Earnings call transcript: Silvercrest’s Q3 2025 results miss expectations

Silvercrest Asset Management Group reported its Q3 2025 earnings, revealing a miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $0.19, below the expected $0.28, representing a negative surprise of 32.14%. Revenue came in at $31.3 million, falling short of the projected $32.25 million and marking a 2.95% shortfall. Despite these results, the stock remained unchanged in after-hours trading, closing at $14.34, which is within its 52-week range of $13.54 to $19.20.

Key Takeaways

• Silvercrest’s Q3 2025 EPS and revenue both fell short of analyst expectations.
• Despite the earnings miss, the company’s stock price remained stable in after-hours trading.
• Year-to-date revenue increased by 1.8%, while expenses rose significantly by 15.4%.
• The company launched a new global value equity strategy and expanded its international presence.
• Total Assets Under Management (AUM) reached a new high of $37.6 billion.

Company Performance

Silvercrest Asset Management Group faced a challenging third quarter, with financial results not meeting market expectations. The company’s revenue increased by 2.9% year-over-year, reaching $31.3 million. However, this was overshadowed by a significant rise in expenses, primarily due to increased compensation and benefits, which grew by 15.4% compared to the previous year. Despite these challenges, the company continued to expand its global footprint and reported strong performance in its international equity strategies.

Financial Highlights

• Revenue: $31.3 million (2.9% YoY increase)
• Net Income: $1.1 million
• Adjusted EBITDA: $4.5 million (14.5% of revenue)
• Total AUM: $37.6 billion (new high)
• Discretionary AUM: $24.3 billion (8% YoY increase)

Earnings vs. Forecast

Silvercrest’s Q3 2025 results fell short of expectations, with EPS at $0.19 compared to the forecasted $0.28, and revenue at $31.3 million versus the expected $32.25 million. The EPS miss of 32.14% is significant and contrasts with the company’s historical trend of meeting or exceeding forecasts in previous quarters.

Market Reaction

Following the announcement, Silvercrest’s stock price remained unchanged in after-hours trading, closing at $14.34. This stability suggests that investors may have anticipated the earnings miss or are focusing on the company’s long-term growth prospects. The stock price is currently within its 52-week range, indicating a level of resilience despite the disappointing quarterly results.

Outlook & Guidance

Looking ahead, Silvercrest expects its Assets Under Management to continue reaching new highs in the coming quarters. The company is optimistic about potential significant allocations in Q4 2025 or Q1 2026 and anticipates a return to previous EBITDA margins. Future guidance remains positive, with EPS forecasts for the upcoming quarters showing potential growth.

Executive Commentary

CEO Rick Hough highlighted the company’s strategic initiatives and growth potential. "We have a lot of wood to chop, so I expect we’ll be getting back to that over that time frame," he stated, emphasizing the company’s commitment to long-term growth. Hough also noted the firm’s recognition for its intellectual capital and differentiated service model in the OCIO space.

Risks and Challenges

• Rising expenses, particularly in compensation and benefits, could pressure margins.
• Increased competition in the global asset management sector may affect market share.
• Regulatory compliance, such as MiFID II for European market entry, could pose operational challenges.
• Market volatility and economic uncertainties may impact investment returns.

Q&A

During the earnings call, analysts inquired about the company’s investment timeline and expected returns, as well as its hiring strategy and future investments. The management confirmed the continuation of the share buyback program, reflecting confidence in the company’s long-term prospects.

Full transcript - Silvercrest Asset Management Group Inc (SAMG) Q3 2025:

Conference Moderator: Good morning and welcome to the Silvercrest Asset Management Group Inc. Third Quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. Please note that the event is being recorded. Before we begin, let me remind you that during today’s call, certain statements made regarding our future performance are forward-looking statements. They are based on current expectations and projections, which are subject to a number of risks and uncertainties, and many factors could cause actual results to differ materially from the statements that are made. Those factors are disclosed in our filings with the SEC under the caption "Risk Factors." For all such forward-looking statements, we claim the protections provided by the Litigation Reform Act of 1995.

All forward-looking statements made on this call are made as of the date hereof, and Silvercrest assumes no obligation to update them. I would now like to turn the conference over to Rick Hough, Chairman and CEO of Silvercrest. Please go ahead.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Good morning and welcome. Joining us for the Third Quarter 2025 earnings call. Our discretionary assets under management, AUM, which primarily drives the firm’s top-line revenue, increased $687 million during the third quarter, primarily due to the beneficial equity markets. Silvercrest added $46.4 million in organic new client accounts during the third quarter and has added $564 million in new client accounts through the third quarter of 2025. Despite overall negative flows during the quarter, closed accounts were immaterial, and new client account flows remain on pace to register one of the stronger levels of organic new client flows over the past several years. Silvercrest has added approximately $2 billion in organic new client accounts year over year, and we are primarily focused on organic new client acquisition and discretionary AUM as a result of our previously announced and ongoing heavy investments in growing the business.

Discretionary AUM now stands at $24.3 billion, which is a 3% sequential quarterly increase and an increase of 8% year over year. Assuming supportive markets and continued business development, we hope discretionary AUM will exceed all-time highs in the coming quarters. Total AUM at the end of the third quarter did hit a new high for the firm at $37.6 billion. Of that total, reported non-discretionary AUM at quarter-end comprised $13.3 billion. These non-discretionary AUM are associated with only 4% of total revenue, mostly comprising fixed fee reporting and family office services. These assets have more than doubled over the past few years, which artificially lowers the apparent average basis points we receive for advising on AUM. To better relay the average basis points of our asset management and advisory businesses, we expect in 2026 to adjust how the firm reports non-discretionary AUM.

This will substantially lower that non-discretionary AUM on a one-time basis without any revenue effect, providing a clear picture of the business. Barring short-term market volatility, the increase in AUM bodes well for future revenue, as Silvercrest primarily bills quarterly in advance. As previously announced and emphasized, Silvercrest has embarked on significant strategic investments to promote growth opportunities. As it takes time for those investments, primarily in intellectual capital and headcount, to bear fruit, our earnings and adjusted EBITDA are substantially lower than the steady-state business and reflect our concerted effort to invest capital to support our long-term strategic priorities. Our strategic initiatives highlight Silvercrest’s both the institutional and wealth market. The firm continues to invest in talent across the firm to drive new growth and successfully transition the business toward the next generation.

Our new business pipeline remains robust, in particular with regards to our new global value equity strategy. Also, as previously discussed, Silvercrest will continue to adjust our interim compensation ratio to match important investments in the business as long as we have compelling opportunities to organically grow the firm and build our return on invested capital. With important initiatives for marketing in Europe, Oceania, and Asia, as well as in U.S.-based personnel, our compensation ratio will remain elevated for the foreseeable future. We previously announced a new buyback program of $25 million in May 2025. As of the end of the third quarter of 2025, we have repurchased approximately $16 million worth of shares. Our strong balance sheet supports ongoing capital returns, our substantial dividend, as well as our growth initiatives. Silvercrest also previously received shareholder approval to increase the number of shares issuable under our equity incentive plan.

We expect to begin rewarding shares to further motivate our professionals in the near future. We announced a dividend of $0.21 per share of Class A common stock, and that dividend will be paid around December 19th to stockholders of record. With that, I will turn things over to Scott Gerard to discuss our financials, and then we will take questions. Thank you. Thank you, Rick. As disclosed in our earnings release, for the third quarter, discretionary AUM as of September 30th of this year was $24.3 billion, and total AUM as of the same date was $37.6 billion. Revenue for the quarter was $31.3 million, and reported consolidated net income for the quarter was $1.1 million. Looking at the third quarter, revenue for the quarter increased $0.9 million, or 2.9% year over year.

Expenses for the quarter increased year over year by $4 million, or 15.4%, primarily driven by increased compensation and benefits expense and general and administrative expenses. Compensation benefits expense for the quarter increased year over year by $3.1 million, or 16.8%, primarily due to increases in salaries and benefits expense, primarily as a result of both merit-based increases and new hires, and an increase in the accrual for bonuses, partially offset by a decrease in equity-based compensation. General and administrative expenses increased by $0.9 million, or approximately 11.9%, primarily due to increases in professional fees, occupancy and related expenses, and recruiting costs, partially offset by decreases in shareholder expenses and trade error expense. Reported net income attributable to Silvercrest or to Class A shareholders for the third quarter was approximately $0.6 million, or $0.07 per basic and diluted Class A share.

Adjusted EBITDA, which we define as EBITDA without giving effect to equity-based compensation expense and non-core and non-recurring items, was approximately $4.5 million, or 14.5% of revenue for the quarter. Adjusted net income, which we define as net income without giving effect to non-core and non-recurring items, and income tax expense, assuming a corporate rate of 26%, was approximately $2.4 million for the quarter, or $0.19 per adjusted basic and diluted earnings per share. Adjusted EPS is equal to adjusted net income divided by the actual Class A and Class B shares outstanding as of the end of the reporting period for basic adjusted EPS, and to the extent diluted, we add unvested restricted stock units and non-qualified stock options to the total shares outstanding to compute diluted adjusted EPS.

Looking at year-to-date, September 30, 2023, revenue increased year over year by $1.7 million, or 1.8%, primarily driven by market appreciation and partially offset by net client outflows. Expenses for the nine months ended September 30, 2023, increased year over year by $7.1 million, or 9.4%, primarily driven by increased compensation expense and general and administrative expenses. Compensation expense for the nine months ended September 30, 2023, increased year over year by $4.6 million, or 8.5%, primarily due to increases in salaries as a result of both new hires and merit-based increases, in addition to an increase in the accrual for bonuses, partially offset by a decrease in equity-based compensation expense.

General and administrative expenses increased by $2.5 million through the nine months ended September 30, 2023, or approximately 11.7%, primarily due to increases in professional fees, occupancy and related expenses, portfolio and systems expense, and travel and entertainment expenses, partially offset by a decrease in trade error expense. Reported net income attributable to Silvercrest, or again, the Class A shareholders for the nine months ended this year, was approximately $5 million, or $0.56 per basic Class A share and $0.55 per diluted Class A share. Adjusted EBITDA was approximately $16.8 million, or 18%, through the end of September of this year. Adjusted net income was approximately $9.6 million, or $0.77 and $0.74 for adjusted basic and diluted EPS for the nine months ended September 30, 2023.

Looking at the balance sheet, total assets were approximately $157.6 million as of September 30, 2023, compared to $194.4 million as of the end of last year. Cash and cash equivalents were approximately $36.1 million as of September 30, as compared to $68.6 million at December 31 of last year. There were no borrowings as of September 30. Total Class A stockholders’ equity was approximately $58.9 million at September 30, and during the third quarter, we repurchased approximately $4.6 million worth of Class A shares. That concludes my remarks. I’ll now turn the call over for Q&A. Thank you, Scott. We’ll take questions at this time.

Conference Moderator: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Christopher Marinac of Janney Montgomery Scott. Please go ahead.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Good morning, Christopher.

Christopher Marinac, Analyst, Janney Montgomery Scott: Hey, good morning. Thank you for hosting us this morning. Just wanted to talk a little bit about calibrating the timing of when the AUM and revenue kind of hit various points to get back to leveraging the expenses that you’re having now. I understand the comment on compensation that you mentioned in the remarks, and just want to understand, do we think about this as maybe an 18, 24-month time frame, or is it any way to kind of give visibility on that?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Yeah. That’s a great question. Obviously, we have multiple investments going on, so it depends on the time horizon for each one. Just very briefly, we have domestic expansion efforts. We are active in Asia and Australia. We are opening an Australian investment trust there. In order to get flows, we are working on our MiFID II with the Central Bank of Ireland in order to face Europe and actively market there, both to existing clients as well as to new institutional and family clients. All of that also includes new marketing professionals, investment team here, etc. That has all, on a short-term basis, kind of occurred over the past year and a half in its bulk. Our headcount has gone up by about 15 to 20 people. I think it’s exactly 15 people, say, over the past year over year.

That’s a lot of hires and quite recent, even though we’ve started hitting EBITDA on earnings for these investments prior to that. The bulk of it has been quite recent. When you put it all together, you’re looking at a longer-term horizon of 18 to 24 months. However, we are done primarily with the investments we made in institutional marketing as well as in our global value equity team. I expect flows for that in a much shorter term than that. The pipeline is very large, and I would look to that more like 6 months to 12 months. We could see even some reasonable allocations in the fourth quarter or first quarter coming up here, which would obviously cover about 6 months. All things being equal, that would start to creep into the profit side and start increasing the EBITDA and earnings on that basis alone.

There’s still other investments to go, so the longer-term horizon is probably more realistic. What I look forward to is really being able to report substantial progress that those investments will be making. The potential is very large, and I’m quite confident that it is going to pay off and that we will be able to report meaningful progress soon.

Christopher Marinac, Analyst, Janney Montgomery Scott: Great. The progress clearly was also this quarter. There was progress for sure in this last quarter. One related question just goes back to kind of professional fees that you called out in the press release. Are any of those temporary, or will you have new professional fees to kind of cover in future periods?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Yeah, Chris. Some of them are temporary, especially related to some of our global initiatives. In our earnings release and 10-Q, there is a reconciliation from GAAP numbers to non-GAAP where we isolate those non-recurring items and add it back. You can get some sense from that disclosure what is temporary.

Christopher Marinac, Analyst, Janney Montgomery Scott: Okay. Great. Rick, to the extent you can comment on this, as you look out a couple of years, do we get back to where the EBITDA margin was? Does the EBITDA margin get recast because it’s now going to be a different company with a different, broader focus?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Yeah. You look out further, and it gets back to where it was, barring any other new investments. Of course, where it was before included ongoing investments that were just on a much smaller scale. We have a lot of wood to chop, so I expect we’ll be getting back to that over that time frame. It’s really just more about organically building completely new things here. If I were to strip everything away that we have done over the past year and a half, two years, we would be at a really historic EBITDA and earnings level.

Christopher Marinac, Analyst, Janney Montgomery Scott: Great, I’ll step back. Thank you very much for taking the questions this morning.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Thank you. I appreciate it.

Conference Moderator: Next question comes from Sandy Mehta of Evaluate Research. Please go ahead.

Sandy Mehta, Analyst, Evaluate Research: Yes. Good morning, Rick and Scott. The global strategy has a very strong performance over the last five years. One, three, five years. You mentioned that you have a very large pipeline. There are interesting dynamics there. The U.S. weighting is 73% of MSCI World. That doesn’t bode well for global strategies. On the other hand, EAFE and emerging markets, international markets have outperformed the U.S. this year by 2x. I think that bodes very well for global. Can you just give us a little bit more color on what you’re seeing from a marketing perspective, the pipeline, and what clients are saying or consultants are saying, what you see out there on global?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Right. Two points. Number one is, while I have focused on the significant opportunities for the global value portfolio because of the size of the allocations it can receive and because it’s new at the firm, that has colored my remarks. That is also the strategy that received a large Australian superannuation fund seeding not quite a year ago, about nine months ago or so. That is the performance you are referring to. In fact, on a shorter-term horizon since that investment, it has performed very, very well, which is really nice to be able to demonstrate to an investor and to other potential investors that this is a good strategy that they should be looking at, given the trends that you noted. That strategy has freedom to change those balances and to move around against the benchmark as they seek relative value and outperformance in the portfolio.

That said, we have other international equity strategies at the firm that focus entirely on investing outside the United States, whether that’s in developed international markets or in emerging markets. Those markets have been hot. I’m very pleased to report that those capabilities, led by a different investment team here at the firm, have done extremely well and also have interest from investors in a growing pipeline. The mandates don’t tend to be quite as large there, and they’re a little different, but that has potential as well. You add those two together in covering both the global, international, and emerging market space, and it looks quite favorable for the firm. In terms of what we are hearing or seeing, our new centralized institutional marketing team and process has been highly engaged, both with very significant sovereign pools of capital. It includes other Australian superannuation trusts.

It includes pooled capital for retail and other retirement assets. It includes interest in Europe, and it includes the globe’s largest consulting firms. We rate extremely well, both on a performance basis for those strategies that I just went through, as well as with regards to the compliance and high quality of the firm here and the institution that we built. Silvercrest, despite being a fairly small asset management firm, also gets a lot of attention for its intellectual capital among those consultants. I just shared with the firm yesterday that one of our update pieces from our investment policy team was one of the most read articles within the internal. Distribution of one of those large consultant firms, one of the globe’s largest. The pipeline itself is not measurable the way we used to measure it. I think we’ve talked about this in prior earnings calls.

We used to have very rigorous standards around what we would announce on a call for the pipeline. That was we were in finals or semifinals presentations, we were invited to put in an RFP, and we expected some form of decision within a six-month period. The consultant industry, in the way the marketing works now, has changed very substantially. Since 2020, which is to say COVID, it gradually changed during that period of time. It became harder and harder for us to measure, and we just are not confident with giving very strong numbers the way we used to be. Instead, I have chosen to provide color. I will say that, from my thinking, it is a very large pipeline. It is quite significant, especially in those international and global areas for the firm. I’m quite optimistic, as you heard in my answer to Christopher.

If I can give harder numbers as we go along here and learn more about how it’s working, I will do so. Unfortunately, I just don’t have the same apples to apples or confidence in giving you the kind of numbers that I did before. As part of that effort, I should mention that we hired a professional who was one of the top institutional client representatives at a competitor firm, one of the larger asset managers in the United States and globally. He has spent his career in Australia and in London, and his contacts have been extremely helpful to us as well. I hope that helps. I’m happy to follow up with anything else, Sandy.

Sandy Mehta, Analyst, Evaluate Research: Yeah, sure. You already talked about expenses, and you said that you hired 15 key hires. The new hires, is most of the hiring done at this point of the senior people that you were hiring? Is that pace of incremental hires going to slow down?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: We’ve done most of that for building out the new equity strategy as well as the institutional team and all of the support work that goes along with that, including trading, marketing support, and analysis. However, as I mentioned earlier to Christopher, we have multiple initiatives going on. There will be new hires for Europe, new hires in Asia, and some new hires domestically on the wealth side. We are not done. However, as this initiative grows and the investments we have made to date produce revenue, it won’t be as noticeable in terms of hitting our earnings and EBITDA because we’ll have cash flow to fund those things. Just as before we hit this very strong investment phase, we were hiring people and investing in the business all along and not hurting earnings or EBITDA when we did that previously.

Depending how soon some of these big hits come along, it may not be as noticeable as it was as we continue to make those investments in the business. Just going back, say, several years pre-COVID and during that, we were investing in the next generation. I was hiring new portfolio managers here. We were investing across the business, and it was not affecting our EBITDA because we had such strong growth and cash flow. I expect that to accelerate and to happen as we move forward over time, as the revenue starts coming in for these initiatives.

Sandy Mehta, Analyst, Evaluate Research: Where are you in terms of OCIO assets currently?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: OCIO is almost $2.2 billion and has a very strong pipeline. I usually don’t talk about wins on the next quarter. I usually wait, but we just got, I think, about a $70 million or so new foundation just joined us, I think, October 1 or 2. It didn’t quite make it in the numbers for this quarter. I expect more from that team. The performance for the OCIO portfolio itself that gets uploaded and compared to our peers is very, very strong as well. I don’t know if you see that, but they have outperformed quite nicely, which really helps us along with our differentiated service model.

Sandy Mehta, Analyst, Evaluate Research: One last question from my side. Your share count has declined 11% year over year. You had the $16 million buyback. Do you disclose what price you bought the stock, or can I ask you whether it’s more at the $16.5 level or more at the $14.5 level, if you let me ask?

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Yeah. We don’t disclose it. I will say that it has been, from our thinking, a very, very favorable price. I think in our last call, we pointed out that we did some pretty substantial block trades in the period just after we announced it. If you looked at the price in June, you’ve got a good idea for a couple of those block trades. We’ve been active in the market all along here. You can assume that since the end of June through August and September, we were actively buying back stock. No, we don’t disclose the price.

Sandy Mehta, Analyst, Evaluate Research: Okay, thank you. All the best.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: I think.

Sandy Mehta, Analyst, Evaluate Research: Yep.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: I think we’ve got about another $8 million or $9 million to go, something in that range. Is that right, Scott?

Scott Gerard, Financial Officer, Silvercrest Asset Management Group: Yeah, that’s correct.

Sandy Mehta, Analyst, Evaluate Research: Thank you.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Welcome, Sandy.

Conference Moderator: Once again, if you would like to ask a question, please press star then one. There are no further questions at this time, so that will conclude our question and answer session. I would like to turn the conference back over to Rick Hough for any closing remarks.

Rick Hough, Chairman and CEO, Silvercrest Asset Management Group: Great. Thank you very much for joining us for this third quarter of 2025 review. As you saw from my business update and the questions, thank you, Sandy and Christopher. This is a critical juncture for the company in terms of our investments. I hope I conveyed that I expect those investments to pay off for this firm, with some progress in the short term and getting back to more elevated levels of earnings and EBITDA as we move further along into 2027 and 2028. The efforts that we have taken to find really talented professionals to enhance our offerings and to grow the visibility of the firm, not just here in the United States, but in other markets with large pools of capital, has been very important to us and I think will have benefits into the future.

Thank you again, and we look forward to discussing the fourth quarter and year end.

Conference Moderator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.

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