Prepared remarks
Good day, and welcome to the PJT Partners Second Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead, ma'am.
Thank you very much, and good morning, and welcome to the PJT Partners Second Quarter 2026 Earnings Conference Call. I'm Sharon Pearson, Head of Investor Relations at PJT. And joining me today are Paul Taubman, our Chairman and Chief Executive Officer; and Helen Meates, our Chief Financial Officer. Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements 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. We believe that these factors are described in the Risk Factors section contained in PJT Partners' 2025 Form 10-K, which is available on our website at pjtpartners.com. I want to remind you that the company assumes no duty to update any forward-looking statements and that the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, you should refer to the financial data contained within the press release we issued this morning, also available on our website. And with that, I'll turn the call over to Paul.
Thank you, Sharon. Good morning, and thank you for joining today's earnings call. Earlier today, we reported record results across the board. Second quarter and first half revenues, adjusted pretax income, and adjusted EPS were all the highest in our firm's history. For the second quarter, revenues were $486 million, up 20%. Adjusted pretax income was $106 million, up 32%, and adjusted EPS was $1.97, up 28% from year-ago levels. For the first half of the year, revenues increased 24%, adjusted pretax income increased 39%, and adjusted EPS increased 36% compared to 2025 levels. When we began this journey, we characterized our firm as an alpha play on strategic advisory. For more than a decade, we've been committed to consistent and continuing investment in our Strategic Advisory business with the goal of enhancing our footprint, our capabilities, and our brand. These investments have transformed the scale and scope of our Strategic Advisory business and are clearly evident in our financial results. Even with this significant build-out, we still have much more to build and much more to achieve. And as that build-out progresses, it will drive opportunities for additional growth in our other businesses. We are increasingly becoming an alpha play, not just in Strategic Advisory, but across all of our businesses. Before I turn the call over to Helen, I'd like to say a few words about our CFO transition. Helen will be stepping down as Chief Financial Officer on October 1 after more than a decade of extraordinary service. She will, however, remain with us through year-end to ensure a seamless transition. Helen has been my partner and sounding board from day one. A lot of what we have accomplished reflects her leadership, her dedication, and her uncompromising integrity. On behalf of the Board and all her colleagues, I want to thank her for her innumerable contributions to PJT Partners. I would also like to congratulate Arun Kalra on his elevation from Director of Finance to Chief Financial Officer. Since joining PJT in 2016, Arun has worked side-by-side with Helen to develop our global finance function. I am confident that Arun will build upon the strong foundation Helen has established and help write the next chapters of our growth story. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail.
Thank you, Paul. It has been a real privilege to serve in this role, and I would like to thank our investors and research analysts for your partnership, your insights and your support of our firm over the years. I'm looking forward to partnering with Arun as he steps into the CFO role on October 1, and my priority will be to ensure that this is a smooth transition. Now turning to our financial results, beginning with revenue. Total revenues for the second quarter were $486 million, up 20% year-over-year. For the 6 months ended June 30, total revenues were $904 million, up 24% year-over-year. And as Paul mentioned, a record for both the second quarter and 6-month periods. Revenues in all our businesses increased for both the second quarter and first 6-month periods, with record revenues in Strategic Advisory and Restructuring. We had a number of transaction completions that met the criteria for revenues to be pulled forward in the second quarter, totaling $35 million across 8 transactions, which is $14 million more than year-ago pull-forwards. Turning to expenses. Consistent with prior quarters, we presented the expenses with certain non-GAAP adjustments, which are more fully described in our 8-K. First, adjusted compensation expense. We accrued compensation expense at 66.5% of revenues for the first half of the year compared with 67.5% for the same period last year. This ratio represents our current best estimate for full-year 2026. Total adjusted non-compensation expense was $57 million in the second quarter, up 10% year-over-year, and $114 million for the first half, up 12% year-over-year. As a percentage of revenues, 11.8% in the second quarter and 12.6% in the first half. The main drivers of the expense increase for the first half of the year were the same as the first quarter: higher occupancy costs and depreciation expense relating to the expansion of our global office footprint, higher travel and business-related expenses, and higher professional fees. We now expect our non-comp expense growth for the year to be slightly higher than previous guidance and closer to 14% year-over-year. The increase primarily reflects the expectation of elevated business-related expense year-over-year, particularly travel and related and professional fees, as well as higher expenses associated with continued investments in AI and technology infrastructure. Turning to adjusted pretax income. We reported record second quarter and first half adjusted pretax income of $106 million and $189 million, respectively. Our adjusted pretax margin was 21.7% for the second quarter compared with 19.7% for the same period last year and 20.9% for the first 6 months compared with 18.6% for the same period last year. The provision for taxes, as with prior quarters, was presented in our results as if all partnership units had been converted to shares and that all of our income was taxed at a corporate tax rate. Our effective tax rate for the first half of the year was 20.5%. This is our current estimate for the full year and is in line with prior guidance. Our adjusted converted earnings were a record for the second quarter of $1.97 per share, up 28%, and a record $3.51 for the first half, up 36% from the same period last year. For the quarter, our weighted average share count was 42.6 million shares, down 2% versus a year ago. During the quarter, we repurchased approximately 498,000 shares and share equivalents, primarily through open market repurchases. Our repurchases for the first 6 months of the year totaled approximately 2.1 million shares. On the balance sheet, we ended the quarter with $535 million in cash, cash equivalents, and short-term investments, and we have no funded debt outstanding. And finally, the Board has approved a quarterly dividend of $0.25 per share. I'll turn the call back to Paul.
Thank you, Helen. Beginning with restructuring. Year-to-date, our market-leading restructuring team ranked #1 in global announced restructurings, #1 in global completed restructurings, #1 in U.S. announced restructurings, and #1 in U.S. completed restructurings. Not surprisingly, given the strong market position, our restructuring team delivered record results for the second quarter and first half, comfortably ahead of prior year levels. We continue to operate in an environment of sustained demand for liability management and restructuring advice. The speed of technological change and dislocation is challenging companies across industries. Many companies are dealing with uncomfortably high leverage, higher financing costs, and challenged operating models. And for a subset of these companies, these challenges are existential. Unlike historical norms, this concentrated stress is playing out against a backdrop of broadly constructive macroeconomic conditions and favorable financing markets. Simply put, we anticipate restructuring activity to remain elevated for the foreseeable future. We also expect our ever more powerful Strategic Advisory franchise to expand our opportunity set for restructuring and other liability management services. Turning to PJT Park Hill. Significant growth in private capital solutions more than offset declines in primary fundraising, enabling PJT Park Hill revenues to increase for the second quarter and first half compared to year-ago levels. Our PCS business benefited from close collaboration with Strategic Advisory and access to an extensive network of global limited partners. Given PCS' strong secular growth characteristics and the opportunity to leverage this integrated platform, we continue to invest in this business. On the primary side, our differentiated high-quality pipeline of fundraises should enable us to deliver strong relative performance even as the overall primary fundraising market remains challenging. Turning to Strategic Advisory. For the second quarter and first half of the year, our Strategic Advisory business delivered record revenues significantly above year-ago levels. We continue to operate in a favorable, albeit volatile deal environment. Despite the stop-start cadence of activity in the first half of the year, the market has been broadly constructive, but challenged by continuing geopolitical and AI uncertainties, which add to volatility. Even though the M&A market has gained steam as the year has progressed, and we are seeing a sharp increase in the number of companies that are investigating M&A opportunities, the annualized level of M&A activity is only up single-digit percentages from year-ago levels. Against that backdrop, our M&A backlog continues to build with mandate counts at record levels, up more than 20% compared to year-ago levels. Our preannounced pipeline, which reflects revenue potential from these mandates, is up an even greater percentage and is also at record levels. Notwithstanding the sizable number of closings we experienced in Q2, our announced pending closed backlog increased appreciably from Q1 levels and ended Q2 just slightly below year-ago levels. As we look ahead, during our journey, we have been steadfast in our commitment to value-enhancing long-term investments that scale and strengthen our business. Over time, these investments have been essential drivers of our growth, enabling us to build our capabilities and brand. For the full year, all of our businesses are on track for record performance. We do, however, expect our revenue growth rate for the full year to be less than that achieved in the first half of the year. As before, we remain confident in our near, intermediate and long-term growth prospects. And with that, we will now take your questions.
Questions and answers
Our first question today comes from Devin Ryan with Citizens Bank.
I just want to start and say congratulations to Helen and Arun as well. It's been a pleasure; consummate professional. And Arun, best wishes to you as well, looking forward to working with you. A question where I'd like to start here just is on the Strategic Advisory business. And when I look at Paul, the partner totals in that group are 91 at the end of the second quarter. I think 19 have been on the platform for less than 2 years. So that ratio keeps declining. It's only 20%. And so that's been one thing that we've looked at just to think about kind of the maturation of the broader PJT advisory business. And I appreciate there's still a lot of white space from here to grow in the absolute. But do you feel like we're getting close to maybe more of a steady state of productivity for the partner group here, as now a smaller number is less than 2 years on platform. Just trying to think about kind of where we are in the maturation of that business and the productivity per partner really.
I think the short answer is no. I think we're building, and you tend to see step function changes. It's not just a one-factor model. You need to look at where the investment is and when you get to critical mass in those investments. So if you're going to build out a region, if you have one individual who's been there for an extended period of time, that may be necessary but not sufficient. Each partner does not operate independently of the other partners and the overall franchise. What we're seeing increasingly are the network effects as we continue to build out. And it's not just time in seat. It's also whether or not we've achieved critical mass in any one of our initiatives, and it's also brand awareness, brand building, walk-in, all of those things come together. I think we're still early days in seeing the true potential of what we're building.
And then just as a follow-up on the restructuring outlook. I appreciate we continue to expect elevated levels of activity. Can we maybe put a finer point on just what you're seeing in the environment and, to the degree that things remain elevated, we're approaching maturity walls. There's obviously some consternation in the software space. Is there a scenario here where that could still have reasonable growth as we look out in the coming years? Or is it elevated just around similar levels? I'm not sure if we can get any deeper on the thought there.
There is the overall market, and then there's our addressable market. I see our addressable market continuing to expand for three reasons. One is we continue to expand geographically, opening up new markets where we have an opportunity to claim our share of activity. Second, relationships and deep domain expertise continue to be brought to bear, and when it comes to the borrower side, as we build out our strategic advisory platform, we have more looks. Third, we've had very strong success with the most sophisticated and repeat consumers of liability management services, which are private equity firms. As we build out our coverage and touch more of those companies, we increase our opportunity set. If you ask me where we are in the overall cycle, I think we're closer to normal than we are to where we've been historically. Looking in the rearview mirror, you're seeing abnormally light levels of activity, partly because we had interest rates that were near zero and very flexible documents with few covenants and long-dated maturities. Ultimately, many of those investments end up stumbling at some point, and they need to be managed actively. What we are seeing is that our owners want to get ahead of these issues, and therefore they're being more proactive in managing their liability stack. You're dealing with a greater quantum of debt, more normalized interest rates, and more proactive addressing of these issues. I think that gets us to another level, but none of that reflects true shocks to the system. None of that reflects a recessionary environment or more bearish sentiment. So we think these activity levels can continue to grind higher. There's also a call option if things were to become more challenging from a macro perspective. But we only control our competitive efforts, and I see our competitive efforts strengthening over time, which gives us tailwind.
Our next question comes from Brennan Hawken with BMO Capital Markets.
I'd also like to give a big congrats to Helen on her retirement and to Arun on his new role, looking forward to working with you. Looking across the businesses, Paul, you gave some great color there. It sounds like they've all grown. You just gave us some really good color on the outlook for restructuring. But it seems as though the growth rates are at different rates here. Is that right? And is Strategic Advisory still delivering most of it? And maybe more importantly, given we're going to see a slower growth rate in the back half of the year versus the first half, which of your businesses do you expect to drive that slower growth?
The slower growth: we grew about 24% for the first half of the year. I don't think we're going to grow 24% for the full year. We are building something special, but I think the full year growth rate will be less than the first half. We're seeing growth in lots of different places. We're seeing a lot of growth in our PCS business as our secondary practice continues to mature, and that has both macro and micro drivers. We see growth in strategic advisory and in liability management. If macro conditions stay roughly consistent with where they are today, the biggest source of growth in aggregate dollars will be the continued strategic advisory buildout.
And Paul, previously, you had focused more on operating leverage versus comp leverage. So interesting to hear you discuss the drivers of the pretax margin expansion that you saw in the second quarter. And given that we've got maybe a bit of an acceleration in noncomp, how do you think about adding another roughly 2 percentage points to the margin similar to what you did in 2025?
We haven't abandoned our perspective, which is we focus mostly on pretax margin and less on the components to get there. I continue to believe we can deliver operating leverage in our business, and we'll continue to do so. The precise pace and timing of that improvement will largely be a function of two things: how robust our revenue growth ends up being for the full year—because the best way to create operating leverage is to grow the top line while being responsible with costs—and the competitive environment. It's a competitive environment not just for talent but for things like travel and services where market forces matter. I continue to believe we will provide increasing operating margin for our shareholders.
Our next question comes from James Yaro with Goldman Sachs.
Firstly, Helen, congrats on the spectacular run, and I wish you the best going forward. Just turning quickly to broader AI impacts on investment banking activity. In my opinion, those appear to be more on the financing market side of the business rather than in M&A or maybe in advisory more broadly. Paul, I'd just love to get your sense of how you think your businesses benefit from AI-related investment banking activity.
There are a lot of companies exposed as a result of these disruptions, and they're rethinking their competitive position. For some of those companies, that will mean more transaction activity. Not everyone will be a winner as we redefine the landscape. Some companies will see share price action as an opportunity to be taken private, others will pursue scale through strategic transactions. You may see private equity firms monetize assets less impacted by AI disruptions, increasing demand for PCS and secondary transactions. We'll see more creative financings for data center build-outs and integrated approaches. Our capital markets team and industry bankers have worked on and continue to work on many financing situations, and net-net this will be healthy for our business.
That's a very comprehensive answer. Just wanted to turn quickly to private equity M&A. We did see, at least on an industry basis, private equity announced M&A improve in June. Just love to get your perspective on where we are in the private equity M&A improvement and whether you think perhaps the second half of this year and beyond could look more like the second half of last year, where there was a somewhat sharp recovery?
I do think private equity M&A will improve. I don't think we stay at current low levels. I've been cautious not because I'm negative but because not every trend is one-way. It has become more difficult to get transactions done, which is good for us because differentiated advice is appreciated. There's an enormous amount of capital that wants to be put to work, often in structured investments rather than simple take-privates. There's skill and nuance required in private situations—advising independent directors, the company, or the buyer—and that plays to our strengths. I expect a steady improvement rather than a dramatic whipsaw recovery.
Our next question comes from Mike Brown with UBS.
I'll echo everyone's comments here. Congrats, Helen, and congrats to you, Arun, as well. So Paul, I wanted to ask a little bit about the PCS business here. So the first half, a record amount of volume in the secondaries market. It looks like it was up about 20% year-over-year, and the GP-led market was up about 35%, so kind of outpacing the broader market. Maybe just talk a little bit about how your secondaries business is performing relative to that market backdrop? And then how has traction been as you continue to invest in the business specifically and then a little more specifically on the GP-led capability side?
We performed very well relative to the market benchmarks. We feel good about our business. We see tremendous opportunity to ride both the macro trend and our ability to be recognized for differentiated execution, structuring, and an integrated approach with our primary fundraising business and Strategic Advisory, which is increasingly recognized.
And Helen, I can't let you get off of an earnings call without a question on comp ratio. So you guys have talked about that you're accruing at 66.5%; that's the best estimate for the year. Clearly, some very positive commentary on the pipeline here. So if the second half continues to play out nicely here relative to your expectations, what would cause that comp ratio to be able to come in a little bit below that 66.5%? What would kind of need to see play out here? And maybe just kind of touch on what you're expecting to see in terms of investments in talent in the second half, as the kind of puts and takes as we think about that comp ratio?
Just a reminder, when we look at the comp ratio, we take a full-year view. That incorporates what we think the revenue outlook looks like for the year, the hiring plan for the full year, and the competitive backdrop. So as we sit here today, 66.5% is our best estimate for the full year. We will refresh it in Q3, but that is what we expect.
Our next question comes from Steven Chubak with Wolfe Research.
Congrats, Helen, on your retirement and the new role, and looking forward to working together. Maybe just to start on liability management. Paul, LME activity has been quite robust these last couple of years. You've been a clear leader. You noted that you're at the top of various league tables, however you might look at it. And while the activity remains strong, some data sources that we track are showing that the mix is shifting back towards more traditional Chapter 7 or 11 bankruptcies. I wanted to see if you're seeing a similar trend across your franchise and how you're positioned if more activity starts to shift away from liability management and restructuring in the out-of-court space.
I don't know if it's shifting away or if it's in addition. Look at the sheer quantum of liability management and the quantum of in-court restructuring; it may be moving a bit more toward in-court balance, but we are well positioned for that too. This is not a one-year trade; we are away from abnormally low levels of liability management and restructuring from prior years. Interest rate forecasts creeping higher will put more pressure on companies. More companies may find they've exhausted options and need restructuring. We're seeing opportunities where previously we might not have been competitive because we didn't have existing corporate relationships, the right industry bankers, early presence, or geographic coverage. All those dials are turning in our favor, which makes us optimistic about our franchise and its durability. That doesn't mean every quarter will be better than the last, but across a three- to five-year horizon, we see a durable environment for growth and share gains.
That's great color, Paul. And it's a good segue to a question that is maybe trying to look at the long-term trajectory on a 3- to 5-year lens, but really focused on the non-comp side. Over the last 5 years, you've been consistently growing non-comps low double-digit, unsurprising given that you've been in growth mode. But given that much of the operating leverage for you and your industry peers is really derived from non-comp leverage, especially given the competition for talent, just wanted to better understand how far along you are in the infrastructure and geographic build-out and when you might expect to see some moderation in non-comp growth or an ability to bend the cost curve.
Since we became a public company, we've focused on investing in the business while looking for efficiency opportunities. Some costs are step-function, such as occupancy. We've taken on additional space in New York and London which gives us the opportunity to grow into that space, and that's where you see some efficiencies. You can't look at a straight-line growth rate other than to realize that investments come at a higher percentage of revenues in the near term. If you look at our non-comp as a percentage of revenues, we've been pretty efficient; we're currently in the 12.5% range. We focus on investment and constantly look for ways to be more efficient.
When we started the firm, the expectation for a traditional non-comp-to-revenue number was a lot higher than what we've delivered, despite aggressive growth. I think we've been quite good at managing costs. I don't want to manage to a quarter and disrupt the long-term health of the franchise. Infrastructure, cybersecurity, and data integrity are priorities, and we won't under-invest there for short-term ratio improvements. As we grow and gain convening power, we'll do more high-quality conferences with strong content that have a commercial effect. The dollars we spend are well spent, and we spend with a view to long-term returns.
Our next question comes from Alex Bond with KBW.
Congrats again to Helen on a great run. Paul, you added some helpful commentary around how the current software dynamic is impacting restructuring. But hoping you can add some color around what you're seeing for software-related activity on the M&A side currently, maybe expectations there over the coming quarters and into next year? And then similarly, it would be helpful to hear a little bit more around how the secondaries business is being impacted here, just given the volume of software-related TVs in recent years.
There was clearly a shock to the system in software. The challenge for many companies is the debate about terminal value rather than near-term operating performance. Some companies that are most insulated from AI threats are finding it frustrating because there's a perception that long-term value is impaired, and there's no quick path to prove otherwise. Over time, you'll see a tiering: some companies will recover, others will need to address leverage or find strategic alternatives. There will likely be more confidence from strategics and capital providers to lean in as headline risk recedes. After some seasoning in pricing and reduced early volatility, you'll return to deal-making mode—take-privates, strategic activity buy-side or sell-side, and companies communicating to investors to seek differentiated valuations. All of those will benefit us over time, and we're closer to seeing that start to occur, though the first six months were probably too soon for most companies.
And then maybe for my follow-up, I just wanted to ask around the year-to-date net hiring activity at the partner level and how this is progressing from your lens? And maybe where should we expect the year-over-year partner headcount growth to end up relative to the historical level or average now that we're a little over halfway through the year and you have a little bit more visibility.
My heuristic is it's similar to the year before; it could be higher or lower. There's volatility. We're in a significant number of important recruiting dialogues. Recruiting is a continuous effort; we spend a tremendous amount of time on it. How that shows up in a quarter or two doesn't mean much about trend. It's analogous to transaction announcements: you can be active and nothing gets announced, then several announce at once. We continue to be an employer of choice, increasingly compelling to high-quality bankers globally. How we end the year is uncertain; we don't manage to quotas. Past trends are a good indicator, and if hiring is higher, it reflects capitalizing on opportunities; if lower, some will roll into 2027.
That concludes our question-and-answer period. I would now like to turn the call back over to Mr. Taubman for closing remarks.
Once again, I just want to thank everyone for their interest in our company and for participating in today's earnings call. We wish everyone a wonderful end of summer, and we'll see you in the fall. Thank you.