Lazard Ltd Q4 FY2025 earnings call

• Firm Strategy: Focus on executing Lazard 2030 long-term growth strategy. Firm-wide revenue in 2025 was $3 billion. - Financial Advisory: Record revenue in 2025, with focus on hiring top talent (expecting more than double 2024's net additions), productivity improvements (average revenue per MD $8.9 million in 2025, aiming for $12.5 million per MD by 2030), and growth in non-M&A areas like private capital, restructuring, etc. - Asset Management: Repositioning underway, with AUM up 12% year over year, record gross inflows, and $13 billion in won but not yet funded mandates. New executive leadership in place. - AI and Contextual Alpha: Emphasis on using AI to enhance client services and decision-making, with contextual alpha incorporating macroeconomic, geopolitical, and regulatory factors.

Financial Advisory: Fourth quarter revenue was $542 million, up 7% from the prior year. Full year financial advisory revenue was $1.8 billion, including record revenue in EMEA and private capital advisory. The revenue mix was roughly 60% M&A and 40% non-M&A. Asset Management: Fourth quarter revenue was $339 million, up 18% from the prior year. Full year asset management revenue was $1.2 billion. AUM was up 12% year over year, with record gross inflows exceeding $50 billion and $13 billion in won but not yet funded mandates.

• Financial Advisory: Expect M&A to accelerate in 2026, with ongoing focus on talent acquisition and productivity. Goal to achieve $12.5 million per Managing Director in 2030. - Asset Management: Anticipate positive net flows in 2026, supported by diversified platform, client demand for international strategies, and $13 billion in won but not yet funded mandates.

• Geopolitical/Regulatory: Impact on corporate discussions and deal activity due to increased rhetoric and contention. - Client Outflows: Potential for outflows in asset management, though normalized levels expected. - Competition: AI adoption by peers could impact market share.

Q: Brennan Hawken asked about advisory trends, specifically non-M&A revenue mix and outlook.

A: Peter Orszag said revenue mix was roughly 60-40 M&A to non-M&A, expects non-M&A to rise, with strong momentum in private capital, restructuring, etc.

Q: Brennan Hawken inquired about CFO transition.

A: Peter Orszag said it's a normal course transition, with Mary Ann as senior advisor to ensure smooth transition.

Q: Mike Brown asked about M&A outlook and asset management exit rate.

A: Peter Orszag said 2026 likely to see increased PE activity, Chris Hogben said exit rate was modestly higher than quarter run rate with mix of fee levels in won but not yet funded mandates.

Q: Brendan O'Brien asked about geopolitical impact and comp ratio.

A: Peter Orszag said no material impact on corporate discussions, expects comp ratio to reduce with operating leverage and efficiency efforts.

Q: Daniel Coquiara asked about M&A trends by geography and asset management personnel changes.

A: Peter Orszag said early days, seeing interest globally, Chris Hogben discussed asset management execution focus on investment performance, growth, and efficiency.

Q: James Yaro asked about Asset Management net flows and growth areas.

A: Chris Hogben said expecting strong gross inflows, normalized outflows, with growth in emerging markets, systematic, and alternative areas.

Q: Ryan Kenny asked about restructuring cycle and inorganic opportunities.

A: Peter Orszag said restructuring continues due to disparate company performance, Chris Hogben said inorganic opportunities would be selective based on fit and economics.

Q: Devin Ryan asked about productivity and AI impact.

A: Peter Orszag said rapid ramp of new managing directors, AI used in daily operations to enhance productivity and client service.

Q: Alexander Bond asked about AI comp leverage and non-comp expense guide.

A: Peter Orszag discussed AI's impact on productivity, Mary Ann Betsch said non-comp expense expected to grow mid to high single-digit with revenue growth