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Lazard, Inc. (LAZ)·Q3 2025 Earnings Summary

Executive Summary

  • Record adjusted net revenue of $725M (+12% YoY) and adjusted diluted EPS of $0.56 (+47% YoY); GAAP net revenue was $748M (-5% YoY) and diluted EPS $0.65, with results driven by both Financial Advisory and Asset Management .
  • Financial Advisory adjusted net revenue rose to $422M (+14% YoY), Asset Management adjusted net revenue reached $294M (+8% YoY); AUM ended at $265B (+17% YTD), with Q3 net inflows of $4.6B and improved fee mix .
  • Costs tracked well: adjusted compensation ratio 65.5% (vs. 66.0% LY) and adjusted non-comp ratio 20.5% (vs. 21.4% LY); CFO guided full-year 2025 effective tax rate to ~20% .
  • Capital return remained consistent: $60M returned in Q3, including a $0.50 dividend declared for Q4 payable Nov 14, 2025; repurchase authorization stood at ~$159M at quarter-end .

What Went Well and What Went Wrong

What Went Well

  • Broad-based revenue strength: Adjusted net revenue up 12% YoY to a quarterly record; FA +14% YoY to $422M; AM +8% YoY to $294M . CEO: “We see an increasingly constructive environment for both of our businesses, with substantial client engagement firmwide.”
  • Asset Management inflection with record inflows: Q3 net inflows $4.6B; AUM $265B (+17% YTD); CFO detailed large institutional mandates and noted fee rate uptick tied to higher-fee strategies .
  • Operating discipline: Adjusted comp ratio improved to 65.5% (vs 66.0% LY); adjusted non-comp ratio down to 20.5% (vs 21.4% LY); adjusted operating margin rose to 14.0% . CFO: “We are maintaining a disciplined approach to our expenses while investing to support long-term growth.”

What Went Wrong

  • GAAP headline declines YoY: GAAP net revenue fell to $748M (-5% YoY); GAAP diluted EPS dropped to $0.65 (-36% YoY), reflecting higher operating expenses and mix effects .
  • Comp still above LT target: Adjusted comp ratio stayed at 65.5%, above the ≤60% goal; non-comp adjusted expense dollars rose 8% YoY for the nine months, keeping the ratio above the 16–20% target .
  • Sequential softness vs Q2: Adjusted net revenue down 6% QoQ; adjusted operating income down 6% QoQ as non-compense remained elevated on technology and asset servicing fees .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Revenue (GAAP, $USD Millions)$648.1 $796.0 $748.1
Adjusted Net Revenue ($USD Millions)$643.2 $769.9 $724.7
Diluted EPS (GAAP, $USD)$0.56 $0.52 $0.65
Adjusted Diluted EPS (Non-GAAP, $USD)$0.56 $0.52 $0.56
Adjusted Operating Margin %11.5% 14.1% 14.0%
Adjusted Compensation Ratio %65.5% 65.5% 65.5%
Adjusted Non-Comp Ratio %23.0% 20.4% 20.5%

Segment adjusted net revenue:

Segment Adjusted Net Revenue ($USD Millions)Q1 2025Q2 2025Q3 2025
Financial Advisory$369.5 $491.4 $422.3
Asset Management$264.5 $268.5 $294.2
Corporate$9.1 $10.0 $8.2

KPIs:

KPIQ1 2025Q2 2025Q3 2025
Ending AUM ($USD Billions)$227 $248 $265
Average AUM ($USD Billions)$231 $239 $257
Net Flows ($USD Billions)-$3.66 $0.68 $4.58
Adjusted Incentive Fees ($USD Millions)$9 $4 $9
Capital Returned ($USD Millions)$175 $60 $60

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax RateFY 2025Not previously provided~20% full-year ETR New/Updated
Non-Comp Expense DollarsFY 2025High single-digit increase YoY (Q2 call, per CFO reference) High single-digit increase YoY (maintained) Maintained
Adjusted Compensation Ratio (LT Target)LT≤60% target ≤60% target reiterated Maintained
Adjusted Non-Comp Ratio (LT Target)LT16–20% target 16–20% target reiterated Maintained
DividendQuarterly$0.50/share (prior quarter) $0.50/share declared Oct 22, 2025 Maintained

Earnings Call Themes & Trends

TopicQ1 2025 (Prior Two Quarters)Q2 2025 (Prior Quarter)Q3 2025 (Current)Trend
AI/Technology initiativesLaunched three active ETFs; strategic focus on platforms Continued ETF build-out; tech investment noted “Leading AI-enabled independent financial services firm”; Perplexity CBO joins Board Increasing emphasis on AI enablement
Macro/regulatory (shutdown, rates)Uncertain environment; discrete tax benefit Europe robustness noted; strong client engagement U.S. gov’t shutdown may delay approvals; rates likely higher-for-longer at short end Macro caution, operational resilience
Advisory mix/geographyFA down YoY; broad sovereign advisory Record FA; robust Europe activity Mix trending toward ~50/50 M&A vs non-M&A; tilt to Europe in Q3 Diversifying product/geography
Private capital/secondariesAlliances (Arini); PCA mandates Continuation funds; broad PCA activity Secondary flows “no deceleration,” permanent vector; PE M&A to re-accelerate in 2026 Structural growth vector
Asset Management flows/feesNet outflows; AUM -9% YoY; repositioning Positive net flows; AUM $248B Record net inflows; AUM $265B; fee rate stabilized-to-slightly higher Clear inflection in flows and mix

Management Commentary

  • CEO (Peter Orszag): “Lazard’s long-term growth strategy continues to build momentum… We see an increasingly constructive environment for both of our businesses, with substantial client engagement firmwide.”
  • CEO on Asset Management: “It is now clear that 2025 is an inflection point for the business… record gross inflows for the third quarter and for the first nine months… total AUM up 17%.”
  • CEO on strategy and AI: “We are… becoming the leading AI-enabled independent financial services firm,” highlighting Board addition of Perplexity’s CBO and Senior Advisor General Kurilla for geopolitical advisory depth .
  • CFO (Mary Ann Betsch): “Record third-quarter firm-wide revenue of $725 million, up 12%… Financial Advisory revenue $422 million, up 14%… Management fees increased 6% YoY, incentive fees $9 million.”
  • CFO guidance: “We currently expect our full-year 2025 effective tax rate to be around 20%.”

Q&A Highlights

  • Hiring, productivity, and comp leverage: Management expects comp leverage from rising revenue per MD and maturation of hires; targeting productivity per MD of ~$12.5M by 2030 .
  • Asset Management flows quality and fees: Gross outflows lower YoY and concentrated in sub-advised; inflows in quant, EM equities, customized solutions; fee rate roughly flat near term after a small increase .
  • Restructuring outlook: Recent bankruptcies not seen as broader private credit stress; dispersion in corporate performance allows concurrent strength in M&A and restructuring; rates path more impactful to restructuring than M&A .
  • Regional mix: Q3 tilt toward Europe; strong corporate activity despite macro/political noise (e.g., France), with many global firms less exposed domestically .
  • Non-comp expense trajectory and AI spend: High single-digit increase in dollars YoY maintained; AI investments modest with high returns, not a material driver of non-comp .

Estimates Context

Results versus Wall Street consensus:

MetricQ1 2025Q2 2025Q3 2025
EPS Consensus Mean ($)0.362*0.398*0.439*
EPS Actual ($)0.56*0.52*0.56*
Revenue Consensus Mean ($USD Millions)654.1*706.5*717.6*
Revenue Actual ($USD Millions)653.5*805.6*746.4*

Values retrieved from S&P Global.*

  • Q3: EPS $0.56 vs $0.44 consensus — bold beat; Revenue $746M vs $718M consensus — bold beat.*
  • Q2: EPS $0.52 vs $0.40 — beat; Revenue $806M vs $707M — beat.*
  • Q1: EPS $0.56 vs $0.36 — beat; Revenue aligned (~$653M vs $654M).*

Key Takeaways for Investors

  • Broad-based beat and quality of revenue: Both FA and AM contributed; narrative support from strong client engagement and robust pipelines in M&A, restructuring, and secondaries .
  • Asset Management turning the corner: Record inflows and higher-fee strategy mix underpin nearer-term operating leverage; watch sustainability of flows and fee rate stability .
  • Expense trajectory constructive: Ratios trending better YoY, with LT targets reiterated; maintain focus on comp ratio glidepath and non-comp containment even as growth investments continue .
  • Tax rate tailwind: FY25 ETR guided to ~20% supports EPS quality; monitor for discrete items vs normalized run-rate .
  • Strategic catalysts: Continued MD hiring, AI enablement, geopolitical advisory depth, and ETF expansion could support medium-term revenue and returns goals (doubling revenue by 2030, 10–15% annual shareholder returns) .
  • Near-term trading lens: Stock likely to respond to consensus beats and AM inflows momentum; risks include macro/regulatory timing (shutdowns), FX on AUM/fees, and comp ratio pace toward 60% .
  • 2026 pivot watch: Management anticipates operating leverage as hired MDs mature and PE M&A accelerates; secondaries remain structurally strong .