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Item 7. Management’s Discussion and Analysis

2025-02-24 compared with 2024-02-23 · 276 added, 225 removed, 553 unchanged (48% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard’s consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K (this “Form 10-K”).

The following discussion should be read in conjunction with Lazard’s consolidated financial statements and the related notes included elsewhere in this Form 10-K.

This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties.

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Business Summary

Lazard, one of the world’s preeminent financial advisory and asset management firms, operates in North and South America, Europe, the Middle East, Asia and Australia.

With origins dating to 1848, we have long specialized in crafting solutions to the complex financial and strategic challenges of a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals.

Our primary business purpose is to serve our clients.

Our deep roots in business centers around the world form a global network of relationships with key decision-makers in corporations, governments and investing institutions.

Founded in 1848, Lazard is one of the world's preeminent financial advisory and asset management firms, 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.

Our mission is to provide trusted, independent financial advice and investment solutions to our clients, backed by the intellectual capital of our firm.

During our more than 175-year history, we have built a global network of relationships with key decision makers in business, government and investing institutions.

This network is both a competitive strength and a powerful resource for Lazard and our clients.

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We operate in cyclical businesses across multiple geographies, industries and asset classes.

In recent years, we have expanded our geographic reach, bolstered our industry expertise and continued to build in growth areas.

Companies, government bodies and investors seek independent advice with a geographic perspective, deep understanding of capital structure, informed research and knowledge of global, regional and local economic conditions.

We believe that our business model as an independent advisor will continue to create opportunities for us to attract new clients and key personnel.

In recent years, we have deepened our sector expertise, enhanced our specialized insights in geopolitical advisory, and increased connectivity to private capital in our financial advisory business.

In addition, we have invested in our global investment and distribution platform in our asset management business to further drive performance.

Business and government leaders and global investors seek trusted advisors, and we believe that our business model as an independent advisor will continue to create opportunities for us to attract new clients and key personnel.

Our principal sources of revenue are derived from activities in the following business segments:

• Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding strategic and mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic advisory matters and capital raising and placement, and

• Asset Management, which offers a broad range of global investment solutions and investment and wealth management services in equity and fixed income strategies, asset allocation strategies, alternative investments and private equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial intermediaries and private clients.

In addition, we record selected other activities in our Corporate segment, including management of cash, investments, deferred tax assets, outstanding indebtedness, certain contingent obligations and certain assets and liabilities associated with a special purpose acquisition company that was sponsored by an affiliate of the Company, Lazard Growth Acquisition Corp.

• 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, capital markets advisory, shareholder advisory, sovereign advisory, geopolitical advisory, restructuring and liability management, capital raising and placement, and other strategic matters;

In addition, we record selected other activities in our Corporate segment, including the management of cash, 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.

Our consolidated net revenue was derived from the following segments:

Year Ended December 31,

2023 2022 2021

Financial Advisory 55 % 60 % 55 %

Asset Management 46 43 45

Corporate (1) (3) –

Total 100 % 100 % 100 %

Conversion to a U.S.

C-Corporation

On January 1, 2024, we completed our Conversion from an exempted company incorporated under the laws of Bermuda named Lazard Ltd to a U.S.

C-Corporation named Lazard, Inc.

We believe that the Conversion may expand our shareholder base by simplifying tax reporting and enhancing trading liquidity.

See “Business Segments” below for discussion of the adjusted operating results of our Financial Advisory, Asset Management and Corporate segments.

Business Environment and Outlook

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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 assets under management (“AUM”).

Weak global economic and financial market conditions can result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management business, but may provide opportunities for our restructuring business.

The global macroeconomic environment is improving and capital market trends are positive.

At the same time, there is a high degree of geopolitical uncertainty that continues to be top of mind for decision-makers.

In our Financial Advisory business, we are seeing M&A activity strengthen while financing, valuation, and regulatory headwinds abate.

In our Asset Management business, positive market sentiment and a widening dispersion of returns across asset classes is leading to increased investor interest across a range of actively managed strategies.

Weak global economic and financial market conditions can result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management business, however, may provide opportunities for our restructuring business.

While geopolitical uncertainty remains a consideration, we believe there are ongoing economic and market improvements relevant to our Financial Advisory and Asset Management businesses.

The tailwinds for Financial Advisory continue to strengthen as technology and generative AI advances, the biotech revolution, global expansion in energy demand and efforts to derisk supply chains create opportunities for clients.

In the U.S., shifts in the antitrust and regulatory environments may positively influence M&A decisions, and while a further decline in interest rates would be beneficial, they are largely secondary to these other factors in driving activity, in our view.

In Asset Management, we see new vectors for growth in wealth management and active ETFs, along with the potential for renewed interest in diversification beyond a handful of very large U.S.

Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.

• Financial Advisory —Despite M&A announcements in 2023 being at their lowest levels in a decade, we remained actively engaged with our clients.

The global scale and breadth of our Financial Advisory business, with particular strength in both the U.S.

and Europe, enables us to advise on a wide range of strategic and restructuring transactions across a variety of industries.

In 2024, we could see increased M&A activity occurring alongside greater restructuring activity as rates remain high and debt maturities approach.

In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital structure, restructuring, and public and private capital markets.

• Financial Advisory —M&A announcements for deals greater than $500 million increased year-over-year and we remain actively engaged with our clients.

The global scale and breadth of our Financial Advisory business, with strength in both the U.S.

and Europe, as well as in public and private capital markets, enables us to advise on a wide range of strategic advisory and restructuring transactions across a variety of industries.

Throughout 2024, we continued to see increased M&A activity occurring alongside higher levels of private capital transactions and greater restructuring and liability management assignments resulting from upcoming debt maturities.

In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals to enhance our capabilities and sector expertise in M&A, public and private capital markets, and restructuring.

• Asset Management —Given our diversified, actively managed investment platform and our ability to provide investment solutions for a global mix of clients, we believe we are positioned to benefit from opportunities across the asset management industry.

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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.

Overall, we continue to focus on the development of our business, including the generation of revenue growth, earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new technology to support the development of existing and new business opportunities, the prudent management of our costs and expenses, the efficient use of our assets and the return of capital to our shareholders.

Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.

Overall, we continue to focus on the development of our business, including the generation of revenue growth, earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new technology to support the development of existing and new business opportunities, the evaluation of other strategic alternatives, the prudent management of our costs and expenses, the efficient use of our assets and the return of capital to our shareholders.

Certain industry-wide market data with respect to our Financial Advisory and Asset Management businesses is included below.

Financial Advisory

As reflected in the following table, which sets forth global M&A industry statistics, the value and number of all completed transactions, including the subset of completed transactions involving values greater than $500 million, decreased in 2023 as compared to 2022.

With respect to announced M&A transactions, the value and number of all transactions, including the subset of announced transactions involving values greater than $500 million, decreased in 2023 as compared to 2022.

The following table sets forth global M&A and restructuring industry statistics for completed and announced M&A transactions and completed restructuring transactions.

Year Ended December 31,

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Number 1,264 1,112 14 %

Completed Restructuring Transactions:

Value $ 317 $ 374 (15) %

Number 328 395 (17) %

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Dealogic as of January 3, 2025.

Global restructuring activity during 2023, as measured by the number of corporate defaults, increased as compared to 2022.

Another measure of global restructuring activity is the number of corporate defaults, which decreased as compared to 2023.

The number of defaulting issuers was 144 in 2024, according to Moody’s Investors Service, Inc., as compared to 164 in 2023.

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M&A fees can be earned as a retainer, working fee, announcement fee, milestone fee, opinion fee or transaction completion fee.

With most fees being paid upon completion of a transaction the timing can be impacted by delays to securing financing, board approvals, regulatory approvals, shareholder votes, changing market conditions or other factors.

Most fees are paid upon completion of a transaction, the timing of which can be impacted by delays due to securing financing, board approvals, regulatory approvals, shareholder votes, changing market conditions or other factors.

Our restructuring and liability management team advises on situations where our clients are financially distressed, providing advice on financial debt restructurings, liability management and M&A.

Bankruptcy proceedings may require court approval of our fees.

The capital markets advisory team advises both public and private issuers on the raising of capital, while the private capital advisory team provides fundraising and secondary advisory services for private equity, private credit, real estate and real assets-focused investment firms.

We also advise on both public and private debt and structured equity transactions, while the private capital advisory team provides fundraising and secondary advisory services for private equity, private credit, real estate and real assets-focused investment firms.

Additionally, Lazard earns fees from providing strategic advice to clients, which may include shareholder advisory, geopolitical advisory and other strategic advisory matters, with such fees not being dependent on the completion of a transaction.

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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 have a direct effect on Asset Management net revenue and operating income.

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.

reasons, including investment performance, changes in prevailing interest rates and financial market performance.

In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S.

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For hedge funds, incentive fees are calculated based on a specified percentage of a fund’s net appreciation, in some cases in excess of established benchmarks or thresholds.

The Company records incentive fees on traditional products and hedge funds at the end of the relevant performance measurement period, when potential uncertainties regarding the ultimate realizable amounts have been determined.

The incentive fee measurement period is generally an annual period (unless an account terminates or redemption occurs during the year).

The incentive fees received at the end of the measurement period are not subject to reversal or payback.

Incentive fees on hedge funds are often subject to loss carryforward provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized by the hedge funds in future periods before any incentive fees can be earned.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold.

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As a result, the Company recognizes incentive fees earned on our private equity funds only when it is probable that a clawback will not occur.

Corporate segment net revenue consists primarily of investment gains and losses on the Company’s investments to seed strategies in our Asset Management business, net of hedging activities, and principal investments in private equity funds, as well as gains and losses on investments held in connection with Lazard Fund Interests (“LFI”) and interest income and interest expense.

Corporate segment net revenue consists primarily of interest income and interest expense, investment gains and losses on the Company’s investments to seed strategies in our Asset Management business, net of hedging activities, and principal investments in private equity funds, as well as gains and losses on investments held in connection with Lazard Fund Interests (“LFI”).

Corporate net revenue can fluctuate due to changes in the fair value of debt and equity securities, as well as due to changes in interest and currency exchange rates and the levels of cash, investments and indebtedness.

Corporate segment total assets represented 49% of Lazard’s consolidated total assets as of December 31, 2023, which are attributable to cash and cash equivalents, investments in debt and equity securities, interests in alternative investment, debt, equity and private equity funds and deferred tax assets.

We use adjusted net revenue, a non-GAAP measure, for comparison of revenues between periods.

Operating Expenses

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 (see Note 16 of Notes to Consolidated Financial Statements), (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments.

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, estimated forfeiture rates, competitive pay conditions and the nature of revenues earned, as well as the mix between current and deferred compensation.

We use “adjusted compensation and benefits expense” and the ratio of “adjusted compensation and benefits expense” to “operating revenue,” both non-GAAP measures, for comparison of compensation and benefits expense between periods.

For the reconciliations and calculations with respect to “adjusted compensation and benefits expense” and related ratios to “operating revenue,” see the table under “Consolidated Results of Operations” below.

See Note 16 of Notes to Consolidated Financial Statements.

We use “adjusted compensation and benefits expense” and the ratio of “adjusted compensation and benefits expense” to “adjusted net revenue,” both non-GAAP measures, for comparison of compensation and benefits expense between periods.

For the reconciliations and calculations with respect to “adjusted compensation and benefits expense” and related ratios to “adjusted net revenue,” see the table under “Consolidated Results of Operations” below.

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 operating revenue to manage costs, balancing a view of current market conditions alongside our objective to drive long-term shareholder value.

Our goal remains to maintain a ratio of adjusted compensation and benefits expense to operating revenue over the cycle in the mid- to high-50s percentage range, while

targeting a consistent deferral policy.

While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will be able to maintain such ratios, or that our policies or initiatives will not change, in the future.

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 operating 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 this goal.

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, amortization and other acquisition-related costs and other expenses.

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 this goal.

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.

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For calculations with respect to “adjusted non-compensation expense”, see the table under “Consolidated Results of Operations” below.

Our operating expenses also include our “provision (benefit) pursuant to tax receivable agreement” .

To the extent inflation results in rising interest rates and has other effects upon the securities markets or general macroeconomic conditions, it may adversely affect our financial position and results of operations by impacting overall levels of M&A activity, reducing our AUM or net revenue, increasing non-compensation expense, or otherwise.

Our operating expenses also include our “benefit pursuant to tax receivable agreement”.

Cost-Saving Initiatives

The Company conducted firm-wide cost-saving initiatives over the course of 2023 that will continue through the first quarter of 2024.

The Company conducted firm-wide cost-saving initiatives over the course of 2023, which were completed during the first quarter of 2024.

See Note 18 of Notes to Consolidated Financial Statements.

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C-Corporation named Lazard, Inc.

Following the Conversion, all of our operating income will be subject to U.S.

federal corporate income taxes, which we anticipate will increase our effective tax rate.

Following the Conversion, all of our operating income is subject to U.S.

federal corporate income taxes.

is subject to U.S.

federal income taxes on all of its operating income and Lazard, through its subsidiaries, is also subject to state and local taxes on its income apportioned to various state and local jurisdictions.

Lazard Group operates principally through subsidiary corporations including through those domiciled outside the U.S.

that are subject to local income taxes in foreign jurisdictions.

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 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 is subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City.

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See “Critical Accounting Policies and Estimates—Income Taxes” below and Notes 19 and 21 of Notes to Consolidated Financial Statements for additional information regarding income taxes, our deferred tax assets and the tax receivable agreement obligation.

Noncontrolling Interests

Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the Company is deemed to control but not own, (ii) LGAC interests (see Note 1 of Notes to Consolidated Financial Statements), (iii) profits interest participation rights and (iv) consolidated VIE interests held by employees.

and 24 of Notes to Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

Net Income Attributable to Noncontrolling Interests

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, (iii) consolidated VIE interests held by employees and (iv) Lazard Growth Acquisition Corp I (“LGAC”) interests through February 2023.

See Notes 15 and 24 of Notes to Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

Consolidated Results of Operations

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Non-compensation 670,390 693,330 601,481

Provision (benefit) pursuant to tax receivable agreement (43,894) (1,209) 2,199

Benefit pursuant to tax receivable agreement (8,237) (43,894) (1,209)

Total operating expenses 2,665,365 2,595,446 2,256,723

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Net Income (Loss) 286,708 (57,307) 392,483

Less - Net Income (Loss) Attributable to Noncontrolling Interests 18,172 34,966 14,481

Net Income (Loss) Attributable to Lazard Ltd $ (75,479) $ 357,517 $ 528,064

Less - Net Income Attributable to Noncontrolling Interests 6,796 18,172 34,966

Net Income (Loss) Attributable to Lazard $ 279,912 $ (75,479) $ 357,517

Operating Income (Loss), as a % of net revenue 12.7 % (3.2) % 18.6 %

The tables below describe the components of operating revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, earnings from operations and related key ratios, which are non-GAAP measures used by the Company to manage its business.

The tables below describe the components of adjusted net revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, adjusted operating income and related key ratios, which are non-GAAP measures used by the Company to manage its business.

We believe such non-GAAP measures in conjunction with U.S.

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($ in thousands)

Operating Revenue:

Net revenue $ 2,515,489 $ 2,773,571 $ 3,193,048

Interest expense (a) 77,457 76,528 74,375

Distribution fees, reimbursable deal costs, bad debt expense and other (b) (105,681) (76,229) (85,053)

Adjusted Net Revenue:

Net revenue - U.S.

GAAP basis $ 3,051,837 $ 2,515,489 $ 2,773,571

Revenue related to noncontrolling interests and similar arrangements (a) (29,553) (30,190) (49,073)

(Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements (b) (16,176) (41,463) 44,261

Distribution fees, reimbursable deal costs, provision for credit losses and other (c) (90,665) (105,681) (76,229)

Interest expense (d) 87,795 77,457 76,528

Asset impairment charges – 19,129 –

Revenue related to noncontrolling interests (c) (30,190) (49,073) (31,624)

(Gains) losses on investments pertaining to LFI (d) (41,463) 44,261 (35,494)

Losses associated with cost-saving initiatives, restructuring and closing of certain offices (e) 4,878 – 23,645

Operating revenue (f) $ 2,439,619 $ 2,769,058 $ 3,138,897

Losses associated with cost-saving initiatives (e) 587 4,878 –

Gain on sale of property (f) (114,271) – –

Adjusted net revenue (g) $ 2,889,554 $ 2,439,619 $ 2,769,058

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(a) Interest expense (excluding interest expense incurred by LFB) is added back in determining operating revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.

(b) Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and bad debt expenses 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.

(c) Revenue or loss related to the consolidation of noncontrolling interests is excluded from operating revenue because the Company has no economic interest in such amount.

(d) Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements for which a corresponding equal amount is excluded from compensation and benefits expense.

(e) Represents losses associated with the reclassification of currency translation adjustments to earnings from accumulated other comprehensive losses in the year ended December 31, 2023 and 2021 and transactions related to foreign currency exchange in the year ended December 31, 2023.

(f) Operating revenue is a non-GAAP measure.

(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.

(b) Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements, for which a corresponding equal amount is excluded from compensation and benefits expense.

(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 uncollectible for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(d) Interest expense (excluding interest expense incurred by LFB) is added back in determining adjusted net revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.

(e) Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, including 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.

(f) Represents gain on the sale of an owned office building.

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

Year Ended December 31,

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Total compensation and benefits expense $ 2,003,212 $ 1,946,010 $ 1,656,451

Noncontrolling interests (a) (9,233) (10,855) (9,216)

(Charges) credits pertaining to LFI (b) (41,463) 44,261 (35,494)

Expenses associated with senior management transition (c) (10,674) (33,019) –

Expenses associated with cost-saving initiatives, restructuring and closing of certain offices (182,103) – (14,922)

Adjusted compensation and benefits expense (d) $ 1,702,537 $ 1,656,838 $ 1,836,227

Adjusted compensation and benefits expense, as a % of operating revenue 69.8 % 59.8 % 58.5 %

Compensation and benefits expense related to noncontrolling interests and similar arrangements (a) (19,961) (9,233) (10,855)

(Charges) credits pertaining to LFI and other similar arrangements (b) (16,176) (41,463) 44,261

Expenses associated with cost-saving initiatives (46,610) (182,103) –

Expenses associated with sale of property (c) (17,002) – –

Expenses associated with senior management transition (d) – (10,674) (33,019)

Adjusted compensation and benefits expense (e) $ 1,903,463 $ 1,702,537 $ 1,656,838

Adjusted compensation and benefits expense, as a % of adjusted net revenue (e) 65.9 % 69.8 % 59.8 %

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(a) Expenses related to the consolidation of noncontrolling interests are excluded because Lazard has no economic interest in such amounts.

(b) Represents changes in fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards for which a corresponding equal amount is excluded from operating revenue.

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

(d) Adjusted compensation and benefits expense is a non-GAAP measure.

(a) Expenses related to the consolidation of noncontrolling interests and similar arrangements are excluded because the Company has no economic interest in such amounts.

(b) Represents changes in the fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards, for which a corresponding equal amount is excluded from adjusted net revenue.

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

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

Year Ended December 31,

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Total non-compensation expense $ 670,390 $ 693,330 $ 601,481

Expenses relating to office space reorganization (a) – (3,764) (4,611)

Distribution fees, reimbursable deal costs, bad debt expense and other (b) (105,681) (76,229) (85,053)

Non-compensation expense related to noncontrolling interests and similar arrangements (a) (2,805) (2,788) (3,255)

Distribution fees, reimbursable deal costs, provision for credit losses and other (b) (90,665) (105,681) (76,229)

Amortization and other acquisition-related costs (242) (334) (60)

Noncontrolling interests (c) (2,788) (3,255) (7,932)

Expenses associated with cost-saving initiatives, restructuring and closing of certain offices (13,023) – (1,539)

Expenses associated with cost-saving initiatives (1,532) (13,023) –

Expenses related to office space reorganization (c) – – (3,764)

Adjusted non-compensation expense (d) $ 575,146 $ 571,504 $ 518,173

Adjusted non-compensation expense, as a % of operating revenue 23.4 % 18.7 % 15.0 %

Adjusted non-compensation expense, as a % of adjusted net revenue (d) 19.9 % 23.4 % 18.7 %

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(a) Represents building depreciation and other costs related to office space reorganization.

(b) Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and bad debt expenses relating to fees and other receivables that are deemed uncollectible for which an equal amount is included for purposes of determining operating revenue.

(c) Expenses related to the consolidation of noncontrolling interests are excluded because the Company has no economic interest in such amounts.

(d) Adjusted non-compensation expense is a non-GAAP measure.

(a) Expenses related to the consolidation of noncontrolling interests and similar arrangements are excluded because the Company has no economic interest in such amounts.

(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 uncollectible for which an equal amount is included for purposes of determining adjusted net revenue.

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

Year Ended December 31,

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($ in thousands)

Earnings From Operations (a):

Operating revenue $ 2,439,619 $ 2,769,058 $ 3,138,897

Adjusted compensation and benefits expense (1,702,537) (1,656,838) (1,836,227)

Adjusted non-compensation expense (571,504) (518,173) (471,947)

Earnings from operations $ 165,578 $ 594,047 $ 830,723

Earnings from operations, as a % of operating revenue 6.8 % 21.5 % 26.5 %

Adjusted Operating Income:

Operating income (loss) $ 386,472 $ (79,957) $ 516,848

Operating income related to noncontrolling interests and

similar arrangements (6,787) (18,169) (34,963)

Interest expense 87,795 77,457 76,528

Amortization and other acquisition-related costs 242 334 60

Asset impairment charges – 19,129 –

Losses associated with cost-saving initiatives 587 4,878 –

Expenses associated with cost saving initiatives 48,142 195,126 –

Gain on sale of property (114,271) – –

Expenses associated with sale of property 17,002 – –

Expenses related to office space reorganization – – 3,764

Expenses associated with senior management transition – 10,674 33,019

Benefit pursuant to tax receivable agreement obligation ("TRA") (a) (8,237) (43,894) (1,209)

Adjusted operating income (b) $ 410,945 $ 165,578 $ 594,047

Adjusted operating income, as a % of adjusted net revenue (b) 14.2 % 6.8 % 21.5 %

_________________

(a) Earnings from operations is a non-GAAP measure.

(a) Represents the effect of the periodic revaluation of the TRA liability.

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

Headcount information is set forth below:

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Managing Directors:

Financial Advisory (a) 210 212 179

Financial Advisory 194 210 212

Asset Management 124 114 120

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Other Business Segment Professionals and Support Staff:

Financial Advisory (a) 1,393 1,463 1,349

Financial Advisory 1,363 1,393 1,463

Asset Management 1,117 1,107 1,105

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Total 3,263 3,291 3,402

________________________

(a) Financial Advisory headcount reflects that, in addition to customary year-end changes, 20 employees were reclassified in the first quarter of 2022 from professionals to managing directors in connection with a consolidation of the Lazard Middle Market LLC broker-dealer license.

A review of our operating results for the year ended December 31, 2024 compared to our operating results for the year ended December 31, 2023 appears below.

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Year Ended December 31, 2024 versus December 31, 2023

The Company reported a net loss attributable to Lazard Ltd of $75 million, as compared to net income attributable to Lazard Ltd of $358 million in 2022.

Net revenue decreased $258 million, or 9%, with operating revenue decreasing $329 million, or 12%, as compared to 2022.

Fee revenue from investment banking and other advisory activities decreased $275 million, or 17%, as compared to 2022.

Asset management fees, including incentive fees, decreased $48 million, or 4%, as compared to 2022.

In the aggregate, interest income, other revenue and interest expense increased $65 million as compared to 2022, the majority of which is recorded in the Corporate segment.

Compensation and benefits expense increased $290 million, or 17%, as compared to 2022.

The Company reported net income attributable to Lazard, Inc.

of $280 million, as compared to net loss attributable to Lazard, Inc.

of $75 million in 2023.

Net revenue increased $536 million, or 21%, with adjusted net revenue increasing $450 million, or 18%, as compared to 2023.

Fee revenue from investment banking and other advisory activities increased $363 million, or 26%, as compared to 2023.

Asset management fees, including incentive fees, increased $37 million, or 3%, as compared to 2023.

In the aggregate, interest income, other revenue and interest expense increased $136 million, as compared to 2023, primarily due to a gain on sale of property 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.

Compensation and benefits expense, which included $47 million associated with the cost-saving initiatives in 2024, increased $57 million, or 3%, as compared to 2023, which included $182 million associated with the cost-saving initiatives.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $1,903 million, an increase of $201 million, or 12%, as compared to $1,703 million in 2023.

The ratio of adjusted compensation and benefits expense to operating revenue was 69.8% for 2023, as compared to 59.8% for 2022.

Non-compensation expense increased $92 million, or 15%, as compared to 2022, primarily due to higher professional services expenses and travel and business development expenses, continued investments in technology and expenses associated with the cost-saving initiatives in 2023.

The ratio of adjusted compensation and benefits expense to adjusted net revenue was 65.9% for 2024, as compared to 69.8% for 2023.

Non-compensation expense decreased $23 million, or 3%, as compared to 2023, which included $13 million associated with the cost-saving initiatives.

Adjusted non-compensation expense increased $4 million, or 1%, as compared to 2023.

The ratio of adjusted non-compensation expense to operating revenue was 23.4% for 2023, as compared to 18.7% for 2022.

The Company reported an operating loss of $80 million, as compared to operating income of $517 million in 2022.

Earnings from operations decreased $428 million, or 72%, as compared to 2022, and, as a percentage of operating revenue, was 6.8%, as compared to 21.5% in 2022.

The provision for income taxes reflects an effective tax rate of 28.3%, as compared to 24.1% in 2022.

The ratio of adjusted non-compensation expense to adjusted net revenue was 19.9% for 2024, as compared to 23.4% for 2023.

The Company reported operating income of $386 million, as compared to an operating loss of $80 million in 2023.

Adjusted operating income increased $245 million, or 148%, as compared to 2023, and as a percentage of adjusted net revenue was 14.2%, as compared to 6.8% in 2023.

The provision (benefit) for income taxes reflects an effective tax rate of 25.8%, as compared to 28.3% in 2023.

See Note 19 of Notes to Consolidated Financial Statements.

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See Note 15 of Notes to Consolidated Financial Statements.

For additional discussion of the drivers of our adjusted operating results for the period, see “Business Segments” below.

Business Segments

The following is a discussion of net revenue and operating income for the Company’s segments:

The following is a discussion of net revenue, adjusted net revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, and adjusted operating income (loss) for the Company’s segments:

Financial Advisory, Asset Management and Corporate.

Adjusted compensation and benefits expense and adjusted non-compensation expense include costs directly incurred by each segment, with certain adjustments.

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

The Company previously disclosed each segment’s operating results on a U.S.

In the applicable tables below, the comparable prior year information has been recast to reflect the updated measures used by management.

See Note 23 of Notes to Consolidated Financial Statements for further information regarding segments.

Financial Advisory

The following table summarizes the reported operating results attributable to the Financial Advisory segment:

The following table summarizes the adjusted operating results attributable to the Financial Advisory segment:

Year Ended December 31,

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($ in thousands)

Net Revenue $ 1,385,357 $ 1,666,156 $ 1,764,509

Operating Expenses (a) 1,489,862 1,304,715 1,356,567

Operating Income (Loss) $ (104,505) $ 361,441 $ 407,942

Operating Income (Loss), as a % of net revenue (7.5) % 21.7 % 23.1 %

Net revenue - U.S.

GAAP basis $ 1,756,183 $ 1,385,357 $ 1,666,156

Reimbursable deal costs, provision for credit losses and other (25,764) (30,565) (13,827)

Interest expense 43 219 93

Losses associated with cost-saving initiatives 587 1,824 –

Total adjustments (a) (25,134) (28,522) (13,734)

Adjusted net revenue (b) 1,731,049 1,356,835 1,652,422

Adjusted compensation and benefits expense 1,132,017 1,014,352 939,164

Adjusted non-compensation expense 202,007 193,661 184,439

Adjusted operating income (b) $ 397,025 $ 148,822 $ 528,819

Adjusted operating income, as a % of adjusted net revenue (b) 22.9 % 11.0 % 32.0 %

________________________

(a) See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.

(a) Total adjustments equal the “other segment items” in Note 23 of Notes to Consolidated Financial Statements.

See “Consolidated Results of Operations” above for further information on the adjustments.

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

Certain Lazard fee and transaction statistics for the Financial Advisory segment are set forth below:

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Dealogic as of January 3, 2025.

The geographical distribution of Financial Advisory net revenue is set forth below in percentage terms and is based on the Lazard offices that generate Financial Advisory net revenue, which are located in the Americas (U.S.

Latin America), EMEA (primarily in the U.K., France, Germany, Italy and Spain) and the Asia Pacific region and therefore may not be reflective of the geography in which the clients are located.

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 region and therefore may not be reflective of the geography in which the clients are located.

Year Ended December 31,

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The Company’s managing directors and many of its professionals have significant experience, and many of them are able to use this experience to advise on a combination of M&A, restructuring and other strategic advisory matters, depending on clients’ needs.

This adaptability enables Lazard to more effectively deploy its professionals to best advantage based on the often counter-cyclical nature of restructuring as compared to our M&A business.

This adaptability enables Lazard to more effectively deploy its professionals based on the often counter-cyclical nature of restructuring as compared to our M&A business.

While Lazard measures revenue by practice area, Lazard does not separately measure the costs or profitability of M&A services as compared to restructuring or other services.

Accordingly, Lazard measures performance in its Financial Advisory segment based on overall segment operating revenue and operating income margins.

Accordingly, Lazard measures performance in its Financial Advisory segment based on overall segment adjusted net revenue and adjusted operating income margins.

Financial Advisory Results of Operations

Year Ended December 31, 2024 versus December 31, 2023

Financial Advisory net revenue decreased $281 million, or 17%, as compared to 2022.

The decrease in Financial Advisory net revenue was primarily driven by decreased number of completed M&A transactions with values greater than $500 million as compared to 2022, reflecting a significant decline in industry-wide completed M&A transactions.

Operating expenses, which include $101 million associated with cost-saving initiatives in 2023, increased $185 million, or 14%, as compared to 2022.

The Financial Advisory operating loss was $105 million, as compared to operating income of $361 million in 2022 and, as a percentage of net revenue, was (7.5)%, as compared to 21.7% in 2022.

Financial Advisory net revenue increased $371 million, or 27%, as compared to 2023.

Financial Advisory adjusted net revenue increased $374 million, or 28%, as compared to 2023.

The increase in Financial Advisory net revenue and adjusted net revenue was primarily driven by an increased number of completed M&A transactions with values greater than $500 million as compared to 2023.

Adjusted compensation and benefits expense increased $118 million, or 12% as compared to 2023, primarily associated with increased adjusted net revenue.

Adjusted non-compensation expense increased $8 million, or 4%, as compared to 2023, primarily due to increased professional services and occupancy and equipment expenses.

Adjusted operating income was $397 million, an increase of $248 million, or 167%, as compared to adjusted operating income of $149 million in 2023, and as a percentage of adjusted net revenue was 22.9%, as compared to 11% in 2023.

Asset Management

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Alternative Investments 2,917 3,330 3,812

Other Alternative Investments 2,799 – –

Private Wealth Alternative Investments 3,097 2,799 –

Private Equity 1,514 1,623 1,038

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Total AUM $ 226,321 $ 246,651 $ 216,125

Total AUM at December 31, 2023 was $247 billion, an increase of $31 billion, or 14%, as compared to total AUM of $216 billion at December 31, 2022 due to market and foreign exchange appreciation, partially offset by net outflows.

Total AUM at December 31, 2024 was $226 billion, a decrease of $20 billion, or 8%, as compared to total AUM of $247 billion at December 31, 2023, due to net outflows and foreign exchange depreciation, partially offset by market appreciation.

Average AUM for the year ended December 31, 2024 increased $10 billion, or 4%, as compared to 2023.

As of both December 31, 2023 and 2022, approximately 85% of our AUM was managed on behalf of institutional and intermediary clients, including corporations, labor unions, public pension funds, insurance companies and banks, and through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisors.

As of both December 31, 2023 and 2022, approximately 15% of our AUM was managed on behalf of individual client relationships.

Our top ten clients accounted for 32%, 29% and 27% of our total AUM at December 31, 2024, 2023 and 2022, respectively.

As of December 31, 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 advisors compared to 85% as of December 31, 2023.

As of December 31, 2024, approximately 18% of our AUM was managed on behalf of individual client relationships compared to 15% as of December 31, 2023.

As of December 31, 2024, AUM with foreign currency exposure represented approximately 62% of our total AUM as compared to 64% at December 31, 2023.

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Total $ 246,651 $ 34,818 $ (70,494) $ (35,676) $ 23,456 $ (8,110) $ 226,321

Inflows include approximately $3.9 billion related to a wealth management acquisition.

Inflows in the Equity asset class were primarily attributable to the Global and Multi-Regional platforms, and inflows in the Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms.

Outflows in the Equity asset class were primarily attributable to the Global, Multi-Regional and Local platforms, and outflows in the Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms.

Net flows were primarily driven by outflows in Global, Local and Multi-Regional Equity platforms and Emerging Markets Fixed Income platform.

Year Ended December 31, 2023

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Total $ 216,125 $ 39,254 $ (42,796) $ (3,542) $ 31,651 $ 2,417 $ 246,651

Inflows include approximately $3.9 billion related to a wealth management acquisition.

Year Ended December 31, 2022

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Alternative Investments 3,040 3,792 4,167

Other Alternative Investments 2,276 – –

Private Wealth Alternative Investments 2,923 2,276 –

Private Equity 1,509 1,121 1,165

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Total Average AUM $ 243,003 $ 233,098 $ 227,444

The following table summarizes the reported operating results attributable to the Asset Management segment:

The following table summarizes the adjusted operating results attributable to the Asset Management segment:

Year Ended December 31,

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($ in thousands)

Net Revenue $ 1,151,496 $ 1,204,927 $ 1,424,985

Operating Expenses (a) 1,011,574 963,640 1,032,825

Operating Income $ 139,922 $ 241,287 $ 392,160

Operating Income, as a % of net revenue 12.2 % 20.0 % 27.5 %

Net revenue - U.S.

GAAP basis $ 1,186,977 $ 1,151,496 $ 1,204,927

Revenue related to noncontrolling interests and similar arrangements (22,214) (16,332) (43,875)

Distribution fees and other (64,901) (67,616) (62,395)

Interest expense 12 11 8

Total adjustments (a) (87,103) (83,937) (106,262)

Adjusted net revenue (b) 1,099,874 1,067,559 1,098,665

Adjusted compensation and benefits expense 603,333 545,308 557,887

Adjusted non-compensation expense 229,960 218,903 205,061

Adjusted operating income (b) $ 266,581 $ 303,348 $ 335,717

Adjusted operating income, as a % of adjusted net revenue (b) 24.2 % 28.4 % 30.6 %

________________________

(a) See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.

Our top ten clients accounted for 29%, 27% and 29% of our total AUM at December 31, 2023, 2022 and 2021, respectively, and no individual client constituted more than 10% of our Asset Management segment net revenue during any of the respective years.

The geographical distribution of Asset Management net revenue is set forth below in percentage terms, and is based on the Lazard offices that manage and distribute the respective AUM amounts.

(a) Total adjustments equal the “other segment items” in Note 23 of Notes to Consolidated Financial Statements.

See “Consolidated Results of Operations” above for further information on the adjustments.

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

No individual client constituted more than 10% of our Asset Management segment net revenue in the years ended December 31, 2024, 2023 and 2022.

The geographical distribution of Asset Management adjusted net revenue is set forth below in percentage terms, and is based on the Lazard offices that manage and distribute the respective AUM amounts.

Such geographical distribution may not be reflective of the geography of the investment products or clients.

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Year Ended December 31, 2024 versus December 31, 2023

Asset Management net revenue decreased $53 million, or 4%, as compared to 2022.

Management fees and other revenue was $1,122 million, a decrease of $16 million, or 1%, as compared to $1,138 million in 2022.

Incentive fees were $30 million, a decrease of $38 million, as compared to $67 million in 2022.

Operating expenses, which included $57 million associated with cost-saving initiatives in 2023, increased $48 million, or 5%, as compared to 2022.

Asset Management operating income was $140 million, a decrease of $101 million, or 42%, as compared to operating income of $241 million in 2022 and, as a percentage of net revenue, was 12.2%, as compared to 20.0% in 2022.

The following table summarizes the reported operating results attributable to the Corporate segment:

Asset Management net revenue increased $35 million, or 3%, as compared to 2023.

Asset Management adjusted net revenue increased $32 million, or 3%, as compared to 2023.

Management fees and other revenue, on an adjusted basis, was $1,057 million, an increase of $19 million, or 2%, as compared to $1,038 million in 2023.

Incentive fees, on an adjusted basis, were $43 million , an increase of $13 million, as compared to $30 million in 2023.

Adjusted compensation and benefits expense increased $58 million, or 11%, as compared to 2023, primarily associated with increased adjusted net revenue.

Adjusted non-compensation expense increased $11 million, or 5%, as compared to 2023, primarily due to increased marketing and business development and technology and information services expenses.

Asset Management adjusted operating income was $267 million, a decrease of $37 million, or 12%, as compared to adjusted operating income of $303 million in 2023, and as a percentage of adjusted net revenue was 24.2%, as compared to 28.4% in 2023.

The following table summarizes the reported adjusted operating results attributable to the Corporate segment:

Year Ended December 31,

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($ in thousands)

Interest income $ 20,709 $ 19,135 $ 2,819

Net revenue (loss) - U.S.

GAAP basis $ 108,677 $ (21,364) $ (97,512)

Revenue related to noncontrolling interests and similar arrangements (7,339) (13,858) (5,198)

(Gains) losses related to Lazard Fund Interests (“LFI”) and other similar arrangements (16,176) (41,463) 44,261

Provision for credit losses and other – (7,500) (7)

Interest expense 87,740 77,227 76,427

Net Interest Expense (56,634) (57,933) (72,532)

Other Revenue (Loss) 35,270 (39,579) 76,086

Net Revenue (Loss) (21,364) (97,512) 3,554

Provision (benefit) pursuant to tax receivable agreement (43,894) (1,209) 2,199

Other operating expenses (credits) (a) 137,904 (10,423) 77,609

Operating Expenses (Credits) 94,010 (11,632) 79,808

Operating Loss $ (115,374) $ (85,880) $ (76,254)

Asset impairment charges – 19,129 –

Losses associated with cost-saving initiatives – 3,054 –

Gain on sale of property (114,271) – –

Total adjustments (a) (50,046) 36,589 115,483

Adjusted net revenue (b) 58,631 15,225 17,971

Adjusted compensation and benefits expense 168,113 142,877 159,787

Adjusted non-compensation expense 143,179 158,940 128,673

Adjusted operating loss (b) $ (252,661) $ (286,592) $ (270,489)

________________________

(a) See Note 18 of Notes to Consolidated Financial Statements for information regarding cost-saving initiatives.

(a) Total adjustments equal the “other segment items” in Note 23 of Notes to Consolidated Financial Statements.

See “Consolidated Results of Operations” above for further information on the adjustments.

(b) Adjusted net revenue and adjusted operating loss are non-GAAP measures.

Corporate Results of Operations

Year Ended December 31, 2024 versus December 31, 2023

Net interest expense decreased $1 million, or 2%, as compared to 2022.

Other revenue (loss) was positively impacted by gains attributable to investments held in connection with LFI in 2023, as compared to losses in 2022.

Such gains in 2023 were offset by losses incurred from the impairment of equity method investments and the liquidation of LGAC in February 2023.

Operating expenses, excluding the benefits pursuant to the TRA, increased $148 million as compared to 2022 primarily due to $37 million associated with cost-saving initiatives in 2023, and charges in 2023 as compared to credits in 2022 pertaining to LFI.

Corporate net revenue, which included a gain on sale of property of $114 million in 2024, as compared to losses incurred from the impairment of equity method investments and the liquidation of LGAC in 2023, increased $130 million as compared to 2023.

This increase was partially offset by lower gains in 2024 as compared to 2023 attributable to investments held in connection with LFI.

Corporate adjusted net revenue increased $43 million, as compared to 2023, primarily due to increased interest income in 2024 as compared to losses from the liquidation of LGAC in 2023.

Adjusted compensation and benefits expense, including centrally managed costs, increased $25 million, or 18%, as compared to 2023, primarily associated with increased total firm adjusted net revenue.

Adjusted non-compensation expense, including centrally managed costs, decreased $16 million, or 10%, as compared to 2023, primarily due to decreased professional services and occupancy and equipment expenses.

The Company’s cash flows are influenced primarily by the timing of the receipt of Financial Advisory and Asset Management fees, the timing of distributions to shareholders, payments of incentive compensation to managing directors and employees and purchases of common stock.

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Fees from our Private Capital Advisory activities are generally collected over a four-year period from billing and typically include an interest component.

The Company makes cash payments for a significant portion of its incentive compensation during the first three months of each calendar year with respect to the prior year’s results.

The Company makes cash payments for a significant portion of its incentive compensation with respect to the prior year’s results during the first three months of each calendar year.

See the Consolidated Financial Statements—Consolidated Statements of Cash Flows for further detail.

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Other operating activities (b) 16 (241) (110)

Net cash provided by (used in) operating activities 165 833 866

Net cash provided by operating activities 743 165 833

Investing activities 134 (38) (56)

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________________________

(a) Consists primarily of amortization of deferred expenses and share-based incentive compensation, noncash lease expenses, depreciation and amortization of property and deferred tax provision (benefit).

(a) Consists primarily of amortization of deferred expenses and share-based incentive compensation, noncash lease expenses, depreciation and amortization of property, gain on sale of owned office building and deferred tax provision (benefit).

(b) Includes net changes in operating assets and liabilities.

(c) Consists primarily of purchases of shares of common stock, tax withholdings related to the settlement of vested RSUs, vested RSAs and vested PRSUs, common stock dividends, changes in customer deposits, distributions to noncontrolling interest holders, distributions to redeemable noncontrolling interests associated with LGAC’s redemption of all its outstanding Class A ordinary shares in 2023, and contributions from redeemable noncontrolling interests and payments of underwriting fees and other offering costs associated with the LGAC IPO in 2021.

(c) Consists primarily of purchases of shares of common stock, tax withholdings related to the settlement of vested RSUs and vested PRSUs, common stock dividends, changes in customer deposits, distributions to noncontrolling interest holders, activity related to borrowings (including in 2024, the issuance of the 2031 Notes and redemption of the 2025 Notes), distributions to redeemable noncontrolling interests associated with LGAC’s redemption of all its outstanding Class A ordinary shares in 2023.

(d) Consists of cash and cash equivalents, deposits with banks and short-term investments and restricted cash.

Liquidity and Capital Resources

The Company’s liquidity and capital resources are derived from multiple sources as described in “—Sources and Uses of Liquidity”.

Sources and Uses of Liquidity

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While cash flow from Asset Management activities is relatively stable, in the case of Financial Advisory, fee receipts are generally dependent upon the successful completion of client transactions, the occurrence and timing of which is irregular and not subject to Lazard’s control.

In the third quarter of 2024, the Company completed the sale of an owned office building for gross proceeds of approximately $194 million, subject to payment of taxes and other expenses.

The resulting net proceeds will be used for general corporate purposes.

Liquidity is significantly impacted by cash payments for incentive compensation, a significant portion of which are made during the first three months of the year.

As a consequence, cash on hand generally declines in the beginning of the year and gradually builds over the remainder of the year.

We also pay certain tax advances during the year on behalf of certain managing directors, which serve to reduce their respective incentive compensation payments.

Additionally, we made payments in August 2023 with respect to deferred cash awards and throughout the year relating to severance and other employee termination costs associated with the cost-saving initiatives.

We expect to make the majority of additional payments relating to severance and other employee termination costs associated with the cost-saving initiatives through the first half of 2024.

We also make payments during the year on behalf of certain managing directors for their estimated taxes, which serve to reduce their respective incentive compensation payments.

Additionally, we made payments through 2024 relating to severance and other employee termination costs associated with the cost-saving initiatives.

(See Note 18 of Notes to Consolidated Financial Statements).

Also see “Senior Debt” below for senior debt refinancing in the first quarter of 2024.

Liquidity is also affected by the level of LFB customer-related demand deposits, primarily from clients and funds managed by LFG.

To the extent that such deposits rise or fall, this has a corresponding impact on liquidity held at LFB, with the majority of such amounts generally being recorded in “deposits with banks and short-term investments”.

In the year ended December 31, 2023, as reflected on the consolidated statements of financial condition, both “deposits and other customer payables” and “deposits with banks and short-term investments” decreased as compared to December 31, 2022, due primarily to customer deposits withdrawals driven by the rising interest rate environment.

To the extent that such deposits rise or fall, and assuming unchanged asset allocation, this has a

corresponding impact on liquidity held at LFB, with the majority of such amounts generally being recorded in “deposits with banks and short-term investments”.

LFB is subject to, and in compliance with, regulatory liquidity coverage ratios and liquidity levels are monitored on a daily basis.

We regularly monitor our liquidity position, including cash levels, lease obligations, investments, credit lines, principal investment commitments, interest and principal payments on debt, capital expenditures, dividend payments, purchases of shares of common stock, compensation and matters relating to liquidity and to compliance with regulatory net capital requirements.

At December 31, 2023, Lazard had approximately $971 million of cash, including approximately $596 million held at Lazard’s operations outside the U.S.

Lazard provides for income taxes on substantially all of its foreign earnings.

We expect that no material amount of additional taxes would be recognized upon receipt of dividends or distributions of such earnings from our foreign operations.

As of December 31, 2023, the Company’s remaining lease obligations were $82 million for 2024, $138 million from 2025 through 2026, $123 million from 2027 through 2028 and $222 million through 2034.

As of December 31, 2023, Lazard had approximately $209 million in unused lines of credit available to it, including a $200 million, five-year, senior revolving credit facility under the Second Amended and Restated Credit Agreement.

At December 31, 2024, Lazard had approximately $1,308 million of cash and cash equivalents, including approximately $671 million held at Lazard’s operations outside the U.S.

Lazard provides for income taxes on substantially all of its foreign earnings and we expect that no material amount of additional taxes would be recognized upon receipt of dividends or distributions of such earnings from our foreign operations.

In the first half of 2025, we plan to make additional investments to seed our Asset Management strategies including in connection with the upcoming launch of actively managed ETFs.

As of December 31, 2024, the Company’s remaining lease obligations were $77 million for 2025, $142 million from 2026 through 2027, $140 million from 2028 through 2029 and $263 million from 2030 through 2039.

As of December 31, 2024, Lazard had approximately $209 million in unused lines of credit available to it, including a $200 million, five-year, senior revolving credit facility under the Second Amended and Restated Credit Agreement among Lazard Group LLC, the Banks from time to time party thereto and Citibank, N.A., as Administrative Agent (as amended from time to time, the “Second Amended and Restated Credit Agreement”).

The Second Amended and Restated Credit Agreement contains customary terms and conditions, including limitations on consolidations, mergers, indebtedness and certain payments, as well as financial condition covenants relating to leverage and interest coverage ratios.

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The Second Amended and Restated Credit Agreement includes financial covenants that require that Lazard Group not permit (i) its Consolidated Leverage Ratio (as defined in the Second Amended and Restated Credit Agreement) for the 12-month period ending on the last day of any fiscal quarter to be greater than 3.25 to 1.00, provided that the Consolidated Leverage Ratio may be greater than 3.25 to 1.00 for four (consecutive or nonconsecutive) quarters so long as it is not greater than 3.50 to 1.00 on the last day of any such quarter, or (ii) its Consolidated Interest Coverage Ratio (as defined in the Second Amended and Restated Credit Agreement) for the 12-month period ending on the last day of any fiscal quarter to be less than 3.00 to 1.00.

For the 12-month period ended December 31, 2023, Lazard Group was in compliance with such ratios.

In any event, no amounts were outstanding under the Second Amended and Restated Credit Agreement as of December 31, 2023.

No amounts were outstanding under the Second Amended and Restated Credit Agreement as of December 31, 2024.

In addition, the Second Amended and Restated Credit Agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary provisions.

At December 31, 2023, the Company was in compliance with all of these provisions.

At December 31, 2024, the Company was in compliance with all financial and nonfinancial provisions.

Lazard’s annual cash flow generated from operations historically has been sufficient to enable it to meet its annual obligations.

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December 31, 2024 December 31, 2023

Senior Debt Maturity Principal Unamortized

Senior Debt Annual Interest Rate Principal Unamortized

Debt Costs Carrying

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Lazard Group 2029 Senior Notes 4.375 % 500.0 3.9 496.1 500.0 4.0 496.0

Lazard Group 2031 Senior Notes 6.00 % 400.0 4.1 $ 395.9 – – –

$ 1,700.0 $ 13.0 $ 1,687.0 $ 1,700.0 $ 9.8 $ 1,690.2

In the first quarter of 2024, Lazard Group issued $400 million of 6.0% senior notes due March 2031 to refinance the upcoming maturity of our 2025 Notes.

At that time we used part of the net proceeds to purchase in a tender offer $236 million of the 2025 Notes and on December 12, 2024, the remaining $164 million aggregate principal amount of the 2025 notes were redeemed or otherwise retired.

The indenture and supplemental indentures relating to Lazard Group’s senior notes contain certain covenants (none of which relate to financial condition), events of default and other customary provisions.

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We may, to the extent required and subject to restrictions contained in our financing arrangements, use other financing sources, which may cause us to be subject to additional restrictions or covenants.

Guarantor Information

On December 12, 2024, Lazard, Inc.

provided an unconditional and irrevocable guarantee for the repayment of the Lazard Group 2027 Notes, 2028 Notes, 2029 Notes and 2031 Notes (collectively, the “Lazard Group Senior Notes”), and on December 23, 2024, the Second Amended and Restated Credit Agreement was amended (such amendment, the “First Amendment to Second Amended and Restated Credit Agreement”), pursuant to which Lazard, Inc.

provided an unconditional and irrevocable guarantee for Lazard Group's obligations under the Second Amended and Restated Credit Agreement.

See Note 13 of Notes to Consolidated Financial Statements for additional information regarding senior debt.

As permitted under Rule 13-01 of Regulation S-X, Lazard, Inc.

has excluded summarized financial information for Lazard Group in this Form 10-K because the combined assets, liabilities and results of operations of Lazard Group for the period were not materially different than the corresponding amounts in Lazard, Inc.’s consolidated financial statements presented herein and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

Stockholders’ Equity

At December 31, 2023, total stockholders’ equity was $482 million, as compared to $675 million and $1,078 million at December 31, 2022 and 2021, respectively, including $424 million, $556 million and $975 million attributable to Lazard Ltd on the respective dates.

At December 31, 2024, total stockholders’ equity was $685 million, as compared to $482 million and $675 million at December 31, 2023 and 2022, respectively, including $636 million, $424 million and $556 million attributable to

on the respective dates.

The net activity in stockholders’ equity during the years ended December 31, 2024 and 2023 is reflected in the table below:

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The Board of Directors of Lazard has issued a series of authorizations to repurchase common stock, which help offset the dilutive effect of our share-based incentive compensation plans.

The Company aims to repurchase at least as many shares as it expects to issue pursuant to such compensation plans in respect of year-end incentive compensation over time.

The Company aims to repurchase shares to offset dilution from the shares it expects to issue pursuant to such compensation plans in respect of year-end incentive compensation over time.

The rate at which the Company purchases shares in connection with this annual objective may vary from period to period due to a variety of factors.

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2024 1,409,988 $ 42.20

As of December 31, 2023, a total of $200 million of share repurchase authorization remaining available under Lazard’s share repurchase program will expire on December 31, 2024.

During the year ended December 31, 2023, Lazard had in place trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open market.

As of December 31, 2024, a total of $200 million of share repurchase authorization remained available under Lazard, Inc.’s share repurchase program which will expire on December 31, 2026.

As of January 24, 2025, our total outstanding share repurchase authorization was approximately $180 million.

During the year ended December 31, 2024, Lazard, Inc.

had in place trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open market.

On January 29, 2025, the Board of Directors of Lazard declared a quarterly dividend of $0.50 per share on our common stock.

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We maintain an allowance for credit losses to provide coverage for estimated losses from our receivables.

We determine the adequacy of the allowance under the current expected credit losses (“CECL”) guidance by (i) applying a bad debt charge-off rate based on historical charge-off experience;

We determine the adequacy of the allowance under the current expected credit losses (“CECL”) guidance by (i) applying a charge-off rate based on historical credit loss experience;

(ii) estimating the probability of loss based on our analysis of the client’s creditworthiness resulting in specific reserves against exposures where we determine the receivables are uncollectible, which may include situations where a fee is in dispute or litigation has commenced;

and (iii) performing qualitative assessments to monitor economic risks that may require additional adjustments.

The allowance for credit losses involves judgment including incorporation of historical loss experience and assessment of risk characteristics of our clients.

The bad debt charge-off rate based on historical charge-off experience was an average annual rate estimated using the most recent two years of charge-off data.

The allowance for credit losses involves judgment including the incorporation of historical loss experience and assessment of risk characteristics of our clients.

The charge-off rate based on historical credit loss experience is an average annual rate estimated using the most recent two years of charge-off data.

When assessing risk characteristics of individual clients, we considered the macroeconomic environment in the local market, our collection experience and recent communication with the client, as well as any potential future engagement with the client.

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Certain of our tax-paying entities have individually experienced losses on a cumulative three-year basis or have tax attributes that may expire unused.

In addition, some of our tax-paying entities have recorded a valuation allowance on

substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these entities as well as foreign taxes that together substantially offset any U.S.

In addition, some of our tax-paying entities have recorded a valuation allowance on substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these entities as well as foreign taxes that together limit their ability to eliminate residual U.S.

tax liability.

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The amount of the TRA liability is an undiscounted amount based upon current tax laws and the structure of the Company and various assumptions regarding potential future operating profitability.

The assumptions reflected in the estimate involve significant judgment, and if our structure or income assumptions were to change, we could be required to accelerate payments under the TRA.

The assumptions reflected in the estimate involve significant judgment, and if our structure or actual income are different than our assumptions, we could be required to accelerate payments under the TRA.

As such, the actual amount and timing of payments under the TRA could differ materially from our estimates.

See Note 21 of Notes to Consolidated Financial Statements for additional information regarding the TRA.

The Company currently expects that approximately $31 million of such obligation will be paid within the next 12 months.

Goodwill has an indefinite life and is tested for impairment annually, as of November 1, or more frequently if circumstances indicate impairment may have occurred.

The Company performs a qualitative assessment about whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount in lieu of actually calculating the fair value of the reporting unit.

The Company currently does not expect a payment will be made against the TRA obligation within the next 12 months.

Goodwill has an indefinite life and is tested for impairment annually or more frequently if circumstances indicate impairment may have occurred.

In 2024, the Company changed its goodwill impairment testing date from November 1 to October 1 to align impairment testing procedures with its quarter-end financial reporting.

The change was applied prospectively and was not material to the Company’s consolidated financial statements as it did not delay, accelerate or avoid an impairment charge.The Company performs a qualitative assessment about whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount in lieu of actually calculating the fair value of the reporting unit.

The qualitative assessment includes significant judgment on the business outlook assumptions of each reporting unit based on historical data, current economic conditions, stock performance and industry trends.

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• Voting Interest Entities.

VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance itself independently and (ii) the equity holders have the obligation to absorb

losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance itself independently and (ii) the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities.

Lazard is required to consolidate a VOE if it holds a majority of the voting interest in such VOE.

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Lazard is required to consolidate a VIE if we are the primary beneficiary having (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to the VIE.

Lazard’s involvement with various entities that are VOEs or VIEs primarily arises from LFI investments, seed and other investments in our Asset Management business, and LGAC.

Lazard’s involvement with various entities that are VOEs or VIEs primarily arises from LFI investments, seed and other investments in our Asset Management business.

Lazard consolidates these entities when it has a controlling financial interest.

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To the extent material, we consolidate seed and LFI investment entities in which we own a controlling financial interest, and we would deconsolidate any such entity when we no longer have a controlling financial interest in such entity.

Seed investments held in entities in which the Company maintained a controlling financial interest were $114 million in eleven entities as of December 31, 2023, as compared to $112 million in thirteen entities as of December 31, 2022.

Seed investments held in entities in which the Company maintained a controlling financial interest were $111 million in ten entities as of December 31, 2024, as compared to $114 million in eleven entities as of December 31, 2023.

LFI investments held in entities in which the Company maintained a controlling financial interest were $93 million in nine entities as of December 31, 2024, as compared to $144 million in nine entities as of December 31, 2023.

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As such, seed investments and substantially all of LFI investments included in “investments” on the consolidated statements of financial condition represented the Company’s economic interest in the seed and LFI investments.

See Note 1 of Notes to Consolidated Financial Statements for additional information on the consolidation of LGAC.

Risk Management

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Debt $ – $ 4,285

Equities (a) 112,807 126,632

Equity (a) 123,457 112,807

Fixed income 20,751 15,860

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For equity market price risk, investment portfolios and their corresponding hedges are beta-adjusted to the All-Country World equity index.

Interest rate and credit spread risk and foreign exchange rate risks are hedged using relevant benchmark indices.

Interest rate and credit spread risk and foreign exchange rate risk are hedged using relevant benchmark indices.

Private equity risk is not hedged due to lack of proxy hedging instruments.

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The Company hedges market exposure arising from a significant portion of our equity investment portfolios by entering into total return swaps.

The Company estimates that a hypothetical 10% adverse change in market prices would result in a net increase of approximately $0.2 million as of December 31, 2023 and a net decrease of approximately $2.0 million as of December 31, 2022 in the carrying value of such investments, including the effect of the hedging transactions.

The Company estimates that a hypothetical 10% adverse change in market prices would result in a net decrease of approximately $0.9 million as of December 31, 2024 and a net increase of approximately $0.2 million as of December 31, 2023 in the carrying value of such investments, including the effect of the hedging transactions.

Interest Rate and Credit Spread Risk—At December 31, 2024 and 2023, the Company’s exposure to interest rate and credit spread risk in its investment portfolio related to investments in debt securities or funds which invest primarily in debt securities was $24 million and $18 million, respectively.

The Company hedges market exposure arising from a portion of our debt investment portfolios by entering into total return swaps.

The Company estimates that a hypothetical 100 basis point adverse change in interest rates or credit spreads would result in a net increase of approximately $0.05 million as of December 31, 2023 and a net decrease of approximately $0.1 million as of December 31, 2022 in the carrying value of such investments, including the effect of the hedging transactions.

The Company estimates that a hypothetical 100 basis point adverse change in interest rates or credit spreads would result in a net increase of approximately $0.6 million as of December 31, 2024 and would not result in a net change in the carrying value of such investments as of December 31, 2023, including the effect of the hedging transactions.

Foreign Exchange Rate Risk—At December 31, 2024 and 2023, the Company’s exposure to foreign exchange rate risk in its investment portfolio, which primarily relates to investments in foreign currency denominated equity and debt securities and, at December 31, 2023, private equity investments, was $65 million and $69 million, respectively.

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The Company estimates that a 10% adverse change in foreign exchange rates versus the U.S.

Dollar would result in a net decrease of approximately $2.0 million and $3.0 million in the carrying value of such investments as of December 31, 2023 and 2022, respectively, including the effect of the hedging transactions.

Dollar would result in a net decrease of approximately $2.0 million in the carrying value of such investments as of both December 31, 2024 and 2023, including the effect of the hedging transactions.

Private Equity—The Company invests in private equity primarily as a part of its co-investment activities and in connection with certain legacy businesses.

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As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised 85% and 15% of total receivables, respectively.

At December 31, 2022, total receivables amounted to $653 million, net of an allowance for credit losses of $18 million.

At December 31, 2023, total receivables amounted to $762 million, net of an allowance for

credit losses of $29 million.

As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised 74% and 26% of total receivables, respectively.

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LFG and LFB offer wealth management and banking services to high net worth individuals and families.

At December 31, 2023 and 2022, customers and other receivables included $86 million and $129 million, respectively, of LFB loans.

Such loans were fully collateralized and monitored for counterparty creditworthiness.

At December 31, 2024 and 2023, customers and other receivables included $83 million and $86 million, respectively, of such LFB loans which are fully collateralized and monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans.

Therefore, there was no allowance for credit losses required at those dates related to such receivables.

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In entering into derivative agreements, the Company is subject to counterparty risk.

Net derivative assets amounted to $3 million and $15 million at December 31, 2023 and 2022, respectively, and net derivative liabilities, excluding the derivative liability arising from the Company’s obligation pertaining to LFI and other similar deferred compensation arrangements amounted to $3 million and $1 million at December 31, 2023 and 2022, respectively.

Net derivative assets amounted to $4 million and $3 million at December 31, 2024 and 2023, respectively, and net derivative liabilities, excluding the derivative liability arising from the Company’s obligation pertaining to LFI and other similar deferred compensation arrangements amounted to $3 million at both December 31, 2024 and 2023.

The Company also records derivative liabilities relating to its obligations pertaining to LFI awards and other similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments, adjusted for estimated forfeitures.

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The Company has in place business continuity and disaster recovery programs that manage its capabilities to provide services in the case of a disruption.

We purchase insurance policies designed to help protect the Company against accidental loss and losses that may significantly affect our financial objectives, personnel, property or our ability to continue to meet our responsibilities to our various stakeholder groups.

We purchase insurance policies designed to help protect the Company against accidental loss and losses that may significantly affect our financial

objectives, personnel, property or our ability to continue to meet our responsibilities to our various stakeholder groups.

See Item 1A, “Risk Factors” above for more information regarding operational risk in our business and Item 1C, “Cybersecurity” above for more information on the Company’s processes to identify, assess and manage cybersecurity risks.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis