Artisan Partners Q3 Earnings Rise as Equity Outflows Cut AUM

Artisan Partners Asset Management Inc. (NYSE: APAM) reported higher third-quarter revenue and earnings, but assets under management fell sharply as equity withdrawals and negative investment returns outweighed continued inflows into credit and alternative strategies.

Revenue for the quarter ended September 30, 2026, increased 4% year over year and 1% sequentially to $312.5 million. GAAP net income rose to $75.2 million, or $1.04 per share, from $66.8 million, or $0.93 per share, a year earlier. In the second quarter, GAAP net income was $80.9 million, or $1.11 per share.

Adjusted net income was $84.2 million, compared with $82.7 million in the prior-year quarter and $76.5 million in the second quarter. Adjusted earnings were $1.03 per adjusted share, up from $1.02 a year earlier and $0.94 in the preceding quarter.

Equity Outflows Weigh on AUM

Ending assets under management declined to $168.7 billion from $183.4 billion at June 30 and $181.3 billion a year earlier. Average AUM was $180.5 billion, 1% below the second-quarter level but 2% higher year over year.

The firm recorded $10.6 billion of net client outflows during the quarter, driven by $11.6 billion of equity withdrawals. Credit generated $300 million of net inflows, while alternatives attracted $700 million. Investment returns and other changes reduced AUM by another $3.8 billion during the quarter.

For the first nine months of 2026, net outflows totaled $24.2 billion. Equity strategies lost $27.4 billion, while credit and alternative strategies generated inflows of $1.8 billion and $1.4 billion, respectively. Positive investment performance and other changes added $12.8 billion to AUM over the nine-month period.

Credit and alternative assets totaled $26.1 billion at September 30, representing 15% of firmwide AUM, up from a 12% share at the end of 2025. Alternative AUM reached $6.5 billion, including assets added through the January acquisition of Grandview Property Partners, while credit AUM stood at $19.6 billion.

Margins Recover Sequentially

Adjusted operating income increased 2% year over year and 9% sequentially to $110.9 million. The adjusted operating margin was 35.5%, compared with 36.2% a year earlier and 32.9% in the second quarter. GAAP operating income was $109.8 million, producing a 35.1% operating margin.

Adjusted operating expenses rose 5% year over year to $201.6 million but declined 2% from the second quarter. Adjusted compensation and benefits expense was $161.1 million, equal to 51.6% of revenue, versus 53.3% a year earlier and 53.7% in the preceding quarter.

For the first nine months, revenue rose 7% to $923.4 million. Adjusted net income increased 7% to $231.5 million, or $2.84 per adjusted share, while the adjusted operating margin edged down to 33.2% from 33.4%. GAAP net income was $214.1 million, or $2.96 per share.

The weighted average fee was 69 basis points in the third quarter, compared with 68 basis points in both the prior-year and second-quarter periods. The year-to-date weighted average fee remained at 68 basis points.

Long-Term Performance Remains Stronger Than One-Year Results

As of September 30, strategies representing 21% of firmwide AUM had outperformed their benchmarks on an average annual gross basis over one year. That proportion increased to 53% over three years, 78% over five years, 92% over 10 years and 99% since inception.

Credit strategies accounted for 100% benchmark outperformance across all reported periods. Equity performance was weaker over one and three years, with 10% and 45% of equity AUM outperforming, respectively, but the proportion rose to 91% over 10 years and 99% since inception.

Capital Position and Priorities

Artisan Partners ended the quarter with $352.4 million of cash and cash equivalents, up from $214.4 million at the end of 2025. Borrowings were unchanged at $190 million, with a leverage ratio of 0.4 times. Stockholders’ equity was $485.3 million, and seed capital declined to $90.9 million from $151.6 million.

The company declared a quarterly dividend of $0.88 per share. Management’s stated priorities remain investing for sustainable long-term growth, maintaining fee discipline, using a variable-cost model to support margin stability and preserving modest leverage and strong cash generation.

The presentation did not provide quantified forward guidance. Artisan Partners identified adverse markets, weak investment performance, changes in client flows, declines in managed asset values, the loss of key personnel, regulatory changes and operational or technical failures as factors that could materially affect future results.