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Lazard's (LAZ) Q2 Earnings & Revenues Beat Estimates, Costs Up
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Lazard Ltd. (LAZ - Free Report) reported second-quarter 2023 adjusted net income of 24 cents per share. This surpassed the Zacks Consensus Estimate of 11 cents. However, the bottom line compared unfavorably with the prior-year quarter’s 92 cents.
Results were hurt by a decline in revenues and higher expenses. Nonetheless, a rise in assets under management (AUM) balance acted as a tailwind.
On a GAAP basis, Lazard’s net loss was $124 million against net income of $95 million in the prior-year quarter. Our estimate for net income was $94.9 million. The challenging operating backdrop and increase in expenses dented the company's performance in the quarter under discussion.
Revenues Decline & Expenses Rise
Quarterly adjusted operating revenues totaled $620 million, down 8.3% year over year. However, the top line surpassed the Zacks Consensus Estimate of $567.8 million.
Operating expenses were $753.2 million, up 46.6% year over year. The rise was due to an increase in all components. Our estimate was $462.5 million. Higher levels of compensation and benefits led the company to report a higher figure for the metric.
The ratio of adjusted compensation expenses to operating revenues was 68.4%, up from the year-earlier quarter’s 58.5%. The ratio of non-compensation expenses to operating revenues was 23.2%, up from the year-ago quarter’s 19.4%.
Quarterly Segmental Performance Weak
Financial Advisory: The segment’s adjusted operating revenues were $344 million, down 15.4% from the year-earlier quarter. We had projected the metric to be $324.8 million.
Asset Management: Segmental adjusted operating revenues of $267 million rose 1% from the prior-year quarter. Our estimation was $227.2 million.
Corporate: Adjusted operating revenues from this segment were $8.8 million, up significantly from the year-earlier quarter.
AUM Increases
As of Jun 30, 2023, total AUM was $239.34 billion, up 10.7% from the prior-year quarter. Our model predicted the metric to be $203.08 billion.
The quarter witnessed a market and foreign-exchange appreciation of $8.2 billion and net outflows of $1 billion. Our estimate for net outflows were $1.83 billion.
Average AUM in the reported quarter was $235.35 billion, up 2.3% year over year. Our anticipation was $217.61 billion.
Balance Sheet Position Strong
Lazard’s cash and cash equivalents totaled $697.8 million as of Jun 30, 2023 compared with $596.6 million as of Mar 31, 2023. Stockholders’ equity was $415.9 million compared with $508.4 million as of Mar 31, 2023.
Capital Deployment Update
In the first half of 2023, Lazard repurchased 2.7 million shares.
As of Jun 30, 2023, the company’s remaining share repurchase authorization was $203 million.
Our Viewpoint
Lazard has a diversified business model which aligns comfortably with the current economic environment. Also, the rise in AUM was another positive. However, declining revenues and rising expenses are concerning.
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2023 adjusted earnings of $9.28 per share handily surpassed the Zacks Consensus Estimate of $8.47. However, the figure reflected a climb of 26% from the year-ago quarter.
Results of BLK were benefited from a decline in expenses and higher non-operating income. Further, AUM balance witnessed improvement. However, lower revenues acted as headwinds.
SEI Investments Co.’s (SEIC - Free Report) second-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 85 cents. The bottom line reflected a rise of 10% from the prior-year quarter.
Results of SEIC were benefited from higher revenues and an increase in AUM balance. However, rising expenses were undermining factors.
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Lazard's (LAZ) Q2 Earnings & Revenues Beat Estimates, Costs Up
Lazard Ltd. (LAZ - Free Report) reported second-quarter 2023 adjusted net income of 24 cents per share. This surpassed the Zacks Consensus Estimate of 11 cents. However, the bottom line compared unfavorably with the prior-year quarter’s 92 cents.
Results were hurt by a decline in revenues and higher expenses. Nonetheless, a rise in assets under management (AUM) balance acted as a tailwind.
On a GAAP basis, Lazard’s net loss was $124 million against net income of $95 million in the prior-year quarter. Our estimate for net income was $94.9 million. The challenging operating backdrop and increase in expenses dented the company's performance in the quarter under discussion.
Revenues Decline & Expenses Rise
Quarterly adjusted operating revenues totaled $620 million, down 8.3% year over year. However, the top line surpassed the Zacks Consensus Estimate of $567.8 million.
Operating expenses were $753.2 million, up 46.6% year over year. The rise was due to an increase in all components. Our estimate was $462.5 million. Higher levels of compensation and benefits led the company to report a higher figure for the metric.
The ratio of adjusted compensation expenses to operating revenues was 68.4%, up from the year-earlier quarter’s 58.5%. The ratio of non-compensation expenses to operating revenues was 23.2%, up from the year-ago quarter’s 19.4%.
Quarterly Segmental Performance Weak
Financial Advisory: The segment’s adjusted operating revenues were $344 million, down 15.4% from the year-earlier quarter. We had projected the metric to be $324.8 million.
Asset Management: Segmental adjusted operating revenues of $267 million rose 1% from the prior-year quarter. Our estimation was $227.2 million.
Corporate: Adjusted operating revenues from this segment were $8.8 million, up significantly from the year-earlier quarter.
AUM Increases
As of Jun 30, 2023, total AUM was $239.34 billion, up 10.7% from the prior-year quarter. Our model predicted the metric to be $203.08 billion.
The quarter witnessed a market and foreign-exchange appreciation of $8.2 billion and net outflows of $1 billion. Our estimate for net outflows were $1.83 billion.
Average AUM in the reported quarter was $235.35 billion, up 2.3% year over year. Our anticipation was $217.61 billion.
Balance Sheet Position Strong
Lazard’s cash and cash equivalents totaled $697.8 million as of Jun 30, 2023 compared with $596.6 million as of Mar 31, 2023. Stockholders’ equity was $415.9 million compared with $508.4 million as of Mar 31, 2023.
Capital Deployment Update
In the first half of 2023, Lazard repurchased 2.7 million shares.
As of Jun 30, 2023, the company’s remaining share repurchase authorization was $203 million.
Our Viewpoint
Lazard has a diversified business model which aligns comfortably with the current economic environment. Also, the rise in AUM was another positive. However, declining revenues and rising expenses are concerning.
Lazard Ltd Price, Consensus and EPS Surprise
Lazard Ltd price-consensus-eps-surprise-chart | Lazard Ltd Quote
Currently, Lazard carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) second-quarter 2023 adjusted earnings of $9.28 per share handily surpassed the Zacks Consensus Estimate of $8.47. However, the figure reflected a climb of 26% from the year-ago quarter.
Results of BLK were benefited from a decline in expenses and higher non-operating income. Further, AUM balance witnessed improvement. However, lower revenues acted as headwinds.
SEI Investments Co.’s (SEIC - Free Report) second-quarter 2023 earnings of 89 cents per share beat the Zacks Consensus Estimate of 85 cents. The bottom line reflected a rise of 10% from the prior-year quarter.
Results of SEIC were benefited from higher revenues and an increase in AUM balance. However, rising expenses were undermining factors.