Lazard Reports Second Quarter and First Half 2025 Results
On both a U.S. GAAP and an adjusted basis 1, Lazard reported second quarter 2025 net income of $55 million or $0.52 per share, diluted. For the first half of 2025, on both a U.S. GAAP and an adjusted basis 1, net income was $116 million or $1.08 per share, diluted.
'Lazard reported another quarter of strong performance across the firm,' said Peter R. Orszag, CEO and Chairman. 'Our Financial Advisory business delivered record revenue for the second quarter and first half of the year. Asset Management achieved positive net flows in the quarter and record gross inflows for the first half of the year, demonstrating progress towards our goal for this year to serve as an inflection point for the business. Firm-wide, high levels of client engagement continue.'
NET REVENUE
Financial Advisory
For the second quarter of 2025, Financial Advisory reported net revenue and adjusted net revenue 1 of $497 million and $491 million, 21% and 20% higher than the second quarter of 2024, respectively.
For the first half of 2025, Financial Advisory reported net revenue and adjusted net revenue 1 of $865 million and $861 million, in line with and 1% higher than the first half of 2024, respectively.
Lazard is one of the world's leading independent financial advisors, serving as a trusted partner to clients on significant and complex M&A transactions. During and since the second quarter of 2025, selected highlights include (clients are in italics):
CD&R's €16 billion acquisition of a controlling 50% stake in Sanofi consumer health unit, Opella
Berry Global's $15.0 billion combination with Amcor
Ferrero's $3.1 billion acquisition of WK Kellogg Co
Roquette Frères' $2.9 billion acquisition of IFF Pharma Solutions
Assura's $2.4 billion recommended combination with Primary Health Properties
Biotage's $1.2 billion acquisition by KKR
L'Oréal's agreement to acquire Color Wow
Panama Canal Railway's sale to APM Terminals
Lazard provides tailored advice, expertise and access to a broad universe of capital providers through our Private Capital Advisory and Capital Solutions practices. Private equity assignments include advising Accel-KKR, Hidden Harbor Capital Partners and IDG Capital on continuation funds and Mainsail Partners on the closing of its Fund VII. In addition, Lazard is advising on capital structure and executing debt raises for ZF Friedrichshafen, NeXtWind, and iFIT Health and Fitness.
Lazard's preeminent restructuring and liability management practice has been engaged in a broad range of mandates including debtor roles involving Solo Brands, Superior Industries, and Wilbur Ellis, and creditor roles involving Lowell, Franchise Group, Saks Global and Southern Water. In addition, our sovereign advisory practice continues to be active in advising governments and sovereign entities across developed and emerging markets.
For a list of publicly announced transactions please visit our website or follow Lazard on LinkedIn.
Asset Management
For the second quarter of 2025, Asset Management net revenue and adjusted net revenue 1 were $292 million and $268 million, 2% and 1% higher than the second quarter of 2024, respectively.
Management fees and other revenue, on an adjusted basis 1, were $265 million for the second quarter of 2025, 1% higher than the second quarter of 2024, and 4% higher than the first quarter of 2025.
Incentive fees on an adjusted basis 1 were $4 million for the second quarter of 2025, compared to $3 million for the second quarter of 2024.
Average assets under management (AUM) was $239 billion for the second quarter of 2025, 3% lower than the second quarter of 2024, and 3% higher than the first quarter of 2025.
For the first half of 2025, Asset Management net revenue and adjusted net revenue 1 were $581 million and $533 million, in line with and 2% lower than the first half of 2024, respectively.
Management fees and other revenue, on an adjusted basis 1, were $520 million for the first half of 2025, 2% lower than the first half of 2024.
Incentive fees on an adjusted basis 1 were $13 million for the first half of 2025, compared to $10 million for the first half of 2024.
Average AUM for the first half of 2025 was $235 billion, 5% lower than the first half of 2024. AUM as of June 30, 2025 was $248 billion, 2% higher than June 30, 2024, and 9% higher than March 31, 2025. The sequential change from March 31, 2025 was driven by market appreciation of $11.9 billion, foreign exchange appreciation of $8.4 billion and net inflows of $0.7 billion.
OPERATING EXPENSES
Compensation and Benefits Expense
For the second quarter of 2025, compensation and benefits expense on a U.S. GAAP and an adjusted basis 1 was $519 million and $504 million, respectively, compared to $453 million and $452 million, respectively, for the second quarter of 2024. The adjusted compensation ratio 2 for the second quarter of 2025 was 65.5%, compared to the second-quarter 2024 ratio of 66.0%.
For the first half of 2025, compensation and benefits expense on a U.S. GAAP and an adjusted basis 1 was $949 million and $926 million, respectively, compared to $1,003 million and $945 million, respectively, for the first half of 2024. The adjusted compensation ratio 2 for the first half of 2025 was 65.5%, compared to the first-half 2024 ratio of 66.0%.
We focus on the adjusted compensation ratio 2 to manage costs, balancing a view of current conditions in the market for talent alongside our objective to drive long-term shareholder value. Our goal is to deliver an adjusted compensation ratio 2 of 60% or below, with timing dependent on market conditions.
Non-Compensation Expenses
For the second quarter of 2025, non-compensation expenses on a U.S. GAAP basis were $184 million, 9% higher than the second quarter of 2024. On an adjusted basis 1, non-compensation expenses were $157 million, 6% higher than the second quarter of 2024.
The adjusted non-compensation ratio 3 was 20.4% for the second quarter of 2025, compared to 21.7% for the second quarter of 2024.
For the first half of 2025, non-compensation expenses on a U.S. GAAP basis were $347 million, 6% higher than the first half of 2024. On an adjusted basis 1, non-compensation expenses were $305 million, 8% higher than the first half of 2024.
The adjusted non-compensation ratio 3 was 21.6% for the first half of 2025, compared to 19.8% for the first half of 2024.
Our goal is to deliver an adjusted non-compensation ratio 3 between 16% to 20%, with timing dependent on market conditions.
TAXES
The provision for income taxes on both a U.S. GAAP and an adjusted basis 1 was $32 million for the second quarter of 2025, which equates to an effective tax rate of 34.1% on a U.S. GAAP basis and 36.5% on an adjusted basis 1.
The provision for income taxes on both a U.S. GAAP and an adjusted basis 1 was $24 million for the first half of 2025, which equates to an effective tax rate of 16.5% on a U.S. GAAP basis and 17.4% on an adjusted basis 1.
CAPITAL MANAGEMENT AND BALANCE SHEET
In the second quarter of 2025, Lazard returned $60 million to shareholders, which included: $47 million in dividends; $4 million in repurchases of our common stock; and $9 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.
In the first half of 2025, Lazard returned $235 million to shareholders, which included: $92 million in dividends; $40 million in repurchases of our common stock; and $103 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.
During the first half of 2025, we repurchased 0.9 million shares at an average price of $46.44. As of June 30, 2025, our total outstanding share repurchase authorization was approximately $160 million.
On July 23, 2025, Lazard declared a quarterly dividend of $0.50 per share on its outstanding common stock. The dividend is payable on August 15, 2025, to stockholders of record on August 4, 2025.
Lazard's financial position remains strong. As of June 30, 2025, our cash and cash equivalents were $978 million.
ENDNOTES
1
A non-GAAP measure. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to the U.S. GAAP results, is a meaningful and useful way to compare our operating results across periods.
2
A non-GAAP measure which represents adjusted compensation and benefits expense as a percentage of adjusted net revenue.
3
A non-GAAP measure which represents adjusted non-compensation expenses as a percentage of adjusted net revenue.
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CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. ET on July 24, 2025, to discuss the company's financial results for the second quarter and first half 2025. The conference call can be accessed via a live audio webcast available through Lazard's Investor Relations website at www.lazard.com, or by dialing +1 800-445-7795 (toll-free, U.S. and Canada) or +1 785-424-1699 (outside of the U.S. and Canada), 15 minutes prior to the start of the call. Conference ID: LAZQ225.
A replay of the conference call will be available by 10:00 a.m. ET, July 24, 2025, via the Lazard Investor Relations website at www.lazard.com, or by dialing +1 800-839-6911 (toll-free, U.S. and Canada) or +1 402-220-6059 (outside of the U.S. and Canada).
ABOUT LAZARD
Founded in 1848, Lazard is one of the world ' s preeminent financial advisory and asset management firms, with operations in North and South America, Europe, the Middle East, Asia, and Australia. Lazard provides advice on mergers and acquisitions, capital markets and capital solutions, restructuring and liability management, geopolitics, and other strategic matters, as well as asset management and investment solutions to institutions, corporations, governments, partnerships, family offices, and high net worth individuals. For more information, please visit www.lazard.com.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains 'forward-looking statements' within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as 'may,' 'might,' 'will,' 'should,' 'could,' 'would,' 'expect,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' 'target,' 'goal,' "pipeline," or 'continue,' and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These forward-looking statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements.
These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A 'Risk Factors,' and also discussed from time to time in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including the following:
Adverse general economic conditions or adverse conditions in global or regional financial markets;
Changes in international trade policies and practices including the implementation of tariffs, proposed further tariffs, and responses from other jurisdictions, and the economic impacts, volatility and uncertainty resulting therefrom;
A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);
Losses caused by financial or other problems experienced by third parties;
Losses due to unidentified or unanticipated risks;
A lack of liquidity, i.e., ready access to funds, for use in our businesses;
Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels; and
Changes in relevant tax laws, regulations or treaties or an adverse interpretation of those items
These risks and uncertainties are not exhaustive. Our SEC reports describe additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
As a result, there can be no assurance that the forward-looking statements included in this release will prove to be accurate or correct. Although we believe the statements reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, achievements or events. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this release to conform our prior statements to actual results or revised expectations and we do not intend to do so.
Lazard, Inc. is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frères Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
(U.S. GAAP - unaudited)
As of
June 30,
December 31,
($ in thousands)
2025
2024
ASSETS
Cash and cash equivalents
$978,259
$1,308,218
Deposits with banks and short-term investments
237,141
268,684
Restricted cash
32,908
32,466
Receivables
754,795
753,623
Investments
637,473
614,947
Property
176,240
160,402
Operating lease right-of-use assets
443,388
434,938
Goodwill and other intangible assets
395,225
393,575
Deferred tax assets
492,254
479,582
Other assets
345,703
347,558
Total Assets
$4,493,386
$4,793,993
Liabilities
Deposits and other customer payables
$400,328
$308,213
Accrued compensation and benefits
391,048
844,953
Operating lease liabilities
518,172
505,483
Tax receivable agreement obligation
75,826
75,899
Senior debt
1,688,631
1,687,052
Other liabilities
549,319
607,610
Total liabilities
3,623,324
4,029,210
Commitments and contingencies
Redeemable noncontrolling interests
83,578
79,629
Stockholders' equity
Preferred stock, par value $.01 per share
–
–
Common stock, par value $.01 per share
1,128
1,128
Additional paid-in capital
225,058
327,810
Retained earnings
1,477,618
1,472,113
Accumulated other comprehensive loss, net of tax
(268,903
)
(326,742
)
Subtotal
1,434,901
1,474,309
Common stock held by subsidiaries, at cost
(693,298
)
(838,069
)
Total Lazard, Inc. stockholders' equity
741,603
636,240
Noncontrolling interests
44,881
48,914
Total stockholders' equity
786,484
685,154
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This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Adjusted Results and Notes to Financial Schedules.
See Notes to Financial Schedules
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This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Adjusted Results and Notes to Financial Schedules.
See Notes to Financial Schedules
Expand
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
($ in thousands)
2025
2025
2024
2025
2024
Net Revenue
Financial Advisory net revenue - U.S. GAAP Basis
$497,306
$367,359
$411,308
$864,665
$864,815
Adjustments:
Reimbursable deal costs, (provision) benefit for credit losses and other (g)
(5,952
)
2,181
(3,372
)
(3,771
)
(10,873
)
Interest expense (h)
5
3
–
8
41
Losses associated with cost-saving initiatives (i)
–
–
–
–
587
Adjusted Financial Advisory net revenue
$491,359
$369,543
$407,936
$860,902
$854,570
Asset Management net revenue - U.S. GAAP Basis
$292,478
$288,100
$285,487
$580,578
$580,963
Adjustments:
Revenue related to noncontrolling interests and similar arrangements (j)
(5,225
)
(6,850
)
(4,054
)
(12,075
)
(8,151
)
Distribution fees and other (g)
(18,765
)
(16,762
)
(16,216
)
(35,527
)
(31,664
)
Interest expense (h)
3
6
2
9
5
Adjusted Asset Management net revenue
$268,491
$264,494
$265,219
$532,985
$541,153
Corporate net revenue - U.S. GAAP Basis
$6,213
($7,408
)
($11,446
)
($1,195
)
$4,324
Adjustments:
(Revenue) loss related to noncontrolling interests and similar arrangements (j)
(6,775
)
839
(866
)
(5,936
)
(3,872
)
(Gains) losses related to Lazard Fund Interests ('LFI') and other similar arrangements (k)
(10,509
)
(5,243
)
1,201
(15,752
)
(8,172
)
Interest expense (h)
21,087
20,960
22,598
42,047
43,204
Revenue related to noncontrolling interests and similar arrangements (j)
(12,000
)
(6,011
)
(4,920
)
(18,011
)
(12,023
)
(Gains) losses related to Lazard Fund Interests ('LFI') and other similar arrangements (k)
(10,509
)
(5,243
)
1,201
(15,752
)
(8,172
)
Distribution fees, reimbursable deal costs, provision for credit losses and other (g)
(24,717
)
(14,581
)
(19,588
)
(39,298
)
(42,537
)
Interest expense (h)
21,095
20,969
22,600
42,064
43,250
Losses associated with cost-saving initiatives (i)
–
–
–
–
587
Adjusted net revenue
$769,866
$643,185
$684,642
$1,413,051
$1,431,207
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This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules
Expand
RECONCILIATION OF U.S. GAAP TO ADJUSTED RESULTS (a)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
($ in thousands, except per share data)
2025
2025
2024
2025
2024
Compensation and Benefits Expense
Compensation and benefits expense - U.S. GAAP Basis
$519,208
$430,270
$452,560
$949,478
$1,003,384
Adjustments:
Compensation and benefits expense related to noncontrolling interests and similar arrangements (j)
(4,436
)
(3,741
)
(1,897
)
(8,177
)
(4,005
)
(Charges) credits pertaining to LFI and other similar arrangements (l)
(10,509
)
(5,243
)
1,201
(15,752
)
(8,172
)
Expenses associated with cost-saving initiatives
–
–
–
–
(46,610
)
Adjusted compensation and benefits expense
$504,263
$421,286
$451,864
$925,549
$944,597
Non-Compensation Expenses
Non-compensation expenses - U.S. GAAP Basis
$183,708
$163,146
$169,149
$346,854
$328,517
Adjustments:
Non-compensation expenses related to noncontrolling interests and similar arrangements (j)
(1,594
)
(657
)
(881
)
(2,251
)
(1,407
)
Distribution fees, reimbursable deal costs, provision for credit losses and other (g)
(24,717
)
(14,581
)
(19,588
)
(39,298
)
(42,537
)
Amortization and other acquisition-related costs
(26
)
(26
)
(68
)
(52
)
(136
)
Expenses associated with cost-saving initiatives
–
–
–
–
(1,532
)
Adjusted non-compensation expenses
$157,371
$147,882
$148,612
$305,253
$282,905
Operating Income
Operating income - U.S. GAAP Basis
$93,081
$54,635
$63,640
$147,716
$118,201
Adjustments:
Operating income related to noncontrolling interests and similar arrangements (j)
(5,970
)
(1,613
)
(2,142
)
(7,583
)
(6,611
)
Interest expense (h)
21,095
20,969
22,600
42,064
43,250
Amortization and other acquisition-related costs
26
26
68
52
136
Losses associated with cost-saving initiatives (i)
–
–
–
–
587
Expenses associated with cost-saving initiatives
–
–
–
–
48,142
Adjusted operating income
$108,232
$74,017
$84,166
$182,249
$203,705
Provision (Benefit) for Income Taxes
Provision (benefit) for income taxes - U.S. GAAP Basis
$31,764
($7,354
)
$11,587
$24,410
$25,924
Adjustment:
Tax effect of adjustments
–
–
(2,960
)
–
14,918
Adjusted provision (benefit) for income taxes
$31,764
($7,354
)
$8,627
$24,410
$40,842
Net Income attributable to Lazard, Inc.
Net income attributable to Lazard, Inc. - U.S. GAAP Basis
$55,346
$60,375
$49,909
$115,721
$85,664
Adjustments:
Losses associated with cost-saving initiatives (i)
–
–
–
–
587
Expenses associated with cost-saving initiatives
–
–
–
–
48,142
Tax effect of adjustments
–
–
2,960
–
(14,918
)
Adjusted net income
$55,346
$60,375
$52,869
$115,721
$119,475
Diluted Weighted Average Shares Outstanding
Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis
104,911,633
104,828,753
100,627,867
104,870,193
99,989,817
Adjustment: participating securities including profits interest participation rights and other
1,785,023
2,847,480
1,561,114
2,316,252
1,870,782
Diluted net income per share:
U.S. GAAP Basis
$0.52
$0.56
$0.49
$1.08
$0.84
Diluted net income effect of adjustments
–
–
0.03
–
0.33
Adjusted Basis
$0.52
$0.56
$0.52
$1.08
$1.17
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This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules
Expand
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
June 30,
($ in thousands)
2025
2025
2024
2025
2024
Non-compensation expenses - U.S. GAAP Basis:
Occupancy and equipment
$33,703
$35,413
$32,031
$69,116
$64,888
Marketing and business development
29,593
27,731
25,493
57,324
49,092
Technology and information services
49,272
46,216
46,406
95,488
91,323
Professional services
24,589
18,837
23,734
43,426
43,614
Fund administration and outsourced services
30,054
26,545
27,114
56,599
53,254
Other
16,497
8,404
14,371
24,901
26,346
Non-compensation expenses - Adjustments:
Occupancy and equipment (j)
($95
)
($95
)
($95
)
($190
)
($1,668
)
Marketing and business development (g) (j)
(4,032
)
(2,657
)
(2,944
)
(6,689
)
(5,023
)
Technology and information services (g) (j)
(35
)
(28
)
(49
)
(63
)
(84
)
Professional services (g) (j)
(931
)
(1,736
)
(1,085
)
(2,667
)
(1,958
)
Fund administration and outsourced services (g) (j)
(17,744
)
(15,843
)
(15,588
)
(33,587
)
(30,623
)
Other (g) (j)
(3,500
)
5,095
(776
)
1,595
(6,256
)
Adjusted non-compensation expenses:
Occupancy and equipment
$33,608
$35,318
$31,936
$68,926
$63,220
Marketing and business development
25,561
25,074
22,549
50,635
44,069
Technology and information services
49,237
46,188
46,357
95,425
91,239
Professional services
23,658
17,101
22,649
40,759
41,656
Fund administration and outsourced services
12,310
10,702
11,526
23,012
22,631
Other
12,997
13,499
13,595
26,496
20,090
Adjusted non-compensation expenses
$157,371
$147,882
$148,612
$305,253
$282,905
Expand
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules.
See Notes to Financial Schedules
Expand
LAZARD, Inc.
Notes to Financial Schedules
(a)
Selected Summary Financial Information and Reconciliations from U.S. GAAP to Adjusted Results contain non-GAAP measures. Lazard believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides a meaningful and useful basis for comparison of its operating results across periods.
(b)
A non-GAAP measure which represents adjusted compensation and benefits expense as a percentage of adjusted net revenue.
(c)
A non-GAAP measure which represents adjusted non-compensation expenses as a percentage of adjusted net revenue.
(d)
A non-GAAP measure which represents adjusted operating income as a percentage of adjusted net revenue.
(e)
A non-GAAP measure which includes units of the long-term incentive compensation program consisting of profits interest participation rights, which are equity incentive awards that, subject to certain conditions, may be exchanged for shares of our common stock. Certain profits interest participation rights may be excluded from the computation of outstanding stock equivalents for U.S. GAAP net income per share. In addition, this measure includes the dilutive effect of the weighted average number of shares of common stock issuable from share-based compensation programs.
(f)
A non-GAAP measure which represents the adjusted provision (benefit) for income taxes as a percentage of adjusted operating income less interest expense, amortization and other acquisition-related costs.
Three Months Ended
Six Months Ended
($ in thousands)
June 30,
March 31,
June 30,
June 30,
June 30,
2025
2025
2024
2025
2024
Adjusted provision (benefit) for income taxes
$31,764
($7,354)
$8,627
$24,410
$40,842
Adjusted operating income less interest expense, amortization and other acquisition-related costs
$87,111
$53,022
$61,496
$140,133
$160,317
Adjusted effective tax rate
36.5%
(13.9%)
14.0%
17.4%
25.5%
(g)
Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs, and (provision) benefit for credit losses relating to fees and other receivables that are deemed uncollectible, for which an equal amount is excluded for purposes of determining adjusted non-compensation expenses and included for purposes of determining adjusted net revenue.
(h)
Interest expense, excluding interest expense incurred by Lazard Frères Banque SA ('LFB'), is added back in determining adjusted net revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.
(i)
Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, primarily consisting of the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss.
(j)
(Revenue) loss and expenses related to the consolidation of noncontrolling interests and similar arrangements are excluded because the Company has no economic interest in such amounts.
(k)
Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements, for which a corresponding equal amount is excluded from compensation and benefits expense.
(l)
Represents changes in the fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards, for which a corresponding equal amount is excluded from adjusted net revenue.
NM
Not meaningful
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Afya intends to repurchase the shares for use in its stock option program, consideration in futures business combinations transactions and general corporate purposes. 3. 2025 Guidance The Company is reaffirming its guidance for 2025, as defined in the following table, which considers the successful acceptance of new students for the second semester of 2025: 4. 2Q25 Overview Segment Information The Company has three reportable segments as follows: Undergraduate, which provides educational services through undergraduate courses related to medical school, undergraduate health science and other ex-health undergraduate programs; Continuing education, which provides medical education (including residency preparation programs, specialization test preparation and other medical capabilities), specialization and graduate courses in medicine, delivered through digital and in-person content; and Medical Practice Solutions, which provides clinical decision, clinical management and doctor-patient relationships for physicians and provide access, demand and efficiency for the healthcare players. Key Revenue Drivers – Undergraduate Programs Table 2: Key Revenue Drivers Six months period ended June 30, 2025 2024 % Chg Undergraduate Programs MEDICAL SCHOOL Approved Seats 3,653 3,203 14.0% Operating Seats 1 3,543 3,153 12.4% Total Students (end of period) 25,733 22,661 13.6% Average Total Students 25,806 22,635 14.0% Average Total Students (ex-Acquisitions)* 24,212 22,635 7.0% Revenue (Total - R$ '000) 1,407,348 1,202,599 17.0% Revenue (ex- Acquisitions* - R$ '000) 1,327,745 1,202,599 10.4% Medical School Net Avg. Ticket (ex- Acquisitions* - R$/month) 9,140 8,855 3.2% UNDERGRADUATE HEALTH SCIENCE Total Students (end of period) 25,718 24,252 6.0% Average Total Students 25,926 24,567 5.5% Average Total Students (ex-Acquisitions)* 25,146 24,567 2.4% Revenue (Total - R$ '000) 130,604 120,471 8.4% Revenue (ex- Acquisitions* - R$ '000) 128,468 120,471 6.6% OTHER EX- HEALTH UNDERGRADUATE Total Students (end of period) 33,090 26,816 23.4% Average Total Students 34,043 27,690 22.9% Average Total Students (ex-Acquisitions)* 32,576 27,690 17.6% Revenue (Total - R$ '000) 103,549 91,097 13.7% Revenue (ex- Acquisitions* - R$ '000) 100,103 91,097 9.9% Total Revenue Revenue (Total - R$ '000) 1,641,501 1,414,166 16.1% Revenue (ex- Acquisitions* - R$ '000) 1,556,283 1,414,166 10.0% *For the six months period ended June 30, 2025, "2025 Ex Acquisitions" excludes: UNIDOM (January to June, 2025; Closing of UNIDOM was in July 2024), and FUNIC (May to June, 2025; Closing of FUNIC was in May 2025). (1) The difference between approved and operating seats refers to Cametá, a campus that is still pre-operational. And FUNIC, a campus that started its operations in the second half of 2025. Expand Key Revenue Drivers – Continuing Education Table 3: Key Revenue Drivers Six months period ended June 30, 2025 2024 % Chg Continuing Education Total Students (end of period) 1 Residency Journey - Business to Physicians B2P 9,224 13,058 -29.4% Graduate Journey - Business to Physicians B2P 9,055 8,100 11.8% Other Courses - B2P and B2B Offerings 27,226 22,921 18.8% Total Students (end of period) 45,505 44,079 3.2% Revenue (R$ '000) Business to Physicians - B2P 125,379 118,940 5.4% Business to Business - B2B 12,141 8,566 41.7% Total Revenue 137,520 127,506 7.9% (1) Total Students figure excludes intercompany transactions. Expand Key Revenue – Medical Practice Solutions Table 4: Key Revenue Drivers Six months period ended June 30, 2025 2024 % Chg Medical Practice Solutions Active Payers (end of period) 1 Clinical Decision 159,373 162,313 -1.8% Clinical Management 36,685 33,398 9.8% Total Active Payers (end of period) 196,058 195,711 0.2% Monthly Active Users (MaU) Total Monthly Active Users (MaU) 230,468 253,497 -9.1% Revenue (R$ '000) 2 Business to Physicians - B2P 75,051 67,163 11.7% Business to Business - B2B 8,944 9,691 -7.7% Total Revenue 84,004 76,854 9.3% (1) Total Active Payers figure excludes intercompany transactions. (2) Revenue from 'Shosp', the clinical management software, was reclassified from B2B to B2P. Expand Key Operational Drivers – Users Positively Impacted by Afya The Users Positively Impacted by Afya represents the total number of medical students from the Undergraduate segment, students from the Continuing Education and users from Medical Practice Solutions. For the second quarter of 2025, Afya's ecosystem reached 301,706 users. Table 5: Key Revenue Drivers Six months period ended June 30, 2025 2024 % Chg Users Positively Impacted by Afya 1 Undergraduate (Total Medical School Students - End of Period) 25,733 22,661 13.6% Continuing Education (Total Students - End of Period) 45,505 44,079 3.2% Medical Practice Solutions (Monthly Active Users) 230,468 253,497 -9.1% Ecosystem Outreach 301,706 320,237 -5.8% (1) Ecosystem outreach does not contemplate intercompany figures. Note that there may be overlap in student numbers within the data. Expand Seasonality of Operations Undergraduate tuition revenues are related to the intake process, and monthly tuition fees charged to students and do not significantly fluctuate during each semester. Continuing education revenues are mostly related to: (i) monthly intakes and tuition fees on medical education, which do not have a considerable concentration in any period; (ii) Residency journey product revenues, derived from e-books transferred at a point of time, which are concentrated at in the first and last quarter of the year due to the enrollments. Medical Practice Solutions are comprised mainly of Afya Whitebook and Afya iClinic revenues, which do not have significant fluctuations regarding seasonality. Revenue Revenue for the second quarter of 2025 was R$919.4 million, an increase of 13.5% over the same period in the prior year. For the six-month period ended June 30, 2025, Revenue was R$1,855.8 million, reflecting a 15.0% increase over the same period of last year. Excluding acquisitions, Revenue in the second quarter increased by 8.5% YoY to R$879.0 million. For the six-month period ended June 30, 2025, excluding acquisitions, Revenue was R$1,770.5 million, reflecting a 9.7% increase over the same period of last year. The quarter revenue increase was mainly due to higher tickets in medicine courses, the maturation of medical school seats and the acquisition of Unidom. Table 6: Revenue & Revenue Mix (in thousands of R$) For the three months period ended June 30, For the six months period ended June 30, 2025 2025 Ex Acquisitions* 2024 % Chg % Chg Ex Acquisitions 2025 2025 Ex Acquisitions* 2024 % Chg % Chg Ex Acquisitions Revenue Mix Undergraduate 814,129 773,744 709,647 14.7% 9.0% 1,641,501 1,556,283 1,414,166 16.1% 10.0% Continuing Education 66,417 66,417 62,091 7.0% 7.0% 137,520 137,520 127,506 7.9% 7.9% Medical Practice Solutions 42,320 42,320 40,281 5.1% 5.1% 84,004 84,004 76,854 9.3% 9.3% Inter-segment transactions (3,466) (3,466) (2,129) 62.8% 62.8% (7,265) (7,265) (4,397) 65.2% 65.2% Total Reported Revenue 919,400 879,015 809,890 13.5% 8.5% 1,855,760 1,770,542 1,614,129 15.0% 9.7% *For the three months period ended June 30, 2025, "2025 Ex Acquisitions" excludes: UNIDOM (April to June, 2025; Closing of UNIDOM was in July 2024), and FUNIC (May to June, 2025; Closing of FUNIC was in May 2025). *For the six months period ended June 30, 2025, "2025 Ex Acquisitions" excludes: UNIDOM (January to June, 2025; Closing of UNIDOM was in July 2024), and FUNIC (May to June, 2025; Closing of FUNIC was in May 2025). Expand Adjusted EBITDA Adjusted EBITDA for the second quarter of 2025 increased by 16.6% to R$400.8 million, up from R$343.8 million in the same period of the prior year, with the Adjusted EBITDA Margin rising by 110 basis points to 43.6%. For the six-month period ended June 30, 2025, Adjusted EBITDA was R$892.8 million, an increase of 20.4% over the same period of the prior year, accompanied by an Adjusted EBITDA Margin increase of 220 basis points in the same period. The increase in Adjusted EBITDA Margin was mainly driven by: (a) higher gross margin in the Undergraduate and Continuing Education segments; (b) the continued ramp-up of the four Mais Médicos campuses launched in 3Q22; (c) restructuring initiatives within Continuing Education and Medical Practice Solutions; and (d) improved cost efficiency in Selling, General, and administrative expenses. Table 7: Reconciliation between Adjusted EBITDA and Net Income (in thousands of R$) For the three months period ended June 30, For the six months period ended June 30, 2025 2024 % Chg 2025 2024 % Chg Net income 176,542 162,200 8.8% 433,578 370,499 17.0% Net financial result 94,809 68,551 38.3% 189,803 142,917 32.8% Income taxes expense 17,468 3,091 465.1% 42,250 13,956 202.7% Depreciation and amortization 94,698 84,038 12.7% 186,453 163,307 14.2% Interest received 1 10,210 8,619 18.5% 24,742 21,034 17.6% Income share associate (3,591) (3,028) 18.6% (7,876) (7,200) 9.4% Share-based compensation 5,557 11,799 -52.9% 12,520 20,428 -38.7% Non-recurring expenses: 5,151 8,557 -39.8% 11,344 16,738 -32.2% - Integration of new companies 2 4,819 5,408 -10.9% 10,788 11,278 -4.3% - M&A advisory and due diligence 3 203 1,336 -84.8% 291 1,583 -81.6% - Expansion projects 4 129 1,765 -92.7% 253 2,370 -89.3% - Restructuring expenses 5 - 48 n.a. 12 1,507 -99.2% Adjusted EBITDA 400,844 343,827 16.6% 892,814 741,679 20.4% Adjusted EBITDA Margin 43.6% 42.5% 110 bps 48.1% 45.9% 220 bps (1) Represents the interest received on late payments of monthly tuition fees. (2) Consists of expenses related to the integration of newly acquired companies. (3) Consists of expenses related to professional and consultant fees in connection with due diligence services for our M&A transactions. (4) Consists of expenses related to professional and consultant fees in connection with the opening of new campuses. (5) Consists of expenses related to the employee redundancies in connection with the organizational restructuring of our acquired companies. Expand Net Income Net Income for the second quarter of 2025, totaled R$176.5 million, reflecting an 8.8% increase YoY. Adjusted Net Income reached R$209.4 million, a decrease of 0.4% over the same period in the prior year. For the six-month period, Afya achieved a Net Income of R$433.6 million, 17.0% higher than the same period of 2024, and an Adjusted Net Income of R$503.3 million, which was 9.1% higher than the previous period. This growth was primarily driven by improved operational performance that was partially offset by a higher tax rate compared to the previous year due to the provision of additional CSLL towards OECD's Pillar Two global minimum tax effects. Basic EPS for the six-month period ended June 30, 2025, reached R$4.69. An increase of 16.9% YoY, reflecting the higher Net Income. Cash and Debt Position As of June 30, 2025, Cash and Cash Equivalents totaled R$1,099.1 million, an increase of 20.6% over December 31, 2024. Net Debt, excluding the effect of IFRS 16, reached R$1,621.0 million, compared to December 31, 2024, Afya reduced its Net Debt by R$193.9 million due to solid Cash Flow from Operating Activities, even considering the business combination with FUNIC and the dividends payment. For the six-month period ended June 30, 2025, Afya generated R$783.0 million in Cash Flow from Operating Activities, up from R$683.4 million in the same period of the previous year, an increase of 14.6% YoY, boosted by operational results. The Operating Cash Conversion Ratio reached 88.8%. The following table shows more information regarding the cost of debt for the first half of 2025, considering loans and financing and accounts payable to selling shareholders. Afya's capital structure remains solid, with a conservative leveraging position and a low cost of debt. Afya's Net Debt (excluding the effect of IFRS16) divided by Adjusted EBITDA mid guidance for 2025 would be 0.97x. CAPEX Capital expenditure consists of the purchase of property and equipment and intangible assets, including expenditure mainly related to the expansion and maintenance of Afya's campuses and headquarters, leasehold improvements, and the development of new solutions in the Medical Practice Solutions and content in the Continuing Education. For the six-months period ended June 30, 2025, CAPEX totaled R$ 225.1 million. Excluding the license payment related to the FUNIC acquisition, CAPEX was R$ 125.4 million, representing 6.8% of Afya's revenue for the period. ESG Metrics ESG commitment is an important part of Afya's strategy and permeates the Company's core values. Afya has been advancing year after year on its core pillars and, since 2021, ESG metrics have been disclosed in the Company's quarterly financial results in three key metrics, Governance and Employee Management, Environmental and Social. The 2024 Sustainability Report can be found at: Table 13: ESG Metrics 1, 2 & 3 2Q25 2Q24 2024 2023 # GRI Governance and Employee Management 1 405-1 Number of employees 9,819 10,181 9,717 9,680 2 405-1 Percentage of female employees 60 % 59 % 59 % 58 % 3 405-1 Percentage of female employees in the board of directors 30 % 30 % 30 % 36 % 4 102-24 Percentage of independent member in the board of directors 40 % 40 % 40 % 36 % Environmental 5 Total renewable energy generated by own photovoltaic plants (MWh) 1,205.706 1,322.982 6,329.796 4,510.637 6 302-1 Total energy consumed (MWh) 7,268.970 6,201.555 24,260.662 24,036.608 7 302-1 % of renewable energy consumed from own generation 16.0 % 21.2 % 23.2 % 16.0 % 8 302-1 % of energy consumed from the power grid 36.7 % 37.0 % 34.8 % 60.3 % 9 302-1 % of energy consumed from the free market 47.2 % 41.8 % 42.0 % 23.7 % Social 10 413-1 Number of free clinical consultations offered by Afya 269,624 228,968 846,264 586,611 11 Number of physicians graduated in Afya's campuses 24,102 20,960 22,867 20,197 12 201-4 Number of students with financing and scholarship programs (FIES and PROUNI) 15,044 11,694 12,342 10,584 13 % students with scholarships over total undergraduate students 17.8 % 15.9 % 16.0 % 16.0 % 14 413-1 Hospital, clinics and city halls partnerships 643 560 614 649 (1) Some factors can influence in the adequate proportionality analysis of data over the years, such as: climate changes, COVID-19 pandemic effects, seasonalities, number of employees, number of students, number of active units, among others. (2) Starting in 2Q22, previously disclosed social data were updated to consider: (a) the number of graduated physicians considering all units after its closing, and (b) partnerships related only to medical schools. (3) The number of students with financing and scholarship programs (FIES and PROUNI) in 2023 excludes students from the Unima and FCM Jaboatão acquisition. As of 2Q25, it also includes students from the UNIDOM acquisition. Expand 5. Conference Call and Webcast Information When: August 13, 2025 at 5:00 p.m. EDT. Who: Mr. Virgilio Gibbon, Chief Executive Officer Mr. Luis André Blanco, Chief Financial Officer Webcast: Expand OR Dial-in: Brazil: +55 11 4632 2236 or +55 11 4632 2237 or +55 11 4680 6788 or +55 11 4700 9668 or +55 21 3958 7888. United States: +1 346 248 7799 or +1 360 209 5623 or +1 386 347 5053 or +1 507 473 4847 or +1 564 217 2000 or +1 646 931 3860 or +1 669 444 9171 or +1 669 900 6833 or +1 689 278 1000 or +1 719 359 4580 or +1 929 205 6099 or +1 253 205 0468 or +1 253 215 8782 or +1 301 715 8592 or +1 305 224 1968 or +1 309 205 3325 or +1 312 626 6799 Webinar ID: 995 2743 1135 Other Numbers: 6. About Afya Limited (Nasdaq: AFYA; B3: A2FY34) Afya is a leading medical education group in Brazil based on the number of medical school seats, delivering an end-to-end physician-centric ecosystem that serves and empowers students and physicians to transform their ambitions into rewarding lifelong experiences from the moment they join us as medical students through their medical residency preparation, graduation program, continuing medical education activities and offering medical practice solutions to help doctors enhance their healthcare services through their whole career. For more information, please visit 7. Forward – Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements other than statements of historical fact could be deemed forward-looking, including risks and uncertainties related to statements about our competition; our ability to attract, upsell and retain students; our capacity to increase tuition prices; our ability to anticipate and meet the evolving needs of students and teachers; our capacity to source and successfully integrate acquisitions; as well as general market, political, economic, and business conditions. Additionally, these statements include financial targets such as revenue, share count and IFRS and non-IFRS financial measures including gross margin, operating margin, net income (loss) per diluted share, and free cash flow. These statements are not guarantees of future performance and undue reliance should not be placed on them. The Company assumes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances occurring after its publication, nor to incorporate new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from those expressed or implied by the forward-looking statements we make. Readers should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent management's beliefs and assumptions only as of the date they are made. Further information on these and other factors that could affect the Company's financial results is included in filings made with the United States Securities and Exchange Commission (SEC) from time to time, including the section titled 'Risk Factors' in the most recent annual report on Form 20-F. These documents are available in the SEC Filings section of the investor relations section of our website at: 8. Non-GAAP Financial Measures To supplement the Company's consolidated financial statements, which are prepared and presented in accordance with IFRS accounting standards as issued by the International Accounting Standards Board—IASB, Afya presents Adjusted EBITDA, Operating Cash Conversion Ratio, Adjusted Net Income and Adjusted EPS, which are non-GAAP financial measures, for the convenience of investors. A non-GAAP financial measure is generally defined as one that intends to measure financial performance but excludes or includes amounts that would not be equally adjusted in the most comparable GAAP measure. Afya calculates Adjusted EBITDA as net income plus/minus net financial result, plus income taxes expense, plus depreciation and amortization, plus interest received on late payments of monthly tuition fees, plus share-based compensation, plus/minus income share associate, plus/minus non-recurring expenses/income. Operating Cash Conversion Ratio is calculated as the Cash flow from Operating Activities plus income taxes paid, minus/plus non-recurring expenses/income divided by Adjusted EBITDA. The calculation of Adjusted Net Income is the Net Income plus amortization of customer relationships and trademark, plus share-based compensation, plus/minus non-recurring expenses/income. The calculation of Adjusted EPS is the Adjusted Net Income minus the non-controlling interests divided by the Weighted average number of outstanding shares. The non-GAAP supplemental financial measures are provided with the intend to help investors in assessing the overall performance of Afya's business regarding its core operations, cash generation and profitability. The non-GAAP financial measures described in this release are not substitutes for the IFRS measures. In addition, the calculations of Adjusted EBITDA, Operating Cash Conversion Ratio, Adjusted Net Income and Adjusted EPS are not standardized financial measures and may differ from the calculations used by other companies, including competitors in the education services industry, and therefore, Afya's measures may not be comparable to those of other companies. 9. Investor Relations Contact 10. Financial Tables Unaudited interim condensed consolidated statements of cash flows For the six-month periods ended June 30, 2025 and 2024 (In thousands of Brazilian reais) June 30, 2025 June 30, 2024 (unaudited) (unaudited) Operating activities Income before income taxes 475,828 384,455 Adjustments to reconcile income before income taxes Depreciation and amortization expenses 186,453 163,307 Write-off of property and equipment 536 139 Write-off of intangible assets 81 163 Allowance for expected credit losses 33,053 30,018 Share-based compensation expense 12,520 20,428 Net foreign exchange differences 2,049 (797) Accrued interest 158,613 102,278 Accrued interest on lease liabilities 59,727 53,770 Share of income of associate (7,876) (7,200) Provision (reversal) for legal proceedings 2,656 3,040 Changes in assets and liabilities Trade receivables (111,519) (79,169) Recoverable taxes (16,395) (15,346) Other assets (5,641) 1,667 Trade payables 6,241 11,455 Taxes payable (743) 319 Advances from customers (52,185) (33,237) Labor and social obligations 37,085 44,970 Other liabilities 2,498 3,117 782,981 683,377 Income taxes paid (11,385) (16,208) Net cash flows from operating activities 771,596 667,169 Investing activities Acquisition of property and equipment (81,617) (45,989) Acquisition of intangibles assets (103,455) (91,119) Dividends received 8,803 6,195 Acquisition of subsidiaries, net of cash acquired (81,463) (164,577) Payments of interest from acquisition of subsidiaries and intangibles (14,536) (25,000) Net cash flows used in investing activities (272,268) (320,490) Financing activities Payments of principal of loans and financing (1,543) (11,524) Payments of interest of loans and financing (110,399) (87,933) Payments of principal of lease liabilities (24,222) (19,859) Payments of interest of lease liabilities (58,793) (53,924) Proceeds from exercise of stock options 24,249 5,541 Dividends paid (138,479) (9,399) Net cash flows used in financing activities (309,187) (177,098) Net foreign exchange differences (2,049) 797 Net increase in cash and cash equivalents 188,092 170,378 Cash and cash equivalents at the beginning of the period 911,015 553,030 Cash and cash equivalents at the end of the period 1,099,107 723,408 Expand
