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01/10 05:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals: positive revenue growth, increased dividends, and strategic focus on private wealth and M&A opportunities. However, the absence of performance fees, slight net client outflows, and lack of specific guidance raise concerns. The Q&A highlights cautious market sentiment, with muted gross flows and unclear management responses. Considering the market cap, the stock is likely to have a neutral reaction over the next two weeks, with movements within the -2% to 2% range.
Ending AUM $176 billion, up 8% compared to the March quarter. Year-to-date average AUM improved 7% over the prior year 6-month period. The increase was driven by strong equity market returns across global markets.
Net client cash outflows $1.9 billion during the June quarter. This was driven by a lower volume of gross equity inflows and outflows compared to the prior quarter. Equity outflows were partially offset by continued positive fixed income flows.
Revenues Up 2% compared to the March quarter and up 4% compared to the prior year second quarter. Year-to-date 2025 revenues were up 5% compared to the first half of 2024, driven by higher average AUM.
Adjusted operating expenses Up 3% from the first quarter of 2025 and 5% from the same quarter last year. The increase was primarily due to higher incentive compensation expense from increased revenues and market appreciation of long-term incentive awards.
Adjusted operating income Increased slightly compared to the prior quarter and 3% compared to the same quarter last year as a result of higher revenue.
Adjusted net income per adjusted share Flat compared to last quarter and up slightly compared to the second quarter of 2024, consistent with operating income.
Dividend per share $0.73 per share with respect to the June 2025 quarter, a 7% increase over the prior quarter. This increase aligns with the company's consistent dividend policy.
Credit team's new strategies: The Credit team launched the Credit Opportunity strategy in 2017, generating 10.23% annual returns net of fees since inception. In 2022, they launched the Floating Rate strategy with 6.68% annual returns net of fees since inception. In 2024, they closed the Artisan Dislocation Opportunities strategy, raising $130 million for dislocation events.
Global Special Situations strategy: Launched earlier this year within the International Value Group, marking their first fixed income strategy.
Emerging market strategies: The Artisan Developing World strategy achieved a 10-year track record with 11.59% annual returns since inception, ranking third among 434 funds. The Sustainable Emerging Markets strategy outperformed its index by over 100 basis points annually across multiple periods. The EMsights Capital Group's three strategies are nearing or have surpassed their 3-year anniversaries with strong performance and business momentum. The group raised a net $700 million year-to-date.
AUM growth: Ending AUM reached $176 billion, up 8% from the previous quarter, driven by strong equity market returns.
Fixed income flows: Positive flows for 12 consecutive quarters, offsetting equity outflows.
Leadership transition: Jason Gottlieb succeeded Eric Colson as CEO, with Eric transitioning to Executive Chair. The transition was methodical to ensure stability.
Distribution reorientation: Shifted focus to intermediate wealth clients, now representing over half of AUM.
Net Client Cash Outflows: The company experienced net client cash outflows of $1.9 billion during the June quarter, driven by lower gross equity inflows and outflows. This trend could impact revenue and financial stability if it continues.
Equity Outflows: Equity outflows were partially offset by positive fixed income flows, but the overall reduction in equity inflows could signal challenges in attracting or retaining equity investors.
China Post-Venture Strategy Closure: The closure of the China Post-Venture strategy resulted in a $1.2 million charge, reflecting potential challenges in managing or scaling certain strategies.
Dependence on Fixed Income Flows: The company has seen 12 consecutive quarters of positive fixed income flows, but a heavy reliance on this segment could pose risks if market conditions for fixed income investments deteriorate.
Regulatory and Market Risks: Forward-looking statements in the call highlight exposure to known and unknown risks and uncertainties, including regulatory changes and market volatility, which could materially impact results.
Debt Management: The company plans to use $50 million in new private placement debt to retire $60 million of maturing debt. While this demonstrates financial management, it also indicates ongoing reliance on debt instruments.
Revenue Projections: Revenue for Q3 is expected to benefit from an 8% higher AUM compared to the previous quarter.
Cost Reductions: The September quarter will benefit from the absence of approximately $2.4 million of costs associated with the closure of the China Post-Venture strategy.
Debt Management: In August 2025, $60 million of senior notes will mature. The company plans to use proceeds from $50 million of new private placement debt along with cash on hand to retire the maturing debt.
Dividend Policy: The Board of Directors declared a quarterly dividend of $0.73 per share for Q2 2025, a 7% increase over the prior quarter.
Emerging Market Strategies: The company expects business expansion in the Developing World strategy, supported by its strong 10-year performance and growing demand for emerging market strategies. Net $700 million has been raised across emerging market strategies year-to-date.
Credit Team Expansion: The company is onboarding two more institutional mandates for the Credit team and is exploring ways to expand the team's degrees of freedom and business.
Quarterly Dividend: The Board of Directors declared a quarterly dividend of $0.73 per share for the June 2025 quarter, representing a 7% increase over the prior quarter.
Year-End Special Dividend: The company continues to return capital to shareholders through a year-end special dividend, consistent with its dividend policy.
The earnings call presents strong financial performance with record high AUM, revenue growth, and increased dividends. The Q&A highlighted growth in demand for emerging markets and non-U.S. strategies, with positive sentiment towards the company's approach to M&A and efforts to improve gross flows. Although some uncertainties exist in M&A specifics, the overall sentiment is positive, supported by expanded margins and cash reserves. Given the market cap of $2.8 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
The earnings call reveals mixed signals: positive revenue growth, increased dividends, and strategic focus on private wealth and M&A opportunities. However, the absence of performance fees, slight net client outflows, and lack of specific guidance raise concerns. The Q&A highlights cautious market sentiment, with muted gross flows and unclear management responses. Considering the market cap, the stock is likely to have a neutral reaction over the next two weeks, with movements within the -2% to 2% range.
The earnings call reflects mixed signals: while there are positive aspects such as increased AUM and a strong focus on emerging markets and wealth clients, the financial performance shows declines in revenue and margins due to the absence of performance fees. The Q&A reveals management's focus on potential growth areas but also highlights uncertainties and lack of clarity in strategy execution. The dividend cut also weighs negatively. Given the market cap, the stock price is likely to remain stable, resulting in a neutral prediction for the next two weeks.
The earnings call presents mixed signals: strong financial metrics with increased revenue and dividends, but significant net client cash outflows and reliance on performance fees. The Q&A reveals uncertainty in growth strategies and expense management. The market cap suggests moderate reaction. The positive dividend news is countered by competitive pressures and operational challenges, leading to a neutral outlook.
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