Virtus Investment Partners (VRTS) Q1 2025 earnings summary

Executive summary

• Assets under management (AUM) declined to $167.5 billion, down 6.6% year-over-year and 4% sequentially, driven by negative market performance and net outflows across all channels.

• Adjusted diluted EPS was $5.73, up 6% year-over-year, while GAAP diluted EPS was $4.05, down 1.2% from Q1 2024.

• Net outflows totaled $3.0 billion, with U.S. retail funds, institutional, and retail separate accounts all contributing.

• Share repurchases increased, with $26.1 million spent in Q1, reducing shares outstanding by 3% over the past year.

• ETFs delivered strong positive net flows and organic growth, partially offsetting outflows in other channels.

Financial highlights

• Revenues (GAAP) were $217.9 million, down 1.9% year-over-year and 7% sequentially; adjusted revenues were $197.6 million.

• Adjusted operating income was $54.6 million, down 27% sequentially, with an adjusted operating margin of 27.6% (32.7% excluding seasonal employment expenses).

• Investment management fees as adjusted were $178.5 million, down 7% sequentially; average management fee rate was 41.7 bps.

• Cash and cash equivalents at quarter-end were $135.4 million, down from $265.9 million at year-end 2024.

• Net income attributable to shareholders was $28.6 million; adjusted net income was $40.5 million.

Outlook and guidance

• Fee rate expected to remain in the 41-42 basis point range, with performance fees of $3-5 million per year incremental.

• Employment expenses as a percentage of revenues anticipated at the higher end of the 49%-51% range if markets remain at current levels.

• Other operating expenses expected to remain in the $30-$32 million quarterly range, with $1 million per quarter in savings from office space reductions starting Q3.

• Management highlights ongoing risks from market volatility, competition, regulatory changes, and potential for further AUM declines.

• Financial flexibility remains with low net leverage and an undrawn $175 million revolver.