Victory Capital's Q4 2024: Contradictions in ETF Strategy, Institutional Pipeline, and Capital Allocation

These are the key contradictions discussed in Victory Capital Holdings' latest 2024Q4 earnings call, specifically including: ETF growth strategy, institutional pipeline, fixed income product performance, ETF strategy and product launches, and share repurchases and capital allocation:



Organic Growth and Strategic Partnerships:
- Victory Capital reported long term net flows improvement in Q4, with accelerated gross sales, ending December with $176.1 billion in total client assets, up 6% year-on-year.
- Growth was driven by success from investments in areas like the ETF platform and a multi-faceted strategic partnership with Amundi, which is expected to close by the end of Q1 2025.

ETF Expansion and Performance:
- The ETF AUM increased to $12 billion, marking a significant rise from less than $200 million in 2015.
- Active and rules-based ETFs were net flow positive and contributed to record revenue for the quarter, with the Victory Shares platform showing particular acceleration in growth.

Financial Performance and Margin Expansion:
- Adjusted earnings per diluted share rose more than 7% to $1.45 in Q4, with adjusted EBITDA and adjusted EBITDA margin setting new quarterly records at $126 million and 54%, respectively.
- Margin expansion was attributed to a variable expense model and leverage from a single operating platform.

Institutional and International Sales:
- The institutional business and international sales channels showed positive net flows, with the Amundi U.S. business posting net long term flows totaling $2.6 billion in 2024.
- Growth in these areas was driven by strong investment performance and successful distribution through global networks.