Executive Summary

Q1 2025 EPS beat materially on both GAAP and adjusted bases ($0.56 vs S&P Global consensus $0.36), aided by a discrete tax benefit; revenue was roughly in line to slightly below consensus (company-reported net revenue $648.1M vs S&P Global consensus $654.1M) . S&P Global consensus values marked with *; Values retrieved from S&P Global.
Advisory revenue declined year over year versus a record Q1 2024; sequentially lower vs Q4 2024 across revenue and margins, as deal timing and macro/tariff uncertainty weighed on activity; management emphasized a growing advisory backlog, particularly in Europe and restructuring/capital solutions .
Asset Management flows improved (net outflows −$3.7B vs −$10.1B in Q4) and fee rate mix was favorable; AUM ended at $227.4B and management highlighted a growing “won-but-not-funded” pipeline and the launch of three U.S. active ETFs .
Cost discipline continued: adjusted comp ratio 65.5% (vs 65.6% in Q4), adjusted non-comp ratio increased to 23.0% (from 19.0% in Q4); management reiterated long-term goals (comp ≤60%, non-comp 16–20%) with timing dependent on market conditions .
Capital returns remained active: $175M returned in Q1 (dividends, buybacks, tax-withholding) and dividend maintained at $0.50/share; $164M of repurchase authorization remained at quarter-end .

What Went Well and What Went Wrong

What Went Well
- EPS beat and resilient profitability despite softer revenues; discrete tax benefit drove a negative adjusted effective tax rate (−13.9%) in the quarter .
- Advisory backlog grew, led by Europe and restructuring; “Over the past month…our backlog in Financial Advisory has continued to grow” (Peter Orszag) .
- Asset Management momentum: improved net flows, higher average fee rate mix, and growing “won-but-not-funded” mandates; “the elevated pipeline…has actually been growing steadily” (Evan Russo) .
What Went Wrong
- Revenue and margins declined vs prior year and quarter: adjusted operating margin fell to 11.5% (from 15.5% in Q4 and 16.0% in Q1’24); adjusted net revenue declined 14% YoY .
- Advisory revenues −17% YoY on adjusted basis (vs a record Q1’24); sponsors/financing headwinds persisted amid tariff uncertainty and dislocated credit markets .
- Non-comp ratio rose to 23.0% (from 18.0% in Q1’24 and 19.0% in Q4’24), reflecting higher adjusted non-comp expenses YoY .

Financial Results

Overall P&L and margins (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Net Revenue (GAAP, $M)	784.9	816.9	648.1
Adjusted Net Revenue ($M)	645.9	812.4	643.2
Diluted EPS (GAAP, $)	1.02	0.80	0.56
Adjusted Diluted EPS ($)	0.38	0.78	0.56
Adjusted Operating Margin %	12.6%	15.5%	11.5%
Adjusted Comp Ratio %	66.0%	65.6%	65.5%
Adjusted Non-Comp Ratio %	21.4%	19.0%	23.0%

Q1 2025 actual vs prior year/quarter and vs estimates

Metric	Q1 2024	Q4 2024	Q1 2025 (Actual)	S&P Global Consensus*
Net Revenue (GAAP, $M)	764.8	816.9	648.1	654.1*
Diluted EPS (GAAP, $)	0.35	0.80	0.56	0.362*

Notes: S&P Global consensus values marked with *; Values retrieved from S&P Global.

Segment breakdown (GAAP net revenue, oldest → newest)

Segment ($M)	Q1 2024	Q4 2024	Q1 2025
Financial Advisory	453.5	520.5	367.4
Asset Management	295.5	312.1	288.1
Corporate	15.8	(15.7)	(7.4)
Total Net Revenue	764.8	816.9	648.1

KPIs and balance sheet (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025
Ending AUM ($B)	247.7	226.3	227.4
Average AUM ($B)	246.0	233.8	230.8
Net Flows ($B)	(12.38)	(10.07)	(3.66)
Incentive Fees (Adj, $M)	3	29	9
Cash & Equivalents ($M)	1,165.7	1,308.2	908.6

Non-GAAP adjustments (illustrative): Adjusted results add back/strip items including distribution fees, reimbursable deal costs, LFI mark-to-market, certain noncontrolling interests and corporate interest expense per schedules -.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Compensation Ratio Target	Multi-year	Aim for ~60% in 2025 (Q4’24 commentary)	Goal ≤60%, timing dependent on market conditions	Maintained; timing tempered
Adjusted Non-Comp Ratio Target	Multi-year	16%–20% over cycle	16%–20%, timing dependent on market conditions	Maintained
Effective Tax Rate	FY 2025	n/a	“High 20%” ETR expected (full-year)	New/Updated
Dividend	Q2 2025	$0.50 declared on 1/29/25	$0.50 declared 4/24/25; payable 5/16/25	Maintained
Revenue/EPS	FY/Q2	n/a	No formal guidance; activity/backlog outlook subject to tariff clarity	n/a

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Macro/Tariffs	Not explicitly emphasized in Q3/Q4 press releases - -	“Massively heightened uncertainty” with a 90-day tariff clarity window; backlog growth sensitive to tariff path (Orszag) -	Heightened focus; key near-term swing factor
Private Capital/Secondaries	Private capital advisory and capital solutions active (Q3/Q4) - -	Private capital >40% of FA revenue past 12 months; liability management favored over Ch.11	Structural tailwind; expanding mix
Europe Backdrop	Strong European deal roster in releases	Backlog expanding in Europe; new Abu Dhabi office; Middle East expansion	Improving; regional diversification
Asset Management Flows/Fee Rate	Q3 outflows (−$12.4B); Q4 outflows (−$10.1B)	Outflows improved (−$3.7B); “won-but-not-funded” pipeline growing; fee rate mix up (Russo)	Improving flows; supportive fee mix
Product Initiatives	n/a in prior press snippets	Launch of three active ETFs (U.S.); Arini private credit alliance in EMEA -	Broadening platform
Cost Discipline	Targets communicated in Q3/Q4	Adjusted comp 65.5%; non-comp 23.0%; targets reaffirmed (timing dependent)	Ongoing discipline

Management Commentary

Strategic positioning: “First quarter performance was solid…with our diversified business model” (Orszag). Backlog growth in FA driven by Europe and restructuring; client demand for geopolitical advisory is “in high demand” .
On tariffs/macro: “Whether [backlog growth] continues…will depend in part on greater certainty regarding tariffs” and “we are in a period of massively heightened uncertainty” (Orszag) .
Asset Management pipeline: “The elevated pipeline…has not only not declined, but…been growing steadily” (Russo) .
Fee rate/mix: “Average fee rate…was up…due to business mix…overall, fee rate stability…has been a positive story” (Russo) .
Capital allocation: Post dividends/interest, buybacks to offset deferred comp; inorganic options—“disproportionately on the Asset Management side”—remain under evaluation with discipline (Orszag) .

Q&A Highlights

Advisory outlook/backlog: Backlog is growing but path-dependent on tariff clarity within ~90 days; diversification across M&A, restructuring, capital solutions supports resilience (Orszag) -.
Sponsors/secondaries: Countervailing forces (tariffs, valuation bid-ask, financing markets) vs natural need to transact; secular growth in secondaries expected regardless (Orszag) .
Restructuring mix: Liability management increasingly prevalent given private capital’s role; faster revenue translation than typical M&A (Orszag) .
Comp framework: 65.5% Q1 accrual “best guess” for year if revenues stable; goal ≤60% remains but timing depends on markets (Betsch/Orszag) .
Asset Management flows: Improved vs 2024; “won-but-not-funded” mandates growing; expect continued funding over next 12–15 months (Russo) .
Fee rate guide: Use 2024 average as a 2025 “jumping off point”; quarterly mix may move around (Russo) .

Estimates Context

EPS: Q1 2025 GAAP diluted EPS $0.56 vs S&P Global consensus $0.3618—beat by ~$0.20 per share, helped by a discrete tax benefit driving a negative adjusted ETR (−13.9%) . S&P Global consensus values marked with *; Values retrieved from S&P Global.
Revenue: Company-reported GAAP net revenue $648.1M vs S&P Global consensus $654.1M—slight miss (~$6M); adjusted net revenue was $643.2M . S&P Global consensus values marked with *; Values retrieved from S&P Global.

Key Takeaways for Investors

Q1 beat on EPS despite softer top line; tax-driven benefit is not structural—watch normalized ETR trajectory (management indicates “high 20%” for FY 2025) for run-rate earnings power .
Advisory momentum exists (growing backlog, Europe strength, restructuring/capital solutions), but near-term conversion is contingent on tariff clarity and credit market stability—key catalyst window ~90 days per management -.
Asset Management fundamentals are improving: flows less negative, fee rate mix supportive, and a growing won-but-not-funded pipeline; ETF expansion and EMEA private credit alliance broaden distribution/products -.
Margin trajectory: Comp ratio progress likely hinges on revenue environment; baseline 65.5% accrual this year if revenues stable; non-comp ratio elevated this quarter—monitor for reversion toward 16–20% target .
Capital returns intact (dividend maintained; buybacks ongoing with $164M authorization remaining)—supports downside while cycle plays out .
Stock narrative likely driven by: (1) tariff/credit-market clarity and deal closings, (2) evidence of FA backlog converting in Europe/restructuring, (3) AM flow inflection and fee-rate stability, and (4) operating leverage toward long-term ratio targets .

S&P Global disclaimer: Consensus estimate values marked with * are retrieved from S&P Global.

Lazard, Inc. (LAZ)·Q1 2025 Earnings Summary