Snapshot
Lazard, Inc. reported $1.46B of revenue in Q1 2026, up 13.1% year over year, with diluted EPS of $0.91 and an operating margin of 6.1%.
- Revenue
- $1.46B
- YoY growth
- +13.1%
- Diluted EPS
- $0.91
- Operating margin
- 6.1%
What management said
- •In addition to today's audio comments, we posted our earnings release on our website.
- •A reconciliation of these non-GAAP financial measures to the comparable GAAP measure is provided in our earnings release and investor presentation.
- •This transaction underscores how Lazard is building on its core advisory franchise while both diversifying our business model and accelerating our growth.
- •Campbell Lutyens is a premier global private markets advisor focused on fund placement, secondary advisory, and GP capital advisory services.
- •Along with our existing PCA group, the transaction combines two highly complementary advisory platforms that will create the leading primary and secondary advisory business globally with approximately $500 million in anticipated combined 2027 revenue.
- •The acquisition marks an important milestone on the path toward Lazard 2030 and an exciting avenue for additional growth.
- •Lazard 2030 is a multi-year plan to build a more productive, resilient, growth-oriented firm.
- •Our focus is on enhancing our long-standing strength in M&A while also building leading platforms in restructuring and liability management, Capital Solutions, and Private Capital Advisory.
- •Our recent investments have expanded the solutions we provide for clients and diversified our revenue mix.
- •Revenue related to private capital connectivity has increased from approximately 25% of total advisory revenue in 2019 to 40% today.
- •Upon closing the Campbell Lutyens acquisition, we will achieve our 2030 target of approximately 50% even while delivering total revenue growth.
- •The acquisition of Campbell Lutyens and establishment of Lazard CL strengthens our ability to deliver for clients at a time when fundraising is increasingly competitive and liquidity solutions are more complex.
What went well
- •Firm-wide adjusted net revenue was $673 million, up 5% compared to one year ago.
- •Asset Management delivered net inflows of $9 billion in the quarter, the highest level of quarterly net flows in almost 20 years, with Asset Management adjusted net revenue up 17% to $309 million and management fees up 25% year-over-year.
- •Lazard announced the acquisition of Campbell Lutyens and the future establishment of Lazard CL, a new private capital advisory unit expected to create the leading primary and secondary advisory business globally with approximately $500 million in anticipated combined 2027 revenue.
- •Revenue related to private capital connectivity has increased from approximately 25% of total advisory revenue in 2019 to 40% today, and the firm expects to reach its 2030 target of approximately 50% upon closing the Campbell Lutyens acquisition.
- •Client engagement remains very active with the pace of client interactions accelerating, and total conflict clearances are up significantly, including conflict clearances for deals above $5 billion up 50% year-over-year.
- •The firm more than exceeded its goal of expanding the financial advisory MD group, recording 28 net additions for 2025 versus a target of 10-15 net additions.
What went wrong
- •Financial advisory adjusted net revenue was $356 million, 4% lower than the prior year, as several transactions moved to later in the year and revenue from this business was not as strong as the firm anticipates the rest of the year will be.
- •Management acknowledged that private equity activity remains the weaker part of M&A, describing a 'waiting for Godot' phenomenon where the anticipated substantial uptick in private equity activity has not yet materialized.
- •Private credit challenges are emerging, concentrated in the software sector and more severe among alternative asset managers and private credit players that have turned to retail investors, creating stress in some sponsor portfolio companies.
- •The first-quarter adjusted compensation ratio was elevated at 69.9% due to GAAP-required accrual on a fixed compensation basis, which has a larger impact in the first quarter.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Adjusted compensation ratio | Full year 2026 | ~65.5% (2025) | closer to ~65.5% (similar to last year) | Lower than Q1 2026 accrual of 69.9%, guided toward prior-year level |
| Adjusted effective tax rate | Full year 2026 | — | high 20s% range | — |
| Asset Management average management fee rate | Remainder of 2026 | 44.6 bps (Q1 2026) | expected to stay around 44.6 bps level | Roughly stable |
| Asset Management net flows | Full year 2026 | — | confident in net inflows for the full year, with possible moderation in coming months | — |
| Financial advisory MD net additions | 2026 | 28 net additions (2025) | within the 10-15 net add range | Lower than 2025 |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Firm-wide adjusted net revenue | +5% | Robust growth in restructuring and liability management and private capital advisory, plus solid M&A performance in Europe, supported by the diversified model; partly offset by financial advisory transactions slipping to later in the year. |
| Financial advisory adjusted net revenue | -4% | Several transactions moved to later in the year; revenue was not as strong as the firm anticipates for the rest of the year. |
| Asset Management adjusted net revenue | +17% | Driven by management fees up 25%, reflecting strong net inflows and higher average AUM. |
| Asset Management management fees | +25% | Higher AUM and improved flows; average AUM was up 15% year-over-year. |
| Average AUM | +15% | Net inflows and market appreciation lifting assets versus the prior year. |
| Average management fee rate | +3.4 bps (41.2 to 44.6 bps) | Favorable mix of business; rate also up sequentially from 43.9 bps in Q4. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Lazard 2030 strategy and private markets connectivity | ~25% of advisory revenue from private capital connectivity in 2019; 40% prior | 40% today, targeting ~50% upon Campbell Lutyens close; firm says it is ahead of schedule on 2030 plan | Accelerating |
| Campbell Lutyens acquisition / Lazard CL | — | All-stock upfront consideration based on a $46.50 reference share price; expected to close before year-end and be EPS accretive in 2027 with no synergies assumed; combined ~$500M 2027 revenue | New |
| Asset Management flows and emerging/international markets demand | — | $9 billion net inflows, best in nearly 20 years; strong one-but-not-funded pipeline; clients reallocating toward emerging and international markets; two-thirds of AUM non-dollar denominated | Strengthening |
| MD recruiting and ramp | 28 net adds in 2025; target 10-15 | Expect to be within the 10-15 range in 2026; about 40% of MDs still in ramping period, with majority of productivity gains yet to come | Normalizing |
| Private equity / sponsor M&A recovery | — | Still awaiting a substantial uptick; alternative asset manager leaders signal 2026 as a buy/sell year; firm sees a significant number of processes underway | Stable/uncertain |
| Geopolitical risk and supply chain repositioning | — | Multinational clients across all sectors rethinking supply chain footprints; choke-point risks better appreciated; firm positions contextual alpha and geopolitical advisory as a differentiator | Rising |
| Operational efficiency and cost discipline | — | Q1 non-comp ratio of 22.1%; CFO launched a long-dated program targeting support-function streamlining across geographies and businesses, with more detail expected in H2 2026 | Increasing focus |
Q&A summary
Can you drive comp ratio improvement for the full year, and are there opportunities for more leverage beyond 2026?
Tracy Farr guided the full-year comp ratio closer to last year's ~65.5%, below the Q1 accrual of 69.9% which reflects higher first-quarter fixed-comp accrual. She sees additional discipline opportunities, particularly streamlining support functions across geographies and businesses via a newly launched long-dated cost program, with more detail in the second half of the year.
What network effects and productivity uplift can Lazard get from Campbell Lutyens?
Peter Orszag said the combined Lazard CL would be the pro forma leader in primary and secondary fundraising, with a flywheel effect of referrals in both directions between M&A/restructuring and fundraising. He emphasized the data-rich environment on GPs and LPs coupled with Lazard's AI systems as a key source of productivity uplift.
Can you help us understand the price paid for Campbell Lutyens and how it was struck?
Tracy Farr said the reference share price was $46.50, based on a medium-range VWAP. Total non-contingent consideration was $575 million, with $460 million paid upfront in stock (about half released at issuance, about half locked up over three years), plus a $115 million deferred payment priced at issuance two years from close and an additional $85 million performance-based earn-out; deferred and earn-out portions can be settled in cash-like security or stock.
What were Campbell Lutyens' profit margins and acquisition multiple?
Tracy Farr said it was acquired at a multiple similar to Lazard's total consolidated weighted average multiple, making it roughly breakeven in year one and lightly accretive in 2027. Its revenue is slightly larger than Lazard's own PCA business, with healthy operating margins in the mid-20s% range.
What is the outlook on the timing and speed of sponsor/private equity M&A recovery?
Peter Orszag clarified he was constructive on the overall market but not specifically on private equity. The firm is still awaiting a substantial uptick; large alternative asset manager leaders publicly say 2026 will be an active buy/sell year. Lazard's private-capital connectivity extends beyond PE M&A into restructuring, liability management, PCA, and Capital Solutions.
Can Asset Management sustain the recent inflow level, and how should we think about the fee rate?
Chris Hogbin said not to straight-line the $9 billion Q1 inflows, with some moderation possible in coming months due to potential redemptions, but the firm remains confident in full-year net inflows backed by a strong unfunded pipeline. The average management fee was 44.6 bps, up from 43.9 bps in Q4 and 41.2 bps a year ago, and is expected to stay around this level through the year.