Artisan Partners Asset Management Inc. (APAM Quick QuoteAPAM - Free Report) reported first-quarter 2024 adjusted net income per adjusted share of 76 cents, missing the Zacks Consensus Estimate of 79 cents. The bottom line increased 18.7% year over year.

Results benefited from a rise in management fees earned from Artisan Funds & Artisan Global Funds and Separate accounts, which resulted in top-line growth. The balance sheet position and the assets under management (AUM) balance improved in the reported quarter. However, elevated operating expenses were the undermining factors.

Net income attributable to Artisan Partners (GAAP basis) was $59.5 million, up from $50.8 million in the prior-year quarter.

Revenues & Expenses Rise

First-quarter revenues were $264.4 million, which rose 12.7% year over year. The top line missed the Zacks Consensus Estimate of $270.2 million.

Management fees earned from Artisan Funds & Artisan Global Funds increased 14.4% year over year to $165.5 million. Management fees earned from Separate accounts grew 10.1% to $98.9 million. We anticipated management fees earned from Artisan Funds & Artisan Global Funds, and Separate accounts to be $163.3 million and $98.2 million, respectively.

Total operating expenses were $186.7 million, up 12.3% year over year. The rise was due to an increase in all components of operating expenses, except for operating costs. We projected operating expenses to be $178.8 million.

Operating income was $77.7 million, up 13.8% year over year.

AUM Balance Rises

As of Mar 31, 2024, the ending AUM was $160.4 billion, up 6.8% from the previous quarter primarily due to investment returns, partially offset by net client cash outflows. We estimated the metric to be $159.6 billion.

The average AUM totaled $154.1 billion, up 9.8% from the prior quarter. We suggested the metric to be $154.8 billion.

Balance Sheet Position Improves

Cash and cash equivalents were $184.2 million compared with $141 million as of Dec 31, 2023. Artisan Partners’ debt leverage ratio, calculated in accordance with its loan agreements, was 0.5X as of Mar 31, 2024.

Dividend Update

The company’s board of directors declared a variable first-quarter dividend of 61 cents per share of Class A common stock. The amount will be paid out on May 31 to shareholders of record as of May 17, 2024.

Our Take

A challenging operating backdrop and several geopolitical concerns may reduce the company’s AUM in the upcoming period. A volatile trend in net outflows over the past years keeps us apprehensive.

Nonetheless, a manageable expense level and decent liquidity position are expected to support financials. Also, diverse investment strategies across multiple asset classes, and investments in new teams and operational capabilities are likely to drive revenues in the upcoming period. 

Currently, Artisan Partners carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock, Inc.’s (BLK Quick QuoteBLK - Free Report) first-quarter 2024 adjusted earnings of $9.81 per share handily surpassed the Zacks Consensus Estimate of $9.42. The figure reflects a jump of 24% from the year-ago quarter.

BLK’s results benefited from a year-over-year rise in revenues and higher non-operating income. Further, the AUM balance witnessed an improvement, driven by net inflows. However, higher expenses acted as a dampener.

Invesco’s (IVZ Quick QuoteIVZ - Free Report) first-quarter 2024 adjusted earnings of 33 cents per share lagged the Zacks Consensus Estimate of 40 cents. The bottom line declined 13.2% from the prior-year quarter.

Invesco’s results were primarily hurt by a decline in adjusted revenues, along with higher adjusted expenses. However, an increase in the AUM balance on decent inflows was a positive.