AllianceBernstein Holding L.P. Q1 FY2026 earnings call

• Key themes: Proposed equitable core bridge merger to accelerate flywheel and enhance scale; firm-wide active net outflows in Q1 concentrated in active equity strategies; generated organic inflows in tax-exempt fixed income and alternatives multi-asset; private market platform reached $85 billion AUM; retail growth sales rose but had net outflows; institutional channel had gross sales increase but net outflows; private wealth had record growth sales and organic growth; private markets platform scaled with Equitable partnership.
• Investment performance: Fixed income markets had modestly negative returns, equities were hurt; retail had growth sales but net outflows; institutional had gross sales increase but net outflows; private wealth had record growth.
• Financial results: Adjusted earnings 83 cents per unit, up 4% YOY. Net revenues $871 million, up 4% YOY. Base fees grew 5% YOY. Performance fees $23 million, down $16 million YOY. Total operating expenses $580 million, up 4% YOY. Operating income $291 million, up 3% YOY. Adjusted operating margin 33.4%, down 30 basis points YOY.

Fixed income: Global bond markets had modestly negative returns in Q1. Credit markets mixed. Bloomberg U.S. Aggregate Index flat. Our American income and global high-yield products underperformed benchmarks. Over longer periods, half of assets outperformed 1 year, 80% 3 years, 64% 5 years. Equities: U.S. equity markets negative in Q1. S&P 500 down 4.3%. 23% of assets outperformed 1 year, 24% 3 years, 44% 5 years. International and emerging market strategies with smaller AUM base performed well. Retail: Retail growth sales surpassed $23 billion but had net outflows of nearly $6 billion in Q1. Active equity and taxable fixed income had outflows, while tax-exempt and alternatives multi-asset had inflows. Institutional: Institutional gross sales increased but had net outflows. Taxable fixed income had inflows, alternatives multi-asset had positive inflows for 5th consecutive quarter. Pipeline reached record-high $27.5 billion. Private wealth: Quarterly growth sales set new records, inflows and net new client assets grew, redemption requests for private credit products well below cap. Private markets: Platform reached $85 billion in AUM, up 13% YOY. Proposed equitable core bridge merger will enhance scale and growth outlook with combined over $350 billion GA assets and $70 - $80 billion new liabilities annually.

• Total performance fees for FY 2026 expected $95 - $115 million, up from prior range. Public markets performance fee outlook $25 - $35 million. Private markets performance fee outlook $70 - $80 million.
• Institutional outlook supported by record pipeline of $27.5 billion, including public market and private markets mandates. Expect continued inflows across secular growth areas.

• Geopolitical tensions and elevated volatility impacted markets.
• Active equity strategies had outflows due to performance challenges and client allocation decisions.
• Taxable fixed income had outflows with retail redemptions concentrated in Asia-Pacific regions.
• Potential impact of Middle East situation on consumer sentiment and high net worth clients.
• Slowdown in M&A activity impacting liquidity events and business sales, which could affect the business.

Q: On the equitable core bridge merger, expectation on managing $100 billion of incremental AUM and mix of public vs private assets.

A: Expect at least $100 billion over time, deal likely to close end of 2026, skews towards public initially but over time private will be beneficiary.

Q: On institutional private credit market, approach to opportunities and risks.

A: Strong momentum in institutional private credit, low redemption rates in retail, significant mandates added to pipeline, broad-based momentum skewing towards insurance but non-insurance also strong.

Q: On expense outlook and flexibility.

A: Expense guide 6.25 to 6.50, flexibility to pull back if needed due to market volatility.

Q: On wealth management talent market and AI.

A: Good talent market with low attrition, adding advisors, using AI in client meeting preparation, client servicing, and lead generation but early innings with no concrete financial impact yet.

Q: On private wealth seasonality and ETF business.

A: April has soft flows due to tax season, ETF platform building momentum with monthly net flows close to half a billion, expanding into new markets.

Q: On private wealth advisor profile and pipeline.

A: Advisor mix 75% traditional and 25% experienced, pipeline average deployment 9 months, record pipeline to be deployed quickly with opportunities from Corbridge Equitable and Asia Pacific.

Q: On ETF distribution footprint and economic arrangements.

A: ETF franchise has third-party distribution growing, dependence on direct platforms low, third-party distribution cost not materially impacted by supermarket changes.

Q: On performance fees and expense growth.

A: Incremental pickup in public side due to international SMIT product in Q1, operating expense growth likely to stay flat.