Sign in

You're signed outSign in or to get full access.

AA

Acadian Asset Management Inc. (AAMI)·Q2 2025 Earnings Summary

Executive Summary

  • Record net client cash flows of $13.8B (11% of BOP AUM) and AUM of $151.1B, the highest in firm history .
  • Revenue rose 16.9% YoY to $127.4M and ENI EPS rose 42% YoY to $0.64; GAAP diluted EPS declined 3% YoY to $0.28 due to higher non-cash equity plan revaluation expenses .
  • Revenue and ENI EPS beat Wall Street consensus for Q2: revenue $127.4M vs $117.6M and ENI EPS $0.64 vs $0.53; Q1 also beat revenue and ENI EPS consensus; coverage is thin (1–2 estimates) (Values retrieved from S&P Global).
  • Management reiterated expense discipline and set FY25 ranges: ENI Operating Expense Ratio ~45–47% and Variable Compensation Ratio ~43–47%; expects revolver paid down by year-end; declared a $0.01 quarterly dividend .

What Went Well and What Went Wrong

What Went Well

  • Record NCCF of $13.8B, driven by a large enhanced equity mandate and strong global equity inflows; six consecutive positive net flow quarters .
  • ENI operating margin expanded 360 bps YoY to 30.7% on improved operating leverage; Adjusted EBITDA up 22% YoY to $39.1M .
  • Management emphasized strong long-term alpha and client diversification: “Acadian achieved a significant milestone… record $13.8 billion of net client cash flows… $151.1 billion of AUM” ; “95% of strategies by revenue are outperforming benchmarks over five-year periods” .

What Went Wrong

  • GAAP diluted EPS down 3% YoY to $0.28 and GAAP operating margin compressed to 12.7% due to higher compensation expense tied to equity plan liability revaluation .
  • Performance fees fell 7% YoY ($2.6M vs $2.8M), and ENI management fee rate declined 2 bps YoY (39→37) as mix shifted toward enhanced mandates .
  • CFO flagged fee-rate variability near term given “lumpy” pipeline mix; management cautioned Q2 NCCF was outsized and not necessarily repeatable .

Financial Results

Quarterly Trend (GAAP and ENI)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$167.8*$119.9*$127.4
GAAP Diluted EPS ($)$1.13*$0.54*$0.28
ENI EPS ($)$1.30 $0.54 $0.64

*Values retrieved from S&P Global.

YoY Comparison (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$109.0 $127.4
GAAP Diluted EPS ($)$0.29 $0.28
GAAP Operating Margin (%)18.9% 12.7%
ENI Revenue ($USD Millions)$108.3 $124.9
ENI Operating Margin (%)27.1% 30.7%
Adjusted EBITDA ($USD Millions)$32.0 $39.1

Actuals vs Wall Street Consensus

MetricQ1 2025Q2 2025
Revenue Actual ($USD Millions)$119.9$127.4
Revenue Consensus Mean ($USD Millions)$113.3$117.6
OutcomeBeatBeat
ENI EPS Actual ($)$0.54$0.64
ENI EPS Consensus Mean ($)$0.493$0.53
OutcomeBeatBeat
EPS # of Estimates32
Revenue # of Estimates11

Values retrieved from S&P Global.

Segment and Fee Composition

MetricQ2 2024Q2 2025
ENI Revenue ($USD Millions)$108.3 $124.9
Management Fees ($USD Millions)$105.5 $122.3
Performance Fees ($USD Millions)$2.8 $2.6
ENI Mgmt Fee Rate (bps)39 37

KPIs

KPIQ2 2025
Net Client Cash Flows (NCCF) ($USD Billions)$13.8
End-of-Period AUM ($USD Billions)$151.1
Average AUM ($USD Billions)$132.4
Share Repurchases (Shares, $USD Millions)0.9M; $23.6
Cash and Cash Equivalents ($USD Millions)$90.2
Revolving Credit Facility Outstanding ($USD Millions)$20.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ENI Operating Expense Ratio (%)FY 2025Unspecified (maintained outlook) ~45–47% Maintained/Clarified
Variable Compensation Ratio (%)FY 2025Unspecified (maintained outlook) ~43–47% Maintained/Clarified
Acadian LLC Key Employee Distribution Ratio (%)FY 2025N/A~9–10%New
Revolving Credit FacilityFY 2025N/AExpected paid down by year-end Maintained
Dividend per Share ($)Q3 2025 PayableN/A$0.01 payable 9/26/2025; record 9/12/2025 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Enhanced Equity/Product MixEnhanced and extensions highlighted as key growth initiatives; robust pipeline Majority of Q2 gross sales driven by enhanced mandates; one outsized new account Up
Operating Leverage/Expense DisciplineEmphasis on scalability; expense ratios monitored ENI OpEx Ratio down 420 bps YoY to 44.6%; FY25 OpEx 45–47% target reiterated Improving
Distribution Platform/GlobalizationStrong consultant ties; 40 countries; increasing non-U.S. AUM % Non-U.S. client AUM mix rose from 37% in Q1 to 43% in Q2 Up
Fee Rate DynamicsBlended fee ~38 bps; mix effects noted ENI mgmt fee rate dipped 2 bps YoY; CFO notes “lumpy” mix across pipeline Mixed
Capital ManagementBuybacks, low leverage, dividend instituted; refinancing senior notes contemplated $23.6M buybacks Q2; $0.01 dividend; revolver to be paid down by year-end Steady
Market/MacroDollar weakening driving non-U.S./EM returns; volatility in early Q2 Turbulent start then recovery; diversification benefits outside U.S. Ongoing volatility

Management Commentary

  • “Acadian achieved a significant milestone… with a record $13.8 billion of net client cash flows, and $151.1 billion of AUM… highest in the firm’s nearly 40 year history.” — Kelly Young .
  • “Q2’25 ENI EPS up 42%… Operating Expense Ratio fell 420 bps to 44.6%… We expect FY 2025 OpEx ~45–47% and Variable Comp ~43–47%.” — Scott Hynes .
  • “The pipeline continues to look very robust… enhanced and extension strategies being key themes… diversified by strategy, channel, and geography.” — Kelly Young .
  • “We’re committed to returning excess capital… while maintaining a durable and resilient balance sheet.” — Scott Hynes .

Q&A Highlights

  • Pipeline composition and breadth: Enhanced equity and global core were primary drivers; one large non-U.S. account diversified client base; management does not expect Q2-level NCCF to repeat each quarter .
  • Capital returns: Ongoing commitment to buybacks balanced against resilience; board declared $0.01 dividend; revolver expected to be paid down by year-end .
  • Operating leverage: Focus on reducing OpEx ratio toward 45–47% in FY25; margin scalability emphasized as AUM grows .
  • Fee rate outlook: Mix-sensitive and “lumpy”; enhanced strategies carry lower fees, while extensions/small cap can be higher; overall dynamic near term .
  • New channels/vehicles: Interest in wealth/sub-advisory and vehicle expansion (e.g., CITs) to tap defined contribution flows .

Estimates Context

  • Q2 2025 revenue beat by $9.8M ($127.4M actual vs $117.6M consensus); ENI EPS beat by $0.11 ($0.64 vs $0.53). Q1 also beat revenue and ENI EPS (Values retrieved from S&P Global).
  • Estimate breadth is limited (1 revenue estimate; 2 EPS estimates for Q2), suggesting potential for estimate volatility (Values retrieved from S&P Global).
  • Given strong NCCF and margin leverage, Street models likely need to reflect higher management fee base and improved ENI operating margin trajectory (Values retrieved from S&P Global).

Key Takeaways for Investors

  • Strong organic growth and AUM momentum: Record NCCF and AUM should support sustained management fee growth into H2’25 .
  • Quality beat on revenue and ENI EPS with disciplined expense control, despite GAAP margin compression from non-cash equity plan revaluations .
  • Mix dynamics matter: Enhanced equity growth can pressure fee rates, but scalability and extensions/small cap contributions can offset; monitor fee-rate trend each quarter .
  • Capital deployment remains shareholder-friendly: Continued buybacks, nominal dividend, and balance sheet flexibility (low net leverage; revolver paydown) .
  • Watch pipeline breadth and non-U.S. traction: Diversification by geography and product supports resilience; non-U.S. client AUM mix rising .
  • For trading: Near-term catalysts include continued net flow wins, fee-rate trend clarity, and confirmation of OpEx/VC ratios within guided ranges; any repeat of outsized enhanced mandates would be a positive surprise .
  • Medium term: Strategic initiatives in extensions and credit, plus vehicle/channel expansion, can broaden revenue sources and support margin scalability .