Executive Summary

Q2 2025 was operationally sound but slightly below Street on both EPS and revenue: as-adjusted EPS $0.73 vs $0.755 consensus (miss), GAAP revenue $136.1M vs $136.9M consensus (miss); GAAP operating margin compressed 180 bps sequentially to 31.8% (as-adjusted 33.6%) . EPS and revenue estimates from S&P Global: $0.755 and $136.9226M, respectively*.
AUM rose 1.5% sequentially to $88.9B on $2.3B market appreciation, partly offset by net outflows of $131M; open-end funds saw a fourth straight quarter of positive net inflows (+$285M) while institutional accounts posted net outflows (-$519M) .
2025 expense outlook edged higher: management now expects G&A +7% to +8% y/y (prior +6% to +7%), comp ratio held at 40.5%, and tax rate 25.3% (as-adjusted) for 2025; post-2025, G&A growth expected to moderate to mid‑single digits .
Strategic initiatives progressed: active ETFs gathered $54M of Q2 inflows and $133M total AUM, and the listed/private real estate strategy with IDR launched in mid‑May; management highlighted a rebuilt awarded‑but‑unfunded pipeline to $776M (net ~$275M after known redemptions) as a forward catalyst .

What Went Well and What Went Wrong

What Went Well
- Investment performance remained strong: 89% of AUM outperformed in Q2; on 1‑year, 94% outperformed; 3/5/10‑year outperformance rates above 95% with 99% over 10 years; fee rate steady at 59 bps .
- Open‑end funds delivered a fourth consecutive quarter of net inflows (+$285M), with U.S. real estate (+$349M) and global listed infrastructure flows in the mix; active ETFs posted $54M net inflows in the first full quarter .
- As-adjusted operating margin stayed resilient at 33.6% despite higher G&A; liquidity improved to $323M vs $295M in Q1 .
What Went Wrong
- Slight misses vs Street: as‑adjusted EPS $0.73 vs $0.755 consensus* and revenue $136.1M vs $136.9M consensus*, reflecting expense growth and modest net outflows .
- Institutional outflows (-$519M) weighed on total flows; preferred securities saw $489M outflows (including model removal at a large allocator), and advisory rebalancings drove $412M of outflows .
- G&A rose on talent acquisition, travel, business development, and ETF launch costs; non‑operating FX losses also reduced as‑adjusted EPS by ~$0.05 .

Financial Results

Revenue, EPS, Margins vs prior periods and estimates

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	121.7	139.8	134.5	136.1
Revenue Consensus ($M)	122.5*	138.2*	141.9*	136.9*
Diluted EPS (GAAP)	$0.63	$0.89	$0.77	$0.72
EPS (as-adjusted)	$0.68	$0.78	$0.75	$0.73
Primary EPS Consensus	$0.671*	$0.743*	$0.720*	$0.755*
Operating Margin (GAAP)	31.5%	35.3%	33.6%	31.8%
Operating Margin (as-adj)	34.9%	35.5%	34.7%	33.6%

Segment revenue mix (Investment advisory & administration fees)

Segment Fees ($M)	Q1 2025	Q2 2025
Open-end funds	69.7	70.6
Institutional accounts	32.2	32.9
Closed-end funds	25.0	25.1
Total investment advisory & admin	126.8	128.5

KPIs

KPI	Q1 2025	Q2 2025
Ending AUM ($B)	87.6	88.9
Average AUM ($B)	86.8	87.2
Net Flows (Total, $M)	+222	-131
Net Flows – Open-end ($M)	+585	+285
Net Flows – Institutional ($M)	-366	-519
Net Flows – Closed-end ($M)	+3	+103
Market Appreciation (Total, $M)	+2,143	+2,250
Distributions (Total, $M)	(600)	(762)
Fee Rate (effective)	59 bps	59 bps
Liquidity ($M)	295	323
Awarded-but-unfunded pipeline ($M)	61	776 (net ~275 after ~$500M known redemptions)
Active ETFs – Net inflows ($M)	“modest inflows” (launch Feb)	54; AUM $133 (incl. $55 seed)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Compensation ratio	FY 2025	~40.5% (Q1 call)	~40.5% (Q2 call)	Maintained
G&A y/y	FY 2025	+6% to +7% vs 2024 (Q1 call)	+7% to +8% vs 2024 (Q2 call)	Raised
Effective tax rate (as‑adj)	FY 2025	25.3% (Q1 call)	25.3% (Q2 call)	Maintained
Post‑2025 G&A cadence	Beyond 2025	N/A	“moderate” to mid‑single digits	New color
Dividend	Q3 2025	N/A	$0.62 per share (payable Aug 21, 2025)	Declared

Drivers: higher G&A tied to talent acquisition, travel/business development, active ETF launch, and foreign office upgrades (HK completed in Q2) .

Earnings Call Themes & Trends

Topic	Q4 2024 (Q‑2)	Q1 2025 (Q‑1)	Q2 2025 (Current)	Trend
Tariffs/macro backdrop	Noted late‑Q4 volatility; GAAP op margin 35.3%	Caution post “Liberation Day” tariffs; rotation to real assets; recession risk acknowledged	April shock trimmed average AUM; risk‑on rebound by quarter end; diversified real assets case reiterated	Stable caution; supportive for real assets
Product performance	EPS beat vs est; margin expansion	81% AUM outperform; strong GLI flows	89% AUM outperform; 4–5 star ratings breadth; real estate bottoming narrative	Improving
Active ETFs/technology & data	N/A	Launch of 3 active ETFs; early inflows; investing in data/analytics	$54M ETF inflows; plan more launches; continued investments	Building
Flows/pipeline	Net inflows $860M; AUM -6.5% q/q on markets	Firm-wide net inflows $222M; pipeline dipped to $61M	Total net outflows $131M; awarded‑but‑unfunded pipeline rebuilt to $776M (net ~$275M)	Mixed near term; better backlog
Regional demand	N/A	Global allocators, offshore SICAV progress	U.S. most active; Asia burgeoning; Europe slower; Middle East less active	Stable
Regulatory/policy	N/A	Tariffs analysis; listed vs private in 401(k)s	Limited “revenge tax” reverberations; removed from regulation	Clarifying

Management Commentary

“Our effective fee rate was 59 basis points, which was in line with the prior quarter… Our operating margin was 33.6%… Ending AUM was $88.9 billion… We generated a meaningful increase in our won but unfunded pipeline.”
“The second quarter saw 89% of our AUM outperform its benchmark… we believe real estate values have bottomed and valuations are attractive.”
“We had net outflows of $131 million after three consecutive quarters of inflows… largest flows included $349 million in net inflows into U.S. real estate and $489 million in outflows from preferred securities.”
“Our active ETFs… recorded $54 million in net inflows. Total AUM is now $133 million… we plan to launch more active ETFs in the coming months.”

Q&A Highlights

Wealth management channel: seasonal dip and April volatility dampened activity; continued allocations to real estate, multi‑strategy real assets, and infrastructure; active ETFs expanding access to ETF‑only RIAs .
Active ETFs traction: attracting new ETF‑only RIAs and facilitating conversions from mutual funds at some wirehouse advisors; early but promising flow build .
Global listed infrastructure: weaker net flows in Q2 due to two large institutional reallocations to target weights despite solid performance; longer‑term bullish with potential listed/private combinations .
Global vs U.S. real estate: rising interest in global strategies; minimal reverberations from U.S. policy (“revenge tax” removed) .
Regional demand: U.S. most active; burgeoning Asia; Europe slower; Middle East currently less active .

Estimates Context

Q2 2025 vs Street: EPS (as‑adjusted) $0.73 vs $0.755 consensus (miss); revenue $136.1M vs $136.9M consensus (miss). Expense growth (talent, travel, ETF costs) and modest net outflows, alongside FX losses, weighed on as‑adjusted EPS and GAAP margin . EPS and revenue estimates from S&P Global: $0.755 and $136.9226M*.
Prior quarters for context: Q1 2025 EPS beat ($0.75 vs $0.72*), but revenue missed ($134.5M vs $141.9M*); Q4 2024 both revenue and EPS beat ($139.8M vs $138.2M*; $0.78 vs $0.743*) .
Outlook for estimates: Expect expense assumptions to drift higher (G&A +7–8% vs +6–7% prior), while pipeline rebuild ($776M gross, ~$275M net after known redemptions) provides some visibility; fee rate stable at 59 bps .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Slight top‑ and bottom‑line misses vs consensus with sequential GAAP margin compression, but as‑adjusted margin remained resilient and fee rate stable at 59 bps, indicating core revenue integrity despite April volatility .
Mix remains favorable: open‑end funds posted a fourth consecutive quarter of inflows, offset by institutional rebalancing‑driven outflows; preferreds saw outsized redemptions tied partly to model changes at a large allocator .
Expense outlook stepped up (G&A +7–8% vs +6–7% prior), pressuring near‑term EPS, but management guided to post‑2025 moderation and is prioritizing selective, distribution‑oriented investments (including ETFs) .
Backlog improvement is notable: awarded‑but‑unfunded pipeline rebounded to $776M (net ~$275M after known redemptions), providing potential near‑term flow support as funding cycles progress .
Strategic optionality growing: active ETFs gaining traction ($54M Q2 inflows; $133M AUM) and the new listed/private real estate strategy with IDR offers a differentiated solution likely to resonate with institutions as real estate recovers .
Real assets narrative remains constructive: management sees real estate having bottomed and infrastructure well‑positioned amid sticky inflation and tariff‑related macro risks; this supports medium‑term allocation tailwinds .
Dividend durability: post‑quarter declaration of a $0.62 Q3 dividend underscores capital return consistency and balance sheet strength ($323M liquidity) .

COHEN & STEERS, INC. (CNS)·Q2 2025 Earnings Summary