EVR - NYSE

Good morning and welcome to the Evercore Third Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Evercore management and the question-and-answer session. [Operator Instructions] I will now turn the call over to Katy Haber, Managing Director of Investor Relations and ESG at Evercore. Please go ahead.

Thank you, operator. Good morning and thank you for joining us today for Evercore's third quarter 2024 financial results conference call. I'm Katy Haber, Evercore's Head of Investor Relations and ESG. Joining me on the call today is John Weinberg, our Chairman and CEO; and Tim LaLonde, our CFO. After our prepared remarks, we will open up the call for questions. Earlier today, we issued a press release announcing Evercore's third quarter 2024 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 Investors section of our website and an archive of it will be available for 30 days, beginning approximately 1 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 could cause actual outcomes to differ materially from those indicated in these statements. These factors include but are not limited to, those discussed in Evercore's 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 GAAP 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 Evercore's performance on an annual basis. As we've noted previously, our results for any particular quarter are influenced by the timing of transaction closing. I will now turn the call over to John.

Thank you, Katy and good morning, everyone. We're pleased to be doing this quarter's earnings call from our London headquarters. We had a strong quarter as our revenues continue to build. The firm generated approximately $740 million in adjusted net revenues, up 28% versus the prior year period, driven by continued improvement in both the macroeconomic environment and capital markets. The interest rate picture has begun to clarify as the Fed lowered rates for the first time since its rapid rate hikes began in early 2022. We believe we are in the midst of a recovery, albeit gradual which will pave the way for a healthy multiyear cycle across the Advisory and Capital Markets businesses industry-wide. Although uncertainty persists, particularly with respect to the upcoming U.S. election and geopolitical tensions, broad market activity and our internal metrics continue to strengthen, further supporting our robust backlog and positioning us for what we believe can be an active 2025. As we have discussed throughout the year, we expect to see activity levels continue to gradually increase over the coming months and into next year. However, the exact timing of when that impacts financial results is hard to pinpoint as this uncertainty could impact the timing of transaction announcement and closing. As the M&A market looks poised to return to more normalized levels, the investments we've made in our businesses have resulted in a stronger, more diversified firm which positions us for growth over the medium to long term. Turning to talent. 2024 has so far been another successful recruiting year. Year-to-date, 8 investment Banking Senior Managing Directors and 1 Senior Adviser have started at or have committed to join the firm. 3 of these 8 SMDs committed since our last earnings call and will be joining either later this year or in early 2025. We have a strong pipeline for external recruits and we are continuing to add high-quality senior talent to our firm. Among the 3 newly committed SMDs, 1 will be building a new product group focused on structured finance, while the other 2 will be joining our financial institutions and sponsor coverage teams, respectively. Additionally, our new senior leaders in France started last month and we are excited about increased levels of client activity and dialogues driving our expanded presence in Europe. In our Equities business, we've added to the depth of our research coverage with a top-tier research analyst to lead coverage on the fintech and IT services sectors. Now let me briefly turn to the quarter. Despite typical summer seasonality and a rise in equity market volatility in late summer, Evercore experienced strong activity in nearly all of its businesses in the third quarter. In Strategic Advisory, we advised on a number of notable and complex transactions, including TIH on the $7.8 billion sale of its retail insurance broking division, McGriff Insurance Services to Marsh McLennan, Avenue Capital Group and Nuveen Asset Management on their $3.4 billion sale of minority equity interest in Vistra Vision to Vistra Corp. and CVC on its acquisition of a significant ownership position in Epicor from Clayton, Dubilier & Rice. These transactions are representative of some of the areas we've been investing in, including financial services, software, energy transition and capabilities that serve our sponsor clients. The European Advisory Team has gathered strength throughout the year with a strong third quarter. While we are continuing to see progress, the improvement in the European M&A market still lags the U.S. and uncertainty in the region remains. In line with trends we've seen in the second quarter, our Financial Sponsors business has continued to see internal dialogue levels build momentum. We believe that further interest rate cuts and continued pressure from LPs to return capital with spurred activity sponsor-related. This is a critical driver to the broader M&A recovery. Our Strategic Defense business remains busy as global activist campaigns continue at historically high levels. The liability management and restructuring practice remains quite active. As such, we believe 2024 will be a strong year for this business. Liability Management continues to be the primary driver of activity and we expect to see strong activity levels continue into 2025 even as the merger market recovers. Our industry-leading Private Capital Advisory businesses delivered another quarter of strong performance with a robust pipeline as we approach the year-end. The continued success of this business has been in part due to our long-standing relationships with GPs and LPs and the decline in cash back to LPs from the drop in sponsor-related portfolio company exits. While the fundraising market typically experiences a summer slowdown in the third quarter, our private funds group is in dialogue with several new funds and activity for this group continues to broaden. We expect fundraising activity to improve as M&A market levels continue to increase. The Underwriting business ended the quarter on a strong note as issuance activity increased in September. In the quarter, we were a lead left bookrunner on Diamondback Energy's $2.6 billion follow-on offering which was the third largest U.S. follow-on offering of the year and Evercore's largest lead left bookrun deal to date. It is clear that our commitment to broadening our sector coverage and enhancing our role in transactions are yielding results. Notably, we participated in the tech IPO research and so far this year, having been a book runner in 5 of the 8 U.S. tech IPOs. We anticipate continued activity in the equity capital markets across the medium to longer term. However, in the short term, the upcoming U.S. election coupled with normal seasonality, may narrow windows of opportunity for issuers. We remain optimistic that the IPO market will be more active in 2025. Our equity franchise experienced the strongest third quarter in nearly a decade. Importantly, this month marks the 10-year anniversary of the Evercore and ISI merger and we are pleased with the performance this business has achieved over the last decade, expanding Evercore's breadth and differentiating us from our peers. In Wealth Management, our assets under management reached $13.9 billion, driven by strong market appreciation and client engagement. Before I turn it over to Tim to discuss the financial results, I want to wrap up with a few points. We continue to believe we are in a gradual recovery and we remain confident that both the market and our results will steadily improve as the market gains further clarity and confidence over the coming quarters. As we look to 2025 and beyond, we remain committed to the execution of our long-term strategic road map while carefully managing our expense base. As demonstrated by our recent hires this past quarter, we are committed to not only expanding our industry and geographic reach but also deepening and diversifying our product and coverage capabilities across adjacent areas. We continue to enhance our client coverage, breadth and depth including investments in covering large, mid and small-cap public and private companies as well as financial sponsors. We believe we are well positioned as the market recovers and are optimistic about Evercore's prospects in the years ahead. With that, let me turn it over to Tim.

Thank you, John. Our third quarter financial results are consistent with the gradual recovery we have conveyed in recent earnings calls and are seeing in the markets and in our businesses. We continue to make strategic investments in our firm and are balancing that with attention to expense management with our focus on providing exceptional client service and building value for our shareholders. We remain committed to improving our expense ratios recognizing that revenue growth also plays an important role in achieving it. We continue to expect gradual improvement in our margins over the near to medium term. With that, I will now discuss our third quarter financial results. For the third quarter of 2024, net revenues, operating income and EPS on a GAAP basis were $734 million, $122 million and $1.86, 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 third quarter adjusted net revenues of $740 million increased 28% versus the third quarter of 2023. The Third quarter adjusted operating income of $135 million increased 63% versus the third quarter of 2023. Adjusted earnings per share of $2.04 increased 57% versus the third quarter of last year. Our adjusted operating margin was 18.2% for the third quarter, up from 14.4% in the third quarter of last year, an improvement of approximately 385 basis points. Turning to the businesses. Third quarter adjusted Advisory Fees of $593 million increased 27% year-over-year, reflecting further improvement in macroeconomic and market conditions. This is consistent with the number of Advisory Fees greater than $1 million which rose by 30%. Our third quarter Underwriting Fees were $44 million, up 43% from a year ago, demonstrating improved diversification across sectors and active engagement in several large high-profile follow-ons. Commissions and Related Revenue of $55 million in the third quarter, nearly our strongest third quarter to date in this business, was up 12% year-over-year, reflecting strong trading commissions and subscription fees. Third quarter adjusted Asset management and Administration Fees of $21 million increased 14% year-over-year, primarily driven by our record AUM which benefited from market appreciation during the quarter. Third quarter adjusted Other Revenue net was approximately $26 million which compares to $10 million a year ago. Approximately 2/3 of the other revenue was interest income and about 1/3 was a gain on our DCCP hedge. Turning to expenses. The adjusted compensation ratio for the third quarter is 66% compared to 68% a year ago, a 200 basis point improvement. This quarter's ratio represents our best judgment of the accrual for this quarter, taking into consideration our view of full year revenue and compensation expense when factoring in SMD hiring, head count levels, expected market levels of compensation at year-end and other relevant factors. Our third quarter results were consistent with our expectations for the quarter. Thus, the compensation ratio remained stable relative to the prior 2 quarters. As I mentioned at the outset, we are striving to make improvements in our comp ratio. However, we also continue to invest in building our firm and so improvements will occur across the near to medium term. Next, non-compensation expenses in the quarter were $117 million, up 15% from a year ago and the adjusted non-comp expense ratio for the quarter is 15.8% compared to 17.6% a year ago, an improvement of 180 basis points. The non-compensation expense increased from a year ago is primarily driven by 3 items. First, an increase in travel and related expenses as client-related travel continues to normalize. Second, professional fees which reflect higher recruiting and consulting fees as well as higher client-related activity. Note that the reimbursement for certain client expenses is reflected in the revenue line. Third, communications and information services expenses related to technology expenses for existing and new platforms as well as increased rates and subscription costs related to higher headcount. Our non-comp expenses on a per employee basis were up 9% versus the prior year but down nearly 8% from the prior quarter. In historical context, our non-comp expense per employee is up less than 6% compared to third quarter in 2019, a pre-COVID year, or a compound annual increase of about 1.1%. We have made improvements on our non-comp ratio over the last 3 consecutive quarters and we expect to continue to do so into year-end. Our adjusted tax rate for the quarter was 28.9% compared to 27.6% in the third quarter of last year. Turning to our balance sheet. As of September 30, our cash and investment securities totaled $1.8 billion which is approximately $200 million higher than last year's level at this time. In the first 9 months of the year, we returned a total of $529 million to shareholders through dividends and repurchases of 2.2 million shares at an average price of $189.69, of which approximately 400,000 shares were repurchased in the third quarter. In the first 9 months of this year, we have returned more capital than we did throughout all of 2023 and we remain committed to our capital return philosophy. Our third quarter adjusted diluted share count was 44.5 million, up from 43.4 million in the prior quarter, an increase of 1.1 million shares. The increase in our share count was largely due to the impact of our higher share price on unvested awards which are accounted for under the treasury stock method and divesting of previously issued awards offset by buybacks. It is important to note that from quarter to quarter significant changes in our average share price can have a material impact on the adjusted diluted share count. This was apparent from the second quarter to the third quarter as our average share price increased 22% from $194.59 to $238.02. As we have stated before, while uncertainty in the economic and geopolitical environment remains, we believe we are in the midst of a gradual recovery and that internal and market indicators, coupled with improvement in the macro backdrop position Evercore well for the remainder of 2024 and beyond. With that, we will now open the line for questions.

[Operator Instructions] Our first question will come from Brendan O'Brien with Wolfe Research.

I guess I just wanted to touch on the comp ratio. I understand there's a lot of factors informing the comp position in any given year and that you're still dealing with elevated deferrals and recruiting expense from prior years. But looking at the year-to-date results, your revenues are up around 22%. But your comp ratio versus the full year '23 levels is only down about 150 bps, implying an incremental comp ratio of a little under 60% year-to-date. So as we think about the trajectory of the comp ratio and the path to getting back below 60% from here, I was hoping you could help frame what the incremental comp margin should look like? Is that high 50s level is the right way to think about that gradual improvement? Or do you have anything that you can help us think through that path, it would be great.

Yes. Brendan, look, when we think about the comp ratio, what I've commented in previous quarterly calls and in the commentary on this earnings release is that improvement there is a gradual thing which I'd characterize as happening over the near to medium term. And so last year, for the overall year, our comp ratio was 67.6%; for this quarter a year ago, it was 68%. And so there's 160 basis point improvement year-to-date on the overall versus last year and 200 basis points versus the prior year. Also, I noted that we're balancing, right, building the firm and we're building, heading into what we think is an improving market. And so we're balancing building the firm to create long-term shareholder value with achieving some improvement on our comp ratio. I also made the point that the competition for bankers remains intense and the associated cost of hiring new bankers and retaining existing bankers continues to be significant. And so when we take all that into consideration, I think the right way to think about our comp ratio is something upon which we're hoping to make and striving to make gradual improvement over time but not dropping down to the kinds of levels you cited in your question in the near term.

We'll take our next question from Ryan Kenny with Morgan Stanley.

Can you give some color on the size of deals in the pipeline? Specifically how willing are companies to look at large cap M&A; is there any uptick in appetite there? And are deal values going to be naturally higher this cycle, given we've seen some substantial growth in global equity market cap and GDP over the last few years?

We in our pipeline have deals of all shapes and sizes. The pipeline is quite robust right now. And so we really -- and the way we cover companies is really up and down the line. And so we do cover bigger companies and there's a lot of activity with respect to the overall merger market. And I think that you should expect that there will be some sizable deals. Clearly, some of the sizable deals will be impacted by the regulatory environment which is somewhat uncertain at this time. But I think you can assume that the activity level will be high, that there will be activity up and down the size ranges and that there will be a substantial number of larger deals. And I think that's just part of how the market is going to recover. I don't think there's going to be a bias towards small deals coming first or large deals coming first. I think it's going to be overall that the market is going to lift by itself kind of across the board.

One other statistic I might add to that is if you look at year-to-date transactions over $1 billion, the number is up 26%. And so the good news is we are seeing some returns certainly of $1 billion-plus transactions.

We'll take our next question from James Yaro with Goldman Sachs.

John, I was hoping you might be able to offer a bit of an update on the cadence of the Advisory recovery. I ask in particular because, at least per geologic, your backlogs, like your peers, have come down a little bit in recent months. What do you see this as driven by? And does this mean there is the potential for a less-than-normal fourth quarter uptick this year? And then maybe as a corollary, could you speak to election impacts, if there are any, right now?

We think the recovery will be gradual. Having said that, our backlogs are robust. Engagement letters, conflict checks and all those things that support the backlog are robust also. So we see that there's a real activity brewing inside the firm. I don't know when those will come through. But we're feeling that there's just a very, very healthy activity inside the firm. And we also think that whereas it may be gradual in terms of how they get booked, announced and how they get executed and closed, we think that the activity levels are really at quite a high level. And frankly, that's across the firm. If you look at the industry groups and really the classic M&A activity, both in the U.S. and in Europe, that's quite fulsome. But also in really virtually, every business at the firm, we have very healthy backlogs and activity brewing. So from our standpoint, we are incredibly busy inside the firm and we are optimistic over -- at how this is going to play out over the balance of the year and in the '25. Now in terms of the election, we're not sure how really, the impact of the election. We do know that in the medium term or short term, the election is going to actually be somewhat of an influence which may have people really hesitate to do anything until they see how both the election turns out and really where the market reacts with respect to the election. But we don't think, in the medium term, that the election is going to impact the merger activity. Clearly, the regulatory environment could, depending on really how that really comes out of the election and which administration is in and which -- and when the administration is in, what they -- how they want to play the regulatory environment. But in the way we're planning for it and then the way we are thinking about it, it's not going to have a broad impact. The bigger deals could be impacted if the regulatory environment remains restrictive. But in the middle market and beyond, those are much less impacted.

Yes. James, one other point I'd add on the backlog is just, of course, what's available to the outside world and to the research community is looking at transactions that are announced but not yet closed, merger transactions. Whereas, of course, with the backlog we look at, we're looking at transactions that have been mandated but in many cases, not yet announced. And the second point on the backlog is, recall that a significant portion of our Advisory business is also non-M&A which does not get picked up in the backlog you'd be looking at.

One more thing that I would just say is that in -- with respect to backlog, one of the things that is an important part of how the market really returns is the sponsor business. And there isn't a lot of backlog in this with respect to the sponsor business but I would just tell you that the activity levels with sponsors right now is robust.

We'll move next to Brennan Hawken with UBS.

This is Ben Rubin [ph] filling in for Brennan. In your prepared remarks, you sounded rather optimistic on restructuring momentum continuing into 2025. I was just hoping you could drill down on the restructuring performance during the third quarter. And was activity last quarter in line with kind of what you've been seeing year-to-date? And lastly, has the start of rate cuts in the U.S. shifted client dialogues at all with respect to the need for, say, capitalizations or bespoke financing?

Sure. The restructuring business is actually very, very busy right now, very active. And what we are seeing is no, there's been no slowdown. In fact, I think we're really at a very high level of capacity right now and really have been. The business is healthy; there's a lot going on. As we've said in the past, the business, the restructuring business is really, to a very large extent, about liability management. And we've been spending a lot of time with clients. Rates going down is not going to, from our standpoint -- going to slow down those advisory assignments and the execution of strategies that come out of that. And that's why when we said in our remarks that we don't think that a picking up merger environment nor a rate cut environment is going to slow down our restructuring business. From what we can see, the visibility that we have, we see that business continuing to perform well into '25.

[Operator Instructions] We will take our next question from Jim Mitchell with Seaport Global.

Maybe just on the ECM business, there's been a lot of volatility in the environment, right? We had record levels in 2021. You had record revenues. It's been a challenge since then, picked up this year. But you've -- underneath that, you've been investing pretty heavily to grow that business. So where do you think you are from a market share perspective and in the next up cycle where you think you could be? Just trying to get a sense of the upside and growth as that business picks up, particularly on the IPO side?

Sure. We see our Equity Capital Markets business really gaining momentum. We have a goal of being inside the top 10. I think we're right around 11 right now. And we think that our activity is becoming much broader in terms of our reach. Several years ago, we were more of a biotech firm on Equity Capital Markets. That continues to be a strength of the firm. But we've broadened out quite a bit. And if you look at the 8 IPOs and tech deals over the last year, we've been in 5 of them as a book runner. And we are just expanding our reach. We are building our capital markets area and also our approach to covering clients with respect to equity throughout. We've added many sectors where we really are covering those companies. So we see that happening. We think our momentum is going to be good. We think that the market is going to be picking up. We think the IPO market will pick up. And we think that our capabilities and our value-add to clients is just growing. And so over time, we're optimistic about that business. We really like the people we have applying to that business. And I think that, from our perspective, it is a real potential growth area for us and we plan that, that will be the case.

We will take our next question from Devin Ryan with Citizens JMP.

Question on Private Capital Advisory, clearly been a great growth story for Evercore. You have a tremendous business there. And it seems like it's operating at a very high level right now, even with sluggish M&A. So I wanted to just get a little bit of a sense around how you're thinking about the growth profile of this business from here and the capacity to do more with the current group versus needing to add more talent to drive revenue growth. I'm just trying to understand, is this still up and into the right story? Or would you be pleased with kind of holding the line on the level of contribution right now?

We think it's up and into the right. It's a business that is doing very well and strengthening. And as you know, we have a whole complex of Advisory businesses for sponsors, whether it's a Private Capital Advisory business that we call, whether it's the Private Funds group which raises funds for them, whether it's really assisting and advising GPs in terms of stakes, whether it's doing the M&A side of sponsors. And really, we think we're in a build. And one of the things that we've talked about on this call that I think is really important is we've really, really bridged these businesses and we are finding real synergy from the strength of each of these businesses and really how we can provide service to the sponsors. We think that what we're providing sponsors now is a real comprehensive advisory approach which we think is really helping. And it's giving us more access in many different respects. So we're feeling good. In terms of the specific PCA business, it's obviously performing very well. The products that they provide, whether it's the continuity funds which has, obviously, over the last 3 or 4 years, been very successful. That continues at a very high level and the pace and the number of transactions and the backlogs are very strong there. But also the LP stake business which has filled dramatically. And really all the other products that really are around that ecosystem really continue to build. So that business is continuing to not just perform but to grow.

We'll take our next question from Aidan Hall with KBW.

John, I heard in your prepared remarks, comments about sponsor activity. At the same time, it feels like this is kind of another quarter where activity hasn't really come to fruition at the same velocity that was initially expected. So I'm just curious if you can provide us with the latest that you're hearing from your sponsor clients and what is really holding up this pent-up demand that we continue to hear about?

Absolutely. Obviously, we're thinking about this a lot because we believe that sponsors business and the pickup in that market will actually fuel quite a bit the merger market recovery. We think that the business on the sponsor side is gathering steam now. Some of the evidence of that is not really apparent at this moment. But really, what we are seeing is that activity levels have increased but certainly off a very low base. There is real pressure to get this business going for the sponsors. They've got a lot of dry powder and that dry powder needs to go to work. LPs have been putting a lot of pressure on sponsors to really start to let them recirculate capital. And as a result, there is a lot of incentive for the sponsors to do deals. From our own dialogues, we see that the spread between buyers and sellers starting to narrow. The activity levels inside our firm are very high. We have a tremendous number of real dialogues going on with sponsors. We have a large number of bake-offs that we have in the hopper that we are in the process of executing on right now. If that bake-off level is any indication, there's a real pickup in really how this is going to play out. But these activities really won't translate until into '25 but we see that the activity levels have clearly picked up.

Our next question from Mike Brown with Wells Fargo.

I wanted to dive into Europe a little bit here. So hires in the Advisory business this quarter were focused on Europe with 2 adds in Paris. Can you just give us an update on how large that franchise is now by MD headcount? Are you still expecting to invest and grow there? Where are you kind of focused on investing next? And then understanding that the recovery there likely lags in U.S., I guess what I would be interested to hear about those is how it could progress? Where are you seeing some good activity near term? And how could that trend over time?

Sure. What we've always said is that Europe is a very important strategic investment for us and we have every intention of continuing to evolve and grow that business. And I'm very pleased with the progress we're having. In Paris, we hired 3 very strong players, a Senior Adviser as well as 2 Senior Managing Directors. We've added -- and on the telecom side, we've added regionally, in addition to Paris and Spain. We are systematically looking for high-quality talent and we are recruiting that talent and bringing it in. We believe that we've got real momentum in that business. We're winning really strong assignments, as you saw in the third quarter. The European business has been good and increasing. And I think that what you will see from us is a continued significant investment in Europe. We won't do it in big, huge numbers. We're going to do it as we always have on a one-by-one basis. But we have a very healthy backlog of high-quality people we're talking to. We have a number of sectors that we continue to focus on. We're bringing some of our really high-quality products increasingly into Europe. So we see Europe as a very significant upside to the firm. And we feel really good about where they're going, their energy level, their commitment, the way we're approaching the business is all very, very positive from our standpoint. So Europe is, I would say, a bright spot for us and one that's going to continue to get our focus.

And we'll take a follow-up from Aidan Hall with KBW.

Great. Tim, maybe just one on the comp ratio. If I just look at the recognized RSU and deferred cash comp year-to-date, it's down as a percent of revenue, it's down a couple of percentage points which would almost largely attribute all of the comp leverage year-to-date versus 2023. So I'm curious to hear how you're thinking about leverage in base salaries and bonuses in '24 versus '23? And the 66% for the year, the best estimate for the year, what is kind of your expectation right now for the fourth quarter that's embedded in that?

Right. I think the right way to think about this is the comp ratio itself has a significant number of components to it. And some of the components have comp leverage and others less so. But there are significant areas within that comp ratio that would include, for example, as you cited, the base and benefits, right, that doesn't go up when revenues goes up. You've got corporate staff which tends to not go up as much. I would say that on average in the industry, non-partner bonuses go up during periods of high revenue but not as much generally as partners, who you tend to have more volatility in their compensation and so on. So there are areas of compensation level. And then those -- in addition to that, there are things like partner hiring and we've invested very heavily in that last year. We've invested heavily in it this year. And what we're focused on is increasing EPS and increasing cash flow per share in building overall value. If the objective were to simply minimize the comp ratio, that would be very easy. You would just stop hiring and stop growing tomorrow and you see lots of expansion. And so what we're really focused on here is making some investment in the company so that we can build the firm and build and create value in the long run and in the medium term.