Quick Take on 2Q26 Earnings Result: Non-Comp Expense Surprise

Research evidence excerpt

Quick Take on 2Q26 Earnings Result: Non-Comp Expense Surprise

UpdateMcontinued hiring with 4 SMDs joining since last earnings call and 7 more

committed to join. Management reiterated the intention to continue to make

gradual comp ratio improvement, while balancing this with continued hiring

amid a healthy talent pipeline.

• Management comments were optimistic on the pipeline resilience, in line

with our expectations. EVR highlighted a near record backlog and

substantial client engagement. This drives EVR's confidence in a strong 2H26

and continued momentum into next year, with a positive outlook across

EVR's business lines. Activity levels are moving higher across both sponsor

and middle market banking, but not yet matching large cap strategic activity

levels, consistent with prior messaging. Potential rate hikes appear to be less

of a concern. EVR said interest rates are unlikely to materially impact M&A

or broader investment banking activity, arguing financing remains readily

available and that the market is being driven by structural factors rather

than interest rates.

Exhibit 1: EVR Advisory was a rare miss for the first time in over two years

EVR: Advisory Revenue Beats/Misses vs. Consensus

100%

80%

60%

40%

20%

0%

-20%

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26

Source: Visible Alpha, Morgan Stanley Research

What We Changed: Lowering 2026 EPS by -57c (3%) to $21.02, mainly on lower

Advisory revenue, higher non-comp expenses, and higher tax rate, partially offset by

lower comp expenses, higher Equity Underwriting revenue, and lower share count.

Lowering 2027 EPS by -98c (-4%) to $26.87, mainly on higher non-comp expenses