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Introduction & Market Context
AllianceBernstein Holding LP (NYSE:AB) reported strong third-quarter 2025 results on October 23, highlighted by record assets under management (AUM) and improved operating margins. The company’s stock responded positively to the earnings beat, rising 3.07% in pre-market trading to $40.56, as investors welcomed the firm’s continued progress in diversifying revenue streams and expanding higher-margin businesses.
The asset manager achieved an adjusted earnings per unit of $0.86, slightly above analysts’ expectations of $0.85, while revenue reached $1.14 billion, significantly exceeding the forecasted $897.08 million. This performance reflects AB’s successful execution of its strategic initiatives, particularly in private markets and wealth management.
Quarterly Performance Highlights
AllianceBernstein reported record firmwide AUM of $860.1 billion as of September 30, 2025, representing a 6.7% increase from $805.9 billion in the same quarter last year. This growth was driven by positive investment performance and net inflows in key business segments.
As shown in the following comprehensive financial highlights table, the company delivered solid improvements across multiple metrics:
Adjusted operating income reached $303 million in Q3 2025, a 15% increase from $264 million in Q3 2024, while the adjusted operating margin expanded by 290 basis points to 34.2%. This margin improvement puts AB ahead of its fiscal year 2025 target of 33%, demonstrating the firm’s effective execution of its strategic plan and operational efficiency.
The company’s revenue growth was supported by a 4.6% year-over-year increase in base fees to $821 million, while adjusted net revenues rose 4.7% to $885 million. The base fee rate increased sequentially to 38.9 basis points, reflecting a favorable mix shift toward higher-fee businesses.
The following chart illustrates the firmwide base fee rate trend over the past five years:
Strategic Growth Initiatives
AllianceBernstein continues to make significant progress in expanding its private markets business, which reached $79.5 billion in AUM, up 17.4% from $67.7 billion in Q3 2024. The company is targeting $90-100 billion in private markets AUM by 2027, with private alternatives becoming an increasingly important driver of revenue and earnings growth.
The firm’s private alternatives platform is diversified across multiple strategies, as illustrated in this breakdown:
The company’s private wealth business also showed strong momentum, with net flows of $1.2 billion in Q3 2025, the highest level since Q1 2023. Private wealth represents approximately 18% of firmwide average AUM but generates about 36% of firmwide revenues, highlighting its importance to AB’s overall profitability.
The following chart demonstrates the strong sales and inflow trends in the private wealth segment:
AllianceBernstein is also strengthening its strategic partnership with Equitable Holdings (NYSE:EQH) through what it calls a "Permanent Capital Flywheel." This partnership leverages EQH’s long-duration capital with AB’s investment capabilities to expand private assets, scale insurance solutions, and grow wealth management businesses.
Investment Performance
While AB’s business growth has been impressive, investment performance presented a mixed picture. Fixed income strategies showed strong three-year and five-year performance, with 86% and 70% of assets outperforming benchmarks, respectively. However, one-year fixed income performance declined significantly, with only 30% of assets outperforming.
Equity strategies continued to face challenges across all time periods, with only 22% of assets outperforming over one year, 41% over three years, and 53% over five years.
The following chart illustrates these performance trends:
This performance disparity has contributed to uneven flows across different asset classes. The institutional channel saw strong demand for private alternatives with inflows of $2.8 billion in alternatives/multi-asset solutions, while active equity strategies experienced outflows of $4.3 billion in the retail channel.
Forward-Looking Statements
Looking ahead, AllianceBernstein expects full-year 2025 performance fees to range between $130 million and $155 million, with private markets accounting for approximately two-thirds of annual performance fees. The company noted that these fees are becoming more recurring in nature, providing greater visibility into future earnings.
The following chart shows the expected distribution of performance fees between private and public markets:
CEO Seth Bernstein emphasized the firm’s commitment to providing diverse investment solutions, stating, "Harnessing our diversified investment expertise and deep distribution capabilities, we remain steadfast in our commitment to providing better outcomes for our clients."
With its operating margin already exceeding the fiscal year 2025 target of 33%, AB appears well-positioned to continue its growth trajectory, particularly in higher-margin businesses like private markets and wealth management. However, challenges remain in improving investment performance in certain strategies, particularly active equities, which could impact future flows and growth.
The company’s strategic initiatives, including its partnership with Equitable Holdings and expansion into the Asian insurance market, provide additional avenues for growth as it works to diversify revenue streams and enhance profitability in an increasingly competitive asset management landscape.
Full presentation:
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