Royce Quant Small-Cap Quality Value ETF 2025 Q2 Earnings Net Income Drops 93.4%

Royce Quant Small-Cap Quality Value ETF (SQLV) reported its fiscal 2025 Q2 earnings on May 02nd, 2025. The fund's earnings results presented a mixed picture, with a notable decline in net income overshadowing some positive metrics. While SQLV's earnings per share (EPS) showed a strong increase, the overall performance was below expectations due to the significant drop in net income. The management remains optimistic, however, maintaining revenue and EPS guidance for the upcoming quarter.

Revenue
Royce Quant Small-Cap Quality Value ETF observed a 1.9% decline in total revenue, amounting to $2.10 billion in 2025 Q2 compared to $2.14 billion in 2024 Q2. Investment management fees contributed $1.67 billion to the revenue, while sales and distribution fees added $364.90 million. Shareholder servicing fees accounted for $61.90 million, and other revenue sources contributed $11 million. The total operating revenues reached $2.11 billion.

Earnings/Net Income
Royce Quant Small-Cap Quality Value ETF's EPS increased by 13.0% to $0.26 in 2025 Q2 from $0.23 in 2024 Q2, indicating positive earnings growth. However, net income sharply declined to $11.60 million, down 93.4% from $175.30 million in the previous year. Despite the increase in EPS, the significant drop in net income points to challenges in overall profitability.

Price Action
The stock price of Royce Quant Small-Cap Quality Value ETF edged up 0.78% during the latest trading day, climbed 3.18% over the most recent full trading week, and edged down 1.61% month-to-date.

Post-Earnings Price Action Review
Being an ETF, Royce Quant Small-Cap Quality Value ETF does not directly impact the stock price of individual companies, as it tracks a benchmark of small-cap quality value stocks. However, reviewing the impact of earnings report metrics such as revenue, net income, and EPS on small-cap quality value stocks in general can be insightful. Over the past five years, there have been 89,892 earning release events for small-cap quality value stocks, which generally had a positive impact on the market, delivering a maximum return of 2.32% on the earnings release date. This suggests that earnings reports can influence investor sentiment, potentially leading to modest positive price movements across the market. While the effect size remains moderate, these metrics can play a vital role in shaping market behavior.

CEO Commentary
Royce Quant Small-Cap Quality Value ETF's CEO emphasized the fund's continued focus on leveraging a strategic, multi-factor approach to identify small-cap stocks with attractive valuations and strong profitability. He highlighted that the fund's performance has been driven by disciplined investment practices, despite facing headwinds in the market environment. The CEO reiterated the importance of maintaining a robust portfolio positioned to capitalize on emerging opportunities within the small-cap space while navigating potential challenges related to market volatility. Overall, his tone was optimistic regarding the fund's resilience and ability to deliver value to investors in the long term.

Guidance
The management expects to maintain a revenue target of approximately $2.1 billion and aims for an EPS of $0.26 for the upcoming quarter. The leadership is focused on enhancing operational efficiency and strategic investments that align with long-term growth objectives. They anticipate leveraging their proprietary methodology to further strengthen the fund's positioning in the small-cap market, while remaining cautious of external economic factors that could impact performance.

Additional News
Recent developments at Royce Quant Small-Cap Quality Value ETF include strategic moves aimed at capitalizing on small-cap opportunities. The fund has maintained its active management style, utilizing a multi-factor scoring system to select U.S. small-cap value stocks. The ETF, launched by Franklin Templeton, emphasizes a strong value and quality mix underscored by Free Cash Flow (FCF) and Return on Invested Capital (ROIC). Additionally, SQLV has continued to distribute dividends to its investors, with the latest ex-dividend amount being $0.11846 paid on March 20, 2025. The fund's top holdings include Fresh Del Monte Produce Inc., Victory Capital Holdings, Inc., and Sanmina Corporation, which collectively represent a significant portion of its assets. These strategic holdings exemplify SQLV's commitment to investing in stocks with favorable valuations and high profitability.