Lazard(US:LAZ)2025-10-23 13:02Financial Data and Key Metrics Changes - For the first nine months of 2025, total firm-wide revenue was $2.1 billion, including record Financial Advisory revenue of $1.3 billion [4] - Third-quarter firm-wide revenue reached $725 million, up 12% year-over-year, driven by both business segments [8] - Financial Advisory revenue for the third quarter totaled $422 million, up 14% from the previous year [8] - Asset Management revenue for the third quarter was $294 million, an increase of 8% year-over-year and 10% sequentially [9] Business Line Data and Key Metrics Changes - Financial Advisory was active in M&A across healthcare, industrials, and consumer and retail sectors, with notable transactions including Mallinckrodt Pharmaceuticals' $6.7 billion deal [8] - Asset Management saw record gross inflows for the third quarter and the first nine months, achieving net positive flows of $1.6 billion year-to-date, with total AUM up 17% [6][10] - Management fees for Asset Management increased by 6% year-over-year, while incentive fees rose to $9 million from $3 million in the previous year [9][10] Market Data and Key Metrics Changes - The company reported a strong client engagement across major geographies, including the U.S., Europe, and the Middle East, indicating a diversified business model [14] - The effective tax rate for the third quarter was 21.4%, down from 32.5% in the previous year, with an expected full-year 2025 effective tax rate around 20% [12] Company Strategy and Development Direction - The company is focused on long-term growth strategies, including expanding its team of Financial Advisory Managing Directors and enhancing productivity [15][20] - The introduction of new active ETFs and a focus on quantitative and emerging market strategies are part of the Asset Management growth strategy [17][18] - The company aims to double firm-wide revenue from 2023 to 2030 and deliver an average annual shareholder return of at least 10% to 15% [20][21] Management's Comments on Operating Environment and Future Outlook - Management sees an increasingly constructive environment for advisory activity, despite potential temporary impacts from the U.S. government shutdown [13][14] - The company anticipates continued growth in both M&A and restructuring activities, driven by a diverse range of client needs and market conditions [14][72] - Management expressed confidence in achieving operating leverage and reducing the compensation ratio in the Asset Management segment [41] Other Important Information - The company has made significant strides in hiring, with 20 new Managing Directors joining in 2025, enhancing its talent pool [4][15] - The company is expanding its presence in the Middle East and Northern Europe, reflecting its commitment to growth in these regions [11] Q&A Session Summary Question: Thoughts on hiring environment and talent retention - Management noted strong success in attracting high-quality talent and reported very few regrettable departures, indicating a healthy Managing Director pool [25][26] Question: Recent success in driving net inflows in Asset Management - Management highlighted significant inflows in quantitative strategies and emerging markets, with a positive outlook for achieving net neutral flows for the year [30][31] Question: Trends in gross outflows in Asset Management - Management confirmed that gross outflows are lower than last year, primarily from sub-advised accounts, with a more promising trajectory outside that category [40] Question: Outlook for restructuring business amid credit concerns - Management does not view recent bankruptcies as indicative of broader issues and expects both M&A and restructuring activities to coexist due to varied corporate performance [67][70] Question: Differences in M&A activity between Europe and the U.S. - Management observed a tilt towards Europe in revenue mixes and emphasized the strength of European companies despite macroeconomic challenges [74][76] Question: Impact of U.S. government shutdown on advisory deals - Management indicated that deals requiring government approvals may be delayed but expect a quick catch-up once the government reopens [78][79]