Second-Quarter 2023 Highlights
- Total Assets Under Management (AUM) of $161.6 billion1
- Long-term gross flows of $5.6 billion
- Long-term net flows of ($2.1) billion
- GAAP operating margin of 42.9%
- Adjusted EBITDA margin of 50.9%2
- GAAP net income of $0.83 per diluted share
- Adjusted net income with tax benefit of $1.11 per diluted
share2
- Board authorizes regular $0.32 quarterly cash dividend
Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital”
or “the Company”) today reported financial results for the quarter
ended June 30, 2023.
“Our investment performance has remained very strong during the
second quarter and first half of this year,” said David Brown,
Chairman and Chief Executive Officer. “Through the end of June, the
percentage of our AUM outperforming benchmarks over the respective
3-, 5-, and 10-year periods was 72%, 79%, and 77%.
“Adjusted EBITDA margin expanded to 50.9% in the second quarter.
This was our 12th consecutive quarter above our 49% guidance, and
the 8th out of the last 12 quarters that our margins were in excess
of 50%.
“Overall, excluding the previously disclosed passive low-fee
redemption in April, long-term net flows improved for the second
consecutive quarter. Entering the year’s second half, we are
encouraged about our net flow outlook through the end of this year
and into next.
“We continued our strong capital return to shareholders during
the quarter with the repurchase of 1.5 million shares, which is the
most for any quarter in our history and we paid out $21 million in
cash dividends. Additionally, our due diligence activities remain
ongoing as we continue to evaluate inorganic growth
opportunities.
“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 Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Assets Under Management1 Ending
$
161,622
$
158,621
$
154,947
$
161,622
$
154,947
Average
157,372
157,817
165,703
157,595
171,283
Long-term Flows2
Long-term Gross
$
5,591
$
5,848
$
9,198
$
11,439
$
20,210
Long-term Net
(2,106
)
(1,235
)
(630
)
(3,342
)
2,413
Money Market/Short-term Flows
Money Market/Short-term Gross
$
231
$
241
$
123
$
472
$
247
Money Market/Short-term Net
(316
)
(9
)
(53
)
(325
)
(106
)
Total Flows
Total Gross
$
5,822
$
6,089
$
9,321
$
11,911
$
20,457
Total Net
(2,422
)
(1,244
)
(683
)
(3,667
)
2,307
Consolidated Financial Results (GAAP)
Revenue
$
204.2
$
201.3
$
216.0
$
405.5
$
446.0
Revenue realization (in bps)
52.1
51.7
52.3
51.9
52.5
Operating expenses
116.7
126.8
96.7
243.5
225.2
Income from operations
87.5
74.6
119.3
162.1
220.9
Operating margin
42.9
%
37.0
%
55.2
%
40.0
%
49.5
%
Net income
56.7
49.3
79.2
105.9
150.5
Earnings per diluted share
$
0.83
$
0.71
$
1.09
$
1.53
$
2.05
Cash flow from operations
77.4
64.2
90.2
141.6
165.1
Adjusted Performance Results (Non-GAAP)3
Adjusted EBITDA
$
104.0
$
99.2
$
106.2
$
203.2
$
220.6
Adjusted EBITDA margin
50.9
%
49.3
%
49.2
%
50.1
%
49.5
%
Adjusted net income
66.4
65.6
71.4
132.1
152.5
Tax benefit of goodwill and acquired intangible assets
9.5
9.5
9.3
19.1
18.6
Adjusted net income with tax benefit
75.9
75.2
80.7
151.1
171.1
Adjusted net income with tax benefit per diluted share
$
1.11
$
1.08
$
1.11
$
2.19
$
2.34
_______________________
1 Total AUM includes both discretionary
and non-discretionary client 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
Victory Capital’s total AUM increased by 1.9%, or $3.0 billion,
to $161.6 billion at June 30, 2023, compared with $158.6 billion at
March 31, 2023. The increase was attributable to positive market
action of $5.5 billion partially offset by net outflows of $2.4
billion. Total gross flows were $5.8 billion for the second quarter
and $11.9 billion for the year-to-date period. For the second
quarter and year-to-date periods, the Company reported total net
outflows of $2.4 billion and $3.7 billion, respectively.
As of June 30, 2023, Victory Capital offered 126 investment
strategies through its 12 autonomous Investment Franchises and
Solutions Platform. The table below presents outperformance against
benchmarks by AUM as of June 30, 2023.
Percentage of AUM Outperforming Benchmark
Trailing
Trailing
Trailing
Trailing
1-Year
3-Years
5-Years
10-Years
63%
72%
79%
77%
Second Quarter 2023 Compared with First Quarter 2023
Revenue increased 1.4% to $204.2 million in the second quarter,
compared with $201.3 million in the first quarter, primarily due to
an increase in revenue realization and one extra day in the
quarter. GAAP operating margin expanded 590 basis points in the
second quarter to 42.9%, up from 37.0% in the first quarter
primarily due to the combination of a non-cash $5.9 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. Second quarter GAAP net income
increased 15.0% to $56.7 million, up from $49.3 million in the
prior quarter. On a per-share basis, GAAP net income increased
17.1% to $0.83 per diluted share in the second quarter, versus
$0.71 per diluted share in the first quarter.
Adjusted net income with tax benefit increased 1.0% to $75.9
million in the second quarter, up from $75.2 million in the first
quarter. On a per-share basis, adjusted net income with tax benefit
increased 2.8% to $1.11 per diluted share in the second quarter,
from $1.08 per diluted share in the prior quarter. Adjusted EBITDA
increased 4.9% to $104.0 million in the second quarter, versus
$99.2 million in the first quarter. Adjusted EBITDA margin expanded
160 basis points in the second quarter of 2023 to 50.9% compared
with 49.3% in the prior quarter.
Second Quarter 2023 Compared with Second Quarter 2022
Revenue for the three months ended June 30, 2023, declined 5.5%
to $204.2 million, compared with $216.0 million in the same quarter
of 2022 as a result of lower average AUM over the comparable
period.
Operating expenses increased 20.7% to $116.7 million, compared
with $96.7 million in last year’s second quarter due to a non-cash
$28.1 million difference in amounts recorded to the change in the
fair value of consideration payable for acquisitions, partially
offset by a reduction in compensation expense as well as
distribution and other asset-based expenses. GAAP operating margin
contracted 1,230 basis points to 42.9% in the second quarter, from
55.2% in the same quarter of 2022. GAAP net income declined 28.5%
to $56.7 million, or $0.83 per diluted share, in the second quarter
compared with $79.2 million, or $1.09 per diluted share, in the
same quarter of 2022.
Adjusted net income with tax benefit decreased 5.9% to $75.9
million, or $1.11 per diluted share, in the second quarter,
compared with $80.7 million, or $1.11 per diluted share in the same
quarter last year. Adjusted EBITDA decreased 2.0% to $104.0
million, compared with $106.2 million in last year’s same quarter.
Year-over-year, adjusted EBITDA margin expanded 170 basis points to
50.9% in the second quarter of 2023, compared with 49.2% in the
same quarter last year.
Six Months Ended June 30, 2023 Compared with Six Months Ended
June 30, 2022
Revenue for the six months ended June 30, 2023, decreased 9.1%
to $405.5 million, compared with $446.0 million in the same period
of 2022. The decrease was primarily due to lower average AUM.
Operating expenses increased 8.1% to $243.5 million for the six
months ended June 30, 2023, compared with $225.2 million in the
same period in 2022 due to a non-cash $39.0 million difference in
amounts recorded to the change in the fair value of consideration
payable for acquisitions, partially offsetting was a decrease in
variable expenses including compensation, distribution and other
asset-based expenses. GAAP operating margin was 40.0% for the six
months ended June 30, 2023, a 950 basis point decrease from the
49.5% recorded in the same period in 2022. GAAP net income
decreased 29.6% to $105.9 million, or $1.53 per diluted share, in
the first six months of 2023 compared with $150.5 million, or $2.05
per diluted share, in the same period in 2022.
Adjusted net income with tax benefit decreased 11.7% to $151.1
million, or $2.19 per diluted share, in the first six months of
2023, compared with $171.1 million, or $2.34 per diluted share in
the same period in 2022. For the six months ended June 30, 2023,
adjusted EBITDA declined 7.9% to $203.2 million, compared with
$220.6 million for the same period in 2022. Year-over-year,
adjusted EBITDA margin expanded 60 basis points to 50.1% in the
first six months of 2023, compared with 49.5% in the same period
last year.
Balance Sheet / Capital Management
The total debt outstanding as of June 30, 2023 was approximately
$1,002 million and consisted of an existing term loan balance of
$631 million and the 2021 Incremental Term Loans balance of $371
million.
During the second quarter, the Company repurchased 1.4 million
shares under its current share repurchase program and net settled
0.1 million shares.
The Company’s Board of Directors approved a regular quarterly
cash dividend of $0.32 per share. The dividend is payable on
September 25, 2023, to shareholders of record on September 11,
2023.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call tomorrow morning, August
4, 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 $161.6 billion in assets under management as of June 30, 2023.
It was ranked No. 55 on the Fortune 100 Fastest-Growing Companies
list for 2022 and is one of only 24 companies to make the list for
the second consecutive year. 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 12 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 nationwide and investment professionals in the U.S. and
abroad. To learn more please visit www.vcm.com or follow Victory
Capital on Twitter and LinkedIn.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. 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. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond Victory Capital’s
control such as the conflict in Ukraine and its effect on our
business, operations and financial results going forward, as
discussed in Victory Capital’s filings with the SEC, that could
cause Victory Capital’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: 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; the Company’s status as an emerging growth company
and a controlled company; 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.
From Fortune. © 2022 Fortune Media IP Limited All rights
reserved. Fortune is a registered trademark of Fortune Media IP
Limited and is used under license. Fortune and Fortune Media IP
Limited are not affiliated with, and do not endorse products or
services of, Victory Capital Holdings, Inc.
The Fortune annual list ranks the top performing, publicly
traded companies in revenues, profits and stock returns over the
three-year period ended April 30, 2022.
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 Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Revenue Investment management fees
$
159,410
$
156,836
$
168,129
$
316,246
$
347,594
Fund administration and distribution fees
44,816
44,484
47,877
89,300
98,431
Total revenue
204,226
201,320
216,006
405,546
446,025
Expenses
Personnel compensation and benefits
54,940
57,602
57,582
112,542
122,483
Distribution and other asset-based expenses
37,344
37,654
40,868
74,998
84,452
General and administrative
13,250
12,388
13,921
25,638
26,683
Depreciation and amortization
9,650
11,680
10,758
21,330
21,365
Change in value of consideration payable for acquisition of
business
1,500
7,400
(26,600
)
8,900
(30,100
)
Acquisition-related costs
16
2
143
18
260
Restructuring and integration costs
—
29
8
29
17
Total operating expenses
116,700
126,755
96,680
243,455
225,160
Income from operations
87,526
74,565
119,326
162,091
220,865
Operating margin
42.9
%
37.0
%
55.2
%
40.0
%
49.5
%
Other income (expense)
Interest income and other income (expense)
1,971
1,544
(3,443
)
3,515
(3,650
)
Interest expense and other financing costs
(14,902
)
(14,239
)
(9,925
)
(29,141
)
(19,158
)
Loss on debt extinguishment
—
—
(963
)
—
(2,518
)
Total other income (expense), net
(12,931
)
(12,695
)
(14,331
)
(25,626
)
(25,326
)
Income before income taxes
74,595
61,870
104,995
136,465
195,539
Income tax expense
(17,924
)
(12,597
)
(25,790
)
(30,521
)
(45,061
)
Net income
$
56,671
$
49,273
$
79,205
$
105,944
$
150,478
Earnings per share of common stock
Basic
$
0.85
$
0.73
$
1.16
$
1.58
$
2.19
Diluted
0.83
0.71
1.09
1.53
2.05
Weighted average number of shares outstanding
Basic
66,466
67,288
68,521
66,874
68,633
Diluted
68,500
69,727
72,867
69,037
73,265
Dividends declared per share
$
0.32
$
0.32
$
0.25
$
0.64
$
0.50
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 Six Months
Ended
June 30,
March 31,
June 30,
June 30,
June 30,
2023
2023
2022
2023
2022
Net income (GAAP)
$
56,671
$
49,273
$
79,205
$
105,944
$
150,478
Income tax expense
(17,924
)
(12,597
)
(25,790
)
(30,521
)
(45,061
)
Income before income taxes
$
74,595
$
61,870
$
104,995
$
136,465
$
195,539
Interest expense
14,146
13,482
9,499
27,628
18,223
Depreciation
2,296
1,971
2,102
4,267
4,056
Other business taxes
382
384
541
766
1,131
Amortization of acquisition-related intangible assets
7,353
9,709
8,656
17,062
17,312
Stock-based compensation
1,538
2,004
2,860
3,542
5,493
Acquisition, restructuring and exit costs
2,949
8,984
(24,033
)
11,933
(24,877
)
Debt issuance costs
756
748
1,560
1,504
3,621
Losses from equity method investments
—
—
9
—
66
Adjusted EBITDA
$
104,015
$
99,152
$
106,189
$
203,167
$
220,564
Adjusted EBITDA margin
50.9
%
49.3
%
49.2
%
50.1
%
49.5
%
Net income (GAAP)
$
56,671
$
49,273
$
79,205
$
105,944
$
150,478
Adjustment to reflect the operating performance of the Company
Other business taxes
382
384
541
766
1,131
Amortization of acquisition-related intangible assets
7,353
9,709
8,656
17,062
17,312
Stock-based compensation
1,538
2,004
2,860
3,542
5,493
Acquisition, restructuring and exit costs
2,949
8,984
(24,033
)
11,933
(24,877
)
Debt issuance costs
756
748
1,560
1,504
3,621
Tax effect of above adjustments
(3,244
)
(5,457
)
2,604
(8,701
)
(670
)
Adjusted net income
$
66,405
$
65,645
$
71,393
$
132,050
$
152,488
Adjusted net income per diluted share
$
0.97
$
0.94
$
0.98
$
1.91
$
2.08
Tax benefit of goodwill and acquired intangible assets
$
9,537
$
9,524
$
9,327
$
19,061
$
18,649
Tax benefit of goodwill and acquired intangible assets per
diluted share
$
0.14
$
0.14
$
0.13
$
0.28
$
0.25
Adjusted net income with tax benefit
$
75,942
$
75,169
$
80,720
$
151,111
$
171,137
Adjusted net income with tax benefit per diluted share
$
1.11
$
1.08
$
1.11
$
2.19
$
2.34
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)
June 30, 2023 December 31, 2022 Assets Cash
and cash equivalents
$
43,780
$
38,171
Receivables
92,964
84,473
Prepaid expenses
7,028
8,443
Investments, at fair value
29,991
27,266
Property and equipment, net
22,485
21,146
Goodwill
981,805
981,805
Other intangible assets, net
1,297,574
1,314,637
Other assets
62,794
64,958
Total assets
$
2,538,421
$
2,540,899
Liabilities and stockholders' equity
Accounts payable and accrued expenses
$
57,438
$
50,862
Accrued compensation and benefits
46,177
58,458
Consideration payable for acquisition of business
239,300
230,400
Deferred tax liability, net
119,757
108,138
Other liabilities
42,272
42,117
Long-term debt, net1
987,376
985,514
Total liabilities
1,492,320
1,475,489
Stockholders' equity
Common stock, $0.01 par value per share:2023 - 600,000,000 shares
authorized, 81,725,730 shares issued and 65,618,689 shares
outstanding; 2022 - 600,000,000 shares authorized, 80,528,137
shares issued and 67,325,534 shares outstanding
817
805
Additional paid-in capital
717,208
705,466
Treasury stock, at cost: 2023 - 16,107,041 shares; 2022 -
13,202,603 shares
(377,670
)
(285,425
)
Accumulated other comprehensive income
34,287
35,442
Retained earnings
671,459
609,122
Total stockholders' equity
1,046,101
1,065,410
Total liabilities and stockholders' equity
$
2,538,421
$
2,540,899
1 Balances at June 30, 2023 and December
31, 2022 are shown net of unamortized loan discount and debt
issuance costs in the amount of $14.3 million and $16.2 million,
respectively. The gross amount of the debt outstanding was $1,001.7
million as of June 30, 2023 and December 31, 2022,
respectively.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under
Management
(unaudited; in millions except
for percentages)
For the Three Months Ended % Change from
June 30,
March 31,
June 30,
March 31,
June 30,
2023
2023
2022
2023
2022
Beginning assets under management
$
158,621
$
152,952
$
178,098
4%
-11%
Gross client cash inflows
5,822
6,089
9,321
-4%
-38%
Gross client cash outflows
(8,244
)
(7,333
)
(10,005
)
12%
-18%
Net client cash flows
(2,422
)
(1,244
)
(683
)
95%
255%
Market appreciation (depreciation)
5,537
6,914
(21,670
)
-20%
N/A
Realizations and distributions
(73
)
—
—
N/A
N/A
Acquired assets / Net transfers
(41
)
—
(797
)
N/A
-95%
Ending assets under management
161,622
158,621
154,947
2%
4%
Average assets under management
157,372
157,817
165,703
0%
-5%
For the Six Months Ended
% Change from
June 30,
June 30,
June 30,
2023
2022
2022
Beginning assets under management
$
152,952
$
183,654
-17%
Gross client cash inflows
11,911
20,457
-42%
Gross client cash outflows
(15,577
)
(18,150
)
-14%
Net client cash flows
(3,667
)
2,307
N/A
Market appreciation (depreciation)
12,451
(29,921
)
N/A
Realizations and distributions
(73
)
(30
)
143%
Acquired assets / Net transfers
(42
)
(1,064
)
-96%
Ending assets under management
161,622
154,947
4%
Average assets under management
157,595
171,283
-8%
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Three Months Ended By Asset Class U.S.
Mid U.S. Small Fixed U.S. Large
Global /
Non-U.S.
Alternative Total Money Market/ Cap
Equity Cap Equity Income Cap Equity
Equity Solutions Investments Long-term
Short-term Total June 30, 2023 Beginning
assets under management
$
29,035
$
15,648
$
26,535
$
11,425
$
14,868
$
54,416
$
3,317
$
155,244
$
3,377
$
158,621
Gross client cash inflows
1,259
743
873
87
559
1,622
449
5,591
231
5,822
Gross client cash outflows
(1,126
)
(1,128
)
(1,324
)
(290
)
(585
)
(2,834
)
(408
)
(7,697
)
(547
)
(8,244
)
Net client cash flows
132
(386
)
(451
)
(204
)
(26
)
(1,212
)
41
(2,106
)
(316
)
(2,422
)
Market appreciation (depreciation)
824
404
48
954
575
2,682
12
5,499
38
5,537
Realizations and distributions
—
—
—
—
—
—
(73
)
(73
)
—
(73
)
Acquired assets / Net transfers
16
(2
)
(34
)
(4
)
(25
)
(49
)
4
(94
)
53
(41
)
Ending assets under management
$
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
55,836
$
3,301
$
158,469
$
3,152
$
161,622
March 31, 2023
Beginning assets under management
$
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
51,507
$
3,663
$
149,649
$
3,302
$
152,952
Gross client cash inflows
1,600
986
1,187
84
378
1,217
397
5,848
241
6,089
Gross client cash outflows
(1,092
)
(873
)
(1,571
)
(384
)
(544
)
(1,778
)
(840
)
(7,083
)
(250
)
(7,333
)
Net client cash flows
508
113
(385
)
(300
)
(166
)
(561
)
(444
)
(1,235
)
(9
)
(1,244
)
Market appreciation (depreciation)
637
423
615
822
920
3,366
96
6,880
34
6,914
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(1
)
9
(48
)
(69
)
(46
)
104
2
(50
)
50
—
Ending assets under management
$
29,035
$
15,648
$
26,535
$
11,425
$
14,868
$
54,416
$
3,317
$
155,244
$
3,377
$
158,621
June 30, 2022
Beginning assets under management
$
30,543
$
18,489
$
33,071
$
14,548
$
15,654
$
58,656
$
4,025
$
174,985
$
3,113
$
178,098
Gross client cash inflows
1,476
701
1,455
126
1,140
2,249
2,051
9,198
123
9,321
Gross client cash outflows
(1,649
)
(1,791
)
(2,743
)
(396
)
(1,090
)
(1,761
)
(397
)
(9,828
)
(177
)
(10,005
)
Net client cash flows
(174
)
(1,090
)
(1,288
)
(270
)
50
488
1,654
(630
)
(53
)
(683
)
Market appreciation (depreciation)
(4,011
)
(2,558
)
(1,575
)
(2,365
)
(2,437
)
(8,652
)
(70
)
(21,669
)
(2
)
(21,670
)
Realizations and distributions
—
—
—
—
—
—
—
—
—
—
Acquired assets / Net transfers
(2
)
(4
)
(809
)
(56
)
(10
)
(7
)
9
(879
)
82
(797
)
Ending assets under management
$
26,356
$
14,837
$
29,398
$
11,857
$
13,257
$
50,485
$
5,617
$
151,807
$
3,140
$
154,947
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Asset Class
(unaudited; in
millions)
For the Six Months Ended By Asset Class U.S.
Mid U.S. Small Fixed U.S. Large
Global /
Non-U.S.
Alternative Total Money Market/ Cap
Equity Cap Equity Income Cap Equity
Equity Solutions Investments Long-term
Short-term Total June 30, 2023 Beginning
assets under management
$
27,892
$
15,103
$
26,353
$
10,973
$
14,160
$
51,507
$
3,663
$
149,649
$
3,302
$
152,952
Gross client cash inflows
2,858
1,728
2,060
170
937
2,839
846
11,439
472
11,911
Gross client cash outflows
(2,219
)
(2,001
)
(2,896
)
(675
)
(1,129
)
(4,612
)
(1,248
)
(14,780
)
(797
)
(15,577
)
Net client cash flows
640
(273
)
(836
)
(504
)
(192
)
(1,774
)
(403
)
(3,341
)
(325
)
(3,667
)
Market appreciation (depreciation)
1,461
827
663
1,775
1,495
6,048
108
12,379
72
12,451
Realizations and distributions
—
—
—
—
(73
)
(73
)
—
(73
)
Acquired assets / Net transfers
15
7
(82
)
(74
)
(71
)
55
6
(144
)
103
(42
)
Ending assets under management
$
30,007
$
15,664
$
26,098
$
12,170
$
15,392
$
55,836
$
3,301
$
158,469
$
3,152
$
161,622
June 30, 2022
Beginning assets under management
$
30,578
$
20,094
$
35,154
$
15,766
$
16,050
$
60,364
$
2,548
$
180,554
$
3,100
$
183,654
Gross client cash inflows
3,909
1,819
3,060
251
2,382
5,051
3,739
20,210
247
20,457
Gross client cash outflows
(3,484
)
(3,143
)
(4,893
)
(779
)
(1,708
)
(3,236
)
(554
)
(17,797
)
(353
)
(18,150
)
Net client cash flows
425
(1,325
)
(1,833
)
(528
)
673
1,815
3,185
2,413
(106
)
2,307
Market appreciation (depreciation)
(4,666
)
(3,939
)
(3,116
)
(3,449
)
(3,533
)
(11,122
)
(98
)
(29,923
)
3
(29,921
)
Realizations and distributions
—
—
—
—
—
—
(30
)
(30
)
—
(30
)
Acquired assets / Net transfers
19
7
(806
)
68
67
(572
)
12
(1,206
)
143
(1,064
)
Ending assets under management
$
26,356
$
14,837
$
29,398
$
11,857
$
13,257
$
50,485
$
5,617
$
151,807
$
3,140
$
154,947
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Three Months
Ended
By Vehicle Separate Accounts and Mutual
Other Pooled Funds(1) ETFs(2)
Vehicles(3) Total June 30, 2023 Beginning
assets under management
$
103,246
$
5,555
$
49,819
$
158,621
Gross client cash inflows
3,639
175
2,008
5,822
Gross client cash outflows
(4,863
)
(421
)
(2,960
)
(8,244
)
Net client cash flows
(1,224
)
(246
)
(952
)
(2,422
)
Market appreciation (depreciation)
3,923
(117
)
1,731
5,537
Realizations and distributions
—
—
(73
)
(73
)
Acquired assets / Net transfers
(28
)
—
(13
)
(41
)
Ending assets under management
$
105,916
$
5,193
$
50,513
$
161,622
March 31, 2023
Beginning assets under management
$
99,447
$
5,627
$
47,877
$
152,952
Gross client cash inflows
4,546
218
1,325
6,089
Gross client cash outflows
(5,406
)
(233
)
(1,694
)
(7,333
)
Net client cash flows
(860
)
(16
)
(369
)
(1,244
)
Market appreciation (depreciation)
4,650
(47
)
2,311
6,914
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
9
(9
)
—
—
Ending assets under management
$
103,246
$
5,555
$
49,819
$
158,621
June 30, 2022
Beginning assets under management
$
118,119
$
5,246
$
54,733
$
178,098
Gross client cash inflows
6,114
608
2,600
9,321
Gross client cash outflows
(7,678
)
(130
)
(2,196
)
(10,005
)
Net client cash flows
(1,565
)
478
404
(683
)
Market appreciation (depreciation)
(13,457
)
(568
)
(7,645
)
(21,670
)
Realizations and distributions
—
—
—
—
Acquired assets / Net transfers
(800
)
—
2
(797
)
Ending assets under management
$
102,297
$
5,155
$
47,494
$
154,947
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.
Victory Capital Holdings, Inc.
and Subsidiaries
Assets Under Management by
Vehicle
(unaudited; in
millions)
For the Six Months Ended By Vehicle Separate
Accounts Mutual and Other Funds(1)
ETFs(2) Vehicles(3) Total June 30, 2023
Beginning assets under management
$
99,447
$
5,627
$
47,877
$
152,952
Gross client cash inflows
8,185
393
3,333
11,911
Gross client cash outflows
(10,269
)
(655
)
(4,654
)
(15,577
)
Net client cash flows
(2,084
)
(262
)
(1,321
)
(3,667
)
Market appreciation (depreciation)
8,573
(164
)
4,042
12,451
Realizations and distributions
—
—
(73
)
(73
)
Acquired assets / Net transfers
(19
)
(9
)
(13
)
(42
)
Ending assets under management
$
105,916
$
5,193
$
50,513
$
161,622
June 30, 2022
Beginning assets under management
$
124,142
$
4,871
$
54,641
$
183,654
Gross client cash inflows
12,704
1,151
6,603
20,457
Gross client cash outflows
(14,061
)
(199
)
(3,890
)
(18,150
)
Net client cash flows
(1,357
)
952
2,712
2,307
Market appreciation (depreciation)
(19,421
)
(667
)
(9,832
)
(29,921
)
Realizations and distributions
—
—
(30
)
(30
)
Acquired assets / Net transfers
(1,066
)
—
2
(1,064
)
Ending assets under management
$
102,297
$
5,155
$
47,494
$
154,947
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.
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/20230803615782/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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