The call in brief

Evercore delivered record second-quarter 2026 results that capped a record first half, with adjusted net revenues of approximately $1.0 billion (up 19%) and adjusted diluted EPS of $2.91 (up 20%); on a GAAP basis net revenues were $990.2 million, operating income $146.6 million, and diluted EPS $2.32 at a 14.8% operating margin. First-half adjusted revenues reached $2.4 billion (up 56%) with adjusted operating income up 99%, and performance was broad-based - record second-quarter revenues in North American Strategic Advisory, the Private Funds Group and Equities, and best-ever quarters for underwriting (fees up 201% to $97 million) and wealth management ($16.2 billion AUM) - as non-M&A businesses contributed over 40% of trailing revenue. Advisory fees rose 11% to $776 million and the firm advised on marquee mandates (Arcosa's $8.5 billion sale to CRH, Iridium's $8 billion sale to Rocket Lab, Parabilis Medicine's record $771 million biotech IPO). The chief blemish was a spike in non-compensation expenses that pushed the Q2 non-comp ratio to 17.5% (versus 13.5% for the half) on growth investments plus episodic items (a notable bad-debt provision, clustered search-and-placement fees, conferences and interns) worth double-digit millions, keeping the adjusted operating margin (22.7% first half) below historical norms; management targets a full-year non-comp ratio near 2025's 14.2% and does not expect a repeat sequential jump in Q3. Evercore improved its adjusted comp ratio to 63.5% (down ~190 bps), returned $823 million of capital in the first half ($734 million of buybacks already surpassing the full-year record), and added 19 senior managing directors year to date. Management gave no explicit revenue guidance but pointed to near-record backlog, strong client engagement (including warming software and AI-driven M&A and a build in sponsor/middle-market activity), and continued momentum into late 2026 and 2027 against demanding record 2025 comparisons, while emphasizing that margins should be evaluated alongside multi-year revenue growth that has quadrupled to $4.7 billion trailing.

What went well
  • Evercore posted record second-quarter revenues that capped a record first half, with adjusted net revenues of approximately $1.0 billion (up 19%) and adjusted diluted EPS of $2.91 (up 20%); first-half adjusted revenues were $2.4 billion, up 56% year over year.
  • On a GAAP basis, net revenues were $990.2 million, operating income $146.6 million, and diluted EPS $2.32, with a 14.8% GAAP operating margin.
  • Performance was broad-based with record second-quarter revenues in North American Strategic Advisory, the Private Funds Group and Equities, and the best-ever quarter for both underwriting (fees up 201% to $97 million) and wealth management (AUM of $16.2 billion).
  • Non-M&A businesses generated more than 40% of trailing-twelve-month revenue, and the firm advised on marquee deals including Arcosa's $8.5 billion sale to CRH, Iridium's $8 billion sale to Rocket Lab, and Parabilis Medicine's $771 million IPO (the largest biotech IPO ever).
  • The adjusted compensation ratio improved to 63.5%, down ~190 basis points year over year, and first-half operating leverage was strong (revenues +56%, adjusted operating income +99%).
  • Evercore returned $823 million of capital in the first half ($734 million of buybacks at ~$325 average), already surpassing its full-year buyback dollar record, while adding 19 senior managing directors year to date (188 total, 50+ ramping) and maintaining a near-record backlog.
What went wrong
  • Adjusted non-compensation expenses spiked, lifting the Q2 non-comp ratio to 17.5% (versus 13.5% for the first half), driven by growth investments plus episodic/seasonal items - including a significant bad-debt/credit-loss provision, elevated search-and-placement fees, conferences, offsites and summer interns - totaling double-digit millions of one-timers.
  • The adjusted operating margin was 19% in the quarter and 22.7% for the first half, still below the firm's historical full-cycle range as it invests and recovers from the 2023 banking downturn.
  • Middle-market and financial-sponsor M&A activity, while improving, continued to run below historical levels, leaving large-cap strategics as the primary driver of the market.
  • Second-half comparisons are demanding, as both Q3 and Q4 2025 were record quarters, and Q1 2026 was the largest revenue quarter in firm history at $1.4 billion.

Management Commentary

Katy Haber
Head of Investor Relations, Evercore

Thank you, operator. Good morning, 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, an archive of it will be available for 30 days beginning approximately one 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, 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 reconciliation, 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 closings. I will now turn the call over to John.

John Weinberg
Chairman and CEO, Evercore

Thank you, Katy. 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. 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. 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 year for M&A on record. 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, 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, 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, four Senior Managing Directors have joined our investment banking practice in healthcare, industrials, private capital advisory, and our private capital markets group, all based in New York. Further, seven additional SMDs have committed to join our growing global investment banking franchise in key areas, including restructuring in the U.S. and Europe, healthcare, chemicals, and equity capital markets, as well as two 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 eight 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 one 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 healthcare, 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. 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 continued 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 over the last several quarters.

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 remained 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 healthcare activity, as well as strength across several other sectors.

In the second quarter, we were active book runner on Parabilis Medicine's $771 million IPO, the largest biotech IPO of all time, and lead left book runner 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. 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.

Tim LaLonde
CFO, Evercore

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, adjusted net revenues were 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, year-over-year. 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. 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 six months is 13.5%. 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.

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 30th, 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'll now open the line for questions.

Analyst Q&A

Steven Chubak — Analyst, Wolfe Research
Hi, good morning, and thanks for taking my question.
Tim LaLonde — CFO, Evercore
Hi, Steven.
Steven Chubak — Analyst, 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-comp's up 30% year to date on a year-on-year basis. 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. Is there anything we can infer about the second half ramp in activity given the near record backlog and the fact that you tethered it to deal pitches, which you referenced earlier?
Tim LaLonde — CFO, Evercore
Yeah, sure. There's a lot packed into that, but happy to tackle it. First, let me take a moment to reiterate or reframe that people have heard often from us, including on this call, which is our business needs to be evaluated on a multi-quarter basis. Our comp ratio for the quarter is, of course, 17.5%. We're not happy with that. For the first half, it's 13.5%. Okay? That would be 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 or in line with what we experienced last year. Then to remind folks, last year it was 14.2%.
Those are the first things, which is multi-quarter, 13.5% for the first half, and we're expecting something more in line with what we achieved last year. Let me double back on the increases we did have. First, 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. That's related to things like conferences, client events, deal pitches, deal execution, which result in travel and professional fees. Some of that is just related to what we expect to be near-term revenue and near-term increased activity. Second, investments that provide returns in the medium term. That's client hires. You mentioned Senior MD is up. This year we've added 11 through external hires. We've promoted eight internally. That's 19 more. We've got 50 who are ramping. That's a lot.
Beyond that, we of course, can hardly turn on the news or pick up a magazine without reading about AI and technology. We have doubled down on our investment there. We added a terrific new Chief Information Officer in 2025. We built out a senior team around him. We have a number of projects underway. We expect that those projects will pay dividends for us over the coming years. That's the next point. As you mentioned, and I mentioned in my prepared remarks, there are episodic items or items that are seasonal in nature, and those include things like the arrival of our interns and certain conferences and/or off-sites that happen to be held in that quarter.
We're hopeful that those are not going to be things that we're going to either see or see in the same magnitude over the next several quarters. We should get some help there as well. There's nothing really overly complicated. It's really just that simple. Multi-quarter, 13.5% for the first half. 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. To a lesser extent, to things that we hope will either be smaller or not present in some of the upcoming quarters. That's that. I think you asked about second half ramp on revenues as well. John, I don't know if you want to maybe share some thoughts on that and then I can chime in.
John Weinberg — Chairman and CEO, Evercore
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. We're very encouraged by the business and the outlook for our business. We expect continued strong performance through the year and into next year.
Tim LaLonde — CFO, Evercore
The only thing I might add to that is as you're thinking about comparative results, just recall that Q3 and Q4 last year were both record quarters.
James Yaro — Analyst, Goldman Sachs
Thanks for the question. 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 timeline as well.
John Weinberg — Chairman and CEO, Evercore
Absolutely. 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. Clearly there's 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 sponsor coverage, and our pitch rate is up substantially from where it was this time last year, and our win rate is also up. 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. We're seeing some real fruits to that labor. Our sponsor business seems to be in a very good place. We're actually very optimistic about where that is going. In terms of middle market, we've added several players in the middle markets. What we're seeing is that the dialogues are quite healthy. 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. All in all, those two sectors we see as a build.
Brennan Hawken — Analyst, BMO Capital Markets
Good morning. Thanks for taking my questions. Tim and John, you spoke to the strength in the business. Tim, you spoke to tough comps in the back half of 2025. 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 a 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 2025 being tough?
Tim LaLonde — CFO, Evercore
Hi, Brennan, and 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. Look, we stopped short of giving revenue guidance. 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. Particularly given uncertainties that always exist in the environment, going to stop short of being any more specific than that.
John Weinberg — Chairman and CEO, Evercore
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. 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. I think the business is healthy.
Neil Iliff — Analyst, Citizens Bank
Hey, guys. This is Neil Iliff 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's in an area that's been heavily affected, maybe you can discuss that as well as some of the other verticals. Maybe if you can give some insight into how spreads are tightening or whether you're seeing that or not.
John Weinberg — Chairman and CEO, Evercore
A what? What was the last part of that question?
Tim LaLonde — CFO, Evercore
Whether spreads are tightening.
John Weinberg — Chairman and CEO, Evercore
Let me start with software. Obviously, there was a pause in the market for software several months ago. 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 the sponsors who own software companies thinking about whether they sell them or not. That activity has picked up, and what we're seeing in our really software coverage business is that 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 is a source of really a great deal of M&A discussion.
Obviously, AI is driving strategic thought for lots of the big strategic, 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. On really all fronts, that's been a catalyst for continuing stronger dialogues. In addition, the AI-software relationship has really 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. 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 any number of places where those relationships which you pointed out will actually drive some investment banking activity.
Tim LaLonde — CFO, Evercore
Yeah. The only thing I'd add to that is we are seeing green shoots of improvements in that space on the M&A side.
Mike Brown — Analyst, UBS
Great. Thanks for taking my question. Maybe just a quick clarification on that last point, and then I'll go ahead and ask that question. Is that comment in, as you said at the end, is that kind of sponsors and strategics when you talked about the green shoots in the software space?
John Weinberg — Chairman and CEO, Evercore
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. On strategics, there is a very strong point of view that software is actually continuing to be powerful, that the blip that happened several months ago was an overreaction, and there is real opportunity both in buying and selling software companies going forward.
Mike Brown — Analyst, UBS
Okay, great. Thanks for that clarification. I did really want to ask you about Europe. With the Robey Warshaw acquisition, that seems like it's really been a good strategic home run for you guys, partnered together now. Maybe just discuss a little bit about what you're seeing in Europe, specifically on the M&A front. How is the 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? 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.
John Weinberg — Chairman and CEO, Evercore
Sure. We see real strength in our European businesses. As you've seen and you've heard from us, we continue to add to our capabilities and also our coverage of companies in Europe. You mentioned Robey Warshaw. That has gone extremely well. The integration has been smooth, and we are really 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 really pleased with that. As you know, we've also added capability throughout Europe. For example, you've seen That we've just added two very strong people in Frankfurt. We have also added a Stockholm office. We are building out our Milan operation and our Paris operation, which is a couple of years old, is actually doing extremely well.
Really across the board, joining Spain, we really have built out a business. What we've done is we've actually built in capability in terms of products that we can add. For example, whether it's debt advisory or whether it's restructuring, we've added to both of those also. On the restructuring side, which was a business which we were really, I think, under-invested in, we have actually put in some significant investments in European restructuring and liability management, and we're seeing real fruits to that also. We feel really enthusiastic and optimistic about the business that we've built. We feel really good about the people we've recruited, and we feel like it's coming together really nicely. That is a business that we do expect to really compete even more effectively.
We think we are going to build share and we really think that the ambitions we have for that business are well-founded.
Jim Mitchell — Analyst, Seaport Global Securities
Hey, good morning. Maybe just on ECM, a record quarter in the second quarter. 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 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.
John Weinberg — Chairman and CEO, Evercore
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 clearly going to determine some of that. We did get the benefit of a very good market, and as we look out, we see good backlog and really significant business in the next couple of quarters, as far as we can see. We feel really good about the people that we've added. We also feel really good about the way that we are approaching the ECM business. Evercore has really taken seriously how we market ECM and really how we engage ECM in how we call on the corporates that we are dealing with really throughout. I'd say that you can expect our ECM business is going to continue to grow. We have an aspiration to be a top 10 underwriter.
Personally, I'm very optimistic about that. I think we have some really high-quality people, both who are inside ECM and also people who are selling that product. I think we feel that it's actually realizing some real potential.
Ryan Kenny — Analyst, Morgan Stanley
Hi, good morning. All right.
John Weinberg — Chairman and CEO, Evercore
Good morning.
Ryan Kenny — Analyst, Morgan Stanley
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?
John Weinberg — Chairman and CEO, Evercore
Well, we do not think that the rates at this point are really going to determine merger activity or even activity within other parts of our business. We think that the market is being driven by other forces right now, and financability 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 of the sponsor portfolio companies. We really think that the market is actually pretty non-committal to really where rates are going to be. I think that it's not really going to impact this market.
In terms of you asking us how are we thinking about rate hikes, right now our projection in ISI is that it's going to be pretty neutral through the end of the year. I think that's the way I think we're approaching it and thinking about it. Generally, we think that where rates are not really going to drive the merger market, at least in the near term.
Alex Bond — Analyst, KBW
Hey, good morning, everyone. Thanks for taking the question. 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. From your remarks, 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. It'd 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. Thank you.
John Weinberg — Chairman and CEO, Evercore
Our PCA business is actually performing well, and we feel really good about the prospects going forward. As you know, we have a very large market share, and we really expect that we will be able to protect that market share. The activity level is very healthy right now, and we see that continuing through the end of the year. As we have discussions with them, there is a very strong inflow of business. They are seeing a lot, and it's really across the board. It's both CVs as well as LPs and GP business. We have some new products that we're also marketing, and that's all going well. Generally, that business is quite healthy. The second part of the question was on software. Software is a really important part of the business in terms of the way we run our business.
In terms of software opportunities, I think that those opportunities are consistent with really what we've seen in the past, which is software is an asset that is being considered on all different levels. As you know, CVs are an option in terms of how you monetize. There are many circumstances where the sponsor, owner of a set of software assets, and we're seeing this quite a number of times, where there's a real belief in that asset that the market may not be sharing. The CV may be a very good alternative to go to the next level and get some monetization in that asset. I think what we're seeing is that software is really continuing to be a part of the PCA business.
I think those dialogues are quite healthy around all the different aspects, and I think we're feeling like this is going to provide some real fuel for that business going forward.
Nathan Stein — Analyst, Deutsche Bank
Hey, good morning. 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? 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? Thanks.
Tim LaLonde — CFO, Evercore
Yeah, sure. That, of course, has multiple facets to it. When you think about it, the crux of the question was non-comp growth and what we expect from that and what it's attributable to. The way I would think about it is there's a baseline growth that will exist because we're a firm that's obviously grown quite substantially over the last three years, five years, seven years, 10 years, whatever timeframe you pick. There is obviously some correlation between headcount growth and non-comps. In the past, what we had talked about with people a little bit was to think about headcount growth, and so that's on the order of 10% recently, and then inflation. Then you've got certain elements that might appreciate at a cost faster than inflation.
John Weinberg — Chairman and CEO, Evercore
Let me pause on headcount for a second, because one of the things we've tried to do over the years, and I think have done a pretty good job of, is making sure we grow our revenues faster than we grow our headcount. Now, given the cyclicality of the industry, that might not be true in any single year, but across any meaningful number of years, whether it's one year, three years, seven years, 10 years, we've grown our revenues faster than we've grown our headcount, and that's important, and that's one of the things that helps give us leverage. That accounts for some of it. There are certain elements of non-comps that are going to grow faster than the cost of inflation. One of those is data or information. We're obviously living in the information age. Data is at a premium.
We see that all over the place, there's a little bit of pricing power there. That's one element of our cost that's increased a little faster. An element that's increased a little more slowly would be certain parts of travel. What COVID did, if there was perhaps one thing that was helpful that came out of it, was that it accelerated the transition to video conference calls. If you look at the number of trips, for instance, we're only just now, on an unadjusted basis, taking as many trips as we were taking pre-COVID to do our business. On a headcount-adjusted basis, we're actually still something around 30% lower per head. We're seeing some benefits there. Partially offsetting that, you've got things like oil prices are higher.
That translates to higher jet fuel costs, so flights are a little more expensive. Hotels are a little more expensive. We go through with each of these components, and some of them are headcount related, some inflation related, some travel to the beat of their own drummer. Then you've got technology. Right? We're at an inflection point in the technology curve, and what we see is technology is obviously accelerating at a rate that's faster than it has historically. Any management team worth its salt is doubling down there and making sure they take advantage of the opportunities that are available. Some element of the increase is investing there. As long as the business is growing, the absolute dollar amount of non-comps will then tend to grow. The point is, we'd like to grow revenues faster.
If you look at us over a sustained period of time, three, four, five, six, seven years, I think we've done a pretty good job of that. By the way, if you look at the question implicitly gets at the one of, is there operating leverage in the business? If you look at our first half results, what you would see is revenues up 56%, earnings up 77%. Okay? That's the definition of leverage. We're striving to achieve more of it in the long run. In the short run, there are some investments to be made as we build out our business.
Gabriel Angelini — Analyst, Bank of America
Hi. Good morning, and thank you for taking the question. I think the hiring backdrop has been quite competitive for some time now, and you even called out search and placement fees, 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? Does just the degree of competition on hiring make it more attractive to do whole business acquisitions at this point? Thank you.
John Weinberg — Chairman and CEO, Evercore
Thanks, Gabriel. We are not really in the business of doing big lift-outs. You've seen we've really only done a couple of situations in recruiting where we've done multiple people. We have the capacity to do it, and we have the appetite, but really this question is really much more about how we think about talent. What we really do is our production in terms of how many people we bring in is more an output than an input, meaning that we really are in the market looking for highly talented people, A-plus people, and we're continuing to do that. In fact, our pipeline is very healthy right now. You heard that we've brought in 11 new people this year, and we continue to be in the market and in several really important dialogues with some very talented people. We will continue to build those.
We're not really, though, looking at big lift-out type opportunities. There may be a couple where we have two or three people who we would bring in together. Really, it's much more a one by one. We've always done it one by one. We've always done it in a very custom approach, filling needs we have with A-plus people. Frankly, it really all starts with the quality of the person. We're going to keep that consistent.
Steven Chubak — Analyst, Wolfe Research
Hey, John. I have a bit of a more nuanced question on comp leverage. Just given historically, you've recruited much more actively from bulge bracket peers versus some of the independents. As we think about the cost of buying out deferred for senior talent at the bulges, the cost has gone up meaningfully just given the share price appreciation we've seen the last three years, whereas the deferred equity appreciation at some of your smaller independent peers has been 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.
John Weinberg — Chairman and CEO, Evercore
Steven, really, to be honest with you, we've never really considered focusing on the bulge bracket versus focusing on independents. We really have done it one by one. The way we do it is we look for the people who we've identified as highly talented, A-plus talent, who we think will fit culturally to the firm. Those are the people we focus on. Believe it or not, the way we recruit, I don't really see a real material difference between the people we take out of the bulge bracket versus the people we get from the independent side. Really, it's as much as anything, their business, the business they've constructed, and how they go about it.
I think if you're really trying to figure out how we're going to really proceed in terms of growing the business with the external hiring process, I think what you should assume is we're going to continue to look across the board. It's going to be really both bulge bracket and independents. We're going to be looking for the most highly talented people. We may have to pay for the most highly talented people, but I think we do it in a way where I think the firm really benefits. The ROI on the talent that we bring in when they come into our platform and they start to really work in the Evercore system. It's very good.
If we go back and we do this, we look at how do we do in terms of the people we've recruited, I think we feel really good about it, and that's why we continue to move forward and drive growth this way. Obviously, internal promotions are something that we care about, and we're spending a lot of time making sure that we are developing our programs to do it. I think you can assume that we're going to continue the process of really looking broadly at the market and hiring the most effective people who are going to drive our business the best.
James Yaro — Analyst, Goldman Sachs
Thank you. Taking a follow-up. I hope to just put a fine point on margins. I think if we look back from 2016 to 2022, your annual adjusted operating margins were in the rough range of 24.5%-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%-28.5%. That compares to 22.7% in the first half of this year. Tim, I was just hoping you might be able to comment a little bit on the operating margin more broadly from here and whether it could return to those historic levels or whether anything has changed structurally.
Tim LaLonde — CFO, Evercore
Yeah, sure. By the way, though, we probably have at least a slightly different perspective on the way one looks at the historical margins, and think about it being more in the kind of 24.5%-25% range because it really has to be looked across full cycle without exceptions. Taking that into mind, I think what we've seen is that we are coming off in 2023, what I would call probably the worst investment banking market in the last 15 years, going back to the financial crisis. We're coming back. The margins were tight. We've been improving them each year. I know people like to focus on comp ratios a lot, and that has been higher, but as I pointed out in one of my previous answers, the non-comp has been lower.
John Weinberg — Chairman and CEO, Evercore
We're probably ballpark 300 basis points lower than we were in the pre-COVID years, and that offsets some of the higher level of comp ratio. We've also talked a bit about investment, in my view, margins cannot be looked at in a vacuum. They have to be looked at hand in glove with growth. Okay? What I would point out on that front, is that we've just delivered a first half where the revenues are essentially the same as they were for the entire year in 2023. That if you go back a ways, I was looking at our revenues for a different exercise I was doing, and was reminded that a dozen years ago, our revenues were in the $800 million-$900 million range a dozen years ago. Okay? In the last four quarters, they're $4.7 billion.
When we think about our business and about creating value for our shareholders, what we're really doing is looking at maximizing value, which is a combination of growth and margins. On that measure, I would say I'm pretty happy with what we've accomplished these last several years.
Brennan Hawken — Analyst, BMO Capital Markets
Hi, thanks for taking the follow-up. Just a real granular question, Tim. You flagged one-timers in the non-comp here in the second quarter. Could you just quantify them, please?
Tim LaLonde — CFO, Evercore
I'll quantify some of it. Some of it gets down into levels of detail that are probably not appropriate for broad consumption. There was bad debt expense, which was somewhat significant. There are things like legal filing, audit types of fees, which are somewhat significant. We had search and placement costs where an unusual number of the commission type arrangements that we pay on those happened to fall in the second quarter. Then there's other seasonal things like conferences, offsite, and summer interns arriving. All of that adds up to a number that I would say hits into the double-digit millions if you sum them all up. Those differences, some of them we expect to either not be there or to be there in smaller quantities as we move into the next couple of quarters.
This quarter, you saw a pretty significant sequential increase in non-comps. I would not expect to see a sequential increase like that this upcoming quarter.
Source: Evercore Inc. earnings call transcript (2026-07-29). Management commentary and analyst Q&A are reproduced as delivered; speaker roles as stated on the call.

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