Good morning and welcome to Lazard's second quarter 2026 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. If anyone should require assistance during the call, please press the star key followed by zero on your telephone keypad. At this time, I will turn the call over to William Murdoch, Lazard's Head Strategy in Investor Relations. Please go ahead.

Good morning and welcome to Lazard's Earning Call for the second quarter and first half. In addition to today's audio comments, we have posted our earnings release. Replay of this call will also be available on our website. Before we begin, let me remind you that we may make forward-looking statements about our business and performance, level of activity, performance, achievements, or other events differ, including they're not limited to, assumes no responsibility for the accuracy or completeness of these forward-looking statements and assumes no duty to update it. Please also note that, unless we state otherwise, all financial measures we discussed today are non-gap. We believe these non-gap financial measures are meaningful when evaluating the company's performance. The reconciliation of these non-gap financial measures to the comparable gap measure is provided in our earnings release and in closing our call today, our- Thank you, William. and that revenue was $786 million for the second quarter and $1.5 billion for the first half through the numbers.

It has now been almost three years since we issued our Lazard 2030 plan, and so it seems appropriate to this long-term profitable. For Lazard 2030, we said we would measure success through relevance, revenue, and returns. We're seeing tangible progress across all three. In the first half of this year, financial advisory achieved its strongest announced league table position since 2014. Asset management delivered its best first-half net inflows in nearly 20 years and reached its highest reported AUM level ever. That progress is driven by the role we play for clients. Increasingly bored CEOs and asset owners are turning to Lazard for their most consequential decisions and investments. We believe this expanding client activity is due to our ability to deliver what we call contextual alpha by combining business analysis with broader insight into geopolitics and the regulatory environment. Clients also value that we can connect capital distribution and technology across a broader platform. With our acquisition of Campbell Lutyens, we will establish a third business that will be the leader in global private capital advisory, providing us with a full array of capabilities in private markets to complement our strength in public markets. At the same time, we are rapidly adopting AI and other technologies to serve clients more effectively and enhance productivity as part of our commitment to being the leading AI-enabled independent financial firm on Wall Street. In short, our work to advance Lazard's legacy is well underway. Tracy will now discuss our financial results along with the near-term effects of the investments we've made. Then I'm going to come back to provide more details on the progress we have made that is reinforcing our confidence in increased growth, productivity, and profitability over Thank you, Peter.

Financial advisory adjusted net revenue was $445 million for the second quarter and $801 million for the first half of 2026. Financial advisory revenue during the quarter was driven primarily by M&A completions in North America. Across Europe and the Middle East, our business continued to perform well despite ongoing geopolitical uncertainty. with our advisory team in London performing particularly well during the quarter. Globally, restructuring and liability management delivered strong results, achieving its best first-half performance in almost a decade. And our private capital advisory business also saw increased client demand, particularly in primary fundraising, highlighting the opportunity ahead with our launch of Lazard CL later this year. Demonstrating increased client engagement and activity across the business, Completed transactions include Synopta on its $1.1 billion sale to Refresco, and Network Connects' sale to Olympus Partners. Recently announced transactions include Altice Francis' proposed sale of SFR for up to 21 billion euros, and Exeterra's landmark deal with its combination with Dominion Energy, creating an enterprise value of approximately $420 billion. Liability management and restructuring assignments include Republic National Distributing Company, and Trinzio. And in private capital advisory, recent assignments include advising Corsair Capital and Chiefs of Amrigo Healthcare on the raise of Fund 4. We're encouraged by the growth opportunities across financial advisory overall by an engagement supporting a stronger second half of the year. Peter will speak more about this in a moment. Turning to asset management, just said net revenue was $331 million for the second $40 million for the first. Revenues included management fees of $310 million for the second. Then the second quarter percent on a sequential quarter. We had market appreciation of $27 billion, foreign exchange depreciation of $1 billion, and a $1 billion increase attributable to acquiring a control $5 billion, $679 billion. Plan engagement remains strong, and new mandates in the quarter reflect ongoing demand for our quantitative equity. Starts Advantage platform provides fundamental insights with strong performance. We continue to develop our ask management platform. During the second quarter, we filed initial registration statements for three additional active ETFs. It is also advancing our broadening AI across research, portfolio construction, and client servicing. We have recently hired senior roles, including expenses are adjusted non-compensation. Adjusted compensation expense was $550 million for the section's transaction, which we anticipate will reduce our adjusted compensation, which we moderate hiring continues to build.

The strategy will increasingly translate into revenue returns as our growth investments can capture. With this progress, asset management revenue is up 23% from one year ago. Even with our strong net inflows in the first half of the year, ongoing client demand has supported our one but not yet funded pipeline, which continues to replenish and is higher than it was at year-end 2025. Looking ahead, we remain on track to deliver positive net flows for the year, and we remain confident in the sustained momentum of the business in the second half of the year. In financial advisory, the repositioning of our business by upgrading our managing directors has been guided by the core conviction that raising the bar on talent and productivity would unlock shareholder value over time. Transformation at this scale is unusual, and since we are now emerging from the period during which we made the strategic choice to turn over 40% of our advisory managing directors, we want to provide more context on our progress. While we do not necessarily intend to provide this level of detail on an ongoing basis, we are doing so now to help investors understand where we are in this transition and what we are seeing as we move through it. To that end, a number of our forward indicators are increasingly encouraging. Conflict clearances are up almost 40% year-over-year on a dollar-weighted basis and up over 100% for deals above $5 billion. dollars. Our weighted backlog for this year is building more rapidly than last year. Our weighted pipeline for 2027, while at an early stage as is typical for July, is already more than twice the level it was for 2026 at this same time last year. And achieving our best position since 2014 in announced league tables is also a net positive for future revenue. We also see evidence of our strategy in client activity and market position. We have invested in talent in our healthcare and power energy and infrastructure groups over the past few years, as some examples, areas where we already have strength and see room to grow. This quarter we were involved in eight announced biopharma transactions over $1 billion, while our role as lead financial advisor to Nextera on the largest energy transaction in history demonstrates the expanding global leadership of our PEI group. Taken together, these indicators reinforce our belief that the repositioning of our advisory business is proceeding as we planned. They also increase our confidence in our managing director by managing director analysis, which shows we are now exiting the transitional period in which the hard decisions required to upgrade our talent created a headwind and moving toward a phase in which the investments we have already made shift to a meaningful tailwind for future growth. While progress in this business is not linear, and we may experience a slight dip in productivity this year given the large number of new MDs we added last year, our MD by MD analysis also shows we remain fully on track to meet our next target of $10 million per MD by 2028. Moving forward, the ramping of our new hires and promotes is increasingly less burdened by the elevated level of separations we made the decision to undertake. This allows their expanding productivity to translate more powerfully into net revenue growth, delivering the longer-term structural improvement aligned with our Lazard 2030 vision and goal. Two other points are worth emphasizing. First, we are very pleased with the quality of talent we have at the firm, including those we have been able to attract to Lazard and to grow from within. Even after only two years on our platform, the average annual productivity of our newly hired MDs has already exceeded the productivity of the MDs we parted with during our strategic repositioning. Our tenured MDs set the standard for global excellence and is encouraging to see the commercial and collegial integration taking place across the firm. We are committed to bringing the compensation ratio down over time, not only through the operating leverage associated with higher productivity, but also through efficiency initiatives that more directly reduce expenses, including through our expanded use of technology. There are broader, longer-term dynamics supporting our financial advisory outlook. Companies continue to pursue scale and rapid technological change and see a constructive regulatory environment. Boards and C-suites increasingly treat geopolitical uncertainty as a feature of the landscape rather than a reason to wait, and an ongoing focus on corporate portfolio composition continues to drive both divestiture activity and M&A. While M&A activity has been robust, it has been concentrated in strategic transactions and private equity, M&A has remained subdued. Our forward indicators would be even more encouraging beyond their current levels if private equity M&A were to become more active. Together, market conditions, client activity, and strong evidence internally on our progress further validate the trajectory that we see. Integration planning is well underway for the Campbell-Lutchins acquisition. As our teams have spent more time together, we have even greater conviction in the strategic logic and cultural fit behind the combination. We also are even more impressed by the quality of talent Campbell-Lutchins brings to complement implement our world-class PCA bankers. In addition to the revenue opportunity with Lazard CL alone, we expect the broader connectivity between our M&A, restructuring, and fundraising businesses to compound over time. Without including revenue or expense synergies, as we said in the announcement, we expect this acquisition to be accretive to earnings in 2027 and thereafter, with clear potential for further upside. In sum, we are confident in our path toward our Lazar 2030 objectives, and I would like to thank our colleagues for their hard work and commitment to our clients. Before I close, I'd also like to welcome Kathy Elsasser to our Board of Directors, a retired Goldman Sachs partner with more than three decades of investment banking experience. Kathy has a broad perspective across both public and private markets. We're excited to have her join us as we build on our momentum in financial advisory, asset management, and firm-wide. Now we'll open the call to questions.

Thank you. At this time, if you have a question, please press star 1 on your telephone keypad. If your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we do ask that you please pick up your handset for best sound quality. We'll take our first question from Gabe Angelini with Bank of America. Please go ahead.

Hi. Good morning. Like you said, there's been a divergence year-to-date in strategic versus sponsor M&A activity, so maybe you can give us a mark-to-market on why we're seeing that divergence and what, in your conversations with sponsors and strategics, is causing that, and then also if you can talk about the outlook for sponsor activity in the second half of this year and first half next year.

Sure. I think the core really involves valuations. Interest rates that we saw from the exceptionally low period of rates existed for a while caused the net present value of cash flows to decline. And that disconnect in valuations, I think, has led to some hesitation to portfolio companies that are held by private equity firms, especially if they're marked at a different level, or the return is not what the sponsors had hoped to achieve. And so I think that's what's causing the delay. Now, there is a counterpressure, which is that LPs, you know, would like to see some cash. And so there's building pressure, a period of higher interest rates persist, and we could talk about the inflationary outlook and the rate environment, but I think that's likely to continue for some period of time. And so there's a bit of, well, what are we waiting for that's starting to emerge, and also this demand for LPs for distributions. On the latter point, I would note that one of the accelerants in the continuation funds and secondary activity is exactly that. And so we are well positioned not only with our existing PCA business, but with the Campbell Elections transaction and the new Lazard CL leg of Lazard to meet client demand for secondaries, which we see is quite robust. But it's the interplay between this valuation effect and the demand for cash that I think is at the heart of the question of when private equity M&A will really pick up again. Beyond that, what I would say is if you get to your question about the second half and into 2027, if you listen to the, you know, both private conversations and public conversations, the heads of the large alternative asset managers, which are the biggest players in private equity, They are suggesting that this is about to shift, you know, await those words converting into action, but characterize the state of play.

Great. Thank you. That's helpful. And maybe just one for Chris. Obviously, you started in the asset management business in December, and I think there have been a number of changes that you've made since joining the business. So maybe if you can walk us through some of the most important changes and maybe some KPIs that we can track to watch the progress that you're making there.

So, look, a number of changes that we've made to really try and strengthen the business. The first was to appoint a chief investment officer for the first time in the business because really the core of what we do is deliver investment outcomes for clients. So having somebody whose full-time job is to focus on bringing the clients is important. And he is, as you might imagine, working very closely with portfolio managers to re-underwrite technology, et cetera. You really need to look at, at the moment, we stand with AI across.

Next question will come from Vernon Hawken with BMO. Please go ahead.

Good morning. Thanks for taking my question. I believe you referenced more pronounced than typical. It would be great if you could add some further color to that. You know, what kind of magnitude would be reasonable when you look at your pipelines and think about what is expected to close? And which businesses do you expect to drive the greater?

Tracy, so I'm going to let him, as a business, our managing directors, tripling that number to 25, and those are disproportionately people that we've added, seeing that show up in the league tables. You know, I mentioned the statistics.

I sure hope not. I'll really take you off if that's the case at different times. So one more, my follow-up. You touched on this a little bit in your comments, Peter, MD headcount. So we saw MDA headcount decline a bit quarter over quarter. Can you talk about what drove that and how we should think about headcount for the rest of the year? You commented on the J-curve and improving some of the ramp. You spoke in your answer to my other question on the quantum of MDAs that you guys have added. So what are some of the important things?

I wouldn't focus too much on the quarter-to-quarter fluctuations in the MD count because that involves some idiosyncratic separation front. I guess the key point is at the end, I believe the number of our advisory managing directors was 238. I'm getting a nod. Okay, so 238. We will be at least at 248, if not more, by the end of the first quarter. I remain on track to continue adding 10 to 15 net MDs per year. And then in terms of where we're working with technology, recruitment effort, that's just what you were asking.

Yeah, I mean, I was kind of hoping to understand a little bit about the ramping, you know.

Okay, Brandon, we've done separations that we strategically made the choice to do, and then the new people that we're bringing on. And what I've heard of clarity at this moment in time, we've done is, again, with a significant amount of turnover. Specifically, the ramping that we're seeing from our new managing directors is very encouraging. For you, it may be a little bit, or anyone on the outside, I don't mean you specifically, that is a little bit off this J-curve that we've talked about, proportionate to the number of managing directors that we separated with because they were disproportionately lower productivity, but still some revenue with those separations. And then you have the ramping of the new managing directors. And I don't want to say unique to Lazard, but we have done something that is unusual and exceptional. Again, we're excited about it's playing out as we hoped it did. More comments on this. One, if you look at the managing director by managing director ramp, it is looking very encouraging. I give you one statistic that even after two years on the platform, they're already above the separated MDs. But that's consistent with what we would like to be seeing. And that was only one data point among many that we have about the ramping occurring. now exiting this transitional j-curve moment um so we've done a very detailed analysis of the net impact if you will of the separations and the new hires that was a significant tailwind i mean sorry headwind excuse me in 2024 it was moving more towards uh neutrality in 25 and 26 but still weighing on our results to some degree and as we move into 2027 it becomes a quite significant tailwind when you go MD by MD very granularly. And that is consistent with the forward indicators that we're roughly this point forward as there are more indicators that we're emerging from this transitional J-curve moment. External results, more consistent with what you may, the patterns that you may have seen at other firms because they did not have the large number of necessary separations. You'll just see them translate into net revenue growth and then into earnings and comp leverage.

Thank you. Our next question will come from Mike Brown with EUVS. Please go ahead.

Great. Good morning. Thanks for taking my questions. So, I wanted to start on the asset management side. So, the first half, $7.5 billion of net inflows, clearly a really positive start to the year. Clearly tracking to the positive net flows for the year, I guess what's clear is you've had that successful first half, but it's also clear that you have a large cushion here for the second half. I assume you're not expecting the second half to be kind of the mirror image or opposite of the first half. Maybe any comments on the puts and takes for flows in the second half, and maybe just touch on where you're seeing the most traction there. Thank you.

Thanks, Mike. That's a great question. So, look, we are very confident in the sustained momentum, the way commercial momentum we're seeing in the business, as you said, is very strong. Underlying that, there's a real breadth, notably from our systematic equities platform, our advantage platform that has doubled in size to 50. But there's a large number of other services, hand, robotics, and then some fixed income strategies. So there's real breadth to it from a product perspective. There's real breadth to it from a geographic perspective we're seeing net inflows but not funded pipeline higher than we had a little bit um lots of good color there and i know you don't have a crystal ball and it's

going to be very kind of revenue dependent um the asset management continues on the path it's on um i guess it'll be kind of fa driven here clearly the optimism is high in the second half So I guess if I frame it this way, if financial advisory is up, say, 40 percent or so in the second half versus the first half or call it 20 percent versus the second half of last year, can you get to that 65 and a half level for the comp ratio that you were at last year?

This is a really good question. And, you know, I think we're probably going to get a few more questions on this. So I know that, you know, there's certain things that we're seeing in the business. momentum. And then secondly, and actually I would point out, I don't know if we mentioned it, but there was a new slide in the investor presentation, some of the volume of change in the MDs and some of the curve that I'll talk to in just a second. So I might point that out because I couldn't. So let me just take a minute to flag that one exception or two, one on revenue more than in 2020 to maintain that consistency. That's probably why we had this. That's regular practice on our own. And so it's not really until the second half of the year. If revenue performs, and that's partly why we had that cap. I continue to think that this exists on both the revenue and the revenue side. Peter just mentioned this. Revenue from our new MDs, 600 MDs, is related to Dividend 15.

Thank you. We'll come from James Yarrow with Goldman Sachs. Please go ahead.

Thanks for taking the question. I want to touch a little bit on AI impacts on investment banking. I posit that much of the AI impact on investment banking activity appears to be in fancy markets rather than M&A. So I'd just love to get your perspective on the ways in which Lazard's strategic advisory business can benefit from AI and specifically on M&A, but more broadly on strategic advisory and maybe in the secondary's business as well.

So first, with regard to client activity, we have, through Lazard Capital Solutions, a lot of capabilities in matching strategics with sources of private capital, including insurance capital, and that is a very active vector for a lot of AI investments. Frankly, even beyond AI, a lot of corporate balance sheet optimization. So that's one piece. I think secondly, Especially as we move towards the Lazard CL, third leg of Lazard in private capital advisory, there's an exceptionally good data asset that the combined businesses will have in terms of insight into GPs and LPs. and deploying our AI technologies to that data is going to, we already know, will provide lots of insight that is commercially relevant and valuable to clients. So one of the things we haven't talked a lot about but that we're excited about is ways of deploying that data asset, if you will, with the scale that the Lazard-CL combination will bring. And then the third piece I'd say is with regard to how we serve our clients. I've spoken about this before, and I mentioned it briefly, but we are committed to being at the forefront of this ongoing revolution in technology, and it is an exciting moment because the tools continue to advance quite rapidly. So the deployment of AI within Lazard to our banking teams and to the asset management side of the business is very encouraging, and every day there are new use cases. And so I'm very excited about the ability of our adoption of this technology to help us serve clients in new and innovative ways. So a lot more to come on that topic as we continue to pursue new opportunities. And, you know, I would just call out the exceptional AI team we have internally and then also the fact that we've got Dmitry Shevilenko, the deputy at perplexity on our board who is a fantastic resource for helping guide us to where the puck is going and not just where it currently sits.

That's very helpful. I just wanted to zoom in and clarify one point on the advisory strength in the quarter. I would argue a strong result here and ahead of what we had at least forecasted. Was there anything that changed relative to your commentary at the uh... inter-quarter conference uh... whether that be in terms of after clothing pull forward or something else just trying to put uh... this quarters results into context relative to your what i would characterize as quite constructive second half outlook for strategic advisory lucky at what i would say is uh... there is there is no exceptional uh... pull forward or uh... uh... that sort of thing i think the point is instead, it's not really a quarterly business because things can bounce around.

And what we're seeing is increasing momentum across the business, some of which showed up in this quarter. And there wasn't any particular M&A, non-M&A mix shift, et cetera. I think it's just an indication of a bit more strengthening of, as we're emerging from this jay-curred period, in our momentum.

Thank you. Our next question will come from Conal Schmitz with Morgan Stanley. Please go ahead.

Good morning. Thanks for taking my question. So I guess I'm speaking with the AI point. You've added a new piece to your AI progression timeline with the rollout of Claude, but you have not spoken much about it. Does this mark a bit of a shift in your AI strategy from a provider standpoint? point. And then broadly, this involves, you know, increased tech investment. How should we think about the model around non-comp expenses trajectory for the remainder of the year? And has there been any progress made so far regarding the reduction in corporate overhead expenses that have been talked about? Thanks.

Okay, I'll take the first part, and Tracy can take the second. We have always been, you know, throughout this AI journey, committed to not locking into a single model, not having a kind of sole source vulnerability or choke point, if you will. So we've been very explicit in having a variety of models that sit inside of our firewall and that can be used by our banking teams. And I think the rollout of Claude is just consistent with a general philosophy. And Claude is not the only model that sits inside of the firewall, as it were. So we've got multiple different models. I think the important thing that we're trying to drive is the cultural change in terms of how work is undertaken. And to be able to easily swap out the underlying model as we do that work is very explicitly part of our AI strategy. So I wouldn't make too much about Claude or any of the other. The progression and the quality of the output is remarkable, and it's exciting to see. One final comment is I'd say at this point our AI spend and token cost is quite modest, and so not really material from any non-comp expense perspective, but I'll let Tracy comment more broadly about non-comp. So, just before I close out, relative to the opportunity, the spend here is still quite modest and I, you know, we will obviously watch that, but we see huge opportunity here and still, and are trying to drive the adoption culturally and are pleased with what we're Yeah, Peter, I'd echo that same point.

I mean, we track a lot of models and there's, we can track that actually by vendor. I may actually come back to that point. You asked about some. We're kind of trying to simplify broadly. But before I talk about that, when you think about the two businesses, we talked about streamlining our research platform, portfolio managers and analysts. In asset management, there was always reductions reflecting that efficiency. Financial advisory, Peter's already mentioned this, but we're not material. Thank you.

That's very helpful. Just one quick follow-up on buybacks and M&A. Okay, so given your restarting buybacks, is it fair to conclude that inorganic growth within the wealth space is unlikely in the near term as you look to increase wealth distribution from here, and how's that strategy going?

Let me first, I wouldn't classify, characterize it the way that you mentioned. You know, we were excited to restart our buyback activity after this transaction. We expect that to continue. But even, I think it's a fair characterization that actually our buyback activity is still a modest level. It wouldn't preclude it.

The question was different if I understood it, which is, does this signal that you're not at a stage in an organic cross-inclusion from our statements, but we've also said we are actively looking at lots of inorganic options, and so it depends on what you mean by the time to answer the question.

Yeah, that was very helpful.

Thank you. Our next question will come from Stephen Chupak with Wolf Research. Please go ahead.

Hi, good morning, and thanks for taking my questions. So, appreciate all the detail unpacking some of the underlying business momentum that admittedly is obscured by the MDJ curve. Also recognize the complex that you spoke to in the second half is certainly going to be contingent on the magnitude of the FA ramp. So looking beyond 26, I was hoping you could speak to expectations for the comp trajectory if you just extrapolate based on the current ramp that you're seeing in productivity from new hires while still staying the course in terms of the commitment to adding talent in line with the 2030 targets.

That is a great question, and we see obviously the comp ratio coming down as we continue to pursue the Lazard 2030 plan while also making the new investments. Because, again, to Tracy's point, I think the underappreciated point here is that elevated level of separations on a one-time basis that we had to do then necessitated, or it was always part of the plan, was matched with an elevated level of lateral, gross lateral hires, not net growth, creates a temporary bump in the comp ratio. So there are kind of three things to highlight as we move into 2027 and 2028. One is just with time the comp ratio comes down because the one-time effects of those buyouts, if you will, you know, fade out of the equation. Secondly, as we continue to raise productivity, and again, I underscored our conviction that we're on track to hit our $10 million dollar per MD productivity target by 2028. We get operating leverage out of the non-MD comp pool because as productivity per MD goes up, the non-MD comp to revenue ratio goes down. And then the third is that we do see the opportunity for efficiencies in how we go to market and in our some of our corporate and other functions. So there's kind of a time effect, there's an operating leverage effect, and then there's a kind of direct efficiency effect. And the combination suggests a significant decline in 27 and 28 in the comp ratio. I don't know, Tracy, if you wanted to elaborate.

No, I think that's really helpful. I think just to maybe even dig in a bit deeper on that timeline, Peter and I have talked about these J-curves. You're kind of seeing a lot of the compensation expense that is driving some of the comp story trend-wise.

Thank you both. That's really helpful, Collar. And just for my follow-up, wanted to just get an update on the non-M&A businesses, whether it's private capital advisory or restructuring, just how you see momentum trending across the different geographies.

Yeah. So, well, on the geographies, I mentioned that we've seen a bit of a shift towards North America. I think that's partly market-driven. It's partly driven by our MD mix, which is, you know, growing disproportionately in North America on purpose. And then with regard to the non-M&A businesses, just to give you again that we're at roughly 60% M&A and 40% non-M&A in the advisory business, the non-M&A piece will expand as we move to integrating Campbell Lutyens. Just as one indicator of that, they'll believe that the Lazard CL combination will produce $500 million in revenue in 2027 next year. And underlying trends that we're seeing in this year, PCA is a very, you know, often has a lot of activity in the fourth quarter, but it's trending in the ways that we expected in healthy business, the fundraising business. And I'd say the same thing in restructuring. We're trading liability management.

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

Thanks. Good morning, Peter, Tracy, Chris. I'll just ask one question here. Peter, you mentioned conflict clearances are up over 100% for deals over $5 billion. That stood out to us. I know that's a material acceleration from the 50% you mentioned last quarter. Obviously, Lazar's always been involved in kind of large, complex deals. But can you just talk about some of the recent acceleration and whether that's a function of the kind of diverging backdrop between strategics and sponsors versus being a result of maybe a concerted effort under your leadership within Lazar just to concentrate on larger deals and perhaps maybe the mix of shifting within the firm and even increasing market share there?

Yeah, a couple comments on this. First, I think you may be mixing and matching slightly. We'll get back to you. But the up 40% dollar-weighted conflict clearances and 100% for deals above $5 billion is a fee-weighted estimate. The prior number you may be citing was the number of conflict clearances. We'll get back to you to make sure, but I believe that that's, but the broader point holds regardless of that detail. We'll get back to you on that, which is we are seeing a significant uplift in our large cap activity. I think that's the reflection of three things. The first is that we, you know, that's what's happening in the marketplace. So coming back to the private equity discussion we were just having, disproportionately strategic strategic activity is the thing driving M&A right now, and just fortunately large deals are driving the strategic activity, so that's partly market. Second, and I think we articulated this on the, one of the prior earnings calls, we had, we were pleased with investments that we had been making in our private capital coverage efforts, but we set ourselves the task of lead table prominence and large cap prominence including in 2026. So this is partly a kind of leadership and management initiative. It's always been core to Lazard to play in that arena. And then the third thing I think is the operating model that we've adopted, the increased level of relationship building and convening, and also the hiring that we've been doing. We are in an increasing number of boardrooms and C-suites, and we're pleased with the progress that isn't even in the conflict clearance numbers, which is the, you know, traction we're getting with large clients. And I just highlight there also Lazard's historical ability, which has been refreshed and renewed and reinforced to deliver contextual alpha, that is to incorporate the geopolitical piece into the analysis, I think is part of what's giving us traction there. But partly market, partly, you know, leadership initiative and uh partly uh our talent and uh our competitive advantage in um in actual alpha all right got it thank you peter and you're correct yeah i was citing the uh the conflict clearances about five uh from last quarter so slightly different uh comparison but the point of the point still holds uh there's disproportionate activity there yep appreciate it okay i'll leave it there.

Thank you, guys. Appreciate it.

Thank you. And our last question will come from Alex Bond with KBW. Please go ahead.

Hey, good morning, everyone. Thanks for squeezing me in here. Follow up to the last question actually around deals in the $1 to $5 billion range. You obviously cited the $5 billion plus range. It has been quite strong year to date. But wondering if you've seen any pickup in activity in this sub-$5 billion range. I know part of the equation here is obviously the still depressed sponsor activity, but is there anything else that you'd point to here that might help get this deal cohort more active here moving forward?

I think a lot of that activity is going to come back to the private equity dynamic we talked about. The reason we gave you the overall dollar-weighted conflict clearances is to give a sense of, you know, overall activity. It is still skewing somewhat towards the very large transactions but if private equity in particular were to become even you would see a significant pickup in smaller deal sizes coexisting with those large strategic ones and so I guess the way I would characterize it is the forward indicators that are very encouraging are encouraging despite the fact that private equity M&A has not yet kind of fully reawakened and if it If it were to do so, the forward indicators would be even stronger.

Okay. Makes sense there. And then maybe one more just quickly on the non-comp side. I'm just wondering if your previous guide of mid to high single digits year-over-year for non-comp growth still holds, and just any commentary on upward pressures on things like travel expense from higher energy prices, and I think you touched on this a little bit earlier, but AI-related costs on the tech side would be helpful as well. Thank you.

Yeah, on the non-comp, that guidance still holds. I think it might be up a point or two from what I said before, but still in that mid-to-high single-digit increase. I think the point on that, there might be a little bit more noise in it this year also because of the Campbell Legends transaction and some of the advisory that related to that. We'll try our best to at least identify it. On the AI spend, Peter mentioned that, that will be increasing. Again, we've highlighted that adoption, but it's not yet material. And again, the return there is very, very strong. You mentioned travel. I mean, this meaning bullish on that, and that's probably an area we always want to be efficient, actually in an environment relationship as paramount. Our T&E spend will be offset by some of the savings that we're trying to do in other areas.

Great. Thank you. This now concludes Lazard's second quarter 2026 Earnings Conference Call. We appreciate your time and participation. You may disconnect.