4Includes wrap program accounts, CITs, UMAs, UCITS, private funds, and non-U.S. domiciled pooled vehicles. 3Includes institutional and retail share classes, money market and VIP funds. 6Includes low-fee (2 to 4 bps) institutional assets. These assets are included as part of Victory's Regulatory Assets Under Management reported in Form ADV Part 1. 1Due to rounding, numbers presented in these tables may not add up precisely to the totals provided. 5Represents only ETF assets held by third parties and excludes ...

For tax purposes, shareholders will generally recognize a capital gain or loss equal to the amount received for their shares over their adjusted basis in such shares. VictoryShares ETFs distributed by Victory Capital Services, Inc., an affiliate of Victory Capital Management Inc. After the close of business on January 28, 2026, the ETFs will no longer accept purchase orders for Creation Units. Shareholders of the ETFs may sell their holdings on the Nasdaq Stock Market prior to the close of trading on Januar ...

Core Insights - Merion Road Capital Management's third-quarter 2025 investor letter indicates a 5.0% return for the Merion Road Small Cap Fund, underperforming the Russell 2000 Index's 12.4% return, while the long-only portfolio achieved a 10.1% return compared to the S&P 500's 8.1% [1] - The strong performance of Kratos significantly contributed to the portfolio's results [1] Company Focus: Victory Capital Holdings, Inc. (NASDAQ:VCTR) - Victory Capital Holdings, Inc. has experienced a one-month return of -2.89% and a 52-week loss of 9.70%, with a market capitalization of $4.123 billion as of November 20, 2025 [2] - The company has successfully closed the acquisition of the Amundi US business, now managing over $300 billion in assets, with positive net flows reported for 2024 and year-to-date 2025 [3] - Victory Capital's management has increased their cost synergy target to $110 million, with historical performance exceeding guidance, and projected free cash flow of at least $7.00 per share next year, indicating a valuation discount compared to peers [3] Market Position and Performance - Victory Capital Holdings, Inc. was held by 22 hedge fund portfolios at the end of the second quarter, an increase from 16 in the previous quarter [4] - The company's third-quarter revenue rose by 3% from the second quarter to $361.2 million [4] - Despite the potential of Victory Capital, the company is viewed as having less upside compared to certain AI stocks, which are considered to carry greater potential and lower downside risk [4]

Core Insights - Victory Capital Holdings, Inc. (VCTR) reported assets under management (AUM) of $313 billion for October 2025, reflecting an increase of nearly 1% from September 2025 [1][8] - The performance of U.S. large-cap and global equity assets grew, while mid-cap and small-cap segments experienced declines [8] - The company’s integrated multi-boutique business model and effective distribution platform are expected to enhance performance in the near term [3] AUM Breakdown - U.S. mid-cap equity AUM decreased by 3.7% to $30.7 billion [1] - U.S. small-cap equity AUM declined by 3.9% to $12.2 billion [1] - Global/non-U.S. equity AUM increased by 2.6% to $29.7 billion [1] - U.S. large-cap equity AUM rose by 2.1% to $61.9 billion [1] - Solutions AUM increased by 2% to $88.7 billion [2] - Fixed-income AUM totaled $80.5 billion, showing a marginal increase [2] - Money market/short-term assets rose by 2.3% to $3.7 billion [2] Market Performance - Over the past six months, VCTR shares have lost 3.7%, compared to the industry's decline of 2.1% [4] - Victory Capital currently holds a Zacks Rank 3 (Hold) [5] Comparison with Peers - Franklin Resources, Inc. (BEN) reported preliminary AUM of $1.69 trillion as of October 31, 2025, which increased by 1.7% from the prior month [6][9]

Client Assets and AUM Growth - Total client assets reached $313.4 billion, with assets under management (AUM) at $310.6 billion as of September 30, 2025, reflecting significant growth from $176.1 billion in 2024[175][188] - AUM increased by $12.1 billion, or 4.1%, from $298.6 billion at June 30, 2025, driven by $14.5 billion in market appreciation, partially offset by $0.3 billion in net outflows[188] - As of September 30, 2025, total Assets Under Management (AUM) reached $310,644 million, up from $176,113 million in 2024, reflecting a significant increase of 76.3% year-over-year[200] - Total Assets Under Management (AUM) as of September 30, 2025, reached $310.64 billion, an increase from $176.11 billion in 2024, representing a growth of 76%[208] - The total long-term assets under management as of September 30, 2025, were $306,985 million, compared to $172,720 million in 2024, reflecting an increase of 77.8%[200] - The company has grown total client assets from $17.9 billion in August 2013 to $313.4 billion as of September 30, 2025, attributed to successful acquisitions and strong investment returns[185] Revenue and Income - Total revenue for the three months ended September 30, 2025, was $361.2 million, up from $225.6 million in the same period in 2024, while total revenue for the nine months was $932.0 million compared to $661.1 million[191] - Net income for the three months ended September 30, 2025, was $96.5 million, compared to $82.0 million in 2024, with net income for the nine months at $217.3 million versus $211.9 million[191] - Adjusted EBITDA for the three months ended September 30, 2025, was $190.5 million, representing 52.7% of revenue, compared to $121.3 million, or 53.7% of revenue, in 2024[191] - Net income attributable to common shareholders for the nine months ended September 30, 2025, was $181.97 million, compared to $211.93 million for the same period in 2024[219] - Earnings per share (EPS) for the three months ended September 30, 2025, were $1.12, compared to $1.26 for the same period in 2024[219] Cash Flows and Financial Activities - The Company recorded a net cash provided by operating activities of $240.4 million for the nine months ended September 30, 2025, a decrease of 3.1% compared to $248.2 million for the same period in 2024[284] - Cash provided by investing activities was $77.7 million for the nine months ended September 30, 2025, primarily from cash acquired through acquisitions of $53.6 million[286] - Cash used in financing activities totaled $329.5 million for the nine months ended September 30, 2025, which included $63.7 million for acquisition consideration and $115.7 million for dividend payments[288] Market Performance and Client Flows - The company generated $17.3 billion in gross flows for the three months ended September 30, 2025, compared to $6.1 billion in 2024, with net outflows of $0.3 billion[188] - Gross client cash inflows for the three months ended September 30, 2025, were $17,296 million, compared to $6,120 million in the same period of 2024, indicating an increase of 182.5%[196] - Net client cash flows for the three months ended September 30, 2025, were negative at $(292) million, an improvement from $(2,636) million in the same period of 2024[196] - The company experienced net outflows of $2.3 billion for the nine months ended September 30, 2025, with significant outflows from U.S. equity strategies[217] Expenses and Costs - Personnel compensation and benefits for the three months ended September 30, 2025, increased by 124.3%, or $53.7 million, to $97.0 million, primarily due to higher salaries and acquisition-related compensation[225] - For the three months ended September 30, 2025, distribution and other asset-based expenses increased by $29.3 million, or 79.6%, to $66.2 million compared to $36.8 million for the same period in 2024, primarily due to higher broker-dealer and platform distribution fees[229] - General and administrative expenses for the three months ended September 30, 2025 increased by $9.4 million, or 67.3%, to $23.5 million compared to $14.0 million for the same period in 2024[231] - Depreciation and amortization for the three months ended September 30, 2025 increased by $14.5 million, or 193.4%, to $22.0 million from $7.5 million for the same period in 2024, due to the amortization of intangible assets from the Amundi US acquisition[233] Acquisitions and Strategic Developments - The acquisition of Amundi U.S. was completed on April 1, 2025, enhancing the company's scale and diversifying its investment capabilities[180][182] - Victory Capital's Solutions Platform manages approximately $52 billion in AUM for non-U.S. investors, supported by a global distribution agreement with Amundi[184] - The company experienced a divestment of approximately $1 billion in assets due to the closure of three Investment Franchises during the third quarter of 2025[202] - Acquisition-related costs for the nine months ended September 30, 2025 were $34.9 million, significantly higher than $9.2 million for the same period in 2024, related to the Amundi US acquisition[238] - Restructuring and integration costs for the nine months ended September 30, 2025 were $25.4 million, compared to $0.8 million for the same period in 2024, primarily related to personnel restructuring[240] Market and Currency Risks - Approximately 9% of AUM is invested in securities denominated in currencies other than the U.S. dollar, which exposes the company to exchange rate risk[295] - A 10% increase or decrease in the value of the U.S. dollar would affect the fair value of AUM by approximately $2.8 billion, impacting revenues by about $13.2 million at a weighted-average fee rate of 47 basis points[295] - The company has not adopted a corporate-level risk management policy for exchange rate risk or client asset management[295] Interest and Debt Management - The Repriced Term Loans, totaling $985.0 million, will mature on September 23, 2032, with an interest rate of SOFR plus a margin of 2.00%[264] - The Company had no outstanding borrowings under the revolving credit facility as of September 30, 2025, maintaining compliance with its financial performance covenants[266] - The company executed a floating-to-fixed interest rate swap to fix the interest rate at 3.465% on $450 million of its Term Loan[296]

Financial Data and Key Metrics Changes - The company achieved record-high gross flows and net flows finished just under flat for the quarter, with total assets reaching $313 billion [5] - Adjusted EBITDA set a new all-time quarterly high at $191 million, resulting in an adjusted EBITDA margin of 52.7% [5][22] - Adjusted earnings per diluted share rose to a record $1.63, up 4% from the second quarter and 20% higher than the quarter immediately preceding the Amundi transaction [5][22] Business Line Data and Key Metrics Changes - Long-term gross flows rose 10% quarter over quarter to $17 billion, reflecting the expanded U.S. distribution team and strong sales outside the U.S. [5][21] - Multiple investment franchises generated positive net long-term flows, including Victory Income Investors, Pioneer Investments, RS Global, Trivalent, and the Victory Shares ETF platform [24] Market Data and Key Metrics Changes - The company currently manages $52 billion of AUM from clients outside the U.S. from 60 countries, where net flows remain positive [7] - 17% of total AUM was from investors outside the United States as of quarter end [23] Company Strategy and Development Direction - The company aims to be a trillion-dollar firm, focusing on strategic acquisitions that enhance its competitive position and shareholder value [34] - The integration process at Pioneer Investments is ahead of plan, with approximately $86 million of net expense synergies achieved on a run-rate basis [6][25] - The company is investing in expanding its distribution capacity outside the U.S. and launching new UCITS products [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the distribution opportunities outside the U.S. and the potential for significant growth in 2026 and beyond [11][46] - The company anticipates a phase of intense consolidation in the industry, which it is well-positioned to navigate [35] Other Important Information - The company repurchased 1.8 million shares during the quarter and has $355 million of capacity remaining on its repurchase authorization [6][27] - The balance sheet remains strong with $116 million of cash and a net leverage ratio of 1.1 times, providing financial flexibility for growth initiatives [27] Q&A Session Summary Question: M&A Strategy and Focus - Management emphasized that all acquisitions will be strategic, aiming for size and scale while also considering smaller, highly strategic deals [34] Question: Pioneer Acquisition Synergies - The company is ahead of synergy targets due to conservative planning and the discovery of operational efficiencies during integration [36][38] Question: Non-U.S. Business Performance - Positive net sales have primarily come from the Pioneer franchise, with expectations for increased flows from legacy Victory products in 2026 [45][46] Question: Inorganic Pipeline and Risks - The inorganic pipeline is full, with active discussions ongoing, and the environment for acquisitions has improved [71][72] Question: Integration Challenges with Alternatives - Management is aware of cultural integration challenges and has been patient in observing the market before pursuing acquisitions in the alternatives space [76]

Financial Data and Key Metrics Changes - The company achieved record-high gross flows and net flows finished just under flat for the quarter, with total assets reaching $313 billion [5] - Adjusted EBITDA set a new all-time quarterly high at $191 million, resulting in an adjusted EBITDA margin of 52.7% [5][22] - Adjusted earnings per diluted share rose to a record $1.63, up 4% from the second quarter and 20% higher than the quarter preceding the Amundi transaction [5][22] - Revenue increased 3% from the second quarter to $361.2 million, with average assets for the quarter rising 7% quarter over quarter [21] - The company returned a total of $163 million to shareholders in the quarter, marking an all-time high [22][28] Business Line Data and Key Metrics Changes - Long-term gross flows rose 10% quarter over quarter to $17 billion, reflecting the expanded U.S. distribution team and strong sales outside the U.S. [5][24] - Multiple investment franchises generated positive net long-term flows, including Victory Income Investors, Pioneer Investments, RS Global, Trivalent, and the VictoryShares ETF platform [24] - Year-to-date positive net flows for the ETF platform reached $5.4 billion, representing a 53% organic growth rate [13] Market Data and Key Metrics Changes - The company currently manages $52 billion of AUM from clients outside the U.S. across 60 countries, with net flows remaining positive [7] - 17% of total AUM was from investors outside the United States as of quarter end [23] Company Strategy and Development Direction - The company aims to be a $1 trillion firm, focusing on strategic acquisitions that enhance its competitive position and shareholder value [34][36] - The integration process at Pioneer Investments is ahead of plan, with $86 million of net expense synergies achieved on a run-rate basis [6][40] - The company is investing in expanding its distribution capacity outside the U.S. and launching new UCITS products [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the distribution opportunities outside the U.S. and the potential for significant growth in 2026 [11][48] - The company anticipates a transformational opportunity in the non-U.S. segment, with strong sales expected from legacy Victory products [48] - Management highlighted the importance of strategic acquisitions in a fragmented industry, emphasizing the need for firms to partner to grow [36][72] Other Important Information - The company has achieved $86 million of net expense synergies and expects to reach a total of $110 million [6][25] - The balance sheet remains strong with $116 million of cash and a net leverage ratio of 1.1x, providing financial flexibility for growth [22][28] Q&A Session Summary Question: M&A Strategy and Focus - Management aims for strategic acquisitions rather than purely financial transactions, with a focus on enhancing the company's capabilities and shareholder value [34][36] Question: Pioneer Acquisition Synergies - The company is ahead of synergy targets due to conservative planning and the identification of operational efficiencies [38][40] Question: Non-U.S. Business Performance - Positive net sales have primarily come from the Pioneer franchise, with expectations for increased flows from legacy Victory products in 2026 [46][48] Question: Inorganic Pipeline and Risks - The inorganic pipeline is full, with active discussions ongoing, and the environment for acquisitions has improved [72][73] Question: Integration Challenges with Alternatives - Management is aware of cultural integration challenges and has been patient in observing the market before pursuing acquisitions in the alternatives space [77]

Financial Data and Key Metrics Changes - Victory Capital achieved record-high gross flows and net flows finished just under flat for the quarter, with total assets reaching $313 billion [4] - Adjusted EBITDA set a new all-time quarterly high at $191 million, resulting in an adjusted EBITDA margin of 52.7% [4][22] - Adjusted earnings per diluted share rose to a record $1.63, up 4% from the second quarter and 20% higher than the quarter immediately preceding the Amundi transaction [4][22] Business Line Data and Key Metrics Changes - Long-term gross flows rose 10% quarter over quarter to $17 billion, reflecting the expanded U.S. distribution team and strong sales outside the U.S. [4] - The ETF business, Victory Shares, saw year-to-date positive net flows of $5.4 billion, representing a 53% organic growth rate through the first nine months of the year [12] - Nearly half of the mutual fund and ETF AUM ranks in the top quartile based on Morningstar's three-year rankings [14] Market Data and Key Metrics Changes - 17% of total AUM was from investors outside the United States, indicating meaningful diversification into non-U.S. geographies [23] - The company currently manages $52 billion of AUM from clients outside the U.S. from 60 countries, where net flows remain positive [6] Company Strategy and Development Direction - The company aims to be a trillion-dollar firm, focusing on strategic acquisitions that enhance its competitive position and satisfy growth objectives [30][31] - The integration process at Pioneer Investments is ahead of plan, with approximately $86 million of net expense synergies achieved on a run-rate basis [5][25] - The company is investing in expanding its distribution capacity outside the U.S. and launching new UCITS products [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the distribution opportunities outside the U.S., particularly in Asia and the Middle East, where there is high demand for U.S. dollar-denominated products [10][11] - The company anticipates that the integration of Pioneer Investments will lead to significant growth in the non-U.S. segment starting in 2026 [38] Other Important Information - The company repurchased 1.8 million shares during the quarter and has $355 million of capacity remaining on its existing repurchase authorization [5][22] - The balance sheet remains strong with $116 million of cash and a net leverage ratio of 1.1 times, providing financial flexibility for growth initiatives [27] Q&A Session Summary Question: M&A Strategy and Focus - Management emphasized that all acquisitions will be strategic, aiming for size and scale to compete effectively in the long term [30][31] Question: Pioneer Acquisition Synergies - The company is ahead of synergy targets due to conservative planning and the identification of operational efficiencies [32][34] Question: Non-U.S. Business Performance - Positive net sales have primarily come from the Pioneer franchise, with expectations for increased flows into legacy Victory products in 2026 [38] Question: Inorganic Pipeline and Opportunities - The inorganic pipeline is full, with active discussions ongoing, and the environment for acquisitions has improved [50][51] Question: Integration Challenges with Alternatives - Management acknowledged the cultural differences between traditional and alternative investments and emphasized a careful approach to integration [52]

Business Highlights - Total client assets reached $313 Billion[6] - Long-term gross flows amounted to $17 Billion[6] - Adjusted EBITDA stood at $190.5 Million with a margin of 52.7%[6] - Adjusted earnings per diluted share with tax benefit was $1.63[6] - Pioneer Investments realized over $86 Million of the projected $110 Million in net expense synergies since the transaction closed on April 1[6] ETF Growth - ETF AUM reached $17.2 Billion[18] - Year-to-date net flows for ETFs were $5.4 Billion, representing a 53% increase[17] Investment Performance - 64% of Total Mutual Funds and ETFs AUM with 4- or 5-Star overall ratings[23] - 63% of strategies outperformed benchmarks over a 3-year period[25] Capital Allocation - $1.1 Billion has been returned to shareholders since IPO[30] - Strategic acquisitions, share repurchases, and dividends totaled $0.2 Billion, $0.4 Billion, and $1.6 Billion respectively[28] Financial Results - Revenue for the quarter was $361.2 Million[35] - GAAP Operating Income was $138 Million[35] - Adjusted Net Income with tax benefit reached $141.3 Million, or $1.63 per diluted share[35]

Core Insights - Victory Capital Holdings (VCTR) reported a revenue of $361.2 million for the quarter ended September 2025, marking a year-over-year increase of 60.1% and an EPS of $1.63 compared to $1.35 a year ago [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $361.76 million, resulting in a surprise of -0.16%, while the EPS exceeded expectations by 1.87% [1] Financial Performance - Victory Capital's shares have returned -7.2% over the past month, contrasting with the Zacks S&P 500 composite's +1.3% change, and the stock currently holds a Zacks Rank 3 (Hold) [3] - The company’s ending assets under management (AUM) totaled $310.64 billion, closely aligning with the average estimate of $310.65 billion from three analysts [4] - Specific AUM figures include: - Money Market/Short-term: $3.66 billion [4] - Alternative Investments: $3.02 billion [4] - U.S. Small Cap Equity: $12.72 billion [4] - U.S. Mid Cap Equity: $31.88 billion [4] - Solutions: $86.96 billion [4] - Global/Non-U.S. Equity: $28.96 billion [4] - Fixed Income: $80.39 billion [4] - U.S. Large Cap Equity: $63.06 billion [4] Revenue Breakdown - Investment management fees generated $288.51 million, surpassing the estimated $282.47 million and reflecting a year-over-year increase of 62.3% [4] - Fund administration and distribution fees amounted to $72.69 million, below the estimated $79.28 million, but still showing a year-over-year increase of 52% [4] - Net client cash flows for Money Market/Short-term were reported at -$48 million, contrasting with the average estimate of $15.44 million from two analysts [4]