BrightSphere Investment (BSIG) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenue for Q1 2025 was $119.9 million, an increase of 13.4% from $105.7 million in Q1 2024[114] - Pre-tax income attributable to controlling interests rose to $28.4 million in Q1 2025, up from $20.7 million in Q1 2024, reflecting a growth of 37.2%[114] - Economic net income (ENI) for Q1 2025 was $20.3 million, compared to $17.4 million in Q1 2024, representing a 16.6% increase[114] - The diluted earnings per share (EPS) increased to $0.54 in Q1 2025, up from $0.44 in Q1 2024, a rise of 22.7%[114] - The company reported a net income of $23.8 million for the three months ended March 31, 2025, an increase of $8.1 million or 51.6% from $15.7 million in 2024[124] Assets Under Management (AUM) - Assets under management (AUM) reached $121.9 billion as of March 31, 2025, up from $110.4 billion a year earlier, marking an increase of 10.8%[114] - Total assets under management (AUM) increased to $121.9 billion as of March 31, 2025, up $4.6 billion or 3.9% from $117.3 billion at December 31, 2024[121] - The U.S. client segment accounted for 63.2% of total AUM, with $77.0 billion as of March 31, 2025, compared to 63.7% with $74.7 billion at December 31, 2024[121] - Institutional client AUM rose to $96.3 billion, up from $93.0 billion, with net flows of $3.1 billion for the three months ended March 31, 2025[120] - The average AUM for the three months ended March 31, 2025, was $120.7 billion, compared to $107.6 billion in 2024, indicating a growth of 12.9%[119] Revenue Streams - ENI revenue for Q1 2025 was $118.2 million, a 12.2% increase from $105.3 million in Q1 2024[114] - Management fees for the three months ended March 31, 2025, were $112.9 million, an increase of $10.7 million or 10.5% compared to $102.2 million in 2024[124] - Performance fees increased to $5.3 million for the three months ended March 31, 2025, up from $3.1 million in 2024, marking a growth of 70.9%[124] - Management fee revenue for Q1 2025 was $112.9 million, up from $102.2 million in Q1 2024, representing a growth of 10.9%[163] - Performance fees increased by 71.0% due to strong performance relative to the market in certain strategies during the three months ended March 31, 2025[184] Operating Efficiency - The U.S. GAAP operating margin improved to 26.6% in Q1 2025, up from 21.7% in Q1 2024, an increase of 494 basis points[114] - The ENI operating margin for Q1 2025 was 28.3%, slightly up from 27.7% in Q1 2024, an increase of 61 basis points[114] - The operating margin improved to 26.6% for the three months ended March 31, 2025, compared to 21.7% in 2024, reflecting enhanced operational efficiency[125] - The U.S. GAAP operating margin, excluding the effect of consolidated Funds, was 26.1% for Q1 2025, compared to 21.5% for Q1 2024[173] Expenses - Total U.S. GAAP compensation and benefits expense increased by $2.7 million, or 4.6%, from $58.1 million in Q1 2024 to $60.8 million in Q1 2025, with variable compensation rising by $3.8 million, or 14.4%[138] - General and administrative expenses increased by $2.3 million, or 11.5%, from $20.0 million in Q1 2024 to $22.3 million in Q1 2025, primarily due to higher systems and outside services costs[140] - ENI operating expenses were $54.3 million in Q1 2025, an increase from $49.5 million in Q1 2024, which is a 9.7% increase[166] - Quant & Solutions segment ENI expenses increased by $9.4 million, or 12.7%, from $73.9 million in Q1 2024 to $83.3 million in Q1 2025[186] Cash Flow and Financial Ratios - Net cash used in operating activities decreased by $9.4 million, from $(39.3) million in Q1 2024 to $(48.7) million in Q1 2025[190] - Net cash from investing activities changed by $13.2 million, from $(1.4) million in Q1 2024 to $11.8 million in Q1 2025[190] - Net cash from financing activities increased by $65.3 million, from $(3.7) million in Q1 2024 to $61.6 million in Q1 2025[190] - As of March 31, 2025, the company had $119.6 million in cash and cash equivalents and $91.5 million in seed capital investments[196] - The Leverage Ratio was 0.4x and the Interest Coverage Ratio was 109.7x as of March 31, 2025[200] Market Risks - The company does not hedge against interest rate risk, and as of March 31, 2025, there were no borrowings under the revolving credit facility[217] - The company has not adopted a corporate-level risk management policy regarding client assets, exposing it to market risks affecting overall AUM value[216] - Market risks include equity market risk, interest rate risk, and foreign currency risk, which could significantly impact management and performance fees[214] - Changes in the composition of AUM towards lower fee rate strategies could negatively impact the overall weighted average fee rate[215]