Prepared remarks
Good morning, and welcome to Evercore's Second Quarter 2026 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Evercore management and the question-and-answer session. I will now turn the call over to Katy Haber, Head of Investor Relations at Evercore. Please go ahead.
Thank you, operator. Good morning, and thank you for joining us today for Evercore's Second Quarter 2026 Financial Results Conference Call. I'm Katy Haber, Evercore's Head of Investor Relations. 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 second quarter 2026 financial results. Our discussion of our results today is complementary to the press release, which is available on our website at evercore.com. This conference call is being webcast live in the For 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. Our record second quarter revenues capped off a record first half for the firm, underscoring the strength of our platform and strategy. For the quarter, we generated $1 billion of adjusted net revenues and adjusted diluted earnings per share of $2.91, up 19% and 20%, respectively, from the second quarter of last year. And for the first half, our revenues were $2.4 billion, up 56% year-over-year. Performance in the quarter continued to be broad-based across nearly all of our businesses with record second quarter revenues in our North American Strategic Advisory business, the Private Funds Group and the equities business. And it was the best quarter ever for Underwriting and Wealth Management. Our results reflect the strength of our client franchise, the benefits of our diversified business model and the continued execution of our long-term strategy despite pockets of market uncertainty experienced throughout the year. Global industry-wide announced M&A activity remains healthy and is currently tracking well above last year's year-to-date levels, which was the second most active. Large-cap strategic M&A remains the primary driver of activity, while middle market and sponsor-related deals, though active, continue to run below historical levels. Equity markets have been resilient, reaching all-time highs in the quarter and broader financing markets remain active. All in all, the building blocks are in place for a healthy deal-making environment. As it relates to Evercore, we continue to see solid activity across a broad range of sectors, products and geographies. Looking ahead to the second half of the year, client engagement remains strong, and our backlog currently sits near record levels, though, as is always the case, the timing of backlog conversion into revenue can vary from quarter-to-quarter, and it is best to evaluate our business on a longer-term basis. We believe the M&A cycle has further room to run over the medium to longer term, supported by both large cap activity and increased participation from financial sponsors in the middle market. We are also seeing more companies pursue M&A to achieve scale and to respond to the technological transformation and disruption brought on by AI, which we expect to be a driver of activity across a number of sectors over time. While the market backdrop remains dynamic, we are encouraged by the outlook for our business and expect to see continued activity in the latter part of this year and into next. Turning to talent. Since our last earnings call, 4 senior managing directors have joined our investment banking practice in health care, industrials, private capital advisory and our private capital markets group, all based in New York. Further, 7 additional SMDs have committed to join our growing global investment banking franchise in key areas, including restructuring in the U.S. and Europe, health care, chemicals and equity capital markets as well as 2 new hires based in our Frankfurt office. As of today, we have 19 new SMD additions year-to-date, 11 external hires, including those that have committed but not yet joined and 8 internal promotions. That brings the total of SMDs in our global investment banking practice to 188 with more than 50 currently ramping. In addition, we had 1 SMD join our equities business in equity trading. Investing in talent is core to our strategy, and we remain committed to thoughtfully expanding our platform over time. Now let me turn to our businesses. In North America Strategic Advisory, activity was robust in nearly all sectors with particular strength in health care, technology and industrials. While industry-wide announcement trends among financial sponsors are still below historical average levels, our sponsor-related activity is up meaningfully year-over-year as we expand our coverage effort with that client base. Our EMEA Strategic Advisory business had a strong quarter and a record first half. In 2025, we announced the Robey Warshaw transaction. And we also established local presence in new European markets. Our enhanced and integrated teams across the region are seeing a real pickup in activity. Our strategic defense and shareholder advisory group continue to be busy as activist campaigns push companies to explore sales and strategic reviews. Globally, in the second quarter, we advised on a number of significant transactions, including Arcosa's $8.5 billion sale to CRH, Iridium Communications $8 billion sale to Rocket Lab, National Grid's $1.75 billion investment in Joulent and Victoria's Secret in its successful proxy fight against BBRC. We also continued to see strong performance across our non-M&A businesses, which generated more than 40% of total revenues over the last 12 months as of the second quarter. Liability management and restructuring business maintained strong activity and dialogue levels consistent with trends we have seen. Our private capital markets and debt advisory team remains active with particular strength in structured equity transactions and securitizations as clients continue to seek innovative capital solutions. Private Capital Advisory maintained its position as the market-leading business in this space and delivered another strong quarter. Our Private Funds Group delivered a record second quarter even as the fundraising market remains subdued, driven by continued strong demand for the highest quality funds. Our Equity Capital Markets business had its best quarter ever, supported by more receptive issuance markets and strong investor demand. We served as an active book runner on 19 transactions with a balanced mix of IPOs and follow-on offerings and benefited from a resurgence in health care activity as well as strength across several other sectors. In the second quarter, we were active bookrunner on Parabilis Medicine's $771 million IPO, the largest biotech IPO of all time and lead left bookrunner on Red Cat's $259 million follow-on offering. Our equities business had record second quarter revenues as our team continues to deliver best-in-class content, corporate access and execution services to our institutional client base. And finally, our Wealth Management business delivered its best revenue quarter and finished with quarter end AUM of $16.2 billion. In summary, our record first half results reflect the breadth and durability of our platform and the continued execution of our long-term strategy. We remain encouraged by the level of client dialogue and engagement we are seeing across our global franchise. We continue to invest in our business, positioning us to capture opportunities as they emerge. With that, let me turn it over to Tim.
Thank you, John. We are pleased with our results, which reflect the progress we have made growing and strengthening our firm and diversifying our revenue streams. For the second quarter of 2026, net revenues, operating income and EPS on a GAAP basis were $990 million, $147 million and $2.32 per share, respectively. My comments from here will focus on non-GAAP metrics, which we believe are useful when evaluating our results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results can be found in our press release, which is on our website. Our adjusted net revenues of approximately $1 billion were a record for the second quarter, up 19% versus a year ago. Throughout the quarter, activity levels and revenues strengthened relative to our expectations at the start of the quarter as the market environment experienced some improvement and deal activity increased. We have consistently said that our business, both revenues and expenses should be evaluated across multiple quarters, and that continues to be the case. For the first half of 2026, approximately $2.4 billion, up 56% versus the first half of last year and represents a record first half for the firm. Adjusted operating income was $190 million for the second quarter and $544 million for the first half, up 21% and 99%, respectively. Adjusted earnings per share were $2.91 for the second quarter and $10.48 for the first half, up 20% and 77% year-over-year, respectively. Our adjusted operating margins for the second quarter and first half were 19% and 22.7%, respectively. Turning to the businesses. Adjusted advisory fees were approximately $776 million in the quarter, up 11% year-over-year. For the first half, advisory revenues were up 61%. Our advisory revenues are a record for the second quarter with strength across nearly every area as well as increased productivity levels. Underwriting fees of $97 million represented our best quarter to date, increased 201% from the prior year period. In the first half, underwriting revenues were up 76%. The strength was driven by robust follow-on and IPO issuance. Commissions and related revenue was $64 million, a record second quarter and up 9% year-over-year. Adjusted asset management and administration fees were approximately $25 million, up 15% versus the prior year. Adjusted other revenue net was approximately $39 million, with a little over half due to gains on our DCCP hedge portfolio as equity markets rallied in the quarter and a little less than half due to interest income. Turning to expenses. Our adjusted compensation ratio for the quarter was 63.5%, down approximately 190 basis points from the second quarter of last year and down approximately 50 basis points from last quarter. We remain focused on making gradual progress over time and balancing that with continued investment in our business. Adjusted non-compensation expenses were $175 million, resulting in a 17.5% non-comp ratio. While this is up significantly from last quarter and from the year ago quarter, like revenues, non-comp expenses and ratios are best evaluated across multiple quarters. Our non-comp expense ratio for the first 6 months is 13.5%. Nonetheless, the increase for the quarter was larger than normal and is primarily due to investments that are intended to yield near-term results for the firm, such as conferences and client events or expenses incurred in deal pitching and execution. Also, investments that are intended to build our business with medium- to longer-term results such as technology, including AI and data management strategies, search and placement fees related to SMD and non-SMD hiring and occupancy costs related to offices for our growing team of professionals. Further, there is some element of seasonality or episodic costs, which we expect may be reduced in coming quarters. For the full year, we would expect to see a modestly higher growth rate in non-comps relative to what we have experienced over the last couple of years. We are striving to achieve an annual non-comp ratio that is approximately in line with what we achieved last year. Our adjusted tax rate for the quarter was 29.4% compared to 30% a year ago. We anticipate that our effective tax rate for the remaining quarters of the year will be similar to what we have experienced in those quarters over the last few years. Turning to our balance sheet. As of June 30, our cash and investment securities totaled nearly $2.4 billion. In the quarter, we returned a total of $150 million of capital through the repurchase of approximately 330,000 shares and the payment of dividends. For the first half of the year, we have returned a total of $823 million, of which $734 million was through share repurchases at an average price of approximately $325 per share. We have already surpassed the full year record for share repurchases based on dollar amount. Our second quarter adjusted diluted share count was 43.7 million shares, down over 730,000 shares from the first quarter. We continue to maintain a strong cash position, which enables us to meet regulatory, capital and operating requirements while providing us with the resources to implement our strategic plan. As we enter the second half of the year, our business remains healthy. We are confident in our plan and optimistic about the opportunities that lie ahead as we remain committed to investing in our business and creating value for our shareholders over time. With that, we will now open the line for questions.
Questions and answers
Our first question will come from Steven Chubak with Wolfe Research.
Tim, I was hoping to double-click into some of your comments around non-comps, just given the bulk of non-comps admittedly are fixed, it's a big driver of operating leverage for you and peers historically. I recognize that some of the investments will be episodic, but the headcount growth is up 10% year-on-year, Senior MD count is up mid- to upper teens and the non-comps are up 30% year-to-date on a year-on-year basis. So thinking about all the areas that you're looking to invest more heavily, still trying to understand, given some of the items you cited might appear to be table stakes, why you're not seeing more non-comp leverage relative to your peers? And is there anything we can infer about the second half ramp in activity given the near record backlog and the fact that you tethered to deal pitches, which you referenced earlier?
Yes, sure. There’s a lot packed into that, but I’m happy to tackle it. First, let me take a moment to reiterate or reframe something people have heard often from us, including on this call, which is that our business needs to be evaluated on a multi-quarter basis. Our non-comp ratio for the quarter is, of course, 17.5%. We’re not happy with that. For the first half, it’s 13.5%. That’s the first point. This compares to a pre-COVID non-comp ratio of more than 17%. Also in my prepared remarks, I mentioned that we would expect the growth rate in non-comps this year to be modestly higher than what we experienced the last few years and that we are striving to finish with a non-comp ratio that’s approximately similar to what we experienced last year. To remind folks, last year it was 14.2%. So those are the first things: multi-quarter view, 13.5% for the first half, and we’re expecting something more in line with last year for the full year. Now let me double back on the increases we did have. First, and this is important, the majority of this is investments in our company for growth. Some of that growth is realized in the very near term and relates to things like conferences, client events, deal pitches, and deal execution, which result in travel and professional fees. So some of that is related to near-term revenue and near-term increased activity. Second, investments that provide returns in the medium term include client hires. You mentioned senior MDs. This year we’ve added 11 through external hires and promoted 8 internally, so that’s 19 more. We’ve got 50 who are ramping. That’s a lot. Beyond that, we can hardly turn on the news or pick up a magazine without reading about AI and technology, and we have doubled down on our investment there. We added a terrific new Chief Information Officer in 2025 and built out a senior team around him. We have a number of projects and expect those projects to pay dividends over the coming years. As I mentioned in my prepared remarks, there are episodic items that are seasonal in nature, including the arrival of our interns and certain conferences and offsites that happen to be held in that quarter. We’re hopeful those will not recur or will not be as large in some upcoming quarters, so we should get some help there as well. It’s really that simple: multi-quarter view, 13.5% for the first half, and something similar to last year for the full year is what we’re striving for. The increases you are seeing are primarily due to investments and, to a lesser extent, to items we expect will either be smaller or not present in some upcoming quarters. Regarding the second half ramp on revenues, John, I don’t know if you want to share some thoughts on that, and then I can chime in.
Sure. On the second half, we are looking at really a very strong second half. We are seeing substantial client engagement. It remains very strong. Backlogs continue at near record levels, which are also echoed by engagement letters and conflict checks, and we're very encouraged by the business and the outlook for our business. And we expect continued strong performance through the year and into next year.
Yes. The only thing I might add to that is as you're thinking about comparative results, just recall that 3Q and 4Q last year were both record quarters.
Our next question comes from James Yaro with Goldman Sachs.
So it feels like there's a two-speed in investment banking or M&A market right now with large-cap strategics outperforming the mid-caps and sponsors. I was hoping you could perhaps provide a little bit of additional color around the mid-cap and sponsor component of the M&A market and what you think actually gets that to improve more fully and perhaps any sense of time line as well?
Absolutely. So we're seeing increased activity, both in the mid-cap area as well as sponsors. It is not clear that this is going to drive an open-the-dams type rally in these sectors. But clearly, there is real activity, and there's a lot of movement in terms of, especially in sponsors, there's a lot of dialogue and thought about when is the opportunity going to come and when are people going to really start moving. Our business is actually in a very good place. We've added substantial numbers of people in sponsors in sponsor coverage. And our pitch rate is up substantially from where it was this time last year, and our win rate is also up. So we're seeing sponsor activity up in a material way. In addition, we've continued to invest in bringing together our private capital advisory businesses and our classic sponsor M&A business, and we're seeing some real fruits to that labor. So our sponsor business seems to be in a very good place, and we're actually very optimistic about where that is going. For the middle markets, we are seeing healthy dialogues. They certainly aren't following the very strong large cap strategics, but there's a lot of dialogue and activity that we feel is going to continue to build the strength of that sector. So all in all, those two sectors, we see as a build.
Our next question will come from Brennan Hawken with BMO Capital Markets.
Tim and John, you spoke to the strength in the business. Tim, you spoke to tough comps in the back half of '25. But typically, we see the second half revenue exceed the first half revenue for you just given the seasonality of the business. The first half had the first quarter, which was remarkably strong, especially for the first quarter. Is it still reasonable to think that the back half revenues can exceed the first half? Or is that going to just be too tough a comp in addition to the back half of '25 being tough?
Yes. Brennan, thanks for the question. I think the way I'd think about it is it is the case if you look back at our historical quarterly revenues for the last, let's call it, decade, to the best of my recollection, I think the fourth quarter has just about always been the best of those four quarters. As you mentioned, first quarter also was an extraordinary quarter at $1.4 billion, which is the biggest quarter in the history of the firm and $100 million higher than our fourth quarter last year. And look, we stopped short of giving revenue guidance. And so I don't want to go too much further than that other than to say, as John said in his remarks, we have near record levels of backlogs. Activity levels are good. We feel good about our business and a continued gradual build, particularly into the latter part of this year and next year. But particularly given uncertainties that always exist in the environment, I'm going to stop short of being more specific than that.
But what I would say, Brennan, is that the dialogue levels, the deals that are in-house and the likelihood of these deals coming to fruition is all quite strong. And so we feel good about the tone of the business. As Tim said, we can't predict, and we're certainly not going to give guidance. But I think the business is healthy.
Our next question will come from Devin Ryan with Citizens Bank.
This is Neo Eloff on for Devin. The question we got is just on how AI is impacting both buyer and seller expectations and how that's maybe evolved over the past few months. Obviously, software has been an area that's been heavily affected. So maybe you can discuss that as well as some of the other verticals. And then maybe if you can give some insight into how spreads are tightening or whether you're seeing that or not?
What was the last part of that question?
Whether spreads are tightening.
Okay. So let me start with software. Obviously, there was a pause in the market for software several months ago. And what we're seeing is that the software sector, especially in the M&A side and the dialogues connected with those, has started to warm up again. Whereas it is somewhat bifurcated in that the very high-quality software companies are actually in dialogue, both to do M&A on the acquisition side as well as the sponsors who own software companies thinking about whether they sell them or not, that activity has picked up. In our software coverage business, the activity level looks to be quite healthy, and we anticipate that that will continue to warm and there'll be more activity. In terms of the activity level generally for AI, AI is a source of a great deal of M&A discussion. AI is driving strategic thought for lots of the big strategics, and that's why you're seeing some of the big strategics look to really do some much stronger and bigger acquisitions. You're also seeing a lot of the big strategics look at capabilities they think they need and the view that they need to scale to be able to compete in AI with a lot of their competitors. So on all fronts, that's been a catalyst for continuing stronger dialogues. In addition, the AI-software relationship has driven more dialogue in the restructuring side of our business where there are some good software companies that need some support on the liability management side. And so we're also seeing activity and expect some activity coming out of software and AI and the impact that AI will have on some of those software companies. There are many places where those relationships will drive some investment banking activity.
The only thing I'd add to that is we are seeing green shoots of improvements in that space on the M&A side.
Our next question comes from Mike Brown with UBS.
Okay. Great. Maybe just a quick clarification on that last point, and then I'll ask that question. But is that comment that you said at the end, is that kind of sponsors and strategics when you talked about the green shoots in the software space?
Yes. We think that there is continuing activity. Our dialogues really are across the board. With respect to sponsors, the sponsors, especially the ones that have really been focused on software, are seeing real opportunities, and we're in a number of dialogues for that. And then on strategics, there is a very strong point of view that software is continuing to be powerful, that the blip that happened several months ago was an overreaction. There is real opportunity both in buying and selling software companies going forward.
Okay. Great. I did really want to ask you about Europe. So with the Robey Warshaw acquisition, that seems like it's really been a good strategic home run for you guys partnering together now. Maybe just discuss a little bit about what you're seeing in Europe, specifically on the M&A front. How are confidence levels for continued activity there and expectations for that market? Do you think that there's still a good pace of acceleration that can come through there? And then do you see that as an opportunity to continue to take share in the region? Maybe just a quick update on what you're seeing on the hiring front as well?
Sure. We see real strength in our European businesses. As you've seen and heard from us, we continue to add to our capabilities and also our coverage of companies in Europe. Robey Warshaw has gone extremely well. The integration has been smooth, and we are pleased with the way our two firms have come together. We've been involved in several important and large transactions where Robey Warshaw and Evercore have worked together, and we're pleased with that. We've also added capabilities throughout Europe. For example, we've added two people in Frankfurt. We have added a Stockholm office and our Paris operation is doing extremely well. Across the board, including Spain, we have really built out a business. We've also built capability in terms of products we can add, such as debt advisory and restructuring, and we've invested significantly in European restructuring and liability management. We're seeing real fruits from those investments. We feel enthusiastic and optimistic about the business we've built. We feel good about the people we've recruited, and it's coming together nicely. We expect to compete even more effectively and to build market share. Our ambitions for that business are well founded.
Our next question comes from Jim Mitchell with Seaport Global Securities.
Maybe just on ECM, a record quarter in the second quarter. So I guess, how are you feeling about the pipeline in that business? How much of the quarter would you attribute to just a really strong environment versus sort of your efforts to diversify your sector coverage and gain share and maybe thinking about higher lows and higher highs from here? Just any broader discussion on ECM would be great.
We feel really good about our ECM operation. I think we're making real progress. It's going to be up and down; the market is going to determine some of that. We did get the benefit of a very good market. Looking forward, we see good backlog and meaningful business in the next couple of quarters. We feel good about the people we've added and the way we are approaching the ECM business. Evercore has taken seriously how we market and engage ECM and how we call on the corporates we deal with. You can expect our ECM business to continue to grow. We have an aspiration to be a top-10 underwriter. I am optimistic about that. We have high-quality people inside ECM and in distribution. I think we're realizing real potential.
Our next question will come from Ryan Kenny with Morgan Stanley.
All right. So it's FOMC Day, and I'm wondering if we can get more details on what your current dialogue with clients is around the potential for additional rate hikes and what the resilience of the pipeline is if we get a surprise hike or if we get lingering uncertainty on future hikes? Would that be a material headwind to any parts of the business?
We do not think that rates at this point are really going to determine merger activity or activity within other parts of our business. We think the market is being driven by other forces right now. Financeability is not really an issue in any of the M&A that we're seeing, nor is it really an issue with respect to the sponsor businesses, although as we all know, if rates go up substantially, that may put some stress on some sponsor portfolio companies. Right now, our projection internally is that rates are going to be pretty neutral through the end of the year, and that's how we're approaching it. Generally, we think that rates are not going to drive the merger market in the near term.
And our next question will come from Alex Bond with KBW.
Maybe one on PCA. Just from looking at the industry data and commentary, it suggests that secondary volumes may have slowed sequentially at the industry level in 2Q. But from your remarks, it sounds like it was another strong quarter for this part of the business. Wondering if you can share with us your expectations for PCA through year-end and also to the extent you think your leading position in the space may help you weather periods where industry volumes may slow to a degree? And then also, it would be helpful to get any color around how what's happening in software is impacting both current activity levels across the secondary space as well as forward expectations here.
Our PCA business is performing well, and we feel good about the prospects. We have a very large market share and expect to protect it. The activity level is healthy right now and we see that continuing through the end of the year. We have strong inflows of business across the board, including GP-led transactions and LP-related activity. We have new products we're marketing and those are going well. Regarding software, it remains an important part of the business. There are many circumstances where a sponsor owner of software assets believes in the asset even if the market does not fully reflect that value, and solutions like continuation vehicles can be useful alternatives to monetize assets. Software will continue to be a part of the PCA business and provide fuel going forward.
Our next question comes from Nathan Stein with Deutsche Bank.
I wanted to follow up on the non-comp side of the expense base. Is the higher growth rate expected in non-comp dollars this year all really from the episodic components in 2Q and investments into the business that you already highlighted? Or does this mean that non-comp expense dollars should overall be higher in the second half of the year versus the first half? And separately, in the press release, you note there was a provision for credit losses that drove some of the increase in non-comp. Can you just talk more about what that was and how much this drove the overall increase?
Yes, sure. That has multiple facets. When you think about non-comp growth and what we expect, there's a baseline growth that exists because we've grown the firm substantially over recent years. There is some correlation between headcount growth and non-comps; headcount is up roughly 10% recently, and inflation also plays a role. In the past, we've grown revenues faster than headcount, and across multi-year periods we've maintained that discipline, which helps give us leverage. There are elements of non-comps growing faster than inflation, such as data and information costs, which are at a premium. Some parts of travel are lower than pre-COVID on a per-headcount basis, but offsetting that are higher jet fuel and hotel costs. Technology is at an inflection point and accelerating; we are investing more there to capture opportunities. So as long as the business grows, absolute non-comp dollars will tend to grow, and we'd like to grow revenues faster. If you look at the first half, revenues are up 56% while earnings are up 77% — that's operating leverage. Regarding the provision for credit losses noted in the press release, there was a bad debt expense component that was somewhat significant this quarter and contributed to the increase in non-comps. There were also legal and audit fees and search and placement costs where an unusual number of commission-type arrangements fell in the second quarter, plus seasonal items like conferences, offsites and summer interns arriving. Those add up to a sum in the double-digit millions. Some of these items we expect will either not recur or will be smaller in upcoming quarters, so I would not expect to see a sequential increase like the one we saw in this quarter in the next quarter.
Our next question comes from Gabriel Angelini with Bank of America.
I think the hiring backdrop has been quite competitive for some time now, and you even called out search and placement fees as one of the drivers of those elevated non-comps. Maybe can you give us a mark-to-market around whether your appetite on the hiring front has changed at all? And does just the degree of competition on hiring make it more attractive to do whole business acquisitions at this point?
Thanks, Gabriel. We are not really in the business of doing large lift-outs. We've only done a couple of situations where we've recruited multiple people. We have the capacity and appetite to do it, but our approach is more one-by-one: we look for highly talented A+ people who fit our culture and fill specific needs. Our pipeline is healthy; we've brought in 11 external hires this year and promoted eight internally. We'll continue to build through targeted hires. There may be a few situations with two or three people joining together, but our model remains individualized recruitment, focusing on quality. We also invest in internal development programs to promote from within.
Next, we have a follow-up question from Steven Chubak with Wolfe Research.
John, I have a bit of a more nuanced question on comp leverage. Historically, you've recruited much more actively from bulge bracket peers versus some of the independents, and the cost of buying out deferrals for senior talent at the bulges has gone up meaningfully given share price appreciation over the last 3 years, whereas deferred equity at some of your smaller independent peers has appreciated far less. I was hoping you could speak to how you're evaluating the cost to recruit from bulges and whether you're still focusing more of your recruiting efforts there versus the independents and how that might inform the longer-term comp trajectory?
Steven, we've never targeted recruiting solely from the bulge bracket versus independents. We search broadly. We identify A+ talent who will fit culturally and drive the business, regardless of source. There's not a material difference in the quality of talent from bulge brackets versus independents in our experience; it's more about how the individual ran their business. We'll continue to look across the board and hire the most effective people who will drive our business. Internal promotions are a priority as well, and we continue to develop our programs to support that. You should assume we'll continue recruiting broadly for the best talent, and we will pay for highly talented people when appropriate, but we focus on return on investment and long-term benefit to the firm.
Next, we have a follow-up question from James Yaro with Goldman Sachs.
I hope to just put a fine point on margins. If we look back from 2016 to 2022, your annual adjusted operating margins were in the rough range of 24.5% to 34%. If I take out the outliers, specifically 2021's elevated 34% and the low in 2019 of roughly 24.5%, the other years in that range were quite tightly clustered around 26% to 28.5%. That compares to 22.7% in the first half of this year. Tim, I was hoping you might be able to comment a little bit on operating margins more broadly from here and whether it could return to those historic levels or whether anything has changed structurally?
Yes, sure. We have a slightly different perspective on historical margins and think of them more in a range closer to the mid-20s when looked across full cycles without exceptions. We are coming off 2023, which was probably the weakest investment banking market in the last 15 years. We've been improving margins each year. Historically, non-comp was lower and comp ratios higher; today there's roughly 300 basis points difference compared to pre-COVID that offsets some comp increases. Margins cannot be looked at in a vacuum; they must be considered alongside growth. We've just delivered a first half where revenues are essentially the same as our full-year 2023 revenues. A dozen years ago, revenues were in the $800 million to $900 million range; in the last four quarters, they're $4.7 billion. When thinking about creating shareholder value, it's a combination of growth and margins. On that measure, I'm satisfied with what we've accomplished over the last several years.
Our last question will come from Brennan Hawken with BMO Capital Markets.
Just a real granular question, Tim. You flagged onetimers in the non-comp here in the second quarter. Could you just quantify them, please?
I'll quantify some of it. Some of the detail isn't appropriate for broad consumption, but the components include bad debt expense, which was somewhat significant; legal and audit fees; search and placement costs where an unusual number of commission-type arrangements happened to fall in the second quarter; and seasonal items like conferences, offsites and summer interns arriving. Summed together, those differences hit into the double-digit millions. Some of these items we expect will either not recur or will be smaller as we move into upcoming quarters. I would not expect to see a sequential increase like the one we saw this quarter in the next quarter.
Ladies and gentlemen, this concludes today's Evercore Second Quarter 2026 Earnings Conference Call. You may now disconnect.