LAZ 10-K & 10-Q changes, risk factors and insider trading

As a financial services firm, our businesses are materially affected by conditions in the global financial markets and economic conditions throughout the world. Unfavorable economic and market conditions have in the past adversely affected and could again in the future adversely affect our financial performance in both the Financial Advisory and Asset Management businesses. The future market and economic climate may deteriorate because of many factors, such as a general slowing of economic growth globally or regionally, periods of disruption or volatility in securities markets, volatility and tightening of liquidity in credit markets, volatility or significant realignments in currency markets, an evolving regulatory environment (and the timing and nature of regulatory reform), increases in interest rates, supply chain disruptions, inflation, corporate or sovereign defaults, extreme weather events or natural disasters, pandemics, terrorismrecession, terrorism, cyberthreats, or political uncertainty or instability.

For example, revenue generated by our Financial Advisory business is directly related to the volume and value of the transactions in which we are involved. During periods of unfavorable or uncertain market or economic conditions, the volume and value of M&A transactions may decrease, thereby reducing the demand for our Financial Advisory services and increasing price competition among financial services companies seeking such engagements. For example, changes, or proposed changes, to international trade and investment policies of the U.S. and other countries, such as new or increased tariffs, could negatively affect market activity levels, and the new U.S. presidential administration has increased tariffs on imports from China and proposed imposing or increasing tariffs on U.S. trading partners.levels. Our results of operations would be adversely affected by any such reduction in the volume or value of M&A transactions. In addition, our profitability would be adversely affected due to our fixed costs and the possibility that we may be unable to reduce our variable costs without reducing revenue or within a timeframe sufficient to offset any decreases in revenue relating to changes in market and economic conditions.

We are exposed to fluctuations in foreign currencies, including through advisory fees paid to our Financial Advisory business and management fees paid to our Asset Management business. Our financial statements are denominated in U.S. Dollars and, for the year ended December 31, 2024,and we received a portion of our consolidated net revenue in other currencies, predominantly in Euros and British Pounds. In addition, we pay a portion of our expenses in such other currencies. The exchange rates of these currencies versus the U.S. Dollar affect the carrying value of our assets and liabilities as well as our revenues, expenses and net income. We do not generally hedge such foreign currency exchange rate exposure arising in our subsidiaries outside of the U.S. Fluctuations in foreign currency exchange rates may also make period to period comparisons of our results of operations difficult.

We experience significant fluctuations in quarterly revenue and profits. These fluctuations generally can be attributed to the fact that we earn a substantial portion of our Financial Advisory revenue upon the successful completion of a transactiontransaction, a financing, or a restructuring, the timing of which is uncertain and is not subject to our control. As a result, our Financial Advisory business is highly dependent on market conditions and the decisions and actions of our clients, interested third parties and governmental authorities. For example, a client or counterparty could delay or terminate an acquisition transaction because of a failure to agree upon final terms, failure to obtain necessary regulatory consents or board of directors, acquirer’s or stockholders’ approval, failure to secure necessary financing, our client is outbid, adverse market conditions or because the seller’s business is experiencing unexpected operating or financial problems. Anticipated bidders for assets of a client during a restructuring transaction may not materialize or our client may not be able to restructure its operations or indebtedness, for example, due to a failure to reach agreement with its principal creditors. In addition, a bankruptcy court may deny our right to collect a success or completion fee. In these circumstances, other than in engagements where we receive retainers, we often do not receive any advisory fees other than the reimbursement of certain expenses, despite the fact that we devote resources to these transactions. Accordingly, the failure of one or more transactions to close either as anticipated or at all could cause significant fluctuations in quarterly revenue and profits and could materially adversely affect our business, financial condition and results of operations. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

In general, our industry continues to experience change and be subject to significant competitive pressures with respect to the retention of top talent, which makes it more difficult for us to retain professionals. Loss of key employees may occur due to perceived opportunity for promotion, compensation levels or composition of compensation, work environment, retirement or the pursuit of philanthropic, civic or similar service opportunities or other individual reasons, some of which may be beyond our control. If managing directors and other key professional employees were to retire, join an existing competitor, form a competing company or otherwise leave us, we could need to replace them, and some of our clients could eventually choose to use the services of that competitor or some other competitor instead of our services. In any such event, our financial advisory fees, asset management fees or AUM could decline. The employment arrangements, non-competition agreements and retention agreements we have or will enter into with our managing directors and other key professional employees may not sufficiently prevent our managing directors and other key professional employees from resigning from practice or competing against us. In addition, these arrangements and agreements may face enforceability challenges and have a limited duration and expire after a certain period of time. We continue to be subject to intense competition in the financial services industry regarding the recruitment and retention of key professionals, and have experienced both departures from and additions to our professional ranks as a result.

Furthermore, we seek to align the interests of our managing directors and other key professional employees with those of our shareholders by awarding deferred compensation in the form of equity, and any change in our ability to grant such awards, including as a result of a shareholder vote against any of our equity incentive plans, could have a negative impact on our ability to promote such alignment. Certain changes to our employee compensation arrangements may result in increased compensation and benefits expense. In addition, any changes to the mix of cash and deferred incentive compensation granted to our employees may affect certain financial measures applicable to our business, including ratios of compensation and benefits expense to revenue, and may result in the issuance of increased levels of common stock to our employees upon vesting of restricted stock units, restricted stock awards, performance-based restricted stock units (“PRSUs”), profits interest participation rights (“PIPRs”) or other equity-based awards in a particular year. Our compensation levels, results of operations and financial position may be significantly affected by many factors, including general economic and market conditions, our operating and financial performance, staffing levels and competitive pay conditions.

Even when securities prices are rising generally, performance can be affected by investment style and mix of asset classes. For example, many of the equity investment strategies in our Asset Management business share a common investment orientation towards relative value or quality investing. We believe thisthese stylestyles tendstend to outperform the market in some market environments and underperform it in others. In particular, a prolonged growth environment, as we have seen over the last several years, may cause some of our investment strategies to go out of favor with some clients, advisors, consultants or third-party intermediaries. In addition, all of our investment strategies are actively managed strategies which seek to outperform relative to a benchmark or generate an absolute return. Management fees for actively managed strategies tend to be higher than those charged for passively managed strategies. The perception that actively managed strategies have, on average, underperformed relative to passively managed strategies over time, combined with greater pressure on clients to acquire asset management services at lower costs, has contributed to increased trends toward passively managed investment strategies. This, in turn, may adversely affect demand for our strategies or result in fee pressure on our business overall. In combination with poor performance relative to peers, changes in personnel, challenging market environments or other difficulties, the underperformance of our investment style may result in significant client or asset departures or a reduction in AUM.

We have made, and in the future may make, principal investments in public or private companies or in alternative investments (including private equity funds) established by us, and we continue to hold principal investments directly or through funds managed by certain affiliates of Lazard, including Edgewater, as well as third parties. Making principal investments is risky, and we may lose some or all of the principal amount of our investments. Certain of these types of investments may be in relatively high-risk, illiquid assets. Because it may take several years before attractive alternative investment opportunities are identified, some or all of the capital committed by us to these funds is likely to be invested in government securities, other short-term, highly-rated debt securities and money market funds that traditionally have offered investors relatively lower returns. In addition, these investments are adjusted for accounting purposes to fair value at the end of each quarter, and any related gains or losses would affect our results of operations and could increase the volatility of our earnings, even though such fair value fluctuations may have no cash impact. It takes a substantial period of time to identify attractive alternative investment opportunities, to raise all the funds needed to make an investment and then to realize the cash value of an investment through resale. Even if an alternative investment proves to be profitable, it may be several years or longer before any profits can be realized in cash or other proceeds.

Our business is highly dependent on communications and information systems, including those of our vendors. Any failure or interruption of these systems, whether caused by fire, extreme weather events, other natural disaster, power or telecommunications failure, geopolitical instability, act of terrorism or war, system modification or upgrade or a delay of any modification or upgrade or otherwise, could materially adversely affect our business. Although back-up systems are in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate.

The U.S. and other governments and institutions have taken actions, and may in the future take further actions, in response to geopolitical events and disruption and volatility in the global financial markets. Such further actions could include expanding current or enacting new standards, requirements and rules that may be applicable to us and our subsidiaries. The effect, complexity and scope of any such expanded or new standards, requirements and rules is uncertain and could increase costs of compliance, monitoring and reporting and result in increased potential for litigation, sanctions and other liabilities, all of which could have adverse consequences to our business, financial condition and results of operations. While we continue to examine the requirements of new regulations that may become applicable to us in the U.S. and in the European Union (see “Business—Regulation” above), and previously announced actual or potential regulations that may be modified, we are not able to predict the ultimate effect on us. In addition, we face increasingly diverging expectations and demands from our stakeholders and our regulators on certain topics, including sustainability and other matters, and jurisdictions in which we operate have adopted or proposed differing or conflicting laws, regulations or policies on these topics. If we are not able to adequately recognize and respond to such developments and such diverging expectations, we may become subject to additional legal or regulatory risk, face increased social, investor or other scrutiny, incur unexpected costs or experience damage to our reputation, in each case that could have a material adverse effect on our business.

There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry generally, and weWe run the risk that employee misconduct could occur in our business as well.business. For example, misconduct by employees could involve the improper use or disclosure of confidential information, which could result in legal action, regulatory sanctions and reputational or financial harm. Our Financial Advisory business often requires that we deal with confidences of great significance to our clients or their counterparties, improper use of which may harm our clients or our relationships with our clients. Any breach of confidences as a result of employee misconduct may adversely affect our reputation, impair our ability to attract and retain Financial Advisory clients and subject us to liability. Similarly, in our Asset Management business, we have authority over client assets, and we may, from time to time, have custody of such assets. In addition, we often have discretion to trade client assets on the client’s behalf and must do so acting in the best interests of the client. As a result, we are subject to a number of obligations and standards, and the violation of those obligations or standards may adversely affect our clients and us. It is difficult to detect and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in all cases.

In recent years, the U.S. Department of Justice and the SEC have alsoannounced devotedthe greaterde-prioritization of resources related to the enforcement of the Foreign Corrupt Practices Act. In addition,contrast, the U.K., France and other jurisdictions have expanded the reach of their anti-bribery laws. While we have developed and implemented policies and procedures designed to ensure compliance with anti-bribery and other laws, such policies and procedures may not be effective in all instances to prevent violations. Any determination that we have violated these laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunction against future conduct, securities litigation and reputational damage, any one of which could adversely affect our business, financial condition and results of operations.

We are a multinational company subject to tax in multiple U.S. and foreign jurisdictions and we earn a significant amount of our income outside the U.S. A change in the mix of earnings and losses or challenge to our transfer pricing methods may result in income generated in countries with differinghigher statutory tax rates may result in higher effective tax rates forthan the company.U.S.. Our effective tax rate is based upon the application of currently enacted income tax laws, regulations and treaties, and upon our non-U.S. subsidiaries’ ability to qualify for benefits under those treaties and those laws, regulations and treaties, and the administrative and judicial interpretations of them are subject to change at any time and such changes may adversely impact our effective tax rate.

As further discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Income Taxes” and Note 21 of Notes to Consolidated Financial Statements, the Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “Amended and Restated Tax Receivable Agreement”), between Lazard and LTBP Trust, a Delaware statutory trust (the “Trust”), provides for the payment by our subsidiaries to the Trust of a significant portion of the cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of certain tax benefits that are subject to the Amended and Restated Tax Receivable Agreement. Any amount paid by our subsidiaries to the Trust will generally be distributed to the owners of the Trust, which includes certainone of our executive officers, in proportion to their beneficial interests in the Trust. If the IRS successfully challenges the tax basis increases we receive, under certain circumstances, our subsidiaries may have made or could make payments under the Amended and Restated Tax Receivable Agreement in excess of our subsidiaries’ cash tax savings.

We have made statements under the captions “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-K that are forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” “pipeline,” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These forward-looking statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to, the numerous risks and uncertainties outlined in “Risk Factors,” including the following:

•financial goals,objectives, including the ratios of adjusted compensation and benefits expense to adjusted net revenue;

•ability to deploy surplus cash through dividends, share repurchases and debt repurchasesretirements;

•expectations with respect to the economy, the securities markets, the market for mergers, acquisitions, restructuringrestructuring, private credit and other financial advisory activity, the market for asset management activity and other macroeconomic, regional and industry trends;

Founded in 1848, Lazard is onea of the world's preeminentglobal financial advisory and asset management firms,firm with operations in North and South America, Europe, the Middle East, Asia, and Australia. Lazard provides advice on mergers and acquisitions, capital markets and capital solutions, restructuring and liability management, geopolitics, and other strategic matters, as well as asset management and investment solutions to institutions, corporations, governments, partnerships, family offices, and high net worth individuals. We aim to deliver independent, differentiated advice and solutions grounded in contextual alpha—the broad insight and judgment needed to navigate macroeconomic, geopolitical, and other factors that we believe help leaders see beyond what the world sees today.

•Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services including M&A advisory, strategic capital markets advisory,solutions, shareholder advisory, sovereign advisory, geopolitical advisory, restructuring and liability management, capital raising and placement, and other strategic matters; and

In addition, we record selected other activities in our Corporate segment, including thecash management of cash,management, investments, deferred tax assets, outstanding indebtedness and certain contingent obligations. We also invest our own capital from time to time, generally alongside capital of qualified institutional and individual investors in alternative investments or private equity investments, and make investments to seed our Asset Management strategies.

Economic and global financial market conditions can materially affect our financial performance. As described above, our principal sources of revenue are derived from activities in our Financial Advisory and Asset Management business segments. Our Financial Advisory revenues are primarily dependent on the successful completion of merger, acquisition, sale, restructuring, capital raising or similar transactions, and our Asset Management revenues are primarily driven by the levels of AUM. Weak or uncertain global economic and financial market conditions can result increate a challenging business environment for M&A and capital-raising activity asand wellmay asalso pressure our Asset Management business,business. however,However, these conditions may providegenerate increased opportunities for our restructuring business. Additionally, heightened equity market volatility can create compelling investment opportunities for Asset Management.

We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge continuously, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all potentially applicable factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. See Item 1A, “Risk Factors” in this Form 10-K. Furthermore, net income and revenue in any period may not be indicative of full-year results or the results of any other period and may vary significantly from year to year and quarter to quarter.

Net revenue trends in Financial Advisory are generally correlated to the level of completed industry-wide M&A transactions and restructuring transactions occurring subsequent to corporate debt defaults, respectively.defaults. However, deviations from this relationship can occur in any given year for a number of reasons. For instance, our results can diverge from industry-wide activity where there are material variances from the level of industry-wide M&A activity in a particular market where Lazard has greater or lesser relative market share, or regarding the relative number of our advisory engagements with respect to larger-sized transactions, and where we are involved in non-public or sovereign advisory assignments.

Lazard’s Asset Management segment principally includes LAM, LFG, LFB and Edgewater.the Edgewater Funds (“Edgewater”). Asset Management net revenue is derived from fees for investment management and advisory services provided to clients. As noted above, the main driver of Asset Management net revenue is the level and product mix of AUM, which is generally influenced by the performance of the global equity markets and, to a lesser extent, fixed income markets as well as Lazard’s investment performance, which impacts its ability to successfully attract and retain assets. As a result, fluctuations (including timing thereof) in financial markets and client asset inflows and outflows for any reason have a direct effect on Asset Management net revenue and operating income. Asset Management fees are generally based on the level of AUM measured daily, monthly or quarterly, and an increase or reduction in AUM, due to market price fluctuations, currency fluctuations, changes in product mix, or net client asset flows will result in a corresponding increase or decrease in management fees. Our investment advisory contracts are generally terminable at any time or on notice of 30 days or less. Institutional and individual clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of AUM or shift their funds to other types of accounts with different rate structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. Moreover, it is possible that awarded institutional mandates may not be funded in the amounts and at the times initially anticipated, or at all. In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

Our operating expenses also include “non-compensation expense”, which includes costs for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourced services, and other expenses. Our occupancy costs represent a significant portion of our aggregate operating expenses and are subject to change from time to time, particularly as leases for real property expire and are renewed or replaced with new, long-term leases for the same or other real property. Our operating expenses also include our “benefit pursuant to tax receivable agreement obligation”.

We believe that “adjusted non-compensation expense”, a non-GAAP measure, when presented in conjunction with measures prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), provides a meaningful and useful basis for our investors to assess our operating results. For calculations with respect to “adjusted non-compensation expense”, see the table under “Consolidated Results of Operations” below. Our operating expenses also include our “benefit pursuant to tax receivable agreement”.

Lazard, Inc. is subject to U.S. federal income taxes on all of its income and, through its subsidiaries, is also subject to state and local taxes on its income apportioned to various state and local jurisdictions. Lazard Group LLC operates principally through subsidiary corporations, including through those domiciled outside the U.S., that are subject to local income taxes in foreign jurisdictions. In addition, Lazard Group LLC is subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City.

Additionally, the Organization for Economic Cooperation and Development (the “OECD”) reached agreement among various countries, including the EU member states, to establish a 15% minimum tax on certain multinational companies, commonly called “Pillar Two”. ManyWe countriesare continuecontinuing to announce changes in their tax laws and regulations to implement the OECDmonitor Pillar Two proposals.legislative Lazarddevelopments isand continuing to evaluate the potentialtheir impact on future periods of the Pillar Two proposals, as new guidance becomes available.periods.

Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the Company is deemed to control but not own, (ii) profits interest participation rights,rights and (iii) consolidated VIE interests held by employees and (iv) Lazard Growth Acquisition Corp I (“LGAC”) interests through February 2023.employees. See Notes 15 and 24 of Notes to Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

(a)Revenue or loss related to the consolidation of noncontrolling interests and similar arrangements are excluded from adjusted net revenue because the Company has no economic interest in such amounts.

(c)Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and provision for credit losses relating to fees and other receivables that are deemed uncollectibleuncollectible, for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(e)Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, includingprimarily consisting of the reclassification of currency translation adjustments to earnings from accumulated other comprehensive losses in the years ended December 31, 2024 and 2023 and transactions related to foreign currency exchange in the year ended December 31, 2023.

(gh)Adjusted net revenue is a non-GAAP measure.

(dc)Represents expenses associated with senior management transition reflecting the departure of certain executive officers.

(b)Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and provision for credit losses relating to fees and other receivables that are deemed uncollectibleuncollectible, for which an equal amount is included for purposes of determining adjusted net revenue.

(dc)Adjusted non-compensation expense and adjusted non-compensation expense, as a percentage of adjusted net revenue are non-GAAP measures.

The Company reported net income attributable to Lazard, Inc. of $280$237 million, as compared to net lossincome attributable to Lazard, Inc. of $75$280 million in 2023.2024.

Net revenue increased $536$47 million, or 21%,2%, with adjusted net revenue increasing $450$140 million, or 18%,5%, as compared to 2023.2024. Fee revenue from investmentInvestment banking and other advisory activitiesfees increased $363$73 million, or 26%,4%, as compared to 2023.2024. Asset management fees, including incentive fees, increased $37$81 million, or 3%,7%, as compared to 2023.2024. In the aggregate, interest income, other revenue and interest expense increaseddecreased $136$107 million, or 56%, as compared to 2023,2024, primarily due to a gain on the sale of propertyan owned office building of $114 million in 2024 as compared to losses incurred from the impairment of equity method investments and the liquidation of LGAC in 2023. This increase was partially offset by lower gains in 2024 as compared to 2023 attributable to investments held in connection with LFI.2024.

Non-compensation expense decreasedincreased $23$34 million, or 3%,5%, as compared to 2023, which included $13 million associated with the cost-saving initiatives.2024. Adjusted non-compensation expense increased $4$38 million, or 1%,7%, as compared to 2023.2024. Such increases in non-compensation expense and adjusted non-compensation expense were primarily due to increased marketing and business development, fund administration and outsourced services and technology and information services expenses. The ratio of adjusted non-compensation expense to adjusted net revenue was 19.9%20.2% for 2024,2025, as compared to 23.4%19.9% for 2023.2024.

Adjusted operatingOperating income increaseddecreased $245$59 million, or 148%,15%, as compared to 2023, and as a percentage of adjusted net revenue was 14.2%, as compared to 6.8% in 2023.2024.

The provision (benefit) for income taxes reflects an effective tax rate of 25.8%,23.4%, as compared to 28.3%25.8% in 2023.2024. See Note 19 of Notes to Consolidated Financial Statements.

Net income attributable to noncontrolling interests decreasedincreased $11$7 million as compared to 2023. See Note 15 of Notes to Consolidated Financial Statements.2024.

Adjusted net revenue, adjusted operating income,income (loss), and adjusted operating income as a percentage of adjusted net revenue, are non-GAAP measures in the tables below.

The geographical distribution of Financial Advisory adjusted net revenue is set forth below in percentage terms and is based on the Lazard offices that generate Financial Advisory adjusted net revenue, which are located in the Americas (primarily in the U.S.), EMEA (primarily in the U.K., France, Germany, Italy and Spain) and the Asia Pacific regionrevenue and therefore may not be reflective of the geography in which the clients are located.

Financial Advisory net revenue increased $371$78 million, or 27%,4%, as compared to 2023.2024. Financial Advisory adjusted net revenue increased $374$94 million, or 28%,5%, as compared to 2023.2024. The increase in Financial Advisory net revenue and adjusted net revenue was primarily drivenattributable byto an increasedincrease numberin ofthe average fee for completed Mnon-M&A transactions with values greater than $500 million as compared to 2023.2024.

Adjusted compensation and benefits expense increased $118$40 million, or 12%3%, as compared to 2023,2024, primarily associateddriven withby increased adjusted net revenue.

Adjusted non-compensation expense increased $8$10 million, or 4%,5%, as compared to 2023,2024, primarily due to increased professional servicesmarketing and occupancybusiness and equipmentdevelopment expenses.

Prices of equity and debt securities and other instruments that comprise our AUM are provided by well-recognized, independent, third-party vendors. Such third-party vendors rely on prices provided by external pricing services which are obtained from recognized exchanges or markets, or, for certain fixed income securities, from evaluated bids or other similarly sourced price.prices.

Total AUM at December 31, 20242025 was $226$254 billion, aan decreaseincrease of $20$28 billion, or 8%,12%, as compared to total AUM of $247$226 billion at December 31, 2023,2024, due to net outflowsmarket and foreign exchange depreciation,appreciation, partially offset by marketnet appreciation.outflows. Average AUM for the year ended December 31, 20242025 increased $10$4 billion, or 4%,2%, as compared to 2023.2024.

As of both December 31, 2025 and 2024, approximately 82% of our AUM was managed on behalf of institutional and intermediary clients, including corporations, labor unions, pension funds, insurance companies and banks, and through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisorsadvisors. compared to 85% asAs of both December 31, 2023.2025 As of December 31,and 2024, approximately 18% of our AUM was managed on behalf of individual client relationships compared to 15% as of December 31, 2023.relationships.

Net flows were primarily driven by outflowsthe inLocal, Global, LocalMulti-Regional and Multi-RegionalGlobal Equity platforms and Emerging Markets Fixed Income platform.platforms.

(b) Adjusted net revenue, adjusted operating income, and adjusted operating income as a percentage of adjusted net revenue are non-GAAP measures.

Adjusted compensation and benefits expense increased $58$37 million, or 11%,6%, as compared to 2023,2024, primarily associateddriven withby increased adjusted net revenue.

The following discussion should be read in conjunction with Lazard’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). All references to “2026,” “2025,” “second quarter,” “first quarterhalf” or “the period” refer to, as the context requires, the three month and six month periods ended MarchJune 31,30, 2026 and 2025.

•future acquisitions or other strategic transactions, the proposedpending acquisition of Campbell Lutyens Holdings Limited (“Campbell Lutyens”) (including the consideration to be paid, the expected timing of consummation and the anticipated benefits to the transaction);

We operate in a competitive, global environment. Ongoing geopoliticalGeopolitical uncertainty, developments in international trade policies and practices, along with shifting domestic governmental priorities, have increased uncertainty relative to prior years. We believe our broad set of capabilities, diversified business model, and the competitive advantage provided by Lazard’s contextual alpha—our ability to incorporate geopolitical, regulatory, and macroeconomic insight into our advice—position us well to meet evolving client needs across varying economic environments. Unpredictability and the potential for related impacts, however, could create or exacerbate market volatility, contribute to weakened economic and business conditions, and reduce our clients’ ability to finalize decision-making or execute on investment priorities.

Source: Dealogic as of AprilJuly 2, 2026.

Another measure of global restructuring activity is the number of corporate defaults, which decreased during the first quarterhalf of 2026 as compared to the first quarterhalf of 2025. The number of defaulting issuers was 2764 in the first quarterhalf of 2026, according to Moody’s Investors Service, Inc., as compared to 3068 in the first quarterhalf of 2025.

The percentage change in major equity market indices at MarchJune 31,30, 2026, as compared to such indices at December 31, 2025 and at MarchJune 31,30, 2025 is shown in the table below:

The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation under Lazard’s 2018 Incentive Compensation Plan, as amended (the “2018 Plan”) and (b) LFI and other similar deferred compensation arrangements, (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments and cash retention awards. Compensation expense in any given period is dependent on many factors, including general economic and market conditions, our actual and forecasted operating and financial performance, staffing levels,levels (including investment in strategic senior hires), estimated forfeiture rates, competitive pay conditions and the nature and level of revenues earned, as well as the mix between current and deferred compensation. See Note 13 of Notes to Condensed Consolidated Financial Statements.

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. We focus on a ratio of adjusted compensation and benefits expense to adjusted net revenue to manage costs, balancing a view of current conditions in the market for talent alongside our objective to drive long-term shareholder value. Our practice is to pay our employees competitively to foster retention and motivate performance and, in doing so, we look to the market for talent and other factors, which are typically correlated with industry revenues, but may vary year by year. At the same time, the amount of compensation we award in a particular year is, in part, deferred and amortized over the successive years. Increased competition for professionals, changes in the macroeconomic environment or the financial markets generally, lower adjusted net revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving thisour goal.compensation objectives.

(c)Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and (provision) benefit for credit losses relating to fees and other receivables that are deemed uncollectible, for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(b)Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and (provision) benefit for credit losses relating to fees and other receivables that are deemed uncollectible, for which an equal amount is included for purposes of determining adjusted net revenue.

(c)Represents expenses related to the proposedpending acquisition of Campbell Lutyens.

Net revenue increased $109$12 million, or 17%,1%, with adjusted net revenue increasing $30$17 million, or 5%,2%, as compared to the 2025 period. Investment banking and other advisory fees decreased $3$45 million, or 1%,9%, as compared to the 2025 period. Asset management fees, including incentive fees, increased $63$59 million, or 24%,22%, as compared to the 2025 period. In the aggregate, interest income, other revenue and interest expense increaseddecreased $49$3 million as compared to the 2025 period, primarily due to a non-cash gain of $78 million on the sale and deconsolidation of the Edgewater management vehicles in the 2026 period.

Non-compensation expenseexpense, which includes $9 million of expenses related to the pending acquisition of Campbell Lutyens, increased $12$24 million, or 7%,13%, as compared to the 2025 period. Adjusted non-compensation expense increased $1$14 million, or 1%,9%, as compared to the 2025 period. Such increases in non-compensation expense and adjusted non-compensation expense were primarily due to increased fund administration and outsourced services and marketing and business development expenses. The ratio of adjusted non-compensation expense to adjusted net revenue was 22.1%21.8% for the 2026 period, as compared to 23.0%20.4% for the 2025 period.

Operating income increaseddecreased $35$55 million, or 64%,60%, as compared to the 2025 period.

The benefitprovision for income taxes reflects an effective tax rate of (12.3)%,63.5%, as compared to (13.5)%34.1% for the 2025 period. The change in the effective tax rate compared to the 2025 period principally relates to the impact of discrete tax benefits for share-based incentive compensation awards and changes in the geographic mix of earnings.earnings and certain elevated factors, including the effect of a current period catch-up adjustment from the tax benefit related to the vesting of share-based incentive compensation awards in the first quarter of 2026.

Net income attributable to noncontrolling interests wasincreased a$3 lossmillion, ofor $0.4 million in the 2026 period49%, as compared to income of $2 million in the 2025 period.

________________________________________ (a)Source: Dealogic as of AprilJuly 2, 2026.

Financial Advisory net revenue decreased $8$47 million, or 2%,9%, as compared to the 2025 period. Financial Advisory adjusted net revenue decreased $13$46 million, or 4%,9%, as compared to the 2025 period. The decreases in Financial Advisory net revenue and adjusted net revenue werereflected primarilylower attributablefees tofrom the completion of fewerM&A transactions as compared to the 2025 period.

Adjusted compensation and benefits expense increaseddecreased $30$4 million, or 12%,1%, as compared to the 2025 periodperiod, drivenas byincreases related to our ongoing investment in strategic senior hires.hires were more than offset by the effect of reduced revenues.

Adjusted non-compensation expense decreasedincreased $1$7 million, or 3%,13%, as compared to the 2025 period.period primarily due to an increase in travel and entertainment.

Total AUM at MarchJune 31,30, 2026 was $259$285 billion, an increase of $5$31 billion, or 2%,12%, as compared to total AUM of $254 billion at December 31, 2025 primarily due to market appreciation and net inflows,inflows and an increase attributable to acquiring a controlling interest in Elaia Partners, a venture capital asset management entity (“Elaia”), partially offset by foreign exchange depreciation and the sale and deconsolidation of the Edgewater management vehicles. Average AUM for the firstsecond quarter of 2026 increased 15%17% as compared to the firstthree quartermonth ofperiod ended June 30, 2025, and average AUM for the first six months of 2026 increased 2%16% as compared to the fourthsix quartermonth ofperiod ended June 30, 2025.

As of both MarchJune 31,30, 2026 and December 31, 2025, approximately 46% of our AUM was managed on behalf of institutional clients, including corporations, labor unions, pension funds, insurance companies, Endowments and Foundations (E&F)/Healthcare and also includes certain Family Office clients. As of MarchJune 31,30, 2026, approximately 45% of our AUM was managed on behalf of financial intermediary clients, including banks, mutual fund sponsors, sub-advisory relationships, broker-dealers, wealth platforms, registered investment advisors (RIAs), and other investors in pooled vehicles as compared to approximately 44% as of December 31, 2025. As of MarchJune 31,30, 2026, approximately 9% of our AUM was managed on behalf of individual client relationships, compared to approximately 10% as of December 31, 2025.

As of bothJune March30, 31, 2026 and December 31, 2025,2026, AUM with foreign currency exposure represented approximately 67%68% of our total AUM.AUM as compared to 67% at December 31, 2025. AUM with foreign currency exposure generally declines in value with the strengthening of the U.S. Dollar and increases in value as the U.S. Dollar weakens, with all other factors held constant.

The following is a summary of changes in AUM by asset class for the three month and six month periods ended MarchJune 31,30, 2026 and 2025:

NetFor the three months ended June 30, 2026, net flows were primarily driven by the Global/InternationalUS Equity and EmergingAlternative Markets EquityInvestments platforms.

Average AUM for the three month and six month periods ended MarchJune 31,30, 2026 and 2025 for each significant asset class is set forth below. Average AUM generally represents the average of the monthly ending AUM balances for the period.

Asset Management net revenue, which included a non-cash gain of $78 million on the sale and deconsolidation of the Edgewater management vehicles in the first quarter of 2026,revenue increased $122$59 million, or 42%,20%, as compared to the 2025 period. Asset Management adjusted net revenue increased $44$63 million, or 17%,23%, as compared to the 2025 period. Management fees, on an adjusted basis, were $296$310 million, an increase of $58 million, or 25%,23%, as compared to $238$252 million in the 2025 period.period primarily due to an increase in average AUM and product mix. Incentive fees, on an adjusted basis, were $11$5 million, an increase of $2$1 million as compared to $9$4 million in the 2025 period. Other revenue, on an adjusted basis, was $1$16 million, aan decreaseincrease of $17$3 million as compared to $18$13 million in the 2025 period.

Asset Management adjusted operating income was $85$74 million, an increase of $22$9 million, or 36%,14%, as compared to adjusted operating income of $62$65 million in 2025,the 2025 period, and, as a percentage of adjusted net revenue, was 27.4%,22.5%, as compared to 23.6%24.3% in 2025.the 2025 period.

Adjusted non-compensation expense, including centrally managed costs, decreasedwas $2substantially million,the or 6%,same as compared to the 2025 period.