Lazard Q2 Earnings Call Highlights

Key Points

• Q2 results showed progress in Lazard’s long-term strategy, with adjusted net revenue of $786 million and signs that the Lazard 2030 plan is starting to show up in client activity, advisory pipelines, and asset flows.
• Financial Advisory and Asset Management both posted strong momentum. Advisory revenue was led by North American M&A, while Asset Management ended June with $285 billion in AUM and $7.4 billion in first-half net inflows, its best first-half inflows in nearly 20 years.
• Expenses and compensation remain a near-term drag, with Lazard’s compensation ratio at 69.9% and an unusually high effective tax rate in the quarter. Management said it expects the compensation ratio to improve over time and reiterated plans to restart buybacks and continue integrating Campbell Lutyens.

Lazard NYSE: LAZ reported second-quarter adjusted net revenue of $786 million and first-half adjusted net revenue of $1.5 billion, while executives said the firm is seeing signs that its multi-year Lazard 2030 strategy is beginning to show through in client activity, asset flows and advisory pipelines.

Chairman and Chief Executive Officer Peter Orszag told analysts that nearly three years after the firm laid out its Lazard 2030 plan, management is measuring progress across “relevance, revenue, and returns.” He said the firm’s Financial Advisory business achieved its strongest announced league table position since 2014 in the first half, while Asset Management posted its best first-half net inflows in nearly 20 years and reached its highest reported assets under management level.

“Increasingly, boards, CEOs and asset owners are turning to Lazard for their most consequential decisions and investments,” Orszag said, attributing the activity to the firm’s ability to combine business analysis with insight into geopolitics and regulation, which he described as “contextual alpha.”

Financial Advisory Revenue Led by North American M&A

Chief Financial Officer Tracy Farr said Financial Advisory adjusted net revenue was $445 million in the second quarter and $801 million for the first half of 2026. Revenue in the quarter was driven primarily by M&A completions in North America, while Europe and the Middle East continued to perform well despite geopolitical uncertainty. Farr said Lazard’s London advisory team performed particularly well during the period.

Farr also said Lazard’s Restructuring and Liability Management business delivered its best first-half performance in almost a decade. Private Capital Advisory saw increased demand, particularly in primary fundraising, which management said supports the rationale for the pending Campbell Lutyens acquisition and the planned launch of Lazard CL later this year.

Transactions cited by management included SunOpta’s $1.1 billion sale to Refresco and Network Connex’s sale to Olympus Partners. Farr also pointed to recently announced assignments including Altice France’s proposed sale of SFR for up to 21 billion euros and NextEra’s combination with Dominion Energy, which she described as creating an enterprise value of approximately $420 billion.

Orszag said forward indicators in the advisory business have improved. Conflict clearances were up almost 40% year over year on a dollar-weighted basis and more than 100% for deals above $5 billion, on a fee-weighted basis. He also said the firm’s weighted backlog for this year is building more rapidly than last year, and its weighted pipeline for 2027 is already more than twice where the 2026 pipeline stood at the same point last year.

Asset Management Posts Strong First-Half Inflows

Asset Management adjusted net revenue totaled $331 million in the second quarter and $640 million for the first half. Management fees were $310 million in the quarter, up 23% from the second quarter of 2025 and 5% sequentially.

Farr said Lazard ended June with $285 billion in assets under management, up 15% from June 2025 and 10% from the prior quarter. During the quarter, the business saw $27 billion of market appreciation, $1 billion of foreign exchange depreciation, $1.6 billion of net outflows and a $1 billion increase tied to acquiring a controlling interest in Allied Partners. For the first half, Lazard delivered net inflows of $7.4 billion, according to Farr.

Chris Hogbin, CEO of Asset Management, said client demand has been broad across products and geographies. He cited demand for the firm’s quantitative equity platform, emerging markets, Japanese equities, international equities, fixed income and private markets. Lazard’s Advantage quantitative equity platform more than doubled over the past year to $50 billion in AUM, according to management.

Hogbin said Lazard had 68% of client AUM outperforming stated benchmarks over five years. He also noted that the firm’s U.S. ETF platform surpassed $1 billion in AUM in February, less than a year after launch, and had doubled to $2 billion by July.

Compensation Ratio and Tax Rate Weigh on Earnings

Expenses were a key focus on the call. Farr said adjusted non-compensation expense was $172 million in the second quarter, resulting in a non-compensation ratio of 21.8%. Adjusted compensation expense was $550 million, resulting in a compensation ratio of 69.9%.

Farr said Lazard continued to accrue compensation in the second quarter at the same level as in the first quarter because several factors that could reduce the compensation ratio are still evolving. Those factors include the closing of the Campbell Lutyens transaction, potential moderation in hiring compared with last year and continued strengthening in the advisory pipeline.

Management said it expects to provide more detail on the full-year compensation ratio when it reports third-quarter results. Orszag said Lazard remains committed to bringing the compensation ratio down over time through higher productivity, operating leverage and efficiency initiatives, including broader use of technology.

Farr said the adjusted effective tax rate was 69.7% for the second quarter, calling it “anomalous” and tied to a catch-up adjustment associated with equity vesting. She said it is not indicative of the full-year effective tax rate, which Lazard still expects to be in the high 20% range on a GAAP basis.

Managing Director Repositioning Remains Central to Strategy

Orszag spent significant time discussing Lazard’s effort to upgrade its Financial Advisory managing director ranks. He said the firm made a strategic decision to turn over 40% of its advisory managing directors as part of the Lazard 2030 plan. While that created a transitional headwind, Orszag said management believes the firm is now moving toward a period in which those investments become a tailwind for growth.

He said Lazard remains on track to reach its target of $10 million in revenue per managing director by 2028. Orszag also said the average annual productivity of newly hired managing directors after two years on Lazard’s platform has already exceeded the productivity of managing directors the firm separated from during the repositioning.

In response to analyst questions, Orszag said Lazard had 238 advisory managing directors at the end of the first quarter and expects to have at least 248 by the end of the first quarter of 2027. He said the firm remains on track to add 10 to 15 net managing directors per year, with hiring focused disproportionately in the U.S. and in areas such as healthcare, industrials, technology, defense technology and private capital.

Buybacks Resume as Campbell Lutyens Integration Advances

Lazard returned capital to shareholders during the quarter and restarted share repurchases after pausing buybacks because of the Campbell Lutyens transaction. Farr said Lazard returned $103 million to shareholders in the second quarter, including a quarterly dividend and share repurchases. The firm has a current repurchase authorization of just over $250 million and declared a quarterly dividend of $0.50 per share.

Orszag said integration planning for Campbell Lutyens is “well underway” and said management has greater conviction in the strategic logic and cultural fit of the combination. Excluding revenue or expense synergies, he said Lazard continues to expect the acquisition to be accretive to earnings in 2027 and thereafter.

Looking ahead, Farr said firmwide revenue is typically stronger in the second half than the first half, driven by Financial Advisory, and that Lazard’s current projections suggest that pattern will be “somewhat more pronounced” this year. Orszag said private equity M&A remains subdued due largely to valuation gaps, but pressure from limited partners for distributions could eventually drive more sponsor activity.

Management also highlighted Lazard’s continued use of artificial intelligence across advisory and asset management. Orszag said AI spending remains modest but that the firm is focused on cultural adoption and maintaining access to multiple models rather than relying on a single provider.

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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