Lazard Ltd. ((LAZ)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Lazard Ltd. recently held its earnings call, reflecting a generally positive sentiment. The company reported strong performance in its Financial Advisory and Asset Management segments, highlighting significant new mandates and increased private capital engagement. However, challenges such as a higher tax rate and compensation expense ratio, along with continued high gross outflows in Asset Management, were noted as areas needing improvement.
Strong Financial Advisory Performance
Financial Advisory at Lazard achieved a record first half of the year with adjusted net revenue of $861 million. This performance underscores the firm’s geographic and product diversity, with particularly strong revenue figures coming from France and Germany.
Asset Management Growth
Lazard’s Asset Management segment reported adjusted net revenue of $533 million for the first half of the year. The quarter saw positive net flows, record gross inflows, and a 10% year-to-date increase in assets under management, highlighting the segment’s robust growth.
Increased Private Capital Engagement
Private capital has become a significant focus for Lazard, contributing over 40% of total Financial Advisory revenue. This reflects the company’s strategic emphasis on this area and its ongoing efforts to enhance its capabilities through hiring.
Successful New Mandates in Asset Management
The company secured several notable new mandates in Asset Management, including a $1 billion investment from a U.S. public pension into Global Equity Advantage and $650 million from a Nordic client for Japanese equities.
Expansion and Talent Acquisition
Lazard has been actively expanding its team, hiring 14 Financial Advisory managing directors in 2025. These new additions have supported the firm’s performance and contributed to securing new client business.
Increased Tax Rate
The adjusted effective tax rate for the second quarter was reported at 36.5%, a significant increase from 14% in the same quarter of the previous year, indicating a challenge that the company needs to address.
High Compensation Expense Ratio
Lazard’s adjusted compensation expense was $504 million, resulting in a ratio of 65.5%. This remains higher than the company’s goal of maintaining a ratio of 60% or below, highlighting an area for potential cost management improvements.
Continued High Gross Outflows in Asset Management
Despite achieving record gross inflows, Lazard continues to face high gross outflows in its Asset Management segment, suggesting a need for enhanced retention strategies.
Forward-Looking Guidance
Lazard remains optimistic about its future, with total firm-wide adjusted net revenue reaching $1.4 billion for the first half of the year. The company expects private equity to play a more significant role in mergers and acquisitions (M&A) and plans to continue investing in talent and technology to support long-term growth.
In summary, Lazard’s earnings call painted a picture of a company performing well in key areas while acknowledging challenges that need addressing. The overall sentiment was positive, with strong performances in Financial Advisory and Asset Management, alongside strategic initiatives to enhance future growth.