Snapshot
Lazard, Inc. reported $1.82B of revenue in Q4 2025, up 10.2% year over year, with diluted EPS of $0.45 and an operating margin of 4.7%.
- Revenue
- $1.82B
- YoY growth
- +10.2%
- Diluted EPS
- $0.45
- Operating margin
- 4.7%
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.
- •Our fourth quarter and full year results demonstrate our ongoing focus on executing our Lazard 2030 long-term growth strategy.
- •For 2025, we reported firm-wide revenue of $3 billion, with record revenue in financial advisory and assets under management up 12% in asset management.
- •Before we turn to our outlook and financial results, I would like to take a moment to thank Mary Ann and welcome Tracy as our new CFO.
- •As CFO, he will lead efforts to improve operational efficiency, helping drive profitable, profitable growth and progress towards Lazard 2030, while playing a central role in engaging with the investment community.
- •You can read more about Tracy in the press release we issued this morning alongside our earnings release.
- •As we look ahead, we see substantial growth in both of our businesses.
- •In financial advisory, the M&A cycle continues to deepen, while client demand remains strong for our other advisory solutions, such as private capital advisory and restructuring and liability management.
- •Looking back on 2025, in Financial Advisory, we reported record revenue of $1.8 billion.
- •We continue to anticipate hiring within or above our stated range going forward, and we will prioritize acquiring top talent to deliver long-term profitable growth over time.
- •This is an increase of $2.5 million per MD since 2023, and we expect continued significant improvement in this important metric in the years ahead, which I will discuss later.
What went well
- •Lazard reported full-year 2025 firm-wide revenue of $3 billion (up 5%), with record Financial Advisory revenue of $1.8 billion and assets under management up 12% in Asset Management.
- •Fourth quarter firm-wide revenue was $892 million, up 10% from the prior year, with Financial Advisory revenue of $542 million (up 7%) and Asset Management revenue of $339 million (up 18% year-over-year and up 15% sequentially).
- •Financial Advisory delivered record revenue for EMEA and for the Private Capital Advisory group plus a strong year in restructuring and liability management, and the firm participated in marquee transactions including Kellanova's $35.9 billion acquisition by Mars and Constellation Energy's $26.6 billion acquisition of Calpine.
- •Average revenue per Managing Director reached $8.9 million, up $2.5 million since 2023, exceeding the productivity goal even though MD additions ran above the 10-15 net target range.
- •Asset Management achieved record gross inflows exceeding the $50 billion target and launched seven active ETFs in the US, surpassing $800 million in AUM, and won-but-not-yet-funded mandates rose to $13 billion, above the prior year.
- •The full-year compensation ratio improved to 65.5% from 65.9%, and the firm returned $393 million to shareholders for the year including $187 million in dividends and $91 million in share repurchases.
What went wrong
- •Asset Management had net outflows of $19.7 billion in the fourth quarter, largely driven by the closure of one US sub-advised relationship; excluding it, net inflows were $8.4 billion for the full year.
- •Quarter-end AUM of $254 billion was 4% lower than September 2025, reflecting that outflow and $800 million of foreign exchange depreciation.
- •Rapid hiring of new Managing Directors puts temporary downward pressure on productivity as bankers acclimate to the platform.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Revenue per Managing Director | 2030 | — | $12.5 million target | Newly added goal |
| Net flows (Asset Management) | FY2026 | — | Positive net flows expected | — |
| Financial Advisory MD net additions | Annual (Q1 to Q1) | 10-15 net adds | Within or above the 10-15 range | Reaffirmed/at-or-above |
| Non-compensation expense | FY2026 | — | Mid- to high-single-digit dollar increase, depending on FX | — |
| M&A activity | FY2026 | — | Expected to accelerate | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Firm-wide revenue (Q4) | +10% to $892 million | Growth across both Financial Advisory and Asset Management |
| Financial Advisory revenue (Q4) | +7% to $542 million | Diversified deal activity across teams and geographies plus marquee transactions |
| Asset Management revenue (Q4) | +18% to $339 million | Higher average AUM (+12%), management fees up 17%, and higher incentive fees |
| Average AUM (Q4) | +12% to $261 billion | Market appreciation and gross inflows |
| Revenue per Managing Director (FY) | +$2.5 million since 2023 to $8.9 million | Higher client traction and productivity despite elevated share of new MDs |
| Compensation ratio (FY) | Improved to 65.5% from 65.9% | Productivity gains even amid accelerated talent investment |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| M&A cycle outlook | — | Expected to accelerate in 2026 as companies seek scale and focus, alongside elevated restructuring and private equity activity | Improving |
| Private capital / non-M&A mix | Private-capital advisory ~25% in 2019 | ~40% today, targeting 50% over time; non-M&A revenue ~40%+ of advisory, can rise toward 50% | Growing |
| MD productivity | $8.9 million per MD in 2025 | Targeting $12.5 million by 2030, with ~$1 million uplift expected as the new-MD share normalizes to ~30% | Rising |
| Asset Management transformation | 2025 an inflection point | New leadership under Chris Hogbin; focus on quant, emerging markets, and customized solutions; positive net flows expected in 2026 | Repositioning |
| Secondaries / continuation funds | Strong multi-year growth | Expected to continue without slowing given low penetration (~one-third), seen as a permanent feature of private equity | Sustained growth |
| AI and Contextual Alpha | Discussed for a couple of years | Adoption accelerated in 2025 with new tools; positioned to drive productivity and operating efficiencies; CEO uses LLMs in daily workflow | Accelerating |
Q&A summary
What is the revenue mix among non-M&A businesses and the outlook for them in the coming year?
Peter Orszag said the year was roughly 60% M&A and 40% non-M&A, with the non-M&A component able to rise toward 50% over time, supported by a record fundraising year (especially secondaries) and strong restructuring and liability management activity.
Why is the CFO transition timeline so abrupt, and could it have been telegraphed earlier?
Peter Orszag said it is very much normal course and not abrupt; an internal successor (Tracy Farr) enables a faster effective date, and outgoing CFO Mary Ann Betsch will serve as a senior advisor to ensure a smooth transition.
When can private equity-driven deal activity ramp more meaningfully, and is there risk continuation vehicle exits disappoint?
Peter Orszag said 2026 is likely the year activity picks up as LPs seek cash returns and bid-ask spreads narrow, and that secondaries will keep growing because penetration is still low (closer to a third), making them a permanent part of the private equity landscape rather than an aberration.
How should investors gain comfort on the guidance for positive net flows in 2026 by asset class?
Chris Hogbin said strong gross inflows are budgeted again (above the prior goal) without a repeat of the large sub-advised closure, supported by $13 billion of unfunded mandates concentrated in emerging markets, systematic, listed infrastructure, and alternatives, aided by investors diversifying toward international markets.
How should comp leverage progress given robust hiring, and what is the path back to a 60% comp ratio?
Peter Orszag said additional operating leverage is expected in 2026 dependent on revenue growth and especially MD productivity gains, with incoming CFO Tracy Farr focused on corporate-function efficiencies as another lever to reduce the comp ratio over time.
Has restructuring peaked, or is there more growth ahead?
Peter Orszag said the widening dispersion in corporate performance means M&A and restructuring/liability management can rise together, as bottom-percentile firms need restructuring help while frontier firms have strong incentives to acquire, so he sees continued activity rather than a peak.