• Firm-wide Adjusted Net Revenue: $812 million for Q4, up 7% year-over-year; $2.9 billion for the full year, up 18% from 2023.
• Financial Advisory Adjusted Net Revenue: $508 million for Q4, up 6% year-over-year; $1.7 billion for the full year, up 28% from 2023.
• Asset Management Adjusted Net Revenue: $287 million for Q4, up 5% year-over-year; $1.1 billion for the full year, up 3% from 2023.
• Management Fees: $258 million for Q4; $1.1 billion for the full year, up 2% from the prior year.
• Incentive Fees: $29 million for Q4; $43 million for the full year.
• Assets Under Management (AUM): $226 billion as of December 31, 2024, down 8% from December 2023.
• Adjusted Compensation Expense: $533 million for Q4; $1.9 billion for the full year 2024.
• Compensation Ratio: 65.9% for the full year, improved by 390 basis points from 2023.
• Adjusted Non-Compensation Expense: $154 million for Q4; $575 million for the full year 2024.
• Effective Tax Rate: 18.1% for Q4; 24.4% for the full year 2024.
• Capital Returned to Shareholders: $61 million in Q4; $303 million for the full year 2024.
• Quarterly Dividend: $0.50 per share declared.
• Share Repurchases: 1.4 million shares repurchased at an average price of $42.20 during 2024.

• Warning! GuruFocus has detected 6 Warning Sign with LAZ.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lazard Inc (NYSE:LAZ) reported strong fourth quarter and full year results for 2024, with firm-wide adjusted net revenue up 18% from 2023.
• The Financial Advisory segment achieved record revenue in Europe and demonstrated increased productivity, contributing significantly to the overall revenue growth.
• Asset Management produced consistent results, with growth in incentive fees due to the outperformance of key strategies.
• Lazard Inc (NYSE:LAZ) entered 2025 with $10 billion in mandates that are won but not yet funded, indicating strong future revenue potential.
• The company is on track to achieve its Managing Director (MD) growth target, with plans to continue investing in talent and increasing MD productivity.

Negative Points

• Asset Management's Assets Under Management (AUM) decreased by 8% from December 2023, with net outflows of $10 billion during the fourth quarter.
• The compensation ratio remains high at 65.9% for 2024, although there is a target to reduce it to 60% by 2025.
• The effective tax rate increased to 24.4% for the full year 2024, compared to the prior year.
• The share count increased nearly 10% in 2024, partly due to elevated amortization and less buyback activity.
• Non-compensation expenses are expected to grow at a mid-single-digit rate in 2025, driven by investments in technology and new buildings.

Q & A Highlights

Q: Can you provide more context on the $10 billion of mandates in asset management and how it compares to prior years? A: Peter Orszag, CEO, explained that the $10 billion in mandates is significantly higher than in recent years, indicating strong momentum. Evan Russo, CEO of Asset Management, added that this reflects investments in their platform and increased client interest in areas like Quant Japan and emerging markets.

Q: How does Lazard view the M&A outlook in Europe compared to the US? A: Peter Orszag noted that despite a challenging macroeconomic environment in Europe, Lazard achieved record advisory revenue in 2024. He highlighted that European companies are increasingly interested in US M&A, and Lazard's strong presence in both regions positions it well to capitalize on this trend.

Q: What are the expectations for Lazard's compensation ratio, and are there any structural changes planned? A: Peter Orszag stated that Lazard aims to achieve a 60% compensation ratio by improving productivity and hiring more productive bankers. He clarified that there are no plans to change the compensation structure, such as increasing deferrals.

Q: How is Lazard addressing the increase in fully diluted share count, and what is the outlook for buybacks? A: Mary Betsch, CFO, explained that the increase in share count was due to elevated amortization and share price. Lazard plans to increase buybacks to offset dilution from stock-based compensation, aiming for a more stable share count.

Q: What is the impact of interest rates on Lazard's advisory pipeline, and how does it affect M&A activity? A: Peter Orszag mentioned that while lower rates could be beneficial, they are not the primary driver of M&A activity. He emphasized that other factors, such as regulatory environment and strategic opportunities, are more influential in driving M&A discussions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.