Victory Capital (NASDAQ:VCTR) reported record long-term net inflows of $11.7 billion in the third quarter of 2026, as demand across multiple investment products and distribution channels helped push total client assets to $355.5 billion.
The asset manager said revenue rose 10% from a year earlier to $396.6 million, while adjusted earnings per diluted share increased 21% to $1.98. Chairman and CEO David Brown said the quarter delivered the strongest organic growth in the company’s history, with momentum continuing into the fourth quarter.
Flows and ETF Assets Reach New Highs
Long-term gross flows reached a record $30.5 billion, up 38% from the second quarter and 80% from the year-earlier period, according to Brown. The $11.7 billion in long-term net inflows represented an annualized organic growth rate of 13.8%, President and CFO Michael Policarpo said.
Brown attributed the results in part to investments in distribution, technology, marketing and product development. The company reported positive long-term net flows in its U.S. intermediary, U.S. institutional and international channels, as well as across fixed income, solutions, multi-asset and global equity strategies.
VictoryShares, the company’s exchange-traded fund platform, recorded $3.9 billion in net inflows during the quarter. ETF assets under management ended the period at $27.7 billion, up 61% from a year earlier. Brown said the company’s flagship free cash flow ETF, VFLO, had more than $12 billion in assets under management.
Asked about the outlook for fixed income and solutions flows, Brown said third-quarter momentum had continued into the fourth quarter. He also described the company’s won-but-not-yet-funded pipeline as significant and spread across asset classes, investment franchises and distribution channels, with expected funding in the fourth quarter and potentially the first quarter of 2027.
First Eagle Deal Remains on Track
Victory Capital continues to target closing its pending acquisition of First Eagle Investments by the end of the first quarter of 2027, subject to customary conditions. A special shareholder meeting to approve the share issuance associated with the transaction is scheduled for November 17.
Brown said First Eagle manages approximately $222 billion in assets and would add global value multi-asset capabilities, as well as a collateralized loan obligation and alternative credit platform. He said the company remains on track with its targets of $280 million in net expense synergies and 35% accretion to annualized 2027 adjusted earnings per share.
During the question-and-answer session, Bank of America analyst Craig Siegenthaler asked about potential client attrition or other flow disruptions from combining the firms. Brown said Victory Capital had not seen flow dis-synergies in its Pioneer acquisition and did not expect material issues with First Eagle. Policarpo said the accretion assumptions include a conservative, single-digit level of organic growth for the combined organization but do not include potential revenue synergies from expanding distribution.
Brown said First Eagle’s investment teams would be compensated through a revenue-sharing approach similar to that used for Victory Capital’s other investment franchises.
Margin Holds Above Long-Term Guidance
Adjusted EBITDA rose 11% year over year to $212.1 million, producing a margin of 53.5%. Victory Capital maintained its long-term adjusted EBITDA margin guidance of 50%, a threshold Policarpo said the company has met or exceeded for 14 consecutive quarters.
On a GAAP basis, operating income was $137.7 million and net income was $1.11 per diluted share. Policarpo said results included higher acquisition-related costs, which rose to $17.1 million, primarily because of the First Eagle transaction.
The company’s average fee rate was 44.8 basis points in the quarter. Policarpo said the decline from the second quarter largely reflected the timing of annual fees: More than $50 million was recognized in the second quarter, compared with about $500,000 in the third. He reiterated full-year fee-rate guidance of 46 to 47 basis points and said the rate could rise into the low to mid-50s after the First Eagle acquisition closes.
International Growth and Capital Returns
International clients accounted for $65.8 billion in assets under management at quarter end, up 46% in the 18 months since the Pioneer transaction closed. Brown said most new international assets were coming from the Pioneer franchise, although legacy Victory products were beginning to gain momentum through the company’s partnership with Amundi.
Victory Capital ended the quarter with $208 million in cash, $975 million in debt and a net leverage ratio of 0.9 times adjusted EBITDA. It returned $81 million to shareholders during the quarter, including $39.3 million in share repurchases.
The board declared a quarterly dividend of $0.50 per share, payable December 23 to shareholders of record on December 10. The company plans to release October assets-under-management data on November 11.
About Victory Capital (NASDAQ:VCTR)
Victory Capital Holdings, Inc is a global investment management company headquartered in San Antonio, Texas. The company provides investment solutions to individual investors, financial professionals, institutions, retirement plans and other organizations through a range of investment strategies and distribution channels.
Its products and services include mutual funds, exchange-traded funds, separately managed accounts, model portfolios, collective investment trusts and customized institutional mandates.
