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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents a mixed picture: positive strategic initiatives and shareholder returns, but uncertainties in the advisory business and high attrition in asset management. The Q&A reveals optimism in future M&A activities and asset management progress, but lacks specifics on achieving key financial goals and AI implementation. The market cap indicates moderate stock sensitivity. Overall, the neutral rating reflects balanced positives and negatives, suggesting limited stock price movement in the short term.
Total firm-wide adjusted net revenue (H1 2025) $1.4 billion, with no year-over-year comparison provided.
Financial Advisory adjusted net revenue (H1 2025) $861 million, a record first half, with no specific year-over-year comparison provided. Reasons include geographic and product diversity, record revenue in France and Germany, and increased emphasis on private capital.
Asset Management adjusted net revenue (H1 2025) $533 million, with no specific year-over-year comparison provided. Reasons include strong investment performance, better focus on sales and distribution, and favorable market conditions.
Firm-wide adjusted net revenue (Q2 2025) $770 million, up 12% year-over-year. Driven by Financial Advisory business.
Financial Advisory adjusted net revenue (Q2 2025) $491 million, up 20% year-over-year. Reasons include strong performance across banking teams and participation in marquee transactions.
Asset Management adjusted net revenue (Q2 2025) $268 million, up 1% year-over-year. Reasons include lower average AUM offset by higher average fees.
Average AUM (Q2 2025) $239 billion, 3% lower year-over-year but up 3% sequentially. Reasons include market appreciation, foreign exchange appreciation, and net inflows.
AUM (as of June 30, 2025) $248 billion, 2% higher year-over-year and 9% higher sequentially. Reasons include market appreciation of $11.9 billion, foreign exchange appreciation of $8.4 billion, and net inflows of $700 million.
Adjusted compensation expense (Q2 2025) $504 million, with a ratio of 65.5%, compared to 66% in Q2 2024. No specific reasons provided.
Adjusted non-compensation expense (Q2 2025) $157 million, with a ratio of 20.4%, compared to 21.7% in Q2 2024. No specific reasons provided.
Adjusted effective tax rate (Q2 2025) 36.5%, compared to 14% in Q2 2024. No specific reasons provided.
Capital returned to shareholders (Q2 2025) $60 million, including a quarterly dividend of $47 million. No specific reasons provided.
Active ETF product launch: Successfully launched first active ETF product set in the U.S., including Japanese equity, equity megatrends, next-gen technologies, and international dynamic equity ETFs. Additional ETFs planned for later this year.
Geographic and product diversity: Record revenue in France and Germany for the first half of the year. Expanded connectivity to private capital, with private capital revenue comprising over 40% of total Financial Advisory revenue.
Global and emerging market strategies: Strong client engagement in global, international, and emerging markets strategies. New mandates include $1 billion from a U.S. public pension, $650 million from a Nordic client, $600 million from a Korean institution, and $500 million from a U.S. retirement provider.
Financial Advisory revenue growth: Achieved record adjusted net revenue of $491 million in Q2, up 20% year-over-year. Participated in marquee transactions and private equity assignments.
Asset Management performance: Adjusted net revenue of $268 million in Q2, up 1% year-over-year. AUM increased 9% year-to-date, reaching $248 billion as of June 30, 2025.
Talent acquisition: Hired 14 Financial Advisory managing directors in 2025, with plans to expand the team by 10-15 net per year by 2030. Recent hires in consumer and retail, healthcare, and power and energy sectors are driving new client business.
Private equity focus: Anticipate increased private equity activity in M&A, supported by investments in private capital coverage efforts.
M&A Outlook Risks: Progress in M&A activity is not expected to be linear, and there are risks tied to unresolved tariff issues and heightened unpredictability in financing markets.
Tax Rate Volatility: The adjusted effective tax rate for the second quarter increased significantly to 36.5% from 14% a year ago, creating potential financial strain and uncertainty for the company.
Expense Management Challenges: While focusing on expense management, the company continues to invest in growth initiatives, which could strain financial resources if not managed effectively.
Market Dependency in Asset Management: The asset management business is heavily reliant on favorable market conditions, which could pose risks if market conditions deteriorate.
Geopolitical and Economic Complexity: The company faces challenges in navigating a complex economic and geopolitical landscape, which could impact client activity and overall business performance.
Private Equity and M&A Risks: The increasing role of private equity in M&A could introduce competitive pressures and execution risks for Lazard.
Talent Acquisition and Retention: The company’s aggressive hiring strategy, while beneficial for growth, could lead to higher costs and integration challenges.
M&A Outlook: Progress will not be linear, but as long as outstanding tariff issues are resolved in line with current expectations over the coming weeks, a significantly improving environment for Financial Advisory activity is anticipated. Dialogue with corporate strategics continues to broaden, corporate balance sheets are strong, and clients are adapting to shifting trade policies. Financing markets are generally constructive despite risks surrounding heightened unpredictability. Technology and generative AI, the energy transition, the biotech revolution, and shifts in global supply chains remain underlying tailwinds supporting client activity. Private equity is expected to play an increasingly active role in M&A, and Lazard is well-positioned to benefit from ongoing investments in private capital coverage efforts.
Talent Pipeline and Hiring: Lazard has hired 14 Financial Advisory managing directors so far in 2025 and remains on track to achieve or exceed its 2030 objective of expanding the team of financial advisories by 10 to 15 net per year. Recent talent additions in consumer and retail, healthcare, and power and energy groups are already supporting performance and resulting in new client business.
Asset Management Outlook: The company anticipates benefiting further if investor preference continues to evolve outside of the United States, given its extensive offerings in global, international, and emerging market strategies. Record gross inflows in the first half of the year and successful sales efforts have replenished won but not yet funded mandates. Additional ETFs are planned for launch later this year, including Japanese equity, equity megatrends, next-gen technologies, and international dynamic equity ETFs. The company is focused on generating alpha by leveraging leading market and research insights.
Tax Rate Guidance: The full-year 2025 effective tax rate is expected to be in the mid-20% range.
Quarterly Dividend: In the second quarter of 2025, Lazard returned $60 million to shareholders, including a quarterly dividend of $47 million. Additionally, a quarterly dividend of $0.50 per share was declared.
The earnings call summary and Q&A reveal several positive indicators: strong talent acquisition, optimistic asset management inflows, and balanced advisory services. Despite some uncertainties in achieving specific financial goals, the overall sentiment is positive with strong M&A prospects, especially in Europe, and a promising secondaries business. The market cap suggests moderate sensitivity to these factors, supporting a positive stock price movement prediction in the range of 2% to 8% over the next two weeks.
The earnings call summary presents a mixed picture: positive strategic initiatives and shareholder returns, but uncertainties in the advisory business and high attrition in asset management. The Q&A reveals optimism in future M&A activities and asset management progress, but lacks specifics on achieving key financial goals and AI implementation. The market cap indicates moderate stock sensitivity. Overall, the neutral rating reflects balanced positives and negatives, suggesting limited stock price movement in the short term.
The earnings call revealed strong financial performance with a notable increase in EPS and revenue growth driven by private capital. The strategic focus on asset management and future mandates suggests continued growth. Despite competitive pressures and regulatory challenges, the share buyback program and increased market share in financial advisory are positive indicators. The Q&A highlighted uncertainties but did not reveal significant negative trends. Given the market cap, a positive stock price movement of 2% to 8% is expected over the next two weeks.
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