Victory Capital(VCTR) - 2025 Q3 - Quarterly Results

Financial Performance - GAAP revenue for Q3 2025 was $361.2 million, a 60.1% increase compared to $225.6 million in Q3 2024, driven by higher average AUM[22]. - Adjusted net income with tax benefit increased 6.5% to $141.3 million, or $1.63 per diluted share, compared to $132.8 million, or $1.57 per diluted share, in Q2 2025[21]. - Net income for Q3 2025 was $96.5 million, compared to $58.7 million in Q2 2025, representing a 64.4% increase[41]. - Earnings per share (EPS) for Q3 2025 was $1.12, compared to $0.69 in Q2 2025[41]. - Adjusted EBITDA for Q3 2025 was $190.5 million, reflecting a 57.1% increase from $121.3 million in Q3 2024[24]. - Adjusted EBITDA for the nine months ended September 30, 2025, reached $485,375 million, compared to $350,117 million for the same period in 2024, reflecting a growth of 38.6%[43]. - The company reported an adjusted net income of $130,850 million for the three months ended September 30, 2025, compared to $122,507 million in the previous quarter, marking a 2.7% increase[43]. Client Assets and Management - Total client assets reached $313 billion, with assets under management (AUM) of $310.6 billion, reflecting an increase of $12.1 billion from $298.6 billion at the end of Q2 2025[16]. - Total client assets at the end of September 30, 2025, were $313,370 million, up from $301,613 million at the end of June 30, 2025[49]. - Ending assets under management (AUM) for September 30, 2025, were $310,644 million, an increase from $298,563 million at June 30, 2025[50]. - Total assets under management (AUM) as of September 30, 2025, reached $310.6 billion, a significant increase from $176.1 billion in 2024, representing an increase of 76.3%[71]. - The U.S. market accounted for 83% of total AUM at $258.5 billion, while non-U.S. assets comprised 17% at $52.2 billion[71]. Cash Flows and Dividends - Long-term gross flows amounted to $17 billion, while long-term net outflows were $244 million for the quarter, marking an improvement in net flows for the fourth consecutive quarter[5]. - The company repurchased 1.8 million shares and returned approximately $163 million to shareholders through share buybacks and cash dividends[7]. - The board authorized a regular quarterly cash dividend of $0.49 per share, payable on December 23, 2025[29]. - The company declared a dividend of $0.49 per share for Q3 2025, consistent with Q2 2025[41]. - For the nine months ended September 30, 2025, gross client cash inflows totaled $42.513 million, a substantial increase from $19.375 million in the same period in 2024, marking a growth of 120%[59]. - The company reported gross client cash outflows of $(44.86) billion for the nine months ended September 30, 2025, up from $(24.88) billion in the previous year[80]. Operational Efficiency - GAAP operating margin expanded to 38.2%, up from 26.8% in the previous quarter, due to reduced personnel and acquisition-related costs[20]. - Total operating expenses decreased to $223.1 million in Q3 2025 from $257.0 million in Q2 2025[41]. - The company’s net debt to leverage ratio improved to 1.1x, enhancing its capacity for inorganic growth opportunities[7]. - The company is on track to achieve $110 million in net expense synergies from the integration of Pioneer Investments[4]. Market Conditions and Strategic Focus - Future business outlook remains cautious due to potential risks including market conditions and geopolitical factors[36]. - The company is focused on maintaining historical returns and exploring new investment strategies[36]. - The company’s strategic focus includes expanding its investment capabilities and enhancing client offerings through new product developments and market expansions[68]. Market Appreciation and Asset Transfers - The company experienced a market appreciation of $14,692 million in total client assets for the three months ended September 30, 2025[50]. - Market appreciation for the three months ended September 30, 2025, was $14.515 million, compared to $10.076 million in the same period of 2024, reflecting a 44% increase[54]. - The company experienced a significant impact from the closure of three Investment Franchises, resulting in approximately $1 billion of divested assets during the third quarter of 2025[55]. - The company experienced a net transfer of assets amounting to negative $2.1 billion, reflecting divestitures related to the closure of three investment franchises[74]. - The company experienced a net transfer of acquired assets amounting to $3 billion during the nine months ended September 30, 2025[80].