Victory Capital Q4 2025 Earnings Call Confirms AUM Growth and Amundi Deal Progress Amid Fee Pressure

What happened

Victory Capital's Q4 2025 earnings call revealed total client assets grew to approximately $320 billion by year-end, up from $313.4 billion in September, driven by market appreciation and modest net inflows across its diversified platform. Management confirmed the 15-year exclusive global distribution agreement with Amundi remains on track to close in early 2026, aiming to expand non-U.S. reach and joint venture opportunities. Despite persistent industry fee compression, the company reported robust operating cash flow for 2025, supporting ongoing share repurchases and dividends while maintaining a net debt/EBITDA ratio of around 1.74x. Key risks such as client withdrawals, integration challenges, and reliance on the Amundi deal's execution were openly discussed, though extended debt maturities to 2032 provide financial flexibility. Overall, the call reinforced the scalable multi-boutique model but highlighted that success hinges on timely Amundi closure and sustained organic growth in a competitive landscape.

Implication

The steady AUM growth and cash flow generation support the current BUY rating, with a P/E of ~10.5 offering value if execution aligns with plans. The Amundi distribution agreement is a critical near-term catalyst; its successful implementation could diversify revenue streams and enhance global scalability, offsetting industry fee pressures. However, persistent net outflows or fee compression risks, as acknowledged in the call, require vigilant monitoring to avoid downgrades. Victory's strong balance sheet and disciplined capital allocation, including debt management and shareholder returns, provide downside protection against market volatility. Ultimately, investors must balance optimism over strategic initiatives with skepticism on integration and competitive challenges, maintaining a hold unless clear progress is demonstrated in 2026.

Thesis delta

The earnings call does not fundamentally alter the BUY thesis, as it confirms AUM growth and Amundi deal progress aligned with prior expectations. However, increased transparency on fee pressure and execution risks suggests a need for closer scrutiny, potentially shifting the stance to HOLD if upcoming milestones are missed. No immediate downgrade is warranted, but the thesis now leans more heavily on timely Amundi execution and sustained cash flow resilience.