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ALLIANCEBERNSTEIN HOLDING L.P. (AB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was resilient: all three channels posted organic growth (+$2.4B net inflows), adjusted EPU rose 10% YoY to $0.80, and adjusted operating margin expanded 340 bps YoY to 33.7% despite lower performance fees sequentially .
  • Versus S&P Global consensus, AB delivered a small EPS beat (Adj. EPU $0.80 vs $0.78*) but a modest revenue miss (Adj. Net Revenues $0.84B vs $0.86B*), reflecting lighter performance fees and market depreciation late in the quarter (especially in equities) .
  • Management raised 2025 full‑year performance fee outlook to $90–$105M from $70–$75M, kept 2025 baseline adjusted margin at ~33%, maintained 48.5% comp ratio accrual, and reiterated non‑comp OPEX guidance of $600–$625M (expense discipline flagged if markets deteriorate) .
  • Flows were driven by private alternatives deployments (+$4.2B alts/MAS net inflows) and continued muni SMA strength (+$2.4B tax‑exempt FI inflows), while overseas taxable FI saw outflows amid rate volatility; pipeline AUM rose to $13.5B, a 7‑quarter high .

What Went Well and What Went Wrong

What Went Well

  • Broad-based organic growth and pipeline: “all three…distribution channels grew organically” with $2.7B active net inflows; institutional pipeline increased to $13.5B .
  • Operating leverage and margin: Adjusted operating margin rose to 33.7% (+340 bps YoY) aided by BRS deconsolidation, relocation savings, and lower promo/G&A; adjusted operating income +6% YoY .
  • Strategic alternatives momentum and Equitable leverage: “over $2.5B of institutional deployments into our private markets platform,” with nearly 40% of Equitable’s second $10B deployed; target $90–$100B private markets AUM by 2027 reiterated .

What Went Wrong

  • Sequential step-down in revenue/profitability: Adjusted net revenues fell 14% QoQ to $0.84B; adjusted operating income down 20% QoQ as Q4 performance fees seasonality rolled off .
  • Market-driven headwinds in equities and taxable FI: Late‑quarter equity drawdown pressured base fees and fee rate; overseas taxable FI outflows persisted amid rates volatility .
  • One-time GAAP noise: GAAP G&A rose YoY due to a $20.8M retirement plan settlement loss and absence of a prior‑year $20.8M grant, dampening GAAP comparisons .

Financial Results

Headline results (actuals)

MetricQ3 2024Q4 2024Q1 2025
Adjusted Net Revenues ($USD Millions)$845.1 $973.3 $838.2
Adjusted Operating Income ($USD Millions)$264.2 $354.4 $282.7
Adjusted Operating Margin (%)31.3% 36.4% 33.7%
Adjusted EPU ($)$0.77 $1.05 $0.80
GAAP Net Revenues ($USD Millions)$1,085.5 $1,257.6 $1,080.6
GAAP Operating Income ($USD Millions)$365.3 $317.5 $236.4
GAAP Operating Margin (%)33.2% 25.0% 21.8%
Distribution per Unit ($)$0.77 $1.05 $0.80

Actual vs S&P Global consensus (EPS and Adjusted Net Revenues)

PeriodAdj. EPU (Actual)EPS Consensus*Adj. Net Revenues (Actual, $M)Revenue Consensus* ($M)Beat/Miss
Q3 2024$0.77 $0.722*845.1 840.3*Beat EPS, Beat Rev
Q4 2024$1.05 $0.858*973.3 895.7*Beat EPS, Beat Rev
Q1 2025$0.80 $0.777*838.2 857.3*Beat EPS, Miss Rev

Values marked with * are from S&P Global consensus via GetEstimates. Values retrieved from S&P Global.

Revenue mix (GAAP, $USD thousands)

Revenue lineQ1 2024Q4 2024Q1 2025
Base fees754,239 829,296 817,866
Performance fees30,166 168,725 37,246
Distribution revenues165,690 198,859 199,020
Dividends and interest44,515 37,872 34,350
Investments (losses) gains11,743 1,912 (20,538)
Other revenues25,293 38,662 30,180
Total net revenues1,104,151 1,257,556 1,080,607

KPIs and flows

KPIQ3 2024Q4 2024Q1 2025
Ending AUM ($B)$805.9 $792.2 $784.5
Average AUM ($B)$785.9 $801.0 $797.5
Total Net Flows ($B)$1.1 $(4.8) $2.4
Active vs Passive Net Flows ($B)Active +2.2; Passive −1.1 Active −3.0; Passive −1.8 Active +2.7; Passive −0.3
Performance Fees ($M, GAAP)$28.8 $168.7 $37.2
Base fee rate (bps)—39.8 (Q4 level) 39.5 (Q1)
Pipeline AUM ($B)$10.1 (9/30/24) $10.7 (12/31/24) $13.5 (3/31/25)
Unit repurchases (3 mo.)——0.8mm units; $30.5M cash

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted operating margin (baseline)FY 2025~33% baseline (issued at Q3 call; reiterated Q4) ~33% baseline; downside if markets weaken Maintained
Non‑comp OPEXFY 2025$600–$625M $600–$625M; tracking better in Q1; discipline if markets deteriorate Maintained (tone more cautious)
Compensation ratio (adjusted)FY 2025Accrue at 48.5% starting Q1’25 Continue at 48.5% into Q2’25; may adjust in H2 Maintained
Performance fees (total)FY 2025$70–$75M recurring (private) baseline Revised total outlook to $90–$105M (public alpha in Q1 adds $19–$20M) Raised
Effective tax rate (ABLP)FY 20256%–7% 6%–7% Maintained
Leverage2025Increase leverage to fund Ruby Re sidecar, opportunistic growth Intend to increase leverage during year Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Performance fees outlookFY’24 total $227M; guided $70–$75M recurring for FY’25 (private) Raised FY’25 total to $90–$105M on public alpha; private remains primary driver Improving
Fee rate durabilityQ4 firm-wide fee rate 39.8 bps; mix headwinds noted 39.5 bps in Q1; caution on mix from equity drawdown and FI mix Slight pressure
Fixed income re‑allocationRecord 2024 active FI inflows ($24.5B); constructive outlook +$1.0B active FI inflows; overseas taxable outflows offset by muni SMA strength Mixed: muni strong, overseas taxable soft
Private markets growthPrivate markets AUM $70B YE’24; target $90–$100B by 2027; Equitable collaboration accelerating ~$2.5B institutional deployments; nearly $14B of $20B Equitable commitment deployed Positive
Retail channel momentumSix straight quarters of organic growth into Q4’24; record sales Seventh straight quarter; $0.9B net inflows; gross $25.7B Positive
Institutional pipeline$10.1B (Q3) → $10.7B (Q4) $13.5B (Q1) Improving
Macro/tariffsQ4’24 noted rates volatility; macro divergence Heightened uncertainty; tariffs headlines; risk aversion More uncertain
Muni tax policy risk—Discussed potential caps/removal; base case no repeal; would cause one-time repricing if repealed Risk monitored

Management Commentary

  • “All three of our global distribution channels grew organically, totaling $2.7 billion active net inflows in the first quarter of 2025… Adjusted operating margin of 33.7% expanded by 340 bps” — Seth Bernstein, CEO .
  • “We have successfully deployed nearly 40% of Equitable's second $10 billion commitment… We remain on target to grow our private markets AUM to $90–$100 billion by 2027.” — Seth Bernstein .
  • “First quarter adjusted earnings of $0.80 per unit were up 10% versus prior year… We will continue to accrue at a 48.5% compensation to revenue ratio in the second quarter of 2025… Non‑comp expenses guided to $600–$625M for 2025.” — Tom Simeone, CFO .
  • “We’re revising our annual performance fee expectations to $90 million to $105 million, up from the prior projection of $70 million to $75 million.” — Tom Simeone .
  • “Retail taxable fixed income outflows in overseas markets… [but] strength of our tax‑exempt franchise in the U.S. and growing ETF franchise provide balance.” — Onur Erzan, Head of Global Client Group/Private Wealth .

Q&A Highlights

  • Retail taxable FI softness overseas; muni SMA strength persists: Overseas rate uncertainty drove taxable FI outflows, while U.S. muni tax‑exempt demand remained robust and ETFs expanded reach .
  • Muni tax exemption risk: Management’s base case is no repeal, though caps are possible; a repeal would cause a one‑time repricing, but muni remains core to client income needs .
  • Equitable relationship: AB remains operationally autonomous; no restrictions on EQH increasing stake; affiliation is strategic for private IG credit and insurance AUM growth .
  • Expense discipline and guidance: Non‑comp OPEX guide reaffirmed; ability to flex spend if revenue backdrop weakens; comp ratio accrual at 48.5% continues .
  • Performance fees outlook: Public markets performance in Q1 increased the 2025 PF outlook; private markets remain the dependable contribution; management does not forecast public PF .
  • Fee rate: Q1 fee rate 39.5 bps; ticked down late in quarter due to U.S. equity drawdown and FI mix; potential mix pressure noted .

Estimates Context

  • Q1 2025: Adj. EPU $0.80 vs $0.777* (beat); Adj. Net Revenues $838.2M vs $857.3M* (miss) .
  • Q4 2024: Adj. EPU $1.05 vs $0.858* (beat); Adj. Net Revenues $973.3M vs $895.7M* (beat) .
  • Q3 2024: Adj. EPU $0.77 vs $0.722* (beat); Adj. Net Revenues $845.1M vs $840.3M* (beat) . Values marked with * are S&P Global consensus via GetEstimates. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Healthy organic growth with broad participation (alts, tax‑exempt FI, retail) and a larger institutional pipeline ($13.5B) supports revenue visibility despite market volatility .
  • Mix/market headwinds likely cap near‑term fee rate; however, durable fee rate strategy and operating leverage (post‑BRS JV and relocation savings) underpin ~33% baseline margin for 2025 .
  • Upwardly revised 2025 performance fee outlook ($90–$105M) is a clear positive sentiment catalyst; private markets remain primary PF engine, with upside from public alpha if markets stabilize .
  • Muni SMA remains a secular growth engine; monitor U.S. legislative risk on muni tax treatment; base case is no repeal, but any change could cause temporary dislocation .
  • Insurance vertical is a durable growth vector; nearly $14B of Equitable’s $20B second commitment deployed; expect increased leverage to fund Ruby Re sidecar and related opportunities .
  • Distribution policy aligns unitholder returns with adjusted earnings ($0.80 distribution this quarter); continued buybacks (0.8mm units; $30.5M) offer capital return balance .
  • Near‑term trading: Watch mix/fee rate progression, monthly AUM prints, and any shifts in taxable FI flows; medium term, private markets AUM scaling and insurance mandates are central to the thesis .

Citations:

  • Q1 2025 8‑K 2.02 and press release details .
  • Q1 2025 call transcript .
  • Q4 2024 press release and call ; .
  • Q3 2024 press release .
  • Monthly AUM context .
  • S&P Global consensus via GetEstimates (see tables; values marked with *). Values retrieved from S&P Global.