Executive Summary / Key Takeaways

• PJT Partners is strategically positioned as a premier, advisory-focused investment bank, leveraging its diversified service mix and deep talent base to navigate volatile markets and capture market share.
• Despite a challenging macroeconomic backdrop characterized by subdued M&A and fragile confidence, the firm achieved record full-year 2024 revenues and profitability, demonstrating the strength of its franchise and the benefits of sustained investment.
• The outlook for 2025 remains confident and "substantially unchanged," anticipating strong growth in Strategic Advisory (weighted to H2), continued elevated activity in Restructuring, and secular growth in Private Capital Solutions, underpinning expectations for meaningful compensation leverage.
• PJT is actively managing its capital structure through share repurchases and maintaining a strong balance sheet with no funded debt, while investing in talent and technology infrastructure for long-term growth.
• Key risks include the persistence of macro uncertainties, geopolitical volatility, regulatory hurdles, and the cyclical nature of capital markets, which could delay the realization of pipeline benefits and impact transaction volumes.

A Differentiated Foundation in Global Advisory

PJT Partners stands as a testament to focused expertise in the complex world of financial advisory. Spun off from Blackstone (BLK) in 2015, the firm was intentionally built as an independent, advisory-centric investment bank. This origin story is crucial, highlighting a deliberate strategy to cultivate a culture of independent advice and high-touch client service, distinct from larger, more diversified financial institutions. Over the past decade, PJT has pursued a disciplined investment strategy, prioritizing the recruitment and development of top-tier talent, expanding its industry and geographic reach, and enhancing its service capabilities. This approach has resulted in a significant increase in its partner count and a more robust global footprint, positioning the firm to capitalize on opportunities across market cycles.

The competitive landscape for PJT is dynamic, primarily comprising other elite boutique and mid-tier investment banks such as Moelis & Company (MC), Evercore Inc. (EVR), and Lazard Ltd. (LAZ). While larger universal banks also compete for mandates, PJT's focus allows it to offer specialized, conflict-free advice. In M&A advisory, firms like Evercore often exhibit higher revenue growth rates and scale, benefiting from a broader institutional approach. Moelis competes directly across M&A and restructuring, demonstrating strong recent revenue growth and solid profitability. Lazard, with its dual focus on advisory and asset management, presents a steady competitor, particularly in global M&A. PJT differentiates itself through its deep expertise in complex restructuring, where its team is consistently ranked number one globally and in the U.S., and its unique network stemming from its Blackstone heritage, which provides a distinct advantage in private equity relationships, particularly benefiting its Park Hill business.

PJT's operational backbone relies on robust technology and data infrastructure. While not possessing a unique, proprietary "technology" in the manufacturing sense, the firm invests in communications and information services, including market data and technology infrastructure, to support its advisory and placement activities. These investments are critical for maintaining efficiency, accessing market intelligence, and facilitating deal execution. Compared to peers like Evercore, PJT's investment in digital tools may lag, potentially contributing to longer deal processing times in certain areas. However, the firm's strategic focus remains on leveraging human intellectual capital and relationships, with technology serving as a vital enabler rather than the primary differentiator. Continued investment in this area is necessary to maintain competitive operational efficiency and support growth.

Performance Reflecting Strategic Depth

PJT's recent financial performance underscores the effectiveness of its strategy and the resilience of its diversified business model in a challenging environment. Full-year 2024 marked a significant milestone, delivering record revenues of $1.49 billion, a substantial 29% increase year-over-year. This record performance was broad-based, with all three core businesses—Strategic Advisory, Restructuring, and PJT Park Hill—achieving record revenues. Adjusted pre-tax income surged 52% to $278 million, and adjusted EPS climbed 54% to $5.02, highlighting significant operating leverage captured during the year.

Looking at the most recent period, the first quarter of 2025, total revenues were $324.5 million, nearly matching the record levels of Q1 2024 despite a shift in the operating environment. Advisory Fees saw a modest decrease, primarily due to lower restructuring and private capital solutions revenues, which were largely offset by an increase in strategic advisory activity. Placement Fees, however, increased, driven by higher fund placement revenues. Expenses saw a slight decrease overall, mainly due to a lower compensation accrual rate, partially offset by increases in non-compensation expenses like travel and occupancy, reflecting increased business activity and office expansion. The effective tax rate in Q1 2025 saw a significant decrease, benefiting from the delivery of vested shares.

The firm's liquidity position remains strong, although cash and cash equivalents decreased in Q1 2025 to $194.3 million from $483.9 million at the end of 2024, primarily due to significant compensation payments and share repurchases. Total cash, cash equivalents, and short-term investments stood at $226.8 million at March 31, 2025. Accounts Receivable increased to $338.6 million, including long-term placement fee receivables. The company maintains a $100 million revolving credit facility, which was undrawn as of March 31, 2025, and has no funded debt outstanding, providing financial flexibility.

PJT is committed to returning capital to shareholders, evidenced by its $500 million share repurchase program, under which it repurchased $127.1 million of stock in Q1 2025, committing a record dollar amount to buybacks during the quarter. The firm also intends to exchange partnership units for cash, further utilizing its liquidity.

Outlook and Strategic Trajectory

Despite acknowledging increased uncertainty and volatility in the current macroeconomic and geopolitical landscape, management's full-year 2025 outlook remains "substantially unchanged" from prior expectations. This confidence is rooted in the firm's robust pipeline, diversified business mix, and the anticipated benefits of its multi-year investment cycle.

For Strategic Advisory, the expectation is for revenues to be "up strongly" in 2025 compared to 2024, with the majority of this increase projected for the second half of the year. This is predicated on a continued normalization of global M&A activity, supported by a record mandate count and a building backlog of announced transactions. Management points to potential catalysts such as central banks cutting rates, more open capital markets, and post-election clarity as drivers for increased transaction velocity, particularly among private equity sponsors who are showing increased interest in continuation vehicles and take-private opportunities.

The Restructuring business is expected to have another active year in 2025, closely tracking 2024's record results. Management maintains high conviction in a multi-year cycle of elevated liability management activity, driven by the sheer quantum of outstanding debt, technological disruption impacting business models regardless of the macro environment, and the need for creative balance sheet solutions in a less forgiving rate environment. While Q1 2025 saw a modest decrease in restructuring revenues, the underlying trend of elevated activity persists, with potential for further upside if economic stresses intensify.

PJT Park Hill is anticipated to continue benefiting from secular growth in Private Capital Solutions, particularly in LP stake sales and GP-led continuation vehicles, which are seeing unprecedented demand for liquidity. While the macro backdrop for traditional primary fundraising is expected to remain challenging, the firm's differentiated approach and "flight to quality" dynamics in a difficult environment are expected to support performance.

Financially, the firm is guiding to a full-year 2025 adjusted compensation ratio of 67.5%, a decrease from 2024 levels, signaling the beginning of "meaningful comp leverage." This leverage is expected as Strategic Advisory revenues are highly confident to grow meaningfully in excess of headcount growth in 2025, a direct result of the multi-year investment in talent now reaching critical mass and productivity. Non-compensation expenses are expected to grow around 12%, reflecting continued strategic investments in infrastructure and increased business activity. The effective tax rate is projected to be around 16.5%.

Risks and Considerations

While the outlook is positive, several risks could impact the realization of PJT's growth potential. The persistence of macroeconomic uncertainties, including inflation, elevated interest rates (particularly on the long end), and fragile business confidence, could delay M&A transaction closings and temper the pace of recovery. Geopolitical volatility and changes in global trade policies, such as tariff uncertainty, can freeze corporate decision-making regarding strategic transactions and supply chain reorientation.

Regulatory review of M&A transactions, particularly larger and consolidating deals, remains a significant hurdle, potentially elongating timelines and increasing execution risk. The cyclical nature of capital markets inherently exposes PJT's revenue to fluctuations in transaction volumes, although its diversified mix across advisory and placement, and the counter-cyclical nature of restructuring, provide some mitigation. The challenging environment for primary fundraising and the slowdown in capital realizations in the alternative space could continue to pressure the Park Hill business. Furthermore, the recent emergence of defaults in the direct lending market, while potentially creating restructuring opportunities, also signals broader credit stress that could impact the overall deal environment.

Conclusion

PJT Partners has successfully navigated a challenging market environment, delivering record performance in 2024 and entering 2025 with a confident outlook. The firm's strategic focus on building a premier, advisory-focused franchise through disciplined investment in talent and capabilities is yielding tangible results, evidenced by its growing market share, record mandate pipeline, and anticipated compensation leverage. While macroeconomic and geopolitical uncertainties persist, PJT's diversified business mix, particularly its leading restructuring practice and growing private capital solutions business, provides resilience. The expected acceleration in Strategic Advisory revenues in the latter half of 2025, coupled with ongoing secular trends in private capital, positions the firm for continued growth. Investors should monitor the pace of M&A market normalization, the trajectory of restructuring activity, and the firm's ability to execute on its robust pipeline, all of which are critical to realizing the full potential of this strategically built fortress in the global advisory landscape.