Financial Data and Key Metrics Changes - In 2025, the company achieved a revenue increase of 8% compared to 2024, with operating income and adjusted operating income rising by 9% and 12% respectively [4] - Assets under management (AUM) reached an all-time high of $180 billion, up nearly 12% from the previous year [6][11] - The December 2025 quarter saw revenues of $336 million, marking an 11% increase from the previous quarter and a 13% increase year-over-year [11] - Adjusted operating income increased by 23% compared to both the prior quarter and the same quarter last year, with an adjusted operating margin of 40.2% [14] Business Line Data and Key Metrics Changes - The credit platform's AUM grew by 29% year-over-year to $17.9 billion, with net inflows totaling $2.8 billion [7] - The alternatives platform's AUM increased by 20% to $4 billion, driven by strong organic growth [7] - The equity platform experienced outflows of $15.6 billion, primarily due to performance issues in global opportunities and U.S. mid-cap growth strategies [7] Market Data and Key Metrics Changes - Approximately 70% of AUM is from non-U.S. markets, with a noted reemergence of emerging markets allocations expected [40] - The company raised over $1 billion in net flows from emerging markets strategies within a short campaign period [40] - The global equity strategy produced a 47% return, contributing to strong performance in international markets [41] Company Strategy and Development Direction - The acquisition of Grandview Property Partners marks a strategic expansion into alternative investments and private real estate [9] - The company aims to leverage its institutional relationships to enhance Grandview's business and expand its investment capabilities [9] - The focus remains on maintaining and growing AUM in public equities through differentiated investment performance and effective client service [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining and growing equity businesses despite recent outflows, emphasizing the need for compelling investment performance [8] - The company anticipates continued growth in credit and alternatives, with Grandview expected to play a significant role in this expansion [45] - Management highlighted a disciplined allocation of resources and capital as key to compounding wealth for clients and shareholders over the long term [19] Other Important Information - The board declared a quarterly dividend of $1.01 per share and a year-end special dividend of $0.57, reflecting a 98% payout ratio relative to adjusted earnings [17] - The company ended the year with approximately $214 million in cash and a conservative leverage ratio of 0.4 times [16] Q&A Session Summary Question: Clarification on AUM levels and Grandview fund timeline - Management explained that AUM was impacted by realizations on properties in Grandview Fund I, which is in the harvesting phase [23] - Fund III had about $150 million in committed assets, with expectations for Fund IV to be significantly larger, aiming for a first close in early to mid-summer [24] Question: Insights on M&A opportunities - Management noted a focus on talent-driven outcomes rather than exclusively on M&A, with interest in private credit and private equity secondaries [27] - The company is engaged in discussions with potential partners and is optimistic about off-market transactions [29] Question: Demand for international value strategy amidst outflows - Management indicated that outflows are primarily due to institutional reallocations rather than underlying issues with the strategy [35] - They expect some continued rebalancing in the first quarter due to strong global market performance [36] Question: Interest in non-U.S. strategies - Management highlighted opportunities in emerging markets and global strategies, with significant net flows observed in recent campaigns [40] - They noted ongoing interest in credit solutions and alternatives, particularly through the Grandview acquisition [45]

Financial Data and Key Metrics Changes - In the second quarter of 2025, the company reported a 15% year-over-year growth in economic earnings per share, reaching $5.39 [4][21] - Adjusted EBITDA for the quarter was $220 million, reflecting a 1% year-over-year increase, with fee-related earnings growing 4% year-over-year [21] - The company generated over $8 billion in net client cash flows, marking the strongest net flow quarter in over a decade [10][20] Business Line Data and Key Metrics Changes - The company added approximately $55 billion in alternative assets under management (AUM), increasing total alternative AUM by 20% in just six months [5][12] - Private markets AUM grew by 50% since 2022, now standing at $150 billion, driven by high teens organic growth and new affiliate partnerships [12][15] - Liquid alternatives generated nearly $12 billion in net inflows during the quarter, with strong demand for tax-aware solutions [13][14] Market Data and Key Metrics Changes - The company experienced $19 billion in client cash inflows into alternatives, offsetting $11 billion in outflows from active equities [10][11] - The wealth channel is seeing an acceleration of alternative flows, particularly in private equity, private credit, and infrastructure [6][12] - The company’s strategic engagement with affiliates is enhancing access to the rapidly expanding wealth marketplace [6][18] Company Strategy and Development Direction - The company is focused on evolving its business mix towards secular growth areas, particularly in alternative asset classes [10][18] - The strategic partnerships with affiliates are aimed at capitalizing on growth opportunities in private markets and liquid alternatives [7][18] - The company anticipates a meaningful increase in economic earnings per share in 2026 due to the growth in alternative AUM and new affiliate partnerships [5][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term impact of their strategy execution, highlighting substantial value creation potential for shareholders [9][24] - The company is well-positioned to continue executing its growth strategy, supported by a strong balance sheet and diversified business profile [20][24] - Management noted that the ongoing demand for alternative strategies is expected to drive further growth across affiliates [6][18] Other Important Information - The company completed the sale of its minority stake in Peppertree, more than doubling its initial investment [8] - The company repurchased approximately $100 million in shares during the second quarter, with a full-year repurchase expectation of around $400 million [24][65] - The company is actively pursuing new investment opportunities, having announced four new partnerships in 2025 [7][8] Q&A Session Summary Question: Contribution from AQR and Pantheon - Management expects both Pantheon and AQR to be double-digit contributors to earnings this year, with AQR focusing on tax-aware solutions benefiting high net worth individuals [28][40] Question: Capacity Constraints for AQR - AQR has a competitive advantage due to its innovation and robust trading systems, allowing it to sustain growth despite potential capacity constraints [43][46] Question: Portfolio Management and Buybacks - The company is focused on long-term partnerships with affiliates rather than actively trading stakes, and buybacks are viewed as a flexible tool for returning capital to shareholders [52][60][63] Question: Private Market Fundraising Consistency - The company has seen substantial growth in private markets, with a diverse range of fundraising sources contributing to a more consistent flow of capital [70][75] Question: European Market Trends - Management has not observed significant reallocations from U.S. to European managers impacting their second-quarter numbers, but they are monitoring the situation closely [80][84]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $228 million, a decline of 12% year over year, primarily due to lower performance fees and a comparison to a one-time private market catch-up fee from the previous year [20][21] - Economic earnings per share were $5.2, reflecting a 3% year-over-year decline, influenced by a $77 million write-down on certain mutual fund assets [21][22] - The company expects adjusted EBITDA for the second quarter to be between $210 million and $225 million, based on current AUM levels [22] Business Line Data and Key Metrics Changes - The private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions [13] - Liquid alternatives saw record 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 [14][15] - The company experienced net outflows of approximately $14 billion in equities, reflecting industry headwinds [15] Market 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][6] - The ongoing market volatility has created opportunities for high-quality investment teams to differentiate themselves, particularly in equities [44] Company Strategy and Development Direction - The company is focusing on strategic capital allocation towards areas of secular growth, particularly in private markets and liquid alternatives [5][6] - Three new partnerships were announced in 2025, with a total commitment of approximately $700 million, expected to be accretive to earnings and improve organic growth [6][10] - The company aims to evolve its business mix towards alternatives, anticipating that alternatives will represent over 50% of earnings in the future [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate incremental shareholder value over time, supported by a strong capital position and a diverse business model [11][25] - The company remains committed to disciplined capital allocation, with plans to repurchase approximately $400 million in shares for the full year, subject to market conditions [25] - Management highlighted the importance of the U.S. Wealth channel and the ongoing demand for alternative products, which is expected to drive future growth [66] Other Important Information - The company has a strong liquidity position and a long-dated capital structure, enabling it to execute its growth strategy effectively [23] - The expected proceeds from the Peppertree transaction are approximately $240 million, which will enhance the company's ability to continue capital allocation towards strategic growth areas [24] Q&A Session Summary Question: What drives the decision to part with one of the affiliates, especially in private markets? - Management stated that the partnership model is centered around supporting affiliates' independence, and any strategic decisions are mutually agreed upon. The recent liquidity events highlight the underlying business value of affiliates [30][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, driven by tax-aware solutions, and emphasized the strong positioning of high-quality liquid alternative firms to deliver excellent risk-adjusted returns [39][41] 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 and defensive approaches [44][46] Question: Can you clarify the 8% accretion from new investments? - Management confirmed that the 8% accretion is based on economic earnings per share and is expected to begin in 2026, following the completion of the Peppertree and Qualitas transactions [50][51] 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 [63][67]