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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 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.
Assets Under Management (AUM) $181.3 billion, an all-time high at quarter end. This increase was driven by strong markets and investment performance.
Revenue Up 7% compared to the June quarter and up 8% compared to the prior year third quarter. Year-to-date, 2025 revenues were up 6% compared to the first 9 months of 2024, driven by higher average AUM.
Adjusted Operating Expenses Down slightly from the second quarter of 2025 due to the absence of $2.4 million of costs associated with the closure of China Post-Venture strategy. However, compared to the same quarter last year, adjusted operating costs were up 6%, primarily from higher variable incentive compensation expense due to increased revenues.
Adjusted Operating Income Increased 22% compared to the prior quarter and 12% compared to the same quarter last year. This was driven by revenue growth and lower fixed expenses.
Adjusted Net Income Per Adjusted Share Up 23% compared to last quarter and up 11% compared to the third quarter of 2024, consistent with operating income.
Margins Expanded by 450 basis points due to revenue growth fueled by strong market conditions and lower fixed expenses.
Cash on Hand $300 million, with $140 million of firm seed investments in emerging strategies and vehicles to support future growth.
Dividend Quarterly dividend of $0.88 per share declared for the September 2025 quarter, a 21% increase over the prior quarter.
New Strategies: Launched the franchise strategy earlier this year with the growth team.
Emerging Market Strategies: Focused campaign to raise assets across emerging market strategies, including sustainable emerging markets, developing world, emerging markets local opportunities, and emerging markets debt opportunities.
Custom Credit Solutions: Developed custom credit solutions with the credit team.
Credit Business Expansion: Achieved $1.8 billion in year-to-date net inflows, marking the 13th consecutive quarter of positive credit flows.
Alternatives Growth: Raised $336 million this year for the global unconstrained strategy and continued building the pipeline for the credit opportunity strategy.
Emerging Market Demand: Growing demand across emerging market strategies with net inflows for the year.
Revenue Growth: Quarterly revenues increased by 7% compared to the previous quarter and 8% year-over-year.
Cost Management: Adjusted operating expenses decreased slightly from the previous quarter due to the absence of $2.4 million in costs from the closure of the China Post-Venture strategy.
Earnings Growth: Adjusted net income per share increased by 23% compared to the previous quarter and 11% year-over-year.
Platform Expansion: Exploring opportunities in real estate, private credit, and secondaries to expand the multi-asset class platform.
Talent Acquisition: Engaging with external talent to build differentiated and enduring investment franchises.
Trailing 1-year performance: Weighed down by underperformance in several of the largest equity strategies, including international value and global opportunities, despite strong long-term track records.
Firm-wide net outflows: Primarily a result of outflows from a handful of equity strategies due to rebalancing in up markets and client terminations, masking positive business development initiatives.
Emerging market strategies: While there are net inflows and growing demand, the company needs to sell more and lose less, indicating challenges in distribution and retention.
Expansion into new investment capabilities: Efforts to expand into areas like real estate, private credit, and secondaries are ongoing but carry risks related to execution and integration of new talent and strategies.
Debt management: The company retired $60 million of debt using proceeds from new private placement debt and cash on hand, but this indicates reliance on debt instruments for financial management.
Performance fees: Approximately 3% of AUM has a performance fee component, with projections similar to 2024, but these remain subject to market and performance conditions, introducing uncertainty.
Performance Fees: The fourth quarter represents the largest opportunity to realize performance fees, with the measurement period ending on December 31. Approximately 3% of AUM has a performance fee component. The company is projecting total performance fees similar to 2024, subject to market and performance conditions.
Dividend Policy: The Board of Directors declared a quarterly dividend of $0.88 per share for the September 2025 quarter, a 21% increase over the prior quarter.
Capital Gains Distributions: The fourth quarter includes the annual mutual fund distribution related to incoming capital gains, with approximately $900 million of those distributions not expected to be reinvested.
Debt Management: The company completed the closing of $50 million of new private placement debt on August 15, 2025, using proceeds along with cash on hand to retire $60 million of debt maturing in August 2025. The $100 million revolving credit facility remains unused.
Emerging Market Strategies: The company is executing a focused campaign to raise assets across emerging market strategies, including sustainable emerging markets, developing world, emerging markets local opportunities, and emerging markets debt opportunities. All these strategies have net inflows for the year, with growing demand.
New Investment Capabilities: The company is exploring opportunities in real estate, private credit, and secondaries as potential extensions to its platform, focusing on areas with large investment opportunities and long-term commercial demand.
Quarterly Dividend: The Board of Directors declared a quarterly dividend of $0.88 per share for the September 2025 quarter, representing a 21% increase over the prior quarter.
Special Dividend: Year-end special dividend may include redemption amounts realized from seed investments as strategies reach scale.
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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