• Total Client Assets: $176.1 billion, up $9.5 billion or 6% from the end of last year.
• Revenue: $232.4 million for Q4, highest quarterly revenue in history; $893 million for the full year, a 9% increase from 2023.
• Adjusted Earnings Per Diluted Share: $1.45 for Q4, up 26% from $1.15 in last year's Q4; $5.36 for the full year, up 19% from $4.51 in 2023.
• Adjusted EBITDA: $126 million for Q4, a new quarterly record.
• Adjusted EBITDA Margin: 54%, a new quarterly record.
• GAAP Operating Income: $111.7 million for Q4, up 29% from the same quarter last year.
• GAAP Earnings Per Diluted Share: $1.17 for Q4; $4.38 for the full year, up more than 40% from $3.12 in 2023.
• Adjusted Net Income with Tax Benefit: $95.1 million for Q4, up 24% from last year's Q4; $353.1 million for the full year, up 15% from the prior year.
• Cash Balance: $127 million at year-end.
• Shareholder Returns: $132.4 million returned in Q4 through share repurchases and dividends.
• Dividend Increase: 7% increase, raising the quarterly dividend to $0.47 per share.
• Cash Flow from Operations: $92 million for Q4.
• Net Leverage Ratio: 1.7 times, unchanged from Q3.
• ETF AUM: Close to $12 billion, up from less than $200 million in 2015.

• Warning! GuruFocus has detected 4 Warning Sign with VCTR.

Release Date: February 07, 2025

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

Positive Points

• Victory Capital Holdings Inc (NASDAQ:VCTR) achieved record revenue for both the fourth quarter and full year 2024, driven by strong sales of high-margin ETFs.
• The company reported a 26% increase in adjusted earnings per diluted share for the fourth quarter, reaching a record high of $1.45.
• Victory Capital Holdings Inc (NASDAQ:VCTR) is on track to close its acquisition of Amundi by the end of the quarter, with anticipated $100 million in cost synergies.
• The company's ETF platform, VictoryShares, saw significant growth, with assets under management increasing to nearly $12 billion.
• Victory Capital Holdings Inc (NASDAQ:VCTR) announced a 7% increase in its quarterly cash dividend, reflecting confidence in its financial performance.

Negative Points

• Despite improvements, long-term net flows have not yet reached the full potential of Victory Capital Holdings Inc (NASDAQ:VCTR).
• Total client assets declined by just under 3% during the fourth quarter, primarily due to market actions.
• The company incurred $2.8 million in acquisition-related expenses in the fourth quarter, impacting overall expenses.
• Sycamore, one of Victory Capital Holdings Inc (NASDAQ:VCTR)'s larger franchises, experienced some outflows, although the company remains confident in its long-term performance.
• The integration of Amundi's products into Victory Capital Holdings Inc (NASDAQ:VCTR)'s distribution network will take time, with significant benefits expected only by the end of 2025 and into 2026.

Q & A Highlights

Q: As we look out into 2025, what strategies do you expect to be most in favor and contribute the most to organic growth? A: David Brown, CEO, highlighted that the VictoryShares ETF platform is performing well and is expected to continue growing. Additionally, the institutional channel presents numerous opportunities, with a significant pipeline of unfunded projects. The integration with Amundi is also anticipated to enhance growth, given Amundi's positive net flows and strong start in 2025.

Q: On the Amundi deal, what sort of revenue synergies do you expect, and how soon do you expect to see flow benefits from the distribution partnership? A: Michael Policarpo, CFO, explained that the 15-year exclusive distribution agreement with Amundi is expected to enhance organic growth. While specific details are not yet available, the addition of Victory products to Amundi's global distribution network is anticipated to be beneficial. The focus is on evaluating which Victory products will be introduced through this channel.

Q: Victory's margins continue to rise. Could you discuss any margin differences across different products or vehicles? A: Michael Policarpo noted that Victory's single operating platform allows for significant scale and efficiency, with over two-thirds of expenses being variable. The ETF business, despite slightly lower revenue realization, remains as profitable as other channels due to its active and rules-based nature. This structure supports strong margins across all product vehicles.

Q: Regarding the Amundi and potential introduction of Victory products in non-US distribution, how rapidly could you introduce products, and what are the key gating factors? A: David Brown stated that the introduction of Victory products will occur throughout 2025 and into 2026. Initially, existing Amundi US products will continue to drive flows, with Victory products being registered and introduced gradually. Each geography will have its own regulatory requirements, but the existing infrastructure of Amundi US will facilitate this process.

Q: Can you provide an update on the Amundi US business's AUM and flow trends? A: Michael Policarpo reported that Amundi US was net flow positive in 2024, with $2.6 billion in net flows across various products. The AUM at year-end was approximately $114 billion. The business has exceeded expectations, with strong investment performance and positive momentum continuing into 2025.

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