Silvercrest's Q3 2025: Contradictions Emerge on OCIO Assets & Pipeline, Global Value Equity Strategy Performance, and EBITDA Margins

Date of Call: October 31, 2025

Financials Results

• Revenue: $31.3M, up $0.9M or 2.9% YOY
• EPS: Reported: $0.07 per basic and diluted Class A share (reported net income attributable to Class A ~$0.6M); Adjusted EPS: $0.19 per adjusted basic and diluted (adjusted net income ~$2.4M)

Guidance:

• Discretionary AUM expected to continue growing and could exceed prior all-time highs assuming supportive markets.
• Management expects 6–12 months for some initiatives (global value, institutional marketing) to drive flows, with a broader 18–24 month horizon to materially leverage current expense base.
• Firm will adjust nondiscretionary AUM reporting in 2026 (one-time reporting change, no revenue effect).
• Dividend declared: $0.21 per Class A share (payable ~Dec 19, 2025).
• $25M buyback program remains with ~$8–9M available.

Business Commentary:

* AUM and Client Acquisition Growth: - Silvercrest Asset Management Group Inc. reported discretionary AUM of $24.3 billion, with a 3% sequential quarterly increase and 8% year-on-year growth. - The firm added $46.4 million in organic new client accounts during Q3, with $564 million in new client accounts for the first nine months of 2025. - The growth was driven by beneficial equity markets and a focus on organic new client acquisition as part of strategic investments.

• Earnings and EBITDA Impact:
• The company's adjusted EBITDA was approximately $4.5 million, or 14.5% of revenue for the quarter.

• The decline in earnings and adjusted EBITDA is attributed to significant strategic investments, primarily in intellectual capital and headcount, aimed at supporting long-term strategic priorities.

• Buyback Program and Shareholder Returns:

• Silvercrest announced a new buyback program of $25 million, with approximately $16 million worth of shares repurchased by the end of Q3 2025.

• The strong balance sheet supports ongoing capital returns, dividends, and growth initiatives, including shareholder approval to increase the number of shares issuable under the equity incentive plan.

• Global Value Equity Strategy and Pipeline:

• Silvercrest's global value equity strategy has a strong performance record, showcasing potential for large allocations and investment from clients like an Australian superannuation fund.
• The firm's pipeline, particularly in global and international equity strategies, is substantial, with interest from sovereign pools of capital, consulting firms, and institutions, driven by strong performance and institutional marketing efforts.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted AUM growth (+$687M Q3) and a record total AUM of $37.6B, described a "very large" institutional pipeline and strong performance for global strategies, and stated confidence that recent investments will pay off and drive improved EBITDA and earnings over time.

Q&A:

• Question from Christopher Marinac (Janney Montgomery Scott LLC, Research Division): Do you see a 18–24 month timeframe for investments to leverage expenses, or can you give more visibility?
  Response: Overall horizon is 18–24 months to materially leverage expenses, but some initiatives (global value and institutional marketing) could drive flows in 6–12 months and impact EBITDA sooner.

• Question from Christopher Marinac (Janney Montgomery Scott LLC, Research Division): Are the elevated professional fees temporary or recurring?
  Response: Some professional fees are temporary, especially tied to global initiatives; nonrecurring items are disclosed in the earnings release and 10‑Q reconciliation.

• Question from Christopher Marinac (Janney Montgomery Scott LLC, Research Division): Will EBITDA margin revert to historical levels or be recast given the broader focus?
  Response: Management expects margins to return toward historical levels over time if no further large investments are made; current compression is driven by recent, larger-scale investments.

• Question from Sandy Mehta (Evaluate Research Limited): Can you give color on the global strategy pipeline and client/consultant interest?
  Response: Global value strategy has shown strong performance (including an Australian seeding) and there is significant institutional interest and a large pipeline, though timing is harder to quantify post‑COVID.

• Question from Sandy Mehta (Evaluate Research Limited): Have you completed the senior hires or will hiring continue?
  Response: Most senior hires for the new equity strategy and institutional team are complete, but additional regional hires (Europe, Asia, US wealth) will continue though pace should moderate as revenue ramps.

• Question from Sandy Mehta (Evaluate Research Limited): How large are OCIO assets currently?
  Response: OCIO assets are approximately $2.2B with a strong pipeline; a roughly $70M foundation win on Oct 1–2 was not included in quarter-end AUM.

• Question from Sandy Mehta (Evaluate Research Limited): Do you disclose buyback prices or ranges for the $16M repurchased to date?
  Response: Company does not disclose specific buyback prices; management said repurchases were at favorable levels, were active June–Sept, and about $8–9M remains under the $25M program.

Contradiction Point 1

OCIO Assets and Pipeline

It involves the status and future expectations of the firm's OCIO assets and pipeline, which are crucial for revenue growth and strategic direction.

What is the current status of OCIO assets and the pipeline? - Sandy Mehta (Evaluate Research Limited)

2025Q3: OCIO assets are nearly $2.2 billion with a strong pipeline. A new foundation with around $70 million in assets joined the firm in early October. The performance of the OCIO portfolio is strong compared to peers. - Richard Hough(CEO)

Can you provide more details on the pipeline and your outlook for OCI and global markets going forward? - Sandy Mehta (Evaluate Research)

2025Q1: OCIO assets are nearly $2.3 billion at the end of the quarter with a strong pipeline. The performance of the OCIO portfolio is strong compared to peers. - Richard Hough(CEO)

Contradiction Point 2

Global Value Equity Strategy Performance

It highlights differing perspectives on the performance of the global value equity strategy, which is a key area for international growth and client attraction.

Can you provide more details on the pipeline and client interest given the strong performance of the global strategy? - Sandy Mehta (Evaluate Research Limited)

2025Q3: The global value equity strategy has shown strong performance, attracting a large Australian superannuation fund. Further, the firm's international equity capabilities have gained interest. - Richard Hough(CEO)

Can you provide more details on the pipeline and outlook for OCI and global operations going forward? - Sandy Mehta (Evaluate Research)

2025Q1: Our global value equity strategies, headed by the team we have recently built out, are stunned, and they've done an outstanding job. They've clearly beaten benchmarks in almost every category despite the volatility. - Richard Hough(CEO)

Contradiction Point 3

Pipeline and Client Interest

It involves changes in reported pipeline and client interest, which are crucial for assessing the company's growth prospects.

Can you provide more details on the pipeline and client interest given the strong performance of the global strategy? - Sandy Mehta(Evaluate Research Limited)

2025Q3: The global value equity strategy has shown strong performance, attracting a large Australian superannuation fund. Further, the firm's international equity capabilities have gained interest. The firm's institutional marketing team has engaged with major pools of capital and consulting firms. The new professional hired from a competitor brings global contacts and expertise. - Richard Hough(CEO, President & Chairman)

Can you provide more details on the current pipeline amount? Can you update us on OCIO's asset levels and outlook? Does the pipeline amount exclude global prospects? Do you expect global inflows in 2025? What opportunities do you see in 2024 and 2025? - Sandy Mehta(Evaluate Research)

2024Q4: We have a pipeline of $1.6 billion, including a significant OCIO mandate. The pipeline has decreased due to some wins. It does not include the global team. We're optimistic about increasing OCIO during 2025 based on market stability. The pipeline includes about $100 million for global value equity. The nature of measuring the pipeline has become more challenging with less RFPs and more informal client communication. - Richard Hough(Chairman and CEO)

Contradiction Point 4

EBITDA Margin Expectations

It involves changes in financial forecasts, specifically regarding EBITDA margin expectations, which are critical indicators for investors.

Over the next few years, will the EBITDA margin return to previous levels or be adjusted for a broader focus? - Christopher Marinac(Janney Montgomery Scott LLC, Research Division)

2025Q3: EBITDA margin will rebound to prior levels once investments are fully embedded. The current investments are more extensive than historical levels. While the firm is focused on growth, it aims to maintain the historical leverage of its business model. - Richard Hough(CEO, President & Chairman)

Given the overall operating leverage outlook over the next few years as you execute the pipeline, will you continue to achieve operating leverage on profitable throughput? - Christopher Marinac(Janney Montgomery Scott)

2024Q4: If we run the company in a steady state without personnel investments, we would return to a high 20s EBITDA margin. We are working to improve our leverage in the institutional business and new opportunities, which could potentially return us to the 32% EBITDA margin we reached during strong market conditions. - Richard Hough(Chairman and CEO)