MC - NYSE

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 Males & Company's Fourth Quarter and Full Year 2025 Financial Results Conference Call. On the phone today are Navid MamMuzatagan, 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.malls.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 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 acquisition of Warner Bros. Allied Gold sale to

Thanks, Navin, 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 Navin 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 noncompensation expenses were $60 million for the fourth quarter, resulting in a 12.4% noncompensation expense ratio. Our adjusted noncompensation expenses for 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 T&E 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 noncompensation 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 noncomp expense ratios contributed to EPS gains. For 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. And 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.

[Operator Instructions]. And our first question comes from the line of Devin Ryan with Citizens Bank.

And goodafternoon 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 Ola. So 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 sponsor is truly reengaged, 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 we -- 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 both 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 1 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 color, Navid. And then just as a follow-up on the restructuring liability management. You mentioned kind of a long runway of activity here. Can we maybe just parse through that a little bit more, like how we should be thinking about a base case for the level of activity there. Is it something around what we've been seeing like you can kind of hold the line or view that maybe it takes a little bit of a step back, but the high -- it stabilizes at a higher base. Just love to kind of think through what kind of that looks like right now? I appreciate there's obviously scenarios where if an economy rolls over, it could be more active, but that probably wouldn't be as good for M&A. So I just love to think about kind of the base case for what that long runway suggests. .

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. There's still -- 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. And so 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 type exercise out of court. But I think some of those companies are going to tip in to more active in-court restructuring assignments. And again, we're well positioned for all of that. In addition, we've significantly bolstered and invested in our creditor site capabilities so that if we're not on the company side in these situations, we have a really good seat working with creditors there. And 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 that 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.

Yes. That's really helpful. Appreciate it. .

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

I wanted to touch a little bit on 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. So 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, which 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. And so 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. And 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?

So it's a great question. And of course, geopolitics and what's happening on the world stage is always a topic when we're in board rooms and we're conversing with clients over potential transactions. Uncertainty is never a friend generally of larger scale corporate transactions. And so certainly, if there was to be some kind of exogenous shock, some geopolitical flare-up that's significant -- that could have an impact on the level of transaction activity as we roll forward. But you're right. I think in a certain respect, there's been, over the last year, just a lot of activity and people may be coming a little numb to some of the flare-ups, the short-term flare-ups and sort of saying, look, I got to do what I need to do to position my business, the best I can. We know technology changes coming. We have to be prepared for that. We have to position ourselves well for that. We know the equity markets are rewarding focus and execution and growth and simplicity of story. We know that's happening. So let's undertake corporate transactions that help us best position ourselves for equity value creation and for dealing with technology disruption that's coming. And perhaps unless there's a very visible geopolitical thing that's on the horizon, people are kind of playing through that.

That's super clear. .

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. And from what we can see in the public completion and pipeline data for 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.

Yes. Look, I don't -- I appreciate the question, Alex. I don't -- we don't want to extrapolate too much based on a month or any particular snapshot. Here's what I can tell you. We -- as we've talked about, we see a really constructive and conducive environment for transactions. We see our clients having a lot of motivation to do transactions. We see our new business generation activity at all-time highs, and we see our pipeline at all-time highs. So how that plays out in terms of specific months and specific quarters is always a little tough to predict. But -- and I think you're right, in an improving environment, you tend to see the first quarter be the weakest quarter seasonally and you build through the year. We certainly saw that last year for us. So I don't want to make any predictions about the first quarter versus the second quarter, et cetera. I just think when you look out into the outlook for 2026 and beyond 2026, we're really optimistic.

Got it. No, fair enough. That makes sense. -- then maybe for a follow-up, just on comps. So really strong leverage there in the quarter and the full year. But thinking about, again, 2026, if the year plays out as expected from a revenue setup and volumes improve, at a solid rate. Can you just give us your updated view on the cadence of maybe getting to that low 60s kind of normalized range that you've highlighted previously.

Yes, sure. Thanks for the question. Look, we're really pleased with our ability to bring that comp ratio down. Just by way of reminder, we did have an elevated comp ratio as market revenues were weaker and we were making substantial investments in the business and saw the opportunity to really catapult our business forward, went from 83% in 2023 to 69% last year and now 65.8%. So we're really pleased with that progress. I think we can continue to do even better than 65.8% to your -- to the point of your question, how much better we can do in 2026, I think will really be dependent on 3 factors: One is what revenues we produce in 2026. That's always a really important determinant in terms of the leverage we can create in the model. Second, what's the environment for banker pay and competition for bankers. It is a competitive market out there. We've pointed that out in previous calls, and we need to obviously protect our base of great bankers we have, and we want to keep growing. And our ability to find great bankers who fit the culture, who are industry leaders and big TAMs, it's not easy to find those people. And when we do find those people and they want to come, if we can make a sensible deal with them, we want to bring them on board. And so how many of those people we can bring on board in 2026 will also impact the specific comp ratio in that given year. So we try to balance all of that. We want to bring the ratio down. I think we're committed to doing that. But we want to do that in the context of still taking advantage of all the opportunities we see in front of us all the great dialogues we're having with bankers who want to join the firm and trying to get more and more of those people to join so we can attack this great opportunity we see in front of us.

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

To start, Naved, you alluded to this a bit in your prepared remarks, but just 1 of the big topics of discussion at the moment is AI disruption and the potential implications for the outlook for M&A activity. On the 1 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 risk that they could struggle to exit a significant portion of their portfolios. So 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 PE softwae 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 in different industries, AI disruption technology shifts are accelerate of M&A activity. And in other parts of the ecosystem, although we haven't seen yet there's not 1 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. And so 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. So early days. We're monitoring it really carefully and more than anything, look, we're in the business of giving advice. And 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 time line 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. So I just wanted to get a sense as to how we should be thinking about the trajectory into next year, how far -- how much or 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 PE 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. And now we're 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. And I think the opportunity for this to be a very meaningful business for us like our CSA businesses, like our capital markets has ramped. I think it's going to be a business that's just like that in terms of the size and scale and the quality. It's just the question is on what time period that happens. And 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. So 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 given 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 Brendan, it's a good question. And 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. But these individuals, a uniquely talented individual in an area that we want to be in or in a sector that we want to be in that fits our culture that's a high bar. It's a very, very high bad across. And when that person shows up and you start a dialogue with them and you know they're going to trade. And by the way, 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. And so 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. And 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. And so we don't always -- can always dictate the timing and these people are unique. They don't grow on trees. So look, we're very cognizant of the pace of what we do. We're 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. And we're very cognizant about deal structure. And beyond that, some of the timing is a little out of our control. Having said that, 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 very 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 1 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. And I know you spoke to the fact that it might be somewhat fluid, it might shift from an M&A discussion to a liability management discussion. So thinking about it broadly just across MoIs, are those a big sector for you? It was always my sense that they were, but curious about sizing.

Sure, Brian. 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 our most productive sectors of the firm. And then within technology, software is a really big piece of that. So 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. And then again, as you think about products, it's not just liability management. So 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, right? And so having the ability now for the first time in our history to be able to be super versatile super fluid across 4 products that could be applicable to that software company or that technology company. It's the first time in our history, we've been able to really do that in a meaningful way with a top technology franchise with a great sponsor coverage team. So 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, for instance.

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. And when I say -- just to clarify, when I say MDs on the platform, that's either lateral hires or internal promotes. So that captures both of those cohorts. And so 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. And so 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 as they introduce their clients to the platform as they mature as bankers. And that's 1 of the things I'm so excited about is just such a high-quality talent level of people who's really brightest days are ahead of them as they partner with their other parts of the firm and as they introduce the firm to their clients.

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 remember, we already have the sponsor relationships, and those are long-standing -- you already have the industry relationships, those are long-standing and a growing platform of industry relationships as we hire great sector bankers. So in fact, it's funny. I was -- oh I brought Matt West, who runs our group and to see a client last week. This is a client we had done capital raising for already, and we were looking at doing M&A for. And the client said, I may want to do a CV and I had mapped there the next day. And so there's no ramp up there because that's already a client of the firm. We just -- we're missing that product capability. We would have missed that opportunity if it wasn't there. And so I think apropos to your question, a lot of the ramp-up there is happening quickly because we're just plugging a product set into it an existing set of relationships, and it's working really beautifully.

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 decreasing. 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. And so 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 timing that we can think about.

Sure. It might be helpful just again, to talk through just how we think about excess capital. So look, we had a good year this year. We're really pleased with our revenue growth. We were able to do all the things we needed to do strategically in terms of hiring, in terms of making technology investments like Chris talked about. And so we still have created a lot of excess cash we have a dividend. So the dividend is the first priority to make sure we maintain and protect that dividend. And then even beyond the dividend this year, we had a fair amount of excess cash. And we deployed a lot of that excess cash towards share repurchase, especially in the fourth quarter. So I think that's how you're -- we're going to think about prioritization going forward is let's grow the business within prudent constructs as we've talked about relative to the previous questions. Let's make those investments that we need to make in our people and our technology, client conferences, those kinds of things, all the things that we need to grow the business long term. The dividend, we're committed to maintaining. And then beyond that, we do want to mitigate some of the share dilution from our equity issuances for compensation. And so we're committed to trying to do that as much as it makes sense to do all within the context of keeping a really, really, really strong balance sheet. We think that's a real strategic advantage for us. And in a business where there is some cyclicality, we just think it makes all the sense in the world to continue to keep dry powder and keep optionality on the balance sheet and make sure we can withstand any market environment.

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

Has regulatory scrutiny on the G-SIB has 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 Mellis' ability to gain market share in a deregulatory environment?

Sure. I don't 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. . And so I don't -- I think that's there, and it's the way it has been. With respect to that next set of bulge-bracket firms, I don't see that meaningfully being different than it's been in the past. And clearly, 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. And that, to me, feels like where we sit in our part of the market is where a lot of the action is taking place and the incremental market share is being gained. And that -- 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. And then 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 kind of 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. And I'd expect changes to come in later quarters, assuming nothing out of the ordinary takes place. And just an additional reminder, we fully expense our retirement eligible equity that's granted in Q1. So 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.