Victory Capital (VCTR) Q2 FY26 earnings call: guidance and Q&A

How has the net flow outlook from the Amundi agreement changed, and is the flow breadth across regions or concentrated?

Flows are coming from three primary regions (Asia, Europe, emerging Middle East) and are broad across product types (fixed income, global, multi-asset), not concentrated in one area. The momentum is accelerating.

“It's pretty deep and wide, and it's accelerating.”

asked by Craig Siegenthaler · answered by David Brown

How has Victory helped Amundi sell its products in the U.S., what are the 2Q flow trends, and what are the underlying economics for Victory?

Efforts focused on distributing Amundi's UCITS offerings, predominantly in Latin America via U.S. intermediary contacts, but this is smaller than Amundi's distribution of Victory products. Economics involve a revenue share, similar to the reverse arrangement.

“Our distribution of their offerings based on the makeup of their offerings is smaller than that.”

asked by Craig Siegenthaler · answered by Michael Policarpo

What else is in the aggregate investment management fee line, and how should investors think about the seemingly stepping up performance fees going forward?

The higher fee rate (47.9 bps) in Q2 includes some annual fees recorded from a GAAP perspective, which are episodic and not pure performance fees. The long-term guidance of 46-47 bps remains the appropriate way to think about revenue realization, fluctuating based on asset/client/distribution mix.

“And those are kind of crystallized based on different metrics that really get us back to or slightly above kind of our wrap rates. And so we don't consider them pure performance fees in the standpoint of an alternative type business.”

asked by Benjamin Budish · answered by Michael Policarpo

Any particular callouts for fixed income flows, and what's the color on July/August flows given confidence in trajectory?

Flows have accelerated into Q3, are broad and diverse, not from a single client or mandate. This is a convergence of past investments. Fixed income sees good activity in shorter-term products and active fixed income ETFs, across two franchises (Victory Income Investors, Pioneer), driven by client demand and international interest in U.S. fixed income.

“We've actually seen an acceleration of flows into the third quarter. So it is not something that, as Mike said in his prepared remarks, it's not a 1-quarter phenomenon.”

asked by Benjamin Budish · answered by David Brown

How will Victory increase its competitiveness through M&A, and in what channels/segments would it like to be more top of mind?

Acquisitions are approached by asking if they make the company better, more competitive, and more capable of servicing clients. Opportunities exist in size, scale, product diversification, and distribution enhancement. The company is excited about the opportunity set and confident in its ability to integrate diverse businesses to reach the $1 trillion AUM goal.

“We don't specifically target asset classes or go after certain areas I think we start off, and I think we articulated in the script, we start off as, does it make our company better? Can we service our clients? Does it make us more competitive?”

asked by Michael Cho · answered by David Brown

Can you elaborate on G&A trends and leverage, and what are the incremental areas of focus for investments?

The platform is built to scale, with over two-thirds of expenses being variable. G&A, which is more fixed, has been stable at $21M-$23M per quarter. The company is comfortable with this level, as it includes investments in technology, AI, new products, and U.S. intermediary partnerships, which are driving net flows. The updated 50% long-term margin guidance reflects the ability to operate efficiently while investing.

“We're comfortable with that at this time. It does include, and I think Dave made reference to it, we've continued to invest in the business through the Pioneer integration, the opportunity set for us to get more scale distribution to make investments in technology, in AI, to bring new products to market.”

asked by Michael Cho · answered by Michael Policarpo

Can you size the won-but-unfunded pipeline, its sources/strategies, and how it compares to prior periods?

The won-but-unfunded pipeline is one of the largest the company has had, driven by fixed income, ETF platform, global, and multi-asset strategies. It's broad across all distribution channels (international, intermediary, institutional) and supported by strong investment performance. The company does not size it in dollars.

“We don't size it from a dollar perspective, but what I can tell you is it's probably one of the larger ones we've had organizationally.”

asked by Alexander Blostein · answered by David Brown

How should investors think about the trajectory of share repurchases, absent M&A?

Strategic acquisitions are the primary capital allocation priority, but the company can do both given strong cash flow. Share repurchases will be opportunistic, with more shares bought in H1 FY26 than all of FY25. It is the second priority after M&A, with dividends being ancillary.

“I think we bought more shares in the first half of this year than we bought all of last year. So we'll be opportunistic about that.”

asked by Alexander Blostein · answered by David Brown