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C&

COHEN & STEERS, INC. (CNS)·Q1 2025 Earnings Summary

Executive Summary

  • Mixed quarter: GAAP diluted EPS of $0.77 and as-adjusted EPS of $0.75; EPS beat a thin consensus, but revenue fell 3.8% q/q to $134.5M on lower average AUM, two fewer days in the quarter, and no performance fees (Q4 had ~$1.4M), partially offset by a higher effective fee rate .
  • AUM rose 2.1% q/q to $87.6B on $222M net inflows (third consecutive quarter of net inflows) and ~$2.1B market appreciation; global listed infrastructure drove notable flow strength, while institutional outflows were anticipated .
  • Guidance maintained: comp ratio ~40.5%, G&A +6–7% y/y, and as-adjusted ETR ~25.3%; GAAP ETR printed lower at 19.5% on discrete tax benefits; liquidity declined to $295M due to annual incentive payouts .
  • Watch items for the stock: revenue miss vs S&P Global consensus, a sharp drop in the institutional “one” unfunded pipeline ($61M vs $531M), and macro risks from tariffs/recession watch; counters include continued net inflows, fee-rate uplift from mix, and infrastructure momentum .

What Went Well and What Went Wrong

  • What Went Well

    • Third consecutive quarter of firm-wide net inflows ($222M); end-period AUM up to $87.6B on flows and market gains .
    • Global listed infrastructure saw “strong flows” in Q1 and remains a strategic growth vector, with positive category performance year-to-date and defensive attributes under a stagflationary backdrop .
    • Effective fee rate improved to ~59 bps (mix) even as average AUM declined; management emphasized durable performance with 81% of AUM outperforming in Q1 and 89% on 1‑year (92% of OE fund AUM rated 4–5 stars) .
    • Quote: “This is the third consecutive quarter of net inflows” and “global listed infrastructure experienced strong flows during the quarter” (R. Dakkuri) .
    • Quote: “We continue to provide meaningful, long-term alpha for our investors... 92% of our open-end fund AUM is rated 4 or 5 star by Morningstar” (J. Cheigh) .
    • Quote: “Our wealth channel has led the way to firm-wide net inflows… for the past 3 quarters” (J. Harvey) .

  • What Went Wrong

    • Revenue down 3.8% q/q to $134.5M; operating margin compressed to 33.6% (+as-adjusted 34.7%) from 35.3% (35.5% as-adjusted) on lower average AUM, fewer days, and absence of Q4 performance fees .
    • Institutional “one” unfunded pipeline dropped to $61M (from $531M), reflecting completed fundings and timing; management aims to translate activity into wins .
    • GAAP ETR fell to 19.5% (vs 21.7% in Q4) driven by discrete tax items; as-adjusted ETR guided at 25.3% for the year; G&A was elevated y/y and is guided to increase 6–7% for infrastructure, foreign office upgrades, and ETF rollout .
    • Quote: “The weak spot in the quarter is our one unfunded pipeline… $61 million compared with $531 million last quarter” (J. Harvey) .
    • Analyst concern: Preferred strategies seeing outflows despite strong performance; broader flow environment in April “not robust” given post-quarter volatility (J. Harvey) .

Financial Results

  • Consolidated results
MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD ‘000s)122,710 139,783 134,467
Operating Income ($USD ‘000s)40,265 49,337 45,198
Operating Margin (GAAP)32.8% 35.3% 33.6%
Operating Margin (As Adj.)35.5% 35.5% 34.7%
Net Income to Common ($USD ‘000s)34,004 45,822 39,778
Diluted EPS (GAAP)$0.68 $0.89 $0.77
Diluted EPS (As Adj.)$0.70 $0.78 $0.75
Avg. AUM ($USD ‘MM)80,175 89,435 86,778
End AUM ($USD ‘MM)81,235 85,814 87,579
Net Inflows/(Outflows) ($USD ‘MM)(1,970) 860 222
  • Revenue mix (sequential comparison)
Revenue Detail ($USD ‘000s)Q4 2024Q1 2025
Investment advisory & admin fees: Open‑end funds70,161 69,658
Investment advisory & admin fees: Institutional35,585 32,167
Investment advisory & admin fees: Closed‑end funds25,994 24,946
Total advisory & admin fees131,740 126,771
Distribution & service fees7,450 7,184
Other593 512
Total Revenue139,783 134,467
  • Operating expenses (sequential)
Expense ($USD ‘000s)Q4 2024Q1 2025
Employee comp & benefits56,504 54,554
Distribution & service fees15,733 15,189
G&A15,784 17,169
D&A2,425 2,357
Total Expenses90,446 89,269
  • KPIs (sequential)
KPIQ4 2024Q1 2025
Effective fee rate (active)~58 bps (ex perf. fees) ~59 bps
Comp ratio (as‑adj.)~40.5% (FY guide) 40.5% (in‑line)
GAAP Effective Tax Rate21.7% 19.5%
Liquidity (cash, Treasurys, liquid seed)$360.9M $295.4M
  • AUM by vehicle (end of period)
AUM ($USD ‘MM)Q4 2024Q1 2025
Open‑end funds40,962 42,298
Institutional accounts33,563 33,886
Closed‑end funds11,289 11,395
Total AUM85,814 87,579

  • Non-GAAP adjustments (illustrative EPS bridge)

    • Q1 2025 as‑adjusted EPS $0.75 vs GAAP $0.77; key items include FX (+$0.02) and tax adjustments (−$0.06) per share; accelerated RSU vesting (+$0.01) .

  • Results vs estimates (S&P Global)

    • Q1 2025 EPS: Actual $0.75 vs consensus $0.72; beat by $0.03 (1 estimate). Revenue: Actual $134.5M vs consensus $141.9M; miss by ~$7.5M (1 estimate).
    • Drivers: lower average AUM and fewer days, Q4 performance fees not recurring; partially offset by fee-rate uplift from mix .

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 call)Current Guidance (Q1 2025 call)Change
Compensation ratio (as‑adj.)2025~40.5% ~40.5% Maintained
G&A growth2025 vs 2024+6% to +7% +6% to +7% Maintained
Effective tax rate (as‑adj.)2025~25.3% ~25.3% Maintained
Notes (Opex drivers)2025ETF launch, infra/office upgrades, biz dev ETF rollout, infra investments, foreign office upgrades Clarified drivers

No quantified revenue/margin/segment revenue guidance was provided in the materials reviewed .

Earnings Call Themes & Trends

TopicQ3 2024 (two quarters ago)Q4 2024 (prior quarter)Q1 2025 (current)Trend
Real assets rotation/inflationListed real assets outperformed; Fed cuts support; valuations attractive Mixed quarter; valuations for core real assets neutral/attractive Defensive real assets benefitting from tariffs/inflation; stagflation-resilient narrative Strengthening tailwinds
Wealth channel flowsBig RIA allocator to U.S. REITs; early wealth comeback RIA-led inflows; net inflows 2Q in a row Wealth led flows again; April “not robust” amid volatility but interest in U.S. REITs/infrastructure Positive but macro-sensitive
Institutional pipelineOne unfunded pipeline $651M; expected redemptions ~$1B across Q4/Q1 One unfunded pipeline $530M; known redemptions ~$800M 1H25 One unfunded pipeline fell to $61M; timing/fundings; known redemptions now ~$290M remaining Near-term weak, timing-related
Active ETFsPlanned early‑next‑year launch; core strategies Launching 3 ETFs in Q1’25; focus RIAs/model builders Launched 3 ETFs in Feb; early flows incl. new RIA-only access; some cannibalization expected Executing; early traction
Preferred securitiesPositive YTD; expect demand as rates fall Outflows slowed; competition from private credit Continued outflows; hangover from regional bank crisis; performance strong Softer demand
Private real estate (CNS REIT)Top-perf. nontraded REIT YTD; shopping centers focus #2 2024 performance; ramp capital raising Top-performing over 12 months ended Feb; 5 shopping centers; RIA platforms live Scaling
Infrastructure demand/AI/powerSecular drivers: decarbonization, digitization, power demand Listed infra growing; takeaways from underperformers Strong flows; stagflationary attributes; infra up ~5% YTD Building momentum
Liquidity vs illiquidityEmphasis on listed + private mix; opportunity cost of illiquidity Balance sheet strong; seed for private vehicles; steady dividend policy Clients prioritizing liquidity; caution on illiquidity cost; listed solutions for retirement plans More client focus
Tariffs/MacroFed easing supportive Macro recalibration; rates, valuations April 2 tariff shock; raised recession odds; hiring bar raised Macro risk elevated

Management Commentary

  • “Revenue for Q1 decreased… primary driver was lower average AUM… also… lower day count… Q4 included performance fees… partially offset by improvement in our effective fee rate… active fee rate was 59 bps” (R. Dakkuri) .
  • “Third consecutive quarter of net inflows… global listed infrastructure experienced strong flows… ending AUM increased… also affected by market appreciation” (R. Dakkuri) .
  • “The first quarter saw 81% of our AUM outperformance benchmark… 1‑year 89%… 92% of our open-end fund AUM is rated 4 or 5 star” (J. Cheigh) .
  • “April 2 tariff… turned… regimes on their heads… we’re still positioned for growth… wealth channel has led the way… case for real assets is gaining momentum” (J. Harvey) .
  • “The weak spot… one unfunded pipeline… $61M vs $531M last quarter… reflects… completed fundings and timing” (J. Harvey) .
  • “Launched our first 3 active ETFs… pleased with the pace of flows… opens access to ETF-only RIAs… some swapping from OEFs expected” (J. Harvey) .

Q&A Highlights

  • Wealth channel and April tone: Post-quarter volatility slowed decision-making; continued interest in U.S. REITs (cycle bottoming) and listed infrastructure; preferreds saw outflows despite strong performance (competition from fixed income/private credit) .
  • Tariffs second-order effects: Expect slower growth, higher inflation; infrastructure seen as “stagflationary strategy”; firm raising hiring bar but continuing strategic investments (ETFs, private) .
  • Active ETFs positioning: Initial focus on RIAs/model builders; accessing new ETF-only allocators; some cannibalization of OEFs anticipated but helps asset retention and future growth .
  • Pipeline outlook: Current low pipeline seen as timing; emphasis on converting activity into wins; known redemptions now ~$290M remaining after majority occurred .
  • Potential M&A: Open to selective inorganic growth or partnerships that fit criteria, given industry dynamics in wealth; disciplined approach .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $0.75 vs $0.72 (beat by $0.03; 1 estimate); Revenue $134.5M vs $141.9M (miss by ~$7.5M; 1 estimate).*
  • Implications: Despite revenue miss (lower average AUM, fewer days, no performance fees vs Q4), mix uplift supported fee rate, and expense control kept comp ratio at 40.5%; as-adjusted ETR guided steady at 25.3% .
  • Forward estimates likely sensitive to: infra flow momentum, wealth channel resilience, pipeline conversion timing, and macro tariff/recession risk .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality of earnings: EPS resilience (beat) despite revenue miss owes to mix-driven fee-rate uplift and discipline on comp (40.5%); watch GAAP/as‑adj. tax rate differences (GAAP 19.5% benefited from discrete items; as‑adj. guided ~25.3%) .
  • Flows durability: Third straight quarter of net inflows with infra as a bright spot; wealth channel continues to lead; supports medium-term AUM/fee trajectory if macro stabilizes .
  • Near-term overhang: Institutional “one” pipeline fell sharply; conversion timing and known redemptions (~$290M remaining) could weigh on near-term net flows .
  • Macro hedge angle: Listed infrastructure and real assets positioned for a stagflationary/ tariff-laden scenario; supportive flows and narrative may continue if inflation stays sticky and growth slows .
  • Vehicle strategy: Active ETFs open new RIA-only channels and aid retention amid vehicle preference shifts; early traction plus expected cannibalization is part of the plan .
  • Cost trajectory: G&A to rise 6–7% y/y on strategic investments (ETFs, offices, infra); margin expansion depends on market beta, organic growth (pipeline wins), and scaling private/ETF initiatives .
  • Actionable: Lean into infra/real assets exposure within CNS’s franchises as catalysts (flows, fee rate) offset pipeline noise; monitor monthly AUM/flows and July updates for pipeline rebuild and ETF traction .

Appendix: Additional Data and Drivers

  • Why revenue fell q/q: lower average AUM, two fewer days, and absence of Q4 performance fees; partially offset by higher effective fee rate from product mix .
  • AUM drivers: Q1 increase from $85.8B to $87.6B due to $222M net inflows and ~$2.1B market appreciation, partially offset by $600M distributions .
  • Liquidity and balance sheet: Liquidity of $295.4M at 3/31/25 (down from $360.9M at 12/31/24) given annual comp payouts; stockholders’ equity $507.7M .
  • Non-GAAP recon: Q1 as-adjusted operating margin 34.7% vs GAAP 33.6%; EPS as-adjusted $0.75 vs GAAP $0.77 with detailed bridges for seed, FX, tax, and other items .

Citations: All data and quotes are sourced from CNS’s Q1 2025 8‑K and exhibits, Q1 2025 earnings call, prior quarters’ filings/calls, and company press releases . Values marked with * retrieved from S&P Global.