Executive Summary

Q2 2025 delivered resilient fundamentals: adjusted net revenues rose 2% YoY to $844.4M and adjusted operating margin expanded 150 bps to 32.3%, though sequential margin ticked down and firm-wide net flows turned negative amid April macro volatility .
Earnings vs estimates: adjusted EPU was $0.76 (vs S&P consensus $0.77*)—a slight miss—while adjusted net revenues modestly beat consensus at $844.4M vs $840.9M*; GAAP EPU was $0.64 .
Strategic positives: AUM reached a record $829.1B; the institutional pipeline surged to $21.9B; performance fee guidance was raised to $110–$130M for FY25; and non-comp expense guidance was tightened to $600–$620M .
Flows reset: firm-wide net outflows of $6.7B (vs $2.4B inflows in Q1) were led by retail active equity (-$3.7B) and taxable fixed income (-$2.4B), largely overseas; flows improved by June as macro stabilized .
Potential stock catalysts: raised performance-fee outlook, record AUM, and a robust $21.9B institutional pipeline (including $5B from RGA) offsetting near-term flow headwinds .

What Went Well and What Went Wrong

What Went Well

Record AUM and stronger pipeline: “assets under management reached a record high of $829 billion…pipeline AUM expanded to nearly $22 billion” .
Margin expansion YoY: adjusted operating margin rose to 32.3% (+150 bps YoY), with adjusted operating income up 7% YoY to $273M .
Performance fees and expense discipline: management raised FY25 total performance fees to $110–$130M and tightened FY25 non-comp expense guide to $600–$620M .
Quote: “We’re on track to deliver a 33% operating margin in 2025…two years ahead of schedule” .
Quote: “Our U.S. Investment grade systematic fixed income strategy…recently earning an A rating from a top consultant” .
Private markets momentum: fee-paying and fee-eligible private markets AUM reached $77B (+20% YoY), supporting longer-term margin and revenue durability .

What Went Wrong

Flows turned negative: firm-wide net outflows were $6.7B (vs +$2.4B in Q1 and +$0.9B YoY); retail active equity (-$3.7B) and taxable fixed income (-$2.4B) led declines, especially overseas .
Fee rate compression: firm-wide base fee rate decreased to 38.7 bps due to mix shift (lower-fee SMAs/ETFs/insurance/retirement grew while higher-fee retail equity saw outflows) .
Sequential margin/EPU down: adjusted operating margin fell to 32.3% from 33.7% in Q1 and adjusted EPU of $0.76 was down from $0.80 in Q1 2025 .
Analyst concern: macro/tariff/FX backdrop weighed on American Income and global HY demand; management acknowledged cyclicality and noted improvement by June .
GAAP EPU dropped YoY to $0.64 (from $0.99), reflecting non-operating drivers and last year’s non-operating gain .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025	Q2 2025 Consensus
Net Revenues (GAAP, $USD Thousands)	$1,027,943	$1,080,607	$1,088,907	—
Adjusted Net Revenues ($USD Thousands)	$825,833	$838,214	$844,434	$840,930 [Q2 2025]*
Operating Income (GAAP, $USD Thousands)	$199,289	$236,369	$222,094	—
Operating Margin (GAAP, %)	19.0%	21.8%	20.7%	—
Adjusted Operating Income ($USD Thousands)	$254,186	$282,748	$272,964	—
Adjusted Operating Margin (%)	30.8%	33.7%	32.3%	—
EPU (GAAP, $/Unit)	$0.99	$0.67	$0.64	—
Adjusted EPU ($/Unit)	$0.71	$0.80	$0.76	$0.774*

Notes: Consensus values marked with an asterisk are retrieved from S&P Global.
Consensus details: Revenue Consensus Mean Q2 2025 $840,930,500; Primary EPS Consensus Mean Q2 2025 $0.77367; Revenue - # of Estimates = 2; Primary EPS - # of Estimates = 6*.

Segment and flows (Q2 2025):

Distribution Channel	Ending AUM ($B)	Active Net Flows ($B)	Passive Net Flows ($B)	Total Net Flows ($B)
Institutional	$340.0	$0.4	($1.9)	($1.5)
Retail	$344.7	($4.2)	($0.6)	($4.8)
Private Wealth	$144.4	($1.0)	$0.6	($0.4)
Total	$829.1	($4.8)	($1.9)	($6.7)

KPIs:

KPI	Q2 2024	Q1 2025	Q2 2025
Ending AUM ($USD Billions)	$769.5	$784.5	$829.1
Average AUM ($USD Billions)	$755.5	$797.5	$799.5
Firm-wide Base Fee Rate (bps)	39.8	39.5	38.7
Headcount	4,264	4,369	4,380
Institutional Pipeline ($USD Billions)	—	$13.5	$21.9
Distribution per Unit ($)	$0.71	$0.80	$0.76 (payable Aug 14, 2025)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non-Compensation Expenses ($M)	FY 2025	$600–$625	$600–$620	Tightened (lower top end)
Performance Fees ($M)	FY 2025	$90–$105	$110–$130	Raised
Compensation Ratio (% of Adjusted Rev)	FY 2025 run-rate	48.5% accrual	48.5% accrual (Q3 maintained)	Maintained
Effective Tax Rate (%)	FY 2025	6%–7%	6%–7%	Maintained
Adjusted Operating Margin (%)	FY 2025	Baseline ~33%	Baseline ~33% (YTD ~33%)	Maintained
Distribution per Unit ($)	Q2 2025	$0.80 (Q1 actual)	$0.76 (Q2 declared)	Lowered (seasonal)

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Margin guidance & operating leverage	Q4 adj margin 36.4%; FY25 baseline 33%; occupancy savings $50M	Q1 adj margin 33.7%; FY25 baseline 33%	Q2 adj margin 32.3%; YTD ~33% baseline re-affirmed	Stable baseline; modest sequential dip
Performance fees outlook	FY24 $227M; FY25 recurring private $70–$75M	Raised total to $90–$105M on public alpha	Raised total to $110–$130M; private alts primary driver	Raised
Insurance/EQH partnership	Ruby Re, insurance vertical momentum	~$14B of $20B EQH commitment deployed; IG private credit focus	Added Pacific Life to LIS platform; planning debt capacity for Ruby Re; $5B RGA in pipeline	Expanding
Retail tax-exempt muni	Record $5B Q4 inflows; +34% in 2024	+19% annualized growth	+14% annualized; 10th consecutive quarter of growth	Strong, moderating
ETFs expansion	17 active ETFs; $5.5B AUM	Entered 2025 with 18 active ETFs, ~$8B AUM	Taxable FI ETF momentum; monthly ETF sales growing	Accelerating
Fee rate trajectory	39.8 bps	39.5 bps	38.7 bps, mix-driven decline	Down modestly
Private markets AUM	$70B fee earning/eligible; target $90–$100B by 2027	$75B	$77B; target intact	Growing

Management Commentary

“As the quarter drew to a close, our assets under management reached a record high of $829 billion…pipeline AUM expanded to nearly $22 billion” — Seth Bernstein (CEO) .
“We’re on track to deliver a 33% operating margin in 2025…two years ahead of schedule” — Seth Bernstein .
“Adjusted earnings for the second quarter came in at $0.76 per unit…we distribute 100% of our adjusted earnings to unitholders” — Tom Simeone (CFO) .
“We now project total performance fees for 2025 of $110,000,000 to $130,000,000…private alternatives will be the primary contributors” — Tom Simeone .
“Retail active equities experienced net outflows of $3.7 billion…taxable fixed income saw net outflows of $2.4 billion, driven largely by overseas redemptions” — Seth Bernstein (press release) .

Q&A Highlights

Retirement income scaling: With Pacific Life joining AB’s multi-insurer lifetime income platform, management emphasized low-fee insurance economics and ongoing expansion with EQH and third-party insurers .
Capital allocation/M&A posture: AB may selectively use unit issuance (e.g., Ruby Re) for insurance-sidecar partnerships; cautious on wealth M&A focusing on small/mid-size RIAs with cultural fit and disciplined pricing .
Margin cadence: CFO reiterated ~33% margin for 1H and expected for 2H, with 2026 guidance pending year-end planning .
Demand normalization: American Income and fixed income flows showed signs of stabilization by June/July after April macro volatility (tariffs/FX), with constructive demand domestically .
Private wealth growth: Multi-pronged strategy—organic advisor hiring, experienced adviser recruitment, and tuck-in RIAs in underpenetrated geographies to scale UHNW capabilities .

Estimates Context

Metric	Q2 2025 Actual	Q2 2025 Consensus	Surprise
Adjusted Net Revenues ($USD)	$844,434,000	$840,930,500*	+$3.5M (~0.4%)
Adjusted EPU ($)	$0.76	$0.77367*	-$0.014 (~-1.8%)

Additional consensus context: Revenue - # of Estimates = 2; Primary EPS - # of Estimates = 6*.
Values marked with an asterisk were retrieved from S&P Global.

Implications:

Slight EPS miss alongside a small revenue beat suggests modest mix/fee-rate pressure and expense uptick (promotion/servicing, G&A) offsetting top-line resilience .
Raised performance-fee guidance could lift FY consensus for EBITDA/EPU if private alts crystallization tracks management outlook .

Key Takeaways for Investors

Near-term: Expect fee-rate pressure from mix (SMAs/ETFs/insurance/retirement) and flow volatility to temper margins sequentially, but improved June/July trends and record AUM underpin stability into 2H .
Performance-fee upside: Raised FY25 guidance ($110–$130M) and private alts deployment momentum support earnings leverage, particularly in commercial real estate debt and AB PCI .
Pipeline strength: $21.9B institutional pipeline (including $5B RGA) provides funding visibility over 12–15 months and offsets April dislocation; watch timing of flows and mix .
Insurance vertical advantage: EQH partnership and multi-insurer lifetime income platform (Pacific Life addition) enhance access to long-duration capital pools, supporting durable revenues at lower fee rates .
Private wealth compounding: UHNW-focused inorganic/organic strategy should drive advisor productivity and net new assets, with interval funds and alternatives broadening product reach .
Expense discipline: Tightened non-comp guide ($600–$620M) and affirmed 48.5% comp ratio help defend margins amid mix shifts; baseline ~33% FY25 margin intact .
Trading lens: Post-print setup reflects a small EPS miss vs a revenue beat, counterbalanced by raised performance-fee guidance and record AUM; narrative hinges on flow normalization and execution on pipeline and private markets .

S&P Global disclaimer: All consensus estimate values marked with an asterisk (*) were retrieved from S&P Global.

ALLIANCEBERNSTEIN HOLDING L.P. (AB)·Q2 2025 Earnings Summary