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Introduction & Market Context
AllianceBernstein Holding L.P. (NYSE:AB) presented its first quarter 2025 results on April 24, 2025, led by President & CEO Seth P. Bernstein and CFO Tom Simeone. The asset management firm reported firmwide active net inflows of $2.7 billion across all three distribution channels, despite challenging equity market performance. The company’s assets under management (AUM) stood at $784.5 billion at quarter-end, down slightly from $792.2 billion at the end of Q4 2024 but up from $758.7 billion in Q1 2024.
The firm’s shares were trading at $36.83 as of the previous close on April 23, 2025, with premarket activity showing a 2.85% increase to $37.88. The stock has been trading near its 52-week high of $41.37, reflecting investor confidence in the company’s strategic direction.
Quarterly Performance Highlights
AllianceBernstein reported positive momentum across all three distribution channels in Q1 2025, with active fixed income and alternatives/multi-asset strategy (MAS) inflows of $1.0 billion and $4.2 billion, respectively. These gains were partially offset by active equity outflows of $2.5 billion, reflecting broader challenges in equity performance.
As shown in the following key financial highlights:
The firm’s adjusted net revenues were $838 million in Q1 2025, down from $884 million in Q1 2024 and $973 million in Q4 2024. However, adjusted operating income increased to $283 million from $267 million in the same quarter last year, though down from $354 million in Q4 2024. Adjusted earnings per unit (EPU) rose to $0.80 from $0.73 year-over-year, representing a 9.6% increase.
The retail channel demonstrated resilience with positive net flows of $0.9 billion, as shown in the following chart:
Institutional business showed strong growth with net flows of $4.6 billion, driven primarily by deployments into private alternatives:
Private wealth management also contributed positively with net flows of $0.8 billion, supported by solid advisor productivity:
Strategic Initiatives & Private Markets Growth
AllianceBernstein continues to make progress on its strategic initiative to grow its private markets business. The firm reported private markets AUM of $75.3 billion, advancing toward its target of $90-$100 billion by 2027. This growth is being driven by a "permanent capital flywheel" strategy that leverages the firm’s relationship with Equitable Holdings (NYSE:EQH).
The company’s approach to expanding its private markets business is illustrated in the following strategic framework:
Performance fees are increasingly being driven by private markets platforms, with the company expecting total FY25 performance fees of $90-$105 million. This represents a shift from historical patterns and provides a more recurring revenue stream.
Investment Performance
The firm’s investment performance showed mixed results across asset classes. Fixed income strategies demonstrated strength with 64% of assets outperforming for the one-year period, 63% for the three-year period, and an impressive 81% for the five-year period.
In contrast, equity performance faced challenges with only 23% of assets outperforming for the one-year period, 52% for the three-year period, and 45% for the five-year period. This weakness in equity performance helps explain the $2.5 billion in active equity outflows during the quarter.
Financial Analysis
AllianceBernstein maintained a solid adjusted operating margin of 33.7% in Q1 2025, exceeding its full-year target of 33%. This represents significant progress in the firm’s margin expansion journey and positions it well to achieve its longer-term goal of 350-500 basis points of margin accretion by 2027.
The company’s base fee rate remained relatively stable at 39.5 basis points, up 0.2 basis points year-over-year but down 0.3 basis points quarter-over-quarter. This stability in fee rates, despite market fluctuations, reflects the firm’s diversified business mix with liquid and illiquid credit accounting for more than 45% of the asset base.
The firm’s assets under management are geographically diversified, with the U.S. representing the largest portion for both institutional and retail clients. This geographic distribution provides some insulation from regional market volatility.
Forward-Looking Statements
Looking ahead, AllianceBernstein reaffirmed its target of achieving a 33% adjusted operating margin for full-year 2025, contingent on maintaining average AUM levels consistent with Q4 2024. The company also reiterated its goal of reaching $90-$100 billion in private markets AUM by 2027, supported by its strategic partnership with Equitable and expansion into insurance solutions.
The firm outlined its unique value proposition, emphasizing its differentiated distribution platform, diversified investment capabilities, growing private markets AUM, margin improvement potential, and investor-friendly partnership structure with a 100% distribution ratio of adjusted earnings.
In summary, AllianceBernstein’s Q1 2025 results demonstrate the firm’s ability to generate positive net flows across all distribution channels despite challenging equity market performance. The continued growth in private markets AUM and strong adjusted operating margin highlight the success of the company’s strategic initiatives. While equity performance remains a challenge, the firm’s diversified business mix and focus on margin expansion provide a solid foundation for future growth.
Full presentation:
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