Earnings call transcript: PJT Partners Q3 2025 beats earnings expectations

PJT Partners Inc. reported strong financial results for the third quarter of 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $1.85 compared to the forecasted $1.40. The revenue also exceeded projections, reaching $447 million against the anticipated $394.68 million. Despite this positive performance, the stock showed no significant movement in pre-market trading.

Key Takeaways

• PJT Partners’ Q3 2025 revenue increased by 37% year-over-year.
• Adjusted EPS rose by 99% compared to the previous year.
• The company ended the quarter with $520 million in cash and cash equivalents.
• Strategic Advisory business reached record revenue levels.
• The stock price remained stable in pre-market trading despite earnings beat.

Company Performance

PJT Partners demonstrated robust financial health in Q3 2025, with a notable 37% increase in revenue year-over-year. The company’s adjusted pre-tax income surged by 86%, reflecting strong operational performance. This growth was fueled by the Strategic Advisory business, which achieved record revenue levels. Despite challenges in the primary fundraising market, PJT Partners maintained its competitive edge with a market-leading restructuring team and a strong strategic advisory mandate count.

Financial Highlights

• Revenue: $447 million, up 37% YoY
• Adjusted EPS: $1.85, up 99% YoY
• Adjusted Pre-tax Income: $94 million, up 86%
• Adjusted Pre-tax Margin: 21% (up from 15.5% last year)
• Effective Tax Rate: 15.5% for 2025

Earnings vs. Forecast

PJT Partners reported an EPS of $1.85, significantly surpassing the forecasted $1.40, resulting in a 32.14% earnings surprise. Revenue also exceeded expectations, coming in at $447 million versus the projected $394.68 million, marking a 13.26% surprise. This performance reflects a strong quarter for the company, continuing its trend of exceeding market expectations.

Market Reaction

Despite the positive earnings report, PJT Partners’ stock price remained unchanged in pre-market trading, holding steady at $162.42. This stability comes amid broader market trends where equity prices are near record highs, and volatility is low. The stock’s current price is situated between its 52-week high of $190.28 and low of $119.76.

Outlook & Guidance

Looking forward, PJT Partners remains optimistic about its growth prospects. The company expects its restructuring results to meet or exceed last year’s record, and its Strategic Advisory business is on track for another record year. The firm continues to invest in talent and geographic expansion, anticipating substantial alignment with last year’s revenue levels.

Executive Commentary

CEO Paul Taubman expressed confidence in the company’s trajectory, stating, "We continue to see tremendous opportunity ahead, and we remain determined to capitalize on our enormous potential." He emphasized the importance of hiring "difference makers" to drive positive financial results.

Risks and Challenges

• Challenges in the primary fundraising market could impact future revenue streams.
• Market volatility, although currently low, poses a potential risk if conditions change.
• The potential impact of macroeconomic factors, such as a government shutdown, could affect operations.
• Increased non-compensation expenses, up 5% in Q3, may pressure margins.
• Competitive pressures in the investment banking sector remain a constant challenge.

Q&A

During the earnings call, analysts focused on the potential impact of a government shutdown and the challenges in the primary fundraising market. Discussions also covered partner productivity and credit market dynamics, providing insights into PJT Partners’ strategic priorities and market positioning.

Full transcript - PJT Partners Inc (PJT) Q3 2025:

Earnings Call Moderator, PJT Partners: Good morning. Welcome to the PJT Partners’ third quarter and nine months 2025 earnings conference call. Joining the earnings conference call today is Paul Taubman, Chairman and Chief Executive Officer; Helen Meates, Chief Financial Officer. During the course of this conference call, management 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. These factors are described in the risk factors section contained in PJT Partners’ 2024 Form 10-K, which is available on PJT Partners’ website at pjtpartners.com. The company assumes no duty to update any forward-looking statements. Also, the presentation made today contains non-GAAP financial measures, which the company believes are meaningful in evaluating the company’s performance.

For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, please refer to the financial data contained within the press release the firm issued this morning, also available on the firm’s website. With that, I’ll turn the call over to Paul Taubman.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Good morning. Thank you all for joining us today. This morning, we reported record results. Revenue, adjusted pre-tax income, and adjusted EPS. All reaching record highs for both the three and nine-month periods. Third quarter revenue was $447 million, up 37%. Adjusted pre-tax income was $94 million, up 86%. And adjusted EPS was $1.85, up 99% from year-ago levels. For the nine months, revenues increased 16% to $1.18 billion. Adjusted pre-tax income increased 34%, and adjusted EPS increased 43% from year-ago levels. Since our last earnings call, we have seen further improvements in the macro environment. Equity prices are near record highs. Volatility across equities and credit near historic lows. Debt issuance is strong, and the IPO market has reopened. This favorable capital markets backdrop has been an important catalyst in the M&A recovery.

Greater clarity on regulatory outcomes, as well as increased CEO confidence, has further amplified deal-making momentum, with many companies revisiting their strategic wish list. That said, we still operate in a world fraught with risk. Continuing geopolitical uncertainty, a weakening labor market, stubbornly high interest rates, and tariff dislocations, coupled with concerns of an AI bubble, have the potential to derail this pickup in activity levels. While we remain optimistic about the near-to-intermediate operating environment, it is a tempered optimism when balanced against these risks. After Helen takes you through our financial results, I will review our business performance and outlook in greater detail. Helen.

Helen Meates, Chief Financial Officer, PJT Partners: Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the third quarter were $447 million, up 37% year-over-year. For the nine months ended September 30, total revenues were $1.179 billion, up 16% year-over-year. Revenue growth for the third quarter and first nine months was primarily driven by strategic advisory, which was up significantly for both periods. Restructuring revenues rose slightly in the third quarter and first nine months, while PJT Partners’ revenues were flat in the third quarter and down modestly for the first nine months. 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 67.5% of revenues for the first nine months of the year, compared to 69.5% for the same period last year.

This ratio represents our current best estimate for the full year 2025. Turning to adjusted non-compensation expense, total adjusted non-compensation expense was $51 million in the third quarter, up 5% year-over-year, and $153 million for the first nine months, up 10.5% year-over-year. As a percentage of revenues, 11.5% in the third quarter and 13% in the first nine months. The main drivers of the expense increase for the first nine months of the year were higher occupancy costs, which are up 19% year-over-year, reflecting the expansion of our New York and London offices, and higher travel-related expenses, which are up 25% year-over-year, primarily reflecting higher levels of business-related travel. Overall, for the full year, we continue to expect that our non-comp expense will grow at around 12%, a similar rate to our 2024 growth rate.

Turning to adjusted pre-tax income, we reported adjusted pre-tax income of $94 million in the third quarter and $230 million for the first nine months. Our adjusted pre-tax margin for the third quarter was 21%, compared with 15.5% for the same period last year, and 19.5% for the first nine months, compared with 16.9% for the same period last year. The provision for taxes, as with prior years we presented our results, is that all partnership units had been converted to shares and that all of our income was taxed at corporate tax rates. Our effective tax rate for the first nine months of 2025 was 15.5%, which now represents our current expectations for the full year. This rate is slightly below our previous full-year estimate of 16.5%. As a result, the effective tax rate for the third quarter was 14%.

The reduction in the full-year rate is primarily due to an updated estimate of our income allocation across state and foreign entities. Earnings per share are adjusted if converted earnings were $1.85 per share for the third quarter, up 99%, and $4.43 per share for the first nine months, up 43% from the same period last year. For the quarter, our weighted average share count was 43.8 million shares, down 2% versus a year ago. During the third quarter, we repurchased the equivalent of approximately 186,000 shares, primarily through exchanges. Our repurchases in the first nine months of the year totaled approximately 2.3 million shares. We are in receipt of exchange notices for an additional 115,000 partnership units, and subject to board approval, we intend to exchange these units for cash.

On the balance sheet, we ended the quarter with $520 million in cash, cash equivalents, and short-term investments, and $558 million in net working capital, and we have no funded debt outstanding. Finally, the board has approved a quarterly dividend of $0.25 per share. Back to Paul.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Thank you, Helen. Beginning with restructuring. Notwithstanding favorable economic and capital markets conditions, demand for liability management and restructuring activity remains high, even with a relatively benign credit environment. Our market-leading restructuring team continues to deliver strong performance, with third-quarter and year-to-date revenues at record levels. At the same time, certain corners of the economy are feeling the weight of relatively high interest rates, dislocations caused by higher tariffs, disruptions resulting from accelerating technological innovation, and changing consumer preferences. While these headwinds may not yet be broad-based, they are being felt in certain industries, including technology, media, healthcare, automotive, and consumer. For the current year, we expect our restructuring results to meet or exceed last year’s record results. Looking ahead, we expect our restructuring bankers to remain highly active as they continue to address liability management opportunities resulting from this concentrated stress. Turning to PJT Partners.

The primary fundraising environment continues to be challenged by historically low levels of capital return, coupled with a significant increase in the number of managers seeking to raise capital. This, in turn, has elongated fundraising timelines and pressured the quantum of capital raised. As GPs and LPs seek additional paths to liquidity, the same forces that have dampened primary fundraising activity have also served to catalyze continuation fund activity, and more capital has flowed into the space as investors have come to better appreciate the attractive return profiles associated with secondary products, creating a virtuous cycle. For PJT Partners, third-quarter revenues were comparable to a year ago, with strength in private capital solutions offsetting lower primary revenues. For the full year, we expect overall PJT Partners’ revenues substantially in line with last year’s record levels. Turning to strategic advisory.

Many of the pieces necessary for a meaningful rebound in M&A activity have fallen into place as the year has progressed. However, the recovery has been uneven. While we have seen a market increase in larger M&A transactions, we have not yet seen an increase in the overall number of transactions, even though the average deal size is up almost 40%. The aggregate number of transactions has actually declined. For the three and nine-month periods, our strategic advisory business delivered record revenues substantially above prior year levels. Our mandate count has increased meaningfully from a year ago and now stands at record levels. Overall, our strategic advisory business remains on track to deliver another record year, as the significant investments we have made over an extended period of time continue to bear fruit.

On the talent front, we continue to add talent as we invest in our strategic advisory franchise and the firm more broadly. As a result of our active recruiting efforts, our headcount overall has increased 7% from a year ago, and four partners joined our strategic advisory franchise in the third quarter. A decade ago, we set out to build a next-generation investment bank. We envisaged a firm where complex challenges would meet creative solutions, where top professionals would build their careers, and where success would be defined by excellence, impact, and integrity. Ten years in, our firm has grown substantially, and so too have our aspirations. Today’s mission is clear: to be the world’s best investment bank. As we celebrate our 10th anniversary, we would like to take this opportunity to acknowledge the dedication of our colleagues and the trust and support of our clients.

To our shareholders, thank you for your partnership. We continue to see tremendous opportunity ahead, and we remain determined to capitalize on our enormous potential. As before, we remain confident in our near, intermediate, and long-term growth prospects. With that, we will now take your questions.

Call Moderator, PJT Partners: Ladies and gentlemen, at this time, the floor is open for your questions. To ask a question, please press Star 1 on your telephone keypad. To get out of the queue, press Star 2. We’ll take a question from Devin Ryan of Citizens. Please go ahead. Your line is open.

Devin Ryan, Analyst, Citizens: Great. Good morning, Paul. Good morning, Helen. Congratulations on 10 years.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Thank you. Good to speak, Devin. Good morning.

Devin Ryan, Analyst, Citizens: Yeah, absolutely. I want to start, Paul, on the restructuring outlook and appreciate the framing that you gave. It still sounds like you expect a strong kind of backdrop there. We’ve been hearing somewhat mixed trends, I would say, through earnings. I just want to get a sense of how you’re thinking about PJT-specific relative to the broader macro backdrop for trends, because you guys have a leading practice and potentially outperform the industry in different environments. Do you still see the environment being very good, or is this more just about PJT maintaining or even gaining share as you’re kind of always going to be active in that business? Thank you.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: It’s always hard to deconstruct the market versus your position in the market precisely. We don’t see any real diminution in restructuring activity. We just don’t see it. We’re operating at elevated levels relative to historic levels. As I’ve pointed out repeatedly, for most of that history, we’re looking back at a baseline where the macroeconomic environment was far more constructive than it is today, and where money was nearly free and interest rates were nearly zero. We’re also looking at a baseline where the quantum of debt outstanding was meaningfully less. We’re also looking at a baseline where there was not as much disruption, innovation, and what we refer to as concentrated stress. In an overall accommodative environment, you can have a higher baseline of restructuring activity. We’ve talked about this repeatedly. We continue to see that.

Now, as it relates to our practice, the growth pillars beyond what the overall market conditions are, are continued penetration of sponsor clients, which will give us a broader addressable market. Second is continued growth outside the United States as we build out local presence around the globe. The third is, as we continue to build out our industry footprint, we have more relationships with which to leverage. I don’t spend a lot of time talking about or thinking about the exact interplay of the two, but as we look at our activity levels, they remain elevated, and we expect them to be elevated for the foreseeable future. I do think there’s a call option on a meaningful shock to the system because we’re not experiencing any of that today. I’m not predicting it, but none of this assumes any real deviation from the current environment.

Devin Ryan, Analyst, Citizens: Yeah. Got it. Okay. Appreciate all that color, Paul. And then just for my follow-up, when I look at partner productivity, I appreciate it’s kind of a crude number from the outside, but on a blended basis, it looks like you’re on track for a record year of productivity on my numbers, at least. And I appreciate some of that. Very strong restructuring, and then you have strategic advisory ramping pretty materially as those partners on the platform mature. I’d love to just get an update on how you think about the productivity potential of partners from here, particularly as strategic advisory still feels like the environment’s getting better, but then also the bankers on the platform are maturing as they’ve been doing.

I guess in that question, just love to hear about how you think about what is a reasonable number of kind of revenue per partner for strategic advisory when you’re hiring somebody externally. Are you targeting $15 million to $20 million, or is there a number? Just any more color you can give on how you’re thinking about the potential from here, given that you’re going to have what looks like a record year there. Thank you.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Yeah. I never think about a number. I never talk about a number. I don’t believe in a number. What I believe is if you hire difference makers, you’ll ultimately make a difference in your financial results to the positive. I really do. I think it’s so hard to come up with a number because you need to assume an environment. You need to assume how active that sector or that product is at that time. You need to look at what else has been built out at the firm, which creates either tailwind or headwind for those individuals. You need to ask yourself, are you looking in year two, year four, year six, year eight? We don’t believe in that. As far as the number, in a perverse way, I’d love nothing more than to take the number down.

I mean, if tomorrow we could find 10 incredible partners to add to the platform, on day one, by definition, our so-called partner productivity would go down because those same revenues would be divided by an extra 10 individuals. It’s a number that we don’t spend a lot of time with, but we have great confidence that what we’re building is highly additive and accretive to our overall financial results and to our brand and to the service of our clients. That’s how we think about it. I think it’s more of a relative construct. If you ask me, do I think we’ve hit maximum levels, I’d say no.

Not close because there are a lot of partially built systems in our franchise, whether it’s just beginning to put our toe in the water in a geography or just beginning the journey to build out an industry group, or we have that, but we don’t yet have full recognition, or we have the recognition from the clients, but it hasn’t yet translated into revenues. I think we feel very good about the direction of travel, but I don’t spend a lot of time thinking about it as a number.

Devin Ryan, Analyst, Citizens: Got it. Okay, appreciate the response there, Paul, and look forward to catching up soon.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Absolutely. Thanks for your questions.

Call Moderator, PJT Partners: We’ll take a question from James Yarrow of Goldman Sachs. Your line is open. Please go ahead.

James Yarrow, Analyst, Goldman Sachs: Good morning, and thanks for taking the questions. Paul, I’d love to just get your perspective on the impact of the government shutdown on the business. Do you expect this to have an impact on the fourth quarter? More importantly, how are you thinking about the impact going forward? Is there anything beyond the temporary impact?

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Look, I think it has real implications to a lot of individuals in this country who are suffering because of the shutdown. I do not think that it really affects our business in a meaningful way. It creates some complexities and complications and maybe some timing issues, but I think those pale in comparison to other implications. What I worry about more is, ultimately, what does this do to the broader macroeconomic environment in the country, which is really a function of how long does this shutdown continue, which workers are not paid for how long, what resolution do we end up with, and what are those implications? I think it is the macro implications that matter more. The reality is no one has answers to that, so we are all watching and waiting.

I think that is the bigger question: what, if anything, does this do to overall economic output and consumer confidence and business confidence?

James Yarrow, Analyst, Goldman Sachs: That’s super clear. Thanks. Just maybe turning to the primary fundraising business, I’d love to just get your perspective on the ability for that to continue to improve. Obviously, it was down for a couple of years there, and you’ve seen a nice bounce back there over the past few quarters. Is this sustainable, and how are you thinking about the outlook for that business?

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: There is good news, bad news, and in fact, the good news. The good news is it’s getting better. The bad news is, as it gets better, everyone is going to want to come to tap the market because they’ve been on the sidelines, so that’s going to make it a crowded trade. The good news from the bad news is, in a crowded market, they’re going to want the best fundraising team, and that’s going to play to our strengths. I think overall, it’s positive, but it’s like everything else. It’s never 100% positive. There are some puts and takes there.

James Yarrow, Analyst, Goldman Sachs: Thanks a lot for the color.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Sure.

Call Moderator, PJT Partners: We’ll take our next question from Brennen Hawkin of Bank of Montreal. Your line is open.

Brennen Hawkin, Analyst, Bank of Montreal: Good morning, Paul. Good morning, Helen. Thanks for taking my question. I was hoping that you could—I know, Paul, I heard you sort of loud and clear that the 67.5 is your expectation for the full year. Taking a step back, what’s the best way we should be thinking about operating leverage, right, and the path for pre-tax margin as you continue to see this strong revenue growth, as you see the—is the investments that you’ve made in Strategic Advisory begin to bear fruit? How should we be thinking about that either into year-end and then, of course, into the coming years? Thanks.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Okay. I think into year-end, we’ve given you our best estimate for this year. You talked about operating leverage, which I appreciate the question because, to me, operating leverage is what’s the pre-tax margin? Because ultimately, that’s what drives shareholder value. If you look at our operating margin for this year and you look at it in the historical context of where we’ve operated, I suspect that if you X out 2020 and 2021 when we lived in this surreal world where there was no travel, there was no entertainment, there was no discretionary spend, and margins were overly inflated, I think our margins this year are going to be at the high end of anything we’ve produced in our 10-year journey as a public company. We are quite proud of that. We are focused on it.

We don’t like to focus on any one individual component of that because, A, there’s a lot of interrelationship between all of these line items, and B, you’re trying not to manage the firm for the here and now. You’re trying to manage it for the long term. If you’re asking me, do we think that there’s further margin improvement along the journey? I think the answer is yes. I just don’t want to lose sight of the fact that while we may be running with comp to revenue margins that are higher than our historical levels have been, we also have run this firm at, I think, the lowest non-comp to revenue margins that we’ve had as a firm. If you take all of that together, the overall output is quite attractive. In answer to your question, there’s more upside from here, and we’re going to get at it.

Exactly how and when, I don’t know. When I look at it over 10 years, this is going to be, exposed to two aberrational years, I think, our best operating margin year in a decade.

Brennen Hawkin, Analyst, Bank of Montreal: That’s great. When we think about the operating margin improvement that you guys are likely to generate here in 2025, is that a good way to be thinking about a path forward? You never want to anchor overly on one particular year, obviously, because things will move around. Is that a decent way to be thinking about it going forward, or are there other factors? What other factors should we consider? Thanks.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: I think as a general matter, we believe in operating leverage in the business. Let’s just start there. We also believe in disciplined cost, but not an obsession with cost at the expense of long-term value-enhancing growth. That is the mix. Since we continue to believe that we should be able to grow our top line faster than our expenses, we think that there is more operating margin to be had. In any given quarter, any given year, you are buffeted by a lot of very specific things, which makes it very difficult to manage to a number in the short term, which is why I like to sort of step back a little bit.

What I just suggested is, if you look back at our journey as a public company over 10 years and you take out the two fantasy years where it just was not a normalized world because no one was traveling, no one was entertaining, there were no conferences, there was no travel expense, there was no entertaining expense, and you just strip those out, we are sitting here today saying we are still seeing the fruits of our investment, and we are going to post, on a relative basis, our best or near best operating margin. That, to me, is just a proof point that, A, there is operating leverage in the business, and B, we can get at that operating leverage.

Brennen Hawkin, Analyst, Bank of Montreal: Thanks for taking my questions, Paul.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Absolutely. Thank you.

Call Moderator, PJT Partners: We’ll take a question from Brendan O’Brien of Wolfe Research. Your line is open. Please go ahead.

Brendan O’Brien, Analyst, Wolfe Research: Good morning, Paul. Thank you for taking my questions. To start, I just wanted to touch on a dynamic you flagged, which is the divergence of deal value versus deal count, which is something we’ve been keeping an eye on ourselves. The drivers of the increase in the larger activity is apparent around DREG and things of that nature. I just wanted to get a sense as to what you think is behind the lack of breadth in activity so far and what could maybe drive an improvement in that dynamic over the next coming year.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Look, I think some of this is. You have to really deconstruct the market. I’ll just give you two. I don’t want to turn this into a treatise. I’ll give you two thoughts. Number one, we clearly are dealing in a more favorable regulatory environment. Where’s that going to create more momentum? It’s going to be in the larger transactions. If you’re dealing with sub-billion-dollar deals or $1 billion-$5 billion sizes and everything, it’s probably a pretty good correlation that that’s not where there’s regulatory complexity. It should be no surprise that as you’re dealing with a more pro-growth, pro-business administration, you would see more of a skew to the high end. That gets picked up in dollar values, doesn’t get picked up in number of transactions as much. The second would be the velocity of capital with sponsors.

I continue to think that we haven’t really gotten the reset with sponsor activity. We will. We hope. When we get that, you’ll start to see that reflected in the number of transactions and in transaction count. I think those would be the two that I would highlight.

Brendan O’Brien, Analyst, Wolfe Research: That’s helpful, Collar. For my follow-up, I just wanted to unpack your commentary on the Park Hill business a bit. You noted in your prepared remarks that Park Hill revenues were down year-on-year so far this year and PCS revenues were up, but the placement line was also up. I just wanted to, if you could just unpack that piece a bit more, whether there’s some non-Park Hill fees in that placement line. Also, last quarter, you noted that you expect a significant acceleration in PCS fees in the second half. Based on the commentary, it does not seem like that came through in three Qs. I just wanted to get an update here.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Let me just take the latter part. I think it did. And just to recall, those get booked in advisory.

Brendan O’Brien, Analyst, Wolfe Research: Yep.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Just to be clear, what we said is exactly what happened. That strength is counted as advisory as distinct from placement in most instances, and that’s reflected in our financials. On the former, I’d turn it back to you.

Unidentified Speaker, PJT Partners: Yeah. And then on the, just a reminder that the placement line includes Park Hill placement, but it also includes any corporate placement. So we did have some placement fees that were outside of Park Hill.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Which is just another—I think all you’re doing is you’re putting a highlight on the fact that I think we maybe need to transition away from these advisory placement designations because I’m not sure it helps give anybody any real clarity on the business. We don’t spend a lot of time apportioning it one way or the other. At the end of the day, they’re advisory with a capital A, revenues, because they all relate to intellectual capital and intellectual advice. I appreciate your question.

Brendan O’Brien, Analyst, Wolfe Research: Thanks for the color, guys.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Thank you.

Call Moderator, PJT Partners: We’ll take a question from Alex Bond of KBW. Your line is open.

Alex Bond, Analyst, KBW: Hey, good morning, everyone. Just wondering if there’s anything that stood out from you in your recent dialogues with clients in regard to the overall credit backdrop. Curious how you’re thinking about this, probably given your obviously strong presence in the restructuring market, the fact that private credit remains in the headlines, and we’ve had a couple of high-profile bankruptcies here recently. Any color you can add here would be great. Thanks.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Yeah. Look, I’ll just make some general observations. One is, when you see spreads tighten as much, I’m not sure that credit’s been appropriately priced. I think that’s maybe more the issue. I suspect that over time, you’ll probably see sort of more normalized spreads. As it relates to these situations, unfortunately, malfeasance is a risk factor, and it occurs in bull markets. It occurs in bad markets. I’m not yet seeing evidence that this is widespread. When you’re putting out an enormous quantum of capital, it does put pressure on diligence, diligence standards. If you’re dealing with individuals or entities that are not forthright and are engaged in improper activity, you’re not going to catch all of it, which is why I just come back to some of this may not have been fully reflected in just how credit overall has been priced.

What we’re much more focused on is the fact that you can’t have a world of enormous technological dislocation, all this innovation, changes in market sizes, customer behaviors, demand, and not have losers alongside winners. Everyone can’t be a winner. As we’re creating all of these new economy technology companies and new ways for efficiency, there are going to be companies left behind. I suspect that if you just take a slightly longer-term lens, the number of companies that are going to need to address their balance sheets is probably more likely to grow than to shrink. It may not happen immediately, but I think there’s a longer-term trend at play here.

Alex Bond, Analyst, KBW: Got it. That makes sense. Maybe for my follow-up, I suppose just trying to understand to what degree maybe the stronger restructuring activity has been a benefit to the comp ratio in recent periods. The headcount here is obviously a little bit lower than the Strategic Advisory business. I guess just in a scenario where maybe the restructuring activity does slow a bit, is there anything that would lead you to believe that there might be less comp leverage just given the smaller headcount there? Maybe if there is anything else we should be considering in that regard. Thank you.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Look, obviously, if there are big dislocations to our revenue, good or not, that will affect because there’s a roll-up of all of the businesses. If we continue to have steady growth or if we’re going to have a reasonable match between headcount growth and revenue, then you’re just going to see a steady decline in the comp ratio. If you see a disconnect between those, as we saw in 2023, where you have the overall strategic advisory market meaningfully down, at the same time you’re adding meaningful heads, you’re going to see real pressure to the comp line. It is like anything else. We see a baseline direction of travel, which is to get our comp ratio lower. If there is a shock to the system in one place, good or bad, that could either accelerate or retard the improvement.

That is why we never want to lock in precisely to a number. We’re much more comfortable talking about the direction of travel and what factors would cause that to no longer be operative.

Alex Bond, Analyst, KBW: Got it. Makes sense. Thank you, Paul.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Thank you.

Call Moderator, PJT Partners: We have a follow-up question from James Yarrow of Goldman Sachs. Your line is open. Please go ahead.

Alex Bond, Analyst, KBW: Thanks for taking the follow-up. I just wanted to ask a nitty-gritty one. Any, I guess, pull forward in the quarter that we should be aware of?

Unidentified Speaker, PJT Partners: It was relatively modest. It was $8 million this quarter. Last year, it was $6 million, so pretty similar.

Alex Bond, Analyst, KBW: Thanks so much.

Paul Taubman, Chairman and Chief Executive Officer, PJT Partners: Thank you. That concludes our question and answer period. I would now like to turn the call back over to Mr. Taubman for closing remarks.

Earnings Call Moderator, PJT Partners: We thank everyone for their interest and for participating in this morning’s earnings report, and we look forward to speaking with all of you in the new year when we report full year results. Thank you and have a good day.

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