Executive Summary

Q3 2025 delivered record management fees ($136.1M) and strong ENI EPS ($0.76), while GAAP diluted EPS declined YoY on higher non‑cash equity-plan revaluation expense .
Net inflows were $6.4B (4% of BOP AUM), the second-highest in firm history, taking AUM to a record $166.4B (+38% YoY) .
Against S&P Global consensus, ENI EPS modestly beat ($0.76 vs $0.757*), while revenue missed ($144.2M vs $147.0M*); expense guidance tightened and lowered for FY25, a constructive signal for operating leverage .
Capital actions: announced redemption of $275M 2026 notes, replacing with a $200M term loan and cash; leverage expected to fall to ~1.0x gross debt/Adj. EBITDA pro forma; a $0.01 dividend was declared (payable Dec 24, 2025) .
Near-term investor catalysts: continued organic flow momentum in Enhanced/Extension strategies, expense-ratio discipline, and deleveraging/interest savings from the refinancing .

What Went Well and What Went Wrong

What Went Well
- Record recurring revenue base: management fees rose 21% YoY to $136.1M on a 34% increase in average AUM; ENI operating margin expanded 157 bps to 33.2% .
- Flows and franchise momentum: Q3 NCCF of $6.4B (4% of BOP AUM) drove record AUM of $166.4B; 94–95% of strategies by revenue outperformed across 3/5/10-year periods, underpinning demand .
- Balance sheet optimization: announced redemption of $275M 2026 notes using a $200M term loan and cash; pro forma gross debt/Adj. EBITDA ~1.0x and net debt/Adj. EBITDA ~0.9x, enhancing flexibility .
What Went Wrong
- GAAP profit dilution from non‑cash items: GAAP diluted EPS fell to $0.42 (‑7% YoY) as compensation expense increased due to higher equity plan liability valuations; GAAP operating margin fell 349 bps YoY to 18.4% .
- Performance fees nearly vanished: performance fees dropped to $0.2M from $10.1M YoY, leaving the revenue mix more dependent on base fees .
- Fee-rate pressure: mix shift toward Enhanced strategies continued to pressure the blended fee rate, with management noting possible further basis-point decline near term as Enhanced flows materialize .

Financial Results

Headline financials (GAAP and management’s non‑GAAP) – oldest to newest:

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$123.1	$127.4	$144.2
GAAP Diluted EPS ($)	$0.45	$0.28	$0.42
ENI Diluted EPS ($)	$0.59	$0.64	$0.76
Adjusted EBITDA ($M)	$40.4	$39.1	$45.1
GAAP Operating Margin (%)	21.9%	12.7%	18.4%
ENI Operating Margin (%)	31.7%	30.7%	33.2%

Revenue mix:

Revenue Component ($M)	Q3 2024	Q2 2025	Q3 2025
Management fees	$112.1	$122.3	$136.1
Performance fees	$10.1	$2.6	$0.2
Consolidated Funds’ revenue	$0.9	$2.5	$7.9
Total revenue	$123.1	$127.4	$144.2

Key KPIs:

KPI	Q3 2024	Q2 2025	Q3 2025
Ending AUM ($B)	$120.3	$151.1	$166.4
NCCF ($B)	$0.5	$13.8	$6.4
ENI OpEx Ratio (% of Mgmt Fees)	48.1%	44.6%	43.3%
Variable Compensation Ratio (%)	43.3%	45.4%	41.5%
Diluted shares O/S (MM)	37.8	35.9	35.8

Vs. Wall Street (S&P Global) consensus:

Metric	Q3 2025 Actual	Q3 2025 Consensus
Revenue ($M)	$144.2	$147.0*
ENI EPS ($)	$0.76	$0.757*

Values with an asterisk (*) are retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ENI Operating Expense Ratio	FY 2025	~45%–47%	~44%–46%	Lowered/tightened
Variable Compensation Ratio	FY 2025	~43%–47%	~43%–45%	Tightened (lower high-end)
Acadian LLC Key Employee Distribution Ratio	FY 2025	n/a	~11%–12% (if markets at Q3 levels)	New disclosure
Dividend per share	Dec 24, 2025 payable	n/a	$0.01 declared	Maintained token dividend
Capital structure	Dec 1, 2025 expected	n/a	Redeem $275M 2026 Notes; fund with $200M term loan + cash	Deleveraging action

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025 & Q2 2025)	Current Period (Q3 2025)	Trend
Distribution & Pipeline	Robust, diversified by strategy/channel/geo	Pipeline “remains robust,” Enhanced/Extension still central; diverse by domicile	Sustained strength
Enhanced Equity demand & fee rates	Blended fee ~38 bps near-term; Enhanced lower fee but growing	Ongoing Enhanced traction; potential further 1 bp fee-rate pressure near term	Continued growth with mild fee compression
Extension strategies	Focus area; part of flows	Increasing US-led interest; growing alongside Enhanced	Building
Systematic Credit	Early-stage build; focus on scalability	Team of ~12, multi-strategy HY/IG; needs 3-year track records for broader adoption	Medium-term growth optionality
Regional demand	More non‑U.S./international interest emerging	Pickup in international; pockets of EM interest returning	Rising ex‑US allocations
Operating leverage	FY25 OpEx ratio 45–47% outlook	Tightened to 44–46%; ENI op margin +157 bps YoY	Positive leverage
Capital management	Buybacks active; modest dividend	$275M notes redemption; $200M term loan; continued buybacks ($5M)	Deleveraging + returns

Management Commentary

“Acadian achieved another milestone…$6.4 billion of net client cash flows…$166.4 billion of AUM…record quarterly management fees of $136.1 million.” – Kelly Young, CEO .
“ENI EPS of $0.76…up 29%…driven by revenue growth from higher AUM and accretive share repurchases.” – Kelly Young .
“We noticed the redemption of…$275 million…Senior Notes…funded with a committed three-year bank term loan and balance sheet cash…pro forma gross debt to Adjusted EBITDA ~1x; net debt to Adjusted EBITDA ~0.9x.” – Scott Hynes, CFO .
“Q3 2025 ENI operating margin expanded 157 bps to 33.2%…Operating expense ratio fell 480 bps to 43.3%…2025 full-year Operating Expense Ratio expected ~44%–46%; VC Ratio ~43%–45%.” – Management .

Q&A Highlights

Pipeline composition: Continued robust, diversified pipeline with strong demand for Enhanced and Extension strategies across U.S. and non‑U.S. clients; approaching a ~50/50 U.S./non‑U.S. AUM split .
Fee-rate outlook: Mix shift toward Enhanced strategies has driven “direction of travel” toward mid‑30s bps; another bp of pressure is possible near term depending on mix .
Capital management: Management to remain “athletic” on buybacks while deleveraging; $200M term loan offers prepay flexibility with no fees, complementing upsized revolver .
Systematic Credit: Building capabilities (team led by Scott Richardson, multiple HY/IG strategies); expects stronger asset traction as track records reach 3 years .

Estimates Context

Q3 2025 ENI EPS modestly beat consensus ($0.76 actual vs $0.757 consensus*), while GAAP revenue missed ($144.2M actual vs $147.0M consensus*) .
Management’s tightening of FY25 OpEx and VC ratio guidance suggests positive estimate revisions to margins if AUM momentum persists and mix remains favorable .
Consensus target price stood at $49.0* around the quarter. Values with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

Revenue base is compounding on record AUM and strong organic flows; recurring management fees +21% YoY with ENI margin expansion (+157 bps) demonstrates operating leverage .
Mix shift to Enhanced/Extension drives durable flows but modest fee-rate compression; watch blended fee trajectory as Enhanced pipeline funds in Q4 .
Deleveraging via $275M notes redemption and $200M term loan should lower interest expense and support capital return flexibility (ongoing buybacks, token dividend) .
Near-term estimate changes likely center on margin guidance tightening (44–46% OpEx ratio; 43–45% VC ratio), partially offset by lower performance-fee assumptions .
Systematic Credit is a multi‑year call option; client adoption should accelerate as strategies hit 3‑year records .
Watch market style factors: management noted crowding in high‑beta/low‑quality stocks as a tactical headwind; normalization could favor Acadian’s quality‑oriented process .
Flow durability and international demand (rising non‑U.S. allocations) remain core drivers into 2026 .

Values with an asterisk (*) are retrieved from S&P Global. All other figures and statements are sourced from company filings and the Q3 2025 earnings call/transcript: .

Acadian Asset Management Inc. (AAMI)·Q3 2025 Earnings Summary