Silvercrest Asset Management Group Inc. Q2 FY2026 earnings call

• AUM Performance

  • Discretionary AUM, the primary driver of firm revenue, reached an all-time firm high at the end of Q2 2026, after a 6.9% quarterly increase driven by market gains.
  • Organic new client account flows hit $111 million in Q2 2026, up from $81 million in Q1 2026 and $80 million in Q2 2025.
  • Net client outflows during Q2 were largely seasonal, from high net worth client tax withdrawals consistent with historical Q2 patterns, and over $200 million of these outflows have no impact on firm revenue.

• Strategic Global Expansion

  • Silvercrest's planned two-year strategic expansion is progressing as designed; the global distribution and infrastructure build-out is now entering the revenue generation phase.
  • The firm secured a ~$350 million (A$500 million) contribution to its global value strategy, which now manages $2.5 billion in AUM.
  • An Australian unit trust has been successfully established, and the firm expects to complete its MIFID licensing through the Central Bank of Ireland by the end of Q3 2026.
  • Administrative and legal costs associated with global expansion will decline meaningfully once licensing is complete, as new distribution channels begin contributing revenue.
  • The firm has secured key third-party ratings for its strategies and vehicles, and is pursuing additional ratings from major global consultants to open further international institutional distribution channels.

• Talent and Investment

  • The firm continues to invest in talent: a Dublin office head and the first Dublin-based portfolio manager will join the firm imminently.
  • Shareholders recently approved an increase in shares issuable under the firm's equity incentive plan, and the company will imminently issue new equity grants to growing team members to align long-term interests with shareholders.
  • Total Q2 2026 compensation and benefits expense was $20.5 million, representing 66.6% of Q2 revenue. The compensation ratio will remain elevated as the firm's current major investment program matures.

• Reporting Change

  • Next quarter, Silvercrest will adjust its AUM reporting, likely eliminating the non-discretionary AUM category entirely. This will create a one-time drop in reported non-discretionary and total AUM with no impact on revenue, and is intended to give investors a clearer view of the discretionary AUM that drives the firm's economics.

• Expense Performance

  • Total Q2 2026 expenses increased 12% year-over-year to $30.3 million, driven by increased compensation (up 8.9% YoY, from merit raises, new Ireland-based hires, bonus accruals, and equity compensation) and higher G&A (up 19.3% YoY, from professional fees, global expansion-related travel, and portfolio systems costs).

Silvercrest's revenue is driven primarily by Discretionary Assets Under Management (AUM). For Q2 2026: Discretionary AUM reached $24.7 billion at quarter-end, a 6.9% increase from $23.1 billion at Q1 2026-end, and a 4.2% year-over-year increase from $23.7 billion, driven by market appreciation partially offset by net client outflows. Total AUM increased 3.6% quarter-over-quarter to $37.0 billion. Total Q2 2026 revenue was $30.8 million, a $0.1 million year-over-year increase. Reported consolidated Q2 2026 net income was $0.5 million, with net income attributable to Class A shareholders at approximately $0.2 million ($0.02 per basic/diluted share). Adjusted EBITDA for Q2 2026 was ~$3.4 million, equal to 11.2% of revenue, and adjusted net income was ~$1.2 million ($0.10 per adjusted basic/diluted share). For H1 2026: Total revenue increased $0.1 million year-over-year, adjusted EBITDA was ~$7.2 million (11.5% of revenue), and adjusted net income was ~$2.6 million ($0.22 per adjusted basic/diluted share). The institutional business segment held $9.8 billion in AUM at Q2-end, up from $8.7 billion at Q1-end. The OCIO (outsourced chief investment officer) segment, built in-house by Silvercrest, held $2.9 billion in AUM at Q2-end. Non-discretionary AUM contributes a very small share of total firm revenue.

• Management did not issue specific numerical guidance for future revenue or expenses, but confirmed that the firm's 2-year strategic expansion plan is proceeding on schedule.
  • Legal, administrative and professional fees associated with global expansion will decline meaningfully after MIFID licensing is completed in Q3 2026, though recurring statutory administrative costs for new international subsidiaries will remain.
  • The compensation ratio will stay elevated as the firm's current major organic growth investment program matures.
  • Management expects to open new institutional distribution channels globally after securing additional third-party consultant ratings, and projects the large current multi-billion dollar institutional pipeline will convert to new AUM growth.

• Forward-looking statements regarding future growth, licensing completion and new flows are subject to risks and uncertainties that could cause actual results to differ materially from projections, with key risk factors disclosed in the firm's SEC filings.
  • Prior relative performance weakness in the firm's value strategies led to institutional outflows in Q2 2026, and sustained performance weakness could lead to further outflows.
  • The large potential institutional pipeline has uncertain conversion probability, so projected new AUM growth is not guaranteed.

Q: G&A expenses rose from 25% to 30.5% in the first half of 2026. What is the expected normal G&A run rate after European and Australian licensing is completed? / A: Management declined to give a precise figure, but confirmed directional decline in G&A after the licensing process concludes. Some recurring costs will remain, including statutory audit and administrative fees for new international subsidiaries, similar to the firm's existing Singapore subsidiary. The majority of the one-time and expansion-related incremental costs will fall. (212 characters)

Q: Strong year-to-date performance for small-cap and value strategies should help marketing efforts; are you seeing increased investor interest in these strategies? / A: Management confirmed strong recent performance does help both asset retention and new client outreach, particularly after prior relative underperformance in value strategies that contributed to Q2 institutional outflows. The improved performance trend is expected to support better flow outcomes going forward. (210 characters)

Q: Can you add more detail on inflow momentum for the strong-performing global and international equity strategies? / A: The firm just closed a A$500 million (~$350 million) inflow to the global value strategy, bringing that strategy's AUM to $2.5 billion, a key threshold for attracting large institutional allocations. The new Australian unit trust will soon receive third-party ratings that open it to domestic wealth and institutional investors, and the total current institutional pipeline across global, emerging markets, international and growth equity strategies totals multiple billions of dollars of potential opportunities. (356 characters)

Q: What is driving net client outflows that offset new organic flows? Are outflows due to client risk-off sentiment or shifts to other asset managers? / A: Outflows are mostly driven by two predictable factors: seasonal high net worth client withdrawals for annual tax payments, a pattern consistent with prior Q2 periods, and most of these large withdrawals have zero impact on firm revenue due to existing flat-fee wealth management arrangements. The remaining outflows came from the institutional value segment, which had prior relative performance weakness that has now reversed, and high net worth outflows are not driven by broad risk-off sentiment or client departures from the firm. (415 characters)