Snapshot
Lazard, Inc. reported $1.50B of revenue in Q3 2025, up 3.6% year over year, with diluted EPS of $0.65 and an operating margin of 6.3%.
- Revenue
- $1.50B
- YoY growth
- +3.6%
- Diluted EPS
- $0.65
- Operating margin
- 6.3%
What management said
- •In addition to today's audio comments, we have posted our earnings release on our website.
- •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 another quarter of strong results reflecting an ongoing focus on our clients and continued momentum behind our long-term growth strategy.
- •For the first nine months of the year, total firm-wide revenue was $2.1 billion, including record Financial Advisory revenue of $1.3 billion.
- •For the first nine months of the year, revenue totaled $827 million, and in the third quarter, revenue was up 8% year over year.
- •We look forward to welcoming Chris Hogan as our CEO of Lazard Asset Management in December, helping to further accelerate our progress and evolve this business for future growth.
- •Today, we've reported record third-quarter firm-wide revenue of $725 million, up 12% from the same time last year, driven by activity across both our businesses.
- •Financial Advisory revenue totaled $422 million, up 14% from one year ago.
- •Completed transactions include Mallinckrodt Pharmaceuticals' $6.7 billion combination with Endo Pharmaceuticals, Ferrero's $3.1 billion acquisition of W.K.
- •Turning to Asset Management, for the third quarter, revenue was $294 million, up 8% compared to the third quarter last year, and up 10% on a sequential basis.
- •We see ongoing client engagement and demand across our investment platforms, particularly with our quantitative and emerging market strategies.
- •We are maintaining a disciplined approach to our expenses while investing to support long-term growth.
What went well
- •Lazard reported record third-quarter firm-wide revenue of $725 million, up 12% year over year, driven by activity across both Financial Advisory and Asset Management.
- •Financial Advisory revenue rose 14% to $422 million on strength in M&A across healthcare, industrials, and consumer/retail, plus restructuring, liability management, and fundraising, with first-nine-months Financial Advisory revenue reaching a record $1.3 billion.
- •Asset Management revenue grew 8% year over year to $294 million and 10% sequentially, with the business reaching an inflection point as record gross inflows and net positive flows of $1.6 billion year to date pushed total AUM up 17%.
- •The compensation ratio improved to 65.5% from 66% a year ago and the non-compensation ratio improved to 20.5% from 21.4%, reflecting expense discipline alongside continued investment.
- •Productivity advanced, with average revenue per MD rising to almost $9 million after hitting the $8.6 million 2024 target a year early, and 20 new Managing Directors joined so far this year.
- •The firm returned $60 million to shareholders in the quarter including a $47 million dividend, and declared a $0.50 per share quarterly dividend.
What went wrong
- •Sub-advised funds tied to U.S. multi-manager mandates continued to drive disproportionate outflows, though management noted these have been more than offset in 2025 and now represent only about 3% of asset management revenue.
- •The U.S. government shutdown may temporarily affect the timing of deal approvals requiring SEC, DOJ, or FTC clearance, creating potential near-term delays in advisory activity.
- •Gross outflows remained relatively elevated, although lower than last year and concentrated in the sub-advised accounts.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year effective tax rate | FY2025 | — | Around 20% | updated |
| Non-compensation expense growth | FY2025 | High single-digit % increase in dollars (prior quarter) | High single-digit % increase in dollars year over year (maintained) | maintained |
| Asset Management net flows | FY2025 | Flat/net zero stretch goal | Increasingly looking to hit net zero flows, with year-to-date net positive flows | tracking ahead |
| Average revenue per MD | 2030 | $10M by 2028 goal | Confident in exceeding beyond 2028; ~$12.5M by 2030 seen as achievable | raised |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Firm-wide revenue | +12% to $725M | Record results from activity across both Financial Advisory and Asset Management |
| Financial Advisory revenue | +14% to $422M | Marquee transactions and strength in M&A, restructuring, liability management, and fundraising |
| Asset Management revenue | +8% to $294M | Higher management fees (+6%) and incentive fees of $9 million versus $3 million a year ago, plus market appreciation |
| Average AUM | +5% to $257B | Market appreciation and net inflows, up 8% sequentially |
| AUM (period end) | +7% to $265B | $12 billion market appreciation and $4.6 billion net inflows, partly offset by $400 million FX depreciation |
| Compensation ratio | Improved to 65.5% from 66% | Revenue growth amid disciplined compensation management |
| Effective tax rate | 21.4% vs. 32.5% | Lower than the prior-year third quarter |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Asset Management turnaround | Outflows from sub-advised mandates a drag | 2025 declared an inflection point with record gross inflows, net positive flows, and a shift toward quant, emerging markets, and customized solutions | improving |
| M&A and restructuring coexistence | Historically inverse cycles | Rising firm-performance dispersion lets strong M&A and restructuring/liability management activity coexist | improving |
| Private capital and secondaries | Strong multi-year CAGR | Tailwinds remain strong with no deceleration; PE return to M&A expected to drive 2026 activity | improving |
| MD hiring and productivity | 10-15 net adds per year target; $8.6M revenue per MD in 2024 | On track at/above the high end of the range with productivity near $9M per MD and a long-term ~$12.5M by 2030 aspiration | improving |
| M&A vs. non-M&A and public vs. private mix | ~60/40 M&A/non-M&A | Trending closer to 50/50 M&A/non-M&A and toward a more balanced public/private capital mix | improving |
| Private credit stress | — | Recent high-profile bankruptcies not viewed as a canary for broader private credit problems | stable |
| Geographic diversification | U.S. and Europe core | Activity across U.S., Europe, and now the Middle East, with new offices and a strong European corporate sector despite macro/political backdrop | improving |
Q&A summary
Alex Bond (KBW) asked how Lazard balances bringing on strong talent against comp leverage, and how retention fits in.
Orszag said the re-energized firm is attracting high-quality MDs with very few regrettable departures; comp leverage comes substantially from raising productivity per MD because non-MD expense does not scale with productivity, giving confidence in a ~$12.5 million revenue-per-MD aspiration by 2030.
Alex Bond asked about drivers of asset management net inflows and confidence in net-neutral flows for the year.
Orszag said gross inflows are disproportionately into quant, emerging markets, custom solutions, and infrastructure, largely non-U.S., while sub-advised accounts see outflows; the net-zero flow goal looked skeptical but year-to-date results are striking and the firm is looking to hit it.
Jim Mitchell (Seaport) asked whether gross outflows are improving more broadly beyond sub-advisory.
Orszag said gross outflows are lower than last year and concentrated in sub-advised accounts; excluding that category the net flow trajectory looks even more promising given 97% of revenue sits outside it.
Jim Mitchell asked whether asset management leverage lowers the bar for advisory to reach a 60% comp ratio.
Orszag expressed confidence operating leverage will build further in 2026 from rising MD productivity and the maturing of recent hires on the advisory side, and from scale-for-strategy on the asset side, without committing to a specific timetable.
Brendan O'Brien (Wolfe) asked whether the restructuring business is seeing building stress amid credit concerns and rate cuts.
Orszag said recent high-profile bankruptcies are not a canary for broader private credit problems; wider firm-performance dispersion lets M&A and restructuring coexist, and he thinks the market is too optimistic on more than one additional Fed rate cut, which would matter more for restructuring than M&A.
Ryan Kenny (Morgan Stanley) asked which advisory areas the government shutdown affects and how fast deals recover.
Orszag said deals needing SEC, DOJ, or FTC approval could face timing delays, but any backlog should clear in weeks not months once the government reopens, and the administration could redefine essential functions if the macro impact grew material.