• Adjusted Net Revenue: $643 million for the first quarter.
• Financial Advisory Adjusted Net Revenue: $370 million, 17% lower than the prior year's first quarter.
• Asset Management Adjusted Net Revenue: $264 million, a decrease of 4% from the prior year quarter.
• Management Fees: $256 million for the first quarter, down 1% from the prior quarter.
• Incentive Fees: $9 million, driven by strong performance in credit fixed income and Japanese equity strategies.
• Assets Under Management (AUM): $227 billion as of March 31, with market appreciation of $800 million and foreign exchange appreciation of $3.9 billion.
• Adjusted Compensation Expense: $421 million, resulting in a compensation ratio of 65.5%.
• Adjusted Non-Compensation Expense: $148 million, resulting in a non-compensation ratio of 23%.
• Adjusted Effective Tax Rate: Negative 13.9% due to a discrete benefit related to stock compensation awards.
• Capital Returned to Shareholders: $175 million, including a quarterly dividend of $45 million and $36 million in stock repurchases.
• Quarterly Dividend Declared: $0.50 per share.

• Warning! GuruFocus has detected 4 Warning Sign with LAZ.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lazard Inc (NYSE:LAZ) reported a solid first quarter performance with strong client engagement and a diversified business model.
• The company's global market share of announced transactions in Financial Advisory increased year-over-year.
• Asset Management saw substantial improvement in flows, driven by large wins in strategic focus areas such as Japanese equities and global equities.
• Lazard Inc (NYSE:LAZ) announced a strategic alliance with Arini Capital Management, expanding connectivity to private capital across Europe.
• The company launched its first active ETF product set in the US, expanding its capability to meet investor preferences and demand.

Negative Points

• Financial Advisory adjusted net revenue was 17% lower than the prior year's record first quarter revenue.
• Asset Management adjusted net revenue decreased by 4% from the prior year quarter.
• The adjusted compensation ratio remained high at 65.5%, slightly below last year's accrual.
• There is substantial unpredictability due to shifting trade policies, which could impact future M&A activity.
• The restructuring backlog is growing, but the timeline for these mandates to hit the P&L remains uncertain.

Q & A Highlights

Q: Are you seeing a higher level than normal of M&A deals dropping out, and do you see risk of that picking up? A: Peter Orszag, CEO: In any normal environment, some deals get pushed out or accelerated, but we haven't seen an elevated level of that. Our M&A backlog continues to expand, but its future depends on resolving tariff uncertainties. Our diversified business model allows us to adapt to client needs in a rapidly changing environment.

Q: How do you think the second quarter can compare to the first quarter? Can it be up sequentially or year-over-year? A: Peter Orszag, CEO: It's challenging to predict specific quarterly outcomes due to ongoing uncertainties. Despite this, client engagement remains high, but I can't provide a definitive answer as we're not in normal times.

Q: To what extent are you seeing sponsor M&A slowdown due to the macro backdrop and tariffs, and what does this mean for the growth of secondaries this year? A: Peter Orszag, CEO: Private equity is built to trade, but uncertainty around tariffs, market valuation shifts, and disruptions in leveraged loan and high-yield markets are countervailing forces. Clarity on tariffs could accelerate secondaries activity, but we see underlying growth in the secondaries market regardless.

Q: Could you talk about trends in restructuring, specifically liability management versus Chapter 11, and the outlook for these components? A: Peter Orszag, CEO: We've diversified our restructuring group to handle both Chapter 11 and liability management. As private capital grows, liability management is more common than formal Chapter 11 processes. We expect this trend to continue, although some firms will still undergo Chapter 11.

Q: What would you need to see in the M&A environment to be more comfortable bringing down the compensation accrual rate? A: Peter Orszag, CEO: The 60% target for the comp ratio depends on market conditions. We included caveats due to uncertainty. Achieving operating leverage depends on external factors, particularly the resolution of policy uncertainties. If revenue remains stable, the 65.5% ratio is our best guess for the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.