AllianceBernstein (AB) Q2 2025 Earnings Call July 24, 2025 10:00 AM ET Company ParticipantsIoanis Jorgali - VP - IRSeth Bernstein - CEO, President & DirectorTom Simeone - CFOOnur Erzan - Head of Global Client Group & Head of Bernstein Private WealthBen Budish - DirectorConference Call ParticipantsNone - AnalystWilliam Katz - Senior Equity AnalystJohn Dunn - AnalystDan Fannon - MD - Research AnalystOperatorThank you for standing by, and welcome to the AllianceBernstein Second Quarter twenty twenty five Earni ...

Financial Data and Key Metrics Changes - The company reported record assets under management (AUM) of $829 billion, marking a post-financial crisis high [6][7] - Adjusted earnings per unit for the second quarter increased by 7% year-over-year to $0.76 [39] - Net revenues reached $844 million, a 2% increase compared to the prior year, while base fees saw a 4% increase [40][41] - Total performance fees decreased by $12 million to $30 million, primarily due to lower public market performance fees [40] Business Line Data and Key Metrics Changes - Private wealth represented 17% of total AUM and 35% of base management fees [7] - Active strategies experienced net outflows of $4.8 billion, with active equity shedding $6 billion [8][29] - The private markets platform grew to $77 billion in fee-paying and net fee-eligible AUM, a 20% year-over-year increase [11] - Alternatives multi-asset inflows totaled $1.6 billion, driven by strong deployments into various strategies [10] Market Data and Key Metrics Changes - The company observed a negative trend in retail flows, with active equity experiencing significant outflows [29] - The retail municipal bond platform grew organically at a 14% annualized rate, continuing to gain market share [9][32] - The U.S. equity market saw a rebound, with the S&P 500 rallying 10.6% in the second quarter [22] Company Strategy and Development Direction - The company aims to grow private markets AUM to $90 billion to $100 billion by 2027, leveraging partnerships with Equitable [14][15] - The focus remains on delivering consistent and profitable growth supported by scale gains and improved operational efficiency [11] - The company is expanding its distribution coverage by forming new partnerships and extending its addressable market [12] Management's Comments on Operating Environment and Future Outlook - Management noted that geopolitical tensions and policy uncertainty impacted investor sentiment, but conditions improved as trade tensions eased [6] - The company expects to maintain a 33% operating margin in 2025, with potential for further margin expansion over time [11][49] - Management expressed confidence in the resilience of their investment strategies despite market volatility [17][20] Other Important Information - The company has invested significantly in operational resources to enhance client service and unlock incremental revenue opportunities [12] - The effective tax rate for the second quarter was 6.7%, in line with full-year guidance [43] Q&A Session Summary Question: How is the company thinking about scaling its retirement income business with Pacific Life joining? - Management highlighted the importance of the insurance segment and the ongoing expansion of engagement in lifetime income solutions, noting that these products tend to be lower fee from an asset management perspective [52][55] Question: Can you clarify the likelihood of further exchanges into AllianceBernstein holding units? - Management explained that the conversion from public to private units is driven by tax treatment and does not affect daily trading volume [56][58] Question: What is the company's stance on potential M&A activity? - Management indicated that they are exploring opportunities, particularly in partnerships with key insured clients, while maintaining a cautious approach to avoid becoming capital-heavy [60][63] Question: How should investors think about the incremental margin and trajectory into 2026? - Management affirmed the expectation of maintaining a 33% margin for both halves of the year, with future guidance for 2026 to be provided later [72][73] Question: Can you discuss the drivers of demand for American Income and the outlook for the rest of the year? - Management noted that demand for American Income is cyclical and has seen signs of stabilization, with positive trends observed in July [87][90]