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01/11 03:39
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate a positive outlook for Janus Henderson. The strategic partnership with Guardian Life, strong institutional net flows, and expansion into private markets are promising. The Q&A highlights strong investment performance and growth in intermediary channels, despite some challenges. The share buyback and dividend increase further support a positive sentiment. Overall, these factors suggest a potential stock price increase of 2% to 8% over the next two weeks.
Assets Under Management (AUM) Increased 23% year-over-year to $457.3 billion, the highest quarterly AUM ever. This increase was driven by the addition of Guardian AUM, market gains, and favorable currency adjustments due to a weakening U.S. dollar.
Net Flows Positive $46.7 billion, marking the fifth consecutive quarter of positive net flows. This includes $46.5 billion from Guardian's general account. Excluding Guardian, net flows were also positive, reflecting a 40% increase in gross sales compared to the prior year, despite market volatility in April.
Adjusted Diluted EPS $0.90, a 6% increase year-over-year. This improvement was attributed to strong investment performance, higher performance fees, and higher average AUM, partially offset by increased expenses and a weaker U.S. dollar.
Net Management Fee Margin 47.5 basis points, a decline from the prior quarter due to mix shift caused by the April drawdown and some one-time adjustments. The addition of Guardian's fixed income portfolio is expected to lower the aggregate net management fee rate by approximately 4.5 basis points.
Performance Fees Positive $15 million, primarily from seasonal CCAP, UK OEIC, and investment trust performance fees. U.S. mutual fund performance fees were positive for the first time in over 10 years, at $1 million, compared to negative $11 million a year ago.
Adjusted Operating Expenses $331 million, a slight increase from the prior quarter. Non-compensation operating expenses rose 8% due to higher marketing and G&A expenses, while adjusted LTI decreased 12% due to seasonal payroll taxes.
Adjusted Operating Margin 33.5%, reflecting improved performance fees and higher average AUM.
Cash and Cash Equivalents $900 million as of June 30, 2025, a decrease from the prior quarter due to share buybacks and net investments in seed capital.
Asset-backed securities ETF (JABS): Launched to provide investors access to short duration, high-quality predominantly fixed rate securitized assets. Complements the existing CLO ETF (JAAA).
Tokenized Janus Henderson Anemoy Treasury Fund: Achieved over $400 million in net inflows, reflecting success in digital asset initiatives.
Guardian partnership: Expanded insurance presence and institutional reach. Managing $46.5 billion of Guardian's fixed income assets, increasing fixed income AUM to $142 billion.
Global ETF expansion: Launched 8 ETFs globally in 2025, making Janus Henderson the 8th largest provider of active ETFs globally and 2nd in active fixed income ETFs.
Net inflows: Achieved $46.7 billion in net inflows, marking the fifth consecutive quarter of positive flows. Excluding Guardian, net flows were still positive.
Investment performance: At least 2/3 of AUM beat benchmarks across 1-, 3-, 5-, and 10-year periods. Over 70% of AUM in top 2 Morningstar quartiles.
Guardian strategic partnership: Includes co-developing proprietary multi-asset solutions and $400 million seed capital commitment for product innovation.
Client relationship evolution: Shifted from transactional to partnership-based relationships, emphasizing deeper collaboration and global accountability.
Market Volatility: The company faced extreme market volatility in April, which impacted retail net outflows and created a challenging flow environment. This could pose risks to consistent net inflows and overall financial stability.
Regulatory and Economic Uncertainty: The company operates in a highly regulated environment and is exposed to economic uncertainties, which could impact its operations and strategic objectives.
Fee Compression: The addition of Guardian's General Account, with predominantly investment-grade fixed income assets, is expected to lower the aggregate net management fee rate by approximately 4.5 basis points, which could impact revenue.
Retail Outflows: Retail net outflows were impacted by market volatility, especially during April, which could indicate challenges in retaining retail clients during uncertain market conditions.
Expense Growth: Non-compensation expenses are expected to grow at a high single-digit percentage compared to 2024, driven by strategic investments, inflation, and currency fluctuations, which could pressure margins.
Active Equity Challenges: The environment remains challenging for active equities across all regions, with net outflows in this segment, which could impact the company's ability to grow in this area.
Currency Fluctuations: A weaker U.S. dollar has impacted expenses and could continue to affect financial results, adding an element of unpredictability to cost management.
Client Retention Risks: The company is transitioning from transactional to partnership-based client relationships, which, while beneficial long-term, could pose short-term risks in client retention and satisfaction.
Revenue Expectations: The company expects its aggregate net management fee rate to decrease by approximately 4.5 basis points due to the Guardian General Account portfolio, which is predominantly investment-grade fixed income.
Expense Guidance: The expected compensation ratio for 2025 remains unchanged at 43% to 44%, assuming 30 June AUM and a 0 market assumption for the second half of the year. Non-compensation expenses are expected to grow at a high single-digit percentage compared to 2024, reflecting strategic investments, inflation, and acquisitions.
Capital Allocation: The company plans to continue returning cash to shareholders through dividends and share buybacks while maintaining the ability to invest in the business both organically and inorganically.
Product Development: Janus Henderson plans to launch additional ETFs globally in the second half of 2025, building on the eight ETFs launched year-to-date. The company is also focusing on accelerating product innovation in securitized credit and high-quality active fixed income products, supported by Guardian's $400 million seed capital commitment.
Market Trends and Client Demand: The company anticipates continued demand for active ETFs, fixed income strategies, and tokenized treasury funds. It also expects to benefit from its diversified global distribution footprint and broad range of product solutions.
Strategic Partnerships: The Guardian partnership is expected to amplify the company's insurance, institutional, and fixed income businesses. This includes managing Guardian's general account, accelerating product innovation, and co-developing proprietary multi-asset solution model portfolios.
Quarterly Dividend: The Board has declared a $0.40 per share dividend to be paid on August 28, 2025, to shareholders of record as of August 11, 2025.
Dividend History: The company has maintained a healthy quarterly dividend and has reduced shares outstanding by over 22% since 2018.
Share Buyback Program: During the quarter, the company repurchased 1.3 million shares as part of its corporate buyback program for $50 million.
Capital Return: In the first half of 2025, the company returned $202 million to shareholders, including $76 million via share repurchases.
The earnings call reveals robust financial performance, with increased revenue, improved operating margins, and substantial shareholder returns. The Q&A indicates positive analyst sentiment, with strong sales and net flows, optimistic growth outlook, and strategic investments. Despite minor concerns in equity performance and vague management responses on acquisitions, the overall sentiment remains positive. The strategic partnership with Guardian and product development plans further enhance prospects. The positive financial metrics, shareholder returns, and strategic initiatives suggest a likely stock price increase within the next two weeks.
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