Victory Capital Q1 revenue jumps 77% to $388M, AUM tops $313bn

Victory Capital Holdings reported record first-quarter results on Wednesday as the San Antonio-based asset manager absorbed the full benefit of its Amundi US acquisition. Revenue climbed 76.7 per cent to $388.0 million, setting all-time highs for earnings, flows, and assets under management.

Adjusted earnings per share reached $1.82 with a tax benefit, beating the consensus analyst estimate of $1.63, according to MarketBeat. GAAP net income rose 80.9 per cent to $112.1 million, or $1.33 per diluted share, from $0.96 in the same quarter a year earlier.

Revenue topped the consensus forecast of $364.97 million. Adjusted EBITDA hit $204.0 million, a quarterly record, with an adjusted EBITDA margin of 52.6 per cent, the firm said in its earnings release. GAAP operating income was $159.2 million for a 41.0 per cent operating margin.

Total client assets stood at $313.1 billion at quarter-end. Ending assets under management of $309.8 billion compared with $167.5 billion a year earlier. Long-term gross flows reached $18.9 billion, an all-time quarterly record and a 104 per cent increase year over year, according to the firm’s earnings call transcript. Net long-term flows were negative $457 million. CEO David Brown said the trend was improving, with several investment franchises turning positive during the quarter.

Investment performance held: 68 per cent of rated mutual fund and ETF assets earned four- or five-star Morningstar ratings and 81 per cent of AUM outperformed benchmarks over the trailing 10 years. Average fee realization was 47.6 basis points. CFO Michael Policarpo told analysts on the post-earnings call that the firm was comfortable guiding to a 46-to-47-basis-point range over the long term. Non-US assets under management reached $55 billion, 18 per cent of the total, up from 3 per cent before the Amundi US transaction closed.

The board authorized a higher quarterly dividend of $0.50 per share, payable June 25 to shareholders of record on June 10. Combined with the roughly 2 million shares repurchased during the quarter, a record for the firm, Victory Capital returned $185 million to shareholders in the first quarter. Over the trailing 12 months, capital returned totalled $512 million, or more than $6 per share.

Some $104 million of the targeted $110 million in net expense synergies from the Pioneer integration have been realized, Policarpo said. The firm is on track to capture the full amount within 2026. Brown told analysts the acquisition pipeline was extensive and inorganic growth would remain a strategic priority. Net leverage was 1.1 times, with $75.8 million in cash against $980.1 million in gross debt and an undrawn $100 million revolver. The stock traded near $84, just below its 52-week high of $88.42, giving the firm a market capitalization of roughly $5.2 billion.