AllianceBernstein L.P.(AB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted earnings per unit for Q1 2025 were 80¢, up 10% year-over-year, reflecting strong markets and organic growth [47] - Net revenues for Q1 2025 were $838 million, down 5$39 million, an increase of $12 million from the prior year [49] Business Line Data and Key Metrics Changes - Firm-wide active net inflows reached$2.7 billion, with all three distribution channels showing organic growth [10] - Fixed income strategies generated $1 billion in active inflows, despite$1.4 billion in taxable outflows [11] - Retail tax-exempt AUM grew to $46 billion, more than doubling since 2020, with a 19$2.5 billion, with retail flows turning positive [13] Company Strategy and Development Direction - The company is expanding its private market platform and aims to grow private market AUM to $90 billion to$100 billion by 2027 [22] - Focus on diversifying growth avenues and deepening partnerships, particularly in private credit and asset-based finance [14] - The company emphasizes a diversified asset mix to provide downside protection against market volatility [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects for fixed income despite current market volatility [77] - The company anticipates continued strength in its tax-exempt franchise and growing ETF offerings [73] - Management remains cautious about potential impacts from policy changes regarding municipal bonds but believes in the resilience of the muni market [95] Other Important Information - The effective tax rate for Q1 2025 was 6.2%, in line with full-year guidance [54] - The company maintains a guidance of $600 to$625 million for full-year 2025 non-compensation expenses [53] - Adjusted operating margin reached 33.7%, up 340 basis points year-over-year, reflecting improved operational leverage [62] Q&A Session Summary Question: Asset allocation trends in the second quarter - Management noted volatility and uncertainty affecting retail channel flows, particularly in taxable fixed income, but expects long-term support from tax-exempt strategies [70][72] Question: Equitable dynamics and structural benefits - Management emphasized the independence of AllianceBernstein and the strategic advantages of being a public company, with no anticipated changes in Equitable's engagement [82][90] Question: Retail municipal SMA flows and potential headwinds - Management believes that while there may be a short-term shock if tax exemptions are altered, the fundamental need for income will sustain demand for municipal bonds [96][98] Question: Expense guidance and flexibility - Management confirmed the guidance for non-compensation expenses remains unchanged, with some flexibility to adjust spending based on market conditions [104][105] Question: Private markets fee expectations - Management revised performance fee expectations upward due to strong public market performance, with private markets remaining a significant contributor [129]