Artisan Partners Asset Management (APAM) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Assets Under Management (AUM): Reached a record $183 billion, up 6% from Q1 2026 and 5% year-over-year.

Average AUM: $182 billion, flat sequentially but up 9% from Q2 2025.

Revenues: $308 million, a 2% increase from Q1 2026 and a 9% increase year-over-year.

Weighted Average Fee Rate: Increased to 68 basis points due to the loss of U.S. Value team mandates.

Adjusted Operating Income: Rose to $101.4 million, an 8% sequential increase, with an adjusted operating margin of 32.9%.

Adjusted Earnings Per Share (EPS): Increased to $0.94, reflecting a 13% year-over-year growth.

Quarterly Dividend: Declared at $0.80 per share, a 4% increase from the previous quarter and a 10% increase year-over-year.

2Strategic Updates and Business Highlights

Investment Performance: 86% of AUM outperformed benchmarks over 3 years, with strong performance in credit and alternatives.

U.S. Value Team Wind-Down: Decision made to wind down the U.S. Value team due to the loss of two large sub-advisory mandates, expected to be completed by Q3 2026.

Net Client Outflows: Totaled $10.5 billion, primarily from U.S. Value and Growth teams.

Growth in Credit and Alternatives: Credit strategies saw net inflows of nearly $700 million, marking 16 consecutive quarters of positive organic growth. Alternatives attracted approximately $300 million in net inflows.

New Initiatives: Focus on expanding credit capabilities and launching new investment vehicles, including potential ETFs and private funds.

3Forward Guidance and Outlook

Q3 2026 Impact: Expected negative impact of $0.03 per share due to the U.S. Value team wind-down.

Expense Management: Anticipated decline in fixed expenses in Q3 due to seasonal adjustments and reduced severance costs.

Long-Term Growth: Positive outlook on expanding investment platforms, particularly in credit and alternatives, with a focus on meeting evolving client demands.

4Bad News, Challenges, or Points of Concern

Net Outflows: Significant outflows of $10.5 billion, with nearly 90% attributed to the U.S. Value and Growth teams, raising concerns about client retention and strategy performance.

Performance Issues: Some equity strategies, particularly in the Growth segment, are underperforming, leading to potential redemption risks.

Market Volatility: Ongoing volatility in global equity markets could impact future performance and client sentiment.

5Notable Q&A Insights

Client Demand: Strong demand for emerging markets and differentiated capabilities, particularly in Sustainable Emerging Markets.

Institutional Pipeline: Positive trends in gross sales and institutional wins, indicating a robust pipeline despite net outflows.

Grandview Property Partners: Anticipation of launching Fund IV in Fall 2026, with a focus on opportunistic investments in a challenging macro environment.

Credit Strategy Performance: Short-term performance challenges noted, particularly due to lack of energy exposure, but management remains confident in long-term capabilities. Overall, Artisan Partners demonstrated resilience in its business model with record AUM and strong investment performance in certain segments, while facing challenges from significant client outflows and performance issues in specific equity strategies. The company is strategically positioning itself for future growth through diversification and expansion into new investment vehicles.