Lazard Q1 Earnings Call Highlights

Key Points

• Lazard is buying Campbell Lutyens to create a new private capital advisory unit called "Lazard CL", which the firm says will be the leading primary and secondary adviser and target roughly $500 million of combined revenue in 2027; the deal carries $575 million of non‑contingent consideration plus an $85 million earnout and is expected to be EPS‑accretive in 2027.
• In Q1 Lazard posted adjusted net revenue of $673 million (up 5% YoY) as Financial Advisory fell 4% while Asset Management rose 17% on $9 billion of net inflows—the strongest quarterly flows in almost two decades—AUM was $259 billion, the Q1 compensation ratio was 69.9% with full‑year guidance near ~65.5%, and the firm returned $174 million to shareholders, including a $0.50 quarterly dividend.

Lazard NYSE: LAZ executives used the firm’s first-quarter 2026 earnings call to outline plans for a major strategic expansion in private markets advisory while reiterating confidence in their broader outlook, even as geopolitical uncertainty and deal timing affected quarterly results.

Campbell Lutyens acquisition to form “Lazard CL” private capital advisory unit

Chief Executive Officer and Chairman Peter Orszag opened the call by highlighting Lazard’s announced acquisition of Campbell Lutyens and the planned formation of “Lazard CL,” a new private capital advisory unit that will sit alongside the firm’s M&A and other advisory practices.

Orszag described Campbell Lutyens as a “premier global private markets advisor focused on fund placement, secondary advisory, and GP capital advisory services.” He said combining Campbell Lutyens with Lazard’s existing private capital advisory group would create “the leading primary and secondary advisory business globally,” with “approximately $500 million in anticipated combined 2027 revenue.” Lazard expects the transaction to close before the end of the calendar year.

Orszag tied the deal to the firm’s “Lazard 2030” multi-year plan, which he said aims to create a “more productive, resilient, growth-oriented firm” by strengthening M&A while expanding restructuring and liability management, Capital Solutions, and Private Capital Advisory. He noted that advisory revenue related to “private capital connectivity” has grown from about 25% of total advisory revenue in 2019 to 40% “today,” and said the Campbell Lutyens deal would bring the firm to its 2030 target of roughly 50% upon closing.

In response to analyst questions, Orszag said Lazard believes it will be “the leader” in primary and secondary fundraising on a pro forma basis after the close and emphasized potential “flywheel” effects between fundraising and Lazard’s other advisory businesses. He also pointed to the value of proprietary GP and LP data and said the combined dataset, paired with Lazard’s AI capabilities, would support deeper client insight.

First-quarter results: advisory softness offset by Asset Management growth

For the first quarter, Orszag reported firm-wide adjusted net revenue of $673 million, up 5% year-over-year. CFO Tracy Farr said financial advisory adjusted net revenue was $356 million, down 4% from the prior-year quarter, while Asset Management adjusted net revenue was $309 million, up 17%.

Orszag said advisory results were impacted by “several transactions” that moved to later in the year. He characterized the business as “lumpy” and cautioned against over-interpreting quarterly fluctuations, while noting strong underlying indicators such as increased client engagement and higher conflict clearances. As one example, he said conflict clearances for deals above $5 billion were up 50% year-over-year, though he stressed there is “no guarantee” clearances translate into announcements and revenue.

Farr highlighted recent advisory assignments spanning private capital advisory, liability management, restructuring, and M&A. She cited private capital advisory work including advising Valerius Capital Partners and Fleming Capital on continuation funds and advising NOVA Infrastructure on the raise of NOVA Infrastructure Fund II. She also pointed to restructuring and liability management roles including debtor engagements with Finnair and Xerox Holdings Corporation, and creditor roles involving Anthology and DISH Network.

On M&A activity, Farr referenced completed work on Keurig Dr Pepper’s $23 billion acquisition of JDE Peet’s and a planned subsequent separation into two independent companies, and a recently announced assignment advising Zurich Insurance Group on its GBP 8.2 billion recommended cash offer for Beazley.

Asset Management sees strongest quarterly net inflows in nearly 20 years

Asset Management was a key bright spot. Orszag said the firm generated $9 billion of net inflows during the quarter, which he described as the highest level of quarterly net flows in almost two decades.

Farr said Asset Management revenue reflected management fees of $296 million, up 25% year-over-year and up 3% sequentially. Incentive fees totaled $11 million. As of March 31, Lazard reported AUM of $259 billion, which Farr said was up slightly versus year-end. She broke down the quarter’s AUM movement as net inflows of $9 billion, market appreciation of $354 million, foreign exchange depreciation of $3 billion, and divestitures of $1.5 billion. Average AUM in the quarter was $266 billion, up 2% sequentially and up 15% from the prior year.

Asset Management CEO Christopher Hogbin said he would not “straight line” first-quarter inflows through the year, noting net flows are the difference between inflows and outflows and that some parts of the business may see redemptions. Still, he said the firm remained “very confident” it will deliver net inflows for the full year and cited a “very strong, but not funded pipeline.”

Hogbin also discussed fee rate trends, stating the average management fee in the quarter was 44.6 basis points, up from 43.9 basis points in the fourth quarter and from 41.2 basis points a year earlier. He said the firm was comfortable that the fee rate should remain around that level through the rest of the year, based on the current mix.

Addressing a question about the impact of Middle East conflict and energy price moves on emerging markets appetite, Hogbin said flows were consistent across January, February, and March and that the firm did not see a change in flows as the conflict began. He said institutional clients tend to take a longer-term view and may see market moves as opportunities to move toward longer-term allocations.

Expenses, compensation ratio outlook, and capital return

Farr said adjusted compensation expense was $471 million in the quarter, producing a compensation ratio of 69.9%. Adjusted non-compensation expense was $149 million, representing a non-compensation ratio of 22.1%. In Q&A, Farr guided to a full-year compensation ratio closer to last year’s level, “around 65.5%,” and discussed efforts to improve operational efficiency and cost management. She also said Lazard had launched a longer-dated program focused on streamlining support functions across geographies and businesses, with more detail expected in the second half of the year.

Orszag and Farr also addressed the firm’s senior hiring. Orszag said Lazard added 28 net managing directors in 2025, above the firm’s 10–15 net-add target, and said hiring in 2026 is expected to be within that range as the firm integrates Campbell Lutyens. Farr added that about 40% of MDs remain in a ramping period and said fixed compensation rose “low double digits” year-over-year in the first quarter, which influenced the quarterly accrual dynamics.

On taxes, Farr said the first-quarter adjusted effective tax rate reflected discrete benefits related to stock-based compensation vesting, and she expects the full-year 2026 effective tax rate to be in the “high 20s% range.”

For capital allocation, Farr said Lazard returned $174 million to shareholders during the quarter, including $47 million in dividends. She also noted the firm declared a quarterly dividend of $0.50 per share.

Deal terms and strategic discipline

Farr provided additional color on the Campbell Lutyens consideration structure, saying total non-contingent consideration is $575 million, including $460 million paid upfront in stock based on a $46.50 reference share price, plus $115 million deferred to two years after closing (priced at issuance) and subject to a further lockup. She also referenced an additional $85 million performance-based earnout and said Lazard has flexibility to settle the deferred and earnout components in either stock or a “cash-like security,” which she said provides optionality to manage dilution.

Discussing financial characteristics, Farr said Campbell Lutyens has “healthy operating margins in the mid-20s% range.” She said Lazard expects the acquisition to be EPS accretive in 2027 with no synergies assumed, and characterized the valuation as being at a multiple similar to Lazard’s consolidated weighted average multiple, “breakeven in the first year and lightly accretive in the second year.”

Orszag reiterated a disciplined approach to future M&A, saying any opportunity must fit strategically, financially, and culturally. He said Lazard had avoided pursuing certain opportunities in Asset Management previously and indicated the firm is also evaluating growth pathways in wealth management, while continuing to consider adding talent and teams where it sees differentiation.

About Lazard NYSE: LAZ

Lazard Ltd. NYSE: LAZ is a leading global financial advisory and asset management firm, offering a comprehensive suite of services to corporations, governments and individuals. Founded in 1848, Lazard has built a reputation for providing independent advice and innovative solutions in complex financial transactions. The firm is publicly traded on the New York Stock Exchange under the ticker symbol LAZ and maintains its headquarters in Hamilton, Bermuda.

In its Financial Advisory segment, Lazard assists clients with mergers and acquisitions, restructurings, capital structure optimization and strategic planning.

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