Reports Virtus Investment Partners Q4 2024 Results
Virtus Investment Partners, Inc. (NYSE: VRTS) reports its financial results for the quarter ending December 31, 2024, showcasing strong revenue growth despite a slight decline in assets under management (AUM). While the company reports a sequential decrease in total assets, it demonstrated impressive revenue increases and operational efficiency during the fourth quarter.
Financial Highlights for Q4 2024
Virtus Investment Partners reports revenues of $233.5 million for Q4 2024, reflecting a 9% increase compared to $214.6 million in Q4 2023 and a 3% increase from $227.0 million in Q3 2024. This revenue growth is primarily attributed to higher assets under management (AUM) and increased sales. However, the company reports net outflows in institutional and retail accounts during the quarter.
Operating expenses for Q4 2024 increased by 4% year-over-year to $182.8 million, up from $175.6 million in Q4 2023. Sequentially, operating expenses grew by 6% compared to $171.8 million in Q3 2024, largely due to higher facilities costs, increased travel and marketing expenditures, and higher operational costs related to consolidated investment products.
Operating income for the fourth quarter rose by 30% to $50.7 million, compared to $39.0 million in the same quarter in 2023. However, it showed an 8% decline from $55.3 million in Q3 2024. The operating margin for Q4 was 21.7%, a notable increase from 18.2% in Q4 2023 but a decrease from 24.3% in the previous quarter.
Net income attributable to Virtus Investment Partners, Inc. for Q4 2024 was $33.3 million, or $4.66 per diluted share. This represents an 8% increase from $30.8 million, or $4.21 per share, in Q4 2023. However, net income decreased by 19% from $41.0 million, or $5.71 per share, in Q3 2024. The diluted earnings per share showed an 11% year-over-year increase but a decline from the previous quarter.
The weighted average shares outstanding for the quarter were 7.139 million, reflecting a 2% decrease from 7.320 million in Q4 2023 and a 1% decrease from 7.176 million in Q3 2024.
Non-GAAP Financial Results
In addition to U.S. GAAP measures, Virtus Investment Partners also reports its non-GAAP financial results to provide a clearer view of its operating performance. Adjusted revenues for Q4 2024 were $212.0 million, marking a 10% increase from $193.4 million in Q4 2023 and a 3% increase from $205.1 million in Q3 2024.
Adjusted operating expenses for Q4 2024 totaled $137.6 million, a 6% increase from $129.5 million in Q4 2023 and a 2% increase from $134.7 million in Q3 2024. As a result, adjusted operating income increased 17% year-over-year to $74.5 million, up from $63.9 million in Q4 2023. Sequentially, adjusted operating income grew by 6% from $70.5 million in Q3 2024.
Adjusted operating margin improved to 35.1% from 33.0% in the same quarter of 2023 and from 34.4% in Q3 2024. Net income attributable to Virtus Investment Partners, Inc., as adjusted, was $53.5 million, or $7.50 per diluted share. This was a 23% increase from $6.11 per share in Q4 2023 and an 8% increase from $6.92 per share in Q3 2024.
Assets Under Management and Asset Flows
Virtus Investment Partners reports ending total assets under management of $175.0 billion as of December 31, 2024. This represents a 2% increase from $172.3 billion in Q4 2023 but a 5% decrease from $183.7 billion in Q3 2024. The sequential decline was due to net outflows in institutional accounts and U.S. retail funds, along with negative market performance. However, these declines were partially offset by positive net flows in exchange-traded funds (ETFs), global funds, and retail separate accounts.
The company’s average total assets under management for Q4 2024 were $182.1 billion, which represents a 12% increase from $162.7 billion in Q4 2023 and a 3% increase from $176.0 billion in the prior quarter.
Total sales for Q4 2024 were $6.4 billion, up 3% from $6.2 billion in the same quarter last year but down 2% from $6.6 billion in Q3 2024. Institutional account sales increased to $1.6 billion, up from $1.2 billion, primarily driven by higher sales of global equity and alternative strategies. However, retail separate account sales decreased from $2.3 billion to $1.8 billion, mainly due to lower sales in intermediary-sold small/mid-cap strategies, despite higher sales in wealth management.
The company reports net outflows of $4.8 billion for Q4 2024, compared to $3.8 billion in the same quarter in 2023 and $1.7 billion in Q3 2024. A significant factor contributing to these outflows was a $3.3 billion partial redemption of an institutional mandate. Institutional net flows were negative at $3.8 billion, while retail separate accounts saw net inflows of $0.1 billion, down from $0.4 billion in the prior quarter.
Balance Sheet and Other Metrics
As of December 31, 2024, Virtus Investment Partners reports cash and cash equivalents of $265.9 million, up 11% from $239.6 million at the same time in 2023 and up 36% from $195.5 million at the end of Q3 2024. The company’s gross debt decreased 9% year-over-year to $236.1 million, down from $258.8 million at the end of 2023, and decreased 2% from $241.8 million in Q3 2024.
The company’s total equity, excluding noncontrolling interests, stood at $897.5 million as of December 31, 2024, a 4% increase from $864.0 million at the end of Q4 2023 and a 1% increase from $889.1 million at the end of Q3 2024.
Working capital increased by 23% to $134.5 million, up from $109.1 million in Q4 2023, while net debt transitioned to a net cash position of $29.8 million, compared to a net debt position of $19.2 million in Q4 2023 and $46.2 million in Q3 2024.
During Q4 2024, the company reports it repurchased 52,176 shares for a total of $12.5 million and repaid $5.7 million of debt.
