Detailed narrative
Strategic Progress and AUM Growth
Silvercrest reported strategic progress in Q2 FY26, with discretionary AUM reaching an all-time high of $24.7 billion, up 6.9% from Q1 FY26 and 4.2% YoY. This growth was primarily driven by market appreciation, partially offset by net client outflows, including seasonal high net worth withdrawals and institutional outflows, though over $200 million of these outflows had no revenue effect. Total AUM increased 3.6% to $37.0 billion.
Organic Flows and Institutional Business
Organic new client account flows were $111 million for the quarter, a significant increase from $81 million in Q1 FY26 and $80 million in Q2 FY25. The institutional pipeline is robust, particularly in global and international equity strategies, with a recent A$500 million (approximately $350 million USD) contribution to the global value strategy, bringing its AUM to $2.5 billion. Institutional AUM now stands at $9.8 billion, up from $8.7 billion in Q1 FY26, and the OCIO business manages $2.9 billion.
Global Infrastructure Build-out and Distribution
The firm is nearing completion of its global infrastructure and distribution build-out, expecting to finalize its MIFID license through the Central Bank of Ireland by the end of Q3 FY26 and establish its Australian Unit Trust. These initiatives are expected to significantly reduce administrative and legal costs post-licensure, opening new institutional distribution channels worldwide. The firm has achieved important third-party ratings for its strategies and is pursuing additional ratings.
Compensation and Investment in Talent
Total compensation and benefits expense was $20.5 million, representing 66.6% of revenue for the quarter, an 8.9% YoY increase. This elevated ratio reflects deliberate costs associated with significant investment in talent, including new hires in Ireland and merit-based increases. The firm plans to make equity grants to professionals to align long-term interests with shareholders and support growth, viewing intellectual capital as its most important resource.
Financial Performance and Expense Drivers
Revenue for Q2 FY26 was $30.8 million, flat year-over-year, primarily due to market appreciation offset by client outflows. Reported consolidated net income for the quarter was $0.5 million, with net income attributable to Class A shareholders at $0.2 million or $0.02 per basic and diluted share. Total expenses increased by $3.2 million or 12% YoY, driven by the rise in compensation and benefits ($1.7 million) and general and administrative expenses ($1.5 million). G&A increases were attributed to professional fees, travel, entertainment related to global initiatives, and portfolio/systems expenses. For the first half, reported net income attributable to Class A shareholders was $0.4 million or $0.05 per share.
Adjusted Profitability
Adjusted EBITDA for Q2 FY26 was $3.4 million, or 11.2% of revenue, and adjusted net income was $2.2 million, or $0.10 per adjusted basic and diluted EPS. For the first half, adjusted EBITDA was $7.2 million (11.5% of revenue) and adjusted net income was $2.6 million ($0.22 per adjusted basic and diluted EPS).
Balance Sheet Overview
Total assets were approximately $139.9 million as of June 30, 2026. Cash and cash equivalents were $20.7 million as of June 30, 2026, compared to $44.1 million at the end of last year. Borrowings totaled $9.5 million, and total Class A stockholders' equity was $46 million as of the same period.