[Second-Quarter Highlights & Management Commentary](index=1&type=section&id=Second%2DQuarter%20Highlights%20%26%20Management%20Commentary) Victory Capital achieved record Q2 2025 financial results, driven by the Pioneer Investments acquisition, strong synergy realization, improved net flows, solid investment performance, and enhanced capital return initiatives - Successfully closed the acquisition of Pioneer Investments (from Amundi), achieving approximately **$70 million** of the expected **$110 million** in net expense synergies by the end of June[4](index=4&type=chunk) - Long-term net flows continued to improve for the third consecutive quarter, with net outflows at just **($660) million**, representing less than **1%** of AUM on an annualized basis[5](index=5&type=chunk)[10](index=10&type=chunk) - The Board increased the share repurchase authorization to **$500 million**. In Q2, the company returned approximately **$71 million** to shareholders through buybacks (**439,000 shares**) and cash dividends[7](index=7&type=chunk)[10](index=10&type=chunk) - The company's net debt to leverage ratio improved to **1.2x**, its lowest level since becoming a public company[7](index=7&type=chunk) - The Board authorized a regular quarterly cash dividend of **$0.49 per share**[10](index=10&type=chunk) [Financial & Operational Performance Summary](index=2&type=section&id=Financial%20%26%20Operational%20Performance%20Summary) Q2 2025 financial performance, significantly impacted by the Amundi US acquisition, saw ending AUM surge to **$298.6 billion**, with strong adjusted (Non-GAAP) growth despite GAAP pressures from acquisition costs Q2 2025 Financial & AUM Snapshot | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | **Ending AUM** | $298.6B | $167.5B | $168.7B | | **Average AUM** | $285.0B | $173.8B | $167.5B | | **Long-term Net Flows** | ($660)M | ($1,205)M | ($1,701)M | | **Revenue** | $351.2M | $219.6M | $219.6M | | **GAAP Operating Margin** | 26.8% | 42.3% | 50.4% | | **GAAP EPS (Diluted)** | $0.68 | $0.96 | $1.12 | | **Adjusted EBITDA** | $178.5M | $116.4M | $116.5M | | **Adjusted EBITDA Margin** | 50.8% | 53.0% | 53.0% | | **Adj. Net Income w/ Tax Benefit per Diluted Share** | $1.57 | $1.36 | $1.31 | [Detailed Financial Analysis](index=3&type=section&id=Detailed%20Financial%20Analysis) The Amundi US acquisition significantly drove financial results, boosting revenue and adjusted metrics while GAAP operating margins and net income contracted due to increased acquisition and restructuring costs [Second Quarter 2025 vs. First Quarter 2025 (QoQ)](index=3&type=section&id=Second%20Quarter%202025%20vs.%20First%20Quarter%202025%20%28QoQ%29) Revenue grew **59.9%** sequentially to **$351.2 million** driven by the Amundi US acquisition, while GAAP operating margin declined due to increased costs, yet adjusted net income rose **50.7%** to **$132.8 million** Q2 2025 vs Q1 2025 Performance | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Revenue | $351.2M | $219.6M | +59.9% | | GAAP Operating Margin | 26.8% | 42.3% | -1,550 bps | | GAAP Net Income | $58.7M | $62.0M | -5.2% | | Adjusted Net Income w/ Tax Benefit | $132.8M | $88.1M | +50.7% | | Adjusted EBITDA | $178.5M | $116.4M | +53.4% | [Second Quarter 2025 vs. Second Quarter 2024 (YoY)](index=3&type=section&id=Second%20Quarter%202025%20vs.%20Second%20Quarter%202024%20%28YoY%29) Year-over-year revenue grew **59.9%** to **$351.2 million** due to higher AUM, while GAAP operating margin contracted significantly, yet adjusted net income and EBITDA increased robustly Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $351.2M | $219.6M | +59.9% | | GAAP Operating Margin | 26.8% | 50.4% | -2,360 bps | | GAAP Net Income | $58.7M | $74.3M | -21.0% | | Adjusted Net Income w/ Tax Benefit | $132.8M | $86.6M | +53.3% | | Adjusted EBITDA | $178.5M | $116.5M | +53.2% | [Six Months Ended June 30, 2025 vs. 2024](index=4&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) First-half 2025 revenue increased **31.1%** to **$570.8 million**, while GAAP operating margin declined due to higher costs, yet adjusted net income and EBITDA grew significantly First Half 2025 vs First Half 2024 Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $570.8M | $435.5M | +31.1% | | GAAP Operating Margin | 32.8% | 44.9% | -1,210 bps | | GAAP Net Income | $120.7M | $129.9M | -7.1% | | Adjusted Net Income w/ Tax Benefit | $220.9M | $169.0M | +30.7% | | Adjusted EBITDA | $294.9M | $228.9M | +28.9% | [Assets Under Management (AUM) Analysis](index=3&type=section&id=Assets%20Under%20Management%20%28AUM%29%20Analysis) Total AUM surged to **$298.6 billion** by June 30, 2025, primarily from the Amundi US acquisition, significantly altering asset class and client mix while maintaining strong investment performance [AUM, Flows, and Investment Performance](index=3&type=section&id=AUM%2C%20Flows%2C%20and%20Investment%20Performance) Total AUM reached **$298.6 billion** at quarter-end, driven by the Amundi US acquisition and market action, with solid investment performance across various long-term periods AUM Outperformance vs. Benchmark (as of June 30, 2025) | Trailing 1-Year | Trailing 3-Years | Trailing 5-Years | Trailing 10-Years | | :--- | :--- | :--- | :--- | | 56% | 58% | 67% | 73% | - **64%** of AUM in mutual funds and ETFs was rated four or five stars overall by Morningstar[6](index=6&type=chunk) [AUM by Asset Class](index=13&type=section&id=AUM%20by%20Asset%20Class) The Amundi US acquisition significantly shifted AUM mix, making Fixed Income and Solutions the largest asset classes, each approximately **$80 billion**, with strong net flows in Solutions Ending AUM by Asset Class (June 30, 2025) | Asset Class | AUM (in millions) | % of Total Long-term AUM | | :--- | :--- | :--- | | Solutions | $79,988 | 27.1% | | Fixed Income | $79,752 | 27.0% | | U.S. Large Cap Equity | $61,844 | 21.0% | | U.S. Mid Cap Equity | $31,643 | 10.7% | | Global / Non-U.S. Equity | $25,576 | 8.7% | | U.S. Small Cap Equity | $13,140 | 4.5% | | Alternative Investments | $2,986 | 1.0% | | **Total Long-term AUM** | **$294,930** | **100.0%** | [AUM by Region](index=15&type=section&id=AUM%20by%20Region) The acquisition significantly expanded the international footprint, with non-U.S. client AUM growing from **3%** to **16%** of total AUM, reaching **$48.5 billion** by June 2025 AUM by Region Comparison | Region | June 30, 2025 | % of Total | June 30, 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | U.S. | $250,035M | 84% | $163,146M | 97% | | Non-U.S. | $48,528M | 16% | $5,535M | 3% | | **Total AUM** | **$298,563M** | **100%** | **$168,681M** | **100%** | [AUM by Vehicle](index=16&type=section&id=AUM%20by%20Vehicle) Mutual Funds remain the largest AUM vehicle at **$168.0 billion**, while ETFs showed the strongest organic growth with **$1.3 billion** in net inflows during Q2 2025 Ending AUM by Vehicle (June 30, 2025) | Vehicle | AUM (in millions) | Q2 2025 Net Flows (in millions) | | :--- | :--- | :--- | | Mutual Funds | $167,973 | ($2,781) | | Separate Accounts and Other Vehicles | $118,615 | $672 | | ETFs | $11,975 | $1,305 | | **Total AUM** | **$298,563** | **($804)** | [Balance Sheet and Capital Management](index=4&type=section&id=Balance%20Sheet%20and%20Capital%20Management) As of June 30, 2025, total debt was approximately **$972 million**, with the Board approving a **$0.49 per share** quarterly dividend and increasing the share repurchase authorization to **$500 million** - Total debt outstanding was approximately **$972 million** as of June 30, 2025[27](index=27&type=chunk) - The Board approved a regular quarterly cash dividend of **$0.49 per share**, payable on September 25, 2025[27](index=27&type=chunk) - The Board increased the 2025 Share Repurchase Program authorization from **$200 million** to **$500 million** and extended it through December 31, 2027[28](index=28&type=chunk) [Appendix: Financial Statements](index=7&type=section&id=Appendix%3A%20Financial%20Statements) This appendix provides detailed unaudited financial statements for June 30, 2025, including Consolidated Statements of Operations, GAAP to Non-GAAP reconciliations, Condensed Consolidated Balance Sheets, and AUM breakdowns [Consolidated Statements of Operations (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) Q2 2025 total revenue significantly increased to **$351.2 million**, but operating expenses, driven by acquisition and restructuring costs, led to GAAP net income of **$58.7 million** Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenue | $351,212 | $219,621 | | Total operating expenses | $256,998 | $109,024 | | *Acquisition-related costs* | *$25,780* | *$3,049* | | *Restructuring and integration costs* | *$13,994* | *$105* | | Income from operations | $94,214 | $110,597 | | Net income | $58,734 | $74,251 | [Reconciliation of GAAP to Non-GAAP Measures (Unaudited)](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non%2DGAAP%20Measures%20%28Unaudited%29) This reconciliation details adjustments from GAAP Net Income to Adjusted EBITDA and Adjusted Net Income, highlighting **$54.0 million** in acquisition and restructuring costs and **$18.6 million** in intangible asset amortization for Q2 2025 Q2 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | Amount | | :--- | :--- | | **Net income (GAAP)** | **$58,734** | | Acquisition, restructuring and exit costs | $53,990 | | Amortization of acquisition-related intangible assets | $18,558 | | Interest expense | $12,200 | | Other adjustments | $7,049 | | **Adjusted EBITDA** | **$178,525** | | **Adjusted net income** | **$122,507** | | Tax benefit of goodwill and acquired intangible assets | $10,255 | | **Adjusted net income with tax benefit** | **$132,762** | [Condensed Consolidated Balance Sheets (Unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) The June 30, 2025 balance sheet reflects the Amundi US acquisition, with total assets growing to **$4.25 billion** and total stockholders' equity doubling to **$2.47 billion**, driven by increased goodwill and intangible assets Balance Sheet Comparison (in thousands) | Asset/Liability/Equity | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total assets | $4,249,447 | $2,547,591 | | Goodwill | $1,232,800 | $981,805 | | Other intangible assets, net | $2,515,005 | $1,260,614 | | Long-term debt, net | $965,674 | $963,862 | | Total liabilities | $1,784,322 | $1,425,954 | | Total stockholders' equity | $2,465,125 | $1,121,637 |

Core Viewpoint - Victory Capital Holdings (VCTR) is expected to report quarterly earnings of $1.45 per share, reflecting a 10.7% increase year-over-year, with revenues projected at $335.82 million, indicating a 52.9% year-over-year growth [1]. Earnings Estimates - The consensus EPS estimate has been revised downward by 0.5% over the past 30 days, indicating a collective reassessment by analysts [2]. - Revisions to earnings estimates are crucial for predicting investor actions, as empirical research shows a strong correlation between earnings estimate trends and short-term stock price performance [3]. Revenue Projections - Analysts estimate 'Revenue - Investment management fees' to reach $262.94 million, a 51.9% increase from the previous year [5]. - 'Revenue - Fund administration and distribution fees' is expected to be $72.87 million, reflecting a year-over-year change of 56.9% [5]. Assets Under Management (AUM) - The consensus estimate for 'Ending Assets Under Management' is $298.57 billion, up from $173.78 billion in the same quarter last year [6]. - 'Ending assets under management - Solutions' is projected to reach $79.99 billion, compared to $58.94 billion a year ago [7]. - 'Ending assets under management - U.S. Large Cap Equity' is expected to be $50.78 billion, significantly up from $13.98 billion in the previous year [7]. - 'Ending assets under management - U.S. Mid Cap Equity' is forecasted at $37.49 billion, compared to $31.02 billion last year [8]. - 'Ending assets under management - U.S. Small Cap Equity' is estimated at $18.35 billion, up from $15.18 billion year-over-year [8]. - 'Ending assets under management - Alternative Investments' is expected to be $2.99 billion, down from $3.39 billion last year [9]. - 'Ending assets under management - Fixed Income' is projected at $79.75 billion, a significant increase from $24.40 billion in the same quarter last year [10]. Stock Performance - Victory Capital shares have returned +7.3% over the past month, outperforming the Zacks S&P 500 composite, which changed by +0.5% [10].

The market expects Victory Capital Holdings (VCTR) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 7, might help the stock move higher if these key number ...

Core Points - AeroVironment Inc. will replace ChampionX Corp. in the S&P MidCap 400, while Victory Capital Holdings Inc. will replace AeroVironment in the S&P SmallCap 600, effective July 18, 2025 [1] - Schlumberger Ltd. is acquiring ChampionX in a deal expected to close on July 16, 2025, pending final conditions [1] Summary by Category Index Changes - Effective Date: July 18, 2025 - S&P MidCap 400: Addition of AeroVironment (Ticker: AVAV, Sector: Industrials) and Deletion of ChampionX (Ticker: CHX, Sector: Energy) [2] - S&P SmallCap 600: Addition of Victory Capital Holdings (Ticker: VCTR, Sector: Financials) and Deletion of AeroVironment (Ticker: AVAV, Sector: Industrials) [2]

Group 1: Company Performance - Victory Capital Holdings, Inc. (VCTR) reported assets under management (AUM) of $298.6 billion for June 2025, reflecting a 3.2% increase from May 31, 2025 [1][8] - U.S. large-cap equity AUM rose 4.9% to $61.8 billion, while U.S. mid-cap equity AUM increased 1.8% to $31.6 billion [1][8] - Solutions assets reached $79.9 billion, up 4.7% from May 2025, and fixed-income AUM totaled $79.7 billion, representing a 1% increase [2][8] Group 2: Market Positioning - The strong positioning of VCTR's integrated multi-boutique business model in a fast-expanding market is expected to boost its performance in the near term [3] - Over the past six months, VCTR shares have gained 29.9%, outperforming the industry's growth of 21.7% [4] Group 3: Comparison with Other Asset Managers - Franklin Resources, Inc. (BEN) reported preliminary AUM of $1.61 trillion as of June 30, 2025, which increased 2.1% from the prior month [7] - Invesco (IVZ) reported AUM of $2 trillion as of June 30, 2025, increasing 3% from the previous month, with strong market returns contributing to a $58 billion increase [9][10]

Financial Data and Key Metrics Changes - Total client assets at the end of March were $171 billion, slightly down from the start of the year, with average AUM approximately 1% lower compared to the fourth quarter [6] - Revenue for the first quarter was $219.6 million, down about 5% from the fourth quarter due to lower average AUM and fewer days in the quarter, but year-over-year revenue was higher [21][22] - Adjusted earnings per diluted share with tax benefit was $1.36, marking the second highest quarterly EPS in company history and a record for any first quarter [9][30] - Adjusted EBITDA was $116 million with a margin of 53%, reflecting a 90 basis point expansion from the first quarter of the previous year [30] Business Line Data and Key Metrics Changes - Gross sales increased by 41% from the last quarter, reaching $9.3 billion, the highest level of quarterly gross sales in three years [6] - The ETF AUM increased to over $13 billion, a 28% increase during the quarter and up 67% year-over-year [8] - The Amundi acquisition resulted in a doubling of fixed income AUM as a percentage of total assets from 14% to 28% [11] Market Data and Key Metrics Changes - The company ended the quarter with $44 billion of AUM sourced from clients outside the U.S., representing 15% of total AUM, compared to less than 5% previously [12][24] - Pioneer Investments generated positive net long-term flows of $1.7 billion in the first quarter, which is not included in the company's numbers due to the transaction closing on April 1 [13][27] Company Strategy and Development Direction - The company is strategically investing in distribution channels, data, technology, marketing, and intermediary partnerships to enhance organic growth [10][19] - Plans for several ETF launches in 2025 are underway, with a focus on expanding the product lineup [9][19] - The company aims to maintain a long-term margin target of 49%, despite short-term integration costs from the Amundi acquisition [45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the underlying activity around flows, viewing the two large redemptions as one-time events that should not distort organic growth progress [7] - The company is well-positioned for organic growth with a larger sales force and enhanced resources dedicated to distribution efforts [19][66] - Management anticipates a potential acquisition announcement in 2025, leveraging the improved balance sheet and cash position [58] Other Important Information - The company returned $39 million to shareholders during the first quarter and increased the quarterly dividend to $0.49 per share [22] - The net leverage ratio remained steady at 1.7 times, with cash on hand increasing to $176 million [22][31] Q&A Session Summary Question: Can you elaborate on the rollout of new products outside the U.S.? - Management indicated that they are working with Amundi to identify successful products for international markets, with launches expected in the latter half of 2025 [35][38] Question: How will margins evolve in the near term? - Management confirmed that while margins are currently at 53%, they expect a slight decline during integration efforts, but remain bullish on achieving long-term targets of 49% [42][45] Question: What is the state of the acquisition pipeline? - Management stated that the company is in a strong position to execute sizable transactions and is leaning towards larger scaled opportunities [56][58] Question: How are fixed income and solutions performing in volatile markets? - Management noted that the fixed income platform has expanded and performed well, with positive net flows observed in the first quarter [64][66] Question: Have there been any dissynergies from the Amundi acquisition? - Management reported no dissynergies from the Amundi acquisition, highlighting positive net flows from Pioneer Investments [72][74] Question: What investments are being made to enhance organic growth? - Management detailed significant investments in sales, marketing, and data technology to support organic growth, with success measured by growth in business [84][87] Question: How important are alternative investment products for future acquisitions? - Management acknowledged the importance of alternative investments and is evaluating various strategies to incorporate them into the platform [90][92] Question: What is the rationale behind the change in dividend policy? - Management explained that the change allows for more opportunistic increases while prioritizing capital for acquisitions and growth [96][98]

Financial Data and Key Metrics Changes - Total client assets at the end of March were $171 billion, slightly down from the start of the year, with average AUM approximately 1% lower compared to the fourth quarter [4] - Revenue for the first quarter was $219.6 million, down about 5% from the fourth quarter due to lower average AUM and fewer days in the quarter [18] - Adjusted earnings per diluted share with tax benefit was $1.36, marking the second highest quarterly EPS in company history [6][18] - Adjusted EBITDA was $116 million with an EBITDA margin of 53%, reflecting a 90 basis point expansion from the first quarter of the previous year [28] Business Line Data and Key Metrics Changes - Gross sales increased by 41% from the last quarter, reaching $9.3 billion, the highest level of quarterly gross sales in three years [4] - The ETF AUM increased to over $13 billion, a 28% increase during the quarter and up 67% year-over-year [5] - The Amundi U.S. business generated positive net long-term flows of $1.7 billion in the first quarter, which is not included in the current numbers due to the transaction closing on April 1 [11] Market Data and Key Metrics Changes - The proportion of retail assets under management rose, with $44 billion sourced from clients outside the U.S., representing 15% of total AUM compared to less than 5% previously [10] - The investment performance remained strong, with 67% of mutual fund and ETF assets earning four or five-star ratings from Morningstar [17] Company Strategy and Development Direction - The company is strategically investing in distribution channels, data, technology, marketing, and intermediary partnerships to enhance organic growth [7][8] - Plans for several ETF launches in 2025 are underway, with a focus on expanding the product lineup [6][10] - The company aims to maintain a long-term margin target of 49%, despite short-term fluctuations due to integration efforts [44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the underlying activity around flows, viewing the recent large redemptions as one-time events that should not distort ongoing growth [5] - The company is encouraged by discussions regarding ongoing diligence activities and sees potential for additional strategic growth opportunities [8][56] Other Important Information - The company increased its quarterly dividend to $0.49 per share, payable on June 25, and anticipates moving back to an annual increase cycle [19][95] - The leverage ratio improved significantly following the Amundi transaction, enhancing financial flexibility [8][29] Q&A Session Summary Question: Can you elaborate on the rollout of new products outside the U.S.? - The company is working with Amundi to identify products for international markets, with launches expected in the latter half of 2025 [35][39] Question: How will margins evolve in the near term? - Margins may see a slight decline during integration efforts, but the long-term target remains at 49% [44][45] Question: What is the current state of the acquisition pipeline? - The company is in a strong position to execute sizable transactions and is leaning towards larger scaled opportunities [56][57] Question: Have there been any dissynergies from the Amundi acquisition? - No dissynergies have been observed; the combined business has resonated well in the market [72] Question: What investments are being made to enhance organic growth? - Significant investments in sales, marketing, and data technology are being made to support organic growth [84][85] Question: How important are alternative investment products for future acquisitions? - Alternatives are important, and the company is evaluating various ways to incorporate them into its offerings [88][89]

[Part I — Financial Information](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section presents Victory Capital Holdings, Inc.'s unaudited condensed consolidated financial statements for Q1 2025, covering balance sheets, operations, cash flows, and notes [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Victory Capital Holdings, Inc.'s unaudited condensed consolidated financial statements for Q1 2025, covering balance sheets, operations, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.58 billion** as of March 31, 2025, driven by cash, with liabilities rising to **$1.44 billion** and equity to **$1.14 billion** Condensed Consolidated Balance Sheet Highlights (Unaudited) | (Amounts in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $175,607 | $126,731 | | Goodwill | $981,805 | $981,805 | | Other intangible assets, net | $1,255,351 | $1,260,614 | | **Total assets** | **$2,583,486** | **$2,547,591** | | **Liabilities & Stockholders' Equity** | | | | Long-term debt, net | $964,763 | $963,862 | | **Total liabilities** | **$1,438,920** | **$1,425,954** | | **Total stockholders' equity** | **$1,144,566** | **$1,121,637** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue increased to **$219.6 million** in Q1 2025, driving net income to **$62.0 million**, or **$0.96 per diluted share**, supported by higher revenue and lower expenses Statement of Operations Summary (Unaudited) | (Amounts in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $219,602 | $215,857 | | Total operating expenses | $126,694 | $131,048 | | Income from operations | $92,908 | $84,809 | | Net income | $61,975 | $55,691 | | Diluted EPS | $0.96 | $0.84 | | Dividends declared per share | $0.47 | $0.335 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to **$81.1 million** in Q1 2025, with financing cash outflow decreasing, leading to a **$48.9 million** increase in cash Cash Flow Summary (Unaudited) | (Amounts in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,094 | $68,684 | | Net cash used in investing activities | ($1,684) | ($910) | | Net cash used in financing activities | ($30,713) | ($111,342) | | Net increase (decrease) in cash | $48,876 | ($43,610) | | Cash and cash equivalents, end of period | $175,607 | $79,937 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Detailed notes explain accounting policies and financial results, covering business, revenue, acquisitions, fair value, debt, equity, and subsequent events - On April 1, 2025, the Company completed the acquisition of Amundi US and reintroduced the brand Pioneer Investments for the acquired business[32](index=32&type=chunk) Disaggregated Revenue by Type and Product (Q1 2025 vs Q1 2024) | (Amounts in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total investment management fees** | **$173,301** | **$169,785** | | Mutual funds (Victory Funds) | $114,341 | $115,173 | | ETFs (VictoryShares) | $8,729 | $5,179 | | **Total fund administration and distribution fees** | **$46,301** | **$46,072** | | **Total revenue** | **$219,602** | **$215,857** | - The estimated fair value of contingent consideration payable to sellers for the WestEnd acquisition was **$143.3 million** as of March 31, 2025, with a **$3.4 million** increase in fair value for Q1 2025[70](index=70&type=chunk)[71](index=71&type=chunk) - On May 8, 2025, the Board of Directors approved a regular quarterly cash dividend of **$0.49 per share**, payable on June 25, 2025[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, noting AUM decreased to **$167.5 billion** due to market action and outflows, yet Q1 2025 revenue and net income increased [Overview and Key Performance Indicators](index=29&type=section&id=MD%26A_Overview) Victory Capital's AUM decreased to **$167.5 billion** due to market depreciation and net outflows, yet financial performance improved with Adjusted EBITDA rising - As of March 31, 2025, the company had total client assets of **$171.4 billion**, including **$167.5 billion** in AUM[138](index=138&type=chunk) Key Performance Indicators (Q1 2025 vs Q1 2024) | (Amounts in millions, except for bps and %) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | AUM at period end | $167,468 | $170,342 | | Average AUM | $173,789 | $163,533 | | AUM net flows | ($1,249) | ($1,127) | | Total revenue | $219.6 | $215.9 | | Revenue realization on average AUM | 51.2 bps | 53.0 bps | | Net income | $62.0 | $55.7 | | Adjusted EBITDA | $116.4 | $112.4 | | Adjusted EBITDA Margin | 53.0% | 52.1% | [Assets Under Management (AUM)](index=31&type=section&id=Assets%20Under%20Management) Total AUM decreased to **$167.5 billion** due to **$1.2 billion** in net outflows and **$3.2 billion** in market depreciation, with varied flows across vehicles AUM Roll-Forward (Q1 2025) | (Amounts in millions) | Amount | | :--- | :--- | | Beginning AUM (Jan 1, 2025) | $171,930 | | Net client cash flows | ($1,249) | | Market appreciation (depreciation) | ($3,172) | | Realizations and distributions | ($21) | | Acquired & divested assets / Net transfers | ($20) | | **Ending AUM (Mar 31, 2025)** | **$167,468** | AUM Net Flows by Vehicle (Q1 2025) | (Amounts in millions) | Net Client Cash Flows | | :--- | :--- | | Mutual Funds | ($3,006) | | ETFs | $2,810 | | Separate Accounts and Other | ($1,053) | | **Total AUM** | **($1,249)** | [GAAP Results of Operations](index=35&type=section&id=GAAP%20Results%20of%20Operations) Q1 2025 total revenue grew **1.7%** to **$219.6 million**, driven by higher AUM, while personnel compensation decreased and acquisition-related costs significantly increased - Investment management fees increased by **$3.5 million (2.1%)** year-over-year due to a higher average AUM of **$173.8 billion** in Q1 2025 compared to **$163.5 billion** in Q1 2024[167](index=167&type=chunk) - Personnel compensation and benefits decreased by **$3.4 million (5.6%)** year-over-year, primarily due to lower unrealized gains on deferred compensation plans and reduced contingent payment compensation expense[171](index=171&type=chunk) - Acquisition-related costs rose by **$7.7 million** to **$8.8 million** in Q1 2025, primarily due to legal, professional, and proxy solicitation costs related to the Amundi US acquisition[177](index=177&type=chunk) [Supplemental Non-GAAP Financial Information](index=37&type=section&id=Supplemental%20Non-GAAP%20Financial%20Information) Non-GAAP measures like Adjusted EBITDA (**$116.4 million**) and Adjusted Net Income (**$78.0 million**) show core operating performance, excluding non-recurring costs Reconciliation of GAAP Net Income to Adjusted EBITDA | (Amounts in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (GAAP) | $61,975 | $55,691 | | Adjustments (Interest, Taxes, D&A, etc.) | $54,424 | $56,665 | | **Adjusted EBITDA** | **$116,399** | **$112,356** | Reconciliation of GAAP Net Income to Adjusted Net Income | (Amounts in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (GAAP) | $61,975 | $55,691 | | Adjustments (Amortization, Stock Comp, etc.) | $21,309 | $22,488 | | Tax effect of adjustments | ($5,327) | ($5,621) | | **Adjusted Net Income** | **$77,957** | **$72,558** | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash increasing to **$175.6 million**, supported by an undrawn **$100.0 million** credit facility and increased operating cash flow - The company maintained a **$100.0 million** revolving credit facility which was undrawn as of March 31, 2025[190](index=190&type=chunk) - Cash flow from operating activities increased by **$12.4 million** year-over-year to **$81.1 million** for Q1 2025[205](index=205&type=chunk) - As of March 31, 2025, the company had a contingent consideration liability of **$143.3 million** related to the WestEnd Acquisition, with a maximum potential payout of **$240.0 million**[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Revenues are highly sensitive to market risk, with a **10%** AUM change impacting annualized revenues by **$85.2 million**, alongside exchange rate and interest rate risks - A **10%** increase or decrease in the value of AUM would cause an annualized change in revenues of approximately **$85.2 million**, based on the weighted-average fee rate of **51 basis points** for Q1 2025[209](index=209&type=chunk) - Approximately **11%** of AUM is invested in securities denominated in currencies other than the U.S. dollar, where a **10%** change in the U.S. dollar's value would impact annualized revenue by approximately **$9.4 million**[211](index=211&type=chunk)[212](index=212&type=chunk) - The company monetized its interest rate swap in October 2023 and is now exposed to interest rate risk on its outstanding variable-rate debt under the 2019 Credit Agreement[214](index=214&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[216](index=216&type=chunk) - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[217](index=217&type=chunk) [Part II — Other Information](index=46&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Stockholder litigation concerning the Amundi transaction, alleging misleading disclosures, was voluntarily discontinued by plaintiffs on April 4, 2025 - Stockholder litigation was filed in September 2024 concerning the Amundi transaction, alleging incomplete and misleading disclosures in the Proxy Statement[220](index=220&type=chunk)[221](index=221&type=chunk) - On April 4, 2025, the plaintiffs in the stockholder litigation filed notices of voluntary discontinuance, effectively ending the actions[222](index=222&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been 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 have been no material changes to the risk factors in the Annual Report on Form 10-K for the year ended December 31, 2024[224](index=224&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a share repurchase program authorizing up to **$200.0 million** through December 31, 2026, with no shares repurchased during Q1 2025 - In December 2024, the Board approved a new share repurchase program authorizing up to **$200.0 million** of Common Stock repurchases through December 31, 2026[225](index=225&type=chunk) Issuer Purchases of Equity Securities (Q1 2025) | (Amounts in millions) | Total Number of Shares Purchased | Approximate Dollar Value That May Yet Be Purchased (in millions) | | :--- | :--- | :--- | | Jan 1-31, 2025 | — | $200.0 | | Feb 1-28, 2025 | — | $200.0 | | March 1-31, 2025 | — | $200.0 | | **Total** | **—** | **$200.0** | [Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[227](index=227&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025[227](index=227&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications required by Sarbanes-Oxley Act, and iXBRL data - Exhibits filed include CEO and CFO certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[229](index=229&type=chunk)

Core Insights - Victory Capital Holdings (VCTR) reported revenue of $219.6 million for Q1 2025, a year-over-year increase of 1.7%, but fell short of the Zacks Consensus Estimate by 2.87% [1] - The company's EPS for the same period was $1.36, compared to $1.25 a year ago, with an EPS surprise of -1.45% against the consensus estimate of $1.38 [1] Financial Performance - The total assets under management (AUM) were reported at $167.47 billion, significantly below the average estimate of $197.22 billion from four analysts [4] - The breakdown of AUM includes: - Global/Non-U.S. Equity: $18.33 billion, matching the average estimate [4] - Solutions: $63.38 billion, matching the average estimate [4] - U.S. Large Cap Equity: $13.10 billion, matching the average estimate [4] - U.S. Mid Cap Equity: $28.96 billion, matching the average estimate [4] - U.S. Small Cap Equity: $13.18 billion, matching the average estimate [4] - Alternative Investments: $2.95 billion, matching the average estimate [4] - Money Market/Short-term: $3.40 billion, matching the average estimate [4] - Total net client cash flows were reported at -$1.25 billion, worse than the average estimate of -$552.44 million [4] - Revenue from investment management fees was $173.30 million, below the average estimate of $178.26 million, but showed a year-over-year increase of 2.1% [4] - Revenue from fund administration and distribution fees was $46.30 million, also below the average estimate of $48.19 million, with a year-over-year increase of 0.5% [4] Market Performance - Victory Capital's shares returned +1.2% over the past month, compared to the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Victory Capital Holdings reported quarterly earnings of $1.36 per share, missing the Zacks Consensus Estimate of $1.38 per share, but showing an increase from $1.25 per share a year ago, indicating a slight earnings surprise of -1.45% [1] Financial Performance - The company posted revenues of $219.6 million for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 2.87%, but an increase from $215.86 million year-over-year [2] - Over the last four quarters, Victory Capital has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Victory Capital shares have declined approximately 10.5% since the beginning of the year, compared to a decline of -4.3% for the S&P 500 [3] Future Outlook - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at $1.49 on revenues of $358.75 million, and for the current fiscal year at $6.02 on revenues of $1.32 billion [7] - The Zacks Industry Rank for Financial - Investment Management is currently in the bottom 15% of over 250 Zacks industries, which may impact stock performance [8]