Good morning and welcome to Lazard's Third Quarter and First Nine Months 2024 Earnings Conference Call. This call is being recorded. Currently, all participants are in a listen-only mode. Following the remarks, we will conduct a question-and-answer session. Instructions will be provided at that time. At this time, I will turn the call over to Alexandra Deignan, Lazard's Head of Investor Relations, Treasury and Corporate Sustainability. Please go ahead.

Thank you, Todd. Good morning, everyone, and welcome to Lazard's earnings call for the third quarter and first nine months of 2024. I'm Alexandra Deignan, Head of Investor Relations, Treasury and Corporate Sustainability. In addition to today's audio comments, we've posted our earnings release on our website. A replay of this call will also be available on our website later today. Before we begin, let me remind you that we may make forward-looking statements about our business and performance. There are important factors that could cause our actual results, level of activity, performance, achievements, or other events to differ materially from those expressed or implied by the forward-looking statements, including but not limited to those factors discussed in the company's SEC filings, which you can access on our website. Lazard assumes no responsibility for the accuracy or completeness of these forward-looking statements and assumes no duty to update them. Today's discussion also includes certain non-GAAP financial measures that we believe are meaningful when evaluating a company's performance. A reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release and investor presentation. Hosting our call today are, Peter Orszag, Lazard's Chief Executive Officer, and Mary Ann Betsch, Lazard's Chief Financial Officer. After our prepared remarks, Peter and Mary Ann will be joined by Evan Russo, Chief Executive Officer of Asset Management, as they open the call for questions. I'll now turn the call over to Peter.

Thank you, Allie. We are pleased to report another quarter of strong results with total firm-wide adjusted net revenue of $2.1 billion for the first nine months of 2024, up 24% from 2023. These results demonstrate the ongoing execution of our Lazard 2030 strategy and our focus on delivering differentiated advice and investment solutions for clients. In financial advisory, we achieved strong year-over-year performance in Europe in the third quarter and record revenue in the Americas year-to-date. Restructuring and liability management was also a meaningful contributor to overall revenue growth, which reflects our longstanding excellence in this area, as well as investments made to diversify through expanding our coverage of the creditor side. There are several factors that present opportunities for further momentum. M&A activity continues to rebound, with M&A valuation multiples having returned to their 10-year average, narrowing the gap between buyer and seller expectations. For the market as a whole, M&A announced volume is up over 20% for the first three quarters of 2024, compared to the same period last year. Private equity is becoming increasingly active, with a significant uptick in sponsor-driven take-private activity. Holding periods for private equity-backed portfolio companies have been at an all-time high, and we believe many of these companies will be brought to market. We are also seeing significant activity in our private equity fundraising business, especially in the secondary market, as the longer holding period I just mentioned has increased demand for liquidity. With regard to growing momentum in private markets, we are well-positioned due to our investments in hiring and developing teams, along with firm-wide collaborative efforts to deliver integrated client solutions. Year-to-date, revenue associated with our overall interactions with private capital, which spans strategic advisory, restructuring, and liability management, along with capital raising, is up more than 50%, compared to the same period last year. We believe that additional growth will occur as we continue to expand our efforts, and as private markets participate more actively in M&A as the cycle develops. Turning to asset management, we delivered another solid quarter of results while pursuing our strategy of strengthening our platform. The third quarter ended on a strong note for equity and bond markets, with U.S. equity markets posting all-time closing highs. Despite secular headwinds affecting active asset management, we believe the reduction in rates and a more appealing outlook for global and emerging market equities support demand for Lazard's investment strategies going forward. During the third quarter, we announced a senior leadership hire for asset management to serve as our global head of ETF. As the active ETF market further develops, we are expanding our efforts to offer investors access to our premier investment products through a more efficient vehicle that aligns with their preferences. For example, last quarter we launched the Lazard Global Listed Infrastructure Active ETF to investors in Australia, which builds on the success of one of our specialty strategies while capturing new business opportunities. Across both of our businesses, excellence in serving clients is predicated on our culture and our people. Periodically, we conduct employee engagement surveys to evaluate and enhance our workplace. We are pleased to see substantial improvements in our latest study, which took place this month, with the best results achieved since launching these engagement surveys. Our colleagues' commitment to Lazard's future is evident in our latest study and in our successful performance this year. Let me now turn the call over to Mary Ann to provide further details on our results, and then I'll share more on our performance and outlook.

Thank you, Peter. Today we reported third quarter firm-wide adjusted net revenue of $646 million, up 21% from the same time last year. The increase in firm-wide revenue was primarily driven by our financial advisory business. Financial advisory adjusted net revenue was $369 million for the third quarter, up 41% from one year ago, and $1.2 billion for the first nine months of 2024, up 39%. Our M&A teams performed well across the firm. Restructuring and liability management also delivered another strong quarter, as client demand persists for the bespoke capital structure solutions we provide. Lazard participated in a number of marquee transactions in the third quarter. Completed transactions include Air Products and Chemicals' sale of its LNG business to Honeywell, KPS Capital Partners' acquisition of Innomotics from Siemens AG, Cupertino Electric's acquisition by Quanta Services, and Vitesco Technologies' merger with Schaeffler. Recently announced transactions include Kellogg's acquisition by Mars, Carlyle's sale of Cogentrix to Quantum Capital, and Siete Foods' acquisition by PepsiCo. We also advised on several capital markets assignments, including Altamont Capital Partners' successful continuation fund vehicle, Kohlberg & Company's closing of its fund for Kohlberg Investors 10, Kingswood Capital Management's closing of its fund three, Phoenix Equity Partners' continuation fund, Health Catalyst's new term loan provided by Silverpoint Finance, and Ecuador capital raise. Turning to asset management, third quarter adjusted net revenue was $272 million, up 4% compared to the third quarter last year. Management fees for the third quarter of $269 million increased 3%, compared to the third quarter last year. As of September 30, we reported AUM of $248 billion, 8% higher than September 2023, and 1% higher than June 2024. During the quarter, we had market appreciation of $9 billion, foreign exchange appreciation of $6 billion, and net outflows of $12 billion, which were largely driven by one client that restructured its developed market assets into passive strategies. Average AUM for the third quarter was $246 billion, 4% higher than the third quarter of 2023, and in line with the second quarter of 2024. Asset management continued to provide a durable source of revenue during the third quarter. We saw strong performance and ongoing demand across several of our core and specialty products, including global listed infrastructure, Japanese equities, and emerging market equities, and across our quantitative platform. During the third quarter, new business across our priority strategies and products included funding a Japanese large cap equities custom mandate for a Swiss pension fund and launching a tax transparent fund for our global equity franchise for an Asian pension fund. Interest in emerging markets equity is also growing, highlighted by a large new mandate from a U.S. public fund and the launch of a tailored emerging markets fund for a Scandinavian client. During the third quarter, we were pleased to be selected as a sub-advisor to an active passive international equity ETF series, utilizing our international quality growth strategy. Now turning to expenses. For the third quarter, our adjusted compensation expense was $426 million, resulting in a ratio of 66%, compared to 68.4% for the third quarter one year ago. For the third quarter, our adjusted non-compensation expense was $138 million, down 7% from the second quarter and in line with the prior year quarter. This equated to a ratio of 21.4%, compared to 25.9% one year ago. We remain focused on managing expenses as conditions for our business improve, while at the same time investing in talent and initiatives that support future growth. Shifting to taxes, our adjusted effective tax rate for the third quarter was 32.5%, compared to 14% last quarter. Given the global nature of our business, our adjusted effective tax rate can vary from quarter to quarter, due to changes in the geographic mix of our earnings and the impact of discrete items in the quarter in which they occur. Despite these quarterly fluctuations, we continue to expect our full year 2024 effective tax rate to be in the mid to high 20% range. Turning to capital allocation, in the third quarter of 2024, we returned $51 million to shareholders, including a quarterly dividend of $45 million. Here today, we repurchased 1.1 million shares, and we currently have share repurchase authorization of $356 million outstanding. We remain committed to balancing investments and growth with returning capital to our shareholders, with a quarterly dividend of $0.50 per share declared yesterday. Now I'll turn the call back to Peter.

Thank you, Mary Ann. Geopolitical risks remain a key consideration for business decisions, with increasing client demand for our geopolitical advisory group as a result. Despite uncertainty in the broader landscape, however, we see ongoing improvement in the underlying conditions relevant to our business. Inflation continues to head in the right direction, as we had predicted earlier in the year. With the Fed's rate cut last month and additional cuts expected in the future, we anticipate that our asset management business will benefit over time as investors shift toward more risk-oriented active management. We also expect M&A activity to further strengthen in the near to midterm, and we are well-positioned in financial advisory to meet that moment. As a result, we see an increasingly constructive operating environment for both businesses moving forward. If the recovery we have seen over the past year continues at the same pace next year, and if our recruiting occurs at the rate envisioned under our Lazard 2030 plan, we currently believe our comp ratio will be at or below 60% in 2025. Our ability to achieve this is sensitive to both factors. First, the market environment substantially affects the operating leverage we can deliver. Second, expansion of advisory Managing Directors at a rate of 10 to 15 net per year is a core component of our long-term strategy. If we find opportunities to hire additional exceptional bankers beyond this rate, we will take them, as we believe that hiring to further accelerate our growth objectives is in the long-term interest of our shareholders. On that topic, we continue to invest in talent and technology to capture growth opportunities. Year-to-date, in financial advisory, we have hired 16 new Managing Directors, all consistent with our Lazard 2030 plan. These new hires include senior leaders in restructuring and liability management and capital solutions, along with financial sponsors and sovereign and pension fund coverage. In addition, senior hires in targeted sectors include expanding our leading global healthcare group and building our consumer retail and leisure group along with our media entertainment and sports practice. Our ability to attract new talent to join our existing team of exceptional bankers helps us build Lazard for the future by combining institutional knowledge, networks, and relationships with new ideas, perspectives, and areas of expertise. We are increasingly focused on developing and deploying AI tools across the firm. Over the past 12 months, we have implemented tailored instances of chat GPT and other related tools, including a custom generative AI platform designed to support activities such as research compilation, content creation, and benchmarking analysis. We see generative AI as a transformative technology that will help us to evolve the way we work by freeing colleagues to spend more time on higher impact activities and help us to deliver innovative solutions for our clients by harnessing the intellectual capital of our firm. Overall, this quarter's results demonstrate the ongoing successful execution of our long-term growth strategy against an improving economic and market backdrop. Over the past year, the sense that Lazard is experiencing an inflection point has become palpable with tangible results in revenue, productivity, and profitability. As I've reflected on my first 12 months as CEO, what I found most satisfying is how quickly Lazard colleagues worldwide have embraced aiming higher and a winning-together mentality, and how that combination has resulted in substantial momentum behind our ambition for the future. Now we'll open the call to questions.

Our first question will come from Brendan O'Brien with Wolfe Research. Please go ahead.

Good morning, and thank you for taking my question. I guess, for my question, I just want to drill down a comment. I'll tell you that it's encouraging to get back below 60%.

You're breaking up slightly. Can we try it one more time?

Can you hear me now?

Better, yes.

Okay, sorry about that. So I just want to drill down on the comp ratio commentary a bit. It was encouraging to hear the commitment to getting back below 60% a year, but I just wanted to understand what type of revenue growth is needed to get there. Is it, you know, continuing at this 24% year-on-year growth rate that you see year-to-date, or is there a level of productivity that we need to be looking at? Yeah, any topics you provide there would be helpful.

Sure, again, you broke up slightly, but I will do my best at guessing what the question was and answer that. As I said, and I'll just reinforce, yes, we have seen significant momentum building, frankly, on both sides of the business. The M&A and advisory side is obviously historically more volatile, so focusing on that for a moment. If the M&A market continues to develop as we currently anticipate, and that includes the cycle spreading into private equity increasingly, that's part of the cycle developing. That's part one of the preconditions for getting back to 60%. And the second is that we have been doing very well at lateral hiring, as I mentioned before, 16 managing directors added this year, fully consistent with hitting the 10 to 15 net add that is under our Lazard 2030 plan and in the areas that we are most excited about capturing additional wallet share. Anyway, I don't know what that was. And so the second condition is that we continue at that pace of hiring, and I just wanted to flag that if we were to be presented with opportunities to hire additional really talented bankers, even above and beyond the baseline for building up the Lazard 2030 plan, we would grab that opportunity. And I would say that in the marketplace, the sense that Lazard is at an inflection point is growing, and so we are being presented with lots of interesting opportunities for bringing additional bankers on board. If there were a match between where the talent were available and where we see the most opportunity, we would take advantage of that, even if it meant that our comp ratio came down a bit less than anticipated. So bottom line is, if the market develops as it looks like it will and as it has been, and this year has largely played out as we expected, and if we remain on the kind of baseline path for Lazard 2030 in terms of hiring but don't go beyond that, those are the conditions under which we currently anticipate that we'll be able to achieve 60% or below in the comp ratio.

Great. Thanks for taking my questions, and apologies for the phone issues.

Thank you. Our next question will come from Brennan Hawken with UBS. Please go ahead.

Good morning. Thanks for taking my question. Hey. How are you, Peter? So I'd love to follow-up on that, so really get you on the revenue side and what you're thinking about plus the recruiting side for that 60%. Is there anything that you guys are considering doing on the expense side to provide you with greater flexibility to deliver that kind of magnitude of comp leverage because 600 basis points is rather substantial in a year. So have you guys been looking at maybe accelerating some of the deferred or making any other changes to drive greater flex?

I want to mention a couple of points, and then Mary Ann can add her thoughts as well. There is significant operating leverage in our business as we see increased activity levels. I've mentioned this previously, particularly as we continue to enhance managing director productivity. It's essential to highlight that achieving this operating leverage and reducing the compensation ratio is crucial for us. The non-managing director resources needed by each managing director remain relatively constant, regardless of their productivity levels. As we improve MD productivity, the non-MD expenses do not change significantly, while the number of managing directors increases, leading to a quicker decline in the compensation ratio. This is a key element in driving further reductions in the compensation ratio. Additionally, when discussing gap compensation, we must consider deferral rates and other relevant factors, so I’ll let Mary Ann elaborate on that.

Yes. So I think bringing the deferral rate down this year, as we've said in past calls, is definitely part of our plan, and that's good for our employees and also good for the 20-25 ratio. How much we'll be able to do that is going to depend on, you know, where we land in terms of revenue for the year. I would also just add on the productivity point, some of the new hires that we've made this year, I would expect, and Peter, hopefully you agree with this, that they're going to ramp up a lot faster than the typical, three-year period that we've generally seen with new hires.

We're actually already seeing that in some cases.

Right. So I think we're going to get even more of that leverage on the new hire front than we've seen in the past. And then I would also just remind you that this is the first year we're going to have kind of a full-year impact of the headcount reduction that we did last year.

Thank you. Our next question will come from Ryan Kenny with Morgan Stanley. Please go ahead.

Hi. Good morning. So on the asset management business, it came up that interest in emerging market equities is growing. Can you give us some color on what's driving that? Is that purely a function of rate cuts of the meager dollar? Is it sustainable? Any color there would be helpful. Thanks.

Yeah, I'll be very brief, and then I'll let Evan comment more. I think the combination of ongoing rate cuts in the future will help to boost demand for emerging market equities. I'd also note that our performance has been strong, and so over time that also attracts attention. But, Evan, do you want to?

Yeah, look, I think we've talked about this for a little bit. I mean, clients have been under allocated and are becoming more and more under allocated, especially as U.S. markets continue to strengthen relative to global markets and especially emerging markets over the past several years. And so I think you are seeing the beginnings, and I think at this early stage we've seen the beginnings of some of the allocators, larger institutional clients, thinking about where there's potential upside in the future relative to current levels and seeing a little bit more balance in the way that they want to manage their portfolios. I'd caution that's early, but for several years we weren't seeing a whole lot of interest. Earlier this year we talked about the conversation levels picking up. We saw a few mandates coming through now, but I think this is going to be a trend we'll see play out over the next year or two. And I think, as Peter mentioned, some of that has to do with rate cuts, a little bit relating to allocation decisions around where opportunity sets are and the valuation levels of those markets. And so as markets continue to develop and as we get more certainty around rate caps and geopolitical events, I think there's definitely more opportunities within the emerging market space over the coming years.

Thank you.

Thank you. Our next question will come from James Yaro with Goldman Sachs. Please go ahead.

Good morning, and thanks for taking my question. I think we're starting to see a bit of a divergence in macro trends across the U.S. and Europe. How is this weighing on the M&A environment in Europe relative to the U.S.?

Yeah, it's really interesting. Thanks for the question. I actually just returned from a week and a half in Europe and so had a very high level of interaction with both corporate and government leaders across the continent. I would say, the macro environment in the United States is more auspicious than in Europe, and that's because of underlying structural challenges in Europe that were at the heart of the Draghi report, exacerbated by higher energy prices associated with the Russian invasion of Ukraine and the challenge to whether exporting to China remains a viable economic strategy going forward. That having been said, the macro environment is only one of the inputs into our businesses. There are many activity levels across sectors can vary for lots of different reasons, whether you're growing at a 0.5%. I mean, the delta here is growing at a 0.5% versus 2% or 3% on the macro level, and that can be swamped by sectoral trends. And one of the interesting things that we've seen is we actually saw in this quarter stronger growth on the advisory side in Europe than elsewhere, despite that macroeconomic environment. And so that just underscores the point that I've been making. We also anticipate that our deep local roots in Europe and in the United States, which are, as you know, the two largest markets, will be beneficial as the geopolitical environment evolves. As one example, one response, if there were hypothetically additional tariffs imposed in the United States, one incentive that creates is to try to invest further in the U.S. And so there are many European companies that are looking at that potential, and we are very well positioned to help them sort through the various scenarios and identify potential targets, etc., because, again, we are really the only independent advisory firm that has deep local roots both in Europe and in the United States.

Very clear. Thank you so much. Thank you.

Thank you. Our next question will come from Devin Ryan with Citizens JMP. Please go ahead.

Hey, good morning. Peter, Mary Ann, and Evan, how are you?

Morning.

So a question just on advisory and really kind of think the potential. So the first nine months, obviously, your second best ever for advisory. You seem to be outperforming a number of firms we track just when we look at kind of where you are in your recovery. Your revenue is up 40% year-to-date in advisory. So I'd just love to get a little bit of a flavor for what you would attribute the difference to and then also how you would frame what a normalization for Lazard looks like, whether it's level upside from here to more normal or productivity per MD. And I appreciate it. I know it's hard to say what a baseline is and it's a moving target if you have bankers, but just try to get a sense of kind of that order of magnitude because I know there's a cyclical aspect, but your advisory revenues have recovered quite a bit and they're sitting close to a record. So I'd just love to think about where we can get to from here? Thanks.

Sure. So, I mean, what I would say is, it is our belief that we have more upside potential than others in either the independent advisory space or among the bulge brackets. And so we believe you are seeing early signs of that. And the reason that we have lots of upside potential is partly just what I had mentioned before, which is we have deep local roots both in the United States and Europe. We have significant potential, which is embodied in the Lazard 2030 plan on a sector-by-sector basis in terms of where the opportunities are. So lots of upside from that perspective. The other big component that I would just highlight is historically, at least in the United States, Lazard had less exposure to private capital than others may have. We have now built out an infrastructure, an ecosystem, in which we can touch alternative asset managers and private capital in multiple different ways, from restructuring liability management to fundraising to Lazard Capital Solutions, to sponsor coverage to traditional private equity M&A. And that feeds on itself and is another source of growth for us as that part of the marketplace expands, in addition to the more traditional large-cap M&A that we also see lots of upside in. So in terms of then capturing that, that's a combination of hiring, which we've mentioned, other measures to make sure that we are collaborating and working very effectively as teams across the platform, new norms around the fees that we charge, new norms around mandate selection. All of that is contributing to the momentum that we've been experiencing, and we see lots of additional upside potential as we continue to execute in these ways. And, in fact, I think, again, I use the phrase selection point on purpose because as these pieces come together, they increasingly build on and reinforce one another. And I think, again, the reason we mentioned the Glint survey results or the internal results is you can sense that internally. People can feel that we are on the move and that they like the direction that we are moving.

All right. Very clear. Thanks, Peter.

Thank you. Our next question will come from Mike Brown with Wells Fargo Securities. Please go ahead.

Hey, good morning, everyone.

Good morning.

I wanted to ask a question about the ownership base here. So earlier this year, you converted from a publicly traded partnership to C Corp. Now we're 10 months in. So I'd just be interested to hear how that conversion has gone compared relative to your expectations and in terms of investor interest, engagement, and overall the ownership base. And then how could it evolve from here? What are some of the index implications that could actually continue to help that ownership base evolve from here? Thank you.

Sure. We've been very pleased with the reaction to the C Corp. conversion, both because one of the motivations was additional liquidity in our daily turnover, share turnover, and we've seen that. But perhaps more fundamentally and more importantly, to open up the idea of owning Lazard to investors that had previously not considered it because of our previous structure. So we have been oversubscribed at every IR conference that we've been going to, which is fantastic. We've had multiple meetings with lots of different potential investors, and we've seen a variety of new investors take a hard look at Lazard and decide that there was a lot of upside potential. I'd call out, for example, Capital Group as one new shareholder that was very well regarded in the space. But there are many, many others. So we continue to be very, very active in terms of our discussions with both existing and potential investors, and I think the C Corp helped unlock that. Now, with regard to the index inclusion, that's just sort of additional upside potential from the conversion. And if it were to occur, great, but we see lots of upside even outside of that. And fundamentally, the C Corp conversion made sense for us, even just given the kind of reaction that we've been getting from new investors. And again, I would just view the index inclusion or any index inclusion as potential upside beyond that.

Okay, great. Thank you for all the call, Peter.

Thank you. We'll take a follow-up question from Brennan Hawken with UBS. Please go ahead.

Hello again. Thanks for taking my follow-up. Just one more question on the sub-60%, Peter, and thanks in advance for your patience. You gave a lot of color on the advisory, Rev. Maybe what are the baseline assumptions on the asset management side of the business for revenue?

I think I said, if the next 12 months develop basically as the previous 12 months have, so you can more or less take that as the basis on the asset side.

Right. And then, you guys, there was a large lumpy outflow during the quarter, but my sense is it was a bit lower fee rate. Could you maybe help us walk through some of the fee rate impact from that and what we should be expecting for the next quarter?

Yeah, I'll start and then I'll let Evan come in on that. Look, this was one mandate, and so anytime you have an AUM from a particular client that is larger, you'd expect the fee rate to be lower. And then, in addition, the particular strategy or fund that it was in also tends to have somewhat lower rates than other strategies. So you put the two together, and that outflow mechanically would raise the average fee rate because of where it was located and because it was relatively large. But we do view it as idiosyncratic and not reflective of the underlying steady state. Evan, do you want to add anything?

Yeah, sure, Brennan. So on the average fee rates for the quarter, as you mentioned, I think, as Peter just said, the one large flow certainly had an impact. The business mix, as we always say, is going to be the biggest driver quarter-to-quarter. We did have some outflows in the U.S. versus some inflows in some of the specialty products that we have, such as Japanese equities and others. So that mix also worked in our favor this month. And a little bit more funds versus SMAs, I wouldn't call that significant, but UCeed’s funds were a little bit higher relative to SMAs this quarter. So a few things sort of contributed to keeping that flat year-over-year and up on a sequential basis. I'd say, you know, going forward, look, I think the trends are probably in line with where we've been in the past. I think you can expect a little bit more compression just because U.S. markets continue to outperform emerging markets and global equities. And so as that proportion of the business goes up just because of market returns and performance there, you're obviously going to drift a little bit lower in the fee rates. So those are some of the puts and takes there. Hopefully that helps you give you some context as to how to think about the average bets.

Great. Thanks for taking my follow-up.

Thank you. Our next question will come from Aidan Hall with KBW. Please go ahead.

Great. Thanks for taking my question. Everyone, just for Mary Ann, I heard your comments about the expectation to potentially, based on the environment, take care of maybe some more deferred comp in the fourth quarter. But I'm just curious how you're thinking about how we should be thinking about the comp ratio? Like, is there a chance that that actually picks up in 4Q as you opportunistically take care of some of that? Or do you think, given the expectations for the revenue environment, you could make progress there while holding the comp ratio? Any color, how to be thinking about that?

Sure. Thanks for the follow-up. So I would think about it as sort of, you know, this is our best estimate at this point in time. There's always uncertainty about where the fourth quarter is going to land. You always have some timing risk on larger deals that could have a big impact. But based on our best estimate today, that is our ratio. And so, I think it's unlikely that it picks up. I think it's also probably unlikely that we do much better, just given the intent to do as much as we can on the deferrals, frankly.

Appreciate that. Maybe just a quick one for Evan. I hear a lot of the optimism around the asset management business last day of the month. Any kind of color on how organic growth trends have fared so far and any visibility through kind of the three-year end?

Yeah, look, I'd say, you know, Peter mentioned this in his remarks earlier, but we believe that it's going to take some time as the rate environment, as higher rates come down, to get some of that money off the cash flow. So we are seeing slower growth inflows this year, and I think that trend is going to continue as you get towards year end. Also, some of the comments we made earlier, it's certainly a big focus in the market right now on the U.S. market and specifically in style for growth. So growth style in the U.S. market relative to international global emerging markets, which is predominant of our business, and also the style that we manage to relative value and quality. And so you put all that together, and so we would expect it to remain a little bit more lumpier and choppier until year end because you're not going to see that new inflow, the gross inflow sort of rebound, which we would expect more into the end of this year. So I would expect, the October sort of flows to go more in line, maybe a little bit more outflows relative to where we've been on average this year. And as we get towards the end of the year, beginning of next year, those allocations start to broaden as we start to see yields start to fall and the money market rates and that cash coming off the sidelines, I think you'll see gross inflows rebound and hopefully move more towards a balanced level as we get into next year.

Appreciate the color. Thanks for taking my questions.

Thank you. We'll take a follow-up question from James Yaro with Goldman Sachs. Please go ahead.

Thanks for taking the follow-up. Just quickly on the non-comps, I think your non-comp system is quite strong in the quarter. Maybe you could just speak to the non-comp growth trajectory from here. Anything that we should read into the lower non-comp level? Did you find perhaps some additional non-comp cost saves versus previous expectations?

Yeah, I'll take that one. So, remember there's seasonality here in the non-comp line. Third quarter is typically our lightest quarter, and the fourth quarter is typically our heaviest quarter. And so I would expect that pattern to hold this year. We have been disciplined in finding cuts to offset the increases that would normally go along with the growth that we've had in the business, including travel, including recruiting costs, including investments in technology. So I think we've done a pretty good job of sort of offsetting those with more discipline in other areas. If you're looking at the full year, I would think we'll probably end up a tick or two on a full-year basis in dollar terms. So that's how I think about the remainder of the year.

Thank you so much.

We also have a follow-up from Devin Ryan with Citizens JMP. Please go ahead.

Thanks a lot. Just a philosophical question on asset management, given some of the headwinds in that industry more broadly. So, obviously, with that, people are very focused on incremental investment and returns on investment that are being made. And you guys spoke about some newer areas of focus, obviously, actively managed EPS and some others. And so I appreciate that there's a level of scale that's necessary before new businesses start contributing positively. And so I just want to think about kind of how you guys are framing the need to grow and perhaps invest in the long term without diluting current earnings power in either that segment or just from one. Thanks.

I can start, and then maybe Evan will have some additional commentary. Look, I think, as we've articulated before, I think we need to think about the market in different segments. So there are the core strategies, which historically have been the focus of Lazard Asset Management. These are the base of many investors' portfolios in particular areas. And in that category, it's very important to be investing in research and distribution and in new ways of delivering the product, for example, active EPS. So we're doing all of that and then making those investments. There's also, then a second category, which I would call specialty funds or specialty strategies, where the theory of the case for active management going forward, even in public markets, is very strong, and we're making additional investments there too. So examples would include systematic/quant. Some of our specialized products, like global listed infrastructure, maybe even Japanese equities would fall under that bucket. And then the third category is things outside of public market investing, so wealth management, private assets. We are looking at all three categories, I would say, with regard to organic growth. That will be disproportionately in the first two. And the inorganic activity that we continue to evaluate would be disproportionately in the third category. Evan, do you want to add anything?

No, I think it's a great summary. And, look, I think we're taking steps in all of those areas. We mentioned active ETF. It's part of our strategic plan for build-out of active ETF products in 2025. We think this is an important and growing area of the market, a growing vehicle for clients, certainly gaining a lot of traction. We're excited that, as we announced, we've hired a head of global ETFs. Help us build out that plan, the infrastructure to launch that in 2025. Everything's underway now. And we think our investment strategies are well-positioned to do well in this space if it's happening. So this is an exciting vector of opportunity growth for us. It's a build, you know, obviously it's a build strategy, so it's going to take time to get off and running. But it's going to create a vector of growth for us that we didn't have previously. And then the other two areas we're also laying some of the groundwork. You know, recently the announcement that we did in Europe with Elaia Partners, Elaia Capital, the premier venture capital firm focused on technology. We're launching a JV to launch a private growth equity fund in 2025. We're very excited about the team and the opportunity set and the reaction that we've gotten from our client base as we've started to discuss with them the opportunities for them to take part and invest in those areas. That's tremendous. And then the work we've done earlier this year to integrate an acquisition we did in wealth management in the U.S. continues on. And I think that's another vector of focus for us as well. So I think we're taking smaller steps on each of these areas to build out opportunities for the years ahead.

Great. Thanks so much.

Thank you. This now concludes Lazard's third-quarter 2024 earnings conference call. Please disconnect your line at this time and have a wonderful day.