Core Insights - Federated Hermes reported Q2 2025 earnings with GAAP EPS of $1.16, exceeding analyst expectations of $1.03 and significantly up from $0.20 in the prior year [1][2] - Total revenue for the quarter was $424.8 million, slightly above the estimate of $422.81 million and an increase from $402.6 million year-over-year [1][2] - The firm achieved record-high assets under management (AUM) of $845.7 billion as of June 30, 2025, marking an 8% increase from $782.7 billion in the previous year [1][2][5] Financial Performance - Net income for Q2 2025 reached $91.0 million, a 333.3% increase from $21.0 million in Q2 2024 [2][8] - Operating expenses decreased by 15% year-over-year, primarily due to the absence of a non-cash impairment charge from the previous year [7] - Nonoperating income rose from $1.9 million to $13.7 million, contributing positively to overall financial performance [7] Business Overview - Federated Hermes is an investment management firm with a diverse range of products, including money market funds, equity funds, fixed-income products, and alternative strategies [3] - The firm generates revenue mainly through fees based on AUM, with a strong emphasis on money market products [3] Strategic Focus - The company is focused on growing AUM, complying with regulations, and leveraging its distribution network [4] - Key success factors include investment performance, regulatory discipline, and innovation in product offerings [4] Segment Performance - Equity AUM increased by 14% to $89.0 billion, driven by strong demand for MDT strategies, which saw AUM rise to $23.2 billion [5][6] - Fixed-income AUM grew 4% year-over-year to $98.7 billion, despite a slight sequential decline [6] - Money market assets reached $634.4 billion, an 8% increase year-over-year, while alternative and private market AUM rose 3% to $20.7 billion [6][11] Product Development and Market Trends - The firm is investing in new product development, including blockchain for money market fund tokenization and expanding ETFs and collective investment trusts [12] - MDT strategies and alternatives are showing strong momentum, with net sales of over $2.5 billion in the previous quarter [10] Capital Return - The regular quarterly dividend was set at $0.34 per share, with ongoing share buybacks authorized for up to 5 million additional shares [9][13] Outlook - Management anticipates continued demand for MDT strategies and alternatives, with a positive pipeline for new mandates in equity and direct lending products [14]

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Federated Hermes, Inc. for the period ended June 30, 2025, including balance sheets, income statements, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$2.15 billion** from **$2.08 billion**, while total liabilities decreased to **$874.5 million**, leading to an increase in total permanent equity to **$1.11 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,151,585** | **$2,084,684** | | Cash and Cash Equivalents | $370,987 | $504,441 | | Goodwill | $864,764 | $804,818 | | **Total Liabilities** | **$874,487** | **$933,964** | | Long-Term Debt | $348,237 | $348,106 | | **Total Permanent Equity** | **$1,114,105** | **$1,095,206** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, total revenue grew to **$424.8 million**, operating income surged to **$117.1 million**, and net income attributable to the company was **$91.0 million**, or **$1.16 per diluted share** Q2 and H1 2025 vs 2024 Income Statement (in thousands, except EPS) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$424,844** | **$402,583** | **$848,384** | **$798,954** | | Operating Income | $117,084 | $40,717 | $248,856 | $139,298 | | **Net Income** | **$91,000** | **$21,027** | **$192,134** | **$96,060** | | Earnings Per Share (Diluted) | $1.16 | $0.20 | $2.40 | $1.12 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was **$33.1 million**, while financing activities used **$169.3 million**, primarily for share repurchases and dividend payments Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $33,086 | $102,705 | | Net Cash Provided (Used) by Investing Activities | ($17,544) | $31,164 | | Net Cash Provided (Used) by Financing Activities | ($169,261) | ($208,575) | | **Net (Decrease) in Cash** | **($136,097)** | **($76,043)** | [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes detail the acquisition of Rivington Energy, revenue disaggregation, debt structure, share repurchase activities, and subsequent events, including a new 5.0 million share repurchase program - On April 7, 2025, Federated Hermes acquired a **60%** equity interest in Rivington Energy Management Limited for an upfront cash payment of **£23.6 million ($30.0 million)** to accelerate growth in non-U.S. markets[23](index=23&type=chunk)[24](index=24&type=chunk) - Money market assets constitute the largest revenue concentration, accounting for **53%** of total revenue for the six months ended June 30, 2025[34](index=34&type=chunk) - The company's debt includes **$350 million** in unsecured senior notes at a fixed rate of **3.29%** due in 2032, with compliance with all debt covenants as of June 30, 2025[68](index=68&type=chunk)[70](index=70&type=chunk) - Subsequent to the quarter end, on July 31, 2025, the board declared a **$0.34 per share** dividend and authorized a new share repurchase program for up to **5.0 million shares** of Class B common stock[99](index=99&type=chunk)[100](index=100&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses an **8%** increase in total managed assets to **$845.7 billion**, covering business and regulatory developments, revenue growth drivers, decreased operating expenses, liquidity, and critical accounting policies [Business Developments](index=28&type=section&id=Business%20Developments) On April 7, 2025, Federated Hermes Limited acquired a **60%** majority interest in Rivington, a UK-based renewable energy project development business, to accelerate non-U.S. growth - The company acquired a **60%** equity interest in Rivington, a U.K.-based renewable energy project development business, on April 7, 2025[106](index=106&type=chunk) [Current Regulatory Developments](index=28&type=section&id=Current%20Regulatory%20Developments) The U.S. regulatory landscape is shifting with a new Presidential administration, leading to a regulatory freeze, delayed SEC rule compliance, and withdrawal of pending proposals, while the company advocates for specific changes - The new U.S. Presidential administration has initiated a regulatory freeze, leading to delayed compliance dates for rules like Form N-PORT amendments and a potential shift towards deregulation[111](index=111&type=chunk)[112](index=112&type=chunk) - The SEC withdrew **15** pending rule proposals in June 2025, including significant proposals on the Custody Rule, cybersecurity risk management, and ESG disclosures[117](index=117&type=chunk) - Federated Hermes is advocating for the repeal of the 2023 amendments to Rule 2a-7 concerning mandatory liquidity fees for institutional money market funds, arguing the SEC's adoption violated the Administrative Procedures Act[115](index=115&type=chunk) [Asset Highlights](index=37&type=section&id=Asset%20Highlights) Total managed assets grew **8%** year-over-year to **$845.7 billion** at June 30, 2025, driven by an **8%** increase in money market assets and a **14%** increase in equity assets Managed Assets at Period End (in millions) | Asset Class | June 30, 2025 | June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Equity | $88,994 | $77,851 | 14% | | Fixed-Income | $98,687 | $95,294 | 4% | | Money Market | $634,400 | $586,647 | 8% | | **Total Managed Assets** | **$845,675** | **$782,729** | **8%** | Average Managed Assets - Six Months Ended June 30 (in millions) | Asset Class | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Equity | $82,834 | $78,553 | 5% | | Fixed-Income | $98,862 | $95,638 | 3% | | Money Market | $636,185 | $580,570 | 10% | | **Total Average Managed Assets** | **$840,254** | **$778,038** | **8%** | [Results of Operations](index=45&type=section&id=Results%20of%20Operations) For Q2 2025, revenue increased by **$22.3 million** YoY, operating expenses decreased by **$54.1 million** due to lower intangible asset related expenses, and net income rose significantly to **$70.0 million** - Q2 2025 revenue increased by **$22.3 million** YoY, mainly from higher average money market (**$18.5 million**) and equity assets (**$2.4 million**)[165](index=165&type=chunk) - Q2 2025 operating expenses decreased by **$54.1 million** YoY, largely because of a **$65.9 million** reduction in Intangible Asset Related expense after a significant impairment was recorded in Q2 2024[167](index=167&type=chunk) - Diluted EPS for Q2 2025 was **$1.16**, an increase of **$0.96** from Q2 2024, driven by higher net income (**$0.88**) and share repurchases (**$0.08**)[176](index=176&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, liquid assets were **$576.9 million**, with operating activities providing **$33.1 million** in cash, while financing activities used **$169.3 million** for share repurchases and dividends - Net cash from operating activities for H1 2025 was **$33.1 million**, down from **$102.7 million** in H1 2024[180](index=180&type=chunk) - During H1 2025, the company used **$185.7 million** to purchase treasury stock and paid **$52.2 million** in dividends[182](index=182&type=chunk) - The company has a **$350 million** revolving credit facility with an additional **$200 million** accordion feature, with no outstanding borrowings as of June 30, 2025[185](index=185&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of June 30, 2025, there were no material changes to the company's market risk exposures from those disclosed in its 2024 Annual Report on Form 10-K - There were no material changes to the company's market risk exposures as of June 30, 2025, compared to the year-end 2024 disclosures[202](index=202&type=chunk) [Controls and Procedures](index=49&type=section&id=Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, excluding the recently acquired Rivington business - The company's disclosure controls and procedures were deemed effective as of June 30, 2025[209](index=209&type=chunk) - The assessment of controls excluded the recently acquired Rivington business, which represented less than **1%** of total assets and revenue[209](index=209&type=chunk) Part II. Other Information [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note (18) of the Consolidated Financial Statements, stating that no material loss related to ordinary course claims is reasonably possible - Information on legal proceedings is detailed in Note (18) to the Consolidated Financial Statements[204](index=204&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There are no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There are no material changes to the risk factors from the company's 2024 Annual Report on Form 10-K[205](index=205&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, **1,547,182 shares** were repurchased at an average price of **$41.72 per share**, with approximately **1.1 million shares** remaining available under the existing program Share Repurchases - Q2 2025 | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | 52,300 | $38.67 | | May | 384,275 | $40.93 | | June | 1,110,607 | $42.14 | | **Total** | **1,547,182** | **$41.72** | - As of June 30, 2025, **1,144,315 shares** remained available for repurchase under the plan authorized in October 2024[207](index=207&type=chunk) [Other Information](index=50&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1(c) or non-Rule 10b5-1(c) trading arrangement during the fiscal quarter ended June 30, 2025 - No director or officer initiated, changed, or ended a Rule 10b5-1 trading plan during the second quarter of 2025[210](index=210&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The exhibits filed with this report include CEO/CFO certifications (Exhibits **31.1**, **31.2**, **32**) and XBRL data files (Exhibits **101**, **104**)[211](index=211&type=chunk)

Core Insights - Federated Hermes, Inc. (FHI) reported second-quarter 2025 adjusted earnings per share of $1.16, exceeding the Zacks Consensus Estimate of $1.02, marking a 20.8% increase from the previous year [1][9] - The company's total managed assets reached a record $845.7 billion, reflecting an 8% year-over-year growth [6][9] - Increased net administrative service fees and net investment advisory fees were significant contributors to revenue growth, alongside a decline in operating expenses [1][3][4] Financial Performance - Net income on a GAAP basis rose to $91 million from $21 million in the year-ago quarter [2] - Total revenues increased by 6% year over year to $424.8 million, slightly surpassing the Zacks Consensus Estimate [3][9] - Quarterly net investment advisory fees grew by 6% year over year to $287.4 million, exceeding estimates [3] - Total operating expenses decreased by 15% year over year to $307.8 million, better than the expected $300 million [4][9] Asset Management - As of June 30, 2025, cash and other investments totaled $607.5 million, while total long-term debt was $348.3 million, showing improvement from the previous quarter [5] - Money-market assets increased by 8% year over year to $634.4 billion, while fixed-income assets rose by 4% to $98.7 billion [6] - Equity assets grew by 14% to $89 billion, and alternative/private market assets increased by 3% to $20.7 billion [7] Capital Distribution - The company repurchased 1,547,182 shares of its class B common stock for $64.5 million during the quarter [8] - The board of directors authorized an 18th share repurchase program, allowing for the buyback of up to an additional 5 million shares with no expiration date [10] Market Position - Federated Hermes demonstrates substantial growth potential supported by a diverse asset and product mix and a solid liquidity position [11]

Financial Data and Key Metrics Changes - The company ended Q2 with record assets under management of $846 billion, an increase driven by gains from equity strategies [3] - Equity assets increased by $8.1 billion or 10% from the prior quarter, with Q2 equity net sales of $1.8 billion representing an organic growth rate of just under 9% [3] - Total revenue for Q2 increased slightly from the prior quarter, primarily due to higher revenue from more days in the quarter and revenue related to the Rivington acquisition [13] - Total Q2 carried interest and performance fees were $1.4 million compared to $5.9 million in the previous quarter [13] Business Line Data and Key Metrics Changes - MDT equity strategies had net sales of $3.8 billion in Q2, up from $3.3 billion in Q1 [4] - Fixed income assets decreased by about $800 million or 1% in Q2, mainly due to net redemptions of $2.4 billion [5] - In the alternative private markets category, assets increased by $1.3 billion or 7% in Q2, primarily due to FX rates and net sales of $231 million [6] - Money market fund assets reached a record high of $468 billion, increasing by $3.1 billion in Q2 [10] Market Data and Key Metrics Changes - The company's estimate of money market mutual fund market share was about 7.11% at the end of Q2, up slightly from 7.1% at the end of Q1 [12] - Managed assets as of recent days were approximately $854 billion, including $642 billion in money markets, $91 billion in equities, and $98 billion in fixed income [13] Company Strategy and Development Direction - The company is actively participating in the development of tokenized money market funds and digital asset infrastructure, exploring opportunities for innovation in the digital assets arena [10][11] - The acquisition of Rivington Energy Management Limited enhances the company's private markets platform by adding project development expertise in the energy transition sector [7] - The company is focused on acquisitions, particularly in the private markets space, and is looking for opportunities to expand its portfolio [48] Management's Comments on Operating Environment and Future Outlook - Management views the tokenization of money market funds as incremental to the traditional money fund business, emphasizing the importance of daily liquidity at par for customers [20][22] - The company expects ongoing innovation and growth in the digital asset space, with a commitment to exploring new distribution methods for its products [11][28] - Management noted that while there is excitement around stablecoins, the actual assets are not yet substantial, indicating a cautious approach to growth in this area [55] Other Important Information - The company completed a share repurchase of approximately 1.5 million shares for about $64.5 million and approved a new program for an additional 5 million shares [15] - The effective tax rate for Q2 was 26.1%, with expectations for the rate to be in the 25% to 28% range for 2025 [14] Q&A Session Summary Question: Update on stablecoin tokenization and its impact on traditional money fund business - Management sees it as incremental, with new customers and opportunities, but emphasizes the need for daily liquidity at par [20][22] Question: Growth in stablecoins and its implications for money market funds - Management believes the current stablecoin market is concentrated and that the Genius Act will provide more definition on backing stablecoins, which could lead to increased supply [35] Question: Capacity concerns for MDT mid and small cap products - Management does not expect any capacity issues for the funds at this time, indicating robust methodologies [40] Question: Capital return priorities and M&A opportunities - The company prioritizes acquisitions as the best use of cash and is actively exploring opportunities in the private markets [48] Question: Tokenization's potential to expand the money market fund industry - Management believes it is too early to estimate the size of growth from tokenization, viewing it as an additional distribution method [56]

Financial Data and Key Metrics Changes - The company ended Q2 with record assets under management of $846 billion, an increase driven by gains from equity strategies [3] - Equity assets increased by $8.1 billion or 10% from the prior quarter, with Q2 equity net sales of $1.8 billion representing an organic growth rate of just under 9% [3] - Total revenue for Q2 increased slightly from the prior quarter, primarily due to higher revenue from more days in the quarter and revenue related to the Rivington acquisition [15] - Total Q2 carried interest and performance fees were $1.4 million compared to $5.9 million in the previous quarter [15] - The Q2 effective tax rate was 26.1%, with expectations for the rate to be in the 25% to 28% range for 2025 [16] Business Line Data and Key Metrics Changes - MDT equity strategies had net sales of $3.8 billion in Q2, up from $3.3 billion in Q1 [4] - Fixed income assets decreased by about $800 million or 1% in Q2, mainly due to net redemptions of $2.4 billion [6] - In the alternative private markets category, assets increased by $1.3 billion or 7% in Q2, primarily due to FX rates and net sales of $231 million [7] - Money market fund assets reached a record high of $468 billion, increasing by $3.1 billion in Q2 [12] Market Data and Key Metrics Changes - The company's estimate of money market mutual fund market share was about 7.11% at the end of Q2, up slightly from 7.1% at the end of Q1 [14] - Managed assets as of recent days were approximately $854 billion, including $642 billion in money markets, $91 billion in equities, and $98 billion in fixed income [15] Company Strategy and Development Direction - The company is actively working on product development plans with Rivington Energy Management to enhance its private markets platform [9] - The company is exploring opportunities in the digital asset space, including tokenized money market funds and digital asset infrastructure [12][13] - The company continues to look for acquisitions, particularly in the private markets space, emphasizing that the highest and best use of cash is for acquisitions [50] Management's Comments on Operating Environment and Future Outlook - Management views the tokenization of money market funds as incremental rather than disintermediating traditional money fund business [22] - The company expects ongoing innovation and growth in the digital asset space, with a commitment to exploring opportunities [14] - Management noted that the stablecoin market is currently about $250 billion, with expectations for significant growth, but emphasized that stablecoins cannot pay interest [36][40] Other Important Information - The company completed the acquisition of a majority interest in Rivington Energy Management, enhancing its capabilities in the renewable energy sector [9] - The company purchased approximately 1.5 million shares of its stock for about $64.5 million during the quarter [17] Q&A Session Summary Question: Update on stablecoin tokenization and its impact on traditional money fund business - Management sees it as incremental, with new customers and products, emphasizing the need for daily liquidity at par [22][24] Question: Growth in stablecoins and its impact on money market funds - Management believes the current stablecoin market is concentrated and that the Genius Act will define backing requirements, which could lead to increased supply in the treasury market [36][37] Question: Capacity concerns for MDT mid and small cap products - Management does not expect any capacity issues at this point, as methodologies and buying capabilities are robust [42] Question: Capital return priorities and M&A opportunities - Management emphasizes that the highest use of cash is for acquisitions and is actively exploring opportunities in the private markets [50] Question: Tokenization of money market funds and its potential impact on the industry - Management believes it is too early to estimate the size of growth from tokenization, viewing it as an additional distribution method [56][58]

Company Overview - Federated Hermes manages $845.7 billion in assets, including $211.3 billion in long-term managed assets: $89.0 billion in equity, $98.7 billion in fixed income, $20.7 billion in alternative/private markets, and $2.9 billion in multi-asset [12] - The company's total revenue for Q2 2025 was $424.8 million [14] - Federated Hermes has $634.4 billion in liquidity assets [10, 16] Asset Class Performance - Equity assets increased by $8.1 billion, a 10% rise from $80.9 billion as of March 31, 2025 [21] - Fixed-income assets decreased by $0.8 billion, a 1% decline from $99.5 billion as of March 31, 2025 [21] Revenue Diversification - In Q2 2025, money market funds contributed an average of 35% to revenue less distribution expense, with a high of 61% and a low of 13% [23] - Equity contributed an average of 43% to revenue less distribution expense, with a high of 56% and a low of 27% [23] - Fixed income contributed an average of 18% to revenue less distribution expense, with a high of 25% and a low of 11% [23] - Alternative/Private Markets and Multi-asset contributed an average of 9% to revenue less distribution expense, with a high of 19% and a low of 6% [23] Distribution Channels - U S Financial Intermediaries account for 67% of assets under management [26] - U S Institutional accounts for 26% of assets under management [26] - International accounts for 7% of assets under management [26] Capital Allocation - Since its IPO in 1998, Federated Hermes has allocated cash towards dividends (45%), share repurchases (35%), and acquisitions (20%) [77] - Total share repurchase, acquisition, and dividend payments since the IPO amount to $6.6 billion [78]

Group 1: Earnings Performance - Federated Hermes reported quarterly earnings of $1.16 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and up from $0.96 per share a year ago [1] - The earnings surprise for this quarter was +13.73%, following a previous surprise of +20.88% when earnings were $1.1 per share against an expectation of $0.91 [2] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] Group 2: Revenue Performance - Revenues for the quarter ended June 2025 were $424.84 million, slightly above the Zacks Consensus Estimate by 0.10%, and an increase from $402.58 million year-over-year [3] - Federated Hermes has also topped consensus revenue estimates three times over the last four quarters [3] Group 3: Stock Performance and Outlook - The stock has gained approximately 20.9% since the beginning of the year, outperforming the S&P 500's gain of 8.2% [4] - The company's earnings outlook is crucial for future stock performance, with current consensus EPS estimates at $1.06 for the coming quarter and $4.37 for the current fiscal year [5][8] - The Zacks Rank for Federated Hermes is currently 2 (Buy), indicating expected outperformance in the near future [7] Group 4: Industry Context - The Financial - Investment Management industry, to which Federated Hermes belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable environment for stock performance [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

[Q2 2025 Earnings Overview](index=1&type=section&id=Q2%202025%20Earnings%20Overview) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Federated Hermes reported a record **$845.7 billion** in assets under management for Q2 2025. Earnings per share surged to **$1.16** from **$0.20** in the prior-year quarter, primarily due to the absence of a significant non-cash impairment charge that impacted the Q2 2024 results. The company also declared a quarterly dividend and authorized a new share repurchase program Financial Metric Comparison | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **EPS (diluted)** | $1.16 | $0.20 | +480% | | **Net Income** | $91.0 million | $21.0 million | +333% | Assets Under Management (AUM) Overview | Assets Under Management (AUM) | June 30, 2025 | June 30, 2024 | March 31, 2025 | | :--- | :--- | :--- | :--- | | **Total Managed Assets** | $845.7 billion | $782.7 billion | $839.8 billion | | **YoY Change** | +$63.0 billion (+8%) | | | | **QoQ Change** | +$5.9 billion (+1%) | | | - The Board of Directors declared a dividend of **$0.34 per share** and authorized a new share repurchase program for up to **5 million shares** of class B common stock[4](index=4&type=chunk) [Business and Operational Highlights](index=1&type=section&id=Business%20and%20Operational%20Highlights) The company experienced strong investor interest in its MDT equity and alternative quantitative investment solutions. Demand was also high for microshort and ultrashort funds, reflecting a focus on capital preservation and liquidity. In terms of capital return, the company repurchased **$64.5 million** of its stock during the quarter - CEO J. Christopher Donahue noted continued interest in the company's MDT equity and alternative quantitative investment solutions, which utilize a disciplined, repeatable process[4](index=4&type=chunk) - Demand for microshort and ultrashort funds was driven by investors seeking capital preservation, liquidity, and higher yields than money market strategies[4](index=4&type=chunk) - During Q2 2025, the company purchased **1,547,182 shares** of its class B common stock for **$64.5 million**[4](index=4&type=chunk) [Assets Under Management (AUM) Analysis](index=1&type=section&id=Assets%20Under%20Management%20(AUM)%20Analysis) Total AUM reached a record **$845.7 billion**, marking an **8%** increase year-over-year. Growth was observed across all major asset classes, with equity assets showing the strongest percentage growth at **14%** YoY. Money market assets remain the largest component, increasing **8%** YoY AUM by Asset Class | Asset Class | AUM at June 30, 2025 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | | **Equity** | $89.0 billion | +14% | +10% | | **Fixed-Income** | $98.7 billion | +4% | -1% | | **Alternative/Private Markets** | $20.7 billion | +3% | +7% | | **Money Market** | $634.4 billion | +8% | -0.4% | | **Total Managed Assets** | **$845.7 billion** | **+8%** | **+1%** | [Equity Assets](index=1&type=section&id=Equity%20Assets) Equity assets increased **14%** year-over-year to **$89.0 billion**. This growth was supported by strong net sales in various MDT strategy funds, including the MDT Mid Cap Growth Fund and MDT All Cap Core Fund - Equity assets stood at **$89.0 billion** at **June 30, 2025**, up **14%** from the prior year and **10%** from the prior quarter[5](index=5&type=chunk) - Top-selling equity funds on a net basis included Federated Hermes MDT Mid Cap Growth Fund, Federated Hermes MDT Mid Cap Growth Collective Investment Fund, and Federated Hermes MDT All Cap Core Fund[5](index=5&type=chunk) [Fixed-Income Assets](index=2&type=section&id=Fixed-Income%20Assets) Fixed-income assets grew **4%** year-over-year to **$98.7 billion**. Top-selling products in this category included microshort and ultrashort bond funds, indicating investor demand for shorter-duration strategies - Fixed-income assets were **$98.7 billion** at **June 30, 2025**, up **4%** from the prior year but down slightly from the previous quarter[7](index=7&type=chunk) - Top-selling fixed-income funds included the Federated Hermes Conservative Municipal Microshort Fund and the Federated Hermes Ultrashort Bond Fund[7](index=7&type=chunk) [Alternative/Private Markets Assets](index=2&type=section&id=Alternative%2FPrivate%20Markets%20Assets) Alternative and private markets assets saw modest growth, increasing **3%** year-over-year to **$20.7 billion** as of **June 30, 2025** - Alternative/private markets assets reached **$20.7 billion**, up **3%** from **June 30, 2024**, and up **7%** from **March 31, 2025**[8](index=8&type=chunk) [Money Market Assets](index=2&type=section&id=Money%20Market%20Assets) Money market assets, the company's largest segment, grew **8%** year-over-year to **$634.4 billion**. Within this, money market fund assets reached a record high of **$468.0 billion** - Total money market assets were **$634.4 billion** at quarter-end, an **8%** increase from the prior year[9](index=9&type=chunk) - Money market fund assets achieved a record **$468.0 billion**, up **10%** from **June 30, 2024**[9](index=9&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) [Q2 2025 vs. Q2 2024 Performance](index=2&type=section&id=Q2%202025%20vs.%20Q2%202024%20Performance) Revenue grew **6%** year-over-year, driven by higher average money market and equity assets. Operating expenses saw a significant **15%** decrease, primarily because the prior-year quarter included a large impairment charge on an intangible asset. This favorable expense comparison, combined with revenue growth, led to a substantial increase in operating and net income - Revenue increased by **$22.3 million (6%)** due to higher average money market and equity assets[10](index=10&type=chunk) - Operating expenses decreased by **$54.1 million (15%)**, mainly due to the absence of a Q2 2024 intangible asset impairment charge of **$66.3 million**[2](index=2&type=chunk)[11](index=11&type=chunk) - Nonoperating income increased by **$11.8 million**, primarily from a rise in the market value of investments[12](index=12&type=chunk) - In Q2 2025, revenue was sourced **53%** from money market assets and **46%** from long-term assets (equity, fixed-income, alternatives)[10](index=10&type=chunk) [Q2 2025 vs. Q1 2025 Performance](index=2&type=section&id=Q2%202025%20vs.%20Q1%202025%20Performance) On a sequential basis, revenue was nearly flat, with the benefit of an extra day in the quarter being offset by lower performance fees. Operating expenses increased by **5%**, largely because the first quarter of 2025 included a one-time value added tax (VAT) refund from the U.K., making for a difficult comparison - Revenue increased by a marginal **$1.3 million**, primarily due to one more day in Q2, partially offset by decreased performance fees[13](index=13&type=chunk) - Operating expenses rose by **$16.0 million (5%)**, mainly because Q1 2025 results included a **$12.3 million VAT refund** which lowered that quarter's expenses[13](index=13&type=chunk) [Year-to-Date (YTD) 2025 vs. YTD 2024 Performance](index=2&type=section&id=Year-to-Date%20(YTD)%202025%20vs.%20YTD%202024%20Performance) For the first six months of 2025, revenue increased by **6%** compared to the same period in 2024, driven by higher average assets. Operating expenses decreased by **9%**, again reflecting the significant impairment charge taken in Q2 2024. Consequently, net income for the first half of the year doubled - YTD revenue increased by **$49.4 million (6%)** due to higher average money market and equity assets, along with an increase in performance fees[15](index=15&type=chunk) - YTD operating expenses decreased by **$60.1 million (9%)**, primarily due to the Q2 2024 impairment charge and a VAT refund received in 2025[17](index=17&type=chunk) - The revenue mix for the first half of 2025 was consistent, with **53%** from money market assets and **46%** from long-term assets[16](index=16&type=chunk) [Detailed Financial Statements and Data](index=5&type=section&id=Detailed%20Financial%20Statements%20and%20Data) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) The income statements for Q2 and the first half of 2025 show substantial year-over-year growth. For Q2 2025, operating income grew **188%** to **$117.1 million**, and net income attributable to the company increased **333%** to **$91.0 million**. For the six-month period, net income doubled to **$192.1 million** Q2 2025 vs Q2 2024 Consolidated Statements of Income | (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $424,844 | $402,583 | 6% | | **Total Operating Expenses** | $307,760 | $361,866 | (15%) | | **Operating Income** | $117,084 | $40,717 | 188% | | **Net Income** | $91,000 | $21,027 | 333% | YTD 2025 vs YTD 2024 Consolidated Statements of Income | (in thousands) | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $848,384 | $798,954 | 6% | | **Total Operating Expenses** | $599,528 | $659,656 | (9%) | | **Operating Income** | $248,856 | $139,298 | 79% | | **Net Income** | $192,134 | $96,060 | 100% | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows total assets of **$2.15 billion** as of **June 30, 2025**, up from **$2.08 billion** at the end of 2024. Key changes include an increase in intangible assets and a corresponding increase in treasury stock due to share repurchases, which reduced total equity Consolidated Balance Sheet Summary | (in thousands) | June 30, 2025 | Dec. 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $2,151,585 | $2,084,684 | | **Total Liabilities** | $874,487 | $933,964 | | **Total Equity** | $1,114,105 | $1,095,206 | [Changes in Long-Term Assets](index=8&type=section&id=Changes%20in%20Long-Term%20Assets) This section details the flow of long-term assets. For Q2 2025, total long-term assets experienced net redemptions of **$466 million**, as net sales of **$1.8 billion** in equity were more than offset by net redemptions of **$2.4 billion** in fixed income. Market gains and foreign exchange had a significant positive impact on ending asset values [By Asset Class](index=8&type=section&id=By%20Asset%20Class) In Q2 2025, equity assets had net sales of **$1.8 billion**, while fixed-income assets saw net redemptions of **$2.4 billion**. Alternative/private markets assets recorded net sales of **$231 million**. Market gains contributed positively across equity (**$5.3B**) and fixed income (**$1.4B**) Q2 2025 Long-Term Asset Flows by Class | Q2 2025 Flows (in millions) | Net Sales (Redemptions) | Market Gains (Losses) | Ending Assets | | :--- | :--- | :--- | :--- | | **Equity** | $1,781 | $5,277 | $88,994 | | **Fixed Income** | ($2,385) | $1,373 | $98,687 | | **Alternative/Private Markets** | $231 | ($118) | $20,738 | | **Total Long-term** | **($466)** | **$6,657** | **$211,275** | [By Asset Class and Offering Type](index=9&type=section&id=By%20Asset%20Class%20and%20Offering%20Type) A deeper look into Q2 2025 flows shows that equity net sales were strong in both funds (**$569M**) and separate accounts (**$1.2B**). Conversely, fixed-income net redemptions were split between funds (-**$1.2B**) and separate accounts (-**$1.2B**) Q2 2025 Net Sales by Asset Class and Offering Type | Q2 2025 Net Sales (in millions) | Funds | Separate Accounts | Total | | :--- | :--- | :--- | :--- | | **Equity** | $569 | $1,212 | $1,781 | | **Fixed Income** | ($1,188) | ($1,197) | ($2,385) | | **Alternative/Private Markets** | $283 | ($52) | $231 | [By Offering Type](index=10&type=section&id=By%20Offering%20Type) For Q2 2025, total long-term fund assets experienced net redemptions of **$413 million**, while separate accounts saw smaller net redemptions of **$53 million**. For the first six months of 2025, both categories saw net inflows, with funds at **$103 million** and separate accounts at **$525 million** Q2 2025 Long-Term Asset Flows by Offering Type | Q2 2025 Flows (in millions) | Net Sales (Redemptions) | Ending Assets | | :--- | :--- | :--- | | **Total Fund Assets** | ($413) | $110,409 | | **Total Separate Account Assets** | ($53) | $100,866 | [Managed and Average Managed Assets](index=11&type=section&id=Managed%20and%20Average%20Managed%20Assets) This section provides a historical view of managed assets. Total managed assets ended Q2 2025 at a record **$845.7 billion**. Average managed assets for the quarter were **$837.3 billion**, down slightly from Q1 2025 but up **7%** from Q2 2024. Money market assets consistently represent the largest portion of both ending and average AUM Managed Assets by Type (Period End) | (in millions) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | **Total Long-term Assets** | $211,275 | $202,651 | $196,082 | | **Money Market Assets** | $634,400 | $637,122 | $586,647 | | **Total Managed Assets** | **$845,675** | **$839,773** | **$782,729** | Average Managed Assets by Quarter | Quarter Ended (in millions) | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Total Avg. Long-term Assets** | $204,761 | $203,377 | $196,816 | | **Total Avg. Money Market Assets** | $632,543 | $639,827 | $582,758 | | **Total Avg. Managed Assets** | **$837,304** | **$843,204** | **$779,574** | [Corporate Information](index=3&type=section&id=Corporate%20Information) [Earnings Call Information](index=3&type=section&id=Earnings%20Call%20Information) The company will host its Q2 2025 earnings conference call on **Friday, August 1, 2025**, at **9 a.m. Eastern Time**. The report provides domestic and international call-in numbers, as well as details for accessing the online webcast and replay - An earnings conference call is scheduled for **9 a.m. Eastern** on **Friday, August 1, 2025**[19](index=19&type=chunk) - Investors can listen via phone by calling **888-506-0062** (domestic) or **973-528-0011** (international), or online through the company's website[19](index=19&type=chunk) [About Federated Hermes](index=3&type=section&id=About%20Federated%20Hermes) Federated Hermes is a global active investment manager headquartered in Pittsburgh, with over **2,000** employees worldwide. As of **June 30, 2025**, the firm managed **$845.7 billion** in assets, offering a wide range of investment solutions to more than **10,000** institutional and intermediary clients - The company is a global leader in active investment management with **$845.7 billion** in assets under management as of **June 30, 2025**[20](index=20&type=chunk)[21](index=21&type=chunk) - It provides equity, fixed-income, alternative/private markets, multi-asset, and liquidity management strategies to over **10,000 institutions and intermediaries** globally[20](index=20&type=chunk)

Financial Performance - Federated Hermes reported earnings per diluted share (EPS) of $1.16 for Q2 2025, a significant increase from $0.20 in Q2 2024, with net income rising to $91.0 million from $21.0 million year-over-year [1][8][13] - Revenue for Q2 2025 increased by $22.3 million or 6% compared to Q2 2024, primarily driven by higher average money market and equity assets [8][14] - Operating expenses decreased by $54.1 million or 15% in Q2 2025, mainly due to lower intangible asset-related expenses from the previous year's impairment [9][15] Asset Management - Total managed assets reached a record $845.7 billion as of June 30, 2025, up $63.0 billion or 8% from $782.7 billion a year earlier [2][36] - Equity assets increased to $89.0 billion, up $11.1 billion or 14% from the previous year, while fixed-income assets rose to $98.7 billion, up $3.4 billion or 4% [4][5] - Money market assets also saw growth, reaching $634.4 billion, an increase of $47.8 billion or 8% from June 30, 2024 [7][36] Investment Strategies - The company experienced strong demand for its microshort and ultrashort funds, appealing to investors focused on capital preservation and liquidity [3] - Federated Hermes' MDT strategies saw assets grow to $23.2 billion, up $6.4 billion from Q1 2025 and $8.9 billion year-to-date [13] Shareholder Returns - The board of directors declared a dividend of $0.34 per share, payable on August 15, 2025 [3][13] - The company repurchased 1,547,182 shares of its class B common stock for $64.5 million during Q2 2025 and authorized a new share repurchase program for an additional 5 million shares [3][13]

Core Viewpoint - The comparison between Federated Hermes (FHI) and Cohen & Steers Inc (CNS) indicates that FHI currently offers better value for investors based on various financial metrics and rankings [1][3][7]. Valuation Metrics - FHI has a forward P/E ratio of 11.17, significantly lower than CNS's forward P/E of 24.45 [5]. - The PEG ratio for FHI is 0.87, while CNS has a PEG ratio of 2.40, suggesting FHI is more favorably valued in terms of expected earnings growth [5]. - FHI's P/B ratio stands at 3.59 compared to CNS's P/B of 7.29, indicating a better market value relative to book value for FHI [6]. Zacks Rank and Earnings Outlook - FHI holds a Zacks Rank of 2 (Buy), reflecting positive earnings estimate revisions, while CNS has a Zacks Rank of 3 (Hold) [3]. - The Zacks Rank system favors stocks with improving earnings outlooks, which supports FHI's position as a more attractive investment [3][7]. Value Grades - FHI has been assigned a Value grade of B, whereas CNS has a Value grade of D, further emphasizing FHI's superior valuation metrics [6].