10-Q: Cohen & Steers Q3 Earnings Rise, AUM Stable Amid Volatility

Cohen & Steers, Inc. reported increased revenue and net income for the third quarter and first nine months of 2025, driven by higher average assets under management, despite a slight decrease in total AUM year-over-year.

Summary

• Net income attributable to common stockholders increased by 5.2% to $41.7 million for the three months ended September 30, 2025, and by 12.2% to $118.3 million for the nine months ended September 30, 2025, compared to the prior year periods.
• Diluted earnings per share rose to $0.81 for the third quarter of 2025 and $2.30 for the nine months, up from $0.77 and $2.08, respectively, in 2024.
• Total revenue grew by 6.4% to $141.7 million for the three months ended September 30, 2025, and by 9.2% to $412.3 million for the nine months, primarily due to higher investment advisory and administration fees.
• Total assets under management (AUM) decreased slightly by 1.0% to $90.9 billion at September 30, 2025, from $91.8 billion at September 30, 2024.
• Open-end funds experienced net inflows of $1.6 billion and market appreciation of $2.8 billion for the nine months ended September 30, 2025.
• Institutional accounts recorded net outflows of $1.4 billion for the nine months, partially offset by $3.1 billion in market appreciation.
• Operating margin improved to 34.5% for the three months ended September 30, 2025, and 33.3% for the nine months, up from 33.7% and 32.7% respectively in 2024.
• Net cash used in operating activities was $(121.5) million for the nine months ended September 30, 2025, primarily due to $264.1 million in net purchases of investments within consolidated funds.
• The company completed a rights offering for its Cohen & Steers Infrastructure Fund, Inc. on October 16, 2025, raising approximately $353.2 million in proceeds, excluding leverage.

Sentiment

Score: 7

Explanation: The company demonstrated solid growth in revenue, net income, and EPS, along with improved operating margins. Open-end funds showed strong inflows. However, total AUM saw a slight decline due to institutional outflows, and cash from operations was significantly impacted by investment purchases. The substantial drop in investment gains and volatile macroeconomic environment present headwinds, but core business performance remains robust.

Positives

• Net income attributable to common stockholders increased by 5.2% to $41.7 million for Q3 2025 and 12.2% to $118.3 million for the nine months ended September 30, 2025.
• Diluted EPS grew by 5.2% to $0.81 for Q3 2025 and 10.6% to $2.30 for the nine months.
• Total revenue increased by 6.4% to $141.7 million for Q3 2025 and 9.2% to $412.3 million for the nine months, driven by higher investment advisory and administration fees.
• Operating margin improved to 34.5% for Q3 2025 and 33.3% for the nine months.
• Open-end funds showed strong performance with $1.6 billion in net inflows and $2.8 billion in market appreciation for the nine months ended September 30, 2025.
• Successfully amended its credit agreement on August 15, 2025, securing a $100.0 million senior unsecured revolving credit facility maturing August 15, 2029, enhancing financial flexibility.
• Completed a rights offering for Cohen & Steers Infrastructure Fund, Inc. on October 16, 2025, raising approximately $353.2 million.

Negatives

• Total Assets Under Management (AUM) decreased by 1.0% to $90.9 billion at September 30, 2025, compared to $91.8 billion at September 30, 2024.
• Institutional accounts experienced net outflows of $1.4 billion for the nine months ended September 30, 2025.
• Net cash used in operating activities was $(121.5) million for the nine months ended September 30, 2025, a significant decrease from $61.9 million provided in the prior year, primarily due to $264.1 million in net purchases of investments within consolidated funds.
• Gain (loss) from investments net decreased significantly to $692k for Q3 2025 from $18,975k for Q3 2024.
• Foreign currency gain (loss) net shifted to a loss of $(2.8) million for the nine months ended September 30, 2025, from a gain of $(2.0) million in the prior year.

Risks

• Exposure to market risk from changes in interest and currency rates, securities markets, and general economic conditions, which may adversely impact assets under management and seed investments.
• Market conditions may not be favorable for increasing assets under management in closed-end funds, which could adversely impact growth.
• Seed investments, particularly illiquid ones, are subject to market risk and may have contractual restrictions on redemption.
• The company has committed to invest up to $175.0 million in certain investment vehicles, with $58.9 million unfunded as of September 30, 2025, and the timing for funding the remaining portion is uncertain.
• Volatile global economic conditions, new fiscal and monetary policies, and global trade tensions could influence investor sentiment and asset flows across regions and sectors.

Future Outlook

The company anticipates paying dividends, subject to board approval, considering general economic and business conditions, strategic plans, results of operations and financial condition, cash flow and liquidity, and contractual, legal and regulatory restrictions. Management believes its continued focus on prudent cost control and operational efficiency positions it to navigate the complex macroeconomic environment and adapt to evolving market conditions.

Management Comments

• Global economic conditions remained volatile through the third quarter of 2025, shaped by new sources of fiscal policy, monetary policy, and global trade tensions.
• While central banks continued to weigh inflation risks against signs of slowing growth, these factors had a more pronounced impact on investor sentiment and asset flows across regions and sectors.
• Despite these challenges, we maintained our disciplined approach, leveraging our portfolio management expertise and robust risk management framework.
• We believe our continued focus on prudent cost control and operational efficiency positions us to navigate this complex environment and adapt to evolving market conditions.

Industry Context

The asset management industry continues to face volatile global economic conditions, including shifts in fiscal and monetary policy, and global trade tensions. Cohen & Steers' performance reflects these dynamics, with strong market appreciation in open-end funds and global listed infrastructure, but also net outflows in institutional accounts, indicating a mixed investor sentiment. The company's specialization in real assets and alternative income positions it within a niche that may offer some resilience or unique challenges depending on market cycles for these specific asset classes.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• No legal matters are currently pending that the company believes could have a material adverse effect on its consolidated results of operations, cash flows, or financial position.

Related Party Transactions

• Revenue earned from affiliated funds totaled $105.5 million for the three months ended September 30, 2025, and $305.0 million for the nine months ended September 30, 2025.
• Receivables from Company-sponsored funds were $38.1 million at September 30, 2025.
• Amounts due from Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) included $2.6 million in accounts receivable and $7.8 million in other assets at September 30, 2025.
• The agreement with CNSREIT was amended to change repayment terms, with amounts due to be reimbursed ratably over a 60-month period commencing at the earlier of December 31, 2026, or when CNSREIT's aggregate NAV is at least $750.0 million.

Stakeholder Impact

• Shareholders: Positive impact from increased net income and EPS, improved operating margin, and declared quarterly dividend of $0.62 per share. Potential for future dividends.
• Investors in Open-end Funds: Benefited from net inflows and market appreciation in these funds.
• Investors in Institutional Accounts: Experienced net outflows, but market appreciation helped mitigate the impact.
• Employees: Higher incentive compensation and salaries contributed to increased employee compensation and benefits.
• Creditors: The company secured a new $100.0 million senior unsecured revolving credit facility, indicating continued access to capital and compliance with covenants.

Next Steps

• Payment of a quarterly dividend of $0.62 per share on November 20, 2025, to stockholders of record on November 10, 2025.
• Evaluation of the impact of ASU 2024-03 (Expense Disaggregation Disclosures) for annual reporting effective January 1, 2027, and interim reporting effective January 1, 2028.
• Evaluation of the impact of ASU 2025-06 (Internal-Use Software) effective January 1, 2028.
• Funding of the remaining $58.9 million of committed investments in certain investment vehicles, with uncertain timing.
• Repayment of amounts due from Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) ratably over a 60-month period commencing at the earlier of December 31, 2026, or when CNSREIT's aggregate NAV is at least $750.0 million.

Key Dates

Recommendation

While Cohen & Steers demonstrated solid financial performance with increased revenue, net income, and EPS, and improved operating margins, the slight decline in total AUM, driven by institutional outflows, and the significant decrease in investment gains warrant a cautious approach. The macroeconomic volatility and substantial cash usage in operating activities due to investment purchases introduce some uncertainty. The new credit facility and successful rights offering provide financial flexibility, but the overall picture suggests a 'hold' position, awaiting clearer trends in AUM growth and investment performance amidst the volatile market.

Keywords

Cohen & Steers, CNS, SEC 10-Q, Asset Management, Investment Advisory, AUM, Real Assets, Alternative Income, Financial Results, Earnings, Q3 2025, Institutional Accounts, Open-end Funds, Closed-end Funds, Real Estate, Preferred Securities, Infrastructure, Financial Reporting