UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title |
Trading Symbol |
Name of Exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). ☐ Yes
As of July 10, 2024, there were
TABLE OF CONTENTS
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3 |
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Item 1. |
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3 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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35 |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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38 |
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39 |
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Financial Statements (Unaudited)
3
Moelis & Company
Condensed Consolidated Statements of Financial Condition
(Unaudited)
(dollars in thousands, except per share amounts)
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June 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Cash and cash equivalents |
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$ |
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Restricted cash |
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Receivables: |
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Accounts receivable, net of allowance for credit losses of $ |
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Accrued and other receivables |
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Total receivables |
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Deferred compensation |
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Investments |
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Right-of-use assets |
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Equipment and leasehold improvements, net |
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Deferred tax assets |
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Prepaid expenses and other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Equity |
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Compensation payable |
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$ |
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$ |
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Accounts payable, accrued expenses and other liabilities |
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Amount due pursuant to tax receivable agreement |
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Deferred revenue |
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Lease liabilities |
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Total liabilities |
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Class A common stock, par value $ |
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Class B common stock, par value $ |
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Treasury stock, at cost; |
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( |
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( |
Additional paid-in-capital |
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Retained earnings (accumulated deficit) |
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( |
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( |
Accumulated other comprehensive income (loss) |
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( |
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( |
Total Moelis & Company equity |
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Noncontrolling interests |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
See notes to the condensed consolidated financial statements (unaudited).
4
Moelis & Company
Condensed Consolidated Statements of Operations
(Unaudited)
(dollars in thousands, except per share amounts)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
$ |
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$ |
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$ |
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$ |
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Expenses |
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Compensation and benefits |
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Occupancy |
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Professional fees |
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Communication, technology and information services |
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Travel and related expenses |
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Depreciation and amortization |
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Other expenses |
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Total expenses |
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Operating income (loss) |
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( |
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( |
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Other income and (expenses) |
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( |
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( |
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Income (loss) before income taxes |
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( |
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( |
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Provision (benefit) for income taxes |
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( |
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( |
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( |
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Net income (loss) |
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( |
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( |
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Net income (loss) attributable to noncontrolling interests |
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( |
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( |
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Net income (loss) attributable to Moelis & Company |
$ |
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$ |
( |
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$ |
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$ |
( |
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Weighted-average shares of Class A common stock outstanding |
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Basic |
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Diluted |
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Net income (loss) per share attributable to holders of shares of Class A common stock |
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Basic |
$ |
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$ |
( |
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$ |
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$ |
( |
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Diluted |
$ |
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$ |
( |
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$ |
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$ |
( |
See notes to the condensed consolidated financial statements (unaudited).
5
Moelis & Company
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(dollars in thousands)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Foreign currency translation adjustment, net of tax |
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( |
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Other comprehensive income (loss) |
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( |
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Comprehensive income (loss) |
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( |
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( |
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Less: Comprehensive income (loss) attributable to noncontrolling interests |
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( |
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( |
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Comprehensive income (loss) attributable to Moelis & Company |
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$ |
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$ |
( |
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$ |
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$ |
( |
See notes to the condensed consolidated financial statements (unaudited).
6
Moelis & Company
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)
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Six Months Ended June 30, |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net income (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Bad debt expense (benefit) |
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Depreciation and amortization |
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Equity-based compensation |
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Deferred tax provision (benefit) |
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( |
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( |
Other |
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( |
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( |
Changes in assets and liabilities: |
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Accounts receivable |
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( |
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Accrued and other receivables |
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( |
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( |
Prepaid expenses and other assets |
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( |
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Deferred compensation |
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( |
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( |
Compensation payable |
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( |
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( |
Accounts payable, accrued expenses and other liabilities |
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( |
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Deferred revenue |
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( |
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Dividends received |
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Net cash provided by (used in) operating activities |
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( |
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( |
Cash flows from investing activities |
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Purchases of investments |
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( |
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( |
Proceeds from sales of investments |
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Notes issued to employees |
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( |
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Purchases of equipment and leasehold improvements |
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( |
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( |
Net cash provided by (used in) investing activities |
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Cash flows from financing activities |
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Payments for dividends and tax distributions |
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( |
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( |
Payments for treasury stock purchases |
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( |
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( |
Payments under tax receivable agreement |
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( |
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Net cash provided by (used in) financing activities |
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( |
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( |
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash |
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( |
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( |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
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( |
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( |
Cash, cash equivalents, and restricted cash, beginning of period |
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Cash, cash equivalents, and restricted cash, end of period |
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$ |
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$ |
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Supplemental cash flow disclosure |
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Cash paid (received) during the period for: |
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Income taxes, net |
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$ |
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$ |
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Other non-cash activity: |
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Class A Partnership Units or other equity converted into Class A Common Stock |
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$ |
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$ |
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Dividends in kind |
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$ |
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$ |
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Non-cash settlement of accounts receivable |
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$ |
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$ |
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Forfeiture of fully-vested Group LP units or other equity units |
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$ |
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$ |
See notes to the condensed consolidated financial statements (unaudited).
7
Moelis & Company
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(dollars in thousands, except share amounts)
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Shares |
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Retained |
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Accumulated |
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Class A |
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Class B |
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Class A |
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Class B |
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Additional |
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Earnings |
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Other |
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Common |
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Common |
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Treasury |
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Common |
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Common |
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Treasury |
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Paid-In |
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(Accumulated |
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Comprehensive |
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Noncontrolling |
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Total |
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Stock |
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Stock |
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Stock |
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Stock |
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Stock |
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Stock |
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Capital |
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Deficit) |
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Income (Loss) |
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Interests |
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Equity |
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Balance as of January 1, 2024 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Net income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
Dividends declared ($ |
— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Treasury Stock Purchases |
— |
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— |
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( |
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— |
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— |
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( |
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— |
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— |
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— |
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— |
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( |
Class A Partnership Units or other equity converted into Class A Common Stock |
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( |
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— |
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( |
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— |
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— |
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— |
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Equity-based payments to non-employees |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Other |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Balance as of March 31, 2024 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Net income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Dividends declared ($ |
— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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( |
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Treasury Stock Purchases |
— |
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— |
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( |
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— |
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— |
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( |
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— |
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— |
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— |
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— |
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( |
Class A Partnership Units or other equity converted into Class A Common Stock |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based payments to non-employees |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2024 |
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( |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
8
Condensed Consolidated Statements of Changes in Equity (continued)
(Unaudited)
(dollars in thousands, except share amounts)
|
Shares |
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Retained |
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Accumulated |
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Class A |
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Class B |
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Class A |
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Class B |
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Additional |
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Earnings |
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Other |
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Common |
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Common |
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Treasury |
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Common |
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Common |
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Treasury |
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Paid-In |
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(Accumulated |
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Comprehensive |
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Noncontrolling |
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Total |
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Stock |
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Stock |
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Stock |
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Stock |
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Stock |
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Stock |
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Capital |
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Deficit) |
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Income (Loss) |
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Interests |
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Equity |
||||||||
Balance as of January 1, 2023 |
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|
( |
|
$ |
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$ |
|
$ |
( |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
|||||||
Net income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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||
Equity-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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|||||
Other comprehensive income (loss) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|||
Dividends declared ($ |
— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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( |
|
Treasury Stock Purchases |
— |
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— |
|
( |
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— |
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— |
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( |
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— |
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— |
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— |
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— |
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( |
Class A Partnership Units or other equity converted into Class A Common Stock |
|
( |
|
— |
|
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|
( |
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|
— |
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|
( |
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— |
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— |
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||||
Equity-based payments to non-employees |
— |
|
— |
|
— |
|
|
— |
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|
— |
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|
— |
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— |
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— |
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— |
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||
Balance as of March 31, 2023 |
|
|
( |
|
$ |
|
$ |
|
$ |
( |
|
$ |
|
$ |
( |
|
$ |
( |
|
$ |
|
$ |
|||||||
Net income (loss) |
— |
|
— |
|
— |
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|
— |
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— |
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— |
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— |
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( |
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— |
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( |
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( |
Equity-based compensation |
|
— |
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— |
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— |
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— |
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— |
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|
|
|
— |
|
|
— |
|
|
|
|
||||
Other comprehensive income (loss) |
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|||
Dividends declared ($ |
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
( |
|
|
— |
|
|
( |
|
|
( |
|
Treasury Stock Purchases |
— |
|
— |
|
( |
|
|
— |
|
|
— |
|
|
( |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
( |
Class A Partnership Units or other equity converted into Class A Common Stock |
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
|||
Equity-based payments to non-employees |
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
||
Balance as of June 30, 2023 |
|
|
( |
|
$ |
|
$ |
|
$ |
( |
|
$ |
1,502,470 |
|
$ |
( |
|
$ |
( |
|
$ |
|
$ |
See notes to the condensed consolidated financial statements (unaudited).
9
Moelis & Company
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(dollars in thousands, except share amounts and where explicitly stated)
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:
10
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, 2023.
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:
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
11
Corporation and U.K. Financial Services Compensation Scheme coverage limits). The Company’s cash equivalents are invested primarily in U.S. and U.K. sovereign debt securities and money market funds.
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.
|
|
June 30, |
||||
|
|
2024 |
|
2023 |
||
Cash |
|
$ |
|
$ |
||
Cash equivalents |
|
|
|
|
||
Restricted cash |
|
|
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |
|
$ |
|
$ |
Additionally, as of December 31, 2023, the Company held cash of $
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 June 30, 2024 and December 31, 2023 were $
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 and six months ended June 30, 2024 and 2023:
|
Three Months Ended June 30, 2024 |
|
Three Months Ended June 30, 2023 |
||||||||||||||
|
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 |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
||||||
Charge-offs, foreign currency translation and other adjustments |
|
( |
|
|
— |
|
|
( |
|
|
|
|
— |
|
|
||
Recoveries |
|
( |
|
|
( |
|
|
( |
|
|
( |
|
|
( |
|
|
( |
Provision for credit losses |
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for credit losses, ending balance |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
12
|
Six Months Ended June 30, 2024 |
|
Six Months Ended June 30, 2023 |
||||||||||||||
|
Accounts Receivable |
|
Accounts Receivable |
||||||||||||||
|
Short-term Receivables |
|
Private Funds Advisory Receivables |
|
Total |
|
Short-term Receivables |
|
Private Funds Advisory Receivables |
|