VCTR Victory Capital Holdings Inc

First-Quarter Highlights

• Total Client Assets of $175.5 billion
• Long-term gross flows of $7.0 billion
• Long-term net flows of ($1.0) billion
• GAAP operating margin of 39.3%
• GAAP net income of $0.84 per diluted share
• Adjusted EBITDA margin of 52.1%
• Adjusted net income with tax benefit of $1.25 per diluted share
• Board authorizes a 10% increase in regular quarterly cash dividend to $0.37

Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or “the Company”) today reported financial results for the quarter ended March 31, 2024.

“We achieved very strong results to start 2024,” said David Brown, Chairman and Chief Executive Officer. “During the first quarter, our long-term gross and net flows improved quarter-over-quarter and year-over-year, reaching their best levels in more than a year. This momentum accelerated toward the end of the quarter, with our long-term net flows turning positive in March. Additionally, we posted the highest level of quarterly revenue, adjusted EBITDA, and Adjusted Net Income in the past six quarters.”

“Our Investment Franchises continued to deliver excellent investment performance for our clients. Through the end of March, the percentage of our AUM outperforming benchmarks over the respective 3-, 5-, and 10-year periods was 61%, 85%, and 80%. In addition, 69% of our AUM in mutual funds and ETFs was rated four or five stars overall by Morningstar.

“The Board authorized a 10% increase in our quarterly cash dividend from $0.335 to $0.37, which will be paid in June.

“Subsequent to quarter end, we disclosed a non-binding Memorandum of Understanding with Amundi to enter into a proposed multi-dimensional transaction that is both strategic and financially compelling at the same time. The strategic transaction would combine Amundi US into our Company and establish 15-year global and reciprocal distribution agreements. These agreements would represent a significant enhancement in the globalization of our Company and are projected to grow AUM and revenue. We are working toward a definitive agreement by the end of June.

“As always, we continue to focus on serving our clients, which is our top priority.”

Total Client Assets includes Total AUM and Other Assets. Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes Other Assets.

The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure.

The table below presents total AUM, and certain GAAP and non-GAAP (“adjusted”) financial results. Due to rounding, total AUM values and other amounts in this press release may not add up precisely to the totals provided.

(in millions except per share amounts or as otherwise noted)

For the Three Months Ended March 31, December 31, March 31,

2024

2023

2023

Assets Under Management1 Ending $

170,342

 

$

161,322

 

$

153,356

 

Average

163,533

 

151,870

 

152,533

 

  AUM Long-term Flows2 Long-term Gross $

6,952

 

$

6,357

 

$

5,848

 

Long-term Net

(1,028

)

(1,334

)

(1,140

)

  AUM Money Market/Short-term Flows Money Market / Short-term Gross $

236

 

$

188

 

$

241

 

Money Market / Short-term Net

(99

)

(47

)

(9

)

  AUM Total Flows Total Gross $

7,187

 

$

6,545

 

$

6,089

 

Total Net

(1,127

)

(1,381

)

(1,149

)

  Consolidated Financial Results (GAAP) Revenue $

215.9

 

$

205.8

 

$

201.3

 

AUM revenue realization (in bps)

53.0

 

53.6

 

53.4

 

Operating expenses

131.0

 

119.5

 

126.8

 

Income from operations

84.8

 

86.3

 

74.6

 

Operating margin

39.3

%

41.9

%

37.0

%

Net income

55.7

 

55.2

 

49.3

 

Earnings per diluted share $

0.84

 

$

0.82

 

$

0.71

 

Cash flow from operations

68.7

 

97.1

 

64.2

 

  Adjusted Performance Results (Non-GAAP)3 Adjusted EBITDA $

112.4

 

$

107.6

 

$

99.2

 

Adjusted EBITDA margin

52.1

%

52.3

%

49.3

%

Adjusted net income

72.6

 

67.4

 

65.6

 

Tax benefit of goodwill and acquired intangible assets

9.7

 

9.7

 

9.5

 

Adjusted net income with tax benefit

82.3

 

77.0

 

75.2

 

Adjusted net income with tax benefit per diluted share $

1.25

 

$

1.15

 

$

1.08

 

__________________________  

1 Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

2 Long-term AUM is defined as total AUM excluding Money Market and Short-term assets.

3 The Company reports its financial results in accordance with GAAP. Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of Non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure.

AUM, Flows and Investment Performance

At March 31, 2024, Victory Capital had total client assets of $175.5 billion, assets under management of $170.3 billion, and other assets of $5.1 billion. Total AUM increased by $9.0 billion to $170.3 billion at March 31, 2024, compared with $161.3 billion at December 31, 2023. The increase was due to positive market action of $10.2 billion, partially offset by net outflows of $1.1 billion. Total gross flows for the first quarter were $7.2 billion, including long-term gross flows of $7.0 billion.

As of March 31, 2024, Victory Capital offered 121 investment strategies through its 11 autonomous Investment Franchises and Solutions Platform. The table below presents outperformance against benchmarks by AUM as of March 31, 2024.

Percentage of AUM Outperforming Benchmark Trailing Trailing Trailing Trailing 1-Year 3-Years 5-Years 10-Years

54%

61%

85%

80%

First Quarter 2024 Compared with Fourth Quarter 2023

Revenue increased $10.1 million to $215.9 million, in the first quarter, compared with $205.8 million in the fourth quarter, due to an increase in average total client assets partially offset by one less day in the quarter and a decrease in revenue realization. GAAP operating margin contracted 260 basis points in the first quarter to 39.3%, down from 41.9% in the fourth quarter, due to an $8.2 million increase in non-cash amounts recorded to the change in fair value of consideration payable for acquisitions as well as an increase in personnel compensation and benefits. First quarter GAAP net income increased 0.9% to $55.7 million, up from $55.2 million in the prior quarter. On a per-share basis, GAAP net income increased 2.4% to $0.84 per diluted share in the first quarter, versus $0.82 per diluted share in the fourth quarter.

Adjusted net income with tax benefit increased 6.9% to $82.3 million, or $1.25 per diluted share, in the first quarter, up from $77.0 million, or $1.15 per diluted share, in the fourth quarter. Adjusted EBITDA increased $4.8 million to $112.4 million in the first quarter compared to $107.6 million in the fourth quarter. Adjusted EBITDA margin contracted 20 basis points in the first quarter of 2024 to 52.1% compared with 52.3% in the prior quarter primarily due to higher seasonal payroll taxes and benefits.

First Quarter 2024 Compared with First Quarter 2023

Revenue for the three months ended March 31, 2024, increased 7.2% to $215.9 million, compared with $201.3 million in the same quarter of 2023. The increase was due to higher average AUM and one additional day. GAAP operating margin was 39.3% in the first quarter, a 230 basis point expansion from 37.0% in the same quarter of 2023. Operating expenses increased 3.4% to $131.0 million, compared with $126.8 million in the first quarter of 2023. The increase was primarily due to a $4.8 million increase in amounts recorded to the change in fair value of consideration payable for acquisitions. GAAP net income increased 13.0% to $55.7 million, or $0.84 per diluted share, in the first quarter compared with $49.3 million, or $0.71 per diluted share, in the same quarter of 2023.

Adjusted net income with tax benefit expanded 9.5% to $82.3 million, or $1.25 per diluted share, in the first quarter, compared with $75.2 million, or $1.08 per diluted share, in the same quarter last year. Adjusted EBITDA increased 13.3% to $112.4 million, compared with $99.2 million in the same quarter of 2023. Year-over-year, adjusted EBITDA margin expanded 280 basis points to 52.1% in the first quarter of 2024, compared with 49.3% in the same quarter last year.

Balance Sheet / Capital Management

The total debt outstanding as of March 31, 2024 was approximately $1,002 million and consisted of an existing term loan balance of $631 million and the 2021 Incremental Term Loans balance of $371 million. Subsequent to March 31, 2024, the Company reduced outstanding debt by $9.5 million.

The Company’s Board of Directors approved a regular quarterly cash dividend of $0.37 per share. The dividend is payable on June 25, 2024, to shareholders of record on June 10, 2024.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call tomorrow morning, May 10, at 8:00 a.m. ET to discuss the results. Analysts and investors may participate in the question-and-answer session. To participate in the conference call, please call (888) 330-3571 (domestic) or (646) 960-0657 (international), shortly before 8:00 a.m. ET and reference the Victory Capital Conference Call. A live, listen-only webcast will also be available via the investor relations section of the Company’s website at https://ir.vcm.com. Prior to the call, a supplemental slide presentation that will be used during the conference call will be available on the Events and Presentations page of the Company’s investor relations website. For anyone who is unable to join the live event, an archive of the webcast will be available for replay shortly after the call concludes.

About Victory Capital

Victory Capital is a diversified global asset management firm with total assets under management of $170.3 billion, and $175.5 billion in total client assets, as of March 31, 2024. The Company employs a next-generation business strategy that combines boutique investment qualities with the benefits of a fully integrated, centralized operating and distribution platform.

Victory Capital provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors. With 11 autonomous Investment Franchises and a Solutions Business, Victory Capital offers a wide array of investment products and services, including mutual funds, ETFs, separately managed accounts, alternative investments, third-party ETF model strategies, collective investment trusts, private funds, a 529 Education Savings Plan, and brokerage services.

Victory Capital is headquartered in San Antonio, Texas, with offices and investment professionals in the U.S. and around the world. To learn more please visit www.vcm.com or follow Victory Capital on Facebook, Twitter, and LinkedIn.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,” “future,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Victory Capital’s control such as continued geopolitical uncertainty including the conflicts in Ukraine and Israel and its effect on our business, operations and financial results going forward, as discussed in Victory Capital’s filings with the SEC, that could cause Victory Capital’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements.

Although it is not possible to identify all such risks and factors, they include, among others, the following: the Memorandum of Understanding is non-binding and there is no certainty that the negotiations will result in definitive agreements or that the currently contemplated terms will not change; risks that the conditions to closing will be satisfied and the transaction will close on the anticipated timeline, if at all; risks associated with expected benefits, or impact on our business, of the proposed transaction, including our ability to achieve any expected synergies; reductions in AUM based on investment performance, client withdrawals, difficult market conditions and other factors such as a pandemic; the nature of the Company’s contracts and investment advisory agreements; the Company’s ability to maintain historical returns and sustain its historical growth; the Company’s dependence on third parties to market its strategies and provide products or services for the operation of its business; the Company’s ability to retain key investment professionals or members of its senior management team; the Company’s reliance on the technology systems supporting its operations; the Company’s ability to successfully acquire and integrate new companies; the concentration of the Company’s investments in long-only small- and mid-cap equity and U.S. clients; risks and uncertainties associated with non-U.S. investments; the Company’s efforts to establish and develop new teams and strategies; the ability of the Company’s investment teams to identify appropriate investment opportunities; the Company’s ability to limit employee misconduct; the Company’s ability to meet the guidelines set by its clients; the Company’s exposure to potential litigation (including administrative or tax proceedings) or regulatory actions; the Company’s ability to implement effective information and cyber security policies, procedures and capabilities; the Company’s substantial indebtedness; the potential impairment of the Company’s goodwill and intangible assets; disruption to the operations of third parties whose functions are integral to the Company’s ETF platform; the Company’s determination that Victory Capital is not required to register as an "investment company" under the 1940 Act; the fluctuation of the Company’s expenses; the Company’s ability to respond to recent trends in the investment management industry; the level of regulation on investment management firms and the Company’s ability to respond to regulatory developments; the competitiveness of the investment management industry; the level of control over the Company retained by Crestview GP; and other risks and factors listed under "Risk Factors" and elsewhere in the Company’s filings with the SEC.

Such forward-looking statements are based on numerous assumptions regarding Victory Capital’s present and future business strategies and the environment in which it will operate in the future. Any forward-looking statement made in this press release speaks only as of the date hereof. Except as required by law, Victory Capital assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(in thousands except per share data and percentages)

  For the Three Months Ended March 31, December 31, March 31,

2024

2023

2023

Revenue Investment management fees $

169,785

 

$

160,677

 

$

156,836

 

Fund administration and distribution fees

46,072

 

45,117

 

44,484

 

Total revenue

215,857

 

205,794

 

201,320

 

  Expenses Personnel compensation and benefits

59,454

 

53,949

 

57,602

 

Distribution and other asset-based expenses

36,263

 

36,438

 

37,654

 

General and administrative

14,012

 

16,702

 

12,388

 

Depreciation and amortization

7,601

 

7,984

 

11,680

 

Change in value of consideration payable for acquisition of business

12,200

 

4,000

 

7,400

 

Acquisition-related costs

1,026

 

83

 

2

 

Restructuring and integration costs

492

 

320

 

29

 

Total operating expenses

131,048

 

119,476

 

126,755

 

  Income from operations

84,809

 

86,318

 

74,565

 

Operating margin

39.3

%

41.9

%

37.0

%

  Other income (expense) Interest income and other income (expense)

3,565

 

3,765

 

1,544

 

Interest expense and other financing costs

(16,486

)

(16,561

)

(14,239

)

Total other expense, net

(12,921

)

(12,796

)

(12,695

)

  Income before income taxes

71,888

 

73,522

 

61,870

 

  Income tax expense

(16,197

)

(18,316

)

(12,597

)

  Net income $

55,691

 

$

55,206

 

$

49,273

 

  Earnings per share of common stock Basic $

0.86

 

$

0.85

 

$

0.73

 

Diluted

0.84

 

0.82

 

0.71

 

  Weighted average number of shares outstanding Basic

64,389

 

65,309

 

67,288

 

Diluted

65,972

 

66,935

 

69,727

 

  Dividends declared per share $

0.335

 

$

0.32

 

$

0.32

 

Victory Capital Holdings, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures1

(unaudited; in thousands except per share data and percentages)

  For the Three Months Ended March 31, December 31, March 31,

2024

2023

2023

Net income (GAAP) $

55,691

 

$

55,206

 

$

49,273

 

Income tax expense

(16,197

)

(18,316

)

(12,597

)

Income before income taxes $

71,888

 

$

73,522

 

$

61,870

 

Interest expense

15,711

 

15,532

 

13,482

 

Depreciation

2,269

 

2,273

 

1,971

 

Other business taxes

369

 

305

 

384

 

Amortization of acquisition-related intangible assets

5,332

 

5,711

 

9,709

 

Stock-based compensation

1,327

 

1,503

 

2,004

 

Acquisition, restructuring and exit costs

14,705

 

5,586

 

8,984

 

Debt issuance costs

755

 

3,128

 

748

 

Adjusted EBITDA $

112,356

 

$

107,560

 

$

99,152

 

Adjusted EBITDA margin

52.1

%

52.3

%

49.3

%

    Net income (GAAP) $

55,691

 

$

55,206

 

$

49,273

 

Adjustment to reflect the operating performance of the Company Other business taxes

369

 

305

 

384

 

Amortization of acquisition-related intangible assets

5,332

 

5,711

 

9,709

 

Stock-based compensation

1,327

 

1,503

 

2,004

 

Acquisition, restructuring and exit costs

14,705

 

5,586

 

8,984

 

Debt issuance costs

755

 

3,128

 

748

 

Tax effect of above adjustments

(5,621

)

(4,061

)

(5,457

)

Adjusted net income $

72,558

 

$

67,378

 

$

65,645

 

Adjusted net income per diluted share $

1.10

 

$

1.01

 

$

0.94

 

  Tax benefit of goodwill and acquired intangible assets $

9,748

 

$

9,655

 

$

9,524

 

Tax benefit of goodwill and acquired intangible assets per diluted share $

0.15

 

$

0.14

 

$

0.14

 

  Adjusted net income with tax benefit $

82,306

 

$

77,033

 

$

75,169

 

Adjusted net income with tax benefit per diluted share $

1.25

 

$

1.15

 

$

1.08

 

 

1 The Company reports its financial results in accordance with GAAP. Adjusted EBITDA and Adjusted Net Income are not defined by GAAP and should not be regarded as an alternative to any measurement under GAAP. Please refer to the section “Information Regarding Non-GAAP Financial Measures” at the end of this press release for an explanation of Non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure.

Victory Capital Holdings, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for shares)

  March 31,2024 December 31,2023 Assets Cash and cash equivalents $

79,937

 

$

123,547

 

Receivables

97,211

 

87,570

 

Prepaid expenses

7,269

 

5,785

 

Investments, at fair value

33,524

 

31,808

 

Property and equipment, net

17,552

 

19,578

 

Goodwill

981,805

 

981,805

 

Other intangible assets, net

1,276,500

 

1,281,832

 

Other assets

12,400

 

10,691

 

Total assets $

2,506,198

 

$

2,542,616

 

  Liabilities and stockholders' equity Accounts payable and accrued expenses $

62,022

 

$

56,477

 

Accrued compensation and benefits

48,521

 

55,456

 

Consideration payable for acquisition of business

149,400

 

217,200

 

Deferred tax liability, net

133,258

 

128,714

 

Other liabilities

45,658

 

42,499

 

Long-term debt, net1

990,206

 

989,269

 

Total liabilities

1,429,065

 

1,489,615

 

  Stockholders' equity Common stock, $0.01 par value per share: 2024 - 600,000,000 shares authorized, 83,166,423 shares issued and 64,671,237 shares outstanding; 2023 - 600,000,000 shares authorized, 82,404,305 shares issued and 64,254,714 shares outstanding

832

 

824

 

Additional paid-in capital

735,517

 

728,283

 

Treasury stock, at cost: 2024 - 18,495,186 shares; 2023 - 18,149,591 shares

(457,539

)

(444,286

)

Accumulated other comprehensive income

28,164

 

31,328

 

Retained earnings

770,159

 

736,852

 

Total stockholders' equity

1,077,133

 

1,053,001

 

Total liabilities and stockholders' equity $

2,506,198

 

$

2,542,616

 

 

1 Balances at March 31, 2024 and December 31, 2023 are shown net of unamortized loan discount and debt issuance costs in the amount of $11.5 million and $12.4 million, respectively. The gross amount of the debt outstanding was $1,001.7 million as of March 31, 2024 and December 31, 2023.

Victory Capital Holdings, Inc. and Subsidiaries

Total Client Assets

(unaudited; in millions)

 

For the Three Months Ended

March 31,

 

December 31,

 

March 31,

2024

 

2023

 

2023

Beginning AUM $

161,322

 

$

148,879

 

$

147,762

 

Beginning other assets1

5,289

 

4,627

 

5,190

 

Beginning total client assets

166,611

 

153,506

 

152,952

 

  AUM net cash flows

(1,127

)

(1,381

)

(1,149

)

Other assets net cash flows

(524

)

200

 

(95

)

Total client assets net cash flows

(1,651

)

(1,181

)

(1,244

)

  AUM market appreciation (depreciation)

10,178

 

13,853

 

6,744

 

Other assets market appreciation (depreciation)

352

 

462

 

170

 

Total client assets market appreciation (depreciation)

10,529

 

14,315

 

6,914

 

  AUM realizations and distributions

—

 

(27

)

—

 

Acquired & divested assets / Net transfers

(31

)

(2

)

—

 

  Ending AUM

170,342

 

161,322

 

153,356

 

Ending other assets

5,117

 

5,289

 

5,265

 

Ending total client assets

175,459

 

166,611

 

158,621

 

Average total client assets2

168,865

 

156,734

 

157,817

 

 

1 Includes low-fee (2 to 4 bps) institutional assets, previously reported in the Solutions asset class within the by asset class table and in Separate Accounts and Other Pooled Vehicles within the by vehicle table. These assets are included as part of Victory’s Regulatory Assets Under Management reported in Form ADV Part 1.

2 For the three-month periods ending March 31, 2024, December 31, 2023 and March 31, 2023 total client assets revenue realization was 51.4 basis points, 52.1 basis points and 51.7 basis points, respectively. 

Victory Capital Holdings, Inc. and Subsidiaries

Total Assets Under Management1

(unaudited; in millions)

  For the Three Months Ended

March 31,

December 31,

March 31,

2024

2023

2023

Beginning assets under management $

161,322

 

$

148,879

 

$

147,762

 

Gross client cash inflows

7,187

 

6,545

 

6,089

 

Gross client cash outflows

(8,314

)

(7,926

)

(7,238

)

Net client cash flows

(1,127

)

(1,381

)

(1,149

)

Market appreciation (depreciation)

10,178

 

13,853

 

6,744

 

Realizations and distributions

—

 

(27

)

—

 

Acquired & divested assets / Net Transfers

(31

)

(2

)

—

 

Ending assets under management

170,342

 

161,322

 

153,356

 

Average assets under management

163,533

 

151,870

 

152,533

 

 

1Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

Victory Capital Holdings, Inc. and Subsidiaries

Other Assets (Institutional)1

(unaudited; in millions)

  For the Three Months March 31, December 31, March 31,

2024

2023

2023

Beginning other assets (institutional) $

5,289

 

$

4,627

 

$

5,190

 

Gross client cash inflows

—

 

200

 

—

 

Gross client cash outflows

(524

)

(1

)

(95

)

Net client cash flows

(524

)

200

 

(95

)

Market appreciation (depreciation)

352

 

462

 

170

 

Realizations and distributions

—

 

—

 

—

 

Acquired & divested assets / Net transfers

—

 

—

 

—

 

Ending other assets (institutional)

5,117

 

5,289

 

5,265

 

Average other assets (institutional)2

5,332

 

4,864

 

5,284

 

 

1 Includes low-fee (2 to 4 bps) institutional assets, previously reported in the Solutions asset class within the by asset class table and in Separate Accounts and Other Pooled Vehicles within the by vehicle table. These assets are included as part of Victory’s Regulatory Assets Under Management reported in Form ADV Part 1.

2 For the three-month periods ending March 31, 2024, December 31, 2023 and March 31, 2023 total other assets (institutional) revenue realization was 3.5 basis points, 3.6 basis points and 3.5 basis points, respectively.

Victory Capital Holdings, Inc. and Subsidiaries

Total Assets Under Management by Asset Class

(unaudited; in millions)

  For the Three Months Ended By Asset Class Global / U.S. Mid U.S. Small Fixed U.S. Large Non-U.S. Alternative Total Money Market / Total Cap Equity Cap Equity Income Cap Equity Equity Solutions Investments Long-term Short-term AUM1 March 31, 2024 Beginning assets under management $

30,604

 

$

15,959

 

$

24,355

 

$

12,635

 

$

16,772

 

$

54,296

 

$

3,431

 

$

158,051

 

$

3,271

 

$

161,322

 

Gross client cash inflows

1,371

 

507

 

1,298

 

68

 

1,090

 

2,165

 

452

 

6,952

 

236

 

7,187

 

Gross client cash outflows

(1,845

)

(925

)

(1,367

)

(332

)

(751

)

(2,410

)

(349

)

(7,980

)

(335

)

(8,314

)

Net client cash flows

(474

)

(418

)

(69

)

(264

)

339

 

(245

)

103

 

(1,028

)

(99

)

(1,127

)

Market appreciation (depreciation)

2,795

 

801

 

176

 

1,555

 

1,133

 

3,749

 

(75

)

10,135

 

42

 

10,178

 

Realizations and distributions

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Acquired assets / Net transfers

(7

)

(45

)

18

 

(31

)

(44

)

33

 

5

 

(69

)

38

 

(31

)

Ending assets under management $

32,918

 

$

16,297

 

$

24,481

 

$

13,895

 

$

18,200

 

$

57,833

 

$

3,465

 

$

167,089

 

$

3,253

 

$

170,342

 

  December 31, 2023 Beginning assets under management $

28,235

 

$

14,650

 

$

23,790

 

$

11,596

 

$

14,807

 

$

49,371

 

$

3,222

 

$

145,671

 

$

3,208

 

$

148,879

 

Gross client cash inflows

1,008

 

555

 

1,072

 

62

 

1,251

 

1,910

 

498

 

6,357

 

188

 

6,545

 

Gross client cash outflows

(1,548

)

(938

)

(1,890

)

(329

)

(657

)

(1,977

)

(352

)

(7,691

)

(234

)

(7,926

)

Net client cash flows

(541

)

(383

)

(818

)

(267

)

595

 

(67

)

146

 

(1,334

)

(47

)

(1,381

)

Market appreciation (depreciation)

2,917

 

1,698

 

1,392

 

1,320

 

1,387

 

5,012

 

91

 

13,816

 

38

 

13,853

 

Realizations and distributions

—

 

—

 

—

 

—

 

—

 

—

 

(27

)

(27

)

—

 

(27

)

Acquired assets / Net transfers

(8

)

(6

)

(8

)

(14

)

(16

)

(20

)

(1

)

(74

)

72

 

(2

)

Ending assets under management $

30,604

 

$

15,959

 

$

24,355

 

$

12,635

 

$

16,772

 

$

54,296

 

$

3,431

 

$

158,051

 

$

3,271

 

$

161,322

 

  March 31, 2023 Beginning assets under management $

27,892

 

$

15,103

 

$

26,353

 

$

10,973

 

$

14,160

 

$

46,317

 

$

3,663

 

$

144,460

 

$

3,302

 

$

147,762

 

Gross client cash inflows

1,600

 

986

 

1,187

 

84

 

378

 

1,217

 

397

 

5,848

 

241

 

6,089

 

Gross client cash outflows

(1,092

)

(873

)

(1,571

)

(384

)

(544

)

(1,683

)

(840

)

(6,988

)

(250

)

(7,238

)

Net client cash flows

508

 

113

 

(385

)

(300

)

(166

)

(466

)

(444

)

(1,140

)

(9

)

(1,149

)

Market appreciation (depreciation)

637

 

423

 

615

 

822

 

920

 

3,196

 

96

 

6,709

 

34

 

6,744

 

Realizations and distributions

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Acquired assets / Net transfers

(1

)

9

 

(48

)

(69

)

(46

)

104

 

2

 

(50

)

50

 

—

 

Ending assets under management $

29,035

 

$

15,648

 

$

26,535

 

$

11,425

 

$

14,868

 

$

49,151

 

$

3,317

 

$

149,979

 

$

3,377

 

$

153,356

 

 

1Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

Victory Capital Holdings, Inc. and Subsidiaries

Assets Under Management by Vehicle

(unaudited; in millions)

  For the Three Months Ended By Vehicle Separate Accounts Mutual and Other Funds1 ETFs2 Vehicles3 Total AUM4 March 31, 2024 Beginning assets under management $

108,802

 

$

4,970

 

$

47,551

 

$

161,322

 

Gross client cash inflows

4,303

 

451

 

2,434

 

7,187

 

Gross client cash outflows

(5,956

)

(449

)

(1,909

)

(8,314

)

Net client cash flows

(1,653

)

2

 

525

 

(1,127

)

Market appreciation (depreciation)

6,796

 

215

 

3,167

 

10,178

 

Realizations and distributions

—

 

—

 

—

 

—

 

Acquired assets / Net transfers

(48

)

43

 

(26

)

(31

)

Ending assets under management $

113,897

 

$

5,229

 

$

51,217

 

$

170,342

 

  December 31, 2023 Beginning assets under management $

101,138

 

$

4,710

 

$

43,031

 

$

148,879

 

Gross client cash inflows

4,126

 

343

 

2,076

 

6,545

 

Gross client cash outflows

(5,887

)

(356

)

(1,682

)

(7,926

)

Net client cash flows

(1,761

)

(13

)

394

 

(1,381

)

Market appreciation (depreciation)

9,466

 

273

 

4,115

 

13,853

 

Realizations and distributions

—

 

—

 

(27

)

(27

)

Acquired assets / Net transfers

(41

)

—

 

39

 

(2

)

Ending assets under management $

108,802

 

$

4,970

 

$

47,551

 

$

161,322

 

  March 31, 2023 Beginning assets under management $

99,447

 

$

5,627

 

$

42,688

 

$

147,762

 

Gross client cash inflows

4,546

 

218

 

1,325

 

6,089

 

Gross client cash outflows

(5,406

)

(233

)

(1,599

)

(7,238

)

Net client cash flows

(860

)

(16

)

(274

)

(1,149

)

Market appreciation (depreciation)

4,650

 

(47

)

2,141

 

6,744

 

Realizations and distributions

—

 

—

 

—

 

—

 

Acquired assets / Net transfers

9

 

(9

)

—

 

—

 

Ending assets under management $

103,246

 

$

5,555

 

$

44,554

 

$

153,356

 

 

1 Includes institutional and retail share classes, money market and VIP funds.

2 Represents only ETF assets held by third parties. Excludes ETF assets held by other Victory Capital products.

3 Includes collective trust funds, wrap program accounts, UMAs, UCITS, private funds and non-U.S. domiciled pooled vehicles.

4Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

Information Regarding Non-GAAP Financial Measures

Victory Capital uses non-GAAP financial measures referred to as Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the Company. These measures eliminate the impact of one-time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the Company. The Company has included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of the Company.

Adjusted EBITDA

Adjustments made to GAAP Net Income to calculate Adjusted EBITDA, as applicable, are:

• Adding back income tax expense;
• Adding back interest paid on debt and other financing costs, net of interest income;
• Adding back depreciation on property and equipment;
• Adding back other business taxes;
• Adding back amortization expense on acquisition-related intangible assets;
• Adding back stock-based compensation expense associated with equity awards issued from pools created in connection with the management-led buyout and various acquisitions and as a result of equity grants related to the IPO;
• Adding back direct incremental costs of acquisitions, including restructuring costs;
• Adding back debt issuance cost expense;
• Adjusting for earnings/losses on equity method investments.

Adjusted Net Income

Adjustments made to GAAP Net Income to calculate Adjusted Net Income, as applicable, are:

• Adding back other business taxes;
• Adding back amortization expense on acquisition-related intangible assets;
• Adding back stock-based compensation expense associated with equity awards issued from pools created in connection with the management-led buyout and various acquisitions and as a result of any equity grants related to the IPO;
• Adding back direct incremental costs of acquisitions, including restructuring costs;
• Adding back debt issuance cost expense;
• Subtracting an estimate of income tax expense applied to the sum of the adjustments above.

Tax Benefit of Goodwill and Acquired Intangible Assets

Due to Victory Capital’s acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide it with additional significant supplemental economic benefit. The tax benefit of goodwill and intangible assets represent the tax benefits associated with deductions allowed for intangible assets and goodwill generated from prior acquisitions in which the Company received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangible assets with a step-up in tax basis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240509601397/en/

Investors: Matthew Dennis, CFA Chief of Staff Director, Investor Relations 216-898-2412 mdennis@vcm.com

Media: Jessica Davila Director, Global Communications 210-694-9693 jessica_davila@vcm.com