Acadian Asset Management Inc.

05/07/2026 | Press release | Distributed by Public on 05/07/2026 05:53

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the "Company", "Acadian Asset Management", "Acadian" or "AAMI" refer to Acadian Asset Management Inc., and references to "we," "our" and "us" refer to AAMI and its consolidated subsidiaries. References to "Hold Co" refer to AAMI and its subsidiaries excluding Acadian Asset Management LLC ("Acadian LLC"). Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to "OM plc" refer to Old Mutual plc, our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell Acadian LLC's products or services, nor is any such information a recommendation for Acadian LLC's products or services.
The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes which appear in this Quarterly Report on Form 10-Q in Item 1, Financial Statements.
This discussion contains forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements" at the end of this Item 2 for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below.
This Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.
Our MD&A is presented in five sections:
•Overview provides a brief description of our business. It includes information on our reporting segment, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and client location, and net flows by segment, client type and client location.
•U.S. GAAP Results of Operations for the Three Months Ended March 31, 2026 and 2025 includes an explanation of changes in our U.S. GAAP revenue, expense and other items for the three months ended March 31, 2026 and 2025, as well as key U.S. GAAP operating metrics.
•Non-GAAP Supplemental Performance Measure - Economic Net Income and Segment Analysis includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three months ended March 31, 2026 and 2025, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics. In addition, this section provides segment analysis for our business segment.
•Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Adjusted EBITDA; Future Capital Needs; Borrowings and Long-Term Debt; Other Compensation Liabilities. The discussion of Adjusted EBITDA includes an explanation of how we calculate Adjusted EBITDA and a reconciliation of U.S. GAAP net income attributable to controlling interests to Adjusted EBITDA.
•Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition. These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time the policies were applied and estimates were made.
Overview
We are a holding company that operates a systematic investment management business through our majority owned subsidiary, Acadian LLC. Acadian LLC is a leading investment manager that offers institutional investors across the globe access to a diversified array of systematic investment strategies designed to meet a range of risk and return objectives. Notable product lines and capabilities include Emerging Equity, Non-U.S. Equity, Global Equity, Small Cap Equity, Enhanced Equity, Equity Extensions, Systematic Credit, and Alternatives. Acadian LLC comprises our Quant & Solutions reportable segment:
•Quant & Solutions-incorporates strategies that utilize advanced technology to collect and analyze data, aiming to identify mispriced assets and generate attractive risk-adjusted returns for investors; product lines and capabilities include Emerging Equity, Non-U.S. Equity, Global Equity, Small Cap Equity, Enhanced Equity, Equity Extensions, Systematic Credit, and Alternatives. This segment consists of our ownership interest in Acadian LLC.
Hold Co is included within the Unallocated Corporate expenses category.
Under U.S. GAAP, Acadian LLC is consolidated into our financial statements. We may also be required to consolidate Acadian LLC's sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third-party clients in those Funds.
The Economics of Our Business
Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. We earn management fees based on assets under management. The majority of our management fees are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM. Changes in the levels of our AUM are driven by market investment performance and net client cash flows. We may also earn performance fees when certain accounts differ in relation to relevant benchmarks or exceed required returns. As of March 31, 2026, approximately $22 billion, or 11%, of our AUM was in accounts with incentive fee features in which we participate in the performance fee. The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year basis.
Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation is comprised of variable compensation at both Hold Co and Acadian LLC. Hold Co variable compensation includes discretionary annual bonuses and may be paid in the form of cash or AAMI equity. Acadian LLC variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.
The arrangement in place with Acadian LLC results in the sharing of economics between us and key management personnel using a profit-sharing model. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of Acadian LLC's equity or profit interests distribution to its employees.
Variable compensation includes the portion of earnings that is contractually allocated to Acadian LLC employees as a bonus pool, typically representing a percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Acadian LLC key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Acadian LLC key employees and ours are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.
Equity or profit interests owned by Acadian LLC key employees are awarded as part of their variable compensation arrangement. Over time, Acadian LLC key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by key employees forgoing cash bonuses in exchange for the equivalent value in Acadian LLC equity or profit interests. The recycling of equity or profit interests is often facilitated by Hold Co; see "U.S. GAAP Results of Operations - U.S. GAAP Expenses - Compensation and Benefits Expense" for a further discussion. Employee equity is valued at a fixed multiple of profits, so employees have transparency into both their earning potential in any year from the bonus pool and share of profits, as well as the current value of their equity and the long-term potential to realize value from its growth.
In this structure, key employees who are managing the business have incentives to manage for profit, but also to manage the business prudently, in the interest of their clients, and invest for growth, since they will benefit over the long term as both employees and equity holders. In this way, key employees are aligned with the public stockholders to generate profits and growth over time.
How We Measure Performance
We manage our business based on one segment, reflecting how our management assesses the performance of our business.
In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business. We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and Acadian LLC equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.
ENI differs from net income determined in accordance with U.S. GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items. In particular, ENI excludes non-cash charges representing the changes in the value of Acadian LLC equity and profit interests held by key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.
ENI revenue is primarily comprised of the fee revenues paid to us by our clients for our advisory services. Revenue included within ENI differs from U.S. GAAP revenue in that it excludes amounts from consolidated Funds which are not attributable to our stockholders.
ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders. Expenses included within ENI differ from U.S. GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Acadian LLC key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, and certain other non-cash expenses.
"Non-controlling interests" is a concept under U.S. GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders. For example, the portion of the net income (loss) of any consolidated Fund that is attributable to the outside investors or clients of the consolidated Fund is included in "Non-controlling interests" in our Condensed Consolidated Financial Statements. Conversely, "controlling interests" is the portion of revenue or expense that is attributable to our stockholders.
For a more detailed discussion of the differences between U.S. GAAP net income and economic net income, see "Non-GAAP Supplemental Performance Measure - Economic Net Income and Segment Analysis."
Summary Results of Operations
The following table summarizes our unaudited results of operations for the three months ended March 31, 2026 and 2025:
($ in millions, unless otherwise noted) Three Months Ended March 31,
2026 2025 2026 vs. 2025
U.S. GAAP Basis
Revenue $ 167.0 $ 119.9 $ 47.1
Pre-tax income attributable to controlling interests 37.5 28.4 9.1
Net income attributable to controlling interests 24.3 20.1 4.2
U.S. GAAP operating margin(1)
25.1 % 26.6 % (152) bps
Earnings per share, basic ($) $ 0.68 $ 0.54 $ 0.14
Earnings per share, diluted ($) $ 0.68 $ 0.54 $ 0.14
Basic shares outstanding (in millions) 35.7 37.4 (1.7)
Diluted shares outstanding (in millions) 35.8 37.4 (1.6)
Economic Net Income Basis(2)(3)
(Non-GAAP measure used by management)
ENI revenue(4)
$ 165.0 $ 118.2 $ 46.8
Pre-tax economic net income(5)
55.5 28.0 27.5
Adjusted EBITDA 61.8 35.2 26.6
ENI operating margin(6)
38.1 % 28.3 % 978 bps
Economic net income(7)
37.6 20.3 17.3
ENI diluted EPS ($)
$ 1.05 $ 0.54 $ 0.51
Other Operational Information
Assets under management (AUM) at period end (in billions)
$ 195.7 $ 121.9 $ 73.8
Net client cash flows (in billions) 21.4 3.8 17.6
(1)U.S. GAAP operating margin equals operating income divided by total revenue.
(2)Economic net income is a non-GAAP measure we use to evaluate the performance of our business. For a reconciliation to U.S. GAAP financial information and a further discussion of economic net income refer to "Non-GAAP Supplemental Performance Measure - Economic Net Income and Segment Analysis."
(3)Excludes severance-related items of $(0.2) million for the three months ended March 31, 2025.
(4)ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue.
(5)Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income attributable to controlling interests.
(6)ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue. ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin is most directly comparable to our U.S. GAAP operating margin (excluding the effect of consolidated Funds).
(7)Economic net income is the non-GAAP measure which is most directly comparable to U.S. GAAP net income attributable to controlling interests.
Assets Under Management
Our total assets under management were $195.7 billion as of March 31, 2026 and $177.5 billion as of December 31, 2025.
The following table presents our assets under management by strategy as of each of the dates indicated:
($ in billions) March 31, 2026 December 31, 2025
AUM % of total AUM % of total
Enhanced Equity $ 57.8 29.5 % $ 40.0 22.5 %
Non-U.S. Equity 39.7 20.3 % 38.4 21.6 %
Small Cap Equity 32.2 16.5 % 32.8 18.5 %
Emerging Markets Equity
25.5 13.0 % 26.0 14.7 %
Global Equity 23.7 12.1 % 22.9 12.9 %
Other 16.8 8.6 % 17.4 9.8 %
Total assets under management $ 195.7 $ 177.5
The following table shows assets under management by client type as of each of the dates indicated:
($ in billions) March 31, 2026 December 31, 2025
AUM % of total AUM % of total
Institutional $ 146.4 74.8 % $ 144.5 81.4 %
Wealth/Other 33.0 16.9 % 16.2 9.1 %
Sub-Advisory 16.3 8.3 % 16.8 9.5 %
Total assets under management $ 195.7 $ 177.5
The following table shows assets under management by client location as of each of the dates indicated:
($ in billions) March 31, 2026 December 31, 2025
AUM % of total AUM % of total
U.S. $ 99.3 50.7 % $ 99.5 56.1 %
EMEA
55.1 28.2 % 37.7 21.2 %
Asia Pacific
31.7 16.2 % 31.2 17.6 %
Other 9.6 4.9 % 9.1 5.1 %
Total assets under management $ 195.7 $ 177.5
AUM flows
Net client cash flows for all periods include reinvested income and distributions. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.
The following table summarizes our asset flows and market appreciation by segment for each of the periods indicated:
Three Months Ended March 31,
($ in billions, unless otherwise noted) 2026 2025
Quant & Solutions
Beginning balance $ 177.5 $ 117.3
Gross inflows 29.6 8.8
Gross outflows (9.3) (5.8)
Reinvested income and distributions 1.1 0.8
Net flows 21.4 3.8
Market appreciation (depreciation) (3.2) 0.8
Ending balance $ 195.7 $ 121.9
Average AUM $ 189.5 $ 120.7
We also analyze our asset flows by client type and client location. Our client types include:
i.Institutional, which includes assets managed for public/government pension funds and other investments, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national investments; also includes corporate and union-sponsored pension plans and other investments; and
ii.Sub-advisory, which includes assets managed for third-party mutual funds sponsored by platforms in the U.S. or abroad, where the end client is typically retail;
iii.Wealth/other, which includes assets managed for registered investment advisor clients, private banks, high-net-worth clients, and family offices, defined contribution clients on certain platforms, mutual funds directly sponsored by Acadian LLC, and other assets.
The following table summarizes our asset flows by client type for each of the periods indicated:
($ in billions) Three Months Ended March 31,
2026 2025
Institutional
Beginning balance $ 144.5 $ 93.0
Gross inflows 8.6 7.0
Gross outflows (4.9) (4.5)
Reinvested income and distributions 0.9 0.6
Net flows 4.6 3.1
Market appreciation (depreciation) (2.7) 0.2
Ending balance $ 146.4 $ 96.3
Wealth/Other
Beginning balance $ 16.2 $ 11.2
Gross inflows 17.9 0.8
Gross outflows (1.0) (0.6)
Reinvested income and distributions 0.1 0.1
Net flows 17.0 0.3
Market appreciation (depreciation) (0.2) 0.1
Ending balance $ 33.0 $ 11.6
Sub-advisory
Beginning balance $ 16.8 $ 13.1
Gross inflows 3.1 1.0
Gross outflows (3.4) (0.7)
Reinvested income and distributions 0.1 0.1
Net flows (0.2) 0.4
Market appreciation (depreciation) (0.3) 0.5
Ending balance $ 16.3 $ 14.0
Total
Beginning balance $ 177.5 $ 117.3
Gross inflows 29.6 8.8
Gross outflows (9.3) (5.8)
Reinvested income and distributions 1.1 0.8
Net flows 21.4 3.8
Market appreciation (depreciation) (3.2) 0.8
Ending balance $ 195.7 $ 121.9
Our categorization of assets under management by client location includes:
i. U.S.-based clients, where the contracting client is based in the United States, and
ii. Non-U.S.-based clients, where the contracting client is based outside the United States.
The following table summarizes asset flows by client location for each of the periods indicated:
($ in billions) Three Months Ended March 31,
2026 2025
U.S.
Beginning balance $ 99.5 $ 74.7
Gross inflows 6.8 4.2
Gross outflows (6.7) (3.7)
Reinvested income and distributions 0.6 0.5
Net flows 0.7 1.0
Market appreciation (depreciation) (0.9) 1.3
Ending balance $ 99.3 $ 77.0
Non-U.S.
Beginning balance $ 78.0 $ 42.6
Gross inflows 22.8 4.6
Gross outflows (2.6) (2.1)
Reinvested income and distributions 0.5 0.3
Net flows 20.7 2.8
Market depreciation (2.3) (0.5)
Ending balance $ 96.4 $ 44.9
Total
Beginning balance $ 177.5 $ 117.3
Gross inflows 29.6 8.8
Gross outflows (9.3) (5.8)
Reinvested income and distributions 1.1 0.8
Net flows 21.4 3.8
Market appreciation (depreciation) (3.2) 0.8
Ending balance $ 195.7 $ 121.9
At March 31, 2026, our total assets under management were $195.7 billion, an increase of $18.2 billion, or 10.3%, compared to $177.5 billion at December 31, 2025 and an increase of $73.8 billion, or 60.5%, compared to $121.9 billion at March 31, 2025. The increase in assets under management compared to March 31, 2025 was driven by positive net client cash flows and equity market appreciation in the last twelve months. The change in assets under management during the three months ended March 31, 2026 reflects net inflows of $21.4 billion and reinvested income and distributions of $1.1 billion, partially offset by net market depreciation of $(3.2) billion. Market appreciation or depreciation reported in current and prior periods includes changes in equity prices, as well as the impact from exchange rate fluctuations on our foreign-denominated AUM. Given a substantial portion of our AUM is denominated in foreign currencies, foreign exchange rate movements during the period can impact AUM when the strength of the U.S. dollar changes relative to other currencies.
For the three months ended March 31, 2026, our net inflows were $21.4 billion compared to $3.8 billion for the three months ended March 31, 2025. The change in net flows during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily driven by strong gross inflows, which increased to $29.6 billion in the three months ended March 31, 2026. Reinvested income and distributions of $1.1 billion and $0.8 billion are reflected in the net flows for the three months ended March 31, 2026 and March 31, 2025, respectively.
Strategies representing 67%, 96%, 96%, and 96% of revenue were outperforming benchmarks on a 1-, 3-, 5-, and 10- year basis as of March 31, 2026. As of March 31, 2026 the 5-year revenue weighted annualized return in excess of benchmark was 4.1%. Assets representing 67%, 93%, 94%, and 92% of assets under management were outperforming benchmarks on a 1-, 3-, 5-, and 10- year basis as of March 31, 2026. As of March 31, 2026 the 5-year asset weighted annualized return in excess of benchmark was 3.4%.
U.S. GAAP Results of Operations for the Three Months Ended March 31, 2026 and 2025
Our U.S. GAAP results of operations were as follows for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions, unless otherwise noted) 2026 2025 Increase
(Decrease)
U.S. GAAP Statement of Operations(1)
Management fees $ 159.3 $ 112.9 $ 46.4
Performance fees 5.7 5.3 0.4
Consolidated Funds' revenue 2.0 1.7 0.3
Total revenue 167.0 119.9 47.1
Compensation and benefits 96.0 60.8 35.2
General and administrative expense 24.9 22.3 2.6
Depreciation and amortization 3.6 4.2 (0.6)
Consolidated Funds' expense 0.6 0.7 (0.1)
Total operating expenses 125.1 88.0 37.1
Operating income 41.9 31.9 10.0
Investment income 0.1 0.3 (0.2)
Interest income 0.9 1.1 (0.2)
Interest expense (3.4) (4.8) 1.4
Net consolidated Funds' investment gains (losses) (1.9) 3.6 (5.5)
Income before taxes
37.6 32.1 5.5
Income tax expense 13.2 8.3 4.9
Net income
24.4 23.8 0.6
Net income attributable to redeemable non-controlling interests in consolidated Funds
0.1 3.7 (3.6)
Net income attributable to controlling interests
$ 24.3 $ 20.1 $ 4.2
Basic earnings per share ($) $ 0.68 $ 0.54 $ 0.14
Diluted earnings per share ($) 0.68 0.54 0.14
Weighted average shares of common stock outstanding-basic
35.7 37.4 (1.7)
Weighted average shares of common stock outstanding-diluted
35.8 37.4 (1.6)
U.S. GAAP operating margin(2)
25.1 % 26.6 %
(1)Certain Funds have been consolidated due to our seed capital investments in the Funds.
(2)U.S. GAAP operating margin equals operating income divided by total revenue.
The following table reconciles our net income attributable to controlling interests to our pre-tax income attributable to controlling interests:
($ in millions) Three Months Ended
March 31,
U.S. GAAP Consolidated Statements of Operations
2026 2025
Net income attributable to controlling interests $ 24.3 $ 20.1
Add: Income tax expense 13.2 8.3
Pre-tax income attributable to controlling interests $ 37.5 $ 28.4
U.S. GAAP Revenues
Our U.S. GAAP revenues principally consist of:
i.management fees earned based on our overall weighted average fee rate charged to our clients and the level of assets under management;
ii.performance fees earned when our investment performance over agreed time periods for certain clients has differed from predetermined hurdles; and
iii.revenue from consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.
Management Fees
Our management fees are a function of the fee rates charged to our clients, which are typically expressed in basis points, and the levels of our assets under management. Our effective management fee rate will vary from period to period based on several factors, including changes in the mix of assets under management caused by market movements and client flows.
Average basis points earned on average assets under management were 34.1 bps for the three months ended March 31, 2026, and 37.9 bps for the three months ended March 31, 2025, respectively. The overall weighted average fee rate decrease for the three months ended March 31, 2026 is the result of changes in the mix of assets under management caused by net inflows or outflows in certain asset classes, and disproportionate market movements.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Management fees increased $46.4 million, or 41.1%, from $112.9 million for the three months ended March 31, 2025 to $159.3 million for the three months ended March 31, 2026. The increase was primarily driven by higher levels of average assets under management. Average assets under management increased 57.0%, from $120.7 billion for the three months ended March 31, 2025 to $189.5 billion for the three months ended March 31, 2026, mainly due to strong net flows and the positive equity market in the past twelve months.
Performance Fees
Approximately $22 billion, or 11% of our AUM, were in accounts with performance fee features in which we participate. Performance fees are typically shared with key employees through various contractual compensation and profit-sharing arrangements.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Performance fees increased $0.4 million, or 7.5%, from $5.3 million for the three months ended March 31, 2025 to $5.7 million for the three months ended March 31, 2026, primarily due to a change in performance relative to benchmarks in certain strategies. Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.
U.S. GAAP Expenses
Our U.S. GAAP expenses principally consist of:
i.compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Acadian LLC key employee distributions, and revaluation of key employee-owned Acadian LLC equity and profit interests;
ii.general and administrative expenses;
iii.depreciation and amortization charges; and
iv.expenses of consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.
Compensation and Benefits Expense
Our most significant category of expense is compensation and benefits awarded to our employees. The following table presents the components of U.S. GAAP compensation expense for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions) 2026 2025
Fixed compensation and benefits(1)
$ 26.6 $ 24.3
Sales-based compensation(2)
6.1 3.5
Variable compensation(3)
40.9 30.2
Acadian LLC key employee distributions(4)
6.3 3.1
Non-cash Acadian LLC key employee equity revaluations(5)
16.1 (0.3)
Total U.S. GAAP compensation and benefits expense
$ 96.0 $ 60.8
(1)Fixed compensation and benefits includes base salaries, payroll taxes and the cost of benefit programs provided.
(2)Sales-based compensation is paid to our sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.
(3)Variable compensation includes the portion of earnings that is contractually allocated to Acadian LLC employees as a bonus pool, plus Hold Co bonuses. Variable compensation may be paid in the form of cash or non-cash equity or profit interests awards. We have a contractual split of performance fees between Acadian LLC employees and AAMI. Acadian LLC's share of performance fees, which ranges between 60%-75% of the total, is allocated entirely to variable compensation. The variable compensation earned on performance fees vests over three-years and compensation expense is recognized over that service period. Hold Co variable compensation includes cash and our equity. Equity-based compensation awards typically vest over several years and are recognized as compensation expense over that service period.
Three Months Ended March 31,
($ in millions) 2026 2025
Cash variable compensation $ 38.6 $ 29.3
Amortization of equity-based awards 2.3 0.9
Total variable compensation(a)
$ 40.9 $ 30.2
(a)For the three months ended March 31, 2025, $30.4 million, of variable compensation expense (of the $30.2 million above) is included with economic net income, which excludes $(0.2) million of variable compensation associated with restructuring.
(4)Acadian LLC key employee distributions represent the share of Acadian LLC profits after variable compensation that is attributable to key employee equity and profit interests holders, according to their ownership interests. Acadian LLC key employee distribution ratio is calculated as Acadian LLC key employee distributions divided by ENI operating earnings. Within Acadian LLC we have a tiered equity structure, where AAMI and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.
(5)Non-cash Acadian LLC key employee equity revaluations represent changes in the value of Acadian LLC equity and profit interests held by key employees. These ownership interests may in certain circumstances be repurchased by Hold Co at a value based on a pre-determined fixed multiple of twelve-month earnings and as such a liability is carried on our balance sheet based on the expected cash to be paid. However, any equity or profit interests repurchased by Hold Co can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. The Acadian LLC equity and profit interest plans have been designed to ensure Hold Co is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.
Fluctuations in compensation and benefits expense for the periods presented are discussed below.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Compensation and benefits expense increased $35.2 million, or 57.9%, from $60.8 million for the three months ended March 31, 2025 to $96.0 million for the three months ended March 31, 2026. Fixed compensation and benefits increased $2.3 million, or 9.5%, from $24.3 million for the three months ended March 31, 2025 to $26.6 million for the three months ended March 31, 2026, primarily reflecting cost of living increases, higher payroll taxes and an increase in the cost of employee benefits. Variable compensation increased $10.7 million, or 35.4%, from $30.2 million for the three months ended March 31, 2025 to $40.9 million for the three months ended March 31, 2026. The increase was primarily attributable to higher pre-bonus profits in the three months ended March 31, 2026, partially offset by lower deferred bonus earned on performance fee revenues in the three months ended March 31, 2026. The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings. Sales-based compensation increased $2.6 million or 74.3% from $3.5 million for the three months ended March 31, 2025 to $6.1 million for the three months ended March 31, 2026, driven by the increase in asset inflows. Acadian LLC key employee distributions increased $3.2 million, or 103.2%, from $3.1 million for the three months ended March 31, 2025 to $6.3 million for the three months ended March 31, 2026. Acadian LLC key employee distributions for certain tiers of equity are calculated after an earnings threshold is met, whereby no distributions are made to these equity holders when earnings are below the threshold. The change in Acadian LLC key employee distributions during the three months ended March 31, 2026 is driven by higher operating earnings and the leveraged nature of this distribution share. Revaluations of Acadian LLC key employee equity changed by $16.4 million, reflecting an increase in the value of key employee ownership interests at Acadian LLC. For certain tiers of Acadian LLC equity, revaluations are calculated based on earnings above a threshold. The change in the revaluation in the three months ended March 31, 2026 reflects primarily the increase in earnings, as well as changes in inputs used in the valuation model, including market risk assumptions and discount rates.
General and Administrative Expense
Three months ended March 31, 2026 compared to three months ended March 31, 2025: General and administrative expense increased $2.6 million, or 11.7%, from $22.3 million for the three months ended March 31, 2025 to $24.9 million for the three months ended March 31, 2026. The increase was primarily due to higher system, portfolio administrative, and consulting costs, partially offset by the impact of foreign currency changes.
Depreciation and Amortization Expense
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Depreciation and amortization expense decreased $(0.6) million, or (14.3)%, from $4.2 million for the three months ended March 31, 2025 to $3.6 million for the three months ended March 31, 2026. The decrease was primarily attributable to the effect of certain software becoming fully depreciated.
U.S. GAAP Other Non-Operating Items of Income and Expense
Other non-operating items of income and expense consist of:
i.investment income (loss);
ii.interest income; and
iii.interest expense.
Investment Income
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Investment income decreased $(0.2) million, or (66.7)%, from $0.3 million for the three months ended March 31, 2025 to $0.1 million for the three months ended March 31, 2026, reflecting a decrease in returns generated by seed capital investments in Funds that are not consolidated by the Company.
Interest Income
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Interest income decreased $(0.2) million, or (18.2)%, from $1.1 million for the three months ended March 31, 2025 to $0.9 million for the three months ended March 31, 2026. The decrease was due to a decrease in short-term investment returns, slightly offset by an increase in average cash balances in the three months ended March 31, 2026.
Interest Expense
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Interest expense decreased $(1.4) million, or (29.2)%, from $4.8 million for the three months ended March 31, 2025 compared to $3.4 million for the three months ended March 31, 2026, related to redemption of our $275 million 4.80% Senior Notes and associated cash flow hedge in December 2025, partially offset by the addition of our $200 million delayed draw term loan facility in October 2025.
U.S. GAAP Income Tax Expense
Our effective tax rate has been impacted by state and local tax obligations, changes in liabilities for uncertain tax positions, tax effects of stock-based compensation, non-deductible compensation, and the mix of income earned in the United States versus foreign jurisdictions. Our effective tax rate could be impacted in the future by these items as well as further changes in tax laws and regulations in jurisdictions in which we operate.
The American Rescue Plan Act of 2021 ("ARPA"), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations. Effective for tax years starting after December 31, 2026, ARPA expands the limitations to cover the next five most highly compensated employees. H.R.1, commonly referred to as the One Big Beautiful Bill Act (the "OBBBA"), includes a broad range of tax reform provisions, including extensions and modifications of certain provisions of the Tax Cuts and Jobs Act, with various effective dates beginning in 2025 through 2027. The OBBBA includes amendments to Internal Revenue Code Section 162(m) that expand the scope of entities and employees considered in determining "covered employees" subject to the limitation on the deductibility of compensation. The Company continues to evaluate and incorporate the impact of IRC Section 162(m) amendments under the OBBBA and ARPA into its interim tax provision, including potential changes in covered employees, compensation structures and related deferred tax balances.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Income tax expense increased $4.9 million, from $8.3 million for the three months ended March 31, 2025 to $13.2 million for the three months ended March 31, 2026. The increase in income tax expense primarily relates to an increase in pretax income attributable to controlling interest and non-deductible compensation in the three months ended March 31, 2026.
U.S. GAAP Consolidated Funds
The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Consolidated Funds' revenue increased $0.3 million, from $1.7 million for the three months ended March 31, 2025 to $2.0 million for the three months ended March 31, 2026. Consolidated Funds' expense decreased $(0.1) million, from $0.7 million for the three months ended March 31, 2025 to $0.6 million for the three months ended March 31, 2026. Net consolidated Funds' investment gain decreased $(5.5) million from $3.6 million for the three months ended March 31, 2025 to $(1.9) million for the three months ended March 31, 2026. These movements relate to the underlying activity of our consolidated Funds.
Key U.S. GAAP Operating Metrics
The following table shows our key U.S. GAAP operating metrics for the three months ended March 31, 2026 and 2025. The second, third and fourth metrics below have each been adjusted to eliminate the effect of consolidated Funds to more accurately reflect the economics of our Company.
Three Months Ended March 31,
($ in millions) 2026 2025
Numerator: Operating income $ 41.9 $ 31.9
Denominator: Total revenue $ 167.0 $ 119.9
U.S. GAAP operating margin(1)
25.1 % 26.6 %
Numerator: Total operating expenses(2)
$ 124.5 $ 87.3
Denominator: Management fee revenue $ 159.3 $ 112.9
U.S. GAAP operating expense / management fee revenue(3)
78.2 % 77.3 %
Numerator: Variable compensation $ 40.9 $ 30.2
Denominator: Operating income before variable compensation and Acadian LLC key employee distributions(2)(4)(5)
$ 87.7 $ 64.2
U.S. GAAP variable compensation ratio(3)
46.6 % 47.0 %
Numerator: Acadian LLC key employee distributions
$ 6.3 $ 3.1
Denominator: Operating income before Acadian LLC key employee distributions(2)(4)(5)
$ 46.8 $ 34.0
U.S. GAAP Acadian LLC key employee distributions ratio(3)
13.5 % 9.1 %
(1)Excluding the effect of Funds' consolidation in the applicable periods, the U.S. GAAP operating margin was 24.5% for the three months ended March 31, 2026 and 26.1% for the three months ended March 31, 2025.
(2)Excludes consolidated Funds' expense of $0.6 million for the three months ended March 31, 2026, and $0.7 million for the three months ended March 31, 2025.
(3)Excludes the effect of Funds consolidation for the three months ended March 31, 2026 and 2025.
(4)Excludes consolidated Funds' revenue of $2.0 million for the three months ended March 31, 2026, and $1.7 million for the three months ended March 31, 2025.
(5)The following table identifies the components of operating income before variable compensation and Acadian LLC key employee distributions, as well as operating income before Acadian LLC key employee distributions:
Three Months Ended March 31,
($ in millions) 2026 2025
Operating income
$ 41.9 $ 31.9
Acadian LLC key employee distributions
6.3 3.1
Operating income of consolidated Funds (1.4) (1.0)
Operating income before Acadian LLC key employee distributions
46.8 34.0
Variable compensation 40.9 30.2
Operating income before variable compensation and Acadian LLC key employee distributions
$ 87.7 $ 64.2
Non-GAAP Supplemental Performance Measure - Economic Net Income and Segment Analysis
As supplemental information, we provide a non-GAAP performance measure that we refer to as economic net income, or ENI, which represents our management's view of the underlying economic earnings generated by us. We define economic net income as ENI revenue less (i) ENI operating expenses, (ii) variable compensation, (iii) key employee distributions, (iv) net interest and (v) taxes, each as further discussed in this section. ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP.
ENI is an important measure to investors because it is used by us to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and equity distributions, and incentivize management. It is also an important measure because it assists management in evaluating our operating performance and is presented in a way that most closely reflects the key elements of our profit share operating model with Acadian LLC. For a further discussion of how we use ENI and why ENI is useful to investors, see "Overview - How We Measure Performance."
To calculate economic net income, we re-categorize certain line items on our Condensed Consolidated Statements of Operations to reflect the following:
•We exclude the effect of Funds' consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders.
•We include within management fee revenue any fees paid to the Company by consolidated Funds.
•We treat sales-based compensation as a general and administrative expense, rather than part of fixed compensation and benefits.
•We identify separately from operating expenses variable compensation and Acadian LLC key employee distributions, which represent Acadian LLC earnings shared with key employees.
We also make the following adjustments to U.S. GAAP results to more closely reflect our economic results:
i.We exclude non-cash expenses representing changes in the value of Acadian LLC equity and profit interests held by key employees. These ownership interests may in certain circumstances be repurchased by Hold Co at a value based on a pre-determined fixed multiple of trailing earnings and as such this value is carried on our balance sheet as a liability. Non-cash movements in the value of this liability are treated as compensation expense under U.S. GAAP. However, any equity or profit interests repurchased by Hold Co can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our equity and profit interest plans have been designed to ensure Hold Co is never required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.
ii.We exclude non-cash amortization or impairment expenses related to acquired goodwill and other intangibles as these are non-cash charges that do not result in an outflow of tangible economic benefits from the business.
iii.We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets.
iv.We exclude seed capital and co-investment gains, losses, and related financing costs. The net returns on these investments are considered and presented separately from ENI because ENI is primarily a measure of our earnings from managing client assets, which therefore differs from earnings generated by our investments, which can be variable from period to period.
v.We include cash tax benefits associated with deductions allowed for acquired intangibles and goodwill that may not be recognized or have timing differences compared to U.S. GAAP.
vi.We exclude the results of discontinued operations attributable to controlling interests since they are not part of our ongoing business and restructuring costs incurred in continuing operations.
vii.We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization.
We also adjust our income tax expense to reflect any tax impact of our ENI adjustments.
Reconciliation of U.S. GAAP Net Income to Economic Net Income for the Three Months Ended March 31, 2026 and 2025
The following table reconciles net income attributable to controlling interests to economic net income for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP net income attributable to controlling interests $ 24.3 $ 20.1
Adjustments to reflect the economic earnings of the Company:
i. Non-cash key employee-owned equity and profit interest revaluations 16.1 (0.3)
ii. Amortization of acquired intangible assets - -
iii.
Capital transaction costs
0.3 0.1
iv.
Seed/Co-investment (gains) losses and financings(1)
1.6 -
v. Tax benefit of goodwill and acquired intangibles deductions 0.3 0.3
vi.
Discontinued operations attributable to controlling interests and restructuring(2)
- (0.2)
vii.
ENI tax normalization
(0.2) 0.2
Tax effect of above adjustments, as applicable(3)
(4.8) 0.1
Economic net income
$ 37.6 $ 20.3
(1)The net return on seed/co-investment (gains) losses and financings for the three months ended March 31, 2026 and 2025 is shown in the following table:
Three Months Ended March 31,
($ in millions) 2026 2025
Seed/Co-investment (gains) losses $ 0.5 $ (1.2)
Financing costs:
Seed/Co-investment average balance 79.5 80.1
Blended interest rate* 5.4 % 6.5 %
Financing costs 1.1 1.2
Net seed/co-investment losses and financing $ 1.6 $ -
* The blended rate is based on the weighted average rate of the long-term debt.
(2)The three months ended March 31, 2025 includes severance-related items of $(0.2) million.
(3)Reflects the sum of lines (i), (ii), (iii), (iv) and the restructuring component of line (vi) multiplied by the respective blended rates applicable to the adjustments. In the three months ended March 31, 2026, we updated our approach for calculating the tax effect of adjustments within the above reconciliation. The three months ended March 31, 2025 used a statutory income tax rate of 27.3% for these adjustments. The Company now applies a blended income tax rate, which is intended to more accurately reflect the tax effect of the adjusting items. The effect of this change on prior periods is not material.
Limitations of Economic Net Income
Economic net income is the key measure our management uses to evaluate the financial performance of, and make operational decisions for, our business. Economic net income is not audited and is not a substitute for net income or other performance measures that are derived in accordance with U.S. GAAP. Furthermore, our calculation of economic net income may differ from similarly titled measures provided by other companies.
Because the calculation of economic net income excludes certain ongoing expenses, including amortization expense and certain compensation costs, it has certain material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings.
ENI Revenues
The following table reconciles U.S. GAAP revenue to ENI revenue for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP revenue $ 167.0 $ 119.9
Exclude revenue from consolidated Funds
(2.0) (1.7)
ENI revenue $ 165.0 $ 118.2
The following table identifies the components of ENI revenue:
Three Months Ended March 31,
($ in millions) 2026 2025
Management fees(1)
$ 159.3 $ 112.9
Performance fees(2)
5.7 5.3
ENI revenue $ 165.0 $ 118.2
(1)ENI management fees correspond to U.S. GAAP management fees.
(2)ENI performance fees correspond to U.S. GAAP performance fees.
ENI Operating Expenses
The largest difference between U.S. GAAP operating expense and ENI operating expense relates to compensation. As shown in the following reconciliation, we exclude the impact of key employee equity revaluations. Variable compensation and Acadian LLC key employee distributions are also segregated out of U.S. GAAP operating expense in order to align with the manner in which these items are contractually calculated.
The following table reconciles U.S. GAAP operating expense to ENI operating expense for the three months ended March 31, 2026 and 2025.
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP operating expense $ 125.1 $ 88.0
Less: items excluded from economic net income
Non-cash key employee equity and profit interest revaluations
(16.1) 0.3
Restructuring costs(1)
- 0.2
Funds' operating expense (0.6) (0.7)
Less: items segregated out of U.S. GAAP operating expense
Variable compensation(2)
(40.9) (30.4)
Acadian LLC key employee distributions
(6.3) (3.1)
ENI operating expense $ 61.2 $ 54.3
(1)The three months ended March 31, 2025 includes $(0.2) million of severance-related items.
(2)The three months ended March 31, 2025 excludes $(0.2) million of severance-related items that are included within restructuring costs.
The following table identifies the components of ENI operating expense:
Three Months Ended March 31,
($ in millions) 2026 2025
Fixed compensation & benefits(1)
$ 26.6 $ 24.3
General and administrative expenses(2)
31.0 25.8
Depreciation and amortization 3.6 4.2
ENI operating expense $ 61.2 $ 54.3
(1)Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. The following table reconciles U.S. GAAP compensation and benefits expense for the three months ended March 31, 2026 and 2025 to ENI fixed compensation and benefits expense:
Three Months Ended March 31,
($ in millions) 2026 2025
Total U.S. GAAP compensation and benefits expense $ 96.0 $ 60.8
Non-cash key employee equity and profit interest revaluations excluded from ENI
(16.1) 0.3
Sales-based compensation reclassified to ENI general & administrative expenses
(6.1) (3.5)
Acadian LLC key employee distributions
(6.3) (3.1)
Restructuring expenses(a)
- 0.2
Variable compensation
(40.9) (30.4)
ENI fixed compensation and benefits $ 26.6 $ 24.3
(a)The three months ended March 31, 2025 includes $(0.2) million of severance-related items.
(2)The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense:
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP general and administrative expense
$ 24.9 $ 22.3
Sales-based compensation 6.1 3.5
ENI general and administrative expense $ 31.0 $ 25.8
Key Non-GAAP Operating Metrics
The following table shows our key non-GAAP operating metrics for the three months ended March 31, 2026 and 2025. We present these metrics because they are the measures our management uses to evaluate the profitability of our business and are useful to investors because they represent the key drivers and measures of economic performance within our business model. Please see the footnotes below for an explanation of each ratio, its usefulness in measuring the economics and operating performance of our business, and a reference to the most closely related U.S. GAAP measure:
Three Months Ended March 31,
($ in millions) 2026 2025
Numerator: ENI operating earnings(1)
$ 62.9 $ 33.5
Denominator: ENI revenue
$ 165.0 $ 118.2
ENI operating margin(2)
38.1 % 28.3 %
Numerator: ENI operating expense
$ 61.2 $ 54.3
Denominator: ENI management fee revenue(3)
$ 159.3 $ 112.9
ENI operating expense ratio(4)
38.4 % 48.1 %
Numerator: ENI variable compensation
$ 40.9 $ 30.4
Denominator: ENI earnings before variable compensation(1)(5)
$ 103.8 $ 63.9
ENI variable compensation ratio(6)
39.4 % 47.6 %
Numerator: Acadian LLC key employee distributions
$ 6.3 $ 3.1
Denominator: ENI operating earnings(1)
$ 62.9 $ 33.5
ENI Acadian LLC key employee distributions ratio(7)
10.0 % 9.3 %
(1)ENI operating earnings represents ENI earnings before Acadian LLC key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. It differs from economic net income because it does not include the effects of Acadian LLC key employee distributions, net interest expense or income tax expense.
The following table reconciles U.S. GAAP operating income to ENI operating earnings:
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP operating income $ 41.9 $ 31.9
Exclude the impact of:
Acadian LLC key employee-owned equity and profit interest revaluations 16.1 (0.3)
Goodwill impairment and amortization of acquired intangible assets - -
Restructuring costs(a)
- (0.2)
Acadian LLC key employee distributions
6.3 3.1
Variable compensation 40.9 30.4
Funds' operating income (1.4) (1.0)
ENI earnings before variable compensation 103.8 63.9
Less: ENI variable compensation(b)
(40.9) (30.4)
ENI operating earnings 62.9 33.5
Less: ENI Acadian LLC key employee distributions (6.3) (3.1)
ENI earnings after Acadian LLC key employee distributions $ 56.6 $ 30.4
(a)The three months ended March 31, 2025 includes $(0.2) million of severance-related items.
(b)The three months ended March 31, 2025 excludes $(0.2) million of severance-related items that are included within restructuring costs.
(2)The ENI operating margin, which is calculated before Acadian LLC key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business. The ENI operating margin is most comparable to our U.S. GAAP operating margin. Our U.S. GAAP operating margin, excluding the effect of consolidated Funds, is 24.5% for the three months ended March 31, 2026 and 26.1% for the three months ended March 31, 2025.
The ENI operating margin is important because it gives investors an understanding of the profitability of the total business relative to revenue, irrespective of the ownership position which we have in Acadian LLC. Management and investors use this ratio when comparing our profitability relative to our peer group and evaluating our ability to manage the cost structure and profitability of our business under different operating environments.
(3)ENI management fee revenue corresponds to U.S. GAAP management fee revenue.
(4)The ENI operating expense ratio is used by management and is useful to investors to evaluate the level of operating expense as measured against our recurring management fee revenue. We have provided this ratio since many operating expenses, including fixed compensation and benefits and general and administrative expense, are generally linked to the overall size of the business. We track this ratio as a key measure of scale economies because in our profit-sharing economic model, scale benefits both the Acadian LLC employees and our stockholders. The ENI operating expense ratio is most comparable to the U.S. GAAP operating expense / management fee revenue ratio.
(5)ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense.
(6)The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation. Variable compensation is primarily comprised of a contractual percentage of Acadian LLC's ENI earnings before variable compensation and may be paid in the form of cash or non-cash Acadian LLC equity or profit interests. Hold Co variable compensation includes cash and AAMI equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio is calculated as variable compensation divided by ENI earnings before variable compensation. The ENI variable compensation ratio is most comparable to the U.S. GAAP variable compensation ratio.
(7)The ENI Acadian LLC key employee distribution ratio is used by management and is useful to investors to evaluate Acadian LLC key employee distributions as measured against our ENI operating earnings. Acadian LLC key employee distributions represent the share of profits after variable compensation that is attributable to Acadian LLC key employee equity and profit interests holders, according to their ownership interests. It is calculated as Acadian LLC key employee distributions divided by ENI operating earnings. Within Acadian LLC, we have a tiered equity structure, where AAMI and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages. The ENI Acadian LLC key employee distributions ratio is most comparable to the U.S. GAAP Acadian LLC key employee distributions ratio.
Tax on Economic Net Income
The following table reconciles the blended effective tax rate to tax on economic net income:
Three Months Ended March 31,
($ in millions) 2026 2025
Pre-tax economic net income(1)
$ 55.5 $ 28.0
Taxes at blended effective tax rate(2)
(18.2) (7.7)
Other reconciling tax adjustments 0.3 -
Tax on economic net income (17.9) (7.7)
Economic net income $ 37.6 $ 20.3
Economic net income effective tax rate(3)
32.3 % 27.5 %
(1)Includes interest income and third-party ENI interest expense, as shown in the following table:
Three Months Ended March 31,
($ in millions) 2026 2025
U.S. GAAP interest income $ 0.9 $ 1.1
U.S. GAAP interest expense (3.4) (4.8)
U.S. GAAP net interest expense (2.5) (3.7)
Other ENI interest expense exclusions(a)
1.4 1.3
ENI net interest expense (1.1) (2.4)
ENI earnings after Acadian LLC key employee distributions(b)
56.6 30.4
Pre-tax economic net income $ 55.5 $ 28.0
(a)Other ENI interest expense exclusions represent cost of financing on seed capital and co-investments and amortization of debt issuance costs.
(b)ENI earnings after Acadian LLC key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Acadian LLC key employee distributions. Refer to "Key Non-GAAP Operating Metrics" for a reconciliation from U.S. GAAP operating income to ENI earnings after Acadian LLC key employee distributions.
(2)Taxed at the blended effective tax rate on pre-tax economic net income. Previously, the Company used a statutory income tax rate of 27.3%. The Company now applies a blended income tax rate, which is intended to more accurately reflect the tax effect. The effect of this change on prior periods is not material.
(3)The economic net income effective tax rate is calculated by dividing the tax on economic net income by pre-tax economic net income.
Investments
The value of our seed capital investments was $96.7 million as of March 31, 2026 and $97.2 million as of December 31, 2025, including direct investments in consolidated Funds. Total seed capital investments represents our seed capital invested within Acadian LLC's investment products. The following table reconciles the investments balance per our Condensed Consolidated Balance Sheets to the total value of our seed capital investments as of each of the dates indicated:
($ in millions) March 31,
2026 		December 31,
2025
Investments per Condensed Consolidated Balance Sheets
$ 50.8 $ 51.2
Seed capital investment in consolidated Funds 83.3 83.9
Investments related to long-term incentive compensation plans (37.4) (37.9)
Total seed capital investments $ 96.7 $ 97.2
Segment Analysis
We operate our business through the following reportable segment:
•Quant & Solutions-incorporates strategies that utilize advanced technology to collect and analyze data, aiming to identify mispriced assets and generate attractive risk-adjusted returns for investors; product lines and capabilities include Emerging Equity, Non-U.S. Equity, Global Equity, Small Cap Equity, Enhanced Equity, Equity Extensions, Systematic Credit, and Alternatives. This segment consists of our ownership interest in Acadian LLC.
The corporate holding company ("Hold Co") is included within the Unallocated Corporate expense category. The Hold Co expenses are not allocated to the Company's business segment, but the CODM does consider the cost structure of the corporate head office when evaluating the financial performance of our segment. The CODM is the Company's Chief Executive Officer.
The primary measure used by the CODM in measuring performance and allocating resources to the segment is ENI. ENI is used to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and equity distributions, and incentivize management. We define economic net income for the segment as ENI revenue less ENI operating expenses. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses recognized under U.S. GAAP.
ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to the Company by consolidated Funds.
Significant segment ENI expenses include fixed compensation and benefits, variable compensation, Acadian LLC key employee distributions, depreciation and amortization, and general and administrative expense under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Acadian LLC equity and profit interests held by Acadian LLC key employees, capital transaction costs, and restructuring costs.
ENI segment results are also adjusted to exclude consolidated Funds' revenues, consolidated Funds' expenses and investment return recorded under U.S. GAAP.
Refer to the reconciliations of U.S. GAAP revenue to ENI revenue, U.S. GAAP Operating expense to ENI Operating expense, variable compensation and Acadian LLC key employee distributions disclosed previously within this section.
Segment ENI Revenue
The following table identifies the components of Quant & Solutions segment ENI revenue for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions) 2026 2025
Management fees $ 159.3 $ 112.9
Performance fees
5.7 5.3
Segment ENI revenue
$ 165.0 $ 118.2
Quant & Solutions Segment ENI Revenue
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Quant & Solutions ENI revenue increased $46.8 million, or 39.6%, from $118.2 million for the three months ended March 31, 2025 to $165.0 million for the three months ended March 31, 2026. The increase was attributable to 41.1% higher management fees driven by higher average AUM resulting from strong net client cash flows and positive equity markets in the past twelve months, along with 7.5% higher performance fees, which are variable and are contractually triggered based on investment performance results over agreed upon time periods.
Segment ENI Expense
The following table identifies the components of Quant & Solutions segment ENI expense for the three months ended March 31, 2026 and 2025:
($ in millions) Three Months Ended March 31,
2026 2025
Fixed compensation & benefits
$ 24.9 $ 22.9
Variable compensation
39.8 29.4
Acadian LLC key employee distributions
6.3 3.1
Depreciation and amortization
3.6 4.2
General and administrative expense 29.0 23.7
Segment ENI expenses
$ 103.6 $ 83.3
Quant & Solutions Segment ENI Expense
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Quant & Solutions segment ENI expenses increased $20.3 million, or 24.4%, from $83.3 million for the three months ended March 31, 2025 to $103.6 million for the three months ended March 31, 2026. Quant & Solutions ENI fixed compensation and benefits expense increased 8.7%, reflecting cost of living increases, higher payroll taxes and an increase in the cost of employee benefits. Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period. The deferred nature of the bonus earned on performance fee revenues can result in compensation expense variability that is uncorrelated to current period earnings. Quant & Solutions ENI variable compensation expense increased 35.4% as a result of higher earnings before variable compensation, and changes in deferred compensation expense earned on current and prior year performance fee revenues in the three months ended March 31, 2026. Acadian LLC key employee distributions for certain tiers of equity are calculated after an earnings threshold is met, whereby no distributions are made to these equity holders when earnings are below the threshold. Acadian LLC key employee distributions attributable to Quant & Solutions increased 103.2%. The change in Acadian LLC key employee distributions during the three months ended March 31, 2026 is driven by higher operating earnings and the leveraged nature of this distribution share. Quant & Solutions ENI general and administrative expense increased 22.4% primarily due to higher sales-based compensation, system, portfolio administrative, and consulting costs, partially offset by the impact of foreign currency changes.
Unallocated corporate expense
The following table identifies unallocated corporate expense for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
($ in millions) 2026 2025
Unallocated corporate expenses(1)
$ 4.8 $ 4.5
(1)Unallocated corporate expenses are presented on a U.S. GAAP basis.
Three months ended March 31, 2026 compared to three months ended March 31, 2025: Unallocated corporate expense increased $0.3 million, or 6.7%, from $4.5 million for the three months ended March 31, 2025 to $4.8 million for the three months ended March 31, 2026. The increase was driven by higher compensation and benefits, slightly offset by lower general and administrative expenses.
Capital Resources and Liquidity
Cash Flows
The following table summarizes certain key financial data relating to cash flows. All amounts presented exclude consolidated Funds:
Three Months Ended March 31,
($ in millions) 2026 2025
Cash provided by (used in)(1)
Operating activities $ (44.3) $ (48.7)
Investing activities (4.2) 11.8
Financing activities 76.2 61.6
(1)Excludes consolidated Funds.
Comparison for the three months ended March 31, 2026 and 2025
Net cash from operating activities, excluding consolidated Funds, changed by $4.4 million, from net cash used of $(48.7) million for the three months ended March 31, 2025 to net cash used of $(44.3) million for the three months ended March 31, 2026, driven by changes in net income offset by changes in operating assets and liabilities period-over-period. In the three months ended March 31, 2026, net cash from investing activities, excluding consolidated Funds, changed by $(16.0) million, from $11.8 million provided in the three months ended March 31, 2025 to $(4.2) million used in the three months ended March 31, 2026, driven by net purchases of investment securities in the three months ended March 31, 2026. Net cash provided in financing activities, excluding consolidated Funds, changed by $14.6 million, from $61.6 million provided in the three months ended March 31, 2025 to $76.2 million provided in the three months ended March 31, 2026, primarily due to lower share repurchases in the three months ended March 31, 2026.
Supplemental Liquidity Measure - Adjusted EBITDA
As supplemental information, we provide information regarding Adjusted EBITDA, which we define as economic net income before net interest, income taxes, depreciation, and amortization. Adjusted EBITDA is a non-GAAP liquidity measure that we provide in addition to, but not as a substitute for, cash flows from operating activities. It should be noted that our calculation of Adjusted EBITDA may not be consistent with Adjusted EBITDA as calculated by other companies. We believe Adjusted EBITDA is a useful liquidity metric because it indicates our ability to make further investments in our business, service debt and meet working capital requirements.
The following table reconciles our U.S. GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three months ended March 31, 2026 and 2025.
Three Months Ended March 31,
($ in millions) 2026 2025
Net income attributable to controlling interests $ 24.3 $ 20.1
Net interest expense to third parties 2.5 3.7
Income tax expense 13.2 8.3
Depreciation and amortization
3.6 4.2
EBITDA $ 43.6 $ 36.3
Non-cash compensation costs, including revaluation of Acadian LLC key employee-owned equity and profit interests
17.7 0.3
(Gain) loss on seed and co-investments 0.5 (1.2)
Restructuring(1)
- (0.2)
Adjusted EBITDA
$ 61.8 $ 35.2
ENI net interest expense to third parties (1.1) (2.4)
Depreciation and amortization(2)
(5.2) (4.8)
Tax on economic net income (17.9) (7.7)
Economic net income
$ 37.6 $ 20.3
(1)The three months ended March 31, 2025 includes $(0.2) million of severance-related items.
(2)Includes non-cash equity-based award amortization expense.
Limitations of Adjusted EBITDA
As a non-GAAP, unaudited liquidity measure and derivation of EBITDA, Adjusted EBITDA has certain material limitations. It does not include cash costs associated with capital transactions and excludes certain U.S. GAAP expenses that fall outside the definition of EBITDA. Each of these categories of expense represents costs to us of doing business, and therefore any measure that excludes any or all of these categories of expense has material limitations.
Future Capital Needs
We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, our relative levels of debt and equity and the overall condition of the credit markets. As of March 31, 2026, we have $129.0 million in cash and cash equivalents and $96.7 million in seed capital investments.
Borrowings and Long-Term Debt
The following table summarizes our financing arrangements as of the dates indicated:
($ in millions) March 31,
2026 		December 31,
2025 		Interest rate Maturity
Revolving credit facility:
$175 million revolving credit facility
$ 85.0 $ - Variable rate October 28, 2028
Total revolving credit facility $ 85.0 $ -
Third party borrowings:
$200 million Delayed Draw Term Loan Due October 28, 2028
$ 200.0 $ 200.0 Variable rate October 28, 2028
Total third party borrowings $ 200.0 $ 200.0
The Delayed Draw Term Loan Credit Agreement and Revolving Credit Agreement
On October 28, 2025 (the "Closing Date"), Acadian LLC entered into a Delayed Draw Term Loan Credit Agreement with the Lenders from time to time party thereto, and Bank of America, N.A. ("Bank of America"), as the Administrative Agent (the "DDTL Credit Agreement"), and a Revolving Credit Agreement with the Lenders from time to time party thereto, Bank of America, as the Administrative Agent and a L/C Issuer, and the other L/C Issuers from time to time party thereto (the "Revolving Credit Agreement").
The DDTL Credit Agreement provides for a delayed draw term loan facility in an aggregate principal amount, as of the Closing Date, of up to $200 million (the "Term Facility"). The term loans mature on October 28, 2028. Subject to certain conditions, Acadian LLC may increase the size of the Term Facility to an aggregate maximum principal amount of $275 million. None of the lenders under the Term Facility are obligated to provide such additional commitments to Acadian LLC.
Loans under the DDTL Credit Agreement bear interest, at Acadian LLC's option, at a rate per annum equal to (i) Term SOFR for the applicable interest period plus an applicable margin equal to a range of 1.5% to 2.0% depending on Acadian LLC's consolidated leverage ratio or (ii) an alternate base rate (defined as a rate equal to the highest of (i) the Federal Funds Rate plus 0.5%, (ii) Bank of America's published "prime rate" and (iii) Term SOFR plus 1.0%) plus an applicable margin equal to a range of 0.5% to 1.0% depending on Acadian LLC's consolidated leverage ratio.
Financial covenants under the Term Facility include the quarterly maintenance by Acadian LLC of (i) a maximum Consolidated Net Leverage Ratio (as defined in the DDTL Credit Agreement) of not greater than 2.5x and (ii) a minimum Consolidated Interest Coverage Ratio (calculated as the ratio of Acadian LLC Consolidated EBITDA (as defined in the DDTL Credit Agreement), divided by Acadian LLC interest expense for the four consecutive fiscal quarters ended on or immediately prior to the date of determination) of not less than 4.0x. For purposes of calculating the Consolidated Net Leverage Ratio, the DDTL Credit Agreement refers to Consolidated Funded Indebtedness (as defined in the DDTL Credit Agreement) minus unrestricted cash at Acadian LLC. At March 31, 2026, Acadian LLC's Leverage Ratio was 1.0x and Acadian LLC's Interest Coverage Ratio was 46.2x.
The Revolving Credit Agreement provides for senior unsecured revolving credit commitments as of the Closing Date in an aggregate principal amount, as of the Closing Date, of up to $175 million (the "Revolving Facility"). The revolving commitments mature on October 28, 2028. Subject to certain conditions, Acadian LLC may increase the size of the Revolving Facility to an aggregate maximum principal amount of $275 million, which may be established in the form of revolving commitments or term loan commitments. None of the lenders under the Revolving Facility are obligated to provide such additional commitments to Acadian LLC.
Borrowings under the Revolving Credit Agreement bear interest, at Acadian LLC's option, at a rate per annum equal to (i) Term SOFR (as defined in the Revolving Credit Agreement) for the applicable interest period plus an applicable margin equal to a range of 1.5% to 2.0% depending on Acadian LLC's Consolidated Leverage Ratio (as defined in the Revolving Credit Agreement) or (ii) an alternate base rate (defined as a rate equal to the highest of (i) the Federal Funds Rate plus 0.5%, (ii) Bank of America's published "prime rate" and (iii) Term SOFR plus 1.0%) plus an applicable margin equal to a range of 0.5% to 1.0% depending on Acadian LLC's Consolidated Leverage Ratio. The Company is required to pay a commitment fee at a per annum rate ranging from 0.25% to 0.375%, with such amount based on Acadian LLC's Consolidated Leverage Ratio on the daily undrawn amount of the revolving commitments, and customary letter of credit participation and fronting fees.
As of March 31, 2026, Acadian LLC had unused lines of credit of $87.5 million comprised of undrawn commitments on the revolving credit facility of $90.0 million less a $2.5 million letter of credit with Bank of America related to one of Acadian LLC's current office spaces.
Other Compensation Liabilities
Other compensation liabilities principally consist of cash-settled Acadian LLC equity and profit interests liabilities held by certain key employees, and voluntary deferred compensation plans. The following table summarizes our other compensation liabilities as of each of the dates indicated:
March 31,
2026 		December 31,
2025
($ in millions)
Share-based payments liability $ 39.5 $ 37.0
Profit interests compensation liability
65.8 54.0
Voluntary deferral plan liability 37.2 37.9
Total $ 142.5 $ 128.9
Share-based payments liability represents the value of Acadian LLC key employee-owned equity that may under certain circumstances be repurchased by us that is considered an equity award under U.S. GAAP based on the terms and conditions attached to these interests. Acadian LLC profit interests liability represents the value of Acadian LLC key employee-owned equity that may under certain circumstances be repurchased by us that is not considered an equity award under U.S. GAAP, but rather a form of compensation arrangement, based on the terms and conditions attached to these interests. Our obligation in any given period in respect of funding these potential repurchases of Acadian LLC equity is limited to only that portion that may be put to us by Acadian LLC key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Acadian LLC key employees.
Certain of our employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation. There is a voluntary deferral plan investment balance included in investments on the Condensed Consolidated Balance Sheets that corresponds to this deferral liability.
Additionally, we have recorded accrued incentive compensation of $47.4 million and $129.9 million on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively. Included within the accrued incentive compensation balance is the vested portion of our deferred compensation pool. The deferred compensation pool is based on a contractual percentage of Acadian LLC performance fee revenues and post-bonus profits, and is subject to a three-year vesting period. Compensation expense is recognized over the requisite service period. Unamortized compensation expense related to the unvested portion of the deferred compensation pool of $16.8 million, $10.4 million and $1.7 million is expected to be recognized in the years ending December 31, 2026, 2027 and 2028, respectively.
Critical Accounting Policies and Estimates
There have been no significant changes to the critical accounting policies and estimates disclosed in our most recent Form 10-K for the year ended December 31, 2025. Critical accounting policies and estimates are those that require management's most difficult, subjective or complex judgments and would therefore be deemed the most critical to an understanding of our results of operations and financial condition.
Recent Accounting Developments
See discussion of Recent Accounting Developments in Note 2 of the accompanying Condensed Consolidated Financial Statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements, which may include, from time to time, anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business, our expected future net cash flows, our anticipated expense levels, capital management, financial condition, results of operations and cash flows, expected use of capital resources, expectations regarding market conditions and/or expected impact of changes in accounting standards and tax law. The words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "can be," "may be," "aim to," "may affect," "may depend," "intends," "expects," "believes," "estimate," "plan," "project," and other similar expressions are intended to identify such forward-looking statements. Such statements are subject to various known and unknown risks and uncertainties and we caution readers that any forward-looking information provided by or on behalf of us is not a guarantee of future performance.
Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2026, and subsequent SEC filings. Due to such risks and uncertainties and other factors, we caution each person receiving such forward-looking information not to place undue reliance on such statements. Further, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and we undertake no obligations to update any forward-looking statement to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.
Acadian Asset Management Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 11:53 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]