APAM — Artisan Partners Asset Management Inc.

Artisan Partners Asset Management Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Assets Under Management (AUM): $173 billion as of March 31, 2026, down 4% from the previous quarter but up 7% year-over-year. AUM recovered to nearly $184 billion by early April.
• Revenue: $303 million, a decrease of 10% from the previous quarter but an increase of 9% year-over-year. The decline was attributed to the absence of performance fees and fewer business days in the quarter.
• Average AUM: $182 billion, up 1% sequentially and 9% year-over-year.
• Adjusted Operating Income: Decreased 30% sequentially but increased 6% year-over-year.
• Adjusted Net Income per Share: Declined 31% from the previous quarter but increased 5% year-over-year.
• Dividend: Declared a quarterly dividend of $0.77 per share, down 24% sequentially but up 13% year-over-year.

2. Strategic Updates and Business Highlights

• Investment Performance: Long-term performance remains strong, with 74% of AUM outperforming benchmarks over 3 years, 76% over 5 years, and 99% over 10 years gross of fees.
• New Initiatives: Onboarded Grandview Property Partners, a real estate private equity firm, and expanded distribution capabilities in EMEA and the intermediate wealth channel.
• Net Flows: Experienced $3.1 billion in net outflows, primarily in equity strategies due to client reallocations. However, positive inflows were noted in 13 investment strategies, including $250 million in sustainable emerging markets and $800 million in credit strategies.
• Recognition: Two investment teams received accolades from Morningstar and Lipper for investment excellence.

3. Forward Guidance and Outlook

• Business Development: Expect continued strong inflows in credit and alternatives, while the equity landscape remains challenging.
• M&A Opportunities: Actively exploring acquisitions and team lift-outs, particularly in credit and alternatives, with a robust pipeline.
• Expense Management: Full-year expense guidance remains unchanged, with expectations for fixed expenses to increase at a low single-digit rate.

4. Bad News, Challenges, or Points of Concern

• Equity Strategy Underperformance: Recent underperformance in large equity strategies has led to significant outflows and challenges in institutional relationships.
• Market Volatility: AUM declined sharply in March due to market conditions, although it has since recovered.
• Absence of Performance Fees: The lack of performance fees in Q1 contributed to decreased revenue and profitability metrics.

5. Notable Q&A Insights

• Equity Reallocation: Discussions highlighted that outflows were primarily due to rebalancing among institutional clients rather than terminations, with a focus on international strategies.
• Institutional Pipeline: The firm is targeting the intermediate wealth space for growth and has seen positive inflows, despite challenges in some equity strategies.
• Future Opportunities: Management expressed optimism about expanding credit and alternatives, with potential deals expected by year-end. They also noted ongoing evaluations of existing businesses for incremental opportunities.

Overall, while Artisan Partners faced challenges in equity strategies leading to net outflows and revenue declines, the firm remains focused on long-term investment performance and strategic growth in credit and alternatives.