Cohen & Steers, Inc. (CNS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with revenue and operating income growth, a decreased compensation ratio, and increased liquidity. The Q&A session reveals positive sentiment from analysts, with management addressing growth in private real estate and active ETFs, indicating potential for future growth. Despite slight AUM decline, net inflows remain strong. The company's strategic initiatives and optimistic outlook on real estate and ETFs further support a positive sentiment. Considering the market cap, the stock price is likely to react positively, within the 2% to 8% range.
Key Financial Performance
Earnings per share (EPS) $0.81 per share for Q4 2025, equal to the prior quarter. Full year 2025 EPS was $3.09, up from $2.93 in 2024. The increase was attributed to solid revenue growth driven by higher average AUM and stable effective fee rates.
Revenue Q4 2025 revenue increased 2% sequentially to $143.8 million. Full year 2025 revenue increased 6.9% year-over-year to $554 million. The growth was driven by higher average AUM and $1.7 million in performance fees.
Operating Income Q4 2025 operating income increased 3% to $52.4 million. Full year 2025 operating income increased 6.3% to $195.1 million. The growth was supported by higher revenue and stable operating margins.
Operating Margin Q4 2025 operating margin was 36.4%, up from 36.1% in the prior quarter. The improvement was due to higher revenue and controlled expenses.
Assets Under Management (AUM) Ending AUM for Q4 2025 was $90.5 billion, slightly down from Q3 2025. However, higher average AUM during Q4 contributed to revenue growth. Net inflows during Q4 were $1.2 billion, offset by market depreciation and distributions.
Compensation Ratio Q4 2025 compensation ratio decreased to 39%, and the full year 2025 ratio was 40%, slightly below the 40.5% guidance. The decrease reflected actual incentive compensation paid.
Liquidity Liquidity at the end of Q4 2025 was $403 million, a $39 million increase from the prior quarter. The increase was attributed to operational cash flow.
Net Inflows Q4 2025 net inflows were $1.28 billion, bringing full year 2025 net inflows to $1.5 billion. The inflows were driven by advisory and closed-end funds, offset by market depreciation and distributions.
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Operating Highlights
Active ETFs: Launched 5 ETFs in 2025 with total AUM of $378 million, including REITs, preferreds, and natural resource equities. New launches include short-duration preferreds and global infrastructure strategy.
Non-Traded REIT: CNS REIT achieved a 10.3% annualized return since its January 2024 inception, outperforming the median equity non-traded REIT.
Global Listed Infrastructure: Record net inflows of $1.6 billion in 2025. Allocation momentum expected to continue due to themes like deglobalization, digitalization, and decarbonization.
Natural Resource Equities: Achieved 30% returns in 2025, leading real asset returns. Positioned as part of a multiyear commodity supercycle.
Real Estate: U.S. REITs returned 3.2% in 2025, but global real estate strategies are gaining interest. Real estate expected to enter a favorable return cycle in 2026.
Net Inflows: Achieved $1.28 billion in Q4 2025 and $1.5 billion for the full year. Positive flows across nearly all vehicles.
Institutional Pipeline: Strengthened to $1.72 billion at year-end 2025 across 20 mandates, with significant activity in U.S. REITs and global listed infrastructure.
Compensation Ratio: Decreased to 39% in Q4 2025 and 40% for the full year, below the guidance of 40.5%.
Global Distribution: Promoted Dan Noonan to Head of Global Distribution. Focus on increasing RIA channel coverage, global sub-advisory, and institutional presence in Japan, the Middle East, and Asia.
Investment in Vehicles and Strategies: Significant investments in new strategies and vehicles over the past few years. Reaching peak balance sheet funding for these initiatives.
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Risk or Challenges
Market Depreciation and Distributions: Ending AUM in Q4 was $90.5 billion, down slightly from Q3, primarily due to market depreciation and distributions.
Increased G&A Expenses: Higher G&A expenses were reported, driven by travel, business development activities, and talent acquisition costs.
Interest Rate Sensitivity: The business experienced net inflows during periods of interest rate easing but faced outflows during interest rate tightening, indicating sensitivity to interest rate changes.
Real Estate Sector Challenges: U.S. REITs, the largest strategy by AUM, underperformed significantly, ranking last among S&P 500 sectors with a 3.2% return in 2025.
Competition in Preferred Securities: Preferred securities faced competition from private credit strategies, leading to outflows despite strong returns in 2025.
Supply Chain and Resource Constraints: Natural resource equities are impacted by supply chain disruptions, capacity discipline, and aging infrastructure, which constrain supply.
Economic and Market Uncertainty: The company anticipates above-consensus global growth, inflation, and interest rates in 2026, which could pose challenges to strategic execution.
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Guidance & Outlook
Compensation and Benefits: The company expects the compensation ratio to remain at 40% in 2026, maintaining a disciplined approach to managing talent in alignment with revenue growth.
General and Administrative (G&A) Expenses: Annual G&A growth in 2026 is projected to moderate from 2025 levels, with an expected mid-single-digit percentage increase.
Effective Tax Rate: The effective tax rate for 2026 is expected to be 25.4% on an as-adjusted basis.
Economic and Market Outlook: The company anticipates above-consensus global growth, inflation, and interest rates in 2026, with broadening economic activity and market returns after years of concentrated gains.
Real Estate Sector: REIT earnings are expected to accelerate above trend to approximately 8% in 2026 and 2027, driven by lower supply, higher economic growth, and demand.
Natural Resource Equities: The company believes the sector is in the early stages of a multiyear commodity super cycle, supported by constrained supply, growing demand, and structural growth opportunities.
Preferred Securities: Lower short-end rates combined with stronger growth are expected to benefit preferred securities, which offer high income and tax advantages.
Global Listed Infrastructure: The company expects continued allocation momentum in this sector, driven by themes such as deglobalization, digitalization, and decarbonization.
Active ETFs: The company aims to achieve profitability in its active ETF offerings in 2026, following successful launches and growing AUM.
Offshore CCAP Vehicles: The company expects to achieve profitability in its offshore CCAP vehicles in 2026, with continued scaling of AUM.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Are you seeing signs of improving demand for private real estate, and do you think it can be a more significant contributor in 2026?
A:Joseph Harvey stated that investor interest in private real estate is in its early stages but showing good early signs. Factors like cracks in private credit markets, reduced interest rates, and adjusted commercial real estate prices are driving this interest. He emphasized that transitions take time but noted that their nontraded REIT is well-positioned with the right investment strategy, performance, and growing platform presence.
Q:Do you think active ETFs can scale more quickly for your company due to being based on established strategies?
A:Joseph Harvey affirmed that active ETFs can scale quickly due to being based on proven strategies. He highlighted the market's preference for active ETFs and the company's milestones to achieve scale for efficient trading spreads. He contrasted this with private strategies, which face more risk and require more performance history. John Cheigh added that their REIT ETF adoption is accelerating, with faster growth in assets under management.
Q:Can you talk about the recent progress in the institutional channel and contrast it with a year ago?
A:Joseph Harvey noted a strong and broadening pipeline in the institutional channel over the past two quarters. He attributed this to the team's persistence and an improved environment for allocators, with more liquidity and flexibility in portfolios. He mentioned investments in sales professionals and consultants to support growth in this segment.
Q:Is the amount you're winning and funding intra-quarter increasing, and what dynamics are driving that?
A:Joseph Harvey stated that the recent increase in intra-quarter funding reflects broader dynamics rather than unique factors. Historically, this activity has been consistent over the long term.
Q:Can you provide insights into regional demand for advisory and subadvisory services?
A:Joseph Harvey observed expanding activity beyond the U.S., with allocators from Belgium, Canada, Japan, the Philippines, and the U.K. He attributed this to better performance in non-U.S. markets and efforts to allocate more resources and sales talent internationally.
Q:What dynamics could make global real estate more of a tailwind?
A:John Cheigh identified two factors: global institutions' preference for global real estate and the improved performance of international markets compared to the U.S. He noted that past underperformance of international markets was due to factors like slow growth in China and Europe, which are now largely resolved. He expects these changes to drive increased demand for global real estate.
Q:Can you break down areas of demand for active ETFs and any surprises?
A:Joseph Harvey mentioned demand from RIAs who exclusively use ETFs, existing open-end fund holders transitioning to ETFs, and model builders using ETFs. He noted that cannibalization of open-end funds is in line with expectations and that onboarding with wire houses is in progress. He emphasized a phased approach to launching ETFs and addressing open-end fund AUM over multiple years.
Q:Review of Unclear Management Responses
A:Management did not avoid directly answering any questions, and their responses were generally clear and detailed.
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Earnings Word Cloud
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CNS Transcript
Cohen & Steers, Inc. (CNS) Q4 2025 Earnings Call Transcript
Positive1-23
The earnings call highlights strong financial performance with revenue and operating income growth, a decreased compensation ratio, and increased liquidity. The Q&A session reveals positive sentiment from analysts, with management addressing growth in private real estate and active ETFs, indicating potential for future growth. Despite slight AUM decline, net inflows remain strong. The company's strategic initiatives and optimistic outlook on real estate and ETFs further support a positive sentiment. Considering the market cap, the stock price is likely to react positively, within the 2% to 8% range.
Cohen & Steers, Inc. (CNS) Q3 2025 Earnings Call Transcript
Positive10-17
The earnings call reveals strong financial performance with increased EPS, revenue, operating margin, and AUM, alongside stable expenses and improved liquidity. The Q&A section highlights positive sentiment towards U.S. REITs and real asset strategies, with expectations of strong future performance. The market cap suggests moderate sensitivity to these positive developments. Despite some management ambiguity on long-term comp ratio guidance, the overall outlook is optimistic, leading to a positive stock price prediction of 2% to 8% over the next two weeks.
Cohen & Steers, Inc. (CNS) Q2 2025 Earnings Call Transcript
Unknown7-18
The earnings call revealed several concerning factors: a slight EPS decline, net outflows, and a drop in operating margin. While there are positive aspects like revenue growth and liquidity increase, the Q&A highlighted uncertainties in wealth management and strategic execution risks. The net outflows and competition pressures further indicate challenges. Given the market cap of $3.57 billion, these factors suggest a negative sentiment, likely resulting in a stock price decrease of -2% to -8% over the next two weeks.
Cohen & Steers, Inc. (NYSE:CNS) Q1 2025 Earnings Call Transcript
Unknown4-18
The earnings call presents mixed signals: while the company reports strong performance in certain segments like CNS REIT and AUM growth, EPS and operating margins have declined. The Q&A reveals concerns about market volatility and vague responses on key issues, which could worry investors. The launch of new ETFs and a focus on innovation are positives, but the decrease in net inflows and unfunded pipeline are negatives. Given the mid-cap status of the company, the stock price is likely to remain stable, resulting in a neutral sentiment.
CNS Slides
CNS Report
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