybe another step function of sponsors truly re-engaged, but just love to get some sense from you and if you can kind of frame out how you think about quantifying that?

Sure, Devin. Thanks for the question. I think the premise of your question is exactly right. As 2025 developed, we saw an increasing velocity of sponsor deals. We think there's still a fair amount to go before we get the kind of volumes that I think will create more equilibrium between capital return and deployment. I do think in terms of opening up the aperture to more deals in the middle market. I think that's coming in 2026. That's certainly what we're seeing in our pipelines and our conversations with sponsors. We've talked about it on a lot of the previous earnings calls. There's just a real push from LPs to get capital return in these portfolio companies. I think we're reaching the point where the financing markets are good, the broader economy is good, inflation seems to be under control. And this is the point where valuations are what they are in the market, and I think sponsors are getting their head around what options are available to them to get return back to their LPs. One of those options in addition to M&A is doing a GP-led secondary, and that's one of the reasons why we're super excited about that business. We have now an industry-leading GP-led secondary capability to pair with our industry-leading sponsor coverage and industry-leading M&A capabilities to bring the sponsors to be a solution provider to help solve those issues. And I think we're really seeing an opening of the market. I think that's going to happen in 2026. And I think we're really well-positioned to take advantage of that.

That's great insight, Navid. Regarding the management of restructuring liabilities, you mentioned that there is a significant amount of activity expected. Can we delve into that a bit further to understand the baseline for this activity? Are we looking at levels similar to what we've been experiencing, or is it likely to decrease a bit, yet stabilize at a higher level? I would like to explore what this scenario might look like currently. I recognize that if the economy falters, there could be increased activity, but that could also negatively impact M&A. I’m interested in your perspective on the baseline indicated by this extended runway.

Sure. So as we look at the base case as you put it, we do think there is this long runway of companies. There's just a number of companies that took advantage of very favorable financing, a very favorable rate and financing environment to take on a fair amount of leverage over the last many years through the last cycle. Some of those companies have done various stages of liability management exercises, but you still have a lot of balance sheets that are still out of whack, quite frankly, relative to the size and the earnings of those companies. On top of that, you see technology disruption coming and it's going to impact some of these sectors pretty dramatically. As we look out into the future, I think there's just going to be many, many companies that still have to grapple with their balance sheet. I think some of that's going to happen through amended extends and liability management types of exercises out of court. But I think some of those companies are going to tip into more active in-court restructuring assignments. Again, we're well positioned for all of that. In addition, we've significantly bolstered and invested in our creditor side capabilities so that if we're not on the company side in these situations, we have a really good seat working with creditors there. We're really excited about the rise of that business and our traction in that business. So a year ago, you said to me, remember we came off a really strong 2024 on the CSA side of the business? We sort of predicted that our business might be down a little bit, given the market backdrop. As I look out this year, I'm predicting flat to up as opposed to flat to down in terms of the strength of our business in what we call CSA.

Our next question comes from the line of James Yaro with Goldman Sachs.

I wanted to touch a little bit on the M&A composition of 2025 and what we could see for 2026 and beyond. 2025 was a heavily mega cap M&A driven market. So I'd love to just get your perspective on the outlook for large deals to continue and juxtaposing that versus the outlook for smaller deals, which I think ties into your sponsor comments. And then I guess if you take a step back, when and why would smaller deals catch up to the big ones?

So look, I think as we look out into the next few years, I do think there's a real possibility of the bigger cap type transaction that we've seen a lot of last year was really a close to a record year on the larger side of the curve of transactions, that continuing. And I think the reason that's going to continue is the motivation to create more scale for these larger companies to serve their customers, to create efficiencies to best position themselves for technology change. Those motivations are only accelerating, and you have a market environment, a regulatory environment that's allowing those kinds of transactions to happen, and who knows how long that's going to last, and a financing environment and a stock market that's conducive to promoting those kinds of transactions. We continue to see very active dialogues with our clients on these bigger type transactions. But I think we're at that point now where this middle market, which we talk about, has been more muted because there's been sort of a disconnect on buyer-seller expectations, we had financing costs that had risen, which make it harder to finance new buyouts of these companies. You had tariffs and inflation and all of those things that make it hard to underwrite a purchase of those kinds of companies. A lot of those issues have dissipated, and this pressure from LPs to get money back that the pressure they're putting on the private equity firms is still really there. I think we're at that point where a number of the financial sponsors who own these portfolio companies now for 6, 7, 8, 9 years are finding it hard to do anything other than actually go to market and see what the market will bear in terms of the price for these portfolio companies. I just think that's increasingly happening. There's really no reason to wait at this point unless there's something specific with that company where you see there's going to be a step function up in the earnings of that company in a year. It now is what it is. It's time to monetize, and I think more and more sponsors are bringing those companies to market.

Excellent. Very clear. So you've talked about a lot of areas of positivity here. I just wanted to touch on 1 area, which is evolving a lot recently, which is geopolitical backdrop. When you're in the boardroom, is that having any impact on dialogues? Or is it just that we've seen so many different permutations of geopolitical considerations that boards are getting more comfortable with that at this point?

It's a great question. Geopolitics and global events are always topics of discussion in boardrooms and client conversations regarding potential transactions. Uncertainty typically does not favor large-scale corporate deals. If a significant geopolitical event were to occur, it could affect the level of transaction activity going forward. However, it seems that over the past year, there has been substantial activity, and people might be becoming desensitized to short-term geopolitical flare-ups, focusing instead on positioning their businesses effectively. We recognize that technological changes are imminent, and we must prepare for that by positioning ourselves appropriately. The equity markets are rewarding clarity, execution, and growth. Thus, we should pursue corporate transactions that enhance our potential for equity value creation while addressing the forthcoming technological disruptions. Unless there is a clear geopolitical event on the horizon, it appears that people are moving ahead with their plans.

And our next question comes from the line of Alex Baum with KBW.

Just a question on the revenue backdrop and how you expect the cadence of revenue recognition to play out over the course of the coming year. So it's only been a month to start the year here, but on the announcement side at the industry level, it's been a little weaker than most had hoped. From what we can see in the public completion and pipeline data, all specifically the first quarter looks like it could be a little bit on the lighter side relative to the past couple of quarters. But with all that said, the overall backdrop obviously remains really constructive. So wondering how you're thinking about this and maybe if you're expecting revenues to potentially be more back-half weighted this year as the environment continues to improve. Yes, any color there would be great.

I appreciate the question, Alex. I don't want to draw too many conclusions based on just one month or a specific snapshot. What I can share is that we see a very positive environment for transactions, with our clients highly motivated to pursue them. Our new business generation activity is at all-time highs, and our pipeline is also at record levels. While predictions about specific months and quarters can be challenging, historically, we observe that the first quarter tends to be the weakest seasonally, with a progression throughout the year. We experienced this trend last year. I won't make any predictions about the first or second quarter, but when we look ahead to 2026 and beyond, we remain very optimistic.

Got it. No, fair enough. That makes sense. For a follow-up, just on comparisons. There was strong leverage in the quarter and the full year. Thinking about 2026, if the year unfolds as anticipated with revenue setup and improved volumes at a solid rate, could you provide your updated perspective on achieving that low 60s normalized range that you've mentioned before?

Yes, thank you for the question. We are very happy with our success in lowering the comp ratio. As a reminder, we had a higher comp ratio due to weaker market revenues and our significant investments in the business, which we believed would propel our growth. We reduced the comp ratio from 83% in 2023 to 69% last year and now to 65.8%. We are pleased with this progress and believe we can improve beyond 65.8%. To answer your question about potential improvements in 2026, we will depend on three key factors: first, the revenue we generate in 2026 is crucial for determining our leverage. Second, we need to consider the environment for banker compensation and competition, as it is a tough market. We need to safeguard our talented bankers while also looking to expand our team. Finding industry-leading bankers who align with our culture in large addressable markets is challenging, but when we do find the right candidates and can make a fair deal, we want to bring them on board. The number of new bankers we can hire in 2026 will also affect that year's comp ratio. We aim to balance all of these elements. We are committed to lowering the ratio while also seizing the opportunities we see and engaging in constructive conversations with potential new bankers to grow our firm and tackle the promising opportunities ahead.

And our next question comes from the line of Brendan O'Brien with Wolfe Research.

To start, Navid, you alluded to this a bit in your prepared remarks, but just one of the big topics of discussion at the moment is AI disruption and the potential implications for the outlook for M&A activity. On one side, I understand that this can be a catalyst for more strategic activity, but just given software companies represent a significant portion of inventory, there's a risk that they could struggle to exit a significant portion of their portfolios. I just wanted to get a sense as to how you view these puts and takes and whether you've seen any impact on your discussions around some of these private equity software companies?

Thanks, Brendan. Look, I think it's an excellent question, and I think your framing of it is spot on. As we talked about earlier, I think in a lot of different parts of the economy and different industries, AI disruption and technology shifts are accelerating M&A activity. In other parts of the ecosystem, although we haven't seen yet, there's not one example I can point to where AI has created a restructuring opportunity in the near term. That's probably coming at some point. Software is getting a lot of attention these days. The public markets are clearly devaluing the multiples on software companies, and SaaS companies are coming down because people are worried about the threat to the business model that AI brings. At some point, that could impact the ability of those companies to finance themselves, and that could lead to transactions that look more like liability management transactions than M&A transactions. We're watching all of that. We're obviously in active dialogue with all our clients about all of those trends. I think you're right to point out that disruption could have a counter effect relative to M&A, but it also could create other opportunities for us to give advice to clients that have to deal with balance sheets in those spaces that are coming under stress. It's early days. We're monitoring it really carefully and more than anything, look, we're in the business of giving advice. Disruption creates the opportunity for us to get closer to our clients and help them navigate through those periods.

That's helpful color. And for my follow-up, I just wanted to get an update on the timeline for the PCA build-out. I know you guys have previously indicated that you think this business could get to a couple of hundred million in revenues, but that's likely to be a relatively nonlinear growth curve. I just wanted to get a sense as to how we should be thinking about the trajectory into next year, how far along that growth path you could be by 2026.

I don't want to make a specific prediction on 2026. Here's what I'll say. We love the team that we're putting together. We love the dialogues we're having with additional folks who may want to join the team, and the early reception from our private equity clients has been phenomenal. Our thesis here is spot on. We have such great relationships in the sponsor community, and they're so long-standing and deep, and our coverage teams do a great job there. We have incredible industry bankers, and we were missing this capability so that we can actually go and have conversations with sponsors about GP-led secondaries. We're now able to have those, and we're winning mandates and we're executing mandates, and it's ramping pretty much exactly the way I thought it would ramp. I think the opportunity for this to be a very meaningful business for us like our CSA businesses, like our capital markets has ramped. The only question is on what time period that happens. I'm optimistic we'll be able to achieve that over the next few years.

And our next question comes from the line of Brennan Hawken with BMO Capital Markets.

And I think that's the first time we went Brendon to Brennan. So there we go. I appreciate the comments, Navid, on the comp leverage uncertainty. But given we've got a marketplace that's really active, and therefore, it's probably good bankers might be a bit low to move because they want to be there for their clients since competition for talent is elevated, so costs are there. Why not maybe ease up on the throttle a little with recruiting at this just current moment, not necessarily changing the opportunity set, but just saying maybe it's not the best time. How do you balance that?

So Brennan, it's a good question. Look, we're only going to do deals that make sense for the firm in the long run and make sense for the culture of the firm. These individuals, uniquely talented individuals in an area that we want to be in or in a sector that we want to be in that fits our culture is a very high bar. It's a very, very high bar across. When that person shows up and you start a dialogue with them, you know they're going to trade. When they trade, they're probably off the market for a number of years. Bankers don't like college football players, these days, where they're trading themselves, marking themselves to market every year. They're going to be at a firm for a period of time. When you find that person who's perfect for your platform, and again, culture is critical. We're just not hiring great bankers. We're hiring great bankers that want to be part of the team, a collaborative team. When that person shows up and you have a good dialogue, and they're ready to move for whatever reason, they don't love the firm, they don't feel like they got paid the right way, something happens inside their firms, they don't like it anymore, or their firm lets them down on some assignment. When that person shows up, you may lose them for a number of years if you don't move. We don't always dictate the timing, and these people are unique; they don't grow on trees. We're very cognizant of the pace of what we do, very cognizant of our ability to onboard people the right way and make sure we can get them going the right way with the right support. We're also very cognizant about deal structure. Some of the timing is a little out of our control. That said, as we said before, the comp ratio and our ability to get leverage, and our ability to make sure we're being prudent there is at the top of our concerns as we think about growth of the company.

That actually is really helpful in framing it. I appreciate that answer Navid, and obviously, you guys did a good job on the comp leverage here recently. So we can certainly point to that. Following up on one of Brendan's questions. And if you think about software and IT services within your sponsor franchise. It's kind of tricky because the public data doesn't do a great job of capturing all your activity. How big are those sectors for your banking and activity-driven business? It was always my sense that they were, but I'm curious about sizing.

Sure, Brennan. Look, as I think you know, we made a major investment, a really great investment in an excellent technology franchise and technology team a few years ago. That build has been really successful, and technology, broadly speaking, is pretty much at the top of the list now for our most productive sectors of the firm. Within technology, software is a really big piece of that. You're right to say that we have a lot of dialogue and a lot of client connectivity to both the sponsors and the companies that fit broadly within the software sector. As you think about products, it's not just liability management. If you have a sponsor that owns a technology company or a software company, that dialogue can be M&A. It could be raising bespoke capital, more of a capital markets type transaction to either get a sponsor some liquidity or deal with a balance sheet challenge. It could be a CV or it could be liability management. We have the ability now for the first time in our history to be versatile and fluid across four products that could be applicable to that software company or that technology company. It's the first time we've been able to really do that meaningfully with a top technology franchise with a great sponsor coverage team. We're going to be there to help our clients find solutions as the market evolves and as they're dealing with the disruption that's coming in that space.

And our next question comes from the line of Ryan Kenny with Morgan Stanley.

So you've done a lot of hiring over the last few years, and it sounds like you'll be opportunistic going forward. Is there any way that we can think about what percent of MDs currently are ramped? And maybe what percent since 2021 are ramped?

Yes. Let me give you some stats. Great question, Ryan. So about 1/3 of our MDs have been MDs on the platform for less than 3 years, and about 1/4 of our MDs have been MDs on the platform for less than 2 years. Just to clarify, when I say MDs on the platform, that's either lateral hires or internal promotes. That captures both of those cohorts. To this point, we're still a firm that's maturing into its talent base, a very, very meaningful percentage of our MDs are younger MDs or MDs that haven't been on the platform for a long period of time. The best years of those MDs, the most productive years of those MDs are really in front of them as they sink into the platform and introduce their clients to the platform.

And as you build out PCA, is the time to ramp for MDs and private capital advisory a lot faster than traditional M&A? Just trying to understand, as you lean into PCA, is that less of a drag on the comp ratio because the MDs can ramp faster?

Yes, I think it's a great question because we already have established sponsor relationships and industry connections that are both long-standing, along with a growing network as we bring on talented sector bankers. It’s interesting. I took Matt West, who leads our group, to meet a client last week. This was a client for whom we had previously done capital raising, and we were considering M&A opportunities. The client mentioned that they might want to pursue a CV, and I had Matt ready to go the next day. There was no ramp-up needed because this client is already associated with us. We would have lost that chance if they weren’t already a client. Much of the ramp-up for PCA is occurring quickly since we’re integrating a product offering into an existing relationship network, and it’s working exceptionally well.

Our next question comes from the line of Nathan Stein with Deutsche Bank.

In the release, you specifically called out the M&A and capital markets revenues increasing in 4Q, while capital structure advisory decreased. Could you just really quick highlight trends in the PCA business relative to the fourth quarter of last year?

Yes. PCA, remember, is still ramping. So that team has really come together towards the back half of this year. Most of their activity is still winning new mandates, originating new business; you're not going to see a lot of actual revenues in the fourth quarter or in 2025 from that business. I think there'll be much more meaningful revenue growth as we move into 2026 on PCA.

Okay. That's fair. And I appreciate the transparency. And for my follow-up, I actually wanted to ask about capital allocation. For the $300 million announced buyback authorization, do you have any thoughts on the timing that we can think about?

Sure. It might be helpful to discuss how we view excess capital. We had a good year and are pleased with our revenue growth. We accomplished our strategic objectives, including hiring and making technology investments. We generated significant excess cash, and our primary focus is to maintain and protect our dividend. This year, we had a considerable amount of excess cash, and we allocated much of it to share repurchases, particularly in the fourth quarter. Moving forward, we will prioritize business growth within prudent limits, as previously discussed. We will make necessary investments in our people, technology, and client conferences to ensure long-term business growth. We are committed to maintaining the dividend and also want to reduce share dilution from equity issuances related to compensation. We aim to achieve this while ensuring a strong balance sheet, which we see as a strategic advantage. Given the cyclicality of our business, it makes sense to maintain liquidity and flexibility to navigate any market conditions.

Our next question comes from the line of Daniel Cocchiaro with Bank of America.

Has regulatory scrutiny on the G-SIB diminished over the past year? Is this coincided with the pickup in competition from the bulge brackets to win more deal mandates? How would you describe Moelis' ability to gain market share in a deregulatory environment?

Sure. I don't think it will probably depend a little bit on which sectors you're talking about, and maybe some sectors are different than others. I don't see meaningfully stronger competition than we've seen in recent years from the bulge brackets who already weren't strong. Look, we have strong bulge bracket competition, clearly, from a handful of firms. They've always been strong; they'll continue to be strong. I don't think that's there; it's the way it has been. With respect to that next set of bulge-bracket firms, I don't see that as being meaningfully different than it's been in the past. The momentum that I see on the client side is really us competing against other independent firms who have really good people and who are entrepreneurial and nimble and have a lot of good intellectual capital and ideas. To me, that feels like where we sit in our part of the market, and where a lot of the action is taking place and the incremental market share is being gained. Of course, we compete against the bulge bracket, but a lot of the times, we're competing against independent firms like us.

And our next question comes from the line of Ken Worthington with JPMorgan.

Circling back to comp in the past couple of years, you've determined the comp ratio. You've started the year at that comp ratio. As you move to either the second half of the year or even the fourth quarter, you've adjusted compensation and the compensation ratio based on the activity levels that you've seen. So as we think about 2026 and where we start the year, where do you anticipate starting that comp ratio just to give us a little help in modeling out the first part of the year?

Yes. I would imagine we would maintain a similar comp ratio to where we ended the year at, so that 65.8%. I think Q1, as you mentioned, it's usually too early to predict the remainder of the year. I'd expect changes to come in later quarters, assuming nothing out of the ordinary takes place. Just an additional reminder, we fully expense our retirement-eligible equity that's granted in Q1. Depending on revenues, the Q1 ratio may not be indicative of the full year.

And that concludes our question-and-answer session. I will now turn the conference back over to Navid for closing remarks.

Great. Thank you, everyone, for joining us. Really appreciate you being on the call and look forward to speaking to you all very soon again. Thank you.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.