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DH

DIAMOND HILL INVESTMENT GROUP INC (DHIL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $37.1m (+2% y/y, -5% q/q), diluted EPS $3.77 (-18% y/y, +38% q/q), and net operating profit margin expanded to 35% (from 23% y/y) on lower operating expenses and a favorable deferred compensation swing .
  • Average AUM/AUA rose to $32.3B (vs. $30.1B in Q1’24), but end-period combined AUM/AUA declined sequentially to $31.6B on net client outflows of $529m (equity -$1.289B; fixed income +$760m) .
  • Adjusted diluted EPS increased to $3.23 (+8% y/y) and adjusted operating margin reached 33% (vs. 32% y/y), reflecting core operating strength after removing consolidated fund and non-hedge investment effects .
  • No formal forward guidance was provided; the Board declared a $1.50 dividend (payable Jun 13, 2025; record date Jun 2, 2025) and continued capital returns ($7.8m in Q1 via repurchases and dividend) .
  • Earnings call transcript was not available; estimate data from S&P Global was unavailable for EPS and revenue consensus, limiting beat/miss assessment (values retrieved from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Fixed income strategies surpassed $7B AUM, partially offsetting US equity outflows; CEO: “Our differentiated fixed income strategies surpassed $7 billion in AUM in Q1, helping partially offset US equity outflows” .
  • Strong operating leverage: net operating income rose 57% y/y to $13.1m as total operating expenses fell 14% y/y; operating margin expanded to 35% .
  • Continued shareholder returns: $7.8m returned ($3.6m buybacks; $4.2m dividends) and regular quarterly dividend maintained at $1.50 .

What Went Wrong

  • Equity net flows were -$1.289B in Q1; total net outflows were -$529m despite fixed income inflows of +$760m .
  • Investment income fell sharply to $1.1m (vs. $9.4m in Q1’24), reducing total earnings despite stronger core operations .
  • End-period AUM/AUA declined to $31.6B from $31.9B at year-end 2024, reflecting market dynamics and net outflows; CEO flagged “uncertain economic and market environment” impacting near-term returns .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD)$39,018,232 $39,121,000 $37,116,210
Diluted EPS ($USD)$5.35 $2.73 $3.77
Net Operating Profit Margin %26% —35%
Adjusted Net Operating Profit Margin %32% —33%
Net Income to Common ($USD)$14,644,593 $7,392,000 $10,362,263
Investment Income, Net ($USD)$9,668,961 $(3,261,000) $1,119,969
Total Operating Expenses ($USD)$28,800,761 $25,882,000 $24,052,311
Deferred Comp Expense (Benefit) ($USD)$2,250,168 $204,000 $(964,655)

Segment/Flow Breakdown (quarterly unless noted):

Metric ($USD Millions)Q3 2024Q1 2025
Net Client Flows (Total)-22 -529
Equity Net Flows-477 -1,289
Fixed Income Net Flows+455 +760
Proprietary Funds Flows+423 +386
Separately Managed Accounts Flows-313 -450
Collective Investment Trusts Flows-23 -303
Other Pooled Vehicles Flows-109 -162

KPIs:

KPIQ3 2024Q4 2024Q1 2025
Total AUM + AUA (End of Period, $USD Billions)$33.232 $31.925 $31.596
Average AUM + AUA ($USD Billions)$32.416 —$32.265
Share Repurchases ($USD Millions)$3.4 —$3.6
Dividend per Share Declared ($USD)$1.50 $1.50 $1.50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/QuarterNo formal guidanceNo formal guidanceMaintained (no guidance)
EPSFY/QuarterNo formal guidanceNo formal guidanceMaintained (no guidance)
Net Operating MarginFY/QuarterNo formal guidanceNo formal guidanceMaintained (no guidance)
Dividend per ShareQ2 2025 payout$1.50 (Q4’24 and prior) $1.50; payable Jun 13, 2025; record Jun 2, 2025 Maintained

Earnings Call Themes & Trends

No Q1 2025 earnings call transcript was published on the IR site or found in the document catalog; trends below reflect management disclosures across press releases and 8-Ks .

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
Fixed income growthTotal fixed income assets reached $5.5B; launched Core Plus Bond and Securitized Credit Fund Fixed income assets $6.2B at YE; adjusted margin 32% Fixed income strategies surpassed $7B AUM; partially offset equity outflows Improving scale, diversification
Equity flowsEquity net outflows -$477m Equity net outflows -$2.544B (annual) Equity net outflows -$1.289B Continued outflows
Vehicle mix (CITs, SMAs, funds)CIT -$23m; SMAs -$313m; funds +$423m CIT +$403m (annual) CIT -$303m; SMAs -$450m; funds +$386m Mixed; CITs/SMAs weaker
Non-operating investment income+$9.7m -$3.3m +$1.1m Volatile; subdued in Q1
Capital returnsNew $50m buyback authorization; $3.4m buybacks; $1.50 dividend $46.8m returned in 2024; $1.50 dividend $7.8m returned (buybacks + dividend); $1.50 dividend Ongoing capital return
AI/technology and regulatory riskAI adoption risk noted in forward-looking statements AI risk noted in forward-looking statements AI risk among key forward-looking factors Ongoing monitoring

Management Commentary

  • “Our differentiated fixed income strategies surpassed $7 billion in AUM in Q1, helping partially offset US equity outflows. The uncertain economic and market environment will likely continue to impact near-term returns for investors across the board. We remain disciplined in seeking investments selling at a discount to underlying value and having patience to wait for that value to be realized.” — Heather Brilliant, CEO .
  • Capital allocation: Board approved a regular quarterly cash dividend of $1.50 per share, payable Jun 13, 2025 (record date Jun 2, 2025) .
  • Non-GAAP framing: Adjustments remove deferred comp liability impacts, consolidated fund effects, and other non-hedge investment income to show core operating performance; non-GAAP effective tax rate was 26.9% in Q1’25 .

Q&A Highlights

  • No Q1 2025 earnings call transcript available; no public Q&A observed on the IR site or in filings .

Estimates Context

  • S&P Global consensus estimates for Q1 2025 were unavailable for EPS and revenue, preventing a beat/miss assessment (values retrieved from S&P Global).
  • Where estimates are unavailable, investors should focus on core drivers: sequential revenue normalization vs. Q4, operating margin expansion, and flow mix (fixed income inflows vs. equity outflows) .
MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD)NA*$37,116,210
Diluted EPS ($USD)NA*$3.77

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Operating efficiency improved meaningfully: 35% GAAP operating margin in Q1, with adjusted margin at 33%, supported by lower operating expenses and deferred comp benefit .
  • Flow mix matters: fixed income inflows (+$760m) continue to offset some equity pressure (-$1.289B); sustaining fixed income momentum is a near-term catalyst for revenue durability .
  • Earnings sensitivity to investment income: the sharp y/y decline in investment income ($1.1m vs. $9.4m) weighed on EPS; monitor non-operating investment volatility as a driver of headline results .
  • AUM/AUA trajectory: end-period combined AUM/AUA fell to $31.6B from $31.9B at YE2024; watch equity markets and client flow trends for the next quarter’s setup .
  • Capital returns steady: dividend maintained at $1.50 and ongoing buybacks ($3.6m in Q1) provide support to per-share metrics and total shareholder return .
  • Product breadth and vehicle diversification: continued emphasis on fixed income capabilities and fund/CIT/SMA channels should help diversify revenue sources as equity flows normalize over time .
  • With no published consensus and call transcript, focus on reported core metrics, flow mix, and management’s discipline on valuation-driven investing amid a “uncertain economic and market environment” .