10-K: Victory Capital Holdings Reports Full-Year 2023 Results, AUM Reaches $166.6 Billion

Victory Capital Holdings reports a diversified asset management platform with $166.6 billion in AUM as of December 31, 2023, driven by positive market action but offset by net outflows.

Summary

• Victory Capital Holdings, Inc. reported its full-year 2023 financial results, showcasing a diversified global asset management firm with $166.6 billion in total assets under management (AUM) as of December 31, 2023.
• The company's business model combines boutique investment qualities with an integrated operating and distribution platform.
• AUM increased by $13.6 billion, or approximately 8.9%, from $153.0 billion at December 31, 2022, primarily driven by positive market action of $21.9 billion.
• Long-term gross inflows were $23.3 billion for the year ended December 31, 2023.
• Long-term net outflows were $6.2 billion for the year ended December 31, 2023.
• Total revenue for the year ended December 31, 2023, was $821.0 million, compared to $854.8 million for the year ended December 31, 2022.
• Net income was $213.2 million for the year ended December 31, 2023, compared to $275.5 million for the same period in 2022.
• GAAP earnings per diluted share was $3.12 for the year ended December 31, 2023, compared to $3.81 for the same period in 2022.
• The company returned more than $243 million of capital to shareholders in 2023 through share repurchases and cash dividends.
• The Board of Directors declared a quarterly cash dividend of $0.335 per share on Victory common stock, payable on March 25, 2024.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While AUM increased and capital was returned to shareholders, net income and revenue decreased. The company faces several risks and challenges, but also has competitive strengths.

Positives

• AUM increased by 8.9% year-over-year, reaching $166.6 billion.
• The company returned over $243 million to shareholders through share repurchases and dividends in 2023.
• A high percentage of mutual fund and ETF assets have fouror five-star Morningstar ratings.
• The company has a diversified platform across investment strategies, franchises, and client types.

Negatives

• Net income decreased from $275.5 million in 2022 to $213.2 million in 2023.
• Total revenue decreased from $854.8 million in 2022 to $821.0 million in 2023.
• Long-term net outflows were $6.2 billion for the year ended December 31, 2023.
• GAAP earnings per diluted share decreased from $3.81 in 2022 to $3.12 in 2023.

Risks

• Market and investment performance risks could reduce AUM, revenues, and profitability.
• The loss of key investment professionals or senior management could adversely affect the business.
• The company relies on contracts and relationships that may be terminated with short notice.
• The company's growth strategy depends on successful acquisitions and integrations.
• Operational and cybersecurity risks could disrupt the business and cause financial losses.
• Reputational harm could lead to a loss of AUM and revenues.
• The company is subject to extensive regulation and the regulatory environment is subject to change.

Future Outlook

The company intends to continue to expand its distribution efforts into non-U.S. markets and expects to continue to grow through strategic acquisitions.

Management Comments

• The document does not contain direct quotes from management.

Industry Context

The announcement reflects trends in the asset management industry, including the shift towards passive products, the importance of investment performance, and the need for diversified investment strategies.

Comparison to Industry Standards

• The document mentions a peer group comprised of Affiliated Managers Group, Inc., Artisan Partners Asset Management Inc., BrightSphere Investment Group plc, Eaton Vance Corp., and Virtus Investment Partners, Inc.
• The document compares Victory Capital's performance against the S&P 500 Index and other relevant benchmarks.
• The document mentions Morningstar ratings as a measure of fund performance, a common industry benchmark.

Corporate Governance

Legal Proceedings

• The Company may be subject to legal proceedings and claims in the ordinary course of business.
• The Company is not currently a party to any material legal proceedings.

Related Party Transactions

• The Company has related party transactions with certain funds that it manages, including the Victory Funds, the VictoryShares, collective trust funds that it sponsors (the Victory Collective Funds), the NEC Funds and other pooled investment vehicles that it sponsors.
• These transactions include investment management, administrative, distribution and compliance fees, as well as investments in proprietary funds.

Stakeholder Impact

• Shareholders will receive a quarterly cash dividend of $0.335 per share.
• Employees may be affected by changes in compensation and benefits.
• Clients may be affected by the performance of the company's investment strategies.
• The company's performance may impact its relationships with suppliers and creditors.

Next Steps

• The company intends to continue to expand its distribution efforts into non-U.S. markets.
• The company intends to continue to grow through strategic acquisitions.
• The company will pay a quarterly cash dividend of $0.335 per share on March 25, 2024.

Key Dates

Keywords

asset management, AUM, investment management, financial results, Victory Capital, mutual funds, ETFs, revenue, net income, share repurchases, dividends