LAZ Q3 Deep Dive: Advisory Strength, Asset Management Inflows, and Evolving Mix Drive Results

Financial advisory firm Lazard (NYSE:LAZ) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 15.8% year on year to $748.1 million. Its non-GAAP profit of $0.56 per share was 27.7% above analysts’ consensus estimates.

Is now the time to buy LAZ? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Lazard’s third quarter results outperformed Wall Street’s consensus for both revenue and adjusted earnings, but the market responded with a modestly negative reaction. Management attributed the quarter’s performance to robust activity in financial advisory, particularly across M&A in healthcare, industrials, and consumer sectors, as well as continued momentum in restructuring and fundraising mandates. CEO Peter Orszag emphasized Lazard’s ability to capture new business opportunities and highlighted the impact of strategic hiring, with 20 new managing directors joining so far this year. Meanwhile, the asset management division saw improved investment performance and record gross inflows, driven by quantitative, emerging markets, and custom mandates. Orszag noted, “Our commercial and collegial approach is producing results by capturing new business opportunities.”

Looking ahead, Lazard’s guidance rests on expectations for a constructive environment in both advisory and asset management, shaped by ongoing client demand and organizational changes. Management believes that the expansion of its financial advisory team and focus on productivity will support future growth, while new leadership in asset management is anticipated to accelerate strategy execution. Orszag highlighted the firm’s plans to further diversify its business, capitalize on private equity’s resurgence, and leverage active management where it sees the most opportunity. He cautioned, however, that macroeconomic uncertainties, such as the timing of rate cuts and geopolitical developments, could influence deal activity and client engagement.

Key Insights from Management’s Remarks

Management credited third quarter momentum to increased advisory mandates in core sectors and an inflection in asset management flows, supported by targeted hiring and product expansion.

• Advisory activity diversification: Lazard’s advisory business saw a mix approaching parity between M&A and non-M&A activities, reflecting growth in restructuring, liability management, and private capital advisory—a shift from its historical M&A dominance, though not yet an even split.
• Strategic hiring and talent retention: Management added 20 new managing directors year-to-date, with hiring focused on key growth markets like the Nordics and Middle East. CEO Orszag reported high engagement scores and minimal regrettable departures, emphasizing the link between productivity per managing director and long-term compensation leverage.
• Asset management inflows surge: The asset management unit achieved record gross inflows and net positive flows year-to-date, led by demand for quantitative and emerging markets strategies. International clients and custom mandates contributed significantly to recent wins, with 80-95% of new mandates originating outside the U.S.
• Expense discipline amid investment: While investing in technology, business development, and expanding its ETF platform (six active strategies launched this year), management held compensation and non-compensation expense ratios steady, focusing on scalable growth.
• Geopolitical and industry expertise: Lazard expanded its geopolitical advisory team and board with high-profile appointments, aiming to bolster its reputation for sophisticated client solutions, particularly as clients navigate complex market and political dynamics.

Drivers of Future Performance

Lazard’s outlook is rooted in continued advisory demand, a strategic shift in asset management, and plans to scale productivity and offerings.

• Private capital and advisory expansion: Management expects growing private equity activity and increased demand for restructuring and liability management as clients respond to varied corporate performance and evolving financing environments.
• Asset management repositioning: The firm is doubling down on active strategies in areas where it believes it can add the most value, such as quantitative, emerging markets, and customized solutions, supported by the launch of new ETFs and leadership changes.
• Cost management and operating leverage: Ongoing investments in technology and business development are paired with a disciplined approach to expenses. Management sees operating leverage materializing through higher productivity per managing director in advisory and greater scale-per-strategy in asset management, though macro headwinds and regulatory changes remain potential risks.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will be tracking (1) the pace of new advisory mandates and the mix between M&A and restructuring, (2) the trajectory of asset management inflows, particularly as new leadership takes over, and (3) the firm’s ability to sustain hiring momentum and productivity gains in key regions. Progress on scaling ETF offerings and adapting to regulatory and macroeconomic shifts will also be important markers.

Lazard currently trades at $49.50, in line with $49.74 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

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