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01/11 07:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Assets Under Management (AUM) $483.8 billion, increased 6% over the prior quarter and 27% year-over-year. Reasons for the increase include positive net flows, market gains, and solid investment performance.
Net Flows $7.8 billion, marking the sixth consecutive quarter of positive net flows. This represents a 7% organic growth rate. Reasons include a global distribution footprint and a broad range of strategies and vehicles.
Adjusted Diluted EPS $1.09, 20% higher compared to the same period a year ago. Reasons include higher average AUM and good investment performance generating higher performance fees.
Net Management Fee Margin 42.7 basis points in the third quarter, a decline from the prior quarter. The decline was primarily due to the integration of lower fee Guardian AUM.
Performance Fees Positive $16 million, primarily reflecting the SICAV absolute return strategy and U.S. mutual funds. This is a significant improvement compared to negative $9 million a year ago.
Adjusted Operating Income Improved 22% quarter-over-quarter and 20% year-over-year. Reasons include higher average AUM and improved performance fees.
Adjusted Operating Expenses $350 million, increased 6% compared to the prior quarter. Reasons include higher profit-based compensation, LTI expense, and investments supporting strategic initiatives.
Adjusted Operating Margin 36.9%, an increase of 200 basis points from a year ago. Reasons include higher operating income and operating leverage.
Cash and Cash Equivalents $1 billion as of September 30, 2025, compared to $395 million of outstanding debt. Reasons include strong financial results and cash flow generation.
Capital Returned to Shareholders $130 million this quarter through dividends and share buybacks. Cumulative share count reduction is 23% since 2018. Reasons include strong liquidity profile and financial performance.
Launch of new ETFs: Introduced Asset Backed securities ETF (JABS) and global artificial intelligence ETF (JHAI) in the U.S., and transformational growth equity EUFIT ETF (JTXX) in Europe.
Private market funds: Launched proprietary funds like Privacore VPC Asset Backed Credit Fund and Privacore PCAM Alternative Growth Fund.
Market share gains: Achieved market share improvement in key regions and diversified organic growth across regions and strategies.
Partnerships: Announced partnership with CNO Financial Group, providing $600 million in long-term capital commitments to Victory Park Capital (VPC).
Operational efficiencies: Transitioning investment management system to Aladdin for scalable operations, expected to increase costs by 1% in 2026 and 2027 but deliver efficiencies from 2028 onwards.
Cost management: Maintained strong cost discipline while investing in strategic initiatives, with adjusted operating expenses increasing by 6%.
Strategic diversification: Focused on private markets through Privacore, Victory Park Capital, and emerging markets private investment team.
Client-centric growth: Diversified flows across regions and strategies, with 21 strategies achieving at least $100 million in net inflows.
Nonbinding acquisition proposal by Trian and General Catalyst: The proposal introduces uncertainty regarding the company's future ownership and strategic direction. This could potentially distract management and impact operational focus.
Transition to Aladdin investment management system: The multiyear transition is expected to increase adjusted operating costs by approximately 1% for 2026 and 2027, creating short-term financial pressure before anticipated efficiencies in 2028.
Fee pressures in the asset management industry: Persistent fee pressures could impact revenue growth, especially as not all AUMs are created equally in terms of profitability.
Equity flows and active equity challenges: The environment for active equities remains challenging, with net outflows in this segment, particularly in the U.K. market.
Dependence on large fundings for net inflows: Several fundings have depleted the near-term pipeline opportunities, which could impact future net inflows.
Regulatory and compliance risks: The transition to new systems and expansion into private markets and emerging markets could expose the company to heightened regulatory scrutiny and compliance risks.
Economic and market uncertainties: Global economic conditions and market volatility could adversely impact investment performance and client flows.
Revenue Growth: The company expects positive organic net new revenue growth in the third quarter, demonstrating success across a broad range of strategies and regions.
Operational Efficiency: Transition to Aladdin investment management system is expected to deliver a more scalable operating model and operational improvements starting in 2028, despite a 1% increase in adjusted operating costs for 2026 and 2027.
Capital Allocation: The company plans to continue returning cash to shareholders through dividends and share buybacks while reinvesting in the business for future growth.
Private Markets Expansion: The company is expanding its private markets capabilities through Privacore, Victory Park Capital, and emerging markets private investment teams, with plans for additional product launches and fund closings in 2025 and 2026.
Market Share and Growth: The company aims to capture market share in key regions, diversify flows across regions and strategies, and establish new strategic partnerships.
Performance Fees: Performance fees for Q4 2025 are expected to be at or above Q4 2024 levels, reflecting strong performance of hedge funds.
Cost Management: The company expects high single-digit percentage growth in non-compensation expenses for 2025, reflecting investments in strategic initiatives and operational efficiencies.
Dividends Paid: The company returned nearly $130 million this quarter through dividends and share buybacks. The Board declared a $0.40 per share dividend to be paid on November 26, 2025, to shareholders of record as of November 10, 2025.
Share Buyback Program: The company repurchased 1.5 million shares for approximately $67 million this quarter. Since the start of the buyback program in Q3 2018, the cumulative share count reduction is 23%.
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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