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AM

AFFILIATED MANAGERS GROUP, INC. (AMG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record $14.0B alternatives net inflows, driving mix shift toward higher-fee, longer-duration assets; GAAP diluted EPS was $2.20 and Economic EPS was $5.20, with consolidated revenue of $496.6M .
  • EPS beat Wall Street consensus ($5.20 vs. $5.09), while revenue was essentially in-line (slightly below $497.6M)*; management guided Q2 2025 Adjusted EBITDA to $210–$225M with seasonally lower performance fees (up to $10M) .
    Values retrieved from S&P Global.
  • Capital allocation remained active: ~$173M repurchases in Q1 and ~$400M expected for FY2025; announced new partnerships with Verition and Qualitas Energy and a minority stake sale in Peppertree (expected ~$240M proceeds) to further diversify into alternatives .
  • Near-term stock catalysts: sustained alternatives momentum (liquid alts +$10B net inflows; private markets +$3B raised), product launches in U.S. wealth, and accretive M&A pipeline (run-rate Economic EPS accretion ~8% from Verition/NorthBridge/Qualitas net of Peppertree beginning in 2026) .

What Went Well and What Went Wrong

What Went Well

  • Record ~$14B net client cash inflows into alternatives led by AQR and Pantheon, offsetting long-only outflows; “we generated a record $14 billion in net client cash inflows into alternative strategies” .
  • Liquid alternatives posted strongest quarterly flows in AMG’s history (+$10B), driven by tax-aware solutions, with attractive stickiness and fee rates .
  • Strategic execution: three new partnerships (NorthBridge/Verition/Qualitas) adding ~$18B AUM and diversifying exposure to multi-strategy and energy transition; “these new investments will add approximately $18 billion in assets under management” .

What Went Wrong

  • GAAP profitability compressed YoY as intangible amortization/impairments surged to $83.3M; GAAP diluted EPS fell to $2.20 and equity-method income declined to $75.3M .
  • Performance fee headwinds vs. prior year: Adjusted EBITDA declined 12% YoY to $228.2M due to lower performance fees and a prior-year private markets catch-up; fee-related earnings growth (+4% YoY) partially offset .
  • Long-only equities experienced ~$14B net outflows amid industry headwinds and near-term performance challenges .

Financial Results

Consolidated P&L and Key Profitability Metrics

MetricQ3 2024Q4 2024Q1 2025
Consolidated Revenue ($USD Millions)$516.4 $524.2 $496.6
GAAP Diluted EPS ($)$3.78 $4.92 $2.20
Adjusted EBITDA (Controlling Interest, $USD Millions)$214.1 $281.7 $228.2
Economic EPS ($)$4.82 $6.53 $5.20

Actuals vs. S&P Global Consensus

MetricQ3 2024Q4 2024Q1 2025
EPS Actual ($)$4.82 $6.53 $5.20
EPS Consensus Mean ($)$4.84*$6.03*$5.09*
EPS Beat/MissIn-lineIn-line/BeatBeat
Revenue Actual ($USD Millions)$516.4 $524.2 $496.6
Revenue Consensus Mean ($USD Millions)$521.9*$530.5*$497.6*
Revenue Beat/MissSlight missSlight missSlight miss

Values retrieved from S&P Global.

AUM and Flow Mix (Strategy)

StrategyAUM 12/31/24 ($B)Net Client Cash Flows Q1 ($B)AUM 3/31/25 ($B)
Alternatives – Private Markets$135.4 +3.4 $140.3
Alternatives – Liquid Alternatives$140.7 +10.2 $154.8
Differentiated Long-Only – Equities$316.2 -13.7 $302.1
Differentiated Long-Only – Multi-Asset & Fixed Income$115.6 -0.3 $115.0
Total$707.9 -0.4 $712.2

KPIs

KPIQ3 2024Q4 2024Q1 2025
Net Client Cash Flows ($B)-2.8 -8.3 -0.4
Equity-Method Income (Net, $M)$52.6 $124.5 $75.3
Performance Fee Earnings (context, $M)N/A$70 (quarter) $20 (quarter)
Share Repurchases ($M)$103 (quarter) $120 (quarter); $700 FY2024 ~$173 (quarter)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)Q2 2025N/A$210–$225 New
Net Performance Fees ($M)Q2 2025N/AUp to $10 New
Economic EPS Accretion (run-rate)Beginning 2026N/A~8% from Verition/NorthBridge/Qualitas net of Peppertree New
Share Repurchases ($M)FY 2025At least ~$400 Approximately $400 Maintained/clarified
AUM Adds/Removals2H 2025N/AAdd Verition $12.6B in Q2; remove Peppertree ~$5B in Q3; Qualitas later in 2025 New timing detail
Dividend ($/share)Q1 2025$0.01 (routine) $0.01 payable June 2, 2025 Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Prev Mentions)Q4 2024 (Prev Mentions)Q1 2025 (Current)Trend
Alternatives momentumPrivate markets fundraising ~$7B; liquid alts +$2B; shift to secular growth areas Private markets FY fundraising ~$24B; alternatives rising share of earnings Record +$14B alternatives flows; liquid alts +$10B; private markets +$3B raised Accelerating
U.S. wealth platformBuilding products; active ETFs discussion >$6B alt AUM; +$2.5B FY flows; 6 continuously offered alt solutions >$5B AMG Pantheon fund; 3 new evergreen products; 2 more filed; >$40B wealth AUM at AMG/affiliates globally Scaling
New partnerships/M&APipeline building; debt issued for flexibility Announced NorthBridge; late-stage opportunities Verition and Qualitas added; Peppertree sale; ~$700M YTD growth investments Active
Performance fees outlookN/ALong-term annual target ~$150M; Q1 guidance $10–$20M Seasonally lower Q2 up to $10M; confidence in long-term contribution Near-term down; LT steady
Equity outflows-2.8B net flows; FX and market mixed -16B net outflows; industry headwinds -14B net outflows; some pockets of performance; wealth tailwinds Persistent headwind

Management Commentary

  • CEO on strategy and flows: “We generated a record $14 billion in net client cash inflows into alternative strategies… we expect our flow profile to continue to improve as our mix shift accelerates.”
  • COO on liquid alts: “$10 billion in net inflows… driven primarily by tax aware solutions and representing the strongest quarterly flow number in liquid alts that AMG has delivered in our history.”
  • CFO on earnings drivers: “Adjusted EBITDA of $228 million… decline of 12% year-over-year driven by lower EBITDA from performance fees and the comparison to a one-time private market catch-up fee… Economic EPS of $5.20 benefited from $720 million of share repurchases over the last 4 quarters.”
  • CEO on partnerships: “These new investments will add approximately $18 billion in assets under management across liquid alternatives and private markets.”

Q&A Highlights

  • Affiliate transaction strategy: Independence-first model; liquidity events (e.g., Peppertree) reflect affiliates’ evolving needs and realized returns, enabling redeployment and shareholder returns .
  • Liquid alternatives: Broad-based client conversations in wealth; tax-aware strategies ramping; Verition positions AMG to benefit from multi-strat growth and volatility-driven demand .
  • Equities: Allocation dialogues shifting with USD trends; quality/defensive approaches producing pockets of outperformance; ongoing product innovation (active ETFs) .
  • Accretion and organic growth: ~8% run-rate Economic EPS accretion from three new investments net of Peppertree beginning in 2026; alternatives’ higher fee/duration and performance fees support long-term earnings .

Estimates Context

  • Q1 2025 EPS beat consensus ($5.20 vs. $5.09)* and revenue was essentially in-line/slightly below ($496.6M vs. $497.6M); prior quarters were broadly in-line with mild revenue misses and EPS at/above consensus (Q4: $6.53 vs. $6.03; Q3: $4.82 vs. $4.84*) .
    Values retrieved from S&P Global.
  • Forward estimate implications: Q2 2025 EBITDA guide ($210–$225M) and lower performance fees (up to $10M) may temper near-term EPS estimates; longer-term, management’s ~8% run-rate Economic EPS accretion from new deals suggests upward bias to 2026 EPS trajectories .

Key Takeaways for Investors

  • Alternatives-led mix shift is accelerating, with record +$14B inflows and +$10B in liquid alts, supporting higher-fee, more durable earnings streams .
  • Near-term profitability pressure reflects intangible impairments and lower performance fees, but fee-related earnings grew YoY and buybacks support per-share metrics .
  • Strategic partnerships (Verition, Qualitas, NorthBridge) are expected to be accretive and diversify exposure across multi-strategy and energy-transition infrastructure .
  • Capital returns remain robust (~$173M Q1 repurchases; $400M FY plan), balanced with active growth investments and anticipated Peppertree proceeds ($240M) .
  • Q2 setup: EBITDA $210–$225M with seasonally lower performance fees; watch Verition AUM inclusion in Q2 and Peppertree removal in Q3 for reported AUM optics .
  • Wealth channel is a multi-year growth vector, with expanding alt product lineup and >$40B global wealth AUM at AMG/affiliates, reinforcing distribution advantages .
  • Medium-term thesis: Alternatives as >50% of earnings over time, supported by pipeline and product innovation, underpins EPS accretion and more resilient cash flows .

Additional Primary Sources Reviewed (Q1 2025 context)

  • Q1 2025 earnings press release and financial tables .
  • Form 8-K Item 2.02 furnishing Q1 2025 results and dividend .
  • Verition partnership announcement (minority stake; $12.6B AUM) .
  • Qualitas Energy partnership announcement (energy transition focus; closing expected Q4 2025) .
  • Peppertree sale announcement (expected ~$240M consideration; closing Q3 2025) .
  • Q4 2024 and Q3 2024 releases and Q4 2024 call for trend analysis .