Victory Capital’s Earnings Call Highlights Record Growth

Victory Capital Holdings ((VCTR)) has held its Q2 earnings call. Read on for the main highlights of the call.

Victory Capital Holdings has reported a positive outlook during its latest earnings call, highlighting significant growth milestones. The company achieved record client assets and successfully executed a strategic acquisition with Amundi. Despite facing challenges such as net outflows and one-time acquisition costs, Victory Capital demonstrated robust financial performance and growth potential, especially in its ETF platform and international expansion.

Record Client Assets

Victory Capital Holdings announced a remarkable increase in total client assets, which surged by 76% quarter-over-quarter, reaching over $300 billion. This marks a record high for the company at the end of a quarter, showcasing its strong market position and ability to attract and retain clients.

Strategic Acquisition Success

The company successfully closed a strategic transaction with Amundi, which significantly increased its size and scale. This acquisition has resulted in $70 million of net expense synergies achieved on a run rate basis, underscoring the effectiveness of Victory Capital’s strategic growth initiatives.

ETF Platform Growth

Victory Capital’s ETF platform demonstrated impressive growth, posting positive net flows of more than $4 billion in the first half of the year. This brought the ETF assets under management to $15 billion, representing an increase of nearly 90% from the previous year, highlighting the platform’s expanding market presence.

Increased Share Repurchase Plan

In a move that reflects confidence in its future growth, Victory Capital’s Board authorized an increase in the share repurchase plan from $200 million to $500 million. This is the largest share repurchase plan in the company’s history, signaling a strong commitment to returning value to shareholders.

Strong Financial Performance

The company reported a 60% increase in revenue from the first quarter, with an adjusted EBITDA margin of 50.8% and an adjusted net income of $132.8 million, or $1.57 per diluted share. These figures highlight Victory Capital’s strong financial health and operational efficiency.

Net Outflows

Despite net outflows of $660 million for the quarter, there has been an improvement in long-term flows on both a gross and net basis. This indicates a positive trend and potential for future growth in client assets.

One-time Acquisition Costs

The company’s GAAP results included $53 million of acquisition-related restructuring and integration costs, which were higher than in previous quarters. These costs are associated with the strategic acquisition of Amundi and are expected to decrease as integration progresses.

Lower Fee Rate

Victory Capital experienced a decrease in the realized fee rate to 49.4 basis points from the first quarter, with expectations of a further decrease to a range of 46 to 47 basis points. This adjustment reflects the company’s strategic pricing decisions in a competitive market.

Forward-looking Guidance

Looking ahead, Victory Capital provided optimistic guidance, with total client assets reaching a record high and gross long-term flows at $15.4 billion. The company anticipates further synergies from the Amundi acquisition, expecting an additional $40 million over the next 15 months. The expansion of ETF offerings and the increased share repurchase plan underscore the company’s confidence in its growth trajectory.

In summary, Victory Capital Holdings’ earnings call conveyed a positive sentiment, driven by record client assets, strategic acquisitions, and strong financial performance. The company’s commitment to growth through its ETF platform and share repurchase plan highlights its robust market position and potential for future success.