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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong AUM growth, a dividend increase, and a stable FRE margin outlook are positive, but declining management fees and specialized funds revenue raise concerns. The Q&A section lacks clarity, adding uncertainty. Overall, the positive and negative factors balance out, leading to a neutral sentiment. Given the market cap of approximately $4.9 billion, the stock is likely to experience minimal movement, falling in the neutral range of -2% to 2%.
Total Asset Footprint $986 billion, a 5% increase year-over-year, driven by market value growth and the addition of technology solutions and back-office mandates.
Assets Under Management (AUM) $141 billion, grew $11 billion or 9% year-over-year, attributed to growth in specialized funds and customized separate accounts.
Assets Under Advisement (AUA) $845 billion, grew $35 billion or 4% year-over-year, primarily due to market value growth and new technology solutions.
Management and Advisory Fees Down 4% year-over-year, primarily due to a decrease in retro fees from $21 million in fiscal Q1 2025 to approximately $300,000 in the current quarter.
Fee-Related Earnings (FRE) $84 million, up 31% year-over-year, driven by strong fee-related performance revenues and controlled G&A growth.
GAAP EPS $1.28, based on $54 million of GAAP net income.
Non-GAAP EPS $1.31, based on $72 million of adjusted net income.
Dividend $0.54 per share, representing a 10% increase over the last fiscal year.
Fee-Earning AUM $74 billion, grew $6.7 billion or 10% year-over-year, driven by specialized fund platforms and semi-liquid evergreen products.
Customized Separate Account Fee-Earning AUM $40 billion, grew $2.1 billion or 5% year-over-year, with growth from new client wins and re-ups from existing clients.
Specialized Funds Fee-Earning AUM $34 billion, grew $4.6 billion or 16% year-over-year, largely driven by the Evergreen platform.
Evergreen Platform AUM $12.5 billion, grew nearly 65% year-over-year, fueled by strong fund performance and global distribution strategy.
Specialized Funds Revenue Decreased by $7 million or 8% year-over-year, due to a significant drop in retro fees.
Customized Separate Accounts Revenue Increased by $1 million or 3% year-over-year, driven by new accounts, re-ups, and investment activity.
Reporting, Monitoring, Data, and Analytics Revenue Increased by over $1 million or 20% year-over-year, due to growth in technology solutions.
Incentive Fees $42 million for the quarter, including $29 million from fee-related performance revenues.
Unrealized Carry Balance Approximately $1.3 billion, up 6% year-over-year, despite recognizing $97 million of incentive fees in the last 12 months.
Total Expenses Decreased by $8 million year-over-year, driven by lower incentive fee-related compensation, offset by higher headcount and equity-based compensation.
FRE Margin 51%, up from 45% in the prior year period, benefiting from strong fee-related performance revenues and controlled G&A growth.
Evergreen platform: The Evergreen platform has grown significantly, with total AUM reaching $12.5 billion, representing a 65% growth over the last 12 months. The platform saw net inflows of $1.2 billion this quarter, marking the first time surpassing $1 billion in net inflows in a single quarter.
New product launches: Six new products were launched over the last 12 months, including infrastructure products for U.S. and non-U.S. investors, a multi-strategy product for European investors, a secondaries product for U.S. investors, a dedicated venture and growth product for U.S. investors, and a fund focused solely on Asian private market investments.
Asian market expansion: A new fund focused solely on Asian private market investments was launched, leveraging the company's significant presence in Asia to access differentiated deal flow.
Global distribution strategy: The company continues to execute its global distribution strategy, expanding relationships with wealth managers and strategic partnerships across geographies.
Fee-earning AUM: Fee-earning AUM grew by 10% year-over-year to $74 billion, driven by specialized fund platforms and customized separate accounts.
Customized separate accounts: Fee-earning AUM for customized separate accounts grew by 5% year-over-year to $40 billion, with new client wins and re-ups from existing clients contributing to growth.
Strategic partnerships: The company is expanding its strategic partnerships, including a differentiated platform with DBS Private Banking, to enhance distribution and client access.
Focus on long-term growth: The company emphasized its long-term growth strategy, describing its approach as a 'marathon, not a sprint,' and highlighted its efforts to build a diversified and sustainable business model.
Management and Advisory Fees: Total management and advisory fees were down 4% year-over-year, primarily due to a significant drop in retro fees from $21 million in fiscal Q1 2025 to $300,000 in the current quarter. This decline could impact revenue stability.
Specialized Funds Revenue: Specialized funds revenue decreased by $7 million or 8% compared to the prior year period, driven by the retro fee impact. This decline in revenue could affect the firm's financial performance.
Customized Separate Accounts: Fee-based decreases were observed due to exit activity and the migration from committed to invested capital in certain accounts, which could lead to unpredictability in revenue generation.
Sales Cycle for SMAs: The sales cycle for SMAs is lengthy, leading to delays in revenue realization from new business wins and contracted accounts.
Economic Environment and Exit Activity: Exit activity and incentive fees have been lighter over the last two quarters, and while improvement is expected with a better macroeconomic environment, this remains a risk to revenue generation.
G&A Expenses: General and administrative expenses have increased over time, driven by revenue-related expenses such as third-party commissions. While cost savings have been implemented, these expenses could pressure margins.
Evergreen Platform: While the Evergreen platform has shown strong growth, its reliance on retail and institutional demand introduces risks if market conditions or client preferences shift.
Unrealized Carry Balance: The unrealized carry balance, while up 6% year-over-year, is subject to market conditions and could impact future incentive fee realization.
Fee-earning AUM growth: Total fee-earning AUM grew by 10% year-over-year to $74 billion, with net quarter-over-quarter growth of 3%. Growth is largely driven by specialized fund platforms, particularly semi-liquid evergreen products.
Customized separate accounts: Fee-earning AUM for customized separate accounts grew by 5% year-over-year to $40 billion, with net quarter-over-quarter growth of 2%. Growth is attributed to new client wins, re-ups from existing clients, and investment activity.
Specialized funds: Fee-earning AUM for specialized funds increased by 16% year-over-year to $34 billion, with quarter-over-quarter growth of 4%. Growth is driven by the Evergreen platform and upcoming closings on drawdown funds expected after summer.
Evergreen platform: Evergreen AUM grew by nearly 65% year-over-year to $12.5 billion. Net inflows for the quarter reached $1.2 billion, marking the first quarter surpassing $1 billion in net inflows. Growth is fueled by strong fund performance, global distribution strategy, and new product launches.
New product launches: Six new products were launched over the last 12 months, including infrastructure products for U.S. and non-U.S. investors, a multi-strategy product for European investors, a secondaries product for U.S. investors, a dedicated venture and growth product for U.S. investors, and a fund focused on Asian private market investments.
Fundraising and closings: The sixth equity opportunities fund has raised nearly $1.3 billion, with additional closings expected into calendar 2026. The second infrastructure fund has raised $775 million and will remain in market through the second half of calendar 2025. The third impact fund has raised $175 million and will remain in market into calendar 2026.
Incentive fees and macro environment: Incentive fees totaled $42 million for the quarter. Exit activity is expected to increase in the back half of the year if the positive macroeconomic environment persists.
Dividend per share: $0.54 per share
Annual dividend target: $2.16 per share for fiscal year 2026
Dividend growth: 10% increase over last fiscal year
The company reported strong financial performance with 23% growth in fee-related revenue and a 34% increase in fee-related earnings. The Evergreen AUM nearly doubled, and the dividend was increased by 10%. The Q&A section did not reveal significant concerns, and the Guardian and Bloomberg partnerships are expected to contribute positively. Given the market cap of approximately $4.9 billion, these factors suggest a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: strong AUM growth, a dividend increase, and a stable FRE margin outlook are positive, but declining management fees and specialized funds revenue raise concerns. The Q&A section lacks clarity, adding uncertainty. Overall, the positive and negative factors balance out, leading to a neutral sentiment. Given the market cap of approximately $4.9 billion, the stock is likely to experience minimal movement, falling in the neutral range of -2% to 2%.
The earnings call highlights strong growth in fee-related earnings, AUM, and dividend increases, which are positive indicators. Despite some revenue declines due to retro fees, the company shows robust performance in specialized funds and evergreen platforms. The Q&A reveals confidence in strategic partnerships and potential growth in incentive fees with a favorable macro environment. The market cap suggests moderate sensitivity to these factors, leading to a positive stock price prediction.
The earnings report highlights strong financial performance, with significant growth in management and advisory fees, fee-related earnings, and AUM. The dividend increase and stable FRE margin are positive indicators. Although market volatility and competition pose risks, management's focus on capitalizing on opportunities and maintaining margins is reassuring. The Q&A section did not reveal major concerns, and the market cap suggests a moderate reaction. Overall, the positive financial results, dividend increase, and stable outlook support a positive stock price movement prediction of 2% to 8% over the next two weeks.
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