Investment banking firm Moelis & Company (NYSE: MC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.2% year on year to $487.9 million. Its non-GAAP profit of $1.13 per share was 35.4% above analysts’ consensus estimates.

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StockStory’s Take

Moelis delivered a strong Q4, with results that were above Wall Street expectations and a positive market reaction. Management attributed the quarter’s performance to robust M&A activity, a record year for its capital markets business, and double-digit increases in both average fees and completed transactions. CEO Navid Mahmoodzadegan highlighted that the firm’s momentum was supported by elevated client activity and a growing pipeline, emphasizing recent advisory roles in notable M&A transactions such as Netflix’s acquisition of Warner Bros. and high-profile capital structure assignments. The firm’s strategic investments in talent and technology, as well as the maturation of new Managing Directors, were also cited as key contributors to revenue growth and operating leverage.

Looking ahead, Moelis’s management expects continued strength in transaction activity through 2026, driven by both strategic and sponsor-led M&A. Mahmoodzadegan said, “The breadth and depth of M&A activity that we saw at the end of last year is expanding and accelerating,” and noted that improving market conditions and growing pressure on financial sponsors to deploy capital should broaden deal volume across transaction sizes. The company is also investing in its private capital advisory segment, anticipating that GP-led secondaries and liability management assignments will become increasingly important. Ongoing technology investments and a maturing talent base are expected to support further operating leverage, though management did flag competition for talent and macro risks as ongoing considerations.

Key Insights from Management’s Remarks

Management pointed to record M&A and capital markets activity, expanding client relationships, and strategic investments in new business lines as major drivers of Q4 performance and future growth.

• M&A and Capital Markets Growth: Significant revenue gains were driven by a 35% increase in M&A activity and a record performance in capital markets, fueled by both large-cap and middle-market transactions. Moelis advised on high-profile deals including Netflix’s acquisition of Warner Bros. and several cross-border transactions, highlighting its role in complex, high-value mandates.

• Private Capital Advisory Expansion: The firm’s private capital advisory (PCA) business, which focuses on GP-led secondary transactions, saw meaningful traction following substantial investment in 2025. Management expects PCA to become an increasingly important revenue stream as the GP-led secondary market continues to grow.

• Talent Investments: Moelis added 21 Managing Directors in 2025 and promoted 13 more in early 2026, resulting in 178 MDs. Approximately one-third of MDs have joined in the past three years, reflecting a strategy to deepen sector expertise and expand coverage in growth markets.

• Expense Management and Operating Leverage: Improved compensation and non-compensation expense ratios reflected disciplined expense management even as the firm continued to invest in technology, data (including artificial intelligence), and client service. Operating leverage was supported by higher revenues and a maturing talent base.

• Shareholder Returns and Balance Sheet Strength: The Board authorized a new $300 million share repurchase program with no expiration, in addition to significant buyback activity in Q4. The company maintains a strong balance sheet with substantial cash and no debt, reinforcing its ability to fund growth and return capital to shareholders.

Drivers of Future Performance

Management expects deal activity to remain robust, with expanding M&A and capital markets pipelines, growing sponsor engagement, and a ramp-up in private capital advisory driving future results.

• Broader M&A and Sponsor Activity: Management anticipates that both large-cap strategic and mid-market sponsor-driven transactions will accelerate through 2026, supported by improved financing conditions, increased board confidence, and growing private equity pressure to return capital to investors.

• Private Capital Advisory Ramp: The PCA business is expected to generate more meaningful revenue as mandates secured in 2025 convert to completions in 2026. Management believes the integration of PCA with sponsor coverage and industry teams provides a competitive advantage as GP-led secondaries become a larger market opportunity.

• Expense and Talent Management: Continued investment in technology and new hires is expected, but management is focused on balancing compensation ratios and disciplined hiring. Risks include maintaining hiring discipline as competition for top bankers intensifies and monitoring macroeconomic or geopolitical developments that could hinder transaction volumes.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) whether sponsor-led M&A and GP-led secondaries accelerate as expected, (2) how quickly the private capital advisory segment translates mandates into revenue, and (3) the impact of continued talent investments on sector coverage and deal execution. Broadening the transaction pipeline and maintaining operating leverage as the business scales will also be important signposts for Moelis’s sustained growth.

Moelis currently trades at $69.22, down from $70.89 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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