AllianceBernstein (AB) Q2 2025 Earnings Call July 24, 2025 10:00 AM ET Company ParticipantsIoanis Jorgali - VP - IRSeth Bernstein - CEO, President & DirectorTom Simeone - CFOOnur Erzan - Head of Global Client Group & Head of Bernstein Private WealthBen Budish - DirectorConference Call ParticipantsNone - AnalystWilliam Katz - Senior Equity AnalystJohn Dunn - AnalystDan Fannon - MD - Research AnalystOperatorThank you for standing by, and welcome to the AllianceBernstein Second Quarter twenty twenty five Earni ...

Financial Data and Key Metrics Changes - The company reported record assets under management (AUM) of $829 billion, marking a post-financial crisis high [6][7] - Adjusted earnings per unit for the second quarter increased by 7% year-over-year to $0.76 [39] - Net revenues reached $844 million, a 2% increase compared to the prior year, while base fees saw a 4% increase [40][41] - Total performance fees decreased by $12 million to $30 million, primarily due to lower public market performance fees [40] Business Line Data and Key Metrics Changes - Private wealth represented 17% of total AUM and 35% of base management fees [7] - Active strategies experienced net outflows of $4.8 billion, with active equity shedding $6 billion [8][29] - The private markets platform grew to $77 billion in fee-paying and net fee-eligible AUM, a 20% year-over-year increase [11] - Alternatives multi-asset inflows totaled $1.6 billion, driven by strong deployments into various strategies [10] Market Data and Key Metrics Changes - The company observed a negative trend in retail flows, with active equity experiencing significant outflows [29] - The retail municipal bond platform grew organically at a 14% annualized rate, continuing to gain market share [9][32] - The U.S. equity market saw a rebound, with the S&P 500 rallying 10.6% in the second quarter [22] Company Strategy and Development Direction - The company aims to grow private markets AUM to $90 billion to $100 billion by 2027, leveraging partnerships with Equitable [14][15] - The focus remains on delivering consistent and profitable growth supported by scale gains and improved operational efficiency [11] - The company is expanding its distribution coverage by forming new partnerships and extending its addressable market [12] Management's Comments on Operating Environment and Future Outlook - Management noted that geopolitical tensions and policy uncertainty impacted investor sentiment, but conditions improved as trade tensions eased [6] - The company expects to maintain a 33% operating margin in 2025, with potential for further margin expansion over time [11][49] - Management expressed confidence in the resilience of their investment strategies despite market volatility [17][20] Other Important Information - The company has invested significantly in operational resources to enhance client service and unlock incremental revenue opportunities [12] - The effective tax rate for the second quarter was 6.7%, in line with full-year guidance [43] Q&A Session Summary Question: How is the company thinking about scaling its retirement income business with Pacific Life joining? - Management highlighted the importance of the insurance segment and the ongoing expansion of engagement in lifetime income solutions, noting that these products tend to be lower fee from an asset management perspective [52][55] Question: Can you clarify the likelihood of further exchanges into AllianceBernstein holding units? - Management explained that the conversion from public to private units is driven by tax treatment and does not affect daily trading volume [56][58] Question: What is the company's stance on potential M&A activity? - Management indicated that they are exploring opportunities, particularly in partnerships with key insured clients, while maintaining a cautious approach to avoid becoming capital-heavy [60][63] Question: How should investors think about the incremental margin and trajectory into 2026? - Management affirmed the expectation of maintaining a 33% margin for both halves of the year, with future guidance for 2026 to be provided later [72][73] Question: Can you discuss the drivers of demand for American Income and the outlook for the rest of the year? - Management noted that demand for American Income is cyclical and has seen signs of stabilization, with positive trends observed in July [87][90]

Financial Performance - Record quarter-end AUM of $829 billion, with 17% in Private Wealth and 83% in Asset Management[5] - 2Q25 adjusted base management fees were up +6% y/y & down -2% q/q, compared to channel avg AUM levels up +8% y/y & down -1% q/q[18] - The firm's blended base fee rate was 38.7 bps in 2Q25, down -2% q/q & y/y, reflecting mix shift[7] - Adjusted operating margin was 32.3% in 2Q25, compared to 30.8% in 2Q24 and 33.7% in 1Q25[10,31] - AB Holding adjusted diluted net income per unit was $0.76 in 2Q25, compared to $0.71 in 2Q24 and $0.80 in 1Q25[10,31] Flows and AUM Composition - Active outflows of $4.8 billion in 2Q25, skewed in April, with demand rebounding in June and pipeline building[5] - Retail posted its first outflowing quarter as overseas demand steps back from turbulent macro[18] - Institutional channel saw positive active net flows in 2Q, >$300 million, driven by taxable FI and alts; outflows concentrated in equities, ~60% passive[25] - Private alts fundraising ~$0.6 billion in 2Q, broad-based across franchises[30] - Equitable ("EQH") AUM reached $137.8 billion in 2Q25, compared to $127.1 billion in 2Q24 and $132.1 billion in 1Q25[10] - Private Markets AUM* reached $77.1 billion in 2Q25, compared to $64.1 billion in 2Q24 and $75.3 billion in 1Q25[10] Strategic Initiatives and Outlook - The company is targeting $90-$100 billion AUM in Private Markets by 2027[9] - The company expects total FY25 performance fees of $110–$130 million, up from $90–105 million across private and public strategies[39,41] - The company is on track for 33% FY25 margins assuming flat markets[42]

[Financial and Operating Highlights](index=1&type=section&id=Financial%20and%20Operating%20Highlights) [CEO's Market and Performance Overview](index=1&type=section&id=CEO's%20Market%20and%20Performance%20Overview) AllianceBernstein achieved a record AUM of $829 billion amid improved investor sentiment, though firm-wide net flows turned negative while the institutional pipeline grew significantly - **Assets Under Management (AUM) reached a record high of $829 billion**, with private wealth comprising 17% of the total[2](index=2&type=chunk) - Firm-wide net flows turned negative, with **active net outflows of $4.8 billion**, breaking the positive momentum of recent quarters, though flows improved from April to June[2](index=2&type=chunk) - The institutional pipeline of awarded but unfunded mandates **grew to nearly $22 billion**, the highest in almost three years, indicating strengthening client relationships[3](index=3&type=chunk) - A cash distribution of **$0.76 per Unit** was declared, payable on August 14, 2025[3](index=3&type=chunk) [Key Financial and Operating Metrics](index=1&type=section&id=Key%20Financial%20and%20Operating%20Metrics) The company reported mixed Q2 2025 results with YoY GAAP operating income growth but a decline in EPU, while adjusted figures showed modest gains and AUM reached a record high Q2 2025 Financial Performance Summary (US $ Thousands except per Unit amounts) | Metric | 2Q 2025 | 2Q 2024 | % Change (YoY) | 1Q 2025 | % Change (QoQ) | | :--- | :--- | :--- | :--- | :--- | :--- | | **U.S. GAAP Measures** | | | | | | | Net revenues | $1,088,907 | $1,027,943 | 5.9% | $1,080,607 | 0.8% | | Operating income | $222,094 | $199,289 | 11.4% | $236,369 | (6.0%) | | Operating margin | 20.7% | 19.0% | 170 bps | 21.8% | (110) bps | | AB Holding EPU | $0.64 | $0.99 | (35.4)% | $0.67 | (4.5%) | | **Adjusted Measures** | | | | | | | Net revenues | $844,434 | $825,833 | 2.3% | $838,214 | 0.7% | | Operating income | $272,964 | $254,186 | 7.4% | $282,748 | (3.5%) | | Operating margin | 32.3% | 30.8% | 150 bps | 33.7% | (140) bps | | AB Holding EPU | $0.76 | $0.71 | 7.0% | $0.80 | (5.0%) | | **AUM (US $ Billions)** | | | | | | | Ending AUM | $829.1 | $769.5 | 7.7% | $784.5 | 5.7% | [Market Performance](index=2&type=section&id=Market%20Performance) Global equity and fixed income markets posted positive returns in the second quarter of 2025, with equity markets showing particularly strong performance Q2 2025 Market Index Returns | Index | 2Q 2025 Return | | :--- | :--- | | S&P 500 Total Return | 10.9% | | MSCI EAFE Total Return | 12.1% | | Bloomberg Barclays US Aggregate Return | 1.2% | | Bloomberg Barclays Global High Yield Index - Hedged | 3.4% | [Assets Under Management (AUM)](index=3&type=section&id=Assets%20Under%20Management) [AUM Overview and Net Flows](index=3&type=section&id=AUM%20Overview%20and%20Net%20Flows) Total assets under management reached $829.1 billion, an 8% year-over-year increase, though the quarter experienced total net outflows of $6.7 billion - Total AUM increased to **$829.1 billion**, up 6% from March 31, 2025, and up 8% from June 30, 2024[6](index=6&type=chunk) - The second quarter saw **total net outflows of $6.7 billion**, compared to net inflows of $2.4 billion in Q1 2025 and $0.9 billion in Q2 2024[7](index=7&type=chunk) [AUM by Distribution Channel](index=3&type=section&id=AUM%20by%20Distribution%20Channel) All three distribution channels experienced net outflows in Q2 2025, with the Retail channel seeing the largest outflow at $4.8 billion, ending a seven-quarter streak of inflows Net Flows by Distribution Channel (Three Months Ended 6/30/2025) | Channel | Net Flows ($ Billions) | | :--- | :--- | | Institutional | ($1.5) | | Retail | ($4.8) | | Private Wealth | ($0.4) | | **Total** | **($6.7)** | - Institutional channel net outflows of **$1.5B** compared to $0.7B inflows in Q1 2025, while the pipeline of unfunded mandates increased to **$21.9B**[8](index=8&type=chunk) - Retail channel net outflows of **$4.8B** compared to $0.9B inflows in Q1 2025, halting seven consecutive quarters of inflows[3](index=3&type=chunk)[9](index=9&type=chunk) - Private Wealth channel net outflows of **$0.4B** compared to $0.8B inflows in Q1 2025, impacted by seasonal tax-related factors[3](index=3&type=chunk)[9](index=9&type=chunk) [AUM by Investment Service](index=11&type=section&id=AUM%20by%20Investment%20Service) Net outflows were concentrated in Equity services, while Alternatives/Multi-Asset Solutions was a bright spot, attracting $1.6 billion in net inflows Net Flows by Investment Service (Three Months Ended 6/30/2025) | Investment Service | Net Flows ($ Billions) | | :--- | :--- | | Equity - Active | ($6.0) | | Equity - Passive | ($1.9) | | Fixed Income - Taxable | ($1.5) | | Fixed Income - Tax Exempt | $1.2 | | Fixed Income - Passive | ($0.1) | | Alternatives/Multi-Asset Solutions | $1.6 | | **Total** | **($6.7)** | - Total actively managed strategies saw **net outflows of $4.8 billion**, while passively managed strategies had **net outflows of $1.9 billion**[44](index=44&type=chunk) [AUM by Client Domicile](index=11&type=section&id=AUM%20by%20Client%20Domicile) As of June 30, 2025, approximately 73% of assets under management were from clients domiciled in the United States, with 27% from non-U.S. clients AUM by Client Domicile as of 6/30/2025 ($ Billions) | Domicile | Institutional | Retail | Private Wealth | Total | | :--- | :--- | :--- | :--- | :--- | | U.S. Clients | $262.4 | $203.7 | $141.4 | $607.5 | | Non-U.S. Clients | $77.6 | $141.0 | $3.0 | $221.6 | | **Total** | **$340.0** | **$344.7** | **$144.4** | **$829.1** | [Financial Results](index=4&type=section&id=Financial%20Results) [US GAAP Financial Results](index=5&type=section&id=US%20GAAP%20Financial%20Results) Q2 2025 GAAP net revenues increased 6% year-over-year to $1.1 billion and operating income rose 11%, but net income per unit fell to $0.64 - Q2 net revenues increased **6% YoY to $1.1 billion**, mainly due to higher investment advisory base fees and lower investment losses[14](index=14&type=chunk) - Q2 operating expenses increased **5% YoY to $867 million**, driven by higher promotion, servicing, compensation, and G&A expenses, including a $14.3 million AB Funds reimbursement[16](index=16&type=chunk) - Q2 operating income rose **11% YoY to $222 million**, with the operating margin expanding by **170 basis points to 20.7%**[18](index=18&type=chunk) - Q2 net income per Unit was **$0.64**, a decrease from $0.99 in Q2 2024 and $0.67 in Q1 2025[19](index=19&type=chunk) [Non-GAAP Financial Results](index=6&type=section&id=Non-GAAP%20Financial%20Results) Adjusted Q2 2025 results showed a 7% year-over-year increase in both operating income and EPU, with a margin expansion to 32.3% - Q2 adjusted net revenues increased **2% YoY to $844 million**, driven by higher investment advisory base fees and investment gains[22](index=22&type=chunk) - Q2 adjusted operating expenses were **flat YoY at $571 million**, as lower G&A was offset by higher compensation and promotion expenses[24](index=24&type=chunk) - Q2 adjusted operating income increased **7% YoY to $273 million**, with the adjusted operating margin expanding **150 basis points to 32.3%**[26](index=26&type=chunk) - Q2 adjusted net income per Unit was **$0.76**, up from $0.71 in Q2 2024 but down from $0.80 in Q1 2025[27](index=27&type=chunk) [Headcount and Unit Repurchases](index=6&type=section&id=Headcount%20and%20Unit%20Repurchases) The company's headcount increased slightly to 4,380 employees, and AB repurchased 0.4 million Holding Units for $13.2 million during the quarter - As of June 30, 2025, employee headcount was **4,380**, an increase from 4,264 a year prior and 4,369 in the previous quarter[28](index=28&type=chunk) Unit Repurchases (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total AB Holding Units Purchased (millions) | 0.4 | 0.9 | | Total Cash Paid for Units Purchased ($ millions) | $13.2 | $29.0 | [Detailed Financial Statements](index=9&type=section&id=Detailed%20Financial%20Statements) [US GAAP Consolidated Statement of Income (Operating Partnership)](index=9&type=section&id=US%20GAAP%20Consolidated%20Statement%20of%20Income%20(Operating%20Partnership)) The Operating Partnership's Q2 2025 GAAP operating income was $222.1 million, with net income attributable to AB Unitholders at $210.5 million Q2 2025 GAAP Statement of Income Highlights (US $ Thousands) | Line Item | 2Q 2025 | 2Q 2024 | % Change | | :--- | :--- | :--- | :--- | | Base fees | $805,319 | $774,017 | 4.0% | | Total net revenues | $1,088,907 | $1,027,943 | 5.9% | | Total operating expenses | $866,813 | $828,654 | 4.6% | | Operating income | $222,094 | $199,289 | 11.4% | | Net income attributable to AB Unitholders | $210,467 | $309,572 | (32.0)% | [AB Holding L.P. Summary Statement of Income (Publicly-Traded Partnership)](index=10&type=section&id=AB%20Holding%20L.P.%20Summary%20Statement%20of%20Income%20(Publicly-Traded%20Partnership)) The publicly-traded partnership reported Q2 2025 net income of $70.2 million, or $0.64 per unit, a 35.4% decrease in EPU from Q2 2024 Q2 2025 AB Holding L.P. Income Summary (US $ Thousands except per Unit) | Line Item | 2Q 2025 | 2Q 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $70,248 | $113,523 | (38.1)% | | Net Income per Unit | $0.64 | $0.99 | (35.4)% | | Distribution per Unit | $0.76 | $0.71 | 7.0% | [Reconciliation of GAAP to Non-GAAP Measures](index=12&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Management uses non-GAAP measures to provide a clearer view of core operating performance by excluding certain non-recurring or non-core items - Management believes non-GAAP measures present a clearer picture of operating performance by removing distortions from items like incentive compensation adjustments and acquisition-related expenses[11](index=11&type=chunk) - **Adjusted Net Revenues** are calculated by excluding distribution revenues and other pass-through costs to reflect the nature of these payments to third parties[48](index=48&type=chunk) - **Adjusted Operating Income** excludes various items such as real estate charges, acquisition-related expenses, and interest on borrowings to better reflect core business performance[53](index=53&type=chunk) [Reconciliation Summary](index=12&type=section&id=Reconciliation%20Summary) Q2 2025 GAAP operating income of $222.1 million was adjusted by a net $50.9 million to arrive at an adjusted operating income of $273.0 million Q2 2025 GAAP to Adjusted Reconciliation Summary (US $ Thousands except per Unit) | Metric | GAAP Basis | Total Adjustments | Adjusted Basis | | :--- | :--- | :--- | :--- | | Net Revenues | $1,088,907 | ($244,473) | $844,434 | | Operating Income | $222,094 | $50,870 | $272,964 | | AB Holding Net Income | $70,248 | $13,630 | $83,878 | | AB Holding EPU | $0.64 | $0.12 | $0.76 | [Notes on Adjustments](index=13&type=section&id=Notes%20on%20Adjustments) Significant adjustments include excluding acquisition-related expenses, a $14.3 million fund reimbursement, and income from non-core equity method investments - Acquisition-related expenses, including professional fees, accretion expense, and amortization of intangibles, are excluded as they are not considered part of core operating results[59](index=59&type=chunk) - A **$14.3 million reimbursement** to AB mutual funds for a third-party service provider's billing error was excluded from adjusted operating income due to its non-core nature[61](index=61&type=chunk) - Income or loss from equity method investments, including joint ventures with Societe Generale, is excluded from adjusted results as this activity is not considered part of core business operations[52](index=52&type=chunk)[60](index=60&type=chunk) [Other Information](index=7&type=section&id=Other%20Information) [Conference Call Information](index=7&type=section&id=Conference%20Call%20Information) Management will host a conference call to discuss Q2 2025 results on Thursday, July 24, 2025, at 9:00 a.m. (CST) - The earnings conference call is scheduled for **Thursday, July 24, 2025, at 9:00 a.m. (CST)**[30](index=30&type=chunk) - Participants can join via webcast at the AB Investor Relations website or by dialing (888) 440-3310 in the U.S. (ID 6072615)[31](index=31&type=chunk) [About AllianceBernstein & Forward-Looking Statements](index=8&type=section&id=About%20AllianceBernstein%20%26%20Forward-Looking%20Statements) AllianceBernstein is a global investment firm in which Equitable Holdings holds an approximate 68.6% economic interest as of June 30, 2025 - The report contains forward-looking statements subject to risks and uncertainties as detailed in the company's Form 10-K and 10-Q filings[34](index=34&type=chunk) - As of June 30, 2025, **Equitable Holdings (EQH) owned an approximate 68.6% economic interest** in AllianceBernstein[37](index=37&type=chunk) - A qualified tax notice states that **100% of AB Holding's distributions to foreign investors** are attributable to income effectively connected with a U.S. trade or business and are subject to withholding[35](index=35&type=chunk)

[Part I - Financial Information](index=4&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents AllianceBernstein Holding L.P.'s unaudited condensed financial statements for the period ended June 30, 2025, showing decreases in total assets and net income compared to prior periods [Condensed Statements of Financial Condition](index=4&type=section&id=Condensed%20Statements%20of%20Financial%20Condition) Total assets decreased to **$1.98 billion** as of June 30, 2025, from **$2.03 billion** at December 31, 2024, primarily due to a reduction in the AB investment Condensed Statement of Financial Condition (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | **$1,982,072** | **$2,034,632** | | Total liabilities | $449 | $2,770 | | Total partners' capital | $1,981,623 | $2,031,862 | | **Total liabilities and partners' capital** | **$1,982,072** | **$2,034,632** | [Condensed Statements of Income](index=5&type=section&id=Condensed%20Statements%20of%20Income) Net income significantly decreased for both the three and six months ended June 30, 2025, reaching **$70.2 million** and **$144.3 million** respectively Condensed Statements of Income (in thousands, except per unit amounts) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | Equity in net income attributable to AB Unitholders | $78,830 | $122,705 | $161,583 | $208,986 | | **Net income** | **$70,248** | **$113,523** | **$144,282** | **$190,745** | | **Net income per Unit** | **$0.64** | **$0.99** | **$1.31** | **$1.66** | [Condensed Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three and six months ended June 30, 2025, was **$80.0 million** and **$166.8 million** respectively, showing a decrease from prior-year periods Condensed Statements of Comprehensive Income (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | Net income | $70,248 | $113,523 | $144,282 | $190,745 | | Other comprehensive income (loss) | $9,779 | $3,692 | $22,550 | $(467) | | **Comprehensive income** | **$80,027** | **$117,215** | **$166,832** | **$190,278** | [Condensed Statements of Changes in Partners' Capital](index=7&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Partners%27%20Capital) Total partners' capital decreased from **$2.09 billion** to **$1.98 billion** over six months, primarily due to cash distributions and unit retirements Changes in Total Partners' Capital - Six Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance, beginning of period | $2,031,862 | | Net income | $144,282 | | Other comprehensive income | $22,550 | | Cash distributions to Unitholders | $(205,229) | | Retirement of AB Holding Units | $(39,388) | | Issuance of AB Holding Units | $39,565 | | Other changes | $(12,019) | | **Balance, end of period** | **$1,981,623** | [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to **$203.9 million** for the six months ended June 30, 2025, matching cash used in financing activities Condensed Statements of Cash Flows - Six Months Ended June 30 (in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $203,922 | $171,959 | | Net cash used in financing activities | $(203,922) | $(171,959) | | **Change in cash and cash equivalents** | **$—** | **$—** | [Notes to Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) This section details the company's business, accounting policies, and financial statement items, including its structure, distribution policies, and a subsequent exchange agreement - AB Holding's primary income and cash flow source is its investment in **AB limited partnership interests**, with AB providing diversified investment management services[28](index=28&type=chunk)[29](index=29&type=chunk) - A distribution of **$0.76 per Unit** was declared on July 24, 2025, for the second quarter of 2025[38](index=38&type=chunk) - Post-quarter, on July 10, 2025, AB and EQH exchanged **19,682,946 units**, resulting in EQH holding **68.6%** and AB Holding **30.8%** economic interest in AB[56](index=56&type=chunk)[57](index=57&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant decrease in net income for the three and six months ended June 30, 2025, attributing it to lower AB ownership and net income, while confirming sufficient liquidity [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Net income for Q2 2025 decreased **38.1%** to **$70.2 million**, and **24.4%** for the six-month period to **$144.3 million**, driven by lower AB equity ownership and net income Results of Operations Highlights (in thousands, except per unit amounts) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | Net income of AB Holding | $70,248 | $113,523 | $144,282 | $190,745 | | % Change | (38.1)% | | (24.4)% | | | Net income per AB Holding Unit | $0.64 | $0.99 | $1.31 | $1.66 | | % Change | (35.4)% | | (21.1)% | | [Management Operating Metrics](index=18&type=section&id=Management%20Operating%20Metrics) The company utilizes non-GAAP measures like 'adjusted net income' to assess performance, with Q2 2025 adjusted net income at **$83.9 million** compared to **$70.2 million** GAAP net income GAAP to Non-GAAP Reconciliation (Q2 2025 vs Q2 2024) | (in thousands, except per Unit amounts) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income, GAAP basis** | **$70,248** | **$113,523** | | Impact of AB non-GAAP adjustments | $13,630 | $(32,232) | | **Adjusted net income** | **$83,878** | **$81,291** | | **Net income per Unit, GAAP basis** | **$0.64** | **$0.99** | | Impact of AB non-GAAP adjustments | $0.12 | $(0.28) | | **Adjusted net income per Unit** | **$0.76** | **$0.71** | - Management employs non-GAAP measures such as **'adjusted net revenues'** and **'adjusted operating income'** for a clearer view of operating performance and long-term trends[62](index=62&type=chunk) [Capital Resources and Liquidity](index=19&type=section&id=Capital%20Resources%20and%20Liquidity) Net cash from operations increased to **$203.9 million** in the first six months of 2025, primarily from AB distributions, which management deems sufficient for all financial obligations - Net cash provided by operating activities increased by **$31.9 million** in the first six months of 2025, primarily due to a **$33.7 million** increase in cash distributions from AB[68](index=68&type=chunk) - Net cash used in financing activities rose by **$31.9 million**, mainly driven by a **$32.5 million** increase in cash distributions to Unitholders[69](index=69&type=chunk) - Management confirms **no liquidity risk** for AB Holding, as distributions are paid only from cash received from AB, net of taxes[70](index=70&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risk profile occurred during Q2 2025 compared to the 2024 Form 10-K disclosures - No material changes to AB Holding's market risk have occurred since the Form 10-K for the year ended December 31, 2024[73](index=73&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the period end, with no material changes to internal control over financial reporting in Q2 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures are **effective** as of the reporting period end[76](index=76&type=chunk) - No material changes to internal control over financial reporting occurred during Q2 2025[77](index=77&type=chunk) [Part II - Other Information](index=23&type=section&id=Part%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is referenced in Note 8 of the condensed financial statements, with management not expecting material impact on financial condition or liquidity - Legal proceedings information is detailed in **Note 8** to the condensed financial statements in Part I, Item 1[79](index=79&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have occurred - No material changes to risk factors were reported from those disclosed in the Form 10-K for the year ended December 31, 2024[80](index=80&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of AB Holding Units occurred in Q2 2025, though AB purchased **338,900** units on the open market and retired **30,200** units in private transactions Issuer Purchases of AB Holding Units (Q2 2025) | Period | Total Units Purchased | Average Price Paid | Publicly Announced Plan | | :--- | :--- | :--- | :--- | | 4/1/25 - 4/30/25 | 338,900 | $36.43 | — | | 5/1/25 - 5/31/25 | 22,682 | $39.63 | — | | 6/1/25 - 6/30/25 | — | — | — | | **Total** | **361,582** | **$36.63** | **—** | - AB purchased **338,900 AB Holding Units** on the open market under a Rule 10b5-1 plan to fund incentive compensation obligations[84](index=84&type=chunk) - AB purchased and retired **30,200 AB Units** in private transactions during Q2 2025[87](index=87&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[88](index=88&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None[89](index=89&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) CEO Seth Bernstein adopted a Rule 10b5-1 trading plan on May 21, 2025, for the sale of up to **31,694 AB Holding Units**, effective August 19 to November 17, 2025 - CEO Seth Bernstein adopted a Rule 10b5-1 trading plan on May 21, 2025, for the sale of up to **31,694 AB Holding Units**, effective from August 19, 2025, to November 17, 2025[90](index=90&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications, AllianceBernstein L.P.'s Form 10-Q, and XBRL data files - Key exhibits include **CEO and CFO certifications** under Sarbanes-Oxley Sections 302 and 906, and the quarterly report of **AllianceBernstein L.P. (Exhibit 99.1)**[92](index=92&type=chunk) [Signature](index=26&type=section&id=SIGNATURE) - The report was signed on **July 24, 2025**, by **Thomas Simeone, Chief Financial Officer**, and **Alexis Luckey, Chief Accounting Officer**[95](index=95&type=chunk)[96](index=96&type=chunk)

Core Insights - AllianceBernstein L.P. has partnered with Pacific Life to enhance its multi-insurer platform for delivering lifetime income solutions to large Defined Contribution (DC) plans [1][2] Group 1: Company Developments - The addition of Pacific Life is part of AllianceBernstein's ongoing expansion of its retirement income capabilities, which includes the Lifetime Income Strategy (LIS) and the AB Secure Income Portfolio [2][3] - The Lifetime Income Strategy currently manages approximately $12 billion in assets, with $4.5 billion specifically in secured income [2] - AllianceBernstein has been a pioneer in offering flexible lifetime income solutions to the DC market since 2012, continuously adapting to client needs [3] Group 2: Product Offerings - The AB Secure Income Portfolio allows DC plan sponsors to implement lifetime income in various ways, providing participants with secure income streams and control over their accounts [3][5] - The multi-insurer structure of the platform aims to produce competitive withdrawal rates and mitigate risks for participants [5] Group 3: Market Position - As of June 2025, AllianceBernstein manages $829 billion in assets, indicating a strong market presence [7] - Pacific Life's involvement reflects a commitment to providing diverse lifetime income solutions for plan sponsors and their employees [5][8]

Group 1 - The Chinese capital market is experiencing a new pattern of deep interaction with foreign institutions, enhancing the convenience for global investors to participate in China's innovative development opportunities [1] - International capital's enthusiasm for allocating assets in China is increasing, with many foreign institutions expressing optimism about the Chinese market's prospects [1][2] - A significant shift has occurred in the priorities of sovereign wealth funds, with 59% of respondents identifying China as a high or medium priority market, indicating a separate allocation to China from broader emerging markets [2] Group 2 - The quality of listed companies in China is improving, providing a solid foundation for foreign institutions' interest, with 60% of companies reporting positive revenue growth in 2024 [3] - Foreign institutions are increasingly focusing on technology innovation, with digital technology and software being the most attractive investment areas, followed by advanced manufacturing and clean energy [5] - The bond market is also attracting international capital, with expectations that capital may flow from the US financial markets to other fixed-income markets, benefiting European, Japanese, and Chinese bonds [5] Group 3 - Foreign institutions are accelerating their investment in the Chinese market, with over 30 new funds launched by firms such as Morgan Asset Management and Fidelity [6] - Several foreign institutions are demonstrating long-term commitment to the Chinese market through capital increases, such as Morgan Stanley Fund's registered capital rising from 600 million to 950 million yuan, a growth of over 58% [6]

Core Insights - Three stocks are highlighted with strong income characteristics and a buy rank for investors to consider on July 14th Group 1: Company Summaries - **Wipro Limited (WIT)**: This IT, consulting, and business process services company has seen a 7.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It has a dividend yield of 2.1%, significantly higher than the industry average of 0.0% [1] - **AllianceBernstein Holding L.P. (AB)**: This investment management company from Mexico has experienced a 4.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It boasts a dividend yield of 7.7%, compared to the industry average of 3% [2] - **MSC Industrial Direct Co., Inc. (MSM)**: This company, which specializes in metalworking and MRO products and services, has seen a 3.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It has a dividend yield of 3.8%, while the industry average is 0.0% [3]

Core Viewpoint - Investors in the Financial - Investment Management sector should consider AllianceBernstein (AB) and Cohen & Steers Inc (CNS) for potential value opportunities [1] Valuation Metrics - AllianceBernstein has a forward P/E ratio of 12.76, while Cohen & Steers has a forward P/E of 25.95 [5] - The PEG ratio for AB is 1.64, indicating a more favorable earnings growth outlook compared to CNS's PEG ratio of 2.55 [5] - AB's P/B ratio is 2.31, significantly lower than CNS's P/B ratio of 7.61, suggesting AB is more undervalued relative to its book value [6] Investment Rankings - AllianceBernstein holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Cohen & Steers has a Zacks Rank of 3 (Hold) [3] - The stronger estimate revision activity for AB, along with its more attractive valuation metrics, positions it as the superior investment option compared to CNS [7]

Core Insights - AllianceBernstein L.P. and AllianceBernstein Holding L.P. reported a preliminary increase in assets under management (AUM) to $829 billion in June 2025, up from $803 billion at the end of May, representing a 3% month-over-month growth driven by market appreciation and modest net inflows [1][2] - The firm experienced net outflows totaling $6.7 billion for the quarter ending June 2025, with institutional net inflows being partially offset by net outflows from retail and private wealth segments during June [1][2] AUM Breakdown - As of June 30, 2025, the total AUM was composed of: - Total Equity: $344 billion, up from $332 billion in May, with actively managed equity at $273 billion and passive equity at $71 billion [2] - Total Fixed Income: $304 billion, an increase from $295 billion in May, with taxable fixed income at $215 billion and tax-exempt fixed income at $79 billion [2] - Alternatives/Multi-Asset: $181 billion, up from $176 billion in May [2] - The AUM for private wealth was $144 billion, reflecting a slight increase from $140 billion in May [2] Company Overview - AllianceBernstein is recognized as a leading global investment management firm, providing diversified investment services to institutional investors, individuals, and private wealth clients across major world markets [5][6] - As of June 30, 2025, AllianceBernstein Holding owned approximately 37.5% of AllianceBernstein, while Equitable Holdings, Inc. owned an approximate 68.6% economic interest in the firm [6]