A multinational financial services firm, Lazard advises corporations, governments, and institutions on mergers, restructurings, and raising capital, while its asset-management arm runs investment portfolios for clients around the world. It began far from finance in 1848, when three French brothers — Alexandre, Lazare, and Simon — opened a dry goods store in New Orleans, then followed the California Gold Rush to San Francisco, where they traded in gold dust and exchanged currency for miners before growing into a bank. Its name simply means "Lazard Brothers," and for much of its history the firm operated as three loosely linked houses in New York, Paris, and London.
Lazard's Q2 operating income fell 40% as a 9% drop in advisory fees and a 9% rise in compensation costs outweighed 23% growth in asset management revenue.
Advisory fees fell again, and the cost of talent is rising faster than . Total revenue rose 16.5% to $817 million, but dropped 40% to $90 million as compensation expense climbed 9%, pushing the to 69.9%. The firm is betting on a private-markets acquisition to change its mix, but for now the core M&A engine is losing power.
Key takeaways
fell 40% to $90 million, as a 9% increase in adjusted compensation and benefits expense to $550 million more than offset a 2% rise in adjusted net .
Financial Advisory adjusted net fell 9% to $445 million, which the company attributed to lower M&A transaction fees, reversing the 20% increase in the same quarter a year ago.
Asset Management adjusted net grew 23% to $331 million, driven by a 17% increase in average to $279 billion and higher management fees, making it the firm's fastest-growing .
Section summaries
Management's Discussion and Analysis
Lazard's Q2 2026 adjusted net revenue rose 2% on strong Asset Management growth, but operating income fell 40% due to higher compensation costs.
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Financial Advisory fell 9% to $445M, driven by lower M&A transaction fees, while the 's dropped 40% to $73M.
The rose to 69.9% of adjusted net from 65.5% a year ago, partly due to investment in strategic senior hires, and remains well above the historical 60% level.
Adjusted non-compensation expense rose 9% to $172 million, including $9 million in costs tied to the pending acquisition of Campbell Lutyens, a private markets advisor.
The company announced a revised deal to acquire Campbell Lutyens for $460 million in initial consideration, with up to $85 million in additional payments, expected to close in the second half of 2026.
What changed
The Q1 2026 watch item on the was answered: the ratio remained at 69.9% in Q2, unchanged from Q1, as the $17 million in Q1 transition costs were replaced by ongoing investment in senior hires, keeping the ratio elevated above the 65.5% full-year 2025 level.
The Q1 2026 watch item on Financial Advisory fee trajectory was answered negatively: instead of reversing as it did in Q2 2025 with a 20% sequential increase, advisory adjusted net fell a further 9% to $445 million, suggesting the M&A completion recovery has stalled.
The FY 2025 watch item on the breaking below 65% has not materialized; the ratio has instead risen to 69.9% in the first half of 2026, moving further from the historical 60% target as the firm invests in headcount ahead of .
The Campbell Lutyens acquisition terms were revised from the up-to-$660 million announced in Q1 to $460 million in initial consideration plus up to $85 million in earn-outs, a lower headline figure, with closing still expected in the second half of 2026.
What to watch
in Q3: whether the 69.9% level retreats as seasonally strengthens, or whether the strategic hiring push and year-end bonus accruals keep it near 70%, given the ratio has now been elevated for two consecutive quarters.
Financial Advisory fee trajectory in Q3: whether the 9% decline in Q2 extends into a third quarter of advisory weakness, or whether the stabilizes, as the $445 million in quarterly fees is the lowest since Q1 2025.
Campbell Lutyens closing and integration: whether the $460 million acquisition closes in the second half of 2026 as expected, and how the addition of a private markets advisory platform affects the mix and the already-elevated compensation ratio.
net flow direction: whether the $279 billion average AUM base, which has risen entirely on market appreciation, can be sustained if net outflows resume, as the filing does not disclose Q2 2026 flow figures.
Asset Management grew 23% to $331M, fueled by a 17% increase in average to $279B and higher management fees, with up 14% to $74M.
Total adjusted compensation and benefits expense rose 9% to $550M, pushing the ratio to to 69.9% from 65.5% a year ago, partly due to investment in senior hires.
Adjusted non-compensation expense increased 9% to $172M, primarily from higher fund administration, outsourced services, and marketing costs, including $9M in expenses for the pending Campbell Lutyens acquisition.
The company announced a $460M initial consideration deal to acquire Campbell Lutyens, a private markets advisor, expected to close in the second half of 2026, with up to $85M in additional consideration.
Liquidity remains strong with $1.1B in cash and equivalents and a fully undrawn $200M , though cash used in operations was $16M for the first half of 2026.
Quantitative and Qualitative Disclosures About Market Risk
Risk Management Quantitative and qualitative disclosures about market risk are included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management”.
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Risk Management
Quantitative and qualitative disclosures about market risk are included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management”.
The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including contractual and employment matters. The Company reviews such matters o…
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The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including contractual and employment matters. The Company reviews such matters on a case-by-case basis and establishes any required accrual if a loss is probable and the amount of such loss can be reasonably estimated. The Company may experience significant variation in its revenue and earnings on a quarterly basis. Accordingly, the results of any pending matter or matters could be significant when compared to the Company’s earnings in any particular quarter. The Company believes, however, based on currently available information, that the results of any pending matters, in the aggregate, will not have a material effect on its business or financial condition.
There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
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There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.