Transcript: Victory Capital Holdings Q2 2026 Earnings Conference Call

Victory Capital Holdings (NASDAQ: VCTR ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

8%. The company completed the Pioneer integration, achieving $110 million in net run-rate expense synergies, and updated its long-term adjusted EBITDA margin guidance from 49% to 50%. 6 billion in AUM from global clients. Victory Capital's focus on strategic acquisitions and organic growth has led to a remarkable increase in AUM by 1,834% since 2013, with a future target of $1 trillion.

Management emphasized strong investment performance, with 71% of AUM outperforming over one year and a commitment to ongoing product innovation and distribution expansion. Full Transcript OPERATOR Good morning and welcome to Victory Capital Holdings second quarter 2020 call. All callers are in listen-only mode. Following the company's prepared remarks, there will be a question and answer session.

If you would like to ask a question, press star one to raise your hand. To withdraw your question, press star one again. I will now turn the call over to Ms. Carly Thomas, the Director of Investor Relations and Responsible Business.

Please go ahead, Ms. Carly Thomas, Director of Investor Relations and Responsible Business Thank you, operator, and good morning, everyone. Before I turn the call over to Chairman and CEO David Brown, I would like to remind you that during today's conference call we may make several forward-looking statements. Victory Capital Holdings' actual results may differ materially from these statements.

Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital Holdings assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release, which was issued after the market closed yesterday, disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance.

com. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David Brown, Chairman and CEO Thanks, Carly. Good morning, everyone, and welcome to Victory Capital Holdings' second quarter 2026 earnings call.

I'm also joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer. I will start with an overview of our second quarter results, which I am pleased to say were exceptional, setting new records across multiple dimensions of our business. After that I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, we will be available to answer your questions.

On slide 5, you will see that Q2 2026 was the strongest quarter in our history. Total client assets reached $346 billion, up 11% from Q1 and 15% higher than at the end of the same period last year. Long-term gross flows of $22 billion were up 17% quarter over quarter and 43% versus the same quarter last year. 2 billion, reflecting the strategic investments we have made, the momentum we have built across all our distribution channels, and the strength of our investment performance by our investment franchises and our solutions platform.

8%. 21, up 21% from last quarter and 41% higher than Q2 of last year. All were records for our company. Moreover, the Pioneer integration is now complete and the full $110 million in net run-rate expense synergies have been fully realized.

Turning to slide 6, investment performance remains a source of great pride for our organization and it continues to be the foundation of what we do. Strong investment performance is not incidental to what we do. It is the reason clients hire us and the reason they stay with us. In an industry where trust is earned through long-term investment results, we believe our track record speaks for itself.

As of June 30, 2026, 57 of our mutual funds and ETFs earned four- or five-star overall ratings from Morningstar, which is 60% of our rated AUM. This represents over half of our Morningstar-rated funds. By comparison, only about a third of Morningstar-rated funds industry-wide carry a four- or five-star rating. When we look at performance against benchmarks, the picture is equally compelling.

Seventy-one percent of our AUM outperformed over the one-year period, 68% over three years, 65% over five years, and an impressive 81% over the ten-year period. On a strategy count basis, 66%, 64%, 67%, and 69% of strategies outperformed their benchmarks over those same time horizons. This breadth of outperformance across time periods, asset classes, and investment styles reflects the talent and discipline of our investment professionals. Across our platform, we remain deeply committed to delivering excellent investment outcomes for our clients.

Slide 7 is the one that I find particularly compelling when you step back and look at how far we have come as a company. S. equity manager with $18 billion in AUM. S.

equity strategies, with fixed income and global equity each making up about 10%. S. equities. That picture had already begun to evolve by our IPO in 2018 when we had grown to over $60 billion in AUM.

S. equity had moved to about 73% of AUM, with fixed income at 12%, global equity at 7%, and solutions at 5%, which included the ETF business in its infancy through a small acquisition. The seeds of diversification had been planted, but the transformation was still in its early stages. Fast forward to today and that story is almost unrecognizable, in the best possible way.

S. equity now represents just 31% of our $346 billion in total client assets. S. equity stands at 11%.

This did not happen by accident, as we have been very purposeful and strategic in the growth of our business. Before every acquisition we've made over the past 13 years, we asked ourselves a simple question: beyond the standalone financial merits, will this make our company better, more competitive, more resilient, and more capable of servicing clients across different market cycles? Our answer has been yes in every case—an intentional approach to building our exceptional platform into what it is today. We also recognize that self-reflection and our relentless willingness to make our company better is essential to our continued growth.

We are constantly reassessing areas of potential growth, guided by our disciplined approach to strengthening our entire business—from strategically refining our already diverse product mix, expanding our distribution capabilities, to enabling our investment professionals with best-in-class tools and resources. Turning to slide 8, our ETF platform continues to be one of the most exciting and consequential growth stories in our business. 2 billion, up 24% year to date and 54% year over year. 5 billion, representing an annualized organic growth rate of 27%.

The momentum here is sustained, broad-based, and is accelerating as we move through the back half of this year and look forward into the future. I want to spend a moment on how we think about this business because I think it is important context. Back in 2015 we made a deliberate, forward-looking decision to acquire the ETF capabilities and infrastructure that form the foundation of what VictoryShares is today. The acquisition included just a few hundred million dollars of ETF assets, but the real story of this business has been what we have built from there.

We have never treated this as a static platform. The growth of VictoryShares has been driven by consistent commitment to product innovation and a disciplined, ongoing evaluation of our investment capabilities relative to what we have heard from clients around what they want and need. What distinguishes us in the marketplace is that we are not in the race to zero. Our average fee rate of 34 basis points reflects the fact that we have built a diversified ETF platform featuring active and rules-based strategies that are organized around innovative investment themes, not a passive product suite competing on price.

Importantly, the margins of our ETF business adhere to our firm-wide standards. Our Free Cash Flow ETF series continues to generate strong and consistent inflows. 8 billion in AUM, and in its three years since launch, VFLO has outperformed the S&P 500, Russell 1000 Growth, and Russell 1000 Value, all with zero Mag 7 exposure. It has earned a Morningstar 5-star overall rating and we are seeing strong demand from financial advisors throughout our intermediary channel.

Across the product suite we are winning new home office recommendations, deepening relationships with key platform partners, and are continuing to add dedicated ETF distribution resources to support that momentum. In addition, our ETFs are now available for sale across Asia and, as of this quarter, in Latin America, a new geography that we believe represents a significant long-term growth opportunity. We will continue to leverage our partnership with Amundi and expand our ETF distribution globally. Slide 9 covers our international business, which continues to gain real and meaningful traction.

The Amundi partnership is performing exactly as expected and trending above our initial financial expectations. 6 billion in AUM from clients outside the United States across 61 countries, with 35 of those countries now having more than $100 million in Victory Capital Holdings AUM. Importantly, our international business was net flow positive again in the quarter and is year to date and has been net flow positive cumulatively since we closed the Pioneer acquisition year to date.

A vast majority of Amundi's client roadshows have been focused on Victory Capital Holdings products, a clear reflection of the priority they have placed on bringing our capabilities to their global client base. Amundi has also maintained several Victory Capital Holdings strategies on their concentrated focus list across client segments and geographies, providing important structural support for flows. We now sub-advise 23 UCITS spanning equities, fixed income, and global multi-asset strategies. Additional UCITS launches are planned in 2026, driven by bottom-up demand signals from Amundi's local distribution teams.

The product set is continuing to expand, the sales teams are becoming more familiarized with our product set, and the momentum in this channel is increasing materially. Turning to slide 10, I want to highlight our growth strategy since it is central to how we think about creating long-term value for our shareholders. 1 billion. Every step of that journey has been intentional—a deliberate, disciplined decision to build something bigger and better than what existed before.

That is what this slide shows. We set out from day one with a clear thesis that the asset management industry was ripe for consolidation, that the right acquirer with the right model could create extraordinary value, and that we had both the capability and the conviction to execute on that thesis to create a unique platform. I want to be very clear about one point. This growth did not come from a single deal.

It came from building a repeatable, institutional-quality capability, a model that works, that scales, and that we now have executed across multiple transactions of varying size and complexity, and in different periods within a market cycle. We know how to identify the right opportunities, we know how to integrate them, and we know how to make the whole organizational platform stronger. As a result, we are often asked whether there are enough acquisition targets out there to sustain our strategy. The answer is yes.

There are more than 110 investment firms managing between $50 and $200 billion in assets and more than 35 firms in the $200 to $500 billion range. That is a deep and fragmented opportunity set. The structural forces driving consolidation—regulatory complexity, technology requirements, distribution scale, and the economics of running a competitive investment platform—are only intensifying. That creates a compelling environment for a proven acquirer like Victory Capital Holdings.

Our balance sheet is strong and our execution track record gives me great confidence in our ability to continue delivering transformational growth. As we work toward our goal of $1 trillion in assets under management, we remain extremely active from an acquisition perspective, evaluating potential significant opportunities. These kinds of opportunities are never done until they are done, but this is the right time for a company, given the strength of our balance sheet and the completion of the Pioneer integration. Slide 11 outlines our capital allocation framework.

Strategic acquisitions are and will remain our primary and best use of capital. Over the last 13 years, we have successfully closed eight acquisitions. Our inorganic growth strategy has helped us deliver over 800% of total shareholder returns since our IPO in 2018. This has also enabled us to grow earnings per share at a 23% compound annual growth rate.

This track record is in part a result of a disciplined, consistent approach to inorganic growth that has guided us since the day we started. Second to strategic acquisitions, our commitment to returning capital to shareholders is real and ongoing. 6 billion in capital to shareholders, with $1 billion in shares repurchased year-to-date. 2 million shares, which is more than we repurchased in all of 2025.

This is a meaningful statement about both our conviction in the value of our stock and the strength of our free cash flow generation. In addition, our dividend provides a consistent and reliable return to shareholders. Looking ahead, I am as excited about the future of this company today as I ever have been. We have the people, the platform, and the strategy, and in many ways we are just getting started.

I will now turn the call over to Mike to walk through the financial results in more detail. Michael Policarpo, CFO Thanks, Dave, and good morning, everyone. The financial results review begins on slide 13. This was a record quarter across the board.

Revenue came in at $435 million, up 12% from Q1 and 24% higher than Q2 of last year. 8%. 21 per diluted share, up 21% from last quarter and 41% versus Q2 2025. To put that EPS figure in context, since our IPO in February 2018, our adjusted earnings per diluted share with tax benefit has grown at a compound annual rate of approximately 23%, and on a quarterly basis EPS is up more than 450% since Q1 2018.

That is a remarkable track record of value creation and reflects the earnings power of our platform. I also would like to take this opportunity to update our long-term adjusted EBITDA margin guidance. Given the demonstrated earnings power of our platform and the completion of the Pioneer integration, we are updating long-term adjusted EBITDA margin guidance from 49% to 50%. This reflects our view of an appropriate normalized margin for this business through a full market cycle—one that accounts for the inherent variability in certain revenue items while reflecting the structural efficiency gains we have made.

Importantly, this level also preserves our ability to continue investing in the business—in our people, our platform, and the future growth initiatives that will drive continued long-term value. We believe 50% is the right anchor for how investors should think about this business over time. 1 million shares during the quarter and returned $138 million to shareholders. 0 times adjusted EBITDA.

S. S. S. direct, and international channels, with clients in 62 countries in total.

Slide 15 shows our long-term AUM flows. This is the slide worth spending some time on because what we are seeing here is not a one-quarter phenomenon. We have real and sustained flow momentum in our business.