Lazard said it posted a sharp decline in quarterly profit on Thursday while moving to reposition its financial advisory operation. The bank reported that more than 80 managing directors were replaced with higher-performing staff between 2023 and 2025 as part of a broader restructuring of its advisory business, a change that touched about 40% of its managing director positions.
The restructuring comes amid a mixed operating picture. The financial advisory unit recorded a 9% drop in quarterly revenue despite noticeable activity in the mergers and acquisitions market. Executives described a period of turnover in the managing director "pool," and signaled plans to recruit bankers focused on sectors with stronger fee potential, including healthcare, industrials and defense technology.
"That (the cuts) does create this interesting dynamic of kind of a loss of revenue associated with them, even if they were lower productivity, there still is some revenue associated with them," CEO Peter Orszag said on a post-earnings call. Orszag added that revenue from newly hired and promoted bankers was expected to ramp up through 2027.
Investors reacted to the results: shares of the bank fell about 3.5% in morning trading after Lazard missed Wall Street profit expectations. Company executives said the earnings miss reflected both a higher tax rate in the quarter and the near-term effects of the advisory overhaul.
To expand its fee base and capture momentum in public markets, Lazard also said it will build out a U.S. IPO advisory business. The strategy will concentrate on advising companies through the listing process without acting as an underwriter, leveraging an established IPO advisory capability the firm already operates in Europe and a recent U.S. hire to support the effort.
Company executives noted that the U.S. IPO market had seen a significant rebound in 2026, citing a major listing that helped spur renewed interest among companies contemplating public offerings. Lazard said it expects to pursue advisory opportunities arising from that resurgence.
On the earnings front, Lazard reported adjusted earnings of $0.12 per share for the second quarter, below the $0.35 per-share consensus compiled by LSEG. Chief Financial Officer Tracy Farr said, "This quarter’s earnings were impacted by an elevated tax rate, which is not indicative of the full-year rate." The firm recorded a provision for income taxes of $24 million in the quarter.
Net income for the three months ended June 30 fell to $5 million, or $0.03 per share, compared with $55 million, or $0.52 per share, in the year-earlier period.
Asset management provided a counterweight to the advisory weakness. On an adjusted basis, asset management revenue rose 23% to $331 million in the quarter, helping to lift total adjusted revenue 2% to $786 million, ahead of analysts’ estimates of roughly $757.5 million.
Lazard said it achieved its strongest first-half net inflows in nearly 20 years and reached a record level of reported assets under management. The firm closed the quarter with $285 billion in assets under management, up from $248 billion a year earlier.
Context and implications
The personnel changes are positioned as part of an effort to improve productivity and capture higher-fee work. Management acknowledges there are near-term revenue consequences from replacing a sizable portion of its managing directors, and expects the benefit from those moves to materialize gradually through 2027. At the same time, the company is leaning on momentum in asset management and the revived U.S. IPO market to broaden revenue streams.