Victory Capital Q2 2025 Earnings Call Transcript

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August 8, 2025

Key Takeaways

  • Positive Sentiment: Total client assets reached a record-high $300 billion with quarterly gross long-term flows of $15.4 billion and net outflows narrowing to $660 million in the third consecutive quarter of flow improvement.
  • Positive Sentiment: Adjusted EBITDA totaled $179 million, delivering a 50.8% margin—above guidance—as a result of favorable asset mix and one-time fee realizations.
  • Positive Sentiment: The company closed its Amundi strategic transaction, adding the Pioneer Investments franchise, expanding into 60 countries and achieving $70 million of run-rate net expense synergies toward a $110 million target.
  • Positive Sentiment: Victory’s ETF platform launched new products, including the first Pioneer-managed ETF, and posted over $4 billion of net flows in H1, growing ETF AUM to $15 billion—up nearly 90% year-over-year.
  • Positive Sentiment: The board raised the share repurchase plan to $500 million—its largest ever—and returned $71 million of capital in Q2, while net leverage fell to 1.2×, earning a positive credit outlook upgrade.
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Earnings Conference Call
Victory Capital Q2 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Good morning, and welcome to the Victory Capital Second Quarter twenty twenty five Earnings Conference Call. All callers are in a listen only mode. Following the company's prepared remarks, there will be a question and answer session. I will now turn the call over to Mr. Matthew Dennis, Chief of Staff and Director of Investor Relations.

Operator

Please go ahead, Mr. Dennis.

Speaker 1

Thank you. Before I turn the call over to David Brown, I would like to remind you that during today's conference call, we may make a number of forward looking statements. Victory Capital's actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital assumes no duty and does not undertake any obligation to update any forward looking statements.

Speaker 1

Our press release, which was issued after the market closed yesterday, disclosed both GAAP and non GAAP financial results. We believe the non GAAP measures enhance the understanding of our business and our performance. Reconciliations between these non GAAP measures and the most comparable GAAP measures are included in tables that can be found in our earnings press release and in the slides accompanying this call, both of which are available on the Investor Relations section of our website at ir.vcm.com. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

Speaker 1

Thanks, Matt. Good morning, and welcome to Victory Capital's second quarter twenty twenty five earnings call. I'm joined today by Michael Pellacarpo, our President, Chief Financial and Administrative Officer as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. I will start today with a business overview of our second quarter. After that, I will turn the call over to Mike to review the financial results in greater detail.

Speaker 1

Following our prepared remarks, Mike, Matt and I will be available to answer your questions. The quarterly business overview begins on slide five. Total client assets increased by 76% quarter over quarter, reaching more than $300,000,000,000 which is a record high for quarter end. Our sales momentum continued with quarterly gross long term flows accelerating to $15,400,000,000 and net outflows coming in at just $660,000,000 This was the third consecutive quarter of improving long term flows on both a gross and net basis. We are encouraged by our current trajectory and further by the sustained underlying momentum we have in several products and capabilities, including our fixed income, global equity and ETF strategies.

Speaker 1

Adjusted EBITDA was $179,000,000 in the quarter, which equates to an adjusted EBITDA margin of 50.8%. This was slightly higher than anticipated due to a positive asset mix and realization of certain fees produced annually but realized this quarter. This caused a slight increase in our revenue and fee rate. Second quarter adjusted net income with tax benefit was $133,000,000 or $1.57 per diluted share. We successfully closed on our multifaceted strategic transaction with Amundi on April 1, which included the acquisition of the Amundi U.

Speaker 1

S. Business and the reintroduction of the Pioneer Investments brand as our newest investment franchise. This resulted in significantly increasing our size and scale, while also substantially enhancing diversification of our business. We are now managing assets for investors in 60 countries and have exciting new investment capabilities in fixed income and numerous equity asset classes. The integration work is progressing very nicely.

Speaker 1

By the end of the second quarter, we had achieved $70,000,000 of net expense synergies on a run rate basis. This represents nearly two thirds of the total $110,000,000 of net expense synergies that we expect to achieve within the first two years of ownership. The remaining $40,000,000 of net expense synergies will be front end loaded with approximately $30,000,000 being realized within next three quarters and the remaining $10,000,000 over the following twelve months. Beyond the integration, we've expanded our product range by launching the first ETF managed by Pioneer on our VictoryShares ETF platform in June. The Victory Shares Pioneer Asset Based Income ETF, TI, is an actively managed ETF that targets premium yields available within selected securitized credit markets giving investors access to private credit like characteristics in a listed liquid ETF wrapper.

Speaker 1

In addition to the Victory Shares Pioneer asset based income ETF, we also expanded our free cash flow series of ETFs with the launch of the Victory Shares International Free Cash Flow ETF, ticker IFLO, and the Victory Shares International Free Cash Flow Growth ETF, ticker GRIN. These products are designed to complement our existing free cash flow ETFs and deliver enhanced diversification. Our ETF platform continued to deliver strong results in the second quarter consistent with the past couple of years. The first half of this year, our ETF platform posted positive net flows of more than $4,000,000,000 bringing our ETF assets under management to $15,000,000,000 at the June. This is up nearly 90% from the same time last year.

Speaker 1

Keep in mind, these are competitively priced products that meet our margin requirements. The process of creating numerous vintage victory strategies in The U. Vehicles for delivery to investors outside of The U. S. By Amundi's distribution team is ongoing.

Speaker 1

In coordination with Amundi, we've identified our first go to market products and expect to have registrations completed in the next few quarters. In the institutional channel, we are live and our products are available and we are working very hard to educate the Amundi sales force, respond to RFPs and client inquiries and assist in marketing our strategies throughout their vast distribution network. We are very optimistic about the opportunity to expand business around the globe. In conjunction with product development and growth efforts, we work hard to ensure our investment capabilities are aligned with client demand, preferences and market opportunities. During the quarter, we carefully evaluate existing products and liquidated several upscale mutual funds in ETFs.

Speaker 1

We also made the decision to close our Newbridge, SOFAS and THB investment franchises, which collectively manage less than $1,000,000,000 of AUM or 0.3% of our total assets at quarter end. This is slightly accretive and will allow us the opportunity to allocate more resources to other parts of our business that will help foster future growth. On slide seven, we show our firm wide investment performance. 57 mutual funds and ETFs representing 64% of the AUM with star ratings were rated overall four five stars by Morningstar. Majority of our AUM and strategies are also outperforming benchmarks across all timeframes shown here.

Speaker 1

Moreover, based on total return rankings, more than 50% of our mutual fund and ETF AUM is ranked in the top quartile in its respective Morningstar category for the important three five year periods. With the Amundi transaction now complete and delivering the expected financial benefits through increased earnings and cash flow, I'm pleased to announce that our Board has authorized an increase to our share repurchase plan from $200,000,000 to $500,000,000 the largest in our history. The future prospects for our business are quite encouraging and I believe the intrinsic value of these opportunities is not currently reflected in our share price. Lastly, we are extremely active from an acquisition perspective evaluating potential opportunities. The current environment is very conducive for executing a transaction and I continue to believe that industry consolidation will accelerate over the next few years.

Speaker 1

Our proven track record, business model and what our platform has to offer potential acquisition candidates is compelling, unique and value added. This along with our strengthened financial position has me very encouraged about our ability to continue to execute on our strategic value creating acquisitions in the short, medium and long term timeframes. With that, I will turn the call over to Mike to go through the quarterly results in greater detail. Mike?

Speaker 2

Thanks, Dave, and good morning, everyone. The financial results review begins on Slide nine. This quarter's results reflect the closing of the Amundi transaction on April 1, and it is the first quarter that includes the results from the Pioneer Investments business. I will provide additional color in several areas to highlight what are permanent changes and those that are one time in nature. Revenue increased to $351,200,000 which was up 60% from the first quarter.

Speaker 2

Average assets for the second quarter rose to $285,000,000,000 which was 64% higher quarter over quarter. The realized fee rate of 49.4 basis points in the quarter was down from the first quarter, which was expected, but not down as much as anticipated. This quarter's fee rate was positively impacted by a better than anticipated asset mix and the realization of certain annual fees this quarter. For the third quarter and beyond, we would expect the fee rate to be in the range of 46 to 47 basis points. Our second quarter GAAP results included $53,000,000 of acquisition related restructuring and integration costs, which was up from less than $10,000,000 in the first quarter.

Speaker 2

This resulted in GAAP operating margin of 26.8%. Our adjusted EBITDA was $178,500,000 which is 53% higher than in the first quarter. Adjusted EBITDA margin came in at 50.8%. We are still maintaining our long term adjusted EBITDA margin guidance at 49%. Adjusted net income with tax benefit rose to $132,800,000 or $1.57 per diluted share.

Speaker 2

As disclosed in yesterday's press release, the Board authorized an increase in our existing share repurchase plan to $500,000,000 This allows us to maintain flexibility in our capital strategy with more capacity for opportunistic open market purchases of our stock. We repurchased 439,000 shares during the second quarter. Combined with dividends, we returned a total of $71,000,000 of capital to shareholders in the quarter. The Board also declared the regular quarterly cash dividend of $0.49 that will be payable on September 25 to shareholders of record on September 10. We held $108,000,000 of cash at the end of the quarter and our net leverage ratio improved to 1.2 times, which is our lowest level of leverage since our initial IPO.

Speaker 2

On Slide 10, you can see the added diversification in our total client assets afforded by the transaction. In addition to diversification in The U. S. Across channels, client types and asset classes, our mix of business has been improved by a meaningful diversification into non U. S.

Speaker 2

Geographies. As of the end of the quarter, we have just over 16% of our total client assets with investors in 60 countries outside of The United States and anticipate the sales efforts here will be an important part of our future growth. Our long term asset flows improved on all metrics, as you can see on Slide 11. We have substantially increased the size and scale of our U. Intermediary and institutional sales teams through the acquisition and are now acquiring and leveraging more data and have even deeper platform relationships that are helping fuel increased sales.

Speaker 2

Gross sales of $15,400,000,000 represent more than 20% of AUM on an annualized basis, which should position us well in the future from an organic growth perspective. Net sales have improved for the third consecutive quarter, which continues to have us encouraged for the future. During the quarter, positive net sales were generated by Integrity, Pioneer and Auris Global as well as our Victory Shares ETF platform. Turning to slide 12. Total revenue jumped 60% from the prior quarter with the addition of the Pioneer Investments business.

Speaker 2

Additionally, our average AUM increased to $285,000,000,000 On slide 13, you can see our expense details for the quarter. GAAP expenses increased by $125,000,000 reflecting the normalized higher operating expenses with the Pioneer Investments business as well as a number of onetime items that will not be recurring in future periods. Our integration efforts are progressing as planned, and we are well underway in executing our operating model. As a result, we have achieved nearly two thirds or $70,000,000 on a run rate basis of the total expected net expense synergies of $110,000,000 after just our first ninety days of ownership. Over the next three quarters, we anticipate another $30,000,000 of net expense synergies to be realized and then the remaining $10,000,000 to be realized over the next twelve month period, which will take us to the second anniversary of the closing of the transaction.

Speaker 2

Included in acquisition, restructuring and integration expenses are certain one time items related to the transaction, including legal, advisory and proxy related costs of completing the transaction as well as certain costs to achieve the net expense synergies, which are front end loaded. We expect to see these onetime costs decline over the period we recognize the net expense synergies. As expected, our cash compensation remained relatively consistent as a percentage of revenue. The acquisition and transaction related compensation is non cash and reflects post transaction expense associated with fully funded deferred compensation plans inherited as part of the transaction that will run off over the next several years. During the quarter, we recorded approximately $27,000,000 in non deductible expenses on a tax basis related to the Amundi transaction.

Speaker 2

This resulted in an effective tax rate of 32.5% in the quarter. On a go forward basis, our normal effective tax rate will be approximately 25%, which is unchanged from previous guidance. Turning to slide 14, we cover our non GAAP metrics. This presentation removes much of the accounting noise and provides a clearer picture of our results and business performance. While our adjusted net income rose 57%, reflecting the economics of the Pioneer Investments business and the benefits of our operating model, due to the transaction structure, we did not receive a step up of acquired intangible assets.

Speaker 2

As such, our cash tax benefit of $10,200,000 was unchanged relative to prior quarters. Adjusted EBITDA increased 53% to 178,500,000 Adjusted net income per diluted share increased 15% to $1.57 from $1.36 Wrapping up on slide 15, the balance sheet is stronger than ever. Our debt to equity ratio improved to 0.39 and our net leverage ratio went from 1.7 times at the end of the first quarter to 1.2 times, providing us with the financial flexibility to execute on our inorganic growth strategy. Our interest expense was unchanged from the first quarter and our interest coverage ratio was nearly 14 times in the period. Recognizing our continuing strong financial position, last month, Moody's upgraded the outlook on our credit rating from stable to positive.

Speaker 2

We expect to continue to return capital via buybacks and dividends while simultaneously pursuing growth initiatives and reinvesting in the business going forward. Our cash generation is such that we can effectively balance strategic internal investments, pursue inorganic opportunities, and deliver shareholder returns. With that, we'll open the call for questions. Operator?

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, in order to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, Our first question comes from the line of Randy Binner with B.

Operator

Riley.

Speaker 3

Hey, good morning. Thanks. I have a couple. The first is just obviously well covered, good quarter. On Slide 13, and maybe this question is for Mike, but the we added back those nonrecurring expenses in the quarter.

Speaker 3

I just I know this nets into the overall synergy guidance, but it just can you give us a sense of like that the how quickly some of those onetime costs wind down in the fully reported number? Is it is it kind of dramatic into third and fourth quarter? Or is that more of a gradual kind of, ongoing expense for those items for the rest of the year?

Speaker 2

Good morning, Randy. Thanks for the question. In Q2, we had, I think, the number of $53,000,000 of acquisition restructuring and transaction related costs. 26,000,000 of that is truly deal related and one time with respect to closing the deal. So think of adviser, legal, proxy, insurance related costs that are all one time of nature and will not recur.

Speaker 2

And then in addition to that, we did have about $14,000,000 of expense really associated with the extraction of the synergies to date. And I think we put a total out there about $30,000,000 in total. We expect to see to realize the synergies, so we're about halfway there. And then the other item yeah. The other item, I think, which we mentioned in, the prepared remarks, there's compensation related expense that we've backed about $13,000,000 to get to the 53,000,000 And that really is related to a fully funded deferred comp plan that we inherited as part of the transaction.

Speaker 2

And that will run off over the next couple of years, but that really is truly noncash and retentive in nature. It was part of the economics of the transaction that we acquired in the balance sheet. So that one will continue for the next couple of years and will be different levels based on mark to market of those deferred comp plans and some amortization. So the bottom line is it'll start to decline. It's definitely one time in q two, and then we'll start to see them decline over the next several quarters as well and not be anywhere near as

Speaker 3

Yeah. I mean, we'll we'll exclude it, but we still need to model it. So that's super helpful. And then, actually, just a a higher level question, and and I know this is for Dave. The I knew I know we knew that fixed income was gonna be a really big part of the the asset mix, you know, pro form a this deal, but just looking at the model, it just it just gets big.

Speaker 3

And, I heard the prepared remarks about some newer products that are kind of more private return oriented, but just kind of like standard fixed income. Just kind of curious if you have a view of kind of how that product sets fitting in given kind of market volatility, interest rate uncertainty, state inflation, that kind

Operator

of thing? Do you just

Speaker 3

have a view on like does that make those flows more? Like do you think the growth there is better or worse? Or just be kind of curious because that's going be a really important piece of the pie.

Speaker 1

Hi. Good morning. First, let me say we love the fixed income asset class in general. I think over the years we have acquired a lot of assets and a lot of capabilities in the fixed income asset class. We have two franchises today.

Speaker 1

You have the Victory Income Investors and then you have Pioneer Investments, which a portion of that manages fixed income. We are covering a lot of the different sleeves within fixed income. And so I really think the environment, as it changes, as it evolves, we have a really good product set for any environment. I think as you know, we have active ETFs that are fixed income. We have usage that are fixed income and then we have institutional separate accounts and we're also in the retirement channel as well from a fixed income perspective.

Speaker 1

So we're well covered from a product perspective, from a distribution perspective and the performance across the board with our two franchises is excellent. So it's an area that we were very purposeful in growing, and I see that as an important piece to our growth going forward. And I think going forward, just really from an active versus passive perspective, Fixed income over the years historically and I think as you look forward, investors have done very well-being active. So we view that as an area where we have great active teams and an area where we think we can grow.

Operator

Alright. Great. Appreciate the responses. Your next question comes from the line of Michael Cho with JPMorgan. Please go ahead.

Speaker 4

Hi. Good morning. Thanks for taking my question. I I just wanted to start with a monthly Monday partnership.

Speaker 2

I mean, Dave, you've kind

Speaker 4

of talked through a number of different places where you're starting to either launch or in the process of launching some different products and initiatives. I was hoping you could flush out a little bit more around your expectations here, you know, for the uplift to to victory, you know, as it relates to non US distribution, either for current products and and, again, as well as some of the key focus areas that you highlighted as well?

Speaker 1

Sure. Good morning and thanks for the question. Let me start off on a higher level. The strategic partnership with Amundi really has given us the ability to sell our products outside of The U. S.

Speaker 1

To really all through Europe and also through Asia.

Speaker 2

That

Speaker 1

if you think about where we start with that, the Pioneer investment franchise has a lot of their products already in Amundi's distribution system throughout Europe and throughout Asia. We're going to continue to support that, invest in it. We're launching new products off of the Pioneer investment franchise. That has grown over the years, and we think that will continue to grow going forward. Immediately on April 1, all of Victory's Vintage Victory's products were available from an institutional perspective throughout Europe, throughout Asia, really throughout all of the Monday's distribution network institutionally.

Speaker 1

We're working with them today around marketing RFPs, client discussions, meeting clients, and we view that as a channel where it's immediately available, educating, and we think that there's going to be a lot of growth there. What we're also working on in parallel with that is launching registered products outside of The U. S. For new Pioneer investment strategies, but also for Vintage Victory strategies. As I said in the prepared remarks, we'll complete the beginning of those registrations for the products we're going to start out with through the end of this year.

Speaker 1

And I think going into 2026 is where we'll start to see some progress there. These products will be registered, a lot of them in usage formats. A Monday's distribution network is just vast all throughout Europe and really throughout Asia. So we're super excited about that. I think going forward, today, it's 16% of our client assets.

Speaker 1

I think we manage money for clients in 60 countries. I think that number is going to grow. And I think over time, as we execute, it will grow significantly. It's a big portion of our story of how we think we're going to grow our business and globalize our business. But we're in the very early stages.

Speaker 1

And you can see through our results that it's beginning. It will begin to come through, and we're really encouraged by it.

Speaker 4

Perfect. Thanks, Dave. And if I

Speaker 2

could just follow-up just quick numbers question,

Speaker 4

just on margins. Just wondering if there was an incremental margin impact from, you know, during the quarter from the higher fee event that that you experienced that that created the uplift for the the two q fee rate. And then just near term, we just look ahead, and we have more cost synergies coming on board, and a number of definition initiatives. I know you reiterate the 49% long term margin, but kind of curious how you're thinking in terms of kind of near term margins ahead just given the benefits coming on board soon. Thank you.

Speaker 1

Well, I think you've identified our over 50% margins for the first quarter after the acquisition, which we're quite pleased with. We've kept our guidance at 49%. The margins will ebb and flow going forward as we continue to invest in the business. We have executed really well and we have exceeded those that guidance, but we're going to keep our guidance at 49. It doesn't mean that there won't be quarters where we're above.

Speaker 1

From a synergy perspective, a couple of things to note that the $70,000,000 net expense synergy that we referenced is on a run rate basis. So not all of those costs are reflected actually in the quarter. And then the remaining $40,000,000 of net expense synergies, we'll get $30,000,000 of that out over the next nine months. And after the really the one year anniversary, the next twelve months will get the next $10,000,000 out. We can't predict what quarter that will happen and what the margins will look like.

Speaker 1

But I think as we've talked about for a long time, our business we run our business looking at margins. We have set up our operating model to have two thirds of our expense approximately be variable. So it allows us to really focus on margins. And I think the 49% guidance that we've kept really gives us the ability to continue to invest in our business.

Speaker 2

Okay, great. Thank you.

Operator

Your next question comes from the line of Alex Blostein with Goldman Sachs. Please go ahead.

Speaker 5

Hey, good morning. Thank you guys for taking the question. Just zooming out maybe a little bit, it seems like there's lots of progress, lots of exciting things happening on product development side as Pioneer kind of comes into the fold here. If you look at the firm's flows, over the last few quarters and over the last couple of years, they've been generally slightly negative. You guys are closer to breakeven now.

Speaker 5

If all goes well, what are sort of the aspirational organic growth you see in the business, as these assets all come together?

Speaker 1

Good morning, It's Dave. So I think first you've seen the improvement over the last few quarters. And this quarter we were net outflow $660,000,000 which is 23 basis points or 92 basis points on an annualized basis, which has improved. It's not where we want to be. We had $15,400,000,000 of gross flows, which is quite significant quarter over quarter.

Speaker 1

It's the highest amount of gross flows we've ever had as an organization. So when we look forward, as we globalize our business, as we continue to expand our product set, we want to be able to grow the business organically. That is our goal. I think we are in best position we've ever been in our organization's history to do that. The industry has some headwinds, but there are a lot of areas with tailwinds and I think we have products that are in the areas with tailwinds.

Speaker 1

So our goal is to consistently grow quarter over quarter organically. I think we've made big, big steps to getting there. One of the things we mentioned in our prepared remarks is we've increased the size and the scale of our U. S. Intermediary sales efforts and that comes from a marketing, from a FTE, from purchasing data, from entering into partnerships with important providers.

Speaker 1

And then on the institutional side, we've increased the size of our team there. So we are investing in distribution. I think you're starting to see some of that in the numbers. And I think as we move forward, also factoring in our efforts outside of The U. S.

Speaker 1

And that kind of getting speeding up over time, I think we're going to be in a great position to grow our business organically.

Speaker 5

Great. Alrighty. Fair enough. Mike, one quick cleanup question for you. Can you just specify the amount of benefit in revenues you guys got from a one time or the seasonal performance fee benefit that that you mentioned?

Speaker 5

I know you said the fee rate improved because of the mix shift as well as the seasonal realization event. Can you just, specify the dollar amount of that event?

Speaker 2

Yeah. The they're it's, Alex, it's hard to do because there's a bunch of different components that factor into it. Right? So that's not just there's asset mix, there's client mix, there's channel mix that, you know, I think as we looked at q two, were actually all positive factors in leaning ahead of the 46 to 47 basis point guidance. And then we did have some revenue realization that was, if you will, onetime in nature.

Speaker 2

I would think if you look at all of those things, we're going to have some ebb and flow going forward. So not easy to quantify. It's immaterial ultimately, to the nature of what we saw at the 49.4 basis points. But again, we just kept guiding to the 46%, 47 But even that, I think we'll have some upside based on asset mix. The equity markets were strong.

Speaker 2

We saw some more retail flow and retail assets that we had anticipated that guide higher from a basis point perspective. So I think we're not able to easily break that out for you.

Speaker 5

Okay. All right. Thanks.

Speaker 4

Sure. Your

Operator

next question comes from the line of Ben Budish with Barclays. Please go ahead.

Speaker 6

Hi, good morning and thanks for taking the question. I just wanted to maybe press on that last point a little bit more. You did mention that there was a specific one time kind of realization related fee. Could you maybe talk about the nature of if you're not able to quantify what the number was, could you maybe talk about like the nature of what that was exactly? I think in your prepared remarks you mentioned that it's something that kind of happens annually, happened to crystallize this quarter.

Speaker 6

And any color on what the margin benefit might have been in the quarter would be helpful. Thank you.

Speaker 2

Sure. Yes. So I think as we said, it's really about how we are able to recognize certain revenue and revenue realization associated with certain products that we have. So that's the nature, if you will, Ben, of kind of what we highlighted. Again, there's an element of asset mix I would point to as well that leans positively as well for the quarter.

Speaker 2

So it really has to do with accounting from a revenue realization perspective. We've highlighted in the past, we have some fulcrum fees. We've highlighted that there are some annual fees that we receive that are not necessarily tied to performance. That's how I would categorize these. And then your second question with respect to impact to margins, I think I would highlight our operating model.

Speaker 2

We talked that we are very margin focused. And so from a low fee product to a high fee product to annualized revenue asset mix, all of that calibrates with our variable cost structure that we have. So there really wasn't a significant impact to our overall margins as a result because of how the expenses are offset to any change in revenue.

Speaker 6

Okay. That's helpful. Maybe just a separate follow-up. You talked a lot about confidence in the flows. Can you maybe talk about what flows looked like maybe sequentially through the quarter?

Speaker 6

How is July shaping up? What the kind of most recent momentum looks like just coming into Q3 here? Thank you.

Speaker 1

Thanks for the question, Ben. We are still integrating our sales teams. So on the intermediary side, that's going to be a buildup. Same thing on the institutional side. And as I discussed earlier on the call, really the same thing on the international side.

Speaker 1

So as every week and every month goes forward, we're getting integrated, more educating of our sales force. And so I anticipate the ramp up to continue to occur. Maybe another way of saying it is we're not hitting on all cylinders today, yet we still have really, really good results. I'd say we're ahead of where I thought we would be, but we've got a lot of work to do. And this quarter was a pretty volatile quarter starting in April where we started off to where we ended.

Speaker 1

So there's a lot of volatility. And I think we worked our way through it really, really nicely. As far as the third quarter, it's too early to tell. We don't get into kind of monthly or updates from a flow perspective as you see a lot of things happen on a weekly basis. So I would say bigger picture as we end the year and go through the rest of this year, I think we're going to ramp up our sales efforts.

Speaker 1

And I'd leave you with that. I think we're ahead of where we thought we would be. And I think the outlook is we're really, really excited about the outlook from a flow and organic growth perspective over the short, medium and long term.

Speaker 5

All right. Thank you very much.

Operator

Seeing as we have no further questions for today, this concludes the Q and A session in today's conference call. We would like to thank everyone for their participation. You may now disconnect your lines. Have a pleasant day.

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