Third-Quarter Highlights
- Total Client Assets of $181.1 billion
- Long-term gross flows of $5.9 billion
- Long-term net flows of ($2.6) billion
- GAAP operating margin of 53.3%
- GAAP net income per diluted share of $1.24
- Adjusted EBITDA margin of 53.7%
- Adjusted net income with tax benefit per diluted share of
$1.35
- Board authorizes an 7% increase in regular quarterly cash
dividend to $0.44
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended September 30, 2024.
“During the third quarter, we made excellent progress toward
closing the Amundi transaction,” said David Brown, Chairman and
Chief Executive Officer. “We reached a formal agreement early in
the quarter and, in October, our shareholders approved all proxy
proposals on the ballot at our Special Meeting of Stockholders.
“Integration work is proceeding, and we are working with
Amundi’s non-U.S. distribution teams to facilitate sales of our
products throughout their global networks and joint ventures upon
closing, which we anticipate will occur in the first quarter of
2025. Based on work completed to date, we are maintaining our
guidance of $100 million in annualized expense synergies. These
expense synergies are expected to be fully realized within two
years of closing with the majority achieved within the first
year.
“Our business performance was strong through the first nine
months of 2024. In the third quarter, we achieved the highest
quarterly adjusted earnings per diluted share with tax benefit,
adjusted EBITDA, and adjusted EBITDA margin in the history of our
firm. Through the end of September, the percentage of our AUM
outperforming benchmarks over the respective 3-, 5-, and 10-year
periods was 60%, 73%, and 77%. In addition, 67% of our AUM in
mutual funds and ETFs was rated four or five stars overall by
Morningstar.
“Cash on the balance sheet was $188 million, up $69 million from
the end of the second quarter. Our net leverage ratio declined to
1.7x due to growth in Adjusted EBITDA and our increased cash
position. Additionally, the Board authorized another 7% increase in
our quarterly cash dividend from $0.41 to $0.44 per share, which
will be paid in December.
“As always, we continue to focus on serving our clients, which
is our top priority.”
1 Total AUM includes both discretionary
and non-discretionary client assets.
2 The Company reports its financial
results in accordance with generally accepted accounting principles
(“GAAP”). Adjusted EBITDA and Adjusted Net Income are not defined
by GAAP and should not be regarded as an alternative to any
measurement under GAAP. Please refer to the section “Information
Regarding Non-GAAP Financial Measures” at the end of this press
release for an explanation of Non-GAAP financial measures and a
reconciliation to the nearest GAAP financial measure.
The table below presents AUM, and certain GAAP and non-GAAP
(“adjusted”) financial results. Due to rounding, AUM values and
other amounts in this press release may not add up precisely to the
totals provided.
(in millions except per share amounts
or as otherwise noted)
For the Three Months Ended For the Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
Assets Under Management1 Ending $
176,113
$
168,681
$
148,879
$
176,113
$
148,879
Average
171,876
167,484
156,491
167,631
153,983
AUM Long-term Flows2 Long-term Gross $
5,876
$
5,813
$
4,955
$
18,640
$
16,294
Long-term Net
(2,631
)
(1,701
)
(2,000
)
(5,361
)
(4,250
)
AUM Money Market/Short-term Flows Money Market / Short-term
Gross $
244
$
255
$
193
$
734
$
666
Money Market / Short-term Net
(5
)
(43
)
(19
)
(147
)
(345
)
AUM Total Flows Total Gross $
6,120
$
6,067
$
5,149
$
19,375
$
16,959
Total Net
(2,636
)
(1,744
)
(2,019
)
(5,508
)
(4,595
)
Consolidated Financial Results (GAAP) Revenue $
225.6
$
219.6
$
209.7
$
661.1
$
615.2
AUM revenue realization (in bps)
52.1
52.6
53.1
52.6
53.3
Operating expenses
105.3
109.0
129.6
345.3
373.1
Income from operations
120.4
110.6
80.0
315.8
242.1
Operating margin
53.3
%
50.4
%
38.2
%
47.8
%
39.4
%
Net income
82.0
74.3
52.0
211.9
158.0
Earnings per diluted share $
1.24
$
1.12
$
0.77
$
3.21
$
2.30
Cash flow from operations
99.8
79.7
91.6
248.2
233.2
Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $
121.3
$
116.5
$
107.2
$
350.1
$
310.4
Adjusted EBITDA margin
53.7
%
53.0
%
51.1
%
53.0
%
50.5
%
Adjusted net income
78.9
76.5
70.3
228.0
202.3
Tax benefit of goodwill and acquired intangible assets
10.1
10.1
9.5
30.0
28.6
Adjusted net income with tax benefit
89.0
86.6
79.8
258.0
230.9
Adjusted net income with tax benefit per diluted share $
1.35
$
1.31
$
1.18
$
3.91
$
3.36
_____________________________________________________
1 Total AUM includes both
discretionary assets under management and non-discretionary assets
under advisement and excludes other assets.
2 Long-term AUM is defined as
total AUM excluding Money Market and Short-term assets.
3 The Company reports its
financial results in accordance with GAAP. Adjusted EBITDA and
Adjusted Net Income are not defined by GAAP and should not be
regarded as an alternative to any measurement under GAAP. Please
refer to the section “Information Regarding Non-GAAP Financial
Measures” at the end of this press release for an explanation of
Non-GAAP financial measures and a reconciliation to the nearest
GAAP financial measure.
AUM, Flows and Investment Performance
At September 30, 2024, Victory Capital had total client assets
of $181.1 billion, assets under management of $176.1 billion, and
other assets of $5.0 billion. Total AUM increased by $7.4 billion
to $176.1 billion at September 30, 2024, compared with $168.7
billion at June 30, 2024. The increase was due to positive market
action of $10.1 billion partially offset by net outflows of $2.6
billion. Total gross flows for the third quarter were $6.1 billion,
including long-term gross flows of $5.9 billion.
As of September 30, 2024, Victory Capital offered 126 investment
strategies through its 11 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of September 30, 2024.
Percentage of AUM Outperforming Benchmark Trailing
Trailing Trailing Trailing 1-Year
3-Years 5-Years 10-Years
46%
60%
73%
77%
Third Quarter 2024 Compared with Second Quarter 2024
Revenue increased 2.7% to $225.6 million in the third quarter,
compared with $219.6 million in the second quarter, primarily due
to higher average AUM over the comparable period. GAAP operating
margin expanded 290 basis points in the third quarter to 53.3%, up
from 50.4% in the second quarter primarily due to a $12.4 million
decrease in compensation related expenses partially offset by a
non-cash $6.6 million difference in amounts recorded to the change
in the fair value of consideration payable for acquisitions. Third
quarter GAAP net income increased 10.4% to $82.0 million, or $1.24
per diluted share, up from $74.3 million, or $1.12 per diluted
share, in the prior quarter.
Adjusted net income with tax benefit increased 2.8% to $89.0
million, or $1.35 per diluted share in the third quarter, up from
$86.6 million, or $1.31 per diluted share, in the second quarter.
Adjusted EBITDA increased 4.1% to $121.3 million in the third
quarter, versus $116.5 million in the second quarter. Adjusted
EBITDA margin expanded 70 basis points in the third quarter of 2024
to 53.7% compared with 53.0% in the prior quarter.
Third Quarter 2024 Compared with Third Quarter 2023
Revenue for the three months ended September 30, 2024, increased
7.6% to $225.6 million, compared with $209.7 million in the same
quarter of 2023 as a result of higher average AUM over the
comparable period.
Operating expenses decreased 18.8% to $105.3 million, compared
with $129.6 million in last year’s third quarter due to the
combination of a non-cash $11.9 million difference in amounts
recorded to the change in the fair value of consideration payable
for acquisitions as well as a decrease in compensation related
expenses. GAAP operating margin expanded 1,510 basis points to
53.3% in the third quarter, from 38.2% in the same quarter of 2023.
GAAP net income increased 57.6% to $82.0 million, or $1.24 per
diluted share, in the third quarter compared with $52.0 million, or
$0.77 per diluted share, in the same quarter of 2023.
Adjusted net income with tax benefit increased 11.6% to $89.0
million, or $1.35 per diluted share, in the third quarter, compared
with $79.8 million, or $1.18 per diluted share in the same quarter
last year. Adjusted EBITDA increased 13.1% to $121.3 million,
compared with $107.2 million in the same quarter of last year.
Year-over-year, adjusted EBITDA margin expanded 260 basis points to
53.7% in the third quarter of 2024, compared with 51.1% in the same
quarter last year.
Nine Months Ended September 30, 2024 Compared with Nine
Months Ended September 30, 2023
Revenue for the nine months ended September 30, 2024, increased
7.5% to $661.1 million, compared with $615.2 million in the same
period of 2023. The increase was primarily due to higher average
AUM.
Operating expenses decreased 7.4% to $345.3 million for the nine
months ended September 30, 2024, compared with $373.1 million in
the same period in 2023 due to the combination of a non-cash $16.8
million difference in amounts recorded to the change in the fair
value of consideration payable for acquisitions as well as a
decreases in compensation related expense and depreciation and
amortization expense, partially offsetting was an increase in
acquisition-related costs. GAAP operating margin was 47.8% for the
nine months ended September 30, 2024, an 840 basis point increase
from the 39.4% recorded in the same period in 2023. GAAP net income
increased 34.2% to $211.9 million, or $3.21 per diluted share, in
the first nine months of 2024 compared with $158.0 million, or
$2.30 per diluted share, in the same period in 2023.
Adjusted net income with tax benefit increased 11.7% to $258.0
million in the first nine months of 2024 compared to $230.9 million
in the same period in 2023. On a per-share basis, adjusted net
income with tax benefit increased 16.4% to $3.91 per diluted share
for the nine months ended September 30, 2024 compared to $3.36 per
diluted share in the same period in 2023. For the nine months ended
September 30, 2024, adjusted EBITDA increased 12.8% to $350.1
million, compared with $310.4 million for the same period in 2023.
Year-over-year, adjusted EBITDA margin expanded 250 basis points to
53.0% in the first nine months of 2024, compared with 50.5% in the
same period last year.
Balance Sheet / Capital Management
The total debt outstanding as of September 30, 2024 was
approximately $992 million and consisted of an existing term loan
balance of $625 million and the 2021 Incremental Term Loans balance
of $367 million.
The Company’s Board of Directors approved a regular quarterly
cash dividend of $0.44 per share. The dividend is payable on
December 23, 2024, to shareholders of record on December 9,
2024.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning,
November 8, at 8:00 a.m. ET to discuss the results. Analysts and
investors may participate in the question-and-answer session. To
participate in the conference call, please call (888) 330-3571
(domestic) or (646) 960-0657 (international), shortly before 8:00
a.m. ET and reference the Victory Capital Conference Call. A live,
listen-only webcast will also be available via the investor
relations section of the Company’s website at https://ir.vcm.com.
Prior to the call, a supplemental slide presentation that will be
used during the conference call will be available on the Events and
Presentations page of the Company’s investor relations website. For
anyone who is unable to join the live event, an archive of the
webcast will be available for replay shortly after the call
concludes.
About Victory Capital
Victory Capital is a diversified global asset management firm
with total assets under management of $176.1 billion, and $181.1
billion in total client assets, as of September 30, 2024. The
Company employs a next-generation business strategy that combines
boutique investment qualities with the benefits of a fully
integrated, centralized operating and distribution platform.
Victory Capital provides specialized investment strategies to
institutions, intermediaries, retirement platforms and individual
investors. With 11 autonomous Investment Franchises and a Solutions
Business, Victory Capital offers a wide array of investment
products and services, including mutual funds, ETFs, separately
managed accounts, alternative investments, third-party ETF model
strategies, collective investment trusts, private funds, a 529
Education Savings Plan, and brokerage services.
Victory Capital is headquartered in San Antonio, Texas, with
offices and investment professionals in the U.S. and around the
world. To learn more please visit www.vcm.com or follow Victory
Capital on Facebook, Twitter, and LinkedIn.
FORWARD-LOOKING STATEMENTS
This earnings release may contain forward-looking statements
within the meaning of applicable U.S. federal and non-U.S.
securities laws. These statements may include, without limitation,
any statements preceded by, followed by or including words such as
“target,” “believe,” “expect,” “aim,” “intend,” “may,”
“anticipate,” “assume,” “budget,” “continue,” “estimate,” “future,”
“objective,” “outlook,” “plan,” “potential,” “predict,” “project,”
“will,” “can have,” “likely,” “should,” “would,” “could” and other
words and terms of similar meaning or the negative thereof and
include, but are not limited to, statements regarding the proposed
transaction and the outlook for Victory Capital’s or Amundi’s
future business and financial performance. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors beyond Victory Capital’s and Amundi’s control and
could cause Victory Capital’s and Amundi’s actual results,
performance or achievements to be materially different from the
expected results, performance or achievements expressed or implied
by such forward-looking statements.
Although it is not possible to identify all such risks and
factors, they include, among others, the following: continued
geopolitical uncertainty including the conflicts in Ukraine and
Israel, risks that the conditions to closing the transaction with
Amundi US will be satisfied and the transaction will close on the
anticipated timeline, if at all; risks associated with expected
benefits, or impact on our business, of the proposed transaction,
including our ability to achieve any expected synergies; reductions
in AUM based on investment performance, client withdrawals,
difficult market conditions and other factors such as a pandemic;
the nature of the Company’s contracts and investment advisory
agreements; the Company’s ability to maintain historical returns
and sustain its historical growth; the Company’s dependence on
third parties to market its strategies and provide products or
services for the operation of its business; the Company’s ability
to retain key investment professionals or members of its senior
management team; the Company’s reliance on the technology systems
supporting its operations; the Company’s ability to successfully
acquire and integrate new companies; the concentration of the
Company’s investments in long-only small- and mid-cap equity and
U.S. clients; risks and uncertainties associated with non-U.S.
investments; the Company’s efforts to establish and develop new
teams and strategies; the ability of the Company’s investment teams
to identify appropriate investment opportunities; the Company’s
ability to limit employee misconduct; the Company’s ability to meet
the guidelines set by its clients; the Company’s exposure to
potential litigation (including administrative or tax proceedings)
or regulatory actions; the Company’s ability to implement effective
information and cyber security policies, procedures and
capabilities; the Company’s substantial indebtedness; the potential
impairment of the Company’s goodwill and intangible assets;
disruption to the operations of third parties whose functions are
integral to the Company’s ETF platform; the Company’s determination
that Victory Capital is not required to register as an "investment
company" under the 1940 Act; the fluctuation of the Company’s
expenses; the Company’s ability to respond to recent trends in the
investment management industry; the level of regulation on
investment management firms and the Company’s ability to respond to
regulatory developments; the competitiveness of the investment
management industry; the level of control over the Company retained
by Crestview GP; and other risks and factors listed under "Risk
Factors" and elsewhere in the Company’s filings with the SEC.
Such forward-looking statements are based on numerous
assumptions regarding Victory Capital’s present and future business
strategies and the environment in which it will operate in the
future. Any forward-looking statement made in this press release
speaks only as of the date hereof. Except as required by law,
Victory Capital assumes no obligation to update these
forward-looking statements, or to update the reasons actual results
could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Consolidated
Statements of Operations
(in thousands except per share
data and percentages)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
Revenue Investment management fees $
177,809
$
173,163
$
163,953
$
520,757
$
480,199
Fund administration and distribution fees
47,819
46,458
45,735
140,349
135,035
Total revenue
225,628
219,621
209,688
661,106
615,234
Expenses Personnel compensation and benefits
43,243
55,660
54,501
158,357
167,043
Distribution and other asset-based expenses
36,828
36,474
38,160
109,565
113,158
General and administrative
14,029
14,385
13,947
42,426
39,585
Depreciation and amortization
7,510
7,551
12,333
22,662
33,663
Change in value of consideration payable for acquisition of
business
(1,600
)
(8,200
)
10,336
2,400
19,236
Acquisition-related costs
5,075
3,049
116
9,150
134
Restructuring and integration costs
180
105
246
777
275
Total operating expenses
105,265
109,024
129,639
345,337
373,094
Income from operations
120,363
110,597
80,049
315,769
242,140
Operating margin
53.3
%
50.4
%
38.2
%
47.8
%
39.4
%
Other income (expense) Interest income and other
income (expense)
3,551
1,557
1,452
8,673
4,967
Interest expense and other financing costs
(16,414
)
(16,279
)
(15,580
)
(49,179
)
(44,721
)
Loss on debt extinguishment
—
(100
)
—
(100
)
—
Total other expense, net
(12,863
)
(14,822
)
(14,128
)
(40,606
)
(39,754
)
Income before income taxes
107,500
95,775
65,921
275,163
202,386
Income tax expense
(25,517
)
(21,524
)
(13,914
)
(63,238
)
(44,435
)
Net income $
81,983
$
74,251
$
52,007
$
211,925
$
157,951
Earnings per share of common stock Basic $
1.26
$
1.15
$
0.79
$
3.28
$
2.38
Diluted
1.24
1.12
0.77
3.21
2.30
Weighted average number of shares outstanding Basic
64,875
64,734
65,774
64,667
66,504
Diluted
66,057
66,075
67,676
66,044
68,636
Dividends declared per share $
0.41
$
0.37
$
0.32
$
1.115
$
0.96
Victory Capital Holdings, Inc.
and Subsidiaries
Reconciliation of GAAP to
Non-GAAP Measures1
(unaudited; in thousands
except per share data and percentages)
For the Three Months Ended For the Nine Months
Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
Net income (GAAP) $
81,983
$
74,251
$
52,007
$
211,925
$
157,951
Income tax expense
(25,517
)
(21,524
)
(13,914
)
(63,238
)
(44,435
)
Income before income taxes $
107,500
$
95,775
$
65,921
$
275,163
$
202,386
Interest expense
15,649
15,468
14,660
46,828
42,288
Depreciation
2,210
2,252
2,302
6,731
6,569
Other business taxes
366
414
636
1,149
1,402
Amortization of acquisition-related intangible assets
5,300
5,299
10,032
15,931
27,094
Stock-based compensation
972
940
1,451
3,239
4,993
Acquisition, restructuring and exit costs
(11,513
)
(4,520
)
11,463
(1,328
)
23,396
Debt issuance costs
775
874
762
2,404
2,266
Adjusted EBITDA $
121,259
$
116,502
$
107,227
$
350,117
$
310,394
Adjusted EBITDA margin
53.7
%
53.0
%
51.1
%
53.0
%
50.5
%
Net income (GAAP) $
81,983
$
74,251
$
52,007
$
211,925
$
157,951
Adjustment to reflect the operating performance of the Company
Other business taxes
366
414
636
1,149
1,402
Amortization of acquisition-related intangible assets
5,300
5,299
10,032
15,931
27,094
Stock-based compensation
972
940
1,451
3,239
4,993
Acquisition, restructuring and exit costs
(11,513
)
(4,520
)
11,463
(1,328
)
23,396
Debt issuance costs
775
874
762
2,404
2,266
Tax effect of above adjustments
1,025
(753
)
(6,085
)
(5,349
)
(14,786
)
Adjusted net income $
78,908
$
76,505
$
70,266
$
227,971
$
202,316
Adjusted net income per diluted share $
1.19
$
1.16
$
1.04
$
3.45
$
2.95
Tax benefit of goodwill and acquired intangible
assets $
10,141
$
10,141
$
9,536
$
30,030
$
28,597
Tax benefit of goodwill and acquired intangible assets per
diluted share $
0.15
$
0.15
$
0.14
$
0.45
$
0.42
Adjusted net income with tax benefit $
89,049
$
86,646
$
79,802
$
258,001
$
230,913
Adjusted net income with tax benefit per diluted share
$
1.35
$
1.31
$
1.18
$
3.91
$
3.36
1 The Company reports its financial
results in accordance with GAAP. Adjusted EBITDA and Adjusted Net
Income are not defined by GAAP and should not be regarded as an
alternative to any measurement under GAAP. Please refer to the
section “Information Regarding Non-GAAP Financial Measures” at the
end of this press release for an explanation of Non-GAAP financial
measures and a reconciliation to the nearest GAAP financial
measure.
Victory Capital Holdings, Inc.
and Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands, except for
shares)
September 30, 2024 December 31, 2023
Assets Cash and cash equivalents $
188,248
$
123,547
Receivables
96,922
87,570
Prepaid expenses
7,932
5,785
Investments, at fair value
34,743
31,808
Property and equipment, net
13,720
19,578
Goodwill
981,805
981,805
Other intangible assets, net
1,265,901
1,281,832
Other assets
22,854
10,691
Total assets $
2,612,125
$
2,542,616
Liabilities and stockholders' equity Accounts payable
and accrued expenses $
61,256
$
56,477
Accrued compensation and benefits
45,595
55,456
Consideration payable for acquisition of business
139,600
217,200
Deferred tax liability, net
152,335
128,714
Other liabilities
56,016
42,499
Long-term debt, net1
982,661
989,269
Total liabilities
1,437,463
1,489,615
Stockholders' equity Common stock, $0.01 par value
per share:2024 - 600,000,000 shares authorized, 83,679,920 shares
issued and 64,924,081 shares outstanding; 2023 - 600,000,000 shares
authorized, 82,404,305 shares issued and 64,254,714 shares
outstanding
837
824
Additional paid-in capital
746,917
728,283
Treasury stock, at cost: 2024 - 18,755,839 shares; 2023 -
18,149,591 shares
(470,727)
(444,286)
Accumulated other comprehensive income
21,955
31,328
Retained earnings
875,680
736,852
Total stockholders' equity
1,174,662
1,053,001
Total liabilities and stockholders' equity $
2,612,125
$
2,542,616
1 Balances at September 30, 2024 and
December 31, 2023 are shown net of unamortized loan discount and
debt issuance costs in the amount of $9.5 million and $12.4
million, respectively. The gross amount of the debt outstanding was
$992.2 million and $1,001.7 million as of September 30, 2024 and
December 31, 2023, respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Total Client Assets
(unaudited; in
millions)
For the Three Months Ended September 30,
June 30, September 30,
2024
2024
2023
Beginning AUM $
168,681
$
170,342
$
157,161
Beginning other assets1
5,094
5,117
4,461
Beginning total client assets
173,775
175,459
161,622
AUM net cash flows
(2,636
)
(1,744
)
(2,019
)
Other assets net cash flows
(446
)
18
300
Total client assets net cash flows
(3,082
)
(1,727
)
(1,719
)
AUM market appreciation (depreciation)
10,076
83
(4,755
)
Other assets market appreciation (depreciation)
333
(40
)
(134
)
Total client assets market appreciation (depreciation)
10,409
43
(4,888
)
AUM realizations and distributions
(2
)
—
—
Acquired & divested assets / Net transfers
(7
)
(1
)
(1,508
)
Ending AUM
176,113
168,681
148,879
Ending other assets
4,981
5,094
4,627
Ending total client assets
181,094
173,775
153,506
Average total client assets2
176,806
172,392
161,147
For the Nine Months Ended September 30,
September 30,
2024
2023
Beginning AUM $
161,322
$
147,762
Beginning other assets1
5,289
5,190
Beginning total client assets
166,611
152,952
AUM net cash flows
(5,508
)
(4,595
)
Other assets net cash flows
(952
)
(791
)
Total client assets net cash flows
(6,460
)
(5,386
)
AUM market appreciation (depreciation)
20,337
7,335
Other assets market appreciation (depreciation)
644
228
Total client assets market appreciation (depreciation)
20,982
7,563
AUM realizations and distributions
(2
)
(73
)
Acquired & divested assets / Net transfers
(38
)
(1,549
)
Ending AUM
176,113
148,879
Ending other assets
4,981
4,627
Ending total client assets
181,094
153,506
Average total client assets3
172,688
158,779
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 For the three-month periods ending
September 30, 2024, June 30, 2024 and September 30, 2023 total
client assets revenue realization was 50.8 basis points, 51.2 basis
points and 51.6 basis points, respectively.
3 For the nine-month periods ending
September 30, 2024 and 2023 total client assets revenue realization
was 51.1 basis points and 51.8 basis points, respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Total Assets Under
Management1
(unaudited; in millions except
for percentages)
September 30,
June 30,
September 30,
2024
2024
2023
Beginning assets under management $
168,681
$
170,342
$
157,161
Gross client cash inflows
6,120
6,067
5,149
Gross client cash outflows
(8,756
)
(7,812
)
(7,168
)
Net client cash flows
(2,636
)
(1,744
)
(2,019
)
Market appreciation (depreciation)
10,076
83
(4,755
)
Realizations and distributions
(2
)
—
—
Acquired & divested assets / Net Transfers
(7
)
(1
)
(1,508
)
Ending assets under management
176,113
168,681
148,879
Average assets under management
171,876
167,484
156,491
For the Nine Months Ended
September 30,
September 30,
2024
2023
Beginning assets under management $
161,322
$
147,762
Gross client cash inflows
19,375
16,959
Gross client cash outflows
(24,882
)
(21,554
)
Net client cash flows
(5,508
)
(4,595
)
Market appreciation (depreciation)
20,337
7,335
Realizations and distributions
(2
)
(73
)
Acquired assets / Net transfers
(38
)
(1,549
)
Ending assets under management
176,113
148,879
Average assets under management
167,631
153,983
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Other Assets
(Institutional)1
(unaudited; in
millions)
For the Three Months
September 30,
June 30,
September 30,
2024
2024
2023
Beginning other assets (institutional) $
5,094
$
5,117
$
4,461
Gross client cash inflows
—
467
300
Gross client cash outflows
(446
)
(449
)
—
Net client cash flows
(446
)
18
300
Market appreciation (depreciation)
333
(40
)
(134
)
Realizations and distributions
—
—
—
Acquired & divested assets / Net transfers
—
—
—
Ending other assets (institutional)
4,981
5,094
4,627
Average other assets (institutional)2
4,930
4,909
4,656
For the Nine Months Ended September 30,
September 30,
2024
2023
Beginning other assets (institutional) $
5,289
$
5,190
Gross client cash inflows
467
400
Gross client cash outflows
(1,419
)
(1,191
)
Net client cash flows
(952
)
(791
)
Market appreciation (depreciation)
644
228
Realizations and distributions
—
—
Acquired & divested assets / Net transfers
—
—
Ending other assets (institutional)
4,981
4,627
Average other assets (institutional)3
5,057
4,796
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 For the three-month periods ending
September 30, 2024, June 30, 2024 and September 30, 2023 total
other assets (institutional) revenue realization was 3.4 basis
points, 3.4 basis points and 3.6 basis points, respectively.
3 For the nine-month periods ending
September 30, 2024 and 2023 total other assets (institutional)
revenue realization was 3.5 basis points and 3.6 basis points,
respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Three Months Ended By Asset Class
Global /
U.S. Mid
U.S. Small
Fixed
U.S. Large
Non-U.S.
Alternative
Total
Money Market /
Total
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Short-term
AUM1
September 30, 2024 Beginning assets under management $
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
)
(2,631
)
(5
)
(2,636
)
Market appreciation (depreciation)
2,649
1,105
973
690
1,212
3,368
51
10,049
27
10,076
Realizations and distributions
—
—
—
—
—
—
(2
)
(2
)
—
(2
)
Acquired assets / Net transfers
(5
)
(2
)
6
(21
)
(13
)
(25
)
3
(58
)
51
(7
)
Ending assets under management $
32,333
$
15,591
$
25,081
$
14,239
$
19,752
$
62,544
$
3,178
$
172,720
$
3,393
$
176,113
June 30, 2024 Beginning assets under management $
32,918
$
16,297
$
24,481
$
13,895
$
18,200
$
57,833
$
3,465
$
167,089
$
3,253
$
170,342
Gross client cash inflows
1,007
559
1,283
67
558
2,035
303
5,813
255
6,067
Gross client cash outflows
(1,659
)
(778
)
(1,508
)
(309
)
(635
)
(2,184
)
(442
)
(7,514
)
(298
)
(7,812
)
Net client cash flows
(652
)
(218
)
(225
)
(241
)
(77
)
(150
)
(139
)
(1,701
)
(43
)
(1,744
)
Market appreciation (depreciation)
(1,247
)
(893
)
116
350
367
1,273
58
24
60
83
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(4
)
(4
)
26
(21
)
(32
)
(21
)
6
(50
)
50
(1
)
Ending assets under management $
31,015
$
15,182
$
24,398
$
13,983
$
18,459
$
58,936
$
3,390
$
165,362
$
3,320
$
168,681
September 30, 2023 Beginning assets under management
$
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
51,375
$
3,301
$
154,009
$
3,152
$
157,161
Gross client cash inflows
1,224
458
892
51
392
1,688
249
4,955
193
5,149
Gross client cash outflows
(1,769
)
(920
)
(1,343
)
(282
)
(519
)
(1,720
)
(402
)
(6,955
)
(213
)
(7,168
)
Net client cash flows
(545
)
(462
)
(451
)
(231
)
(126
)
(32
)
(153
)
(2,000
)
(19
)
(2,019
)
Market appreciation (depreciation)
(1,224
)
(547
)
(460
)
(287
)
(451
)
(1,895
)
71
(4,793
)
39
(4,755
)
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(2
)
(5
)
(1,397
)
(57
)
(8
)
(78
)
3
(1,545
)
37
(1,508
)
Ending assets under management $
28,235
$
14,650
$
23,790
$
11,596
$
14,807
$
49,371
$
3,222
$
145,671
$
3,208
$
148,879
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Nine Months Ended By Asset Class
Global /
U.S. Mid
U.S. Small
Fixed
U.S. Large
Non-U.S.
Alternative
Total
Money Market /
Total
Cap Equity
Cap Equity
Income
Cap Equity
Equity
Solutions
Investments
Long-term
Short-term
AUM1
September 30, 2024 Beginning assets under management $
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
18,640
734
19,375
Gross client cash outflows
(5,804
)
(2,980
)
(4,514
)
(1,127
)
(1,871
)
(6,472
)
(1,234
)
(24,001
)
(881
)
(24,882
)
Net client cash flows
(2,451
)
(1,330
)
(589
)
(918
)
356
(129
)
(299
)
(5,361
)
(147
)
(5,508
)
Market appreciation (depreciation)
4,196
1,014
1,265
2,595
2,713
8,390
34
20,208
129
20,337
Realizations and distributions
—
—
—
—
—
—
(2
)
(2
)
—
(2
)
Acquired assets / Net transfers
(16
)
(51
)
50
(72
)
(89
)
(13
)
14
(177
)
139
(38
)
Ending assets under management $
32,333
$
15,591
$
25,081
$
14,239
$
19,752
$
62,544
$
3,178
$
172,720
$
3,393
$
176,113
September 30, 20231 Beginning assets under management
$
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
46,317
$
3,663
$
144,460
$
3,302
$
147,762
Gross client cash inflows
4,083
2,186
2,952
222
1,329
4,427
1,095
16,294
666
16,959
Gross client cash outflows
(3,988
)
(2,921
)
(4,239
)
(957
)
(1,648
)
(5,141
)
(1,650
)
(20,544
)
(1,010
)
(21,554
)
Net client cash flows
95
(735
)
(1,287
)
(735
)
(319
)
(715
)
(555
)
(4,250
)
(345
)
(4,595
)
Market appreciation (depreciation)
237
280
203
1,488
1,044
3,792
180
7,224
111
7,335
Realizations and distributions
—
—
—
—
—
—
(73
)
(73
)
—
(73
)
Acquired assets / Net transfers
13
2
(1,479
)
(130
)
(79
)
(23
)
8
(1,689
)
140
(1,549
)
Ending assets under management $
28,235
$
14,650
$
23,790
$
11,596
$
14,807
$
49,371
$
3,222
$
145,671
$
3,208
$
148,879
1 Total AUM includes both discretionary
assets under management and non-discretionary assets under
advisement and excludes other assets.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Three Months Ended By Vehicle
Separate Accounts Mutual and Other
Funds1 ETFs2 Vehicles3 Total AUM4
September 30, 2024 Beginning assets under management $
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 assets / Net transfers
(10
)
(7
)
10
(7
)
Ending assets under management $
117,044
$
6,694
$
52,375
$
176,113
June 30, 2024 Beginning assets under management $
113,897
$
5,229
$
51,217
$
170,342
Gross client cash inflows
3,553
480
2,034
6,067
Gross client cash outflows
(5,061
)
(178
)
(2,573
)
(7,812
)
Net client cash flows
(1,508
)
302
(539
)
(1,744
)
Market appreciation (depreciation)
385
(91
)
(211
)
83
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(190
)
—
190
(1
)
Ending assets under management $
112,584
$
5,440
$
50,657
$
168,681
September 30, 2023 Beginning assets under management
$
105,916
$
5,193
$
46,052
$
157,161
Gross client cash inflows
3,283
232
1,633
5,149
Gross client cash outflows
(5,119
)
(557
)
(1,492
)
(7,168
)
Net client cash flows
(1,836
)
(324
)
141
(2,019
)
Market appreciation (depreciation)
(2,925
)
(165
)
(1,665
)
(4,755
)
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(17
)
6
(1,497
)
(1,508
)
Ending assets under management $
101,138
$
4,710
$
43,031
$
148,879
1 Includes institutional and retail share
classes, money market and 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.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Nine Months Ended By Vehicle
Separate Accounts Mutual and Other
Funds1 ETFs2 Vehicles3 Total
September 30, 2024 Beginning assets under management $
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 assets / Net transfers
(248
)
36
174
(38
)
Ending assets under management $
117,044
$
6,694
$
52,375
$
176,113
September 30, 2023 Beginning assets under management
$
99,447
$
5,627
$
42,688
$
147,762
Gross client cash inflows
11,468
625
4,866
16,959
Gross client cash outflows
(15,388
)
(1,211
)
(4,955
)
(21,554
)
Net client cash flows
(3,921
)
(586
)
(89
)
(4,595
)
Market appreciation (depreciation)
5,648
(329
)
2,015
7,335
Realizations and distributions
—
—
(73
)
(73
)
Acquired assets / Net transfers4
(36
)
(3
)
(1,511
)
(1,549
)
Ending assets under management $
101,138
$
4,710
$
43,031
$
148,879
1 Includes institutional and retail share
classes, money market and 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.
Information Regarding Non-GAAP
Financial Measures
Victory Capital uses non-GAAP financial measures referred to as
Adjusted EBITDA and Adjusted Net Income to measure the operating
profitability of the Company. These measures eliminate the impact
of one-time acquisition, restructuring and integration costs and
demonstrate the ongoing operating earnings metrics of the Company.
The Company has included these non-GAAP measures to provide
investors with the same financial metrics used by management to
assess the operating performance of the Company.
Adjusted EBITDA
Adjustments made to GAAP Net Income to calculate Adjusted
EBITDA, as applicable, are:
- Adding back income tax expense;
- Adding back interest paid on debt and other financing costs,
net of interest income;
- Adding back depreciation on property and equipment;
- Adding back other business taxes;
- Adding back amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense 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;
- Adding back direct incremental costs of acquisitions, including
restructuring costs;
- Adding back debt issuance cost expense;
- Adjusting for earnings/losses on equity method
investments.
Adjusted Net Income
Adjustments made to GAAP Net Income to calculate Adjusted Net
Income, as applicable, are:
- Adding back other business taxes;
- Adding back amortization expense on acquisition-related
intangible assets;
- Adding back stock-based compensation expense associated with
equity awards issued from pools created in connection with the
management-led buyout and various acquisitions and as a result of
any equity grants related to the IPO;
- Adding back direct incremental costs of acquisitions, including
restructuring costs;
- Adding back debt issuance cost expense;
- Subtracting an estimate of income tax expense applied to the
sum of the adjustments above.
Tax Benefit of Goodwill and Acquired
Intangible Assets
Due to Victory Capital’s acquisitive nature, tax deductions
allowed on acquired intangible assets and goodwill provide it with
additional significant supplemental economic benefit. The tax
benefit of goodwill and intangible assets represent the tax
benefits associated with deductions allowed for intangible assets
and goodwill generated from prior acquisitions in which the Company
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107097306/en/
Investors: Matthew Dennis, CFA Chief of Staff Director,
Investor Relations 216-898-2412 mdennis@vcm.com
Media: Jessica Davila Director, Global Communications
210-694-9693 jessica_davila@vcm.com
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