Artisan Partners Asset Management (APAM) Q2 2024 earnings summary

Executive summary

• Focused on high value-added investing, expanding into alternatives and emerging markets with a talent-driven approach, and reported strong Q2 2024 financial results with year-over-year growth in revenue, operating income, and net income.

• Managing 19 strategies and over $159 billion in AUM as of June 2024, up 11% year-over-year, with AUM at $158.9B at quarter-end after $1.6B in net client cash outflows.

• Recent wins include $800 million in Sustainable Emerging Markets and $860 million in Emerging Markets Debt Opportunities.

• The firm maintains a long-term growth focus, fee discipline, and alignment of interests between employees and shareholders.

• Reported Q2 2024 and six-month results, with a declared quarterly dividend and a scheduled July 24, 2024, conference call to discuss results.

Financial highlights

• Q2 2024 revenues were $270.8M, up 11% year-over-year and 2% sequentially, with adjusted operating income of $87.3M, up 13% year-over-year and 7% sequentially.

• Adjusted net income for Q2 2024 was $66.0M, with adjusted EPS of $0.82, up from $0.71 in Q2 2023.

• Operating margin improved to 32.0% for Q2 2024, with adjusted operating margin at 32.2%.

• Net client cash outflows were $1.6B in Q2 2024, with outflows in growth and value strategies partially offset by inflows in sustainable emerging markets and fixed income.

• Operating expenses increased 11% year-over-year, mainly due to higher compensation and benefits.

Outlook and guidance

• Expect continued growth in alternatives and emerging markets, with a strong pipeline of large mandates and ongoing investment in new strategies.

• Anticipate long-term amortization of $16 million in each of Q3 and Q4 2024, excluding mark-to-market impacts.

• Management expects business and financial results to remain lumpy over time, driven by market conditions and AUM fluctuations.

• Confident in ability to compete for institutional mandates as strategies mature and reach key track record milestones.

• The firm expects continued market volatility but believes its variable cost structure and strong cash flow provide stability.