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DATE

Thursday, May 7, 2026 at 8:00 a.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — David Brown
  • President, Chief Financial and Administrative Officer — Michael Policarpo
  • Outgoing Executive — Matt [last name not provided]
  • Incoming Executive — Carly Thomas

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TAKEAWAYS

  • Total Client Assets -- $313 billion at quarter end, slightly below the previous record.
  • Long-Term Gross Flows -- $18.9 billion, up 11% sequentially from Q4 2025 and 104% year over year.
  • Adjusted EBITDA -- $204 million, the highest in company history, with an adjusted EBITDA margin of 52.6%.
  • Adjusted Earnings per Diluted Share (w/ Tax Benefit) -- $1.82, an increase of 2% sequentially and 34% year over year.
  • Total Revenue -- $388 million, up 4% quarter over quarter and 77% year over year.
  • Record Capital Return to Shareholders -- $185 million distributed through $0.50 per share dividend and repurchase of 2 million shares.
  • ETF Platform Assets under Management -- Over $20 billion, a 7% sequential and 53% year-over-year increase.
  • ETF Net Flows -- $1.3 billion positive, contributing to ongoing organic growth.
  • International Distribution AUM -- $55 billion with presence in 60 countries, 29 of which have over $100 million in Victory products.
  • Investment Performance -- 71% of AUM outperformed benchmarks for the 1-year period; 58 funds and ETFs earned 4- or 5-star Morningstar ratings, covering 68% of rated AUM.
  • Pioneer Acquisition Synergies -- $104 million of $110 million in targeted net expense synergies achieved since closing 12 months ago.
  • Average Fee Rate -- 47.6 basis points for the quarter, at the high end of stated guidance, supported by "annual fees that we record" in Q1 according to Policarpo, with guidance maintained at 46-47 basis points.
  • Net Flows -- Negative $457 million, showing meaningful improvement, with positive net flows in several franchises and channels.
  • Operating Expenses -- $228.8 million, up from $220.9 million in Q4, largely due to seasonal payroll resets and modest acquisition/integration costs.
  • Net Leverage Ratio -- 1.1x, providing management flexibility for capital allocation.
  • Dividend Increase -- Quarterly cash dividend raised to $0.50 per share as approved by the Board, payable June 25, 2026.
  • Balance Sheet Liquidity -- $76 million cash on hand and $100 million undrawn revolving credit facility.
  • Share Repurchases Since Pioneer Acquisition -- 5 million shares repurchased since April 1, 2025, representing about 22% of the shares issued to Amundi.

SUMMARY

Victory Capital Holdings (VCTR +1.20%) reported record adjusted EBITDA, adjusted earnings per diluted share, and long-term gross flows for the quarter, while also distributing $185 million to shareholders via dividends and buybacks. The ETF platform surpassed $20 billion in AUM with an annualized CAGR of 28% since 2017, and net inflows remain positive across several investment franchises and the international distribution channel. Management confirmed substantial completion of Pioneer integration, achieving $104 million of $110 million projected synergies, and maintained its strategic priority on large-scale inorganic growth alongside steady capital return.

  • Pioneer Investments, Trivalent, RS Global, VictoryShares ETFs, and WestEnd Advisors all generated positive net flows, reflecting multichannel strength not previously consolidated in a single quarter.
  • Brown stated, "we have the patience and discipline to wait for the right opportunity and the financial strength to move decisively," underscoring management’s intent to pursue acquisitions as the primary use of capital while remaining opportunistic with repurchases.
  • International channel expansion in Asia and imminent access to Latin American markets for ETFs open new growth avenues, which management describes as "just beginning to get vintage Victory products launched and into the channel."
  • The “won but not yet funded” pipeline remains significant, spanning multiple franchises and channels, potentially supporting future organic growth as mandates are funded in upcoming quarters.
  • Cash interest expense declined to $14 million due to a Q3 2025 refinancing, which lowered the borrowing cost by 35 basis points.
  • The Board's approved dividend increase to $0.50 per share provides an enhanced base for future shareholder distributions without reference to one-time special events.
  • Brown addressed the Janus M&A attempt directly, explaining, "We thought that the Janus opportunity, buying that business would create a phenomenal business coming out the other side," highlighting willingness to consider both large and smaller-scale strategic acquisitions aimed at reaching the company’s $1 trillion AUM goal.

INDUSTRY GLOSSARY

  • UCITS: Undertakings for Collective Investment in Transferable Securities; standardized, regulated investment funds authorized for sale in the European Union and international markets.
  • ETF: Exchange Traded Fund; a pooled investment vehicle trading on stock exchanges, typically offering low fees and intraday liquidity.
  • Morningstar Rating: An industry-standard, risk-adjusted performance rating for mutual funds and ETFs, ranging from 1 to 5 stars.
  • Net Leverage Ratio: Calculated as net debt divided by EBITDA, used to assess financial leverage and risk.
  • “Won but not yet funded” Pipeline: Investment mandates contractually awarded but not yet fully funded or contributing to AUM; serves as an indicator of future asset growth potential.

Full Conference Call Transcript

Carly Thomas: Thanks, Matt, and congratulations. I have big shoes to fill, and I'm grateful for the example you've set over the past 3 years we've worked together. I've learned a great deal from you. And to everyone on the call, on the webcast or reading along, I'm excited to work with you and continue building on the momentum Matt's helped to create. Before I turn the call over to David Brown, I would like to remind you that during today's conference call, we may make several forward-looking statements. Victory Capital's actual results may differ materially from these statements.

Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release, which was issued after the market closed yesterday, disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance.

Reconciliations between these non-GAAP measures and the most comparable GAAP measures are included in tables that can be found in our earnings press release and in the slides accompanying this call, both of which are available on the Investor Relations section of our website at ir.vcm.com. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

David Brown: Thanks, Carly, and Matt, on behalf of the entire Victory Capital team, thank you. Your dedication, your professionalism and the standard you set for how we engage with our shareholders and the investment community has been invaluable. We are deeply grateful, and we wish you all the best in this next chapter. Good morning, all, and welcome to Victory Capital's First Quarter 2026 Earnings Call. I'm joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer; and of course, Matt and Carly. I will start today with an overview of our first quarter results, which I'm pleased to say were exceptional while also highlighting a few specific areas of our business.

After that, I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, we will be available to answer your questions. The quarterly business overview begins on Slide 5. I want to start by saying that Q1 2026 was an exceptional quarter, one that set new records across multiple dimensions of our business. We achieved record long-term gross flows, record adjusted EBITDA and record adjusted earnings per share, all in the same quarter. We also progressed meaningfully in several other strategic areas of our business that are reflected in our quarterly results. The results reflect the strength of the platform and our team's ability to execute.

We ended March with $313 billion in total client assets, slightly below the record quarter end level we achieved at year-end. Long-term gross flows reached $18.9 billion, which was up 11% from Q4 2025. To put that in perspective, this is 104% higher than in the same quarter last year and reflects the continued momentum of our expanded U.S. distribution platform, our growing international distribution channel and the ongoing strength of our VictoryShares ETF platform.

At an annualized run-rate of approximately $76 billion or roughly 24% of long-term AUM, we believe we are generating gross sales at a level that can support positive organic growth over time as we continue to invest and integrate sales and marketing resources from our Pioneer acquisition. Long-term net flows improved meaningfully during the quarter. The trajectory here is encouraging with multiple investment franchises and VictoryShares ETFs generating positive net flows. Additionally, our international distribution channel continues to yield positive flows even as we are just beginning to get vintage Victory products launched and into the channel. From a financial perspective, adjusted EBITDA reached $204 million, and our adjusted EBITDA margin came in at 52.6%.

We are particularly proud of these results because they demonstrate the resilience of our operating model and the exceptional people who run it day in and day out. The consistency of our margin speaks for itself, above 49% every single quarter since 2020 and above 50% in the majority of them. That does not happen by accident. It is the direct result of a purposely designed, highly efficient, scalable platform utilizing technology and smart strategic outsourcing, which affords us the ability to invest in the areas that matter the most for future growth while allowing us to maintain the discipline that defines how we run the business.

Adjusted earnings per diluted share with tax benefit were $1.82, up 2% from Q4 and 34% higher than Q1 of last year. We also continue to return meaningfully capital to shareholders. I will cover this in more detail later, but we repurchased a quarterly record of 2 million shares of VCTR common stock during the quarter and combined with our dividend, returned $185 million to shareholders. As we step back and look at where we are as a company, Q1 2026 reflects the continued payoff of the strategic investments we have made in distribution, technology, product development and people as well as the transformational impact of the Pioneer acquisition and the Amundi distribution partnership. The integration is substantially complete.

We are on track with our synergies and the benefits are evident in our results. Turning to Slide 6. I want to provide an update on our VictoryShares ETF platform, which continues to be one of the most exciting growth engines in our business. ETF AUM ended the quarter at over $20 billion, up 7% quarter-over-quarter and 53% year-over-year. That is a remarkable pace of growth and reflects both the quality of our product lineup and the investments we have made in distribution. Our ETF AUM CAGR since 2017 is 28%, and we see no signs of that momentum slowing. Net flows for the quarter were $1.3 billion, continuing the strong organic growth trajectory.

Our free cash flow ETF series continues to generate consistent inflows and our fixed income ETFs remain in demand across the intermediary channel. We are winning new shelf space and home office recommendations, and our sales team continues to deepen relationships with key platform partners and financial advisers. Lastly, I would also like to remind you that our average ETF fee rate is 35 basis points with margins that meet our firm-wide requirements. Internationally, I'm pleased to report that we have commenced selling our U.S.-listed ETFs across Asia, which represents a new distribution channel for this business. The early reception has been positive.

And as we develop this channel, we think there is a great opportunity to expand our client base to include investors outside the U.S. In addition, we are close to having our ETFs available for sale in certain countries in Latin America, which would represent another new geography for this platform. Looking ahead, we also filed 3 new ETF products with the SEC during the first quarter with additional launches planned throughout 2026. Product development remains active, and we continue to identify opportunities to expand our suite in ways that are aligned with client demand. Slide 7 highlights our international distribution platform, which continues to gain traction.

At quarter end, we had $55 billion of assets under management from clients outside the U.S. across 60 countries with 29 of those countries now having more than $100 million in assets under management in Victory products. Importantly, our international channel was net flow positive again in Q1 '26 and is net flow positive since we closed the Pioneer acquisition. I want to take a moment to provide some context on where we are in the development of this channel because I think it is important to appreciate both the progress we have made and the significant opportunity that lies ahead.

The Amundi sales force is a large and highly capable global distribution engine, and they are quickly learning about Victory Capital and our Investment franchises. Building conviction in a new product set, completing the necessary due diligence and educating platforms, financial advisers, consultants and institutional clients across dozens of markets around the world is a multiyear journey. Everything is going as planned, and the structural foundation is firmly in place, which we are building on. We have a 15-year strategic distribution agreement with Amundi, under which Victory Capital serves as their exclusive provider of U.S. manufactured traditional active investment solutions.

We have a Victory Capital sales team located in major geographies supporting the Amundi sales infrastructure as well as a sales support group here in the U.S. And we now manage 23 UCITS products spanning equities, fixed income and global multi-asset strategies, giving the Amundi sales force a diversified and growing product set to work with. We are planning additional UCITS launches in 2026, including additional strategies from Vintage Victory investment franchises with priorities driven by bottom-up demand signals from Amundi's local distribution teams. The product set is expanding, the sales teams are getting up to speed and the momentum is building. We look forward to reporting on our progress here as this channel continues to grow.

Turning to Slide 9. Investment performance improved during the first quarter and remains excellent across the platform. As of March 31, 2026, 58 mutual funds and ETFs earned 4- or 5-star overall ratings from Morningstar, representing 68% of our rated AUM. This performance reflects broad-based strength across our investment franchises. When we look at performance against benchmarks, the picture is equally compelling. 71% of our AUM outperformed over the 1-year period, 67% over 3 years, 68% over 5 years and an impressive 81% over the 10-year period. On a strategy count basis, 69%, 67%, 70% and 70% of strategies outperformed over those same periods. Investment performance is the foundation of everything we do.

The results we are reporting today reflect the talent and discipline of our investment professionals across all our investment franchises, and we remain deeply committed to delivering excellent investment outcomes for our clients. Slide 10 covers our long-term growth and capital allocation strategy. Since our IPO in 2018, we have returned $1.4 billion to shareholders through a combination of share repurchases and dividends. That is a remarkable figure when you consider that we received just $157 million in net proceeds from the IPO back in February of 2018. During the first quarter, we repurchased 2 million shares of VCTR common stock.

This reflects our conviction in the value of our stock and our commitment to returning capital to shareholders when the opportunity presents itself. Combined with our dividend, we returned $185 million to shareholders in the quarter alone. And over the trailing 12 months, we have returned $512 million of capital to shareholders, more than $6 per share. I also want to highlight that since April 1, 2025, the date we closed the Pioneer acquisition, we have repurchased approximately 5 million shares of VCTR common stock. That represents approximately 22% of the 22.9 million shares we issued to Amundi as consideration for the transaction. That said, I want to be clear about our capital allocation priorities.

Strategic acquisitions remain our best and primary use of capital. Our buyback program is meaningful and ongoing, but is complementary to, not a substitute for our long-term inorganic growth strategy. We evaluate capital deployment on a facts and circumstances basis, and our flexible balance sheet gives us the ability to pursue multiple objectives simultaneously. Turning to Slide 11. I want to spend a few minutes on our acquisition strategy because it remains an important input into how we think about creating long-term value for shareholders. Inorganic growth is a strategic priority, and our pipeline of acquisition opportunities is extensive, and we are very active. The environment for transactions in our sector remains highly favorable.

The structural forces driving consolidation, increasing regulatory complexity, technology requirements, distribution access and scale economics are only becoming more pronounced. That backdrop creates a compelling opportunity for a well-capitalized, proven acquirer like Victory Capital. Our approach has always been and will remain disciplined. We evaluate every opportunity against a clear set of strategic and financial criteria, and we will not compromise those standards. Every acquisition we have made has been strategically grounded, designed to improve our overall platform, enhance our distribution capabilities, diversify our client base or add complementary investment capabilities. The financial benefits are a positive outcome, not the starting point.

Importantly, this remains a highly fragmented industry, and there are a lot of opportunities to better our company via acquisitions. In fact, I would stress we have more opportunities today than we have ever had as we review our pipeline and our current discussions. We have the ability to pursue multiple opportunities at the same time, and that is exactly what we have done over the years and what we are doing today. That said, we have the patience and discipline to wait for the right opportunity and the financial strength to move decisively when one presents itself.

We have a tremendous business today that is positioned very well in the market to deliver for our clients and our shareholders in a very positive way. The exact timing of any given transaction is always difficult to predict, but our track record of consistent superior execution over more than a decade gives me great confidence in our ability to continue delivering transformational growth through M&A as we work our way to our $1 trillion in assets under management goal. With that, I will turn the call over to Mike, who will go through the financial results in more detail. Mike?

Michael Policarpo: Thanks, Dave, and good morning, everyone. The financial results review begins on Slide 13. Total revenue came in at $388 million, up 4% from the fourth quarter and 77% compared to the first quarter of last year. Adjusted EBITDA reached $204 million and adjusted EBITDA margin was 52.6%. Adjusted net income with tax benefit was $153 million or $1.82 per diluted share, up 34% from the same quarter last year. With the Pioneer integration substantially complete and our distribution investments beginning to gain traction, we are starting to see the earnings power of the business.

We returned $185 million to shareholders in the quarter in combination of our quarterly dividend and the repurchase of 2 million shares of VCTR common stock. The Board also approved an increase in our regular quarterly cash dividend to $0.50 per share, payable on June 25 to shareholders of record on June 10. The balance sheet is in excellent shape with a net leverage ratio of 1.1x, which gives us the flexibility to pursue all our capital allocation objectives simultaneously. On Slide 14, we show our total client assets at quarter end. We ended March with $313 billion in total client assets. Our AUM remains well diversified across the U.S. retail, U.S. institutional, U.S. direct and international channels.

One data point I would like to highlight on this slide is the continued growth of our international business. We now have clients in 60 countries and 29 of those countries have more than $100 million in AUM with us. As Dave described, we are still in the early stages of developing this channel and the trajectory is very encouraging. Our long-term flows are shown on Slide 15. Long-term gross flows of $18.9 billion were the highest quarterly gross sales in our history. This marks the fourth consecutive quarter of gross flows at or above $15 billion.

Net flows improved meaningfully during the quarter, coming in at negative $457 million, and we are encouraged by the trend pointing towards sustained positive organic growth as our distribution investments continue to be realized and our momentum broadens. Multiple investment franchises and platforms contributed positive net flows in the quarter, including Pioneer Investments, Trivalent, RS Global, VictoryShares ETFs and WestEnd Advisors. This breadth of positive contributors is exactly what we have been working towards, and it reflects the diversity and quality of our investment platform. And our international channel was also net flow positive in Q1 and since the Pioneer acquisition. Our firm-wide won but not yet funded pipeline remains significant, spanning multiple franchises and distribution channels.

We expect this to provide additional support to our flow results as mandates fund over the coming quarters. Slide 16 provides additional detail on revenue. As I mentioned, our quarterly revenue of $388 million was a record for the company. We saw an increase of $13.9 million quarter-over-quarter. Year-over-year revenue was up 77%, a reflection of the transformational impact of the Pioneer acquisition. Our average fee rate of 47.6 basis points was at the high end of our guidance range, and we continue to expect the fee rate to remain in the 46 to 47 basis point range going forward, reflecting the current mix of our diversified business.

The stability of our fee rate through significant changes in our AUM composition, including the Pioneer acquisition, the growth in our ETF platform and various product launches speaks to the quality and balance of our product, client and vehicle mix. Turning to expenses on Slide 17. Total operating expenses were $228.8 million in the first quarter, up from $220.9 million in Q4. The sequential increase was primarily driven by 2 factors: first, the seasonal reset of annual payroll taxes and employee benefits that occurs every first quarter; and second, a modest increase in acquisition, restructuring and integration costs. Cash compensation as a percentage of revenue was 24% in the quarter, reflecting the seasonal payroll dynamics I mentioned.

On a normalized basis, we continue to expect cash compensation to run in the low to mid-20s as a percentage of revenue. On synergies, we have now achieved approximately $104 million of the expected $110 million in total net expense synergies from the Pioneer acquisition, which closed just 12 months ago. The integration is substantially complete, and we are well positioned to capture the remaining synergies over the course of 2026. I want to take a step back and explain what this net synergy achievement represents. We acquired a business that significantly increased the size and scale of our company and will be fully integrated in less than 2 years.

And we are exceeding many of our financial objectives while also globalizing our business through the international distribution channel, which has been net flow positive since the close of the acquisition. Moreover, the Pioneer Investments franchise has been net flow positive since we closed the acquisition, and we have launched new products for the franchise, specifically the first ETF managed from the platform. Lastly, we are simultaneously investing in the future growth of the entire business by adding significant resources to our sales and marketing functions across every distribution channel. Turning to our non-GAAP metrics on Slide 18. Adjusted EBITDA of $204 million and an adjusted EBITDA margin of 52.6% represents the continued strength and consistency of our platform.

As noted, 19 of the last 23 quarters have delivered margins above 50% and all have been above 49%. This consistency through different market cycles, multiple acquisitions and while making significant investments in our platform is what distinguishes our business model from many others in our industry. Adjusted net income with tax benefit of $153.2 million or $1.82 per diluted share was up 2% from Q4 and 34% from Q1 of last year. Finally, turning to Slide 19. Our balance sheet and capital management position remains strong and provide us with significant strategic flexibility. At March 31, 2026, we had $76 million of cash, $980 million of debt and a net leverage ratio of 1.1x.

Our $100 million revolving credit facility remains undrawn. Cash interest expense declined again in the quarter to $14 million, reflecting the benefit of the refinancing we completed in Q3 2025 that lowered our borrowing cost by 35 basis points through reducing our interest rate. On capital return, as Dave highlighted, we repurchased 2 million shares during Q1 and combined with dividends, returned $185 million to shareholders. Over the trailing 12 months, we have returned $512 million to shareholders, more than $6 per diluted share. We believe this context is important and reflects our commitment to creating shareholder value through disciplined capital allocation. Looking ahead, our capital allocation philosophy is grounded in flexibility and discipline.

We evaluate our capital deployment on an ongoing basis, informed by the facts and circumstances at any given time. Our primary objective remains the execution of accretive strategic acquisitions that make our business better. Our buyback program is active and meaningful, and our dividend provides a consistent return to shareholders. The strength of our free cash flow generation and our healthy balance sheet gives us the ability to pursue all these objectives simultaneously. With that, I will turn the call back to the operator for questions.

Operator: [Operator Instructions] Your first question comes from the line of Michael Cho with JPMorgan.

Y. Cho: I just wanted to touch on one of the areas you highlighted during your prepared remarks on ETFs. And so it's clearly seen extremely strong growth over the years and you continue to launch. It's still less than 10% of AUM today. So the question is, are there opportunities that might further energize growth here in this successful segment that you've seen? And when we think about strategy, are there are the priorities kind of the launch over the next 12 to 18 months?

David Brown: Good morning, michael, it's Dave. Let me start off and say we have seen great growth on our ETF platform. We've seen that in a number of different areas on the intermediary side. Our client base and the platforms that we're on have been expanding. And then we're also getting additional products on those platforms. In our prepared remarks, I spoke about expanding the distribution outside the U.S. Today, our ETFs are available throughout Asia, and we're opening up some countries in Latin America. So that will help us with our growth. We're launching new products. We mentioned that we launched the first ETF off the Pioneer franchise platform. We'll launch additional ones.

And we will expand out some other investment strategies as well into an ETF wrapper. So we'll have product expansion and development. We're putting distribution resources from a people perspective, from investment in our distribution partners and from a marketing perspective. So it will be multifaceted on how we grow the business. We're super excited about it. There is industry tailwind as well. And then I think our product set really matches well with what's happening in the industry where people are looking for solutions and really moving away from just ETFs as beta exposure.

And then lastly, and I always like to remind this is our average fee on our ETF is 30-- ETF platform is 35 basis points, which very much looks and acts like an active product. So it matches our fee rate requirements and really matches our margin requirements as well as a firm.

Y. Cho: Great. Thanks for that, Dave. If I could just follow up on your last point or last topic around fee rates and not specific to ETFs, but just more broadly for Victory in general. Can you just talk through -- Mike, I think you gave some commentary on mix or fee rates. But I was wondering if you could just talk through what supported the fee rate expansion quarter-over-quarter and if there's any performance fees or anything like that in there? And then why would you expect it to compress from here just given the normalized range of 46 to 47 you highlighted other than the mix that you called out?

Michael Policarpo: Yes. Mike, thanks for the question. I think we've said our fee rates has really been a driver based on kind of the asset class, product mix, client mix, distribution channel and vehicle mix that we have. And I think as we sit here today, we've been pretty consistent over the last 12 months post the Pioneer acquisition in the 46 to 47 basis point range, plus or minus a little bit depending upon, as you -- as I called out, the asset mix or the client mix. In Q1, we did have some annual fees that we record that really are fees that get us to our standard rack rates.

There's just an accounting that we record them in the first quarter. And so we look at that over the course of a normalized period, and we're still in that long-term 46 to 47 basis point range. The areas of growth from a business perspective, we highlighted our international distribution channel. We also highlighted and you just asked the question to Dave about our ETF growth. Those fees are still supportive of our overall fee rate. And we're comfortable with that guidance as we look out based on the growth that we foresee to still have that 46 to 47 basis point range.

Again, I think one thing we always highlight when we talk about our fee rate is the margin. Everything we do, channel, client, vehicle meets the margin requirements that we have. And we'll continue to look at that as we move forward, but we're really happy with where the margins have been and will continue to be.

Operator: Your next question comes from the line of Benjamin Budish with Barclays.

Unknown Analyst: Hi, this is [Nathan] on for Ben. Just a follow-up on the fee rate dynamic here. Can you speak more about the annual fees that the firm has included and just the guidance around the total revenue. We understand that it has been guiding to 46 to 47 for a while now, at least from Q2 due to like asset mix and client mix. But it seems like the firm consistently outperforms this metric or the guidance. So I just want to have a little bit more color on what you guys are seeing in the annual fee portion.

Michael Policarpo: Yes. We really -- it's not much more to add from the last question, I would say, the last answer that we provided. We're still comfortable with the 46 to 47 basis point range from a long-term guidance perspective. And any of the annual fees that we report in a particular quarter are pretty material to the overall business. And again, those fees are really just getting us back to kind of our standard rack rates with some of the clients that we have. So nothing to add at this point in time.

I think if we continue to see changes in the dynamics from an asset class or a vehicle perspective, we can evaluate it, but we're comfortable with the 46 to 47 basis points.

Unknown Analyst: Thank you, and just can you speak more about the won but unfunded channel? Is there a way to size how large that is for the business?

David Brown: Yes. It's Dave. Our won but not yet funded business, we don't guide on a number, but I can tell you that it's widespread on a number of different franchises and platforms and a number of different channels. Where we're seeing strength is on the ETF side, on the global products side, both on Pioneer and from RS's perspective, Trivalent, WestEnd Advisors and then also on the Pioneer multi-asset and fixed income and also on the equity side. So all 3 of their major platforms. So we're very excited about, as we said in our prepared remarks about really the trajectory of gross and net flows -- we have excellent investment performance, and that's the beginning of it.

And we've really taken the time to invest in our distribution channels. We've increased the investment. We've increased our FTE in almost all of the channels. And so we think we're pretty well positioned to continue kind of the growth in -- from a flow perspective and the won but not yet funded book really supports that.

Operator: Your next question comes from the line of Kenneth Lee with RBC.

Kenneth Lee: Just one on capital management and potential for inorganic growth opportunities there. Obviously, very meaningful share repurchases in the quarter. Should we interpret that as a signal that perhaps maybe an opportunity for inorganic growth is perhaps not really imminent? Or is that not the right takeaway there? Thanks.

David Brown: No, it's absolutely not the right takeaway. We are opportunistic with buying our shares. We want to own our shares. We think there's great value in owning our shares and the earnings power of our company. So when we have the cash available, and we think we have the ability to do a lot of different things with our capital, we'll buy our shares. We've done it aggressively. We have a lot of capacity and a lot of dry powder. But as I said in the prepared remarks, our #1 use of our capital is to do strategic acquisitions. And we are in a really great environment from an acquisitive perspective.

There are lots of pressures on many traditional asset management firms, and we are a proven acquirer. So we're going to use our capital to buy businesses. And when we're not buying businesses or in coordination with buying businesses where we have extra capital, we will buy our shares because we think they have -- there's a lot of value in them.

Kenneth Lee: Great. That's very helpful. And one follow-up, if I may. I just wanted to dig into some of the comments, I think it was in the prepared remarks about adding some more sales and marketing resources across the various channels there. Wonder if you could just flesh that out a little bit more. Is this driven more by product specialization? Or I just want to get a little bit more details around what's driving this?

David Brown: It's really on a number of different fronts. First, as we see our international channel expand, we're adding resources to support the growth there. And so we're adding resources in the field and really also from a support structure. And then as we grow our intermediary distribution, we're adding resources to deal with marketing, digital marketing, support of the platform, support of different channels within the intermediary side, and that's from a technology perspective and also from a people perspective. So it's a number of different channels. And something that I think that we're going to continue to do over time.

We're going to continue to invest in distribution, continue to invest in servicing clients and continue to invest in our ability to get new clients.

Operator: Your next question comes from the line of Alex Blostein.

Anthony Corbin: This is Anthony on for Alex. I wanted to click into the like M&A attempt of Janus earlier in the quarter. And I guess my question is, I guess, what was the rationale behind the deal, just given the size and fairly similar overlap product mix of the 2 firms? And then maybe just as a follow-up, like on the forward pipeline, should we expect a similar size deal and maybe product mix?

David Brown: So I think the Janus opportunity was well covered in the press. We thought that the Janus opportunity, buying that business would create a phenomenal business coming out the other side, and it was a business that we thought we could buy and it would make our company better. And as far as looking forward, we've guided towards a $1 trillion goal of assets under management. We are looking at larger acquisitions. We're also looking at, I'd say, smaller strategic acquisitions maybe to fill in certain products that we don't have or certain things we're trying to accomplish. But our acquisition focus is definitely on the larger side, but we're going to be opportunistic.

And as I said in my prepared remarks, -- we're extremely active. We have the ability to work on multiple things at the same time, and we have significant capacity. So we're in a great spot. We can do something very large like a Janus. We can do something strategic that maybe is smaller. And we are talking to a lot of different people. But the #1 thing for us is, any acquisition we're going to do, we start off from a strategic lens, and it has to make our company better. And from there, we do our diligence and we have our KPIs that we need to hit to do an acquisition.

Anthony Corbin: Thank you, that's it from me and Congratulations, Matt, on your retirement.

Operator: [Operator Instructions] There are no further questions at this time. We have reached the end of the Q&A. This concludes today's call. Thank you for attending. You may now disconnect.