Federated Hermes (FHI) Q3 2025 earnings summary

Executive summary

• Achieved record assets under management (AUM) of $871.2 billion as of September 30, 2025, up 9% year-over-year and 3% sequentially, driven by gains in money market and equity strategies.

• Q3 2025 net income was $104.1 million, up 19% from Q3 2024; diluted EPS was $1.34, up 26% year-over-year.

• Revenue for Q3 2025 was $469.4 million, up 15% year-over-year, with a declared dividend of $0.34 per share payable November 14, 2025.

• The company completed the acquisition of a 60% interest in Rivington, a UK-based renewable energy project developer, and announced an agreement to acquire up to 80% of FCP Fund Manager, L.P., a U.S. real estate manager, expected to close in 2026.

• Maintains a diversified asset mix and global distribution, with strong U.S. and international presence.

Financial highlights

• Equity assets rose 6% sequentially to $94.7 billion; fixed income assets reached a record $101.8 billion, up 2% year-over-year; money market assets hit $652.8 billion, up 10% year-over-year.

• Q3 2025 operating income was $129.5 million, up 16% year-over-year; operating expenses rose 15%, mainly due to higher distribution, compensation, and FX-related costs.

• Cash and investments at quarter-end were $647 million, with long-term debt at $1.46 billion.

• Effective tax rate for Q3 was 24.4%, impacted by R&D tax credits.

• For the first nine months of 2025, net income was $296.3 million, up 61% year-over-year; EPS was $3.75, up 70%.

Outlook and guidance

• Institutional pipeline is strong, with over $2.1 billion in net institutional mandates yet to fund, mostly in private markets and equities.

• Management expects continued investment in technology initiatives, with $253 million planned over the next three years.

• Sufficient liquidity is expected to meet both short- and long-term cash needs, supported by strong cash flow and available credit.

• FCP acquisition expected to close by end of Q1 2026, with anticipated accretive impact by 2027.

• Expense growth expected in line with asset growth and new initiatives, with further FCP closing costs in Q4.