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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance, with EPS beating expectations, increased performance fees, and improved margins. Despite a slight decline in net revenues, operating expenses decreased significantly. The Q&A section reveals confidence in long-term prospects, with no significant risks highlighted. The market cap suggests moderate price movement, leading to a positive prediction of 2% to 8%.
EPS $0.80, up 10% year-over-year, beating expectations of $0.78 due to strong markets and sustained organic growth.
Net Revenues $838 million, down 5% year-over-year, but up 6% on a like-for-like basis, reflecting lower revenues from Bernstein Research.
Base Fees Increased by 8% year-over-year, in line with growth in firm-wide average AUM.
Performance Fees $39 million, increased by $12 million from the prior year, reflecting sustained alpha generation from international small cap and middle market lending strategies.
Total Operating Expenses $555 million, down 10% year-over-year, due to deconsolidation of Bernstein Research and lower occupancy costs.
Compensation Expenses $414 million, down 6% year-over-year, with a compensation ratio of 48.5% of adjusted net revenues.
Adjusted Operating Margin 33.7%, up 340 basis points year-over-year, demonstrating improved operating leverage.
Firm-wide Fee Rate 39.5 basis points, slightly higher than the first quarter of 2024, supported by AUM shifts.
Private Market AUM Reached $75 billion, marking a 20% increase compared to a year ago.
Retail Inflows $500 million, driven by demand for U.S. Large Cap Growth and other strategies.
Institutional Sales Inflows Rebounded to the highest level since Q4 2022, with a pipeline of $13.5 billion, up $2.8 billion sequentially.
Private Wealth Inflows Grew to an annualized organic growth rate of more than 2%, the fastest pace in two years.
New Product Launches: Our Security of the Future portfolio continues to attract solid inflows, surpassing $1 billion in AUM just one year since we launched.
Market Expansion: We are actively expanding our private market platform by deepening existing partnerships, establishing new ones, and diversifying the growth avenues of our business.
Geographic Market Growth: Our differentiated distribution platform gives us an edge in growing markets like Asia, US high net worth, and insurance, where we’ve consistently gained market share.
Operational Efficiency: Our diversified asset mix coupled with our enhanced operational efficiency provides downside protection to our revenue base and to our margins.
Expense Management: Our first quarter total operating expenses of $555 million declined 10% year over year, reflecting the deconsolidation of Bernstein Research as well as lower occupancy costs.
Strategic Partnerships: We continue to scale our distribution, leveraging our leading brand awareness and our expertise in vehicle versatility to expand our third-party growth avenues.
Growth Strategy: We remain on target to grow our private market AUM to $90 billion to $100 billion by 2027.
Trade Policy Uncertainty: Escalating uncertainty around trade policy poses risks to economic growth and market stability.
Economic Growth: Dimming economic outlook for the US due to changing trade policies may impact investment performance.
Taxable Fixed Income Outflows: A $1.4 billion outflow in taxable fixed income strategies indicates challenges in meeting investor demand amid uncertain rate outlook.
Market Volatility: Elevated rate volatility and policy risks could lead to further market dislocations, affecting investment strategies.
Fee Rate Pressure: Potential downward pressure on fee rates due to market movements and a shift towards lower-fee mandates.
Performance Fee Volatility: Public alpha generation is volatile and difficult to predict, impacting performance fee expectations.
Margin Pressure: Future margins may face downward pressure if market weakness continues, despite efforts to manage expenses.
Investment Strategy Risks: Challenges in maintaining consistent growth and performance in a volatile market environment, particularly in equities.
Active Net Inflows: Generated $2.7 billion in firm-wide active net inflows in Q1 2025.
Private Market Platform Expansion: Actively expanding private market platform, aiming to grow private market AUM to $90 billion to $100 billion by 2027.
Fee-Earning Assets: Fee-paying and fee-eligible assets under management reached $75 billion, a 20% increase year-over-year.
Retail Tax Exempt Growth: Retail Tax Exempt AUM reached $46 billion, more than doubling since 2020.
Diversification Strategy: Diversified asset mix provides downside protection to revenue base and margins.
Partnership with Equitable: Leveraging Equitable's capital commitment to seed and scale higher fee, longer-dated private alternative strategies.
Performance Fee Expectations: Revised annual performance fee expectations to $90 to $105 million, up from $70 to $75 million.
Operating Margin Forecast: Forecast for a 33% operating margin for 2025, assuming flat markets from year-end 2024 levels.
Non-Compensation Expenses Guidance: Maintaining guidance of $600 to $625 million for full-year 2025 non-compensation expenses.
Compensation Ratio Guidance: Guidance for a 48.5% compensation to revenue ratio in Q2 2025.
Investment in Growth: Allocating resources for targeted growth investments, including new investment teams and products.
Adjusted Earnings Per Unit (EPU): First quarter adjusted earnings of 80¢ per unit were up 10% versus the prior year, benefiting from strong markets early in the quarter, sustained organic growth, a durable fee rate, and solid margin expansion.
Distributions to Unitholders: Distributions and EPU grew uniformly as we distribute 100% of our adjusted earnings to unitholders.
Performance Fees: Performance fees of $39 million increased by $12 million from the prior year period, reflecting sustained alpha generation from our international small cap and middle market lending strategies.
Annual Performance Fee Expectations: We’re revising our annual performance fee expectations to $90 to $105 million, up from the prior projection of $70 to $75 million.
Hurdle-based Performance Fees: We anticipate an additional $50 to $60 million of hurdle-based performance fees for the remainder of 2025.
The earnings call summary and Q&A indicate strong financial performance, successful partnerships, and optimistic guidance. Management expressed excitement about new ventures, particularly in Asia and private credit, and highlighted margin expansion and cost savings. Despite some unclear responses, the overall sentiment is positive, with strategic plans and partnerships likely to boost stock price by 2% to 8%.
The earnings call summary indicates strong financial performance with a 20% YoY increase in fee-eligible assets and a 10% rise in earnings per unit. The Q&A section reveals positive developments, like the partnership with Pacific Life, and a focus on scalable M&A opportunities. Despite some uncertainties in guidance, the company's robust AUM growth, strategic partnerships, and optimistic outlook for flagship strategies suggest a positive stock price movement over the next two weeks.
The earnings call highlights strong financial performance, with EPS beating expectations, increased performance fees, and improved margins. Despite a slight decline in net revenues, operating expenses decreased significantly. The Q&A section reveals confidence in long-term prospects, with no significant risks highlighted. The market cap suggests moderate price movement, leading to a positive prediction of 2% to 8%.
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