Lincoln International, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, good morning, everyone.

Welcome to Lincoln International's earnings call for the second quarter of 2026. Earlier today, we posted our earnings release and an investor presentation on the investor relations section of our website at www.lcln.com. A replay of today's call will also be available on our website following the conclusion of the call. Before we begin, I'd like to remind everyone that today's discussion may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to our earnings release and our filings with the SEC. Except as required by applicable law, Lincoln International assumes no duty to update or revise these forward-looking statements.

In addition, during today's call, we will discuss certain non-GAAP financial measures. We believe these measures provide useful supplemental information to investors regarding the performance of our business. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the earnings release and our investor presentation, which is available on our website. Joining me on today's call are Rob Brown, Chief Executive Officer, Theodore Heidloff, Chief Financial Officer, and Brian Garfield, Head of Portfolio Valuations. Rob and Ted will provide opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Rob.

Thank you, Ally, thank you everyone for joining us this morning. We are pleased to report record second quarter and first half revenues and adjusted earnings for our initial quarterly results as a public company. These results reflect broad-based strength across both of our businesses, momentum we're seeing in the private capital markets, and the investments we've made over the past several years. As you likely know, during the quarter, we completed our successful initial public offering and began trading on the New York Stock Exchange on May 20th. We are very excited to welcome all of our new shareholders and remain focused on creating long-term value for all stakeholders. Becoming a public company provides us with the capital and flexibility to invest for growth, while importantly preserving our culture and broadening ownership across the organization.

All of this positions us to accelerate towards our long-term vision of becoming the best investment banking advisory firm in the global private capital markets. In the second quarter, we reported $226 million of revenue, reflecting growth of 51% year-over-year and 43% growth from our first quarter this year. Adjusted operating margin was 20% in the second quarter, and adjusted net income grew 48% from the prior year period. Our strong performance in the second quarter was driven by both of our business segments, with investment banking revenues up 56% and valuation and opinions revenue up 35% from the second quarter of 2025. The diversification within each of our segments contributed to our strong results with M&A, capital advisory, Private Funds Advisory, portfolio valuations, and transaction opinions each generating double-digit revenue growth.

We believe these results reflect the breadth of our platform, our authentic client relationships, and deep sector expertise, which has allowed us to capture market share. Our performance also reflects an improving market backdrop, although the recovery clearly has not been linear. Robust performance in the second quarter relative to the first quarter aligned with an improving macro environment, as pronounced challenges earlier in the year gave way to more positive trends. As the second quarter progressed, moderating geopolitical risks and a healthy economy supported market improvements and a higher level of confidence. As M&A picked up and while capital remained accessible, we saw pricing becoming more transparent and buyers and sellers gaining conviction to transact. While markets do remain selective, companies and financial sponsors are increasingly looking beyond near-term volatility and focusing on executing long-term strategic priorities.

While we believe this recovery is in its early stages and some sectors do lag, private equity remains a powerful catalyst for future M&A activity. Elevated dry powder, extended hold periods, and the large inventory of portfolio companies continue to create pressure to both deploy capital and realize investments. More broadly, strong corporate fundamentals, stable interest rates, and continued access to financing have reinforced confidence. At the same time, uncertainty has not disappeared, and we do continue to closely monitor the macroeconomic and geopolitical factors that affect our markets, as well as the overall business performance of our clients. We believe, however, that the environment today is more constructive than it was during the first quarter and that the pace of transaction activity has the potential to build momentum. We're seeing these trends across each of our business segments.

Within investment banking, M&A activity in both the U.S. and Europe accelerated as the year progressed, particularly in industrials and business services. Our software practice, which for us is underweighted relative to our other sectors, continued to face some headwinds. However, even that market is beginning to improve as it becomes more clear which companies stand to benefit from artificial intelligence and which may face greater disruption as a result of it. Overall, our near record backlog continues to build, and it's supported by strong new business activity. Beyond M&A activity, capital advisory performed well across both healthy financings and distressed situations. Private Funds Advisory continues to see demand for capital solutions, including secondary transactions.

We believe the continued growth of both capital advisory and Private Funds Advisory highlights the benefits for our clients of our full suite of solutions, as well as the material investments in talent that we've made in both of these businesses over the past few years. Our valuations and opinions business also continued strong momentum as demand for portfolio valuations and transaction opinions increased. This market continues to expand. It's supported by growth in assets under management, more frequent reporting requirements, and the expansion of retail-oriented market products, and the strong level of continuation vehicles and other secondary transactions, particularly for our opinion business. These trends broaden the universe of investments requiring third-party valuations, increase the frequency of valuation activity, and have driven greater demand for fairness and solvency opinions. Supporting this growth is our continued investment in talent.

In addition to the 6 managing directors promoted at the beginning of the year, 7 managing directors joined us as lateral hires in the first half of 2026 across both the U.S. and Europe. This brings our total managing directors to 162 firm wide. These hires included senior people in key sectors such as asset and wealth management, pharmaceutical services, technology, restructuring, capital advisory, and transaction opinions. We have more managing directors joining us later in the year in a robust pipeline of strong lateral and internal managing director candidates. In recent years, we've prioritized managing director hiring to drive growth and improve productivity. Throughout 2024 and 2025, after carefully mapping our needs in new and existing sectors, as well as refining our recruiting strategy, we hired more than 30 managing directors across nearly all products and geographies.

As these managing directors ramp up in productivity, they are starting to contribute more meaningfully to our results, and we expect this impact to continue to grow as they further integrate into our platform. As we look ahead, we remain optimistic about the long-term growth of the private capital markets and the opportunities that it creates for Lincoln. The first half of 2026 demonstrated the market's ability to absorb volatility and investors' ability to pivot and recalibrate business strategies. We believe our strong market position, reputation for excellence, deep relationships, unique data insights, and very importantly, our differentiated culture, position us well to benefit from the positive trends in our markets, and our results this quarter reinforce our confidence in the strategy we have been executing. Overall, we're encouraged by both our performance and the improving market backdrop.

We believe we're entering the second half of the year with strong momentum, a healthy pipeline, and a diversified platform that positions us well for continued growth. With that, I would like to turn the call over to Ted to review our financial results in more detail.

Thank you, Rob. We're pleased to report strong second quarter and first half results following our initial public offering. It's been an exciting period of growth and transition for our firm and our people. Our performance this quarter reflects strong revenue growth in both of our businesses, a disciplined focus on operating margins, and our strength and balance sheet post IPO, which provides flexibility and the ability to invest for growth. Before reviewing our financial results in greater detail, I'd like to note that my comments today will focus on adjusted financial results and that our acquisition of MarshBerry in October of 2025 impacts the comparability of 2026 results as compared to the prior year.