Victory Capital Holdings ((VCTR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Victory Capital Holdings recently held its earnings call, shedding light on a year marked by record-breaking achievements and some challenges. Overall sentiment was positive, reflecting a strong performance and promising growth potential for the company. Despite a decline in total client assets and some outflows in the Sycamore franchise, the company’s successes, including record revenue and progress in strategic acquisitions, were celebrated.
Record Revenue and Earnings
Victory Capital reported impressive financial results, with record revenue reaching $232.4 million for the fourth quarter and $893 million for the full year 2024. This represents a 9% increase from the previous year. Additionally, adjusted earnings per diluted share hit a record high of $1.45 in the quarter, marking a 26% year-over-year increase.
Strong Growth in ETF Platform
The Victory Shares ETF platform experienced robust growth, with assets under management (AUM) nearing $12 billion. This growth was driven by innovative product launches and an expanded distribution network, contributing to accelerated sales throughout the year.
Amundi Acquisition Progress
Victory Capital’s acquisition of Amundi U.S. is proceeding as planned, with the deal expected to close by the end of the quarter. The company anticipates $100 million in cost synergies, with Amundi U.S. mutual funds posting net long-term flows of $2.6 billion in 2024.
Shareholder Returns
The company demonstrated a strong commitment to shareholder returns, distributing $132.4 million in the fourth quarter through share repurchases and dividends. Moreover, Victory Capital announced a 7% increase in its quarterly cash dividend.
Record Adjusted EBITDA and Margin
Victory Capital achieved a record adjusted EBITDA of $125.5 million in Q4, with a margin of 54%. For the full year, adjusted EBITDA grew by 14% to reach $476 million, with a margin expansion of 230 basis points to 53.2%.
Decline in Total Client Assets
Despite strong financial performance, the company faced a decline in total client assets, which fell by just under 3% during the fourth quarter, ending at $176.1 billion. This decline was primarily attributed to market actions.
Sycamore Franchise Outflows
The Sycamore franchise encountered some challenges, experiencing outflows despite its long-term positive cycles. This posed a difficulty in maintaining net inflows.
Forward-Looking Guidance
In its forward-looking statements, Victory Capital projected continued growth and financial strength. The company anticipates $100 million in cost synergies from the Amundi acquisition within two years, with most savings expected in the first year. Additionally, the ETF platform is set to continue its strong performance, with significant AUM growth anticipated.
In summary, Victory Capital’s recent earnings call highlighted a year of remarkable achievements, underscored by record revenue and strategic growth initiatives. While facing some challenges, the company’s focus on innovation and strategic acquisitions positions it well for future growth. The overall sentiment of the call was positive, reflecting confidence in the company’s ability to sustain its momentum and deliver value to shareholders.
