Perella Weinberg Partners 10-Q

Item 1. Financial Statements (Unaudited) Perella Weinberg Partners Condensed Consolidated Statements of Financial Condition (Unaudited) (Dollars in Thousands, Except Per Share Amounts) June 30, 2023 December 31, 2022 Assets Cash and cash equivalents $ 129,761 $ 171,570 Restricted cash 2,649 2,596 Investments in short-term marketable debt securities 50,004 140,110 Accounts receivable, net of allowance 50,959 67,906 Due from related parties 3,499 3,362 Fixed assets, net of accumulated depreciation and amortization 70,977 48,390 Intangible assets, net of accumulated amortization 22,482 25,772 Goodwill 34,383 34,383 Prepaid expenses and other assets 33,819 36,190 Right-of-use lease assets 147,631 153,720 Deferred tax assets, net 35,938 33,094 Total assets $ 582,102 $ 717,093 Liabilities and Equity Accrued compensation and benefits $ 90,409 $ 217,011 Accounts payable, accrued expenses and other liabilities 34,808 46,336 Deferred revenue 2,178 5,014 Lease liabilities 171,323 165,601 Amount due pursuant to tax receivable agreement 25,116 22,991 Total liabilities 323,834 456,953 Commitments and Contingencies (Note 17) Class A common stock, par value $ 0.0001 per share ( 1,500,000,000 shares authorized, 54,371,216 issued and 41,625,690 outstanding at June 30, 2023; 1,500,000,000 shares authorized, 52,237,247 issued and 41,744,961 outstanding at December 31, 2022) 5 5 Class B common stock, par value $ 0.0001 per share ( 600,000,000 shares authorized, 43,778,015 issued and outstanding at June 30, 2023; 600,000,000 shares authorized, 44,563,877 issued and outstanding at December 31, 2022) 4 4 Preferred stock, par value $ 0.0001 per share ( 100,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022) — — Additional paid-in-capital 279,317 242,129 Retained earnings (accumulated deficit) ( 32,616 ) ( 18,071 ) Accumulated other comprehensive income (loss) ( 4,822 ) ( 6,538 ) Treasury stock, at cost ( 12,745,526 and 10,492,286 shares of Class A common stock at June 30, 2023 and December 31, 2022, respectively) ( 101,074 ) ( 80,067 ) Total Perella Weinberg Partners equity 140,814 137,462 Non-controlling interests 117,454 122,678 Total equity 258,268 260,140 Total liabilities and equity $ 582,102 $ 717,093 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 3 Perella Weinberg Partners Condensed Consolidated Statements of Operations (Unaudited) (Dollars in Thousands, Except Per Share Amounts) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues $ 165,545 $ 151,104 $ 296,971 $ 302,980 Expenses Compensation and benefits 106,216 90,587 176,179 177,832 Equity-based compensation 42,212 36,427 89,883 77,317 Total compensation and benefits 148,428 127,014 266,062 255,149 Professional fees 8,737 7,419 16,290 17,722 Technology and infrastructure 9,293 7,521 17,805 15,077 Rent and occupancy 6,678 5,378 14,092 11,107 Travel and related expenses 4,726 3,641 9,500 5,935 General, administrative and other expenses 5,796 6,491 11,190 11,766 Depreciation and amortization 3,639 2,653 6,474 5,596 Total expenses 187,297 160,117 341,413 322,352 Operating income (loss) ( 21,752 ) ( 9,013 ) ( 44,442 ) ( 19,372 ) Non-operating income (expenses) Related party income 276 950 549 1,508 Other income (expense) ( 1,337 ) 3,776 ( 1,054 ) 5,619 Change in fair value of warrant liabilities — 10,094 — 22,100 Total non-operating income (expenses) ( 1,061 ) 14,820 ( 505 ) 29,227 Income (loss) before income taxes ( 22,813 ) 5,807 ( 44,947 ) 9,855 Income tax expense (benefit) ( 4,543 ) 3,141 743 6,137 Net income (loss) ( 18,270 ) 2,666 ( 45,690 ) 3,718 Less: Net income (loss) attributable to non-controlling interests ( 18,629 ) ( 6,599 ) ( 40,926 ) ( 14,441 ) Net income (loss) attributable to Perella Weinberg Partners $ 359 $ 9,265 $ ( 4,764 ) $ 18,159 Net income (loss) per share attributable to Class A common shareholders Basic $ 0.01 $ 0.21 $ ( 0.11 ) $ 0.40 Diluted $ ( 0.19 ) $ 0.00 $ ( 0.56 ) $ ( 0.01 ) Weighted-average shares of Class A common stock outstanding Basic 42,743,611 44,584,181 42,531,895 45,247,373 Diluted 86,521,626 90,688,871 86,566,075 91,953,077 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 4 Perella Weinberg Partners Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Dollars in Thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (loss) $ ( 18,270 ) $ 2,666 $ ( 45,690 ) $ 3,718 Foreign currency translation gain (loss), net of tax 1,898 ( 5,177 ) 3,483 ( 7,279 ) Comprehensive income (loss) ( 16,372 ) ( 2,511 ) ( 42,207 ) ( 3,561 ) Less: Comprehensive income (loss) attributable to non-controlling interests ( 17,661 ) ( 9,228 ) ( 39,159 ) ( 18,131 ) Comprehensive income (loss) attributable to Perella Weinberg Partners $ 1,289 $ 6,717 $ ( 3,048 ) $ 14,570 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 5 Perella Weinberg Partners Condensed Consolidated Statements of Changes in Equity (Unaudited) (Dollars in Thousands, Except Per Share Amounts) Shares Class A Common Stock Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Non- Controlling Interests Total Equity Balance at December 31, 2021 43,649,319 50,154,199 ( 1,000,000 ) $ 4 $ 5 $ ( 12,000 ) $ 158,131 $ ( 18,075 ) $ ( 1,746 ) $ 145,033 $ 271,352 Net income (loss) — — — — — — — 8,894 — ( 7,842 ) 1,052 Equity-based awards — — — 22,695 — 18,710 41,405 Distributions to partners — — — — — — — — — ( 15,823 ) ( 15,823 ) Issuance of Class A common stock for vested PWP Incentive Plan Awards 601,098 — — — — — — — — — — Withholding payments on vested PWP Incentive Plan Awards — — — — — — ( 6,075 ) — — — ( 6,075 ) Dividends declared ($ 0.07 per share of Class A common stock) — — — — — — 116 ( 4,229 ) — — ( 4,113 ) Foreign currency translation gain (loss) — — — — — — — — ( 1,040 ) ( 1,062 ) ( 2,102 ) Other — — — — — — 734 — — 1,265 1,999 Issuance of Class A common stock and exchange of PWP OpCo Units with corresponding Class B common stock for cash using Offering proceeds (Note 9—Stockholders’ Equity) 3,502,033 ( 3,498,534 ) — 1 — — ( 538 ) — — — ( 537 ) Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity) 337,048 ( 336,712 ) — — — — 17 — — — 17 Treasury stock purchase — — ( 172,303 ) — — ( 1,598 ) — — — — ( 1,598 ) Change in ownership interests — — — — — — 4,665 — — ( 4,665 ) — Balance at March 31, 2022 48,089,498 46,318,953 ( 1,172,303 ) $ 5 $ 5 $ ( 13,598 ) $ 179,745 $ ( 13,410 ) $ ( 2,786 ) $ 135,616 $ 285,577 Net income (loss) — — — — — — — 9,265 — ( 6,599 ) 2,666 Equity-based awards — — — — — — 18,432 — — 18,525 36,957 Distributions to partners — — — — — — — — — ( 2,856 ) ( 2,856 ) Issuance of Class A common stock for vested PWP Incentive Plan Awards 66,116 — — — — — — — — — — Withholding payments on vested PWP Incentive Plan Awards — — — — — — ( 359 ) — — — ( 359 ) Dividends declared ($ 0.07 per share of Class A common stock) — — — — — — 134 ( 4,689 ) — — ( 4,555 ) Foreign currency translation gain (loss) — — — — — — — — ( 2,548 ) ( 2,629 ) ( 5,177 ) Other — — — — ( 8 ) — — ( 6 ) ( 14 ) Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity) 629,591 ( 628,965 ) — — — — 263 — — — 263 Treasury stock purchase — — ( 6,267,904 ) — — ( 43,689 ) — — — — ( 43,689 ) Change in ownership interests — — — — — — 5,654 — — ( 5,654 ) — Balance at June 30, 2022 48,785,205 45,689,988 ( 7,440,207 ) $ 5 $ 5 $ ( 57,287 ) $ 203,861 $ ( 8,834 ) $ ( 5,334 ) $ 136,397 $ 268,813 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 6 Perella Weinberg Partners Condensed Consolidated Statements of Changes in Equity (Unaudited) (Dollars in Thousands, Except Per Share Amounts) Shares Class A Common Stock Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Non- Controlling Interests Total Equity Balance at December 31, 2022 52,237,247 44,563,877 ( 10,492,286 ) $ 5 $ 4 $ ( 80,067 ) $ 242,129 $ ( 18,071 ) $ ( 6,538 ) $ 122,678 $ 260,140 Net income (loss) — — — — — — — ( 5,123 ) — ( 22,297 ) ( 27,420 ) Equity-based awards — — — — — — 27,932 — — 20,334 48,266 Distributions to partners — — — — — — — — — ( 3,119 ) ( 3,119 ) Issuance of Class A common stock for vested PWP Incentive Plan Awards 1,250,162 — 99,057 — — 1,189 ( 1,189 ) — — — — Withholding payments on vested PWP Incentive Plan Awards — — — — — — ( 11,356 ) — — — ( 11,356 ) Dividends declared ($ 0.07 per share of Class A common stock) — — — — — — 169 ( 4,925 ) — — ( 4,756 ) Foreign currency translation gain (loss) — — — — — — — — 786 799 1,585 Other — — — — — — ( 14 ) — — ( 17 ) ( 31 ) Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity) 786,644 ( 785,862 ) — — — — 457 — — — 457 Treasury stock purchase — — ( 1,457,304 ) — — ( 14,754 ) — — — — ( 14,754 ) Change in ownership interests — — — — — — 2,678 — — ( 2,678 ) — Balance at March 31, 2023 54,274,053 43,778,015 ( 11,850,533 ) $ 5 $ 4 $ ( 93,632 ) $ 260,806 $ ( 28,119 ) $ ( 5,752 ) $ 115,700 $ 249,012 Net income (loss) — — — — — — — 359 — ( 18,629 ) ( 18,270 ) Equity-based awards — — — — — — 24,173 — — 18,407 42,580 Distributions to partners — — — — — — — — — ( 5,692 ) ( 5,692 ) Issuance of Class A common stock for vested PWP Incentive Plan Awards 97,163 — 24,386 — — 293 ( 189 ) (98) — — 6 Withholding payments on vested PWP Incentive Plan Awards — — — — — — ( 453 ) — — — ( 453 ) Dividends declared ($ 0.07 per share of Class A common stock) — — — — — — 156 ( 4,758 ) — — ( 4,602 ) Foreign currency translation gain (loss) — — — — — — — — 930 968 1,898 Other — — — — — — 747 — — 777 1,524 Treasury stock purchase — — ( 919,379 ) — — ( 7,735 ) — — — — ( 7,735 ) Change in ownership interests — — — — — — ( 5,923 ) — — 5,923 — Balance at June 30, 2023 54,371,216 43,778,015 ( 12,745,526 ) $ 5 $ 4 $ ( 101,074 ) $ 279,317 $ ( 32,616 ) $ ( 4,822 ) $ 117,454 $ 258,268 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 7 Perella Weinberg Partners Condensed Consolidated Statements of Cash Flows (Unaudited) (Dollars in Thousands) Six Months Ended June 30, 2023 2022 Cash flows from operating activities Net income (loss) $ ( 45,690 ) $ 3,718 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Equity-based awards vesting expense 90,846 78,362 Depreciation and amortization 6,474 5,596 Change in fair value of warrant liabilities — ( 22,100 ) Foreign currency revaluation 1,401 — Non-cash operating lease expense 7,006 7,694 Deferred taxes 343 ( 1,217 ) Other 1,144 1,250 Decrease (increase) in operating assets: Accounts receivable, net of allowance 16,431 4,691 Due from related parties ( 138 ) 587 Prepaid expenses and other assets 1,364 1,336 Increase (decrease) in operating liabilities: Accrued compensation and benefits ( 126,207 ) ( 212,126 ) Accounts payable, accrued expenses and other liabilities ( 5,127 ) ( 1,246 ) Deferred revenue ( 2,906 ) ( 2,966 ) Lease liabilities 4,692 ( 8,819 ) Amount due pursuant to tax receivable agreement ( 472 ) — Net cash provided by (used in) operating activities ( 50,839 ) ( 145,240 ) Cash flows from investing activities Purchases of fixed assets ( 34,829 ) ( 3,959 ) Purchases of investments in short-term marketable debt securities ( 49,733 ) ( 115,001 ) Maturities of investments in short-term marketable debt securities 140,551 — Other 488 — Net cash provided by (used in) investing activities 56,477 ( 118,960 ) Cash flows from financing activities Proceeds from the Offering, net of underwriting discount — 36,526 Exchange of PWP OpCo Units and corresponding Class B common stock for cash using Offering proceeds — ( 36,526 ) Payment of offering costs — ( 798 ) Distributions to partners ( 8,811 ) ( 18,679 ) Dividends paid on Class A and Class B common stock ( 6,502 ) ( 6,569 ) Withholding payments for vested PWP Incentive Plan Awards ( 11,809 ) ( 6,434 ) Treasury stock purchases ( 22,489 ) ( 44,740 ) Net cash provided by (used in) financing activities ( 49,611 ) ( 77,220 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,217 ( 10,331 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 41,756 ) ( 351,751 ) Cash, cash equivalents and restricted cash, beginning of period 174,166 504,775 Cash, cash equivalents and restricted cash, end of period $ 132,410 $ 153,024 Supplemental disclosure of non-cash activities Lease liabilities arising from obtaining right-of-use lease assets $ 178 $ 67,876 Accrued capital expenditures $ 6,906 $ — Accrued dividends and dividend equivalent units on unvested PWP Incentive Plan Awards $ 3,781 $ 2,721 Non-cash paydown of Partner promissory notes $ 1,547 $ 2,567 Deferred tax effect resulting from exchanges of PWP OpCo Units, net of amounts payable under tax receivable agreement $ 457 $ 1,061 Accrued treasury stock purchases $ — $ 547 Pending broker-to-broker trades $ — $ 2,364 Supplemental disclosures of cash flow information Cash paid for income taxes $ 4,185 $ 8,925 The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited) 8 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 1—Organization and Nature of Business Perella Weinberg Partners and its consolidated subsidiaries, including PWP Holdings LP (“PWP OpCo”) (collectively, “PWP” and the “Company”), is a global independent advisory firm that provides strategic and financial advice to a wide range of clients. The Company’s activities as an investment banking advisory firm constitute a single business segment that provides a range of advisory services, including advice related to mission-critical strategic and financial decisions, mergers and acquisitions (“M&A”) execution, shareholder and defense advisory, financing and capital solutions advice with resources focused on restructuring and liability management, capital markets advisory, private capital placement, as well as specialized underwriting and research services primarily for the energy and related industries. Perella Weinberg Partners (formerly known as FinTech Acquisition Corp. IV (“FTIV”)) was incorporated in Delaware on November 20, 2018 as a special purpose acquisition company for the purpose of acquiring businesses or assets through a business combination. On June 24, 2021, the Company consummated a business combination pursuant to a Business Combination Agreement among various parties, resulting in FTIV acquiring partnership interests in PWP OpCo, and PWP OpCo becoming jointly-owned by Perella Weinberg Partners, PWP Professional Partners LP (“Professional Partners”) and existing partners, as part of an umbrella limited partnership C-corporation (Up-C) structure (the “Business Combination”). The operations of PWP OpCo are conducted through a wholly-owned subsidiary, Perella Weinberg Partners Group LP, and its subsidiaries which are consolidated in these financial statements. PWP GP LLC is the general partner that controls PWP OpCo. The limited partner interests of PWP OpCo are held by Investor Limited Partners (the “ILPs”) and Professional Partners. The Company shareholders are entitled to receive a portion of PWP OpCo’s economics through their direct ownership interests in shares of Class A common stock of PWP. The non-controlling interest owners of PWP OpCo receive economics through ownership of PWP OpCo Class A partnership units (“PWP OpCo Units”). See Note 9—Stockholders’ Equity for additional information. Note 2—Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements reflect the financial condition, results of operations and cash flows of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All intercompany balances and transactions between the consolidated subsidiaries comprising the Company have been eliminated in the accompanying condensed consolidated financial statements. These condensed consolidated financial statements and notes thereto are unaudited, and as permitted by the interim reporting rules and regulations set forth by the Securities and Exchange Commission (the “SEC”), exclude certain financial information and note disclosures normally included in annual audited financial statements prepared in accordance with U.S. GAAP. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. The condensed consolidated financial statements reflect all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods. Consolidation The Company’s policy is to consolidate entities in which the Company has a controlling financial interest and variable interest entities where the Company is deemed to be the primary beneficiary. The Company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) when it has both (i) the power to make the decisions that most significantly affect the economic performance of the VIE and (ii) the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. PWP is the primary beneficiary of and consolidates PWP OpCo, a VIE. As of June 30, 2023 and December 31, 2022, the net assets of PWP OpCo were $ 239.5 million and $ 237.9 million, respectively. As of June 30, 2023 and December 31, 2022, the Company did not consolidate any VIEs other than PWP OpCo. Use of Estimates The preparation of the condensed consolidated financial statements and related disclosures in accordance 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 condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and the assumptions underlying these estimates are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary. 9 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) In preparing the condensed consolidated financial statements, management makes estimates regarding the measurement of amount due pursuant to the tax receivable agreement, measurement and timing of revenue recognition, assumptions used in the provision for income taxes, measurement of equity-based compensation, evaluation of goodwill and intangible assets, fair value measurement of financial instruments, 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 includes both cash and interest-bearing money market accounts and cash equivalents are defined as highly liquid investments with original maturities of three months or less from the date of purchase. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents. The Company maintains cash with banks and brokerage firms, which from time to time may exceed federally insured limits. Restricted cash represents cash that is not readily available for general purpose cash needs. As of June 30, 2023 and December 31, 2022, the Company had restricted cash of $ 2.6 million maintained as collateral for letters of credit related to certain office leases. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of June 30, 2023 and June 30, 2022 is presented below: June 30, 2023 2022 Cash $ 129,761 $ 150,286 Cash equivalents — — Restricted cash 2,649 2,738 Cash, cash equivalents and restricted cash as shown on statements of cash flows $ 132,410 $ 153,024 Foreign Currencies In the normal course of business, the Company and its subsidiaries may enter into transactions denominated in a non-functional currency. The Company recognized net foreign exchange gains (losses) arising from such transactions of $( 1.1 ) million and $( 2.2 ) million during the three and six months ended June 30, 2023, respectively, and $ 3.8 million and $ 5.2 million for the three and six months ended June 30, 2022, respectively, which are included in Other income (expense) in the Condensed Consolidated Statements of Operations. In addition, the Company consolidates its foreign subsidiaries that have non-U.S. dollar functional currencies. Non-U.S. dollar denominated assets and liabilities are translated to U.S. dollars at the exchange rate prevailing at the reporting date and income, expenses, gains and losses are generally translated using the average exchange rate throughout the period. Cumulative translation adjustments arising from the translation of non-U.S. dollar denominated operations are included as a component of Accumulated other comprehensive income (loss) in the Condensed Consolidated Statements of Changes in Equity. Recently Adopted Accounting Pronouncements There were no recently adopted accounting pronouncements that had a material effect on the Company’s condensed consolidated financial statements. Future Adoption of Accounting Pronouncements No changes to U.S. GAAP that are not yet effective are expected to have a material effect on the Company’s condensed consolidated financial statements. 10 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 3—Revenue and Receivables from Contracts with Customers The following table disaggregates the Company’s revenue between over time and point in time recognition: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Over time $ 157,469 $ 149,287 $ 281,798 $ 295,885 Point in time 8,076 1,817 15,173 7,095 Total revenues $ 165,545 $ 151,104 $ 296,971 $ 302,980 Reimbursable expenses billed to clients were $ 1.3 million and $ 2.5 million for the three and six months ended June 30, 2023, respectively, and $ 0.9 million and $ 1.3 million for the three and six months ended June 30, 2022, respectively. Remaining Performance Obligations and Revenue Recognized from Past Performance As of June 30, 2023, the aggregate amount of the transaction price, as defined in the Accounting Standards Codification (“ASC”), allocated to performance obligations yet to be satisfied was $ 1.7 million, and the Company generally expects to recognize this revenue within the next 12 months. Such amounts primarily relate to the Company’s performance obligations of providing transaction-related advisory services. The Company recognized revenue of $ 86.8 million and $ 181.0 million during the three and six months ended June 30, 2023, respectively, and $ 103.7 million and $ 223.6 million during the three and six months ended June 30, 2022, respectively, related to performance obligations that were satisfied or partially satisfied in prior periods. These amounts were recognized upon the resolution of revenue constraints and uncertainties in the respective periods and were generally related to transaction-related advisory services. Contract Balances As of June 30, 2023 and December 31, 2022, the Company recorded $ 2.2 million and $ 5.0 million, respectively, for contract liabilities which are presented as Deferred revenue on the Condensed Consolidated Statements of Financial Condition. The Company recognized revenue of $ 1.2 million and $ 3.4 million for the three and six months ended June 30, 2023, respectively, and $ 2.8 million and $ 4.9 million for the three and six months ended June 30, 2022, respectively, of the respective beginning deferred revenue balance, which was primarily related to transaction-related advisory services that are recognized over time. Accounts Receivable and Allowance for Credit Losses As of June 30, 2023 and December 31, 2022, $ 6.6 million and $ 5.1 million, respectively, of accrued revenue was included in Accounts receivable, net of allowance on the Condensed Consolidated Statements of Financial Condition. These amounts represent amounts due from clients and are recognized as revenue in accordance with the Company’s revenue recognition policies but unbilled at the end of the period. As of June 30, 2023, certain accounts receivable in the aggregate amount of $ 20.7 million were individually greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients. Of that amount, all was subsequently received after June 30, 2023. As of December 31, 2022, certain accounts receivable in the aggregate amount of $ 28.4 million, were greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients. Of that amount, all was subsequently received after year end. 11 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) The allowance for credit losses activity for the three and six months ended June 30, 2023 and 2022 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Beginning balance $ 1,227 $ 1,378 $ 1,143 $ 1,851 Bad debt expense 903 1,388 1,065 1,672 Write-offs ( 198 ) ( 30 ) ( 281 ) ( 760 ) Recoveries 82 — 82 — Foreign currency translation and other adjustments 7 ( 11 ) 12 ( 38 ) Ending balance $ 2,021 $ 2,725 $ 2,021 $ 2,725 Note 4—Leases The Company leases office space and certain office equipment under operating lease agreements. See the summary below of significant new leases and lease modifications. During the first half of 2022, the Company entered into amendments to its New York and Los Angeles office leases, as well as a new 12-year lease agreement related to the relocation of the Company’s United Kingdom (“U.K.”) office in London. The New York lease amendment extended the term of the lease by approximately 16 years with an expiration of December 31, 2039. The amended term of the Los Angeles lease is scheduled to expire on December 31, 2032. In the second quarter of 2022, the Company’s amended Los Angeles lease commenced and the amended New York lease partially commenced resulting in an increase to Lease liabilities and a corresponding increase to Right-of-use lease assets of $ 66.3 million. In the third quarter of 2022, the New York lease became fully commenced and the London lease also commenced, which resulted in an additional $ 62.3 million increase to Lease liabilities and a corresponding increase to Right-of-use lease assets. Other information as it relates to the Company’s operating leases was as follows: June 30, 2023 December 31, 2022 Weighted-average discount rate - operating leases 4.6 % 4.6 % Weighted-average remaining lease term - operating leases 14.7 years 14.9 years Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Operating lease cost $ 5,388 $ 4,226 $ 10,772 $ 8,861 Variable lease cost 594 565 1,944 1,007 Sublease income - operating leases ( 160 ) ( 160 ) ( 319 ) ( 363 ) Total net lease cost $ 5,822 $ 4,631 $ 12,397 $ 9,505 Net cash outflows (inflows) on operating leases (1) $ ( 2,857 ) $ 4,975 $ ( 466 ) $ 9,963 __________________ (1) Presented net of lease incentives received, including landlord contributions to tenant improvements. 12 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) As of June 30, 2023, the maturities of undiscounted operating lease liabilities of the Company are as follows: Years Ending: Operating Leases Sublease Income Net Payments Remainder of 2023 $ ( 2,881 ) $ 77 $ ( 2,958 ) 2024 7,454 — 7,454 2025 18,367 — 18,367 2026 19,442 — 19,442 2027 18,608 — 18,608 Thereafter 188,581 — 188,581 Total lease payments (1) 249,571 $ 77 $ 249,494 Less: Imputed Interest ( 78,248 ) Total lease liabilities $ 171,323 __________________ (1) Future lease payments are presented net of expected lease incentives, including landlord contributions to tenant improvements. Refer to Note 16—Related Party Transactions for information regarding the Company’s subleasing arrangements. Note 5—Intangible Assets The following table provides the detail of the intangible assets: June 30, 2023 Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 47,400 $ ( 31,205 ) $ 16,195 Trade names and trademarks 18,400 ( 12,113 ) 6,287 Total $ 65,800 $ ( 43,318 ) $ 22,482 December 31, 2022 Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 47,400 $ ( 28,835 ) $ 18,565 Trade names and trademarks 18,400 ( 11,193 ) 7,207 Total $ 65,800 $ ( 40,028 ) $ 25,772 The intangible assets are amortized over an average useful life of ten years . Intangible amortization expense was $ 1.6 million and $ 3.3 million for the three and six months ended June 30, 2023, respectively, and $ 1.6 million and $ 3.3 million for the three and six months ended June 30, 2022, respectively, which is included in Depreciation and amortization in the Condensed Consolidated Statements of Operations. Amortization of intangible assets held at June 30, 2023 is expected to be $ 6.6 million for each of the years ending December 31, 2023, 2024, 2025, and $ 6.0 million for the year ending December 31, 2026. These intangible assets will be fully amortized by November 30, 2026. 13 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 6—Regulatory Requirements The Company has a number of consolidated subsidiaries registered as broker-dealers with regulatory agencies in their respective countries, including the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Canadian Investment Regulatory Organization (“CIRO,” formerly the Investment Industry Regulatory Organization of Canada or “IIROC”), the Financial Conduct Authority (“FCA”) of the U.K. and the Autorité de contrôle prudentiel et de resolution (“ACPR”) of France. None of the SEC regulated subsidiaries hold funds or securities for, or owe money or securities to clients or carry accounts of or for clients, and as such are all exempt from the SEC Customer Protection Rule (Rule 15c3-3). As of June 30, 2023 and December 31, 2022, all regulated subsidiaries were in excess of their applicable minimum capital requirements. As a result of the minimum capital requirements and various regulations on these broker dealers, a portion of the capital of each subsidiary of the Company is restricted and may be unavailable to pay its creditors. Note 7—Fixed Assets Fixed assets are recorded at cost less accumulated depreciation and amortization and consist of the following as of June 30, 2023 and December 31, 2022: June 30, 2023 December 31, 2022 Leasehold improvements $ 65,616 $ 76,389 Furniture and fixtures 11,283 15,313 Equipment 21,111 21,382 Software 5,920 6,945 Total 103,930 120,029 Less: Accumulated depreciation and amortization ( 32,953 ) ( 71,639 ) Fixed assets, net $ 70,977 $ 48,390 Depreciation expense related to fixed assets was $ 1.9 million and $ 3.0 million for the three and six months ended June 30, 2023, respectively, and $ 0.8 million and $ 1.8 million for the three and six months ended June 30, 2022, respectively. Amortization expense related to software development costs was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2023, respectively, and $ 0.3 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively. During the six months ended June 30, 2023, the Company disposed of certain assets, substantially all of which were fully depreciated and related to the renovations and relocation of the New York and London office space. Leasehold improvement assets capitalized during the six months ended June 30, 2023 were largely related to build-out projects associated with new or amended office leases in New York and London. Refer to Note 4—Leases for further information. Note 8—Income Taxes The following table summarizes the Company’s tax position for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Income (loss) before income taxes $ ( 22,813 ) $ 5,807 $ ( 44,947 ) $ 9,855 Income tax expense (benefit) $ ( 4,543 ) $ 3,141 $ 743 $ 6,137 Effective income tax rate 19.9 % 54.1 % ( 1.7 ) % 62.3 % The Company’s overall effective tax rate in each of the periods presented above varies from the U.S. federal statutory rate primarily because (i) a portion of the Company’s income is allocated to non-controlling interests held in PWP OpCo in which the majority of any tax liability on such income is borne by the holders of such non-controlling interests and reported outside of the condensed consolidated financial statements, (ii) a portion of the Company’s compensation expense is non-deductible for tax purposes, and (iii) during the three and six months ended June 30, 2023, the Company recognized a previously unrecognized tax benefit at one of its foreign subsidiaries, as referenced below. 14 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) As of June 30, 2023 and December 31, 2022, the Company recorded a liability for unrecognized tax benefits of $ 2.8 million and $ 5.6 million, respectively, related to potential double taxation at certain of its foreign subsidiaries. During the three and six months ended June 30, 2023, the Company favorably resolved an inquiry from a taxing authority, which caused the Company to change its assessment of the technical merits of this tax position at one of its foreign subsidiaries. The Company does not expect there to be any material changes to uncertain tax positions within 12 months of the reporting date. Note 9—Stockholders’ Equity Share Repurchase Program The Company’s Board of Directors approved a stock repurchase program on February 16, 2022 under which the Company is authorized to repurchase up to $ 100.0 million of the Company’s Class A common stock, and on February 8, 2023, the Board approved an incremental $ 100.0 million, in each case with no requirement to purchase any minimum number of shares. The manner, timing, pricing and amount of any transactions will be subject to the Company’s discretion. During the three and six months ended June 30, 2023, the Company purchased 919,379 and 2,376,683 shares, respectively, resulting in an increase of $ 7.7 million and $ 22.5 million, respectively, at cost, to Treasury stock on the Company’s Condensed Consolidated Statement of Financial Condition. During the three and six months ended June 30, 2022, the Company purchased 6,267,904 and 6,440,207 shares, respectively, resulting in an increase of $ 43.7 million and $ 45.3 million, respectively, at cost, to Treasury stock on the Company’s Condensed Consolidated Statement of Financial Condition. The 11,920,699 shares purchased since inception of the share repurchase program through June 30, 2023 were purchased at an average price per share of $ 7.65 . Non-Controlling Interests Perella Weinberg Partners owns less than 100% of the economic interests in PWP OpCo with the remaining interests held by non-controlling interests. As of June 30, 2023, PWP held a 48.8 % ownership interest in PWP OpCo. Professional Partners and the ILPs owned 43,778,015 PWP OpCo Units as of June 30, 2023, which represented a 51.2 % non-controlling ownership interest in PWP OpCo. These PWP OpCo Units are exchangeable into PWP Class A common stock on a one-for-one basis. Class B-1 and Class B-2 common stock have de minimis economic rights. PWP OpCo Limited Partnership Agreement Exchange Rights In accordance with the Amended and Restated Agreement of Limited Partnership of PWP OpCo, dated as of June 24, 2021 (as amended, restated, modified or supplemented from time to time, the “PWP OpCo LPA”), holders of PWP OpCo Units (“PWP OpCo Unitholders”) (other than the Company) may exchange these units for (i) shares of Class A common stock on a one -for-one basis or (ii) cash from an offering of shares of Class A common stock with the form of consideration determined by the Company. Concurrently with an exchange of PWP OpCo Units for shares of Class A common stock or cash by a PWP OpCo Unitholder who also holds shares of Class B common stock, such PWP OpCo Unitholder will be required to surrender to the Company a number of shares of Class B common stock equal to the number of PWP OpCo Units exchanged, and such shares will be converted into shares of Class A common stock or cash (at the Company’s option) which will be delivered to such PWP OpCo Unitholder at a conversion rate of 0.001 . On January 21, 2022, the Company closed a follow-on public offering of 3,502,033 shares of Class A common stock (the “Offering”) at a public offering price of $ 10.75 per share for total gross proceeds of $ 37.6 million, before deducting underwriting discounts and commissions. All proceeds from the Offering, net of the underwriting discounts and commissions of $ 0.32 per share or an aggregate of $ 1.1 million, were used by the Company to settle an exchange of certain PWP OpCo Units and certain shares of Class B common stock. Under the terms of the underwriting agreement, directors, officers and certain significant shareholders signed customary lockup agreements with respect to their ownership of Class A common stock. Total deferred offering costs of $ 1.3 million for the Offering were netted against the proceeds of the offering in Additional paid-in-capital on the Condensed Consolidated Statements of Financial Condition. The Company settled exchanges of certain PWP OpCo Units and certain shares of Class B common stock for 786,644 shares during the six months ended June 30, 2023, and 629,591 and 966,639 shares, respectively, during the three and six months ended June 30, 2022, of Class A common stock. The exchanges created a step-up in tax basis for which the Company recorded on the Condensed Consolidated Statements of Financial Condition an increase in Deferred tax assets, net, as well as a related increase in Amounts due pursuant to the tax receivable agreement resulting in a net increase to Additional paid-in-capital. There were no exchanges during the three months ended June 30, 2023. 15 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 10—Debt As of June 30, 2023, and December 31, 2022, the Company had no outstanding debt. The Company has a revolving credit facility (the “Revolving Credit Facility”) through a credit agreement with Cadence Bank, N.A. (“Cadence Bank”), dated November 30, 2016 (as amended, the “Credit Agreement”), with an available line of credit of $ 50 million with up to $ 20 million of available incremental revolving commitments. The Company incurred $ 1.8 million in issuance costs related to the Credit Agreement, which were amortized as interest expense using the effective interest method over the life of the Revolving Credit Facility. Interest expense related to the Revolving Credit Facility was immaterial during the three and six months ended June 30, 2023 and June 30, 2022 and is included within Other income (expense) on the Condensed Consolidated Statements of Operations. Unamortized debt issuance costs of $ 0.3 million and $ 0.4 million, as of June 30, 2023 and December 31, 2022, respectively are reported within Prepaid expenses and other assets on the Condensed Consolidated Statements of Financial Position. On June 30, 2023, the Credit Agreement was amended to provide for Term SOFR as the replacement benchmark rate for LIBOR, such that future SOFR-based loans will accrue interest at Term SOFR plus (i) a 0.10 %- 0.25 % per annum spread based on interest payment frequency (with an adjusted Term SOFR floor of 0.25 %) and (ii) a fixed rate of 2.00 % per annum. Note 11—Warrants Warrant Exchange As of June 30, 2023 and December 31, 2022, the Company had no warrants outstanding. On August 23, 2022, the Company concluded an offer to holders of its outstanding warrants which provided such holders the opportunity to receive 0.20 shares of the Company’s Class A common stock in exchange for each warrant tendered by such holders. This offer coincided with a solicitation of consents from holders of the public warrants to amend the warrant agreement (together, the “Warrant Exchange Offer”). Further information regarding the Company’s warrants is described in Note 12—Warrants in the Notes to Consolidated Financial Statements in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Prior to Warrant Exchange Prior to the Warrant Exchange Offer, each warrant entitled the registered holder to purchase one share of Class A common stock at an exercise price of $ 11.50 per share. The warrants met the definition of a derivative under ASC Topic 815, Derivatives and Hedging, and as such, the Company recorded these warrants as liabilities at fair value upon the closing of the Business Combination in accordance with ASC Topic 820, Fair Value Measurement, with subsequent changes in their respective fair values recorded in Change in fair value of warrant liabilities on the Condensed Consolidated Statements of Operations. Note 12—Equity-Based Compensation Further information regarding the Company’s equity-based compensation awards is described in Note 13—Equity-Based Compensation in the Notes to Consolidated Financial Statements in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Concurrent with the Business Combination, the Company adopted the Perella Weinberg Partners 2021 Omnibus Incentive Plan (the “PWP Incentive Plan”), which establishes a plan for the granting of incentive compensation awards measured by reference to PWP Class A common stock (“PWP Incentive Plan Awards”). Under the PWP Incentive Plan, the Company may grant options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance restricted stock units (“PSUs”), stock bonuses, other stock-based awards, cash awards or any combination of the foregoing. The PWP Incentive Plan established a reserve for a one-time grant of awards that occurred in connection with the Business Combination (the “Transaction Pool Reserve”) as well as a reserve for general purpose grants (the “General Share Reserve”). During the third quarter of 2021, in connection with the Business Combination, the Company granted awards (the “Business Combination Awards”) in the form of (i) restricted stock units out of the Transaction Pool Reserve consisting of (a) PSUs that only vest upon the achievement of both service and market conditions and (b) RSUs that vest upon the achievement of service conditions as well as (ii) PSUs out of the General Share Reserve to certain executives and a small number of other partners that vest upon the achievement of both service and market conditions. 16 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) The Company grants RSU awards out of the General Share Reserve from time to time, which vest upon the achievement of service conditions. Additionally, during the six months ended June 30, 2023, the Company granted PSUs from the General Share Reserve that vest upon the achievement of both service and market conditions. During the six months ended June 30, 2023 and 2022, the Company granted 7,857,726 and 6,449,163 awards, respectively, from the General Share Reserve at a weighted average grant date fair value of $ 9.61 and $ 9.90 per award, respectively. Prior to the Business Combination, Professional Partners granted certain equity-based awards to partners providing services to PWP OpCo (the “Legacy Awards”). In connection with the Business Combination, existing Legacy Awards were canceled and replaced by converting each limited partner’s capital interests in Professional Partners attributable to PWP OpCo into (“Professional Partners Awards”). As of June 30, 2023, total unrecognized compensation expense related to all unvested equity-based awards was $ 347.7 million, which is expected to be recognized over a weighted average period of 2.5 years. The following table presents the expense related to awards that were recorded in Professional fees and components of Equity-based compensation included on the Condensed Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Professional fees PWP Incentive Plan Awards $ 368 $ 530 $ 963 $ 1,045 Total Professional fees $ 368 $ 530 $ 963 $ 1,045 Equity-based compensation PWP Incentive Plan Awards $ 23,805 $ 17,902 $ 51,142 $ 40,082 Legacy Awards (1) 3,224 3,338 6,449 6,677 Professional Partners Awards (1) 15,183 15,187 32,292 30,558 Total Equity-based compensation $ 42,212 $ 36,427 $ 89,883 $ 77,317 Income tax benefit of equity-based awards $ 3,065 $ 2,328 $ 6,624 $ 5,567 __________________ (1) The vesting of these awards does not dilute Perella Weinberg Partners shareholders relative to Professional Partners. As such the related equity-based compensation expense is fully attributed to non-controlling interests. Note 13—Other Compensation and Benefits Compensation and benefits includes, but is not limited to, salaries, bonuses (discretionary awards and guaranteed amounts), severance, deferred compensation, benefits and payroll taxes. In all instances, compensation expense is accrued over the requisite service period. Benefit Plans Certain employees participate in employee benefit plans, which consists of defined contribution plans including (i) profit-sharing plans qualified under Section 401(k) of the Internal Revenue Code and (ii) a U.K. pension scheme for U.K. employees and (iii) a Germany pension plan for employees in Germany. Expenses related to the Company’s employee benefit plans were $ 1.7 million and $ 3.4 million for the three and six months ended June 30, 2023, respectively, and $ 1.5 million and $ 2.9 million for the three and six months ended June 30, 2022, respectively, and are included in Compensation and benefits in the Condensed Consolidated Statements of Operations. Business Realignment During the second quarter of 2023, the Company began a review of the business, which will result in employee reductions in order to improve compensation alignment and to provide greater flexibility to advance strategic opportunities (the “Business Realignment”). 17 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) In conjunction with the Business Realignment and for each of three and six months ended June 30, 2023, the Company incurred expenses related to separation and transition benefits of $ 3.8 million and the acceleration of equity-based compensation amortization (net of forfeitures) of $ 1.3 million, recorded in Compensation and benefits and Equity-based compensation, respectively, on the Condensed Consolidated Statements of Operations. Approximately $ 18 million of additional expense is expected to be incurred during the second half of 2023. This estimate is based on certain assumptions, and actual results may differ materially if unanticipated costs are incurred related to the Business Realignment. As of June 30, 2023, the $ 3.3 million obligation related to the Business Realignment was recorded in Accrued compensation and benefits on the Condensed Consolidated Statements of Financial Condition, which reflected payments of $ 0.5 million made during the six months ended June 30, 2023. Note 14—Net Income (Loss) Per Share Attributable to Class A Common Shareholders The calculations of basic and diluted net income (loss) per share attributable to Class A common shareholders are presented below: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net income (loss) attributable to Perella Weinberg Partners – basic $ 359 $ 9,265 $ ( 4,764 ) $ 18,159 Dilutive effect from assumed exchange of PWP OpCo Units, net of tax ( 16,980 ) ( 9,319 ) ( 43,859 ) ( 18,647 ) Net income (loss) attributable to Perella Weinberg Partners – diluted $ ( 16,621 ) $ ( 54 ) $ ( 48,623 ) $ ( 488 ) Denominator: Weighted average shares of Class A common stock outstanding – basic 42,743,611 44,584,181 42,531,895 45,247,373 Weighted average number of incremental shares from assumed exchange of PWP OpCo Units 43,778,015 46,104,690 44,034,180 46,705,704 Weighted average shares of Class A common stock outstanding – diluted 86,521,626 90,688,871 86,566,075 91,953,077 Net income (loss) per share attributable to Class A common shareholders Basic $ 0.01 $ 0.21 $ ( 0.11 ) $ 0.40 Diluted $ ( 0.19 ) $ 0.00 $ ( 0.56 ) $ ( 0.01 ) Basic and diluted net income (loss) per share attributable to Class B common shareholders has not been presented as these shares are entitled to an insignificant amount of economic participation. The Company uses the treasury stock method to determine the potential dilutive effect of unvested PWP Incentive Plan Awards and outstanding warrants (prior to the Warrant Exchange Offer) and the if-converted method to determine the potential dilutive effect of exchanges of PWP OpCo Units into Class A common stock. The Company adjusts net income (loss) attributable to Class A common shareholders under both the treasury stock method and if-converted method for the reallocation of net income (loss) between Class A common shareholders and non-controlling interests that result upon the assumed issuance of dilutive shares of Class A common stock as if the issuance occurred as of the beginning of the applicable period. 18 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) The following table presents the weighted average potentially dilutive shares that were excluded from the calculation of diluted net income (loss) per share under the treasury stock method or if-converted method, as applicable, because the effect of including such potentially dilutive shares was antidilutive for the period presented: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Warrants (1) n/a — n/a — PWP Incentive Plan Awards 275,508 41,654 1,001,289 168,435 Total 275,508 41,654 1,001,289 168,435 __________________ (1) Prior to the Warrant Exchange Offer on August 23, 2022, the warrants were out-of-the-money which resulted in no potentially dilutive shares under the treasury stock method. For the three and six months ended June 30, 2023, the warrants were not outstanding, and thus, they are not applicable. Refer to Note 11—Warrants for further information regarding the Warrant Exchange Offer. Note 15—Fair Value Measurements and Investments 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) based on inputs: Level 1 – Unadjusted quoted prices are available in active markets for identical financial instruments as of the reporting date. Level 2 – Pricing inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3 – Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. 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. As of June 30, 2023 and December 31, 2022, the fair values of cash, restricted cash, accounts receivable, due from related parties, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these items. 19 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Fair Value of Financial Instruments The following table summarizes the categorization and fair value estimate of the Company’s financial instruments that are measured on a recurring basis pursuant to the above fair value hierarchy levels as of June 30, 2023 and December 31, 2022: June 30, 2023 Level 1 Level 2 Level 3 Total Financial asset U.S. Treasury securities (1) $ 50,004 $ — $ — $ 50,004 December 31, 2022 Level 1 Level 2 Level 3 Total Financial assets U.S. Treasury securities (2) $ — $ 140,110 $ — $ 140,110 Cash surrender value of company-owned life insurance — 488 — 488 Total financial assets $ — $ 140,598 $ — $ 140,598 __________________ (1) Consists of U.S. Treasury bills and notes that mature on January 25, 2024. (2) Consists of U.S. Treasury notes that matured on January 31, 2023. The Company had no transfers between fair value levels during the three and six months ended June 30, 2023 and 2022. The Company’s investment in U.S. Treasury securities is presented within Investments in short-term marketable debt securities on the Condensed Consolidated Statements of Financial Condition, and the aggregate cost basis of the investment was $ 49.7 million and $ 139.2 million as of June 30, 2023 and December 31, 2022, respectively. The Company had net realized and unrealized gains (losses) on these investments of $ 0.3 million and $ 0.7 million for the three and six months ended June 30, 2023, respectively, and nominal amounts for the three and six months ended June 30, 2022. The cash surrender value of company-owned life insurance is included in Prepaid expenses and other assets on the Condensed Consolidated Statements of Financial Condition at the amount that could be realized under the contract as of December 31, 2022, which approximates fair value. Equity Method Investments The Company applied the equity method of accounting to its investment in PFAC Holdings I LLC (“PFAC Holdings”), an indirect parent of PWP Forward Acquisition Corp. I (“PFAC”), a special purpose acquisition company. On December 13, 2022, PFAC was dissolved and as a result the Company wrote off its investment in PFAC Holdings. Prior to dissolution, the Company recorded its share of earnings of PFAC Holdings in Other income (expense) on the Condensed Consolidated Statements of Operations . 20 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 16—Related Party Transactions PWP Capital Holdings LP On February 28, 2019, a reorganization of the existing investment banking advisory and asset management businesses of PWP Holdings LP was effected which resulted in the spin-off of its asset management business (the “Separation”). PWP Holdings LP was divided into (i) PWP OpCo, which holds the former advisory business and (ii) PWP Capital Holdings LP, which holds the former asset management business. TSA Agreement – In connection with the Separation, the Company entered into a transition services agreement (the “TSA”) with PWP Capital Holdings LP under which the Company agreed to provide certain administrative services to PWP Capital Holdings LP. Sublease Income – In connection with the Separation, the Company subleases a portion of its office space at its New York location to PWP Capital Holdings LP. Sublease rent payments are due monthly and are based on PWP Capital Holdings LP’s pro-rata portion of the underlying lease agreements including base rent as well as other lease related charges. See additional information regarding the subleases in Note 4—Leases. Compensation Arrangements – In addition, PWP Capital Holdings LP has entered into an arrangement with certain employees of the Company, including members of management, related to services provided directly to PWP Capital Holdings LP. With respect to services provided to PWP Capital Holdings LP, the amounts paid and payable to such employees now and in the future are recognized by PWP Capital Holdings LP. All compensation related to services these employees provide to the Company are included in Compensation and benefits in the Condensed Consolidated Statements of Operations. Amounts due from PWP Capital Holdings LP are reflected as Due from related parties on the Condensed Consolidated Statements of Financial Condition. The following table shows the components of income from PWP Capital Holdings LP reported within Related party income in the Condensed Consolidated Statements of Operations for the periods presented: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 TSA income – Compensation related $ 94 $ 213 $ 186 $ 418 TSA income – Non-compensation related 22 547 44 667 Sublease income 160 160 319 363 Total income from PWP Capital Holdings LP $ 276 $ 920 $ 549 $ 1,448 Tax Receivable Agreement In connection with the Business Combination, the Company entered into a tax receivable agreement with PWP OpCo, Professional Partners and ILPs that provides for payment of 85 % of the amount of cash savings, if any, in U.S. federal, state and local and foreign income taxes that the Company is deemed to realize as a result of (a) each exchange of interests in PWP OpCo for cash or stock of the Company and certain other transactions and (b) payments made under the tax receivable agreement. As of June 30, 2023, the Company had an amount due of $ 25.1 million pursuant to the tax receivable agreement, which represents management’s best estimate of the amounts currently expected to be owed in connection with the tax receivable agreement for the Business Combination and subsequent exchanges made to date and is reported within Amount due pursuant to tax receivable agreement on the Condensed Consolidated Statement of Financial Condition. The Company expects to make the following payments with respect to the tax receivable agreement, which are exclusive of potential payments in respect of future exchanges and may differ significantly from actual payments made: 21 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Years Ending: Estimated Payments Under Tax Receivable Agreement Remainder of 2023 $ — 2024 1,091 2025 1,340 2026 1,388 2027 1,418 Thereafter 19,879 Total payments $ 25,116 Partner Promissory Notes The Company loaned money pursuant to promissory note agreements (the “Partner Promissory Notes”) to certain partners. The Partner Promissory Notes bear interest at an annual rate equal to the Federal Mid-Term Rate on an annual basis. The Partner Promissory Notes are due on various dates or in the event a partner is terminated or leaves at will. Repayment of the Partner Promissory Notes may be accelerated based on certain conditions as defined in the promissory note agreements and are primarily secured by the partner’s equity interests in PWP OpCo or one of its affiliates. As the Partner Promissory Notes and associated interest receivable relate to equity transactions, they have been recognized as a reduction of equity on the Condensed Consolidated Statements of Financial Condition in the amount of $ 2.0 million and $ 3.5 million as of June 30, 2023 and December 31, 2022, respectively. During the six months ended June 30, 2023 and 2022, certain partners effectively repaid $ 1.5 million and $ 2.6 million, respectively, of principal and interest related to Partner Promissory Notes by foregoing the amount due from their respective deferred compensation agreements. Other Partner Loans and Loan Guarantees In November 2021, PWP OpCo agreed to provide loans to certain partners. As of June 30, 2023 and December 31, 2022, $ 3.5 million and $ 3.4 million, respectively, of outstanding loans to certain partners and related interest receivable are recognized in Due from related parties on the Condensed Consolidated Statements of Financial Condition. Additionally, the Company has unconditionally guaranteed certain of its partners’ loans with First Republic Bank. Refer to Note 17—Commitments and Contingencies for additional information on the guarantees. Other Related Party Transactions In February 2022, the Company paid $ 0.5 million to an entity controlled by a member of the Board of Directors to reimburse a portion of expenses incurred by that entity in connection with the joint pursuit of a potential investment opportunity. The Company’s U.K. subsidiary, Perella Weinberg UK Limited, Professional Partners and certain partners (including one partner who serves as a Company director and president) are party to a reimbursement agreement, pursuant to which such partners directed Professional Partners to pay distributions related to certain of their Professional Partners Awards first to a subsidiary of the Company, so that the subsidiary can make employment income tax payments on such distributions to the appropriate non-U.S. authorities. Note 17—Commitments and Contingencies Loan Guarantees The Company has unconditionally guaranteed certain of its partners’ loans with First Republic Bank (“Lender”) whereby it will pay the Lender upon the occurrence of a default event. These guarantees are secured by the partners’ interests in Professional Partners. The total guarantees related to partners was $ 1.6 million as of December 31, 2022, and as of June 30, 2023 only nominal guarantees remained. As of June 30, 2023 and December 31, 2022, no loans were in default. 22 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Indemnifications The Company enters into certain contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown. As of June 30, 2023 and December 31, 2022, the Company expects no claims or losses pursuant to these contracts; therefore, no liability has been recorded related to these indemnification provisions. Legal Contingencies From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Some of these matters may involve claims of substantial amounts. Although there can be no assurance of the outcome of such legal actions, in the opinion of management and after consultation with external counsel, the Company believes it is neither probable nor reasonably possible that any current legal proceedings or claims would individually or in the aggregate have a material adverse effect on the condensed consolidated financial statements of the Company as of June 30, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022. On October 20, 2015, Professionals GP, PWP MC LP, PWP Equity I LP and Perella Weinberg Partners Group LP (collectively, the “PWP Plaintiffs”), filed a complaint against Michael A. Kramer, Derron S. Slonecker, Joshua S. Scherer, Adam W. Verost (collectively, the “Individual Defendants”) and Ducera Partners LLC (together with the Individual Defendants, “Defendants”) in New York Supreme Court, Commercial Division (the “Court”). The complaint alleges that the Individual Defendants, three former partners and one former employee of the PWP Plaintiffs, entered into a scheme while at PWP to lift out the PWP Plaintiffs’ restructuring group to form a new competing firm that they were secretly forming in breach of their contractual and fiduciary duties to the PWP Plaintiffs. The complaint contains 14 causes of action, and seeks declaratory relief as well as damages resulting from the Individual Defendants’ contractual and fiduciary breaches, and from Defendants' unfair competition and tortious interference with the PWP Plaintiffs’ contracts and client relationships. On November 9, 2015, Defendants filed an Answer, Counterclaims, Cross-claims and a Third-Party Complaint, which contained 14 causes of action. On July 17, 2016, the Court issued a decision, dismissing half of Defendants’ claims with prejudice. On August 18, 2016, Defendants filed an Amended Answer, Counterclaims, Cross-claims and Third-Party Complaint, with seven counterclaims and cross-claims. On December 12, 2016, Defendants appealed the dismissal of three of their counterclaims and cross-claims to the New York Appellate Division, First Department (the “First Department”). On August 29, 2017, the First Department issued a decision denying Defendants’ appeal other than allowing one Defendant to proceed with his breach of fiduciary duty counterclaim. On October 27, 2017, Defendants moved the First Department for leave to appeal its decision to the New York Court of Appeals. On December 28, 2017, the First Department denied Defendants’ motion for leave. On April 24, 2018, Defendants filed a Second Amended Answer, Counterclaims, Cross-claims and Third-Party Complaint, with eight counterclaims and cross-claims. Defendants are seeking declaratory relief and damages of no less than $ 60.0 million, as well as statutory interest. In addition, on January 19, 2022, Defendants filed a motion for leave to renew their New York Labor Law counterclaim that the Court dismissed in 2016. On June 30, 2023, the Court issued a decision denying Defendants’ motion for leave. Discovery is complete. Both the PWP Plaintiffs and Defendants subsequently moved for summary judgment. On March 20, 2020, the parties completed briefing of their respective motions. The Court held oral argument on the motions on May 27, 2021. On May 24, 2023, the Court issued a decision and order on both motions for summary judgment (the “Summary Judgment Decision”). The Court granted the PWP Plaintiffs’ motion with respect to the restrictive covenants in the PWP Plaintiffs’ agreements, finding that they are valid and enforceable, and otherwise denied the motion. The Court denied Defendants’ motion in its entirety. On July 25, 2023, Defendants filed a notice of appeal of the Summary Judgment Decision. We believe that our 14 causes of action are meritorious. Further, we believe that we have meritorious defenses to Defendants’ remaining counterclaims and cross-claims and plan to vigorously contest them. Litigation, however, can be uncertain and there can be no assurance that any judgment for one or more of Defendants or other outcome of the case would not have a material adverse effect on us. Additionally, even if we prevail in the litigation and are awarded damages, we do not know if we will be able to fully collect on any judgment against any or all Defendants. Legal and professional fees incurred related to this litigation are presented net of expected insurance reimbursement within Professional fees in the Condensed Consolidated Statements of Operations. 23 Perella Weinberg Partners Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 18—Business Information The Company’s activities of providing advisory services for M&A, private placements and financial advisory, as well as services for underwriting of securities offered for sale in public markets, commissions for the brokerage of publicly traded securities and equity research constitute a single business segment. The Company is organized as one operating segment in order to maximize the value of advice to clients by drawing upon the diversified expertise and broad relationships of its senior professionals across the Company. The Company has a single operating segment and therefore a single reportable segment. For the three months ended June 30, 2023, one individual client generated revenues of $ 17.0 million, which accounted for more than 10% of aggregate revenue, while no individual client accounted for more than 10% of aggregate revenue for the six months ended June 30, 2023. For the three months ended June 30, 2022, one individual client generated revenues of $ 25.3 million, which accounted for more than 10% of aggregate revenue, while no individual client accounted for more than 10% of aggregate revenue for the six months ended June 30, 2022. Since the financial markets are global in nature, the Company generally manages its business based on the operating results of the Company taken as a whole, not by geographic region. The following tables set forth the geographical distribution of revenues and assets based on the location of the office that generates the revenues or holds the assets and therefore may not be indicative of the geography in which the Company’s clients are located: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues United States $ 134,782 $ 129,659 $ 230,320 $ 221,817 International 30,763 21,445 66,651 81,163 Total $ 165,545 $ 151,104 $ 296,971 $ 302,980 June 30, 2023 December 31, 2022 Assets United States $ 433,146 $ 531,590 International 148,956 185,503 Total $ 582,102 $ 717,093 Note 19—Subsequent Events The Company has evaluated subsequent events through the issuance date of these condensed consolidated financial statements. On July 4, 2023, the Company entered into a lease amendment related to the Paris office. The Paris lease amendment extends the term of the lease by approximately 9 years with an expected expiration of November 30, 2032. On August 2, 2023, the Board of Directors of PWP declared a cash dividend of $ 0.07 per share of Class A common stock. This dividend will be paid on September 12, 2023 to Class A common stockholders of record on September 1, 2023. Holders of Class B common stock will also receive dividends equal to the amount of dividends made on 0.001 shares of Class A common stock. 24