• Net Flows: Over $20 billion in net flows for the year, reaching $153 billion by year-end 2024.
• Net Revenue: $760 million, a 37% increase from the prior year.
• Net Operating Income: $578 million, a 50% increase from the prior year.
• Dividend: Fourth quarter dividend of USD0.0378 per share, up from USD0.0348 in the third quarter.
• Operating Margin: 76%, a 170 basis point increase from 2023.
• FUM Growth: Just under 27% year-over-year, driven by $20.2 billion of net flows.
• Management Fees: Represented 96.8% of net revenue in 2024.
• Average Management Fee: 49.6 basis points, up from 48.8 basis points in 2023.
• Operating Expenses: Increased by 37% compared to the prior year.
• Compensation and Benefits: Consistent at circa 56% of total operating expenses year-over-year.
• Effective Tax Rate: Decreased from 26.97% to 26.48%.
• Cash and Accounts Receivable: Growth aligned with revenue growth.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• GQG Partners Inc (ASX:GQG) reported strong net flows of over $20 billion for the year, bringing total assets under management to $153 billion.
• Net revenues increased by approximately 37% to $760 million, with net operating income rising by 50% to $578 million.
• The company declared a fourth-quarter dividend of USD0.0378 per share, maintaining a 90% payout ratio, and plans to expand the dividend payout ratio to 50% to 95% of distributable earnings.
• All four primary strategies demonstrated strong long-term outperformance on a 3-, 5-, and 10-year basis, with top quintile 5-year Alpha and Sharpe ratios.
• GQG Partners Inc (ASX:GQG) successfully closed its first acquisition, launching the Private Client Services business, and reported strong performance from the acquired boutiques.

Negative Points

• The institutional business has experienced seven consecutive quarters of net outflows, indicating a more mature and potentially saturated channel.
• There was a notable asset allocation shift in Q4, with investors moving away from non-US towards US equity strategies, impacting flows.
• The company faces challenges in maintaining its high operating margin, which is heavily influenced by market beta and sales growth.
• Management fee margins are at the higher end of their historical range, with potential downward pressure if US equity grows faster than other strategies.
• The PCS Master Fund de-consolidation had a complex accounting impact, although it resulted in a zero net income after-tax impact for GQG Partners Inc (ASX:GQG).

Q & A Highlights

Q: Can you elaborate on the dividend policy change and its implications for capital management? A: Tim Carver, CEO: The change provides flexibility with our capital base. We don't plan to reduce the dividend to build capital currently. The change allows us to use the balance sheet for growth opportunities, such as acquisitions, without relying on debt. Rajiv and I are incentivized to maintain high dividends as we are major shareholders.

Q: What are the prospects for the institutional channel, given its recent outflows? A: Tim Carver, CEO: The institutional business is more mature and less of a growth driver compared to wholesale and intermediary markets. However, it remains important, and we expect some growth, especially with the re-branding of our value strategies. The recent outflows are not significant, and we continue to have strong gross flows.

Q: Can you discuss the impact of recent market events on investor sentiment and flows? A: Tim Carver, CEO: There was a brief period of retail outflows likely due to political events, but we've had active dialogue with clients, and there are no lingering risks. Our clients have benefited from our investments, and we are confident in our current positions.

Q: How do you plan to capitalize on the growth opportunity in the US equity strategy? A: Tim Carver, CEO: The US equity strategy is less mature but has significant growth potential. We are expanding through separately managed accounts and retail distribution partnerships. We expect higher growth in US equity strategies compared to others.

Q: What is the outlook for management fee margins, considering the mix of products and channels? A: Tim Carver, CEO: It's challenging to predict precisely, but we are at the higher end of our historical range. Growth in US equity could exert downward pressure, while retail growth could push it upward. We don't expect significant increases from current levels.

Q: What are your plans for acquisitions within the PCS business? A: Tim Carver, CEO: PCS capital is primarily third-party, with potential co-investments from our balance sheet. We aim for the first fund to reach $200-$250 million, with long-term potential for $1 billion. We target specialist strategies with meaningful differentiation.

Q: How do you view operating leverage and cost management going forward? A: Tim Carver, CEO: We don't target specific margins but focus on investing in talent and infrastructure. Market-driven returns are the biggest margin driver. We aim to field the best team possible, which may lead to variable margins.

Q: Are there any changes in reinvestment trends or seasonality affecting net flows? A: Tim Carver, CEO: There is some seasonality in Q4 outflows and Q1 inflows, but it's hard to trace precisely. The main difference this year was a Q4 asset allocation shift towards US equity, which we don't expect to be ongoing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.