Executive Summary

Q3 2025 was mixed: revenue fell 4% year over year to $37.4M while GAAP net operating margin held steady at 26%; adjusted operating margin was 32% (flat YoY) . EPS was $4.99 (−7% YoY) and adjusted EPS $3.24 (−3% YoY) .
Flows improved: net client inflows were $41M vs. $22M of outflows in Q3’24, driven by nearly $1.0B fixed income inflows offset by $0.9B equity outflows; total AUM/AUA ended at $32.4B (+$0.5B QoQ) .
Capital return accelerated: Board declared a $1.50 regular Q4 dividend and a $4.00 special dividend (total annual dividends $10.00/share), with ~$14.5M YTD buybacks cited by management .
Strategic update: management highlighted continued fixed income momentum (~$2B YTD inflows) and conversion of the Large Cap Concentrated Fund to an ETF as a distribution upgrade .
Wall Street consensus: S&P Global consensus EPS and revenue for Q3 2025 were not available; estimate comparisons could not be made (see Estimates Context).*

What Went Well and What Went Wrong

What Went Well

Fixed income momentum and net inflows: Q3 saw $976M fixed income inflows and $41M total net inflows, improving from $22M outflows in Q3’24; AUM/AUA ended at $32.4B, up from $31.9B at year-end 2024 .
Margin stability: GAAP operating margin held at 26% YoY; adjusted operating margin remained 32%, demonstrating expense control despite slightly lower revenue .
Capital return: Declared $4.00 special dividend in addition to $1.50 regular Q4 dividend; CEO cited ~$27.2M total dividends in 2025 and ~$14.5M YTD buybacks, reinforcing shareholder yield focus .

What Went Wrong

Top-line pressure: Revenue declined 4% YoY to $37.4M despite flat average AUM/AUA, reflecting fee pressure and equity outflows; investment income also fell YoY (−12%) .
Equity outflows persisted: Equity strategies had $935M outflows in Q3 (vs. $477M outflows in Q3’24), partly offset by fixed income inflows; equity outflows totaled $3.1B YTD .
EPS decline YoY: GAAP diluted EPS fell to $4.99 from $5.35 and adjusted EPS to $3.24 from $3.35, as lower revenue and investment income weighed versus a strong prior-year comp .

Financial Results

Income Statement and EPS (YoY and QoQ)

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$39.0	$36.0	$37.4
Net Operating Income ($M)	$10.2	$7.8	$9.7
Net Income Attributable to Common ($M)	$14.6	$15.6	$13.6
Diluted EPS ($)	$5.35	$5.73	$4.99
Investment Income, net ($M)	$9.7	$14.6	$8.5
GAAP Operating Margin (%)	26%	22%	26%
Adjusted Operating Margin (%)	32%	30%	32%
Adjusted Diluted EPS ($)	$3.35	$2.86	$3.24

Notes: Adjusted figures exclude market-driven deferred comp effects, consolidated funds impact, and non-hedging investment income/loss per company reconciliation .

Flows and AUM/AUA

KPI	Q3 2024	Q2 2025	Q3 2025
Net Client Flows ($M)	$(22)	$(644)	$41
Equity Net Flows ($M)	$(477)	$(896)	$(935)
Fixed Income Net Flows ($M)	$455	$252	$976
Market Appreciation & Income ($M)	$2,006	$923	$471
End AUM ($B)	$31.3	$30.1	$30.6
End AUA ($B)	$2.0	$1.8	$1.8
End AUM + AUA ($B)	$33.2	$31.9	$32.4
Avg AUM + AUA ($B)	$32.4	$31.0	$32.4

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular Dividend	Q4 2025	$1.50/share (Q2 declaration)	$1.50/share (payable Dec 5, 2025; record Nov 21, 2025)	Maintained
Special Dividend	Q4 2025	None	$4.00/share (payable Dec 5, 2025; record Nov 21, 2025)	Introduced
Revenue/Margins/OpEx/Tax	FY/Q4 2025	Not provided	Not provided	N/A

Management did not issue quantitative guidance for revenue, margins, OpEx, OI&E, or tax rate in the Q3 materials .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was available in our corpus or via company materials; themes reflect management commentary from press releases.

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Product/Vehicle Strategy	Launched Diamond Hill Securitized Total Return Fund (7/1/25)	Converted Large Cap Concentrated Fund to an ETF	Expanding vehicle set for distribution reach
Flows Mix	Fixed income AUM >$7B; equity outflows persisted	Fixed income +$976M vs. equity −$935M; net inflows +$41M	Fixed income momentum offsets equity outflows
Macro/Volatility	“Steep market volatility” provided opportunities (Q2)	Market appreciation slowed QoQ ($471M vs. $923M Q2)	Macro mixed; more muted Q3 market tailwind
Technology/AI (Risk framing)	Noted as risk factor in filings	Continued inclusion in forward-looking risk disclosures	Monitoring technology/AI adaptation risks
Governance	—	Added independent director Diane C. Nordin, CFA; Board expanded to 8	Strengthened board oversight

Management Commentary

“We are encouraged by the continued growth of our fixed income strategies, which added nearly $1 billion in net flows this quarter and $2 billion year-to-date.” — Heather Brilliant, CEO .
“The conversion of our Large Cap Concentrated Fund to an ETF during the quarter highlights our commitment to delivering our investment capabilities through vehicles that best serve our clients.” — Heather Brilliant, CEO .
“Our Q4 special dividend of $4.00 per share brings our total annual dividends to $10.00 per share, resulting in another $27.2 million returned to shareholders during 2025.” — Heather Brilliant, CEO .

Q&A Highlights

No earnings call transcript for Q3 2025 was found; therefore, Q&A themes, clarifications, and tonal shifts could not be assessed from a primary-source call recording/transcript.

Estimates Context

S&P Global consensus estimates for Q3 2025 EPS and revenue were not available for DHIL at the time of query; as a result, we cannot assess beat/miss vs. Street for the quarter.*
All comparisons herein are vs. prior-year and prior-quarter actuals from the company’s 8-K press release and reconciliations .

Key Takeaways for Investors

Fixed income momentum is the swing factor: ~$1.0B fixed income inflows offset ~$0.9B equity outflows, yielding net inflows and modest AUM/AUA growth; sustaining this mix could stabilize fees against equity headwinds .
Margins are resilient despite revenue pressure: GAAP and adjusted operating margins held steady YoY at 26% and 32%, respectively, reflecting disciplined compensation and operating expense controls .
Capital return remains a cornerstone: A $4 special dividend plus the regular $1.50 Q4 dividend and ongoing buybacks (~$14.5M YTD) enhance total yield and may support shares near-term .
Investment income variability matters: Q3 net investment income fell YoY and QoQ, impacting EPS; watch market-sensitive items and non-GAAP adjustments for core earnings quality .
Strategy execution: Vehicle innovation (ETF conversion) and product breadth (new securitized fixed income strategies) point to incremental distribution advantages and potential flow durability .
Governance refresh: The addition of an experienced independent director strengthens oversight and may aid long-term strategic execution .
Near-term trading lens: The special dividend is a clear catalyst; absent Street estimates, focus will likely shift to flows, fee stability, and any subsequent AUM updates as the primary drivers.

Additional Detail: Non-GAAP Adjustments (Q3 2025)

Adjusted operating margin of 32% excludes deferred comp mark-to-market and non-hedging investment income, and adjusts for consolidated funds; adjusted diluted EPS was $3.24 vs. GAAP $4.99 .
Reconciliation items included: deferred comp liability (+2.1M to operating income), consolidated funds (−0.9M to total non‑op income), and other investment income (−5.5M to total non‑op income) with related tax effects .

Other Relevant Press Releases Around Q3 2025

Board appointment: Diane C. Nordin, CFA, appointed as Independent Director; Board expanded from 7 to 8; committee assignments include Audit, Compensation, and Nominating & Governance .

Estimates disclaimer: We attempted to retrieve consensus via S&P Global; no data were returned for DHIL’s Q3 2025 EPS or revenue at query time. Values cited in this report are company-reported actuals from the 8‑K press release and related reconciliations .

DIAMOND HILL INVESTMENT GROUP INC (DHIL)·Q3 2025 Earnings Summary