10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 001-38388

Victory Capital Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware		32-0402956
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

15935 La Cantera Parkway, San Antonio, Texas		78256
(Address of principal executive offices)		(Zip Code)

(216) 898-2400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	VCTR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s Common Stock, par value $0.01 per share as of April 30, 2025 was 67,236,287.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION

Item 1.	Financial Information	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
	Signatures	41

Forward‑Looking Statements

This report includes forward-looking statements, including in the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These forward‑looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward‑looking statements in this report.

Forward‑looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward‑looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following; risks associated with the expected benefits or impact on our business; reductions in assets under management (“AUM”) based on investment performance, client withdrawals, difficult market conditions and other factors such as the conflicts in Ukraine and Israel or a pandemic; the nature of our contracts and investment advisory agreements; our ability to maintain historical returns and sustain our historical growth; our dependence on third parties to market our strategies and provide products or services for the operation of our business; our ability to retain key investment professionals or members of our senior management team; our reliance on the technology systems supporting our operations; our ability to successfully acquire and integrate new companies; risks associated with expected benefits of the Amundi transaction; the concentration of our investments in long only small‑ and mid‑cap equity and U.S. clients; risks and uncertainties associated with non‑U.S. investments; our efforts to establish and develop new teams and strategies; the ability of our investment teams to identify appropriate investment opportunities; our ability to limit employee misconduct; our ability to meet the guidelines set by our clients; our exposure to potential litigation (including administrative or tax proceedings) or regulatory actions; our ability to implement effective information and cyber security policies, procedures and capabilities; our substantial indebtedness; the potential impairment of our goodwill and intangible assets; disruption to the operations of third parties whose functions are integral to our exchange traded fund (“ETF”) platform; our determination that we are not required to register as an “investment company” under the 1940 Act; the fluctuation of our expenses; our ability to respond to recent trends in the investment management industry; the level of regulation on investment management firms and our ability to respond to regulatory developments; the competitiveness of the investment management industry; the level of control over us retained by Crestview Partners II GP, L.P.; and other risks and factors included, but not limited to, those listed under the caption “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025, which is accessible on the SEC’s website at www.sec.gov.

In light of these risks, uncertainties and other factors, the forward‑looking statements contained in this report might not prove to be accurate. All forward‑looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward‑looking statements, whether as a result of new information, future events or otherwise.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Victory Capital Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except shares data)


	March 31, 2025			December 31, 2024
Assets
Cash and cash equivalents	$	175,607		$	126,731
Receivables		95,823			100,667
Prepaid expenses		8,868			8,634
Investments, at fair value		34,511			35,213
Property and equipment, net		11,124			11,874
Goodwill		981,805			981,805
Other intangible assets, net		1,255,351			1,260,614
Other assets		20,397			22,053
Total assets	$	2,583,486		$	2,547,591

Liabilities and stockholders' equity
Accounts payable and accrued expenses	$	71,064		$	57,951
Accrued compensation and benefits		42,361			51,648
Consideration payable for acquisition of business		143,300			139,894
Deferred tax liability, net		163,435			157,120
Other liabilities		53,997			55,479
Long-term debt, net		964,763			963,862
Total liabilities		1,438,920			1,425,954

Stockholders' equity
Common stock, $0.01 par value per share: 2025 - 600,000,000 shares authorized, 84,376,002 shares issued and 63,925,017 shares outstanding; 2024 - 600,000,000 shares authorized, 83,947,949 shares issued and 63,653,212 shares outstanding;		844			839
Additional paid-in capital		756,420			752,371
Treasury stock, at cost: 2025 - 20,450,985 shares; 2024 - 20,294,737 shares		(584,051	)		(574,856	)
Accumulated other comprehensive income		15,707			18,683
Retained earnings		955,646			924,600
Total stockholders' equity		1,144,566			1,121,637
Total liabilities and stockholders' equity	$	2,583,486		$	2,547,591

See the accompanying notes to the unaudited condensed consolidated financial statements.

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Victory Capital Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,
	2025			2024
Revenue
Investment management fees	$	173,301		$	169,785
Fund administration and distribution fees		46,301			46,072
Total revenue		219,602			215,857

Expenses
Personnel compensation and benefits		56,136			59,454
Distribution and other asset-based expenses		35,477			36,263
General and administrative		14,328			14,012
Depreciation and amortization		7,432			7,601
Change in value of consideration payable for acquisition of business		3,406			12,200
Acquisition-related costs		8,750			1,026
Restructuring and integration costs		1,165			492
Total operating expenses		126,694			131,048

Income from operations		92,908			84,809

Other income (expense)
Interest income and other income		704			3,565
Interest expense and other financing costs		(13,211	)		(16,486	)
Total other expense, net		(12,507	)		(12,921	)

Income before income taxes		80,401			71,888

Income tax expense		(18,426	)		(16,197	)

Net income	$	61,975		$	55,691

Earnings per share of common stock
Basic	$	0.97		$	0.86
Diluted	$	0.96		$	0.84

Weighted average number of shares outstanding
Basic		63,711			64,389
Diluted		64,714			65,972

Dividends declared per share of common stock	$	0.47		$	0.335

See the accompanying notes to the unaudited condensed consolidated financial statements.

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Victory Capital Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025			2024
Net income	$	61,975		$	55,691

Other comprehensive income (loss), net of tax
Net amortization of deferred gain on terminated cash flow hedges		(3,104	)		(3,139	)
Net unrealized income (loss) on foreign currency translation		128			(25	)
Total other comprehensive income (loss), net of tax		(2,976	)		(3,164	)

Comprehensive income	$	58,999		$	52,527

See the accompanying notes to the unaudited condensed consolidated financial statements.

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Victory Capital Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)


									Accumulated
						Additional			Other
	Common		Treasury			Paid-In			Comprehensive			Retained
	Stock		Stock			Capital			Income			Earnings			Total
Balance, December 31, 2024	$	839	$	(574,856	)	$	752,371		$	18,683		$	924,600		$	1,121,637
Issuance of common stock		—		—			96			—			—			96
Shares withheld related to net settlement of equity awards		—		(9,195	)		—			—			—			(9,195	)
Vesting of restricted share grants		4		—			(4	)		—			—			—
Exercise of options		1		—			452			—			—			453
Other comprehensive loss		—		—			—			(2,976	)		—			(2,976	)
Share-based compensation		—		—			3,505			—			—			3,505
Dividends paid		—		—			—			—			(30,929	)		(30,929	)
Net income		—		—			—			—			61,975			61,975
Balance, March 31, 2025	$	844	$	(584,051	)	$	756,420		$	15,707		$	955,646		$	1,144,566


									Accumulated
						Additional			Other
	Common		Treasury			Paid-In			Comprehensive			Retained
	Stock		Stock			Capital			Income			Earnings			Total
Balance, December 31, 2023	$	824	$	(444,286	)	$	728,283		$	31,328		$	736,852		$	1,053,001
Issuance of common stock		—		—			75			—			—			75
Shares withheld related to net settlement of equity awards		—		(13,253	)		—			—			—			(13,253	)
Vesting of restricted share grants		4		—			(4	)		—			—			—
Exercise of options		4		—			3,193			—			—			3,197
Other comprehensive loss		—		—			—			(3,164	)		—			(3,164	)
Share-based compensation		—		—			3,970			—			—			3,970
Dividends paid		—		—			—			—			(22,384	)		(22,384	)
Net income		—		—			—			—			55,691			55,691
Balance, March 31, 2024	$	832	$	(457,539	)	$	735,517		$	28,164		$	770,159		$	1,077,133

See the accompanying notes to the unaudited condensed consolidated financial statements.

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Victory Capital Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities
Net income	$	61,975		$	55,691
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for deferred income taxes		7,275			5,566
Depreciation and amortization		7,432			7,601
Deferred financing costs, accretion expense and derivative gains/losses		(3,068	)		(3,097	)
Stock-based and deferred compensation		3,660			5,842
Change in fair value of contingent consideration obligations		3,406			12,200
Unrealized depreciation (appreciation) on investments		835			(1,306	)
Noncash lease expense		82			—
Changes in operating assets and liabilities:
Receivables		4,289			(10,459	)
Prepaid expenses		(271	)		(1,484	)
Other assets		666			(240	)
Accounts payable and accrued expenses		13,836			6,625
Accrued compensation and benefits		(18,155	)		(7,953	)
Other liabilities		(868	)		(302	)
Net cash provided by operating activities		81,094			68,684

Cash flows from investing activities
Purchases of property and equipment		(1,589	)		(500	)
Purchases of investments		(1,526	)		(709	)
Sales of investments		1,431			299
Net cash used in investing activities		(1,684	)		(910	)

Cash flows from financing activities
Issuance of common stock		549			3,272
Repurchase of common stock		(451	)		(2,946	)
Payments of taxes related to net share settlement of equity awards		(885	)		(9,284	)
Payment of dividends		(29,926	)		(22,384	)
Payment of consideration for acquisition		—			(80,000	)
Net cash used in financing activities		(30,713	)		(111,342	)

Effect of changes of foreign exchange rate on cash and cash equivalents		179			(42	)

Net increase (decrease) in cash and cash equivalents		48,876			(43,610	)
Cash and cash equivalents, beginning of period		126,731			123,547
Cash and cash equivalents, end of period	$	175,607		$	79,937

Supplemental cash flow information
Cash paid for interest	$	17,227		$	20,329
Cash paid for income taxes		1,503			1,125
Noncash items
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	—		$	2,797

See the accompanying notes to the unaudited condensed consolidated financial statements.

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Victory Capital Holdings, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. ORGANIZATION AND NATURE OF BUSINESS

Victory Capital Holdings, Inc., a Delaware corporation (along with its wholly-owned subsidiaries, collectively referred to as the “Company,” “Victory,” or in the first-person notations of “we,” “us,” and “our”) provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors. With 11 autonomous Investment Franchises and a Solutions Platform, the Company offers a wide array of investment products, including actively and passively managed mutual funds, rules-based and active exchange traded funds (“ETFs”), institutional separate accounts, variable insurance products (“VIPs”), alternative investments, private closed end funds, and a 529 Education Savings Plan. The Company’s strategies are also offered through third-party investment products, including mutual funds, third-party ETF model strategies, retail separately managed accounts (“SMAs”) and unified managed accounts (“UMAs”) through wrap account programs, Collective Investment Trusts (“CITs”), and undertakings for the collective investment in transferable securities (“UCITs”).

Victory Capital Management Inc. (“VCM”), a wholly-owned subsidiary of the Company, is a registered investment adviser and provides mutual fund administrative services for the Victory Portfolios, Victory Variable Insurance Funds, the mutual fund series of the Victory Portfolios II and the Victory Portfolios III (collectively, the “Victory Funds”), a family of open-end mutual funds, and the VictoryShares (the Company’s ETF brand). Additionally, VCM employs all of the Company’s United States investment professionals across its Franchises and Solutions, which are not separate legal entities. VCM’s wholly-owned subsidiaries include RS Investment Management (Singapore) Pte. Ltd., RS Investments (UK) Limited and NEC Pipeline LLC.

Victory Capital Services, Inc. (“VCS”), a wholly-owned subsidiary of the Company, is registered with the SEC as an introducing broker-dealer and serves as distributor and underwriter for the Victory Funds, which includes the mutual funds of the Victory Portfolios III (the “Victory Funds III”) and a 529 Education Savings Plan. VCS offers brokerage services to individual investors through an open architecture brokerage platform. VCS is also the placement agent for certain private funds managed by VCM. Victory Capital Transfer Agency, Inc. (“VCTA”) is registered with the SEC as a transfer agent for the Victory Funds III.

WestEnd Advisors, LLC (“WestEnd”) is an ETF strategist adviser that provides financial advisers with a turnkey, core model allocation strategy for either a holistic solution or complementary source of alpha. WestEnd is a wholly-owned subsidiary of Victory Capital Holdings, Inc. and is the Company’s second registered investment adviser.

On April 1, 2025, the Company completed the acquisition of Amundi US and reintroduced the brand Pioneer Investments ("Pioneer" or "Pioneer Investments") for the acquired business and investment products. VCM will serve as the investment adviser and provide mutual fund administration services for the Pioneer mutual funds under Victory Portfolios IV and Victory Variable Insurance Funds II. VCS will serve as the distributor to Victory Portfolios IV and Victory Variable Insurance Funds II. Refer to Note 4, Acquisitions and Note 17, Subsequent Events for further details related to the acquisition.

NOTE 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In the opinion of management, the consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial condition, results of operations, and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the operations of the Company and its wholly-owned subsidiaries, after elimination of all intercompany balances and transactions. Our involvement with non-consolidated variable interest entities (“VIEs”) includes sponsored investment funds.

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For further discussion regarding VIEs, refer to Note 2, Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Estimates and Assumptions

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements and the notes. Actual results may ultimately differ materially from those estimates.

New Accounting Pronouncements

Recently Issued Accounting Standards

•

Reporting Comprehensive Income: In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses" ("DISE"). This ASU does not change or remove current expense presentation requirements within the Consolidated Statements of Operations. However, the amendments require disclosure, on an annual and interim basis, of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements. DISE is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact that this ASU will have on the Company's consolidated financial statement disclosures.

•

Income Taxes: In December 2023, the FASB issued ASU 2023-09, "Income Taxes: Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 revises income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as the effectiveness of certain other income tax disclosures. The new standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The standard should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact that ASU 2023-09 will have on the Company's consolidated financial statement disclosures.

NOTE 3. REVENUE RECOGNITION

In accordance with the revenue recognition standard requirements, the following table disaggregates our revenue by type and product:


	Three Months Ended March 31,
(in thousands)	2025		2024
Investment management fees
Mutual funds (Victory Funds)	$	114,341	$	115,173
ETFs (VictoryShares)		8,729		5,179
Separate accounts and other vehicles		47,993		47,312
Performance-based fees
Mutual funds (Victory Funds III)		2,191		2,023
Separate accounts and other vehicles		47		98
Total investment management fees		173,301		169,785

Fund administration and distribution fees
Administration fees
Mutual funds (Victory Funds)		26,845		26,334
ETFs (VictoryShares)		1,094		744
Distribution fees
Mutual funds (Victory Funds)		5,347		5,583
Transfer agent fees
Mutual funds (Victory Funds III)		13,015		13,411
Total fund administration and distribution fees		46,301		46,072

Total revenue	$	219,602	$	215,857

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The following table presents balances of receivables:


(in thousands)	March 31, 2025		December 31, 2024
Customer receivables
Mutual funds (Victory Funds)	$	56,084	$	59,247
ETFs (VictoryShares)		3,773		3,029
Separate accounts and other vehicles		34,685		37,045
Receivables from contracts with customers		94,542		99,321
Non-customer receivables		1,281		1,346
Total receivables	$	95,823	$	100,667

Revenue

The Company’s revenue includes fees earned from providing;

•

investment management services,

•

fund administration services,

•

fund transfer agent services, and

•

fund distribution services.

Revenue is recognized for each distinct performance obligation identified in customer contracts when the performance obligation has been satisfied by transferring services to a customer either over time or at the point in time when the customer obtains control of the service. Revenue is recognized in the amount of variable or fixed consideration allocated to the satisfied performance obligation that Victory expects to be entitled to in exchange for transferring services to a customer. Variable consideration is included in the transaction price only when it is probable that a significant reversal of such revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Investment management, fund administration and fund distribution fees are generally considered variable consideration as they are typically calculated as a percentage of AUM. Fund transfer agent fees are also considered variable consideration as they are calculated as a percentage of AUM or based on the number of accounts in the fund. In such cases, the amount of fees earned is subject to factors outside of the Company’s control including customer or underlying investor contributions and redemptions and financial market volatility. These fees are considered constrained and are excluded from the transaction price until the asset values or number of accounts on which the customer is billed are calculated and the value of consideration is measurable.

The Company has contractual arrangements with third parties to provide certain advisory, administration, transfer agent and distribution services. Management considers whether we are acting as the principal service provider or as an agent to determine whether revenue should be recorded based on the gross amount payable by the customer or net of payments to third-party service providers, respectively. Victory is considered a principal service provider if we control the service that is transferred to the customer. We are considered an agent when we arrange for the service to be provided by another party and do not control the service.

Investment Management Fees

Investment management fees are received in exchange for investment management services that represent a series of distinct incremental days of investment management service. Control of investment management services is transferred to the customers over time as these customers receive and consume the benefits provided by these services. Investment management fees are calculated as a contractual percentage of AUM and are generally paid in arrears on a monthly or quarterly basis.

AUM represents the financial assets the Company manages for clients on either a discretionary or non-discretionary basis. In general, AUM reflects the valuation methodology that corresponds to the basis used for determining revenue such as net asset value for the Victory Funds and certain other pooled funds and account market value for separate accounts. For the Company’s private closed-end alternative investment products, AUM represents limited partner capital commitments during the commitment period of the fund. Following the earlier of the termination of the commitment period and the beginning of any commitment period for a successor fund, AUM generally represents, depending on the fund, the lesser of a) the net asset value of the fund and b) the aggregated adjusted cost basis of each unrealized portfolio investment or the limited partner capital commitments reduced by the amount of capital contributions used to make portfolio investments that have been disposed.

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Investment management fees are recognized as revenue using a time-based output method to measure progress. Revenue is recorded at month end or quarter end when the value of consideration is measured. The amount of investment management fee revenue varies from one reporting period to another as levels of AUM change (from inflows, outflows and market movements) and as the number of days in the reporting period change.

The Company may waive certain fees for investment management services provided to the Victory Funds, VictoryShares and other pooled investment vehicles and may subsidize certain share classes of the Victory Funds, VictoryShares and other pooled investment vehicles to ensure that specified operating expenses attributable to such share classes do not exceed a specified percentage. These waivers and reimbursements reduce the transaction price allocated to investment management services and are recognized as a reduction to investment management fees revenue. The amounts due to the Victory Funds, VictoryShares and other pooled investment vehicles for waivers and expense reimbursements represent consideration payable to customers, which is recorded in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets, and no distinct services are received in exchange for these payments.

Performance-based investment management fees, which include fees under performance fee and fulcrum fee arrangements, are included in the transaction price for providing investment management services. Performance-based investment management fees are calculated as a percentage of investment performance on a client’s account versus a specified benchmark or hurdle based on the terms of the contract with the customer. Performance-based investment management fees are variable consideration and are recognized as revenue when and to the extent that it is probable that a significant reversal of the cumulative revenue for the contractual performance period will not occur. Performance-based investment management fees recognized as revenue in the current period may pertain to performance obligations satisfied in prior periods. Fulcrum fee arrangements include a performance fee adjustment that increases or decreases the total investment management fee depending on whether the assets being managed experienced better or worse investment performance than the index specified in the customer’s contract. The performance fee adjustment arrangement with certain equity and fixed income Victory Funds III is calculated monthly based on the investment performance of those funds relative to their specified benchmark indexes over the discrete performance period ending with that month.

Fund Administration Fees

The Company recognizes fund administration fees as revenue using a time-based output method to measure progress. Fund administration fees are determined based on the contractual rate applied to average daily net assets of the Victory Funds and VictoryShares for which administration services are provided. Revenue is recorded on a monthly basis when the value of consideration is measured using actual average daily net assets and constraints are removed. The Company’s fund administration fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations.

The Company has contractual arrangements with a third party to provide certain sub-administration services. We are the primary obligor under the contracts with the Victory Funds and VictoryShares and have the ability to select the service provider and establish pricing. As a result, fund administration fees and sub-administration expenses are recorded on a gross basis.

Fund Transfer Agent Fees

The Company recognizes fund transfer agent fees using a time-based output method to measure progress. Fund transfer agent fees are determined based on the contractual rate applied to either the average daily net assets of the Victory Funds III for which transfer agent services are provided or number of accounts in the Victory Funds III. Revenue is recorded on a monthly basis when the value of consideration is measured using actual average daily net assets or actual number of accounts and constraints are removed. The Company’s fund transfer agent fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations.

The Company also receives fees for sub-transfer agency services under contracts with the Victory Funds for member class shares. Sub-transfer agency fees are recognized and recorded in a manner similar to fund transfer agent fees and are recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations.

The Company has contractual arrangements with a third party to provide certain sub-transfer agent services. As the Company is the primary obligor under the transfer agency contracts with the Victory Funds III and has the ability to select the service provider and establish pricing, fund transfer agent fees and sub-transfer agent expenses are recorded on a gross basis.

Fund Distribution Fees

The Company receives compensation for sales and sales-related services promised under distribution contracts with the Victory Funds. Revenue is measured in an amount that reflects the consideration to which the Company expects to be

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entitled in exchange for providing distribution services. Distribution fees are generally calculated as a percentage of average net assets in the Victory Funds. The Company’s performance obligation is satisfied at the point in time when control of the services is transferred to customers, which is upon investor subscription or redemption.

Based on the nature of the calculation, the revenue for these services is accounted for as variable consideration. The Company may recognize distribution fee revenue in the current period that pertains to performance obligations satisfied in prior periods as variable consideration is recognized only when uncertainties are resolved. The Company’s distribution fee revenue is recorded in fund administration and distribution fees in the unaudited Condensed Consolidated Statements of Operations.

The Company has contractual arrangements with third parties to provide certain distribution services. The Company is the primary obligor under the contracts with the Victory Funds and has the ability to select the service provider and establish pricing. Substantially all of the Company’s revenue is recorded gross of payments made to third parties.

Included in fund distribution fees are transaction and account-level fees paid by VCS brokerage platform customers for trade execution, cash transfer and other services.

Costs Incurred to Obtain or Fulfill Customer Contracts

The Company is required to capitalize certain costs directly related to the acquisition or fulfillment of a contact with a customer. Victory has not identified any sales-based compensation or similar costs that meet the definition of an incremental cost to acquire a contract and as such we have no intangible assets related to contract acquisitions.

Direct costs incurred to fulfill services under the Company’s distribution contracts include sales commissions paid to third party dealers for the sale of Class C Shares. The Company may pay upfront sales commissions to dealers and institutions that sell Class C shares of the participating Victory Funds at the time of such sale. Upfront sales commission payments with respect to Class C shares equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution. When the Company makes an upfront payment to a dealer or institution for the sale of Class C shares, the Company capitalizes the cost of such payment, which is recorded in prepaid expenses in the unaudited Condensed Consolidated Balance Sheets and amortizes the cost over a 12-month period, the estimated period of benefit.

Valuation of AUM and fund investments

The fair value of assets under management of the Victory Funds and VictoryShares is primarily determined using quoted market prices or independent third-party pricing services or broker price quotes. In certain circumstances, a quotation or price evaluation is not readily available from a pricing service. In these cases, pricing is determined by management based on a prescribed valuation process that has been approved by the directors/trustees of the sponsored products. The same prescribed valuation process is used to price securities in separate accounts and the Company’s other non-alternative investment vehicles for which a quotation or price evaluation is not readily available from a pricing service.

The fair value of Level III assets held by alternative investment vehicles is determined under the respective valuation policy for each fund. The valuation policies address the fact that substantially all the investments of a fund may not have readily available market information and therefore the fair value for these assets is typically determined using unobservable inputs and models that may include subjective assumptions. AUM reported by the Company for alternative investment vehicles may not necessarily equal the funds’ net asset values or the total fair value of the funds’ portfolio investments as AUM represents the basis for calculating management fees.

For the periods presented, less than one percent of the Company’s total AUM were Level III assets priced without using a quoted market price, broker price quote or pricing service quotation.

NOTE 4. ACQUISITIONS

NEC Acquisition

Under the terms of the purchase agreement for New Energy Capital Partners ("NEC"), which closed on November 1, 2021, the Company will pay up to an additional $35.0 million in cash based on net revenue growth over a six-year period following the closing date on the private, closed-end alternative investment funds managed by the NEC franchise (“NEC Funds”). The maximum amount of contingent payments, less any contingent payments previously paid, is due upon the occurrence of certain specified events within a five year period following the Start Date.

The Company determined that substantially all of the contingent payments payable per the NEC purchase agreement represent compensation for post-closing services. The Company records compensation expense over the estimated service period in an amount equal to the total contingent payments currently forecasted to be paid.

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As of March 31, 2025 and December 31, 2024, the Company determined that the contingent payments are no longer probable of occurring and the liability for NEC contingent payments was zero.

For the three months ended March 31, 2024, the Company recorded $1.0 million in NEC contingent payment compensation expense which is included in personnel compensation and benefits in the unaudited Condensed Consolidated Statements of Operations.

WestEnd Acquisition

Under the terms of the WestEnd purchase agreement, which closed on December 31, 2021, a maximum of $320.0 million ($80.0 million per year) of contingent payments is payable to sellers. Contingent earn-out payments are based on net revenue of the WestEnd business during each of the first four years following the close of the acquisition, subject to certain “catch-up” provisions over a five and one-half year period following the close of the acquisition.

In March 2024, the Company paid $80.0 million in cash to sellers as a catch-up payment for the first earn-out period. The estimated fair value of contingent consideration payable to sellers was $143.3 million as of March 31, 2025 and $139.9 million as of December 31, 2024, respectively.

For the three months ended March 31, 2025 and 2024, the change in the liability was an increase of $3.4 million and $12.2 million, respectively. The impact of increasing or decreasing the valuation of the contingent consideration liability is recorded in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations.

The estimated fair value of contingent consideration payable to sellers is estimated using the real options method. WestEnd net revenue growth is simulated in a risk-neutral framework to calculate expected probability-weighted earn out payments, which are then discounted from the expected payment dates at the relevant cost of debt. Significant assumptions and inputs include the WestEnd net revenue projected annual growth rate, the market price of risk adjustment for revenue, which adjusts the projected revenue growth rate to a risk-neutral expected growth rate, revenue volatility and discount rate. The market price of risk adjustment for revenue and revenue volatility are based on data for comparable companies. As the contingent consideration represents a subordinate, unsecured claim of the Company, the Company assesses a discount rate which incorporates adjustments for credit risk and the subordination of the contingent consideration.

Significant inputs to the valuation of contingent consideration payable to sellers as of March 31, 2025 and December 31, 2024 are as follows and are approximate values:



	March 31, 2025			December 31, 2024
Net revenue 5 year average annual growth rate		11	%		12	%
Market price of risk adjustment for revenue (continuous)		5	%		5	%
Revenue volatility		19	%		21	%
Discount rate		6	%		7	%
Years remaining in earn out period		2.6			2.8
Undiscounted estimated remaining earn out payments $ millions	$153 - $240			$152 - $240

Pioneer Investments

On July 8, 2024, the Company, Amundi Asset Management S.A.S ("Amundi'), and, solely for certain provisions thereof, Amundi S.A., (“Amundi Parent,” and together with Amundi, the “Amundi Parties”) entered into the Contribution Agreement (the “Contribution Agreement”) to combine Amundi’s U.S. business into the Company.

On April 1, 2025, the Company completed the transactions contemplated by the Contribution Agreement. In exchange for the contribution of all the shares of the Amundi US to the Company, at the closing (the “Closing”), the Company issued to Amundi (a) 3,293,471 newly issued shares of Common Stock, representing 4.9% of the number of issued and outstanding shares of Common Stock after giving effect to such issuance, and (b) 14,305,982 newly issued shares of Preferred Stock, which, together with the shares of Common Stock issued to Amundi represented in the aggregate 21.2% of the Company’s fully diluted shares after giving effect to such share issuances. The consideration due to Amundi is subject to a customary post-closing adjustment as well as true-up payments in respect of client consents obtained in the 180 days following the Closing. True-up payments due to Amundi will be settled by adjusting the number of shares issued to Amundi at the Closing. Refer to Note 17, Subsequent Events for further details related to the Closing and Preferred Stock issuance.

Assets acquired and liabilities assumed will be recognized at their respective fair values as of the acquisition date. The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires

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the use of judgment in determining the appropriate assumptions and estimates. Due to the limited time since the acquisition date, the preliminary acquisition valuation is incomplete at this time. As a result, we are unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed, including the information required for valuation of intangible assets and goodwill.

Acquisition-related costs

Acquisition-related costs include legal fees, advisory services, mutual fund proxy voting costs and other one-time expenses related to business combinations. The Company expensed $8.8 million and $1.0 million in acquisition-related costs in the three months ended March 31, 2025 and 2024, respectively. These amounts are included in acquisition-related costs in the unaudited Condensed Consolidated Statements of Operations and relate primarily to the Amundi US acquisition.

NOTE 5. Fair Value Measurements

The Company determines the fair value of certain financial and nonfinancial assets and liabilities. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value determinations utilize a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability.

Classification within the fair value hierarchy contains three levels:

•

Level 1—Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

•

Level 2—Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the asset or liability being measured.

•

Level 3—Valuation inputs are unobservable and significant to the fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The following table presents assets and liabilities measured at fair value on a recurring basis:


	As of March 31, 2025
(in thousands)	Total			Level 1		Level 2		Level 3
Financial Assets
Money market fund	$	105,910		$	105,910	$	-	$	-
Investments in proprietary funds		616			616		-		-
Deferred compensation plan investments		33,895			33,895		-		-
Total Financial Assets	$	140,421		$	140,421	$	-	$	-
Financial Liabilities
Contingent consideration arrangements	$	(143,300	)	$	-	$	-	$	(143,300	)
Total Financial Liabilities	$	(143,300	)	$	-	$	-	$	(143,300	)


	As of December 31, 2024
(in thousands)	Total			Level 1		Level 2		Level 3
Financial Assets
Money market fund	$	110,475		$	110,475	$	-	$	-
Investments in proprietary funds		605			605		-		-
Deferred compensation plan investments		34,608			34,608		-		-
Total Financial Assets	$	145,688		$	145,688	$	-	$	-
Financial Liabilities
Contingent consideration arrangements	$	(139,894	)	$	-	$	-	$	(139,894	)
Total Financial Liabilities	$	(139,894	)	$	-	$	-	$	(139,894	)

Level 1 assets consist of money market funds and open-end mutual funds. The fair values for these assets are determined utilizing quoted market prices for identical assets.

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Contingent consideration arrangements represent the WestEnd earn-out payment liability, which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets.

Significant unobservable inputs for the option pricing model used to determine the estimated fair value of the WestEnd Acquisition earn-out payment liability include the WestEnd net revenue projected growth rate, revenue volatility, market price of risk and discount rate. An increase in the projected growth rate for revenue results in a higher fair value for the earn-out payment liability while an increase in the discount rate results in a lower fair value for the earnout payment liability. An increase in the market price of risk and revenue volatility results in a lower fair value. Refer to Note 4, Acquisitions, for further details related to the valuation of contingent consideration payable related to the WestEnd Acquisition.

Changes in the fair value of contingent consideration arrangement liabilities, realized or unrealized, are recorded in earnings and are included in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations.

The following table presents the balance of the contingent consideration arrangement liabilities for the three months ended March 31, 2025:


(in thousands)	Contingent Consideration Liabilities
Balance, December 31, 2024	$	139,894
WestEnd change in fair value measurement		3,406
Balance, March 31, 2025	$	143,300

There were no transfers between any of the Level 1, 2 and 3 categories in the fair value measurement hierarchy from December 31, 2024 to March 31, 2025. The Company recognizes transfers at the end of the reporting period.

The net carrying value of accounts receivable and accounts payable approximates fair value due to the short‑term nature of these assets and liabilities. The fair value of our long-term debt as of March 31, 2025 is considered to be its carrying value as the interest rate on the bank debt is variable and approximates current market rates. As a result, Level 2 inputs are utilized to determine the fair value of our long‑term debt.

NOTE 6. Related-Party Transactions

The Company considers certain funds that it manages, including the Victory Funds, the VictoryShares, collective trust funds that it sponsors (the “Victory Collective Funds”), the NEC Funds and other pooled investment vehicles that it sponsors, to be related parties as a result of its advisory relationship.

The Company receives investment management, administrative, distribution and compliance fees in accordance with contracts that VCM and VCS have with the Victory Funds and has invested a portion of its balance sheet cash in the Victory Treasury Money Market Trust and earns interest on the amount invested in this fund.

The Company receives investment management, administrative and compliance fees in accordance with contracts that VCM has with the VictoryShares.

We also receive investment management fees from the Victory Collective Funds, the NEC Funds and other pooled investment vehicles under VCM’s advisory contracts with these funds. In addition, VCTA receives fees for transfer agency services under contracts with the Victory Funds III and sub-transfer agency services under contracts with the Victory Funds for member class shares.

Director fees payable by the Company in cash and contributions made under the Director Deferred Compensation Plan for non-employee members of our Board of Directors are included in general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations.

Fees payable to Amundi US for sub-advisory services provided to certain Victory Funds are included in distribution and other asset-based expenses in the unaudited Condensed Consolidated Statements of Operations.

The table below presents balances and transactions involving related parties included in the unaudited Condensed Consolidated Balance Sheets and unaudited Condensed Consolidated Statements of Operations.

•

Included in cash and cash equivalents is cash held in the Victory Treasury Money Market Trust.

•

Included in receivables (investment management fees) are amounts due from the Victory Funds, the VictoryShares, the Victory Collective Funds, the NEC Funds and other pooled investment vehicles for investment management services.

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•

Included in receivables (fund administration and distribution fees) are amounts due from the Victory Funds for fund administration services and compliance services, amounts due from the VictoryShares for fund administration services, amounts due from the Victory Funds III for transfer agent services and amounts due from the Victory Funds for sub-transfer agent services.

•

Included in prepaid expenses are amounts paid by VCM that will be invoiced to the NEC Funds in subsequent periods.

•

Included in revenue (investment management fees) are amounts earned for investment management services provided to the Victory Funds, the VictoryShares, the Victory Collective Funds, the NEC Funds and other pooled investment vehicles.

•

Included in revenue (fund administration and distribution fees) are amounts earned for fund administration and compliance services, transfer agent services and sub-transfer agent services.

•

Realized and unrealized gains and losses and dividend income on investments in the Victory Funds classified as investments in proprietary funds and deferred compensation plan investments and dividend income on investments in the Victory Treasury Money Market Trust are recorded in interest income and other income (expense) in the unaudited Condensed Consolidated Statements of Operations.

•

Amounts due to the Victory Funds, the VictoryShares and other pooled investment vehicles for waivers of investment management fees and reimbursements of fund operating expenses are included in accounts payable and accrued expenses in the unaudited Condensed Consolidated Balance Sheets and represent consideration payable to customers.


(in thousands)	March 31, 2025		December 31, 2024
Related party assets
Cash and cash equivalents	$	105,910	$	110,475
Receivables (investment management fees)		48,645		50,520
Receivables (fund administration and distribution fees)		15,262		16,014
Prepaid expenses		1,846		1,702
Investments (investments in proprietary funds, fair value)		616		605
Investments (deferred compensation plan investments, fair value)		33,759		34,473
Total	$	206,038	$	213,789

Related party liabilities
Accounts payable and accrued expenses (fund reimbursements)	$	5,536	$	5,889


	Three Months Ended March 31,
(in thousands)	2025		2024
Related party revenue
Investment management fees	$	132,486	$	128,335
Fund administration and distribution fees		46,301		46,072
Total	$	178,787	$	174,407

Related party expense
General and administrative	$	161	$	112
Distribution and other asset-based expenses		185		—
	$	346	$	112
Related party other income (expense)
Interest income and other income (expense)	$	745	$	3,286

NOTE 7. Investments

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As of March 31, 2025 and December 31, 2024, the Company had investments in proprietary funds and deferred compensation plan investments. Investments in proprietary funds consist primarily of seed capital investments in certain Victory Funds. Deferred compensation plan investments are held under deferred compensation plans and consist of investments in the Victory Funds.

Unrealized and realized gains and losses on investments in proprietary funds and deferred compensation plan investments are recorded in earnings as interest income and other income (expense).

Investments in Proprietary Funds

The following table presents a summary of the cost and fair value of investments in proprietary funds:


			Gross Unrealized					Fair
(in thousands)	Cost		Gains		(Losses)			Value
As of March 31, 2025	$	659	$	35	$	(78	)	$	616
As of December 31, 2024		621		46		(62	)		605

The following table presents proceeds from sales of investments in proprietary funds and realized gains and losses recognized during the three months ended March 31, 2025 and 2024:


	Sale		Realized
(in thousands)	Proceeds		Gains		(Losses)
For the three months ended March 31, 2025	$	37	$	—	$	—
For the three months ended March 31, 2024		—		—		—

Deferred Compensation Plan Investments

The following table presents a summary of the cost and fair value of deferred compensation plan investments:


			Gross Unrealized					Fair
(in thousands)	Cost		Gains		(Losses)			Value
As of March 31, 2025	$	33,514	$	1,211	$	(830	)	$	33,895
As of December 31, 2024		33,224		1,802		(418	)		34,608

The following table presents proceeds from sales of deferred compensation plan investments and realized gains and losses recognized during the three months ended March 31, 2025 and 2024:


	Sale		Realized
(in thousands)	Proceeds		Gains		(Losses)
For the three months ended March 31, 2025	$	1,394	$	204	$	(9	)
For the three months ended March 31, 2024		299		22		(5	)

NOTE 8. Income Taxes

The effective tax rate for the three months ended March 31, 2025 and 2024 differs from the United States federal statutory rate primarily due to state and local income taxes, excess tax benefits on share-based compensation and non-deductible expenses.

For the three months ended March 31, 2025 and 2024, the provision for income taxes was $18.4 million and $16.2 million, or 22.9% and 22.5%, of pre-tax income respectively. The effective tax rate for the three months ended March 31, 2025 was higher than the effective tax rate for the same period in 2024 mainly due to lower excess tax benefits on share-based compensation.

No valuation allowance was recorded for deferred tax assets in the period ended March 31, 2025 and 2024.

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NOTE 9. Debt

The following table presents the components of long-term debt in the unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 under the Company's credit agreement ("2019 Credit Agreement").


	March 31, 2025					December 31, 2024
(in thousands)	Amount			Interest Rate	Effective Interest Rate	Amount			Interest Rate	Effective Interest Rate
Term Loans
Due July 2026	$	624,693		6.64%	7.03%	$	624,693		6.93%	7.33%
Due December 2028		347,496		6.64%	6.96%		347,496		6.93%	7.26%
Term loan principal outstanding		972,189					972,189
Unamortized debt issuance costs		(5,326	)				(5,935	)
Unamortized debt discount		(2,100	)				(2,392	)
Long-term debt, net	$	964,763				$	963,862

The Company elects to use three-month Term SOFR plus a ten-point credit spread adjustment plus the margin on SOFR required by the 2019 Credit Agreement to pay interest on its debt.

The 2019 Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the first lien leverage ratio, measured as of the last day of each fiscal quarter on which outstanding borrowings under the revolving credit facility exceed 35.0% of the commitments thereunder (excluding certain letters of credit), of no greater than 3.80 to 1.00. As of March 31, 2025, there were no outstanding borrowings under the revolving credit facility and the Company was in compliance with its financial performance covenant.

There were no repayments of outstanding term loans under the 2019 Credit Agreement during the three months ended March 31, 2025 and 2024.

The following table presents the components of interest expense and other financing costs on the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024.


	For the Three Months Ended March 31,
(in thousands)	2025			2024
Interest expense	$	16,190		$	19,463
Amortization of debt issuance costs		749			755
Amortization of debt discount		292			302
Amortization of deferred gain on terminated interest rate swap		(4,109	)		(4,154	)
Other		89			120
Total	$	13,211		$	16,486

NOTE 10. Equity

Shares Rollforward

The following tables present the changes in the number of shares of Common Stock issued and repurchased (in thousands):


	Shares of Common Stock Issued		Shares of Treasury Stock
Balance, December 31, 2024		83,948		(20,295	)
Issuance of shares		1		—
Vesting of restricted share grants		384		—
Exercise of options		43		—
Shares withheld related to net settlement of equity awards		—		(156	)
Balance, March 31, 2025		84,376		(20,451	)

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	Shares of Common Stock Issued		Shares of Treasury Stock
Balance, December 31, 2023		82,404		(18,150	)
Issuance of shares		2		—
Vesting of restricted share grants		382		—
Exercise of options		378		—
Shares withheld related to net settlement of equity awards		—		(345	)
Balance, March 31, 2024		83,166		(18,495	)

Share Repurchased and Withheld

Share Repurchase Programs

In December 2024, the Company’s Board of Directors approved a new share repurchase program (the “2025 Share Repurchase Program”) authorizing the repurchase of up to $200.0 million of the Company’s Common Stock through December 31, 2026. Under the 2025 Share Repurchase Program, which took effect in December 2024, the Company may purchase its shares from time to time in privately negotiated transactions, through block trades, pursuant to open market purchases, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC. The amount and timing of purchases under the 2025 Share Repurchase Program will depend on a number of factors including the price and availability of the Company’s shares, trading volume, capital availability, Company performance and general economic and market conditions. The 2025 Share Repurchase Program can be suspended or discontinued at any time.

No shares were repurchased by the Company during the three months ended March 31, 2025 and 2024. As of March 31, 2025, $200.0 million was available for future repurchases under the 2025 Share Repurchase Program.

Shares Withheld for Net Settlement of Employee Equity Awards

During the three months ended March 31, 2025 and 2024, the Company net settled 0.2 million shares and 0.3 million shares of Common Stock, respectively, to satisfy employee tax obligations.

Dividend Payments

Dividends paid for the three months ended March 31, 2025 and 2024 totaled $29.9 million and $21.6 million, respectively, relating to quarterly dividends declared by the Company's Board of Directors. Dividends paid or payable related to dividends previously declared upon vesting of restricted stock totaled $1.0 million and $0.8 million at March 31, 2025 and 2024, respectively.

NOTE 11. Share‑Based Compensation

Current Period Activity

Stock option award and restricted stock award activity during the three months ended March 31, 2025 and 2024 was as follows:


	Shares Subject to Stock Option Awards
	Three Months Ended March 31,
	2025							2024
	Avg wtd		Avg wtd					Avg wtd		Avg wtd
	grant-date		exercise					grant-date		exercise
	fair value		price		Units			fair value		price		Units
Outstanding at beginning of period	$	5.08	$	9.94		720,415		$	4.68	$	8.76		1,801,853
Forfeited		—		—		—			—		—		—
Exercised		5.27		10.62		(42,651	)		4.41		8.45		(378,149	)
Outstanding at end of period	$	5.07	$	9.90		677,764		$	4.76	$	8.84		1,423,704
Vested	$	5.14	$	10.13		501,566		$	4.74	$	8.79		1,247,506
Unvested		4.85		9.23		176,198			4.85		9.23		176,198

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	Restricted Stock Awards
	Three Months Ended March 31,
	2025					2024
	Avg wtd grant-					Avg wtd grant-
	date fair value		Units			date fair value		Units
Unvested at beginning of period	$	36.67		911,242		$	30.39		853,748
Granted		58.00		398,425			40.03		465,972
Vested		34.10		(383,663	)		30.66		(382,099	)
Forfeited		29.84		(22,652	)		30.49		(3,419	)
Unvested at end of period	$	47.34		903,352		$	35.09		934,202

During the three months ended March 31, 2025, the Company issued restricted stock awards for 398,425 shares of Common Stock, of which awards for 4,081 shares were fully vested on the grant date, awards for 45,548 shares vest over two years, awards for 97,461 shares vest over three years, and awards for 251,335 shares vest over four years.

Share-Based Compensation Expense

The Company recorded $3.5 million and $4.0 million of share-based compensation expense during the three months ended March 31, 2025 and 2024, respectively, in personnel compensation and benefits in the unaudited Condensed Consolidated Statements of Operations.

NOTE 12. Earnings Per Share

The following table sets forth the reconciliation of basic earnings per share and diluted earnings per share from net income for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands except per share amounts)	2025		2024
Net income	$	61,975	$	55,691
Shares:
Basic: Weighted average number of shares outstanding		63,711		64,389
Plus: Incremental shares from assumed conversion of dilutive instruments		1,003		1,583
Diluted: Weighted average number of shares outstanding		64,714		65,972
Earnings per share
Basic:	$	0.97	$	0.86
Diluted:	$	0.96	$	0.84

For the three months ended March 31, 2025, there were no anti-dilutive equity awards excluded from the calculation of diluted earnings per share . For the three months ended March 31, 2024, 0.5 million of unvested share-based compensation awards were excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. Holders of unvested share-based compensation awards do not have rights to receive nonforfeitable dividends on the shares covered by the awards.

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NOTE 13. Accumulated Other Comprehensive Income (Loss)

The following table presents changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2025 and 2024.


				Cumulative
	Cash Flow			Translation
(in thousands)	Hedges (1)(2)			Adjustment			Total
Balance, December 31, 2024	$	18,853		$	(170	)	$	18,683
Other comprehensive income before reclassification and tax		—			170			170
Tax impact		—			(42	)		(42	)
Reclassification adjustments, before tax		(4,109	)		—			(4,109	)
Tax impact		1,005			—			1,005
Net current period other comprehensive income (loss)		(3,104	)		128			(2,976	)
Balance, March 31, 2025	$	15,749		$	(42	)	$	15,707
Balance, December 31, 2023	$	31,460		$	(132	)	$	31,328
Other comprehensive loss before reclassification and tax		—			(33	)		(33	)
Tax impact		—			8			8
Reclassification adjustments, before tax		(4,154	)		—			(4,154	)
Tax impact		1,015			—			1,015
Net current period other comprehensive loss		(3,139	)		(25	)		(3,164	)
Balance, March 31, 2024	$	28,321		$	(157	)	$	28,164

(1)

Reclassifications out of accumulated other comprehensive income (loss) related to cash flow hedges are recorded in interest expense and other financing costs.

(2)

On October 30, 2023, the Company terminated the Swap. The termination resulted in a $44.4 million deferred gain recorded in AOCI, before tax, which is being amortized on a straight-line basis over the remaining term of the hedged debt (through July 1, 2026). Please refer to Note 14, Derivatives, for further information on the monetization of the gain on the Swap.

NOTE 14. DERIVATIVES

Interest Rate Swaps

In the fourth quarter of 2023, the Company monetized the gain on the floating-to-fixed interest rate swap transaction (“Swap”) entered into in 2020 to effectively fix the interest rate on $450 million of its outstanding Term Loan through the Term Loan maturity date of July 1, 2026.

The deferred gain on the termination of the Swap is being amortized on a straight-line basis through July 1, 2026 and is included in interest expense and other financing costs on the unaudited Condensed Consolidated Statements of Operations. For the three months ended March 31, 2025 and 2024, the Company recorded $4.1 million and $4.2 million, respectively, in amortization of deferred gain on Swap monetization. As of March 31, 2025 and December 31, 2024, the unamortized deferred gain on Swap monetization was $20.8 million and $24.9 million, respectively, before tax.

The following tables summarize the classification of the Swap in our unaudited condensed financial statements (in thousands):


		Three Months Ended
		March 31,
Statement of Operations	Description	2025		2024
Interest expense and other financing costs	Reclassification from AOCI – Amortization of Swap deferred gain		4,109		4,154


		Three Months Ended
		March 31,
Statements of Comprehensive Income	Description	2025			2024
Other comprehensive income (loss)	Amortization of deferred gain on terminated Swap, net of tax		(3,104	)		(3,139	)

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NOTE 15. LEASES

The Company determines if a contract is a lease at inception. We have leases primarily for office facilities and information technology equipment. All of our leases are classified as operating leases.

Supplemental balance sheet information related to the Company’s operating leases as of March 31, 2025 and December 31, 2024 was as follows (in thousands):


	March 31, 2025		December 31, 2024
Operating lease right-of-use ("ROU") assets(1)	$	18,989	$	19,839
Current portion of operating lease liabilities(2)		2,636		2,932
Noncurrent portion of operating lease liabilities(2)		17,466		17,939
Total operating lease liabilities	$	20,102	$	20,871

(1) ROU assets are recorded in other assets on the unaudited Condensed Consolidated Balance Sheets.

(2) Current portion and noncurrent portion of operating lease liabilities are recorded in other liabilities on the unaudited Condensed Consolidated Balance Sheets.


	March 31, 2025			March 31, 2024
Weighted-average remaining lease term	8.2 years			8.3 years
Weighted-average discount rate		6.8	%		6.7	%

The components of lease expense and other lease information as of and during the three months ended March 31, 2025 and 2024 are as follows (in thousands):


	March 31, 2025			March 31, 2024
Operating lease cost	$	1,183		$	1,341
Short-term lease cost		—			—
Variable lease cost		323			525
Gross lease cost	$	1,506		$	1,866
Sub-lease income		(15	)		(222	)
Net lease cost	$	1,491		$	1,644

Other lease information
Cash paid for amounts included in measurement of lease liabilities
Operating cash flows for operating leases	$	1,101		$	1,436

In general, our leases have remaining lease terms of approximately 1 year to 11 years. These leases generally contain renewal options for periods ranging from two to five years. Because the Company is not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term and associated potential option payments are excluded from lease payments. Expenses associated with operating leases are recorded in general and administrative expenses on the unaudited Condensed Consolidated Statements of Operations. Variable lease costs, such as utilities and common area maintenance charges, are excluded from lease liabilities and expensed as incurred. The variable lease costs are determined based on terms in the lease contracts and primarily relate to usage of the ROU asset and services received from the lessor.

The following table summarizes the maturity of our operating lease liabilities as of March 31, 2025 (in thousands):

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	As of March 31, 2025
2025	$	2,887
2026		3,757
2027		3,296
2028		2,759
2029		2,783
Thereafter		11,596
Total undiscounted lease payments		27,078
Less: imputed interest		6,976
Total lease liabilities	$	20,102

NOTE 16. SEGMENT REPORTING

Since the Company operates and reports in one segment, all financial segment information can be found in the consolidated financial statements.

Supplemental information related to significant segment expenses included the Consolidated Statements of Operations is as follows:


	Three Months Ended March 31,
(in thousands)	2025		2024
Salaries, payroll related taxes and employee benefits	$	21,745	$	24,476
Incentive compensation		23,667		23,943
Sales-based compensation(1)		7,220		6,079
Equity awards granted to employees and directors(2)		3,504		3,969
Acquisition and transaction-related compensation		—		987
Total personnel compensation and benefits expense	$	56,136	$	59,454


	Three Months Ended March 31,
(in thousands)	2025		2024
Broker-dealer distribution fees	$	4,800	$	5,042
Platform distribution fees		21,611		22,128
Sub-administration		4,390		4,101
Sub-advisory		1,872		2,336
Middle-office		2,804		2,656
Total distribution and other asset-based expenses	$	35,477	$	36,263

(1) Represents sales-based commissions paid to our distribution teams. Sales-based compensation varies based on gross and net client cash flows and revenue earned on sales.

(2) Share-based compensation typically vests over several years based on service and the achievement of specific business and financial targets. The value of share-based compensation is recognized as compensation expense over the vesting period.

The measure of segment assets is reported on the unaudited Condensed Consolidated Balance Sheets as Total Assets.

NOTE 17. SUBSEQUENT EVENTS

Amended and Restated Distribution and Services Agreements

On April 1, 2025, the Company completed the acquisition of Amundi US. In connection with the Closing, the Amundi Parties, the Company, and VCM, amended and restated the Off-Shore Master Distribution and Services Agreement and the On-Shore Master Distribution and Services Agreement, each dated as of July 8, 2024 (the “Original Agreements”, and, as amended and restated, the “Amended and Restated Distribution and Services Agreements”). The Amended and Restated Distribution and Services Agreements, which became effective as of the Closing, have substantially the same material terms as the Original Agreements. Under the Amended and Restated Distribution and Services Agreements, Victory is entitled to a percentage of fee revenues derived from Victory’s products that the Amundi Parties distribute outside the United States, and the Amundi Parties are entitled to a percentage of fee revenues derived from the Amundi Parties’ products that Victory

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distributes in the United States. The Distribution and Services Agreements will continue until the 15th anniversary of the date of the Closing, and automatically renew thereafter and remain effective for successive five-year terms. The Distribution and Services Agreements may be terminated under certain limited circumstances.

Shareholder Agreement

In connection with the Closing, the Company and Amundi also entered into a shareholder agreement (the “Shareholder Agreement”). Pursuant to the terms of the Shareholder Agreement, Amundi was granted certain resale shelf and piggyback registration rights in respect of the Common Stock and any shares of the Common Stock issuable by the Company upon the conversion of Preferred Stock, in each case, to the extent the Preferred Stock and the Common Stock was issued to Amundi under the Contribution Agreement or acquired pursuant to Amundi’s participation rights under the Shareholder Agreement. In addition, for a period of three years following the Closing, Amundi remains subject to a customary “lock-up” of the Common Stock and Preferred Stock (subject to certain exceptions) and a standstill, which among other things, prohibits Amundi from acquiring additional equity securities of the Company (subject to certain exceptions).

Preferred Stock

At the Closing, the shares of Preferred Stock issued to Amundi under the Contribution Agreement were issued pursuant to the terms of the Certificate of Designations, Powers, Preferences and Rights of Series A Non-Voting Convertible Preferred Stock of the Company. Holders of Preferred Stock do not have any voting rights, except as required by applicable law. The Preferred Stock is economically equivalent to Common Stock (including with respect to dividends), except that, upon liquidation of the Company (but not a consolidation, merger or reorganization), holders of the Preferred Stock would be entitled to a liquidation preference equal to $0.01 per share, plus the amount of any declared but unpaid dividends thereon as of the applicable date.

The shares of Preferred Stock are not convertible to shares of Common Stock at the option of the holder. Upon specified transfers of the Preferred Stock to third parties, the shares of Preferred Stock will automatically convert into shares of Common Stock in the hands of the transferee on an equivalent basis. Conversion will only occur in the event of a transfer of shares to an entity that is not an affiliate of Amundi in certain specified transfer scenarios.

Quarterly Cash Dividends

On May 8, 2025, the Company’s Board of Directors approved a regular quarterly cash dividend of $0.49 per share. The dividend is payable on June 25, 2025, to shareholders of record on June 10, 2025.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “Victory,” or in the first-person notations of “we,” “us,” and “our” shall mean Victory Capital Holdings, Inc., a Delaware corporation, and its wholly-owned subsidiaries.

Objective

The objective of this section of the Quarterly Report on Form 10-Q is intended to provide a discussion and analysis, from management’s perspective, of the key performance indicators and material information necessary to assess our financial condition and results of operations for the three months ended March 31, 2025 and 2024 and cash flows for the three months ended March 31, 2025 and 2024. In addition, we also discuss the Company’s contractual and off-balance sheet arrangements. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2024. This discussion and analysis contains forward-looking statements and should also be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” included in the Annual Report on Form 10-K for the year ended December 31, 2024.

Overview

Our Business – Victory is a diversified global asset management firm with total client assets of $171.4 billion, assets under management of $167.5 billion and other assets of $4.0 billion as of March 31, 2025. The Company operates a next-generation business model combining boutique investment qualities with the benefits of an integrated, centralized operating and distribution platform.

The Company provides specialized investment strategies to institutions, intermediaries, retirement platforms and individual investors with 11 autonomous Investment Franchises and a Solutions Platform. Victory Capital offers a wide array of investment products, including actively and passively managed mutual funds, rules-based and active exchange traded funds (“ETFs”), institutional separate accounts, variable insurance products (“VIPs”), alternative investments, private closed end funds, and a 529 Education Savings Plan. Victory Capital’s strategies are also offered through third-party investment products, including mutual funds, third-party ETF model strategies, retail separately managed accounts (“SMAs”) and unified managed accounts (“UMAs”) through wrap account programs, Collective Investment Trusts (“CITs”), and undertakings for the collective investment in transferable securities (“UCITs”). As of March 31, 2025, our Franchises and our Solutions Platform collectively managed a diversified set of 125 investment strategies for a wide range of institutional and retail clients and direct investors.

Franchises – Our Franchises are largely operationally integrated but are separately branded and make investment decisions independently from one another within guidelines established by their respective investment mandates. Our largely integrated model creates a supportive environment in which our investment professionals, largely unencumbered by administrative and operational responsibilities, can focus on their pursuit of investment excellence. VCM employs all of our U.S. investment professionals across our Franchises, which are not separate legal entities.

Solutions – Our Solutions Platform consists of multi‑asset, multi-manager, quantitative, rules-based, factor-based, and customized portfolios. These strategies are designed to achieve specific return characteristics, with products that include values-based and thematic outcomes and exposures. We offer our Solutions Platform through a variety of vehicles, including separate accounts, mutual funds, UMA accounts, and rules-based and active ETFs under our VictoryShares ETF brand. Like our Franchises, our Solutions Platform is operationally integrated and supported by our centralized distribution, marketing, and operational support functions.

Professionals within our institutional and retail distribution channels, direct investor business and marketing organization sell our products through our centralized distribution model. Our institutional sales team focuses on cultivating relationships with institutional consultants, who account for the majority of the institutional market, as well as asset allocators seeking sub-advisers. Our retail sales team offers intermediary and retirement platform clients, including broker-dealers, retirement platforms and RIA networks, mutual funds and ETFs as well as SMAs through wrap fee programs and access to our investment models through UMAs. Our direct investor business serves the investment needs of individual clients.

We have grown our total client assets from $17.9 billion following the management-led buyout with Crestview GP in August 2013 to $171.4 billion at March 31, 2025. We attribute this growth to our success in sourcing acquisitions and evolving them into organic growers, generating strong investment returns, and developing institutional, retail, and direct investor channels with deep penetration.

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Business Highlights

Assets under management:

•

AUM at March 31, 2025 decreased by $4.5 billion, or 2.6%, to $167.5 billion from $171.9 billion at December 31, 2024, driven by negative market action of $3.2 billion net outflows of $1.2 billion. Total gross flows for the first quarter were $9.5 billion, including long-term gross flows of $9.3 billion.

•

AUM at March 31, 2025 and 2024 was $167.5 billion and $170.3 billion, respectively. We experienced $3.2 billion in negative market action for the three months ended March 31, 2025 compared to $10.2 billion in market appreciation for the same period in 2024. We generated $9.5 billion in gross sales, including $9.3 billion in long-term gross sales, and $1.2 billion in total net outflows for the three months ended March 31, 2025 compared to $7.2 billion in gross sales, including $7.0 billion in long-term gross sales, and $1.1 billion in total net outflows for the same period in 2024.

Investment performance:

•

45 of our Victory Capital mutual funds and ETFs had overall Morningstar ratings of four or five stars and 67% of our fund and ETF AUM were rated four or five stars overall by Morningstar. 47% of our strategies by AUM had investment returns in excess of their respective benchmarks over a one-year period, 64% over a three-year period, 65% over a five-year period and 79% over a ten-year period. On an equal-weighted basis, 48% of our strategies have outperformed their benchmarks over a one-year period, 63% over a three-year period, 59% over a five-year period and 64% over a ten-year period.

Financial highlights:

•

Total revenue for the three months ended March 31, 2025 was $219.6 million compared to $215.9 million for the same period in 2024.

•

Net income was $62.0 million for the three months ended March 31, 2025 compared to $55.7 million for the same period in 2024.

•

Adjusted EBITDA was $116.4 million for the three months ended March 31, 2025, or 53.0% of revenue, compared to $112.4 million, or 52.1% of revenue, for the same period in 2024. Refer to “Supplemental Non-GAAP Financial Information” for further information about the Adjusted EBITDA calculation and reconciliation of generally accepted accounting principles (“GAAP”) net income to Adjusted EBITDA.

•

Adjusted Net Income with tax benefit was $88.1 million for the three months ended March 31, 2025 compared to $82.3 million for the three months ended March 31, 2024. Refer to “Supplemental Non-GAAP Financial Information” for further information about the Adjusted Net Income calculation and reconciliation of GAAP net income to Adjusted Net Income.

Key Performance Indicators

The following table is a summary of key performance indicators utilized by management to assess results of operations:


	Three Months Ended March 31,
($ in millions, except for basis points and percentages)	2025			2024
AUM at period end	$	167,468		$	170,342
Average AUM		173,789			163,533
Gross flows		9,486			7,187
AUM net short term flows		(44	)		(99	)
AUM net long term flows		(1,205	)		(1,028	)
AUM net flows		(1,249	)		(1,127	)
Total revenue		219.6			215.9
Revenue realization on average AUM	51.2 bps			53.0 bps
Net income		62.0			55.7
Adjusted EBITDA(1)		116.4			112.4
Adjusted EBITDA Margin(2)		53.0	%		52.1	%
Adjusted Net Income(1)		78.0			72.6
Tax benefit of goodwill and acquired intangibles(3)		10.1			9.7

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(1)

Management utilizes Adjusted EBITDA and Adjusted Net Income to measure the operating profitability of the business. These measures eliminate the impact of one‑time acquisition, restructuring and integration costs and demonstrate the ongoing operating earnings metrics of the business. These measures are explained in more detail and reconciled to net income calculated in accordance with GAAP in “Supplemental Non‑GAAP Financial Information.”

(2)

Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenue.

(3)

Represents the tax benefits associated with deductions allowed for intangibles and goodwill generated from prior acquisitions in which we received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangibles with a step-up in tax basis. Due to our acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide us with a significant supplemental economic benefit.

The following table presents a reconciliation of our total client assets(1) as of the dates indicated:


	Three Months Ended March 31,
(in millions)	2025			2024
Beginning AUM	$	171,930		$	161,322
Beginning other assets		4,165			5,289
Beginning total client assets		176,096			166,611

AUM net cash flows		(1,249	)		(1,127	)
Other assets net cash flows		(277	)		(524	)
Total client assets net cash flows		(1,526	)		(1,651	)

AUM market appreciation (depreciation)		(3,172	)		10,178
Other assets market appreciation (depreciation)		78			352
Total client assets market appreciation (depreciation)		(3,094	)		10,529

AUM realizations and distributions		(21	)		—
Acquired & divested assets / Net transfers		(20	)		(31	)

Ending AUM		167,468			170,342
Ending other assets		3,967			5,117
Ending total client assets		171,435			175,459
Average total client assets		177,849			168,865

(1)

Includes low-fee (2 to 4 bps) institutional assets, previously reported in the Solutions asset class within the by asset class table and in Separate Accounts and Other Pooled Vehicles within the by vehicle table. These assets are included as part of Victory’s Regulatory Assets Under Management reported in Form ADV Part 1.

The following table presents a reconciliation of our total AUM(1) as of the dates indicated:


	Three Months Ended March 31,
(in millions)	2025			2024
Beginning AUM	$	171,930		$	161,322
Gross client cash inflows		9,486			7,187
Gross client cash outflows		(10,736	)		(8,314	)
Net client cash flows		(1,249	)		(1,127	)
Market appreciation (depreciation)		(3,172	)		10,178
Realizations and distributions		(21	)		—
Acquired & divested assets / Net transfers		(20	)		(31	)
Ending AUM		167,468			170,342
Average AUM		173,789			163,533

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(1)

Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

The following table presents a reconciliation of our other assets (institutional)(1) as of the dates indicated:


	Three Months Ended March 31,
(in millions)	2025			2024
Beginning other assets (institutional)	$	4,165		$	5,289
Gross client cash inflows		—			—
Gross client cash outflows		(277	)		(524	)
Net client cash flows		(277	)		(524	)
Market appreciation (depreciation)		78			352
Realizations and distributions		—			—
Acquired & divested assets / Net transfers		—			—
Ending other assets (institutional)		3,967			5,117
Average other assets (institutional)		4,060			5,332

(1)

Assets Under Management

Our profitability is largely affected by the level and composition of our AUM (including asset class and distribution channel) and the effective fee rates on our products. The amount and composition of our AUM are, and will continue to be, influenced by a number of factors, including; (i) investment performance, including fluctuations in the financial markets and the quality of our investment decisions; (ii) client flows into and out of our various strategies and investment vehicles; (iii) industry trends toward products or strategies that we either do or do not offer; (iv) our ability to attract and retain high quality investment, distribution, marketing and management personnel; (v) our decision to close strategies or limit growth of assets in a strategy when we believe it is in the best interest of our clients or conversely to re‑open strategies in part or entirely; and (vi) general investor sentiment and confidence. Our goal is to establish and maintain a client base that is diversified by Franchise and Solutions, asset class, distribution channel and vehicle. Due to rounding, AUM numbers presented in the tables below may not add up precisely to the totals provided.

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The following table presents our total AUM by asset class as of the dates indicated:


	As of
	March 31,
(in millions)	2025		2024
Solutions	$	63,378	$	57,833
U.S. Mid Cap Equity		28,964		32,918
Fixed Income		24,157		24,481
Global / Non-U.S. Equity		18,334		18,200
U.S. Small Cap Equity		13,182		16,297
U.S. Large Cap Equity		13,104		13,895
Alternative Investments		2,945		3,465
Total Long-Term Assets	$	164,064	$	167,089
Money Market & Short-Term Assets		3,404		3,253
Total AUM(1)	$	167,468	$	170,342

(1)

Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

The following tables summarize our total AUM asset flows by asset class for the periods indicated:



	U.S. Mid			U.S. Small						U.S. Large			Global /												Money
	Cap			Cap			Fixed			Cap			Non-U.S.						Alternative			Total			Market /
(in millions)	Equity			Equity			Income			Equity			Equity			Solutions			Investments			Long-term			Short-term			Total AUM(1)
For the Three Months Ended March 31, 2025
Beginning AUM	$	30,584		$	14,785		$	24,402		$	14,148		$	19,095		$	62,593		$	2,980		$	168,586		$	3,344		$	171,930
Gross client cash inflows		1,098			445			928			82			2,137			4,363			256			9,309			177			9,486
Gross client cash outflows		(1,733	)		(847	)		(1,545	)		(469	)		(3,251	)		(2,318	)		(351	)		(10,514	)		(222	)		(10,736	)
Net client cash flows		(635	)		(402	)		(617	)		(386	)		(1,114	)		2,045			(96	)		(1,205	)		(44	)		(1,249	)
Market appreciation / (depreciation)		(979	)		(1,194	)		328			(630	)		396			(1,202	)		79			(3,202	)		30			(3,172	)
Realizations and distributions		—			—			—			—			—			—			(21	)		(21	)		—			(21	)
Acquired & divested assets / Net transfers		(6	)		(7	)		44			(27	)		(44	)		(57	)		2			(94	)		75			(20	)
Ending AUM	$	28,964		$	13,182		$	24,157		$	13,104		$	18,334		$	63,378		$	2,945		$	164,064		$	3,404		$	167,468
For the Three Months Ended March 31, 2024
Beginning AUM	$	30,604		$	15,959		$	24,355		$	12,635		$	16,772		$	54,296		$	3,431		$	158,051		$	3,271		$	161,322
Gross client cash inflows		1,371			507			1,298			68			1,090			2,165			452			6,952			236			7,187
Gross client cash outflows		(1,845	)		(925	)		(1,367	)		(332	)		(751	)		(2,410	)		(349	)		(7,980	)		(335	)		(8,314	)
Net client cash flows		(474	)		(418	)		(69	)		(264	)		339			(245	)		103			(1,028	)		(99	)		(1,127	)
Market appreciation / (depreciation)		2,795			801			176			1,555			1,133			3,749			(75	)		10,135			42			10,178
Realizations and distributions		—			—			—			—			—			—			—			—			—			—
Acquired & divested assets / Net transfers		(7	)		(45	)		18			(31	)		(44	)		33			5			(69	)		38			(31	)
Ending AUM	$	32,918		$	16,297		$	24,481		$	13,895		$	18,200		$	57,833		$	3,465		$	167,089		$	3,253		$	170,342

(1)

Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

The following table presents our total AUM by distribution channel as of the dates indicated:


	As of March 31,
	2025					2024
(in millions)	Amount		% of total			Amount		% of total
Retail	$	71,143		43	%	$	66,700		39	%
Direct		57,170		34	%		59,893		35	%
Institutional		39,155		23	%		43,749		26	%
Total AUM(1)(2)	$	167,468		100	%	$	170,342		100	%

(1)

The allocation of AUM by distribution channel involves the use of estimates and the exercise of judgment.

(2)

Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

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The following tables summarize our asset flows by vehicle for the periods indicated:


							Separate
							Accounts and
							Other Pooled
(in millions)	Mutual Funds(1)			ETFs(2)			Vehicles(3)			Total AUM(4)
Three Months Ended March 31, 2025
Beginning AUM	$	113,645		$	7,508		$	50,777		$	171,930
Gross client cash inflows		3,323			3,061			3,102			9,486
Gross client cash outflows		(6,328	)		(251	)		(4,156	)		(10,736	)
Net client cash flows		(3,006	)		2,810			(1,053	)		(1,249	)
Market appreciation (depreciation)		(2,243	)		(50	)		(880	)		(3,172	)
Realizations and distributions		—			—			(21	)		(21	)
Acquired & divested assets / Net transfers		(5	)		(15	)		—			(20	)
Ending AUM	$	108,392		$	10,253		$	48,823		$	167,468
Three Months Ended March 31, 2024
Beginning AUM	$	108,802		$	4,970		$	47,551		$	161,322
Gross client cash inflows		4,303			451			2,434			7,187
Gross client cash outflows		(5,956	)		(449	)		(1,909	)		(8,314	)
Net client cash flows		(1,653	)		2			525			(1,127	)
Market appreciation (depreciation)		6,796			215			3,167			10,178
Realizations and distributions		—			—			—			—
Acquired & divested assets / Net transfers		(48	)		43			(26	)		(31	)
Ending AUM	$	113,897		$	5,229		$	51,217		$	170,342

(1)

Includes institutional and retail share classes, money market and Variable Insurance Products or VIP funds.

(2)

Represents only ETF assets held by third parties. Excludes ETF assets held by other Victory Capital products.

(3)

Includes collective trust funds, wrap program accounts, UMAs, UCITS, private funds and non-U.S. domiciled pooled vehicles.

(4)

Total AUM includes both discretionary assets under management and non-discretionary assets under advisement and excludes other assets.

March 31, 2025 AUM compared to December 31, 2024 AUM. At March 31, 2025, our total AUM was $167.5 billion, a decrease of $4.5 billion, or 2.6%, from $171.9 billion at December 31, 2024, primarily due to negative market action of $3.2 billion and net outflows of $1.2 billion.

Net outflows were driven by our global non-U.S., U.S. mid cap, U.S. small cap, and U.S. large cap equity strategies as well as our fixed income strategies and Alternative investments platform of $1.1 billion, $0.6 billion, $0.4 billion, $0.4 billion, $0.6 billion, and $0.1 billion, respectively, partially offset by net inflows from our Solutions platform of $2.0 billion.

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GAAP Results of Operations

The following table presents our GAAP results of operations for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(in thousands, except per share data)	2025			2024
Revenue
Investment management fees	$	173,301		$	169,785
Fund administration and distribution fees		46,301			46,072
Total revenue		219,602			215,857

Expenses
Personnel compensation and benefits		56,136			59,454
Distribution and other asset-based expenses		35,477			36,263
General and administrative		14,328			14,012
Depreciation and amortization		7,432			7,601
Change in value of consideration payable for acquisition of business		3,406			12,200
Acquisition-related costs		8,750			1,026
Restructuring and integration costs		1,165			492
Total operating expenses		126,694			131,048

Income from operations		92,908			84,809

Other income (expense)
Interest income and other income		704			3,565
Interest expense and other financing costs		(13,211	)		(16,486	)
Total other expense, net		(12,507	)		(12,921	)

Income before income taxes		80,401			71,888

Income tax expense		(18,426	)		(16,197	)

Net income	$	61,975		$	55,691

Earnings per share of common stock
Basic	$	0.97		$	0.86
Diluted	$	0.96		$	0.84

Weighted average number of shares outstanding
Basic		63,711			64,389
Diluted		64,714			65,972

Dividends declared per share of common stock	$	0.47		$	0.335

Investment Management Fees

Three months ended March 31, 2025 compared to March 31, 2024. Investment management fees increased by $3.5 million, or 2.1%, to $173.3 million for the three months ended March 31, 2025 from $169.8 million for the same period in 2024 due to an increase in average AUM year over year. Average AUM was $173.8 billion for the three months ended March 31, 2025 compared to $163.5 billion for the same period in 2024.

Fund Administration and Distribution Fees

Three months ended March 31, 2025 compared to March 31, 2024. Fund administration and distribution fees increased by $0.2 million, or 0.5%, to $46.3 million for the three months ended March 31, 2025 from $46.1 million for the same period in 2024 mostly due to an increase in fund administration fees partially offset by a decrease in transfer agent fees.

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Personnel Compensation and Benefits

The following table presents the components of GAAP personnel compensation and benefits expense for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024
Salaries, payroll related taxes and employee benefits	$	21,745	$	24,476
Incentive compensation		23,667		23,943
Sales-based compensation(1)		7,220		6,079
Equity awards granted to employees and directors(2)		3,504		3,969
Acquisition and transaction-related compensation		—		987
Total personnel compensation and benefits expense	$	56,136	$	59,454

(1)

Represents sales-based commissions paid to our distribution teams. Sales-based compensation varies based on gross and net client cash flows and revenue earned on sales.

(2)

Equity awards typically vest over several years based on service and the achievement of specific business and financial targets. The value of the equity awards is recognized as compensation expense over the vesting period.

Three months ended March 31, 2025 compared to March 31, 2024. Personnel compensation and benefits were $56.1 million for the first quarter of 2025, a decrease of $3.4 million, or 5.6%, from $59.5 million for the same period in 2024. Salaries, payroll related taxes and employee benefits decreased $2.7 million primarily due lower unrealized gains relating to our deferred compensation plans. Acquisition and transaction-related compensation decreased $1.0 million due to lower contingent payment compensation expense.

Distribution and Other Asset‑Based Expenses

The following table presents the components of distribution and other asset-based expenses for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024
Broker-dealer distribution fees	$	4,800	$	5,042
Platform distribution fees		21,611		22,128
Sub-administration		4,390		4,101
Sub-advisory		1,872		2,336
Middle-office		2,804		2,656
Total distribution and other asset-based expenses	$	35,477	$	36,263

Three months ended March 31, 2025 compared to March 31, 2024. Distribution and other asset-based expenses were $35.5 million for the three months ended March 31, 2025, compared to $36.3 million for the same period in 2024. The decrease of $0.8 million, or 2.2% was primarily due to lower platform distribution and sub-advisory fees over the comparable period.

General and Administrative

Three months ended March 31, 2025 compared to March 31, 2024. General and administrative expenses were $14.3 million for the three months ended March 31, 2025 compared to $14.0 million for the same period in 2024. The increase of $0.3 million, or 2.3%, was primarily due to increases in technology related expenses.

Depreciation and Amortization

Three months ended March 31, 2025 compared to March 31, 2024. Depreciation and amortization decreased $0.2 million, or 2.2%, to $7.4 million for the three months ended March 31, 2025 from $7.6 million for the same period in 2024, primarily due to a decrease in depreciation expense related to information technology equipment.

Change in Value of Consideration Payable for Acquisition of Business

Three months ended March 31, 2025 compared to March 31, 2024. The change in value of consideration payable for acquisition of business decreased $8.8 million as a result of an increase of $3.4 million in the fair value of contingent

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consideration associated with the WestEnd Acquisition for the three months ended March 31, 2025 compared to an increase of $12.2 million for the three months ended March 31, 2024. Refer to Note 4, Acquisitions, for further details on the fair value of contingent consideration payable.

Acquisition‑Related Costs

Three months ended March 31, 2025 compared to March 31, 2024. Acquisition-related costs were $8.8 million for the three months ended March 31, 2025, compared to $1.0 million for the same period in 2024. The increase of $7.7 million was primarily due to legal, professional, and proxy solicitation related to the Amundi US acquisition.

Restructuring and Integration Costs

Three months ended March 31, 2025 compared to March 31, 2024. Restructuring and integration costs for the three months ended March 31, 2025 and 2024 were $1.2 million and $0.5 million, respectively. Restructuring and integration costs for the three months ended March 31, 2025 and 2024 were primarily due to personnel restructuring.

Interest Income and Other Income (Expense)

Three months ended March 31, 2025 compared to March 31, 2024. Interest income and other income/(expense) was income of $0.7 million and $3.6 million for the three months ended March 31, 2025 and 2024, respectively. The decrease is primarily due to a decrease in the net unrealized fair value of deferred compensation plan investments over the comparable period.

Interest Expense and Other Financing Costs

Three months ended March 31, 2025 compared to March 31, 2024. Interest expense and other financing costs decreased $3.3 million to $13.2 million for the three months ended March 31, 2025, compared to $16.5 million for the same period in 2024 as a result of a lower debt principal balance and lower average interest rate over the comparable period.

Income Tax Expense

Three months ended March 31, 2025 compared to March 31, 2024. The effective tax rate for the three months ended March 31, 2025 and 2024 was 22.9% and 22.5%, respectively. The higher effective tax rate in 2025 is mainly due to lower excess tax benefits on share-based compensation when compared to the comparable period.

Supplemental Non‑GAAP Financial Information

We use non-GAAP performance measures to evaluate the underlying operations of our business. Due to our acquisitive nature, there are a number of acquisition and restructuring related expenses included in GAAP measures that we believe distort the economic value of our organization and we believe that many investors use this information when assessing the financial performance of companies in the investment management industry. We have included these non-GAAP measures to provide investors with the same financial metrics used by management to assess the operating performance of our Company. The non-GAAP measures we report are Adjusted EBITDA and Adjusted Net Income.

The following table sets forth a reconciliation from GAAP financial measures to non-GAAP measures for the periods indicated:


	Three Months Ended March 31,
(in thousands)	2025			2024
Reconciliation of non-GAAP financial measures:
Net income (GAAP)	$	61,975		$	55,691
Income tax expense		(18,426	)		(16,197	)
Income before income taxes	$	80,401		$	71,888
Interest expense(1)		12,521			15,711
Depreciation(2)		2,168			2,269
Other business taxes(3)		922			369
Amortization of acquisition-related intangible assets(4)		5,264			5,332
Stock-based compensation(5)		1,053			1,327
Acquisition, restructuring and exit costs(6)		13,321			14,705
Debt issuance costs(7)		749			755
Adjusted EBITDA	$	116,399		$	112,356

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	Three Months Ended March 31,
(in thousands)	2025			2024
Reconciliation of non-GAAP financial measures:
Net income (GAAP)	$	61,975		$	55,691
Adjustments to reflect the operating performance of the Company:
i. Other business taxes(3)		922			369
ii. Amortization of acquisition-related intangible assets(4)		5,264			5,332
iii. Stock-based compensation(5)		1,053			1,327
iv. Acquisition, restructuring and exit costs(6)		13,321			14,705
v. Debt issuance costs(7)		749			755
Tax effect of above adjustments(8)		(5,327	)		(5,621	)
Adjusted Net Income	$	77,957		$	72,558
Tax benefit of goodwill and acquired intangibles(9)	$	10,141		$	9,748

Adjustments made to GAAP Net Income to calculate Adjusted EBITDA and Adjusted Net Income, as applicable, are:

(1)

Adding back interest paid on debt and other financing costs, net of interest income.

(2)

Adding back depreciation on property and equipment.

(3)

Adding back other business taxes.

(4)

Adding back amortization expense on acquisition‑related intangible assets.

(5)

Adding back share-based compensation associated with equity awards issued from pools created in connection with the management‑led buyout and various acquisitions and as a result of equity grants related to the IPO.

(6)

Adding back direct incremental costs of acquisitions, including restructuring costs.


	Three Months Ended March 31,
(in thousands)	2025		2024
Acquisition-related costs	$	8,750	$	1,026
Restructuring and integration costs		1,165		492
Change in value of consideration payable for acquisition of business		3,406		12,200
Personnel compensation and benefits		—		987
Total acquisition, restructuring and exit costs	$	13,321	$	14,705

(7)

Adding back debt issuance costs.

(8)

Subtracting an estimate of income tax expense applied to the sum of the adjustments above.

(9)

Represents the tax benefits associated with deductions allowed for intangible assets and goodwill generated from prior acquisitions in which we received a step-up in basis for tax purposes. Acquired intangible assets and goodwill may be amortized for tax purposes, generally over a 15-year period. The tax benefit from amortization on these assets is included to show the full economic benefit of deductions for all acquired intangible assets with a step-up in tax basis. Due to our acquisitive nature, tax deductions allowed on acquired intangible assets and goodwill provide us with a significant supplemental economic benefit.

Non-GAAP measures should be considered in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Our non-GAAP measures may differ from similar measures at other companies, even if similar terms are used to identify these measures.

Liquidity and Capital Resources

Our primary uses of cash relate to repayment of our debt obligations, funding of acquisitions and working capital needs, repurchasing of shares and payment of dividends, which are all expected to be met through cash generated from our operations and available capital resources.

The following table shows our liquidity position as of March 31, 2025 and December 31, 2024.


	March 31,			December 31,
(in thousands)	2025			2024
Cash and cash equivalents	$	175,607		$	126,731
Accounts and other receivables		95,823			100,667
Undrawn commitment on credit facility(1)		100,000			100,000
Accounts and other payables		(113,425	)		(109,599	)

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(1)

The balance at March 31, 2025 represents the Company’s $99.9 million revolving credit facility and a $0.1 million standby letter of credit used as collateral for THB’s real estate location.

We manage our cash balances in order to fund our day-to-day operations. Our accounts receivable consists primarily of investment management fees that have been earned but not yet received from clients, income and other taxes receivable, and amounts receivable from the funds. We perform a review of our receivables on a monthly basis to assess collectability. We maintained a $100.0 million revolving credit facility at March 31, 2025 and December 31, 2024 (under the 2019 Credit Agreement) which had approximately $100.0 million undrawn as of March 31, 2025 and December 31, 2024.

2021 Debt Repricing

On February 18, 2021, the Company entered into the Second Amendment (the “Second Amendment”) to the 2019 Credit Agreement with the other loan parties thereto, Barclays Bank PLC, as administrative agent, and the Royal Bank of Canada as fronting bank. Pursuant to the Second Amendment, the Company repriced the existing term loans with replacement term loans in an aggregate principal amount of $755.7 million (the “Repriced Term Loans”). The Repriced Term Loans have substantially the same terms as the previously existing term loans, including the same maturity date of July 2026, except that the Repriced Term Loans provided for a reduced applicable margin on LIBOR of 25 basis points. After the Second Amendment, the applicable margin on LIBOR under the Repriced Term Loans was 2.25%.

2021 Incremental Term Loans

On December 31, 2021, the Company entered into the Third Amendment (the “Third Amendment”) to the 2019 Credit Agreement with the guarantors party thereto, Barclays Bank PLC, as administrative agent, and the lenders party thereto from time to time. Pursuant to the Third Amendment, the Company obtained incremental term loans (the “2021 Incremental Term Loans”) in an aggregate principal amount of $505.0 million and used the proceeds to fund the WestEnd Acquisition and to pay fees and expenses incurred in connection therewith. The 2021 Incremental Term Loans mature in December 2028 and bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves and subject to a 50 basis point floor) plus a margin of 2.25% or an alternate base rate plus a margin of 1.25%.

2022 LIBOR to Term SOFR Rate Transition

On September 23, 2022, the Company entered into the Fourth Amendment (the “Fourth Amendment”) to the 2019 Credit Agreement to change the interest rate on the Repriced Term Loans and 2021 Incremental Term Loans from LIBOR to a rate based on SOFR plus a ten-basis point credit spread adjustment. There was no change to the applicable margin on the referenced rate as a result of the Fourth Amendment.

The LIBOR rate loans outstanding as of the Fourth Amendment’s effective date continued as LIBOR rate loans until the end of their then current interest periods. The 2021 Incremental Term Loans converted into Term SOFR loans on September 30, 2022, while the Repriced Term Loans converted into Term SOFR loans on October 6, 2022. Also on October 6, 2022, the interest periods for the Repriced Term Loans and 2021 Incremental Term Loans were aligned and the three-month Term SOFR rate was elected for all the Company’s term loans.

Fifth Amendment

On June 7, 2024, the Company entered into the Fifth Amendment (the "Fifth Amendment") to the 2019 Credit Agreement, extending the maturity date of the $100.0 million senior secured first lien revolving facility from July 1, 2024 to March 31, 2026, and decreasing the drawn interest rate margin by 0.50% per annum. The revolving facility otherwise remains subject to substantially the same terms as those set forth in the 2019 Credit Agreement. The Company incurred $1.0 million in upfront fees, arranger fees and other third party costs related to the Fifth Amendment to the 2019 Credit Agreement, which were recorded to revolving credit facility debt issuance cost in other assets.

On July 1, 2024, the Company executed an agency succession agreement, by and among Barclays Bank PLC as the resigning administrative agent and collateral agent under the 2019 Credit Agreement and Royal Bank of Canada, as the successor administrative agent and collateral agent.

2020 Swap Transaction

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For the three months ended March 31, 2025 and 2024, the Company recorded $4.1 million and $4.2 million, respectively, in amortization of deferred gain on Swap monetization. As of March 31, 2025 and December 31, 2024, the unamortized deferred gain on Swap monetization was $20.8 million and $24.9 million, respectively, before tax.

The Swap was designated as a cash flow hedge. Prior to its termination, the Swap was measured at fair value with mark-to-market gains or losses deferred and included in AOCI(L), net of tax, to the extent the hedge was determined to be effective. Gains or losses were reclassified to interest expenses and other financing costs on the unaudited Condensed Consolidated Statements of Operations in the same period during which the hedged transaction affected earnings.

Due to the termination of the Swap, there was no amount receivable from the Swap counterparty at March 31, 2025 and December 31, 2024. Refer to Note 14, Derivatives, for further information on the Swap.

Contingent Consideration

At March 31, 2025, the Company had $143.3 million in contingent consideration that is estimated to be payable over the next year and two years resulting from the WestEnd Acquisition. For the three months ended March 31, 2025, the Company recorded an increase of $3.4 million in the contingent payment liability associated with the WestEnd Acquisition, which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets. At March 31, 2025, the estimated fair value of the WestEnd Acquisition contingent payments was $143.3 million, and a maximum of $240.0 million in contingent consideration ($80.0 million per year) is potentially payable to sellers.

There were no other significant changes to our contractual obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2024.

Capital Requirements

Victory Capital Services is a registered broker-dealer subject to the Uniform Net Capital requirements under the Exchange Act, which requires maintenance of certain minimum net capital levels. In addition, we have certain non-U.S. subsidiaries that have minimum capital requirements. As a result, such subsidiaries of our Company may be restricted in their ability to transfer cash to their parents.

Cash Flows

The following table is derived from our unaudited Condensed Consolidated Statements of Cash Flows:


	Three Months Ended March 31,
(in thousands)	2025			2024
Net cash provided by operating activities	$	81,094		$	68,684
Net cash used in investing activities		(1,684	)		(910	)
Net cash used in financing activities		(30,713	)		(111,342	)

Operating Activities – Cash provided by operating activities during the three months ended March 31, 2025 was $81.1 million, compared to $68.7 million of cash provided by operating activities for the same period in 2024. The $12.4 million increase in cash provided by operating activities was primarily due to increases of $6.3 million and $12.6 million in net income and working capital items, respectively, partially offset by a decrease of $8.8 million in the change in the fair value of contingent consideration.

Investing Activities – Cash used in investing activities during the three months ended March 31, 2025 was $1.7 million and consisted of net trading activity of $0.1 million and $1.6 million of property and equipment purchases. The nature of our trading activities is further described in Note 2, Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Financing Activities – Cash used in financing activities during the three months ended March 31, 2025 was $30.7 million, compared to $111.3 million of cash used in financing activities for the same period in 2024. The $80.6 million decrease was primarily due to timing of payment relating to WestEnd contingent consideration.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

Substantially all of our revenues are derived from investment management, fund administration and distribution fees, which are primarily based on the market value of our AUM. Accordingly, our revenues and net income may decline as a result of our AUM decreasing due to depreciation of our investment portfolios. In addition, such depreciation could cause our clients to withdraw their assets in favor of other investment alternatives that they perceive to offer higher returns or lower risk, which could cause our revenues and net income to decline further.

The value of our AUM was approximately $167 billion at March 31 2025. A 10% increase or decrease in the value of our AUM, if proportionately distributed over all of our strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $85.2 million at our weighted-average fee rate of 51 basis points for the quarter ended March 31, 2025. Because of declining fee rates from larger relationships and differences in our fee rates across investment strategies, a change in the composition of our AUM, in particular, an increase in the proportion of our total AUM attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted-average fee rate. The same 10% increase or decrease in the value of our total AUM, if attributed entirely to a proportionate increase or decrease in the AUM of the Victory Funds, to which we provide a range of services in addition to those provided to institutional separate accounts, would cause an annualized increase or decrease in our revenues of approximately $98.5 million at the Victory Funds’ aggregate weighted-average fee rate of 59 basis points for the quarter ended March 31, 2025. If the same 10% increase or decrease in the value of our total AUM was attributable entirely to a proportionate increase or decrease in the assets of our institutional separate accounts, it would cause an annualized increase or decrease in our revenues of approximately $65.1 million at the weighted-average fee rate across all of our institutional separate accounts of 39 basis points for the quarter ended March 31, 2025.

As is customary in the investment management industry, clients invest in particular strategies to gain exposure to certain asset classes, which exposes their investment to the benefits and risks of those asset classes. We believe our clients invest in each of our strategies in order to gain exposure to the portfolio securities of the respective strategies and may implement their own risk management program or procedures. We have not adopted a corporate‑level risk management policy regarding client assets, nor have we attempted to hedge at the corporate level or within individual strategies the market risks that would affect the value of our overall AUM and related revenues. Some of these risks, such as sector and currency risks, are inherent in certain strategies, and clients may invest in particular strategies to gain exposure to particular risks. While negative returns in our strategies and net client cash outflows do not directly reduce the assets on our balance sheet (because the assets we manage are owned by our clients, not us), any reduction in the value of our AUM would result in a reduction in our revenues.

Exchange Rate Risk

A portion of the accounts that we advise hold investments that are denominated in currencies other than the U.S. dollar. To the extent our AUM are denominated in currencies other than the U.S. dollar, the value of that AUM will decrease with an increase in the value of the U.S. dollar or increase with a decrease in the value of the U.S. dollar. Each investment team monitors its own exposure to exchange rate risk and makes decisions on how to manage that risk in the portfolios they manage. We believe many of our clients invest in those strategies in order to gain exposure to non‑U.S. currencies, or may implement their own hedging programs. As a result, we generally do not hedge an investment portfolio’s exposure to non‑U.S. currency.

We have not adopted a corporate-level risk management policy to manage this exchange rate risk. Assuming 11% of our AUM are invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangement, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our AUM by approximately $1.8 billion, which would cause an annualized increase or decrease in revenues of approximately $9.4 million at our weighted-average fee rate for the business of 51 basis points for the quarter ended March 31, 2025.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. On March 27, 2020, the Company executed the Swap, a floating-to-fixed interest rate swap transaction, to effectively fix the interest rate at 3.465% on $450 million of its outstanding Term Loan through the Term Loan maturity date of July 2026. On February 18, 2021, pursuant to the Second Amendment, the Company lowered the spread on the Term Loan by 0.25% resulting in a new fixed rate of 3.215% on the $450 million of Term Loan subject to the Swap. On September 26, 2022, the Company and the Swap counterparty executed an amendment to the Swap to update LIBOR conventions to SOFR conventions and to modify the fixed rate for the change from three-month LIBOR to three-month Term

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SOFR effective on October 6, 2022. On October 30, 2023, the Company monetized the gain on the Swap and entered into an agreement to terminate the Swap, which was effective on October 30, 2023. Refer to Note 14, Derivatives, for further information on the Swap. At March 31, 2025, we were exposed to interest rate risk as a result of the amounts outstanding under the 2019 Credit Agreement, as amended. Refer to Note 9, Debt, for a description of the amounts outstanding as of such date and the applicable interest rate.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) at March 31, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Stockholder Litigation

Terms used and not otherwise defined in this section are defined in the Form 8-K filed by VCH on September 30, 2024.

On September 19, 2024, two complaints were filed in the Supreme Court of the State of New York, New York County by purported Victory Capital Holdings Inc. (“VCH”), stockholders (“Stockholder Litigation”) against VCH and the members of the VCH board of directors in connection with the Contribution Agreement.

The complaints in the Stockholder Litigation include allegations that, among other things, the defendants caused to be filed a materially incomplete and misleading Proxy Statement with the SEC relating to the proposed Contribution and assert claims for alleged negligent misrepresentation and concealment and negligence under New York common law.

Additionally, since the filing of the Preliminary Proxy Statement, VCH received five demand letters from purported VCH stockholders alleging similar insufficiencies in the disclosures in the Preliminary Proxy Statement and/or the Proxy Statement (such letters, the “Demand Letters,” and together with the Stockholder Litigation, (the “Litigation Matters”). VCH believes that the allegations contained in the Litigation Matters are without merit, that the disclosures in the Proxy Statement complied with applicable laws, and that no further disclosures were required to supplement the Proxy Statement under applicable laws. However, to avoid the risk of the Litigation Matters delaying or adversely affecting the Contribution and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, VCH voluntarily made supplemental disclosures to the Proxy Statement. VCH specifically denies all allegations in the Litigation Matters and that any additional disclosure was or is required. On April 4, 2025, the plaintiffs in the Stockholder Litigation filed notices of voluntary discontinuance in each action.

From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC and the information contained in this report. The declaration, payment and determination of the amount of our quarterly dividends may change at any time. In making decisions regarding our quarterly dividends, we consider general economic and business conditions, our strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual restrictions (including under the terms of our 2019 Credit Agreement as amended) and legal, tax, regulatory and such other factors as we may deem relevant. There have been no material changes to the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

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							Approximate Dollar Value
	Total Number of				Total Number of Shares of		That May Yet Be Purchased
	Shares of		Average Price		Stock Purchased as Part of		Under Outstanding
	Common Stock		Paid Per Share		Publicly Announced		Plans or Programs
Period	Purchased		of Common Stock		Plans or Programs		(in millions)
Jan 1-31, 2025		—	$	—		—	$	200.0
Feb 1-28, 2025		—		—		—		200.0
March 1-31, 2025		—		—		—		200.0
Total		—	$	—		—

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended March 31, 2025, as such terms are defined under Item 408(a) of Regulation S-K.

Item 6. Exhibits

EXHIBIT INDEX



Exhibit No.		Description
31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
101		The following information formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024, (v) Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2025 and 2024; (vi) Notes to Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2025 and 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 9th day of May, 2025.


VICTORY CAPITAL HOLDINGS, INC.


By:	/s/ MICHAEL D. POLICARPO
	Name:	Michael D. Policarpo
	Title:	President, Chief Financial Officer and Chief Administrative Officer