Victory Capital Q1 2025 presentation: Amundi deal boosts assets to $286 billion

Victory Capital Holdings Inc (NASDAQ:VCTR) reported its first quarter 2025 financial results on May 9, showcasing the transformative impact of its strategic partnership with Amundi and highlighting strong ETF performance amid mixed overall flows. The asset manager’s presentation revealed how the recently closed Amundi acquisition significantly expands its scale and global reach.

Quarterly Performance Highlights

Victory Capital reported total client assets of $171.4 billion for Q1 2025, with adjusted earnings per diluted share (including tax benefit) of $1.36. The company generated revenue of $219.6 million, adjusted EBITDA of $116.4 million, and maintained a robust adjusted EBITDA margin of 53.0% - marking the 15th consecutive quarter with margins at or above 50%.

As shown in the following financial results summary, the company reported GAAP operating income of $92.9 million with a GAAP operating margin of 42.3%, while GAAP net income reached $0.96 per diluted share:

The quarter saw long-term gross flows of $9.3 billion, up 41% compared to Q4 2024, though net flows remained negative at -$1.2 billion. However, the ETF business demonstrated particular strength with gross flows of $3.1 billion and net flows of $2.8 billion.

The following chart illustrates the trend in long-term AUM flows, showing the significant increase in gross flows during Q1 2025:

Revenue remained flat quarter-over-quarter at $219.6 million, impacted by market action, fewer days in the first quarter, and product mix shift. The average fee rate declined to 51.2 basis points from 52.5 basis points in the previous quarter.

Strategic Partnership with Amundi

The most significant development highlighted in the presentation was Victory Capital’s strategic partnership with Amundi, which closed on April 1, 2025. This transaction dramatically increases the company’s scale, bringing total assets to $286 billion - a substantial increase from the $171.4 billion reported at the end of Q1.

As illustrated in the following diversification chart, the combined entity offers enhanced diversification across asset classes, vehicles, channels, and geography:

The presentation noted that Pioneer Investments, part of the Amundi acquisition, generated positive net flows of $1.7 billion in Q1 2025, which are not included in Victory Capital’s reported figures. Management projects net expense synergies of $110 million from the partnership.

The strategic partnership significantly expands Victory Capital’s distribution capabilities, particularly outside the United States. The company’s client base now extends to more than 60 countries, with local presence in 35 countries through Amundi’s distribution networks in Europe and joint ventures in Asia and India.

The following slide details how the company is investing strategically to enhance its distribution capabilities:

Investment Performance and Distribution Strategy

Victory Capital emphasized its strong investment performance, with 79% of AUM outperforming benchmarks over the 10-year period. According to Morningstar data as of March 31, 2025, the company has 45 mutual funds and ETFs with 4- or 5-star overall ratings, representing 67% of total mutual fund and ETF AUM.

The following chart illustrates the company’s commitment to long-term investment performance:

The presentation highlighted Victory Capital’s well-diversified distribution channels and client base. Total (EPA:TTEF) client assets by distribution channel showed some decline over recent quarters, from $181.1 billion in Q3 2024 to $171.4 billion in Q1 2025, though this trend is expected to reverse with the addition of Pioneer Investments’ assets.

Capital Management and Shareholder Returns

Victory Capital ended the quarter with a strong balance sheet, reporting $176 million in cash and cash equivalents. The company’s debt stood at $972 million, with a net debt to adjusted EBITDA ratio of 1.7x. During the quarter, Victory Capital returned $39 million to shareholders and increased its quarterly cash dividend by 4% to $0.49 per share.

The presentation emphasized Victory Capital’s track record of shareholder value creation since its IPO, with total shareholder return of 415%. The stock price reached $57.87 as of March 31, 2025, while diluted shares outstanding have decreased over time due to the company’s share repurchase program.

As shown in the following chart of shareholder value creation since IPO:

Victory Capital has also demonstrated impressive growth in adjusted EBITDA and margin expansion since its IPO, with quarterly adjusted EBITDA up 192% and adjusted EBITDA margin expanded by 1,510 basis points:

Similarly, adjusted EPS with tax benefit has shown strong growth, up 240% since IPO with a compound annual growth rate of 19%:

Forward-Looking Statements

Looking ahead, Victory Capital outlined its long-term growth and capital allocation strategy, focusing on enhancing shareholder value through strategic acquisitions, evolving its product set to drive organic growth, and gaining efficiency from its integrated platform.

The company highlighted its commitment to enhancing balance sheet flexibility through strong free cash flow generation, increasing capacity for additional deals, opportunistic share repurchases, and dividend growth. Since its IPO, Victory Capital has returned $903 million to shareholders through dividends and share repurchases.

The presentation also detailed ongoing and future cash-tax benefits, noting $1.6 billion in total future tax amortization and $393 million in future cash tax savings (assuming a 25% tax rate). The net present value of these benefits is estimated at $265 million, or more than $4.00 per share.

Victory Capital’s Q1 2025 presentation paints a picture of a company significantly transformed by its strategic partnership with Amundi, with enhanced scale, global reach, and distribution capabilities. While facing some challenges with overall net flows, the company continues to demonstrate strong financial performance, particularly in its ETF business, while maintaining robust margins and returning capital to shareholders.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.