Lazard Inc

Previous wording

The following discussion should be read in conjunction with Lazard’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”). All references to “2024,” “2023,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2024 and 2023.

Current wording

The following discussion should be read in conjunction with Lazard’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”). All references to “2024,” “2023,” “third quarter,” “first nine months” or “the period” refer to, as the context requires, the three month and nine month periods ended September 30, 2024 and 2023.

Previous wording

Management has included in Parts I and II of this Form 10-Q, including in its MD&A, statements that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal” 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 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 Form 10-K under the caption “Risk Factors,” including the following:

Current wording

Management has included in Parts I and II of this Form 10-Q, including in its MD&A, statements that are forward-looking statements. 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,” 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 Form 10-K under the caption “Risk Factors,” including the following:

Previous wording

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 Form 10-Q to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Current wording

As a result, there can be no assurance that the forward-looking statements included in this Form 10-Q 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 Form 10-Q to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Previous wording

•future acquisitions, including the consideration to be paid and the timing of consummation;

Current wording

•future acquisitions or other strategic transactions, including the consideration to be paid and the timing of consummation;

Previous wording

•Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding strategic and mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory, and other strategic advisory matters and capital raising and placement, and

Current wording

•Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding strategic and M&A advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory, and other strategic advisory matters and capital raising and placement, and

Previous wording

Economic and global financial market conditions can materially affect our financial performance. As described above, our principal sources of revenue are derived from activities in our Financial Advisory and Asset Management business segments. Our Financial Advisory revenues are primarily dependent on the successful completion of merger, acquisition, sale, restructuring, capital raising or similar transactions, and our Asset Management revenues are primarily driven by the levels of assets under management (“AUM”). Weak global economic and financial market conditions can result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management business, but may provide opportunities for our restructuring business.

Current wording

Economic and global financial market conditions can materially affect our financial performance. As described above, our principal sources of revenue are derived from activities in our Financial Advisory and Asset Management business segments. Our Financial Advisory revenues are primarily dependent on the successful completion of merger, acquisition, sale, restructuring, capital raising or similar transactions, and our Asset Management revenues are primarily driven by the levels of AUM. Weak global economic and financial market conditions can result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management business, but may provide opportunities for our restructuring business.

Previous wording

•Financial Advisory—M&A announcements for deals greater than $500 million are up year-over-year with 2023 being at their lowest levels in a decade. We remained actively engaged with our clients. The global scale and breadth of our Financial Advisory business, with particular strength in both the U.S. and Europe, enables us to advise on a wide range of strategic and restructuring transactions across a variety of industries. Throughout 2024, we continue to see increased M&A activity occurring alongside greater restructuring activity as rates remain high and debt maturities approach. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital structure, restructuring, and public and private capital markets.

Current wording

•Financial Advisory—M&A announcements for deals greater than $500 million are up year-over-year with 2023 being at their lowest levels in a decade. We remained actively engaged with our clients. The global scale and breadth of our Financial Advisory business, with particular strength in both the U.S. and Europe, enables us to advise on a wide range of strategic and restructuring transactions across a variety of industries. Throughout 2024, we continue to see increased M&A activity occurring alongside greater restructuring and liability management activity based upon upcoming debt maturities. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital structure, restructuring, and public and private capital markets.

Previous wording

Overall, we continue to focus on the development of our business, including the generation of revenue growth, earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new technology to support the development of existing and new business opportunities, the prudent management of our costs and expenses, the efficient use of our assets and the return of capital to our shareholders.

Current wording

Overall, we continue to focus on the development of our business, including the generation of revenue growth, earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new technology to support the development of existing and new business opportunities, the evaluation of other strategic alternatives, the prudent management of our costs and expenses, the efficient use of our assets and the return of capital to our shareholders.

Previous wording

Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.

Current wording

Certain industry-wide market data with respect to our Financial Advisory and Asset Management businesses is included below.

Previous wording

Another measure of global restructuring activity is the number of corporate defaults, which decreased during the first half of 2024 as compared to the first half of 2023. The number of defaulting issuers was 72 in the first half of 2024 according to Moody’s Investors Service, Inc., as compared to 86 in the first half of 2023.

Current wording

Another measure of global restructuring activity is the number of corporate defaults, which decreased during the first nine months of 2024 as compared to the first nine months of 2023. The number of defaulting issuers was 107 in the first nine months of 2024 according to Moody’s Investors Service, Inc., as compared to 127 in the first nine months of 2023.

Previous wording

The majority of Lazard’s Financial Advisory net revenue historically has been earned from advice and other services provided in M&A transactions. The amount of the fee earned can vary depending upon the type, size and complexity of the transaction Lazard is advising on. M&A fees can be earned as a retainer, working fee, announcement fee, milestone fee, opinion fee or transaction completion fee. Most fees are paid upon completion of a transaction, the timing of which can be impacted by delays to securing financing, board approvals, regulatory approvals, shareholder votes, changing market conditions or other factors.

Current wording

The majority of Lazard’s Financial Advisory net revenue historically has been earned from advice and other services provided in M&A transactions. The amount of the fee earned can vary depending upon the type, size and complexity of the transaction Lazard is advising on. M&A fees can be earned as a retainer, working fee, announcement fee, milestone fee, opinion fee or transaction completion fee. Most fees are paid upon completion of a transaction, the timing of which can be impacted by delays due to securing financing, board approvals, regulatory approvals, shareholder votes, changing market conditions or other factors.

Previous wording

Lazard’s Asset Management segment principally includes LAM, LFG, Lazard Frères Banque SA (“LFB”) and the Edgewater Funds (“Edgewater”). Asset Management net revenue is derived from fees for investment management and advisory services provided to clients. As noted above, the main driver of Asset Management net revenue is the level and product mix of AUM, which is generally influenced by the performance of the global equity markets and, to a lesser extent, fixed income markets as well as Lazard’s investment performance, which impacts its ability to successfully attract and retain assets. As a result, fluctuations (including timing thereof) in financial markets and client asset inflows and outflows have a direct effect on Asset Management net revenue and operating income. Asset Management fees are generally based on the level of AUM measured daily, monthly or quarterly, and an increase or reduction in AUM, due to market price fluctuations, currency fluctuations, changes in product mix, or net client asset flows will result in a corresponding increase or decrease in management fees. Our investment advisory contracts are generally terminable at any time or on notice of 30 days or less. Institutional and individual clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of AUM or shift their funds to other types of accounts with different rate structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

Current wording

Lazard’s Asset Management segment principally includes LAM, LFG, Lazard Frères Banque SA (“LFB”) and the Edgewater Funds (“Edgewater”). Asset Management net revenue is derived from fees for investment management and advisory services provided to clients. As noted above, the main driver of Asset Management net revenue is the level and product mix of AUM, which is generally influenced by the performance of the global equity markets and, to a lesser extent, fixed income markets as well as Lazard’s investment performance, which impacts its ability to successfully attract and retain assets. As a result, fluctuations (including timing thereof) in financial markets and client asset inflows and outflows for any reason have a direct effect on Asset Management net revenue and operating income. Asset Management fees are generally based on the level of AUM measured daily, monthly or quarterly, and an increase or reduction in AUM, due to market price fluctuations, currency fluctuations, changes in product mix, or net client asset flows will result in a corresponding increase or decrease in management fees. Our investment advisory contracts are generally terminable at any time or on notice of 30 days or less. Institutional and individual clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of AUM or shift their funds to other types of accounts with different rate structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

Previous wording

Corporate segment total assets represented 50% of Lazard’s consolidated total assets as of June 30, 2024, which are attributable to cash and cash equivalents, investments in debt and equity securities, interests in alternative investment, debt, equity and private equity funds and deferred tax assets.

Current wording

Corporate segment total assets represented 53% of Lazard’s consolidated total assets as of September 30, 2024, which are attributable to cash and cash equivalents, investments in debt and equity securities, interests in alternative investment, debt, equity and private equity funds and deferred tax assets.

Previous wording

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. We focus on a ratio of adjusted compensation and benefits expense to adjusted net revenue 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 remains to deliver a ratio of adjusted compensation and benefits expense to adjusted net revenue over the cycle in the mid-to high-50s percentage range, while targeting a consistent deferral policy. While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will be able to maintain such ratios, or that our policies or initiatives will not change, in the future. Our practice is to pay our employees competitively to foster retention and motivate performance and, in doing so, we look to the market for talent and other factors, which are typically correlated with industry revenues, but may vary year by year. At the same time, the amount of compensation we award in a particular year is, in part, deferred and amortized over the successive years. Increased competition for professionals, changes in the macroeconomic environment or the financial markets generally, lower adjusted net revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.

Current wording

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. We focus on a ratio of adjusted compensation and benefits expense to adjusted net revenue 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 remains to deliver a ratio of adjusted compensation and benefits expense to adjusted net revenue over the cycle in the mid-to high-50s percentage range, while targeting a consistent deferral policy. While we have implemented policies and initiatives that we believe will assist us in delivering ratios within this range, there can be no guarantee that we will be able to deliver or maintain such ratios, or that our policies or initiatives will not change, in the future. Our practice is to pay our employees competitively to foster retention and motivate performance and, in doing so, we look to the market for talent and other factors, which are typically correlated with industry revenues, but may vary year by year. At the same time, the amount of compensation we award in a particular year is, in part, deferred and amortized over the successive years. Increased competition for professionals, changes in the macroeconomic environment or the financial markets generally, lower adjusted net revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.

Previous wording

Lazard’s condensed consolidated financial statements are presented in U.S. Dollars. Many of our non-U.S. subsidiaries have a functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S. Dollar, generally the currency of the country in which the subsidiaries are domiciled. Such subsidiaries’ assets and liabilities are translated into U.S. Dollars using exchange rates as of the respective balance sheet date, while revenue and expenses are translated at average exchange rates during the respective periods based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiary’s functional currency are reported as a component of stockholders’ equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included in the condensed consolidated statements of operations.

Current wording

assets and liabilities are translated into U.S. Dollars using exchange rates as of the respective balance sheet date, while revenue and expenses are translated at average exchange rates during the respective periods based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiary’s functional currency are reported as a component of stockholders’ equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included in the condensed consolidated statements of operations.

Previous wording

The tables below describe the components of adjusted net revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, adjusted operating income (loss) and related key ratios, which are non-GAAP measures used by the Company to manage its business. We believe such non-GAAP measures in conjunction with U.S. GAAP measures provide a meaningful and useful basis for comparison between present, historical and future periods, as described above.

Current wording

The tables below describe the components of adjusted net revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, adjusted operating income and related key ratios, which are non-GAAP measures used by the Company to manage its business. We believe such non-GAAP measures in conjunction with U.S. GAAP measures provide a meaningful and useful basis for comparison between present, historical and future periods, as described above.

Previous wording

(e)Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, including the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss.

Current wording

(e)Represents losses associated with the closing of certain offices as part of the cost-saving initiatives, including the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss and transactions related to foreign currency exchange.

Previous wording

(f)Adjusted net revenue is a non-GAAP measure.

Current wording

(g)Adjusted net revenue is a non-GAAP measure.

Previous wording

(c)Represents expenses associated with senior management transition reflecting the departure of certain executive officers.

Current wording

(d)Represents expenses associated with senior management transition reflecting the departure of certain executive officers.

Previous wording

(d)Adjusted compensation and benefits expense is a non-GAAP measure.

Current wording

(e)Adjusted compensation and benefits expense is a non-GAAP measure.

Previous wording

(a)Expenses related to the consolidation of noncontrolling interests are excluded because Lazard has no economic interest in such amounts.

Current wording

(a)Expenses related to the consolidation of noncontrolling interests are excluded because the Company has no economic interest in such amounts.

Previous wording

The Company’s quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality, the performance of equity markets and other factors.

Current wording

The Company’s quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality, the performance of equity markets and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.

Previous wording

The Company reported net income attributable to Lazard of $86 million, as compared to net loss attributable to Lazard of $146 million in the 2023 period.

Current wording

The Company reported net income attributable to Lazard of $108 million, as compared to net income attributable to Lazard of $7 million in the 2023 period.

Previous wording

Net revenue increased $265 million, or 22%, with adjusted net revenue increasing $284 million, or 25%, as compared to the 2023 period. Fee revenue from investment banking and other advisory activities increased $234 million, or 37%, as compared to the 2023 period. Asset management fees, including incentive fees, increased $12 million, or 2%, as compared to the 2023 period. In the aggregate, interest income, other revenue and interest expense increased $19 million, as compared to the 2023 period, the majority of which is recorded in the Corporate segment.

Current wording

Net revenue increased $261 million, or 50%, with adjusted net revenue increasing $114 million, or 21%, as compared to the 2023 period. Fee revenue from investment banking and other advisory activities increased $101 million, or 38%, as compared to the 2023 period. Asset management fees, including incentive fees, increased $13 million, or 5%, as compared to the 2023 period. In the aggregate, interest income, other revenue and interest expense increased $147 million as compared to the 2023 period, the majority of which is recorded in the Corporate segment.

Previous wording

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $452 million, an increase of $28 million, or 7%, as compared to $424 million in the 2023 period. The ratio of adjusted compensation and benefits expense to adjusted net revenue was 66.0% for the 2024 period, as compared to 68.4% for the 2023 period.

Current wording

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $426 million, an increase of $63 million, or 17%, as compared to $364 million in the 2023 period. The ratio of adjusted compensation and benefits expense to adjusted net revenue was 66.0% for the 2024 period, as compared to 68.4% for the 2023 period.

Previous wording

Non-compensation expense decreased $12 million, or 7%, as compared to the 2023 period which included $10 million associated with the cost-saving initiatives. Adjusted non-compensation expense increased $5 million, or 3%, as compared to the 2023 period primarily reflecting higher professional services and technology expenses. The ratio of adjusted non-compensation expense to adjusted net revenue was 21.7% for the 2024 period, as compared to 23.2% for the 2023 period.

Current wording

Non-compensation expense decreased $6 million, or 4%, as compared to the 2023 period. Adjusted non-compensation expense increased $1 million, or 1%, as compared to the 2023 period. The ratio of adjusted non-compensation expense to adjusted net revenue was 21.4% for the 2024 period, as compared to 25.9% for the 2023 period.

Previous wording

The Company reported operating income of $64 million, as compared to an operating loss of $110 million in the 2023 period.

Current wording

The Company reported operating income of $161 million, as compared to an operating loss of $5 million in the 2023 period.

Previous wording

Adjusted operating income increased $32 million, or 61%, as compared to the 2023 period, and, as a percentage of adjusted net revenue, was 12.3% for the 2024 period, as compared to 8.4% in the 2023 period.

Current wording

Adjusted operating income increased $51 million, or 166%, as compared to the 2023 period, and, as a percentage of adjusted net revenue, was 12.6% for the 2024 period, as compared to 5.7% in the 2023 period.

Previous wording

The provision for income taxes reflects an effective tax rate of 21.9%, as compared to 7.8% for the 2023 period. The change in the effective tax rate principally relates to changes in the geographic mix of earnings inclusive of losses without tax benefits in 2023 and the impact of discrete items primarily relating to a favorable court decision in a longstanding tax matter during the second quarter of 2024.

Current wording

The provision for income taxes reflects an effective tax rate of 28.0%, as compared to 239.5% for the 2023 period. The change in the effective tax rate principally relates to changes in the geographic mix of earnings inclusive of losses without tax benefits in 2023 and the impact of discrete items.

Previous wording

The Company reported net income attributable to Lazard of $50 million, as compared to net loss attributable to Lazard of $124 million in the 2023 period.

Current wording

The Company reported net income attributable to Lazard of $194 million, as compared to net loss attributable to Lazard of $139 million in the 2023 period.

Previous wording

Net revenue increased $42 million, or 7%, with adjusted net revenue increasing $65 million, or 10%, as compared to the 2023 period. Fee revenue from investment banking and other advisory activities increased $59 million, or 17%, as compared to the 2023 period. Asset management fees, including incentive fees, decreased $4 million, or 1%, as compared to the 2023 period. In the aggregate, interest income, other revenue and interest expense decreased $13 million as compared to the 2023 period, the majority of which is recorded in the Corporate segment.

Current wording

Net revenue increased $526 million, or 31%, with adjusted net revenue increasing $398 million, or 24%, as compared to the 2023 period. Fee revenue from investment banking and other advisory activities increased $335 million, or 38%, as compared to the 2023 period. Asset management fees, including incentive fees, increased $25 million, or 3%, as compared to the 2023 period. In the aggregate, interest income, other revenue and interest expense increased $165 million, as compared to the 2023 period, the majority of which is recorded in the Corporate segment.

Previous wording

Compensation and benefits expense, which included $47 million associated with the cost-saving initiatives in the 2024 period, decreased $19 million, or 2%, as compared to the 2023 period which included $157 million associated with the cost-saving initiatives.

Current wording

Compensation and benefits expense, which included $47 million associated with the cost-saving initiatives in the 2024 period, increased $82 million, or 6%, as compared to the 2023 period which included $166 million associated with the cost-saving initiatives.

Previous wording

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $945 million, an increase of $121 million, or 15%, as compared to $823 million in the 2023 period. The ratio of adjusted compensation and benefits expense to adjusted net revenue was 66.0% for the 2024 period, as compared to 71.8% for the 2023 period.

Current wording

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $1,371 million, an increase of $184 million, or 16%, as compared to $1,187 million in the 2023 period. The ratio of adjusted compensation and benefits expense to adjusted net revenue was 66.0% for the 2024 period, as compared to 70.7% for the 2023 period.

Previous wording

Non-compensation expense decreased $22 million, or 6%, as compared to the 2023 period which included $10 million associated with the cost-saving initiatives. Adjusted non-compensation expense decreased $3 million, or 1%, as compared to the 2023 period. The ratio of adjusted non-compensation expense to adjusted net revenue was 19.8% for the 2024 period as compared to 24.9% for the 2023 period.

Current wording

Non-compensation expense decreased $28 million, or 5%, as compared to the 2023 period which included $12 million associated with the cost-saving initiatives. Adjusted non-compensation expense decreased $2 million, or 1%, as compared to the 2023 period. The ratio of adjusted non-compensation expense to adjusted net revenue was 20.3% for the 2024 period as compared to 25.2% for the 2023 period.

Previous wording

The Company reported operating income of $118 million, as compared to an operating loss of $147 million in the 2023 period.

Current wording

The Company reported operating income of $279 million, as compared to an operating loss of $152 million in the 2023 period.

Previous wording

Adjusted operating income increased $166 million as compared to the 2023 period, and, as a percentage of adjusted net revenue, was 14.2% for the 2024 period, as compared to 3.3% in the 2023 period.

Current wording

Adjusted operating income increased $217 million as compared to the 2023 period, and, as a percentage of adjusted net revenue, was 13.7% for the 2024 period, as compared to 4.1% in the 2023 period.

Previous wording

The provision for income taxes reflects an effective tax rate of 18.2%, as compared to (9.4)% for the 2023 period. The change in the effective tax rate principally relates to changes in the geographic mix of earnings inclusive of losses without tax benefits in 2023 and the impact of discrete items primarily relating to a favorable court decision in a longstanding tax matter during the second quarter of 2024.

Current wording

The provision for income taxes reflects an effective tax rate of 25.4%, as compared to 15.2% for the 2023 period. The change in the effective tax rate principally relates to changes in the geographic mix of earnings inclusive of losses without tax benefits in 2023 and the impact of discrete items including a favorable court decision in a longstanding tax matter during the second quarter of 2024.

Previous wording

Financial Advisory net revenue increased $59 million, or 17%, as compared to the 2023 period, reflecting an increase in the industry-wide value of completed M&A transactions.

Current wording

Financial Advisory net revenue increased $105 million, or 39%, as compared to the 2023 period, primarily driven by an increased number of completed M&A transactions with values greater than $500 million as compared to the 2023 period.

Previous wording

Financial Advisory operating income was $40 million as compared to an operating loss of $87 million in the 2023 period and, as a percentage of net revenue, was 9.8%, as compared to (24.7)% in the 2023 period.

Current wording

Financial Advisory operating income was $37 million as compared to an operating loss of $30 million in the 2023 period and, as a percentage of net revenue, was 10.0%, as compared to (11.1)% in the 2023 period.

Previous wording

Financial Advisory net revenue increased $235 million, or 37%, as compared to the 2023 period. The increase in Financial Advisory net revenue was primarily driven by increased number of completed M&A transactions with values greater than $500 million as compared to the 2023 period, reflecting an increase in industry-wide completed M&A transactions.

Current wording

Financial Advisory net revenue increased $340 million, or 38%, as compared to the 2023 period. The increase in Financial Advisory net revenue was primarily driven by an increased number of completed M&A transactions with values greater than $500 million as compared to the 2023 period.