Victory Capital Holdings Inc.

11/05/2026 | Press release | Distributed by Public on 11/05/2026 08:00

Quarterly Report for Quarter Ending September 30, 2026 (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, 2026 and 2025 and cash flows for the nine months ended September 30, 2026 and 2025. 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, 2025 (the "2025 Annual Report"). 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 2025 Annual Report.

Overview

Our Business - Victory is a diversified global asset management firm with total client assets of $355.5 billion, assets under management of $351.9 billion and other assets of $3.6 billion as of September 30, 2026. 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"). As of September 30, 2026, our Franchises and our Solutions Platform collectively managed a diversified set of 187 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.

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.

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 in August 2013 to $355.5 billion at September 30, 2026. We attribute this growth to our success in sourcing acquisitions and evolving them into organic growers, generating strong investment returns, and developing institutional, retail, international, and direct investor channels with deep penetration.

Pioneer Investments - On April 1, 2025, the Company completed the transactions contemplated by the Contribution Agreement to combine Amundi's U.S. business into the Company and reintroduced the brand Pioneer Investments for the acquired business and investment products. The addition of Pioneer Investments as the Company's largest Investment Franchise meaningfully enhances the Company's scale, expands its global client base and further diversifies its investment capabilities. The sequential results reflect Pioneer Investments as of April 1, 2025, which significantly impacted our financial results for the three and nine months ended September 30, 2026 when compared to the comparable period. Refer to Note 3 of the condensed consolidated financial statements for further details related to the acquisition.

Business Highlights

Assets under management:

•
AUM at September 30, 2026 increased by $9.4 billion, or 2.8%, to $351.9 billion from $342.5 billion at June 30, 2026, driven by net inflows of $11.7 billion partially offset by negative market action of $2.2 billion. Total gross flows for the third quarter were $30.8 billion, including long-term gross flows of $30.5 billion.
•
AUM at September 30, 2026 and 2025 was $351.9 billion and $310.6 billion, respectively. We generated $30.8 billion in gross flows and $11.7 billion in net inflows for the three months ended September 30, 2026 compared to $17.3 billion in gross flows and $0.3 billion in net outflows for the same period in 2025.
•
AUM at September 30, 2026 and 2025 was $351.9 billion and $310.6 billion, respectively. We generated $72.4 billion in gross flows and $15.2 billion in net inflows for the nine months ended September 30, 2026 compared to $42.5 billion in gross flows and $2.3 billion in net outflows for the same period in 2025. Net flows for the nine months ended September 30, 2026 were comprised of $15.4 billion of net long-term inflows and $0.3 billion of short-term outflows.

Investment performance:

•
56 of our Victory Capital mutual funds and ETFs had overall Morningstar ratings of four or five stars and 62% of our fund and ETF AUM were rated four or five stars overall by Morningstar. 60% of our strategies by AUM had investment returns in excess of their respective benchmarks over a one-year period, 69% over a three-year period, 63% over a five-year period and 77% over a ten-year period. On an equal-weighted basis, 64% of our strategies have outperformed their benchmarks over a one-year period, 63% over a three-year period, 66% over a five-year period and 69% over a ten-year period.

Financial highlights:

•
Total revenue for the three months ended September 30, 2026 was $396.6 million compared to $361.2 million for the same period in 2025. For the nine months ended September 30, 2026 and 2025, total revenue was $1.2 billion and $932.0 million, respectively.
•
Net income was $91.3 million for the three months ended September 30, 2026 compared to $96.5 million for the same period in 2025. For the nine months ended September 30, 2026 and 2025, net income was $342.8 million and $217.3 million, respectively.
•
Adjusted EBITDA was $212.1 million for the three months ended September 30, 2026, or 53.5% of revenue, compared to $190.5 million, or 52.7% of revenue, for the same period in 2025. For the nine months ended September 30, 2026, Adjusted EBITDA was $658.9 million, or 54.0% of revenue, compared to $485.4 million, or 52.1% of revenue, for the same period in 2025. 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 $163.2 million for the three months ended September 30, 2026 compared to $141.3 million for the three months ended September 30, 2025. For the nine months ended September 30, 2026, Adjusted Net Income with tax benefit was $499.3 million compared to $362.2 million for the same period in 2025. 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 and percentages)

2026

2025

2026

2025

AUM at period end

$

351,869

$

310,644

$

351,869

$

310,644

Average AUM

350,630

303,584

333,574

254,117

Gross flows

30,816

17,296

72,422

42,513

AUM net short term flows

(2

)

(48

)

(290

)

(236

)

AUM net long term flows

11,702

(244

)

15,446

(2,108

)

AUM net flows

11,700

(292

)

15,156

(2,345

)

Total revenue

396.6

361.2

1,219.9

932.0

Revenue realization on average AUM

44.8 bps

47.2 bps

46.3 bps

49.0 bps

Net income

91.3

96.5

342.8

217.3

Adjusted EBITDA(1)

212.1

190.5

658.9

485.4

Adjusted EBITDA Margin(2)

53.5

%

52.7

%

54.0

%

52.1

%

Adjusted Net Income(1)

152.5

130.9

467.4

331.3

Tax benefit of goodwill and acquired intangibles(3)

10.7

10.5

31.9

30.9

Adjusted net income with tax benefit per diluted share(4)

$

1.98

$

1.63

$

5.99

$

4.59

(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 shares of series A Non-Voting Convertible Preferred stock for the three and nine months ended September 30, 2026 and 2025.

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)

2026

2025

2026

2025

Beginning AUM

$

342,450

$

298,563

$

313,775

$

171,930

Beginning other assets

3,611

3,050

2,846

4,165

Beginning total client assets

346,061

301,613

316,621

176,096

AUM net cash flows

11,700

(292

)

15,156

(2,345

)

Other assets net cash flows

-

(502

)

390

(1,948

)

Total client assets net cash flows

11,700

(794

)

15,546

(4,293

)

AUM market appreciation (depreciation)

(2,208

)

14,515

23,505

31,589

Other assets market appreciation (depreciation)

31

177

406

509

Total client assets market appreciation (depreciation)

(2,177

)

14,692

23,911

32,098

AUM realizations and distributions

(56

)

-

(518

)

(24

)

Acquired & divested assets / Net transfers(2)

(16

)

(2,141

)

(49

)

109,493

Ending AUM

351,869

310,644

351,869

310,644

Ending other assets

3,642

2,726

3,642

2,726

Ending total client assets

355,511

313,370

355,511

313,370

Average total client assets

354,304

306,457

336,981

257,625

(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. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, increasing AUM by $114.6 billion, 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)

2026

2025

2026

2025

Beginning AUM

$

342,450

$

298,563

$

313,775

$

171,930

Gross client cash inflows

30,816

17,296

72,422

42,513

Gross client cash outflows

(19,116

)

(17,588

)

(57,265

)

(44,858

)

Net client cash flows

11,700

(292

)

15,156

(2,345

)

Market appreciation (depreciation)

(2,208

)

14,515

23,505

31,589

Realizations and distributions

(56

)

-

(518

)

(24

)

Acquired & divested assets / Net transfers(2)

(16

)

(2,141

)

(49

)

109,493

Ending AUM

351,869

310,644

351,869

310,644

Average AUM

350,630

303,584

333,574

254,117

(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. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, increasing AUM by $114.6 billion, 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)

2026

2025

2026

2025

Beginning other assets (institutional)

$

3,611

$

3,050

$

2,846

$

4,165

Gross client cash inflows

-

-

627

-

Gross client cash outflows

-

(502

)

(237

)

(1,949

)

Net client cash flows

-

(502

)

390

(1,948

)

Market appreciation (depreciation)

31

177

406

509

Realizations and distributions

-

-

-

-

Acquired & divested assets / Net transfers

-

-

-

-

Ending other assets (institutional)

3,642

2,726

3,642

2,726

Average other assets (institutional)

3,673

2,873

3,408

3,508

(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 total AUM by asset class as of the dates indicated:

As of

September 30,

(in millions)

2026

2025

Solutions

$

113,935

$

86,963

U.S. Mid Cap Equity

27,906

31,877

Fixed Income

88,146

80,386

Global / Non-U.S. Equity

38,849

28,960

U.S. Small Cap Equity

9,652

12,722

U.S. Large Cap Equity

65,963

63,061

Alternative Investments

3,750

3,016

Total Long-Term Assets

$

348,201

$

306,985

Money Market & Short-Term Assets

3,668

3,660

Total AUM(1)

$

351,869

$

310,644

(1)
Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

The following tables summarize our total AUM 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, 2026

Beginning AUM

$

31,285

$

11,331

$

83,412

$

66,390

$

37,441

$

105,641

$

3,365

$

338,864

$

3,585

$

342,450

Gross client cash inflows

780

287

11,725

3,047

3,055

10,991

605

30,488

327

30,816

Gross client cash outflows

(2,744

)

(1,239

)

(4,968

)

(4,041

)

(1,754

)

(3,825

)

(215

)

(18,787

)

(329

)

(19,116

)

Net client cash flows

(1,965

)

(952

)

6,757

(994

)

1,301

7,165

389

11,702

(2

)

11,700

Market appreciation / (depreciation)

(1,409

)

(709

)

(2,029

)

626

166

1,092

24

(2,240

)

31

(2,208

)

Realizations and distributions

-

-

-

-

-

(19

)

(37

)

(56

)

-

(56

)

Acquired & divested assets / Net transfers

(5

)

(18

)

6

(59

)

(57

)

56

9

(69

)

53

(16

)

Ending AUM

$

27,906

$

9,652

$

88,146

$

65,963

$

38,849

$

113,935

$

3,750

$

348,201

$

3,668

$

351,869

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

(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.

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)

Nine Months Ended September 30, 2026

Beginning AUM

$

29,993

$

11,179

$

80,544

$

63,380

$

30,680

$

91,228

$

3,038

$

310,042

$

3,733

$

313,775

Gross client cash inflows

2,126

823

25,099

7,999

9,722

24,448

1,330

71,548

873

72,422

Gross client cash outflows

(7,437

)

(3,870

)

(16,246

)

(10,914

)

(5,479

)

(11,504

)

(652

)

(56,103

)

(1,163

)

(57,265

)

Net client cash flows

(5,311

)

(3,047

)

8,853

(2,916

)

4,243

12,945

678

15,446

(290

)

15,156

Market appreciation / (depreciation)

3,242

1,544

(1,043

)

5,630

4,032

9,748

260

23,412

93

23,505

Realizations and distributions

-

-

(266

)

-

-

(19

)

(232

)

(518

)

-

(518

)

Acquired & divested assets / Net transfers

(18

)

(24

)

58

(131

)

(106

)

33

6

(181

)

132

(49

)

Ending AUM

$

27,906

$

9,652

$

88,146

$

65,963

$

38,849

$

113,935

$

3,750

$

348,201

$

3,668

$

351,869

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

(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, increasing AUM by $114.6 billion, partially offset by assets divested due to the closure of three Investment Franchises.

The following table presents our total AUM by distribution channel as of the dates indicated:

As of September 30,

2026

2025

(in millions)

Amount

% of total

Amount

% of total

Investor

$

63,974

18

%

$

63,059

20

%

Non-US

65,838

19

%

52,160

17

%

Institutional

92,817

26

%

78,837

25

%

Retail

129,240

37

%

116,588

38

%

Total AUM(1)(2)

$

351,869

100

%

$

310,644

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.

The following table presents our total AUM by region as of the dates indicated:

As of September 30,

2026

2025

(in millions)

Amount

% of total

Amount

% of total

U.S.

$

286,031

81

%

$

258,484

83

%

Non-U.S.

65,838

19

%

52,160

17

%

Total AUM(1)

$

351,869

100

%

$

310,644

100

%

(1)
Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

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)

Three Months Ended September 30, 2026

Beginning AUM

$

180,696

$

19,171

$

142,583

$

342,450

Gross client cash inflows

8,790

4,251

17,775

30,816

Gross client cash outflows

(9,962

)

(352

)

(8,802

)

(19,116

)

Net client cash flows

(1,173

)

3,899

8,973

11,700

Market appreciation (depreciation)

(1,395

)

511

(1,324

)

(2,208

)

Realizations and distributions

-

-

(56

)

(56

)

Acquired & divested assets / Net transfers

-

-

(16

)

(16

)

Ending AUM

$

178,128

$

23,582

$

150,159

$

351,869

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

Separate

Accounts and

Other Pooled

(in millions)

Mutual Funds(1)

ETFs(2)

Vehicles(3)

Total AUM(4)

Nine Months Ended September 30, 2026

Beginning AUM

$

172,203

$

15,049

$

126,523

$

313,775

Gross client cash inflows

23,854

7,556

41,011

72,422

Gross client cash outflows

(31,509

)

(1,157

)

(24,599

)

(57,265

)

Net client cash flows

(7,655

)

6,399

16,412

15,156

Market appreciation (depreciation)

13,605

2,167

7,733

23,505

Realizations and distributions

-

-

(518

)

(518

)

Acquired & divested assets / Net transfers

(25

)

(33

)

9

(49

)

Ending AUM

$

178,128

$

23,582

$

150,159

$

351,869

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

(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. Nine months ended September 30, 2025 includes the impact of Pioneer Investments, increasing AUM by $114.6 billion, partially offset by assets divested due to the closure of three Investment Franchises.

September 30, 2026 AUM compared to June 30, 2026 AUM. At September 30, 2026, our total AUM was $351.9 billion, an increase of $9.4 billion, or 2.8%, from $342.5 billion at June 30, 2026, primarily due to net inflows of $11.7 billion partially offset by negative market action of $2.2 billion.

Net inflows were driven by our fixed income strategies, global non-U.S. equity strategies, Solutions platform, and alternative investments of $6.8 billion, $1.3 billion, $7.2 billion, $0.4 billion, respectively, partially offset by net outflows from our U.S. mid cap, U.S. small cap, and U.S. large cap equity strategies of $2.0 billion, $1.0 billion, and $1.0 billion, respectively.

September 30, 2026 AUM compared to December 31, 2025 AUM. At September 30, 2026, our total AUM was $351.9 billion, an increase of $38.1 billion, or 12.1%, from $313.8 billion at December 31, 2025, primarily due to positive market action of $23.5 billion and net inflows of $15.2 billion.

Net inflows were driven by our fixed income strategies, global non-U.S. equity strategies, Solutions platform, and alternative investments of $8.9 billion, $4.2 billion, $12.9 billion, and $0.7 billion, respectively, partially offset by net outflows from our U.S. mid cap, U.S. small cap, and U.S. large cap equity strategies of $5.3 billion, $3.0 billion, and $2.9 billion, respectively.

GAAP Results of Operations

The following table presents our GAAP results of operations for the three and nine months ended September 30, 2026 and 2025.

Three Months Ended September 30,

Change

(in thousands, except per share data)

2026

2025

$

%

Revenue

Investment management fees

$

322,085

$

288,509

$

33,576

12

%

Fund administration and distribution fees

74,488

72,686

1,802

2

%

Total revenue

396,573

361,195

35,378

10

%

Expenses

Personnel compensation and benefits

126,001

96,983

29,018

30

%

Distribution and other asset-based expenses

72,403

66,160

6,243

9

%

General and administrative

22,899

23,463

(564

)

-2

%

Depreciation and amortization

20,516

22,032

(1,516

)

-7

%

Change in value of consideration payable for acquisition of business

561

3,841

(3,280

)

-85

%

Acquisition-related costs

15,529

379

15,150

3997

%

Restructuring and integration costs

941

10,211

(9,270

)

-91

%

Total operating expenses

258,850

223,069

35,781

16

%

Income from operations

137,723

138,126

(403

)

0

%

Other income (expense)

Interest income and other income

82

4,875

(4,793

)

-98

%

Interest expense and other financing costs

(13,865

)

(13,113

)

(752

)

6

%

Loss on debt extinguishment

-

(614

)

614

-100

%

Total other expense, net

(13,783

)

(8,852

)

(4,931

)

56

%

Income before income taxes

123,940

129,274

(5,334

)

-4

%

Income tax expense

(32,639

)

(32,733

)

94

0

%

Net income

$

91,301

$

96,541

$

(5,240

)

-5

%

Preferred stock dividends

(10,018

)

(9,696

)

Net income attributable to preferred stockholders

(12,254

)

(12,528

)

Net income attributable to common stockholders

$

69,029

$

74,317

-7

%

Earnings per share of common stock

Basic

$

1.12

$

1.12

Diluted

$

1.11

$

1.11

Weighted average number of shares outstanding

Basic

61,740

66,206

Diluted

62,471

66,964

Dividends declared per share of common stock

$

0.50

$

0.49

Nine Months Ended September 30,

Change

(in thousands, except per share data)

2026

2025

$

%

Revenue

Investment management fees

$

1,000,697

$

744,116

$

256,581

34

%

Fund administration and distribution fees

219,226

187,893

31,333

17

%

Total revenue

1,219,923

932,009

287,914

31

%

Expenses

Personnel compensation and benefits

357,356

262,037

95,319

36

%

Distribution and other asset-based expenses

208,403

163,676

44,727

27

%

General and administrative

66,429

61,172

5,257

9

%

Depreciation and amortization

61,677

51,258

10,419

20

%

Change in value of consideration payable for acquisition of business

6,139

8,339

(2,200

)

-26

%

Acquisition-related costs

22,534

34,909

(12,375

)

-35

%

Restructuring and integration costs

6,728

25,370

(18,642

)

-73

%

Total operating expenses

729,266

606,761

122,505

20

%

Income from operations

490,657

325,248

165,409

51

%

Other income (expense)

Interest income and other income

10,559

11,585

(1,026

)

-9

%

Interest expense and other financing costs

(40,138

)

(39,558

)

(580

)

1

%

Loss on debt extinguishment

(2,028

)

(614

)

(1,414

)

230

%

Total other expense, net

(31,607

)

(28,587

)

(3,020

)

11

%

Income before income taxes

459,050

296,661

162,389

55

%

Income tax expense

(116,205

)

(79,411

)

(36,794

)

46

%

Net income

$

342,845

$

217,250

$

125,595

58

%

Preferred stock dividends

(29,806

)

(19,369

)

Net income attributable to preferred stockholders

(53,084

)

(15,913

)

Net income attributable to common stockholders

$

259,955

$

181,968

43

%

Earnings per share of common stock

Basic

$

4.16

$

2.77

Diluted

$

4.11

$

2.73

Weighted average number of shares outstanding

Basic

62,502

65,728

Diluted

63,301

66,620

Dividends declared per share of common stock

$

1.49

$

1.45

Investment Management Fees

Three months ended September 30, 2026 compared to September 30, 2025. Investment management fees increased by $33.6 million, or 11.6%, to $322.1 million for the three months ended September 30, 2026 from $288.5 million for the same period in 2025 due to an increase in average AUM year over year. Average AUM was $350.6 billion for the three months ended September 30, 2026 compared to $303.6 billion for the same period in 2025.

Nine months ended September 30, 2026 compared to September 30, 2025. Investment management fees increased by $256.6 million, or 34.5%, to $1.0 billion for the nine months ended September 30, 2026 from $744.1 million for the same

period in 2025 due the crystallization of certain annual fees received in the second quarter and an increase in average AUM. Average AUM was $333.6 billion for the nine months ended September 30, 2026 compared to $254.1 billion for the same period in 2025.

Fund Administration and Distribution Fees

Three months ended September 30, 2026 compared to September 30, 2025. Fund administration and distribution fees increased by $1.8 million, or 2.5%, to $74.5 million for the three months ended September 30, 2026 from $72.7 million for the same period in 2025 primarily due to an increase in fund administration fees as a result of higher mutual fund average net assets.

Nine months ended September 30, 2026 compared to September 30, 2025. Fund administration and distribution fees increased by $31.3 million, or 16.7%, to $219.2 million for the nine months ended September 30, 2026 from $187.9 million for the same period in 2025 primarily due to the same factors 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, 2026 and 2025:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2026

2025

2026

2025

Salaries, payroll related taxes and employee benefits

$

30,712

$

37,935

$

108,654

$

101,087

Incentive compensation

40,518

36,403

139,900

98,186

Sales-based compensation(1)

14,980

10,031

36,778

27,863

Equity awards granted to employees and directors(2)

36,458

5,646

59,646

14,808

Acquisition and transaction-related compensation

3,333

6,968

12,378

20,093

Total personnel compensation and benefits expense

$

126,001

$

96,983

$

357,356

$

262,037

(1)
Represents sales-based commissions paid to our distribution teams. Sales-based compensation varies based on gross and net client cash flows and revenue earned on sales.
(2)
Equity awards typically vest 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.

Three months ended September 30, 2026 compared to September 30, 2025. Personnel compensation and benefits were $126.0 million for the third quarter of 2026, an increase of $29.0 million, or 29.9%, from $97.0 million for the same period in 2025. Equity awards granted to employees and directors, incentive compensation expense, and sales-based compensation expense increased $30.8 million, $4.1 million, and $4.9 million, respectively, primarily due to the vesting of Tranche's 1 and 2 of the Founder's Plan performance-stock award and an increase in variable compensation expense as a result of an increase in operating results. Salaries, payroll related taxes and employee benefits expense and transaction-related compensation decreased $7.2 million and $3.6 million, respectively.

Nine months ended September 30, 2026 compared to September 30, 2025. Personnel compensation and benefits were $357.4 million for the nine months ended September 30, 2026, an increase of $95.3 million, or 36.4%, from $262.0 million for the same period in 2025. Equity awards granted to employees and directors, incentive compensation expense, sales based compensation expense and salaries, payroll related taxes and employee benefits expense increased $44.8 million, $41.7 million, $8.9 million, and $7.6 million, respectively, primarily due to the vesting of Tranche's 1 and 2 of the Founder's Plan performance-stock award, an expanded business, and an increase in variable costs as a result of an increase in operating results. Acquisition and transaction-related compensation decreased $7.7 million due to a decrease in contingent payment compensation expense.

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, 2026 and 2025:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2026

2025

2026

2025

Broker-dealer distribution fees

$

23,253

$

22,497

$

68,373

$

48,130

Platform distribution fees

36,003

33,518

105,097

86,573

Sub-administration

6,329

5,538

17,856

15,202

Sub-advisory

1,984

1,934

6,180

5,484

Middle-office

4,834

2,673

10,897

8,287

Total distribution and other asset-based expenses

$

72,403

$

66,160

$

208,403

$

163,676

Three months ended September 30, 2026 compared to September 30, 2025. Distribution and other asset-based expenses were $72.4 million for the three months ended September 30, 2026, compared to $66.2 million for the same period in 2025. The increase of $6.2 million, or 9.4% was primarily due to higher broker-dealer and platform distribution fees over the comparable period as a result of higher average AUM and an expanded business.

Nine months ended September 30, 2026 compared to September 30, 2025. Distribution and other asset-based expenses were $208.4 million for the nine months ended September 30, 2026, compared to $163.7 million for the same period in 2025. The increase of $44.7 million, or 27.3% was primarily due to higher broker-dealer and platform distribution fees over the comparable period as a result of higher average AUM and an expanded business.

General and Administrative

Three months ended September 30, 2026 compared to September 30, 2025. General and administrative expenses were $22.9 million for the three months ended September 30, 2026 compared to $23.5 million for the same period in 2025. The decrease of $0.6 million, or 2.4%, was primarily due to decreases in professional and technology related expenses.

Nine months ended September 30, 2026 compared to September 30, 2025. General and administrative expenses were $66.4 million for the nine months ended September 30, 2026 compared to $61.2 million for the same period in 2025. The increase of $5.3 million, or 8.6%, was primarily due to increases in professional fees and technology related expenses.

Depreciation and Amortization

Three months ended September 30, 2026 compared to September 30, 2025. Depreciation and amortization decreased $1.5 million, or 6.9%, to $20.5 million for the three months ended September 30, 2026 from $22.0 million for the same period in 2025, primarily due to a decrease in depreciation expense related to information technology equipment.

Nine months ended September 30, 2026 compared to September 30, 2025. Depreciation and amortization increased $10.4 million, or 20.3%, to $61.7 million for the nine months ended September 30, 2026 from $51.3 million for the same period in 2025, primarily due to nine months worth of amortization expense of definite-lived intangible assets associated with the Amundi US acquisition in 2026 compared with six months worth of amortization expense of definite-lived intangible assets associated with Amundi US acquisition in 2025.

Change in Value of Consideration Payable for Acquisition of Business

Three months ended September 30, 2026 compared to September 30, 2025. The change in value of consideration payable for acquisition of business decreased $3.3 million as a result of an increase of $0.6 million in the fair value of contingent consideration associated with the WestEnd Acquisition for the three months ended September 30, 2026 compared to an increase of $3.8 million for the three months ended September 30, 2025. Refer to Note 3, Acquisitions, for further details on the fair value of contingent consideration payable.

Nine months ended September 30, 2026 compared to September 30, 2025. The change in value of consideration payable for acquisition of business decreased $2.2 million as a result of an increase of $6.1 million in the fair value of contingent consideration associated with the WestEnd Acquisition for the nine months ended September 30, 2026 compared to an increase of $8.3 million for the nine months ended September 30, 2025. Refer to Note 3, Acquisitions, for further details on the fair value of contingent consideration payable.

Acquisition-Related Costs

Three months ended September 30, 2026 compared to September 30, 2025. Acquisition-related costs were $15.5 million for the three months ended September 30, 2026, compared to expense of $0.4 million for the same period in 2025. The increase of $15.2 million was due to an increase in legal and professional fees.

Nine months ended September 30, 2026 compared to September 30, 2025. Acquisition-related costs were $22.5 million for the nine months ended September 30, 2026, compared to $34.9 million for the same period in 2025. The decrease of $12.4 million was due to a decrease in legal and professional fees.

Restructuring and Integration Costs

Three months ended September 30, 2026 compared to September 30, 2025. Restructuring and integration costs for the three months ended September 30, 2026 and 2025 were $0.9 million and $10.2 million, respectively. The decrease in restructuring and integration costs for the three months ended September 30, 2026 and 2025 were primarily due to a decrease in integration and conversions related costs associated with the Amundi US acquisition.

Nine months ended September 30, 2026 compared to September 30, 2025. Restructuring and integration costs for the nine months ended September 30, 2026 and 2025 were $6.7 million and $25.4 million, respectively. The decrease is due to the same factors discussed in the quarterly section.

Interest Income and Other Income

Three months ended September 30, 2026 compared to September 30, 2025. Interest income and other income/(expense) was income of $0.1 million and $4.9 million for the three months ended September 30, 2026 and 2025, respectively. The decrease is primarily due to a decrease in the net unrealized fair value of deferred compensation plan investments over the comparable period.

Nine months ended September 30, 2026 compared to September 30, 2025. Interest income and other income/(expense) was income of $10.6 million and $11.6 million for the nine months ended September 30, 2026 and 2025, respectively. The decrease is due to the same factors discussed in the quarterly section.

Interest Expense and Other Financing Costs

Three months ended September 30, 2026 compared to September 30, 2025. Interest expense and other financing costs increased $0.8 million to $13.9 million for the three months ended September 30, 2026, compared to $13.1 million for the same period in 2025 due a decrease in the deferred gain on the termination of the Swap, partially offset by a decrease in the average interest rate. Refer to Note 10, Debt, and Note 13, Derivatives, for further details.

Nine months ended September 30, 2026 compared to September 30, 2025. Interest expense and other financing costs were relatively flat, increasing $0.6 million to $40.1 million for the nine months ended September 30, 2026, compared to $39.6 million for the same period in 2025.

Loss on Debt Extinguishment

Three months ended September 30, 2026 compared to September 30, 2025. For the three months ended September 30, 2026, the Company had no losses on debt extinguishment. For the three months ended September 30, 2025, loss on debt extinguishment was $0.6 million and related to the write-off of unamortized debt issuance costs and unamortized debt discount as a result of debt refinancing. Refer to Note 10, Debt, for further details.

Nine months ended September 30, 2026 compared to September 30, 2025. For the nine months ended September 30, 2026 and 2025, loss on debt extinguishment was $2.0 million and $0.6 million, respectively, and was due to the write-off of unamortized debt issuance costs and unamortized debt discount as a result of debt refinancing. Refer to Note 10, Debt, for further details.

Income Tax Expense

Three months ended September 30, 2026 compared to September 30, 2025. The effective tax rate for the three months ended September 30, 2026 and 2025 was 26.3% and 25.3%, respectively. The higher effective tax rate in 2026 is mainly due to an increase in non-deductible expenses.

Nine months ended September 30, 2026 compared to September 30, 2025. The effective tax rate for the nine months ended September 30, 2026 and 2025 was 25.3% and 26.8%, respectively. The year-over-year decrease in the effective tax rate is primarily driven by an increase in excess tax benefits on share-based compensation.

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)

2026

2025

2026

2025

Reconciliation of non-GAAP financial measures:

Net income (GAAP)

$

91,301

$

96,541

$

342,845

$

217,250

Income tax expense

(32,639

)

(32,733

)

(116,205

)

(79,411

)

Income before income taxes

$

123,940

$

129,274

$

459,050

$

296,661

Interest expense(1)

14,114

12,136

40,055

36,857

Depreciation(2)

2,218

3,295

6,785

8,699

Other business taxes(3)

481

637

357

2,252

Amortization of acquisition-related intangible assets(4)

18,297

18,737

54,891

42,559

Share-based compensation(5)

32,547

2,022

46,968

5,182

Acquisition, restructuring and exit costs(6)

20,364

21,400

47,779

88,711

Debt issuance costs(7)

174

2,950

2,987

4,454

Adjusted EBITDA

$

212,135

$

190,451

$

658,872

$

485,375

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2026

2025

2026

2025

Reconciliation of non-GAAP financial measures:

Net income (GAAP)

$

91,301

$

96,541

$

342,845

$

217,250

Adjustments to reflect the operating performance of the Company:

i. Other business taxes(3)

481

637

357

2,252

ii. Amortization of acquisition-related intangible assets(4)

18,297

18,737

54,891

42,559

iii. Share-based compensation(5)

32,547

2,022

46,968

5,182

iv. Acquisition, restructuring and exit costs(6)

20,364

21,400

47,779

88,711

v. Debt issuance costs(7)

174

2,950

2,987

4,454

Tax effect of above adjustments(8)

(10,646

)

(11,437

)

(28,471

)

(29,094

)

Adjusted Net Income

$

152,518

$

130,850

$

467,356

$

331,314

Tax benefit of goodwill and acquired intangibles(9)

$

10,716

$

10,487

$

31,947

$

30,883

Weighted average number of shares outstanding - diluted (GAAP)

62,471

66,964

63,301

66,620

Weighted average number of shares outstanding - diluted (Non-GAAP)(10)

82,508

86,751

83,310

78,833

Adjusted net income with tax benefit per diluted share

$

1.98

$

1.63

$

5.99

$

4.59

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 share-based compensation associated with equity awards in connection with acquisitions and certain one-time performance-based shares.
(6)
Adding back direct incremental costs of acquisitions, including restructuring costs. The following table presents the components of acquisition, restructuring and exit costs for the periods indicated:

Three Months Ended September 30,

Nine Months Ended
September 30,

(in thousands)

2026

2025

2026

2025

Acquisition-related costs

$

15,529

$

379

$

22,534

$

34,909

Restructuring and integration costs

941

10,211

6,728

25,370

Change in value of consideration payable for acquisition of business

561

3,841

6,139

8,339

Personnel compensation and benefits

3,333

6,969

12,378

20,093

Total acquisition, restructuring and exit costs

$

20,364

$

21,400

$

47,779

$

88,711

(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.
(10)
The Company includes participating securities in its computation of adjusted earnings per diluted share, including shares of series A Non-Voting Convertible Preferred stock for the three and nine months ended September 30, 2026 and 2025.

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, 2026 and December 31, 2025.

September 30,

December 31,

(in thousands)

2026

2025

Cash and cash equivalents

$

207,724

$

163,690

Accounts and other receivables

188,759

181,141

Undrawn commitment on credit facility

100,000

100,000

Accounts and other payables

(172,475

)

(158,742

)

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, 2026 and December 31, 2025 (under the 2019 Credit Agreement) which had approximately $100.0 million undrawn as of September 30, 2026 and December 31, 2025.

2019 Credit Agreement

Since 2019, the Company is a party to a credit agreement (the "2019 Credit Agreement"), which includes both a revolving credit facility (the "Revolving Facility") with aggregate commitments of $100.0 million (with a $10.0 million sub-limit for the issuance of letters of credit) and a term loan with an aggregate principal amount of $985.0 million (the "Existing Term Loans"). The Revolving Facility matures on September 23, 2030 and the Existing Term Loans mature on September 23, 2032.

On September 23, 2025, pursuant to the Sixth Amendment of the 2019 Credit Agreement, the Company extended the maturity date of the first lien revolving credit facility (the "Revolving Facility") from March 31, 2026 to September 23, 2030 and decreased the drawn interest rate margin by 0.25% per annum. The Company also refinanced its Existing Term Loans with the Repriced Term Loans in an aggregate principal amount of $985 million.

On May 18, 2026, pursuant to the Seventh Amendment of the 2019 Credit Agreement, the Company refinanced its existing term loans (the "Existing Term Loans") with repriced term loans (the "Repriced Term Loans") which will bear interest at an annual rate equal to, at the option of the Company, either SOFR plus a margin of 1.75% or an alternate base rate plus a margin of 0.75%.

The Company elects to use three-month Term SOFR plus a margin of 1.75% required by the 2019 Credit Agreement to pay interest on its debt.

Pursuant to ASC 470-50, Debt - Modifications and Extinguishments, the Company evaluated the Repriced Term Loans on a lender-by-lender basis and accounted accordingly for debt extinguishment costs and debt modification costs (for the portion of the transaction that did not meet the accounting criteria for debt extinguishment). On the unaudited Condensed Consolidated Statement of Cash Flows, the financing cash outflows and inflows associated with each amendment were determined on a lender-by-lender basis and repayments during the nine months ended September 30, 2026 and 2025 totaled $314.0 million and $235.8 million, respectively. During the nine months ended September 30, 2026, the Company incurred costs of $2.4 million related to the Seventh Amendment, of which $2.0 million was recorded as a loss on debt extinguishment and $0.4 million was recognized as general and administrative expense in the unaudited Condensed Consolidated Statement of Operations. 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 financing cash outflows or inflows or costs incurred associated with this transaction during the three months ended September 30, 2026.

The Company repaid an additional $2.5 million and $7.4 million of the outstanding term loans under the 2019 Credit Agreement during the three and nine months ended September 30, 2026, respectively.

Contingent Consideration

At September 30, 2026, the Company had $53.8 million in contingent consideration that is estimated to be payable over the next year resulting from the WestEnd Acquisition. For the three and nine months ended September 30, 2026, the Company recorded an increase of $0.6 million and $6.1 million, respectively, 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. At September 30, 2026, the estimated fair value of the WestEnd Acquisition contingent payments was $53.8 million, and a maximum of $80.0 million in contingent consideration is potentially payable to sellers.

There were no other significant changes to our contractual obligations as reported in our 2025 Annual Report.

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)

2026

2025

Net cash provided by operating activities

$

479,740

$

240,409

Net cash provided by investing activities

12,269

77,658

Net cash used in financing activities

(447,935

)

(329,453

)

Operating Activities - Cash provided by operating activities during the nine months ended September 30, 2026 was $479.7 million, compared to $240.4 million of cash provided by operating activities for the same period in 2025. The $239.3 million increase in cash provided by operating activities was primarily due to increases of $125.6 million in net income, $51.1 million in non-cash items, and $62.6 million in working capital.

Investing Activities - Cash provided by investing activities during the nine months ended September 30, 2026 was $12.3 million and consisted of net trading activity of $15.3 million offset by $3.0 million of property and equipment purchases. The nature of our trading activities is further described in Note 2, Significant Accounting Policies, to the consolidated financial statements included in our 2025 Annual Report.

Financing Activities - Cash used in financing activities during the nine months ended September 30, 2026 was $447.9 million, compared to $329.5 million of cash used in financing activities for the same period in 2025. The $118.4 million increase was primarily due to higher activity and cash utilized for repurchases of common stock, net activity related to

stock-based equity awards, payment of dividends, and net activity related to long-term debt of $80.3 million, $42.4 million, $8.2 million, and $12.7 million, respectively, partially offset by a $23.8 million decrease in payment of consideration for acquisition.

Victory Capital Holdings Inc. published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 14:02 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]