Executive Summary

Q2 results showed operating leverage: ENI EPS rose to $0.45 (+60.7% y/y; +2.3% q/q) on ENI revenue +14% y/y, while GAAP EPS was $0.29 (+7.4% y/y; -21.6% q/q) as variable comp and GAAP expense items weighed on margins .
AUM reached $112.6B (+12.7% y/y; +2.0% q/q) with net flows flat as very large inflows and outflows offset; management reiterated expectation for “breakeven to flat cadence” near term .
Capital returns remained active: BSIG repurchased 0.9M shares for $20.5M in Q2 and declared a $0.01 interim dividend; YTD repurchases through Q2 totaled 4.4M shares ($94.9M) .
No formal revenue/EPS guidance; management guided FY ratios: Operating Expense Ratio ~46–50%, Variable Comp Ratio ~46–50%, Affiliate Key Employee Distribution Ratio ~7–8%, and reiterated revolver paydown by year-end from operating cash flow .

What Went Well and What Went Wrong

What Went Well

Strong non-GAAP earnings power and leverage: “ENI earnings per share of $0.45… The significantly larger percentage increase in ENI compared to the revenue increase reflects our continued discipline on operating expenses and the operating leverage embedded in our business.” .
Investment performance remained robust: 86%, 92% and 93% of strategies by revenue beat benchmarks over 3-, 5-, and 10-year periods, supporting client retention and pricing mix .
Strategic initiatives progressing: Systematic Credit (U.S. HY seeded Nov-2023, Global HY seeded Apr-2024; U.S. IG seeded Jul-2024) and Equity Alternatives multi-strategy fund continue building track records .

What Went Wrong

Flows remained mixed and lumpy: “Net client cash flows were incidentally flat” as three very large inflows and three very large outflows offset; management continues to see client derisking to fixed income and rebalancing .
Managed Volatility pressure persisted; fee rate uplift still largely mix-dependent, with EM demand mixed given geopolitics and state client considerations .
GAAP operating margin compressed to 19% (from 21% y/y) on higher compensation (including Acadian equity plan liability) and variable compensation, despite revenue growth .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($M)	$96.3	$105.7	$109.0
Net Income Attributable to Controlling Interests ($M)	$11.4	$14.6	$11.0
Diluted EPS (GAAP)	$0.27	$0.37	$0.29
U.S. GAAP Operating Margin (%)	21%	22%	19%
ENI Revenue ($M)	$95.0	$105.3	$108.3
ENI ($M)	$12.0	$17.4	$17.2
ENI Diluted EPS ($)	$0.28	$0.44	$0.45
Adjusted EBITDA ($M)	$24.7	$31.9	$32.0
ENI Operating Margin (%)	22%	28%	27%

Segment performance (Quant & Solutions = Acadian)

Metric	Q2 2023	Q1 2024	Q2 2024
Segment ENI ($M)	$24.5	$31.4	$31.7
Segment Adjusted EBITDA ($M)	$28.9	$36.0	$36.3

Key Performance Indicators

KPI	Q2 2023	Q1 2024	Q2 2024
AUM End of Period ($B)	$99.9	$110.4	$112.6
Average AUM ($B)	$97.9	$107.6	$110.3
Net Flows ($B)	$0.1	$0.4	—
Annualized Rev Impact of Net Flows ($M)	$0.9	($0.2)	$1.4
ENI Mgmt Fee Rate (bps)	38.1	38.2	38.5
Operating Expense Ratio (%)	55.2	48.4	48.8
Variable Comp Ratio (%)	51.8	47.7	48.2
Share Repurchases (shares/$)	—	3.5M / $74M	0.9M / $20.5M
Dividend per share	—	—	$0.01 (payable 9/27/24)

Notes: ENI adjusts GAAP for non-economic items (e.g., $5.9M non-cash revaluation of Acadian key employee equity, tax normalization), seed/co-investment gains, and other reconciling items; see reconciliations .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating Expense Ratio	FY 2024	n/a	~46%–50%	n/a
Variable Compensation Ratio	FY 2024	n/a	~46%–50%	n/a
Affiliate Key Employee Distribution Ratio	FY 2024	n/a	~7%–8%	n/a
Balance Sheet (Acadian Revolver)	FY 2024	n/a	Revolver expected to be fully repaid by year-end from operating cash flow	n/a
Dividend	Q3 2024	n/a	$0.01 per share; record 9/13/24; pay 9/27/24	n/a

No formal revenue/EPS/Op margin guidance provided.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23, Q1’24)	Current Period (Q2’24)	Trend
Flows & Pipeline	Q4: -$2B NCF on managed vol and reallocations; pipeline healthy but slower conversions . Q1: +$0.4B NCF; expect flattish near term; derisking to FI noted .	Q2: Net flows flat; three very large inflows offset by three very large outflows; expect “breakeven to flat cadence” across strategies .	Mixed/flat
Fee Rate/Mix	Q4: Fee rate stable around 38 bps; potential uplift from Equity Alts and Systematic Credit (higher fee) over time .	Slight fee rate uptick driven by EM mix; EM did relatively well in Q2 .	Slightly improving
Expense Discipline & Operating Leverage	Q1: Investments in scalable infrastructure largely complete; leverage to rising revenue; OpEx growth to moderate .	ENI +43% y/y vs revenue +14% y/y; OpEx ratio fell to 48.8% vs 55.2% y/y; management expects FY OpEx ratio ~46–50% .	Improving
Capital Allocation	Q4: New $100M authorization; opportunistic buybacks; seed new strategies . Q1: 3.5M shares repurchased; minimum cash ~$25M; seeding continued .	Q2: 0.9M shares repurchased; cash ~$72M; min cash ~$20M; opportunistic repo/seeding; authorization renewal “in due course” .	Ongoing
Managed Volatility & Client Derisking	Q4: Continued managed vol outflows in beta-driven market . Q1: Expect continued pressure; pension derisking to FI .	Pressure persists; client rebalancing and LDI flows to FI continue .	Persistent headwind
EM Demand/Geopolitics	Q1: EM interest slower despite strong performance .	Mixed client appetite; valuation appeal vs geopolitical/state-client concerns .	Mixed

Management Commentary

“For the second quarter of 2024, we produced ENI earnings per share of $0.45… The significantly larger percentage increase in ENI compared to the revenue increase reflects our continued discipline on operating expenses and the operating leverage embedded in our business.”
“Between December 2023 and June of 2024, we repurchased 4.7 million of our shares or 11% of our total outstanding shares for $100 million.”
“Net client cash flows were incidentally flat… we had select large and lumpy inflows… and select large and lumpy outflows, and these lumpy flows basically offset each other.”
Capital minimum and use: “We think about minimum cash levels around $20 million… excess for buybacks and seeding… we’ll remain opportunistic on both.”
Cost control and leverage: “We are now in a good position to keep the expenses more or less at these levels… we do have the operating leverage.”

Q&A Highlights

Flows detail: Three very large inflows (one “more than a couple of billion,” and two ~$1B) offset by similarly large outflows in assorted strategies; pipeline remains healthy across stages .
Capital allocation: Min cash ~$20M; balance deployed opportunistically between buybacks and seeding; authorization likely renewed “in due course,” no formulaic repurchase cadence .
Fee rate: Slight pickup driven by mix (EM outperformed), with higher-fee strategies helping; fee rate otherwise stable around high-30s bps .
Expense outlook: After multi-year infrastructure investments and abating inflationary pressures, expenses expected to stay roughly flat aside from 2–3% COLA, supporting operating leverage .
EM narrative: Mixed client appetite due to valuations vs geopolitical/state-client constraints; no clear directional flow pattern yet .

Estimates Context

Wall Street consensus (S&P Global) for BSIG Q2 2024 EPS and revenue was unavailable in our system due to missing S&P Capital IQ mapping for the ticker; therefore “vs. estimates” comparisons are not shown. We will update if/when S&P Global mapping is available.

Key Takeaways for Investors

Operating leverage is the story: ENI +43% y/y on +14% ENI revenue, with the ENI OpEx ratio down ~640 bps y/y (55.2% → 48.8%), positioning EPS to outgrow revenue if markets cooperate .
Flows remain lumpy but not deteriorating; expect flattish NCF near term as derisking and rebalancing offset strategy wins; watch for funding of pipeline to turn the cadence positive .
Mix tailwind emerging: Fee rate ticked up with EM and higher-fee strategies; medium-term upside from Equity Alts and Systematic Credit penetration .
Capital return continues, but pacing is finite near term: with ~$72M cash, ~$20M minimum, and seed needs, buybacks remain opportunistic; authorization renewal anticipated .
Balance sheet manageable: Net leverage ~1.6x; Acadian revolver expected fully repaid by year-end from operating cash flow .
Watch managed volatility outflows and EM client sentiment; either a normalization in beta leadership or stronger EM risk appetite could improve organic trajectory .
Non-GAAP is central to the equity story; reconcile GAAP headwinds (variable comp, equity plan liability revaluation) with ENI and Adj. EBITDA measures when framing valuation .

Disclosures and data sources: BrightSphere Q2 2024 8-K and earnings presentation (Aug 1, 2024) –; Q2 2024 earnings call transcript (Aug 1, 2024) –; Q1 2024 call (May 2, 2024) –; Q4 2023 call (Feb 1, 2024) –.

BrightSphere Investment Group Inc. (BSIG)·Q2 2024 Earnings Summary