Janus Henderson Group Q1 2025 Earnings Report

Janus Henderson Group EPS Results

• Actual EPS: $0.79
• Consensus EPS: $0.72
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.71

Janus Henderson Group Revenue Results

• Actual Revenue: $621.40 million
• Expected Revenue: $623.56 million
• Beat/Miss: Missed by -$2.16 million
• YoY Revenue Growth: +12.60%

Janus Henderson Group Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 9:00AM ET

Janus Henderson Group (NYSE:JHG) is an asset management holding entity. Through its subsidiaries, the firm provides services to institutional, retail clients, and high net worth clients. It manages separate client-focused equity and fixed income portfolios. The firm also manages equity, fixed income, and balanced mutual funds for its clients. It invests in public equity and fixed income markets, as well as invests in real estate and private equity. Janus Henderson Group plc was founded in 1934 and is based in London, United Kingdom with additional offices in Jersey, United Kingdom and Sydney, Australia.

Janus Henderson Group Q1 2025 Earnings Call Transcript

Key Takeaways

• Amid market volatility, AUM fell just 1% to $373.2 billion thanks to $2 billion of net inflows and a 44% jump in year-over-year gross sales, marking the fourth consecutive quarter of positive flows.
• Long-term investment performance remains robust, with at least 65% of assets outperforming benchmarks over three, five and ten years and over 70% of AUM in the top two Morningstar quartiles.
• First quarter adjusted diluted EPS of $0.79 rose 11% year-over-year, and the company boosted its quarterly dividend by 3% while authorizing a new $200 million share buyback program.
• Janus Henderson struck a multifaceted partnership with Guardian Life to manage $45 billion of public fixed income, secure up to $400 million in seed capital, and co-develop multi-asset solutions for Park Avenue Securities.
• Under its Protect & Grow, Amplify and Diversify strategy, the firm expanded capabilities via acquisitions and partnerships—adding active ETFs with Tabula, asset-backed lending with Victory Park Capital, emerging markets private capital via NBK, tokenization with Anomoi/Centrifuge and democratized alternatives through Privacor.

Presentation

[Operator]

Good morning. My name is Lucy, and I will be your conference facilitator today. Thank you for standing by, and welcome to the Janus Henderson Group First Quarter twenty twenty five Results Briefing.

[Operator]

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. In the interest of time, questions will be limited to one initial and one follow-up question. In today's conference call, certain matters discussed may constitute forward looking statements. Actual results could differ materially from those projected in the forward looking statements due to a number of factors, including, but not limited to, those described in the forward looking statements and Risk Factors sections of the company's most recent Form 10 ks and other more recent filings made with the SEC.

[Operator]

Janus Henderson assumes no obligation to update any forward looking statements made during the call. Thank you. Now it is my pleasure to introduce Ali Dibaj, Chief Executive Officer of Janus Henderson. Mr. Dibaj, you may begin your conference.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Welcome, everyone, and thank you for joining us today on Janus Henderson's first quarter twenty twenty five earnings call. I'm Ali Dibaj, and I'm joined by our CFO, Roger Thompson. In today's call, I'll start with some thoughts on the quarter before handing it over to Roger to run through quarterly results in more detail. After Roger's comments, I'll provide an update on our strategic progress, including our recently announced multifaceted strategic partnership with the Guardian Life Insurance Company, which we are excited about and believe will deliver value for our clients and shareholders and Guardian and its policyholders. And then we'll take your questions following those prepared remarks.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Turning to slide two. Market conditions continue to be tumultuous as changing monetary and fiscal policies, U. S. Recession fears and global trade uncertainty dampen investor sentiment. While Janice Henderson is not immune to the current market conditions, we believe we can navigate this period of market uncertainty given our truly global footprint.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We have a diverse and global client base, which we are proactively engaging and supporting. It's during challenging times like these, our clients and their clients need our differentiated insights, investment discipline and world class service the most. Turning to the first quarter, even amidst these significant market challenges, we were resilient and able to deliver a good set of results. Assets under management decreased only 1% to $373,200,000,000 as market declines were partially offset by $2,000,000,000 of positive net flows and favorable currency adjustments due to a weakening U. S.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Dollar. We delivered our fourth consecutive quarter of positive net flows. The net inflow results reflect a 44% increase in year over year gross sales, positive net flows again in both of our intermediary and institutional channels and we continue to maintain and capture market share in several key intermediary markets. As we stated previously, delivering positive active flows is a key differentiator for Janus Henderson in an industry with well documented active flow headwinds. Turning to investment performance.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Despite some short term volatility which often happens in the industry amidst a fast market dislocation, our long term investment performance is solid with at least 65% of assets beating respective benchmarks on a three, five and ten year basis. Against peers, investment performance is even stronger with over 70% of AUM in the top two Morristown quartiles over all time periods. The current market dislocation, while challenging, presents unique opportunities. Tides will not lift all boats and active asset management is critical. In situations such as this, our investment professionals are seeing opportunities to invest in high quality, innovative and or undervalued stocks, bonds and other securities to deliver for our clients.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We've always had a focus on quality and that quality theme is as important now as ever. Moving to our financial results, which remain solid. Adjusted diluted EPS of $0.79 is an 11% increase compared to the first quarter of twenty twenty four. Our financial performance and strong balance sheet continue to provide us the flexibility to invest in the business both organically and inorganically and return cash to shareholders. Today we announced a 3% increase to the quarterly dividend and a new board approved share buyback authorization of up to $200,000,000 through April 2026.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We also see many asset managers out there looking for a safer harbor to pull into and thus we remain active and disciplined in M and A as well. In summary, our net flows are positive. Our long term investment performance is solid. We continue to execute our strategy. Financial results are good.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We continue to be disciplined and ROI focused on expenses. We have a strong and stable balance sheet and our truly global footprint positions us well for the future and provides a strong foundation to navigate periods of market uncertainty. I'll now turn the call over to Roger to run you through the detail of the financial results.

[Roger Thompson, CFO at Janus Henderson Group]

Thanks, Ali, and thank you everyone for joining us on today's call. Starting on Slide three and investment performance. As Ali mentioned, despite some short term volatility, our medium and long term investment performance versus benchmark remained solid with at least 65% of AUM beating their respective benchmarks over the three, five and ten year time periods. Overall investment compared to peers continues to be competitively strong with at least 70% of AUM in the top two Morningstar quartiles over all time periods presented. Active management in portfolios is essential during times of disruption, times such as these, and our over 350 investment professionals are intensely focused on differentiating between the good and the bad companies, separating the weak from the chaff and positioning us to deliver the best possible investment outcomes for our clients and their clients over the long term.

[Roger Thompson, CFO at Janus Henderson Group]

Slide four shows total company flows by quarter. Net inflows for the quarter were $2,000,000,000 compared to net inflows of $3,300,000,000 last quarter and a significant improvement over net outflows of $3,000,000,000 a year ago. The year over year improvement was primarily driven by a 44% increase in gross sales and marked the best quarterly gross sales result in over four years. The increase in gross sales compared to the prior year is across a broad range of regions and strategies including ETFs, absolute return equity, our biotech hedge fund, US mid cap growth, balanced, global small cap, multi sector credit, and asset backed securities. Turning to slide five and flows by client type.

[Roger Thompson, CFO at Janus Henderson Group]

Please note that beginning in the first quarter of twenty twenty five, ETF gross flow activity is reflected in the applicable client type that generated the activity. Access to improved data transparency enabled us to make this change. For periods prior to 2025, all ETF flow activity is shown in the intermediary channel. This change better illustrates the wide range of clients investing in our suite of active ETFs from supermarket clients in the self directed channel, advised clients and model portfolios within intermediary, and larger sophisticated clients within our institutional channel. The intermediary channel net flows were positive $1,500,000,000 In the first quarter, the US and Asia Pacific region experienced net inflows with net outflows in EMEA.

[Roger Thompson, CFO at Janus Henderson Group]

In The U. S, net flows were positive for the seventh consecutive quarter. Several strategies contributed to the net inflows in the first quarter, including most of the active ETFs, multi sector credit and U. S. Mid cap growth.

[Roger Thompson, CFO at Janus Henderson Group]

U. S. Intermediary is a key initiative under our protect and grow strategic pillar, and we're pleased that we've delivered net inflows in the first quarter and are gaining market share against a challenging market backdrop. Under our Amplify strategic pillar, we've talked about amplifying our investments and client service strengths using various means, including vehicles through which we deliver our products. In addition to ETFs, flows in CITs and hedge funds in this channel were positive in the first quarter.

[Roger Thompson, CFO at Janus Henderson Group]

In APAC Intermediary, net flows were positive for the third consecutive quarter and the best intermediary net flow result in the region in over three years. Net inflows in this channel demonstrate our truly global investment capabilities, which included global technology leaders managed by our Edinburgh team, tactical fixed income managed by our Melbourne team, and the balanced strategy managed out of our Denver office. Institutional net inflows were $800,000,000 compared to net inflows of $900,000,000 in the prior quarter. Institutional net flows include $600,000,000 of ETF net inflows. We're pleased to see increased interest and utilization of our high quality, highly liquid and stable securitized fixed income ETFs from institutional clients.

[Roger Thompson, CFO at Janus Henderson Group]

Elsewhere, we're continuing to work to create a sustainable pipeline, and we're encouraged by the leading indicators and the increasing number of opportunities across all of our regions. Our pipeline is growing and is starting to mature, but there's still much more to do. Net outflows for the self directed channel, which includes direct and supermarket investors, were $300,000,000 The first quarter includes approximately $700,000,000 of ETF net inflows from our supermarket clients. Excluding ETFs, self directed net outflows were roughly flat to the prior quarter and the prior year. It's good to see self directed clients taking advantage of the opportunity to invest directly in our ETFs.

[Roger Thompson, CFO at Janus Henderson Group]

Slide six shows flows in the quarter by capability. Equity flows were negative $4,200,000,000 A challenging environment for active equities was exacerbated during the quarter with the market dislocation and risk off sentiment. First quarter net inflows for fixed income were $5,600,000,000 compared to $5,200,000,000 of net inflows in the prior quarter. Several strategies contributed to the positive fixed income flows. Active fixed income ETFs delivered strong positive flows of $5,700,000,000 in the quarter led by flows in JAAA.

[Roger Thompson, CFO at Janus Henderson Group]

Other strategies contributing to positive flows were multi sector credit, asset backed securities and Australian fixed income. Net outflows in the multi asset capability were $600,000,000 primarily due to net outflows in the balanced strategy. Despite net outflows in aggregate for balanced, several regions were net positive, including EMEA, Latin America, and Asia Pacific. And finally, net inflows in the alternatives capability were $1,200,000,000 driven primarily by absolute return equity and pulled hedge funds. Moving on to the financials.

[Roger Thompson, CFO at Janus Henderson Group]

Slide seven is our U. S. GAAP statement of income. And on Slide eight, we explain the adjusted financial results. Adjusted operating results are lower compared to the prior quarter, primarily due to the significant annual performance fees realized in the fourth quarter of twenty twenty four.

[Roger Thompson, CFO at Janus Henderson Group]

More relevantly, compared to the first quarter a year ago, operating income and EPS are up 22% and up 11% respectively, as a result of higher average AUM and operating leverage and improved three year investment performance leading to better mutual fund performance fees. Looking at the detail, adjusted revenue decreased 14% compared to the prior quarter, primarily due to those lower seasonal performance fees and increased 14% compared to the prior year, primarily due to higher management fees on higher average AUM and the improved U. S. Mutual fund performance fees. Net management fee margin remained relatively stable at 48.5 basis points, which remains the differentiator for Janus Henderson.

[Roger Thompson, CFO at Janus Henderson Group]

I want to remind you that as part of the announced strategic partnership with Guardian, Janus Henderson will manage the $45,000,000,000 investment grade public fixed income portfolio for Guardian's general account, and we expect that our aggregate net management fee rate will be approximately five to six basis points lower once the assets are fully onboarded, which is expected to be at the end of the second quarter. First quarter performance fees of negative $4,000,000 primarily consist of US mutual fund performance fees. Whilst negative, US mutual fund performance fees have improved significantly compared to the negative $13,000,000 a year ago. Continuing on to expenses. Adjusted operating expenses for the first quarter decreased 9% to $330,000,000 compared to the prior quarter.

[Roger Thompson, CFO at Janus Henderson Group]

Adjusted employee compensation expense, which includes fixed and variable costs, was down 13% compared to the prior quarter, primarily from incentive compensation on higher revenues in the fourth quarter of twenty twenty four. Adjusted LTI increased 21% compared to the prior quarter, largely due to seasonal payroll taxes triggered by annual vestings in the quarter. In the appendix, we've provided the usual table on the expected future amortization of existing grants for you to use in your models. The first quarter adjusted comp to revenue ratio was seasonally higher at 45.8%, which is down from 48.2 in the first quarter of last year and fifty point one percent two years ago. The higher rate in the first quarter is primarily due to the payroll taxes on annual LTI vesting and the beginning of year reset of payroll taxes and retirement contributions.

[Roger Thompson, CFO at Janus Henderson Group]

Adjusted non comp operating expenses decreased 12% compared to the fourth quarter, primarily from lower marketing and G and A expenses. With respect to 2025 expense expectations, we are navigating an uncertain operating landscape. We remain committed to strong cost discipline, ensuring that we manage our cost base while continuing to support the long term growth objectives of the business. Our previously stated expected compensation ratio in 2025 remains unchanged at 43% to 44%, assuming March 31 AUM and a zero market assumption for the remainder of the year. For non compensation, including the non comp related to the new Guardian business and the weakening US dollar, we expect to be at the higher end of the mid to high single digit percentage growth guidance due to the investments supporting our ongoing strategic initiatives and operational efficiencies, inflation and the full year impact of the consolidation of VPC, NBK, Tabula, and now Guardian.

[Roger Thompson, CFO at Janus Henderson Group]

If the market deteriorates further and that decline is prolonged, we have expense levers and will actively manage our cost structure, allowing us to maintain financial discipline and the flexibility to continue to invest strategically in the business where it makes sense to do so. Finally, our expectation of the firm's tax rate on adjusted net income attributable to JHG remains unchanged at a range of 23% to 25%. Our first quarter adjusted operating margin was 32%, an increase of two twenty basis points from a year ago, demonstrating the leverage in our business. Adjusted diluted EPS was $0.79 up 11% from the comparable Q1 twenty twenty four period. Skipping over Slide nine and wrapping up on Slide 10 with a look at our liquidity profile.

[Roger Thompson, CFO at Janus Henderson Group]

Our balance sheet remains strong and stable. Cash and cash equivalents were $1,100,000,000 as of the March 31, which is lower than the end of the year primarily due to the payment of annual variable compensation. The first quarter cash position is typically our lowest given seasonal cash needs. Compared to the same period a year ago, our cash and cash equivalents are 19% higher. During the quarter, we funded our quarterly dividend and repurchased 600,000.0 shares for $27,000,000 Shares repurchased were lower this quarter as we paused our share buyback during the lead up to the Guardian strategic partnership announcement and through today's release of earnings to the market.

[Roger Thompson, CFO at Janus Henderson Group]

As Ali discussed, we are committed to returning cash to shareholders and are pleased to announce that the board has authorized a new share buyback program of up to $200,000,000 to be completed by April 2026. We will start this in short order. The board has also approved a 3% increase in our quarterly dividend to $0.40 per share to be paid on the May 29 to shareholders of record as of the May 12. The buyback program and the increase in our dividends do not alter our ability to invest in the business organically or inorganically and return cash to shareholders. Currently, our liquidity profile allows us to do both.

[Roger Thompson, CFO at Janus Henderson Group]

Our return of excess cash is consistent with our capital allocation framework. We'll look to return capital to shareholders where there isn't an immediately more compelling investment in the business. In summary, we have a strong liquidity position and we continue to balance the capital needs and the investment opportunities of the business with returning capital to shareholders. With that, I'd like to turn it back over to Ali to give an update on our strategic progress.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Thanks Roger. Turning to slide 11 and a reminder of our three strategic pillars of protecting and grow our core businesses, amplify our strength not fully leveraged and diversify where clients give us the right to win. We are in the execution phase and we believe this strategic vision has us on the path to over time deliver organic growth consistently. In Protect and Grow, we've talked previously about the importance of protecting and growing our U. S.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Intermediary business and the progress we've made in capturing market share. Within Amplify, we've talked about our institutional business, our product development and expansion efforts, the acquisition of Tabula and the partnership with Anemoine Centrifuge. We also recently announced our partnership with Guardian Life, which I'll discuss in more detail later in the presentation. Under Diversify, we expanded into differentiated private market capabilities for clients with the acquisitions of N and B K Capital Partners and Victory Park Capital. We established our joint venture, Privacor, focused on the democratization of alternatives.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We've spoken about M and A quite a bit. So how does M and A and partnerships fit into our strategy? Recall that for us at least, M and A is a lever to deliver all three elements of our strategy and not a strategy unto itself. On slide 12, we outline how M and A and strategic partnerships are contributing to our strategic vision, not yet to protect and grow but so far to amplify and diversify the business. We followed a targeted approach.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We won't be all things to all people but have placed measured bets on growth vectors that have the potential for significantly higher growth rates over the long term compared to our existing business. As I said previously, we want to skate to where the puck is going on behalf of clients and shareholders and we believe those with whom we have partnered are uniquely positioned to help us grow faster. Asset backed lending has emerged as a significant and differentiated market opportunity within private credit and we believe it will remain appealing to clients as they increasingly look to diversify their private credit exposure beyond just direct lending. Victory Park Capital specializes in asset backed lending and has differentiated origination. We believe that despite all the fervor regarding asset backed lending out there, there are actually only a handful or less of asset management firms who have proven track records of doing asset backed private credit well and have been doing it for decades.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We are fortunate to be a leader among that select group with Victory Park Capital that has been doing asset backed lending way before it was the cool thing to talk about. Others are tempting asset backed with a handful of hires, but our scale platform of 30 investment professionals, high quality technology platform to manage risk of smaller balance credit and a history of relationships in the sector is unmatched. In active ETFs, the European ETF market is undergoing a significant transformation growing considerably and mirroring trends observed in The U. S. Market where active management is increasingly incorporated in the ETF wrapper.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

This shift represents a considerable growth opportunity for asset managers seeking to broaden the way in which clients access their investment capabilities and capitalize on evolving client preferences in the European market. The acquisition of Tabula allows Janus Henderson early access to this growing market and builds on our extremely successful suite of active ETFs in The U. S. Where Janus Henderson is now eighth largest provider of active ETF and third largest provider of active fixed income ETFs. We've quickly moved to leverage the business launching four active ETFs in the last six months with more to come in 2025.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

In emerging market debt, we've addressed both the private and public markets. We expanded into differentiated private market capabilities for clients with the acquisition of NDK Capital Partners, which allows Janice Henderson early entry into the rapidly growing emerging markets private capital space. On the public side, we brought in a well respected emerging market debt team. This team is a key component of a global fixed income platform that supports single strategy and multi sector portfolios. Pervacorp seeks to take advantage of and be the leader in the democratization of private alternatives into the private wealth channel.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Alternatives as a category represents a several trillion dollar market today with asset growth expected to continue. Our net worth investors command $80,000,000,000,000 of assets globally and are expected to account for much of the growth in private markets. PurvaCore is selling on three wirehouse platforms and expect to add another this year. They also are expanding into RIAs and broker dealers. Purvacor has more products coming online in the coming months and they are working with Victory Park Capital on innovative solutions for the wealth channel.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

In September of last year, we partnered with Anemoi and Centrifuge to manage Anemoi's Liquid Treasury Fund, a fully on chain tokenized fund issued on Centrifuge's public blockchain that provides investors with direct access to the short term U. Treasury bills. Blockchain readiness and tokenization are key pillars underpinning Janus Henderson's innovation strategy and the decision to partner with Anomoy Centrifuge in this way reflects the firm's commitment to digital assets and our desire to embrace disruptive financial technologies. The partnership has already begun to demonstrate success with initial $200,000,000 allocation now funded as we were one of three firms selected from 40 submissions in the largest tokenization RFP ever conducted. This early validation is very rewarding and we will continue to expand our offering where tokenization can provide real world benefits to clients today while we also keep an eye on the potential benefits to a broader range of clients in the future.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Finally and most recently, we further solidified our presence in insurance with the announced strategic partnership with Guardian, which we are very excited about. On that, turning to Slide 13 for more background on the multifaceted strategic partnership with Guardian announced earlier in April. Guardian is one of America's largest and most well respected life insurers and a leading provider of employee benefits. Guardian has a history of profitable growth, dollars 172,000,000,000 in assets under administration and a 7% annual growth rate since 2019. We are extremely energized to partner with Guardian.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

This partnership was founded on a shared set of client focused values, leverages our complementary strengths, creates alignment for mutual growth and intends to achieve mutually beneficial outcomes for policyholders, our clients, shareholders and employees. Through the partnership, Janis Henderson will manage the $45,000,000,000 investment grade public fixed income portfolio for Guardian's general account expanding Jenness Henderson's pro form a fixed income AUM to $135,000,000,000 bringing pro form a fixed income AUM to over 30% of pro form a companywide AUM. On a pro form a basis again, Janice Henderson will manage over $100,000,000,000 for global insurance companies, greatly expanding the firm's institutional reach and insurance presence and positions Janice Henderson as a top 15 unaffiliated insurance asset manager. In addition, Guardian will commit up to $400,000,000 of seed capital to help accelerate Janus Henderson's continued innovation in securitized credit and high quality active fixed income products as well as other fixed income capabilities. One opportunity area is the further expansion of our ETFs.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

This would build on the success of Janus Henderson's active fixed income ETF suite, which includes JAAA, the largest CLO ETF JBBB, which provides exposure to floating rate CLOs, generally rated BBB JSI, which invests in opportunities across The U. S. Securitized markets, JMBS, the largest actively managed mortgage backed securities ETF and VNLA, an active global short duration income ETF. Guardian and Janice Henderson have agreed to pursue a strategic initiative to co develop proprietary multi asset solution models for Guardian's duly registered broker dealer and registered investment advisor Park Avenue Securities or PAS. As a key partner to PAS, Janus Henderson will develop investment solutions for PAS clients, bringing together Janus Henderson's full suite of global investment allocation solutions capabilities, including Janus Henderson Edge, the firm's award winning proprietary analytics platform from its portfolio construction and strategy team.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Guardian will receive equity warrants and other economic considerations designed to support a shared goal of accelerating growth and driving value creation. On a standalone basis excluding other upside potential from the partnership, the Guardian IMA contributes positively to Janus Henderson's operating margins and is accretive to earnings upon full integration by mid-twenty twenty six. As previously mentioned, Janus Henderson's aggregate net management fee rate will be approximately five to six basis points lower once the assets are fully onboarded, which is expected to be at the end of the second quarter of twenty twenty five. Wrapping up on slide 14, we believe we have a strong foundation as a truly global asset manager enabling Janus Henderson to navigate periods of market uncertainty. We have a diverse and global client base that we are proactively engaging and supporting We have a broad offering of investment strategies and styles with global and regional focuses.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Despite some short term volatility, our long term investment performance is solid. Disruption creates opportunity for active managers like Janice Henderson to look at a wider spectrum of companies that we think will outperform over the longer term. Flows were net positive for the fourth consecutive quarter resulting in a 2% organic growth rate over the last twelve months. Organic growth is a key differentiator for Janus Henderson in an industry with well documented active flow headwinds. We announced a multifaceted strategic partnership with Guardian amplifying several areas of our business.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Importantly, this partnership demonstrates that we are a home for some of the most sophisticated clients in the world. Great deals are still going to happen even in this uncertain environment and we'll find ways to win and grow. In that vein, we continue to look actively to buy, build or partner to further diversify the business where clients give us the right. We have a strong balance sheet and good free cash flow generation, which enables us to return cash to shareholders and reinvest in the business. Looking ahead, in this period of uncertainty, we'll focus on what we can control including cost discipline, investment in the business, client outreach and investment performance.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Let me turn the call back over to the operator to take your questions.

[Operator]

Thank Our first question comes from Ken Worthington of JPMorgan. Ken, your line is now open. Please go ahead.

[Ken Worthington, Financial Analyst at JP Morgan]

Hi, good morning. Thanks for taking the questions. Maybe first, I wanted to dig into CLO, CLO ETF capacity. Given the size of money coming in over a short period and the risk that in poor market conditions money might be possibly flowing out as quickly, how are you thinking about the ETF franchise's ability to navigate CEO liquidity particularly in times of stress? And are there any lessons maybe learned in April that sort of confirm or alter your views on the build out of this product suite?

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Ken, thanks for the question. So we've been quite fortunate with the CLO franchises that we've created, obviously, in ETF form, preferentially for clients. In fact, year to date flows are positive $3,000,000,000, which is, you know, more than peers combined. So so effectively, we are the category. We're about 80% of, of the market share in this category, we've created this category.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

So effectively, we are the market. And what we've seen mostly is that investors in this ETF and in the franchises that we bought on boarding on ETFs are medium to long term type investors. Sometimes that does mean some investors have taken it from a shorter term perspective, and that's where you get the, uncertainty in the marketplace create the volatility that you're exactly asking about. We were watching this very, very closely as you can imagine. And what we've seen consistently, particularly in a, quite volatile time in the April, since then it's been pretty stable.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

But in the April, that, the redemptions have been absorbed completely as expected. Very little impact on the CLO market, on the portfolio. Again, these are underlyingly quite liquid. There's an in kind element, obviously, given the ETF piece to it as well. So we've seen no dislocations, no surprises.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

In fact, we were quite pleased with how the market reacted, in a very measured and disciplined manner, again, exactly as we'd expected, even given our size.

[Ken Worthington, Financial Analyst at JP Morgan]

Okay. Perfect. Thank you for that. And then just maybe quickly on the institutional channel, second consecutive quarter of positive flows. That part of the franchise continues to perform better.

[Ken Worthington, Financial Analyst at JP Morgan]

Can you talk about next steps in terms of where you're going to drive better results from here going forward? What's sort of next in the pecking order priorities to continue to drive even better results as we look forward?

[Ali Dibadj, Director & CEO at Janus Henderson Group]

On institutional specifically, Ken?

[Ken Worthington, Financial Analyst at JP Morgan]

Institutional specifically.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Yes. So look, you're right. It's now a couple of consecutive quarters of positive flows. You've seen some in the past, but we're starting to get a little bit more steady in that way. And the pipeline is building.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Set aside the one not funded $45,000,000,000 from Guardian, that's obviously a big pipeline win that we're very proud about. But if you think about some of the leading indicators, for example, in The U. S, we're seeing an RFP activity that's up about 100% quarter on quarter or I should say, Q1 twenty twenty four to Q1 twenty twenty five. We've gotten more and more consultant support across the board. In fact, we had a very big firm watch flag that was on us for many years removed from us just this past quarter, which opens up, as you'd imagine, many more doors globally.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We're continuing to see opportunities up and being in kind of late stage opportunities and finals and all that sort of stuff in the kind of 20% to 30% range year on year again in The U. S. And EMEA and the rest of the world do the same thing. There, we're seeing opportunities increased by around 60%. So things are, as we said, it would take some time, but playing out as planned as we'd expected.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

And part of that is not just because of the products that we're certainly bringing to bear already, but also some of the new products that we brought to bear, whether it be emerging market debt or, NBK or VP Park Capital or things like that we can do with Guardian. So we are seeing a broad based interest with the products that we already have and we've had for quite some time. We're seeing a lot of interest in some, what we call them, immutable thematics like tech and health care, and small cap equities where there's opportunities and absolute return equities and high conviction equities. In Europe, we've recently seen a lot more interest in investments. I think given all the headlines around investing in Europe and gladly, we are a truly global firm and can offer great European investments and global investments.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Multi asset is coming up on the radar screen. Securitize, obviously. Our balanced fund is showing some progress because people want the balance of fixed income and the yield of fixed income with the upside potential of equities. So so, I don't wanna give you a big laundry list. I kinda did.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

But it's a it's a broad gamut of areas where people are really looking to us on institutional, and the consultant environment is becoming much more benign towards us as well.

[Ken Worthington, Financial Analyst at JP Morgan]

Excellent. Thank you so much.

[Operator]

Our next question comes from Bill Katz of TD Cowen. Bill, your line is now open. Please go ahead.

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Great. Thank you very much. Good morning. And congrats again on the Guardian transaction. Maybe starting there, it seems like a very intriguing deal on a lot of vectors from my perspective.

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Can you talk a little bit about where you see the greatest opportunity for incremental growth maybe just with the Guardian itself? I think you mentioned that business is growing about 7% annually. But also in terms of their incremental distribution platform, what kind of products might you see the early opportunities for wins? Thank you.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Hey, Bill. Thanks very much for the question on Guardian. As you can probably tell, we're pretty energized about this partnership. And it starts with really sharing the same client focused values, policyholder values, really sharing complementary strengths, and I'll get to some of that on distribution side for sure. And very importantly, alignment for mutual growth from an economics perspective.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We think we can certainly enhance Guardian's both investment and solutions capabilities and benefiting its policyholders and its clients. We're very pleased that this partnership ends up developing a $100,000,000,000 global insurance asset manager like us. That's the number for us. That puts us into the top 15 realm. And we think that there is, point number one, really great growth potential to amplify some of the insurance relationships that we can have with others.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

And indeed, we've had several phone calls and outreaches from other insurance companies really intrigued by this deal, wanting to learn more about this deal and trying to understand why the some of the most sophisticated assets in the world trust us and wanna come to us. And and we think that's we're becoming a true global contender to get more insurance assets to your growth question. And we think we can amplify that. Still in the amplify realm, not only in insurance, but beyond that, we think we have the opportunity to, again, bring to bear, the the the the winning opportunity of of of getting these great assets with other institutional clients as well. And and, there too, we're getting more intriguing phone calls and outreaches about what other partnerships we can create.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We clearly have the seed opportunity of $400,000,000, that we can bring to bear. And I think we've, the team here has shown a track record of growing products. We think we can take that seed and grow them. And, of course, very, very importantly, we have a great set of employees that are still currently at Guardian coming over to us, and we definitely want to leverage their skill sets and their expertise. We're very, very proud and happy that they've decided to join us at Janus Henderson and grow their businesses.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Now in particular on the distribution side of things, you're right. They have a great broker dealer, Park Avenue Securities. It's about 50 and a half billion dollars of client assets under management. We have a partnership with them where we're developing proprietary, both models, diagnostic tools, investment solutions, training modules, etcetera, really to amplify what we have internally from a broader solutions perspective, our multi asset business, our adaptive asset business, our portfolio construction business, our quant solutions businesses as well. And we think that's going to be very, very fruitful because we can bring to bear a better investment platform for those 2,400 clients, for those sorry, 2,400 advisers.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We can also bring new products to those clients and grow that business. So we feel very, very pleased about all the different vectors that this partnership can bring to bear to grow the business, let alone the underlying 45,000,000,000 that we're starting

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Great. Thank you. And then just as a follow-up, I think you mentioned a couple of times in the commentary just around the pipeline for M and A. Can you talk a little bit about where incrementally, you might be interested on interested in, excuse me? And then as you think about maybe the expectation between the bid and the ask, where does that sit particularly after such a turbulent year to date market backdrop?

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Thank you.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Thanks for the question. It's a very, very active M and A environment right now. We will always and as you've seen, and I think page 12 of our presentation, that kind of additional page, would support the view that we're always going be client led. We're always going to be market led. And so we continue to look at opportunities to buy, build, or partner across the board.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Our, balance sheet and cash flow allows us to be, a safe harbor, I guess, in these tumultuous times. There is a significant interest out there in in speaking with us. I wouldn't say, Bill, that on the valuation point, there's capitulation in any sort, but there's certainly a curiosity, given the given the volatility in the marketplace and, joining forces with a firm that has shown a pretty steady, not just revenue growth, but organic revenue growth, pretty steady execution on its strategy, pretty steady growth of businesses that we brought on board already and want to continue to do that. But we'll continue to be very disciplined on that front across the board. But we see a lot of activity out there.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

I think you're right. And I would say that the bid ask spread has come down a little bit, but I'm not sure you're capitulating yet in some of our peers.

[William (Bill) katz, Senior Equity Analyst at TD Cowen]

Thank you for taking the questions.

[Operator]

Thank you. Our next question is from Craig Siegenthaler of Bank of America. Craig, your line is now open. Please go ahead.

[Craig Siegenthaler, Managing Director at Bank of America]

Good morning, Ali. Hope everyone is doing well. And congrats on the Guardian Life I'm agreement signing. We actually have a follow-up to Bill's question. And I heard your comments on the $45,000,000,000 AUM and the net five to six basis point management fee rate.

[Craig Siegenthaler, Managing Director at Bank of America]

But my question is on the organic growth rate. What do you see as the flow trajectory on this $45,000,000,000 AUM base going forward? Or should we essentially assume it's sort of stable at $45,000,000,000 at the five to six basis point fee rate?

[Ali Dibadj, Director & CEO at Janus Henderson Group]

So Guardian has had a great growth trajectory historically. One of the reasons that we partnered with them is the like mindedness about continuing to grow. We certainly would expect and hope and continue to see growth in that $45,000,000,000 given they're such a successful company, and we're both aligned with growing that business.

[Craig Siegenthaler, Managing Director at Bank of America]

Thanks, Ali. And just for a follow-up, when we take a step back and look at the entire $100,000,000,000 plus AUM insurance client business, there's lots of partnerships now formed between insurance companies and asset managers, especially annuity business. Is there a lot more AUM up for grabs? Or is most of it tied up now either with third party asset managers or internal CIO divisions where they're really not looking for a partner?

[Ali Dibadj, Director & CEO at Janus Henderson Group]

There's plenty of room out there, actually. And and, look, I wanna underline the obvious here perhaps is that this partnership with Guardian, was was hard fought, and it does suggest that we are a great home for for the most sophisticated assets in the world, and really true global contender relative to a lot of others who were vying for those assets. Again, we're number 15 now in the world, with the real aspiration, Craig, to your question, to continue to garner assets from the insurance, clients. And that is a growing client base, and a growing asset base, as a category. So again, as page 12 would suggest, we expect growth not only organically, but for us inorganically there.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

And there are many more opportunities in the insurance world globally, remember, for us. If you think about it, 45,000,000,000 is half that $100,000,000,000 roughly. There's another $55,000,000,000 elsewhere in the world that we also think has opportunity. So we think there's quite a lot of opportunity out there and partnering with a similar culture, with a growth trajectory and with the services and investment skill sets and client service that we bring to bear to the insurance client, but we see enormous opportunity there to continue to grow that business.

[Craig Siegenthaler, Managing Director at Bank of America]

Thanks, Ali.

[Operator]

Thank you. We have a question from Michael Cyprys of Morgan Stanley. Michael, your line is now open. Please go ahead.

[Annalei Davis, Analyst at Morgan Stanley]

Hey, this is Annalie Davis on for Mike. You guys talked a little bit about the setup for active management in 2025. Just curious if you could talk a little bit more about how you see the opportunity set just given continued uncertainty, and also what steps you guys taking to help your investment teams best capture this? Thanks.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Hey, Annalie, thanks for the question. So let me maybe divide it into two buckets, talking about the current environment and talking about the kind of what we're hearing from clients in that context. Look. Clearly, there's a dislocation in the marketplace. It happened all of a sudden.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

It happened quite quite quickly. It certainly feels like it's stabilizing now. You don't really ever know, but it feels like it's stabilizing now. And, certainly, dislocation may impact some of the short term flows and investment performance, and certainly, I'll get to that in a second. But it also really importantly, particularly for us, offers real great opportunities.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

We are an active investing shop. We have three fifty investors around the world who spend all of their time, as Roger said, in the prepared remarks, separating wheat from chaff, finding the good company for the bad company. And now more than ever, our clients need that help. Need that help to not just assume an index is going to drive everything, particularly if it's focused on seven stocks that are lagging a little bit. Our clients need that help to figure out geographically where they can distribute their AUM.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

And and that is perfectly falling in our lap. Again, not just with the three fifty investors we have around the world, but with the roughly 600, marketing and client service people we have around the world who support that client base. So, candidly, dislocation in the short term might cause pause for some others. For us, across the floors, across our offices, around the world, we see enormous opportunity to serve clients better given who we are and what we do. Again, an active asset management shop with great client service and a focus on delivering together for our clients.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Now from the second part of it is from a business perspective, again, we are a truly global operation. We are not just U. S. We are global, and we can offer that to our clients. And on top of that, we have a very strong balance sheet that offers, I think to, Craig's question earlier on, offers us a lot of opportunity to both invest in the business, return cash to shareholders, and importantly, be a safe harbor for asset managers who are a little bit more impacted by this uncertainty.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

So M and A is part of that. We're also, Emily, to your question, very, very focused on being disciplined on our cost structure. We are looking at always continuous opportunities to improve our cost structure, to become more efficient, become more efficient on behalf of our shareholders, as well as our employees and our clients and to be able to deliver that. So we see this opportunity set greater than the risk set in this current environment. Second part, I think, to your question, sorry if I've expanded more than you wanted me to, but on the kind of client views part of things, again, I would say that, you know, there's a subset of clients that are more short term oriented and I'd argue have been a

[Ali Dibadj, Director & CEO at Janus Henderson Group]

little bit spooked for lack

[Ali Dibadj, Director & CEO at Janus Henderson Group]

of a better word, probably not a technical term, but for lack of a better word in the marketplace right now. But but most of what we're seeing is people looking to reallocate to active, reallocate to global, reallocate to fixed income both on the public and the private side and have had really strong areas of interest across the board for us. And I mentioned some of them, but some of the technology or health care is informatics, of the small cap equities, absolute return strategies that we have, Some of the contrarian strategies are actually people looking for the opposite bet. High conviction strategies in Europe and around the world, global research strategies, adaptive multi asset, just go down the list securitized. We're actually benefiting quite a bit from folks looking for other areas to invest because we're global, because we're pretty broad in what we offer.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

So hopefully that answers your question, Annalie.

[Annalei Davis, Analyst at Morgan Stanley]

Yes, that's perfect. Thanks so much. That's all for me.

[Operator]

Thank you. Our next question is from John Dunn of Evercore ISI. John, your line is now open. Please go ahead.

[John Dunn, Analyst at Evercore]

Thank you. Could you maybe talk a little bit about the geographic looking across regions, the kind of color on the different demand flow demands regionally in the intermediary channel and then separately in the institutional channel?

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Sure. Just in terms of what products people are looking for?

[John Dunn, Analyst at Evercore]

The products, but also just like the temperature kind of demand. Any differences between

[Ali Dibadj, Director & CEO at Janus Henderson Group]

So look, we we've seen similar concern in the intermediary channels in particular. Again, that's not atypical. That's quite, unfortunately, for the end client, it is something that often happens when there is a gyration in the market. People seem to kind of freeze and pull money out. I think that's certainly happened in the April.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Again, things seem to have stabilized right now. But I'd say that was broad based certainly in EMEA, UK and The U. S. I think Asia still continued to be quite strong and Latin America still continues to be quite strong. So folks with perhaps a little bit more of a longer term growth oriented view, the intermediary channels seem fine there.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Institutional is typical, it's a little bit more stable, right? It's a little bit more longer term focus across the board. We've seen a little bit more stability there and not a lot of gyration in that market, John.

[John Dunn, Analyst at Evercore]

Great. Thank you very much.

[Operator]

We currently have no further questions. So I'll hand back to Ali Dibaj for closing remarks.

[Ali Dibadj, Director & CEO at Janus Henderson Group]

Thanks, Lucy. Thanks everyone for listening, including our clients, of course, our shareholders and very importantly, our employees and my colleagues at Janus Henderson, who hopefully feel that they're individually and collectively across all departments improving the firm. The firm is clearly living its vision of investing in a brighter future together. And I thank my colleagues for their hard work and hopefully continued success. Thanks everybody.

[Operator]

This concludes today's call. Thank you for joining. You may now disconnect your lines.

Participants

Executives

• Ali Dibadj, Director & CEO
• Roger Thompson, CFO

Analysts

• Ken Worthington, Financial Analyst at JP Morgan
• William (Bill) katz, Senior Equity Analyst at TD Cowen
• Craig Siegenthaler, Managing Director at Bank of America
• Annalei Davis, Analyst at Morgan Stanley
• John Dunn, Analyst at Evercore