What Lazard (LAZ) Said on Its Q3 Earnings Call

Key Points

• Q3 adjusted net revenue rose 11% year over year, driven by record financial-advisory revenue of $465 million and continued asset-management growth. Advisory benefited primarily from M&A activity, while Lazard’s weighted 2027 pipeline was more than twice the comparable 2026 level.
• Lazard expects to complete its Campbell Lutyens acquisition and launch Lazard CL in early November. Management projects the private-capital advisory business will generate about $500 million in revenue and be earnings-accretive in 2027, excluding potential synergies.
• Asset-management fees rose 18% to a record $321 million, with record gross inflows of $54 billion through the first nine months and improved investment performance. Lazard returned $88 million to shareholders in Q3 and plans to continue share repurchases through year-end.

Lazard NYSE: LAZ reported that adjusted net revenue rose 11% year over year in the third quarter of 2026, supported by record quarterly financial advisory revenue and continued growth in asset-management management fees. Chief Executive Officer and Chairman Peter Orszag said the firm’s Lazard 2030 strategy was progressing as planned, citing stronger client activity, forward indicators in advisory and record gross inflows in asset management.

Orszag also said Lazard expects to close its acquisition of Campbell Lutyens and launch Lazard CL, its third global business focused on private capital advisory, in early November after receiving regulatory approvals. The firm continues to expect Lazard CL to generate approximately $500 million in revenue and be accretive to earnings in 2027, excluding potential synergies.

Financial Advisory Sets Third-Quarter Record

Financial advisory adjusted net revenue totaled $465 million in the third quarter and $1.3 billion in the first nine months of 2026. Chief Financial Officer Tracy Farr said the quarterly result included transaction-fee pull-forwards from deals that closed shortly after Sept. 30, though the amount was in line with the company’s two-year average.

The record quarterly result was driven primarily by mergers and acquisitions, with record third-quarter and nine-month revenue in both the Americas and the United Kingdom. Orszag said Lazard’s investments in talent were beginning to translate into results. Over the last three years, the firm has hired or promoted 80 managing directors in North America in sectors including healthcare, industrials, consumer, media and entertainment, technology, and power and infrastructure.

Lazard’s announced league-table position is its strongest in more than a decade, according to Orszag. Dollar-weighted conflict clearances rose more than 30% year over year, while conflict clearances for transactions above $5 billion increased more than 85%. The company’s weighted pipeline for 2027 was slightly more than twice the level of its 2026 pipeline at the same point last year, measured on a revenue basis and weighted by the estimated probability of collecting fees.

For the third quarter, Lazard said approximately 61% of advisory revenue came from M&A and 39% from non-M&A businesses. The company continues to expect the second half of 2026 to be stronger than the first half, with a stronger second-half-to-first-half revenue relationship than in 2025.

Completed advisory assignments included Corteva Agriscience’s $50 billion spin-off of Vylor, MasTec’s $1.7 billion acquisition of Superior Group, and Geneta Health’s sale to R1. Recently announced assignments included Emera’s merger with Canadian Utilities, with a combined enterprise value of approximately CAD 72 billion, and OCS Group’s proposed £3.1 billion acquisition.

Campbell Lutyens Integration and M&A Outlook

Orszag said the Campbell Lutyens business was performing ahead of assumptions underlying the acquisition. Lazard sees early cost-synergy opportunities involving real estate, vendors and information technology, along with revenue opportunities from referrals between Lazard CL’s fundraising and secondary-advisory operations and Lazard’s M&A bankers.

“We anticipate, even though we didn’t assume that in underwriting the deal, that we will be able to at least match, and in all likelihood, significantly beat” the M&A referral levels generated under Campbell Lutyens’ former joint venture with another investment bank, Orszag said.

Management said higher interest rates have not materially reduced strategic clients’ willingness to pursue transactions. Orszag cited the need for scale amid technological change, greater vertical integration to address supply-chain disruptions, and efforts to reconfigure geographic footprints as major drivers of activity. He also pointed to a more constructive U.S. regulatory environment, particularly for large transactions.

Private-equity M&A has yet to fully recover, management said, as portfolio-company owners await better valuations while limited partners seek liquidity. Orszag said that environment is also supporting demand for secondaries advisory. Lazard expects restructuring activity to continue growing, with higher rates contributing to distress among weaker-performing companies and potential stress in parts of the AI ecosystem.

Asset Management Fees Rise as Performance Improves

Asset management adjusted net revenue was $330 million in the third quarter and $970 million in the first nine months. Management fees reached a record $321 million for the quarter, up 18% year over year, and $927 million for the nine-month period, up 22%. The third quarter marked Lazard’s sixth consecutive quarter of sequential management-fee growth.

Assets under management stood at $284 billion at Sept. 30, up 7% from a year earlier and roughly unchanged from the prior quarter. During the quarter, market appreciation added $1.9 billion, foreign-exchange movements reduced assets by $0.2 billion, and net outflows were $2.3 billion. Average AUM was $287 billion, 11% above the prior-year quarter.

Gross inflows reached a record $54 billion in the first nine months, and the company said it remains on track for positive net flows for the full year. As of quarter-end, 70% of client AUM outperformed stated benchmarks over one year and 67% outperformed over three years, Lazard’s best investment-performance results in five years.

Chris Hogbin, CEO of Asset Management, said client demand was strongest in areas delivering consistent performance, including Lazard Advantage quantitative equity strategies, emerging markets, Japanese equities, fixed income and convertible arbitrage. Lazard’s international quantitative ETF, IDEQ, had grown to nearly $2 billion in AUM since launching last year. The firm plans to introduce its first actively managed fixed-income ETFs next month.

Expenses, Capital Returns and Efficiency Efforts

Lazard reported adjusted non-compensation expense of $156 million in the third quarter, representing a 19.3% non-compensation ratio. Adjusted compensation expense was $562 million, or a 69.9% compensation ratio. Farr said the company continued to take a conservative approach to compensation accruals, with the quarterly accrual unchanged from the first two quarters.

The company is considering reducing its compensation deferral rate as part of the year-end process. Farr said such a change would accelerate compensation-expense recognition in the current year without changing total compensation awarded, raising the reported compensation ratio by a few percentage points this year while reducing it in later years. Management has not made a final decision.

Lazard is also pursuing operational-efficiency initiatives, including centralizing and automating certain corporate and support functions, rationalizing vendors and expanding the use of artificial intelligence. Farr said the company expects to provide specifics on expense reductions beginning in 2027.

During the third quarter, Lazard returned $88 million to shareholders, including $49 million in dividends and $33 million in share repurchases. The company declared a quarterly dividend of $0.50 per share and said it expects to continue repurchases through the remainder of the year while balancing buybacks with investment and compensation-related share issuance.

About Lazard (NYSE:LAZ)

Lazard, Ltd. is a global financial advisory and asset management firm that serves corporations, financial institutions, governments, sovereign entities and individuals. Its Financial Advisory business provides advice on mergers and acquisitions, strategic matters, capital structure, restructuring, capital raising and other complex financial transactions.

Through its Asset Management business, Lazard offers investment strategies across equities, fixed income, private markets, alternatives and multi-asset portfolios.

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