MOELIS & CO, 10-Q filed on 4/28/2022
Quarterly Report
v3.22.1
Document and Entity Information - shares
 3 Months Ended
Mar. 31, 2022
Apr. 14, 2022
Entity Registrant Name Moelis & Co  
Entity Central Index Key 0001596967  
Document Type 10-Q  
Document Period End Date Mar. 31, 2022  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Interactive Data Current Yes  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q1  
Trading Symbol MC  
Entity File Number 001-36418  
Entity Tax Identification Number 46-4500216  
Entity Address, Address Line One 399 Park Avenue  
Entity Address, Address Line Two 4th Floor  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10022  
City Area Code 212  
Local Phone Number 883-3800  
Title of 12(b) Security Class A Common Stock  
Security Exchange Name NYSE  
Entity Incorporation, State or Country Code DE  
Document Quarterly Report true  
Document Transition Report false  
Class A Common Stock    
Entity Common Stock, Shares Outstanding   64,827,108
Class B Common Stock    
Entity Common Stock, Shares Outstanding   4,685,898
v3.22.1
Condensed Consolidated Statements of Financial Condition - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Assets    
Cash and cash equivalents $ 130,420 $ 520,213
Restricted cash 635 801
Receivables:    
Accounts receivable, net of allowance for credit losses of $2,281 and $2,823 as of March 31, 2022 and December 31, 2021, respectively 39,273 41,870
Accrued and other receivables 15,372 27,698
Total receivables 54,645 69,568
Deferred compensation 22,346 11,499
Investments 228,346 263,341
Right-of-use assets 160,137 164,083
Equipment and leasehold improvements, net 59,583 59,163
Deferred tax assets 422,636 448,123
Prepaid expenses and other assets 18,531 18,890
Total assets 1,097,279 1,555,681
Liabilities and Equity    
Compensation payable 99,953 503,707
Accounts payable, accrued expenses and other liabilities 52,316 69,883
Amount due pursuant to tax receivable agreement 307,115 307,363
Deferred revenue 5,573 4,539
Lease liabilities 187,407 191,890
Total liabilities 652,364 1,077,382
Commitments and Contingencies (See Note 11)
Treasury stock, at cost; 7,894,635 and 5,873,180 shares as of March 31, 2022 and December 31, 2021, respectively (354,249) (256,320)
Additional paid-in-capital 1,306,290 1,280,498
Retained earnings (accumulated deficit) (514,502) (535,282)
Accumulated other comprehensive income (loss) (1,247) (560)
Total Moelis & Company equity 437,057 489,068
Noncontrolling interests 7,858 (10,769)
Total equity 444,915 478,299
Total liabilities and equity 1,097,279 1,555,681
Class A Common Stock    
Liabilities and Equity    
Common stock, par value $0.01 per share 718 685
Class B Common Stock    
Liabilities and Equity    
Common stock, par value $0.01 per share $ 47 $ 47
v3.22.1
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Accounts receivable, allowance for credit losses $ 2,281 $ 2,823
Treasury stock, shares 7,894,635 5,873,180
Class A Common Stock    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 71,824,917 68,518,779
Common stock, shares outstanding 63,930,282 62,645,599
Treasury stock, shares 7,894,635 5,873,180
Class B Common Stock    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 4,685,898 4,686,344
Common stock, shares outstanding 4,685,898 4,686,344
v3.22.1
Condensed Consolidated Statements of Operations - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Revenues $ 302,088 $ 263,866
Expenses    
Compensation and benefits 176,637 156,499
Occupancy 5,810 7,695
Professional fees 4,315 5,999
Communication, technology and information services 8,779 8,659
Travel and related expenses 7,643 1,610
Depreciation and amortization 2,039 1,449
Other expenses 7,438 9,512
Total expenses 212,661 191,423
Operating income (loss) 89,427 72,443
Other income and (expenses) (2,235) 3,179
Income (loss) before income taxes 87,192 75,622
Provision (benefit) for income taxes 13,598 (176)
Net income (loss) 73,594 75,798
Net income (loss) attributable to noncontrolling interests 7,879 9,269
Net income (loss) attributable to Moelis & Company 65,715 66,529
Class A Common Stock    
Expenses    
Net income (loss) attributable to Moelis & Company $ 65,715 $ 66,529
Weighted-average shares of Class A common stock outstanding    
Basic (in shares) 64,824,347 60,932,966
Diluted (in shares) 70,000,473 66,360,217
Net income (loss) per share attributable to holders of shares of Class A common stock    
Basic (in dollars per share) $ 1.01 $ 1.09
Diluted (in dollars per share) $ 0.94 $ 1.00
v3.22.1
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 73,594 $ 75,798
Foreign currency translation adjustment, net of tax (764) (744)
Other comprehensive income (loss) (764) (744)
Comprehensive income (loss) 72,830 75,054
Less: Comprehensive income (loss) attributable to noncontrolling interests 7,802 9,180
Comprehensive income (loss) attributable to Moelis & Company $ 65,028 $ 65,874
v3.22.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Cash flows from operating activities    
Net income (loss) $ 73,594 $ 75,798
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Bad debt expense (benefit) (288) 3,149
Depreciation and amortization 2,039 1,449
Equity-based compensation 37,067 50,963
Deferred tax provision 25,973 21,245
Other 3,192 (2,615)
Changes in assets and liabilities:    
Accounts receivable 2,643 14,401
Accrued and other receivables 11,957 (32,589)
Prepaid expenses and other assets 463 (587)
Deferred compensation (10,957) (3,660)
Compensation payable (403,408) (160,178)
Accounts payable, accrued expenses and other liabilities (17,798) 1,969
Deferred revenue 1,040 5,409
Dividends received 2,029 2,279
Net cash provided by (used in) operating activities (272,454) (22,967)
Cash flows from investing activities    
Purchases of investments (117,432) (78,723)
Proceeds from sales of investments 147,250 173,046
Note payments received from (issued to) employees   70
Purchases of equipment and leasehold improvements (2,458) (3,539)
Net cash provided by (used in) investing activities 27,360 90,854
Cash flows from financing activities    
Payments for dividends and tax distributions (45,647) (39,685)
Payments for treasury stock purchases (97,929) (74,211)
Payments under tax receivable agreement (248)  
Other proceeds 100  
Net cash provided by (used in) financing activities (143,724) (113,896)
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash (1,141) (792)
Net increase (decrease) in cash, cash equivalents, and restricted cash (389,959) (46,801)
Cash, cash equivalents, and restricted cash, beginning of period 521,014 203,284
Cash, cash equivalents, and restricted cash, end of period 131,055 156,483
Cash paid during the period for:    
Income taxes, net 7,165 1,913
Other non-cash activity    
Class A Partnership Units or other equity converted into Class A Common Stock 150 3,903
'Dividends in kind $ 5,572 5,131
Forfeiture of fully-vested Group LP units or other equity units   $ 25
v3.22.1
Condensed Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Total
Common Stock
Class A Common Stock
Common Stock
Class B Common Stock
Treasury Stock
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interests
Balance at beginning of the period at Dec. 31, 2020 $ 444,473 $ 620 $ 59 $ (152,170) $ 1,052,322 $ (420,682) $ (201) $ (35,475)
Balance at beginning of the period (in shares) at Dec. 31, 2020   61,986,927 5,948,750 (3,959,083)        
Changes in Equity                
Net income (loss) 75,798         66,529   9,269
Equity-based compensation 50,963 $ 36     41,508     9,419
Equity-based compensation (in shares)   3,612,341            
Other comprehensive income (loss) (744)           (655) (89)
Dividends declared and tax distributions (39,685)       5,131 (39,013)   (5,803)
Treasury Stock Purchases $ (74,211)     $ (74,211)        
Treasury Stock Purchases (in shares) (1,363,934)     (1,363,934)        
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges $ 3,903 $ 10 $ (10)   2,161     1,742
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges (in shares)   1,049,293 (1,049,293)          
Equity-based payments to non-employees 108       108      
Other (25)       (25)      
Balance at end of the period at Mar. 31, 2021 460,580 $ 666 $ 49 $ (226,381) 1,101,205 (393,166) (856) (20,937)
Balance at end of the period (in shares) at Mar. 31, 2021   66,648,561 4,899,457 (5,323,017)        
Balance at beginning of the period at Dec. 31, 2021 478,299 $ 685 $ 47 $ (256,320) 1,280,498 (535,282) (560) (10,769)
Balance at beginning of the period (in shares) at Dec. 31, 2021   68,518,779 4,686,344 (5,873,180)        
Changes in Equity                
Net income (loss) 73,594         65,715   7,879
Equity-based compensation 37,067 $ 33     20,949     16,085
Equity-based compensation (in shares)   3,305,692            
Other comprehensive income (loss) (764)           (687) (77)
Dividends declared and tax distributions (45,647)       5,572 (44,935)   (6,284)
Treasury Stock Purchases $ (97,929)     $ (97,929)        
Treasury Stock Purchases (in shares) (2,021,455)     (2,021,455)        
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges $ 150       (774)     924
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges (in shares)   446 (446)          
Equity-based payments to non-employees 45       45      
Other 100             100
Balance at end of the period at Mar. 31, 2022 $ 444,915 $ 718 $ 47 $ (354,249) $ 1,306,290 $ (514,502) $ (1,247) $ 7,858
Balance at end of the period (in shares) at Mar. 31, 2022   71,824,917 4,685,898 (7,894,635)        
v3.22.1
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Class A Common Stock    
Dividends declared per share of Class A common stock $ 0.60 $ 0.55
v3.22.1
Organization and Basis of Presentation
 3 Months Ended
Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation
1.
ORGANIZATION AND BASIS OF PRESENTATION

Moelis & Company and its consolidated subsidiaries (the “Company,” “we,” “our,” or “us”) is a leading global investment bank, incorporated in Delaware. Prior to the Company’s Initial Public Offering (“IPO”), the business operated as a Delaware limited partnership that commenced operations during 2007. Following the IPO, the operations are owned by Moelis & Company Group LP (“Group LP”), a U.S. Delaware limited partnership, and Group LP is controlled by Moelis & Company. Moelis & Company’s shareholders are entitled to receive a portion of Group LP’s economics through their direct ownership interests in shares of Class A common stock of Moelis & Company. The noncontrolling interest owners of Group LP (not Moelis & Company) receive economics of the operations primarily through their ownership interests in Group LP partnership units.

The Company’s activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, financial sponsors and governments, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters.

Basis of Presentation —The condensed consolidated financial statements of Moelis & Company include its partnership interests in Group LP, its equity interest in the sole general partner of Group LP, Moelis & Company Group GP LLC (“Group GP”), and its interests in its subsidiaries. Moelis & Company will operate and control all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP. The Company operates through the following subsidiaries:

•
Moelis & Company LLC (“U.S. Broker Dealer”), a Delaware limited liability company, a registered broker-dealer with the U.S. Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
•
Moelis & Company Israel Ltd., a limited company incorporated in Israel.

 

•
Moelis & Company International Holdings LLC (“Moelis International”), a Delaware limited liability company, owns the following entities and investments, directly or indirectly:

 

•
Moelis & Company UK LLP (“Moelis UK”), a limited liability partnership registered under the laws of England and Wales. In addition to the United Kingdom, Moelis UK maintains operations through the following branches:

 

•
Moelis & Company Europe Limited, Frankfurt am Main Branch (German branch)

 

•
Moelis & Company UK LLP, DIFC Branch (Dubai branch)

 

•
Moelis & Company Asia Limited (“Moelis Asia”), a limited company incorporated in Hong Kong licensed under the Hong Kong Securities and Futures Ordinance to provide financial advisory services. In addition to Hong Kong, Moelis Asia maintains operations in Beijing, China through a wholly-owned Chinese subsidiary, Moelis & Company Consulting (Beijing) Company Limited.

 

•
Moelis & Company Netherlands B.V., a private limited company incorporated in Amsterdam, Netherlands. In addition to Amsterdam, Moelis Netherlands maintains operations in Paris, France through a wholly owned subsidiary, Moelis & Company Netherlands B.V. French Branch

 

•
Moelis & Company Europe B.V., a private limited company incorporated in Amsterdam, Netherlands.

 

•
Moelis & Company India Private Limited, a private limited company incorporated in Mumbai, India.

 

•
Moelis & Company Assessoria Financeira Ltda. (“Moelis Brazil”), a limited liability company incorporated in São Paulo, Brazil.

 

•
Moelis & Company Saudi Limited, a limited liability company incorporated in Riyadh, Saudi Arabia

 

•
An equity method investment in MA Financial Group Limited (previously known as Moelis Australia Limited) (“MA Financial”), a public company listed on the Australian Securities Exchange.
v3.22.1
Summary of Significant Accounting Policies
 3 Months Ended
Mar. 31, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting —The Company prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the combined operations, assets and liabilities of the Company. The Notes are an integral part of the Company's condensed consolidated financial statements. As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Consolidation —The Company’s policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company has ownership of the majority of voting interests. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity’s operating and financial decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company’s subsidiaries have been eliminated in consolidation.

Use of Estimates —The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

In preparing the condensed consolidated financial statements, management makes estimates and assumptions regarding:

•
the adequacy of the allowance for credit losses;
•
the assessment of whether revenues from variable consideration should be constrained due to the probability of a significant revenue reversal;
•
the assessment of probable lease terms and the measurement of the present value of such obligations;

 

•
the measurement and realization of deferred taxes;

 

•
the measurement of amount due pursuant to tax receivable agreement; and

 

•
other matters that affect the reported amounts and disclosures of contingencies in the condensed consolidated financial statements.

 

Cash, Cash Equivalents and Restricted Cash —Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase.

The Company’s cash is maintained in U.S. and non-U.S. bank accounts, of which most bank account balances had little or no insurance coverage (most balances are held in U.S. and U.K. accounts which exceeded the U.S. Federal Deposit Insurance Corporation and U.K. Financial Services Compensation Scheme coverage limits). The Company’s cash equivalents are invested primarily in U.S. Treasury instruments and money market securities.

The Company’s restricted cash is comprised of collateral deposits primarily held by certain non-U.S. subsidiaries. These deposits are required for certain direct debit accounts and are also used to satisfy future U.S. medical claims. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of March 31, 2022 and 2021, is presented below.

 

 

 

March 31,

 

 

2022

 

2021

Cash

 

$

109,358

 

$

97,899

Cash equivalents

 

 

21,062

 

 

57,503

Restricted cash

 

 

635

 

 

1,081

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

131,055

 

$

156,483

 

Additionally, as of December 31, 2021, the Company held cash of $135,217 and cash equivalents of $384,996.

Receivables —The accompanying condensed consolidated statements of financial condition present accounts receivable balances net of allowance for credit losses based on the Company’s assessment of the collectability of customer accounts.

Included in the accounts receivable balances at March 31, 2022 and December 31, 2021 were $11,064 and $20,041, respectively, of long term receivables related to private funds advisory capital raising engagements, which are generally paid in installments over a period of three to four years. These long term receivables generated interest income of $294 and $204 for the three months ended March 31, 2022 and 2021, respectively.

The Company maintains an allowance for credit losses that, in management’s opinion, provides for an adequate reserve to cover losses that may be incurred. For purposes of determining appropriate allowances, the Company stratifies its population of accounts receivable into two categories, one for short-term receivables and a second for private funds advisory receivables. Each population is separately evaluated using an aging method that results in a percentage reserve based on the age of the receivable, in addition to considerations of historical charge-offs and current economic conditions.

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This has the effect of reducing both the gross receivable and the allowance for credit losses. If a reserved accounts receivable is subsequently collected, such recoveries reduce the gross receivable and the allowance for credit losses and is a reduction of bad debt expense, which is recorded within other expenses on the condensed consolidated statement of operations. The combination of recoveries and the provision for credit losses of a reported period comprise the Company’s bad debt expense.

The following tables summarize credit loss allowance activity for the three months ended March 31, 2022 and 2021:

 

 

Three Months Ended March 31, 2022

 

 

Three Months Ended March 31, 2021

 

 

Accounts Receivable

 

 

Accounts Receivable

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

Allowance for Credit Losses, beginning balance

$

 

2,621

 

 

$

 

202

 

 

$

 

2,823

 

 

$

 

3,577

 

 

$

 

198

 

 

$

 

3,775

 

Charge-offs, foreign currency translation and other adjustments

 

 

(186

)

 

 

 

(68

)

 

 

 

(254

)

 

 

 

(741

)

 

 

 

—

 

 

 

 

(741

)

Recoveries

 

 

(740

)

 

 

 

(87

)

 

 

 

(827

)

 

 

 

(1,126

)

 

 

 

—

 

 

 

 

(1,126

)

Provision for credit losses

 

 

475

 

 

 

 

64

 

 

 

 

539

 

 

 

 

4,253

 

 

 

 

22

 

 

 

 

4,275

 

Allowance for credit losses, ending balance

$

 

2,170

 

 

$

 

111

 

 

$

 

2,281

 

 

$

 

5,963

 

 

$

 

220

 

 

$

 

6,183

 

Deferred Compensation —Deferred compensation costs represent arrangements with certain employees whereby cash payments are subject to a required period of service subsequent to payment by the Company. These amounts are charged to expenses over the period that the employee is required to provide services in order to vest in the payment.

Financial Instruments at Fair Value —Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily-available actively quoted prices or for which fair value can be measured from actively-quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest level of observability) based on inputs:

Level 1 —Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price.

Level 2 —Pricing inputs that are significant to the overall fair value measurement are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies.

Level 3 —Pricing inputs that are significant to the overall fair value measurement are unobservable for the instruments and include situations where there is little, if any, market activity for the investments.

The determination of fair value is based on the best information available, may incorporate management’s own assumptions, and involves a significant degree of judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the instrument. The Company's methodology for reclassifications impacting the fair value hierarchy is that transfers in/out of the respective category are reported at fair value as of the beginning of the period in which the reclassification occurred.

Investments Held at Cost — Investments without readily determinable fair values are measured at cost, less impairment. If the Company identifies an observable price change in an orderly transaction for an investment held at cost, it will measure the investment at fair value as of the date the observable transaction occurred. The Company shall reassess at each reporting period whether such investments should continue to be measured at cost, less impairment, or another method. Any resulting gain or loss from a change in measurement shall be recorded in other income and expenses on the condensed consolidated statement of operations. Investments held at cost are reported within investments on the condensed consolidated statements of financial condition.

Equity Method Investments — The Company accounts for its equity method investments under the equity method of accounting as the Company does not control these entities but has the ability to exercise significant influence. The amounts recorded in investments on the condensed consolidated statements of financial condition reflect the Company’s share of contributions made to, distributions received from, and the equity earnings and losses of, the investment. The Company reflects its share of gains and losses of the investment in other income and expenses in the condensed consolidated statements of operations using the most recently available earnings data at the end of the period.

Leases — The Company maintains operating leases for corporate offices and an aircraft. The Company determines if a contract contains a lease at inception. Operating leases are recorded as right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated statements of financial condition. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease liabilities are recognized at the lease commencement date and are measured at the present value of anticipated lease payments over the lease term. The operating lease ROU assets are equal to the lease liabilities, adjusted for certain lease incentives, accrued rents, and prepaid rents. Typically, our borrowing rate is used to determine the present value of lease payments because the implicit rate is not readily determinable. Our lease terms may include options to extend or terminate the lease. These options are factored into our present value calculations when it is reasonably certain that such options will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term.

Equipment and Leasehold Improvements —Office equipment and furniture and fixtures are stated at cost less accumulated depreciation, which is determined using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years, respectively. Leasehold improvements are stated at cost less accumulated amortization, which is determined using the straight-line method over the lesser of the term of the lease or the estimated useful life of the asset.

Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to expenses as incurred. Assets that are in development and have not yet been placed in service are generally classified as “Construction in Progress” and are reclassified to the appropriate category when the associated assets are placed in service. Upon retirement or disposal of assets, the cost and related accumulated depreciation or amortization are removed from the condensed consolidated statements of financial condition and any gain or loss is reflected in the condensed consolidated statements of operations.

Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company was treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. Additional Group LP Class A partnership units may be issued and exchanged for shares of Class A common stock in the Company. The initial purchase and future exchanges are expected to result in an increase in the tax basis of Group LP’s assets attributable to the Company’s interest in Group LP. These increases in the tax basis of Group LP’s assets attributable to the Company’s interest in Group LP would not have been available but for the initial purchase and future exchanges. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax the Company would otherwise be required to pay in the future. As a result, the Company records a deferred tax asset for such increase in tax basis.

The Company has entered into a tax receivable agreement with its eligible Managing Directors that will provide for the payment by the Company to its eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax or franchise tax that the Company actually realizes as a result of (a) the increases in tax basis attributable to exchanges by its eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by the Company as a result of this tax receivable agreement. The Company expects to benefit from the remaining 15% of cash savings, if any, in income tax that it realizes and record any such estimated tax benefits as an increase to additional paid-in-capital. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing the Company’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had it not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. The Company has recorded the estimated tax benefits related to the increase in tax basis and imputed interest as a result of the initial purchase and subsequent exchanges described above as a deferred tax asset in the condensed consolidated statements of financial condition. The amount due to its eligible Managing Directors related to the tax receivable agreement as a result of the initial purchase and subsequent exchanges described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated statements of financial condition. The amounts recorded for the deferred tax asset and the liability for our obligations under the tax receivable agreement are estimates. Any adjustments to our estimates subsequent to their initial establishment will be included in net income (loss). Future exchanges of Class A partnership units in Group LP for Class A common shares in the Company will be accounted for in a similar manner.

Software— Costs related to implementation of cloud computing arrangements that qualify for capitalization are stated at cost less accumulated amortization within prepaid and other assets on the Company’s condensed consolidated statement of financial condition. Such capitalized costs are amortized using the straight-line method over the term of the cloud computing service contract or another rational basis, beginning when the cloud computing arrangement is substantially complete and ready for its intended use. All costs not directly related to the implementation of cloud computing arrangements, including overhead costs and costs of service agreements, will be expensed in the period they are incurred. The amortization expense of such capitalized costs will be presented under communication, technology and information services on the condensed consolidated statement of operations.

Revenue and Expense Recognition—We earn substantially all of our revenues by providing advisory services on mergers and acquisitions, recapitalizations and restructurings, capital markets transactions, private fund raisings and secondary transactions, and other corporate finance matters. The Company also acts as an underwriter of certain securities offerings. We provide our advisory services on an ongoing basis which, for example, may include evaluating and selecting one of multiple strategies. In many cases, we are not paid until the completion of an underlying transaction.

The Company recognizes the vast majority of its advisory services revenues over time, including reimbursements for certain out-of-pocket expenses, when or as our performance obligations are fulfilled and collection is reasonably assured. The determination of whether revenues are recognized over time or at a point in time depends upon the type of service being provided and the related performance obligations. We identify the performance obligations in our engagement letters and determine which services are distinct (i.e. separately identifiable and the client could benefit from such service on its own). We allocate the transaction price to the respective performance obligations by estimating the amount of consideration we expect in exchange for providing each service. Both the identification of performance obligations and the allocation of transaction price to the respective performance obligations requires significant judgment.

During such advisory engagements, our clients are continuously benefitting from our advice and the over time recognition matches the transfer of such benefits. However, the recognition of transaction fees, which are variable in nature, is constrained until substantially all services have been provided, specified conditions have been met (e.g. transaction closing) and it is probable that a significant reversal of revenue will not occur in a future period. Upfront fees and retainers specified in our engagement letters that meet the over time criteria will be recognized on a systematic basis over the estimated period where the related services are performed.

With respect to fairness opinions, fees are fixed and delivering the opinion is a separate performance obligation from other advisory services that may be promised under the same engagement letter; as such these revenues are recognized at a point in time when the engagement is formally completed and the client can obtain substantially all of the benefits from the service. Similarly, underwriting engagements are typically a single performance obligation and fees are generally recognized as revenue when the offering has been deemed to be completed by the lead manager of the underwriting group. In these instances, point in time recognition appropriately matches the transfer and consumption of our services.

Incremental costs of obtaining a contract are expensed as incurred since such costs are generally not recoverable and the typical duration of our advisory contracts is less than one year. Costs to fulfill contracts consist of out-of-pocket expenses that are part of performing our advisory services and are typically expensed as incurred, except where the transfer and consumption of our services occurs at a point in time. For engagements recognized at a point in time, out-of-pocket expenses are capitalized and subsequently expensed in the condensed consolidated statement of operations upon completion of the engagement. The Company records deferred revenues when it receives fees from clients that have not yet been earned (e.g. an upfront fee) or when the Company has an unconditional right to consideration before all performance obligations are complete (e.g. upon satisfying conditions to earn an announcement fee, but before the transaction is consummated).

Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive advisory fees that would have been received if the transaction had been completed, despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client, the inability of our client to restructure its operations, or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out-of-pocket expenses.

We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our holistic approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements, and capital markets expertise can be instrumental on both M&A and restructuring assignments.

Equity-based Compensation — The Company recognizes the cost of services received in exchange for equity instrument awards. The cost is based on its grant-date fair value based on quoted market prices at the time of grant amortized over the service period required by the award’s vesting terms. In certain instances, the Company may grant an equity-based award with a post-vesting restriction, which is reflected in the grant-date fair value of the award. The Company also recognizes the cost of services received from a nonemployee in exchange for an equity instrument based on the award’s grant-date fair value. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units (“RSUs”). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a reduction of retained earnings with a corresponding increase in additional paid-in capital, resulting in no net change to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the underlying award does not vest.

The Company has terms that qualify certain employees to terminate their services while not forfeiting certain qualifying incentive RSUs granted during employment. For qualifying awards, (i) the employee must be at least 56 years old, (ii) the employee must have provided at least 5 consecutive years of service to the Company and (iii) the total of (i) and (ii) must be equal to at least 65 years. Any such RSUs will continue to vest on their applicable vesting schedule, subject to noncompetition and other terms. Over time a greater number of employees may become retirement eligible and the related requisite service period over which we will expense these awards will be shorter than the stated vesting period. Any unvested RSUs are eligible to receive dividends in kind; however, the right to dividends in kind will be forfeited if the underlying award does not vest.

Income Taxes — The Company accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s condensed consolidated statements of financial condition as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. For the three months ended March 31, 2022 and 2021, no unrecognized tax benefit was recorded. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense. For the three months ended March 31, 2022 and 2021, no such amounts were recorded.

The Company recognizes excess tax benefits and deficiencies as income tax benefits or expenses in the condensed consolidated statement of operations. These are reflected in accounts payable, accrued expenses and other liabilities within the condensed consolidated statement of cash flows.

Effective January 1, 2021, the Company adopted ASU No. 2019-12, “Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain rule exceptions to simplify accounting for income taxes. ASU 2019-12 has been incorporated into our provision for income taxes calculation and does not have a material impact to our overall income taxes.

Foreign Currency Translation — Assets and liabilities held in non-U.S. dollar denominated currencies are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary. Non-functional currency related transaction gains and losses are immediately recorded in the condensed consolidated statements of operations.
v3.22.1
Recent Accounting Pronouncements
 3 Months Ended
Mar. 31, 2022
Accounting Standards Update and Change in Accounting Principle [Abstract]  
Recent Accounting Pronouncements
3.
RECENT ACCOUNTING PRONOUNCEMENTS

 

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform” (“ASU 2020-04”). ASU 2020-04 provides optional guidance for entities that are impacted by interest rate reform. Specifically, ASU 2020-04 allows for contracts under the scope of Topic 310—Receivables to be accounted for prospectively with the updated interest rate, among other specifications for debt, derivative instruments, and other contracts. ASU 2020-04 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application is permitted. The Company has evaluated this ASU and does not expect its adoption to have a material impact to the Company's condensed consolidated financial statements.
v3.22.1
Fixed and Intangible Assets
 3 Months Ended
Mar. 31, 2022
Property, Plant and Equipment [Abstract]  
Fixed and Intangible Assets
4.
FIXED AND INTANGIBLE ASSETS

 

Equipment and leasehold improvements, net consists of the following:

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

Office equipment

 

$

15,469

 

$

15,883

Furniture and fixtures

 

 

14,306

 

 

14,303

Leasehold improvements

 

 

61,705

 

 

61,054

Total

 

 

91,480

 

 

91,240

Less accumulated depreciation and amortization

 

 

                (31,897)

 

 

                (32,077)

Equipment and leasehold improvements, net

 

$

59,583

 

$

59,163

 

Depreciation and amortization expenses for fixed assets totaled $2,039 and $1,449 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and December, 31, 2021, there were $2,005 and $2,127 of costs capitalized, net of $866 and $744 of accumulated amortization, respectively, within prepaid expenses and other assets on our condensed consolidated statements of financial condition related to the implementation of cloud computing arrangements. The amortization expense of the capitalized costs was $122 for each of the three months ended March 31, 2022 and 2021, and was recorded within communication, technology and information services on the condensed consolidated statements of operations.
v3.22.1
Investments
 3 Months Ended
Mar. 31, 2022
Investments, All Other Investments [Abstract]  
Investments
5.
INVESTMENTS

Investments Measured at Fair Value

Fair value investments are presented within investments on the Company’s condensed consolidated statements of financial condition. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring investments at fair value. See Note 2 for further information on the Company's fair value hierarchy.

The estimated fair value of money market securities, U.S. Treasury instruments, common stock, and warrants are based on quoted prices for recent trading activity in identical or similar instruments. The Company generally invests in U.S. Treasury instruments with maturities of less than twelve months and considers U.S. Treasury instruments to be risk free and does not reserve for expected credit losses on these investments. Common stock and warrants held of publicly-traded companies are categorized as Level 1 in the fair value hierarchy.

The fair value of the Company's financial assets as of March 31, 2022, have been categorized based upon the fair value hierarchy as follows:

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

$

 

9,996

 

 

$

 

—

 

 

$

 

9,996

 

 

$

 

—

 

Money market securities

 

 

11,066

 

 

 

 

—

 

 

 

 

11,066

 

 

 

 

—

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

 

 

171,114

 

 

 

 

—

 

 

 

 

171,114

 

 

 

 

—

 

Common stock

 

 

12,231

 

 

 

 

12,231

 

 

 

 

—

 

 

 

 

—

 

Warrants

 

 

537

 

 

 

 

537

 

 

 

 

—

 

 

 

 

—

 

Total financial assets

$

 

204,944

 

 

$

 

12,768

 

 

$

 

192,176

 

 

$

 

—

 

For the three months ended March 31, 2022, unrealized losses of $3,880 were recognized in other income and expenses on the condensed consolidated statement of operations related to equity investments measured at fair value held at March 31, 2022. The cost basis of the financial assets recorded at fair value is included in investments on the condensed consolidated statement of financial condition was $190,598 as of March 31, 2022.

The fair value of the Company's financial assets as of December 31, 2021 have been categorized based upon the fair value hierarchy as follows:

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

$

 

301,992

 

 

$

 

—

 

 

$

 

301,992

 

 

$

 

—

 

Money market securities

 

 

83,004

 

 

 

 

—

 

 

 

 

83,004

 

 

 

 

—

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

 

 

200,973

 

 

 

 

—

 

 

 

 

200,973

 

 

 

 

—

 

Common stock

 

 

15,964

 

 

 

 

15,964

 

 

 

 

—

 

 

 

 

—

 

Warrants

 

 

684

 

 

 

 

684

 

 

 

 

—

 

 

 

 

—

 

Total financial assets

$

 

602,617

 

 

$

 

16,648

 

 

$

 

585,969

 

 

$

 

—

 

For the three months ended March 31, 2021, there were no unrealized gains or losses recognized in other income and expenses on the condensed consolidated statement of operations related to equity investments measured at fair value at March 31, 2021. The cost basis of the financial assets recorded at fair value included in investments on the condensed consolidated statement of financial condition was $220,422 as of December 31, 2021.

Investments Held at Cost

The Company made investments in the sponsors (collectively referred to herein as "Atlas Crest Sponsors") of several Atlas Crest Investment Corp. entities (each an "Atlas Crest Entity" and collectively referred to as "Atlas Crest Entities"), each a special purpose acquisition company ("SPAC"). The Company's Chief Executive Officer, Kenneth Moelis, is the managing member of the Atlas Crest Sponsors and serves as Non-Executive Chairman of the Atlas Crest Entities. The Company does not direct the activities of the Atlas Crest Sponsors or the related SPACs.

Investments in the Atlas Crest Sponsors (discussed in the preceding section) that do not have readily determinable fair values are measured at cost less impairment and are included in investments on the condensed consolidated statements of financial condition. As of March 31, 2022, and the December 31, 2021, the aggregate investment balances of the Atlas Crest Sponsors held at cost was $1,895.

Equity Method Investments

Equity-method investments are presented within investments on the Company’s condensed consolidated statements of financial condition. As of March 31, 2022 and December 31, 2021, the carrying value of the Company's equity method investment in MA Financial (formerly known as Moelis Australia Limited) was $42,569 and $43,825. The Company's share of earnings on this investment is recorded in other income and expenses on the condensed consolidated statements of operations.

During the three months ended March 31, 2022 and March 31, 2021, MA Financial declared dividends, of which the Company received $2,029 and $2,279, respectively. The Company accounted for the dividends as returns on investment and reduced the carrying value of the investment in MA Financial by the amount of dividends received.

From time to time, MA Financial may issue shares in connection with a transaction or employee compensation which reduces the Company's ownership interest in MA Financial and can result in dilution gains or losses. Such gains or losses are recorded in other income and expenses on the condensed consolidated statements of operation.
v3.22.1
Net Income (Loss) Per Share Attributable to Class A Common Shareholders
 3 Months Ended
Mar. 31, 2022
Earnings Per Share [Abstract]  
Net Income (Loss) Per Share Attributable to Class A Common Shareholders
6.
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS

The calculations of basic and diluted net income (loss) per share attributable to holders of shares of Class A common stock for the three months ended March 31, 2022 and 2021 are presented below.

 

 

 

 

Three Months Ended March 31,

(dollars in thousands, except per share amounts)

 

 

2022

 

 

2021

Numerator:

 

 

 

 

 

 

 

 

Net income (loss) attributable to holders of shares of Class A common stock—basic

 

 

$

65,715

 

 

$

66,529

Add (deduct) dilutive effect of:

 

 

 

 

 

 

 

 

Noncontrolling interests related to Class A partnership units

 

(a)

 

 

 

(a)

 

 

Net income (loss) attributable to holders of shares of Class A common stock—diluted

 

 

$

65,715

 

 

$

66,529

Denominator:

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding—basic

 

 

 

64,824,347

 

 

 

60,932,966

Add (deduct) dilutive effect of:

 

 

 

 

 

 

 

 

Noncontrolling interests related to Class A partnership units

 

(a)

 

 

 

(a)

 

 

Weighted average number of incremental shares issuable from unvested RSUs and stock options, as calculated using the treasury stock method

 

(b)

 

5,176,126

 

(b)

 

5,427,251

Weighted average shares of Class A common stock outstanding—diluted

 

 

 

70,000,473

 

 

 

66,360,217

Net income (loss) per share attributable to holders of shares of Class A common stock

 

 

 

 

 

 

 

 

Basic

 

 

$

1.01

 

 

$

1.09

Diluted

 

 

$

0.94

 

 

$

1.00

 

We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation.

(a) Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable exchange restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 76,469,649 and 74,625,284 for the three months ended March 31, 2022 and 2021, respectively. In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) available to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests in consolidated entities associated with the Group LP Class A partnership units (including any tax impact). For the three months ended March 31, 2022 and 2021, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive.

 

(b) Certain shares of Moelis & Company’s Class A common stock assumed to be issued pursuant to certain RSUs as calculated using the treasury stock method were antidilutive and therefore have been excluded from the calculation of diluted net income (loss) per share attributable to Moelis & Company for certain periods. During the three months ended March 31, 2022 and 2021, there were 3,308 and 1,539 RSUs that would have been included in the treasury stock method calculation if the effect were dilutive, respectively.

v3.22.1
Equity-Based Compensation
 3 Months Ended
Mar. 31, 2022
Share-based Payment Arrangement [Abstract]  
Equity-Based Compensation
7.
EQUITY‑BASED COMPENSATION

2014 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the Moelis & Company 2014 Omnibus Incentive Plan (the “Plan”) to provide additional incentives to selected officers, employees, Managing Directors, non-employee directors, independent contractors, partners, senior advisors and consultants. The Plan provides for the issuance of incentive stock options (“ISOs”), nonqualified stock options, stock appreciation rights (“SARs”), restricted stock, RSUs, stock bonuses, other stock-based awards (including partnership interests that are exchangeable into stock upon satisfaction of certain conditions) and cash awards.

Restricted Stock Units (RSUs) and other stock-based awards

Pursuant to the Plan and in connection with the Company’s annual compensation process and ongoing hiring process, the Company issues RSUs and other stock-based awards which generally vest over a service life of four to five years. For the three months ended March 31, 2022 and 2021, the Company recognized expense of $37,067 and $50,963, respectively, in relation to these awards.

The following table summarizes activity related to RSUs for the three months ended March 31, 2022 and 2021.

 

Restricted Stock Units

 

2022

2021

 

 

Weighted

 

Weighted

 

 

Average

 

Average

 

Number of

Grant Date

Number of

Grant Date

 

Shares

Fair Value

Shares

Fair Value

Unvested Balance at January 1,

8,068,120

$

46.36

8,742,695

$

41.45

Granted

2,761,285

 

49.91

2,704,521

 

54.74

Forfeited

                (26,800)

 

47.92

                (34,974)

 

48.44

Vested

           (2,828,354)

 

46.49

           (3,528,273)

 

42.17

Unvested Balance at March 31,

7,974,251

$

47.68

7,883,969

$

46.15

 

In addition, the Company issues partnership units that are intended to qualify as "profits interest" for U.S. federal income tax purposes ("Partnership Units") that, subject to certain terms and conditions, are exchangeable into shares of Moelis & Company Class A common stock on a one-for-one basis. These Partnership Units are recorded as noncontrolling interests in the Company's condensed consolidated statements of financial condition. Further, these Partnership Units generally vest over a service life of five years, however in certain arrangements the Partnership Units are granted without a service requirement, but do not have exchange rights until the third anniversary of the grant-date. For the three months ended March 31, 2022 and 2021, the Company granted 809,899 and 395,834 Partnership Units with a grant-date fair value of $38,413 and $21,672, respectively.

 

As of March 31, 2022, the total compensation expense related to unvested RSUs and other stock-based awards not yet recognized was $229,224, which is expected to be recognized over a weighted-average period of 2.1 years.
v3.22.1
Stockholders Equity
 3 Months Ended
Mar. 31, 2022
Stockholders' Equity Note [Abstract]  
Stockholders Equity
8.
STOCKHOLDERS EQUITY

Class A Common Stock

In April 2014, the Company issued 15,263,653 shares of Class A common stock in connection with the IPO and reorganization. Since its IPO, the Company has conducted several offerings of Class A common stock in order to facilitate organized liquidity and increase the public float of its Class A common stock. The aggregate increase to Class A common stock as a result of such offerings was 24,923,349 shares. The Company did not retain any proceeds from the sale of its Class A common stock.

As of March 31, 2022, there were 71,824,917 shares of Class A common stock issued, 7,894,635 shares of treasury stock, and 63,930,282 shares outstanding. As of December 31, 2021, there were 68,518,779 shares of Class A common stock issued, 5,873,180 shares of treasury stock, and 62,645,599 shares outstanding. The changes in Class A common stock are due primarily to the IPO and offering transactions described above, exchanges of Class A partnership units, the exercise of stock options and vesting of restricted stock units in connection with the Company’s annual compensation process and ongoing hiring process.

 

Class B Common Stock

In conjunction with Moelis & Company’s IPO of its Class A common stock, the Company issued 36,158,698 shares of Class B common stock. Moelis & Company Partner Holdings LP (“Partner Holdings”) holds all shares of Class B common stock, enabling it initially to exercise majority voting control over the Company. In connection with the Company’s offerings of Class A common stock described above, 24,919,744 shares of Class B common stock were purchased from Partner Holdings at a cost of $550. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1). Shares of Class B common stock are generally not transferrable and, if transferred other than in the limited circumstances set forth in Moelis & Company’s Amended and Restated Certificate of Incorporation, such shares shall automatically convert into a number of shares of Class A common stock, or dollar equivalent. Each share of Class B common stock may also be converted to a number of Class A shares at the option of the holder. Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1.

 

As of March 31, 2022, and December 31, 2021, 4,685,898 and 4,686,344 shares of Class B common stock were issued and outstanding, respectively, due primarily to the IPO and offering transactions, and Class B conversions described above.

Treasury Stock

During the three months March 31, 2022 and 2021, the Company repurchased 2,021,455 and 1,363,934 shares, respectively, pursuant to the Company’s share repurchase program and shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the delivery of equity-based compensation awards. The result of the repurchases was an increase of $97,929 and $74,211, respectively, in the treasury stock balance on the Company’s condensed consolidated statements of changes in equity as of March 31, 2022 and 2021.

Share Repurchase Plan

In February 2019, the Board of Directors authorized the repurchase of up to $100,000 of shares of Class A common stock and/or Class A partnership units of Group LP with no expiration date. In July 2021, the Board of Directors authorized the repurchase of an additional $100,000 of shares of Class A common stock and/or Class A partnership units of Group LP with no expiration date. Under this share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased will be opportunistic and measured in nature and will depend on a variety of factors, including price and market conditions. The remaining balance of shares authorized for repurchase under the program was $109,025 as of March 31, 2022.

Noncontrolling Interests

A Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock and represents the Company’s noncontrolling interests (non-redeemable). As of March 31, 2022 and December 31, 2021, partners held 6,901,884 and 6,090,500 Group LP partnership units, respectively, representing a 10% and 9% noncontrolling interest in Moelis & Company, respectively.

 

Controlling Interests

Moelis & Company operates and controls all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP, and thus the 63,930,282 shares of Class A common stock outstanding as of March 31, 2022 (62,645,599 as of December 31, 2021), represents the controlling interest.
v3.22.1
Related-Party Transactions
 3 Months Ended
Mar. 31, 2022
Related Party Transactions [Abstract]  
Related-Party Transactions
9.
RELATED‑PARTY TRANSACTIONS

Aircraft Lease— On August 30, 2014, a related party, Moelis & Company Manager LLC ("Manager"), acquired an aircraft with funds received solely from its managing member (Mr. Moelis). The aircraft was used and operated by the Company pursuant to a dry lease with Manager. The terms of the dry lease were comparable to the market rates of leasing from an independent third party. Pursuant to this dry lease arrangement, the lessee is obligated to bear its share of the costs of operating the aircraft. In addition, Mr. Moelis was the other lessee of the aircraft and shared the operating and related costs of the plane in proportion to his respective use pursuant to a cost sharing and operating agreement. On July 12, 2019, the Company terminated its aircraft dry lease with Manager, the lessor, and Mr. Moelis, the other lessee (the “Old Lease”) and the related cost sharing agreement with Mr. Moelis, which were set to expire by their terms on December 31, 2019, and entered into a new dry lease with Manager, the lessor, and Mr. Moelis, the other lessee (the “New Lease”) and cost sharing agreement with Mr. Moelis, which terminate on December 31, 2022. The terms of the New Lease and new cost sharing agreement are substantially similar to the Old Lease and related cost sharing agreement.

For the three months ended March 31, 2022 and 2021, the Company incurred $324 and $324 in aircraft lease costs to be paid to Manager, respectively.

Promissory Notes —As of March 31, 2022, there were $119 of unsecured promissory notes from employees held by the Company (December 31, 2021: $219). Any outstanding balances are reflected in accrued and other receivables on the condensed consolidated statements of financial condition. The notes held bear fixed interest rates ranging from 3.00% to 4.00%. During each of the three months ended March 31, 2022 and 2021, the Company received $0 and $70, respectively, of principal repayments and recognized interest income of $5 and $5, respectively, on such notes, which is included in other income and expenses on the condensed consolidated statements of operations. During the three months ended March 31, 2022, the Company recognized $100 of compensation and benefits expense related to a tranche of a promissory note that will not be repaid.

Services Agreement —In connection with the Company’s IPO, the Company entered into a services agreement with a related party, Moelis Asset Management LP, whereby the Company provides certain administrative services to Moelis Asset Management LP for a fee. This fee totaled $55 and $57 for the three months ended March 31, 2022 and 2021, respectively. The amount of the fee is based upon the estimated usage and related expense of all shared services between the Company and Moelis Asset Management LP during the relevant period, and will be assessed periodically by management as per the terms of the agreement. As of March 31, 2022 and December 31, 2021, the Company had no balances due to or from Moelis Asset Management LP.

Affiliated SPACs and SPAC Sponsors—The Company provides office space, secretarial, administrative, and other corporate services to Atlas Crest Entities. These services are provided to the Atlas Crest Entities upon consummation of their IPOs, in each case for a fee of $10 per month. For the three months ended March 31, 2022 and 2021, these fees totaled $30 and $50, respectively. This arrangement shall continue with each Atlas Crest Entity until such Atlas Crest Entity consummates a business combination or is liquidated. As of March 31, 2022, and December 31, 2021, the Company had no balances due from the Atlas Crest Entities or their sponsors.

Revenues —From time to time, the Company enters into advisory transactions with affiliated entities, such as an Atlas Crest Entity or Moelis Asset Management LP and its affiliates. The Company earned revenues associated with such transactions of $159 and $0 for the three months ended March 31, 2022 and 2021, respectively.
v3.22.1
Regulatory Requirements
 3 Months Ended
Mar. 31, 2022
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]  
Regulatory Requirements
10.
REGULATORY REQUIREMENTS

Under the SEC Uniform Net Capital Rule (SEC Rule 15c3-1) Alternative Standard under Section (a)(1)(ii), the minimum net capital requirement is $250. As of March 31, 2022, U.S. Broker Dealer had net capital of $205,967, which was $205,717 in excess of its required net capital. As of December 31, 2021, U.S. Broker Dealer had net capital of $180,342 which was $180,092 in excess of its required net capital.

Certain other non-U.S. subsidiaries are subject to various securities and capital adequacy requirements promulgated by the regulatory and exchange authorities of the countries in which they operate. These subsidiaries have consistently exceeded their local capital adequacy requirements.
v3.22.1
Commitments and Contingencies
 3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
11.
COMMITMENTS AND CONTINGENCIES

Bank Lines of Credit — The Company renewed its $65,000 revolving credit facility which extended the maturity date to June 30, 2022. Unless the lender issues a notice of termination at least 60 days prior to such maturity date, this facility will automatically extend to June 30, 2023. Borrowings on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the borrower’s option of (i) LIBOR plus 1% or (ii) Prime minus 1.50%. As of March 31, 2022 and December 31, 2021, the Company had no borrowings under the credit facility.

As of March 31, 2022, the Company’s available credit under this facility was $64,227 as a result of the issuance of an aggregate amount of $773 of various standby letters of credit, which were required in connection with certain office lease and other agreements. The Company incurs a 1% per annum fee on the outstanding balance of issued letters of credit.

On May 24, 2021, U.S. Broker Dealer entered into a $30,000 revolving credit facility agreement pre-approved by FINRA to provide additional regulatory capital as necessary. Under this facility, the Company may borrow capital until May 24, 2022, the end of the credit period, and must repay aggregate principal balances by the maturity date of May 24, 2023. Borrowings on the facility bear interest equal to the Prime rate, payable quarterly in arrears of the last day of March, June, September and December of each calendar year. The Company had no borrowings under this credit facility and the available balance was $30,000 as of March 31, 2022.

Leases —The Company maintains operating leases for corporate offices and an aircraft with various expiration dates, some of which extend through 2036. Some leases include options to terminate or to extend the lease terms. The Company records lease liabilities measured at the present value of anticipated lease payments over the lease term, including options to extend or terminate the lease when it is reasonably certain such options will be exercised. The implicit discount rates used to determine the present value of the Company’s leases are not readily

determinable, thus the Company uses its secured borrowing rate, which was determined with reference to our available credit line. See below for additional information about the Company’s leases.

 

 

 

Three Months Ended

 

 

March 31,

($ in thousands)

 

2022

 

2021

Supplemental Income Statement Information:

 

 

 

 

 

 

 

 

Operating lease cost

 

$

5,597

 

 

$

7,154

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Net operating cash outflows for operating leases

 

$

5,767

 

 

$

5,980

 

Right-of-use assets obtained in exchange for lease obligations (e.g. new leases and amendments commenced during the period):

 

$

               —

 

 

$

321

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

Weighted-average remaining lease term - operating leases

 

 

13.16

years

 

 

13.69

 years

Weighted-average discount rate - operating leases

 

 

3.52

%

 

 

3.52

 %

 

As of March 31, 2022, the future sublease income and maturities of our operating lease liabilities are as follows:

 

Fiscal year ended

 

Sublease Income

 

Operating Leases

Remainder of 2022

 

$

                               (659)

 

$

16,792

2023

 

 

                               (878)

 

 

21,964

2024

 

 

                               (878)

 

 

20,066

2025

 

 

                               (439)

 

 

17,375

2026

 

 

                                  —

 

 

16,300

Thereafter

 

 

                                  —

 

 

162,584

Total Payments

 

$

                            (2,854)

 

$

255,081

 

 

 

 

 

 

 

Less: Tenant improvement allowances

 

 

                          (14,303)

Less: Present value adjustment

 

 

                          (53,371)

Total

 

$

187,407

 

Contractual Arrangements —In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and which provide indemnification for specified losses, including certain indemnification of certain officers, directors and employees.

Legal —In the ordinary course of business, from time to time the Company and its affiliates are involved in judicial or regulatory proceedings, arbitration or mediation concerning matters arising in connection with the conduct of its businesses, including contractual and employment matters. In addition, government agencies and self-regulatory organizations conduct periodic examinations and initiate administrative proceedings regarding the Company’s business, including, among other matters, compliance, accounting and operational matters, that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, investment advisor, or its directors, officers or employees. In view of the inherent difficulty of determining whether any loss in connection with such matters is probable and whether the amount of such loss can be reasonably estimated, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, the Company cannot estimate the amount of such loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that it is not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company.
v3.22.1
Employee Benefit Plans
 3 Months Ended
Mar. 31, 2022
Retirement Benefits [Abstract]  
Employee Benefit Plans
12.
EMPLOYEE BENEFIT PLANS

The Company covers substantially all U.S. salaried employees with a defined contribution 401(k) plan. Each salaried employee of the Company who has attained the age of 21 is eligible to participate in the 401(k) plan on their first day of employment. Any employer contributions to the 401(k) plan are entirely at the discretion of the Company. The Company accrued expenses relating to employer matching contributions to the 401(k) plan for the three months ended March 31, 2022 and 2021, in the amounts of $715 and $715, respectively.
v3.22.1
Income Taxes
 3 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
13.
INCOME TAXES

The Company’s operations are comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of their interest holders, except for certain other foreign, state, and local entity-level taxes (for example, the New York City Unincorporated Business Tax (“UBT”)). In addition, the Company is subject to U.S. corporate federal, state, and local income tax on its allocable share of results of operations from Group LP.

The Company’s provisions for income tax and effective tax rate were an expense of $13,598 and 15.6% and a benefit of $176 and (0.2%) for the three months ended March 31, 2022 and 2021, respectively. The income tax provision for the aforementioned periods primarily reflects the Company’s allocable share of earnings from Group LP at the prevailing U.S. federal, state, and local corporate income tax rates offset by the effect of the excess tax benefit recognized in connection with the delivery of equity-based compensation at an appreciated price above the grant date price for such equity. The excess tax benefit for the three months ended March 31, 2022 and 2021 were $8,551 and $17,542, respectively.
v3.22.1
Revenues and Business Information
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Revenues and Business Information
14.
REVENUES AND BUSINESS INFORMATION

The Company’s activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, financial sponsors, governments and sovereign wealth funds, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings, capital markets and other corporate finance matters.

Since the financial markets are global in nature, the Company generally manages its business based on the operating results of the enterprise taken as whole, not by geographic region. The following table disaggregates the revenues and assets based on the location of the office that generates the revenues or holds the assets, and therefore may not be reflective of the geography in which our clients are located.

 

 

Three Months Ended March 31,

 

 

2022

 

2021

 

Revenues:

 

 

 

 

 

 

United States

$

248,326

 

$

206,252

 

Europe

 

45,378

 

 

43,716

 

Rest of World

 

8,384

 

 

13,898

 

Total

$

302,088

 

$

263,866

 

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

Assets:

 

 

 

 

 

 

United States

 

$

932,684

 

$

1,356,193

Europe

 

 

83,845

 

 

92,605

Rest of World

 

 

80,750

 

 

106,883

Total

 

$

1,097,279

 

$

1,555,681

 

As of March 31, 2022, and December 31, 2021, the Company had deferred revenues of $5,573 and $4,539, respectively. These amounts primarily consist of upfront fees and retainers for our services. During the three months ended March 31, 2022 and 2021, $2,873 and $1,682 of revenues were recognized from the opening balance of deferred revenues, respectively.

Due to the factors that may delay or terminate a transaction (see Note 2), the Company does not estimate constrained transaction fees for revenue recognition. Quantitative disclosures of constrained variable consideration are not provided for remaining, wholly unsatisfied, performance obligations. The remaining performance obligations related to retainers, upfront fees and announcement fees are typically associated with contracts that have durations of one year or less.
v3.22.1
Subsequent Events
 3 Months Ended
Mar. 31, 2022
Subsequent Events [Abstract]  
Subsequent Events
15.
SUBSEQUENT EVENTS

The Company has evaluated subsequent events for adjustment to or disclosure in these condensed consolidated financial statements through the date of this report and has not identified any recordable or disclosable events not otherwise reported in these financial statements or the notes thereto other than the following event. The Board of Directors of Moelis & Company has declared a dividend of $0.60 per share to be paid on June 8, 2022, to Class A common stockholders of record on May 9, 2022.
v3.22.1
Summary of Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2022
Accounting Policies [Abstract]  
Basis of Accounting

Basis of Accounting —The Company prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the combined operations, assets and liabilities of the Company. The Notes are an integral part of the Company's condensed consolidated financial statements. As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Consolidation

Consolidation —The Company’s policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company has ownership of the majority of voting interests. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity’s operating and financial decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company’s subsidiaries have been eliminated in consolidation.
Use of Estimates

Use of Estimates —The preparation of condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and could have a material impact on the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

In preparing the condensed consolidated financial statements, management makes estimates and assumptions regarding:

•
the adequacy of the allowance for credit losses;
•
the assessment of whether revenues from variable consideration should be constrained due to the probability of a significant revenue reversal;
•
the assessment of probable lease terms and the measurement of the present value of such obligations;

 

•
the measurement and realization of deferred taxes;

 

•
the measurement of amount due pursuant to tax receivable agreement; and

 

•
other matters that affect the reported amounts and disclosures of contingencies in the condensed consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash —Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase.

The Company’s cash is maintained in U.S. and non-U.S. bank accounts, of which most bank account balances had little or no insurance coverage (most balances are held in U.S. and U.K. accounts which exceeded the U.S. Federal Deposit Insurance Corporation and U.K. Financial Services Compensation Scheme coverage limits). The Company’s cash equivalents are invested primarily in U.S. Treasury instruments and money market securities.

The Company’s restricted cash is comprised of collateral deposits primarily held by certain non-U.S. subsidiaries. These deposits are required for certain direct debit accounts and are also used to satisfy future U.S. medical claims. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of March 31, 2022 and 2021, is presented below.

 

 

 

March 31,

 

 

2022

 

2021

Cash

 

$

109,358

 

$

97,899

Cash equivalents

 

 

21,062

 

 

57,503

Restricted cash

 

 

635

 

 

1,081

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

131,055

 

$

156,483

 

Additionally, as of December 31, 2021, the Company held cash of $135,217 and cash equivalents of $384,996.
Receivables

Receivables —The accompanying condensed consolidated statements of financial condition present accounts receivable balances net of allowance for credit losses based on the Company’s assessment of the collectability of customer accounts.

Included in the accounts receivable balances at March 31, 2022 and December 31, 2021 were $11,064 and $20,041, respectively, of long term receivables related to private funds advisory capital raising engagements, which are generally paid in installments over a period of three to four years. These long term receivables generated interest income of $294 and $204 for the three months ended March 31, 2022 and 2021, respectively.

The Company maintains an allowance for credit losses that, in management’s opinion, provides for an adequate reserve to cover losses that may be incurred. For purposes of determining appropriate allowances, the Company stratifies its population of accounts receivable into two categories, one for short-term receivables and a second for private funds advisory receivables. Each population is separately evaluated using an aging method that results in a percentage reserve based on the age of the receivable, in addition to considerations of historical charge-offs and current economic conditions.

After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This has the effect of reducing both the gross receivable and the allowance for credit losses. If a reserved accounts receivable is subsequently collected, such recoveries reduce the gross receivable and the allowance for credit losses and is a reduction of bad debt expense, which is recorded within other expenses on the condensed consolidated statement of operations. The combination of recoveries and the provision for credit losses of a reported period comprise the Company’s bad debt expense.

The following tables summarize credit loss allowance activity for the three months ended March 31, 2022 and 2021:

 

 

Three Months Ended March 31, 2022

 

 

Three Months Ended March 31, 2021

 

 

Accounts Receivable

 

 

Accounts Receivable

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

Allowance for Credit Losses, beginning balance

$

 

2,621

 

 

$

 

202

 

 

$

 

2,823

 

 

$

 

3,577

 

 

$

 

198

 

 

$

 

3,775

 

Charge-offs, foreign currency translation and other adjustments

 

 

(186

)

 

 

 

(68

)

 

 

 

(254

)

 

 

 

(741

)

 

 

 

—

 

 

 

 

(741

)

Recoveries

 

 

(740

)

 

 

 

(87

)

 

 

 

(827

)

 

 

 

(1,126

)

 

 

 

—

 

 

 

 

(1,126

)

Provision for credit losses

 

 

475

 

 

 

 

64

 

 

 

 

539

 

 

 

 

4,253

 

 

 

 

22

 

 

 

 

4,275

 

Allowance for credit losses, ending balance

$

 

2,170

 

 

$

 

111

 

 

$

 

2,281

 

 

$

 

5,963

 

 

$

 

220

 

 

$

 

6,183

 
Deferred Compensation

Deferred Compensation —Deferred compensation costs represent arrangements with certain employees whereby cash payments are subject to a required period of service subsequent to payment by the Company. These amounts are charged to expenses over the period that the employee is required to provide services in order to vest in the payment.
Financial Instruments at Fair Value

Financial Instruments at Fair Value —Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily-available actively quoted prices or for which fair value can be measured from actively-quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest level of observability) based on inputs:

Level 1 —Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price.

Level 2 —Pricing inputs that are significant to the overall fair value measurement are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies.

Level 3 —Pricing inputs that are significant to the overall fair value measurement are unobservable for the instruments and include situations where there is little, if any, market activity for the investments.

The determination of fair value is based on the best information available, may incorporate management’s own assumptions, and involves a significant degree of judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the instrument. The Company's methodology for reclassifications impacting the fair value hierarchy is that transfers in/out of the respective category are reported at fair value as of the beginning of the period in which the reclassification occurred.
Investments Held at Cost

Investments Held at Cost — Investments without readily determinable fair values are measured at cost, less impairment. If the Company identifies an observable price change in an orderly transaction for an investment held at cost, it will measure the investment at fair value as of the date the observable transaction occurred. The Company shall reassess at each reporting period whether such investments should continue to be measured at cost, less impairment, or another method. Any resulting gain or loss from a change in measurement shall be recorded in other income and expenses on the condensed consolidated statement of operations. Investments held at cost are reported within investments on the condensed consolidated statements of financial condition.
Equity Method Investments

Equity Method Investments — The Company accounts for its equity method investments under the equity method of accounting as the Company does not control these entities but has the ability to exercise significant influence. The amounts recorded in investments on the condensed consolidated statements of financial condition reflect the Company’s share of contributions made to, distributions received from, and the equity earnings and losses of, the investment. The Company reflects its share of gains and losses of the investment in other income and expenses in the condensed consolidated statements of operations using the most recently available earnings data at the end of the period.
Leases

Leases — The Company maintains operating leases for corporate offices and an aircraft. The Company determines if a contract contains a lease at inception. Operating leases are recorded as right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated statements of financial condition. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease liabilities are recognized at the lease commencement date and are measured at the present value of anticipated lease payments over the lease term. The operating lease ROU assets are equal to the lease liabilities, adjusted for certain lease incentives, accrued rents, and prepaid rents. Typically, our borrowing rate is used to determine the present value of lease payments because the implicit rate is not readily determinable. Our lease terms may include options to extend or terminate the lease. These options are factored into our present value calculations when it is reasonably certain that such options will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term.
Equipment and Leasehold Improvements

Equipment and Leasehold Improvements —Office equipment and furniture and fixtures are stated at cost less accumulated depreciation, which is determined using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years, respectively. Leasehold improvements are stated at cost less accumulated amortization, which is determined using the straight-line method over the lesser of the term of the lease or the estimated useful life of the asset.

Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to expenses as incurred. Assets that are in development and have not yet been placed in service are generally classified as “Construction in Progress” and are reclassified to the appropriate category when the associated assets are placed in service. Upon retirement or disposal of assets, the cost and related accumulated depreciation or amortization are removed from the condensed consolidated statements of financial condition and any gain or loss is reflected in the condensed consolidated statements of operations.
Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement

Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company was treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. Additional Group LP Class A partnership units may be issued and exchanged for shares of Class A common stock in the Company. The initial purchase and future exchanges are expected to result in an increase in the tax basis of Group LP’s assets attributable to the Company’s interest in Group LP. These increases in the tax basis of Group LP’s assets attributable to the Company’s interest in Group LP would not have been available but for the initial purchase and future exchanges. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax the Company would otherwise be required to pay in the future. As a result, the Company records a deferred tax asset for such increase in tax basis.

The Company has entered into a tax receivable agreement with its eligible Managing Directors that will provide for the payment by the Company to its eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax or franchise tax that the Company actually realizes as a result of (a) the increases in tax basis attributable to exchanges by its eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by the Company as a result of this tax receivable agreement. The Company expects to benefit from the remaining 15% of cash savings, if any, in income tax that it realizes and record any such estimated tax benefits as an increase to additional paid-in-capital. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing the Company’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had it not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. The Company has recorded the estimated tax benefits related to the increase in tax basis and imputed interest as a result of the initial purchase and subsequent exchanges described above as a deferred tax asset in the condensed consolidated statements of financial condition. The amount due to its eligible Managing Directors related to the tax receivable agreement as a result of the initial purchase and subsequent exchanges described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated statements of financial condition. The amounts recorded for the deferred tax asset and the liability for our obligations under the tax receivable agreement are estimates. Any adjustments to our estimates subsequent to their initial establishment will be included in net income (loss). Future exchanges of Class A partnership units in Group LP for Class A common shares in the Company will be accounted for in a similar manner.
Software

Software— Costs related to implementation of cloud computing arrangements that qualify for capitalization are stated at cost less accumulated amortization within prepaid and other assets on the Company’s condensed consolidated statement of financial condition. Such capitalized costs are amortized using the straight-line method over the term of the cloud computing service contract or another rational basis, beginning when the cloud computing arrangement is substantially complete and ready for its intended use. All costs not directly related to the implementation of cloud computing arrangements, including overhead costs and costs of service agreements, will be expensed in the period they are incurred. The amortization expense of such capitalized costs will be presented under communication, technology and information services on the condensed consolidated statement of operations.
Revenue and Expense Recognition

Revenue and Expense Recognition—We earn substantially all of our revenues by providing advisory services on mergers and acquisitions, recapitalizations and restructurings, capital markets transactions, private fund raisings and secondary transactions, and other corporate finance matters. The Company also acts as an underwriter of certain securities offerings. We provide our advisory services on an ongoing basis which, for example, may include evaluating and selecting one of multiple strategies. In many cases, we are not paid until the completion of an underlying transaction.

The Company recognizes the vast majority of its advisory services revenues over time, including reimbursements for certain out-of-pocket expenses, when or as our performance obligations are fulfilled and collection is reasonably assured. The determination of whether revenues are recognized over time or at a point in time depends upon the type of service being provided and the related performance obligations. We identify the performance obligations in our engagement letters and determine which services are distinct (i.e. separately identifiable and the client could benefit from such service on its own). We allocate the transaction price to the respective performance obligations by estimating the amount of consideration we expect in exchange for providing each service. Both the identification of performance obligations and the allocation of transaction price to the respective performance obligations requires significant judgment.

During such advisory engagements, our clients are continuously benefitting from our advice and the over time recognition matches the transfer of such benefits. However, the recognition of transaction fees, which are variable in nature, is constrained until substantially all services have been provided, specified conditions have been met (e.g. transaction closing) and it is probable that a significant reversal of revenue will not occur in a future period. Upfront fees and retainers specified in our engagement letters that meet the over time criteria will be recognized on a systematic basis over the estimated period where the related services are performed.

With respect to fairness opinions, fees are fixed and delivering the opinion is a separate performance obligation from other advisory services that may be promised under the same engagement letter; as such these revenues are recognized at a point in time when the engagement is formally completed and the client can obtain substantially all of the benefits from the service. Similarly, underwriting engagements are typically a single performance obligation and fees are generally recognized as revenue when the offering has been deemed to be completed by the lead manager of the underwriting group. In these instances, point in time recognition appropriately matches the transfer and consumption of our services.

Incremental costs of obtaining a contract are expensed as incurred since such costs are generally not recoverable and the typical duration of our advisory contracts is less than one year. Costs to fulfill contracts consist of out-of-pocket expenses that are part of performing our advisory services and are typically expensed as incurred, except where the transfer and consumption of our services occurs at a point in time. For engagements recognized at a point in time, out-of-pocket expenses are capitalized and subsequently expensed in the condensed consolidated statement of operations upon completion of the engagement. The Company records deferred revenues when it receives fees from clients that have not yet been earned (e.g. an upfront fee) or when the Company has an unconditional right to consideration before all performance obligations are complete (e.g. upon satisfying conditions to earn an announcement fee, but before the transaction is consummated).

Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive advisory fees that would have been received if the transaction had been completed, despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client, the inability of our client to restructure its operations, or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out-of-pocket expenses.

We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our holistic approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements, and capital markets expertise can be instrumental on both M&A and restructuring assignments.
Equity-based Compensation

Equity-based Compensation — The Company recognizes the cost of services received in exchange for equity instrument awards. The cost is based on its grant-date fair value based on quoted market prices at the time of grant amortized over the service period required by the award’s vesting terms. In certain instances, the Company may grant an equity-based award with a post-vesting restriction, which is reflected in the grant-date fair value of the award. The Company also recognizes the cost of services received from a nonemployee in exchange for an equity instrument based on the award’s grant-date fair value. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units (“RSUs”). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a reduction of retained earnings with a corresponding increase in additional paid-in capital, resulting in no net change to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the underlying award does not vest.

The Company has terms that qualify certain employees to terminate their services while not forfeiting certain qualifying incentive RSUs granted during employment. For qualifying awards, (i) the employee must be at least 56 years old, (ii) the employee must have provided at least 5 consecutive years of service to the Company and (iii) the total of (i) and (ii) must be equal to at least 65 years. Any such RSUs will continue to vest on their applicable vesting schedule, subject to noncompetition and other terms. Over time a greater number of employees may become retirement eligible and the related requisite service period over which we will expense these awards will be shorter than the stated vesting period. Any unvested RSUs are eligible to receive dividends in kind; however, the right to dividends in kind will be forfeited if the underlying award does not vest.
Income Taxes

Income Taxes — The Company accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” (“ASC 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s condensed consolidated statements of financial condition as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. For the three months ended March 31, 2022 and 2021, no unrecognized tax benefit was recorded. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense. For the three months ended March 31, 2022 and 2021, no such amounts were recorded.

The Company recognizes excess tax benefits and deficiencies as income tax benefits or expenses in the condensed consolidated statement of operations. These are reflected in accounts payable, accrued expenses and other liabilities within the condensed consolidated statement of cash flows.

Effective January 1, 2021, the Company adopted ASU No. 2019-12, “Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain rule exceptions to simplify accounting for income taxes. ASU 2019-12 has been incorporated into our provision for income taxes calculation and does not have a material impact to our overall income taxes.
Foreign Currency Translation

Foreign Currency Translation — Assets and liabilities held in non-U.S. dollar denominated currencies are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary. Non-functional currency related transaction gains and losses are immediately recorded in the condensed consolidated statements of operations.
v3.22.1
Summary of Significant Accounting Policies (Tables)
 3 Months Ended
Mar. 31, 2022
Accounting Policies [Abstract]  
Summary of Cash, Cash Equivalents and Restricted Cash A reconciliation of the Company’s cash, cash equivalents and restricted cash as of March 31, 2022 and 2021, is presented below.

 

 

 

March 31,

 

 

2022

 

2021

Cash

 

$

109,358

 

$

97,899

Cash equivalents

 

 

21,062

 

 

57,503

Restricted cash

 

 

635

 

 

1,081

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

131,055

 

$

156,483

Summary of Credit Loss Allowance Activity

The following tables summarize credit loss allowance activity for the three months ended March 31, 2022 and 2021:

 

 

Three Months Ended March 31, 2022

 

 

Three Months Ended March 31, 2021

 

 

Accounts Receivable

 

 

Accounts Receivable

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

 

 

Short-term Receivables

 

 

 

Private Funds Advisory Receivables

 

 

 

Total

 

Allowance for Credit Losses, beginning balance

$

 

2,621

 

 

$

 

202

 

 

$

 

2,823

 

 

$

 

3,577

 

 

$

 

198

 

 

$

 

3,775

 

Charge-offs, foreign currency translation and other adjustments

 

 

(186

)

 

 

 

(68

)

 

 

 

(254

)

 

 

 

(741

)

 

 

 

—

 

 

 

 

(741

)

Recoveries

 

 

(740

)

 

 

 

(87

)

 

 

 

(827

)

 

 

 

(1,126

)

 

 

 

—

 

 

 

 

(1,126

)

Provision for credit losses

 

 

475

 

 

 

 

64

 

 

 

 

539

 

 

 

 

4,253

 

 

 

 

22

 

 

 

 

4,275

 

Allowance for credit losses, ending balance

$

 

2,170

 

 

$

 

111

 

 

$

 

2,281

 

 

$

 

5,963

 

 

$

 

220

 

 

$

 

6,183

 
v3.22.1
Fixed and Intangible Assets (Tables)
 3 Months Ended
Mar. 31, 2022
Property, Plant and Equipment [Abstract]  
Schedule of Equipment and Leasehold Improvements, Net

Equipment and leasehold improvements, net consists of the following:

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

Office equipment

 

$

15,469

 

$

15,883

Furniture and fixtures

 

 

14,306

 

 

14,303

Leasehold improvements

 

 

61,705

 

 

61,054

Total

 

 

91,480

 

 

91,240

Less accumulated depreciation and amortization

 

 

                (31,897)

 

 

                (32,077)

Equipment and leasehold improvements, net

 

$

59,583

 

$

59,163

 
v3.22.1
Investments (Tables)
 3 Months Ended
Mar. 31, 2022
Investments, All Other Investments [Abstract]  
Summary of Financial Assets Recorded at Fair Value On Recurring Basis

The fair value of the Company's financial assets as of March 31, 2022, have been categorized based upon the fair value hierarchy as follows:

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

$

 

9,996

 

 

$

 

—

 

 

$

 

9,996

 

 

$

 

—

 

Money market securities

 

 

11,066

 

 

 

 

—

 

 

 

 

11,066

 

 

 

 

—

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

 

 

171,114

 

 

 

 

—

 

 

 

 

171,114

 

 

 

 

—

 

Common stock

 

 

12,231

 

 

 

 

12,231

 

 

 

 

—

 

 

 

 

—

 

Warrants

 

 

537

 

 

 

 

537

 

 

 

 

—

 

 

 

 

—

 

Total financial assets

$

 

204,944

 

 

$

 

12,768

 

 

$

 

192,176

 

 

$

 

—

 

The fair value of the Company's financial assets as of December 31, 2021 have been categorized based upon the fair value hierarchy as follows:

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

$

 

301,992

 

 

$

 

—

 

 

$

 

301,992

 

 

$

 

—

 

Money market securities

 

 

83,004

 

 

 

 

—

 

 

 

 

83,004

 

 

 

 

—

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury instruments

 

 

200,973

 

 

 

 

—

 

 

 

 

200,973

 

 

 

 

—

 

Common stock

 

 

15,964

 

 

 

 

15,964

 

 

 

 

—

 

 

 

 

—

 

Warrants

 

 

684

 

 

 

 

684

 

 

 

 

—

 

 

 

 

—

 

Total financial assets

$

 

602,617

 

 

$

 

16,648

 

 

$

 

585,969

 

 

$

 

—

 
v3.22.1
Net Income (Loss) Per Share Attributable to Class A Common Shareholders (Tables)
 3 Months Ended
Mar. 31, 2022
Earnings Per Share [Abstract]  
Schedule of Calculations of Basic and Diluted Net Income (Loss) Per Share

The calculations of basic and diluted net income (loss) per share attributable to holders of shares of Class A common stock for the three months ended March 31, 2022 and 2021 are presented below.

 

 

 

 

Three Months Ended March 31,

(dollars in thousands, except per share amounts)

 

 

2022

 

 

2021

Numerator:

 

 

 

 

 

 

 

 

Net income (loss) attributable to holders of shares of Class A common stock—basic

 

 

$

65,715

 

 

$

66,529

Add (deduct) dilutive effect of:

 

 

 

 

 

 

 

 

Noncontrolling interests related to Class A partnership units

 

(a)

 

 

 

(a)

 

 

Net income (loss) attributable to holders of shares of Class A common stock—diluted

 

 

$

65,715

 

 

$

66,529

Denominator:

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding—basic

 

 

 

64,824,347

 

 

 

60,932,966

Add (deduct) dilutive effect of:

 

 

 

 

 

 

 

 

Noncontrolling interests related to Class A partnership units

 

(a)

 

 

 

(a)

 

 

Weighted average number of incremental shares issuable from unvested RSUs and stock options, as calculated using the treasury stock method

 

(b)

 

5,176,126

 

(b)

 

5,427,251

Weighted average shares of Class A common stock outstanding—diluted

 

 

 

70,000,473

 

 

 

66,360,217

Net income (loss) per share attributable to holders of shares of Class A common stock

 

 

 

 

 

 

 

 

Basic

 

 

$

1.01

 

 

$

1.09

Diluted

 

 

$

0.94

 

 

$

1.00

 

We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation.

(a) Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable exchange restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 76,469,649 and 74,625,284 for the three months ended March 31, 2022 and 2021, respectively. In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) available to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests in consolidated entities associated with the Group LP Class A partnership units (including any tax impact). For the three months ended March 31, 2022 and 2021, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive.

 

(b) Certain shares of Moelis & Company’s Class A common stock assumed to be issued pursuant to certain RSUs as calculated using the treasury stock method were antidilutive and therefore have been excluded from the calculation of diluted net income (loss) per share attributable to Moelis & Company for certain periods. During the three months ended March 31, 2022 and 2021, there were 3,308 and 1,539 RSUs that would have been included in the treasury stock method calculation if the effect were dilutive, respectively.
v3.22.1
Equity-Based Compensation (Tables)
 3 Months Ended
Mar. 31, 2022
Share-based Payment Arrangement [Abstract]  
Summary of Activity Related to RSUs

The following table summarizes activity related to RSUs for the three months ended March 31, 2022 and 2021.

 

Restricted Stock Units

 

2022

2021

 

 

Weighted

 

Weighted

 

 

Average

 

Average

 

Number of

Grant Date

Number of

Grant Date

 

Shares

Fair Value

Shares

Fair Value

Unvested Balance at January 1,

8,068,120

$

46.36

8,742,695

$

41.45

Granted

2,761,285

 

49.91

2,704,521

 

54.74

Forfeited

                (26,800)

 

47.92

                (34,974)

 

48.44

Vested

           (2,828,354)

 

46.49

           (3,528,273)

 

42.17

Unvested Balance at March 31,

7,974,251

$

47.68

7,883,969

$

46.15

v3.22.1
Commitments and Contingencies (Tables)
 3 Months Ended
Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Additional Leases Information See below for additional information about the Company’s leases.

 

 

 

Three Months Ended

 

 

March 31,

($ in thousands)

 

2022

 

2021

Supplemental Income Statement Information:

 

 

 

 

 

 

 

 

Operating lease cost

 

$

5,597

 

 

$

7,154

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Net operating cash outflows for operating leases

 

$

5,767

 

 

$

5,980

 

Right-of-use assets obtained in exchange for lease obligations (e.g. new leases and amendments commenced during the period):

 

$

               —

 

 

$

321

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

Weighted-average remaining lease term - operating leases

 

 

13.16

years

 

 

13.69

 years

Weighted-average discount rate - operating leases

 

 

3.52

%

 

 

3.52

 %
Schedule of Future Sublease Income and Maturities of Our Operating Lease Liabilities

As of March 31, 2022, the future sublease income and maturities of our operating lease liabilities are as follows:

 

Fiscal year ended

 

Sublease Income

 

Operating Leases

Remainder of 2022

 

$

                               (659)

 

$

16,792

2023

 

 

                               (878)

 

 

21,964

2024

 

 

                               (878)

 

 

20,066

2025

 

 

                               (439)

 

 

17,375

2026

 

 

                                  —

 

 

16,300

Thereafter

 

 

                                  —

 

 

162,584

Total Payments

 

$

                            (2,854)

 

$

255,081

 

 

 

 

 

 

 

Less: Tenant improvement allowances

 

 

                          (14,303)

Less: Present value adjustment

 

 

                          (53,371)

Total

 

$

187,407

v3.22.1
Revenues and Business Information (Tables)
 3 Months Ended
Mar. 31, 2022
Segment Reporting [Abstract]  
Schedule of Geographical Distribution of Revenues and Assets The following table disaggregates the revenues and assets based on the location of the office that generates the revenues or holds the assets, and therefore may not be reflective of the geography in which our clients are located.

 

 

Three Months Ended March 31,

 

 

2022

 

2021

 

Revenues:

 

 

 

 

 

 

United States

$

248,326

 

$

206,252

 

Europe

 

45,378

 

 

43,716

 

Rest of World

 

8,384

 

 

13,898

 

Total

$

302,088

 

$

263,866

 

 

 

 

March 31,

 

December 31,

 

 

2022

 

2021

Assets:

 

 

 

 

 

 

United States

 

$

932,684

 

$

1,356,193

Europe

 

 

83,845

 

 

92,605

Rest of World

 

 

80,750

 

 

106,883

Total

 

$

1,097,279

 

$

1,555,681

v3.22.1
Summary of Significant Accounting Policies - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Mar. 31, 2021
Dec. 31, 2020
Cash and Cash Equivalents        
Cash $ 109,358 $ 135,217 $ 97,899  
Cash equivalents 21,062 384,996 57,503  
Restricted cash 635 801 1,081  
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 131,055 $ 521,014 $ 156,483 $ 203,284
v3.22.1
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Dec. 31, 2020
Accounting Policies [Line Items]        
Cash $ 109,358,000 $ 97,899,000 $ 135,217,000  
Cash equivalents 21,062,000 57,503,000 384,996,000  
Long-term receivables 11,064,000   20,041,000  
Interest income from long-term receivables 294,000 204,000    
Cumulative effect on retained earnings $ 444,915,000 460,580,000 478,299,000 $ 444,473,000
Assets and Liabilities, Lessee        
Percentage of tax benefits payable to partners under tax receivable agreement 85.00%      
Remaining percentage of cash savings realized by the Company (as a percent) 15.00%      
Revenue and Expense Recognition and Equity-Based Compensation        
Minimum age of retiring employees required so that certain qualifying awards granted during employment will not be forfeited 56 years      
Consecutive years of service of retiring employees required so that certain qualifying awards granted during employment will not be forfeited 5 years      
Minimum total age and consecutive years of service of retiring employees required so that certain qualifying awards granted during employment will not be forfeited 65 years      
Income Taxes        
Unrecognized tax benefits $ 0 0    
Income tax related interest and penalties 0 0    
Retained Earnings        
Accounting Policies [Line Items]        
Cumulative effect on retained earnings $ (514,502,000) $ (393,166,000) $ (535,282,000) $ (420,682,000)
Minimum        
Accounting Policies [Line Items]        
Installment Period 3 years      
Minimum | Office Equipment and Furniture and Fixtures        
Assets and Liabilities, Lessee        
Useful lives 3 years      
Maximum        
Accounting Policies [Line Items]        
Installment Period 4 years      
Maximum | Office Equipment and Furniture and Fixtures        
Assets and Liabilities, Lessee        
Useful lives 7 years      
v3.22.1
Summary of Significant Accounting Policies - Summary of Credit Loss Allowance Activity (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Financing Receivable Allowance For Credit Losses [Line Items]    
Allowance for Credit Losses, beginning balance $ 2,823 $ 3,775
Charge-offs, foreign currency translation and other adjustments (254) (741)
Recoveries (827) (1,126)
Provision for credit losses 539 4,275
Allowance for credit losses, ending balance 2,281 6,183
Short-term Receivables    
Financing Receivable Allowance For Credit Losses [Line Items]    
Allowance for Credit Losses, beginning balance 2,621 3,577
Charge-offs, foreign currency translation and other adjustments (186) (741)
Recoveries (740) (1,126)
Provision for credit losses 475 4,253
Allowance for credit losses, ending balance 2,170 5,963
Private Funds Advisory Receivables    
Financing Receivable Allowance For Credit Losses [Line Items]    
Allowance for Credit Losses, beginning balance 202 198
Charge-offs, foreign currency translation and other adjustments (68)  
Recoveries (87)  
Provision for credit losses 64 22
Allowance for credit losses, ending balance $ 111 $ 220
v3.22.1
Fixed and Intangible Assets - Schedule of Equipment and Leasehold Improvements, Net (Details) - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Equipment and Leasehold Improvements, Net    
Total $ 91,480 $ 91,240
Less accumulated depreciation and amortization (31,897) (32,077)
Equipment and leasehold improvements, net 59,583 59,163
Office Equipment    
Equipment and Leasehold Improvements, Net    
Total 15,469 15,883
Furniture and Fixtures    
Equipment and Leasehold Improvements, Net    
Total 14,306 14,303
Leasehold Improvements    
Equipment and Leasehold Improvements, Net    
Total $ 61,705 $ 61,054
v3.22.1
Fixed and Intangible Assets - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Equipment and Leasehold Improvements, Net      
Depreciation and amortization expenses $ 2,039 $ 1,449  
Prepaid Expenses and Other Assets      
Equipment and Leasehold Improvements, Net      
Costs capitalized, net of accumulated amortization 2,005   $ 2,127
Accumulated amortization, net 866   $ 744
Communication, Technology and Information Services      
Equipment and Leasehold Improvements, Net      
Amortization expense of capitalized costs $ 122 $ 122  
v3.22.1
Investments - Summary of Financial Assets Recorded at Fair Value On Recurring Basis (Details) - Fair Value, Recurring - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Fair value measurements    
Total financial assets $ 204,944 $ 602,617
U.S. Treasury Instruments    
Fair value measurements    
Cash and cash equivalents 9,996 301,992
Investments in securities 171,114 200,973
Warrants    
Fair value measurements    
Investments in securities 537 684
Money Market Securities    
Fair value measurements    
Cash and cash equivalents 11,066 83,004
Common Stock    
Fair value measurements    
Investments in securities 12,231 15,964
Level 1    
Fair value measurements    
Total financial assets 12,768 16,648
Level 1 | Warrants    
Fair value measurements    
Investments in securities 537 684
Level 1 | Common Stock    
Fair value measurements    
Investments in securities 12,231 15,964
Level 2    
Fair value measurements    
Total financial assets 192,176 585,969
Level 2 | U.S. Treasury Instruments    
Fair value measurements    
Cash and cash equivalents 9,996 301,992
Investments in securities 171,114 200,973
Level 2 | Money Market Securities    
Fair value measurements    
Cash and cash equivalents $ 11,066 $ 83,004
v3.22.1
Investments - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Schedule of Investments      
Investments at fair value, cost basis $ 190,598   $ 220,422
Dividends received 2,029 $ 2,279  
Corporate Joint Venture      
Schedule of Investments      
Dividends received 2,029 2,279  
Equity method investments 42,569   43,825
Common Stock      
Schedule of Investments      
Unrealized gains (losses) on equity securities (3,880) $ 0  
Atlas Crest Sponsors      
Schedule of Investments      
Investments at fair value, cost basis $ 1,895   $ 1,895
v3.22.1
Net Income (Loss) Per Share Attributable to Class A Common Shareholders - Schedule of Calculations of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Numerator:    
Net income (loss) attributable to holders of shares of Class A common stock—basic $ 65,715 $ 66,529
Class A Common Stock    
Numerator:    
Net income (loss) attributable to holders of shares of Class A common stock—basic 65,715 66,529
Add (deduct) dilutive effect of:    
Net income (loss) attributable to holders of shares of Class A common stock—diluted $ 65,715 $ 66,529
Denominator:    
Weighted average shares of Class A common stock outstanding—basic 64,824,347 60,932,966
Add (deduct) dilutive effect of:    
Weighted average number of incremental shares issuable from unvested RSUs and stock options, as calculated using the treasury stock method 5,176,126 5,427,251
Weighted average shares of Class A common stock outstanding—diluted 70,000,473 66,360,217
Net income (loss) per share attributable to holders of shares of Class A common stock    
Basic $ 1.01 $ 1.09
Diluted $ 0.94 $ 1.00
v3.22.1
Net Income (Loss) Per Share Attributable to Class A Common Shareholders - Schedule of Calculations of Basic and Diluted Net Income (Loss) Per Share (Parenthetical) (Details) - Class A Common Stock - shares
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Earnings Per Share Basic [Line Items]    
Number of shares of common stock to be issued upon exchange of a partnership unit 1  
Fully diluted shares of common stock outstanding if all Class A partnership units were to be exchanged for common stock immediately following the reorganization 76,469,649 74,625,284
Restricted Stock and RSUs    
Earnings Per Share Basic [Line Items]    
Number of antidilutive securities excluded from calculation of diluted income (loss) per share 3,308 1,539
v3.22.1
Equity-Based Compensation - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Compensation expenses $ 37,067 $ 50,963
Partnership Units, granted 809,899 395,834
Partnership Units, grant-date fair value $ 38,413 $ 21,672
RSUs and Other Stock-based Awards    
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Vesting period 5 years  
Total compensation expense not yet recognized $ 229,224  
Weighted average period to recognize compensation expense 2 years 1 month 6 days  
RSUs and Other Stock-based Awards | Minimum    
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Vesting period 4 years  
RSUs and Other Stock-based Awards | Maximum    
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Vesting period 5 years  
Class A Common Stock    
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Number of shares of common stock to be issued upon exchange of a partnership unit 1  
Class A Common Stock | RSUs and Other Stock-based Awards    
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]    
Number of shares of common stock to be issued upon exchange of a partnership unit 1  
v3.22.1
Equity-Based Compensation - Summary of Activity Related to RSUs (Details) - Restricted Stock Units - $ / shares
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Number of Shares    
Unvested Balance at the beginning of the period 8,068,120 8,742,695
Granted 2,761,285 2,704,521
Forfeited (26,800) (34,974)
Vested (2,828,354) (3,528,273)
Unvested Balance at the end of the period 7,974,251 7,883,969
Weighted Average Grant Date Fair Value    
Unvested Balance at the beginning of the period $ 46.36 $ 41.45
Granted 49.91 54.74
Forfeited 47.92 48.44
Vested 46.49 42.17
Unvested Balance at the end of the period $ 47.68 $ 46.15
v3.22.1
Stockholders Equity - Additional Information (Details)
$ in Thousands
 1 Months Ended 3 Months Ended
Nov. 30, 2014
Apr. 30, 2014
shares
Mar. 31, 2022
USD ($)
shares
Mar. 31, 2021
USD ($)
shares
Dec. 31, 2021
shares
Jul. 28, 2021
USD ($)
Feb. 28, 2019
USD ($)
Class Of Stock [Line Items]              
Treasury stock, shares     7,894,635   5,873,180    
Treasury stock shares acquired (in shares)     2,021,455 1,363,934      
Treasury stock shares acquired | $     $ 97,929 $ 74,211      
Number of units held by noncontrolling interest holders     6,901,884   6,090,500    
Group LP              
Class Of Stock [Line Items]              
Noncontrolling interests (as a percent)     10.00%   9.00%    
Class A Common Stock              
Class Of Stock [Line Items]              
Aggregate stock issuance (in shares)   15,263,653          
Increase in shares outstanding   24,923,349          
Common stock, shares issued     71,824,917   68,518,779    
Treasury stock, shares     7,894,635   5,873,180    
Common stock, shares outstanding     63,930,282   62,645,599    
Number of shares of common stock to be issued upon exchange of a partnership unit     1        
Class A Common Stock | Share Repurchase Plan              
Class Of Stock [Line Items]              
Share value authorized for repurchase | $           $ 100,000 $ 100,000
Value of remaining shares authorized for repurchase | $     $ 109,025        
Class A Common Stock | Group LP              
Class Of Stock [Line Items]              
Common stock, shares outstanding     63,930,282   62,645,599    
Class B Common Stock              
Class Of Stock [Line Items]              
Increase in shares outstanding   36,158,698          
Common stock, shares issued     4,685,898   4,686,344    
Common stock, shares outstanding     4,685,898   4,686,344    
Ratio of subscription price to the initial public offering price of shares of common stock 0.00055            
Dividends payable ratio to outstanding shares of publicly traded common stock 0.00055            
Stock purchased     24,919,744        
Purchase cost | $     $ 550        
v3.22.1
Related-Party Transactions - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Related-party transactions      
Compensation and benefits expense related to tranche of promissory note $ 176,637 $ 156,499  
Unsecured Promissory Notes      
Related-party transactions      
Compensation and benefits expense related to tranche of promissory note 100    
Manager | Aircraft Lease Entered into During August 2014      
Related-party transactions      
Expenses 324 324  
Employees      
Related-party transactions      
Unsecured promissory notes from employees 119   $ 219
Employees | Unsecured Promissory Notes      
Related-party transactions      
Principal repayments 0 70  
Interest income recognized $ 5 5  
Employees | Minimum | Unsecured Promissory Notes      
Related-party transactions      
Interest rates (as a percent) 3.00%    
Employees | Maximum | Unsecured Promissory Notes      
Related-party transactions      
Interest rates (as a percent) 4.00%    
Moelis Asset Management LP      
Related-party transactions      
Fee for services $ 55 57  
Due from related party 0   0
Revenue from related parties 159 0  
Atlas Crest Entities      
Related-party transactions      
Fee for services 30 $ 50  
Fee for services peer month 10    
Due from related party $ 0   $ 0
v3.22.1
Regulatory Requirements - Additional Information (Details) - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Regulatory Requirements    
Minimum net capital requirement $ 250  
U.S. Broker Dealer    
Regulatory Requirements    
Net capital 205,967 $ 180,342
Net capital in excess of required net capital $ 205,717 $ 180,092
v3.22.1
Commitments and Contingencies - Additional Information (Details) - USD ($)
 3 Months Ended
May 24, 2021
Mar. 31, 2022
Dec. 31, 2021
Bank line of credit      
Available credit under the facility   $ 64,227,000  
Revolving Credit Facility Due at May 24, 2023      
Bank line of credit      
Commitment amount $ 30,000,000    
Maturity date May 24, 2023    
Reference rate (as a percent)   Prime rate  
Borrowings under the credit facility   $ 0  
Available credit under the facility   $ 30,000,000  
Line of credit facility credit period to borrow capital May 24, 2022    
Line of credit facility, frequency of payments   quarterly  
Revolving Credit Facility      
Bank line of credit      
Fixed rate of interest (as a percent)   3.50%  
Borrowings under the credit facility   $ 0 $ 0
Standby Letters of Credit      
Bank line of credit      
Letters of credit outstanding   $ 773,000  
Fee on the outstanding balances (as a percent)   1.00%  
LIBOR | Revolving Credit Facility      
Bank line of credit      
Interest rate margin (as a percent)   1.00%  
Reference rate (as a percent)   LIBOR  
Prime | Revolving Credit Facility      
Bank line of credit      
Interest rate margin (as a percent)   (1.50%)  
Reference rate (as a percent)   Prime  
Secured Bank Line of Credit      
Bank line of credit      
Commitment amount   $ 65,000,000  
Minimum days to issue termination notice   60 days  
Maturity date   Jun. 30, 2023  
v3.22.1
Commitments and Contingencies - Schedule of Additional Leases Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Supplemental Income Statement Information:    
Operating lease cost $ 5,597 $ 7,154
Cash paid for amounts included in the measurement of lease liabilities:    
Net operating cash outflows for operating leases $ 5,767 5,980
Right-of-use assets obtained in exchange for lease obligations (e.g. new leases and amendments commenced during the period):   $ 321
Other Information    
Weighted-average remaining lease term - operating leases 13 years 1 month 28 days 13 years 8 months 8 days
Weighted-average discount rate - operating leases 3.52% 3.52%
v3.22.1
Commitments and Contingencies - Schedule of Future Minimum Rental Payments Required Under Operating Leases in Place (Details) - USD ($)
$ in Thousands
Mar. 31, 2022
Dec. 31, 2021
Sublease Income    
Remainder of 2022 $ (659)  
2023 (878)  
2024 (878)  
2025 (439)  
Total Payments (2,854)  
Operating Leases    
Remainder of 2022 16,792  
2023 21,964  
2024 20,066  
2025 17,375  
2026 16,300  
Thereafter 162,584  
Total Payments 255,081  
Less: Tenant improvement allowances (14,303)  
Less: Present value adjustment (53,371)  
Operating Lease, Liability $ 187,407 $ 191,890
v3.22.1
Employee Benefit Plans - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Retirement Benefits [Abstract]    
Minimum age required to be eligible to participate in the 401(k) plan 21 years  
Expenses accrued relating to employer matching contributions $ 715 $ 715
v3.22.1
Income Taxes - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Income Tax Disclosure [Abstract]    
Provision (benefit) for income taxes $ 13,598 $ (176)
Effective tax rate (as a percent) 15.60% (0.20%)
Excess tax benefit $ (8,551) $ (17,542)
v3.22.1
Revenues and Business Information - Schedule of Geographical Distribution of Revenues and Assets (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Revenues From External Customers And Long Lived Assets [Line Items]      
Revenues $ 302,088 $ 263,866  
Total assets 1,097,279   $ 1,555,681
United States      
Revenues From External Customers And Long Lived Assets [Line Items]      
Revenues 248,326 206,252  
Total assets 932,684   1,356,193
Europe      
Revenues From External Customers And Long Lived Assets [Line Items]      
Revenues 45,378 43,716  
Total assets 83,845   92,605
Rest of World      
Revenues From External Customers And Long Lived Assets [Line Items]      
Revenues 8,384 $ 13,898  
Total assets $ 80,750   $ 106,883
v3.22.1
Revenues and Business Information - Additional Information (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2022
Mar. 31, 2021
Dec. 31, 2021
Segment Reporting [Abstract]      
Deferred revenue $ 5,573   $ 4,539
Revenues recognized from opening balance of deferred revenues $ 2,873 $ 1,682  
v3.22.1
Subsequent Events - Additional Information (Details) - Subsequent Event
Apr. 27, 2022
$ / shares
Subsequent Event [Line Items]  
Dividends declared per share $ 0.60
Dividend payable date Jun. 08, 2022
Dividend payable record date May 09, 2022