Victory Capital Holdings Inc.
11/07/2025 | Press release | Distributed by Public on 11/07/2025 08:12
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the "Company," "Victory," or in the first-person notations of "we," "us," and "our" shall mean Victory Capital Holdings, Inc., a Delaware corporation, and its wholly-owned subsidiaries.
Objective
The objective of this section of the Quarterly Report on Form 10-Q is intended to provide a discussion and analysis, from management's perspective, of the key performance indicators and material information necessary to assess our financial condition and results of operations for the three and nine months ended September 30, 2025 and 2024 and cash flows for the nine months ended September 30, 2025 and 2024. In addition, we also discuss the Company's contractual and off-balance sheet arrangements. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2024. This discussion and analysis contains forward-looking statements and should also be read in conjunction with the disclosures and information contained in "Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q and in "Item 1A. Risk Factors" included in the Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
Our Business - Victory is a diversified global asset management firm with total client assets of $313.4 billion, assets under management of $310.6 billion and other assets of $2.7 billion as of September 30, 2025. The Company operates a next-generation business model combining boutique investment qualities with the benefits of an integrated, centralized operating and distribution platform.
The Company provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors with multiple autonomous Investment Franchises and a Solutions Platform. Victory Capital offers a wide array of investment products, including actively and passively managed mutual funds, rules-based and active exchange traded funds ("ETFs"), institutional separate accounts, variable insurance products ("VIPs"), alternative investments, private closed end funds, and a 529 Education Savings Plan. Victory Capital's strategies are also offered through third-party investment products, including mutual funds, third-party ETF model strategies, retail separately managed accounts ("SMAs") and unified managed accounts ("UMAs") through wrap account programs, Collective Investment Trusts ("CITs"), and undertakings for the collective investment in transferable securities ("UCITS") and other pooled funds. As of September 30, 2025, our Franchises and our Solutions Platform collectively managed a diversified set of 189 investment strategies for a wide range of institutional and retail clients and direct investors.
Franchises -Our Franchises are largely operationally integrated but are separately branded and make investment decisions independently from one another within guidelines established by their respective investment mandates. Our largely integrated model creates a supportive environment in which our investment professionals, largely unencumbered by administrative and operational responsibilities, can focus on their pursuit of investment excellence. VCM employs all of our U.S. investment professionals across our Franchises, which are not separate legal entities.
Pioneer Investments
On July 8, 2024, the Company, Amundi Asset Management S.A.S ("Amundi'), and, solely for certain provisions thereof, Amundi S.A., ("Amundi Parent," and together with Amundi, the "Amundi Parties") entered into the Contribution Agreement (the "Contribution Agreement") to combine Amundi's U.S. business into the Company. The addition of Amundi U.S. as the Company's largest Investment Franchise meaningfully enhances the Company's scale, expands its global client base and further diversifies its investment capabilities.
Amundi U.S., based in Boston, Massachusetts, was a wholly owned subsidiary of Amundi, and specializes in providing and distributing investment solutions to a wide range of clients and investors, including institutional investors, corporations, central banks, sovereign wealth funds, and individual investors.
On April 1, 2025 (the "Closing"), the Company completed the transactions contemplated by the Contribution Agreement (the "Contribution") and reintroduced the brand Pioneer Investments ("Pioneer" or "Pioneer Investments") for the acquired business and investment products. In exchange for the contribution of all the shares of the Amundi US to the Company, the Company issued to Amundi (a) 3,293,471 newly issued shares of Common Stock, representing 4.9% of the number
of issued and outstanding shares of Common Stock after giving effect to such issuance, and (b) 19,742,300 newly issued shares of Preferred Stock, which, together with the shares of Common Stock issued to Amundi represented in the aggregate 26.1% of the Company's fully diluted shares after giving effect to such share issuances. The Preferred Stock issued to Amundi includes 14,305,982 shares issued on April 1, 2025 and 5,436,318 shares issued on May 23, 2025 as a true up payment in respect of client consents obtained in the 30 days following the Closing. Closing consideration due to Amundi is subject to a customary post-closing adjustment. On August 1, 2025, in accordance with the terms of the Contribution Agreement, Amundi forfeited its beneficial ownership of 44,026 shares of Preferred stock as a result of a post-closing adjustment to the amount of Preferred stock received by Amundi at the closing of the transaction.
VCM serves as the investment adviser and provides mutual fund administration services for the Pioneer mutual funds under Victory Portfolio IV and Victory Variable Insurance Funds II. VCS serves as the distributor to Victory Portfolios IV and Victory Variable Insurance Funds II. The sequential results include Pioneer Investments as of April 1, 2025, which significantly impacted our financial results for the three and nine months ended September 30, 2025 when compared to the comparable periods. Refer to Note 4, Acquisitions, for further details related to the acquisition.
Solutions -Our Solutions Platform consists of multi-asset, multi-manager, quantitative, rules-based, factor-based, and customized portfolios. These strategies are designed to achieve specific return characteristics, with products that include values-based and thematic outcomes and exposures. We offer our Solutions Platform through a variety of vehicles, including separate accounts, mutual funds, UMA accounts, and rules-based and active ETFs under our VictoryShares ETF brand. Like our Franchises, our Solutions Platform is operationally integrated and supported by our centralized distribution, marketing, and operational support functions.
We have clients spanning 60 countries and manage approximately $52 billion in AUM for non-US investors. Through our exclusive global distribution agreement with Amundi, we have access to 35 countries and 1,000 third-party distributors in 20 countries. Professionals within our institutional and retail distribution channels, direct investor business and marketing organization sell our products through our centralized distribution model. Our institutional sales team focuses on cultivating relationships with institutional consultants, who account for the majority of the institutional market, as well as asset allocators seeking sub-advisers. Our retail sales team offers intermediary and retirement platform clients, including broker-dealers, retirement platforms and RIA networks, mutual funds and ETFs as well as SMAs through wrap fee programs and access to our investment models through UMAs. Our direct investor business serves the investment needs of individual clients.
We have grown our total client assets from $17.9 billion following the management-led buyout with Crestview GP in August 2013 to $313.4 billion at September 30, 2025. We attribute this growth to our success in sourcing acquisitions and evolving them into organic growers, generating strong investment returns, and developing institutional, retail, and direct investor channels with deep penetration.
Business Highlights
Assets under management:
•
AUM at September 30, 2025 increased by $12.1 billion, or 4.1%, to $310.6 billion from $298.6 billion at June 30, 2025, due to $14.5 billion of market appreciation partially offset by $0.3 billion of net outflows.
•
AUM at September 30, 2025 and 2024 was $310.6 billion and $176.1 billion, respectively. We generated $17.3 billion in gross flows and $0.3 billion in net outflows for the three months ended September 30, 2025 compared to $6.1 billion in gross flows and $2.6 billion in net outflows for the same period in 2024.
•
AUM at September 30, 2025 and 2024 was $310.6 billion and $176.1 billion, respectively. We generated $42.5 billion in gross flows and $2.3 billion in net outflows for the nine months ended September 30, 2025 compared to $19.4 billion in gross flows and $5.5 billion in net outflows for the same period in 2024. Net flows for the nine months ended September 30, 2025 were comprised of $2.1 billion and $0.2 billion of net long-term and short-term outflows, respectively.
Investment performance:
•
56 of our Victory Capital mutual funds and ETFs had overall Morningstar ratings of four or five stars and 64% of our fund and ETF AUM were rated four or five stars overall by Morningstar. 54% of our strategies by AUM had investment returns in excess of their respective benchmarks over a one-year period, 64% over a three-year period, 65% over a five-year period and 77% over a ten-year period. On an equal-weighted basis, 53% of our strategies have outperformed their benchmarks over a one-year period, 63% over a three-year period, 68% over a five-year period and 65% over a ten-year period.
Financial highlights:
•
Total revenue for the three months ended September 30, 2025 was $361.2 million compared to $225.6 million for the same period in 2024. For the nine months ended September 30, 2025 and 2024, total revenue was $932.0 million and $661.1 million, respectively.
•
Net income was $96.5 million for the three months ended September 30, 2025 compared to $82.0 million for the same period in 2024. For the nine months ended September 30, 2025 and 2024, net income was $217.3 million and $211.9 million, respectively.
•
Adjusted EBITDA was $190.5 million for the three months ended September 30, 2025, or 52.7% of revenue, compared to $121.3 million, or 53.7% of revenue, for the same period in 2024. For the nine months ended September 30, 2025, Adjusted EBITDA was $485.4 million, or 52.1% of revenue, compared to $350.1 million, or 53.0% of revenue, for the same period in 2024. Refer to "Supplemental Non-GAAP Financial Information" for further information about the Adjusted EBITDA calculation and reconciliation of generally accepted accounting principles ("GAAP") net income to Adjusted EBITDA.
•
Adjusted Net Income with tax benefit was $141.3 million for the three months ended September 30, 2025 compared to $89.0 million for the three months ended September 30, 2024. For the nine months ended September 30, 2025, Adjusted Net Income with tax benefit was $362.2 million compared to $258.0 million for the same period in 2024. Refer to "Supplemental Non-GAAP Financial Information" for further information about the Adjusted Net Income calculation and reconciliation of GAAP net income to Adjusted Net Income.
Key Performance Indicators
The following table is a summary of key performance indicators utilized by management to assess results of operations:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
($ in millions, except for basis points, percentages, and per share amounts) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
AUM at period end |
310,644 |
176,113 |
310,644 |
176,113 |
||||||||||||
|
Average AUM |
303,584 |
171,876 |
254,117 |
167,631 |
||||||||||||
|
Gross flows |
17,296 |
6,120 |
42,513 |
19,375 |
||||||||||||
|
AUM net short-term flows |
(48 |
) |
(5 |
) |
(236 |
) |
(147 |
) |
||||||||
|
AUM net long-term flows |
(244 |
) |
(2,631 |
) |
(2,108 |
) |
(5,361 |
) |
||||||||
|
AUM net flows |
(292 |
) |
(2,636 |
) |
(2,345 |
) |
(5,508 |
) |
||||||||
|
Total revenue |
361.2 |
225.6 |
932.0 |
661.1 |
||||||||||||
|
Revenue realization on average AUM |
47.2 bps |
52.1 bps |
49.0 bps |
52.6 bps |
||||||||||||
|
Net income |
96.5 |
82.0 |
217.3 |
211.9 |
||||||||||||
|
Adjusted EBITDA(1) |
190.5 |
121.3 |
485.4 |
350.1 |
||||||||||||
|
Adjusted EBITDA margin(2) |
52.7 |
% |
53.7 |
% |
52.1 |
% |
53.0 |
% |
||||||||
|
Adjusted net income(1) |
130.9 |
78.9 |
331.3 |
228.0 |
||||||||||||
|
Tax benefit of goodwill and acquired intangibles(3) |
10.5 |
10.1 |
30.9 |
30.0 |
||||||||||||
|
Adjusted net income with tax benefit per diluted share(4) |
1.63 |
1.35 |
4.59 |
3.91 |
||||||||||||
(1) Management utilizes Adjusted EBITDA and Adjusted net income to measure the operating profitability of the business. These measures eliminate the impact of one-time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the business. These measures are explained in more detail and reconciled to net income calculated in accordance with GAAP in "Supplemental Non-GAAP Financial Information."
(2) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue.
(3) Represents the tax benefits associated with deductions allowed for intangibles and goodwill generated from prior acquisitions in which we received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangibles with a step-up in tax basis. Due to our acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide us with a significant supplemental economic benefit.
(4) The Company includes participating securities in its computation of adjusted earnings per diluted share, including 19.8 million shares of Series A Non-Voting Convertible Preferred Stock.
The following table presents a reconciliation of our total client assets(1)as of the dates indicated:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in millions) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Beginning AUM |
$ |
298,563 |
$ |
168,681 |
$ |
171,930 |
$ |
161,322 |
||||||||
|
Beginning other assets |
3,050 |
5,094 |
4,165 |
5,289 |
||||||||||||
|
Beginning total client assets |
301,613 |
173,775 |
176,096 |
166,611 |
||||||||||||
|
AUM net cash flows |
(292 |
) |
(2,636 |
) |
(2,345 |
) |
(5,508 |
) |
||||||||
|
Other assets net cash flows |
(502 |
) |
(446 |
) |
(1,948 |
) |
(952 |
) |
||||||||
|
Total client assets net cash flows |
(794 |
) |
(3,082 |
) |
(4,293 |
) |
(6,460 |
) |
||||||||
|
AUM market appreciation (depreciation) |
14,515 |
10,076 |
31,589 |
20,337 |
||||||||||||
|
Other assets market appreciation (depreciation) |
177 |
333 |
509 |
644 |
||||||||||||
|
Total client assets market appreciation (depreciation) |
14,692 |
10,409 |
32,098 |
20,982 |
||||||||||||
|
AUM realizations and distributions |
- |
(2 |
) |
(24 |
) |
(2 |
) |
|||||||||
|
Acquired & divested assets / Net transfers(2) |
(2,141 |
) |
(7 |
) |
109,493 |
(38 |
) |
|||||||||
|
Ending AUM |
310,644 |
176,113 |
310,644 |
176,113 |
||||||||||||
|
Ending other assets |
2,726 |
4,981 |
2,726 |
4,981 |
||||||||||||
|
Ending total client assets |
313,370 |
181,094 |
313,370 |
181,094 |
||||||||||||
|
Average total client assets |
306,457 |
176,806 |
257,625 |
172,688 |
||||||||||||
(1) Includes low-fee (2 to 4 bps) institutional assets, previously reported in the Solutions asset class within the by asset class table and in Separate Accounts and Other Pooled Vehicles within the by vehicle table. These assets are included as part of Victory's Regulatory Assets Under Management reported in Form ADV Part 1.
(2) Three months ended September 30, 2025 includes the impact of approximately $1 billion of divested assets from the closure of three Investment Franchises in the third quarter. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following table presents a reconciliation of our total AUM(1)as of the dates indicated:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in millions) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Beginning AUM |
$ |
298,563 |
$ |
168,681 |
$ |
171,930 |
$ |
161,322 |
||||||||
|
Gross client cash inflows |
17,296 |
6,120 |
42,513 |
19,375 |
||||||||||||
|
Gross client cash outflows |
(17,588 |
) |
(8,756 |
) |
(44,858 |
) |
(24,882 |
) |
||||||||
|
Net client cash flows |
(292 |
) |
(2,636 |
) |
(2,345 |
) |
(5,508 |
) |
||||||||
|
Market appreciation (depreciation) |
14,515 |
10,076 |
31,589 |
20,337 |
||||||||||||
|
Realizations and distributions |
- |
(2 |
) |
(24 |
) |
(2 |
) |
|||||||||
|
Acquired & divested assets / Net transfers(2) |
(2,141 |
) |
(7 |
) |
109,493 |
(38 |
) |
|||||||||
|
Ending AUM |
310,644 |
176,113 |
310,644 |
176,113 |
||||||||||||
|
Average AUM |
303,584 |
171,876 |
254,117 |
167,631 |
||||||||||||
(1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(2) Three months ended September 30, 2025 includes the impact of approximately $1 billion of divested assets from the closure of three Investment Franchises in the third quarter. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following table presents a reconciliation of our other assets (institutional)(1)as of the dates indicated:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in millions) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Beginning other assets (institutional) |
$ |
3,050 |
$ |
5,094 |
$ |
4,165 |
$ |
5,289 |
||||||||
|
Gross client cash inflows |
- |
- |
- |
467 |
||||||||||||
|
Gross client cash outflows |
(502 |
) |
(446 |
) |
(1,949 |
) |
(1,419 |
) |
||||||||
|
Net client cash flows |
(502 |
) |
(446 |
) |
(1,948 |
) |
(952 |
) |
||||||||
|
Market appreciation (depreciation) |
177 |
333 |
509 |
644 |
||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
||||||||||||
|
Acquired & divested assets / Net transfers |
- |
- |
- |
- |
||||||||||||
|
Ending other assets (institutional) |
2,726 |
4,981 |
2,726 |
4,981 |
||||||||||||
|
Average other assets (institutional) |
2,873 |
4,930 |
3,508 |
5,057 |
||||||||||||
(1) Includes low-fee (2 to 4 bps) institutional assets, previously reported in the Solutions asset class within the by asset class table and in Separate Accounts and Other Pooled Vehicles within the by vehicle table. These assets are included as part of Victory's Regulatory Assets Under Management reported in Form ADV Part 1.
Assets Under Management
Our profitability is largely affected by the level and composition of our AUM (including asset class and distribution channel) and the effective fee rates on our products. The amount and composition of our AUM are, and will continue to be, influenced by a number of factors, including; (i) investment performance, including fluctuations in the financial markets and the quality of our investment decisions; (ii) client flows into and out of our various strategies and investment vehicles; (iii) industry trends toward products or strategies that we either do or do not offer; (iv) our ability to attract and retain high quality investment, distribution, marketing and management personnel; (v) our decision to close strategies or limit growth of assets in a strategy when we believe it is in the best interest of our clients or conversely to re-open strategies in part or entirely; and (vi) general investor sentiment and confidence. Our goal is to establish and maintain a client base that is diversified by Franchise and Solutions, asset class, distribution channel and vehicle. Due to rounding, AUM numbers presented in the tables below may not add up precisely to the totals provided.
The following table presents our AUM by asset class as of the dates indicated:
|
As of |
||||||||
|
September 30, |
||||||||
|
(in millions) |
2025 |
2024 |
||||||
|
Solutions |
$ |
86,963 |
$ |
62,544 |
||||
|
Fixed Income |
80,386 |
25,081 |
||||||
|
U.S. Mid Cap Equity |
31,877 |
32,333 |
||||||
|
U.S. Small Cap Equity |
12,722 |
15,591 |
||||||
|
Global / Non-U.S. Equity |
28,960 |
19,752 |
||||||
|
U.S. Large Cap Equity |
63,061 |
14,239 |
||||||
|
Alternative Investments |
3,016 |
3,178 |
||||||
|
Total Long-Term Assets |
306,985 |
172,720 |
||||||
|
Money Market & Short-Term Assets |
3,660 |
3,393 |
||||||
|
Total AUM(1)(2) |
$ |
310,644 |
$ |
176,113 |
||||
(1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(2) Includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following tables summarize our asset flows by asset class for the periods indicated:
|
U.S. Mid |
U.S. Small |
U.S. Large |
Global / |
Money |
||||||||||||||||||||||||||||||||||||
|
Cap |
Cap |
Fixed |
Cap |
Non-U.S. |
Alternative |
Total |
Market / |
|||||||||||||||||||||||||||||||||
|
(in millions) |
Equity |
Equity |
Income |
Equity |
Equity |
Solutions |
Investments |
Long-term |
Short-term |
Total AUM(1) |
||||||||||||||||||||||||||||||
|
For the Three Months Ended September 30, 2025 |
||||||||||||||||||||||||||||||||||||||||
|
Beginning AUM |
$ |
31,833 |
$ |
13,140 |
$ |
79,752 |
$ |
61,654 |
$ |
25,576 |
$ |
79,988 |
$ |
2,986 |
$ |
294,930 |
$ |
3,632 |
$ |
298,563 |
||||||||||||||||||||
|
Gross client cash inflows |
819 |
307 |
5,816 |
1,960 |
2,923 |
4,921 |
216 |
16,962 |
334 |
17,296 |
||||||||||||||||||||||||||||||
|
Gross client cash outflows |
(2,229 |
) |
(1,494 |
) |
(5,491 |
) |
(3,930 |
) |
(930 |
) |
(2,962 |
) |
(169 |
) |
(17,206 |
) |
(382 |
) |
(17,588 |
) |
||||||||||||||||||||
|
Net client cash flows |
(1,410 |
) |
(1,187 |
) |
325 |
(1,970 |
) |
1,993 |
1,958 |
47 |
(244 |
) |
(48 |
) |
(292 |
) |
||||||||||||||||||||||||
|
Market appreciation / (depreciation) |
1,469 |
977 |
1,247 |
4,003 |
1,695 |
5,112 |
(25 |
) |
14,478 |
37 |
14,515 |
|||||||||||||||||||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||
|
Acquired & divested assets / Net transfers(2) |
(14 |
) |
(209 |
) |
(939 |
) |
(626 |
) |
(304 |
) |
(95 |
) |
7 |
(2,180 |
) |
38 |
(2,141 |
) |
||||||||||||||||||||||
|
Ending AUM |
$ |
31,877 |
$ |
12,722 |
$ |
80,386 |
$ |
63,061 |
$ |
28,960 |
$ |
86,963 |
$ |
3,016 |
$ |
306,985 |
$ |
3,660 |
$ |
310,644 |
||||||||||||||||||||
|
For the Three Months Ended September 30, 2024 |
||||||||||||||||||||||||||||||||||||||||
|
Beginning AUM |
$ |
31,015 |
$ |
15,182 |
$ |
24,398 |
$ |
13,983 |
$ |
18,459 |
$ |
58,936 |
$ |
3,390 |
$ |
165,362 |
$ |
3,320 |
$ |
168,681 |
||||||||||||||||||||
|
Gross client cash inflows |
975 |
584 |
1,344 |
73 |
578 |
2,143 |
179 |
5,876 |
244 |
6,120 |
||||||||||||||||||||||||||||||
|
Gross client cash outflows |
(2,300 |
) |
(1,278 |
) |
(1,640 |
) |
(486 |
) |
(485 |
) |
(1,877 |
) |
(443 |
) |
(8,508 |
) |
(249 |
) |
(8,756 |
) |
||||||||||||||||||||
|
Net client cash flows |
(1,325 |
) |
(694 |
) |
(296 |
) |
(413 |
) |
94 |
265 |
(263 |
) |
(2,632 |
) |
(5 |
) |
(2,636 |
) |
||||||||||||||||||||||
|
Market appreciation / (depreciation) |
2,649 |
1,105 |
973 |
690 |
1,212 |
3,368 |
51 |
10,048 |
27 |
10,076 |
||||||||||||||||||||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
- |
- |
(2 |
) |
(2 |
) |
- |
(2 |
) |
|||||||||||||||||||||||||||
|
Acquired & divested assets / Net transfers |
(5 |
) |
(2 |
) |
6 |
(21 |
) |
(13 |
) |
(25 |
) |
3 |
(57 |
) |
51 |
(7 |
) |
|||||||||||||||||||||||
|
Ending AUM |
$ |
32,333 |
$ |
15,591 |
$ |
25,081 |
$ |
14,239 |
$ |
19,752 |
$ |
62,544 |
$ |
3,178 |
$ |
172,720 |
$ |
3,393 |
$ |
176,113 |
||||||||||||||||||||
(1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(2) Three months ended September 30, 2025 includes the impact of approximately $1 billion of divested assets from the closure of three Investment Franchises in the third quarter.
|
U.S. |
U.S. |
|||||||||||||||||||||||||||||||||||||||
|
U.S. Mid |
Small |
Large |
Global / |
Money |
||||||||||||||||||||||||||||||||||||
|
Cap |
Cap |
Fixed |
Cap |
Non-U.S. |
Alternative |
Total |
Market / |
|||||||||||||||||||||||||||||||||
|
(in millions) |
Equity |
Equity |
Income |
Equity |
Equity |
Solutions |
Investments |
Long-term |
Short-term |
Total AUM(1) |
||||||||||||||||||||||||||||||
|
Nine Months Ended September 30, 2025 |
||||||||||||||||||||||||||||||||||||||||
|
Beginning AUM |
$ |
30,584 |
$ |
14,785 |
$ |
24,402 |
$ |
14,148 |
$ |
19,095 |
$ |
62,593 |
$ |
2,980 |
$ |
168,586 |
$ |
3,344 |
$ |
171,930 |
||||||||||||||||||||
|
Gross client cash inflows |
2,776 |
1,209 |
12,759 |
4,299 |
6,579 |
13,377 |
694 |
41,694 |
819 |
42,513 |
||||||||||||||||||||||||||||||
|
Gross client cash outflows |
(5,582 |
) |
(3,081 |
) |
(13,048 |
) |
(7,762 |
) |
(5,553 |
) |
(8,023 |
) |
(754 |
) |
(43,803 |
) |
(1,055 |
) |
(44,858 |
) |
||||||||||||||||||||
|
Net client cash flows |
(2,806 |
) |
(1,872 |
) |
(289 |
) |
(3,463 |
) |
1,026 |
5,355 |
(59 |
) |
(2,108 |
) |
(236 |
) |
(2,345 |
) |
||||||||||||||||||||||
|
Market appreciation / (depreciation) |
1,747 |
168 |
2,747 |
10,831 |
5,354 |
10,529 |
110 |
31,486 |
103 |
31,589 |
||||||||||||||||||||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
- |
- |
(24 |
) |
(24 |
) |
- |
(24 |
) |
|||||||||||||||||||||||||||
|
Acquired & divested assets / Net transfers(2) |
2,351 |
(358 |
) |
53,526 |
41,545 |
3,485 |
8,487 |
9 |
109,045 |
448 |
109,493 |
|||||||||||||||||||||||||||||
|
Ending AUM |
$ |
31,877 |
$ |
12,722 |
$ |
80,386 |
$ |
63,061 |
$ |
28,960 |
$ |
86,963 |
$ |
3,016 |
$ |
306,985 |
$ |
3,660 |
$ |
310,644 |
||||||||||||||||||||
|
Nine Months Ended September 30, 2024 |
||||||||||||||||||||||||||||||||||||||||
|
Beginning AUM |
$ |
30,604 |
$ |
15,959 |
$ |
24,355 |
$ |
12,635 |
$ |
16,772 |
$ |
54,296 |
$ |
3,431 |
$ |
158,051 |
$ |
3,271 |
$ |
161,322 |
||||||||||||||||||||
|
Gross client cash inflows |
3,353 |
1,650 |
3,925 |
209 |
2,227 |
6,343 |
935 |
18,642 |
734 |
19,375 |
||||||||||||||||||||||||||||||
|
Gross client cash outflows |
(5,804 |
) |
(2,980 |
) |
(4,514 |
) |
(1,127 |
) |
(1,871 |
) |
(6,472 |
) |
(1,234 |
) |
(24,002 |
) |
(881 |
) |
(24,882 |
) |
||||||||||||||||||||
|
Net client cash flows |
(2,451 |
) |
(1,330 |
) |
(589 |
) |
(918 |
) |
356 |
(129 |
) |
(299 |
) |
(5,360 |
) |
(147 |
) |
(5,508 |
) |
|||||||||||||||||||||
|
Market appreciation / (depreciation) |
4,196 |
1,014 |
1,265 |
2,595 |
2,713 |
8,390 |
34 |
20,207 |
129 |
20,337 |
||||||||||||||||||||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
- |
- |
(2 |
) |
(2 |
) |
- |
(2 |
) |
|||||||||||||||||||||||||||
|
Acquired & divested assets / Net transfers |
(16 |
) |
(51 |
) |
50 |
(72 |
) |
(89 |
) |
(13 |
) |
14 |
(177 |
) |
139 |
(38 |
) |
|||||||||||||||||||||||
|
Ending AUM |
$ |
32,333 |
$ |
15,591 |
$ |
25,081 |
$ |
14,239 |
$ |
19,752 |
$ |
62,544 |
$ |
3,178 |
$ |
172,720 |
$ |
3,393 |
$ |
176,113 |
||||||||||||||||||||
(1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(2) Nine months ended September 30, 2025 includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following table presents our AUM by distribution channel as of the dates indicated:
|
As of September 30, |
||||||||||||||||
|
2025 |
2024 |
|||||||||||||||
|
(in millions) |
Amount |
% of total |
Amount |
% of total |
||||||||||||
|
Investor |
$ |
63,059 |
20 |
% |
$ |
61,989 |
35 |
% |
||||||||
|
Non-US |
52,160 |
17 |
% |
5,855 |
3 |
% |
||||||||||
|
Institutional |
78,837 |
25 |
% |
37,440 |
21 |
% |
||||||||||
|
Retail |
116,588 |
38 |
% |
70,829 |
40 |
% |
||||||||||
|
Total AUM(1)(2)(3) |
$ |
310,644 |
100 |
% |
$ |
176,113 |
100 |
% |
||||||||
(1) The allocation of AUM by distribution channel involves the use of estimates and the exercise of judgment.
(2) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(3) Includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following table presents our total AUM by region as of the dates indicated:
|
As of September 30, |
||||||||||||||||
|
2025 |
2024 |
|||||||||||||||
|
(in millions) |
Amount |
% of total |
Amount |
% of total |
||||||||||||
|
U.S. |
$ |
258,484 |
83 |
% |
$ |
170,258 |
97 |
% |
||||||||
|
Non-U.S. |
52,160 |
17 |
% |
5,855 |
3 |
% |
||||||||||
|
Total AUM(1)(2) |
$ |
310,644 |
100 |
% |
$ |
176,113 |
100 |
% |
||||||||
(1) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(2) Includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
The following tables summarize our asset flows by vehicle for the periods indicated:
|
Separate |
||||||||||||||||
|
Accounts and |
||||||||||||||||
|
Other Pooled |
||||||||||||||||
|
(in millions) |
Mutual Funds (1) |
ETFs (2) |
Vehicles (3) |
Total AUM(4) |
||||||||||||
|
For the Three Months Ended September 30, 2025 |
||||||||||||||||
|
Beginning AUM |
$ |
167,973 |
$ |
11,975 |
$ |
118,615 |
$ |
298,563 |
||||||||
|
Gross client cash inflows |
7,088 |
1,573 |
8,635 |
17,296 |
||||||||||||
|
Gross client cash outflows |
(9,081 |
) |
(320 |
) |
(8,187 |
) |
(17,588 |
) |
||||||||
|
Net client cash flows |
(1,993 |
) |
1,252 |
449 |
(292 |
) |
||||||||||
|
Market appreciation (depreciation) |
8,218 |
560 |
5,737 |
14,515 |
||||||||||||
|
Realizations and distributions |
- |
- |
- |
- |
||||||||||||
|
Acquired & divested assets / Net transfers(5) |
(1,276 |
) |
- |
(866 |
) |
(2,141 |
) |
|||||||||
|
Ending AUM |
$ |
172,923 |
$ |
13,786 |
$ |
123,935 |
$ |
310,644 |
||||||||
|
For the Three Months Ended September 30, 2024 |
||||||||||||||||
|
Beginning AUM |
$ |
112,584 |
$ |
5,440 |
$ |
50,657 |
$ |
168,681 |
||||||||
|
Gross client cash inflows |
3,553 |
992 |
1,575 |
6,120 |
||||||||||||
|
Gross client cash outflows |
(5,526 |
) |
(158 |
) |
(3,073 |
) |
(8,756 |
) |
||||||||
|
Net client cash flows |
(1,973 |
) |
834 |
(1,498 |
) |
(2,636 |
) |
|||||||||
|
Market appreciation (depreciation) |
6,443 |
426 |
3,208 |
10,076 |
||||||||||||
|
Realizations and distributions |
- |
- |
(2 |
) |
(2 |
) |
||||||||||
|
Acquired & divested assets / Net transfers |
(10 |
) |
(7 |
) |
10 |
(7 |
) |
|||||||||
|
Ending AUM |
$ |
117,044 |
$ |
6,694 |
$ |
52,375 |
$ |
176,113 |
||||||||
|
Separate |
||||||||||||||||
|
Accounts and |
||||||||||||||||
|
Other Pooled |
||||||||||||||||
|
(in millions) |
Mutual Funds (1) |
ETFs (2) |
Vehicles (3) |
Total AUM(4) |
||||||||||||
|
Nine Months Ended September 30, 2025 |
||||||||||||||||
|
Beginning AUM |
$ |
113,645 |
$ |
7,508 |
$ |
50,777 |
$ |
171,930 |
||||||||
|
Gross client cash inflows |
17,346 |
6,202 |
18,965 |
42,513 |
||||||||||||
|
Gross client cash outflows |
(25,125 |
) |
(835 |
) |
(18,897 |
) |
(44,858 |
) |
||||||||
|
Net client cash flows |
(7,779 |
) |
5,367 |
68 |
(2,345 |
) |
||||||||||
|
Market appreciation (depreciation) |
17,440 |
829 |
13,320 |
31,589 |
||||||||||||
|
Realizations and distributions |
- |
- |
(24 |
) |
(24 |
) |
||||||||||
|
Acquired & divested assets / Net transfers(5) |
49,617 |
82 |
59,794 |
109,493 |
||||||||||||
|
Ending AUM |
$ |
172,923 |
$ |
13,786 |
$ |
123,935 |
$ |
310,644 |
||||||||
|
Nine Months Ended September 30, 2024 |
||||||||||||||||
|
Beginning AUM |
$ |
108,802 |
$ |
4,970 |
$ |
47,551 |
$ |
161,322 |
||||||||
|
Gross client cash inflows |
11,409 |
1,923 |
6,043 |
19,375 |
||||||||||||
|
Gross client cash outflows |
(16,543 |
) |
(785 |
) |
(7,555 |
) |
(24,882 |
) |
||||||||
|
Net client cash flows |
(5,134 |
) |
1,138 |
(1,512 |
) |
(5,508 |
) |
|||||||||
|
Market appreciation (depreciation) |
13,624 |
550 |
6,164 |
20,337 |
||||||||||||
|
Realizations and distributions |
- |
- |
(2 |
) |
(2 |
) |
||||||||||
|
Acquired & divested assets / Net transfers |
(248 |
) |
36 |
174 |
(38 |
) |
||||||||||
|
Ending AUM |
$ |
117,044 |
$ |
6,694 |
$ |
52,375 |
$ |
176,113 |
||||||||
(1) Includes institutional and retail share classes, money market and Variable Insurance Products or VIP funds.
(2) Represents only ETF assets held by third parties. Excludes ETF assets held by other Victory Capital products.
(3) Includes collective trust funds, wrap program accounts, UMAs, UCITS, private funds and non-U.S. domiciled pooled vehicles.
(4) Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.
(5) Three months ended September 30, 2025 includes the impact of approximately $1 billion of divested assets from the closure of three Investment Franchises in the third quarter. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, partially offset by assets divested due to the closure of three Investment Franchises.
September 30, 2025 AUM compared to June 30, 2025 AUM. At September 30, 2025, our total AUM was $310.6 billion, an increase of $12.1 billion, or 4.1%, from $298.6 billion at June 30, 2025, driven by $14.5 billion of market appreciation partially offset by $0.3 billion of net outflows.
Net outflows were driven by our U.S. mid cap, U.S. small cap, and U.S. large cap equity strategies of $1.4 billion, $1.2 billion, $2.0 billion, respectively, partially offset by net inflows of $2.0 billion, $2.0 billion, and $0.3 billion in our Solutions platform, global/non-US equity strategies, and our fixed income strategies, respectively.
September 30, 2025 AUM compared to December 31, 2024 AUM. Total AUM increased by $138.7 billion, or 80.7%, to $310.6 billion at September 30, 2025 compared to $171.9 billion at December 31, 2024. The increase in AUM was due to the combination of $114 billion of AUM acquired relating to Pioneer Investments as well as $31.6 billion of market appreciation partially offset by $2.3 billion of net outflows.
Net outflows were driven by our U.S. mid cap, U.S. small cap, and U.S. large cap equity strategies, our fixed income strategies, and alternative investments of $2.8 billion, $1.9 billion, $3.5 billion, $0.3 billion, and $0.1 billion, respectively, partially offset by net inflows of $5.4 billion and $1.0 billion in our Solutions platform and global/non-US equity strategies, respectively.
GAAP Results of Operations
The following table presents our GAAP results of operations for the three and nine months ended September 30, 2025 and 2024.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands, except per share data) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Revenue |
||||||||||||||||
|
Investment management fees |
$ |
288,509 |
$ |
177,809 |
744,116 |
$ |
520,757 |
|||||||||
|
Fund administration and distribution fees |
72,686 |
47,819 |
187,893 |
140,349 |
||||||||||||
|
Total revenue |
361,195 |
225,628 |
932,009 |
661,106 |
||||||||||||
|
Expenses |
||||||||||||||||
|
Personnel compensation and benefits |
96,983 |
43,243 |
262,037 |
158,357 |
||||||||||||
|
Distribution and other asset-based expenses |
66,160 |
36,828 |
163,676 |
109,565 |
||||||||||||
|
General and administrative |
23,463 |
14,029 |
61,172 |
42,426 |
||||||||||||
|
Depreciation and amortization |
22,032 |
7,510 |
51,258 |
22,662 |
||||||||||||
|
Change in value of consideration payable for acquisition of business |
3,841 |
(1,600 |
) |
8,339 |
2,400 |
|||||||||||
|
Acquisition-related costs |
379 |
5,075 |
34,909 |
9,150 |
||||||||||||
|
Restructuring and integration costs |
10,211 |
180 |
25,370 |
777 |
||||||||||||
|
Total operating expenses |
223,069 |
105,265 |
606,761 |
345,337 |
||||||||||||
|
Income from operations |
138,126 |
120,363 |
325,248 |
315,769 |
||||||||||||
|
Other income (expense) |
||||||||||||||||
|
Interest income and other income |
4,875 |
3,551 |
11,585 |
8,673 |
||||||||||||
|
Interest expense and other financing costs |
(13,113 |
) |
(16,414 |
) |
(39,558 |
) |
(49,179 |
) |
||||||||
|
Loss on debt extinguishment |
(614 |
) |
- |
(614 |
) |
(100 |
) |
|||||||||
|
Total other expense, net |
(8,852 |
) |
(12,863 |
) |
(28,587 |
) |
(40,606 |
) |
||||||||
|
Income before income taxes |
129,274 |
107,500 |
296,661 |
275,163 |
||||||||||||
|
Income tax expense |
(32,733 |
) |
(25,517 |
) |
(79,411 |
) |
(63,238 |
) |
||||||||
|
Net income |
$ |
96,541 |
$ |
81,983 |
$ |
217,250 |
$ |
211,925 |
||||||||
|
Preferred stock dividends |
(9,696 |
) |
- |
(19,369 |
) |
- |
||||||||||
|
Income attributable to Preferred stockholders |
(12,528 |
) |
- |
(15,913 |
) |
- |
||||||||||
|
Net income attributable to common shareholders |
$ |
74,317 |
$ |
81,983 |
$ |
181,968 |
$ |
211,925 |
||||||||
|
Earnings per share of common stock |
||||||||||||||||
|
Basic |
$ |
1.12 |
$ |
1.26 |
$ |
2.77 |
$ |
3.28 |
||||||||
|
Diluted |
$ |
1.11 |
$ |
1.24 |
$ |
2.73 |
$ |
3.21 |
||||||||
|
Weighted average number of shares outstanding |
||||||||||||||||
|
Basic |
66,206 |
64,875 |
65,728 |
64,667 |
||||||||||||
|
Diluted |
66,964 |
66,057 |
66,620 |
66,044 |
||||||||||||
|
Dividends declared per share of common stock |
$ |
0.49 |
$ |
0.41 |
$ |
1.45 |
$ |
1.115 |
||||||||
Investment Management Fees
Three months ended September 30, 2025 compared to September 30, 2024.Investment management fees increased 62.3%, or $110.7 million, to $288.5 million for the three months ended September 30, 2025 from $177.8 million for the
same comparable period in 2024 due to an increase in average AUM primarily driven by Pioneer Investments over the comparable period.
Nine months ended September 30, 2025 compared to September 30, 2024. Investment management fees increased by $223.4 million, or 42.9%, to $744.1 million for the nine months ended September 30, 2025 from $520.8 million due to the same factors discussed above in the quarterly section.
Fund Administration and Distribution Fees
Three months ended September 30, 2025 compared to September 30, 2024. Fund administration and distribution fees increased by $24.9 million, or 52.0%, to $72.7 million for the three months ended September 30, 2025 compared to $47.8 million for the same period in 2024 due primarily to higher mutual fund average net assets.
Nine months ended September 30, 2025 compared to September 30, 2024. Fund administration and distribution fees increased by $47.5 million, or 33.9%, to $187.9 million for the nine months ended September 30, 2025 from $140.3 million for the same period in 2024 due to the same factors as discussed above in the quarterly section.
Personnel Compensation and Benefits
The following table presents the components of GAAP personnel compensation and benefits expense for the three and nine months ended September 30, 2025 and 2024:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Salaries, payroll related taxes and employee benefits |
$ |
37,935 |
$ |
21,824 |
$ |
101,087 |
$ |
67,548 |
||||||||
|
Incentive compensation |
36,403 |
26,472 |
98,186 |
74,920 |
||||||||||||
|
Sales-based compensation(1) |
10,031 |
6,401 |
27,863 |
18,096 |
||||||||||||
|
Equity awards granted to employees and directors(2) |
5,646 |
3,714 |
14,808 |
11,448 |
||||||||||||
|
Acquisition and transaction-related compensation(3) |
6,968 |
(15,168 |
) |
20,093 |
(13,655 |
) |
||||||||||
|
Total personnel compensation and benefits expense |
$ |
96,983 |
$ |
43,243 |
$ |
262,037 |
$ |
158,357 |
||||||||
(1) Represents sales-based commissions paid to our distribution teams. Sales-based compensation varies based on gross client cash flows and revenue earned on sales.
(2) Share-based compensation typically vests over several years based on service and the achievement of specific business and financial targets. The value of the equity awards is recognized as compensation expense over the vesting period.
(3) Acquisition and transaction-related compensation costs for the three and nine months ended September 30, 2025 primarily consists of vesting of certain Amundi US deferred compensation awards for former Amundi US employees. For the three and nine months ended September 30, 2024 acquisition and transaction-related compensation consisted of a decrease in the NEC contingent payment compensation.
Three months ended September 30, 2025 compared to September 30, 2024. Personnel compensation and benefits were $97.0 million for the three months ended September 30, 2025, an increase of $53.7 million, or 124.3%, from $43.2 million for the same period in 2024 mostly attributable to an increase in salaries, payroll related taxes and employee benefits as well as an increase in acquisition and transaction-related compensation of $16.1 million and $22.1 million, respectively. Excluding the impact of salaries, payroll taxes and employee benefits and acquisition and transaction-related compensation over the comparable period, personnel compensation and benefits increased $15.5 million, or 42.3%, due to an increase in variable costs such as incentive and sales-based compensation and equity awards granted. Incentive compensation, sales-based compensation, and equity awards granted to employees and directors were $36.4 million, $10.0 million, and $5.6 million, respectively, for the three months ended September 30, 2025, compared to $26.5 million, $6.4 million, and $3.7 million, respectively, for the same period in 2024.
Nine months ended September 30, 2025 compared to September 30, 2024. Personnel compensation and benefits increased by $103.7 million, or 65.5%, to $262.0 million for the nine months ended September 30, 2025 from $158.4 million for the same period in 2024 due to an increase in salaries, payroll related taxes and employee benefits as well as an increase in acquisition and transaction-related compensation of $33.5 million and $33.7 million, respectively. Excluding
the impact of salaries, payroll taxes and employee benefits and acquisition and transaction-related compensation over the comparable period, personnel compensation and benefits increased $36.4 million, or 34.8%, due to an increase in variable costs such as incentive and sales-based compensation and equity awards granted. Incentive compensation, sales-based compensation, and equity awards granted to employees and directors were $98.2 million, $27.9 million, and $14.8 million, respectively, for the nine months ended September 30, 2025, compared to $74.9 million, $18.1 million, and $11.4 million, respectively, for the same period in 2024.
Distribution and Other Asset-Based Expenses
The following table presents the components of distribution and other asset-based expenses for the three and nine months ended September 30, 2025 and 2024:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Broker-dealer distribution fees |
$ |
22,497 |
$ |
5,049 |
$ |
48,130 |
$ |
15,060 |
||||||||
|
Platform distribution fees |
33,518 |
22,406 |
86,573 |
66,821 |
||||||||||||
|
Sub-administration |
5,538 |
4,313 |
15,202 |
12,590 |
||||||||||||
|
Sub-advisory |
1,934 |
2,330 |
5,484 |
7,008 |
||||||||||||
|
Middle-office |
2,673 |
2,730 |
8,287 |
8,086 |
||||||||||||
|
Total distribution and other asset-based expenses |
$ |
66,160 |
$ |
36,828 |
$ |
163,676 |
$ |
109,565 |
||||||||
Three months ended September 30, 2025 compared to September 30, 2024. Distribution and other asset-based expenses are primarily based on AUM. For the three months ended September 30, 2025, distribution and other asset-based expenses were $66.2 million, an increase of $29.3 million, or 79.6%, from $36.8 million for the same period in 2024. The increase is primarily due to higher broker-dealer and platform distribution fees over the comparable period.
Nine months ended September 30, 2025 compared to September 30, 2024.Distribution and other asset-based expenses were $163.7 million for the nine months ended September 30, 2025, an increase of $54.1 million, or 49.4%, from $109.6 million for the same period in 2024 primarily due to the same factors as discussed above in the quarterly section.
General and Administrative
Three months ended September 30, 2025 compared to September 30, 2024.General and administrative expenses increased $9.4 million, or 67.3%, to $23.5 million at September 30, 2025 compared to $14.0 million for the three months ended September 30, 2024. The increase is primarily due to an increase facilities and data services and technology related expenses.
Nine months ended September 30, 2025 compared to September 30, 2024. For the nine months ended September 30, 2025 and 2024, general and administrative expenses were $61.2 million and $42.4 million, respectively, for a year over year increase of $18.7 million, or 44.1%. The increase was primarily due to the same factors as discussed above in the quarterly section.
Depreciation and Amortization
Three months ended September 30, 2025 compared to September 30, 2024.Depreciation and amortization increased by $14.5 million, or 193.4%, to $22.0 million for the three months ended September 30, 2025 from $7.5 million for the same period in 2024, due to the amortization of definite-lived intangible assets associated with the Amundi US acquisition in the third quarter of 2025.
Nine months ended September 30, 2025 compared to September 30, 2024.Depreciation and amortization increased by $28.6 million, or 126.2%, to $51.3 million for the nine months ended September 30, 2025 from $22.7 million for the same period in 2024 due to the same factors as discussed above in the quarterly section.
Change in Value of Consideration Payable for Acquisition of Business
Three months ended September 30, 2025 compared to September 30, 2024.The change in value of consideration payable for acquisition of business increased $5.4 million as a result of a decrease of $1.6 million in the fair value of the contingent consideration associated with the WestEnd Acquisition for the three months ended September 30, 2024, compared to an increase of $3.8 million for the WestEnd Acquisition for the three months ended September 30, 2025. Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable.
Nine months ended September 30, 2025 compared to September 30, 2024.The change in value of consideration payable for acquisition of business increased $5.9 million due the change in the fair value of the contingent consideration associated with the WestEnd Acquisition increasing $8.3 million for the nine months ended September 30, 2025 compared to a $2.4 million increase for the nine months ended September 30, 2024. Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable.
Acquisition-Related Costs
Three months ended September 30, 2025 compared to September 30, 2024.Acquisition-related costs were $0.4 million and $5.1 million for the three months ended September 30, 2025 and 2024, respectively. The acquisition-related costs for the three months ended September 30, 2025 and 2024 related to legal and professional fees, associated with the Amundi US acquisition.
Nine months ended September 30, 2025 compared to September 30, 2024.Acquisition-related costs were $34.9 million and $9.2 million for the nine months ended September 30, 2025 and 2024, respectively. The acquisition-related costs for the nine months ended September 30, 2025 and 2024 were related to the same factors discussed above in the quarterly section.
Restructuring and Integration Costs
Three months ended September 30, 2025 compared to September 30, 2024.Restructuring and integration costs were $10.2 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively. The restructuring and integration costs for the three months ended September 30, 2025 were primarily related to personnel restructuring.
Nine months ended September 30, 2025 compared to September 30, 2024.Restructuring and integration costs were $25.4 million and $0.8 million for the nine months ended September 30, 2025 and 2024, respectively. The restructuring and integration costs for the nine months ended September 30, 2025 were related to the same factors discussed above in the quarterly section.
Interest Income and Other Income
Three months September 30, 2025 compared to September 30, 2024.For the three months ended September 30, 2025 and 2024, interest income and other income was income of $4.9 million and $3.6 million, respectively. The increase over the comparable period is primarily due to an increase in the net unrealized fair value of deferred compensation plan investments.
Nine months ended September 30, 2025 compared to September 30, 2024.For the nine months ended September 30, 2025 and 2024, interest income and other income was income of $11.6 million and $8.7 million, respectively. The income for the nine months ended September 30, 2025 and 2024 was related to an increase in the net unrealized fair value of deferred compensation plan investments.
Interest Expense and Other Financing Costs
Three months ended September 30, 2025 compared to September 30, 2024.Interest expense and other financing costs decreased by $3.3 million to $13.1 million for the three months ended September 30, 2025, compared to $16.4 million for the same period in 2024 due a decrease in the average interest rate and principal balance over the comparable period.
Nine months ended September 30, 2025 compared to September 30, 2024.For the nine months ended September 30, 2025 and 2024, interest expense and other financing costs were $39.6 million and $49.2 million, respectively. The year-over-year decrease is due to the same factors as discussed above in the quarterly section. Refer to Note 9, Debt, for further details.
Loss on Debt Extinguishment
Three months ended September 30, 2025 compared to September 30, 2024. For the three months ended September 30, 2025, loss on debt extinguishment was $0.6 million. The Company had no losses on debt extinguishment for the three months ended September 30, 2024. Refer to Note 9, Debt, for further details.
Nine months ended September 30, 2025 compared to September 30, 2024. For the nine months ended September 30, 2025 and 2024, the Company had losses on debt extinguishment of $0.6 million and $0.1 million, respectively. Refer to Note 9, Debt, for further details.
Income Tax Expense
Three months ended September 30, 2025 compared to September 30, 2024. The effective tax rate for the three months ended September 30, 2025 and 2024 was 25.3% and 23.7%, respectively. The effective tax rate for the three months ended September 30, 2025 was higher than the effective tax rate for the same period in 2024 due to decreased excess tax benefits on share-based compensation.
Nine months ended September 30, 2025 compared to September 30, 2024. For the nine months ended September 30, 2025 and 2024, the effective tax rate was 26.8% and 23.0%, respectively. The year-over-year increase in the effective tax rate is due to decreased excess tax benefits on share-based compensation and increased non-deductible expenses. Refer to Note 8, Income Taxes, for further details on the Company's income taxes.
Supplemental Non-GAAP Financial Information
We use non-GAAP performance measures to evaluate the underlying operations of our business. Due to our acquisitive nature, there are a number of acquisition and restructuring related expenses included in GAAP measures that we believe distort the economic value of our organization and we believe that many investors use this information when assessing the financial performance of companies in the investment management industry. We have included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of our Company. The non-GAAP measures we report are Adjusted EBITDA and Adjusted Net Income.
The following table sets forth a reconciliation from GAAP financial measures to non-GAAP measures for the periods indicated:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Reconciliation of non-GAAP financial measures: |
||||||||||||||||
|
Net income (GAAP) |
$ |
96,541 |
$ |
81,983 |
$ |
217,250 |
$ |
211,925 |
||||||||
|
Income tax expense |
(32,733 |
) |
(25,517 |
) |
(79,411 |
) |
(63,238 |
) |
||||||||
|
Income before income taxes |
129,274 |
107,500 |
296,661 |
275,163 |
||||||||||||
|
Interest expense(1) |
12,136 |
15,649 |
36,857 |
46,828 |
||||||||||||
|
Depreciation(2) |
3,295 |
2,210 |
8,699 |
6,731 |
||||||||||||
|
Other business taxes(3) |
637 |
366 |
2,252 |
1,149 |
||||||||||||
|
Amortization of acquisition-related intangible assets(4) |
18,737 |
5,300 |
42,559 |
15,931 |
||||||||||||
|
Stock-based compensation(5) |
2,022 |
972 |
5,182 |
3,239 |
||||||||||||
|
Acquisition, restructuring and exit costs(6) |
21,400 |
(11,513 |
) |
88,711 |
(1,328 |
) |
||||||||||
|
Debt issuance costs(7) |
2,950 |
775 |
4,454 |
2,404 |
||||||||||||
|
Adjusted EBITDA |
$ |
190,451 |
$ |
121,259 |
$ |
485,375 |
$ |
350,117 |
||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Reconciliation of non-GAAP financial measures: |
||||||||||||||||
|
Net income (GAAP) |
$ |
96,541 |
$ |
81,983 |
$ |
217,250 |
$ |
211,925 |
||||||||
|
Adjustments to reflect the operating performance of the Company: |
||||||||||||||||
|
i. Other business taxes(3) |
637 |
366 |
2,252 |
1,149 |
||||||||||||
|
ii. Amortization of acquisition-related intangible assets(4) |
18,737 |
5,300 |
42,559 |
15,931 |
||||||||||||
|
iii. Stock-based compensation(5) |
2,022 |
972 |
5,182 |
3,239 |
||||||||||||
|
iv. Acquisition, restructuring and exit costs(6) |
21,400 |
(11,513 |
) |
88,711 |
(1,328 |
) |
||||||||||
|
v. Debt issuance costs(7) |
2,950 |
775 |
4,454 |
2,404 |
||||||||||||
|
Tax effect of above adjustments(8) |
(11,437 |
) |
1,025 |
(29,094 |
) |
(5,349 |
) |
|||||||||
|
Adjusted Net Income |
$ |
130,850 |
$ |
78,908 |
$ |
331,314 |
$ |
227,971 |
||||||||
|
Tax benefit of goodwill and acquired intangibles(9) |
$ |
10,487 |
$ |
10,141 |
$ |
30,883 |
$ |
30,030 |
||||||||
Adjustments made to GAAP Net Income to calculate Adjusted EBITDA and Adjusted Net Income, as applicable, are:
(1) Adding back interest paid on debt and other financing costs, net of interest income.
(2) Adding back depreciation on property and equipment.
(3) Adding back other business taxes.
(4) Adding back amortization expense on acquisition-related intangible assets.
(5) Adding back stock-based compensation associated with equity awards issued from pools created in connection with the management-led buyout and various acquisitions and as a result of equity grants related to the IPO.
(6) Adding back direct incremental costs of acquisitions, including restructuring costs.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
(in thousands) |
2025 |
2024 |
2025 |
2024 |
||||||||||||
|
Acquisition-related costs |
$ |
379 |
$ |
5,075 |
$ |
34,909 |
$ |
9,150 |
||||||||
|
Restructuring and integration costs |
10,211 |
180 |
25,370 |
777 |
||||||||||||
|
Change in value of consideration payable for acquisition of business |
3,841 |
(1,600 |
) |
8,339 |
2,400 |
|||||||||||
|
Personnel compensation and benefits |
6,969 |
(15,168 |
) |
20,093 |
(13,655 |
) |
||||||||||
|
Total acquisition, restructuring and exit costs |
$ |
21,400 |
$ |
(11,513 |
) |
$ |
88,711 |
$ |
(1,328 |
) |
||||||
(7) Adding back debt issuance costs.
(8) Subtracting an estimate of income tax expense applied to the sum of the adjustments above.
(9) Represents the tax benefits associated with deductions allowed for intangible assets and goodwill generated from prior acquisitions in which we received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangible assets with a step-up in tax basis. Due to our acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide us with a significant supplemental economic benefit.
Non-GAAP measures should be considered in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Our non-GAAP measures may differ from similar measures at other companies, even if similar terms are used to identify these measures.
Liquidity and Capital Resources
Our primary uses of cash relate to repayment of our debt obligations, funding of acquisitions and working capital needs, repurchasing of shares and payment of dividends, which are all expected to be met through cash generated from our operations and available capital resources.
The following table shows our liquidity position as of September 30, 2025 and December 31, 2024.
|
September 30, |
December 31, |
|||||||
|
(in thousands) |
2025 |
2024 |
||||||
|
Cash and cash equivalents |
$ |
115,741 |
$ |
126,731 |
||||
|
Accounts and other receivables |
176,985 |
100,667 |
||||||
|
Undrawn commitment on revolving credit facility(1) |
100,000 |
100,000 |
||||||
|
Accounts and other payables |
(158,317 |
) |
(109,599 |
) |
||||
(1) The balance December 31, 2024 represent the Company's $99.9 million revolving credit facility and a $0.1 million standby letter of credit used as collateral for THB's real estate location.
We manage our cash balances in order to fund our day-to-day operations. Our accounts receivable consists primarily of investment management fees that have been earned but not yet received from clients, income and other taxes receivable, and amounts receivable from the funds. We perform a review of our receivables on a monthly basis to assess collectability.
We maintained a $100.0 million revolving credit facility at September 30, 2025 and December 31, 2024, which had approximately $100.0 million undrawn as of September 30, 2025 and December 31, 2024.
Sixth Amendment
On September 23, 2025, the Company entered into the Sixth Amendment to Credit Agreement (the "Sixth Amendment"), among the Company, the other loan parties party thereto, the lenders party thereto, and Bank of America, N.A., as
administrative agent, which amends the Credit Agreement dated as of July 1, 2019 (as amended by the First Amendment to Credit Agreement dated as of January 17, 2020, the Second Amendment to Credit Agreement dated as of February 18, 2021, the Third Amendment to Credit Agreement dated as of December 31, 2021, the Fourth Amendment to Credit Agreement dated as of September 23, 2022, and the Fifth Amendment to Credit Agreement dated June 7, 2024, the "Existing Credit Agreement"), among the Company, the other loan parties party thereto from time to time, Bank of America, N.A, as administrative agent and collateral agent, and the lenders party thereto from time to time.
Pursuant to the Existing Credit Agreement, the Company obtained a $100.0 million senior secured first lien revolving credit facility (the "Revolving Facility"). The Sixth Amendment extended the maturity date of the Revolving Facility from March 31, 2026 to September 23, 2030 and decreased the drawn interest rate margin by 0.25% per annum. The Revolving Facility otherwise remains subject to substantially similar terms to those set forth in the Existing Credit Agreement.
Pursuant to the Sixth Amendment, the Company also refinanced its existing term loans (the "Existing Term Loans") with replacement term loans (the "Repriced Term Loans") in an aggregate principal amount of $985.0 million. The Repriced Term Loans will mature on September 23, 2032 and will bear interest at an annual rate equal to, at the option of the Company, either SOFR plus a margin of 2.00% or an alternate base rate plus a margin of 1.00%. The Repriced Term Loans otherwise remain subject to substantially similar terms to those that were applicable to the Existing Term Loans.
The Company elects to use three-month Term SOFR plus the margin on SOFR required by the 2019 Credit Agreement to pay interest on its debt.
The 2019 Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the first lien leverage ratio, measured as of the last day of each fiscal quarter on which outstanding borrowings under the revolving credit facility exceed 35.0% of the commitments thereunder (excluding certain letters of credit), of no greater than 4.00 to 1.00. As of September 30, 2025, there were no outstanding borrowings under the revolving credit facility and the Company was in compliance with its financial performance covenant.
There were no repayments of outstanding term loans under the 2019 Credit Agreement during the three and nine months ended September 30, 2025.
During the three and nine months ended September 2025, the Company incurred costs of $2.2 million related to the Sixth Amendment, of which $1.6 million was recorded in general and administrative expense and $0.6 million was recognized as a loss on debt extinguishment in the unaudited Condensed Consolidated Statement of Operations.
There were no repayments of outstanding term loans under the 2019 Credit Agreement during the three months ended September 30, 2024, and no loss on debt extinguishment was recorded in the period. Repayments of outstanding term loans under the 2019 Credit Agreement totaled $9.5 million for the nine months ended September 30, 2024. The Company recognized a loss on debt extinguishment of $0.1 million in the period due to the repayments of term loan principal.
Fifth Amendment
On June 7, 2024, the Company entered into the Fifth Amendment to the 2019 Credit Agreement, extending the maturity date of the $100.0 million senior secured first lien revolving facility from July 1, 2024 to March 31, 2026, and decreasing the drawn interest rate margin by 0.50% per annum. The revolving facility otherwise remains subject to substantially the same terms as those set forth in the 2019 Credit Agreement. The Company incurred $1.0 million in upfront fees, arranger fees and other third party costs related to the Fifth Amendment to the 2019 Credit Agreement, which were recorded to revolving credit facility debt issuance cost in other assets.
2022 LIBOR to Term SOFR Rate Transition
On September 23, 2022, the Company entered into the Fourth Amendment (the "Fourth Amendment") to the 2019 Credit Agreement to change the interest rate on the Repriced Term Loans and 2021 Incremental Term Loans from LIBOR to a rate based on SOFR plus a ten-basis point credit spread adjustment. There was no change to the applicable margin on the referenced rate as a result of the Fourth Amendment.
The LIBOR rate loans outstanding as of the Fourth Amendment's effective date continued as LIBOR rate loans until the end of their then current interest periods. The 2021 Incremental Term Loans converted into Term SOFR loans on September 30, 2022, while the Repriced Term Loans converted into Term SOFR loans on October 6, 2022. Also on October 6, 2022, the interest periods for the Repriced Term Loans and 2021 Incremental Term Loans were aligned and the three-month Term SOFR rate was elected for all the Company's term loans.
2021 Incremental Term Loans
On December 31, 2021, the Company entered into the Third Amendment (the "Third Amendment") to the 2019 Credit Agreement with the guarantors party thereto, Barclays Bank PLC, as administrative agent, and the lenders party thereto from time to time. Pursuant to the Third Amendment, the Company obtained incremental term loans (the "2021 Incremental Term Loans") in an aggregate principal amount of $505.0 million and used the proceeds to fund the WestEnd Acquisition and to pay fees and expenses incurred in connection therewith. The 2021 Incremental Term Loans mature in December 2028 and bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves and subject to a 50 basis point floor) plus a margin of 2.25% or an alternate base rate plus a margin of 1.25%.
2021 Debt Repricing
On February 18, 2021, the Company entered into the Second Amendment (the "Second Amendment") to the 2019 Credit Agreement with the other loan parties thereto, Barclays Bank PLC, as administrative agent, and the Royal Bank of Canada as fronting bank. Pursuant to the Second Amendment, the Company repriced the existing term loans with replacement term loans in an aggregate principal amount of $755.7 million (the "Repriced Term Loans"). The Repriced Term Loans have substantially the same terms as the previously existing term loans, including the same maturity date of July 2026, except that the Repriced Term Loans provided for a reduced applicable margin on LIBOR of 25 basis points. After the Second Amendment, the applicable margin on LIBOR under the Repriced Term Loans was 2.25%.
2020 Swap Transaction
In the fourth quarter of 2023, the Company monetized the gain on the floating-to-fixed interest rate swap transaction ("Swap") entered into in 2020 to effectively fix the interest rate on $450 million of its outstanding Term Loan through the Term Loan maturity date of July 2026.
On September 23, 2025, the Company entered into the Sixth Amendment of the Credit Agreement, which extended the maturity of the Repriced Term Loans to September 23, 2032. Refer to Note 9 for further information on the Sixth Amendment to the Credit Agreement. The deferred gain on the termination of the Swap is being amortized on a straight-line basis through September 23, 2032 and is included in interest expense and other financing costs on the unaudited Condensed Consolidated Statements of Operations.
For the three months ended September 30, 2025 and 2024, the Company recorded $4.5 million and $4.2 million, respectively, in amortization of deferred gain on Swap monetization. For the nine months ended September 30, 2025 and 2024, the Company recorded $12.7 million and $12.5, respectively, in amortization of deferred gain on Swap monetization. As of September 30, 2025 and December 31, 2024, the unamortized deferred gain on Swap monetization was $12.2 million and $24.9 million, respectively, before tax.
The Swap was designated as a cash flow hedge. Prior to its termination, the Swap was measured at fair value with mark-to-market gains or losses deferred and included in AOCI(L), net of tax, to the extent the hedge was determined to be effective. Gains or losses were reclassified to interest expenses and other financing costs on the unaudited Condensed Consolidated Statements of Operations in the same period during which the hedged transaction affected earnings.
Due to the termination of the Swap, there was no amount receivable from the Swap counterparty at September 30, 2025 and December 31, 2024. Refer to Note 14, Derivatives, for further information on the Swap.
Contingent Consideration
At September 30, 2025 and December 31 2024, the estimated fair value of the contingent consideration payable to the sellers was $84.5 million and $139.9 million, respectively resulting from the WestEnd Acquisition. For the three months and nine months ended September 30, 2025, the Company recorded an increase of $3.8 million and $8.3 million in the contingent payment liability associated with the WestEnd Acquisition, which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets. During the nine months ended September 30, 2025, the Company paid $63.7 million in cash to sellers for the second earn-out period.
There were no other significant changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2024.
Capital Requirements
Victory Capital Services is a registered broker-dealer subject to the Uniform Net Capital requirements under the Exchange Act, which requires maintenance of certain minimum net capital levels. In addition, we have certain non-U.S. subsidiaries that have minimum capital requirements. As a result, such subsidiaries of our Company may be restricted in their ability to transfer cash to their parents.
Cash Flows
The following table is derived from our unaudited Condensed Consolidated Statements of Cash Flows:
|
Nine Months Ended September 30, |
||||||||
|
(in thousands) |
2025 |
2024 |
||||||
|
Net cash provided by operating activities |
$ |
240,409 |
$ |
248,168 |
||||
|
Net cash provided by (used in) investing activities |
77,658 |
(1,583 |
) |
|||||
|
Net cash used in financing activities |
(329,453 |
) |
(182,010 |
) |
||||
Operating Activities-Cash provided by operating activities during the nine months ended September 30, 2025 was $240.4 million, compared to $248.2 million of cash provided by operating activities for the same period in 2024. The $7.8 million decrease in cash provided by operating activities is due to an $67.7 million increase in working capital items partially offset by a $54.6 million increase in non-cash items and a $5.3 million increase in net income.
Cash provided by operating activities during the nine months ended September 30, 2024 was $248.2 million and comprised of $211.9 million and $55.9 million of net income and non-cash items, respectively, partially offset by $19.7 million in working capital source of cash.
Investing Activities- Cash provided by investing activities during the nine months ended September 30, 2025 was $77.7 million and consisted of primarily of cash acquired from acquisition of $53.6 million and net trading activity of $27.6 million partially offset by purchases of property and equipment of $3.6 million.
Cash used in investing activities during the nine months ended September 30, 2024 was $1.6 million and consisted of primarily of property and equipment purchases of $1.1 million and $0.5 million of net trading activity.
Financing Activities-Cash used in financing activities during the nine months ended September 30, 2025 was $329.5 million and was mostly attributable to payment of consideration for acquisition, payment of dividends, repurchases of common stock, and net activity related to stock-based equity awards of $63.7 million, $115.7 million, $144.9 million, and $10.0 million, respectively.
Cash used in financing activities during the nine months ended September 30, 2024 was $182.0 million and was mostly attributable to payment of consideration for acquisition, payment of dividends, repayment of long-term debt, repurchases of common stock, and net activity related to stock-based equity awards of $80.0 million, $73.0 million, $9.5 million, $6.7 million, and $11.8 million, respectively.
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