Victory Capital(US:VCTR)2026-02-04 21:34Financial Performance - Fourth-quarter revenue increased 61.0% to $374.1 million compared to $232.4 million in the same quarter of 2024, driven by higher average AUM[20] - GAAP net income for the fourth quarter rose 16.9% to $112.8 million, or $1.32 per diluted share, up from $96.5 million, or $1.11 per diluted share, in the prior quarter[18] - Adjusted net income with tax benefit increased 59.5% to $151.7 million, or $1.78 per diluted share, compared to $95.1 million, or $1.45 per diluted share, in the same quarter last year[21] - Total revenue for the year ended December 31, 2025, increased 46.2% to $1.3 billion compared to $893.5 million in 2024[23] - Net income attributable to common shareholders for the year ended December 31, 2025, was $270.151 million, compared to $288.864 million in 2024, indicating a decrease of 6.5%[35] - Basic earnings per share for the year ended December 31, 2025, was $4.13, down from $4.47 in 2024, a decline of 7.6%[35] Assets Under Management (AUM) - Total client assets reached $316.6 billion, with assets under management (AUM) at $313.8 billion, an increase of $3.2 billion from the previous quarter[15] - Total assets under management (AUM) increased to $313,775 million as of December 31, 2025, up from $310,644 million at September 30, 2025, and significantly higher than $171,930 million at December 31, 2024[46] - The average total client assets for the year ended December 31, 2025, was $272.134 million, compared to $174.542 million in 2024[42] - The company reported a beginning AUM of $30.584 billion for U.S. Mid Cap Equity and $14.785 billion for U.S. Small Cap Equity as of December 31, 2025[58] - As of December 31, 2025, total assets under management (AUM) reached $313.77 billion, an increase from $171.93 billion at the beginning of the year[70] Cash Flows - Long-term gross flows for the fourth quarter were $17.1 billion, while long-term net flows were negative at ($2.1) billion[9] - Gross client cash inflows for the year ended December 31, 2025, were $59,985 million, compared to $26,167 million for the year ended December 31, 2024, reflecting a substantial increase[46] - Gross client cash inflows for the year ended December 31, 2025, totaled $21.916 billion, while gross client cash outflows were $21.441 billion, resulting in net client cash flows of $475 million[58] - The company experienced a net cash outflow of $4.456 million in AUM for the year ended December 31, 2025[42] - For the three months ended December 31, 2025, net client cash flows were negative at $(2.111) billion, with gross inflows of $17.472 billion and outflows of $19.583 billion[66] Expenses and Margins - The adjusted EBITDA margin for the fourth quarter was 52.8%, reflecting a 10 basis point increase from the previous quarter[19] - The company reported a GAAP operating margin of 40.9% for the fourth quarter, an increase of 270 basis points from the previous quarter[18] - Personnel compensation and benefits expenses increased to $362.991 million for the year ended December 31, 2025, from $217.214 million in 2024, a rise of 67.1%[35] - Total operating expenses for the year ended December 31, 2025, were $827.708 million, compared to $465.963 million in 2024, an increase of 77.5%[35] Market Performance - Market appreciation for the year ended December 31, 2025, was $37,742 million, compared to $18,100 million for the year ended December 31, 2024, indicating strong market performance[46] - The company experienced a market depreciation of $(2.237) million for the year ended December 31, 2024, indicating challenges in the previous year[66] - The company reported a market appreciation of $6.273 million in total client assets for the three months ended December 31, 2025[42] - Market appreciation contributed $37.742 billion to the AUM for the year ended December 31, 2025[70] Strategic Initiatives - The company achieved $97 million in net expense synergies from the integration of Pioneer Investments, with an additional $13 million expected in 2026[6] - The company plans to continue developing new teams and strategies to enhance its investment offerings and market position[31] - The company plans to continue expanding its market presence, particularly following the acquisition of Pioneer Investments, which added $114.6 billion to AUM[44] - The company plans to continue expanding its market presence and product offerings, leveraging the recent acquisition to enhance its competitive position[59] Risks and Considerations - Victory Capital's forward-looking statements indicate potential risks including market conditions and client withdrawals, which could impact future performance[31] - The impact of divested assets from the closure of three investment franchises was approximately $1 billion for the three months ended September 30, 2025[55] Non-GAAP Measures - Adjusted EBITDA and Adjusted Net Income are used to measure the operating profitability of the company, eliminating one-time acquisition and restructuring costs[74] - The tax benefit from amortization of acquired intangible assets and goodwill provides significant supplemental economic benefits to the company[75] - The company emphasizes the importance of non-GAAP financial measures to provide investors with insights into ongoing operating performance[74] - Adjustments to GAAP Net Income for calculating Adjusted EBITDA include adding back various expenses such as income tax, interest, and stock-based compensation[76]