Artisan Partners Asset Management (APAM) Q4 2023 earnings summary

Executive summary

• Year-end AUM was $150.2B, up 17% for 2023; $27.0B in investment returns and other changes was partly offset by $4.1B of net client outflows and $0.7B of distributions not reinvested.

• 4Q23 adjusted net income rose 21% YoY to $62.8M and adjusted EPS was $0.78; FY23 adjusted net income fell 7% to $233.1M and adjusted EPS fell 7% to $2.89.

• Long-term priorities include sustainable growth, differentiated investment teams, fee discipline, and investment in talent and distribution while preserving shareholder value.

Financial highlights

• 4Q23 revenue rose 10% YoY to $249.0M; higher average AUM and a $3.9M increase in performance fees contributed to growth.

• 4Q23 GAAP net income was $64.8M, or $0.92 per diluted share, versus $52.9M and $0.76; adjusted net income was $62.8M, or $0.78 per adjusted share, versus $52.0M and $0.65.

• 4Q23 adjusted operating income was $80.0M, up 13%, and adjusted operating margin was 32.1%, up 90 bps; GAAP operating income was $76.4M and margin was 30.7%.

• FY23 revenue declined 2% to $975.1M; adjusted operating income fell 9% to $308.4M and adjusted operating margin declined 270 bps to 31.6%.

• FY23 GAAP net income was $222.3M, or $3.19 per diluted share, versus $206.8M and $2.94; adjusted net income was $233.1M, or $2.89 per adjusted share, versus $249.6M and $3.11.

Outlook and guidance

• 2024 long-term incentive compensation expense impact is estimated at $68.7M, versus $54.8M in 2023, equal to 5.6% of revenue.

• Long-term priorities include sustainable growth, maintaining fee levels supported by value-added strategies, and investing in differentiated talent, investment capabilities and distribution.

• Expected quarterly dividend policy, subject to board approval, is ~80% of quarterly cash generation, generally adjusted net income plus long-term incentive expense, less reserves for future franchise capital awards and other cash uses.