Affiliated Managers Group's Q3 2025 Earnings Call: Contradictions Emerge on AQR Revenue, Fee Mix, and Inorganic Growth

Date of Call: November 3, 2025

Financials Results

• EPS: $6.10 economic earnings per share, up 27% YOY; Q4 EPS guidance $8.10–$9.26

Guidance:

• Q4 adjusted EBITDA: $325M–$370M, including $75M–$120M of net performance fees.
• Full-year performance fees expected to be $110M–$155M.
• Q4 economic EPS: $8.10–$9.26 (assumes 28.9M weighted average shares).
• Expect at least $500M of 2025 share repurchases.
• Full-quarter contributions expected from Montefiore and Comvest; Qualitas Energy and BBH closings expected Q4'25 and Q1'26 with no Q4 impact.
• Anticipate meaningful EBITDA and EPS growth in 2026 driven by organic alternative inflows and capital deployment.

Business Commentary:

* Record Inflows and AUM Growth: - AMG reported $9 billion in firm-wide net inflows for Q3 2025, contributing to a year-to-date total of $17 billion. This equates to a 3% annualized organic growth rate. - The increase in alternative AUM represents a 27% growth rate in economic earnings per share. - This growth was driven by strong demand for alternative strategies, particularly in liquid alternatives and private markets.

• Alternative Assets and EBITDA Contribution:
• Alternative assets under management increased by nearly 30%, reaching $353 billion, contributing 55% of AMG's EBITDA on a run rate basis.
• The company experienced a 17% year-over-year increase in adjusted EBITDA for Q3 2025.

• This growth was influenced by the significant inflows into alternatives, including records in liquid alternatives, and margin expansion at key affiliates like Pantheon and AQR.

• New Investments and Strategic Collaborations:

• AMG committed $1 billion across five new investments in 2025 and announced a strategic collaboration with BBH Credit Partners.
• These strategic investments and collaborations are aimed at expanding product offerings and enhancing distribution capabilities in high-growth areas.
• The strategic collaboration with BBH highlights the value of AMG's capital formation capabilities and its alignment with growing demand for alternative investment solutions in the U.S. wealth channel.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted a 17% year-over-year increase in adjusted EBITDA and '27% growth rate in economic earnings per share,' record $9B quarterly alternative net inflows ($17B YTD), and stated they 'anticipate a meaningful increase in our full year economic earnings per share in 2026.'

Q&A:

• Question from William Katz (TD Cowen): Jay, maybe one for you. I think the theme coming out of today's call is just the franchise momentum both from a de novo perspective as well as incrementally through inorganic. A, maybe I was wondering if you could just maybe delve a little bit more into BBH, how that sort of rose? Did they seek you out? And then just as you look at the pipeline looking ahead, how should we be thinking about activity level into next year after a really strong 2025?
  Response: BBH approached AMG and chose a strategic collaboration because AMG's capital-formation and U.S. wealth distribution capabilities are complementary; AMG's pipeline for alternative affiliate investments remains robust and disciplined, targeting mid- to high‑teens returns while returning capital via buybacks if opportunities are insufficient.

• Question from Alexander Blostein (Goldman Sachs): It feels a little bit earlier than typical to give guidance in 2026, but could you help contextualize what that could mean for next year given moving pieces including expansion in margins at AQR and Pantheon?
  Response: Management expects meaningful 2026 EPS upside driven by full-year contributions from 2025 investments, continued organic alternative inflows and margin expansion at AQR and Pantheon, but will provide more detailed 2026 guidance on a future call.

• Question from Ritwik Roy (Jefferies): You reported another quarter of accelerating liquid alts flows, and it sounds like momentum in the tax-aware AQR strategies continues to be a big contributor. Can you add color on the diversity of flows from AQR and performance fee potential, and note any notable private markets fundraises to be aware of into 2026?
  Response: Liquid alts drove record $14B quarterly inflows, led by AQR's tax-aware wealth strategies (which generate management fees and have performance-fee potential); private-markets affiliates raised $4B this quarter, notably strong at Pantheon with contributions from EIG and Abacus.

Contradiction Point 1

AQR's Revenue Contribution and Growth Expectations

It involves differing expectations regarding AQR's revenue contribution and growth potential, which are crucial for investor forecasts and strategic planning.

How should we view the margin expansion at AQR and Pantheon for next year, and what growth expectations do you have through 2026? - Alexander Blostein (Goldman Sachs)

2025Q3: We are obviously very excited about AQR's continued very strong performance, both on the product side, on the business development side. They continue to get traction in the marketplace. - Jay Horgen(CEO)

Jay, you mentioned AQR and Pantheon's EBITDA contribution is in double digits this year. Can you elaborate on this and provide the mix of management vs. potential performance fees? - Daniel Thomas Fannon (Jefferies)

2025Q2: AQR is expected to be a significant contributor and grow double-digits, and that will obviously help us on the margin profile. - Jay Horgen(CEO)

Contradiction Point 2

Fees and Mix of Fee-Related Earnings

It affects the perception of the company's revenue streams and financial performance, including the mix of fee-related earnings and performance fees.

How might the margin expansion at AQR and Pantheon impact next year's outlook, and can you provide guidance on growth expectations through 2026? - Alexander Blostein (Goldman Sachs)

2025Q3: The mix of fee-related earnings versus net performance fees is changing favorably. - Jay Horgen(CEO & Director)

Clarify the 8% accretion from investments and the Peppertree sale, and comment on organic growth factoring in fee rates and ownership stakes? - Brian Bedell (Deutsche Bank)

2025Q1: While long-only outflows have lower fee rates, we maintain a balance with higher ownership in these businesses. - Dava Ritchea(CFO), Thomas Wojcik(COO)

Contradiction Point 3

Inorganic Growth Opportunities

It highlights the company's approach to inorganic growth, which is essential for expansion and diversification.

Can you elaborate on BBH's growth trajectory and whether they initiated contact with the company? - William Katz (TD Cowen)

2025Q3: It has been a landmark year for AMG, driven by alternatives. Inorganic and organic growth profiles are improving. - Jay Horgen(CEO)

As you think about the pipeline, Jay, is the go-forward strategy the NorthBridge model involving a minority stake and a smaller franchise leveraged via your global distribution platform, or could larger deals accelerate strategic or operational progress more quickly? - Bill Katz (TD Cowen)

2024Q4: We aim to preserve independence and strategically support our affiliates. There may be opportunities to invest beyond this range, but we will ensure a high investment bar is met. - Jay Horgen(CEO)