Snapshot
Lazard, Inc. reported $1.59B of revenue in Q2 2025, up 14.5% year over year, with diluted EPS of $0.52 and an operating margin of 5.9%.
- Revenue
- $1.59B
- YoY growth
- +14.5%
- Diluted EPS
- $0.52
- Operating margin
- 5.9%
What management said
- •A reconciliation of these non GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation.
- •We are pleased to report strong performance and results with total firm wide adjusted net revenue of $1,400,000,000 for the first half of the year.
- •Financial Advisory achieved a record first half of the year with adjusted net revenue of $861,000,000 Advisory revenue this year has demonstrated the geographic and product diversity of our business.
- •Results represent the overall strength of Lazard's team and brand, which includes record revenue in France and Germany for the first half of the year.
- •Over the past twelve months, revenue associated with private capital has been over 40% of total financial advisory revenue, reflecting our increased emphasis on this business and hiring over time.
- •Asset Management continued to deliver solid results with adjusted net revenue of $533,000,000 for the first half of the year.
- •I'll share more on our outlook shortly, but first let me turn the call over to Mary Anne to provide further details on the quarter's results.
- •Today, we reported second quarter firm wide adjusted net revenue of $770,000,000 up 12% from the same time last year.
- •Increase in firm wide revenue was driven by our Financial Advisory business.
- •Financial Advisory adjusted net revenue was a record $491,000,000 for the second quarter, up 20% from one year ago.
- •Completed transactions include CD and R's acquisition of a controlling 50% stake in Sanofi's consumer health unit and Rocat Freres acquisition of IFF Pharma Solutions.
- •Turning to asset management for the second quarter, adjusted net revenue was $268,000,000 up one percent compared to the second quarter last year and up 2% on a sequential basis.
What went well
- •Financial Advisory delivered a record first half with adjusted net revenue of $861 million, and second-quarter Financial Advisory adjusted net revenue was a record $491 million, up 20% from a year ago.
- •Firm-wide adjusted net revenue for the second quarter was $770 million, up 12% year over year.
- •Asset Management generated positive net inflows of $700 million in the quarter, record gross inflows for the first half, and AUM rose to $248 billion, up 9% from March 2025 and 2% from June 2024.
- •Revenue associated with private capital has been over 40% of total Financial Advisory revenue over the trailing twelve months, reflecting expanded connectivity to private capital.
- •Expense ratios improved year over year, with the adjusted compensation ratio at 65.5% (versus 66%) and the adjusted non-compensation ratio at 20.4% (versus 21.7%).
- •The firm hired 14 financial advisory managing directors so far in 2025 and launched its first active ETF product set in the U.S.
What went wrong
- •The adjusted effective tax rate rose sharply to 36.5% in the quarter, compared with 14% in the second quarter of 2024.
- •Asset Management continued to experience high gross outflows, including a substantial outflow from a sub-advised account, which offset much of the gross inflows.
- •Average AUM for the quarter of $239 billion was 3% lower than the year-ago period, and the M&A channel of private-capital activity remained subdued.
- •Management cautioned that the improving advisory environment will not be linear and that tariff and regulatory uncertainty had not yet been fully resolved.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year effective tax rate | FY2025 | — | mid-20% range | set |
| Non-compensation expense growth (dollar basis) | FY2025 | mid single digit | high single digit | raised |
| Net flows (Asset Management) | FY2025 | — | flat flows (stretch goal, still within reach) | reaffirmed |
| Net financial advisory MD additions | through 2030 | 10 to 15 net per year | on track to achieve or exceed 10 to 15 net per year | reaffirmed |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Firm-wide adjusted net revenue | +12% | Increase driven by the Financial Advisory business. |
| Financial Advisory adjusted net revenue (Q2) | +20% | Banking teams performed well across the firm with participation in marquee transactions; record revenue in France and Germany for the first half. |
| Asset Management adjusted net revenue (Q2) | +1% | Management fees up 1% as lower average AUM was more than offset by higher average fees. |
| Average AUM (Q2) | -3% | Lower average AUM versus the 2024 period, partially offset by 3% sequential improvement. |
| Adjusted effective tax rate (Q2) | 36.5% vs 14% | Higher tax rate compared with the second quarter of 2024. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Diversification into private capital / non-M&A advisory | ongoing emphasis and hiring over time | private capital over 40% of advisory revenue; business mix roughly 60% M&A / 40% non-M&A | rising |
| Improving M&A and advisory environment | watchful waiting mindset in the prior quarter | increasingly constructive environment with broadening dialogue and faster average time to close | rising |
| Asset Management inflection / net flows | stretch goal of flat flows for the year set earlier in 2025 | positive net flows in the quarter and record first-half gross inflows | rising |
| Senior talent recruiting | 10 to 15 net MD additions per year toward 2030 | 14 financial advisory MDs hired year to date, on track to meet or exceed the target | rising |
| AI as a transformational driver | tools deployed inside the firewall for bankers | AI advancing faster than anticipated; four-part strategy spanning tooling, culture, knowledge digitization and deeper client relationships | rising |
| Restructuring and liability management | predominantly debtor-based restructuring historically | shift toward liability management and a roughly 60/40 debtor-creditor balance | rising |
Q&A summary
Is the advisory recovery back to the enthusiasm seen at the start of the year, or does tariff uncertainty still weigh on sentiment?
The early-year consensus was too frothy; the environment is now increasingly constructive, supported by tailwinds in technology, scale and supply-chain shifts. Tariff and regulatory uncertainty are clarifying, the average time to close accelerated in the quarter, financing markets are improving, and U.S. activity is expected to pick up disproportionately in the back half.
What changes drove the asset management net inflows on the distribution side, and how is the unfunded mandate backlog trending?
The unfunded mandate backlog is higher than the elevated level at the start of the year. Drivers include sales and distribution team changes maturing, clearer goals and accountability at the product/strategy/client level, and strong investment performance steering net inflows into emerging market, global, quantitative and Japanese equities.
Given the improving outlook, when can the comp ratio reach the 60%-or-below goal?
The ratio was held flat at 65.5% as the conservative choice given lumpy quarterly results. Reaching 60% depends on market conditions, performance, and hiring; raising MD productivity creates operating leverage on the largely fixed non-MD cost base, but no specific timetable was given.
How does sentiment in Europe compare with the U.S., and what is the hiring outlook?
First-half activity was disproportionately European (Europe-to-Europe or Europe-to-rest-of-world), with continued hiring there including financial sponsors, insurance and debt advisory talent. U.S. activity is expected to pick up disproportionately in the second half while Europe stays active.
Why is attrition still relatively high in asset management if the non-U.S. equity environment is improving?
Gross outflows are natural churn; institutional decision cycles move slowly, creating lags. Net inflows were achieved despite a substantial sub-advised outflow, with momentum across channels, geographies and products, and the broader investor reallocation away from U.S. equity is still in its early-adopter stage.
When will the long-hyped sponsor M&A recovery take off, and what about asset management fee rates?
Mounting LP pressure from low cash distributions plus resolving regulatory and tariff headwinds should drive a pickup in private-equity M&A. On fees, the average fee rate actually rose slightly sequentially; sub-advised accounts are large but under 5% of asset revenue, so a mix shift away from them should keep the average fee rate stable or rising.