In addition to today's audio comments, we have posted our earnings release on our website. A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation. We are pleased to report another quarter of strong results reflecting an ongoing focus on our clients and continued momentum behind our long-term growth strategy. For the first nine months of the year, total firm-wide revenue was $2.1 billion, including record Financial Advisory revenue of $1.3 billion.
For the first nine months of the year, revenue totaled $827 million, and in the third quarter, revenue was up 8% year over year. We look forward to welcoming Chris Hogan as our CEO of Lazard Asset Management in December, helping to further accelerate our progress and evolve this business for future growth. Today, we've reported record third-quarter firm-wide revenue of $725 million, up 12% from the same time last year, driven by activity across both our businesses. Financial Advisory revenue totaled $422 million, up 14% from one year ago.
Completed transactions include Mallinckrodt Pharmaceuticals' $6.7 billion combination with Endo Pharmaceuticals, Ferrero's $3.1 billion acquisition of W.K. Turning to Asset Management, for the third quarter, revenue was $294 million, up 8% compared to the third quarter last year, and up 10% on a sequential basis. We see ongoing client engagement and demand across our investment platforms, particularly with our quantitative and emerging market strategies. We are maintaining a disciplined approach to our expenses while investing to support long-term growth.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year effective tax rate | FY2025 | Around 20% (updated) |
| Non-compensation expense growth | FY2025 | High single-digit % increase in dollars year over year (maintained) (maintained) |
| Asset Management net flows | FY2025 | Increasingly looking to hit net zero flows, with year-to-date net positive flows (tracking ahead) |
| Average revenue per MD | 2030 | Confident in exceeding beyond 2028; ~$12.5M by 2030 seen as achievable (raised) |
| Metric | YoY | Note |
|---|---|---|
| Firm-wide revenue | +12% to $725M | Record results from activity across both Financial Advisory and Asset Management |
| Financial Advisory revenue | +14% to $422M | Marquee transactions and strength in M&A, restructuring, liability management, and fundraising |
| Asset Management revenue | +8% to $294M | Higher management fees (+6%) and incentive fees of $9 million versus $3 million a year ago, plus market appreciation |
| Average AUM | +5% to $257B | Market appreciation and net inflows, up 8% sequentially |
| AUM (period end) | +7% to $265B | $12 billion market appreciation and $4.6 billion net inflows, partly offset by $400 million FX depreciation |
| Compensation ratio | Improved to 65.5% from 66% | Revenue growth amid disciplined compensation management |
| Effective tax rate | 21.4% vs. 32.5% | Lower than the prior-year third quarter |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Asset Management turnaround | Outflows from sub-advised mandates a drag | 2025 declared an inflection point with record gross inflows, net positive flows, and a shift toward quant, emerging markets, and customized solutions | Improving |
| M&A and restructuring coexistence | Historically inverse cycles | Rising firm-performance dispersion lets strong M&A and restructuring/liability management activity coexist | Improving |
| Private capital and secondaries | Strong multi-year CAGR | Tailwinds remain strong with no deceleration; PE return to M&A expected to drive 2026 activity | Improving |
| MD hiring and productivity | 10-15 net adds per year target; $8.6M revenue per MD in 2024 | On track at/above the high end of the range with productivity near $9M per MD and a long-term ~$12.5M by 2030 aspiration | Improving |
| M&A vs. non-M&A and public vs. private mix | ~60/40 M&A/non-M&A | Trending closer to 50/50 M&A/non-M&A and toward a more balanced public/private capital mix | Improving |
| Private credit stress | — | Recent high-profile bankruptcies not viewed as a canary for broader private credit problems | Stable |
| Geographic diversification | U.S. and Europe core | Activity across U.S., Europe, and now the Middle East, with new offices and a strong European corporate sector despite macro/political backdrop | Improving |