Artisan Partners Asset Management Inc. Q1 FY2025 earnings call

• Eric Colson emphasized Artisan's business model is stable with expenses adjusting to AUM changes. Their investment teams have autonomy to execute through market volatility. They've expanded from 5 to 11 investment teams and 12 to 27 strategies, moving to a multi-asset class platform. - Jason Gottlieb discussed new strategies like Artisan Global Special Situation launched in March, led by Brian Louko. Highlighted milestones of existing strategies: Artisan Global Unconstrained at 3 years, Emerging Market Debt Opportunities and Local Opportunities approaching 3 years, and Developing World strategy approaching 10 years with a 10+ year track record. - Charles Daley mentioned first quarter results had lower revenues due to absence of performance fees, net client cash outflows, but fixed income had positive flows for 11 consecutive quarters. AUM by distribution channel showed intermediated wealth channel growth to 60% of total AUM.

At quarter end, Artisan Partners had $162 billion in AUM. The intermediated wealth channel accounts for 60% of total AUM, with $97 billion sourced from that channel and an annualized organic growth rate of 5% over five years. First quarter of 2025 marked the 11th consecutive quarter of positive fixed income flows. Net client cash outflows during the March quarter were approximately $2.8 billion, with equity outflows partially offset by positive flows into fixed income and alternative businesses. Average AUM for the quarter was up 1% sequentially and 8% compared to the March 2024 quarter.

• For the full year of 2025, fixed expenses are expected to increase mid- to low-single digits. Adjusted operating income is down 19% sequentially from absence of performance fees but up 9% compared to the same quarter last year. Adjusted net income per adjusted share declined 21% sequentially but up 9% year-over-year. The Board declared a quarterly dividend of $0.68 per share for the March 2025 quarter, lower than Q4 due to absence of performance fees.

• Comments made during the call include forward-looking statements subject to known and unknown risks, including factors set forth in the earnings release and detailed in SEC filings. These risks may cause actual results to differ materially from those disclosed.

Q: Could you expand on opportunities in fixed income and alternatives, specifically in retail or insurance channel?

A: Jason Gottlieb said they can expand degrees of freedom with existing franchises like Global Unconstrained, and see opportunities via lift-out or M&A.

Q: How should we think about normalized expenses and levers to maintain margins?

A: Charles Daley said full-year guidance hasn't changed much, variable expenses declined 6% on lower revenues, offsetting seasonal fixed expense increases.

Q: Any areas of capacity constrained or opening?

A: Jason Gottlieb said some strategies are in soft close mode, but potential for capacity opening as teams evaluate taking on additional capacity.

Q: Unpack commentary on 172 relationships and 117, and backdrop for institutional business?

A: Eric Colson said intermediated wealth channel progress, institutional space has rebalancing but they've aligned to fill fixed income and alternatives, and see institutional space as strong.

Q: Further growth in intermediate wealth, any particular segments?

A: Eric Colson said long-term asset allocation differs from institutional, three-year track records like EMsights Group strategies play well, and existing strategies also fit.

Q: Color on institutional side RFP, due diligence, client allocations?

A: Eric Colson said Q1 had equity rebalancing, increased interest in credit space, mostly communication with clients.