Victory Capital Q1 Earnings Call Highlights

Key Points

• Victory Capital posted record Q1 2026 results, with total revenue of $388 million, adjusted EBITDA of $204 million and adjusted EPS of $1.82 all hitting company highs or near-highs. Gross long-term flows rose to $18.9 billion, reflecting strong sales momentum and the benefit of the Pioneer acquisition.
• Its ETF and international businesses continued to expand. VictoryShares ETF assets topped $20 billion, ETF net flows were $1.3 billion, and the firm said U.S.-listed ETFs are starting to be sold in Asia and soon in parts of Latin America.
• Integration progress and capital return remained major themes, with Victory saying it has achieved about $104 million of the expected $110 million in Pioneer-related synergies. The board raised the quarterly dividend to $0.50 per share, while management said M&A remains the primary use of capital despite ongoing share buybacks.

Victory Capital NASDAQ: VCTR reported record first-quarter 2026 results, with executives pointing to higher gross flows, the contribution from the Pioneer acquisition and continued growth in its exchange-traded fund and international distribution platforms.

Chairman and CEO David Brown called the quarter “exceptional,” saying the company set records for long-term gross flows, adjusted EBITDA and adjusted earnings per share. Victory Capital ended March with $313 billion in total client assets, slightly below its year-end level, while long-term gross flows rose to $18.9 billion, up 11% from the fourth quarter of 2025 and 104% from the prior-year quarter.

Brown said the gross flow level equated to an annualized run rate of about $76 billion, or roughly 24% of long-term assets under management. He said that level of sales can support positive organic growth over time as Victory continues to invest in and integrate sales and marketing resources from the Pioneer acquisition.

Long-term net flows improved to negative $457 million in the quarter. President, Chief Financial and Administrative Officer Michael Policarpo said multiple franchises and platforms generated positive net flows, including Pioneer Investments, Trivalent, RS Global, VictoryShares ETFs and WestEnd Advisors.

Revenue and Earnings Reach Records

Policarpo said total revenue was $388 million, up 4% from the fourth quarter and 77% from the first quarter of last year. He attributed the year-over-year increase to the “transformational impact” of the Pioneer acquisition.

Adjusted EBITDA reached $204 million, with an adjusted EBITDA margin of 52.6%. Brown said Victory Capital has maintained an adjusted EBITDA margin above 49% in every quarter since 2020 and above 50% in most of those quarters, attributing the consistency to the company’s operating model, use of technology and strategic outsourcing.

Adjusted net income with tax benefit was $153.2 million, or $1.82 per diluted share, up 2% from the fourth quarter and 34% from the first quarter of 2025.

Victory’s average fee rate was 47.6 basis points, which Policarpo said was at the high end of the company’s guidance range. He said Victory continues to expect the fee rate to remain in the 46- to 47-basis-point range, reflecting the current mix of the business. In response to analyst questions, Policarpo said some annual fees recorded in the first quarter helped bring certain client fees to standard rates, but he described them as immaterial to the overall business.

ETF Platform Continues to Expand

VictoryShares ETF assets ended the quarter at more than $20 billion, up 7% from the prior quarter and 53% year over year. Brown said the ETF platform has generated a 28% compound annual growth rate in assets under management since 2017.

ETF net flows were $1.3 billion in the quarter. Brown said the company continued to see inflows into its Free Cash Flow ETF suite and demand for fixed income ETFs across the intermediary channel. He also said Victory is gaining new shelf space and home office recommendations.

Brown highlighted that Victory’s average ETF fee rate is 35 basis points and said the ETF platform meets the firm’s margin requirements. During the call’s question-and-answer session, he said the company sees industry tailwinds as clients increasingly look to ETFs for solutions beyond beta exposure.

The company has begun selling its U.S.-listed ETFs across Asia and is close to making them available in certain Latin American countries, Brown said. Victory also filed three new ETF products with the SEC during the first quarter and expects additional launches during 2026, including more strategies placed into an ETF wrapper.

International Distribution Gains Traction

Victory Capital reported $55 billion in assets from clients outside the U.S. across 60 countries at quarter-end. Brown said 29 of those countries now have more than $100 million invested in Victory products.

The international channel was net flow positive in the first quarter and has been net flow positive since Victory closed the Pioneer acquisition, executives said. Brown said the company remains in the early stages of building out the international opportunity through its strategic distribution agreement with Amundi.

Under the 15-year agreement, Victory serves as Amundi’s exclusive provider of U.S.-manufactured traditional active investment solutions. Brown said Victory has sales personnel in major geographies supporting Amundi’s sales infrastructure, along with a U.S.-based sales support group.

Victory now manages 23 UCITS products across equities, fixed income and global multi-asset strategies. Brown said additional UCITS launches are planned for 2026, including strategies from “Vintage Victory” investment franchises, with priorities driven by demand signals from Amundi’s local distribution teams.

Integration, Expenses and Balance Sheet

Operating expenses were $228.8 million in the first quarter, up from $220.9 million in the fourth quarter. Policarpo said the increase was driven primarily by the seasonal reset of annual payroll taxes and employee benefits, along with a modest increase in acquisition, restructuring and integration costs.

Cash compensation was 24% of revenue in the quarter. Policarpo said Victory continues to expect cash compensation to run in the low- to mid-20% range of revenue on a normalized basis.

The company has achieved approximately $104 million of the expected $110 million in total net expense synergies from the Pioneer acquisition, which closed 12 months ago. Policarpo said the integration is substantially complete and Victory expects to capture the remaining synergies during 2026.

At March 31, Victory had $76 million in cash, $980 million in debt and a net leverage ratio of 1.1 times. Its $100 million revolving credit facility remained undrawn. Policarpo said cash interest expense declined to $14 million, reflecting the benefit of a refinancing completed in the third quarter of 2025.

Capital Returns and M&A Remain Priorities

Victory repurchased 2 million shares of common stock during the quarter and, combined with its dividend, returned $185 million to shareholders. Over the trailing 12 months, the company returned $512 million, or more than $6 per diluted share.

The board approved an increase in the regular quarterly cash dividend to $0.50 per share, payable June 25 to shareholders of record on June 10.

Brown said strategic acquisitions remain Victory’s “best and primary use of capital,” while share repurchases are complementary to the company’s inorganic growth strategy. He said Victory has repurchased about 5 million shares since April 1, 2025, representing about 22% of the 22.9 million shares issued to Amundi as consideration for the Pioneer transaction.

In response to a question about whether the company’s sizable share repurchases indicated that M&A opportunities were not imminent, Brown said that was “absolutely not the right takeaway.” He said Victory remains active in pursuing acquisitions and has “significant capacity.”

Asked about Victory’s earlier pursuit of Janus, Brown said the company believed buying that business would have created “a phenomenal business coming out the other side” and made Victory better. Looking ahead, he said the company is evaluating both larger acquisitions and smaller strategic transactions that could fill product gaps or address specific objectives.

Victory also announced a leadership transition in investor relations. Matthew Dennis, Chief of Staff and Director of Investor Relations, said the call would be his final earnings cycle as he retires from the company. Carly Thomas, Director of Investor Relations and Responsible Business, was introduced as his successor in the investor relations role.

About Victory Capital NASDAQ: VCTR

Victory Capital NASDAQ: VCTR is a global investment management firm that provides a broad range of strategies across equities, fixed income, multi-asset and alternative investments. Serving institutional, intermediary and retail clients, the company delivers tailored solutions through active, research-driven portfolio management. Its product lineup includes traditional mutual funds, separately managed accounts, sub-advisory services and specialized strategies such as ESG-focused and municipal bond portfolios.

Founded in 1988, Victory Capital has expanded its capabilities via both organic growth and strategic acquisitions, integrating experienced investment teams to enhance its offerings in areas like smart beta, global equity and fixed income.

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