Financial Data and Key Metrics Changes - In Q1 2025, the company reported adjusted EBITDA of $228 million, a decline of 12% year-over-year, primarily due to lower performance fee earnings and a comparison to a one-time private market catch-up fee from the previous year [21][22] - Economic earnings per share were $5.2, reflecting a 3% year-over-year decline, influenced by a $77 million write-down related to certain mutual fund assets [22] - The company expects adjusted EBITDA for Q2 2025 to be between $210 million and $225 million, based on current AUM levels [23] Business Line Data and Key Metrics Changes - The company generated a record $14 billion in net client cash inflows into alternative strategies, which offset outflows from the long-only business [5] - Private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions [14] - Liquid alternatives saw net inflows of $10 billion, driven mainly by tax-aware solutions, marking the strongest quarterly flow number in liquid alternatives in the company's history [15][16] Market Data and Key Metrics Changes - The company experienced net outflows of approximately $14 billion in equities, reflecting industry headwinds [17] - Multi-asset and fixed income net flows were flat during the quarter, indicating a stable but challenging environment for these asset classes [17] Company Strategy and Development Direction - The company is focusing on strategic capital allocation towards areas of secular growth, particularly in alternatives, to achieve sustained organic growth [5][6] - New partnerships have been established with Northbridge, Verition, and Qualitas Energy, expected to add approximately $18 billion in AUM across liquid alternatives and private markets [10][11] - The company aims to enhance its competitive position by investing in high-quality independent firms and expanding its capabilities in product development and distribution [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate incremental shareholder value over time, despite recent market volatility [12] - The company anticipates that the contribution from alternatives will further increase, with expectations that alternatives will represent over 50% of earnings in the future [55] - The ongoing demand for investments in renewable energy and energy transition assets is highlighted as a critical driver for future growth [8] Other Important Information - The company repurchased $173 million in shares during Q1 2025 and plans to repurchase approximately $400 million for the full year, subject to market conditions [25][26] - The balance sheet remains strong, with a liquidity position supported by a $1.25 billion undrawn revolver [24] Q&A Session Summary Question: What drives the decision to part with one of the affiliates, especially in private markets? - Management clarified that the strategy remains unchanged, focusing on partnerships with independent firms. Decisions to evolve relationships are mutually agreed upon and reflect the affiliates' changing circumstances [29][32][34] Question: Can you discuss the diversity of flows in liquid alternatives and the outlook? - Management noted that liquid alternatives had a standout quarter with $10 billion in net inflows, primarily driven by tax-aware solutions, and expressed confidence in the continued attractiveness of high-quality liquid alternative firms [37][40] Question: What are the dynamics in the equity market regarding investor allocations? - Management acknowledged headwinds in equities but noted opportunities for high-quality investment teams to differentiate themselves, particularly with a focus on quality-oriented strategies [42][44] Question: Can you clarify the expected 8% accretion from new investments? - Management confirmed that the 8% accretion is based on annualized economic earnings per share, expected to begin in 2026, following the completion of the PepperTree sale and other investments [47][50] Question: How is the distribution expansion for existing products going? - Management highlighted the growth of alternatives AUM on the U.S. Wealth platform and the successful launch of new products, indicating a strong pipeline for future product development [58][62]