Executive Summary / Key Takeaways

• Lazard is executing a strategic transformation under its "Lazard 2030" plan, aiming to double firm-wide revenue from 2023 to 2030 and deliver 10-15% average annual shareholder returns, driven by enhanced productivity and diversified offerings.
• The Financial Advisory segment is experiencing an increasingly constructive environment, with Q3 2025 adjusted net revenue up 14% year-over-year, propelled by higher average fees, robust M&A, restructuring, and private capital advisory, and a significant increase in Managing Director (MD) productivity to nearly $9 million.
• Asset Management is at an "inflection point," achieving $1.6 billion in net positive flows year-to-date through Q3 2025, fueled by record gross inflows into high-conviction strategies like quantitative and emerging markets, and the successful launch of six active ETFs.
• Lazard is strategically leveraging technology, particularly AI, to scale its intellectual capital and enhance client relationships, with new board appointments and internal initiatives aimed at becoming a leading AI-enabled financial services firm.
• Despite macroeconomic uncertainties and competitive pressures from larger, diversified financial institutions, Lazard's global footprint, specialized expertise, and reenergized culture position it for continued operating leverage and market share gains, with a full-year 2025 effective tax rate expected around 20%.

A Legacy Reimagined: Lazard's Strategic Ascent

Founded in 1848, Lazard has cultivated a formidable reputation as a global financial advisory and asset management firm, specializing in bespoke solutions for complex financial and strategic challenges. Its enduring legacy is built upon a vast network of relationships with key decision-makers across business, government, and investing institutions, a competitive strength that continues to underpin its market position. Under the ambitious "Lazard 2030" strategy, the firm is undergoing a significant transformation, aiming to double firm-wide revenue from 2023 levels and deliver an average annual shareholder return of 10% to 15% over the period.

Lazard's core business is bifurcated into two primary segments: Financial Advisory and Asset Management. The Financial Advisory segment offers a comprehensive suite of services including mergers and acquisitions (M&A) advisory, capital markets, restructuring and liability management, sovereign advisory, and geopolitical insights. The Asset Management segment provides global investment solutions across equities, fixed income, asset allocation, and alternative investments. This dual-engine model, coupled with a renewed strategic focus, positions Lazard to capitalize on evolving market dynamics.

The broader industry landscape is characterized by increasing M&A activity, a growing role for private capital, and a potential shift in investor sentiment away from heavily concentrated U.S. equity exposure. Underlying these trends are powerful tailwinds such as rapid advancements in technology, the biotech revolution, the energy transition, and the strategic repositioning of global supply chains. These drivers create a fertile ground for Lazard's specialized advisory services and diversified investment offerings.

Competitive Edge in a Crowded Field

Lazard operates in a highly competitive environment, contending with global investment banking behemoths like Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM), and leading asset managers such as BlackRock (BLK). Lazard distinguishes itself through its specialized, client-centric advisory services, often providing greater efficiency in handling intricate deals compared to the integrated solutions offered by larger, more diversified institutions. Its established reputation for discretion and expertise in international and sovereign advisory makes it a preferred choice for tailored solutions in complex cross-border transactions.

Compared to Goldman Sachs, Lazard's focused approach in advisory can lead to more agile decision-making, while its extensive global network helps counter the scale of larger rivals by providing deeper access to emerging markets. Against Morgan Stanley, Lazard's depth in specialized restructurings and sovereign work offers a qualitative edge, though MS's broader asset management platforms and digital tools provide a stronger market position in wealth management. Lazard's lean structure can result in lower costs and faster innovation for targeted clients compared to JPMorgan Chase's vast, integrated ecosystem. In asset management, Lazard's tailored strategies for institutional clients provide efficiency in customized portfolios, contrasting with BlackRock's technology-driven, scalable solutions.

While Lazard's smaller scale can lead to higher customer acquisition costs and potential gaps in digital technology compared to its larger peers, its strategic adaptability and client-focused execution, particularly in international advisory, remain potent competitive advantages. The firm actively recruits top talent, winning "bake-offs" against competitors by offering a compelling brand, a reenergized culture, and a clear strategic vision.

Technological Differentiation and the AI Imperative

Lazard is not merely a traditional financial services firm; it is actively transforming into an AI-enabled independent financial services firm. This technological differentiation is a core component of its strategy to scale intellectual capital and enhance client relationships. The firm is investing in its technology infrastructure and data science capabilities, with a clear vision for how AI will reshape its operations and client service.

The tangible benefits of this technological push are multifaceted. AI is expected to meaningfully scale Lazard's intellectual capital, allowing its expert teams to process vast amounts of information more efficiently and generate deeper insights. This translates into improved efficiency in deal-making and investment analysis, enhancing the firm's ability to deliver superior advice and solutions. The appointment of Dmitry Shevelenko, Chief Business Officer of Perplexity, to Lazard's Board of Directors underscores the firm's commitment to integrating cutting-edge AI expertise at the highest levels.

Lazard's approach to AI involves four key pillars:

• Forefront of Technology: Being at the cutting edge of available AI tools for bankers and investment professionals.
• Cultural Shift: Fostering an "anti-QWERTY generation" mindset among its workforce, encouraging adoption of new, efficient AI-driven workflows over outdated practices.
• Digitizing Knowledge: Systematically digitizing the vast, often tacit, knowledge residing within the firm to make it accessible and actionable for AI tools.
• Reinforcing Human Relationships: Paradoxically, as technology improves, Lazard believes the importance of deep client connectivity and trusted human relationships will only expand, with AI enabling more focused and insightful client interactions.

For investors, this technological roadmap is crucial. It contributes to Lazard's competitive moat by potentially boosting MD productivity, lowering operational costs over time, and enhancing its market positioning as an innovative, forward-thinking advisor. The stated goal is to improve the experience for Lazard's people and, by extension, the quality and speed of service for its clients, driving long-term growth and profitability.

Performance with Perspective: A Story of Growth and Transformation

Lazard's recent financial performance reflects the early successes of its strategic initiatives and an improving market backdrop. For the third quarter of 2025, Lazard reported adjusted net revenue of $725 million, a 12% increase from the prior-year period, while net income attributable to Lazard was $71 million. For the first nine months of 2025, adjusted net revenue rose 3% to $2.14 billion, with net income attributable to Lazard at $187 million. The year-over-year net income comparison was impacted by a $114 million gain on the sale of an owned office building in the 2024 period.

Financial Advisory: Driving Productivity and Diversification

The Financial Advisory segment has been a key growth engine. In Q3 2025, adjusted net revenue for Financial Advisory increased 14% to $422 million, and for the first nine months, it grew 5% to $1.28 billion. This growth was primarily driven by an increase in the average fee for completed transactions. The segment demonstrated strength across M&A (particularly in healthcare, industrials, consumer and retail), restructuring and liability management, and primary and secondary fundraising.

Lazard's focus on Managing Director (MD) productivity is yielding results. Average revenue per MD reached almost $9 million, surpassing the 2024 target of $8.6 million a year early. The firm aims to continue raising productivity, targeting $10 million per MD by 2028, and sees $12.5 million by 2030 as "imminently achievable." This increased productivity is a core driver of operating leverage, as non-MD compensation expenses do not scale proportionally with revenue generated by more productive partners. Lazard is also actively expanding its MD ranks, with 20 new MDs joining in 2025, on track to meet or exceed its 2030 objective of 10 to 15 net MD additions annually. The mix of advisory revenue is evolving, trending closer to a 50-50 split between M&A and non-M&A activities, and revenue associated with private capital now constitutes over 40% of total Financial Advisory revenue, with a goal to reach 50%.

Asset Management: An Inflection Point

The Asset Management segment is undergoing a significant turnaround, with 2025 identified as an "inflection point." Adjusted net revenue for Asset Management increased 8% to $294 million in Q3 2025, and 2% to $827 million for the first nine months. Assets Under Management (AUM) stood at $265 billion as of September 30, 2025, a 17% increase from December 31, 2024. Crucially, the segment achieved $1.6 billion in net positive flows year-to-date, driven by record gross inflows into strategic focus areas such as quantitative and emerging market strategies.

Lazard differentiates its Asset Management business, noting that sub-advised funds associated with U.S. multi-manager mandates, while contributing disproportionately to outflows, represent less than 5% of asset management revenue. The remaining 95% of revenue comes from higher-fee strategies like quant, emerging market equity, global, and specialized products, which are experiencing positive momentum. The firm entered 2025 with $10 billion in "won but not yet funded mandates," a figure that has continued to grow, signaling future inflows. Lazard is also expanding its offerings, having launched six active ETFs in 2025, including U.S. Systematic Small Cap and listed infrastructure ETFs, to meet evolving client demand. The average fee rate saw a slight increase in Q3 2025 and is expected to remain roughly flat in the near term, as higher-fee inflows offset lower-fee outflows. Christopher Hogbin's appointment as CEO of Lazard Asset Management, effective December 2025, is expected to further accelerate growth.

Expense Management and Capital Allocation

Lazard maintains a disciplined approach to expenses while investing for long-term growth. The adjusted compensation and benefits ratio for Q3 2025 was 65.5%, down from 66% in Q3 2024. For the first nine months, the ratio was also 65.5%, down from 66%. Management aims for a 60% target compensation ratio in 2025, contingent on Financial Advisory growth and MD hiring. Adjusted non-compensation expense increased 8% in Q3 2025 and 8% for the first nine months, primarily due to investments in technology and information services, marketing and business development, and higher asset servicing fees. For the full year 2025, non-compensation expense is expected to increase in the high single-digit percentage range. The full-year 2025 effective tax rate is projected to be around 20%.

Lazard's liquidity remains strong, with $1.17 billion in cash and cash equivalents as of September 30, 2025, and $210 million in unused lines of credit.

The company recently refinanced debt, issuing $300 million in 5.625% senior notes due 2035 to repurchase outstanding 2027 Notes. Capital allocation priorities include returning capital to shareholders through dividends ($0.50 per share declared for Q4 2025) and share repurchases, with $159 million remaining authorized and a medium-term objective to offset dilution from stock-based compensation.

Conclusion

Lazard is demonstrating a compelling strategic resurgence, driven by a reenergized culture, diversified business model, and proactive investments in talent and technology. The firm's "Lazard 2030" strategy is gaining traction, with strong performance in Financial Advisory fueled by increased MD productivity and a broadening revenue mix, and a significant turnaround in Asset Management marked by positive net flows and strategic product launches. Lazard's commitment to becoming an AI-enabled financial services leader, coupled with its deep-rooted expertise in complex geopolitical and financial advisory, provides a distinct competitive advantage in an increasingly uncertain global landscape. While macroeconomic volatility, international trade policies, and intense competition from larger, more diversified players present ongoing risks, Lazard's focused execution, robust liquidity, and clear long-term objectives position it for sustained growth and enhanced shareholder value. The firm's ability to leverage its unique blend of human capital and technological innovation will be paramount in realizing its ambitious targets and solidifying its standing as a preeminent independent advisor.